Press Releases

JUPITER, Fla., November 3, 2011/PR Newswire/ — Dyadic International, Inc. (“Dyadic”) (OTC Pink: DYAI), a global biotechnology company focused on the discovery, development, manufacture and sale of enzyme and protein products for the bioenergy, industrial enzyme and biopharmaceutical industries, today announced financial results for the quarter ended September 30, 2011.

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 OTC market website at www.otcmarkets.com/stock/DYAI/financials and on Dyadic’s website at www.dyadic.com/wt/dyad/investors.

Dyadic’s President and Chief Executive Officer, Mark Emalfarb, stated, “In the third quarter, Dyadic continued to make strong progress in performing funded research at our facility in the Netherlands which not only increases our research and development revenue but also enhances our opportunities for broader strategic partnerships. We also continued to see improvements in the customer base and profitability of our industrial enzyme business. Lastly, our biofuels licensees reported progress in the third quarter in scaling up towards ultimate commercialization of second generation biofuels and biochemicals which may utilize our C1 technology.”

FINANCIAL RESULTS

Total revenue for the third quarter ended September 30, 2011 increased 30% to $2.6 million compared to $2.0 million for the quarter ended September 30, 2010. Total revenue for the nine months ended September 30, 2011 increased 27% to $7.9 million compared to $6.2 million for the same period last year. The increase in total revenue for both periods as compared to the same periods ended September 30, 2010 was due to an increase in research and development revenue and, with respect to the nine month comparison, also due to an increase in license fee revenue.

Net product related revenue for the third quarter ended September 30, 2011 increased to $2.0 million compared to $1.9 million for the third quarter ended September 30, 2010. Net product related revenue for the nine months ended September 30, 2011 was flat as compared to the same period a year ago.

Research and development revenue for the third quarter ended September 30, 2011 increased to $536,000 compared to $64,000 for the third quarter ended September 30, 2010. Research and development revenue for the nine months ended September 30, 2011 increased to $1.3 million compared to $618,000 for the nine months ended September 30, 2010.

There was no license fee revenue for the third quarter ended September 30, 2011. License fee revenue for the nine months ended September 30, 2011 increased to $ 1.0 million compared to $32,000 for the nine months ended September 30, 2010. The increase in license fee revenue for the nine month period ended September 30, 2011 compared to the same period last year was due to an upfront license fee recognized in the second quarter of 2011 from a licensee in the animal feed industry.

Gross profit for the third quarter ended September 30, 2011 increased to $784,000 compared to $339,000 for the third quarter ended September 30, 2010. This increase was the result of higher research and development revenue and improved product margins. Gross profit for the nine months ended September 30, 2011 nearly doubled to $2.9 million compared to the same period last year due to increased margins on product revenue and the recognition of license fee income.

General and administrative expenses for the third quarter ended September 30, 2011 increased to $1.3 million compared to $1.1 million for the third quarter ended September 30, 2010. For the nine months ended September 30, 2011, general and administrative expenses increased to $4.4 million compared to $3.7 million for the nine months ended September 30, 2010. The increase in both periods was due to costs incurred by Dyadic in the completion of the arbitration of its professional liability lawsuit against its former auditors, as well as additional business development costs.

Net loss for the third quarter ended September 30, 2011 was $1.3 million, or $(0.04) per basic and diluted share, compared to a net loss of $1.4 million, or $(0.04) per basic and diluted share for the third quarter ended September 30, 2010. Net loss for the nine months ended September 30, 2011 was $3.6 million, or $(0.11) per basic and diluted share, compared to a net loss of $3.9 million, or $(0.13) per basic and diluted share, for the nine months ended September 30, 2010.

At September 30, 2011, cash and cash equivalents were $4.0 million compared to $4.5 million at December 31, 2010. During the third quarter of 2011, Dyadic raised $3.0 million through the private placement of convertible subordinated secured promissory notes, of which $2.4 million was received during the third quarter as reflected in the condensed consolidated balance sheet as of September 30, 2011. The remaining $600,000 was received in October and will be reflected in the year-end financial statements. A significant portion of the decrease in cash since the end of last year was due to costs incurred by Dyadic in the completion of the arbitration of its professional liability lawsuit against its former auditors.

Conference Call

Dyadic’s third quarter 2011 financial results conference call is scheduled for 5:00 p.m. Eastern Time on Thursday, November 3, 2011. The conference call may be accessed by dialing 888-661-5176 (from the United States or Canada) or 913-312-0702 (from other countries) five to ten minutes prior to start time and providing the passcode 3489907. A replay of the conference call will be available on the Dyadic website (www.dyadic.com) shortly after the live event.

ABOUT DYADIC

Dyadic 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 enzyme and protein products for the bioenergy, industrial enzyme and biopharmaceutical industries.

Dyadic trades on the OTC Pink tier of the OTC market. Investors can find real-time quotes, market information and financial reports for Dyadic on the OTC market website (www.otcmarkets.com/stock/DYAI/quote).

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

Certain 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 SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Nine Months Ended

Three Months Ended

September 30,

September 30,

Revenue:

2011

2010

2011

2010

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Product Related Revenue, Net

$

5,492,082

$

5,541,489

$

2,039,528

$

1,922,552

License Fee Revenue

1,017,000

32,000

Research and Development Revenue

1,349,985

617,695

535,883

64,120

Total Revenue

7,859,067

6,191,184

2,575,411

1,986,672

Cost of Goods Sold

5,004,147

4,738,392

1,790,994

1,647,413

Gross Profit

2,854,920

1,452,792

784,417

339,259

Expenses:

General and Administrative

4,353,282

3,740,039

1,340,945

1,105,897

Sales and Marketing

807,199

738,757

270,746

266,161

Research and Development

910,597

920,444

288,480

271,809

Foreign Currency Exchange Losses (Gains), Net

6,183

137,852

87,527

(122,691)

Total Expenses

6,077,261

5,537,092

1,987,698

1,521,176

(Loss) from Operations

(3,222,341)

(4,084,300)

(1,203,281)

(1,181,917)

Other Income (Expense):

Interest Income

8,388

46,003

1,714

9,992

Interest Expense

(342,872)

(132,657)

(116,135)

(67,591)

Gain on Reduction of Accrued Stockholder Litigation

410,000

Other

(155,260)

(155,503)

Total Other Income (Expense)

(334,484)

168,086

(114,421)

(213,102)

Net (Loss)

$

(3,556,825)

$

(3,916,214)

$

(1,317,702)

$

(1,395,019)

Net (Loss) per Common Share

Basic

$

(0.11)

$

(0.13)

$

(0.04)

$

(0.04)

Diluted

$

$

$

$

(0.11)

(0.13)

(0.04)

(0.04)

Weighted Average Common Shares Used in Calculating Net (Loss)

Per Share:

Basic

31,317,553

30,971,296

31,413,614

31,063,147

Diluted

31,317,553

30,971,296

31,413,614

31,063,147

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

ASSETS

2011

2010

(Unaudited)

Current Assets:

Cash and Cash Equivalents

$

4,039,753

$

4,535,279

Restricted Cash

256,628

247,082

Accounts Receivable, Net

1,344,250

1,276,574

Inventory, Net

2,702,264

2,782,433

Prepaid Expenses and Other Current Assets

347,631

336,638

Total Current Assets

8,690,526

9,178,006

Fixed Assets, Net

606,445

719,161

Intangible Assets, Net

413,634

310,978

Other Assets

16,930

16,930

$

9,727,535

$

10,225,075

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

Accounts Payable

$

1,199,079

$

1,801,123

Accrued Expenses

436,949

417,996

Accrued Interest Payable

114,778

146,230

Deferred Research and Development Obligation

155,648

Note Payable to Stockholder

1,424,941

1,424,941

Income Taxes Payable

168

168

Total Current Liabilities

3,331,563

3,790,458

Convertible Subordinated Debt

6,400,000

4,000,000

COMMITMENTS AND CONTINGENCIES

9,731,563

7,790,458

Stockholders’ Equity (Deficit):

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 – 31,427,495 and 31,138,120, Respectively

31,428

31,138

Additional Paid-in Capital

78,219,580

77,101,690

Accumulated Deficit

(78,255,036)

(74,698,211)

$

(4,028)

$

2,434,617

9,727,535

10,225,075

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

2011

2010

Operating Activities

(Unaudited)

(Unaudited)

Net (Loss)

$

(3,556,825)

$

(3,916,214)

Adjustments to Reconcile Net (Loss) to Net Cash (Used In) Operating Activities:

Depreciation and Amortization of Fixed Assets

193,128

230,999

Amortization of Intangible and Other Assets

23,675

11,465

Reduction of Allowance for Doubtful Accounts

(50,011)

(111,399)

Reduction of Inventory Reserve

(75,389)

(363,795)

Compensation Expense on Stock Option Grants

1,068,374

668,154

Stock Issued for Financial Services

63,000

Gain on Reduction of Accrued Stockholder Litigation

(410,000)

Changes in Operating Assets and Liabilities:

Accounts Receivable

(17,665)

344,493

Inventory

155,558

248,567

Prepaid Expenses and Other Current Assets

(10,942)

129,288

Accounts Payable

(602,044)

(197,463)

Accrued Expenses

18,902

(222,143)

Accrued Interest Payable

(31,452)

6,253

Accrued Stockholder Litigation

(2,840,000)

Deferred Research and Development Obligation

155,648

Income Taxes Payable

1,238

Net Cash (Used In) Operating Activities

(2,729,043)

(6,357,557)

Investing Activities

Purchases of Fixed Assets

(80,412)

(166,446)

Cost of Patents

(126,331)

(81,228)

Restricted Cash

(9,546)

12,036

Net Cash (Used In) Investing Activities

(216,289)

(235,638)

Financing Activities

Proceeds from Issuance of Convertible Subordinated Debt

2,400,000

4,000,000

Proceeds from Stock Warrant Exercises

15,000

16,876

Proceeds from Stock Option Exercises

34,806

31,197

Net Cash Provided by Financing Activities

2,449,806

4,048,073

Net (Decrease) in Cash and Cash Equivalents

(495,526)

(2,545,122)

Cash and Cash Equivalents at Beginning of Period

4,535,279

8,419,934

Cash and Cash Equivalents at End of Period

$

4,039,753

$

5,874,812

Supplemental Cash Flow Information

Cash Paid for Interest

$

374,324

$

126,404

CONTACT:

Dyadic International, Inc.

Michael J. Faby

Vice President Finance

Phone: 561-743-8333

Email: mfaby@dyadic.com