Dyadic International Reports Q1 2014 Financial Results
- Total Revenue increased 20% -
JUPITER, Fla., May 8, 2014 /PRNewswire/ — Dyadic International, Inc. (“Dyadic”) (OTCQX: DYAI), a global biotechnology company focused on the discovery, development, manufacture and sale of enzymes and others proteins for the bioenergy, bio-based chemicals, biopharmaceutical and industrial enzyme industries, today announced financial results for the first quarter ended March 31, 2014.
Chief Executive Officer, Mark Emalfarb, stated, “Dyadic is off to a strong start in 2014. Investments in our proprietary technologies are continuing to pay off on multiple fronts. Revenues grew 20% in the first quarter. This is a result of increased sales in all of our targeted market sectors, including animal nutrition, starch, alcohol and brewing. Our gross profit has nearly doubled, led by progress made on both the product and R&D side of the business. Enzyme product margins are improving due to a combination of positive factors, including decreased raw material costs and improved productivity gains. We are also very proud to announce that the expansion of our Dutch research center is already starting to produce better than expected results with both internal and external research projects. Earlier this week, we announced the strengthening of our management team in Europe. The hiring of a Vice President of Business Development and Director of Sales will allow the Dyadic team to tap into the extensive experience each of them brings from within the biotechnology industry. Also accomplished in the first quarter, we uplisted our stock to the OTCQX marketplace, providing our shareholders with greater transparency. Dyadic’s technology licensing model is expected to bring us recurring royalty streams in a broad variety of end markets. We anticipate the first of such royalties later this year from Abengoa Bioenergy, a C1 licensee. Abengoa has reported that their cellulosic ethanol plant in Hugoton, Kansas will begin operations this year. By strengthening our European leadership team and expanding our Dutch research center we expect to see more rapid technology advancements and accelerated growth in research and product revenues. We are committed to augmenting our leadership team worldwide, and we look forward to making additional announcements in the coming months.”
Q1 2014 Financial Results
Total revenue increased 20% for the three months ended March 31, 2014 to $3.0 million as compared to $2.5 million for the prior year.
Net product related revenue increased over 17% to $2.5 million for the three months ended March 31, 2014, as compared to $2.1 million for the prior year. This increase was due both to several new customers in certain key markets, including animal feed, starch, alcohol and brewing, and increased sales to existing customers.
Research and development revenue for the quarter increased 36% to $526,000 compared to $387,000 for the same period in 2013. The increase was due to the start of certain external research and development projects and better than expected performance by our team of scientists on executing those projects ahead of schedule.
There was no license fee revenue recorded in the first quarter of 2014.
Cost of Goods Sold
For the three months ended March 31, 2014, cost of goods sold was approximately $2.0 million, or 66% of total revenue, as compared to approximately $2.0 million, or 79% of total revenue for the three months ended March 31, 2013. The decrease in cost of goods sold as a percentage of total revenues was primarily the result of improved product related margins and very efficient project execution on research and development revenue generating projects, which in the aggregate, accounted for the improvements.
Gross profit increased from $520,000 in the first quarter of 2013 to $1,000,000 in the first quarter of this year. Gross profit margins increased from 21% last year to 34% for the first quarter of 2014. Margins improved in both product related revenues and research and development revenues. The margin increases in product related revenues were due in part to reduced raw material costs and increased productivity due to modified fermentation and downstream processing equipment. Additionally, price increases on certain higher volume products contributed to the increase in gross profit. Our margins on research and development revenues were up as we reached certain project objectives on in our research program earlier than expected that allowed us to recognize revenues with higher margins.
General and Administrative
Total general and administrative expenses for the quarter increased 51% to $1.9 million compared to $1.3 million for the same period in 2013. The increase was due primarily to expert costs associated with the ongoing litigation against the Company’s former outside legal counsel of approximately $675,000, as compared to $185,000 in Q1 of 2013. Excluding legal fees associated with the lawsuit, general and administrative expenses were up 14% from the prior year. Costs and expenses related to the lawsuit are expected to decrease significantly through the remainder of the 2014. The professional liability lawsuit is expected to continue through 2014, with an anticipated trial date sometime in 2015. Costs and expenses will again increase as we near trial preparation, and throughout the trial itself.
Sales and Marketing
Sales and Marketing costs increased $37,000, or 18% quarter over quarter. The majority of the increase was due to additional sales resources brought online in the second quarter of 2013. As we recently announced, we added sales resources starting in June 2014 and expect to continue to expand the team during the remainder of 2014.
Research and Development
Research and development expense increased 14% to $330,000. This increase is lower than anticipated as technical resources were deployed on certain third party funded projects during the quarter. It is expected that research and development spending will increase through the remainder of the year.
Gain on Sale of Fixed Assets
During the first quarter of 2014, as previously announced, we closed our Greensboro, North Carolina facility and sold the assets for a net gain of approximately $12,000. We do not anticipate any further costs associated with the closure.
Net loss for the three months ended March 31, 2014 was $1.6 million, or ($0.05) per basic and fully diluted share, as compared to a net loss of $1.5 million, or ($0.05) per basic and fully diluted share, for three months ended March 31, 2013. Exclusive of litigation related legal fees, the net loss for the three months ended March 31, 2014 would have been $894,000, or ($0.03) per basic and fully diluted share, as compared to a net loss of $1.3 million, or ($0.04) per basic and fully diluted share, for the three months ended March 31, 2013.
Cash and Cash Equivalents
At March 31, 2014, cash and cash equivalents totaled $7.0 million as compared to $8.9 million at December 31, 2013. The decrease was substantially due to the increase in legal expenses and inventory on hand to satisfy anticipated sales for 2014. Additionally, Dyadic launched its new Fibrezyme G4 product in April, which required cash expenditures to ensure product availability in certain strategic geographic regions to meet projected demand.
Total Convertible Subordinated Debt (“Debt”) as of March 31, 2014 was $6.8 million. On October 1, 2013, the Company extended the maturity dates of all of its outstanding debt to January 1, 2015. The Company has the right to prepay all of the debt any time after March 31, 2014, without penalty, with 30 days written notice. The remaining $1.4 million Note Payable to Stockholder is non-convertible, and is not subject to the prepayment provision. All debt is classified as short-term in the Condensed Consolidated Balance Sheet as of March 31, 2014.
Capital expenditures for the three months ended March 31, 2014 were approximately $84,000 as compared to $88,000 for the same period last year.
Cash Flow From Operating Activities
As reflected in our condensed consolidated financial statements, we incurred a loss of approximately $1.6 million and $1.5 million for the three months ended March 31, 2014 and 2013, respectively. Net cash used in operating activities was approximately $1.8 million in the first quarter of 2014 as compared to $153,000 provided by operations in the first quarter of 2013. The majority of the cash used in operating activities in the first quarter of 2014 was related to the increase in litigation related legal expenses and increased inventory levels previously mentioned. The first quarter of 2013 included $1,000,000 cash received as part of the Abengoa license expansion in 2012.
From Investing Activities
For the three months ended March 31, 2014, our net cash used in investing activities was approximately $65,000 as compared to approximately $90,000 for the three months ended March 31, 2013. The decrease is mainly due to the completion of our facility expansion at our Dutch research center in late 2013 and early 2014 in support of our new product development initiatives.
From Financing Activities
For the three months ended March 31, 2014, there was no net cash provided by financing activities. Approximately $59,000 was raised during the three months ended March 31, 2013. This amount is primarily due to cash received from proceeds from the exercises stock options, granted under our equity plans.
The financial information contained in this earnings press release should be read in conjunction with the financial statements and related footnotes which have been posted on the OTC marketplace website at www.otcmarkets.com/stock/DYAI/filings and on Dyadic’s website at www.dyadic.com/investorinfo/financials/.
Dyadic’s 2014 first quarter financial results conference call is scheduled for 5:00 p.m. Eastern Standard Time on Thursday, May 8, 2014. The conference call may be accessed by dialing 888-224-1164 (from the United States or Canada) or 913-312-0720 (from other countries) five to ten minutes prior to start time and providing the passcode 7367813. A replay of the conference call will be available on Dyadic’s website (www.dyadic.com) 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 chemical, biopharmaceutical and industrial enzyme industries. Dyadic utilizes an integrated technology platform based on its patented and proprietary C1 microorganism, which enables the development and large scale manufacture of low cost enzymes and other proteins for diverse market opportunities. The C1 platform technology can also be used to screen for the discovery of novel genes. In addition to the sale of proprietary enzyme products, Dyadic actively pursues licensing arrangements and other commercial opportunities to leverage the value of these technologies by providing its partners and collaborators with the benefits of manufacturing and/or utilizing the enzymes and other proteins which these technologies help produce. Please visit Dyadic’s website at www.dyadic.com. Dyadic trades on the OTCQX tier of the OTC marketplace. Investors can find real-time quotes, market information and financial reports for Dyadic on the OTC marketplace website at www.otcmarkets.com/stock/DYAI/quote.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in this earnings press release are “forward-looking statements” within the meaning of the federal securities laws. Statements about our beliefs and expectations regarding our technology platform, our licensing strategy, our ability to create higher margin products, expected litigation costs, our ability to continue past success and the enormous potential and value of C1 as well as statements containing the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend” and similar expressions may constitute forward-looking statements. These forward-looking statements involve risks, uncertainties and other factors 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 in this earnings press release. Investors are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Any forward-looking statements speak only as of the date of this earnings press release and, except as required by law, Dyadic expressly disclaims any intent or obligation to update or revise any forward-looking statements to reflect actual results, any changes in expectations or any change in events. If Dyadic does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Factors that could cause results to differ materially include, but are not limited to: (1) general economic conditions, including the recent conditions in the global markets; (2) Dyadic’s ability to retain and attract employees; (3) competitive pressures and reliance on key customers and collaborators; (4) Dyadic’s research and development efforts, (5) the outcome of the current litigation by Dyadic against its former counsel and (6) other factors discussed in Dyadic’s publicly available filings, including the risk factors included in Dyadic’s Annual Report filed with the OTC Markets Group on March 31, 2014.
DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended March 31, ---------------------------- 2014 2013 ---- ---- Revenue: (Unaudited) (Unaudited) Product Related Revenue, Net $2,459,160 $2,095,072 Research and Development Revenue 525,872 386,736 Total Net Revenue 2,985,032 2,481,808 Cost of Goods Sold: 1,978,959 1,961,392 Gross Profit 1,006,073 520,416 --------- ------- Expenses: General and Administrative 1,898,688 1,258,366 Sales and Marketing 241,421 203,930 Research and Development 330,209 289,584 Foreign Currency Exchange Losses/(Gains), Net (42,852) 60,293 2,427,466 1,812,173 Total Expenses (Loss) from Operations (1,421,393) (1,291,757) Other Income (Expense) Interest Income 9,650 1,278 Interest Expense (168,843) (169,717) Gain on Sale of Fixed Assets 11,600 - Total Other Income (Expense) (147,593) (168,439) -------- -------- Net (Loss) $(1,568,986) $(1,460,196) Net (Loss) per Common Share Basic $(0.05) $(0.05) Diluted $(0.05) $(0.05) Weighted Average Common Shares Used in Calculating Net (Loss) Per Share: Basic 34,028,762 31,929,185 ========== ========== Diluted 34,028,762 31,929,185 ========== ==========
DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, 2014 December 31, 2013 -------------- ----------------- ASSETS (Unaudited) Current Assets: Cash and Cash Equivalents $7,005,646 $8,892,396 Restricted Cash 172,665 200,378 Accounts Receivable, Net 1,280,833 1,677,338 License Fee Receivable - 110,693 Inventory, Net 3,707,172 2,800,090 Prepaid Expenses and Other Current Assets 264,787 171,601 ------- ------- Total Current Assets 12,431,103 13,852,496 Fixed Assets, Net 533,427 504,781 Intangible Assets, Net 571,871 566,867 Other Assets 16,028 16,173 $13,552,429 $14,940,317 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts Payable $2,929,521 $2,573,106 Accrued Expenses 407,582 469,681 Accrued Interest Payable 167,871 171,601 Note Payable to Stockholder 1,424,941 - Convertible Subordinated Debt 6,818,000 - Deferred Research and Development Obligation 633,014 914,769 Total Current Liabilities 12,380,929 4,129,157 Note Payable to Stockholder - 1,424,941 Convertible Subordinated Debt - 6,818,000 --- --------- 12,380,929 12,372,098 ---------- ---------- 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 34,044 34,028 Outstanding - 34,043,745 and 34,028,245, Respectively Additional Paid-in Capital 81,373,863 81,209,585 Stock Subscriptions Receivable (185,963) (182,838) Stock to be Issued 38,867 27,769 Accumulated Deficit (80,089,311) (78,520,325) Total Stockholders' Equity 1,171,500 2,568,219 --------- --------- $13,552,429 $14,940,317 =========== ===========
DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, ---------------------------- 2014 2013 ---- ---- (Unaudited) (Unaudited) Operating Activities Net (Loss) $(1,568,986) $(1,460,196) Adjustments to Reconcile Net (Loss) to Net Cash Provided By (Used in) Operating Activities: Depreciation and Amortization of Fixed Assets 55,270 47,668 Amortization of Intangible and Other Assets 14,987 12,146 Recovery of Allowance for Doubtful Accounts - (15,000) Increase (Decrease) in Inventory Reserve (52,000) 108,000 Share Based Compensation 172,267 193,776 Gain on Sale of Fixed Assets (11,600) - Changes in Operating Assets and Liabilities: Accounts Receivable 396,505 (141,804) License Fee Receivable 110,693 1,000,000 Inventory (855,082) 658,266 Prepaid Expenses and Other Current Assets (93,186) (5,054) Other Assets 145 - Accounts Payable 356,414 (310,552) Accrued Expenses (62,098) (28,142) Accrued Interest Payable (3,730) 168,928 Deferred Research and Development Obligation (281,755) (74,231) (1,822,156) 153,805 Net Cash Provided By (Used In) Operating Activities Investing Activities Proceeds from Sale of Fixed Assets 11,600 - Purchases of Fixed Assets (83,916) (88,168) Patent Costs (19,991) (8,060) Restricted Cash 27,713 5,801 (64,594) (90,427) Net Cash (Used In) Investing Activities Financing Activities Proceeds from Stock Option Exercises - 58,500 --- ------ Net Increase (Decrease) in Cash and Cash Equivalents (1,886,750) 121,878 Cash and Cash Equivalents at Beginning of Period 8,892,396 3,990,062 --------- --------- Cash and Cash Equivalents at End of Period $7,005,646 $4,111,940 Supplemental Cash Flow Information: Cash Paid for Interest $137,481 $ - === Non-Cash Items: Conversion of Convertible Subordinated Debt into Shares of Common Stock $ - $182,000 === Non-Cash Advances to Employees for Stock Options Exercises $3,125 $ - ===
SOURCE Dyadic International, Inc.