First question: What are the ramifications of this company not selling your product; monetary or perspection? If you are ok dealing with the impacts then...

Second question: Are you under contract with this company? If so, is there an exclusivity or termination clause? If no exclusivity, sell away. If there is a termination clause, is it performance-based or just providing notice? Execute it. If you aren't under contract, let them know that you've decided to take the product in-house and that you will no longer be selling them the product.

Keep in mind that you will always be more passionate about your product then anyone else. You are going to be forever disappointed if that is the standard you hold other companies to.