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Dyadic International Reports 2010 Third Quarter Financial Results
Date:11/15/2010

JUPITER, Fla., Nov. 15, 2010 /PRNewswire-FirstCall/ -- Dyadic International, Inc. ("Dyadic") (Pink Sheets: DYAI), a global biotechnology company focused on the discovery, development, manufacture and sale of specialty enzyme and protein products and solutions for the bioenergy, industrial enzyme and biopharmaceutical industries, today announced financial results for the third quarter ended September 30, 2010. The financial information contained in this press release should be read in conjunction with the financial statements and related footnotes which have been posted on the Pink Sheets website at www.pinksheets.com and on Dyadic's website at www.dyadic.com.

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Dyadic's President and Chief Executive Officer, Mark Emalfarb, stated, "During the third quarter, we improved our cash position, increased our enzyme sales and made progress in further developing our internal and external efforts to identify, negotiate and secure new licensing opportunities and other strategic collaborations for our core technologies."

Recent Company HighlightsIn the third quarter of 2010, Dyadic made progress in the following areas:

Cash Position

  • Improved cash position by raising an aggregate of $4,000,000 through the private placement of convertible subordinated secured promissory notes

  • Industrial Enzymes

  • Increased sales by 15% in the third quarter as compared to the same period a year ago
  • Improved product mix resulting in increased product margins of 31% for the year to date as compared to 22% for the same period a year ago
  • Expanded distribution network to increase product availability in remote markets
  • Introduced ROCKSOFT BioACE 5X, a new acid cellulase product for the Asian textile market

  • Biofuels

  • Developed an improved seventh generation of a C1 biofuels strain which produces a mix of enzymes that is more efficient in releasing sugars from waste streams containing ligno-cellulosic materials than previous C1 biofuels strains
  • Initiated discussions with new potential partners and continued ongoing dialogue with companies for the potential license of Dyadic's C1 technology for the development and commercialization of biofuels and biochemicals

  • Biopharmaceuticals

  • Continued discussions with several companies and investors regarding the potential funding of EnGen Bio, Inc., Dyadic's prospective exclusive licensee of its C1 platform technology for biopharmaceutical applications, which was recently awarded a cash grant of approximately $250,000 under the U.S. Government's Qualifying Therapeutic Discovery Project program

  • Research & Development

  • Demonstrated the capability of Dyadic's C1 platform technology in third party-funded research and development projects to over-express heterologous genes for the production of certain proteins and enzymes at substantially higher levels than the original producing organism and are leveraging these results through further collaborations to improve the cost structure of new and existing products in a variety of industries
  • Continued to improve the efficiency and performance of Dyadic's enzymes for use in creating new industrial enzyme products and enhancing Dyadic's current product offerings in the areas of animal feed, pulp and paper, starch and alcohol, food and brewing, textiles and alternative fuels
  • Continued to enhance our C1 technology and mine for novel genes through the annotation project that was conducted in collaboration with Scripps Florida, a division of the Scripps Research Institute, and Dyadic Netherlands, for greater applicability in producing higher enzyme yields at lower cost for the benefit of our licensing and research partners
  • Initiated several provisional patent applications on genes and the enzymes they encode which resulted from ongoing research generated through the Scripps annotation program

  • Intellectual Property

  • Sixth U.S. patent issued to Dyadic in October 2010

  • Financial ResultsTotal revenue for the third quarter ended September 30, 2010 decreased to approximately $2.0 million as compared to approximately $2.1 million for the third quarter ended September 30, 2009. Total revenue for the nine months ended September 30, 2010 decreased to approximately $6.2 million as compared to approximately $19.0 million for the nine months ended September 30, 2009. The decrease in total revenue for the three and nine month periods ended September 30, 2010 as compared to the three and nine month periods ended September 30, 2009 was due to a decrease in license fee revenue and research and development revenue as described below.

    Net product related revenue for the third quarter increased approximately 15% to approximately $2.0 million as compared to approximately $1.7 million for the third quarter of 2009. Net product related revenue for the nine months ended September 30, 2010 increased approximately 14% to approximately $5.5 million as compared to approximately $4.9 million for the same period a year ago.

    Gross margins for net product related revenue (exclusive of shipping and other costs) for the nine months ended September 30, 2010 increased to approximately 31% as compared to approximately 22% for the nine months ended September 30, 2009 as a result of the continued focus on more profitable product lines and improvements to inventory management and overall operating efficiencies.

    There was no license fee revenue for the third quarter ended September 30, 2010 as compared to license fee revenue of $125,000 for the third quarter ended September 30, 2009. License fee revenue for the nine months ended September 30, 2010 decreased to $32,000 as compared to approximately $10.2 million for the nine months ended September 30, 2009. The decrease in license fee revenue for the three and nine month periods ended September 30, 2010 as compared to the same periods in 2009 was due to license fee revenue recognized in the third quarter of 2009 of approximately $9.9 million from Codexis, Inc. ("Codexis") pursuant to a non-exclusive license agreement between Codexis and Dyadic.

    Research and development revenue for the third quarter ended September 30, 2010 decreased to approximately $64,000 as compared to approximately $298,000 for the third quarter ended September 30, 2009. Research and development revenue for the nine months ended September 30, 2010 decreased to approximately $618,000 as compared to approximately $3.9 million for the nine months ended September 30, 2009. The decrease in research and development revenue for the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009 was due to research and development revenue recognized in the first quarter of 2009 of approximately $3.3 million from Abengoa Bioenergy R&D, Inc. ("Abengoa") pursuant to a securities purchase agreement between Dyadic and Abengoa.

    Net loss for the third quarter ended September 30, 2010 was approximately $1.4 million, or $(0.04) per basic and diluted share as compared to a net loss of approximately $654,000, or $(0.02) per basic and diluted share for the third quarter ended September 30, 2009. Net loss for the nine months ended September 30, 2010 was approximately $3.9 million, or $(0.13) per basic and diluted share as compared to net income of approximately $10.2 million, or $0.34 per basic and $0.31 per diluted share, for the nine months ended September 30, 2009.

    At September 30, 2010, cash and cash equivalents were approximately $5.9 million as compared to approximately $8.4 million at December 31, 2009. A significant portion of this decrease in cash and cash equivalents was due to costs incurred by Dyadic to resolve the stockholder class action lawsuit.  Cash and cash equivalents during the third quarter of 2010 were positively affected by the private placement by Dyadic of an aggregate principal amount of $4,000,000 of convertible subordinated secured promissory notes.

    Conference CallA conference call to discuss Dyadic's 2010 third quarter financial results is scheduled for 11:00 a.m. Eastern Time on Monday, November 15, 2010. The conference call may be accessed by dialing 888-259-8885 (domestic) or 913-312-1520 (international) five to ten minutes prior to start time and providing the passcode 4674501.

    About DyadicDyadic International, Inc. is a global biotechnology company that uses its patented and proprietary technologies to conduct research, development and commercial activities for the discovery, development, manufacture and sale of specialty enzyme and protein products and solutions for the bioenergy, industrial enzyme and biopharmaceutical industries. Please visit Dyadic's website at www.dyadic.com.

    Dyadic makes financial disclosures through the Pink OTC Markets Disclosure and News Service which offers free information on the Pink Sheets website (www.pinksheets.com) concerning issuers listed on the Pink Sheets over-the-counter market. Investors can access and download Dyadic's financial reports and other announcements that Dyadic makes through the Pink Sheets website. Dyadic will also continue providing updates through regular press releases as appropriate.

    Cautionary Statement for Forward-Looking StatementsCertain statements contained in this press release are forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause Dyadic's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Except as required by law, Dyadic expressly disclaims any intent or obligation to update any forward-looking statements.DYADIC INTERNATIONAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Nine Months Ended September 30, Three Months Ended September 30, 2010 2009 2010 2009 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue:Product Related Revenue, Net

    $

    5,541,489

    $

    4,877,551

    $

    1,922,552

    $

    1,666,587License Fee Revenue32,00010,175,000-125,000Research and Development Revenue617,6953,918,56164,120297,760Total Revenue6,191,18418,971,1121,986,6722,089,347Cost of Goods Sold:4,738,3924,574,3531,647,4131,598,567Gross Profit1,452,79214,396,759339,259490,780Expenses:General and Administrative3,740,0392,475,6421,105,897631,263Sales and Marketing 738,757723,661266,161268,204Research and Development 920,444863,311271,809238,841Foreign Currency Exchange Losses (Gains), Net137,85251,223(122,691)971Total Expenses5,537,0924,113,8371,521,1761,139,279Income (Loss) from Operations(4,084,300)10,282,922(1,181,917)(648,499)Other Income (Expense) Interest Income46,003113,8989,99242,903Interest Expense(132,657)(160,189)(67,591)(50,323)Gain on Reduction of Accrued Stockholder Litigation410,000---Other(155,260)1,494(155,503)1,494Total Other Income (Expense)168,086(44,797)(213,102)(5,926)Net Income (Loss)

    $

    (3,916,214)

    $

    10,238,125

    $

    (1,395,019)

    $

    (654,425)Net Income (Loss) per Common ShareBasic

    $

    (0.13)

    $

    0.34

    $

    (0.04)

    $

    (0.02)Diluted

    $

    (0.13)

    $

    0.31

    $

    (0.04)

    $

    (0.02)Weighted Average Common Shares Used in  Calculating Net Income (Loss) Per Share:Basic30,971,29630,042,58931,063,14730,119,180Diluted30,971,29632,951,46431,063,14730,119,180DYADIC INTERNATIONAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSSeptember 30,December 31, 20102009ASSETS(Unaudited)Current Assets:Cash and Cash Equivalents$

    5,874,812

    $

    8,419,934Restricted Cash304,093316,129Accounts Receivable, Net1,142,9391,376,034Inventory, Net2,935,6092,820,381Prepaid Expenses and Other Current Assets291,367420,654Total Current Assets10,548,82013,353,132Fixed Assets, Net775,086839,639Intangible Assets, Net217,930148,167Other Assets16,92916,930$

    11,558,765

    $

    14,357,868LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:Accounts Payable$

    1,751,575

    $

    1,949,038Accrued Expenses492,856713,163Accrued Stockholder Litigation-3,250,000Accrued Interest Payable66,09159,838Note Payable to Stockholder1,424,9411,424,941Income Taxes Payable168767Total Current Liabilities3,735,6317,397,747Convertible Subordinated Debt4,000,000-Total Liabilities7,735,6317,397,747COMMITMENTS AND CONTINGENCIESStockholders’ Equity:Preferred Stock, $.0001 Par Value:Authorized Shares – 5,000,000; None Issued and Outstanding--Common Stock, $.001 Par Value,Authorized Shares – 100,000,000; Issued and Outstanding –

    31,116,870 and 30,613,995, Respectively31,11730,614Additional Paid-In Capital76,878,51076,075,899Stock to Be Issued-23,887Accumulated Deficit(73,086,493)(69,170,279)3,823,1346,960,121$

    11,558,765

    $

    14,357,868DYADIC INTERNATIONAL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 2010 2009 (Unaudited) (Unaudited) Operating ActivitiesNet Income (Loss)

    $

    (3,916,214)$

    10,238,125Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By (Used In) Operating Activities:Depreciation and Amortization of Fixed Assets230,999219,306Amortization of Intangible and Other Assets11,46510,661Reduction of Allowance for Doubtful Accounts(111,399)-Reduction of Inventory Reserve(363,795)(645,961)Compensation Expense on Stock Option Grants668,15494,568Stock Issued for Financial Services63,000-Stock Issued for Rent-5,000Gain on Reduction of Accrued Stockholder Litigation(410,000)-Changes in Operating Assets and Liabilities:Accounts Receivable344,49331,817Inventory248,5671,229,629Prepaid Expenses and Other Current Assets129,287101,407Other Assets1101,999Accounts Payable(197,463)(592,049)Accrued Expenses(222,143)19,257Accrued Interest Payable to Stockholder6,253(143,977)Accrued Stockholder Litigation(2,840,000)-Deferred Research and Development Obligations-(3,207,863)Income Taxes Payable1,238(7,646)Net Cash Provided By (Used In) Operating Activities(6,357,557)7,454,273Investing ActivitiesPurchases of Fixed Assets(166,446)(80,361)Patent Costs(81,228)-Restricted Cash12,036(20,124)Net Cash (Used In) Investing Activities(235,638)(100,485)Financing ActivitiesRepayment of Note Payable to Stockholder-(1,000,000)Proceeds from Issuance of Convertible Subordinated Debt4,000,000-Proceeds from Stock Warrant Exercises16,876-Proceeds from Issuance of Common Stock-27,083Proceeds from Stock Option Exercises31,19716,050Net Cash Provided By (Used In) Financing Activities4,048,073(956,867)Net Increase (Decrease) in Cash and Cash Equivalents(2,545,122)6,396,921Cash and Cash Equivalents at Beginning of Period8,419,9342,826,542Cash and Cash Equivalents at End of Period

    $

    5,874,812$

    9,223,463Supplemental Cash Flow Information:Cash Paid for Interest

    $

    126,404$

    304,166
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    SOURCE Dyadic International, Inc.
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