Financial Review
FROM KEITH BIGSBY
REVENUES
The Group continued to grow its product revenues as we mature as a business. Overall revenues increased for the year to US$6.6 million (2008: US$5.9 million). However, product revenues grew to US$2.9 million (2008: US$1.0 million) the majority of which came from Terminix and also included Sustainable Solutions product revenues of US$0.3 million (2008: US$(0.1) million). Collaborative revenue reduced to US$3.7 million (2008: US$4.9 million) with the impact of the revised Kraft contract.
COST OF SALES AND GROSS PROFIT
Cost of sales for the year was US$6.4 million (2008: US$4.4 million). This included project costs for collaborative revenue projects of US$2.6 million (2008: US$2.7 million), cost of insecticide products of US$1.5 million, (2008: US$1.0 million), and cost of sales of WasteSolver of US$0.3 million (2008 of US$0.0 million). We have included an inventory write-off of US$1.7 million (2008: US$0.7 million) largely in Sustainable Solutions for which we are continuing efforts to identify places to sell the inventory.
OPERATING EXPENSES
Overall, operating expenses for the year have reduced
by 30% to US$14.2 million (2008: US$20.4 million). The expenses for the year include non-cash stock compensation to employees and non-employees of US$3.3 million (2008: US$4.1 million), depreciation and amortization of US$0.5 million (2008: US$0.5 million) and provision for doubtful debts of US$0.1 million (2008: US$0.9 million). The net cash spent on operating expenses is continuing to decline and the costs for the second half of 2009 include US$0.6 million in non-recurring severance costs. The table below analyses the net cash operating expense by department for each six-month period over the last two years.
Six Months Ended
31 Dec. 2009
30 Jun. 2009
31 Dec. 2008
30 Jun. 2008
General and administrative
$2.4m
1.4m
2.6m
3.1m
Business development
1.0m
1.8m
1.9m
2.1m
Research and product development
1.5m
2.3m
2.1m
3.1m
Total
$4.9m
5.5m
6.6m
8.3m
OTHER INCOME AND COSTS
Finance income decreased to US$15 thousand (2008:
US$442 thousand) earned from reduced funds on deposit and declining interest rates in the year which reduced to
a weighted average of 0.04% (2008: 3.31%). The interest expense was paid on a capitalized equipment lease and remains materially unchanged at US$3 thousand (2008:
US$5 thousand).
Changes in the fair value of warrants was insignificant in the year (2008: US$(1.0) million) and relates to warrants issued to the underwriters of the IPO which were impacted by the significant reduction in the stock price during 2008.
T YR AT ECH, INC. / ANNUAL R EPORT 20 0 9
