2014

Dyadic International Reports First Quarter 2013 Financial Results -- Signs Landmark Research & License Agreement with BASF (subsequent event) --

-- Enzyme Product Sales Up 20% Y/Y --

-- Cash Balance Up 3% from December 31, 2012 --

-- Expects Revenue Growth and Profitability for Full Year 2013 --

-- Strengthens Management Team with New COO --

JUPITER, Fla., May 15, 2013 /PRNewswire/ -- Dyadic International, Inc. (OTC Pink: DYAI), a  global biotechnology company, today announced financial results for the quarter ended March 31, 2013.

(Logo: http://photos.prnewswire.com/prnh/20110621/CL06708LOGO)

Dyadic's President and Chief Executive Officer, Mark Emalfarb, stated, "The highlights of Dyadic's first quarter are continuing momentum in our industrial enzyme business and commercialization of our C1 enzyme expression platform.  As we announced earlier today, Dyadic entered into a landmark partnership agreement with BASF, which further validates C1 as an industry-leading enzyme discovery and production platform.  Based on our current trajectory, we expect profitability and revenue growth in 2013.  Industrial enzyme sales increased by over 20% compared to the first quarter of last year.  Our cash position improved with the January 2013 receipt of a $1,000,000 license payment, representing the second installment due under the Abengoa license expansion.  Finally, the hiring of Danai Brooks as our new Chief Operating Officer will provide the company with additional leadership, augment our management capabilities, and accelerate our licensing and other strategic collaboration efforts."

Operating Highlights

Earlier today, Dyadic announced that it entered a non-exclusive worldwide license agreement with BASF, the world's leading chemical company with over $90 billion in sales.  Under the terms of the agreement, BASF will be able to use Dyadic's patented and proprietary C1 platform technology to develop, produce, distribute and sell industrial enzymes in certain fields for a variety of applications.  Additionally, BASF will fund research and development at Dyadic's research lab in The Netherlands. In addition to this research funding, BASF has agreed to pay Dyadic a $6 million upfront license fee, and certain research and commercial milestone fees, as well as royalties upon commercialization.

Dyadic's President and Chief Executive Officer, Mark Emalfarb, stated, "Empowering BASF, the world's leading chemical company, with our C1 technology provides them with access to a commercially-proven industrial enzyme production platform.  In using its vast resources to develop, manufacture and sell new products from the C1 platform, BASF will have business opportunities for a variety of markets, including animal and human nutrition. This transaction will have long-lasting effects on the industrial enzyme businesses of both Dyadic and BASF."

Emalfarb concluded, "Dyadic looks forward to working with BASF and utilizing our C1 technology for the expression of next-generation enzyme products for a range of applications.  This collaboration is yet another example of Dyadic's ability to leverage our technologies in a variety of industries."

In addition to the BASF research and license agreement noted above, other recent developments include:

  • Abengoa Bioenergy is expected to use C1 derived enzymes to produce cellulosic sugars for its commercial scale cellulosic ethanol biorefinery being built in Hugoton, Kansas.  Based on publicly available information, Dyadic believes that the plant is still on track to meet the previously announced schedule to begin production before the end of 2013.  The plant will have an annual nameplate capacity of 25 million gallons.  In January 2013, the Company received the second installment of $1.0 million included in the expanded Abengoa license agreement announced last year.  The remaining $2.5 million payment is due in July 2013.
  • In the biopharmaceutical field, good progress is being made in the development collaboration with Sanofi Pasteur.  Dyadic's research team continues to progress in the expression and purification of proteins that may form the basis for a vaccine.  Dyadic recently signed its third extension to the agreement and it is hopeful that the project will be moving to the next phase of this collaboration.
  • The Company strengthened its management team with the recent announcement of the addition of Danai Brooks as Executive Vice President and Chief Operating Officer.  Mr. Brooks joins Dyadic from J.P. Morgan, where he served as a Vice President in their investment bank.  While at J.P. Morgan, Brooks advised clients across a broad spectrum of sectors, including chemicals, renewable energy and industrials.  He has held senior operational, engineering and manufacturing positions with Dell, Inc., Mars, Inc. and Ford Motor Company.
  • During the quarter, the Company continued to make progress in its research and development efforts, especially in new strains that will enhance the Company's AlternaFuel CMAX3 product.  The Company expects to initiate the testing of these new CMAX enzyme mixes in the third or fourth quarter of 2013.

First Quarter 2013 Financial Results

First quarter 2013 revenue was $2.5 million, which is comparable to the first quarter of 2012.  Product related revenue increased 20% to $2.1 million from $1.7 million for the same period last year.  Product sales growth was offset by a 51% decrease in research and development revenue to $387,000 for the first quarter of 2013. The decline was due to a delay in the start of several external research and development projects that have now either begun or are expected to begin in the second quarter.  Due to the nature and timing of projects and resources, research and development revenue may vary materially from quarter-to-quarter as projects are initiated, completed, or extended.

Gross profit decreased to $520,000 in the first quarter of 2013 from $757,000 in the first quarter of 2012 due to the decrease in research and development revenue and the loss of related margins on that revenue.  Product margins decreased slightly in the first quarter of 2013 as compared to 2012, due primarily to changes in the product sales mix.  During the first quarter of 2013, the Company also increased its provision for slow moving inventory, and experienced increases in certain raw material prices. The Company continuously evaluates more cost effective raw materials for use in its manufacturing processes on an ongoing basis.  Product related revenue margins are expected to improve through the remainder of the year.

Operating expenses increased 33% to $1.8 million when compared to Q1 2012.  This increase was due to higher general and administrative expenses, primarily a result of additional legal costs being incurred for experts necessary for the Company's litigation against former outside legal counsel.  These costs were anticipated and are expected to be incurred through the conclusion of trial.  During the first quarter, the Company increased its investment in research and development to $290,000, a 48% increase over Q1 2012.

The net loss for the quarter ended March 31, 2013 was $1.5 million ($0.05 per basic and diluted share), versus a net loss of $781,000 ($0.02 per basic and diluted share) for the quarter ended March 31, 2012.  The increase in the net loss was due primarily to the decrease in research and development revenue gross profit combined with increased operating expenses.

During the first quarter of 2013, the Company generated operating cash flows of $154,000.   For the same period in 2012, the Company used $454,000 of cash flow in operations.  During the first quarter of 2013, the Company received the second installment of $1.0 million due under the Abengoa license agreement expansion.  For the same period, capital expenditures were $88,000, and proceeds from the exercise of stock options were $59,000

The Company's cash and cash equivalents increased 3% to $4.1 million at quarter end, when compared to the cash balance of $4.0 million as of December 31, 2012.  Debt decreased by $182,000 to $8.2 million as of March 31, 2013, due to the conversion of subordinated debt to common stock during the quarter.

2013 Outlook

As a result of the BASF licensing fee and expected growth in product sales, the Company now expects to report profitability and increased revenue for the full year 2013.

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 http://www.otcmarkets.com/stock/DYAI/filings and on Dyadic's website at http://dyadic.com/investorinfo/financials/.

Conference Call

A conference call to discuss Q1 2013 results is scheduled for 5:00 p.m. Eastern Time on Wednesday, May 15, 2013.  The conference call may be accessed by dialing +1 (800) 289-0517 (from the United States or Canada) or +1 (913) 981-5556 (from other countries) five to ten minutes prior to start time and providing the passcode 2781568.  A simultaneous webcast of the call can be accessed via the Dyadic website (www.dyadic.com).  A replay of the conference call will also be available on the Dyadic website 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


















 Three Months Ended March 31, 




2013


2012


Revenue:


 (Unaudited) 


 (Unaudited) 


Product Related Revenue, Net

$

2,095,072

$

1,739,381


Research and Development Revenue


386,736


783,581


       Total Revenue


2,481,808


2,522,962








Cost of Goods Sold:


1,961,392


1,766,125


Gross Profit


520,416


756,837








Expenses:






General and Administrative


1,258,366


981,373


Sales and Marketing 


203,930


229,137


Research and Development 


289,584


196,310


Foreign Currency Exchange Losses/(Gains), Net


60,293


(41,719)


       Total Expenses


1,812,173


1,365,101








(Loss) from Operations


(1,291,757)


(608,264)








Other Income (Expense) 






Interest Income


1,278


1,485


Interest Expense


(169,717)


(174,156)


Total Other Income (Expense)


(168,439)


(172,671)














Net (Loss)

$

(1,460,196)

$

(780,935)














Net (Loss) per Common Share






Basic

$

(0.05)

$

(0.02)


Diluted

$

(0.05)

$

(0.02)








Weighted Average Common Shares Used in Calculating Net (Loss) Per Share:






Basic


31,929,185


31,515,400


Diluted


31,929,185


31,515,400








 

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS























March 31,
2013



December 31,
2012


ASSETS




(Unaudited)














Current Assets:









Cash and Cash Equivalents



$

4,111,940


$

3,990,062


Restricted Cash




186,554



192,355


Accounts Receivable, Net




1,417,602



1,260,798


License Fee Receivable




2,500,000



3,500,000


Inventory, Net




1,998,921



2,765,187


Prepaid Expenses and Other Current Assets




242,443



237,389


                  Total Current Assets




10,457,460



11,945,791











Fixed Assets, Net




434,360



393,860


Intangible Assets, Net




521,138



525,224


Other Assets




16,173



16,173





$

11,429,131


$

12,881,048











LIABILITIES AND STOCKHOLDERS' EQUITY


















Current Liabilities:









Accounts Payable



$

1,376,625


$

1,687,177


Accrued Expenses




384,341



412,483


Accrued Interest Payable  




170,833



1,905


Note Payable to Stockholder




1,424,941



1,424,941


Convertible Subordinated Debt




6,818,000



-


Deferred Research and Development Obligation




493,169



567,400


                  Total Current Liabilities




10,667,909



4,093,906


Convertible Subordinated Debt




-



7,000,000






10,667,909



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 – 32,126,245 and 31,656,245, Respectively




32,126



31,656


Additional Paid-in Capital




80,281,567



79,847,761


Accumulated Deficit




(79,552,471)



(78,092,275)


                  Total Stockholders' Equity




761,222



1,787,142





$

11,429,131


$

12,881,048











 

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




















 Three Months Ended March 31, 




2013



2012




 (Unaudited) 



 (Unaudited) 


Operating Activities







 Net (Loss) 

$

(1,460,196)


$

(780,935)


 Adjustments to Reconcile Net (Loss) to Net Cash   







      Provided By (Used in) Operating Activities: 







 Depreciation and Amortization of Fixed Assets 


47,668



52,534


 Amortization of Intangible and Other Assets 


12,146



12,131


 Recovery of Allowance for Doubtful Accounts 


(15,000)



-


 Increase in Inventory Reserve 


108,000



-


 Compensation Expense on Stock Option Grants 


193,776



308,974


 Changes in Operating Assets and Liabilities: 







 Accounts Receivable 


(141,804)



127,574


 License Fee Receivable 


1,000,000



-


 Inventory 


658,266



(507,903)


 Prepaid Expenses and Other Current Assets 


(5,054)



(76,398)


 Accounts Payable 


(310,552)



114,106


 Accrued Expenses 


(28,142)



(11,410)


 Accrued Interest Payable 


168,928



(131)


 Deferred Research and Development Obligation 


(74,231)



307,275


 Net Cash Provided By (Used In) Operating Activities 


153,805



(454,183)









 Investing Activities 







 Purchases of Fixed Assets 


(88,168)



(6,332)


 Cost of Patents 


(8,060)



(17,099)


 Restricted Cash 


5,801



(7,496)


 Net Cash (Used In) Investing Activities 


(90,427)



(30,927)









 Financing Activities 







 Proceeds from Stock Option Exercises 


58,500



23,337









 Net Increase (Decrease) in Cash and Cash Equivalents 


121,878



(461,773)


 Cash and Cash Equivalents at Beginning of Period 


3,990,062



3,691,755


 Cash and Cash Equivalents at End of Period 

$

4,111,940


$

3,229,982









 Supplemental Cash Flow Information: 







 Cash Paid for Interest 

$

-


$

173,496









 Non-Cash Items: 







 Conversion of Convertible Subordinated Debt  







    into Shares of Common Stock 

$

182,000


$

-









SOURCE Dyadic International, Inc.



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