TYRATECH • ANNUAL REPORT 2014 • PAGE 37
Envance Technologies, LLC
TyraTech entered a Shared Services Agreement with Envance
in December 2012 to provide general and administrative,
marketing, supply chain and manufacturing, and research/
development services on a cost plus basis to support Envance's
business activities. The Company applies ASC 605 in determining
whether it is appropriate to record the gross amount of
collaborative revenues and related costs or the net amount
earned. The Company records and presents revenue from these
transactions on a gross basis. As described previously, for the
year ended 31 December 2014 TyraTech invoiced Envance $0.2
million for these services (2013: $0.7 million).
TyraTech accounts for its investment in Envance using the equity
method of accounting. In 2013, TyraTech's investment in Envance
was reduced from $0.4 million to zero and the equity method was
suspended. In October 2014, the Company made a Covering
Capital Contribution of $0.3 million. As of 31 December 2014,
TyraTech's inception-to-date investment loss in Envance is $1.3
million, $0.7 million of which is reflected in the Company's 2013
and 2014 Consolidated Statements of Operations. If Envance
subsequently reports net income, the Company will resume
applying the equity method only after its share of that net
income equals the share of net losses not recognised during the
period the equity method was suspended. As of 31 December
2014, the Company's share of Envance net losses not recognised
was $0.6 million.
(12) 401(K) PLAN
The Company maintains a defined contribution 401(k) plan.
The 401(k) plan is designed in accordance with the applicable
sections of the Internal Revenue Code, and is subject to minimum
3% funding requirements as required for a safe harbor plan. The
401(k) plan covers all eligible employees of the Company and
its subsidiaries upon completion of three months of service.
Employees may elect to contribute up to a maximum of 60%
of their salary, subject to Internal Revenue Service limitations.
The Company has a matching policy in which the Company
matches 100% of the first 4% of each employee's compensation
contributed to the 401(k) plan. For the years ended 31
December 2014 and 2013, the Company's contribution, including
administrative expenses, amounted to $0.1 million and $0.1
million and is charged to general and administrative, business
development, and research and development expenses in the
consolidated statements of operations.
(13) INCOME TAXES
Beginning on 24 May 2007, the Company is subject to both
federal and state income taxes. For the period prior to 24 May
2007, the Company operated as a pass through entity for tax
purposes and any tax liability was the responsibility of its members.
The difference between the "expected" tax benefit (computed
by applying the federal corporate income tax rate to the loss
before income taxes) and the actual tax benefit is primarily due
to the effect of the valuation allowance described below.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and amounts utilised for income
tax purposes. The tax effects of temporary differences that give
rise to significant portions of deferred taxes at 31 December 2014
and 2013 are presented below:
2014 2013
Deferred tax assets:
Accrued compensation $88,460 $36,970
Accrued expenses - 14,542
Deferred revenue 54,639 718,482
Deferred rent 49,892 44,123
Net operating loss and charitable
contribution carry forward 24,277,873 21,390,135
Basis in intangibles 2,474,516 2,808,159
Stock compensation 2,017,213 1,957,710
Total gross deferred tax assets 28,962,593 26,970,121
Less valuation allowance (28,866,889) (26,870,561)
Net deferred tax assets 95,704 99,560
Deferred tax liabilities
Prepaid expenses (68,460) (48,865)
Property and equipment (27,244) (50,695)
Net deferred tax liabilities (95,704) (99,560)
Net deferred tax asset $- $ -
