Dyadic International Reports Financial Results for First and Second Quarters of 2009 and Fiscal Years 2008 and 2007

JUPITER, Fla.--Dyadic International, Inc. (Pink Sheets: DYAI) (“Dyadic”) today announced financial results for the first and second quarters of 2009 as well as for the years ended December 31, 2008 and 2007. The financial information contained in this press release should be read in conjunction with the financial statements, footnotes and independent auditors’ report which have been posted on the Pink Sheets website at www.pinksheets.com and on Dyadic’s website at www.dyadic.com.

Dyadic’s Chief Executive Officer, Mark Emalfarb, stated, “Today marks a significant milestone for Dyadic in becoming current with its financial reporting and being able to share its recent efforts to build the long-term viability of the company. We are committed to providing financial information on a timely basis going forward. As of today, Dyadic has a current cash position of approximately $9.6 million which is sufficient to conduct its operations. We are aggressively pursuing a variety of research and business collaborations to leverage our patented and proprietary technologies and to grow our industrial enzyme business including additional technology licensing deals, co-development of products and processes and enhancing our manufacturing capabilities.”

Highlights and Achievements

June 2008

• Newly elected Board of Directors re-appointed Dyadic founder, Mark Emalfarb, as Chief Executive Officer and Chairman of the Board.
• Restructured our business to better align Dyadic with market needs by streamlining operations, reducing inventory and overhead, and shifting manufacturing from Poland to Mexico for greater flexibility.

September 2008

• Promoted Brian E. Murdoch to Director of Sales & Marketing. Brian has been with Dyadic for five years and has ten years of domestic and international enzyme sales and marketing experience.
• Promoted Richard H. Jundzil to Director of Development & Quality. Rich has been with Dyadic for more than six years and has over 16 years of quality and operations experience within the biotechnology industry including, most recently, at Genzyme Corporation.

November 2008

• Entered into a non-exclusive license agreement with Codexis, Inc. (“Codexis”) for the right to use Dyadic’s patented and proprietary C1 fungus (the “C1 Platform Technology”) for the development and large-scale production of enzymes in certain fields including biofuels and chemical and pharmaceutical intermediate production. Dyadic received an upfront payment of $10 million from Codexis in the first half of 2009 and is entitled to receive other undisclosed remuneration upon commercialization of these enzymes.

January 2009

• Reduced our debt from approximately $2.4 million to approximately $1.4 million.
• Strengthened our executive management team by hiring Adam J. Morgan as our Vice President General Counsel & Business Development who brings significant legal, business development, licensing and operational experience to Dyadic.

March – April 2009

• Filed a lawsuit against Dyadic’s former auditors and financial and transactional consultants and advisors, its former outside corporate and securities counsel as well as the law firm and its partners previously retained to conduct a corporate internal investigation, for professional negligence/malpractice, breach of fiduciary duty, constructive fraud and civil conspiracy.

May 2009

• Settled pending litigation with Abengoa Bioenergy New Technologies, Inc. (“Abengoa”).
• Entered into a non-exclusive license agreement with Abengoa, one of the world’s largest ethanol producers and alternative energy companies, for the right to use Dyadic’s patent rights and know-how relating to the C1 Platform Technology, for the development and large-scale production of enzymes for use in manufacturing biofuels (including cellulosic ethanol and butanol), power and/or chemicals. Dyadic is entitled to receive facility fees and royalties upon commercialization of these enzymes.

June 2009

• Settled an informal inquiry with the U.S. Securities and Exchange Commission.
• Appointed Goldstein Lewin & Co. (“Goldstein Lewin”) as Dyadic’s new independent auditors.

October 2009

• Received acknowledgement (GRAS Notice No. GRN 000292) from the U.S. Food and Drug Administration (“FDA”) that it has no questions that a cellulase enzyme preparation derived from Dyadic’s C1 Platform Technology is Generally Recognized As Safe (“GRAS”) under the intended conditions of use as concluded by Dyadic.
• Goldstein Lewin completed audits of Dyadic’s financial statements for the years ended December 31, 2008 and 2007 as well as the reviews of the first and second quarters of 2009.

In addition to these and other accomplishments, Dyadic has continued its efforts to improve its technologies as a means to discovering and developing new products and processes which we anticipate will expand our potential for research and business opportunities for the benefit of Dyadic and its partners. These improvements include, without limitation, the annotation and re-sequencing of the C1 genome in collaboration with Scripps Florida, a division of The Scripps Research Institute headquartered in La Jolla, California.

Second Quarter 2009 Financial Results

Total revenue for the quarter ended June 30, 2009 increased to approximately $11.9 million, as compared to approximately $3.2 million for the quarter ended June 30, 2008.

As previously reported, Dyadic received the remaining $5 million of a total $10 million upfront license fee from Codexis and recognized related revenues of approximately $9.8 million during this quarter.

Net product related revenue for the quarter ended June 30, 2009 decreased to approximately $1.8 million, as compared to approximately $2.2 million for the quarter ended June 30, 2008. This was due, in part, to Dyadic’s restructuring of its industrial enzyme business to focus on higher margin products for growing segments of the industry, such as animal feed, while streamlining product lines and discontinuing some lower margin products in declining segments of the industry, such as textiles, as well as global economic conditions.

Net income for the quarter ended June 30, 2009 increased to approximately $8.6 million or $0.29 per basic share and $0.26 per diluted share, as compared to a net loss of approximately $4.2 million, or $(0.14) per basic and diluted share, for the quarter ended June 30, 2008.

At June 30, 2009, cash and cash equivalents were approximately $9.9 million. Inventory at the end of this year's second quarter was approximately $3.1 million. Working capital at June 30, 2009 amounted to approximately $11.2 million, and stockholders' equity was approximately $12.4 million.

First Quarter 2009 Financial Results

Total revenue for the quarter ended March 31, 2009 increased to approximately $5 million, as compared to approximately $3.4 million for the quarter ended March 31, 2008.

Dyadic recognized approximately $3.3 million in research and development revenue during the first quarter from the unrecognized portion of a total of $10 million in proceeds received from Abengoa pursuant to a Securities Purchase Agreement (the “Abengoa Securities Purchase Agreement”) entered into between Dyadic and Abengoa in October 2006.

Net product related revenue for the quarter ended March 31, 2009 decreased to approximately $1.5 million, as compared to approximately $2.5 million for the quarter ended March 31, 2008. This was due, in part, to Dyadic’s restructuring of its industrial enzyme business to focus on higher margin products for growing segments of the industry, such as animal feed, while streamlining product lines and discontinuing some lower margin products in declining segments of the industry, such as textiles, as well as global economic conditions.

Net income for the quarter ended March 31, 2009 increased to approximately $2.3 million, or $0.08 per basic share and $0.07 per diluted share, as compared to a net loss of approximately $3.9 million, or $(0.13) per basic and diluted share, for the quarter ended March 31, 2008.

At March 31, 2009, cash and cash equivalents were approximately $6.1 million. Inventory at the end of this year's first quarter was approximately $3.5 million. Working capital at March 31, 2009 amounted to approximately $2.5 million, and stockholders' equity was approximately $3.8 million.

Fiscal 2008 Financial Results

Total revenue for the twelve months ended December 31, 2008 was approximately $13.1 million as compared to approximately $13.3 million for fiscal 2007.

Dyadic recognized approximately $3.3 million in research and development revenue during fiscal 2008 from a total of $10 million in proceeds received from Abengoa pursuant to the Abengoa Securities Purchase Agreement entered into between Dyadic and Abengoa in October 2006.

Net product related revenue for the year ended December 31, 2008 decreased to approximately $9.2 million, as compared to approximately $9.7 million for the year ended December 31, 2007. This was due primarily to Dyadic’s restructuring of its industrial enzyme business beginning in the second half of 2008 to focus on higher margin products for growing segments of the industry, such as animal feed, while streamlining product lines and discontinuing some lower margin products in declining segments of the industry, such as textiles, as well as global economic conditions.

Net loss for 2008 was approximately $12.4 million, or $(0.41) per basic and diluted share, as compared to a net loss of approximately $15.5 million, or $(0.52) per basic and diluted share, for fiscal 2007.

Fiscal 2007 Financial Results

Total revenue for the twelve months ended December 31, 2007 was approximately $13.3 million as compared to approximately $15.4 million for fiscal 2006. The decline in sales was attributable in large part to Dyadic’s abandonment of its Asian operations and pricing pressure on enzymes in the textile industry.

Dyadic recognized approximately $3.3 million in research and development revenue during fiscal 2007 from a total of $10 million in proceeds received from Abengoa pursuant to the Abengoa Securities Purchase Agreement entered into between Dyadic and Abengoa in October 2006.

Net product related revenue for the year ended December 31, 2007 increased to approximately $9.7 million, as compared to approximately $9.3 million for the year ended December 31, 2006.

Net loss for 2007 was approximately $15.5 million, or $(0.52) per basic and diluted share, as compared to a net loss of approximately $10.9 million, or $(0.45) per basic and diluted share for fiscal 2006.

Chief Executive Officer, Mark Emalfarb, added, “Since returning to Dyadic in June 2008, we have made substantial progress in re-positioning Dyadic to grow both our licensing and industrial enzymes businesses. We are focused on leveraging our patented and proprietary technologies by continuing to invest in their improvement and finding suitable partners and collaborators to maximize the many benefits that these technologies can offer for diverse markets such as biofuels, industrial enzymes and biopharmaceuticals.”

Mr. Emalfarb continued, “In particular, Dyadic is working with its partners to apply and improve its technologies to produce the maximum quantity of fermentable sugars from biomass at the lowest cost for use as an alternative to oil or other petroleum-based products such as plastics, polymers and chemicals. In addition to our license deals with Abengoa and Codexis, we are actively pursuing transactions with other potential licensees in the biofuels industry and seeking government funding, both in the U.S. and Europe, in this growing area. We believe that Dyadic’s success in biofuel enzyme discovery and production is evidence of the C1 Platform Technology’s applicability across diverse biotechnology fields including protein discovery, protein production and biogenerics. For biopharma and other industries where Dyadic lacks the necessary knowledge and expertise, Dyadic will rely more heavily on the resources of our potential partners to realize the full potential of our technologies. Finally, the completion earlier this month of our FDA GRAS notification process shows our ability to produce C1-derived enzymes for the food and animal feed industries which provides Dyadic with the ability to work with potential collaborators where the lack of GRAS status previously presented a barrier to entry for these types of products in these and other markets.”

About Dyadic

Dyadic International, Inc. is an early-stage biotechnology company that uses its patented and proprietary technologies to conduct research, development and commercial activities for the discovery, development, manufacture and sale of products and solutions for the bioenergy, industrial enzyme and biopharmaceutical industries. Please visit Dyadic’s website at www.dyadic.com.

Dyadic has begun making financial disclosures through the Pink OTC Markets Disclosure and News Service which offers free information on the Pink Sheets website (www.pinksheets.com) concerning issuers listed on the Pink Sheets over-the-counter market. Investors can access and download Dyadic’s financial reports and other announcements that Dyadic makes through the Pink Sheets website. Dyadic will also continue providing updates through regular press releases as appropriate.

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.

Contact:

Dyadic International, Inc.
Adam J. Morgan
Vice President General Counsel & Business Development
Phone: 561-743-8333
Email: amorgan@dyadic.com

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
		June 30,				December 31,
		2009				2008
ASSETS		(Unaudited)
Current Assets:
Cash and Cash Equivalents		$	9,891,000			$	2,826,542
Restricted Cash			343,158				344,355
Accounts Receivable, Net			1,513,447				1,504,200
Inventory, Net			3,140,674				3,775,750
Prepaid Expenses and Other Current Assets			615,097				637,202
Total Current Assets			15,503,376				9,088,049
Fixed Assets, Net			964,178				1,039,458
Intangible Assets, Net			155,353				162,420
Other Assets			109,898				137,502
		$	16,732,805			$	10,427,429
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable		$	2,359,173			$	2,678,794
Accrued Expenses			251,623				325,634
Accrued Interest Payable to Stockholder			27,106				194,260
Deferred Research and Development Obligation			250,000				3,332,863
Note Payable to Stockholder			1,424,941				2,424,941
Income Taxes Payable			3,074				8,658
Total Current Liabilities			4,315,917				8,965,150
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 – 30,040,675 and 29,990,675, Respectively			30,041				29,991
Additional Paid-In Capital			75,906,556				75,843,581
Accumulated Deficit			(63,519,709	)			(74,411,293	)
			12,416,888				1,462,279
		$	16,732,805			$	10,427,429

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		Six Months Ended June 30,								Three Months Ended June 30,
		2009				2008				2009				2008
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Revenue:
Product Related Revenue, Net		$	3,210,964			$	4,725,355			$	1,754,765			$	2,195,001
Research and Development Revenue			13,670,801				1,914,931				10,146,388				1,043,448
Total Revenue, Net			16,881,765				6,640,286				11,901,153				3,238,449
Cost of Goods Sold:			2,752,553				4,749,783				1,596,556				2,211,948
Gross Profit			14,129,212				1,890,503				10,304,597				1,026,501
Expenses:
General and Administrative			1,737,236				5,968,411				913,979				3,092,885
Sales and Marketing			549,546				1,495,717				278,529				730,031
Research and Development			861,723				2,662,096				478,521				1,406,090
Foreign Currency Exchange Losses (Gains), Net			50,252				(63,662	)			18,770				(1,453	)
Total Expenses			3,198,757				10,062,562				1,689,799				5,227,553
Income (Loss) from Operations			10,930,455				(8,172,059	)			8,614,798				(4,201,052	)
Other Income (Expense)
Interest Income			70,995				127,491				48,116				28,765
Interest Expense			(109,866	)			(200,202	)			(43,316	)			(135,174	)
Other			-				78,783				(1,198	)			75,779
Total Other Income (Expense), Net			(38,871	)			6,072				3,602				(30,630	)
Net Income (Loss)		$	10,891,584			$	(8,165,987	)		$	8,618,400			$	(4,231,682	)
Net Income (Loss) per Common Share
Basic		$	0.36			$	(0.27	)		$	0.29			$	(0.14	)
Diluted		$	0.33			$	(0.27	)		$	0.26			$	(0.14	)
Weighted Average Common Shares Used in Calculating
Net Income (Loss) Per Share:
Basic			30,027,962				29,990,675				30,002,830				29,990,675
Diluted			32,936,567				29,990,675				33,218,934				29,990,675

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		Six Months Ended June 30,
		2009				2008
		(Unaudited)				(Unaudited)
Operating Activities
Net Income (Loss)		$	10,891,584			$	(8,165,987	)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By (Used in) Operating Activities:
Depreciation and Amortization of Fixed Assets			87,682				142,471
Amortization of Intangible and Other Assets			7,067				26,065
Amortization of Costs Related to Modification of Notes Payable to			-				10,100
Stockholder
Provision for Doubtful Accounts			-				11,000
Reduction of Inventory Reserve			(490,414	)			-
Compensation Expense on Stock Option Grants			58,025				161,846
Stock Issued for Rent			5,000				-
Changes in Operating Assets and Liabilities:
Accounts Receivable			(9,247	)			(125,126	)
Inventory			1,125,490				(649,993	)
Prepaid Expenses and Other Current Assets			22,105				(1,037,736	)
Other Assets			27,604				22,568
Accounts Payable			(319,621	)			(264,612	)
Accrued Expenses			(74,011	)			(655,535	)
Accrued Interest Payable to Stockholder			(167,154	)			71,687
Deferred Research and Development Obligation			(3,082,863	)			(1,666,250	)
Income Taxes Payable			(5,584	)			2,711
Net Cash Provided By (Used In) Operating Activities			8,075,663				(12,116,791	)
Investing Activities
Purchases of Fixed Assets			(12,402	)			(71,591	)
Restricted Cash (Withdrawal) Deposit			1,197				(243,599	)
Net Cash Provided By (Used In) Investing Activities			(11,205	)			(315,190	)
Financing Activities
Repayment of Note Payable to Stockholder			(1,000,000	)			-
Net Cash (Used In) Financing Activities			(1,000,000	)			-
Net Increase (Decrease) in Cash and Cash Equivalents			7,064,458				(12,431,981	)
Cash and Cash Equivalents at Beginning of Period			2,826,542				15,953,984
Cash and Cash Equivalents at End of Period		$	9,891,000			$	3,522,003
Supplemental Cash Flow Information:
Cash Paid for Interest		$	277,020			$	128,515

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
		March 31,				December 31,
		2009				2008
ASSETS		(Unaudited)
Current Assets:
Cash and Cash Equivalents		$	6,131,810			$	2,826,542
Restricted Cash			325,375				344,355
Accounts Receivable, Net			1,454,853				1,504,200
Inventory, Net			3,518,606				3,775,750
Prepaid Expenses and Other Current Assets			5,518,660				637,202
Total Current Assets			16,949,304				9,088,049
Fixed Assets, Net			983,800				1,039,458
Intangible Assets, Net			158,906				162,420
Other Assets			120,785				137,502
		$	18,212,795			$	10,427,429
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable		$	2,721,095			$	2,678,794
Accrued Expenses			299,682				325,634
Accrued Interest Payable to Stockholder			-				194,260
Deferred Research and Development Obligation			10,000,000				3,332,863
Note Payable to Stockholder			1,424,941				2,424,941
Income Taxes Payable			-				8,658
Total Current Liabilities			14,445,718				8,965,150
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 – 29,990,675			29,991				29,991
Stock to be Issued			5,000				-
Additional Paid-In Capital			75,872,432				75,843,581
Accumulated Deficit			(72,140,346	)			(74,411,293	)
			3,767,077				1,462,279
		$	18,212,795			$	10,427,429

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		Three Months Ended March 31,
		2009				2008
		(Unaudited)				(Unaudited)
Revenue:
Product Related Revenue, Net		$	1,456,199			$	2,530,354
Research and Development Revenue			3,524,413				871,483
Total Revenue, Net			4,980,612				3,401,837
Cost of Goods Sold:			1,155,997				2,537,835
Gross Profit			3,824,615				864,002
Expenses:
General and Administrative			823,257				2,875,526
Sales and Marketing			271,017				765,686
Research and Development			383,202				1,256,006
Foreign Currency Exchange Losses (Gains), Net			31,482				(62,209	)
Total Expenses			1,508,958				4,835,009
Income (Loss) from Operations			2,315,657				(3,971,007	)
Other Income (Expense)
Interest Income			22,879				98,726
Interest Expense			(66,550	)			(65,028	)
Other			1,198				3,004
Total Other Income (Expense), Net			(42,473	)			36,702
Net Income (Loss)		$	2,273,184			$	(3,934,305	)
Net Income (Loss) per Common Share
Basic		$	0.08			$	(0.13	)
Diluted		$	0.07			$	(0.13	)
Weighted Average Common Shares Used in Calculating Net Income (Loss) Per Share:
Basic			29,990,675				29,990,675
Diluted			32,223,645				29,990,675

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		Three Months Ended March 31,
		2009				2008
		(Unaudited)				(Unaudited)
Operating Activities
Net Income (Loss)		$	2,273,184			$	(3,934,305	)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided By (Used in) Operating Activities:
Depreciation and Amortization of Fixed Assets			52,397				70,538
Amortization of Intangible and Other Assets			3,514				13,032
Amortization of Costs Related to Modification of Notes Payable to
Stockholder			-				5,050
Provision (Recovery) for Doubtful Accounts			(4,476	)			11,000
Compensation Expense on Stock Option Grants			28,851				80,477
Stock to be Issued for Rent			5,000				-
Changes in Operating Assets and Liabilities:
Accounts Receivable			53,823				(11,406	)
Inventory			257,144				(205,766	)
Prepaid Expenses and Other Current Assets			(4,881,458	)			(605,920	)
Other Assets			16,717				11,414
Accounts Payable			42,301				31,421
Accrued Expenses			(25,952	)			124,592
Accrued Interest Payable to Stockholder			(194,260	)			(663	)
Deferred Research and Development Obligation			6,667,137				(833,125	)
Income Taxes Payable			(7,634	)			(6,457	)
Net Cash Provided By (Used In) Operating Activities			4,286,288				(5,250,118	)
Investing Activities
Purchases of Fixed Assets			-				(28,059	)
Restricted Cash (Withdrawal) Deposit			18,980				(243,599	)
Net Cash Provided By (Used In) Investing Activities			18,980				(271,658	)
Financing Activities
Repayment of Note Payable to Stockholder			(1,000,000	)			-
Net Cash (Used In) Financing Activities			(1,000,000	)			-
Net Increase (Decrease) in Cash and Cash Equivalents			3,305,268				(5,521,776	)
Cash and Cash Equivalents at Beginning of Period			2,826,542				15,953,984
Cash and Cash Equivalents at End of Period		$	6,131,810			$	10,432,208
Supplemental Cash Flow Information:
Cash Paid for Interest		$	260,810			$	65,691

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2008 AND 2007
		2008				2007
ASSETS
Current Assets:
Cash and Cash Equivalents		$	2,826,542			$	15,953,984
Restricted Cash			344,355				349,193
Accounts Receivable, Net			1,504,200				1,411,070
Inventory, Net			3,775,750				6,122,758
Prepaid Expenses and Other Current Assets			637,202				794,318
Total Current Assets			9,088,049				24,631,323
Fixed Assets, Net			1,039,458				1,186,617
Intangible Assets, Net			162,420				90,337
Other Assets			137,502				182,409
		$	10,427,429			$	26,090,686
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable		$	2,678,794			$	1,941,754
Accrued Expenses			325,634				1,521,174
Accrued Interest Payable to Stockholder			194,260				48,896
Deferred Research and Development Obligation			3,332,863				3,332,500
Note Payable to Stockholder			2,424,941				2,404,742
Income Taxes Payable			8,658				6,456
Total Current Liabilities			8,965,150				9,255,522
Long-Term Liabilities:
Deferred Research and Development Obligation			-				3,332,863
			8,965,150				12,588,385
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 – 29,990,675			29,991				29,991
Additional Paid-In Capital			75,843,581				75,517,205
Accumulated Deficit			(74,411,293	)			(62,044,895	)
			1,462,279				13,502,301
		$	10,427,429			$	26,090,686

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS DECEMBER 31, 2008 AND 2007
		2008				2007
Revenue:
Product Related Revenue, Net		$	9,156,529			$	9,676,581
Research and Development Revenue			3,958,546				3,603,373
Total Revenue, Net			13,115,075				13,279,954
Cost of Goods Sold:			9,112,945				8,521,251
Gross Profit			4,002,130				4,758,703
Expenses:
General and Administrative			9,733,989				8,247,588
Sales and Marketing			2,344,736				3,381,430
Research and Development			4,102,516				5,008,615
Foreign Currency Exchange Losses, Net			24,153				23,947
Impairment Loss			-				3,993,276
Total Expenses			16,205,394				20,654,856
Loss from Operations			(12,203,264	)			(15,896,153	)
Other Income (Expense)
Interest Income			145,765				1,092,778
Interest Expense			(388,980	)			(272,252	)
Liquidated Damages			-				(1,103,906	)
Gain on Sale of Land			-				200,000
Gain on Reversal of Related Party Payable			-				475,393
Other			80,081				120
Total Other Income (Expense), Net			(163,134	)			392,133
Net Loss		$	(12,366,398	)		$	(15,504,020	)
Basic and Diluted Net Loss Per Common Share		$	(0.41	)		$	(0.52	)
Weighted Average Common Shares Used in Calculating Net Loss Per Share:
Basic and Diluted			29,990,675				29,961,563

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
															Accumulated Deficit Total
		Common Stock					Additional Paid In Capital				Stock Option Exercise
		Shares		Amount															Total
Balance at December 31, 2006		29,792,992		$	29,793		$	74,501,592			$	(19,313	)		$	(46,540,875	)		$	27,971,197
Amortization of Deferred Compensation on Employee and Nonemployee Stock Options		-			-			(109,172	)			-				-				(109,172	)
Issuance of Stock for Consulting Services		87,125			87			643,460				-				-				643,547
Issuance of Stock for Stock Option Exercises		53,050			53			165,089				19,313				-				184,455
Issuance of Stock for Warrant Exercises		57,508			58			316,236				-				-				316,294
Net Loss		-			-			-				-				(15,504,020	)			(15,504,020	)
Balance at December 31, 2007		29,990,675			29,991			75,517,205				-				(62,044,895	)			13,502,301
Amortization of Deferred Compensation on Employee and Nonemployee Stock Options		-			-			326,376				-				-				326,376
Net Loss		-			-			-				-				(12,366,398	)			(12,366,398	)
Balance at December 31, 2008		29,990,675		$	29,991		$	75,843,581			$	-			$	(74,411,293	)		$	1,462,279

DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS DECEMBER 31, 2008 AND 2007
		2008				2007
Operating Activities
Net Loss		$	(12,366,398	)		$	(15,504,020	)
Adjustments to Reconcile Net Loss to Net Cash (Used In) Operating Activities:
Depreciation and Amortization of Fixed Assets			286,656				217,100
Amortization of Intangible and Other Assets			51,722				52,941
Amortization of Costs Related to Modification of Notes Payable to
Stockholder			20,200				25,910
Provision (Recovery) for Doubtful Accounts			255,000				(2,000	)
Inventory Reserve			226,712				578,579
Gain on Sale of Land			-				(200,000	)
Compensation Expense on Stock Option Grants			326,376				(109,172	)
Stock Issued for Consulting Services			-				643,547
Impairment Loss			-				3,993,276
Changes in Operating Assets and Liabilities:
Accounts Receivable			(348,129	)			(356,995	)
Inventory			2,120,296				(1,380,172	)
Prepaid Expenses and Other Current Assets			157,116				15,954
Other Assets			44,907				(33,250	)
Accounts Payable			737,040				340,868
Accrued Expenses			(1,194,489	)			47,998
Accrued Interest Payable to Stockholder			145,364				-
Deferred Research and Development Obligation			(3,332,500	)			(3,332,500	)
Income Taxes Payable			2,202				(17,501	)
Other Liabilities			-				(89,877	)
Net Cash (Used In) Operating Activities			(12,867,925	)			(15,109,314	)
Investing Activities
Cost of Patents			(123,805	)			(47,231	)
Purchases of Fixed Assets			(140,550	)			(794,443	)
Proceeds from Sale of Land			-				1,200,000
Restricted Cash (Withdrawal) Deposit			4,838				(349,193	)
Net Cash (Used In) Provided By Investing Activities			(259,517	)			9,133
Financing Activities
Proceeds from Stock Warrant Exercises			-				316,294
Proceeds from Stock Option Exercises			-				184,455
Net Cash Provided by Financing Activities			-				500,749
Net Decrease in Cash and Cash Equivalents From Continuing Operations			(13,127,442	)			(14,599,432	)
Cash and Cash Equivalents at Beginning of Period			15,953,984				30,553,416
Cash and Cash Equivalents at End of Period		$	2,826,542			$	15,953,984
Supplemental Cash Flow Information:
Cash Paid for Interest		$	359,735			$	237,119
Cash Paid for Income Tax		$	-			$	4,500