P13
proceeds of the Fundraising the Company will have sufficient cash to fund its operations until the Company achieves profitability. The achievability of these forecasts is dependent on a number of key assumptions, in particular, increased market penetration through the Company's strategic relationship with Terminix in 2010 and 2011 and the resulting sales increase and successful leverage of the Company's products and technology into international consumer markets. If the Company does not perform in line with these key assumptions underlying the forecasts, the Company's cash resources may be absorbed earlier than forecasted.
The Company's Future Operating Results Will Be Highly Dependent on How Well It Manages the Expansion of
Its Operations
The Company may experience periods of rapid growth in the number of its customers and in the number of products it supplies. This, in turn, would likely necessitate an increase in the number of the Company's employees, its operating and financial systems, sub-contract manufacturers and the geographic scope of its operations. This growth and expansion may place a significant strain on the Company's financial, management and other resources. To manage its expanded operations effectively, TyraTech will be required to continue to improve its existing operational, financial and management processes and to implement new systems. TyraTech will be reliant upon distribution sales, particularly as it expands its operation and is therefore dependent on such distribution to achieve growth and expansion of its operations.
Market Penetration Rates
The Company's business model assumes that, over time, its product will be adopted by the market. However, it is possible that penetration rates may be slower than the Company's forecasts assume.
The Company Has an Outstanding Litigation With Molecular Securities, Inc.
In November 2008, Molecular Securities, Inc. filed a complaint against the Company asserting claims for breach of contract. Molecular Securities, Inc. alleges that it is owed $2.8 million for services that it allegedly provided to the Company plus interest. This claim is being contested in court and the Company expects the claim to be resolved in 2010.
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 Securities, Inc. were to prevail in some or all of its claims against the Company, there could be a material adverse effect upon the Group's working capital and the Company might have insufficient funds to meet such a claim.
The Failure of TyraTech's Patents, Trade Secrets and Confidentiality Agreements to Protect Its Intellectual Property May Adversely Affect Its Business
TyraTech is the owner, or co-owner, of intellectual property rights, including patents, trade marks, designs, copyright, trade secrets and confidential information. Whilst it may apply from time to time to register additional patents, trade marks, designs and copyrights and take reasonable steps
to protect its trade secrets and confidential information, TyraTech's ability to compete effectively with other companies depends, amongst other things, on the adequate protection of intellectual property rights owned by or licensed to it. There can also be no assurance that patents will be issued in connection with any of its applications now pending or which may be applied for in the future, or that the lack of any such patents will not have a material adverse effect on TyraTech's ability to develop and market its proposed products or that third parties will not misappropriate TyraTech's trade secrets and confidential information. There can be no assurance as to the ownership, validity or scope of any patents
in which TyraTech has an interest or that claims relating to such patents will not be asserted by other parties or that,
if challenged, such patents will not be revoked. Even if
patent protection is obtained, no assurance can be given
that TyraTech will successfully commercialise the product or technology prior to expiry of the patent protection. It is also not certain that extensions of patent protection (patent term extensions, supplementary protection certificates or their equivalent around the world) will be available at the end of the term of patents currently in existence so as to provide patent protection during the initial period in which products are marketed. TyraTech may be unable to adequately protect its proprietary information and know-how. In addition to its patented technology, TyraTech relies upon unpatented proprietary technology, processes and know-how. TyraTech has confidentiality agreements in place with customers, suppliers
