TYRATECH, INC. • ANNUAL REPORT 2011 • PAGE 35
(c) Cash and Cash Equivalents
The Company considers all highly liquid securities with maturities
of three months or less when acquired to be cash equivalents.
Financial instruments, which potentially subject the Company
to significant concentrations of credit risk, consist principally
of cash equivalents and accounts receivable. The Company
maintains cash balances at financial institutions and invests
in unsecured money market funds. Accounts at these institutions
are insured by the Federal Deposit Insurance Corporation
up to $250,000. At times during the year, balances in these
accounts exceeded the federally insured limits; however, the
Company has not experienced any losses in such accounts.
(d) Accounts Receivable
Accounts receivable are recorded at the invoiced amount
and do not bear interest. A specific allowance is made when
a receivable is not considered collectable. This determination
results from an analysis of the specific creditor, the age
of the receivable and payment past performance of the
creditor. Amounts collected on trade accounts receivable
are included in net cash provided by operating activities in
the accompanying consolidated statements of cash flows.
The Company does not have any off balance sheet credit
exposure related to its customers.
(e) Inventory
Inventory is stated at the lower of cost or market. Cost is determined
using the first in, first out method (FIFO).
(f) Property and Equipment
Purchased property and equipment is recorded at cost. Depreciation
and amortization are provided on the straight-line
method over the estimated useful lives of the related assets
as follows:
Leasehold improvements Initial term of the
lease or life of the
improvement,
whichever is shorter
Furniture, fixtures and equipment 4-7 years
Computer equipment and software 5 years
Management periodically reviews long-lived assets to be
held and used in operations for impairment whenever events
or changes in circumstances indicate the carrying value of
an asset may not be recoverable. An impairment loss is recognized
when the estimated future cash flows from the asset
are less than the carrying value of the assets. Assets to be disposed
of are reported at the lower of their carrying amounts
or fair value less costs to sell. Management is of the opinion
that the carrying amount of its long-lived assets does not exceed
the estimated recoverable amount.
(g) Revenue Recognition
The Company's business strategy includes entering into collaborative
license and development agreements with agricultural,
insecticide and human and animal food companies
for the development and commercialization of the Company's
product candidates. The terms of the agreements typically
include nonrefundable license fees, funding of research
and development, payments based upon achievement of
development milestones and royalties on product sales.
PRODUCT SALES
Revenue is recognized for product sales when persuasive
evidence of an arrangement exists, delivery has occurred or
services have been rendered, the risks and rewards of ownership
have been transferred to the customer, the amount
of revenue can be measured reliably and collection of the
related receivable is reasonably assured. If product sales are
subject to customer acceptance, revenues are not recognized
until customer acceptance occurs. Sales/use tax, when
required, is included in sales invoices but not in the reported
