Dyadic International, Inc. (AMEX:DIL), a biotechnology company,
today announced financial results for the third quarter ended
September 30, 2006, highlighted by a notable increase in sales of
the Company's proprietary enzymes to customers in the pulp and
paper industry, effective cost management resulting in a strong
closing cash balance, and improved gross margin as compared to the
third quarter of 2005. Third Quarter 2006: Total net sales for the
quarter ended September 30, 2006 increased slightly to
approximately $4.2 million, as compared to approximately $4.1
million for the quarter ended September 30, 2005. Third quarter
2006 net sales to the pulp & paper industry increased by 72%
versus prior year to approximately $0.9 million, which represented
21% of net sales as compared to 13% of net sales for the third
quarter of 2005. Textile industry net sales were approximately $2.4
million for the third quarter of 2006 versus approximately $2.8
million in the third quarter of 2005. As previously reported, the
market for enzymes for applications in the textile industry
continues to be affected by global pressure on pricing and margins.
Sales of enzymes to the animal feed and other markets increased to
approximately $0.9 million for this year's third quarter from
approximately $0.8 million for the same period of 2005. Gross
margin for the third quarter of 2006 increased to 31% of revenue as
compared to 20% for the third quarter of 2005, reflecting the shift
in sales from the textile industry to the pulp and paper, animal
feed and other higher margin industries. Net loss for the quarter
ended September 30, 2006 decreased to approximately $2.3 million,
or $0.10 per share (basic and diluted), as compared to a net loss
of approximately $2.5 million, or $0.11 per share (basic and
diluted), for the quarter ended September 30, 2005. At September
30, 2006, cash and cash equivalents were approximately $9.4
million, prior to the closing on November 8, 2006 of the $10
million R&D and stock purchase transaction with Abengoa
Bioenergy. Inventories at the end of this year's third quarter were
approximately $6.3 million. Working capital at September 30, 2006
amounted to approximately $16.5 million, and shareholders' equity
was approximately $17.9 million. Nine Months 2006: Net sales for
the nine months ended September 30, 2006 were approximately $12
million as compared to approximately $11.9 million for the
comparable period last year. Net sales to the pulp & paper
industry increased by 63% for the nine months ended September 30,
2006 over those in the same period last year, and totaled
approximately $2.1 million. Textile industry net sales were
approximately $7.8 million for the first nine months of 2006 versus
approximately $8.6 million for the same period last year. Sales of
enzymes to the animal feed and other markets increased to
approximately $2.1 million for the first nine months of 2006 from
approximately $1.9 million for the same period of 2005. Gross
margin for the nine months ended September 30, 2006 increased to
27% of revenue as compared to 20% for the first nine months of
2005. This increase was primarily the result of a 32% increase in
net sales of higher-margin products to industries such as pulp
& paper, animal feed and others to a total of approximately
$4.2 million for this year's first nine months, as compared to
approximately $3.2 million for the comparable period last year. Net
loss for the nine months ended September 30, 2006, was
approximately $7.7 million, or $0.33 per share (basic and diluted),
as compared to net loss of approximately $7.9 million, or $0.36 per
share (basic and diluted), for the nine months ended September 30,
2005. "We made important strides in the development of our core C1
and other enabling technologies for our enzyme, biorefinery and
bioscience initiatives, while effectively managing our cash
position," said President and CEO Mark Emalfarb. Cash at September
30, 2006, was approximately $9.4 million, prior to the closing on
November 8, 2006 of the $10 million R&D and stock purchase
transaction with Abengoa Bioenergy Company, a major global ethanol
producer and a leader in the production of ethanol from both corn
and cellulose feedstocks. "In addition to significantly enhancing
our cash position, we believe our partnership with Abengoa will
help us accelerate the development of our proprietary C1 biofactory
and other technologies for large-scale production of fermentable
sugars which may be used for the production of ethanol, other
biofuels, polymers and other chemicals from renewable biomass,
thereby transitioning our petroleum-based economy to one based on
agricultural residues and energy crops," Emalfarb said. C1 Host
Technology Development Progress Update Dr. Glenn Nedwin, Dyadic's
Chief Science Officer and President of the Biosciences Business,
commented, "Dyadic recently was granted an important U.S. patent
which we believe protects our novel technology for robotic
screening in filamentous fungi using our C1 platform, further
strengthening the Company�s intellectual property position. With
broad claims covering C1 (Chrysosporium lucknowense) and a number
of other industrially relevant fungi, including Trichoderma and
Aspergillus, we believe the patent also validates Dyadic's 'one
stop shop' model where gene discovery and improvement, gene
expression, and product manufacturing can all be performed in the
same host organism. This provides Dyadic with a unique capability
to improve the odds of identifying potentially useful proteins and
to screen for gene variants for improving functional properties of
target proteins, thereby shortening R&D development timelines,
reducing development costs, and increasing the probability of
successfully bringing products to the market." Dr. Nedwin
continued, "We have also had success in further developing our C1
fungal biofactory for the production of human antibodies and other
high-value therapeutic proteins. We have successfully expressed a
fully functional, bioactive, stable monoclonal antibody in our low
protease C1 strain. Due to its expected low cost of manufacturing
as compared to mammalian cells and its ability to produce human
proteins, we believe our C1 host may become a significant
alternative production host for the pharmaceutical industry. "Other
recent C1 technology developments include the identification of a
number of novel enzymes which may be important for low-cost
production of fermentable sugars, initially targeted towards
cellulosic ethanol production, and the ability to over-express
multiple genes in C1. We also are moving forward in our
collaboration with The Scripps Research Institute to further
annotate the C1 genome, which will yield a comprehensive genetic
and biochemical blueprint. We believe that these tools may allow us
to identify additional commercial enzyme product leads, including
improved cellulases and hemicellulases for use in textile, pulp and
paper, food and animal feed applications, the production of ethanol
from biomass, and the identification and production of high-value
therapeutic proteins. We expect that these improvements in our core
C1 and related technologies will enable C1 to produce a wider
variety of proteins at higher yields and at lower cost." About
Dyadic Dyadic International, Inc., based in Jupiter, Florida, with
operations in the United States of America, Hong Kong and mainland
China, Poland and The Netherlands, 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 is applying its technologies to produce enzymes
for use in converting various agricultural products (e.g. corn) and
waste products (e.g. switch grass, wheat straw, sugar cane bagasse,
etc.) into fermentable sugars, which can then be used in the
production of traditional and cellulosic ethanol as well as other
products currently derived from petroleum. Dyadic's C1 technology
also is being developed to facilitate the discovery, development
and large-scale production of human antibodies and other high-value
therapeutic proteins. Dyadic currently sells more than 45 liquid
and dry enzyme products to more than 200 industrial customers in
approximately 50 countries for the textile, pulp & paper,
animal feed, alcohol, starch, and food and beverage industries.
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,
and our subsequent filings with the SEC. Except as required by law,
we expressly disclaim any intent or obligation to update any
forward-looking statements. Dyadic International, Inc. Condensed
Consolidated Balance Sheet September 30, 2006 (Unaudited) � Assets
Current assets: Cash and cash equivalents $ 9,436,613� Accounts
receivable, net of allowance for uncollectible accounts of $598,953
2,976,433� Inventory 6,280,197� Prepaid expenses and other current
assets 1,253,298� Total current assets 19,946,541� � Fixed assets,
net 1,818,991� Intangible assets, net 109,079� Goodwill 1,808,458�
Other assets 67,448� Total assets $ 23,750,517� � Liabilities and
stockholders� equity Current liabilities: Accounts payable $
1,694,717� Accrued expenses 1,586,756� Accrued interest �
shareholder 48,897� Income taxes payable 100,539� Total current
liabilities 3,430,909� � Long-term liabilities: Note payable to
stockholder 2,367,305� Other liabilities 74,078� Total long-term
liabilities 2,441,383� Total liabilities 5,872,292� � 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 �
24,623,525 24,624� Additional paid-in capital 59,770,752� Notes
receivable from exercise of stock options (212,500) Accumulated
deficit (41,704,651) Total stockholders� equity 17,878,225� Total
liabilities and stockholders� equity $ 23,750,517� Dyadic
International, Inc. Condensed Consolidated Statements of Operations
(Unaudited) � � Three-Months Ended Nine-Months Ended September 30,
September 30, 2006� 2005� 2006� 2005� � Net sales $ 4,204,771� $
4,140,145� $ 12,000,093� $ 11,862,582� � Cost of goods sold
2,893,037� 3,317,956� 8,726,450� 9,513,604� Gross profit 1,311,734�
822,189� 3,273,643� 2,348,978� � Expenses: Research and development
997,791� 1,020,105� 2,895,749� 3,529,268� Selling and marketing
924,476� 809,824� 2,540,355� 1,996,221� General and administrative
1,728,772� 1,412,625� 5,140,510� 4,311,875� Foreign currency
exchange losses (gains), net 14,535� 9,127� 111,277� (27,354) Total
expenses 3,665,574� 3,251,681� 10,687,891� 9,810,010� � Loss from
operations (2,353,840) (2,429,492) (7,414,248) (7,461,032) � Other
income (expense): Interest expense (70,218) (177,184) (517,969)
(526,945) Investment income, net 104,065� 109,232� 293,916�
132,490� Minority interest --� (24,805) (13,355) (35,376) Other
income, net 1,328� 5,637� 12,949� 1,621� Total other income
(expense) 35,175� (87,120) (224,459) (428,210) � Loss before income
taxes (2,318,665) (2,516,612) (7,638,707) (7,889,242) Provision for
income taxes 25,351� 15,387� 58,227� 43,265� Net loss $ (2,344,016)
$ (2,531,999) $ (7,696,934) $ (7,932,507) � Net loss per common
share: Basic and diluted $ (0.10) $ (0.11) $ (0.33) $ (0.36)
Weighted average common shares used in calculating net loss per
share: Basic and diluted 24,565,671� 22,251,105� 23,582,285�
22,084,352� Dyadic International, Inc. (AMEX:DIL), a biotechnology
company, today announced financial results for the third quarter
ended September 30, 2006, highlighted by a notable increase in
sales of the Company's proprietary enzymes to customers in the pulp
and paper industry, effective cost management resulting in a strong
closing cash balance, and improved gross margin as compared to the
third quarter of 2005. Third Quarter 2006: Total net sales for the
quarter ended September 30, 2006 increased slightly to
approximately $4.2 million, as compared to approximately $4.1
million for the quarter ended September 30, 2005. Third quarter
2006 net sales to the pulp & paper industry increased by 72%
versus prior year to approximately $0.9 million, which represented
21% of net sales as compared to 13% of net sales for the third
quarter of 2005. Textile industry net sales were approximately $2.4
million for the third quarter of 2006 versus approximately $2.8
million in the third quarter of 2005. As previously reported, the
market for enzymes for applications in the textile industry
continues to be affected by global pressure on pricing and margins.
Sales of enzymes to the animal feed and other markets increased to
approximately $0.9 million for this year's third quarter from
approximately $0.8 million for the same period of 2005. Gross
margin for the third quarter of 2006 increased to 31% of revenue as
compared to 20% for the third quarter of 2005, reflecting the shift
in sales from the textile industry to the pulp and paper, animal
feed and other higher margin industries. Net loss for the quarter
ended September 30, 2006 decreased to approximately $2.3 million,
or $0.10 per share (basic and diluted), as compared to a net loss
of approximately $2.5 million, or $0.11 per share (basic and
diluted), for the quarter ended September 30, 2005. At September
30, 2006, cash and cash equivalents were approximately $9.4
million, prior to the closing on November 8, 2006 of the $10
million R&D and stock purchase transaction with Abengoa
Bioenergy. Inventories at the end of this year's third quarter were
approximately $6.3 million. Working capital at September 30, 2006
amounted to approximately $16.5 million, and shareholders' equity
was approximately $17.9 million. Nine Months 2006: Net sales for
the nine months ended September 30, 2006 were approximately $12
million as compared to approximately $11.9 million for the
comparable period last year. Net sales to the pulp & paper
industry increased by 63% for the nine months ended September 30,
2006 over those in the same period last year, and totaled
approximately $2.1 million. Textile industry net sales were
approximately $7.8 million for the first nine months of 2006 versus
approximately $8.6 million for the same period last year. Sales of
enzymes to the animal feed and other markets increased to
approximately $2.1 million for the first nine months of 2006 from
approximately $1.9 million for the same period of 2005. Gross
margin for the nine months ended September 30, 2006 increased to
27% of revenue as compared to 20% for the first nine months of
2005. This increase was primarily the result of a 32% increase in
net sales of higher-margin products to industries such as pulp
& paper, animal feed and others to a total of approximately
$4.2 million for this year's first nine months, as compared to
approximately $3.2 million for the comparable period last year. Net
loss for the nine months ended September 30, 2006, was
approximately $7.7 million, or $0.33 per share (basic and diluted),
as compared to net loss of approximately $7.9 million, or $0.36 per
share (basic and diluted), for the nine months ended September 30,
2005. "We made important strides in the development of our core C1
and other enabling technologies for our enzyme, biorefinery and
bioscience initiatives, while effectively managing our cash
position," said President and CEO Mark Emalfarb. Cash at September
30, 2006, was approximately $9.4 million, prior to the closing on
November 8, 2006 of the $10 million R&D and stock purchase
transaction with Abengoa Bioenergy Company, a major global ethanol
producer and a leader in the production of ethanol from both corn
and cellulose feedstocks. "In addition to significantly enhancing
our cash position, we believe our partnership with Abengoa will
help us accelerate the development of our proprietary C1 biofactory
and other technologies for large-scale production of fermentable
sugars which may be used for the production of ethanol, other
biofuels, polymers and other chemicals from renewable biomass,
thereby transitioning our petroleum-based economy to one based on
agricultural residues and energy crops," Emalfarb said. C1 Host
Technology Development Progress Update Dr. Glenn Nedwin, Dyadic's
Chief Science Officer and President of the Biosciences Business,
commented, "Dyadic recently was granted an important U.S. patent
which we believe protects our novel technology for robotic
screening in filamentous fungi using our C1 platform, further
strengthening the Company's intellectual property position. With
broad claims covering C1 (Chrysosporium lucknowense) and a number
of other industrially relevant fungi, including Trichoderma and
Aspergillus, we believe the patent also validates Dyadic's 'one
stop shop' model where gene discovery and improvement, gene
expression, and product manufacturing can all be performed in the
same host organism. This provides Dyadic with a unique capability
to improve the odds of identifying potentially useful proteins and
to screen for gene variants for improving functional properties of
target proteins, thereby shortening R&D development timelines,
reducing development costs, and increasing the probability of
successfully bringing products to the market." Dr. Nedwin
continued, "We have also had success in further developing our C1
fungal biofactory for the production of human antibodies and other
high-value therapeutic proteins. We have successfully expressed a
fully functional, bioactive, stable monoclonal antibody in our low
protease C1 strain. Due to its expected low cost of manufacturing
as compared to mammalian cells and its ability to produce human
proteins, we believe our C1 host may become a significant
alternative production host for the pharmaceutical industry. "Other
recent C1 technology developments include the identification of a
number of novel enzymes which may be important for low-cost
production of fermentable sugars, initially targeted towards
cellulosic ethanol production, and the ability to over-express
multiple genes in C1. We also are moving forward in our
collaboration with The Scripps Research Institute to further
annotate the C1 genome, which will yield a comprehensive genetic
and biochemical blueprint. We believe that these tools may allow us
to identify additional commercial enzyme product leads, including
improved cellulases and hemicellulases for use in textile, pulp and
paper, food and animal feed applications, the production of ethanol
from biomass, and the identification and production of high-value
therapeutic proteins. We expect that these improvements in our core
C1 and related technologies will enable C1 to produce a wider
variety of proteins at higher yields and at lower cost." About
Dyadic Dyadic International, Inc., based in Jupiter, Florida, with
operations in the United States of America, Hong Kong and mainland
China, Poland and The Netherlands, 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 is applying its technologies to produce enzymes
for use in converting various agricultural products (e.g. corn) and
waste products (e.g. switch grass, wheat straw, sugar cane bagasse,
etc.) into fermentable sugars, which can then be used in the
production of traditional and cellulosic ethanol as well as other
products currently derived from petroleum. Dyadic's C1 technology
also is being developed to facilitate the discovery, development
and large-scale production of human antibodies and other high-value
therapeutic proteins. Dyadic currently sells more than 45 liquid
and dry enzyme products to more than 200 industrial customers in
approximately 50 countries for the textile, pulp & paper,
animal feed, alcohol, starch, and food and beverage industries.
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,
and our subsequent filings with the SEC. Except as required by law,
we expressly disclaim any intent or obligation to update any
forward-looking statements. -0- *T Dyadic International, Inc.
Condensed Consolidated Balance Sheet September 30, 2006 (Unaudited)
Assets Current assets: Cash and cash equivalents $9,436,613
Accounts receivable, net of allowance for uncollectible accounts of
$598,953 2,976,433 Inventory 6,280,197 Prepaid expenses and other
current assets 1,253,298 ------------ Total current assets
19,946,541 ------------ Fixed assets, net 1,818,991 Intangible
assets, net 109,079 Goodwill 1,808,458 Other assets 67,448
------------ Total assets $23,750,517 ============ Liabilities and
stockholders' equity Current liabilities: Accounts payable
$1,694,717 Accrued expenses 1,586,756 Accrued interest -
shareholder 48,897 Income taxes payable 100,539 ------------ Total
current liabilities 3,430,909 ------------ Long-term liabilities:
Note payable to stockholder 2,367,305 Other liabilities 74,078
------------ Total long-term liabilities 2,441,383 ------------
Total liabilities 5,872,292 ------------ 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 -
24,623,525 24,624 Additional paid-in capital 59,770,752 Notes
receivable from exercise of stock options (212,500) Accumulated
deficit (41,704,651) ------------ Total stockholders' equity
17,878,225 ------------ Total liabilities and stockholders' equity
$23,750,517 ============ *T -0- *T Dyadic International, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three-Months Ended Nine-Months Ended September 30, September 30,
2006 2005 2006 2005
---------------------------------------------------- Net sales
$4,204,771 $4,140,145 $12,000,093 $11,862,582 Cost of goods sold
2,893,037 3,317,956 8,726,450 9,513,604
---------------------------------------------------- Gross profit
1,311,734 822,189 3,273,643 2,348,978
---------------------------------------------------- Expenses:
Research and development 997,791 1,020,105 2,895,749 3,529,268
Selling and marketing 924,476 809,824 2,540,355 1,996,221 General
and administrative 1,728,772 1,412,625 5,140,510 4,311,875 Foreign
currency exchange losses (gains), net 14,535 9,127 111,277 (27,354)
---------------------------------------------------- Total expenses
3,665,574 3,251,681 10,687,891 9,810,010
---------------------------------------------------- Loss from
operations (2,353,840) (2,429,492) (7,414,248) (7,461,032)
---------------------------------------------------- Other income
(expense): Interest expense (70,218) (177,184) (517,969) (526,945)
Investment income, net 104,065 109,232 293,916 132,490 Minority
interest -- (24,805) (13,355) (35,376) Other income, net 1,328
5,637 12,949 1,621
---------------------------------------------------- Total other
income (expense) 35,175 (87,120) (224,459) (428,210)
---------------------------------------------------- Loss before
income taxes (2,318,665) (2,516,612) (7,638,707) (7,889,242)
Provision for income taxes 25,351 15,387 58,227 43,265
---------------------------------------------------- Net loss
$(2,344,016) $(2,531,999) $(7,696,934) $(7,932,507)
==================================================== Net loss per
common share: Basic and diluted $(0.10) $(0.11) $(0.33) $(0.36)
==================================================== Weighted
average common shares used in calculating net loss per share: Basic
and diluted 24,565,671 22,251,105 23,582,285 22,084,352
==================================================== *T
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