What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-26 compared with 2024-03-28 · 342 added, 307 removed, 661 unchanged (50% of the section changed)

2 unchanged sentences

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) , means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.

4 unchanged sentences

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this Annual Report because we are a “smaller reporting company.”

Changes in Internal Controls Over Financial Reporting

11 unchanged sentences

Insider Trading Arrangements

During the quarter ended December 31, 2023, none of our directors or officers (as defined in Rule 16a - 1 under the Securities Exchange Act of 1934, as amended) adopted or terminated a “Rule 10b5 - 1 trading arrangement” or a “non-Rule 10b5 - 1 trading arrangement” (each as defined in Item 408 (a) and (c), respectively, of Regulation S-K).

During the quarter ended December 31, 2024, none of our directors or officers (as defined in Rule 16a - 1 (f) under the Exchange Act) adopted or terminated a “Rule 10b5 - 1 trading arrangement” or a “non-Rule 10b5 - 1 trading arrangement” (each as defined in Item 408 (a) and (c), respectively, of Regulation S-K).

Disclosure Regarding Foreign Jurisdictions That Prevent Inspections

31 unchanged sentences

March 11, 2024

Amendment, dated as of October 4, 2024, to Form of Senior Secured Convertible Promissory Note due March 8, 2027

October 8, 2024

Dyadic International, Inc.

6 unchanged sentences

2021 Equity Incentive Plan

March 28, 2024

Form of Restricted Stock Unit Agreement Pursuant to the Dyadic International, Inc.

2021 Equity Incentive Plan

March 28, 2024

Form of Restricted Stock Unit Agreement Pursuant to the Dyadic International, Inc.

12 unchanged sentences

January 14, 2019

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

January 14, 2019

Employment Agreement dated November 8, 2024, between Dyadic International, Inc.

and Ping Rawson

November 2024

Employment Agreement between Dyadic International Inc.

20 unchanged sentences

Joint Development Agreement with Leprino Foods Company, dated May 12, 2022

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

Ltd., dated May 7, 2019

Non-Exclusive Sublicense Agreement among Dyadic International, Inc., Alphazyme, LLC, dated May 5, 2019

1 unchanged sentence

June 29, 2020

Master Services Agreement and Work Order, between Dyadic International (USA), Inc.

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

Alphazyme Sale Agreement dated January 18, 2023

12 unchanged sentences

March 11, 2024

License and Development Agreement between Dyadic International (USA), Inc.

and Proliant Biologicals, LLC d/b/a Proliant Health and Biologicals, dated June 27, 2024

Grant Agreement between Dyadic International, Inc.

and the Bill & Melinda Gates Foundation, dated as of November 16, 2024

November 26, 2024

Insider Trading Policy

Subsidiaries of the Registrant

Consent of Independent Registered Public Accounting Firm - Crowe LLP

Consent of Independent Registered Public Accounting Firm - Mayer Hoffman McCann P.C.

Power of Attorney (included on signature page)

7 unchanged sentences

Policy Related to Recovery of Erroneously Awarded Compensation

March 28, 2024

Inline XBRL Instance Document

23 unchanged sentences

Rawson, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Pursuant to the requirements of Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Chief Executive Officer, Director

12 unchanged sentences

Arindam Bose, Ph.D.

March 28, 2024

Buckland, Ph.D.

/s/ Michael P.

3 unchanged sentences

Report of Independent Registered Public Accounting Firm (PCAOB ID 173 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 199) F-3

Consolidated Balance Sheets as of December 31, 2024 and 2023

7 unchanged sentences

Opinion on the Financial Statements

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

(the "Company") as of December 31, 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

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

(the "Company") as of December 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2024 and 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years ended December 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

3 unchanged sentences

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

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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 audit 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.

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.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provide a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

6 unchanged sentences

March 26, 2025

Report of Independent Registered Public Accounting Firm

To the Board of Directors and

Stockholders of Dyadic International, Inc.:

Opinion on the Financial Statements

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

and Subsidiaries (“Company”) as of December 31, 2022, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

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.

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

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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 audit, 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.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/Mayer Hoffman McCann P.C.

We have served as the Company’s auditor from 2008 through 2023.

Petersburg, Florida

March 28, 2024

DYADIC INTERNATIONAL, INC.

16 unchanged sentences

Operating lease right-of-use asset, net

Investment in Alphazyme

92,211 141,439

10,396 10,462

$ 9,930,275 $ 8,219,236

Liabilities and stockholders’ equity

6 unchanged sentences

833,813 490,113

Deferred license revenue, current portion

Operating lease liability, current portion

54,249 48,059

Accrued interest

Accrued interest- related party

Total current liabilities

2,448,017 2,251,781

Deferred license revenue, net of current portion

Non-current liabilities:

Convertible notes, net of issuance costs

Convertible notes, net of issuance costs - related party

Operating lease liability, net of current portion

34,621 88,870

Total liabilities

2 unchanged sentences

Stockholders’ equity:

Preferred stock, $.

0001 par value:

Preferred stock, $ .0001 par value:

Authorized shares - 5,000,000 ;

none issued and outstanding

Common stock, $.

001 par value:

Common stock, $ .001 par value:

Authorized shares - 100,000,000 ;

17 unchanged sentences

Research and development revenue

$ 2,545,865 $ 2,683,244

License revenue

352,941 247,059

Total revenue

2,898,806 2,930,303

Costs and expenses:

Costs of research and development revenue

1,975,849 2,123,193

Research and development

3,297,266 4,501,365

General and administrative

5,817,013 6,421,505

Foreign currency exchange loss

38,417 49,918

Total costs and expenses

11,128,545 13,095,981

Loss from operations

( 8,229,739 ) ( 10,165,678 )

Other income:

Other income (expense):

Interest income

416,686 180,420

Gain on sale of Alphazyme

Total other income

1,434,278 430,420

$ ( 6,795,461 ) $ ( 9,735,258 )

Interest expense

Interest expense - related party

Total other income (expense), net

Basic and diluted net loss per common share

$ ( 0.24 ) $ ( 0.34 )

Basic and diluted weighted-average common shares outstanding

28,798,833 28,364,482

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

5 unchanged sentences

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

Stock-based compensation expenses

— — — — 1,888,944 — 1,888,944

Issuance of common stock upon exercise of stock options

333,943 334 — — 543,257 — 543,591

— — — — — ( 9,735,258 ) ( 9,735,258 )

Issuance of common stock upon vesting of restricted stock units

Balance at December 31, 2023

40,816,602 $ 40,817 ( 12,253,502 ) $ ( 18,929,915 ) $ 103,458,697 $ ( 73,481,860 ) $ 11,087,739

Stock-based compensation expenses

— — — — 1,244,121 — 1,244,121

Issuance of common stock upon vesting of restricted stock units

247,961 248 — — 341,938 — 342,186

— — — — — ( 6,795,461 ) ( 6,795,461 )

Issuance of common stock upon exercise of stock options

Issuance of common stock upon settlement of convertible debt

Balance at December 31, 2024

41,064,563 $ 41,065 ( 12,253,502 ) $ ( 18,929,915 ) $ 105,044,756 $ ( 80,277,321 ) $ 5,878,585

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

4 unchanged sentences

Cash flows from operating activities

$ ( 6,795,461 ) $ ( 9,735,258 )

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

Stock-based compensation expense

1,244,121 1,888,944

Amortization of held-to-maturity securities, net

( 53,032 ) 33,790

Amortization of debt issuance costs

Gain on investment in Alphazyme

( 1,017,592 ) —

Foreign currency exchange loss

38,418 49,918

Changes in operating assets and liabilities:

Operating lease assets and liabilities, net

Interest receivable

48,202 36,090

Accounts receivable

( 141,332 ) ( 83,265 )

Prepaid expenses and other current assets

64,902 ( 13,925 )

Operating lease assets and liabilities, net

Accounts payable

( 651,168 ) ( 248,128 )

Accrued expenses

444,269 245,521

Accrued interest

Accrued interest - related party

Deferred license revenue

( 352,942 ) ( 147,058 )

Deferred research and development obligations

449,370 ( 110,404 )

Net cash used in operating activities

( 6,726,755 ) ( 8,083,775 )

Cash flows from investing activities

Purchases of held-to-maturity investment securities

( 2,995,988 ) ( 9,869,280 )

Proceeds from maturities of investment securities

9,148,000 7,500,000

Proceeds from the sale of investment in Alphazyme

Net cash provided by (used in) investing activities

7,449,896 ( 2,369,280 )

Net cash (used in) provided by investing activities

Cash flows from financing activities

Proceeds from issuance of convertible notes, net of issuance costs

Proceeds from issuance of convertible notes, net of issuance costs - related party

Proceeds from exercise of options

1 unchanged sentence

Effect of exchange rate changes on cash

( 2,385 ) ( 44,744 )

Net decrease in cash and cash equivalents

720,756 ( 9,954,208 )

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

5,794,272 15,748,480

Cash and cash equivalents at end of period

$ 6,515,028 $ 5,794,272

Supplemental cash flow information

Vesting of restricted stock units

$ 342,186 $ —

Conversion of convertible notes

Cash paid for interest

Right-of-use asset obtained in exchange for lease obligations

$ 156,983 $ —

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

3 unchanged sentences

Dyadic International, Inc.

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

Over the past two plus decades, the Company developed a gene expression platform for producing commercial quantities of industrial enzymes and other proteins, and previously licensed this technology to third parties, such as Abengoa Bioenergy SA, BASF SE, Codexis, Inc.

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.

Subsequent to the Company selling its industrial technology business to Danisco USA (“Danisco”), the industrial biosciences business of DuPont (NYSE:

DD) (the “DuPont Transaction”) on December 31, 2015, the Company has been focused on building the C1 -cell protein production platform 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 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.

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

The Company expects to incur losses and have negative net cash flows from operating activities as it continues developing its microbial platforms and related products, and as it expands its pipelines and engages in further research and development activities for internal products as well as for its third -party collaborators and licensees.

The success of the Company depends on its ability to develop its technologies and products to the point of regulatory approval and subsequent revenue generation or through the sublicensing of the Company’s technologies and products, to raise capital to finance these developmental efforts.

For the year ended December 31, 2023, the Company received $ 1.3 million from the sale of its equity interest in Alphazyme, LLC, and $ 600,000 upfront payment from a product development and licensing agreement.

On March 8, 2024, the Company sold and 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 in reliance on the exemption from registration provided by Section 4 (a)( 2 ) of the Securities Act of 1933, as amended (the “Securities Act”).

The purchasers of the Convertible Notes include 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 Convertible Notes will be senior, secured obligations of Dyadic and its affiliates, and interest will be payable quarterly in cash on the principal amount equal to 8 % per annum.

For the past nine years since the Company sold its industrial technology business to Danisco USA (“Danisco”), the industrial biosciences business of DuPont (NYSE:

DD) (the “DuPont Transaction”), the Company has been focused on building innovative microbial protein production 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.

As part of the DuPont Transaction, Dyadic retained co-exclusive rights to its proprietary and patented C1 protein production platform (the “C1 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.

Danisco retained certain rights to utilize the C1 platform in pharmaceutical applications, including the development and production of pharmaceutical products, for which it will be required to make royalty payments to Dyadic upon commercialization.

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 in licensed by Danisco.

After the DuPont Transaction, the Company has directed its efforts toward advancing the C1 platform to address the increasing global demand for the development and manufacturing of prophylactic and therapeutic biopharmaceuticals for human and animal health.

The Company’s biopharmaceutical development efforts have been centered on enhancing the capability of the C1 platform to produce stable, properly folded, and functional proteins for pharmaceutical applications, including vaccines and monoclonal antibodies.

In addition to improving the quality and productivity of the C1 platform, the Company has sought to validate its platform for human use through a series of fully funded biopharmaceutical projects, extensive animal studies utilizing C1 -produced proteins, and in 2024, the successful completion of a Phase 1 first -in-human study for a vaccine antigen produced using C1, which demonstrated its safety for human applications.

Recognizing the longer development timelines, clinical testing, and regulatory requirements associated with human and animal pharmaceutical products, the Company has refined its core business strategy to expand into recombinant (non-animal derived) alternative proteins for non-pharmaceutical applications in research, nutrition, and industrial markets.

To address these opportunities, the Company has developed and launched the Dapibus™ Protein Production Platform (“Dapibus™”), which supports various applications within the alternative proteins field, namely in Life Sciences, Food & Nutrition, and Bioindustrial applications.

Given the reduced developmental costs, shorter timelines, and fewer regulatory requirements associated with alternative proteins, Dapibus™ has enabled the Company to generate near-term recurring revenue while continuing to build long-term value through C1 for pharmaceutical applications.

The Company anticipates achieving commercialization of certain alternative protein products in 2025 through a combination of existing collaborations and internal manufacturing efforts.

Liquidity, Capital Resources, and Going Concern

In accordance with FASB Accounting Standards Codification (“ASC”) 205 - 40, Presentation of Financial Statements – Going Concern (“Topic 205 - 40” ), management is required to evaluate whether there are conditions and events, considered in the aggregate that raise substantial doubt about the Company’s ability to continue as a going concern for at least 12 months from the issuance date of the Company’s condensed interim financial statements.

This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the financial statements are issued.

When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern.

The mitigating effect of management’s plans, however, is only considered if both ( 1 ) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and ( 2 ) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued.

The Company expects to incur losses and have negative net cash flows from operating activities as it continues developing its microbial protein production platforms and related products, and as it expands its pipelines and engages in further research and development activities for internal products as well as for its third -party collaborators and licensees.

The success of the Company depends on its ability to develop its technologies and products to the point of regulatory approval and subsequent revenue generation or through the sublicensing of the Company’s technologies and products, and its ability to raise capital to finance these developmental efforts.

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, we re $ 5,824,326 .

The Company intends to use the net proceeds from the offering of the Convertible Notes for working capital and general corporate purposes.

The Convertible Notes are senior, secured obligations of Dyadic and its affiliates, and interest is payable quarterly in cash on the principal amount equal to 8 % per annum.

The Convertible Notes will mature on March 8, 2027 ( the “Maturity Date”), unless earlier converted, repurchased, or redeemed in accordance with the terms of the Convertible Notes.

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.

The conversion price is $ 1.79 per share of the Common Stock, which is equal to 125 % of the trailing 30 -day VWAP of the Common Stock ending on the trading day immediately preceding the date of the securities purchase agreement.

This private placement funding strengthened our financial position, and it will support our new-term revenue growth and accelerate our strategic objective of commercialization opportunities for pharmaceutical and non-pharmaceutical applications.

The Company has received successful top-line results for the Phase 1 clinical trial of DYAI- 100, and we do not plan to continue Phase 2/3 clinical trials unless third -party funding is secured.

The Company expects its existing cash and cash equivalents and cash raised from the Convertible Notes, 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

12 ) months from the date of issuance of the financial statements contained in this Form

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.

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.

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.

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 changed from $ 1.79 to $ 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, which are May 8, 2026, August 8, 2026 and November 8, 2026.

The Convertible Notes contain customary covenants, and the Securities Purchase Agreement relating to the Convertible Notes also contains certain affirmative and negative covenants (including, without limitation, restrictions on our ability to incur indebtedness, permit liens, make dividends or certain debt payments or consummate certain affiliate transactions).

The Company was in compliance with its covenants with respect to the Convertible Notes as of December 31, 2024.

As of December 31, 2024, $ 910,000 of the Convertible Notes have been converted into 556,623 shares of Common Stock.

For more information regarding the Convertible Notes, including the covenants related thereto , see Note 5 to the Co nsolidated Financial Statements.

In addition, on November 16, 2024, Dyadic entered into an agreement with the Bill & Melinda Gates Foundation (the “Gates Foundation”) relating to a grant in the amount of $ 3,092,136 awarded from the Gates Foundation for the cell line development of monoclonal antibodies targeting respiratory syncytial virus and malaria utilizing the Company’s C1 platform to provide globally accessible treatment options for underserved populations (the “Gates Foundation Grant”).

As of December 31, 2024, the Company had $ 6,506,750 cash and $ 2,780,825 short-term investment securities (including accrued interest) on its balance sheet, totaling $ 9,287,575 .

The Company expects its existing cash and cash equivalents, and cash raised from the Convertible Notes, or other debt instruments, and or other means, the Gates Foundation Grant, 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 Annual 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 and 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.

Basis of Presentation

1 unchanged sentence

Dyadic consolidates entities in which we have a controlling financial interest.

We consolidate subsidiaries in which we hold and/or control, directly or indirectly, more than 50% of the voting rights.

We consolidate our subsidiaries in which we hold and/or control, directly or indirectly, more than 50% of the voting rights.

All significant intra-entity transactions and balances have been eliminated in consolidation.

1 unchanged sentence

generally accepted accounting principles (“GAAP”).

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.

Segment Information

Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, or CODM, in deciding how to allocate resources and in assessing performance.

The CODM is the Company's senior management team that includes the Chief Executive Officer, Chief Operating Officer, and Chief Financial Officer.

The Company views its operations as and manages its business in one operating segment, which is the business of developing and commercializing synthetic protein products using the Company’s proprietary microbial platforms, including C1 and Dapibus™.

Segment information is further described in Note 9 to the consolidated financial statements included in this Annual Report on Form 10 -K.

Use of Estimates

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

For the years ended December 31, 2023 and 2022 , the Company’s revenue was generated from sixteen and fourteen customers, respectively.

As of December 31, 2023 and 2022 , the Company’s accounts receivable was from thirteen and six customers, respectively.

For the years ended December 31, 2024 and 2023 , the Company’s revenue was generated from 19 and 16 customers, respectively.

As of December 31, 2024 and 2023 , the Company’s accounts receivable was from nine and thirteen customers, respectively.

Significant customers are those that account for greater than 10% of the Company’s revenues.

For the years ended December 31, 2023 and 2022 , two and three signifi cant customers accounted for approximately $ 1,150,000 or 45.2 % an d $ 1,811,000 or 67.5 % of r esearch and development revenue, respectively.

For the years ended December 31, 2024 and 2023 , two significant customers accounted for approximately $ 1,915,000 or 54.8 % and $ 1,503,000 or 51.9 % of revenue, respectively.

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

The Company conducts operations in the Netherlands through its foreign subsidiary and generates a portion of its revenues from customers that are located outside of the United States.

For the years ended December 31, 2023 and 2022 , the Company had six customers outside of the United Sates (i.e.

European and Asian customers) that accounted for approximately $ 537,000 or 21.1 % and $ 586,000 or 21.8 % of total revenue, respectively.

As of December 31, 2023 and 2022 , the Company had six and four customers outside of the United Sates (i.e.

European and Asian customers) that accounted for approximately $ 213,000 or 45.6 % and $ 91,000 or 27.4 % of accounts receivable, respectively.

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

For each of the years ended December 31, 2023 and 2022 , three CROs accounted for approximately $4,644,0 00 or 96.0 % and $ 5,575,000 or 97.9 % of total research services we purchased, respectively.

As of December 31, 2023 , three CROs accounted for approximately $ 620,000 or 94.4 % of a ccounts payable.

For the years ended December 31, 2024 and 2023 , the Company had eleven and six customers outside of the United States (i.e., European and Asian customers) that accounted for approximately $ 1,526,000 or 43.7 % and $ 537,000 or 18.5 % of total revenue, respectively.

As of December 31, 2024 and 2023 , the Company had four and six customers outside of the United States (i.e., European and Asian customers) that accounted for approximately $ 146,000 or 61.5 % and $ 213,000 or 45.6 % of accounts receivable, respectively.

The Company uses CROs to conduct its research projects and manage its clinical trial.

For the years ended December 31, 2024 and 2023 , two and three CROs accounted for approximately $ 2,389,000 or 93.0 % and $ 4,644,000 or 96.0 % of total research serv ices we purchased, respectively.

As of December 31, 2024 , two CROs accounted for approximately $ 284,000 or 58.9 % of ac counts payable.

As of December 31, 2023 , three CROs accounted for approximately $ 620,000 or 94.4 % of accounts payable.

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

The loss of business from one of these CROs or a combination of them could adversely affect the Company's operations.

Cash and Cash Equivalents

We treat highly liquid investments with original maturities of three months or less when purchased as cash equivalents, including money market funds, which are unrestricted for withdrawal or use.

The Company has no restricted cash balances as of December 31, 2024 and 2023.

Investment Securities

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11,360 11,360

$ 970,462 $ 1,057,164

Revenue Recognition

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Revenue related to grants:

The Company may receive grants from governments, agencies, and other private and not -for-profit organizations.

T he Company may receive grants from governments, agencies, and other private and not -for-profit organizations.

These grants are intended to be used to partially or fully fund the Company’s research collaborations .

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.

However, most, if not all, of such potential grant revenues, when received, is expected to be earmarked for third parties to advance the research required, including preclinical and clinical trials.

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 the royalty has been allocated has been satisfied (or partially satisfied).

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expired on August 31, 2023, and there was no right-of-use asset or lease liability recognized for this lease due to its short-term nature.

In August 2023, the Company entered into a new lease ( “1044 N Lease”) comprising approximately 1,719 square feet of office space located at 1044 N US 1, Jupiter, Florida, commencing September 1, 2023 ( “Commencement Date”) and will expire on August 31, 2026.

In August 2023, the Company entered into a new lease ( “1044 N Lease”) for office space for its new corporate headquarters located at 1044 N US 1, Jupiter, Florida, commencing September 1, 2023 ( “Commencement Date”) and expiring on August 31, 2026.

Rent is subject to three percent ( 3 %) annual increases, and the Company is responsible for certain common area maintenance charges and taxes throughout the life of the 1044 N Lease.

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The options were not included in the lease term used in determining the right-of-use asset or lease liability as the Company did not consider it reasonably certain they would exercise the options.

For the years ended December 31, 2023 and 2022 , the Company’s total operating lease expense was approximately $ 72,000 and $ 58,000 , respectively.

As of December 31, 2023 , the Company’s total operating lease liabilities was approximately $ 136,929 , which is presented net of imputed interest of $ 16,770 , and the operating lease right-of-use asset was approximately $ 141,439 .

There were no operating lease liabilities or operating lease right-of-use assets as of December 31, 2022.

For the years ended December 31, 2024 and 2023 , the Company’s total operating lease expense was $ 106,785 and $ 71,656 , respectively.

As of December 31, 2024 , the Company’s total operating lease liabilities was $ 88,870 , which is presented net of imputed interest o f $ 6,669 , and the oper ating lease right-of-use asset was $ 92,211 .

As of December 31, 2023, the Company’s total operating lease liabilities was $ 136,929 , which is presented net of imputed interest of $ 16,770 , and the operating lease right-of-use asset was $ 141,439 .

As of December 31, 2024 , the weighted average remaining lease term was 1.7 years, and the weighted average discount rate was 8.8 %.

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Differences between tax positions taken or expected to be taken in a tax return and the net benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability should be recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for unrecognized tax benefits, because it represents a company’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provision of ASC 740.

For the year ended December 31, 2023 , other income of approximately $ 1,018,000 was related to the sale of the equity interest in Alphazyme, LLC.

For the year ended December 31, 2022, other income of $ 250,000 was related to a settlement payment we received from the termination of term sheet of a proposed license and collaboration.

Comprehensive Income (Loss)

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For the years ended December 31, 2024 and 2023 , the effect of the potential exercise of options to purchase 5,788,597 and 5,469,247 shares of common stock, respectively, were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (the “ASU”) 2016 - 13, Financial Instruments — Credit Losses (Topic 326 ) :

Measurement of Credit Losses on Financial Instruments .

which replaces the incurred loss model with a forward-looking expected credit loss (“CECL”) model and requires consideration of a broader range of reasonable and supportable information to estimate expected credit losses.

ASU 2016 - 13 applies to financial assets, measured at amortized cost, including held-to-maturity debt securities and accounts receivable.

ASU 2016 - 13 must be adopted using a modified retrospective transition method through a cumulative-effect adjustment to members’ equity in the period of adoption.

The Company adopted ASU 2016 - 13 and related amendments as of January 1, 2023, and the adoption of the new standard did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements Not Adopted as of December 31, 2023

In December 2023, the FASB issued Accounting Standards Update 2023 - 09 – Income Taxes (Topic ASC 740 ) Income Taxes.

New and Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (the “ASU”) 2023 - 07 – Segment Reporting (Topic ASC 280 ), or ASU 2023 - 07, Improvements to Reportable Segment Disclosures.

The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant segment expenses.

The enhancements under this update require disclosure of significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss, require disclosure of other segment items by reportable segment and a description of the composition of other segment items , require annual disclosures under ASC 280 to be provided in interim periods, clarify use of more than one measure of segment profit or loss by the CODM, require that the title of the CODM be disclosed with an explanation of how the CODM uses the reported measures of segment profit or loss to make decisions, and require that entities with a single reportable segment provide all disclosures required by this update and required under ASC 280.

ASU 2023 - 07 is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023 - 07 and applied the guidance retrospectively to all periods presented in the consolidated financial statements.

In December 2023, the FASB issued ASU 2023 - 09 – Income Taxes (Topic ASC 740 ) Income Taxes.

The ASU improves the transparency of income tax disclosures by requiring ( 1 ) consistent categories and greater disaggregation of information in the rate reconciliation and ( 2 ) income taxes paid disaggregated by jurisdiction.

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The amendments in ASU 2023 - 09 will become effective beginning with our 2025 fiscal year.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

We do not expect that this guidance will have a material impact on our financial position and results of operations.

In November 2023, the FASB issued Accounting Standards Update 2023 - 07 – Segment Reporting (Topic ASC 280 ) Improvements to Reportable Segment Disclosures.

The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant segment expenses.

ASU 2023 - 07 is effective for public business entities for fiscal years beginning after December 15, 2023, with early adoption permitted.

We continue to evaluate these changes and do not expect that this guidance will have a material impact on our financial position, results of operations, or financial statement disclosures.

We do not expect that this guidance will have a material impact on our financial position and our results of operations.

Cash, Cash Equivalent, and Investments

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

Gates Foundation Grant

In November 2024, Bill & Melinda Gates Foundation (the “Gates Foundation”) awarded the Company a grant in the amount of $ 3,092,136 for the cell line development of monoclonal antibodies targeting respiratory syncytial virus and malaria utilizing the Company’s C1 platform to provide globally accessible treatment options for underserved populations (the “Gates Foundation Grant”).

In December 2024, the Company received approximately $ 0.8 million of the Gates Foundation Grant, and the remaining award will be received in 2025 and 2026 in the amount of approximately $ 1.5 million and $ 0.7 million, respectively.

For the year ended December 31, 2024, the Company has not recognized any research and development revenue, in connection with the Gates Foundation Grant.

On June 27, 2024 , the Company entered into a License and Development Agreement (the “Proliant Agreement”) with Proliant Biologicals, LLC d/b/a Proliant Health and Biologicals (“Proliant”), pursuant to which, Proliant will license Dyadic’s proprietary fungal microbial expression and production platforms and microbial strains for the production of recombinant serum albumin, for an initial period of 10 years with an option to extend for an additional 3 years under certain circumstances.

Under the terms of the Proliant Agreement, Dyadic has received an initial upfront payment of $ 500,000 , a second payment of $ 500,000 for completing the transfer of a Production Strain (as defined in the Proliant Agreement) and will receive a final payment of $ 500,000 upon the meeting of a certain productivity threshold.

Upon commencing commercial sales of animal-free recombinant serum albumin products produced pursuant to the Proliant Agreement, the Company will receive royalties based on a certain percentage of the gross margin received by Proliant, as defined in the Proliant Agreement.

For the year ended December 31, 2024 , the Company recognized a total of $ 1.0 million in license revenue related to the Proliant Agreement, as the performance obligations for the first and second payments have been satisfied.

On September 18, 2023, Dyadic International (USA) Inc., a subsidiary of the Company, signed a Development and Exclusive License Agreement (the “Inzymes Agreement”) with Inzymes ApS (“Inzymes”), a Denmark corporation, to develop and commercialize certain non-animal dairy enzymes used in the production of food products using Dyadic’s proprietary Dapibus™ platform.

Under the terms of the Inzymes Agreement, a research collaboration to develop a basket of dairy enzymes will be fully funded by Inzymes with an upfront payment of $ 0.6 million and an additional payment payable upon the first commercial sale of product.

Dyadic will also be eligible to receive success fees upon the achievement of certain target yields, milestone payments upon the first commercial sale of each product and royalties.

In October 2023, the Company received the upfront payment of $ 0.6 million in accordance with the terms of the Inzymes Agreement.

The payment consisted of funding for specified product research and development efforts and right of first refusal for certain product candidates.

For the year ended December 31, 2023 , the Company recorded research and development revenues of approximately $ 110,000 , in connection with the Inzymes Agreement.

In October 2023, the Company received an upfront payment of $ 0.6 million in accordance with the terms of the Inzymes Agreement.

On October 11, 2024, the Inzymes Agreement was amended (“the Amended Inzymes Agreement”) to change the scope of research and development services required under the agreement as well as adjust the success fees upon the achievement of certain target yields, milestone payments upon first commercial sale of each product and royalties.

For the year ended December 31, 2024 , the Company has completed all product research and development services and satisfied all related performance obligations under the Amended Inzymes Agreement, and recognized $ 890,169 in license revenues, including success fees upon the achievement of target yield of one related product.

For the year ended December 31, 2024, the Company also recognized research and development revenues of $ 25,000 related to the Amended Inzymes Agreement.

The Company will continue evaluating the achievement of milestones related to target yields and product commercialization of each product when they are considered probable and estimable under the Inzymes Agreement.

A Global Food Ingredient Company

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Under the initial terms of the JDA, Dyadic was to develop its proprietary production cell lines for the manufacture of animal free ingredient product candid ates.

As of December 31, 2023, th e GFIC has completed its one -year funding commitment for the initial phase of research collaboration in an amount approximatin g $1.35 million, and, pu rsuant to the GFIC’s rights under the JDA, the Company and the GFIC are conferring to decide whether or not, and if it is possible, to move forward to the next phase of the project.

The Company is also considering other funding sources to continue the project.

For the years ended December 31, 2023 and 2022 , the Company recorded research and development revenues, including milestone payments, of approximate ly $ 631,000 and $ 790,000 , respectively, in c onnection 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.

Since then, the Company has expanded the license agreement to include additional research projects to develop animal vaccines for livestock.

Under the Phibro/Abic Agreement, the Company has received an exclusivity payment in April 2022 and is eligible 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.

As of December 31, 2023 , there were no events or circumstances that would change the transaction price and no milestone or royalty payments have been recognized.

On December 16, 2021, the Company entered 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”).

For the years ended December 31, 2024 and 2023 , the Company recorded research and development revenues, including milestone payments, of $ 0 and approximately $ 631,000 , respectively, in c onnection with the JDA.

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

On October 2, 2023, Janssen provided written notice to Dyadic that it has decided to wind down the collaboration with an effective end date of December 31, 2023.

For the years ended December 31, 2023 and 2022 , the Company recognized approximately $ 353,000 and $ 176,000 license revenue and research and development revenues of approximat ely $ 520,000 and $ 539,000 , resp ectively, in connection with the Janssen Agreement.

As of December 31, 2023 and 2022 , approximately $ 145,000 an d $ 121,000 of accounts receivable were related to Janssen, respectively.

For the year ended December 31, 2024 , there were no revenues related to the Janssen Agreement.

For the year ended December 31, 2023, the Company recognized approximately $ 353,000 in license revenue and approximately $ 520,000 in research and development revenues in connection with the Janssen Agreement.

As of December 31, 2024 and 2023 , $ 0 an d approximately $ 145,000 of accounts receivable were related to Janssen, respectively.

In 2019 the Company entered into a sub-licensing agreement with Alphazyme, LLC (“Alphazyme”) that was subsequently amended (the “Amended Alphazyme LLC Agreement”).

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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.

For the year ended December 31, 2023, the Company received a total cash payment of approximately $ 1.3 million from the sale of its equity interest in Alphazyme, LLC.

For the year ended December 31, 2023 , there was no provision for income taxes or unrecognized tax benefits recorded.

The significant components of gain (loss) before income taxes are as follows:

Years Ended December 31,

$ ( 6,766,409 ) $ ( 9,828,427 )

Foreign operations

( 29,052 ) 93,169

Total loss before provision for income taxes

$ ( 6,795,461 ) $ ( 9,735,258 )

The Company has no current or deferred income tax for the years ended December 31, 2023 and 2022 .

The income tax provision differs from the expense amount that would result from applying the federal statutory rates to income before income taxes due to permanent differences, state income taxes and a change in the deferred tax valuation allowance.

The reconciliation between the statutory tax rate and the Company’s actual effective tax rate is as follows:

Years Ended December 31,

statutory rate

( 21.00 )% ( 21.00 )%

State taxes, net of federal benefit

( 4.19 ) ( 4.35 )

Non-deductible items

Change in valuation allowance

True-up adjustment

Foreign operations

( 0.11 ) 0.24

Change in tax rate

Effective income tax rate

The significant components of the Company’s net deferred income tax assets are as follows:

Section 174 - R&D expenses

$ 1,769,000 $ 1,046,400

Stock option expense

1,419,300 1,341,900

NOL carryforward

11,620,700 11,524,900

Research and development credits

1,503,600 1,623,100

Operating lease liability

Right-of-use asset

134,800 ( 78,200 )

Deferred tax asset, net of deferred tax liabilities

16,446,300 15,458,100

Valuation allowance

( 16,446,300 ) ( 15,458,100 )

Net deferred tax asset

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

In assessing the realizability of deferred tax assets, Management evaluates whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

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, 2023 and 2022.

The Company had federal and state net operating loss (“NOL”) carryforwards available as of December 31, 2023, and 2022, in the amount of approximately $ 45.9 million and $ 44.0 million, respectively.

Approximately $ 42.9 million of the federal 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.

In addition, the Company had foreign net operating loss carryforwards available as of December 31, 2023, and 2022, in the amounts of approximately $ 1.4 million and $ 1.4 million.

These foreign net operating loss carryforwards will begin to expire, if unused, in various amounts between 2025 and 2027.

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.

For the year ended December 31, 2024, there were no revenues related to Alphazyme.

For the year ended December 31, 2023, the Company recognized a total revenue of approximately $ 1.3 million from the sale of its equity interest in Alphazyme, LLC.

Commitments and Contingencies

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In August 2023, the Company entered into a new lease comprising approximately 1,719 square feet of office space located at 1044 N US 1, Jupiter, Florida, commencing September 1, 2023, and will expire on August 31, 2026.

The Company occupies this space for an annual rental rate of approximately $ 59,000 .

The Company occupies this space for an annual rental rate of approximately $ 59,000 , excluding common area maintenance expenses.

The Netherlands Office

The Company maintains a small satellite office in Wageningen, The Netherlands.

The Company occupies a flexible office space for an annual rental rate of approximately $ 4,800 .

The lease expires on January 31, 2025, and thereafter, the Company will reconsider the leased space to a lign with the future operations of the Company.

The Company occupies a flexible office space for an annual rental rate of approximatel y $ 4,600 .

The lease expires on January 31, 2026, and thereafter, the Company will reconsider the leased space to align with the future operations of the Company.

As of December 31, 2024 , the future minimum annual lease payments under the operating leases are below.

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The contracts set forth the Company’s minimum purchase requirements that are subject to adjustments based on certain performance conditions.

The commitments related to agreements to purchase certain services in the ordinary course of business, as of December 31, 2023 is approximately $ 932,000 .

All current contracts expire in 2024.

VTT Research Contract Extension

On January 31, 2024, the Company entered into the Third Amendment to the commission contract concerning VTT Technical Research Centre of Finland Ltd.

(“VTT”) to develop Dyadic’s C1 fungal expression system for ther apeutic protein production.

The original contract was entered on June 28, 2019, and subsequently amended by the First Amendment on June 21, 2022 and the Second Amendment on September 9, 2022.

Under the terms of the Third Amendment, the contract duration is extended to January 31, 2025 and Dyadic will pay VTT approximately a total of EUR €186,000 to continue developing Dyadic’s C1 -cell protein production platform for therapeutic protein production, including C1 host system.

Dyadic retains the right to terminate the contract with 90 days’ notice.

As of December 31, 2024 , the commitments related to agreements to purchase certain services in the ordinary course of business are below.

All current contracts expire in or before 2026.

Legal Proceedings

We are not currently involved in any litigation that we believe could have a materially adverse effect in our financial condition or results of operations.

From time to time, the Company is subject to legal proceedings, asserted claims and investigations in the ordinary course of business, including commercial claims, employment and other matters, which management considers immaterial, individually and in the aggregate.

The Company is not currently involved in any litigation that it believes could have a materially adverse effect in our financial condition or results of operations.

The Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

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Protracted litigation and/or an unfavorable resolution of one or more of proceedings, claims or investigations against the Company could have a material adverse effect on the Company’s consolidated financial position, cash flows or results of operations.

Convertible Notes

On March 8, 2024, the Company issued senior secured convertible promissory notes (the “Convertible Notes”) with an aggregate principal amount of $ 6.0 million, of which, $2.0 million were sold to related parties, including immediate family members and family trusts related to Mark Emalfarb, our President and Chief Executive Officer and a member of our Board of Directors.

The Convertible Notes are senior, secured obligations of the Company and its affiliates, and interest is payable quarterly in cash on the principal amount equal to 8 % per annum, and guaranteed by its subsidiary, Dyadic International (USA), Inc.

under a subsidiary guarantee for the benefit of the holders of the Convertible Notes (each such holder, a “Holder”).

The Convertible Notes mature on March 8, 2027, unless earlier converted or redeemed in accordance with the terms of the Convertible Notes.

The Convertible Notes are secured by a first priority lien on substantially all assets of the Company and Dyadic International (USA), Inc.

The Convertible Notes are accounted for in accordance with ASC 470 - 20, Debt with Conversion and Other Options and ASC 815 - 15, Derivatives and Hedging .

Under ASC 815, contracts that are both indexed to its own stock and classified in stockholders’ equity in its statement of financial position are not considered to be derivative instruments.

Based on the Company’s analysis, it is determined that the Convertible Notes contain embedded features that are indexed to the Company’s own stock and are classified in stockholders’ equity in the Company’s statement of financial position, but do not meet the requirements for bifurcation and recognition as derivatives, and therefore, do not need to be accounted for separately.

Accordingly, the proceeds received from the issuance of the Convertible Notes were recorded as a single liability in accordance with ASC 470 on the Company’s consolidated balance sheets.

The Company incurred $ 175,674 of debt issuance costs associated with the Convertible Notes, which were recorded as a reduction of the Convertible Notes on the consolidated balance sheets.

The debt issuance costs are being amortized and recognized as additional interest expense over the expected life of the Convertible Notes using the effective interest method.

We determined the expected life of the debt is equal to the three -year term of the Convertible Notes.

On October 4, 2024, the Company entered into an amendment (the “Amendment”) to the Convertible Notes.

Under 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 fal l on any of the 26, 29 and 32 -month anniversaries of the original issue date of the Convertible Notes which are May 8, 2026, August 8, 2026 and November 8, 2026.

The Company assessed the Amendment for a debt extinguishment or modification in accordance with ASC 470 - 50.

As both the change in the present value of future cash flows of the modified Convertible Notes to that of the original Convertible Notes (including callable features) and the change in fair value of the embedded conversion option to that of the carrying value of the Convertible Notes immediately before modification resulted in a less than 10% change, the Amendment was deemed not substantial and is regarded as a note modification.

The Company did not incur any gain or loss relating to the modification and any incremental costs related to the Amendment were expensed.

For the year ended December 31, 2024 , $ 257,778 o f interest was paid and debt issuance costs o f $ 63,020 wer e amortized and recorded in interest expense in the consolidated statements of operations.

As of December 31, 2024 , accrued interest on the Convertible Notes to related parties and other third parties was $ 27,173 and $ 80,000 , respe ctively.

As of December 31, 2024 , accumulated amortized debt issuance costs were $ 36,376 .

As of December 31, 2024, $ 910,000 of the Convertible Notes were converted into 556,623 shares o f the Company’s common stock.

As of December 31, 2024 , convertible notes payable consisted of the following:

Issuance Date

Interest Rate

Convertible Note

Principal Repayments

Conversion to

Principal Outstanding

Francisco Trust dated 2/28/1996 (1)

8% $ 1,000,000 $ — $ — $ 1,000,000

Bradley Emalfarb (2)

8% 500,000 — ( 500,000 ) —

Bradley Scott Emalfarb Irrevocable Trust (2)

8% 410,000 — ( 410,000 ) —

Emalfarb Descendent Trust (3)

8% 90,000 — — 90,000

Convertible Notes - Related Party

$ 2,000,000 $ — $ (910,000 ) 1,090,000

Unamortized Debt Issuance Costs - Related Party

Net Carrying Amount

Convertible Notes - Third Party

8% $ 4,000,000 $ — $ — 4,000,000

Unamortized Debt Issuance Costs - Third Party

Net Carrying Amount

Thomas Emalfarb, nephew of Mr.

Emalfarb, our President and Chief Executive Officer, is the Trustee of the Francisco Trust.

Thomas Emalfarb may be deemed to have voting, dispositive and investment power with respect to the shares of common stock held by the Francisco Trust and disclaims any such beneficial ownership other than to the extent of any pecuniary interest he may have therein, directly or indirectly.

The amount of accrued interest as of December 31, 2024 , is $ 20,000 .

( 2 ) Mark A.

Emalfarb, our President and Chief Executive Officer, is the Trustee of the Irrevocable Trust and the brother of Mr.

Emalfarb, who is the sole beneficiary of the Irrevocable Trust.

Emalfarb, as sole beneficiary of the Irrevocable Trust, therefore, may be deemed to have voting, dispositive and investment power with respect to the shares of common stock held by the Irrevocable Trust and disclaims any such beneficial ownership other than to the extent of any pecuniary interest he may have therein, directly or indirectly.

For the year ended December 31, 2024 , $ 500,000 of the Convertible Notes held by Mr.

Emalfarb were converted into 294,891 shares of the Company’s common stock.

For the year ended December 31, 2024 , $ 410,000 of the Convertible Notes held by Bradley Scott Emalfarb Irrevocable Trust were converted into 261,732 shares of the Company’s common stock.

As of December 31, 2024 , the amount of accrued interest for Bradley Emalfarb and Bradley Scott Emalfarb Irrevocable Trust was $ 1,733 and $ 3,640 , respectively.

( 3 ) Messrs.

Thomas Emalfarb, Scott Emalfarb and Michael Emalfarb, nephews of Mr.

Emalfarb, our President and Chief Executive Officer, are co-trustees of the Descendant Trust and may therefore be deemed to have shared voting, dispositive and investment power over the shares of common stock held by the Descendant Trust.

The amount of accrued interest as of December 31, 2024 , is $ 1,800 .

The Convertible Notes contain customary covenants, and the Securities Purchase Agreement relating to the Convertible Notes also contains certain affirmative and negative covenants (including, without limitation, restri ctions on our ability to incur indebtedness, permit liens, make dividends or certain debt payments or consummate certain affiliate transactions).

The Company was in compliance with its covenants with respect to the Convertible Notes as of December 31, 2024.

Share-Based Compensation

4 unchanged sentences

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

As of April 16, 2021, 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.

As of April 16, 2021, 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 December 31, 2024 , the Company had 5,788,597 stock options outstanding and an additio nal 2,056,629 share s of common stock available for grant under the 2021 Plan.

3 unchanged sentences

Vesting is determined by the Board of Directors at the time of grant.

The term of any stock option awards under the Company’s 2011 Plan and 2021 Plan is ten years, except for certain options granted to the contractors which are either one or three years.

The term of any stock option awards under the Company’s 2011 Plan and 2021 Plan is ten years, except for certain options granted to the contractors which are between two to three years.

The grant-date fair value of each option grant is estimated using the Black-Scholes option pricing model and amortized on a straight-line basis over the requisite service period, which is generally the vesting period, for each separately vesting portion of the award as if the award was, in substance, multiple awards.

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The expected life of option was based on the contractual term of the option and expected employee exercise and post-vesting employment termination behavior.

The Company uses 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 contract ors (i.e., 1 or 3 years).

The Company uses the weighted average vesting period and contractual term of the option as the best estimate of the expected life of a new option .

The assumptions used in the Black-Scholes option pricing model for stock options granted for the years ended December 31, 2024 and 2023 are as follows:

5 unchanged sentences

63.02 - 63.64 % 62.22% - 64.27 %

61.30 % - 61.58 %

Expected life of options (in years)

2.63 - 6.25 1.13 -6.25

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

4 unchanged sentences

( 15,680 ) 3.50

( 75,000 ) 4.81

Outstanding at December 31, 2023

5,469,247 $ 3.08 5.66 $ 322,738

Exercised (2)

( 55,000 ) 1.18

( 383,063 ) 2.16

( 73,312 ) 1.73

Outstanding at December 31, 2024

2 unchanged sentences

4,438,810 $ 3.19 4.44 $ 436,263

( 1 ) Represents the following stock options granted:

Annual share-based compensation awards on January 3, 2023, including:

(a) 406,250 stock options with an exercise price of $ 1.38 per share granted to executives and key personnel, upon one year anniversary, or vesting annually in equal installments over four years, (b) 262,500 stock options with an exercise price of $ 1.38 per share granted to members of the Board of Directors, vesting upon one year anniversary, (c) 24,100 stock options with an exercise price of $ 1.38 per share granted to employees, vesting annually in equal installments over four years, and (d) 15,000 stock options with an exercise price of $ 1.38 per share granted to a consultant, vesting upon one year anniversary.

• Throughout the year the following stock options were granted:

(a) on May 30, 2023, 37,500 stock options with an exercise price of $ 2.23 per share granted to a consultant, vesting over two months from the grant date, (b) on September 15, 2023, 55,000 stock options with an exercise price of $ 1.75 per share granted to a consultant, vesting over a year and half from the grant date, and (c) on October 23, 2023, 5,000 stock options with an exercise price of $ 1.66 per share granted to an employee vesting annually in equal installments over four years.

( 2 ) Represents the following stock options expired:

27 0,000 stock options with an exercise price of $ 1.39 per share granted to executive, (b) 25,000 stock options with an exercise price of $ 3.99 per share granted to a consultant, (c) 25,000 stock options with an exercise price of $ 1.75 per share granted to a member of the Board of Directors, (d) 31,520 stock options with an exercise price ranging between $ 1.39 and $ 5.27 per share granted to a former employee.

( 3 ) Represents the cancellation of unvested portion of the stock options granted previously to a former employee with exercise price ranging between $ 1.39 to $ 5.27 .

( 1 ) Represents the following options granted:

Annual share-based compensation awards on January 2, 2024, with an exercise price of $ 1.59 , including:

(a) 387,500 stock options granted to executives and key personnel, vesting upon one year anniversary, or annually in equal installments over four years, (b) 352,500 stock options granted to members of the Board of Directors, vesting upon one year anniversary, (c) 17,600 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.

One-time awards on April 11, 2024, with an exercise price of $ 1.84 , including 20,000 stock options granted to an executive, vesting annually in equal installments over four years, and 13,125 stock options granted to a member of the Board of Directors, vesting upon one year anniversary.

A one -time award on September 23, 2024, of 25,000 stock options granted to a consultant with an exercise price of $ 1.79 , vesting in three months.

( 2 ) Represents the following options exercised:

(a) 25,000 stock options exercised at $ 0.97 , and (b) 30,000 stock options exercised at $ 1.36 .

( 3 ) Represents the following options expired:

(a) 300,000 stock options with an exercise price of $ 1.87 per share granted to an executive, (b) 25,000 stock options with an exercise price of $ 1.76 per share granted to a member of the Board of Directors, (c) 7,500 stock options with an exercise price of $ 5.56 per share granted to a consultant, (d) 25,000 stock options with an exercise price of $ 4.14 per share granted to a consultant, and (e) 25,563 stock options with a weighted average exercise price of $ 2.93 per share granted to employees.

( 4 ) Represents the following options canceled:

(a) 50,000 stock options granted to a former member of the Board of Directors, (b) 13,125 stock options granted to the Company's former Chairman of the Board of Directors, and (c) 10,187 stock options granted to the Company's former employee.

The weighted average grant-date fair market value of stock options granted for the years ended December 31, 2024 and 2023 was $ 0.95 and $ 0.81 , respectively, based on the Black-Scholes option pricing model.

1 unchanged sentence

As of December 31, 2024 and 2023 , total unrecognized compensation cost related to non-vested stock options granted under the Company’s equity compensation plans was $ 319,978 and $ 559,121 , respectively, which is expected to be recognized over a weighted average period of 2.40 years and 2.68 years, respectively.

The Company adjusts unrecognized compensation cost for actual forfeitures as they occur.

The Company adjusts the unrecognized compensation cost for actual forfeitures as they occur.

Restricted Stock Units

2 unchanged sentences

The fair market value of RSUs is generally determined based on the closing market price of the stock on the grant date.

The following table summarizes the restricted stock award activity during the year ended December 31, 2023 :

The following table summarizes the restricted stock units activity during the year ended December 31, 2024 :

Weighted-Average

1 unchanged sentence

( 437,546 ) 1.52

Unvested shares forfeited (3)

( 11,792 ) 1.59

Outstanding at December 31, 2024

117,925 $ 1.59

( 1 ) On January 3, 2023, the Company granted 247,961 RSUs with immediate vesting, to executives and key personnel in lieu of cash bonuses earned for the year ended 2022.

The Company also granted 163,044 RSUs, vesting upon one year anniversary of the grant, to the Board of Directors as a result of the Board agreeing to a reduction in director cash compensation for 2023.

On December 6, 2023, the Company granted 50,000 RSUs to a consultant, vesting at the end of the service period.

On January 2, 2024, the Company granted 141,510 RSUs, vesting upon one year anniversary of the grant, to members of the Board of Directors.

On March 13, 2024, the Company granted 212,709 RSUs with immediate vesting, to executives and key personnel in lieu of cash bonuses earned for the year of 2023.

The fair value of the restricted stock unit is the Company’s closing stock price on the grant date as reported on the Nasdaq Stock Exchange.

Represents the vesting of 212,709 RSUs granted to executives and key personnel, 174,837 RSUs granted to the Board of Directors, and 50,000 RSUs granted to a consultant.

Represents the cancellation of RSUs granted to a former member of the Board of Directors.

Compensation Expenses

We recognize all share-based payments to employees, consultants, and our Board, as non-cash compensation expense, in research and development expenses or general and administrative expenses in the consolidated statement of operations, and these charges had no impact on the Company’s reported cash flows.

We recognize all share-based payments to employees, consultants, and our Board, as non-cash compensation expenses, in research and development expenses or general and administrative expenses in the consolidated statement of operations, and these charges had no impact on the Company’s reported cash flows.

Stock-based compensation expense is calculated on the grant date fair values of such awards, and recognized each period based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period.

9 unchanged sentences

$ 1,126,279 $ 1,244,121

The following table summarizes the Company’s non-cash share-based compensation expenses:

The following table summarizes the Company’s non-cash share-based compensation expense allocation between options and restricted stock units:

Years Ended December 31,

Share based compensation expense- stock options

Share-based compensation expenses- stock option

$ 861,999 $ 1,004,054

Share based compensation expense- restricted stock units

Share-based compensation expenses- restricted stock units

264,280 240,067

$ 1,126,279 $ 1,244,121

Shareholders’ Equity

Issuances of Common Stock

For the year ended December 31, 2024 , there wer e 556,623 shares of the Company’s common stock issued resulting from the conversion of convertible notes with a weighted average issue price of $ 1.63 pe r share, 437,546 shares of the Company’s common stock issued resulting from the vesting of restricted stock units with a weighted average issue price of $ 1.52 pe r share, and 30,569 shares of the Company's common stock issued resulting from the exercise of stock options, with a weighted average issue price of $ 1.04 per share.

For the year ended December 31, 2023, there were 247,961 shares of the Company’s common stock issued resulting from the vesting of restricted stock units with a weighted average issue price of $ 1.38 per share.

For the year ended December 31, 2022, there were 333,943 shares of the Company’s common stock issued resulting from the exercise of stock options, with a weighted average issue price of $ 1.63 per share.

Treasury Stock

As of December 31, 2024 , and 2023 , there were 12,253,502 shares of common stock held in treasury, at a cost of approximately $ 18.9 million, representing the purchase price on the date the shares were surrendered to the Company.

For the year ended December 31, 2024 , there was no provision for income taxes or unrecognized tax benefits recorded.

The significant components of gain (loss) before income taxes are as follows:

Years Ended December 31,

$ ( 5,757,824 ) $ ( 6,766,409 )

Foreign operations

( 51,335 ) ( 29,052 )

Total loss before provision for income taxes

$ ( 5,809,159 ) $ ( 6,795,461 )

The Company has no current or deferred income tax for the years ended December 31, 2024 and 2023 .

The reconciliation between the statutory tax rate and the Company’s actual effective tax rate is as follows:

Years Ended December 31,

statutory rate

( 21.00 )% ( 21.00 )%

State taxes, net of federal benefit

( 4.29 ) ( 4.19 )

Non-deductible items

Change in valuation allowance

True-up adjustment

Foreign operations

Change in tax rate

Effective income tax rate

The significant components of the Company’s net deferred income tax assets are as follows:

Section 174 - R&D expenses

$ 2,123,800 $ 1,769,000

Stock option expense

1,584,700 1,419,300

NOL carryforward

12,655,300 11,620,700

General Business credits

1,278,400 1,503,600

Operating lease liability

22,500 34,700

Right-of-use asset

( 23,400 ) ( 35,800 )

Deferred tax asset, net of deferred tax liabilities

17,642,100 16,446,300

Valuation allowance

( 17,642,100 ) ( 16,446,300 )

Net deferred tax asset

In assessing the realizability of deferred tax assets, Management evaluates whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

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, 2024 and 2023.

The Company had federal and state net operating loss (“NOL”) carryforwards available as of December 31, 2024, and 2023, in the amount of approximately $ 49,903,000 and $ 45,850,000 , respectively.

Approximately $ 46,965,000 of the federal 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 2038.

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

The Company operates and manages its business as one reportable segment and one operating segment, which is the business of developing and commercializing synthetic protein products using the Company’s proprietary microbial platforms, including C1 and Dapibus™.

The Company's chief operating decision maker, or CODM, is the Company's senior management team that includes the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer.

The CODM assesses performance for the segment and decides how to allocate resources based on consolidated net loss that is also reported on the consolidated statements of operations.

The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets.

The Company operates in the U.S.

All material long-lived assets of the Company reside in the U.S.

For geographic information about the Company’s product revenues, see Note 1, Concentration .

Long-lived assets primarily consist of operating lease right-of-use assets.

The CODM uses consolidated net loss to evaluate the Company's spend and monitor budget versus actual results.

The monitoring of budgeted versus actual results is used in assessing performance of the segment and in establishing resource allocation across the organization.

Factors used in determining the reportable segment include the nature of the Company's operating activities, the organizational and reporting structure and the type of information reviewed by the CODM to allocate resources and evaluate financial performance.

The accounting policies of the segment are the same as those described in Note 1 of the notes to the consolidated financial statements included in this Annual Report on Form 10 -K.

The C ODM reviews cash, cash equivalents and investment securities as a measure of segment assets.

As of December 31, 2024 and 2023, the Company’s cash, cash equivalents and investment securities were $ 9.3 million and $ 7.3 million, respectively.

The following table presents information about segment revenue, significant segment expenses and segment operating loss for the years ended December 31, 2024 and 2023:

Years Ended December 31,

$ 3,495,389 $ 2,898,806

Cost of revenues

1,194,624 1,975,849

Research and development expenses:

Outside contracted services

1,503,397 2,677,941

Personnel related costs

414,916 510,647

Facilities, overhead, and other

67,411 65,584

General and administrative expenses:

Compensation and related expenses

2,308,566 2,200,914

Business consulting expenses

764,326 305,348

Legal and professional services

998,630 931,038

Other G&A expenses

995,501 1,244,121

Share-based compensation expenses

1,126,279 1,178,686

Foreign currency exchange loss

22,561 38,417

Other Income (expenses), net

91,663 1,434,278

$ ( 5,809,159 ) $ ( 6,795,461 )

Subsequent Events

1 unchanged sentence

Except for items mentioned in the notes, and as discussed below, management is not aware of any material events that have occurred subsequent to the balance sheet date that would require adjustment to, or disclosure in the accompanying financial statements.

2024 Annual Grants

On January 2, 2025, the Company granted an annual stock option award with an exercise price of $ 1.74 , including:

(a) 356,500 stock options granted to executives and key personnel, vesting upon one year anniversary, or annually in equal installments over four years, (b) 277,500 stock options granted to members of the Board of Directors, vesting upon one year anniversary, (c) 19,500 stock options granted to employees, vesting annually in equal installments over four years, and (d) 20,000 stock options granted to a consultant, vesting upon one year anniversary.

On January 2, 2024, the Company grant ed 141,510 restricted stock units , vesting upon one year anniversary, to the Board of Directors as a result of reduction in director cash compensation of 2024.

The grant of these RSUs has been approved by the Compensation Committee of the Board of Directors in December 2023.

On March 11, 2024, the Compensation Committee of the Board of Directors approved and granted an aggregate of 212,709 restricted stock units, vested in full, to executives and key personnel in lieu of cash bonus earned for the year ended December 31, 2023.

Senior Secured Convertible Promissory Notes

On March 8, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) pursuant to which the Company issued 8.0 % Senior Secured Convertible Promissory Notes due March 8, 2027 in an aggregate principal amount of $ 6.0 million (the “Convertible Notes”).

The purchasers of the Convertible Notes include 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 U/A/D February 28, 1996, an existing holder of more than 5% of our outstanding common stock, (collectively, the “Purchasers”).

The Convertible Notes were sold in a private placement in reliance on the exemption from registration provided by Section 4 (a)( 2 ) of the Securities Act of 1933, as amended.

The net proceeds from the sale of the Convertible Notes, after deducting offering expenses, will be approximately $ 5,850,000 .

The Company intends to use the net proceeds from the offering of the Convertible Notes for working capital and general corporate purposes.

The Convertible Notes will be senior, secured obligations of the Company and its affiliates, and interest will be payable quarterly in cash on the principal amount equal to 8 % per annum, and guaranteed by Dyadic International (USA), Inc.

under a subsidiary guarantee for the benefit of the holders of the Convertible Notes (each such holder, a “Holder”).

The Convertible Notes will mature on March 8, 2027 , unless earlier converted or redeemed in accordance with the terms of the Convertible Notes.

The Convertible Notes are secured by a first priority lien on substantially all assets of the Company and its subsidiary, Dyadic International (USA), Inc., pursuant to the Security Agreement (as defined below).

The Convertible Notes are convertible into shares of the Company’s common stock, in whole or in part, at the option of the Holders at any time, based on an initial conversion price of $ 1.79 per share of common stock, subject to adjustment in certain circumstances;

provided that the Company shall not effect any Conversion of a Note and the Holder thereof shall not have any right to convert any portion of such Note to the extent that, after giving effect to such conversion, such Holder would beneficially own shares of the company in excess of the limits provided in the applicable Convertible Notes;

provided further that the Company shall not issue any common stock pursuant to the terms of the Convertible Notes if such issuance would exceed 19.99% of the Company’s issued and outstanding Common Stock on date of the Purchase Agreement or otherwise exceed the aggregate number of shares of Common Stock which the Company may issue without breaching the Company’s obligations under the rules or regulations of Nasdaq.

The Holders may require the Company to redeem all or any part of the Convertible Notes on a redemption date falling on any of the 18, 21, 24, 27, 30, and 33 -month anniversaries of the original issue date of the Convertible Notes (any such date, a “Redemption Date”) upon not less than 60 calendar days written notice prior to the applicable Redemption Date.

The Company may also elect to redeem all or any part of the Convertible Notes on a Redemption Date upon not less than 60 calendar days written notice prior to the applicable Redemption Date.

The Convertible Notes contain customary terms and covenants and customary events of default ("Events of Default”).

Upon the occurrence of any Event of Default, at the Holder’s election, the outstanding principal amount of the applicable Convertible Notes, plus accrued but unpaid interest, liquidated damages, and other amounts owing in respect thereof through the date of acceleration, shall become immediately due and payable.

After the occurrence of any Event of Default that results in the eventual acceleration of any Note, the interest rate on such Note shall accrue at an interest rate equal to 18 % per annum (with a credit for any “unused” guaranteed interest).

The Securities Purchase Agreement also contains certain affirmative and negative covenants (including, without limitation, restrictions on our ability to incur indebtedness, permit liens, make dividends or certain debt payments or consummate certain affiliate transactions) and customary representations and warranties of the Company and the Purchasers, indemnification obligations of the Company, termination provisions, and other obligations and rights of the parties.

The Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers, pursuant to which the Company has agreed to register under the Securities Act any common stock of the Company issuable upon conversion of the Convertible Notes.

The Company also entered into a security agreement (the “Security Agreement”) with the Purchasers, pursuant to which the Company granted the Purchasers a continuing security interest in certain collateral to secure the full and prompt payment, performance and observance of all present and future indebtedness, obligations, liabilities and agreements of any kind of the Company to the Purchasers arising under or in connection with the Convertible Notes.

Dyadic International (USA), Inc., a subsidiary of the Company (the “Guarantor”) also entered into a subsidiary guarantee (the “Subsidiary Guarantee”) with the Purchasers, pursuant to which the Guarantor has guaranteed to the Purchasers the prompt and complete payment and performance when due of the obligations under the Securities Purchase Agreement.

On January 2, 2025, the Company granted 96,984 restricted stock units, vesting upon one year anniversary, to the Board of Directors as a result of reduction in director cash compensation of 2025, and an aggregate of 133,039 restricted stock units, vested in full, to executives and key personnel in lieu of cash bonus earned for the year ended December 31, 2024.

On March 20, 2025, the Company announced that it has received a funding award from CEPI to use C1 to accelerate the development of protein-based vaccines through the partnership with Fondazione Biotecnopolo di Siena (FBS), a non-profit foundation backed by the Italian government.

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