DYADIC INTERNATIONAL INC

Previous wording

The Company has no products approved for sale. All our revenue to date has been research revenue from third-party collaborations and government grants, as well as revenue from sublicensing agreements and collaborative arrangements, which may include upfront payments, options to obtain a license, payment for research and development services, milestone payments and royalties, in the form of cash or non-cash considerations (e.g., minority equity interest).

Current wording

The Company has no products approved for sale. All our revenue to date has been research revenue from third-party collaborations and grants, as well as revenue from sublicensing agreements and collaborative arrangements, which may include upfront payments, options to obtain a license, payment for research and development services, milestone payments and royalties, in the form of cash or non-cash considerations (e.g., minority equity interest).

Previous wording

We invoice customers based on our contractual arrangements with each customer, which may not be consistent with the period that revenues are recognized. When there is a timing difference between when we invoice customers and when revenues are recognized, we record either a contract asset (unbilled accounts receivable) or a contract liability (deferred research and development obligations), as appropriate. If upfront fees or considerations related to sublicensing agreement are received prior to the technology transfer, the Company will record the amount received as deferred revenue from licensing agreement.

Current wording

We invoice customers based on our contractual arrangements with each customer, which may not be consistent with the period that revenues are recognized. When there is a timing difference between when we invoice customers and when revenues are recognized, we record either a contract asset (unbilled accounts receivable) or a contract liability (deferred research and development obligations), as appropriate. If upfront fees or considerations related to a sublicensing agreement are received prior to the technology transfer, the Company will record the amount received as deferred revenue from the licensing agreement.

Previous wording

We have granted stock options to employees, directors, and consultants. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes model considers volatility in the price of our stock, the risk-free interest rate, the estimated life of the option, the closing market price of our stock and the exercise price. For purposes of the calculation, we assumed that no dividends would be paid during the life of the options. We also used the weighted-average vesting period and contractual term of the option as the best estimate of the expected life of a new option, except for the options granted to the CEO (i.e., 5 or 10 years) and certain contractors (i.e., 2 or 5 years). The expected stock price volatility was calculated based on the Company’s own volatility since the DuPont Transaction. The Company reviews its volatility assumption on an annual basis and has used the Company’s historical volatilities since 2016, as the DuPont Transaction resulted in significant changes in the Company’s business and capital structure.

Current wording

We have granted stock options to employees, directors, and consultants. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes model considers volatility in the price of our stock, the risk-free interest rate, the estimated life of the option, the closing market price of our stock and the exercise price. For purposes of the calculation, we assumed that no dividends would be paid during the life of the options. We also used the weighted-average vesting period and contractual term of the option as the best estimate of the expected life of a new option, except for the options granted to the CEO (i.e., 5 or 10 years) and certain contractors (i.e., 2 to 5 years). The expected stock price volatility was calculated based on the Company’s own volatility. The Company reviews its volatility assumption on an annual basis and has used the Company’s historical volatilities since 2016.

Previous wording

The Company accounts for income taxes under the asset and liability method in accordance with ASC Topic 740, “Income Taxes”. Under this method, income tax expense /(benefit) is recognized for: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all the deferred tax assets will not be realized.

Current wording

The Company accounts for income taxes under the asset and liability method in accordance with ASC Topic 740, “Income Taxes”. Under this method, income tax expense /(benefit) is recognized for: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all the deferred tax assets will not berealized.

Previous wording

Three Months Ended March 31, 2025 Compared to the Same Periods in 2024

Current wording

Three and Six Months Ended June 30, 2025 Compared to the Same Periods in 2024

Previous wording

The following table summarizes the Company’s revenue and cost of revenue for the three months ended March 31, 2025 and 2024:

Current wording

The following table summarizes the Company’s revenue and cost of revenue for the three and six months ended June 30, 2025 and 2024:

Previous wording

For the three months ended March 31, 2025, the decrease in research and development revenue and cost of research and development revenue was due to the decreasing numbers of collaborations conducted in 2025. The Company’s research and development revenue was generated from four collaborations compared to nine collaborations for the same period a year ago. The grant revenue and cost of grant revenue for the three months ended March 31, 2025, was related to the Gates Foundation Grant and CEPI grants. There was no grant revenue for the three months ended March 31, 2024.

Current wording

For the three months ended June 30, 2025, the decrease in research and development revenue and cost of research and development revenue was due to a reduction in the number of active collaborations to eight compared to ten for the same period a year ago.

Previous wording

General and administrative expenses for the three months ended March 31, 2025, decreased by 10.8% to $1,596,000 compared to $1,789,000 for the same period a year ago. The decrease reflected decreases in business development and investor relations expenses of $97,000, in management incentives of $78,000, and accounting and legal expenses of $41,000 and insurance expense of $10,000 offset by other increases of $34,000.

Current wording

General and administrative expenses for the three months ended June 30, 2025, decreased by 10.6% to $1,437,000 compared to $1,608,000 for the same period a year ago. The decrease reflected reductions in business development and investor relations expenses of $82,000, accounting and legal expenses of $41,000, insurance expenses of $28,000, and management incentives of $22,000, partially offset by other expense increases of $2,000.

Previous wording

Loss from operations for the three months ended March 31, 2025, decreased to $ 2,002,000 compared to $ 2,126,000 for the same period a year ago. The decrease in loss from operations was largely due to decreases in general and administrative expenses of $193,000, and an increase in research revenue of $59,000, offset by an increase of $154,000 in cost of research revenue.

Current wording

Loss from operations for the three months ended June 30, 2025, decreased to $1,729,000 compared to $2,043,000 for the same period a year ago. The decrease in loss from operations was largely attributable to an increase in total revenue of $581,000 and a reduction in general and administrative expenses of $171,000, partially offset by increases in cost of revenue of $311,000 and research and development expenses of $113,000.

Previous wording

For the three months ended March 31, 2025, total other income (expenses), net, was an expense of $25,000 compared to an income of $116,000 for the same period a year ago. The decrease in other income was largely due to a $81,000 increase in interest expenses related to the Convertible Notes and the $61,000 Gain on sale of Alphazyme in 2024.

Current wording

For the six months ended June 30, 2025, total other income (expenses), net, was an expense of $90,000 compared to an income of $113,000 for the same period a year ago. The decrease in other income was largely due to gain on sale of Alphazyme of $61,000 in 2024, decrease in interest income of $88,000 and $55,000 increase in interest expenses related to the Convertible Notes.

Previous wording

On March 8, 2024, the Company issued an aggregate principal amount of $6.0 million of its 8.0% Senior Secured Convertible Promissory Notes due March 8, 2027 (the “Convertible Notes”) in a private placement. The purchasers of the Convertible Notes included immediate family members and family trusts related to Mark Emalfarb, our President and Chief Executive Officer and a member of our Board of Directors, including The Francisco Trust, an existing holder of more than 5% of the Company’s outstanding common stock, (collectively, the “Purchasers”). The net proceeds from the sale of the Convertible Notes, after deducting offering expenses, were $5,824,000. The Company intends to use the net proceeds from the offering of the Convertible Notes for working capital and general corporate purposes. This private placement funding is expected to support our near-term revenue growth and accelerate our strategic objective of commercialization opportunities for pharmaceutical and non-pharmaceutical applications.

Current wording

On March 8, 2024, the Company issued an aggregate principal amount of $6.0 million of its 8.0% Senior Secured Convertible Promissory Notes due March 8, 2027 (the “Convertible Notes”) in a private placement. The purchasers of the Convertible Notes included immediate family members and family trusts related to Mark Emalfarb, our Chief Executive Officer and a member of our Board of Directors, including The Francisco Trust, an existing holder of more than 5% of the Company’s outstanding common stock, (collectively, the “Purchasers”). The net proceeds from the sale of the Convertible Notes, after deducting offering expenses, were $5,824,000. The Company intends to use the net proceeds from the offering of the Convertible Notes for working capital and general corporate purposes. This private placement funding is expected to support our near-term revenue growth and accelerate our strategic objective of commercialization opportunities for pharmaceutical and non-pharmaceutical applications.

Previous wording

The Convertible Notes can be converted into shares of Dyadic’s Class A common stock (the “Common Stock”), at the option of the holders of the Convertible Notes (the “Noteholders”) at any time prior to the Maturity Date. On October 4, 2024, the Company entered into an amendment (the “Amendment”) to the Convertible Notes. Pursuant to the Amendment, (i) the conversion price upon which the Convertible Notes will be convertible into shares of the Company’s common stock is $1.40 per share of common stock, and (ii) the Redemption Date (as defined in the Amendment) will fall on any of the 26, 29 and 32-month anniversaries of the original issue date of the Convertible Notes.

Current wording

The Convertible Notes can be converted into shares of Dyadic’s common stock, par value $0.001 per share (the “Common Stock”), at the option of the holders of the Convertible Notes (the “Noteholders”) at any time prior to the Maturity Date. On October 4, 2024, the Company entered into an amendment (the “Amendment”) to the Convertible Notes. Pursuant to the Amendment, (i) the conversion price upon which the Convertible Notes will be convertible into shares of the Company’s common stock is $1.40 per share of common stock, and (ii) the Redemption Date (as defined in the Amendment) will fall on any of the 26, 29 and 32-month anniversaries of the original issue date of the Convertible Notes.

Previous wording

On May 1, 2025, the Company entered into a second amendment (the “Second Amendment”) to the Convertible Notes with a majority of the current holders. Pursuant to the Second Amendment, the Redemption Date (as defined in the Second Amendment) will now fall on December 1, 2026.

Current wording

On May 1, 2025, the Company entered into a second amendment (the “Second Amendment”) to the Convertible Notes. Pursuant to the Second Amendment, the Redemption Date (as defined in the Second Amendment) will now fall on December 1, 2026.

Previous wording

During the year ended December 31, 2024, $910,000 of the Convertible Notes were converted into 556,623 shares of Common Stock. For more information regarding the Convertible Notes, including the covenants related thereto, see Note 4 to the Consolidated Financial Statements.

Current wording

During the year ended December 31, 2024, $910,000 of Convertible Notes were converted into 556,623 shares of Common Stock. For more information regarding the Convertible Notes, including the covenants related thereto, see Note 4 to the Consolidated Financial Statements.

Previous wording

As of March 31, 2025, the Company had $5,064,941 cash and $2,307,685 short-term investment securities (including accrued interest) totaling $7,349,413. The Company expects its existing cash, cash equivalents and its investment securities will be sufficient to meet its operational, business, and other liquidity requirements for at least the next twelve (12) months from the date of issuance of the financial statements contained in this Quarterly Report. However, the Company has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it. In the event our financing needs are not able to be met by our existing cash, cash equivalents and investments, we would seek to raise additional capital through strategic financial opportunities that could include, but are not limited to, future public or private equity offerings, collaboration agreements, convertible notes or other debt instruments, and/or other means. Any amounts raised may be used for the further development and commercialization of product candidates, and for other working capital purposes. There is no guarantee that any of these strategic or financing opportunities will be executed or realized on favorable terms, if at all, and some could be dilutive to existing shareholders

Current wording

The Company expects its existing cash and cash equivalents, and cash raised from the Convertible Notes and the Offering on August 1, 2025, investments in debt securities, and operating cash flows will be sufficient to meet its operational, business, and other liquidity requirements for at least the next twelve (12) months from the date of issuance of the financial statements contained in this Quarterly Report. However, the Company has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it. In the event our financing needs are not able to be met by our existing cash, cash equivalents and investments, we would seek to raise additional capital through strategic financial opportunities that could include, but are not limited to, future public or private equity offerings, collaboration agreements, and/or other means. Any amounts raised may be used for the further development and commercialization of product candidates, and for other working capital purposes. There is no guarantee that any of these strategic or financing opportunities will be executed or realized on favorable terms, if at all, and some could be dilutive to existing shareholders.

Previous wording

As of March 31, 2025, cash and cash equivalents were$5.1 million compared to$6.5 million as of December 31, 2024. The carrying value of investment grade securities, including accrued interest as of March 31, 2025, was$2.3 million compared to$2.8 million as of December 31, 2024.

Current wording

As of June 30, 2025, cash, cash equivalents, and restricted cash and cash equivalents were $4.0 million compared to $6.5 million as of December 31, 2024. The carrying value of investment grade securities, including accrued interest as of June 30, 2025, was $3.3 million compared to $2.8 million as of December 31, 2024. Additional $5.3 million was received from the net proceeds of the Offering on August 1, 2025

Previous wording

Net cash used in operating activities for the three months ended March 31, 2024 was $1.1 million, which was principally attributable to a net loss of $2.0 million, partially offset by changes in operating assets and liabilities of $0.7 million and share-based compensation expenses of $0.3 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was $2.1 million, which was principally attributable to a net loss of $3.8 million, partially offset by changes in operating assets and liabilities of $1.1 million and share-based compensation expenses of $0.6 million.

Previous wording

Net cash used in operating activities for thethree months ended March 31, 2025 was $2.0 million, which was principally attributable to a net loss of $2.0 million, partially offset by changes in operating assets and liabilities of $0.2 million and share-based compensation expenses of $0.2 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2024 was $3.1 million, which was principally attributable to a net loss of $4.0 million, partially offset by changes in operating assets and liabilities of $0.4 million and share-based compensation expenses of $0.6 million.

Previous wording

Net cash provided by investing activities for thethree months ended March 31, 2025 was $0.5 million, compared to a net cash used in investing activities of $0.7 million for thethree months ended March 31, 2024. The change in investing activities was attributable to a reduction in purchases of investment securities of $0.2 million, increases in proceeds received from maturities of investment securities of $1.0 million, and proceeds from the sale of investment in Alphazyme in 2024 of $0.1 million.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 was $0.5 million, compared to the net cash used in investing activitiesof$3.1 million for the six months ended June 30, 2024. The change in investing activities was attributable to a reduction in purchases of investment securitiesof$0.2 million, an increase in proceeds received from maturities of investment securities of $2.5 million and proceeds from the sale of investment in Alphazyme in 2024 of$0.1 million.

Previous wording

Net cash provided by financing activitiesfor thethree months ended March 31, 2025 was $24,000, which was related to net proceeds from exercise of stock, compared to the net cash provided by financing activity of $5,824,000 for thethree months ended March 31, 2024, which was related to net proceeds from the issuance of convertible notes.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2025 was approximately $24,000, which was related to net proceeds from exercise of stock, compared to the net cash provided by financing activity of $5.8 million for the six months ended June 30, 2024, which was related to net proceeds from the issuance of Convertible Notes.