Dyadic International, Inc. (AMEX:DIL), a biotechnology company
engaged in the development, manufacture and sale of biological
products, today announced financial results for the third quarter
and nine-months ended September 30, 2005. Third Quarter 2005 and
Subsequent Highlights: -- Continued to execute its business plan
and made significant progress in meeting one of the Company's top
priorities for 2005 - to sharply expand the introduction of the
Company's new pulp & paper enzyme products on a global basis.
Currently, the company's enzymes are undergoing trials in a number
of paper companies throughout the world. The trials seek to
evaluate the economic impact the company's products have on the
bleach-boosting, bio-refining and de-inking processes. Some of
these potential improvements include significant cost-savings in
the use of chemicals and energy, improvements in paper quality, and
reduction in effluent streams. -- Recruited and assembled a team of
seasoned sales and marketing executives along with technical sales
personnel with extensive pulp & paper industry experience and
contacts to implement the Company's global pulp and paper strategy.
-- Continued to support its textile customers, directing the
necessary resources to customer support and R&D innovation to
maintain market share in this segment. -- Strengthened the
Scientific Advisory Board, adding several renowned scientists,
including Dr. Arnold Demain, Professor of Industrial Microbiology,
Emeritus, Massachusetts Institute of Technology; Dr. Carlos Barbas,
Kellogg Professor and Chair of Molecular Biology and Chemistry at
The Scripps Research Institute; and Dr. Joseph Villafranca, former
Executive Vice President, Pharmaceutical Development and
Operations, Neose Technologies, Inc. Third Quarter 2005 and Year to
Date Financial Results: Net sales for the quarter ended September
30, 2005, were approximately $4.1 million, as compared to
approximately $4.5 million for the quarter ended September 30,
2004. The decline in net sales reflects aggressive pricing by the
Company's competitors in the textile industry, which in turn puts
pressure on gross profit and operating margins. The Company's
strategy is to decrease its dependence on sales to the textile
industry by accelerating its investment in less competitive
markets. Net sales also continue to be adversely affected by the
residual effects of the Company's inability, between 2003 and most
of 2004, to fund working capital, staffing expansion, product
registrations and product development needs. Third quarter 2005 net
sales from higher-margin industrial enzyme industries, such as pulp
& paper, food and animal feed, increased by 39% over net sales
for the three-months ended September 30, 2004, and represented 32%
of net sales, as compared to 21% of net sales in the 2004 third
quarter. Net sales to the pulp & paper industry comprised 13%
of total net sales for the quarter as compared with 8% for the same
period in 2004, while sales to the textile industry comprised 68%
and 79% for the corresponding periods. Net loss for the quarter
ended September 30, 2005, was approximately $2.5 million, or $0.11
per share (diluted), as compared to approximately $1.3 million net
loss, or $0.09 per share (diluted), for the quarter ended September
30, 2004. The higher net loss was primarily a result of the
Company's increased selling, general and administrative expenses to
meet increased financial reporting requirements of being a public
company, and expenses associated with hiring additional personnel
to support new marketing initiatives for the Company's Enzyme
Business. Research and development expenses for the quarter ended
September 30, 2005, were approximately $1.1 million, as compared to
approximately $1.0 million for the quarter ended September 30,
2004. The increase was partially due to the hiring of additional
R&D personnel and outside contract labor. Selling, general and
administrative (SG&A) expenses for the quarter ended September
30, 2005, were approximately $2.2 million, as compared to
approximately $1.2 million for the quarter ended September 30,
2004. The increase in SG&A expenses was partially a result of
the substantial investments in personnel and other initiatives the
Company has made since November 2004 to expand its sales, marketing
and product development efforts, as well as to staff the Company to
operate as a public company. Cash and cash equivalents were
approximately $13.8 million as of September 30, 2005, as compared
to approximately $1.8 million at September 30, 2004. Net sales for
the nine-months ended September 30, 2005, were approximately $11.9
million, as compared to approximately $12.9 million for the
comparable period ended September 30, 2004. The decline in net
sales reflects aggressive pricing by the Company's competitors in
the textile industry, which in turn puts pressure on gross profit
and operating margins. The Company's strategy is to decrease its
dependence on sales to the textile industry by accelerating its
investment in less competitive markets. Net sales also continue to
be adversely affected by the residual effects of the Company's
inability, between 2003 and most of 2004, to fund working capital,
staffing expansion, product registrations and product development
needs. The Company is endeavoring to transition its sales base from
the lower margin textile enzymes to higher margin areas such as
enzymes for the pulp and paper, food and animal feed industries,
and despite a decrease in the first quarter of 2005, has begun to
achieve slight growth in these other enzyme industries, increasing
net sales in these industries during the second and third quarters,
for an increase in net sales of 19% in these industries for the
nine-months ended September 30, 2005, over net sales for the
nine-months ended September 30, 2004 (or 27% of net sales versus
20%). Net loss for the nine-months ended September 30, 2005, was
approximately $7.9 million, or $0.36 per share (diluted), as
compared to approximately $3.4 million net loss, or $0.23 per share
(diluted), for the nine-months ended September 30, 2004. The higher
loss was primarily a result of the Company's increased selling,
general and administrative expenses to meet increased financial
reporting requirements of being a public company, expenses
associated with hiring additional personnel to support new
marketing initiatives for the Company's Enzyme Business and
increased R&D expenses to continue the development of the
Company's proprietary C1 Host Technology. "In the third quarter of
2005, we continued our push into the pulp & paper market while
continuing to advance the C1 Host Technology," said Mark Emalfarb,
Dyadic's President and CEO. "Having completed our transition to a
public company in the second quarter of 2005, we managed to
significantly reduce the cash burn and plan to continue to maintain
our focus on judiciously managing our cash resources while striving
to achieve our business plan's objectives. During the remainder of
2005 and into 2006, we intend to continue to focus on the
following: execute on our pulp & paper strategy, prioritize
among the many other higher margin market opportunities and
accelerate the development of our C1 Host Technology for expression
of human antibodies and other therapeutic proteins in our fungal
expression system." About Dyadic Dyadic International, Inc., is
engaged in the development, manufacture and sale of biological
products (proteins, enzymes, peptides and other bio-molecules), as
well as the licensing of its enabling proprietary technology to
business collaborators for the discovery, development and
manufacture of biological products from genes. Dyadic markets its
products and services for applications in the textile, chemical,
agricultural, pulp & paper, pharmaceutical, biotechnology and
other industries, using its proprietary C1 Host Technology and C1
Expression and Screening Systems for the discovery, development and
production of biological products. 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 our actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. For a discussion of these risks and uncertainties,
please see our filings from time to time with the Securities and
Exchange Commission, which are available free of charge on the
SEC's web site at http://www.sec.gov, including our Annual Report
on Form 10-KSB for the year ended December 31, 2004, and our
Quarterly Report on Form 10-QSB for the quarter ended September 30,
2005. Except as required by law, we expressly disclaim any intent
or obligation to update any forward-looking statements. Our
Quarterly Report on Form 10-QSB Information contained in this press
release should be read in conjunction with our Quarterly Report on
Form 10-QSB for the quarter ended September 30, 2005, as filed with
the Securities and Exchange Commission on November 14, 2005, which
contains our unaudited condensed consolidated financial statements
and other information for the quarter ended September 30, 2005, and
the nine-months ended September 30, 2005. -0- *T Dyadic
International, Inc. Condensed Consolidated Statements of Operations
(Unaudited) Three-Months Ended Nine-Months Ended September 30,
September 30, 2005 2004 2005 2004
------------------------------------------------------- Net sales
$4,140,145 $4,513,024 $11,862,582 $12,944,314 Cost of goods sold
3,317,956 3,496,811 9,513,604 9,818,967
------------------------------------------------------- Gross
profit 822,189 1,016,213 2,348,978 3,125,347
------------------------------------------------------- Expenses:
Research and development 1,067,310 975,386 3,758,528 2,683,126
Selling, general and adminis- trative 2,175,244 1,226,542 6,078,836
3,279,936 -------------------------------------------------------
Total expenses 3,242,554 2,201,928 9,837,364 5,963,062
------------------------------------------------------- Loss from
operations (2,420,365) (1,185,715) (7,488,386) (2,837,715)
------------------------------------------------------- Other
income (expense): Interest expense (177,184) (123,412) (526,945)
(347,086) Investment income, net 109,232 840 132,490 2,576 Minority
interest (24,805) (20,613) (35,376) (67,088) Foreign currency
exchange (losses) gains, net (9,127) 78,509 27,354 (55,752) Other
income, net 5,637 7,474 1,621 17,987
------------------------------------------------------- Total other
expense (96,247) (57,202) (400,856) (449,363)
------------------------------------------------------- Loss before
income taxes (2,516,612) (1,242,917) (7,889,242) (3,287,078)
Provision for income taxes 15,387 28,529 43,265 85,487
------------------------------------------------------- Net loss
$(2,531,999) $(1,271,446) $(7,932,507) $(3,372,565)
======================================================= Net (loss)
income applicable to holders of common stock $(2,531,999)
$(1,271,446) $(7,932,507) $7,104,737
======================================================= Net (loss)
income per common share: Basic $(0.11) $(0.09) $(0.36) $0.56
======================================================= Diluted
$(0.11) $(0.09) $(0.36) $(0.23)
======================================================= Weighted
average common shares used in calculating net (loss) income per
share: Basic 22,251,105 13,453,431 22,084,352 12,794,096
======================================================= Diluted
22,251,105 13,453,431 22,084,352 14,754,768
======================================================= *T -0- *T
Condensed Consolidated Balance Sheets September 30, 2005 and 2004
(Unaudited) September 30, September 30, Assets 2005 2004 Current
assets: Cash and cash equivalents $13,772,049 $1,753,199 Restricted
cash 34,658 -- Accounts receivable, net of allowance for
uncollectible accounts of $500,142 and $225,718 at September 30,
2005 and 2004, respectively 2,634,365 3,794,929 Inventory 5,193,051
5,985,242 Prepaid expenses and other current assets 557,767 927,088
------------------------ Total current assets 22,191,890 12,460,458
------------------------ Fixed assets, net 1,632,262 875,723
Intangible assets, net 161,207 213,335 Goodwill 467,821 467,821
Other assets 138,038 561,089 ------------------------ Total assets
$24,591,218 $14,578,426 ======================== Liabilities and
stockholders' equity Current liabilities: Accounts payable
$1,529,846 $4,503,502 Accrued expenses 1,542,213 1,090,762 Accrued
interest payable to stockholders 67,268 -- Current portion of notes
payable to stockholders 171,986 222,232 Income taxes payable 56,579
91,967 ------------------------ Total current liabilities 3,367,892
5,908,463 ------------------------ Long-term liabilities: Notes
payable to stockholders, net of current portion 3,538,893 6,103,350
Other liabilities 34,455 -- Minority interest 134,542 149,268
------------------------ Total long-term liabilities 3,707,890
6,252,618 ------------------------ Total liabilities 7,075,782
12,161,081 ------------------------ 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 - 22,251,105 22,251
13,934 Additional paid-in capital 49,381,339 23,439,541 Notes
receivable from exercise of stock options (462,500) (250,000)
Accumulated deficit (31,425,654)(20,786,130)
------------------------ Total stockholders' equity 17,515,436
2,417,345 ------------------------ Total liabilities and
stockholders' equity $26,591,218 $14,578,426
======================== *T
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