TYRATECH, INC. • ANNUAL REPORT 2011 • PAGE 37
ognition criteria are recorded as deferred revenue in the accompanying
consolidated balance sheets. Amounts not expected
to be recognized during the year ending December
31, 2012 are classified as long-term deferred revenue. As of
December 31, 2011, the Company has short-term deferred
revenue of US$668,717, (2010: US$1,951,643) and long-term
deferred revenue of US$2,321,715 (2010: US$2,083,333) related
to its collaborations.
CUSTOMER CONCENTRATIONS
The Company had one customer in the pesticides and insecticides
segment in 2011 that represented 99 % of total product
sales (2010: one customer represented 96%). Further, in 2011
one customer represented 100% of accounts receivable (2010:
one customer represented 95% of accounts receivable).
(h) Equity Based Compensation
Stock based compensation cost is measured at the grant
date based on the value of the award and is recognized
as expense on a straight-line basis over the vesting period.
Compensation expense is recognized only for those shares
expected to vest, with forfeitures based upon future expectations.
(i) Research and Technical Development
Research and technical development costs are expensed
as incurred. Research and technical development costs for
the year ended December 31, 2011 amount to US$2,779,892
(2010: US$3,050,278) after charging US$686,091 (2010:
US$2,156,502) to cost of sales.
(j) Income Taxes
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax basis and
operating losses and tax credit carry forwards. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period
that includes the enactment date. Valuation allowances are
recorded when necessary to reduce deferred tax assets to
the amount expected to be realized.
The Company adopted the provisions of Financial Accounting
Standards Board (FASB) Accounting Standards Codification
(ASC) 740, Income Taxes, on January 1, 2009. As required
by the uncertain tax position guidance of ASC 740, the Company
recognizes the financial statement benefit of a tax
position only after determining that the relative tax authority
would more-likely-than-not sustain the position following
an audit. For tax positions meeting the more-likely-than-not
threshold, the amount recognized in the financial statements
is the largest benefit that has a greater than fifty percent likelihood
of being realized upon ultimate settlement with the relevant
tax authority. At the adoption date, the Company applied
the uncertain tax position guidance of ASC 740 to all tax
positions for which the statute of limitations remained open.
As of December 31, 2011 and December 31, 2010, the Company
did not record any asset for unrecognized tax benefits.
(k) Use of Estimates
The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial
statements and accompanying disclosures. Although
these estimates are based on management's best knowledge
of current events and actions the Company may undertake
in the future, actual results ultimately may differ from
the estimates. The Company does not expect changes in the
estimates and assumptions used in these financial statements
to materially affect these results within the next year.
