DIL Dyadic International

Dyadic International, Inc. (AMEX:DIL), a biotechnology company, today announced financial results for the year ended December 31, 2005. Overview of Year 2005 and Subsequent Highlights "2005 was highlighted by the further development of our proprietary C1 Host Technology for both industrial and bioscience applications, including identification of the complete C1 genome sequence; continued progress in the diversification of Dyadic's Enzyme Business, as sales to the pulp & paper industry increased 75%; and key additions to our management team, Scientific Advisory Board and Board of Directors that enhanced our capabilities for the future," said President and CEO Mark Emalfarb. "Our C1 technology development program is on the right track. This proprietary microbial production system for production of large or small quantities of enzymes or other proteins has already proven its value in the manufacture of Dyadic's proprietary enzymes for industrial applications such as pulp & paper and textiles. Our goal is to apply this technology to the discovery and production of proteins and antibodies for human therapeutics, as well as enzymes that can potentially be used to produce cellulosic ethanol, a gasoline substitute, from agricultural waste such as corn stover, wheat straw, sugar cane bagasse or other renewable feedstocks. "In addition to pressing ahead in technology development, we also expanded and upgraded Dyadic's operating platform in anticipation of continued growth. We have assembled a team of seasoned sales and marketing executives to implement an aggressive growth strategy in the Enzyme Business, where we continue to see substantial upside potential in the pulp & paper and other markets. We also added a number of renowned scientists to our Scientific Advisory Board, and recruited Glenn E. Nedwin, Ph.D., co-founder and President of Novozymes, Inc. since 1992, to our team as Chief Scientific Officer and President of Dyadic's Biosciences Business. "We are pleased by Dyadic's progress in 2005 and excited about our opportunities for the future," Emalfarb added. Financial Results For the twelve months ended December 31, 2005, Dyadic reported net sales of approximately $15,883,000, primarily from the sale of industrial enzymes. This compares to net sales for 2004 of approximately $16,741,000. As anticipated, sales of enzymes to the textile industry declined to approximately $11,454,000 from approximately $13,320,000 for 2004, primarily as a result of intense price competition. Notably, sales of enzymes to the pulp & paper industry increased 75%, to approximately $1,869,000 from approximately $1,069,000 for the prior year. Research and development expenses increased 35% to approximately $4,899,000 from approximately $3,621,000 for 2004, as the Company devoted additional resources to the development of its C1 Host Technology. Sales and marketing expenses increased to approximately $2,809,000 for 2005 from approximately $1,857,000 for the prior year, reflecting the Company's expanded sales and marketing efforts in the pulp & paper market. The net loss for 2005 was approximately $10,515,000, or $0.48 per share (diluted). This compares to a net loss for 2004 of approximately $6,080,000, or $0.37 per share (diluted). At December 31, 2005, Dyadic reported cash and cash equivalents of approximately $12,150,000 versus approximately $20,511,000 at December 31, 2004. About Dyadic Dyadic International, Inc. is engaged in the development, manufacture and sale of biological products using a number of proprietary fungal strains to produce enzymes and other biomaterials, principally focused on a system for protein production based on the patented Chrysosporium lucknowense fungus, known as C1. Dyadic currently sells more than 45 liquid and dry enzyme products to more than 200 industrial customers in approximately 50 countries. Dyadic intends to utilize its patented enabling and proprietary platform technologies on its own behalf and under license to business collaborators for the discovery, development and manufacture of biological products from genes to produce targeted protein products for diverse markets. 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, 2005. Except as required by law, we expressly disclaim any intent or obligation to update any forward-looking statements. Information contained in this press release should be read in conjunction with our Annual Report on Form 10-KSB for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on March 29, 2006, which contains our audited consolidated financial statements and other information for the year ended December 31, 2005. -0- *T Dyadic International, Inc. Condensed Consolidated Balance Sheet December 31, 2005 Assets Current assets: Cash and cash equivalents $12,149,848 Restricted cash 34,658 Accounts receivable, net of allowance for uncollectible accounts of $530,738 2,869,167 Inventory 5,413,558 Prepaid expenses and other current assets 804,628 -------------- Total current assets 21,271,859 -------------- Fixed assets, net 1,732,929 Intangible assets, net 148,175 Goodwill 467,821 Other assets 132,280 -------------- Total assets $23,753,064 ============== Liabilities and stockholders' equity Current liabilities: Accounts payable $ 2,601,455 Accrued expenses 1,400,937 Accrued interest payable to stockholders 142,629 Short term notes payable 267,590 Notes payable to stockholders of subsidiary 171,986 Income taxes payable 54,106 -------------- Total current liabilities 4,638,703 -------------- Long-term liabilities: Notes payable to stockholders, including accrued interest 3,631,677 Other liabilities 106,685 Minority interest 103,891 -------------- Total long-term liabilities 3,842,253 -------------- Total liabilities 8,480,956 -------------- 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 - 22,420,188 22,420 Additional paid-in capital 49,719,905 Notes receivable from exercise of stock options (462,500) Accumulated deficit (34,007,717) -------------- Total stockholders' equity 15,272,108 -------------- Total liabilities and stockholders' equity $23,753,064 ============== *T -0- *T Dyadic International, Inc. Condensed Consolidated Statements of Operations Year Ended December 31 2005 2004 --------------------------- Net sales $15,882,969 $16,740,847 Cost of goods sold 12,856,607 12,832,890 --------------------------- Gross profit 3,026,362 3,907,957 --------------------------- Operating Expenses: Research and development 4,898,876 3,621,451 Sales and marketing 2,808,937 1,856,710 General and administrative 5,321,229 3,756,965 Foreign currency exchange (gains) losses, net (16,785) 213,471 --------------------------- Total operating expenses 13,012,257 9,448,597 --------------------------- Loss from operations (9,985,895) (5,540,640) --------------------------- Other income (expense): Interest expense (710,537) (597,906) Investment income 249,280 69,011 Minority interest (4,725) (16,987) Other (expense) income, net 1,535 16,654 --------------------------- Total other expense (464,447) (529,228) --------------------------- Loss before income taxes (10,450,342) (6,069,868) Provision for income taxes 64,228 9,714 --------------------------- Net loss $(10,514,570)$(6,079,582) =========================== Net (loss) income applicable to holders of common stock $(10,514,570)$ 4,397,720 =========================== Net (loss) income per common share: Basic $ (0.48)$ 0.31 =========================== Diluted $ (0.48)$ (0.37) =========================== Weighted average shares and equivalent shares used in calculating net income (loss) per share: Basic 22,132,158 14,387,533 =========================== Diluted 22,132,158 16,324,085 =========================== *T