Dyadic International Reports First Quarter 2013 Financial Results
– Signs Landmark Research & License Agreement with BASF (subsequent event) –
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.
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.”
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.
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/.
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.
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, December 31, 2013 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.