What changed in this filing

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Item 9A. Controls and Procedures

2023-03-29 compared with 2022-03-29 · 204 added, 276 removed, 864 unchanged (36% of the section changed)

36 unchanged sentences

The information required by this item is incorporated by reference to the Company’s definitive proxy statement relating to the 2023 annual meeting of shareholders.

The definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the 2021 fiscal year.

The definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the 2022 fiscal year.

Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated by reference to the Company’s definitive proxy statement relating to the 2023 annual meeting of shareholders.

The definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the 2021 fiscal year.

The definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the 2022 fiscal year.

Principal Accounting Fees and Services

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January 14, 2019

Second Amended and Restated Bylaws dated December 13, 2018

January 14, 2019

Third Amended and Restated Bylaws dated March 28, 2023

March 29, 2023

Specimen Stock Certificate Evidencing Shares of Common Stock

28 unchanged sentences

January 14, 2019

Consulting Agreement, dated March 13, 2017, by and between Dyadic International, Inc.

and Novaro Ltd.

on behalf of Matthew Jones

January 14, 2019

Compensation Letter, dated March 26, 2018, by and between Dyadic International, Inc.

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10.18†#

Joint Development Agreement

10.19†#

Research and Commercialization Collaboration Agreement with Serum Institute of India Pvt.

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and CR2O B.V., Dated May 28, 2021

Term Sheet for Intellectual Property License Agreement dated August 10, 2021

August 11, 2021

10.24†#

1 unchanged sentence

December 16, 2021

10.25†#

Alphazyme Sale Agreement dated January 18, 2023

January 23, 2023

Code of Ethics (1)

1 unchanged sentence

January 14, 2019

Consent  

of Independent Registered Public Accounting Firm

Consent of Independent Registered Public Accounting Firm

Certification of Chief Executive Officer of Dyadic Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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Notes to Consolidated Financial Statements

Mayer Hoffman McCann P.C .

140 Fountain Parkway North, Suite 410 ■

Petersburg, FL 33716

727.572.1400 ■

727.571.1933 ■

 www.mhmcpa.com 

Report of Independent Registered Public Accounting Firm

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Stockholders of Dyadic International, Inc.:

To the Board of Directors and Stockholders of Dyadic International, Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Dyadic International, Inc.

and Subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’

and Subsidiaries (“Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, stockholders’

equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Mayer Hoffman McCann P.C.

We have served as the Company’s auditor since 2008.

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March 29, 2023

Member of Kreston International - a global network of independent accounting firms

DYADIC INTERNATIONAL, INC.

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176,471  

147,059  

Total current liabilities

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176,471  

352,941  

Total liabilities

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Research and development revenue

$ 2,403,831  

$ 1,601,921  

License revenue

Total revenue

Costs and expenses:

Costs of research and development revenue

1,944,438  

1,424,931  

Provision for contract losses

187,388  

Research and development

8,392,370  

3,868,121  

General and administrative

6,697,617  

6,084,799  

Foreign currency exchange loss

96,893  

62,345  

Total costs and expenses

17,131,318  

11,627,584  

Loss from operations

( 14,727,487 )  

( 10,025,663 )

Other income:

Interest income

51,704  

446,999  

Gain from the sale of investments in BDI

1,605,532  

Unrealized gain from investment in Alphazyme

284,709  

Total other income

1,657,236  

731,708  

Loss before income taxes

( 13,070,251 )  

( 9,293,955 )

Provision for income taxes

31,318  

$ ( 13,070,251 )  

$ ( 9,325,273 )

Basic and diluted net loss per common share

$ ( 0.47 )  

Basic and diluted weighted-average common shares outstanding

27,838,047  

27,471,587  

The accompanying notes are an integral part of these audited consolidated financial statements.

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Balance at December 31, 2020

39,612,659  

$ 39,613  

( 12,253,502 )  

$ ( 18,929,915 )  

$ 96,105,851  

$ ( 41,351,078 )  

$ 35,864,471  

Stock-based compensation expenses

1,651,893  

Issuance of common stock upon exercise of stock options

135,000  

255,335  

255,470  

( 9,325,273 )  

Balance at December 31, 2021

39,747,659  

$ 39,748  

( 12,253,502 )  

$ ( 18,929,915 )  

$ 98,013,079  

$ ( 50,676,351 )  

$ 28,446,561  

Stock-based compensation expenses

1,784,102  

Issuance of common stock upon exercise of stock options

735,000  

1,229,315  

1,230,050  

( 13,070,251 )  

Balance at December 31, 2022

40,482,659  

$ 40,483  

( 12,253,502 )  

$ ( 18,929,915 )  

$ 101,026,496  

$ ( 63,746,602 )  

$ 18,390,462  

The accompanying notes are an integral part of these audited consolidated financial statements.

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Cash flows from operating activities

$ ( 13,070,251 )  

$ ( 9,325,273 )

Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation expense

1,784,102  

1,651,893  

Amortization of held-to-maturity securities, net

329,612  

331,277  

Unrealized gain from investment in Alphazyme

Gain from the sale of investment in BDI

( 1,605,532 )  

Gain on investment in BDI

Foreign currency exchange loss

96,893  

62,345  

Changes in operating assets and liabilities:

Interest receivable

17,872  

217,464  

Accounts receivable

( 31,792 )  

363,365  

Income tax receivable

500,616  

Prepaid expenses and other current assets

( 95,366 )  

Accounts payable

549,562  

Accrued expenses

219,824  

Deferred license revenue

500,000  

Deferred research and development obligations

28,131  

44,372  

Net cash used in operating activities

( 11,276,945 )  

( 6,574,392 )

Cash flows from investing activities

Purchases of held-to-maturity investment securities

( 11,283,940 )  

( 17,638,947 )

Proceeds from maturities of investment securities

14,900,000  

39,761,000  

Proceeds from the sale of investment in BDI

1,605,532  

Net cash provided by investing activities

5,221,592  

22,122,053  

Net cash (used in) provided by investing activities

Cash flows from financing activities

Proceeds from exercise of options

1,230,050  

255,470  

Net cash provided by financing activities

1,230,050  

255,470  

Effect of exchange rate changes on cash

( 63,262 )  

10,370  

Net (decrease) increase in cash and cash equivalents

( 4,888,565 )  

15,813,501  

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

20,637,045  

4,823,544  

Cash and cash equivalents at end of period

$ 15,748,480  

$ 20,637,045  

Supplemental cash flow information

Cash received from income tax refund

$ 500,616  

The accompanying notes are an integral part of these audited consolidated financial statements.

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Dyadic International, Inc.

(“Dyadic”, “we”, “us”, “our”, or the “Company”) is a global biotechnology platform company based in Jupiter, Florida with operations in the United States and a satellite office in the Netherlands, and it utilizes a number of third -party consultants and research organizations to carry out the Company’s activities.

(“Dyadic”, “we”, “us”, “our”, or the “Company”) is a global biotechnology platform company based in Jupiter, Florida with operations in the United States and a satellite office in the Netherlands, and it utilizes several third -party consultants and research organizations to carry out the Company’s activities.

Over the past two plus decades, the Company has developed a gene expression platform for producing commercial quantities of industrial enzymes and other proteins, and has previously licensed this technology to third parties, such as Abengoa Bioenergy, BASF, Codexis and others, for use in industrial (non-pharmaceutical) applications.

This technology is based on the Thermothelomyces heterothallica (formerly known as 

Myceliophthora thermophila ) fungus, which the Company named C1.

The C1 -cell protein production platform is a robust and versatile thermophilic filamentous fungal expression system for the development and production of biologic products including enzymes and other proteins.

This technology is based on the Thermothelomyces heterothallica (formerly known as Myceliophthora thermophila ) fungus, which the Company named C1.

On December 31, 2015, the Company sold its industrial technology business to Danisco USA (“Danisco”), the industrial biosciences business of DuPont (NYSE:

DD) (the “DuPont Transaction”).

DD) (the “DuPont Transaction”).

As part of the DuPont Transaction, Dyadic retained co-exclusive rights to the C1 -cell protein production platform for use in all human and animal pharmaceutical applications, and currently the Company has the exclusive ability to enter into sub-license agreements (subject to the terms of the license and to certain exceptions) for use in all human and animal pharmaceutical applications.

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In certain circumstances, Dyadic may owe a royalty to either Danisco or certain licensors of Danisco, depending upon whether Dyadic elects to utilize certain patents either owned by Danisco or licensed in by Danisco.

After the DuPont Transaction, the Company has primarily been focused on the animal and human biopharmaceutical industries, specifically in further improving and applying the proprietary C1 -cell protein production platform into a safe and efficient protein production platform to help speed up the development, lower production costs and improve the performance of biologic vaccines and drugs and other biological products at flexible commercial scales.

Some examples of human and animal vaccines and drugs which have the potential to be produced from C1 -cells are protein antigens, virus-like particles (“VLPs”), monoclonal antibodies (“mAbs”), Bi/Tri-specific antibodies, Fab antibody fragments, Fc-fusion proteins, as well as other therapeutic enzymes and proteins.

The Company is involved in multiple funded research collaborations with animal and human pharmaceutical companies which are designed to leverage its C1 -cell protein production platform to develop innovative vaccines and drugs, biosimilars and/or biobetters. Additionally, the Company has begun to develop other technologies that have potential applications in non-pharmaceutical markets.  

Impact of COVID- 19

The outbreak of COVID- 19 has led to adverse impacts on the U.S.

and global economies and created uncertainty regarding the potential impact to the Company’s employees, operations, and research projects.

The extent to which the COVID- 19 pandemic will directly or indirectly impact our business will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning the severe acute respiratory syndrome coronavirus 2 (SARS-CoV- 2 ) and its variants and the actions taken and the level of success to contain or treat the SARS-CoV- 2 virus and its variants, the economic impact on local, regional, national and international business partners and markets, delays or disruptions in our on-going research projects, and unavailability of the employees of the Company or third -party contract research organizations with whom we conduct business, due to illness or quarantines, all of which are highly uncertain and cannot be predicted at this time.

Management is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, vendors, industry, and workforce.

Even after the COVID- 19 pandemic has subsided, the Company may continue to experience adverse impacts to its business because of economic recession or depression that has occurred or may occur in the future.

Given the daily evolution of the COVID- 19 outbreak and the ongoing response to curb its spread (including government travel and meeting restrictions), currently we are not able to accurately estimate the effects of the COVID- 19 outbreak to our results of operations, financial condition, or liquidity.

After the DuPont Transaction, the Company has been focused on building innovative microbial platforms to address the growing demand for global protein bioproduction and unmet clinical needs for effective, affordable, and accessible biopharmaceutical products for human and animal health and for other biologic products for use in non-pharmaceutical applications.

The C1 -cell protein production platform is a robust and versatile thermophilic filamentous fungal expression system for the development and production of biologic products including enzymes and other proteins for human and animal health.

Some examples of human and animal vaccines and drugs which have the potential to be produced from C1 -cells are protein antigens, ferritin nanoparticles, virus-like particles (“VLPs”), monoclonal antibodies (“mAbs”), Bi/Tri-specific antibodies, Fab antibody fragments, Fc-fusion proteins, as well as other therapeutic enzymes and proteins.

The Company also developed the Dapibus™

thermophilic filamentous fungal based microbial protein production platform to enable the rapid development and large-scale manufacture of low-cost proteins, metabolites, and other biologic products for use in non-pharmaceutical applications, such as food, nutrition, and wellness.

Liquidity and Capital Resources

We rely on our existing cash and cash equivalents, investments in debt securities, and operating cash flow to provide the working capital needs for our operations.

We believe that our existing cash position and investment in investment grade securities will be adequate to meet our operational, business, and other liquidity requirements for at least the next twelve ( 12 ) months.

However, in the event our financing needs for the foreseeable future are not able to be met by our existing cash, cash equivalents and investments, we would seek to raise funds through public or private equity offerings, and through other means to meet our financing requirements.

Additionally, the Company may decide to fund all of a Phase I clinical trial to demonstrate the safety in humans of a protein produced from the C1 -cell protein production platform i n humans.

There is no assurance that external funding will be available at acceptable terms, if at all, and the Company may, therefore, self-fund these vital projects.

We rely on our existing cash and cash equivalents, investments in debt securities, and operating cash flows to provide the working capital needs for our operations.

We believe that our existing cash position and investments in investment grade securities will be adequate to meet our operational, business, and other liquidity requirements for at least the next twelve ( 12 ) months. However, 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 funds through public or private equity offerings, and/or other means to meet our financing requirements.

The Company has self-funded the development and cGMP manufacturing costs of its proprietary COVID- 19 vaccine candidate, DYAI- 100, and in February 2023 completed the dosing of its related Phase 1 clinical trial to demonstrate the safety in humans of a protein produced from the C1 -cell protein production platform. We do not expect that significant amounts of additional capital will be needed to support the continued development, manufacturing and testing of DYAI- 100 in 2023 and beyond. 

In January 2023, the Company received cash payment of approximately $ 1.27  million from the sale of its equity interest in Alphazyme, LLC. 

See Note 8 Subsequent Events for details.

Summary of Significant Accounting Policies

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generally accepted accounting principles (“GAAP”).

Since concluding the DuPont Transaction, the Company has conducted business in one operating segment, which is identified by the Company based on how resources are allocated, and operating decisions are made.

The Company conducts business in one operating segment, which is identified by the Company based on how resources are allocated, and operating decisions are made.

Management evaluates performance and allocates resources based on the Company as a whole.

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The Company only deals with reputable financial institutions and has not experienced any losses in such accounts.

For each of the years ended December 31, 2021 and 2020 , the Company’s revenue was generated from fourteen  customers.

For each of the years ended December 31, 2022 and 2021 , the Company’s revenue was generated from 

fourteen  customers.

December 31, 2022 and 2021 , the Company’s accounts receivable was from 

eight and nine  customers, respectively.

six and eight  customers, respectively.

The loss of business from one or a combination of the Company’s customers could adversely affect its operations.

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For the years ended December 31, 2022 and 2021 , the Company had 

eight  and seven  customers outside of the United Sates (i.e.

six  and eight  customers outside of the United Sates (i.e.

European and Asian customers) that accounted for approximately $ 586,000  or 

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71.3 % of total revenue, respectively. As of 

December 31, 2021 and 2020 , the Company had four  and seven  customers outside of the United Sates (i.e.

European and Asian customers) that accounted for approximately $ 157,000  or 56.4 % and $ 123,000  or 41.6 % of accounts receivable, respectively.

The Company uses several contract research organizations (“CROs”) to conduct its research projects.

For the years ended December 31, 2021 and 2020 , three  and 

one CRO(s) accounted for approximately $ 9,061,000  or 

December 31, 2022 and 2021 , the Company had four  and four customers outside of the United Sates (i.e.

European and Asian customers) that accounted for approximately $ 91,000  or 

27.4 % and $ 157,000  or 56.4 % of accounts receivable, respectively.

The Company uses several contract research organizations (“CROs”) to conduct its research projects and manage its clinical trial.

For the years ended December 31, 2022 and 2021 , 

three CROs accounted for approximately $ 5,575,000  or 

97.9 % and $ 9,061,000  or 

95.1 % of total research services we purchased, respectively.

December 31, 2021 , two CROs accounted for approximately $ 1,312,000  or 84.8 % of accounts payable.

December 31, 2020 , one CRO accounted for approximately $ 690,000  or 68.1 % of accounts payable.

The loss of business from this CRO or a combination of the Company’s CROs could adversely affect its operations.

December 31, 2022 , three  CROs accounted for approximately $ 1,018,000  or 79.7 % of accounts payable.

December 31, 2021 , two  CROs accounted for approximately $ 1,312,000  or 84.8 % of accounts payable.

The loss of business from any CRO or a combination of the Company’s CROs could adversely affect its operations.

Cash and Cash Equivalents

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The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable.

Substantially all of our accounts receivable were current and include unbilled amounts that will be billed and collected over the next twelve ( 12 ) months.

There was no allowance for doubtful accounts as of December 31, 2021 and 2020 .

Substantially all our accounts receivable were current and include unbilled amounts that will be billed and collected over the next twelve ( 12 ) months.

There was no allowance for doubtful accounts as of 

December 31, 2022 and 2021 .

Accounts receivable consist of the following:

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Revenue Recognition

The Company has no products approved for sale at this point.

The Company has no pharmaceutical products approved for sale at this point.

All of 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).

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We recognize revenue when we satisfy a performance obligation by transferring control of the service to a customer in an amount that reflects the consideration that we expect to receive.

Depending on how the performance obligation under our license and collaboration agreements is satisfied, we elected to recognize the revenue either at a point in time or over time by using the input method under Topic 606 to measure the progress toward complete satisfaction of a performance obligation.

Under the input method, revenue will be recognized based on the entity’s efforts or inputs to the satisfaction of a performance obligation (e.g., resources consumed, labor hours expended, costs incurred, or time elapsed) relative to the total expected inputs to the satisfaction of that performance obligation.

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These costs consist primarily of full-time equivalent effort and third -party contract costs.

Revenue will be recognized based on actual costs incurred as a percentage of total budgeted costs as the Company completes its performance obligations.

A cost-based input method of revenue recognition requires management to make estimates of costs to complete the Company’s performance obligations.

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The cumulative effect of revisions to estimated costs to complete the Company’s performance obligations will be recorded in the period in which changes are identified and amounts can be reasonably estimated.

A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.

Revenue related to grants:

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These grants are intended to be used to partially or fully fund the Company’s research collaborations, including opportunities arising in connection with COVID- 19 that the Company is pursuing with certain collaborators.

However, most, if not all, of such potential grant revenues, if received, is expected to be earmarked for third parties to advance the research required, including preclinical and clinical trials for SARS-CoV- 2 vaccines and/or antibodies candidates.

Revenue related to sublicensing agreements:

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If the milestone payment is in exchange for a sublicense and is based on the sublicensee’s subsequent sale of product, the Company recognizes milestone payment by applying the accounting guidance for royalties.

To date, the Company has not recognized any milestone payment revenue resulting from any of its sublicensing arrangements.

With respect to licenses deemed to be the predominant item to which the sales-based royalties relate, including milestone payments based on the level of sales, the Company recognizes revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

To date, the Company has not recognized any royalty revenue resulting from any of its sublicensing arrangements.

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.

We are not required to disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

The Company adopted a practical expedient to expense sales commissions when incurred because the amortization period would be one year or less.

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$ 8,392,370  

Provision for Contract Losses

The Company assesses the profitability of our collaboration agreements to provide research services to our contracted business partners and identifies those contracts where current operating results or forecasts indicate probable future losses.

If an anticipated contract cost exceeds anticipated contract revenue, a provision for the entire estimated loss on the contract is recorded and then accreted into the statement of operations over the remaining term of the contract.

The provision for contract losses is based on judgment and estimates, including revenues and costs, where applicable, the consideration of our business partners’

reimbursement, and when such loss is deemed probable to occur and is reasonable to estimate.

Foreign Currency Transaction Gain or Loss

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In addition, such investments are inherently risky in that such companies are typically at an early stage of development, may have no or limited revenues, may not be or may never become profitable, may not be able to secure additional funding or their technologies, services or products may not be successfully developed or introduced into the market.

On January 18, 2023, the Company entered into a Securities Purchase Agreement, under which the Company agreed to sell its equity interest in Alphazyme, LLC (the “Alphazyme Sale Agreement”).

After taking into account the adjustments for the transaction and legal expenses, payments to the Company were approximately US$1.27 million in connection with the sale.

See Note 8 Subsequent Events for details.

For the year ended December 31, 2021, the Company recorded a gain from the sale of its investment in BDI in other income in the amount of approximately $ 1.6  million, net of transaction and legal expenses. 

For the year ended December 31, 2020, the Company recorded an unrealized gain from its investment in Alphazyme resulting from a third -party capital contribution in the amount of $ 284,709 , which represented the fair market value of the Company’s investment in Alphazyme at that time.

As of December 31, 2021, the Company does not consider its investment in Alphazyme to be impaired.

The Company accounts for income taxes under the asset and liability method in accordance with ASC Topic 740, “Income Taxes”.

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Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the reporting period.

Diluted net loss per share adjusts the weighted average number of common shares outstanding for the potential dilution that could occur if common stock equivalents, such as stock options, warrants, restricted stock and convertible debt, were exercised and converted into common stock, calculated by applying the treasury stock method.

Diluted net loss per share adjusts the weighted average number of common stock outstanding for the potential dilution that could occur if common stock equivalents, such as stock options, warrants, restricted stock, restricted stock units and convertible debt, were exercised and converted into common stock, calculated by applying the treasury stock method.

For the years ended December 31, 2022 and 2021 , the effect of the potential exercise of options to purchase 

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not  expect ASU 

2016 - 13  to have a material impact on our consolidated financial positions, results of operations, and cash flows. 

December 2019 ,  the FASB issued ASU 

2019 - 12,  

Income Taxes (Topic  

Simplifying the Accounting for Income Taxes .

The amendments of this update simplify the accounting for income taxes by removing certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The Company adopted ASU 

2019 - 12  on 

January 1, 2021, 

and the adoption of ASU 

2019 - 12  did 

not  have any material impact on our consolidated financial positions, results of operations, cash flows and related disclosures.

2016 - 13  to have a material impact on our consolidated financial positions, results of operations, and cash flows.

Other pronouncements issued by the FASB or other authoritative accounting standards group with future effective dates are either not applicable or not significant to our consolidated financial statements.

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The Company’s investments in debt securities are classified as held-to-maturity and are recorded at amortized cost, and its investments in money market funds are classified as cash equivalents.

The following table shows the Company’s cash, available-for-sale securities, and short-term and long-term investment securities by major security type as of December 31, 2021 and 2020 :

The following table shows the Company’s cash, available-for-sale securities, and investment securities by major security type as of December 31, 2022 and 2021 :

December 31, 2022

3 unchanged sentences

Cash and Cash Equivalents

$ 26,782  

Money Market Funds

5,767,490  

5,794,272  

Short-Term Investment Securities (2)

Corporate Bonds (3)

6,800,062  

( 47,208 )  

6,847,270  

$ 12,594,334  

$ ( 47,208 )  

$ 12,641,542  

December 31, 2021

3 unchanged sentences

Cash and Cash Equivalents

$ 1,377,094  

Money Market Funds

14,371,386  

15,748,480  

Short-Term Investment Securities (2)

Corporate Bonds (3)

4,509,285  

( 2,495 )  

4,511,780  

$ 20,257,765  

$ ( 2,495 )  

$ 20,260,260  

( 1 ) Definition of the three -level fair value hierarchy:

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( 2 ) Short-term investment securities will mature within 12 months or less, from the applicable reporting date.

( 3 ) The premium paid to purchase held-to-maturity investment securities was $ 283,940  

and $ 282,946 for the years ended December 31, 2021 and 2020 , respectively.

( 3 ) For the years ended December 31, 2022 and 2021 , the Company received discounts of $ 6,280  and paid premiums of $ 283,940 to purchase held-to-maturity investment securities, 

respectively.

The Company considers declines in market value of its investment portfolio to be temporary in nature.

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     Research and Collaboration Agreements, Sublicense Agreements, and Investments in Privately-Held Companies

A Global Food Ingredient  

On May 10, 2022, the Company entered into a Joint Development Agreement (the “JDA”) with a Global Food Ingredient Company (“GFIC”) to develop and manufacture several animal free ingredient products using the Company’s biotechnologies.

Under the terms of the JDA, Dyadic is to develop its proprietary production cell lines for the manufacture of animal free ingredient product candidates.

The research collaboration will be fully funded by the GFIC in an amount approximating $ 4.1 million over two years.

Dyadic will receive certain defined “Success Fees”

(the “Success Fees”), upon researching certain productivity and activity levels and milestones at different stages of the collaboration.

Dyadic will also receive a “Commercialization Fee”

(the “Commercialization Fee”) of low eight figures upon commercialization, and a royalty payment of low single digits based on commercial sales. 

The JDA can be terminated in its entirety along with any sublicense granted, with or without cause by either party, within 90  business days after receipt of written termination notice. 

Accounting Treatment  

The Company considered the guidance in ASC 

808,  Collaborative Arrangements (ASC 

808 ) and determined the JDA is 

not  applicable to such guidance. The Company concluded that GFIC represented a customer and applied relevant guidance from ASC 

606,  Revenue from Contracts with Customers (ASC 

606 ) to evaluate the appropriate accounting for the JDA. 

The Company identified the following promises under the JDA:

( 1 ) to provide agreed-upon research and development services with GFIC’s proteins;

( 2 ) to nominate a project manager and two additional steering committee members to meet at least quarterly to review the project’s status;

( 3 ) to grant a R&D license in consideration of GFIC’s payment of Service Fees and its other project obligations;

and ( 4 ) to grant a commercial license in consideration of and subject to GFIC’s payment of the commercialization fee and royalties. 

The Company concluded that, while participation on the joint steering committee was capable of being distinct from other promises, such participation is considered to be part of the research and development services and does not constitute the transfer of a good or service within the context of the JDA. Additionally, the Company concluded that the promise to grant a commercial license is a contingent promise based upon the success of the research project which is outside the control of both the Company and the GFIC, and therefore, it should be accounted for in the same way as a customer option.

The Company further concluded that the contingent promise to grant a commercial license is not considered a material right and does not give rise to a separate performance obligation. 

Based on management’s assessment, the Company concluded the agreed-upon research and development services and the R&D license under the R&D plan should be combined and accounted for as one single performance obligation in consideration of the service fees.

Accordingly, the Company recorded the service fees as research and development revenue using the cost-based input method in accordance with the Company’s policy (Note 

Under the JDA, the Company is also eligible to receive Success Fees upon certain milestones, a Commercialization Fee upon commercialization, and future sales-based royalty payments.

The Success Fees are considered constrained variable considerations and excluded from the transaction price at inception.

The Company will re-evaluate the Success Fees and estimate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

The Company will 

not  recognize revenue related to the Commercialization Fee and sales-based royalty until the associated event occurs.

For the year ended December 31, 2022 , the Company recorded research and development revenues of approximately $ 790,000  in connection with the JDA.

On February 10, 2022, the Company entered into an exclusive sub-license agreement with Abic Biological Laboratories Ltd.

(“Abic”), an affiliate of Phibro Animal Health Corporation (“Phibro”) to provide services for a targeted disease (the “Phibro/Abic Agreement”).

The Phibro/Abic Agreement was an addendum to the initially non-exclusive sub-license agreement the Company signed with Phibro on July 1, 2020.

According to the Phibro/Abic Agreement, the Company received an exclusivity payment in April 2022.

In July 2022, the Company expanded the license agreement to include an additional research project to develop another animal vaccine for livestock. 

Phibro/Abic may terminate the Phibro/Abic Agreement in its entirety, or any sublicense granted, in each case with or without cause at any time upon 90 days’ prior written notice to Dyadic. 

Accounting Treatment

The Company considered the guidance in ASC 808, Collaborative Arrangements (ASC 808 ) and determined the Phibro Agreement is not applicable to such guidance. The Company concluded that Phibro/Abic represented a customer and applied relevant guidance from ASC 606, Revenue from Contracts with Customers (ASC 

606 ) to evaluate the appropriate accounting for the Phibro/Abic Agreement. 

The Company identified the following obligations under the Phibro/Abic Agreement:

( 1 ) an exclusive right to utilize the C1 -cell protein production platform for certain disease;

( 2 ) our obligation to provide agreed-upon research and development services;

( 3 ) research report to be provided to Phibro/Abic based on the requirements of the agreement.

Based on management’s assessment, the Company concluded two performance obligations should be accounted for separately:

( 1 ) the agreed-upon research and development services, and ( 2 ) the right to exclusively access and use C1 -cell protein production platform for certain disease.

Accordingly, the Company records the R&D services as research and development revenue using the cost-based input method in accordance with the Company’s policy (Note 1 ). 

Under the Phibro/Abic Agreement, the Company has received an exclusivity payment in April 2022 and is elgible to receive certain milestone payment upon regulatory approval, and future sales-based royalty payments.

The milestone payment is considered constrained variable consideration and excluded from the transaction price at inception.

The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

The Company will not recognize revenue related to sales-based royalty until the associated event occurs.

On December 16, 2021, the Company entered into a Research, License, and Collaboration Agreement (the “Janssen Agreement”) for the manufacture of therapeutic protein candidates using its C1 -cell protein production platform with Janssen Biotech, Inc., one of the Janssen Pharmaceutical Companies of Johnson & Johnson (“Janssen”).

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The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

At December 31, 2021, the Company recorded the upfront payment of $ 0.5  million as deferred license revenue, current and non-current portion. 

December 31, 2022 ,  

the deferred license revenue, current and non-current portion were approximately $ 176,000  and $ 176,000 , respectively. For the years ended December 31, 2022  and 2021, the Company recorded research and development revenues of $ 539,000 and $0, respectively, in connection with the Janssen Agreement. As of 

December 31, 2022 and 2021 , approximately $ 121,000  and $ 0 of accounts receivable were related to the Janssen Agreement, respectively. 

IDBiologics, Inc. 

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On April 25, 2021, the Company entered into a project agreement (the “Project Agreement”) to provide additional research services to IDBiologics.

For the year ended December 31, 2021, approximatel y $ 194,000 of r esearch and development revenue and approximately $ 27,000 of unbilled accounts receivable were related to the Project Agreement. 

For the years ended December 31, 2022 and 2021 , the Company recorded research and development revenues of approximatel y $ 109,000 and $ 194,000 , respectively, in connection with IDBiologics.

December 31, 2022 and 2021 , $ 0 and approximately $ 27,000 of unbilled accounts receivable were related to IDBiologics, respectively. 

On May 5, 2019, the Company entered into a sub-license agreement (the “Alphazyme Sub-License Agreement”) with Alphazyme, LLC (“Alphazyme”).

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the Company recorded a gain of $ 284,709 from 

its investment in Alphazyme resulting from a third -party capital contribution obtained by Alphazyme. As of December 31, 2021, the Company does not consider its investment in Alphazyme to be impaired, as there was no event or transaction that would change the value of this investment.

On January 18, 2023, the Company entered into a Securities Purchase Agreement, under which the Company agreed to sell its equity interest in Alphazyme, LLC (the “Alphazyme Sale Agreement”).

Net proceeds to the Company were approximately $ 1.27 million in connection with the sale. The Company also has the potential to receive additional payments based on the future sales of Alphazyme’s existing products, pursuant to the Alphazyme Sale Agreement.

The Amended Sublicense Agreement between Dyadic and Alphazyme, which was previously entered on June 24, 2020, remains in effect.

Under the Amended Alphazyme Sub-License Agreement, Dyadic is entitled to potential milestone and royalty payments upon the commercialization of Alphazyme products using Dyadic’s proprietary C1 -cell protein production platform.

On June 30, 2017, the Company entered into a strategic Research Services Agreement (the “RSA”) with Biotechnology Developments for Industry in Pharmaceuticals, S.L.U.

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In connection with the BDI Sale, the Company also entered into an amendment to the Service Framework Agreement (the “Amended SFA”) with BDI Pharma. Under the Amended SFA, the Company maintains the right to engage in research and development projects at BDI Pharma until June 30, 2025, with the non-compete term extending to June 30, 2030, without any other material terms and conditions changed.

For the years ended December 31, 2022 and 2021, there was no research and development revenue or research and development expenses associated with the Amended SFA.

Novovet and Luina Bio 

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Therefore, the Novovet Up-Front Consideration received under the Luina Bio Sub-License Agreement, in the form of a 20 % equity interest in Novovet, does not yet meet the revenue recognition criteria under ASC 606.

On February 15, 2022, the Company sent a letter to Luina Bio Pty Ltd and Novovet Pty Ltd, indicating its intention to terminate the Luina Bio Sub-License Agreement.

June 29, 2022, 

the Company sent a letter to Luina Bio Pty Ltd and Novovet Pty Ltd, to transfer our shares of Novovet Pty Ltd back to Novovet pursuant to the Shareholders Agreement.

     Income Taxes

The Tax Cuts and Jobs Act (“TCJA”) was enacted on December 22, 2017 and became effective January 1, 2018.

The TCJA contains several key provisions, including a reduction in the U.S.

federal corporate income tax rate from 35% to 21% and repeal of the corporate alternative minimum tax (“AMT”).

The TCJA’s reduction in the U.S.

statutory tax rate had no additional impact on the consolidated financial statement for the year ended December 31, 2019.

The TCJA repealed the corporate AMT but permitted unused AMT credit carryforwards to be used to reduce the regular tax obligation in future years.

Any AMT credit carryforwards that do not reduce regular taxes are eligible for a 50% refund in 2018 through 2020, and a 100% refund in 2021.

Subsequently, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), which was signed into law in March 2020, accelerated the full refund of any unused AMT credits from 2021 (as provided for in the TCJA) to 2018 or 2019, at the taxpayer’s election.

Accordingly, we reclassified the balance of the AMT credit from the deferred tax asset to an income tax receivable in 2018.

The corresponding balance in the valuation allowance has been reversed into income tax benefit in the amount of $ 1,001,233 . In 2019, we have received 50% or approximately $ 0.5 million AMT refund for tax year 2018.

In 2020, we received the remaining 50% or approximately $ 0.5 million AMT refund for the tax year 2019.

For the year ended December 31, 2022 , there was 

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93,169  

45,618  

Total loss before provision for income taxes

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Non-deductible items

( 0.84 )  

Change in valuation allowance

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Change in tax rate

( 1.88 )  

Effective income tax rate

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1,656,500  

Unrealized gain from investment in Alphazyme

Section 174 - R&D expenses

1,046,400  

Unrealized gain from investment in Alphazyme

( 78,200 )  

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Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

Based on Management’s evaluation, the net deferred tax asset, was offset by a full valuation allowance as of December 31, 2021 and 2020.

The Company had net operating loss (“NOL”) carryforwards available as of December 31, 2021 

and 2020, in the amount of approximately $ 39.9  million and $ 27.3 million, respectively.

Approximately $ 37.1  million of the net operating loss carryforwards will be carried forward indefinitely and will be available to offset 80 % of taxable income.

Based on Management’s evaluation, the net deferred tax asset, was offset by a full valuation allowance as of December 31, 2022 

The Company had net operating loss (“NOL”) carryforwards available as of December 31, 2022, and 2021, in the amount of approximately $ 44.0 million and $ 39.9 million, respectively.

Approximately $ 41.1 million of the net operating loss carryforwards will be carried forward indefinitely and will be available to offset 80 % of taxable income.

The remaining amount of the net operating loss carryforwards will expire at varying dates through 2037.

Income generated in India is subject to Tax Deducted at Source (“TDS”), which is a means of collecting income tax at the source when income is generated rather than at later by the Indian government.

The TDS amount paid can be used as foreign tax credit for US tax purposes.

However, we do not expect to use the credit due to our loss from operation.

As a result, the Company recorded a provision for income taxes of approximately $ 31,000  as a result of TDS for the year ended December 31, 2020.

There was no provision for income taxes related to TDS for the year ended December 31, 2021.

The Tax Cuts and Jobs Act eliminated the current year deduction election for research and experimental expenditures.

Instead, a taxpayer must charge such expenditures to a capital account and is allowed to amortize such expenditures ratably over a five -year period (or fifteen -year period for expenditures attributable to foreign research), beginning with the midpoint of the tax year in which such expenditures are paid or incurred.

     Commitments and Contingencies

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The Company occupies a flexible office space for an annual rental rate of approximately $ 4,000 .

The lease expires on January 31, 2023, and thereafter, the Company will reconsider the leased space to align with the future operations of the Company.

The lease expires on January 31, 2024, and thereafter, the Company will reconsider the leased space to a lign with the future operations of the Company.

VTT Research Contract Extension

On June 28, 2019, the Company extended its research contract (“Contract”) through June 2022 with VTT Technical Research Centre of Finland Ltd.

(“VTT”).

Under the terms of this Contract, Dyadic will pay VTT a total of EUR €2.52 million over 

three years to continue developing Dyadic’s C1 fungal expression system for therapeutic protein production, including C1 host system improvement, glycoengineering, and management of third -party target protein projects.

VTT is subject to an additional success bonus up to EUR €350,000 based on the technical targets stipulated in the Contract.

Dyadic and its sublicensees will also have the right to use synthetic promoters developed by VTT with an access fee. On November 9, 2021, the Company further expanded the Contract to pay an additional EUR €191,700 over the next 6  months to conduct the glycoengineering strategy with the best protease deletion strains and other platform development work. Dyadic retains the right to terminate the Contract with 90 days’

On September 12, 2022, the Company extended its research contract (“Amendment”) through December 2023 with VTT Technical Research Centre of Finland Ltd.

(“VTT”). Under the terms of this Amendment, Dyadic will pay VTT a total of approximately EUR €1.1 million over 

fifteen months to continue developing Dyadic’s C1 -cell protein production platform for therapeutic protein production, including C1 host system improvement, glycoengineering, and management of third -party target protein projects. Dyadic retains the right to terminate the Contract with 90 days’

Purchase Obligations

The following table provides a schedule of commitments related to agreements to purchase certain services in the ordinary course of business, as of December 31, 2022 :

$ 2,912,761  

164,794  

40,951  

$ 3,118,506  

The purchase obligations in the table above are primarily related to our contracts with the Company’s contract research organizations to provide certain research services.

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Since the effective date of the 2021 Plan, all equity awards were made from the 2021 Plan, and no additional awards will be granted under the 2011 Plan.

The 2021 Plan increased the number of shares available for the grant of stock options, restricted stock awards and other awards by 

3,000,000  in addition to the number of shares remaining available for the grant of new awards under the 2011  Plan as of April 16, 2021. 

The 2021 Plan is reserved for issuance of a variety of share-based compensation awards, including stock options, restricted stock awards, restricted stock unit awards, performance award, dividend equivalents award, deferred stock awards, stock payment awards and stock appreciation rights.

The 2021 Plan increased the number of shares available for grant by 

3,000,000  in addition to the number of shares remaining available for the grant of new awards under the 2011  Plan as of April 16, 2021.

As of December 31, 2022 , the Company had 5,031,097  stock options outstanding and an additio nal 

3,672,561 share s of common stock available for grant under the 2021 Plan.

As of December 31, 2020 , there were 4,638,390 stock options outstanding and an additional 2,134,211  shares of common stock available for grant under the 2011 Plan.

As of December 31, 2021 , there were 4,774,215  stock options outstanding and an additional 4,263,386  shares of common stock available for grant under the 2021 Plan.

Stock Options

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Expected stock price volatility.

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. 

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. 

Expected life of option.

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54.52 % - 60.80 %

Expected life of options

0.5 - 6.25 Years

1.75 - 6.25 Years

Expected life of options (in years)

The following table summarizes the combined stock option activity under the Company’s Equity Compensation Plans:

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( 333,943 )  

( 200,000 )  

( 75,000 )  

Outstanding at December 31, 2022

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2022, including:

(a) 417,500 stock options with an exercise price of $ 5.16 per share granted to executives and key personnel, upon one year anniversary, or vesting annually in equal installments over four years, (b) 227,500 stock options with an exercise price of $ 5.16 per share granted to members of the Board of Directors, vesting upon one year anniversary, (c) 23,325 stock options with an exercise price of $ 5.16 per share granted to employees, vesting annually in equal installments over four years and (d) 5,000 stock options with an exercise price of $ 5.16 per share granted to a consultant, vesting upon one year anniversary.

One-time award on January 8, 2021, 35,000 stock options with an exercise price of $ 5.50 per share granted to a new member of the Board of Directors, vesting in one year from the grant date.

One-time award on January 21, 2021, 7,500 stock options with an exercise price of $ 5.65 per share granted to a consultant, vesting in one year from the grant date.

One-time award on March 22, 2021, 30,000 stock options with an exercise price of $ 6.87 per share granted to a consultant, vesting in one year from the grant date.

One-time award on August 24, 2021, 25,000 stock options with an exercise price of $ 4.96 per share granted to a consultant, vesting in one year from the grant date.

One-time award on November 1, 2021, 25,000 stock options with an exercise price of $ 4.14 per share granted to a consultant, vesting in one year from the grant date.

One-time award on November 9, 2021, 75,000 performance-based stock options with an exercise price of $ 4.10 per share granted to a new executive, vesting upon the achievement of specific performance conditions.

As of December 31, 2021.

the Company believes that the achievement of the requisite performance conditions is not probable and, as a result, no compensation cost has been recognized for these awards.

(a) 325,000 stock options with an exercise price of $ 4.81 per share granted to executives and key personnel, upon one year anniversary, or vesting annually in equal installments over four years, (b) 75,000 performance-based stock option to a key personnel with an exercise price of 

$4.81 per share, vesting upon the achievement of specified performance conditions, (c) 277,500 stock options with an exercise price of $4.81 per share granted to members of the Board of Directors, vesting upon one year anniversary, (d) 23,325 stock options with an exercise price of $ 4.81  per share granted to employees, vesting annually in equal installments over four years and (e) 15,000 stock options with an exercise price of $ 4.81  per share granted to a consultant, vesting upon one year anniversary.

One-time award on June 10, 2022, 150,000 stock options with an exercise price of $ 2.60 per share granted to the Board of Directors, vesting in one year from the grant date as a result of a reduction in director cash compensation.

( 2 ) Represents the following stock options exercised:

500,000 stock options exercised at $ 1.67 , 150,000 stock options exercised at $ 1.63 , 60,000 stock options exercised at $ 1.93 , and 25,000 stock options exercised at $ 1.39 .

The weighted average grant-date fair market value of stock options granted for the years ended December 31, 2021 and 2020 was $ 2.49  and $ 2.09  respectively, based on the Black-Scholes option pricing model.

150,000 stock options exercised at $ 1.87 , 40,000 stock options exercised at $ 1.63 , 8,943  stock options exercised at $ 1.57 , and 50,000 stock options exercised at $ 1.44 , 50,000  stock options exercised at $ 1.39 , and 35,000 stock options exercised at $ 1.21 .

( 3 ) Represents the following stock options expired:

30,000 stock options with exercise price of $ 6.87 , 90,000 stock options with exercise price of $ 5.27 , 80,000 stock option with exercise price of $ 5.16 .

( 4 ) Represents the cancellation of performance-based stock options granted to the Company’s former Managing Director of Business Development and Licensing, who separated from the Company on April 22, 2022.

The weighted average grant-date fair market value of stock options granted for the years ended December 31, 2022 and 2021 was $ 2.49 and $ 2.49 , respectively, bas ed on the Black-Scholes option pricing model.

The intrinsic value of options exercised for the years ended December 31, 2022 and 2021 was $ 365,000  and $ 1,730,000 , respectively.

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Issuances of Common Stock

For the years ended December 31, 2021 and 2020  there were 

735,000 and 135,000  shares of the Company's common stock issued, as a result of the exercise of stock option, with a weighted average issue price per share of $ 1.67  and $ 1.89 , respectively.

For the years ended December 31, 2022 and 2021  there were 333,943  and 735,000  shares of the Company's common stock issued, as a result of the exercise of stock options, with a weighted average issue price per share of $ 1.63  and $ 1.67 , respectively.

Treasury Stock

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Stock Option Grant

On January 3, 2022, the Company granted to executives and key personnel an aggregate of 325,000 stock options with an exercise price of $ 4.81 .

The options will vest in one year from the date of grant or annually in equal installments over four years.

On January 3, 2022, the Company granted 75,000  performance-based stock options to a key personnel with an exercise price of $ 4.81 .

The options will vest upon the achievement of specified performance conditions.

On January 3, 2022, the Company granted to members of the Board an aggregate of 

277,500 stock options with an exercise price of $ 4.81 . The options will vest in one year from the date of grant.

On January 3, 2022, the Company granted to non-executive employees an aggregate of 23,325  stock options with an exercise price of $ 4.81 .

The options will vest annually in equal installments over four years.

On January 3, 2022, the Company granted 15,000 stock options to a consultant with an exercise price of $ 4.81 .

The options will vest in one year from the date of grant.

Termination of a Material Definitive Agreement

On March 17, 2022, the Company and Sorrento Therapeutics, Inc., have mutually agreed to terminate the August 11, 2021 term sheet, due to a disagreement between the parties concerning the timing, and terms and conditions, for the entry into the license agreement.

Dyadic has not incurred any early termination penalties.

On January 3, 2023, the Company granted an annual stock option award with an exercise price of $ 1.38 , including:

(a) 406,250 stock options granted to executives and key personnel, vesting upon one year anniversary, or annually in equal installments over four years, (b) 262,500 stock options granted to members of the Board of Directors, vesting upon one year anniversary, (c) 24,100  stock options granted to employees, vesting annually in equal installments over four years, and (d) 15,000 stock options granted to a consultant, vesting upon one year anniversary. 

On January 3, 2023, the Company granted 247,961 restricted stock units (“RSUs”) vested in full, to executives and key personnel in lieu of cash bonus earned for the year ended 2022.

The Company also granted 163,044 RSUs, vesting upon 

one year anniversary, to the Board of Directors as a result of reduction in director cash compensation of 2023.

 The grant of these RSUs has been approved by the Compensation Committee of the Board of Directors in November 2022.

Sale of Equity Interest in Alphazyme 

On January 18, 2023, the Company entered into a Securities Purchase Agreement, under which the Company agreed to sell its equity interest in Alphazyme, LLC.

After taking into account the adjustments for the transaction and legal expenses, payments to the Company were approximately $ 1.27 million in connection with the sale. The Company also has the potential to receive additional payments based on the future sales of Alphazyme’s existing products, pursuant to the Alphazyme Sale Agreement.

The Amended and Restated Non-Exclusive Sublicense Agreement between Dyadic and Alphazyme, which was previously entered on June 24, 2020, remains in effect, under which, Dyadic is entitled to potential milestone and royalty payments upon the commercialization of Alphazyme products using Dyadic’s proprietary C1 -cell protein production platform.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures