TIDMTYR TIDMTYRU
RNS Number : 4249Q
TyraTech, Inc.
12 September 2017
Strictly Embargoed until 07.00: 12 September 2017
TyraTech, Inc.
("TyraTech" or the "Company")
Interim Results for the Six Months Ended 30 June 2017
TyraTech Inc. (AIM: TYR, and TYRU), a life sciences company
focused on nature-derived insect and parasite control products,
today announces its interim results for the six-month period ended
30 June 2017.
Operational Highlights
-- Head lice category recovering growth in the US
-- Vamousse(R) same store sales in the US outpacing category growth
-- Launch of Vamousse Lice Repellent with CVS and Meijer in the US
-- Secured distribution of Guardian(R) in over 600 Kroger stores
in the US and launched with Amazon.com, Inc. in the UK
-- Full launch of OutSmart(R) equine fly repellent with partner SmartPak
-- A major global consumer goods company chose TyraTech's
technology for home pest control products to be commercialized with
Envance Technologies
Financial Highlights
-- Total gross revenue for the six-month period to 30 June 2017
was $4.3 million (2016: $4.1 million)
-- Gross product sales increased 5% to $4.2 million (2016: $4.0 million)
-- Net product sales were $3.6 million an increase of 12% over
the corresponding period (2016: $3.2 million)
-- Gross profit increased 13% to $2.5 million (2016: $2.2 million)
-- Overall operating expenses decreased for the six-month period
to $3.2 million (2016: $3.8 million
-- Loss from operations more than halved at $0.7 million (2016: $1.5 million)
-- Net loss of $0.3 million after gain on related party sale of
intellectual property (IP) to Envance Technologies (2016: $1.5
million)
-- Cash and cash equivalents were $1.3 million (30 June 2016:
$2.1 million, 31 December 2016: $1.8 million)
Post Period End
-- Cash and cash equivalents enhanced by the receipt of $0.5
million from the sale of IP to Envance Technologies
-- Launch of a new PureScience(TM) product for the poultry and swine markets in the US
Commenting on the results José Barella, Non-Executive Chairman
said:
"Overall the Company performed well in the first half of 2017.
Against a background of a general recovery in the US head lice
market from the natural variability experienced in 2016, our
Vamousse product range continued to outpace the category and gain
market share in the US where we concentrated our marketing
efforts."
With regards to the strategic review, he added:
"We continue to work on our strategic review. Our focus remains
to unlock the full value of the business for shareholders. The
process is progressing well and we intend to provide a full update
to the market once we have reached concrete conclusions as to the
best outcome for all our shareholders."
Commenting on the outlook Bruno Jactel, CEO added:
"For the full year 2017, it is expected that the Company will
show a significant reduction of its net losses when compared with
last year. This will be achieved through a combination of sales
growth and tight control of operational expenses, together with the
sale of IP to Envance.
Looking to 2018, we have hopes of further increasing the
distribution for our Vamousse range of products in the US.
We also note with great interest the recent issues regarding the
use of unauthorized insecticides to control red mites in poultry
facilities in Europe and the resulting effects on egg production.
We believe that our pesticide-free products deliver competitive
efficacy against the red mite, which is a major problem in Europe.
We have already initiated field studies in France and plan to
progress this opportunity as quickly as resources and the
regulatory situation permit."
For further information:
TyraTech Inc.
Bruno Jactel, Chief Executive Tel: +1 919 415
Officer 4340
Erica H. Boisvert, Chief Financial Tel: +1 919 415
Officer 4287
www.tyratech.com
SPARK Advisory Partners Limited
(Nominated Adviser) Tel: +44 20 3368
Matt Davis / Mark Brady 3551
Allenby Capital Limited (Joint
Broker) Tel: +44 20 3328
Chris Crawford 5656
Belvedere Communications (PR)
John West / Kim van Beeck Tel: +44 20 3567
0510
Chairman's Statement
Overall the Company performed well in the first half of 2017
with successes for each of the brands.
Against a background of a general recovery in the US head lice
market from the natural variability experienced in 2016, our
Vamousse product range continued to outpace the category and gain
market share in the US where we concentrated our marketing
efforts.
Our Guardian DEET-free personal insect repellent achieved its
first significant placement in over 600 Kroger stores in the US. In
the UK, Guardian was launched online at www.amazon.co.uk with
strong reviews.
The PureScience range of animal health products targeting
poultry production operations also made good progress from a small
base with limited marketing support.
The re-formulated Outsmart equine fly repellent has been well
received by customers and is on course to exceed our partner,
SmartPak's, expectations for the year.
We set out to carefully control costs and manage our cash
resources while still allowing the business to progress, albeit at
a slower rate. This strategy has been successful, and our cash
position ($1.3 million at the half-year end) has been further
enhanced by the receipt of $0.5 million for the sale of IP to
Envance Technologies LLC, our Joint Venture with American Vanguard
Corporation (AMVAC) subsequent to our half year end. As previously
announced, Envance also had a major success in the licensing of our
joint IP to one of the largest global consumer products
corporations for the development and commercialisation of a range
of household pest control products. This is a significant milestone
for the Company. This validates TyraTech's technology and the value
of the R&D know-how. This agreement can be an enabler to create
new products also for animal health through new joint IP
development.
We also announced in May the initial conclusions of the
strategic review that had been implemented by the Board in
February, which determined that shareholder value would be best
delivered by dividing the Company's IP and products into two
separate entities based on human health and animal health. Whilst
recognising that the animal health business ultimately offers the
larger opportunities, it will require significant further
investment. The human health business has well-established products
and distribution, but has an opportunity to grow through
geographical expansion and market share with greater marketing
investment.
We continue to work on our strategic review. Our focus remains
to unlock the full value of the business for shareholders. The
process is progressing well and we intend to provide a full update
to the market once we have reached concrete conclusions as to the
best outcome for all our shareholders.
We believe that both aspects of our business can continue to
develop. There are good prospects for increased distribution for
Vamousse in the US next year. Recent publicity exemplifies the real
need for effective and safe solutions worldwide to the problem of
red mites in poultry facilities in Europe, where we currently have
trials underway, following the prosecutions for illegal use of
synthetic pesticides in egg production units. This issue
illustrates exactly the problems our products are designed to
address and reinforces our confidence in the potential for our
technology.
José Barella
Non-executive Chairman
11 September 2017
Chief Executive Officer's Statement
Overview
The year began strongly with double-digit net sales growth, an
improvement in net product margin, and over 50% reduction of the
loss from operations as compared with the first half of 2016. This
was further enhanced by the sale of IP to Envance Technologies LLC
(our joint venture with AMVAC) which resulted in a net loss before
and after tax of $0.3 million compared to $1.5 million net loss
before and after tax in the first half of 2016.
The Company has pursued a dual strategy of growing existing
business whilst conducting the previously announced strategic
review, and solid progress has been made on both fronts.
Operational Review
A delicate balance had to be reached between growing the
existing business segments and controlling costs to ensure that we
had sufficient resources to implement the business strategy.
For Vamousse, we decided to focus our marketing and commercial
resources on the US market and reduce investment in other
geographies, most notably the UK. This decision resulted in
Vamousse growing in the larger US market, outpacing the category
and accelerating its upward trajectory in the last months of the
semester. Correspondingly, as expected, it resulted in a slowdown
of Vamousse sales in the UK.
The head lice category in the US recovered in the first half of
2017 compared to the first half of 2016 when the head lice market
had declined, probably due to biological, cyclical variation. In
addition, the performance of the shampoo in the US exceeded
expectations, giving an important indication that the prevention
market has some strong growth potential. This has reinforced our
belief that the Company's products could capture a significant
portion of this daily-use market, given that they lead the way in
terms of efficacy and safety. The trend was further confirmed by
the placing of Vamousse Lice Repellent at CVS and Meijer, both
major retailers in the US. This product is specifically designed
for proactive families who want to protect their children everyday
against catching lice.
By contrast, and mainly because the Company decided not to run a
TV campaign in the UK during the first half of the year, the
performance of Vamousse in the UK was lower than last year.
However, given that sales of Vamousse are very sensitive to
marketing expenditures, the Board believes that the performance of
the product can recover its growth if we commit to future higher
direct to consumer spending.
For the first time, Guardian, the DEET-free mosquito and tick
repellent, achieved retail distribution. Kroger, the largest
grocery chain by retail sales in the US, accepted the product in
over 600 stores in the southern half of the US, and sales, though
modest, are exceeding the Company's expectations.
Significant progress, albeit supported by limited commercial and
marketing investment, has also been made with PureScience products
for production animals. The products are sold in a significant
number of production facilities in the poultry and swine industry,
with some of the largest producers in the US. The feedback from the
customers is very positive which lays the foundation for future
growth.
Our partner, SmartPak, fully launched OutSmart, the equine fly
repellent, for the fly season. Customer satisfaction is high and
sales are on track to exceed our partner's expectations for this
launch year.
At the end of the period, the Company announced that Envance
Technologies LLC had entered a Joint Development and License
Agreement with a major global consumer products company to develop
and commercialise a range of pest control household products based
on TyraTech's nature-derived technologies. In addition to the
potential financial benefit from collaborative revenues and
royalties, TyraTech will more importantly benefit from access to
the new IP created by this agreement for use in its own fields
(human health and animal health).
Strategic Review
As well as focusing on ongoing operations, the Company has been
conducting a comprehensive strategic review of its assets and
growth options. The Board announced in May that it was intending to
divide the Company's intellectual property and products into two
separate entities, focused on human health and animal health
respectively. A more detailed update will be given to shareholders
in due course and it is expected that the reorganization of the
Company will be completed by the end of the year.
Outlook
For the full year 2017, it is expected that the Company will
show a significant reduction of its net losses when compared with
last year. This will be achieved through a combination of sales
growth and tight control of operational expenses, together with the
sale of IP to Envance. The sale to Envance has also provided the
Company with an upfront payment of $500,000, received subsequent to
the half year-end.
Looking to 2018, we have hopes of further increasing the
distribution for our Vamousse range of products in the US. We also
note with great interest the recent issues regarding the use of
unauthorized insecticides to control red mites in poultry
facilities in Europe and the resulting effects on egg production.
We believe that our pesticide-free products deliver competitive
efficacy against the red mite, which is a major problem in Europe.
We have already initiated field studies in France and plan to
progress this opportunity as quickly as resources and the
regulatory situation permit.
Bruno Jactel
Chief Executive Officer
11 September 2017
Financial Review
Revenue
Total gross revenue for the six-month period to 30 June 2017 was
$4.3 million (2016: $4.1 million). Gross product sales were $4.2
million of which $3.7 million were sales in the US and $0.5 million
in the UK. Other EU countries contributed $26,000 in the period
(2016: $4.0 million; $3.1 million US, $0.8 million in the UK, and
$37,000 other EU countries), with net product sales of $3.6 million
(2016: $3.2 million). Collaborative revenue decreased slightly to
$112,000 (2016: $164,000). Collaborative revenue includes upfront
license fee amortisation and cost reimbursement from our Envance
Technologies agreements. Prior year collaborative revenue included
the Mondelez Global (Kraft) agreement which ended in the second
half of 2016.
Cost of sales and gross profit
Material and manufacturing costs for product sales were $1.2
million (2016: $1.1 million) and costs related to collaborative
revenue decreased slightly to $46,000 (2016: $56,000). Gross profit
increased to $2.5 million, with a margin on net revenue of 67%
(2016: $2.2 million and 66%). Margin on net product sales was 68%
(2016: 66%).
Operating expenses
Overall operating expenses from continuing operations decreased
in the six-month period to $3.2 million (2016: $3.8 million). This
is primarily related to a decrease in UK marketing costs and
administrative costs. Operating expenses for the six months
included non-cash equity compensation of $0.1 million (2016: $0.1
million) and depreciation and amortisation of $38,000 (2016:
$18,000).
Loss for the period
Operating loss for the half year reduced by $0.8 million to $0.7
million (2016: $1.5 million). Net loss after tax reduced to $0.3
million with the first half of 2017 benefitting from a gain of $0.5
million on the sale of IP to Envance Technologies.
Liquidity and cash flow
Cash used in operations for the period was $0.3 million compared
to $1.7 million in the first half of 2016, a $1.4 million decrease
from the first half of 2016. This decrease in cash used in
operations is primarily due to controlling operating costs and the
increase in gross profit coupled with more efficient use of working
capital. There were no sales of common stock in the periods ended
2017 and 2016 and the Company currently has no committed external
source of funds.
Based on the Company's existing cash and cash equivalents ($1.3
million at 30 June 2017) enhanced by the receipt of $0.5 million
from the sale of IP to Envance Technologies subsequent to the half
year-end, its current operating plans, anticipated revenues from
product sales, technology licensing agreements, and collaborative
arrangements, and the ability to control costs, the Company's
forecasts indicate that it will have sufficient cash resources for
at least the next twelve months from the date of this release.
The Company invests its cash resources in deposits with banks
with the highest credit ratings, putting security before absolute
levels of return.
Erica H. Boisvert
Chief Financial Officer
11 September 2017
TYRATECH, INC.
Consolidated Statements of Operations
and Comprehensive Loss
in $000's
(Unaudited) (Unaudited) (Audited)
six months six months year ended
ended ended
30-Jun-17 30-Jun-16 31-Dec-16
----------------------- ----------------------------------- ----------------------------- -----------------------------
Gross revenue:
Product $ $ $
4,225 3,977 8,026
Collaborative 112 164 333
----------------------- ----------------------------------- ----------------------------- -----------------------------
Total gross
revenue 4,337 4,141 8,359
Less: sales
discounts,
returns,
and
allowances 577 731 1,142
----------------------- ----------------------------------- ----------------------------- -----------------------------
Total net
revenue 3,760 3,410 7,217
Cost of revenue:
Product 1,180 1,106 2,266
Collaborative 46 56 129
----------------------- ----------------------------------- ----------------------------- -----------------------------
Total cost
of revenue 1,226 1,162 2,395
----------------------- ----------------------------------- ----------------------------- -----------------------------
Gross profit 2,534 2,248 4,822
Costs and expenses:
General and
administrative 1,504 1,681 3,079
Business
development 1,157 1,468 2,848
Research and
development 584 617 1,204
----------------------------------- ----------------------------- -----------------------------
Total costs
and
expenses 3,245 3,766 7,131
----------------------- ----------------------------------- ----------------------------- -----------------------------
Loss from
operations (711) (1,518) (2,309)
----------------------- ----------------------------------- ----------------------------- -----------------------------
Other income
(expense):
Other income 1 - 30
Gain on related 456 - -
party sale
of IP
----------------------------------- ----------------------------- -----------------------------
Total other
income 457 - 30
----------------------- ----------------------------------- ----------------------------- -----------------------------
Loss before
income
taxes (254) (1,518) (2,279)
Income tax - - -
expense
----------------------------------- ----------------------------- -----------------------------
Net loss $ (254) $ (1,518) $ (2,279)
----------------------- ----------------------------------- ----------------------------- -----------------------------
Other comprehensive
loss:
Foreign
currency
translation
gain (loss) 23 (78) (121)
----------------------- ----------------------------------- ----------------------------- -----------------------------
Comprehensive loss $ (231) $ (1,596) $ (2,400)
----------------------- ----------------------------------- ----------------------------- -----------------------------
Net loss per common
share
Basic and
diluted ($0.00) ($0.00) ($0.01)
----------------------- ----------------------------------- ----------------------------- -----------------------------
Weighted average
number of
common shares (000's)
Basic and
diluted 366,582 366,582 366,582
----------------------- ----------------------------------- ----------------------------- -----------------------------
The accompanying notes are an integral part
of these consolidated financial statements.
TYRATECH, INC.
Consolidated Balance Sheets
in $000's
(Unaudited) (Unaudited) (Audited)
six months six months year
ended ended ended
30-Jun-17 30-Jun-16 31-Dec-16
---------------------------------------------- ------------ ------------ ----------
ASSETS
Current assets
Cash and cash equivalents $ 1,321 $ 2,091 $ 1,755
Accounts receivable 1,114 1,324 985
Related party receivable 500 - -
Inventory 990 1,386 988
Prepaid expenses 143 205 162
---------------------------------------------- ------------ ------------ ----------
Total current assets 4,068 5,006 3,890
Property and equipment, net
of accumulated depreciation 19 21 23
Intangible assets 391 161 300
Long term deposits 69 69 69
Total assets 4,547 5,257 4,282
---------------------------------------------- ------------ ------------ ----------
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Accounts payable 924 686 742
Accrued liabilities 833 900 501
Deferred revenue 221 215 298
---------------------------------------------- ------------ ------------ ----------
Total current liabilities 1,978 1,801 1,541
Deferred revenue and other
long-term liabilities 20 20 20
------------ ------------ ----------
Total liabilities 1,998 1,821 1,561
---------------------------------------------- ------------ ------------ ----------
Shareholders' equity
Common stock, at $0.001 par
authorized 480 million; 367.7
million shares issued, 366.6
million shares outstanding
(30 June 2016: Common stock,
at $0.001 par authorized 480
million; 367.7 million shares
issued, 366.6 million shares
outstanding) 367 367 367
Additional paid in capital 92,112 91,964 92,053
Accumulated deficit (89,714) (88,699) (89,460)
Accumulated other comprehensive
income (103) (83) (126)
Treasury stock of 1.1 million
shares (2016: 1.1 million shares) (108) (108) (108)
Total Tyratech, Inc. shareholders'
equity 2,554 3,441 2,726
---------------------------------------------- ------------ ------------ ----------
Non-controlling interest (5) (5) (5)
------------ ------------ ----------
Total shareholders' equity 2,549 3,436 2,721
Total liabilities & shareholders'
equity $ 4,547 $ 5,257 $ 4,282
---------------------------------------------- ------------ ------------ ----------
The accompanying notes are an integral part
of these consolidated financial statements.
TYRATECH, INC.
Consolidated Statements
of Cash Flows
Six months ended 30 June
2017 and 2016
in $000's
(Unaudited) (Unaudited) (Audited)
six months six months year
ended ended ended
30-Jun-17 30-Jun-16 31-Dec-16
-------------------------------------- ---------------------- ---------------------- ----------------------
Cash flows from operating
activities:
Net loss $ (254) $ (1,518) $ (2,279)
Adjustments to reconcile
net loss to net cash used
in operating activities:
Depreciation 4 12 17
Amortisation of intangible
assets 47 6 56
Amortisation of stock awards 59 68 157
Gain on related party sale (456) - -
of IP
Changes in operating assets
and liabilities:
Accounts receivable (129) (207) 132
Inventory (2) (557) (159)
Prepaid expenses and long-term
deposits 19 13 56
Accounts payable and accrued
liabilities 514 290 (52)
Deferred revenue and other
long-term liabilities (77) 145 228
-------------------------------------- ---------------------- ---------------------- ----------------------
Net cash used in operating
activities (275) (1,748) (1,844)
-------------------------------------- ---------------------- ---------------------- ----------------------
Cash flows from investing
activities:
Intangible asset acquisition
costs (182) (38) (227)
Purchase of property and
equipment - - (8)
Net cash used in investing
activities (182) (38) (235)
-------------------------------------- ---------------------- ---------------------- ----------------------
Net decrease in cash (457) (1,786) (2,079)
Cash and cash equivalents,
beginning of the period 1,755 3,955 3,955
Accumulated other comprehensive
income (loss) 23 (78) (121)
Cash and cash equivalents,
end of the period $ 1,321 $ 2,091 $ 1,755
-------------------------------------- ---------------------- ---------------------- ----------------------
Supplemental disclosure
of Non-cash Activities
Related party receivable
on sale of IP 500
The accompanying notes are an integral
part of these consolidated financial statements.
Notes
1. Basis of Preparation
These interim consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles in the United States of America ("U.S. GAAP"),
references to U.S. GAAP issued by the Financial Accounting
Standards Board ("FASB") in the Company's notes to its interim
consolidated financial statements are to the FASB Accounting
Standards Codification, sometimes referred to as the "Codification"
or "ASC". They do not include all disclosures that would otherwise
be required in a complete set of financial statements and the
interim consolidated financial information should be read in
conjunction with the audited annual financial statements for the
year ended December 31, 2016.
The independent Auditors' Report on that Annual Report and
Financial Statements for the year ended 31(st) December 2016 was
unqualified and did not did not draw attention to any matters by
way of emphasis. The financial information for the six-month
periods ended June 30, 2017 and June 30, 2016 is unaudited.
The same accounting policies, presentation and methods of
computation are followed in these interim condensed consolidated
financial information as were applied in the Group's 2016 annual
audited financial statements. In addition, the FASB have issued a
number of recent accounting pronouncements. It is not expected that
any of these will have a material impact on the Group. The Board of
Directors approved this interim report on 11 September 2017.
2. Liquidity and Capital Resources
At 30 June 2017 the Company had $1.3 million (30 June 2016: $2.1
million, 31 December 2016: $1.8 million) in cash and cash
equivalents and no indebtedness. The Company currently has no
committed external source of funds.
The Company's operations have been funded through a combination
of common stock issuances, product sales, collaborative
arrangements, and proceeds from technology licensing
agreements.
The Company's future capital requirements will depend on many
factors. For example, i) the level of product sales of the
Company's currently marketed products and any additional products
that may be marketed in the future; ii) the scope, progress,
results, and costs of development activities for current product
candidates; iii) the costs of commercialisation activities
including product marketing, sales, and distribution; and iv) the
costs of preparing, filing, and prosecuting patent applications and
maintaining, enforcing, and defending claims to intellectual
property.
Based on the Company's existing cash, its current operating
plans, anticipated revenues from product sales, technology
licensing agreements, and collaborative arrangements, and the
ability to control costs, the Company's forecasts indicate that it
will have sufficient cash resources for at least the next twelve
months.
3. Envance Technologies, LLC
The Company accounts for its investment in Envance using the
equity method of accounting. In 2013, the Company's investment in
Envance was reduced from $0.4 million to zero and the equity method
was suspended. As of 30 June 2017, the Company's inception to date
investment loss in Envance is $1.2 million (June 30, 2016: $1.3
million, 31 December 2016: $1.4 million). As of June 30, 2017 the
Company's share of Envance net losses not recognized was $0.6
million (June 30, 2016: $0.7 million, December 31, 2016: $0.8
million).
4. SARs Issuance
Total SARs expense recognized for the six months ended 30 June
2017 was approximately $59,000 (30 June 2016: $68,000, 31 December
2016: $157,000). During 2016, the Company issued 5,345,000 Stock
Appreciation Rights (SARs) to various employees and a non-executive
director.
5. Subsequent Events
In July 2017, the July 2014 warrants expired, with all shares
remaining unexercised as of the expiration date.
We have evaluated all events and transactions through 11
September 2017, the date the consolidated financial statements were
available to be issued. Based on such evaluation, no other events
have occurred that in the opinion of management warrant disclosure
in or adjustment to the consolidated financial statements.
6. Cautionary statement
This Interim Report has been prepared solely to provide
additional information to shareholders to assess the Company's
strategies and the potential for these strategies to succeed. The
Interim Report should not be relied on by any other party or for
any other purpose. The Interim Report contains certain
forward-looking statements with respect to the financial condition,
results of operations and businesses of the Company. These
statements are made in good faith based on the information
available to them up to the time of their approval of this report.
However, such statements should be treated with caution as they
involve risk and uncertainty because they relate to events and
depend upon circumstances that will occur in the future. There are
a number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements. The continuing uncertainty in global
economic outlook inevitably increases the economic and business
risks to which the Company is exposed. Nothing in this announcement
should be construed as a profit forecast.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFEFMFFWSEEU
(END) Dow Jones Newswires
September 12, 2017 02:00 ET (06:00 GMT)
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