11th Aug 2011 07:08
For Immediate Release 11 August 2011
Interim Results for the six months ended 30 June 2011
TyraTech Inc. (AIM: TYR), a natural life sciences company that harnesses the power of nature to improve human and animal health using a proprietary, novel technology that is both effective against insects and parasites and safe for people and pets, today announces its interim results for the six month period ended 30 June 2011.
Financial Highlights:
·; Total revenues from continuing operations increased by 85% to US$5.0 million (2010: US$2.7 million);
·; Product sales increased by 103% to US$2.8 million (2010: US$1.4 million)
·; Collaborative revenue increased by 64%, due primarily to milestone revenue for the first half of US$1.4 million (2010: nil)
·; Gross profit increased to US$3.5 million (2010: $0.7 million)
·; Overall operating expenses from continuing operations increased 7% to US$4.1 million (2010: US$3.8 million);
·; Loss from continuing operations was significantly improved at US$0.5 million for the first half of 2011, (2010: US$3.1 million net loss); and
·; Cash and cash equivalents of US$1.6 million at 30 June 2011 (US$1.5 million at 30 June 2010 and US$3.3 million at 31 December 2010)
Operational Highlights:
·; Delivery of three new innovative insect control products to Terminix;
·; Over a 100% increase in the delivery of Terminix products in the six months ended 30 June 2011; and
·; Continued product development efforts on our Kraft project as well as early efforts on additional products in existing and new categories
For further information:
TyraTech Inc.
Alan Reade, Executive Chairman +1 919 415 4310Peter Jerome, Chief Financial Officer +1 919 415 4280
www.tyratech.com
Brewin Dolphin
Matthew Davis +44 207 248 4400
www.brewin.co.uk
Executive Chairman's Statement
I am very pleased to report a most successful first half of 2011.
During this period we have successfully delivered three new products to our partner Terminix which have resulted in significant milestone payments and may result in an important new revenue stream in 2012.
The functional food project with our partner Kraft continues to make very good progress. The project has:
·; A clearly defined regulatory strategy
·; Selected final formulations
·; Transferred technology to a manufacturing facility
·; Initiated field trials
We have made good progress with the regulatory process for our household insecticide products for Europe and expect to have 3 new products registered by the end of the year. We are in the process of identifying potential distribution partners and hope to be in a position to launch in 2012.
We are also in the advanced stages of developing three new animal health products with a further two in the pipeline. Again we are we are in discussion with potential partners - although we have not ruled out more direct routes to market.
The relocation of the Company's operations to the Research Triangle Park area has been successfully completed and we now have all our Research, Product Development and Commercial activities in one efficient location. We are already seeing important benefits from this with improved communications and faster decision making as well as expected financial benefits.
It can be seen from the financial results that we have significantly accelerated the speed and effectiveness of product development. We have also managed to control costs and improve margins. We are very satisfied with the increase in product revenues - in this first six months we have more than doubled the product sales over the same period last year and our total revenues for the six months are 9% higher than the previous full year.
Cost control has allowed the good top line results to flow through to the bottom line with the loss from operations being reduced from US$3.1 million in 2010 to US$0.5 million in 2011.
We certainly have a challenging period in front of us. It is a period in which we have to balance continued cost control with speed to complete product development and registrations. We have to secure agreements with new partners in some areas (i.e. Europe) and make important strategic decisions in Animal Health particularly which route we take to the customer.
Alan Reade
Executive Chairman
11 August 2011Financial Review
Revenue
Total revenue for the six month period to 30 June 2011 from continuing operations was US$5.0 million (2010: US$2.7 million). Product sales were a significant driver for the increase in revenue, with sales increasing to US$2.8 million (2010: US$1.4 million). From a volume standpoint, we experienced a 123% increase in total units shipped over the first half of 2010. Collaborative revenue increased to US$2.2 million (2010: US$1.3 million). Collaborative revenue includes upfront license fee amortization, milestone revenue and cost reimbursement from our Kraft partnership. Milestone revenue was US$1.4 million (2010: US$ nil) due to the receipt of three milestone payments. Cost reimbursement from Kraft decreased to US$0.3 million (2010: US$1.2 million) as a result of decreased expenditures on the project by TyraTech.
Cost of sales and gross profit
Material and manufacturing costs for product sales was US$1.1 million (2010: US$0.9 million) and costs for our Kraft partnership were US$0.3 million (2010: US$1.2 million). Gross profit increased to 71% (2010: 26%) as a result of improved manufacturing execution and the full amount of our milestone revenue of US$1.4 million being realized in gross profit for the six months.
Operating expenses
Overall operating expenses from continuing operations increased by 7% for the six month period to US$4.1 million (2010: US$3.8 million). Included within our general and administrative expenses are exceptional costs of US$0.3 million incurred to relocate our offices and laboratory facilities to Morrisville, North Carolina. Excluding these costs, overall operating expenses from continuing operations would have decreased 1% as we continue to focus on controlling our cost structure. The overall expense for the six months included non-cash equity compensation of US$0.5 million (2010: US$0.6 million) and depreciation of US$0.1 million (2010: US$0.1 million).
Liquidity and cash flow
Cash used in operations for the period was US$1.6 million compared to US$2.6 million, a US$1.0 million improvement. This improvement was the result of our net loss decreasing by $2.6 million, offset by an increase in working capital related to the increased product volumes from our relationship with Terminix.
There were no financing activities during the first half of 2011.
The Company invests its cash resources in deposits with banks with the highest credit ratings, putting security before absolute levels of return.
Peter Jerome
Chief Financial Officer & Group Secretary
11 August 2011
Consolidated Statements of Operations
in $'000 (except share information)
(Unaudited) six months ended 30 June |
| |||||||
2011 |
2010 |
year ended 31 December 2010 |
| |||||
Revenues: Product sales |
$2,832 |
$1,398 |
$2,056 | |||||
Collaborative revenue | 2,164 | 1,318 | 2,536 | |||||
Total revenue | 4,996 | 2,716 | 4,592 | |||||
Cost and expenses related to product sales and collaborative revenue: Product costs Collaborative costs and expenses |
1,141 317 |
856 1,151 |
1,113 2,156 |
| ||||
Total costs and expenses | 1,458 | 2,007 | 3,269 |
| ||||
| ||||||||
Gross Profit | 3,538 | 709 | 1,323 |
| ||||
Costs and expenses: |
| |||||||
General and administrative Business and development | 1,849 548 | 1,750 371 | 3,658 705 |
| ||||
Research and technical development | 1,660 | 1,661 | 3,050 |
| ||||
Total costs and expenses | 4,057 | 3,782 | 7,413 |
| ||||
| ||||||||
Loss from operations | (519) | (3,073) | (6,090) |
| ||||
Other income (expense): |
| |||||||
Interest/other expense | (8) | (9) | (17) |
| ||||
Loss from continuing operations before income taxes | (527) | (3,082) | (6,107) |
| ||||
| ||||||||
Income tax expense | - | - | - |
| ||||
| ||||||||
Loss from continuing operations
Discontinued operations: (Note 4) (Loss) income from discontinued operations before income taxes Income tax expense (Loss) income from discontinued operations | (527)
- - - | (3,082)
(47) - (47) | (6,107)
10 - 10 |
| ||||
Net loss attributable to non-controlling interest | - | 5 | 6 |
| ||||
Net loss attributable to TyraTech, Inc. including discontinued operations | $(527) |
$(3,124) |
$(6,091) |
| ||||
Net loss per common share from continuing operations: |
| |||||||
Basic and diluted Net loss per common share from discontinued operations Basic and diluted Net loss per common share attributable to TyraTech, Inc. including discontinued operations Basic and diluted Weighted average number of common shares: Basic and diluted
The accompanying notes are an integral part of these consolidated financial statements. | (0.01)
-
(0.01)
51,456,681 | (0.11)
-
(0.11)
27,091,966 | (0.16)
-
(0.16)
37,116,234
|
| ||||
Consolidated Balance Sheets
in $'000 (except share information)
(Unaudited) six months ended 30 June 2011 | (Unaudited) six months ended 30 June 2010 |
year ended 31 December 2010 | ||
Assets | ||||
Current Assets: | ||||
Cash and cash equivalents | $1,638 | $1,475 | $3,344 | |
Accounts receivable, net | 2,070 | 83 | 791 | |
Inventory | 380 | 177 | 341 | |
Prepaid expenses Current assets from discontinued operations |
| 152 - | 143 33 | 105 1 |
Total current assets | 4,240 | 1,911 | 4,582 | |
Property and equipment, net of accumulated depreciation |
564 |
700 |
626 | |
Total assets | $4,804 | $2,611 | $5,208 | |
Liabilities and Shareholders' Equity | ||||
Current Liabilities: | ||||
Accounts payable Accrued liabilities Current liabilities of discontinued operations | $963 498 2 | $786 1,104 166 | $429 884 2 | |
Deferred revenue Current installments of obligation under capital lease | 1,230 - | 154 9 | 1,952 - | |
Total current liabilities | 2,693 | 2,219 | 3,267 | |
Other long-term liabilities |
2,319 |
105 |
2,102 | |
Total liabilities | 5,012 | 2,324 | 5,369 | |
Equity | ||||
Common stock, at $0.001 par authorized and issued 52 million for 6/30/11 and 12/31/10 and 47 million for 6/30/10 | 52 | 47 | 52 | |
Additional paid in capital | 69,539 | 66,550 | 69,060 | |
Accumulated deficit | (69,794) | (66,300) | (69,268) | |
Treasury stock of 0 common stock at 6/30/11 and 12/31/10 and 326,241 common stock at 6/30/10 |
- |
(4) |
- | |
TyraTech Inc. shareholders' equity (deficit) Non-controlling interest Total shareholders' equity (deficit) |
(203) (5) (208) |
293 (6) 287 |
(156) (5) (161) | |
Total liabilities & shareholders' equity | $4,804 | $2,611 | $5,208 | |
The accompanying notes are an integral part of these consolidated financial statements. |
Consolidated Statements of Cash Flow
in $ '000
(Unaudited) six months ended 30 June 2011 | (Unaudited) six months ended 30 June 2010 |
year ended 31 December 2010 |
| ||||||||
Cash flows from operating activities: Net loss |
$(527) |
$(3,129) |
$(6,097) |
| |||||||
Adjustments to reconcile net loss to net cash used in operating activities: Discontinued operations |
(10) |
| |||||||||
Depreciation and amortization | 123 | 121 | 239 |
| |||||||
Amortization of stock awards Non-cash performance bonus | 479 | 572 | 943 150 |
| |||||||
Loss on disposal of assets | - | 8 | 7 |
| |||||||
Changes in operating assets and liabilities: |
| ||||||||||
Accounts receivable | (1,279) | 490 | (263) |
| |||||||
Inventory Prepaid expenses Accounts payable and accrued liabilities | (39) (46) 148 | 149 72 (575) | (117) 110 (1,049) |
| |||||||
Deferred revenue Net cash used in discontinued operations | (505)
| (322) | 3,473 (77) |
| |||||||
Net cash used in operating activities | (1,646) | (2,614) | (2,691) | ||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property and equipment Sale of property and equipment | (60) - | (21) 25 | (64) 26 | ||||||||
Net cash (used in) provided by investing activities |
(60) |
4 |
(38) | ||||||||
Cash flows from financing activities: | |||||||||||
Payments made under capital leases | - | (6) | (17) | ||||||||
Net proceeds from sale of common stock | - | 2,826 | 4,823 | ||||||||
Contribution from non-controlling interest | - | 2 | |||||||||
Net cash provided by financing activities |
- |
2,820 |
4,808 | ||||||||
Net (decrease) increase in cash and cash equivalents | (1,706) | 210 | 2,079 | ||||||||
Cash and cash equivalents beginning of the period | 3,344 | 1,265 | 1,265 | ||||||||
Cash and cash equivalents end of the period | $1,638 | $1,475 | $3,344 | ||||||||
Supplemental disclosures: Cash paid for interest Cash paid for income taxes Non-cash operating activities: The Company exchanged inventory for settlement of accounts payable and accrued liabilities of a Sustainable Solutions, LLC. supplier: Accounts payable and accrued liabilities Inventory
These accompanying notes are an integral part of these consolidated financial statements. |
$- $-
$ - $ - |
$- $-
$(283) $283 |
$3 $-
$- $-
| ||||||||
Notes to the Interim Consolidated Financial Statements
1. Basis of Preparation
The financial statements of TyraTech, Inc. and its subsidiaries (TyraTech Sustainable Solutions, LLC; TyraChem, LLC; TyraTech International Ltd.; TyraTech International LP; TyraTech International BV; and TyraTech International Coop) referred to as the "Company" have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP) and the attached financial statements have been prepared on a consolidated basis.
The results for the year ended 31 December 2010 have been extracted from the statutory consolidated financial statements of TyraTech, Inc. for the year ended 31 December 2010 which were prepared in accordance with US GAAP.
The unaudited interim consolidated financial statements for the six months ended 30 June 2011 and 2010 were prepared on the basis of the accounting policies set out in the most recently published consolidated financial statements of the Company for the year ended 31 December 2010. As permitted, this interim report has been prepared in accordance with AIM rules.
2. Liquidity and Capital Resources
At 30 June 2011 the Company had US$1,638,122, (2010: US $1,475,232) in cash and cash equivalents and no indebtedness.
The Company has had significant negative cash flows from operating activities since inception. The Company is continuing to reduce the magnitude of these negative operating cash flows through cost reduction programs and product sales expansion. The Company believes that with the existing cash on hand, cash expected from existing supply contracts, funding from prospective agreements, and a continued focus on cost control, that the Company will have sufficient cash to meet its working capital needs through the remainder of 2011 through 30 June 2012.
3. Segments
The Company previously considered itself to have two separate strategic business units that offer different products. They were managed separately because each business required different knowledge, skills and marketing strategies. These two business segments were pesticides and insecticides and sustainable solutions. In the first half of 2010 the Company decided to discontinue the business conducted in the sustainable solutions segment. The effect of that decision is discussed in the Discontinued Operations footnote.
4. Discontinued Operations
During 2010, the Company discontinued its sustainable solutions segment which is reported as discontinued operations in the consolidated statements of operations for the six months ended 30 June 2011 and 2010 and the twelve months ended 31 December 2010. The assets and liabilities of discontinued operations have been reclassified and are segregated in the consolidated balance sheets for the six months ended 30 June 2011 and 2010.
The Company ceased operations of the Sustainable Solutions, LLC. subsidiary effective 31 March 2010 and began liquidating the product inventory and settling the remaining liabilities with suppliers. This subsidiary was discontinued because its operations did not align with the Company's strategic plans.
The consolidated statements of operations for the six months ended 30 June 2011 and 2010 and twelve months ended December 31, 2010, exclude revenues of US$0, US$82,101, and US$108,963 and losses of US$0, net loss of US$46,551, and net income of US$10,070 respectively, from discontinued operations.
The following table summarizes the major categories of assets and liabilities being discontinued:
(Unaudited) six months ended 30 June 2011 | (Unaudited) six months ended 30 June 2010 | (Audited) year ended 31 December 2010 | |
$'000 | $'000 | $'000 | |
Accounts receivable | $- | $1 | $1 |
Prepaid expenses | - | - | - |
Inventory | - | 32 | - |
Total current assets | $- | $33 | $1 |
Accounts payable | $1 | $165 | $1 |
Accrued expenses | 1 | 1 | 1 |
Total current liabilities | $2 | $166 | $2 |
5. Revenue (net of discontinued operations)
(Unaudited) six months ended 30 June 2011 | (Unaudited) six months ended 30 June 2010 | (Audited) year ended 31 December 2010 | |
$'000 | $'000 | $'000 | |
Opening deferred revenue | 4,035 | 476 | 476 |
Closing deferred revenue | 3,530 | 154 | 4,035 |
Movement in deferred revenue | 505 | 322 | (3,559) |
Invoices raised | 4,491 | 2,394 | 8,151 |
Total revenue | $4,996 | $2,716 | $4,592 |
6. Loss per Common Stock
The calculation of the basic and diluted earnings per ordinary share is based on the Company's loss, excluding the effect of losses attributable to non-controlling interests, and including losses from discontinued operations, of US$526,000 for the six months ended 30 June 2011 (six months ended 30 June 2010: loss of US$3,123,557; year ended 31 December 2010: loss of US$6,090,488), and on 51,456,681, (30 June 2010: 27,091,966; 31 December 2010: 37,116,234) common shares, the weighted average number in issue and ranking for dividend during the period. There is no impact considered on the conversion of stock options or warrants as the effect would be anti-dilutive.
7. Accounts Receivable and Other Assets (net of discontinued operations)
(Unaudited) six months ended 30 June 2011 $'000 | (Unaudited) six months ended 30 June 2010 $'000 | (Audited) year ended 31 December 2010 $'000 | |
Accounts receivable and other assets |
2,070 |
83 |
791 |
Prepaid expenses | 152 | 143 | 105 |
$2,222 | $226 | $896 |
8. Related Party Transactions
The Company utilizes Nottingham Spirk (NS) for product development services. A member of the Company's Board of Directors also serves as a director for NS. During the six month period ended 30 June 2011 the Company paid $244,827 to NS for product development services.
During the six months to 30 June 2011 Alan Reade, Executive Chairman of the Company, completed the purchase of 96,745 common shares of $0.001 each in the Company. As a result of these transactions Alan Reade holds 4,168,553 common shares, equal to 8.04% of the issued share capital of the Company.
9. Movement in Shareholders' Equity during the six months ended 31 December 2010 and 30 June 2011
Common Stock | Additional Paid-in Capital | Accum-ulated deficit | Treasury Stock | Non-con- trolling Interest | Total | |
$'000 | $'000 | $'000 | $'000 | $'000 | $'000
| |
Shareholders' Equity, as of 30 June 2010
Stock based compensation
Proceeds from issuance of common stock, net of expenses
Non-controlling interest
Net loss
Re-issuance of treasury stock
Shareholders' Deficit, as of 31 December 2010
Issuance of common stock for a SARs exercise
|
$47
5
52
- | $66,550
371
1,992
146
69,059
9 |
$(66,300)
(2,967)
(69,267) |
$(4)
4
- |
$(6)
1
(5)
|
$287
371
1,997
1
(2,967)
150
(161)
9 |
Stock based compensation
|
| 471
| 471
| |||
Net loss | (527) |
| (527) | |||
Shareholders' Deficit, as of 30 June 2011 |
$52 |
$69,539 |
$(69,794) |
$- |
$(5) |
$(208) |
10. Contingencies
In November, 2008, Molecular Securities, Inc. ("Molecular") filed a Complaint against the Company asserting claims for breach of contract and quantum merit. Molecular alleges that it is owed US$2,760,470 for services it allegedly provided to TyraTech plus interest, attorneys' fees and costs. On 26 May 2011, the New York Supreme Court, Appellate Division of New York County issued a ruling entering judgment in favor of the Company and against Molecular's complaint in its entirety. In July 2011, Molecular applied for permission to appeal the ruling with the Court of Appeals (New York's highest court). The Company continues to vigorously defend itself and continues to believe that the recording of any liability is inappropriate as Molecular's claims are meritless.
11. Subsequent Events
We have evaluated all events and transactions through 10 August 2011, the date the consolidated financial statements were available to be issued. Based on such evaluation, no events have occurred that in the opinion of management warrant disclosure in or adjustment to the consolidated financial statements.
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