TYRATECH, INC. • ANNUAL REPORT 2011 • PAGE 15
History of losses
The Group has experienced operating losses in each year
since its inception and, as at 31 December 2011, had accumulated
losses of US$72.0 million. The Group will incur further
losses and there can be no assurance that the Group will ever
achieve significant revenues or profitability.
Working capital and significance of the Fundraisings
As at 31 December 2011, the Company had cash and shortterm
deposits of US$0.9 million. In February 2012, the Company
completed an equity fund-raise totaling US$4.1million, gross
of cash expenses related to the fund-raise (US$3.8 million, net
of cash expenses). The Directors believe that, based on current
forecasts, the Company will have sufficient cash to fund
its operations into 2013. 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 its largest customer in 2013 and the resulting
sales increase and successful leverage of the Company's
products and technology into consumer markets, combined
with its ability to enter into new partnerships in new 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.
Customer Concentration
The Company sells its products to one customer. The Company
is seeking to expand its customer base through additional partnerships,
however, diversification of its customer base could
take a lengthy period of time.
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 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
products will be adopted by the market. However, it is possible
that penetration rates may be slower than the Company's
forecasts assume.
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
