TYRATECH • ANNUAL REPORT 2014 • PAGE 36
N o t e s t o C o n s o l i d at e d F i n a n c i a l
S t at e m e n t s ( c o n t ' d )
to the production of "functional foods" which treat and prevent
parasites in humans through additives to foods, beverages and
dietary supplements. During the years ended 31 December
2014 and 2013 Mondelez funded the joint project $33,143 and
$66,811, respectively. At 31 December 2014 the Company
had a receivable from Mondelez for $28,112 and in 2013 the
Company had a liability to Mondelez for $9,803 for joint project
funding. The project expenses in 2014 and 2013 relate primarily
to expenditures for pursuing joint patent applications related
to the project. During the second half of 2012 the Company
and Mondelez agreed to discontinue the functional food
development project and jointly pursue third party companies
to monetise the project's intellectual property. The parties
agreed to terminate their monetisation efforts if no monetisation
agreements have been entered into within two (2) years and if
Mondelez does not wish to further pursue commercialisation or
sublicensing independently. The parties are continuing to pursue
monetization efforts in the first half of 2015.
Accounting Summary
The Company considers its arrangement with Mondelez to be a
revenue arrangement with multiple deliverables. The Company's
deliverables under this collaboration include an exclusive license
to its parasitic technologies, research and development services,
and participation on a steering committee. The Company
determined that the deliverables, specifically, the license,
research and development services and steering committee
participation, represented a single unit of accounting because
the Company believes that the license, although delivered at
the inception of the arrangement, does not have stand alone
value to Mondelez without the Company's research and
development services and steering committee participation and
because objective and reliable evidence of the fair value of the
Company's research and development services and steering
committee participation could not be determined. Upon
execution of the revised monetization agreement, the Company
extended revenue recognition of the final exclusivity payment
of $1.0 million to the end of the original exclusivity term of the
technology sublicense agreement, ended 5 December 2016.
For the year ended 31 December 2014 TyraTech recognised
collaborative revenue of $0.1 million (2013: $0.1 million) and
deferred revenue decreased to $0.1 million (2013: $0.2 million).
Terminix Product Development and Supply Agreement
The Company entered into a Product Development and
Supply Agreement ("TMX Agreement") with Terminix in late
2010. An amendment to the Agreement in September 2012
discontinued the joint product development portions of the
Agreement, including any further new product completion fees
for the Company, as well as granting the Company the right to
market and commercialise products in the consumer market
channel to the extent and for the time period authorised in the
TMX Agreement. Additionally, the minimum product purchases
($150.0 million) required by 31 December 2014 to maintain
Terminix's exclusive market rights through 2017 were reduced to
$11.0 million.
Based upon the lack of indication from Terminix that it intended
to fulfill its $11.0 million product purchase commitment within the
contractual timeframe, TyraTech management reviewed the
probability of Terminix fulfilling its obligation, and it determined
the probability was remote.
Given the above, management believed that in addition to
recognizing the current year $0.4 million (2013: $0.4 million) earned
under the TMX Agreement, it was appropriate to recognize the
remaining $1.2 million as current period revenue.
Subsequent to year end, based upon Terminix not fulfilling its
obligation, on 31 January 2015 the Company exercised its right
to cancel the exclusive market rights arrangement with Terminix,
and currently, as outlined in the TMX Agreement, the parties
operate under a non-exclusive commercial relationship.
American Chemical Corporation ("AMVAC")
The Company completed an Intellectual Property License
Agreement ("AMVAC Agreement") with AMVAC in November
2012. The AMVAC Agreement granted AMVAC irrevocable rights
to license, sub-license, develop, manufacture, commercialise,
use, market, and sell selected products within selected market
channels related to the licensed intellectual property. The
Company received and recognised $2.4 million in revenue
during 2012 upon signing the AMVAC Agreement and AMVAC
will pay an additional $1.32 million ratably over a ten-year period.
