TyraTech, Inc. Interim Results -2-

Total revenue for the six month period to 30 June 2014 was $1.3 million (2013: $0.8 million). Gross product sales were $1.0 million, with net product sales of $0.9 million (2013: $0) and resulted from the retail launch of Vamousse Treatment mousse at Walmart in the USA and the Natunex brand of insect control products by Novartis Animal Health. Collaborative revenue decreased to $0.4 million (2013: $0.8 million). Collaborative revenue includes upfront licence fee amortisation and cost reimbursement from our Envance Technologies and Mondelez Global agreements. Licencefees remained constant at $0.3 million (2013: $0.3 million). Cost reimbursement from Mondelez Global decreased to $16,000 (2013: $25,000) as a result of decreased expenditures on the project by TyraTech, and the cost reimbursement from Envance Technologies decreased to $0.1 million (2013: $0.5 million) as a result of Envance hiring salaried staff in the second half of 2013 to perform work previously provided by TyraTech.

Cost of sales and gross profit

Material and manufacturing costs for product sales were $0.3 million (2013: $0) and costs for our Mondelez Global and Envance Technologies agreements were $0.1 million (2013: $0.5 million). Gross profit increased to $0.8 million and 65% (2013: $0.3 million and 33%) primarily as a result of product revenue generated in the first half of 2014.

Operating expenses

Overall operating expenses from continuing operations increased by 41% for the six month period to $3.5 million (2013: $2.5 million). This increase in operating expenses was primarily driven by a $1.0 million increase in US and UK marketing costs related to the Vamousse head lice treatment/shampoo and personal repellants. Operating expenses for the six months included non-cash equity compensation of $0.1 million (2013: $0.1 million) and depreciation of $48,899 (2013: $57,967).

Liquidity and cash flow

Cash used in operations for the period was $3.2 million compared to $1.9 million in the first half of 2013, a $1.3 million increase from the first half of 2013. This increase is primarily due to an increase spend in US marketing in 2014, as well as the initial costs of opening a TyraTech branch office and launching Vamousse head lice treatment/shampoo in the UK for sales in the second half of 2014.

In February the Company raised $2.9 million in capital, net of expenses, through the issuance of 37,391,763 common shares to fund our operations while we continued negotiations with our existing and new partners. Post the period end, in July, the Company raised an additional $5.7 million (net of expenses).

The Company invests its cash resources in deposits with banks with the highest credit ratings, putting security before absolute levels of return.

R. Daniel Williams

Chief Financial Officer

29 September 2014

Consolidated Statements of Operations

in $'000 (except share information)

 
                                                            (Unaudited) six months 
                                                                     ended 
                                                                    30 June 
 
                                                                                                             Year ended 
                                                                                                            31 December 
                                                         2014                  2013                             2013 
 Revenues: 
  Product sales                                              $887                         $-                                  $- 
 Collaborative revenue                                        393                        765                               1,366 
                                                   --------------   ------------------------      ------------------------------ 
 Total revenue                                              1,280                        765                               1,366 
    Cost and expenses related to product 
     sales 
   and collaborative revenue: 
   Product costs                                              301                          -                                   - 
   Collaborative costs and expenses                           142                        514                                 733 
                                                   --------------   ------------------------      ------------------------------ 
 Total costs and expenses                                     443                        514                                 733 
                                                   --------------   ------------------------      ------------------------------ 
 
 Gross Profit                                                 837                        251                                 633 
                                                   --------------   ------------------------      ------------------------------ 
 
      Costs and expenses: 
    General and administrative                              1,591                      1,526                               2,798 
  Business and development                                  1,073                         93                                 430 
 Research and technical development                           804                        848                               1,754 
                                                   --------------   ------------------------      ------------------------------ 
 Total costs and expenses                                   3,468                      2,467                               4,982 
                                                   --------------   ------------------------      ------------------------------ 
 
 Loss from operations                                     (2,631)                    (2,216)                             (4,349) 
 
   Other income (expense): 
   Warrant expense                                          (450)                      (390)                               (210) 
 Net loss on unconsolidated subsidiary                          -                      (217)                               (359) 
 Interest/other expense                                      (25)                          -                                  16 
                                                   --------------   ------------------------      ------------------------------ 
 Loss before income taxes                                 (3,106)                    (2,823)                             (4,902) 
 
    Income tax expense                                          -                          -                                   - 
                                                   --------------   ------------------------      ------------------------------ 
 
   Net loss attributable to TyraTech, 
   Inc.                                                  $(3,106)                   $(2,823)                            $(4,902) 
                                                   ==============   ========================      ============================== 
 
      Net loss per common share attributable 
      to TyraTech, Inc. Basic and diluted 
                                                          $(0.02)                    $(0.02)                             $(0.03) 
                                                                                 136,289,682 
   Weighted average number of common 
    shares: 
    Basic and diluted                                 194,341,270                                                    152,417,371 
 
   The accompanying notes are an integral 
    part of these unaudited interim 
    consolidated financial statements. 
 
 

Consolidated Balance Sheets

in $'000 (except share information)

 
                                                                     (Unaudited) six months 
                                                                              ended 
                                                                             30 June 
 
                                                                                                                    Year ended 
                                                                                                                    31 December 
                                                                  2014                  2013                           2013 
 Assets 
 Current assets: 
 Cash and cash equivalents                                           $576                   $3,658                           $873 
 Accounts receivable, net                                             621                      176                             85 
 Inventory                                                            267                       17                             63 
 Prepaid expenses                                                     123                       27                            150 
 Total current assets                                               1,587                    3,878                          1,171 
                                                  -----------------------  -----------------------  ----------------------------- 
 
 Property and equipment, net of 
  accumulated depreciation 
  Investment in unconsolidated 
   subsidiary                                                         126                      215                            167 
  Long term deposits                                                    -                      142                              - 
                                                                       66                       65                             66 
 Total assets                                                      $1,779                   $4,300                         $1,404 
                                                  -----------------------  -----------------------  ----------------------------- 
 
 Liabilities and