control with our technology and innovation capabilities, and additional markets will be explored for expansion of the partnership.
Our partnership with Kraft Foods to develop new functional food products for the benefit of people living in areas with endemic parasitic disease continues to progress. This innovative relationship and plan was built around a staged development process that includes participation of both companies working together. The project successfully achieved the first stage completion in 2007 resulting in a multi-million dollar payment to TyraTech. The successful accomplishment of key project objectives in 2008, combined with a mutual desire for some modifications to the original Agreement structure, resulted in the payment of approximately 75% of the second stage milestone to TyraTech at the end of 2008. The companies are working aggressively to complete the second stage, which is expected to occur during 2009.
In January 2009, we announced the creation of a joint venture named TyraChem. The new company was formed with Chemplast
(a subsidiary of McNeel International Corporation), which has been consistently recognized for its development of innovative products since it first revolutionized commercial banana cultivation with plastic resins incorporating pesticides. The formation of TyraChem will utilize Chemplast´s market presence, as well as its technology expertise in the plastics arena. These strengths, together with our proprietary potent blends of plant derived pesticides, will enable the development of innovative products which have the ability to protect against synthetic chemical resistant insects and fungi in the agriculture and consumer markets worldwide.
TyraChem will also develop markets for TyraTech Naturals products for direct application in the banana and pineapple field. The control of both insects and fungal disease is a major issue in the banana and pineapple industries whereby one popular approach to protecting growing banana bunches is to envelop the growing bananas in a plastic bag that incorporate insecticides, for which McNeel is currently a global market leader. In addition, both insecticides and fungicides can be directly sprayed on plants to protect both the plant itself, as well as the growing fruit from damage. Years of chemical pesticides usage has resulted in the emergence of resistant organisms. Regulatory limitations in bringing new synthetic chemical pesticides into the market and a general movement to safer and more organic pesticides have opened a significant market opportunity. TyraChem will focus directly on this opportunity with specific products ranging from TyraTech Naturals based plastic banana tree bags to crop insecticide and fungicide sprays.
The level of interest across this industry is high as the TyraTech technology has the potential to address a number of key challenges facing fruit exporters. Key benefits to the industry include improved crop yield and quality of fruit, a reduction in the use of synthetic pesticides and progress towards more sustainable and safer production practices. Under the terms of the 50:50 joint venture, Chemplast
will provide all the up-front development funding of which 50% will
be reimbursed through a preferential distribution from the joint venture´s profits.
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06
Chief Executive Officer´s Review
(continued)
