TYRATECH • ANNUAL REPORT 2014 • PAGE 29
(e) 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 history of the creditor. After evaluating
its accounts receivable balances, the Company determined an
allowance for uncollectible accounts was not required for the
years ended 31 December 2014 and 2013. 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.
(f) Inventory
Inventory is stated at the lower of cost or market. Cost is
determined using the first in, first out method (FIFO). The Company
has determined an inventory reserve is not required for the years
ended 31 December 2014 and 2013.
(g) Cost of Revenue
Cost of revenue is comprised of the product cost of goods sold
and the cost of freight to customers. Cost of revenue is deducted
from net revenue to arrive at gross profit.
(h) Treasury Stock
Treasury stock is recorded using the cost method. Management
has not made any decisions as to whether the reacquired shares
will be retired, held indefinitely, or reissued.
(i) Shareholders' Equity
On 28 March 2013, the Company issued 60,000,000 new common
shares at a price equal to £0.05 per share for total consideration
of £3.0 million ($4.5 million). A further 600,000 shares were issued
in settlement of other expenses of £30,000 ($45,588).
On 31 January 2014, the company issued 37,391,763 new common
shares at a price equal to £0.05 per share for total consideration
of £1.9 million ($3.1 million). On 28 July 2014 at a Special Meeting
a resolution was passed increasing the Company's authorised
shares to 380,000,000 from 300,000,000. Additionally, on 31 July
2014, 50,000,000 new common shares were issued at £0.07 per
share for total consideration of £3.5 million ($6.0 million). Lastly, on
07 October 2014, 6,155,000 common shares were issued pursuant
to the exercise of a warrant issued to AMVAC under the AMVAC
stock warrant agreement dated 02 April 2013 (as amended) for
consideration of approximately £0.3 million ($0.5 million).
(j) Property and Equipment
Purchased property and equipment is recorded at cost.
Depreciation is 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. For the years ended 31 December 2014
and 2013 no impairment losses have be recognised.
(k) Revenue Recognition
The Company's business strategy includes selling its commercial
products through various distribution channels and entering into
collaborative license and development agreements.
Product Revenue
Revenue is recognised as product revenue 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 revenues
are subject to customer acceptance, revenue is not recognised
until customer acceptance occurs. Sales and use tax, when
required, is included in customer invoices recorded as sales tax
payable, and remitted monthly to the appropriate state revenue
departments.
