Press Releases

Total Revenue increased 10%
Product Related Revenue increased 25%
License Fee Revenue increased 9%
Income from Operations of $0.6 million

Jupiter, Fla., March 13, 2014/PR Newswire/ – Dyadic International, Inc. (“Dyadic”) (OTCQX: DYAI), a global biotechnology company focused on the discovery, development, manufacture and sale of enzymes and others proteins for the bioenergy, bio- based chemicals, biopharmaceutical and industrial enzyme industries, today announced financial results for the year ended December 31, 2013.

Dyadic’s President and Chief Executive Officer, Mark Emalfarb, stated, “We continue to lay the foundationfor our continued success including increasing available capital, signing a broad license agreement with BASF, joining the OTCQX U.S. Premier marketplace and expanding our state-of-the-art Dutch research center. Our strategic objectives have always been to unlock the enormous potential of our technologies, including the C1 platform. We think we are remarkably well positioned to continue to grow and exploit new opportunities in 2014 and beyond.”

FULL YEAR 2013 FINANCIAL RESULTS

Revenue

Total revenue increased 10% for the year ended December 31, 2013 to $17.1 million as compared to $15.6 million for the year ended December 31, 2012.

Net product related revenue increased 25% to $9.8 million for the year ended December 31, 2013 as compared to $7.8 million for the year ended December 31, 2012. The increase was driven primarily by increases in the animal health and nutrition segments, the addition of two major customers and additional registration by a customer of an animal feed product containing a Dyadic enzyme in Europe. Our product related business has an increasingly global footprint with 47% of sales in Europe, 35% of sales in North America and 17% of sales in Asia.

License fee revenue for the year increased by $500,000 due to the licensing agreement Dyadic entered into with BASF in the second quarter of 2013. The agreement called for BASF to pay an aggregate $6.0 million upfront license fee as compared to the $5.5 million that Abengoa paid for an expansion of their non-exclusive C1 license in 2012.

Research and development revenue for the year ended December 31, 2013 decreased 42% to $1.3 million compared to $2.3 million for the year ended December 31, 2012. The decrease was the result of delays in the start of certain external research and development projects, and the reallocation of research and development resources from externally funded projects to new product development initiatives. These initiatives are internally funded, and are expected to accelerate the continued enhancements and improvements to our C1 Platform Technology.

Cost of Goods Sold

For the year ended December 31, 2013, cost of goods sold was approximately $9.1 million, or 81.8% of total revenue excluding license fees, as compared to approximately $7.6 million, or 75.4% of total revenue excluding license fees, for the year ended December 31, 2012, an increase of approximately $1.5 million. We have excluded license fee revenue from the percentages above because license fee revenues do not have costs attributed to them for financial reporting purposes. This increase in cost of goods sold was primarily the result of the shift from higher margin research and development revenue to industrial enzyme product sales. In addition, product related margins decreased in 2013 by approximately 5% due to increased manufacturing and raw material costs, and product mix. However, we have made progress with our manufacturing operations over the past several months lowering raw material costs and increasing yields and productivity, which we expect to positively impact margins in 2014.

Gross Profit

Gross profit remained relatively flat year-over-year at approximately $8.0 million for both of the years ended December 31, 2013 and 2012. The minimal growth in gross profit was primarily due to the higher license fees and product related revenues, being offset by lower research and development revenue.

Operating Expenses

Total operating expenses for the year ended December 31, 2013 increased 17% to $7.5 million compared to $6.4 million for the year ended December 31, 2012. The increase was due primarily to increased costs associated with litigation against our former outside legal counsel of approximately $1.5 million, which was partially offset by the recovery of a doubtful account receivable of $300,000 that was previously fully reserved as of December 31, 2012. The increased litigation costs were anticipated and are expected to be lower in 2014 as the preparation for trial starts to wind down in anticipation of the trial itself. The professional liability lawsuit is expected to continue through 2014 and into 2015.

Research and development expenses increased $145,000 to $1.1 million as we continue with our accelerated new product development program to further enhance our proprietary C1 platform technology, and to bring new C1-based products to market. Research and development expenses are expected to further increase in 2014.

Net Loss

Based on the factors discussed above, the net loss for the year ended December 31, 2013 was $429,000, or ($0.01) per basic and fully diluted share, as compared to a net income of $1.3 million, or $0.04 per basic and fully diluted share, for year ended December 31, 2012.

Pro forma for the non-recurring expenses associated with litigation against our former outside legal counsel and other related events, we had a positive net income of $1.3 million, or $0.04 per basic and fully diluted share for the year ended December 31, 2013, as compared to a pro forma net income of $1.0 million, or $0.03 per basic and fully diluted share for the year ended December 31, 2012.

Cash and Cash Equivalents

At December 31, 2013, cash and cash equivalents totaled $8.9 million as compared to $4.0 million at December 31, 2012. The increase was largely due to Dyadic’s receipt of the BASF license fee and receipt of the remaining $3.5 million due under the Abengoa License Expansion announced in 2012.

Debt

Total Convertible Subordinated Debt (“Debt”) as of December 31, 2013 and 2012 was $6.8 million and $7.0 million, respectively. In January 2013, $182,000 of the Debt was converted to common stock. In October 2013, Dyadic extended the maturity dates of all of its outstanding debt to January 1, 2015. Dyadic has a right to prepay $6.8 million of the Debt any time after March 31, 2014, without penalty, with 30 days written notice. The remaining $1.4 million Note Payable to Stockholder is non-convertible, and is not subject to the prepayment provision.

The financial information contained in this earnings press release should be read in conjunction with the financial statements and related footnotes which have been posted on the OTC marketplace website athttp://www.otcmarkets.com/stock/DYAI/filings and on Dyadic’s website at https://www.dyadic.com/investorinfo/financials/.

Conference Call

Dyadic’s 2013 year-end financial results conference call is scheduled for 5:00 p.m. Eastern Standard Time on Thursday, March 13, 2014. The conference call may be accessed by dialing 888-220-8440 (from the United States or Canada) or 913-312-0733 (from other countries) five to ten minutes prior to start time and providing the passcode 7388205. A replay of the conference call will be available on Dyadic’s 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 enzymes and other proteins for the bioenergy, bio-based chemicals, biopharmaceutical and industrial enzyme industries.  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 earnings press release are “forward-looking statements” within the meaning of the federal securities laws. Statements about our beliefs and expectations regarding our technology platform, our licensing strategy, our ability to create higher margin products, expected litigation costs, our ability to continue past success and the enormous potential and value of C1 as well as statements containing the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend” and similar expressions may constitute forward-looking statements. 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 in this earnings press release. 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 earnings 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. If Dyadic does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward- looking statements. 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 and (6) other factors discussed in Dyadic’s publicly available filings, including the risk factors included in Dyadic’s Initial Information and Disclosure Statement filed with the OTC Markets Group on March 11, 2014.

 DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,

Revenue:

2013

2012

Product Related Revenue, Net

$

9,800,767

$

7,819,547

License Fee Revenue

6,000,000

5,500,000

Research and Development Revenue

1,333,974

2,282,173

Total Revenue

17,134,741

15,601,720

Cost of Goods Sold

9,103,957

7,616,222

Gross Profit

8,030,784

7,985,498

Expenses:

General and Administrative

5,546,999

4,802,653

Sales and Marketing

944,124

700,778

Research and Development

1,066,471

921,714

Foreign Currency Exchange (Gains), Net

(83,312)

(27,989)

Total Expenses

7,474,282

6,397,156

Income from Operations

556,502

1,588,342

Other Income (Expense)

Interest Income

14,613

5,245

Interest Expense

(686,022)

(701,090)

Gain (Loss) on Settlement of Litigation

(313,143)

525,000

Total Other Income (Expense)

(984,552)

(170,845)

Income (Loss) before Provision for Income Taxes

(428,050)

1,417,497

Provision for Income Taxes

(68,000)

Net Income (Loss)

$

(428,050)

$

1,349,497

Net Income (Loss) per Common Share:

Basic

$

(0.01)

$

0.04

Diluted

$

(0.01)

$

0.04

Weighted Average Common Shares Used in

Calculating Net Income (Loss) per Share:

Basic

32,797,253

31,608,841

Diluted

32,797,253

34,225,590

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

December 31,

ASSETS

2013

2012

Current Assets:

Cash

$

8,892,396

$

3,990,062

Restricted Cash

200,378

192,355

Accounts Receivable, Net

1,677,338

1,260,798

License Fee Receivable

110,693

3,500,000

Inventory, Net

2,800,090

2,765,187

Prepaid Expenses and Other Current Assets

171,601

237,389

Total Current Assets

13,852,496

11,945,791

Fixed Assets, Net

504,781

393,860

Intangible Assets, Net

566,867

525,224

Other Assets

16,173

16,173

$

14,940,317

$

12,881,048

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts Payable

$

2,573,106

$

1,687,177

Accrued Expenses

469,681

412,483

Accrued Interest Payable

171,601

1,905

Note Payable to Stockholder

1,424,941

Deferred Research and Development Obligation

914,769

567,400

Total Current Liabilities

4,129,157

4,093,906

Note Payable to Stockholder

1,424,941

Convertible Subordinated Debt

6,818,000

7,000,000

Total Liabilities

12,372,098

11,093,906

COMMITMENTS AND CONTINGENCIES

Stockholders’ 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 –

34,028

31,656

34,028,245 and 31,656,245, Respectively

Additional Paid-In Capital

81,209,585

79,847,761

Stock Subscriptions Receivable

(182,838)

Stock to be Issued

27,769

Accumulated Deficit

(78,520,325)

(78,092,275)

Total Stockholders’ Equity

2,568,219

1,787,142

$

14,940,317

$

12,881,048

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,

Operating Activities

2013

2012

Net Income (Loss)

$

(428,050)

$

1,349,497

Adjustments to Reconcile Net Income (Loss) to Net Cash

Provided By Operating Activities:

Depreciation and Amortization of Fixed Assets

201,224

204,176

Amortization of Intangible and Other Assets

52,279

52,305

Increase (Decrease) in Allowance for Doubtful Accounts

(380,507)

320,573

Increase (Decrease) in Inventory Reserve

(81,000)

245,000

Compensation Expense on Stock Option Grants

806,557

1,198,559

Change in Operating Assets and Liabilities

Accounts Receivable

(36,033)

193,402

License Fee Receivable

3,389,307

(3,500,000)

Inventory

46,097

266,195

Prepaid Expenses and Other Current Assets

65,788

43,423

Accounts Payable

885,929

(348,076)

Accrued Expenses

57,198

(26,557)

Accrued Interest Payable

169,696

(171,591)

Deferred Research and Development Obligation

347,369

538,266

Net Cash Provided by Operating Activities

5,095,854

365,172

Investing Activities

Purchases of Fixed Assets

(312,145)

(45,815)

Patent Costs

(93,922)

(80,144)

Restricted Cash

(8,023)

22,021

Net Cash (Used In) Investing Activities

(414,090)

(103,938)

Financing Activities

Proceeds from Stock Warrant Exercises

159,195

Proceeds from Stock Option Exercises

61,375

37,073

Net Cash Provided by Financing Activities

220,570

37,073

Net Increase in Cash

4,902,334

298,307

Cash at Beginning of Year

3,990,062

3,691,755

Cash at End of Year

$

8,892,396

$

3,990,062

Supplement Cash Flow Information:

Cash Paid for Interest

$

516,326

$

872,681

Cash Paid for Income Taxes

$

$

68,000

Non-Cash Items:

Conversion of Convertible Debt into Share of Common Stock

$

182,000

$

Non-Cash Advances to Employees for Stock Options and

Stock Warrant Exercises

$

182,838

$

INVESTOR RELATIONS CONTACT:

Dyadic International, Inc. Michael J. Faby

Vice President and Chief Financial Officer Phone: 561-743-8333

Email: mfaby@dyadic.com