– BUSINESS REVENUE FROM PRODUCT, R&D AND MILESTONES UP 12% –
– BUSINESS GROSS PROFIT FROM PRODUCT, R&D AND MILESTONES UP 208% –
– RECORD PRODUCT-RELATED GROSS MARGINS –
– FIRST C1 MILESTONE PAYMENTS RECEIVED FROM BASF AND ABENGOA –
– ISSUED NEW $2 MILLION CONVERTIBLE NOTES ON MARCH 9, 2015 –
JUPITER, Fla., March 11, 2015 – Dyadic International, Inc. (“Dyadic”) (OTCQX: DYAI), a global biotechnology company whose patented and proprietary technologies are used to develop, manufacture and sell enzymes and other proteins for the bioenergy, bio-based chemical, biopharmaceutical and industrial enzyme industries, today announced today announced financial results for the year ended December 31, 2014.
Chief Executive Officer, Mark Emalfarb, stated, “We have been very focused on building the foundation of our business to get to profitability from revenues derived from our enzyme product sales, third party funded research programs and ongoing royalty and milestone payments from C1 licensees. In that regard, Dyadic had a successful 2014 with a 12% year-over-year increase in revenue and tripling of gross profit from our combined businesses, excluding one-time, upfront license fees. We continued to strengthen our leadership team, R&D capabilities and corporate governance, including the recent appointment of Mike Tarnok to Chairman of the Board. The technology behind C1 has never been better as we are achieving record high productivity in some of our programs, which we expect will translate directly to even lower cost manufacturing processes for ourselves, our licensees and collaborators. Additionally, we have a variety of late stage discussions and negotiations ongoing that we anticipate will lead to the further strengthening of our balance sheet.”
Q3 2014 Financial Results
Total revenue for fiscal year ending December 31, 2014 year decreased to $12.5 million compared to $17.1 million for fiscal year 2013. The decrease in total revenue is primarily due to the $6.0 million BASF upfront license fee in 2013. This decrease was partially offset by 53% growth in our research and development revenue of $710,000, and the receipt of $700,000 in milestone payments from Abengoa and BASF. Excluding the 2013 upfront BASF license fee, revenue increased $1.4 million, or 12%, to $12.5 million compared to $11.1 million for the same period last year.
Net product related revenue remained flat at $9.8 million. Sales for the period were driven by growth in the starch and alcohol markets, offset by lower sales to the textile market.
License fee revenue for the nine months decreased $5.3 million due to the $6.0 million BASF upfront licensing fee in 2013. The $700,000 received in 2014 represents contractual payments of $500,000 from Abengoa for the first payment related to their Hugoton, Kansas facility, and a $200,000 payment from BASF for achieving our first research project milestone.
Research and development revenue for 2014 increased to $2.0 million compared to $1.3 million for 2013. The increase was due to a higher number of externally funded projects performed at our expanded research facility in the Netherlands.
Gross profit for fiscal year ending December 31, 2014 decreased to $4.3 million compared to $7.4 million for fiscal year 2013. The decrease is due to the reduction of the 100% margin BASF upfront license fee of $6.0 million in 2013. Partially offsetting the effect of the decrease in license fee revenues, were higher gross profits from the product related sales, research and development revenues, and the first payments for the new Abengoa Hugoton facility and a research milestone from BASF. Excluding the 2013 upfront BASF license fee, gross profit increased $2.9 million, or 208%, to $4.3 million compared to $1.4 million for the same period last year.
General and Administrative Expenses
General and administrative expenses were $6.1 million for fiscal year ending December 31, 2014 as compared to $5.0 million for the period last year, reflecting an increase of 22%. Litigation costs increased year-over-year to $1.4 million from $1.3 million in 2013, an increase of 6%. The non-litigation-related G&A increase of $1.0 million, is reflected partially by staff additions and related costs for hiring a new Chief Operating Officer, Chief Financial Officer, Vice President Business Development and expansion of the Board of approximately $700,000, the impact of a 2013 bad debt recovery of $300,000, SEC registration and related costs of approximately $250,000, and a patent abandonment charge of $100,000, partially offset by a reduction in other legal and third party advisory fees of approximately $350,000.
Sales and Marketing
Sales and Marketing expenses for the fiscal year ended December 31, 2014 rose 32% to $1.2 million. The increase is partially due to the addition of Sales Directors in Europe and in the USA to strengthen our sales leadership team.
Research and Development
Research and Development for the fiscal year ending December 31, 2014 was up 119% to $2.2 million. This increase reflects our continued investment in further improving our C1 platforms capabilities and productivity, and in product development.
As a result of the above discussion, overall operating expenses for the fiscal year ended December 31, 2014 increased 41% to $9.7 million compared to $6.9 million for the same period last year.
Net Income (Loss)
Net loss for the fiscal year ended December 31, 2014 was $6.0 million, or ($0.18) per basic and diluted share, compared to a net loss of $428,000, or ($0.01) per basic and diluted share, for the same period a year ago.
Financial Position and Cash Flow Analysis
At December 31, 2014, cash and cash equivalents were $2.5 million compared to $8.9 million at December 31, 2013. During the fiscal year ended December 31, 2014, the Company used approximately $6.4 million in cash and cash equivalents versus generating $4.9 million for fiscal year 2013. The use of cash and cash equivalents for the fiscal year 2014 reflects the following funding needs: (i) our operating losses of $3.3 million; (ii) changes in working capital of $1.7 million, primarily due to an increase in inventory and a reduction in accounts payable; (iii) cash litigation costs related to our professional liability lawsuit brought against our outside former legal counsel of $1.2 million; and (iv) investing activities of approximately $200,000, primarily capital and patent expenditures.
Private Placement of Convertible Note (Subsequent Event)
As reported in our press release on March 9, 2015, the Company completed a private placement of $2,000,000 in convertible subordinated secured promissory note (the “Note”). The Note will pay interest quarterly at a rate of 10% per annum and is convertible at the holder’s option into shares of Dyadic common stock at $1.28 per share. Unless converted, the Note will mature on January 1, 2016. Dyadic expects to use the proceeds from this offering for working capital including continued investments in research and development, and general corporate purposes.
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 enzymes and other proteins for the bioenergy, bio-based chemical, biopharmaceutical and industrial enzyme industries. Dyadic utilizes an integrated technology platform based on its patented and proprietary C1 microorganism, which enables the development and large scale manufacture of low cost enzymes and other proteins for diverse market opportunities. The C1 platform technology can also be used to screen for the discovery of novel genes. In addition to the sale of proprietary enzyme products, Dyadic actively pursues licensing arrangements and other commercial opportunities to leverage the value of these technologies by providing its partners and collaborators with the benefits of manufacturing and/or utilizing the enzymes and other proteins which these technologies help produce. Please visit Dyadic’s website at www.dyadic.com. Dyadic trades on the OTCQX tier of the OTC marketplace. Investors can find real-time quotes, market information and financial reports for Dyadic on the OTC marketplace website at www.otcmarkets.com/stock/DYAI/quote.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this press release are forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks, uncertainties and other factors 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. Investors are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Any forward-looking statements speak only as of the date of this press release and, except as required by law, Dyadic expressly disclaims any intent or obligation to update or revise any forward-looking statements to reflect actual results, any changes in expectations or any change in events. Factors that could cause results to differ materially include, but are not limited to: (1) general economic conditions, including the recent conditions in the global markets; (2) Dyadic’s ability to retain and attract employees; (3) competitive pressures and reliance on key customers and collaborators; (4) Dyadic’s research and development efforts, (5) the outcome of the current litigation by Dyadic against its former counsel, (6) Dyadic’s ability to obtain additional debt or equity financing sources and (7) other factors discussed in Dyadic’s publicly available filings, including the risk factors included in Dyadic’s Form 10 Amendment No. 2 filed with the Securities and Exchange Commission and the OTC Markets Group on October 9, 2014.
Dyadic International, Inc.
Thomas L. Dubinski
Chief Financial Officer