TyraChem's costs which have been funded by our partner, these will be paid out of future distributions. In addition there is an amount of US$0.1 million for the amount of severance liabilities recorded at the end of the year which will be paid in 2011.
There were no changes in the Company's issued shares during the year, however after the year end on May 20
the Company issued 24,443,888 of new common shares of US$0.001 each for a gross cash consideration of £2.2 million US$3.2 million and £1.9 million US$2.8 million net of cash expenses. A further 749,112 of new common shares of US$0.001 each were issued in settlement of other expenses of £67,420 US$99,781. These shares are subject to a lock up agreement of six months, which expires on November
20, 2010.
LIQUIDITY AND CASH FLOW
Net loss before and after tax for the year was US$13.9 million (2008: US$17.4 million) including non-cash expenses such as amortization of employee stock awards of US$3.3 million (2008: US$4.1 million), depreciation and amortization of US$0.5 million (2008: US$0.5 million), write-off of inventory US$1.9 million (2008: US$0.7 million), doubtful debt write-off/ provisions of US$ 0.1 million (2008: US$0.9 million) and changes in the value of existing warrants of US$(0.0) million (2008: US$(1.0) million). In addition the accounting for the non-controlling interest in our joint venture, TyraChem, is US$(28) thousand (2008: nil). The net increase in accounts receivable, prepaid expenses and inventory of US$0.4 million (2008: US$3.1 million) is due largely to Sustainable Solutions. There was an increase in payables and accruals of US$1.3 million (2008: reduction US$2.1 million) with a provision for severance provisions booked at the end of the year amongst other items. All this together has resulted in a net cash outflow from operating activities in the year of US$7.9 million (2008: US$17.9 million).
Cash invested in property, plant and equipment (PP&E) was negligible in the year (2008: US$0.4 million).
Contribution from Chemplast Inc. for its non-controlling interest in TyraChem was US$28 thousand (2008: US$ nil).
During 2008, the Group received treasury stock in settlement of a loan of US$0.5 million, which was made to fund an unanticipated tax liability of Dr. Armstrong resulting from the conversion of units in TyraTech LLC to common shares in TyraTech, Inc.
Cash and cash equivalents were US$1.3 million at the end of 2009 (2008: US$9.2 million). We invest our cash resources in deposits with banks with the highest credit ratings, putting security before absolute levels of return.
In November 2008, Molecular Securities, Inc. (Molecular) filed a complaint against the Company asserting claims for breach of contract. Molecular alleges that it is owed US$2.8 million for services that it allegedly provided to TyraTech plus interest. TyraTech strongly refutes this claim and is
vigorously defending itself in the lawsuit. After taking advice on the merits and demerits of the lawsuit the Company does not intend to provide any liability for the lawsuit. Motions
in connection with the lawsuit are expected to be heard by
the New York Court during the course of this financial year. The precise timing of any final determination of the lawsuit remains uncertain. Whilst the Directors believe that the Company will successfully defend itself in the lawsuit there can be no assurance that this will be the case. If Molecular were to prevail in some or all of its claim against TyraTech there could be a material adverse effect upon the Group's working capital which could in turn significantly delay the development of the Group's business and the Company achieving profitability.
CURRENCY EFFECTS
The Group has no significant overseas currency exposures and does not use financial derivatives to manage currency risk.
Keith Bigsby/Chief Financial Officer
21 June 2010
T YR AT ECH, INC. / ANNUAL R EPORT 20 0 9
