Press Releases

Achieves profitability on more than doubling of revenue

JUPITER, Fla., August 13, 2012/PR Newswire/ — Dyadic International, Inc. (“Dyadic”) (OTC Pink: DYAI), a global biotechnology company focused on the discovery, development, manufacture and sale of enzymes and other proteins for the bioenergy, bio-based chemicals, biopharmaceutical and industrial enzyme industries, today announced financial results for the second quarter and six months ended June 30, 2012.

Dyadic’s President and Chief Executive Officer, Mark Emalfarb, stated, “I am very pleased with the progress we have made in reporting a profit for the second quarter and first half of 2012 which ranks among the best results in the company’s history. Equally gratifying is that these results were driven by significant revenue increases in all of Dyadic’s business segments highlighted by the expansion of our license agreement with Abengoa Bioenergy as well as double- digit increases in our industrial enzyme and research and development businesses. Our research and development team in The Netherlands continues to enhance Dyadic’s technologies and products as recently demonstrated by comparative tests of our AlternaFuel® CMAX3™ which equaled or exceeded the performance of other leading enzymes on the market in converting biomass into fermentable sugars. We are working diligently to build on these results by continuing to demonstrate Dyadic’s capabilities to engineer robust fungal strains that produce high quality, cost-efficient enzymes and other proteins at commercial scale for multiple industry applications.”

Second Quarter Highlights

  1. Total revenue for the quarter more than doubled over the same period last year fueled by growth in all operating segments:

  2. Greater than four-fold increase in license fee revenue

  3. 19% increase in the sale of industrial enzymes

  4. 18% increase in research and development revenue

  5. Gross profit for the quarter increased more than three-fold over the same period last year

  6. Net income for the quarter was $0.13 per basic share and $0.12 per diluted share as compared to a loss of $0.02 per basic and diluted share for the same period last year

  7. Recognized a fee of $5.5 million for the expansion of Dyadic’s non-exclusive license agreement with Abengoa Bioenergy New Technologies, Inc. (“Abengoa”) to use Dyadic’s C1 platform technology to develop, manufacture and sell enzymes to convert biomass into sugars for the production of fuels, chemicals and/or power

  8. Demonstrated productivity results of Dyadic’s AlternaFuel® CMAX3™ which equaled or exceeded the performance of other industry-leading enzymes in converting biomass into fermentable sugars for the production of biofuels and bio-based chemicals

  9. Joined a multidisciplinary research consortium funded by the European Community’s Seventh Framework Programme (FP7) to conduct a three year research project coordinated by Procter & Gamble Technical Centres Limited which will employ environmentally-friendly technologies to convert the renewable agricultural waste stream, lignin, into high value sustainable commercial products such as adhesives, detergents and cosmetics

Financial Results

Total revenue for the second quarter ended June 30, 2012 increased to $7.8 million compared to $3.0 million for the second quarter ended June 30, 2011. Total revenue for the six months ended June 30, 2012 increased to $10.4 million compared to $5.3 million for the six months ended June 30, 2011. The  increases in total revenue for the three and six month periods ended June 30, 2012 as compared to the same periods ended June 30, 2011 were due to increases in license fee revenue, product related revenue and research and development revenue.

License fee revenue for the three and six months ended June 30, 2012 increased to $5.5 million compared to $1.0 million for the same periods last year. The increases in license fee revenue for the three and six month periods ended June 30, 2012 compared to the same periods ended June 30, 2011 were due to a $5.5 million license fee recognized in the second quarter of 2012 from Abengoa for the expansion of its license rights pursuant to an amended and restated license agreement entered into between Dyadic and Abengoa in April 2012.

Net product related revenue for the second quarter ended June 30, 2012 increased 19% to $2.0 million compared to $1.6 million for the second quarter ended June 30, 2011. Net product related revenue for the six months ended June 30, 2012 increased 7% to $3.7 million from $3.5 million for the same period a year ago.

Research and development revenue for the second quarter ended June 30, 2012 increased 18% to $381,000 compared to $323,000 for the second quarter ended June 30, 2011. Research and development revenue for the six months ended June 30, 2012 increased 43% to $1.2 million compared to $814,000 for the six months ended June 30, 2011.

Gross profit for the second quarter ended June 30, 2012 increased to $6.0 million compared to $1.3 million for the second quarter ended June 30, 2011. Gross profit for the six months ended June 30, 2012 increased to $6.7 million compared to $2.1 million from the same period a year ago.

Total expenses for the second quarter ended June 30, 2012 decreased 8% to $1.8 million compared to $1.9 million for the same period last year. Total expenses for the six months ended June 30, 2012 decreased 23% to $3.1 million compared to $4.1 million for the same period a year ago. The decreases in total expenses were due to a reduction in litigation- related costs from the same period a year ago and Dyadic’s continued focus on improving cost controls and operational efficiencies.

Interest expense for the three and six months ended June 30, 2012 increased 53% to $174,000 and $348,000, respectively, compared to the same periods last year. These increases were due to an additional $3.0 million of convertible debt raised in the second half of 2011.

Net income for the second quarter ended June 30, 2012 was $4.0 million, or $0.13 per basic and $0.12 per diluted share, compared to a net loss of $736,000, or a net loss of $0.02 per basic and diluted share for the second quarter ended June 30, 2011. Net income for the six months ended June 30, 2012 was $3.2 million, or $0.10 per basic and $0.09 per diluted share, compared to a net loss of $2.2 million, or a net loss of $0.07 per basic and diluted share, for the six months ended June 30, 2011.

At June 30, 2012, cash and cash equivalents were $2.3 million compared to $3.7 million at December 31, 2011. The license fee of $5.5 million from Abengoa referenced above is payable in three installments over the next twelve months. The first installment of $2.0 million is due in October 2012.

On April 12, 2012, Dyadic extended the maturity dates of its $8.4 million in outstanding debt to January 1, 2014. All other provisions of the outstanding debt remained unchanged.

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 https://www.dyadic.com/investorinfo/financials/.

Conference Call

Dyadic will host a conference call at 5:00 p.m. Eastern Time today to discuss its 2012 second quarter financial results.

In order to participate in the conference call, please use the following dial-in numbers and confirmation code:

  1. From the United States or Canada: 888-812-8522

  1. From other countries: 913-312-0980

  1. Passcode: 4245750

A replay of the conference call will be available on Dyadic’s website at 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 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

Six Months Ended June 30,

Three Months Ended June 30,

2012

2011

2012

2011

Revenue:

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Product Related Revenue, Net

$

3,704,846

$

3,452,554

$

1,965,465

$

1,647,346

License Fee Revenue

5,500,000

1,017,000

5,500,000

1,017,000

Research and Development Revenue

1,164,520

814,102

380,939

322,793

Total Revenue

10,369,366

5,283,656

7,846,404

2,987,139

Cost of Goods Sold:

3,629,039

3,213,153

1,862,912

1,684,827

Gross Profit

6,740,327

2,070,503

5,983,492

1,302,312

Expenses:

General and Administrative

2,256,914

3,012,337

1,275,542

1,327,746

Sales and Marketing

358,818

536,453

129,681

268,719

Research and Development

464,419

622,117

268,107

318,114

Foreign Currency Exchange Loss (Gain), Net

61,579

(81,344)

103,298

12,690

Total Expenses

3,141,730

4,089,563

1,776,628

1,927,269

Income (Loss) from Operations

3,598,597

(2,019,060)

4,206,864

(624,957)

Other Income (Expense)

Interest Income

2,754

6,675

1,269

2,484

Interest Expense

(347,719)

(226,737)

(173,563)

(113,731)

Total Other Income (Expense)

(344,965)

(220,062)

(172,294)

(111,247)

Income (Loss) Before Provision for Income Taxes

3,253,632

(2,239,122)

4,034,570

(736,204)

Provision for Income Taxes

(65,000)

(65,000)

Net Income (Loss)

$

3,188,632

$

(2,239,122)

$

3,969,570

$

(736,204)

Net Income (Loss) per Common Share

Basic

$

0.10

$

(0.07)

$

0.13

$

(0.02)

Diluted

$

0.09

$

(0.07)

$

0.12

$

(0.02)

Weighted Average Common Shares Used in Calculating Net

Income (Loss) Per Share:

Basic

31,562,375

31,265,054

31,609,349

31,271,269

Diluted

33,776,053

31,265,054

33,793,937

31,271,269

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

June 30, 2012

December 31, 2011

(unaudited)

Current Assets:

Cash and Cash Equivalents

$

2,262,569

$

3,691,755

Restricted Cash

210,138

214,376

Accounts Receivable, Net

1,531,989

1,774,773

License Fee Receivable

5,500,000

Inventory, Net

3,104,778

3,276,382

Prepaid Expenses and Other Current Assets

292,400

280,812

Total Current Assets

12,901,874

9,238,098

Fixed Assets, Net

452,763

552,221

Intangible Assets, Net

507,246

497,385

Other Assets

$

16,173

$

16,173

13,878,056

10,303,877

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:

Accounts Payable

$

1,486,045

$

2,065,708

Accrued Expenses

393,614

437,719

Accrued Interest Payable

173,365

173,496

Income Taxes Payable

65,000

Note Payable to Stockholder

1,424,941

Deferred Research and Development Obligation

308,640

Total Current Liabilities

2,426,664

4,101,864

Note Payable to Stockholder

1,424,941

Convertible Subordinated Debt

7,000,000

7,000,000

COMMITMENTS AND CONTINGENCIES

10,851,605

11,101,864

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 –

31,648,120 and 31,448,745, Respectively

31,648

31,449

Additional Paid-in Capital

79,247,943

78,608,586

Stock to be Issued

3,750

Accumulated Deficit

(76,253,140)

(79,441,772)

$

3,026,451

$

(797,987)

13,878,056

10,303,877

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

Six Months Ended June 30,

2012

2011

Operating Activities

(Unaudited)

(Unaudited)

Net Income (Loss)

$

3,188,632

$

(2,239,122)

Adjustments to Reconcile Net Income (Loss) to Net Cash (Used in) Operating

Activities:

Depreciation and Amortization of Fixed Assets

108,726

138,151

Amortization of Intangible and Other Assets

24,457

15,402

Reserve (Recovery) of Doubtful Accounts

117,000

(50,011)

Reserve (Recovery) of Inventory Reserve

140,000

(75,389)

Compensation Expense on Stock Option Grants

600,881

658,684

Stock to be Issued for Financial Services

(3,750)

Changes in Operating Assets and Liabilities:

Accounts Receivable

125,784

(300,506)

License Fee Receivable

(5,500,000)

Inventory

31,604

(258,972)

Prepaid Expenses and Other Current Assets

(11,588)

(86,844)

Accounts Payable

(579,663)

484,003

Accrued Expenses

(44,105)

223,249

Accrued Interest Payable

(131)

(32,700)

Income Taxes Payable

65,000

Deferred Research and Development Obligation

308,636

150,369

Net Cash (Used In) Operating Activities

(1,428,517)

(1,373,686)

Investing Activities

Purchases of Fixed Assets

(9,265)

(76,919)

Cost of Patents

(34,318)

(67,985)

Restricted Cash

4,238

(23,370)

Net Cash (Used In) Investing Activities

(39,345)

(168,274)

Financing Activities

Proceeds from Stock Warrant Exercises

15,000

Proceeds from Stock Option Exercises

38,676

34,369

Net Cash Provided by Financing Activities

38,676

49,369

Net (Decrease) in Cash and Cash Equivalents

(1,429,186)

(1,492,591)

Cash and Cash Equivalents at Beginning of Period

3,691,755

4,535,279

Cash and Cash Equivalents at End of Period

$

2,262,569

$

3,042,688

Supplemental Cash Flow Information:

Cash Paid for Interest

$

173,349

$

259,437

CONTACT:

Dyadic International, Inc.

Michael J. Faby

Vice President and Chief Financial Officer

Phone: 561-743-8333

Email: mfaby@dyadic.com