Dyadic International (NASDAQ: DYAI) grows Q1 2026 revenue but flags going-concern risks
Rhea-AI Filing Summary
Dyadic International, Inc. reported first-quarter 2026 revenue of $1.11 million, up from $393,572 a year earlier, driven by research collaborations, grant funding and license milestones, including recognition of $273,000 from its Proliant serum albumin agreement and continued Gates Foundation and CEPI grant activity.
The company posted a net loss of $1.95 million for the quarter, slightly improved from a $2.03 million loss in 2025, as higher revenue was offset by increased general and administrative expenses of $1.76 million. Cash, cash equivalents, restricted cash and investment securities totaled about $6.6 million as of March 31, 2026, and management believes this will fund operations for at least 12 months.
Stockholders’ equity turned negative at $(0.41) million, and Dyadic remains dependent on external funding, including $5.09 million of 8% senior secured convertible notes and a new at‑the‑market program of up to $4.24 million. Recent milestones—such as Proliant’s commercial launch of AlbuFree DX, Inzymes milestones, and new distribution and OEM agreements—support its strategic shift toward revenue-focused, non‑animal protein applications.
Positive
- Strong revenue growth and first commercial launches: Q1 2026 revenue rose to $1.11 million from $393,572, supported by Proliant milestones, Gates and CEPI grants, and an Inzymes milestone tied to first commercial product sales, marking a shift from purely R&D to commercial and royalty-bearing activity.
Negative
- Going‑concern risk and negative equity: Management identifies conditions that raise substantial doubt about continuing as a going concern under ASC 205‑40. Stockholders’ equity turned negative at $(0.41) million, with ongoing operating losses and reliance on debt, grants and potential equity issuance.
- Leverage and related‑party concentration in funding: Dyadic carries $6.0 million of 8% senior secured convertible notes (about $5.09 million outstanding), a significant portion held by related parties, adding fixed cash interest obligations and governance complexity while limiting financial flexibility.
Insights
Revenue is ramping and products are commercializing, but Dyadic remains loss-making with tight capital and negative equity.
Dyadic grew Q1 2026 revenue to $1.11 million, nearly triple the prior year, as Proliant, Gates, CEPI and Inzymes contracts moved forward. Loss from operations narrowed modestly to $1.90 million, showing early operating leverage but still meaningfully exceeding revenue.
Liquidity is a key constraint. Cash, restricted cash and investments of roughly $6.6 million and an at‑the‑market facility of up to $4.24 million sit alongside $5.09 million of 8% senior secured convertible notes maturing in 2027. Stockholders’ equity is now negative, and management acknowledges conditions that raise substantial doubt under going‑concern guidance, even as it believes existing resources cover at least 12 months.
Commercial progress is tangible: Proliant’s AlbuFree DX launch, Inzymes’ non‑animal chymosin commercialization, a BRIG Bio alpha‑lactalbumin deal, and OEM/distribution agreements broaden potential royalty and product revenue. Subsequent filings may clarify how quickly these relationships translate into material, recurring cash flows relative to Dyadic’s burn rate and covenant‑constrained balance sheet.
Key Figures
Key Terms
8.0% Senior Secured Convertible Promissory Notes financial
At-The-Market Equity Offering Program financial
restricted cash financial
deferred research and development obligations financial
held-to-maturity investment securities financial
going concern financial
Earnings Snapshot
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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The number of shares outstanding of the registrant’s common stock as of May 12, 2026 was .
TABLE OF CONTENTS
| Page | ||
| PART I FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 32 |
| Item 4. | Controls and Procedures | 32 |
| PART II OTHER INFORMATION | 33 | |
| Item 1. | Legal Proceedings | 33 |
| Item 1A. | Risk Factors | 33 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33 |
| Item 3. | Defaults Upon Senior Securities | 33 |
| Item 4. | Mine Safety Disclosures | 33 |
| Item 5. | Other Information | 33 |
| Item 6. | Exhibits | 34 |
| Signatures | 35 | |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q (“Quarterly Report”) contains forward-looking statements within the meaning of the federal securities laws, particularly under Item 2 “Management’s Discussion and Analysis.” All statements other than statements of historical fact are forward-looking. Examples of forward-looking statements include, but are not limited to, statements regarding industry prospects, future business, future results of operations or financial condition, future liquidity and capital resources, our ability to implement our agreements with third parties, management strategies, and our competitive position. Forward-looking statements generally can be identified by use of the words “expect,” “should,” “intend,” “anticipate,” “will,” “project,” “may,” “might,” “potential,” or “continue” and other similar terms or variations of them or similar terminology. Dyadic International, Inc., and its subsidiaries caution readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Such statements reflect the current views of our management with respect to our operations, results of operations and future financial performance.
Forward-looking statements involve many risks, uncertainties, or other factors beyond Dyadic’s control. These factors include, but are not limited to (i) our history of net losses; (ii) market and regulatory acceptance of our microbial protein production platforms and other technologies; (iii) failure to commercialize our microbial protein production platforms or our other technologies; (iv) competition, including from alternative technologies; (v) the results of nonclinical studies and clinical trials; (vi) our capital needs; (vii) changes in global economic and financial conditions; (viii) our reliance on information technology; (ix) our dependence on third parties; (x) government regulations and environmental, social and governance issues; (x) intellectual property risks; (xi) our ability to comply with the listing standards of the Nasdaq Stock Market LLC (“Nasdaq”); and (xii) other factors discussed in Dyadic’s publicly available filings, including information set forth under the caption “Risk Factors” in this Quarterly Report and in our annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 25, 2026, as amended on April 30, 2026 (the “Annual Report”). We caution you that the foregoing list of important factors is not exclusive. Any forward-looking statements are based on our beliefs, assumptions, and expectations of future performance, considering the information currently available to us. Before investing in our common stock, investors should carefully read the information set forth under the caption “Risk Factors” and elsewhere in this Quarterly Report, in our Annual Report and in our other SEC filings, which could have a material effect on our business, results of operations and financial condition. The forward-looking statements contained in this Quarterly Report are made only as of the date hereof, and except as required by law, we undertake no obligation to publicly update any forward-looking statements for any reason after the date of this Quarterly Report to conform these statements to actual results or to changes in our expectations.
| 2 |
PART I
Item 1. Financial Statements
DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| March 31, 2026 | December 31, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term investment securities | ||||||||
| Restricted cash | ||||||||
| Interest receivable | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Long-term investment securities | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Deferred research and development obligations | ||||||||
| Operating lease liability | ||||||||
| Accrued interest | ||||||||
| Accrued interest - related party | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Convertible notes, net of issuance costs | ||||||||
| Convertible notes, net of issuance costs - related party | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 5) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $ par value: | ||||||||
| Authorized shares - ; issued and outstanding | ||||||||
| Common stock, $.001 par value: | ||||||||
| Authorized shares - ; issued shares - and , outstanding shares- and as of March 31, 2026, and December 31, 2025, respectively | 48,693 | 48,442 | ||||||
| Additional paid-in capital | ||||||||
| Treasury stock, shares held at cost - | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ( | ) | ||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 3 |
DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Revenue: | ||||||||
| Research and development revenue | $ | $ | ||||||
| Grant revenue | ||||||||
| License and milestone revenue | ||||||||
| Total revenue | ||||||||
| Costs and expenses: | ||||||||
| Cost of research and development revenue | ||||||||
| Cost of grant revenue | ||||||||
| Research and development | ||||||||
| General and administrative | ||||||||
| Foreign currency exchange (gain) loss | ( | ) | ||||||
| Total costs and expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): |
|
| ||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Interest expense - related party | ( | ) | ( | ) | ||||
| Total other income (expense), net | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic and diluted net loss per common share | $ | ) | $ | ) | ||||
| Basic and diluted weighted-average common shares outstanding | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 4 |
DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-In | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| January 1, 2026 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock-based compensation expense | — | — | ||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | — | |||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| March 31, 2026 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Additional Paid-In | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| January 1, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||
| Stock-based compensation expense | — | — | ||||||||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | — | |||||||||||||||||||||||||||
| Issuance of common stock upon exercise of stock options | — | |||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| March 31, 2025 | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 5 |
DYADIC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation expense | ||||||||
| Amortization of held-to-maturity securities, net | ( | ) | ( | ) | ||||
| Amortization of debt issuance costs | ||||||||
| Foreign currency exchange (gain) loss, net | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Interest receivable | ||||||||
| Accounts receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Operating lease assets and liabilities | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ||||||
| Accrued interest - related party | ( | ) | ||||||
| Deferred research and development obligation | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchases of held-to-maturity investment securities | ( | ) | ( | ) | ||||
| Proceeds from maturities of investment securities | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities | ||||||||
| Proceeds from exercise of stock options | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Net decrease in cash, cash equivalents, and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents, and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | $ | ||||||
| Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Vesting of restricted stock units | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
Notes to Consolidated Financial Statements
Note 1: Organization and Summary of Significant Accounting Policies
Description of Business
Dyadic International, Inc. (“Dyadic”, “we”, “us”, “our”, or the “Company”) d/b/a, Dyadic Applied BioSolutions, is a global biotechnology platform company headquartered in Jupiter, Florida, with operations in the U.S. and the Netherlands. We develop and commercialize scalable, non-animal protein production platforms to meet growing global demand across the life sciences, food and nutrition, and bio-industrial markets.
Effective August 1, 2025, we are doing business as Dyadic Applied BioSolutions. This rebranding initiative marks a strategic transition from a research-driven organization to a commercially focused enterprise. The new name and visual identity better reflect the emphasis on delivering applied biotechnology solutions through our patented and proprietary Dapibus™ and C1 protein production platforms.
Our proprietary platforms—Dapibus™ and C1—are designed for rapid, cost-effective, and flexible production of high-value proteins, enabling partners to reduce development timelines and manufacturing costs. Our focus is to commercialize high-value, non-therapeutic proteins in the life sciences, food, nutrition and industrial bioprocessing sectors. These proteins avoid the regulatory complexity and high costs associated with therapeutic biologics, enabling faster time to revenue, broader market reach, and long-term supply agreements. Our recent significant milestones across both food and nutrition as well as fully funded legacy collaborations, such as with the Gates Foundation, underscore our strategic shift to revenue-focused bioprocessing protein platforms from therapeutic and vaccine development.
Liquidity and Capital Resources
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 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 DapibusTM and C1 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, commercialization, 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 $
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
During
the year ended December 31, 2024, $
On May 1, 2025, the Company amended the Convertible Notes to extend the Redemption Date (as defined in the Convertible Notes) to December 1, 2026.
On September 15,
2025, the Company amended the security agreement to reflect updates to the Secured Parties (as defined in the Security Agreement) thereunder,
including the addition of a trust for the benefit of the Company’s Chief Executive Officer, Mark Emalfarb, as a result of his purchase
and assignment to him of one of the Notes from an existing note holder in a principal amount of $
On December 23, 2025, the Company
entered into an additional amendment to the Convertible Notes, pursuant to which (i) the Maturity Date (as defined in the Convertible
Notes) was extended from March 8, 2027 to December 31, 2027, (ii) the conversion price at which the Convertible Notes are convertible
into shares of the Company’s common stock was set at $
| 7 |
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 March 31, 2026.
On
November 16, 2024, Dyadic entered into an agreement with the Gates Foundation (the “Gates Foundation,” formerly known as the Bill and Melinda Gates Foundation) relating to a grant in the amount of $
On
March 20, 2025, the Company received a funding award (the “CEPI Grant”) from Coalition for Epidemic Preparedness (“CEPI”)
to advance Dyadic’s C1 platform through a $
On
August 1, 2025, the Company completed an underwritten offering of
shares of the Company’s common stock (the “Offering”) pursuant to an underwriting agreement, dated July 30, 2025,
between the Company and Craig-Hallum Capital Group LLC (“Craig-Hallum”). The public offering price in the Offering was
$
per share of common stock. The net proceeds to the Company from the Offering were approximately $
On March 6, 2026, the Company
entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with Craig-Hallum as sales agent (the “Sales
Agent”), pursuant to which the Company may offer and sell from time to time, at its option, shares of the Company’s common
stock having an aggregate offering price of up to $
The
Company expects its existing cash, cash equivalents, restricted cash and its investment securities, including accrued interest,
totaling approximately $
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements, including the accounts of the Company and its wholly owned subsidiaries, have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as found in the Accounting Standards Codification (“ASC”), Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in consolidated financial statements have been condensed or omitted pursuant to such rules and regulations. All significant intra-entity transactions and balances have been eliminated in consolidation. The information included in this Quarterly Report should be read in conjunction with the audited consolidated financial statements and footnotes as of and for the year ended December 31, 2025, included in our Annual Report.
| 8 |
In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all adjustments, which are of a normal recurring nature, considered necessary for a fair presentation of all periods presented. The results of the Company’s operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for a full fiscal year.
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, President & 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 recombinant protein products using the Company’s proprietary microbial platforms, including Dapibus™ and C1. Segment information is further described in Note 8 to the consolidated financial statements included in this Quarterly Report on Form 10-Q.
Use of Estimates
The preparation of these consolidated financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amount of assets and liabilities and related disclosure of contingent assets and liabilities at the date of our consolidated financial statements and the reported amounts of revenues and expenses during the applicable period. Estimates inherent in the preparation of these consolidated financial statements include, but are not limited to, estimates related to revenue recognition, accrued expenses, stock-based compensation expense, warrants, and income taxes. The Company bases its estimates on historical experience and other market specific or other relevant assumptions it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts, and experience. Actual results may differ from these estimates under different assumptions or conditions. Such differences could be material to the consolidated financial statements.
Concentrations and Credit Risk
The Company’s financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash and cash equivalents, investment securities, and accounts receivable. At times, the Company has cash, cash equivalents, and investment securities at financial institutions exceeding the Federal Depository Insurance Company (“FDIC”) and the Securities Investor Protection Corporation (“SIPC”) insured limit on domestic currency and the Netherlands’ FDIC counterpart for foreign currency. The Company currently deals with four reputable financial institutions and has not experienced any losses in those accounts.
For
each of the three months ended March 31, 2026 and 2025, the Company’s revenue was generated from seven customers. Significant
customers are those that account for greater than 10% of the Company’s revenue. For the three months ended March 31, 2026 and
2025, four significant customers accounted for $
As
of March 31, 2026, and December 31, 2025, accounts receivable was from six and four customers, of which, two customers accounted
for $
The
Company conducts operations in the Netherlands through its foreign subsidiary and generates a portion of its revenue from customers
that are located outside of the United States. For each of the three months ended March 31, 2026 and 2025, the Company had one
customer outside of the United States (i.e., European customers) that accounted for $
As
of March 31, 2026 and December 31, 2025, the Company had two customers outside of the United States (i.e., European customers)
that accounted for $
The
Company uses several contract research organizations (“CROs”) to conduct its research projects. For each of the three
months ended March 31, 2026 and 2025, two CROs accounted for $
| 9 |
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.
Investment Securities
The Company’s investment policy requires investment securities to be investment grade and held to maturity with the primary objective to maintain a high degree of liquidity while maximizing yield. The Company invests excess cash balances in short-term and long-term investment grade securities. Short-term investment securities mature within twelve (12) months or less, and long-term investment securities mature over twelve (12) months from the applicable reporting date. Management determines the appropriate classification of each investment at the time of purchase and reevaluates the classifications at each balance sheet date.
The Company classifies its investments in debt securities as held-to-maturity. Held-to-maturity securities are those securities that the Company has the ability and intent to hold until maturity. Held-to-maturity securities are recorded at amortized cost, net of allowance for credit losses if applicable, and adjusted for the amortization or accretion of premiums or discounts. Premiums and discounts are amortized over the life of the related held-to-maturity security. When a debt security is purchased at a premium, both the face value of the debt and premium amount are reflected as investing outflow.
When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates, and whether it is more likely than not the Company will be required to sell the investment before recovery of the investment’s cost basis. The Company measures expected credit losses on held to maturity debt securities on an individual security basis. The estimate of expected credit losses considers historical credit information from external sources. The impairment of the investment that is related to the credit loss, if any, is expensed in the period in which the event or change occurred.
The Company classifies its investments in money market funds as available-for-sale securities and presented as cash equivalents on the consolidated balance sheets. As of March 31, 2026 and December 31, 2025, all our money market funds were invested in U.S. Government money market funds, for which the risk of loss is minimal.
As of March 31, 2026, and December 31, 2025, the Company did not have any investment securities classified as trading.
Restricted Cash
Restricted cash represents amounts subject to restrictions under an agreement with the Gates Foundation. These funds may need to be refunded and are limited to use as specified in the agreement. The restriction on these funds lapse as the Company fulfills its obligations under the agreement. Amounts expected to be used within the next twelve (12) months are classified as current.
Accounts Receivable
Accounts receivable consists of billed receivables currently due from customers and unbilled receivables. Unbilled receivables represent the excess of contract revenue (or amounts reimbursable under contracts) over billings to date. Such amounts become billable in accordance with the contract terms, which usually consider the passage of time, achievement of certain milestones or completion of the project.
| 10 |
Accounts
receivable are stated net of an allowance for credit losses, if deemed necessary based on the Company’s evaluation of collectability
and potential credit losses. Management assesses the collectability of its accounts receivable using the specific identification of account
balances and considers the credit quality and financial condition of its significant customers, historical information regarding credit
losses and the Company’s evaluation of current and expected future economic conditions and changes in our customer collection trends.
If necessary, an allowance for credit losses is recorded against accounts receivable such that the carrying value of accounts receivable
reflects the net amount expected to be collected. Accounts receivable balances are written off against the allowance for credit losses
when the potential for collectability is considered remote. Substantially all of our accounts receivable were current and include unbilled
amounts that will be billed and collected over the next twelve (12) months. Management determined that
Accounts receivable consists of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Billed receivable | $ | $ | ||||||
| Unbilled receivable | ||||||||
| $ | $ | |||||||
Accounts Payable
Accounts payable consist of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Research and development expenses | $ | $ | ||||||
| Legal and professional expenses | ||||||||
| Other | ||||||||
| $ | $ | |||||||
Accrued Expenses
Accrued expenses consist of the following:
| March 31, 2026 | December 31, 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Research and development expenses | $ | $ | ||||||
| Employee wages and benefits | ||||||||
| Legal expenses | ||||||||
| Other | ||||||||
| $ | $ | |||||||
Deferred Financing Costs
Deferred financing costs represent costs incurred in connection with the issuance of debt instruments and equity financings. Deferred financing costs related to the issuance of debt are amortized over the term of the financing instrument using the effective interest method and are presented in the consolidated balance sheets as an offset against the related debt. Offering costs from equity financings are netted against the gross proceeds received from the equity financings. See Note 4 for the amortization amount.
| 11 |
Revenue Recognition
As of March 31, 2026, the Company has not recognized any revenue from product sales. All our revenue to date has been research revenue from third-party collaborations and grants, as well as revenue from sublicensing agreements and collaborative arrangements, which may include upfront payments, options to obtain a license, payment for research and development services, milestone payments and royalties, in the form of cash or non-cash considerations (e.g., minority equity interest).
Revenue related to research collaborations and agreements: The Company typically performs research and development services as specified in each respective agreement on a best-efforts basis, and recognizes revenue from research funding under collaboration agreements in accordance with the 5-step process outlined in ASC Topic 606 (“Topic 606”): (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) locate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We recognize revenue when we satisfy a performance obligation by transferring control of the service to a customer in an amount that reflects the consideration that we expect to receive. Depending on how the performance obligation under our license and collaboration agreements is satisfied, we recognize the revenue either at a point in time or over time by using the input method under Topic 606 to measure the progress toward complete satisfaction of a performance obligation.
Under the input method, revenue will be recognized based on the entity’s efforts or inputs to the satisfaction of a performance obligation (e.g., resources consumed, labor hours expended, costs incurred, or time elapsed) relative to the total expected inputs to the satisfaction of that performance obligation. The Company believes that the cost-based input method is the best measure of progress to reflect how the Company transfers its performance obligation to a customer. In applying the cost-based input method of revenue recognition, the Company uses actual costs incurred relative to budgeted costs to fulfil the performance obligation. These costs consist primarily of full-time equivalent effort and third-party contract costs. Revenue will be recognized based on actual costs incurred as a percentage of total budgeted costs as the Company completes its performance obligations.
A cost-based input method of revenue recognition requires management to make estimates of costs to complete the Company’s performance obligations. In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates. The cumulative effect of revisions to estimated costs to complete the Company’s performance obligations will be recorded in the period in which changes are identified, and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.
Revenue related to grants: The Company receives 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 revenue, when received, is expected to be earmarked for third parties to advance the research required, including preclinical and clinical trials. Revenue related to grants is presented on a gross basis on the Consolidated Statements of Operations.
Revenue related to sublicensing agreements: If the sublicense to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the license when technology is transferred to the customer and the customer can use and benefit from the license.
Customer options: If the sublicensing agreement includes customer options to purchase additional goods or services, the Company will evaluate if such options are considered material rights to be deemed as separate performance obligations at the inception of each arrangement.
Milestone payments: At the inception of each arrangement that includes development, commercialization, and regulatory milestone payments, the Company evaluates whether the achievement of the milestones is considered probable and estimates the amount to be included in the transaction price. If the milestone payment is in exchange for a sublicense and is based on the sublicensee’s subsequent sale of the product, the Company recognizes milestone payment by applying the accounting guidance for royalties.
| 12 |
Royalties: With respect to licenses deemed to be the predominant item to which the sales-based royalties relate, including milestone payments based on the level of sales, the Company recognizes revenue at the later of (i) when the related sales occur or (ii) when the performance obligation to which some or all of the royalty relates has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of its sublicensing arrangements.
We invoice customers based on our contractual arrangements with each customer, which may not be consistent with the period that revenue is recognized. When there is a timing difference between when we invoice customers and when revenue is recognized, we record either a contract asset (unbilled accounts receivable) or a contract liability (deferred research and development obligations), as appropriate. If upfront fees or considerations related to a sublicensing agreement are received prior to the technology transfer, the Company will record the amount received as deferred revenue from the licensing agreement.
Research and Development Costs
Research and development (“R&D”) costs are expensed as incurred. R&D costs are for the Company’s internally funded pharmaceutical programs and other governmental and commercial projects.
Research and development costs consist of personnel-related costs, facilities, research-related overhead, services from independent contract research organizations, and other external costs. Research and development costs, for the three months ended March 31, 2026 and 2025 were as follows:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Outside contracted services | $ | $ | ||||||
| Personnel related costs | ||||||||
| Facilities, overhead and other | ||||||||
| $ | $ | |||||||
Foreign Currency Transaction Gain or Loss
The Company and its foreign subsidiary use the U.S. dollar as its functional currency and initially measure the foreign currency denominated assets and liabilities at the transaction date. Monetary assets and liabilities are then re-measured at exchange rates in effect at the end of each period, and property and non-monetary assets and liabilities are carried at historical rates.
Fair Value Measurements
The Company applies fair value accounting for certain financial instruments that are recognized or disclosed at fair value in the financial statements. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
| ● | Level 1 – Quoted prices in active markets for identical assets or liabilities. | |
| ● | Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | |
| ● | Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. |
The Company’s financial instruments included cash, cash equivalents, restricted cash and cash equivalents, investment in debt securities, accounts receivable, accounts payable and accrued expenses, accrued payroll and related liabilities, deferred research and development obligations, deposits, warrants, and the Company’s 8% Senior Secured Convertible Promissory Notes (the “Convertible Notes”), due December 2027. The carrying amount of these financial instruments, except for warrants and investment in debt securities and Convertible Notes, approximates fair value due to the short-term maturities of these instruments. The Company’s short-term and long-term investments in debt securities are recorded at amortized cost, and their estimated fair value amounts are provided by the third-party broker service for disclosure purposes. See Note 4 for additional information related to the Convertible Notes and Note 6 for warrants.
| 13 |
Income Taxes
For
the three months ended March 31, 2026, there was
We recognize all share-based payments to employees, consultants, and our Board of Directors (the “Board”), as non-cash compensation expense, in research and development expenses or general and administrative expenses in the consolidated statements of operations based on the grant date fair values of such payments. Stock-based compensation expense recognized each period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. Forfeitures are recorded as they occur.
For performance-based awards, the Company recognizes related stock-based compensation expenses based upon its determination of the potential likelihood of achievement of the specified performance conditions at each reporting date.
Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common stock shares outstanding during the reporting period. Diluted net loss per share adjusts the weighted average number of common stock shares outstanding for the potential dilution that could occur if common stock equivalents, such as stock options, were exercised and converted into common stock, calculated by applying the treasury stock method.
For the three months ended March 31, 2026, a total of shares of potentially dilutive securities, including shares of unvested restricted stock units, stock options to purchase shares of common stock, and stock warrants to purchase shares of common stock, were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive. For the three months ended March 31, 2025, a total of shares of potentially dilutive securities, including shares of unvested restricted stock units and options to purchase shares of common stock, were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive.
Recently Adopted Accounting Pronouncements as of March 31, 2026
In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides entities with a practical expedient to simplify the estimation of expected credit losses on current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606, Revenue from Contracts with Customers (“ASC 606”) by allowing the assumption that current conditions as of the balance sheet date will not change during the remaining life of the asset. The Company adopted ASU 2025-05 for the quarter ended March 31, 2026. The adoption of ASU 2025-05 does not have any material impact on the Company’s results of operations, financial position or liquidity or its related financial statement disclosures.
New Accounting Pronouncements as of March 31, 2026
In November 2024, the FASB issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 enhances the disclosures about an entity’s expenses by requiring more detailed information about the types of expenses in commonly presented expense captions. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 clarifies and reorganizes existing interim reporting guidance, including the scope of Topic 270 and interim disclosure requirements, and introduces a disclosure principle requiring entities to disclose material events or changes occurring since the most recent annual reporting period. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2025-11 on its consolidated financial statements and related disclosures.
Other recent authoritative guidance issued by the FASB (including technical corrections to the Accounting Standards Codification) and the SEC did not or are not expected to have a material effect on the Company’s consolidated financial statements or related disclosures.
| 14 |
Note 2: Cash, Cash Equivalents, and Investments
The Company’s investments in debt securities are classified as held-to-maturity and are recorded at amortized cost, net of allowance for credit losses, and its investments in money market funds are classified as available-for-sale securities and presented as cash equivalents or restricted cash equivalents on the consolidated balance sheets. The following table shows the Company’s cash, available-for-sale securities, and investment securities by major security type as of March 31, 2026, and December 31, 2025:
| March 31, 2026 (Unaudited) | ||||||||||||||||||||||
| Allowance | Gross | Gross | ||||||||||||||||||||
| for | Unrealized | Unrealized | ||||||||||||||||||||
| Level (1) | Fair Value | Credit Losses | Holding Gains | Holding Losses | Adjusted Cost | |||||||||||||||||
| Assets: | ||||||||||||||||||||||
| Cash deposits | 1 | $ | $ | $ | $ | $ | ||||||||||||||||
| Money market funds (2) | 1 | |||||||||||||||||||||
| Short-term investment in corporate bonds (3)(5)(6) | 2 | ( | ) | |||||||||||||||||||
| Long-term investment in corporate bonds (4)(5)(6) | 2 | — | ( | ) | ||||||||||||||||||
| Total financial assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
| Reconciliation to cash, cash equivalents and investments on condensed consolidated balance sheet | ||||||||||||||||||||||
| Minus: Restricted cash | ( | ) | ||||||||||||||||||||
| Total cash, cash equivalents and investments | $ | |||||||||||||||||||||
| December 31, 2025 (Audited) | ||||||||||||||||||||||
| Allowance | Gross | Gross | ||||||||||||||||||||
| for | Unrealized | Unrealized | ||||||||||||||||||||
| Level (1) | Fair Value | Credit Losses | Holding Gains | Holding Losses | Adjusted Cost | |||||||||||||||||
| Assets: | ||||||||||||||||||||||
| Cash deposits | 1 | $ | $ | $ | $ | $ | ||||||||||||||||
| Money market funds (2) | 1 | |||||||||||||||||||||
| Short-term investment in corporate bonds (3)(5)(6) | 2 | ( | ) | |||||||||||||||||||
| Total financial assets | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||
| Reconciliation to cash, cash equivalents and investments on condensed consolidated balance sheet | ||||||||||||||||||||||
| Minus: Restricted cash | ( | ) | ||||||||||||||||||||
| Total cash, cash equivalents and investments | $ | |||||||||||||||||||||
Notes:
| (1) |
| ● | Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities | |
| ● | Level 2 - Other inputs that are directly or indirectly observable in the markets | |
| ● | Level 3 - Inputs that are generally unobservable |
| (2) | |
| (3) | |
| (4) | |
| (5) | |
| (6) |
| 15 |
Note 3: Research and Collaboration Agreements, Sublicense Agreements, and Investments in Privately Held Companies
Gates Foundation Grant
In
November 2024, the Gates Foundation (the “Gates Foundation”, formerly known as the Bill & Melinda Gates Foundation) awarded
the Company a grant in the amount of $
As
of March 31, 2026, the Company has received a total of $
The Company is required to apply the funds it receives under the agreements solely toward direct costs for the applicable funded projects, other than less than 15% of such funds, which may apply toward general overhead and administrative expenses that support the entire operations of the Company. The Company receives funding in advance and tracks and reports eligible expenses incurred to the Gates Foundation. Funds received in advance that have not been spent are recorded as restricted cash and cash equivalents and as deferred research and development obligations in the Company’s consolidated balance sheets. As the Company incurs costs associated with research and development related to the project, on a monthly basis, the Company reclasses amounts from the grant to recognize grant revenue and cost of grant revenue. The deferred research and development obligations also include grant funds spent but not yet expensed in accordance with GAAP. The grant agreements include the Gates Foundation’s discretionary termination provisions. Any grant funds that have not been used or committed to the funded project must be returned promptly to the Gates Foundation upon expiration or termination of the agreement.
For
the three months ended March 31, 2026, the Company recognized grant revenue of $
As
of March 31, 2026, the Company had restricted cash of $
Coalition for Epidemic Preparedness Innovations (CEPI) Grant
On
March 20, 2025, the Company received a funding award from CEPI to advance Dyadic’s C1 platform through a $
For
the three months ended March 31, 2026, the Company recognized grant revenue of $
Proliant
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
On
October 14, 2025, the Company achieved the productivity threshold and received the final milestone payment of $
As of December
31, 2025, the Company has recognized $
Upon commencing commercial sales of animal-free recombinant serum albumin products, the Company anticipates receiving royalties in 2026, based on a specified percentage of the gross margin received by Proliant as defined in the Proliant Agreement.
| 16 |
Inzymes ApS
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. In October
2023, the Company received an upfront payment of $
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 $
In
June 2025, the Company recognized milestone revenue of $
In February
2026, final development activities for the first recombinant non-animal product were completed and the first commercial sale was
achieved. Upon achievement of this milestone, the Company received and recognized a $
Note 4: Convertible Notes Payable
On
March 8, 2024, the Company issued an aggregate principal amount of $
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, as amended, will mature on
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 $
| 17 |
On
October 4, 2024, the Company entered into an amendment (the “Amendment”) to the Convertible Notes. Under the Amendment, (i)
the conversion price at which the Convertible Notes are convertible into shares of the Company’s common stock was set at $
During the year ended December 31, 2024, $
On May 1, 2025, the Company amended the Convertible Notes to extend the Redemption Date (as defined in the Convertible Notes) to December 1, 2026.
On September 15, 2025, the Company
amended the security agreement to reflect updates to the Secured Parties (as defined in the Security Agreement) thereunder, including
the addition of a trust for the benefit of the Company’s Chief Executive Officer, Mark Emalfarb, as a result of his purchase and
assignment to him of one of the Notes from an existing note holder in a principal amount of $
On
December 23, 2025, the Company entered into an additional amendment to the Convertible Notes, pursuant to which (i) the Maturity Date
(as defined in the Convertible Notes) was extended from March 8, 2027 to
The Company assessed each of the Amendments for a debt extinguishment or modification in accordance with ASC 470-50. As both the changes 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, none of the Amendments were deemed substantial and they are regarded as note modifications. The Company did not incur any gain or loss relating to the modifications and any incremental costs, including legal fees, related to the Amendments were expensed.
For
the three months ended March 31, 2026 and 2025, $
As
of March 31, 2026, accrued interest on the Convertible Notes totaled $
| 18 |
As of March 31, 2026, convertible notes payable consisted of the following:
| Holder | Issuance Date | Due Date | Interest Rate | Convertible Note Principal | Principal Repayments | Conversion to Common Stock | Principal Outstanding | |||||||||||||||||
| Mark A. Emalfarb Trust (1) | % | |||||||||||||||||||||||
| Francisco Trust dated 2/28/1996 (2) | % | |||||||||||||||||||||||
| Bradley Emalfarb (3) | % | ( | ) | |||||||||||||||||||||
| Bradley Scott Emalfarb Irrevocable Trust (3) | % | ( | ) | |||||||||||||||||||||
| Emalfarb Descendent Trust (4) | % | |||||||||||||||||||||||
| Convertible Notes - Related Party | $ | $ | $ | ( | ) | |||||||||||||||||||
| Unamortized Debt Issuance Costs - Related Party | ( | ) | ||||||||||||||||||||||
| Net Carrying Amount | $ | |||||||||||||||||||||||
| Convertible Notes - Third Party (1) | % | $ | $ | $ | ||||||||||||||||||||
| Unamortized Debt Issuance Costs - Third Party | ( | ) | ||||||||||||||||||||||
| Net Carrying Amount | $ | |||||||||||||||||||||||
Notes:
| (1) | |
| (2) | |
| (3) | |
| (4) |
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 March 31, 2026.
| 19 |
Note 5: Commitments and Contingencies
Legal Proceedings
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. The requirement for these provisions is reviewed at least quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Litigation is inherently unpredictable and costly. 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.
Description of Equity Plans
The 2021 Equity Incentive Award Plan (the “2021 Plan”) was adopted by the Company’s Board of Directors on April 9, 2021 and approved by the Company’s Annual Meeting of Shareholders (the “Annual Meeting”) on June 11, 2021. The 2021 Plan serves as a successor to the Company’s 2011 Equity Incentive Plan (the “2011 Plan”). Since the adoption of the 2021 Plan, all equity awards were made from the 2021 Plan, and no additional awards will be granted under the 2011 Plan. The 2021 Plan 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 the effective date of the 2021 Plan, the number of shares authorized for issuance under the 2021 Plan was increased by shares, in addition to any shares remaining available for grant under the 2011 Plan.
As of March 31, 2026, the Company had stock options outstanding and unvested restricted stock units in addition to shares of common stock available for grant under the 2021 Plan. As of December 31, 2025, the Company had stock options outstanding and unvested restricted stock units, in addition to shares of common stock available for grant under the 2021 Plan.
Stock Options
Options are granted to purchase common stock at prices that are equal to the fair value of the common stock on the date the option is granted. 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 , except for certain options granted to the contractors, which are two to .
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. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs, including the following.
| 20 |
Risk-free interest rate. The risk-free interest rate is based on U.S. Treasury rates with securities approximating the expected lives of options at the date of grant.
Expected dividend yield. The expected dividend yield is zero, as the Company has never paid dividends to common shareholders and does not currently anticipate paying any in the foreseeable future.
Expected stock price volatility. The expected stock price volatility was calculated based on the Company’s own volatility. The Company reviews its volatility assumption on an annual basis.
Expected life of option. 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.
| Risk-free interest rate | % - | % | ||
| Expected dividend yield | % | |||
| Expected stock price volatility | - | % | ||
| Expected life of options (in years) | - |
| Weighted-Average | ||||||||||||||||
| Weighted-Average | Remaining Contractual | Aggregate Intrinsic | ||||||||||||||
| Shares | Exercise Price | Term (Years) | Value | |||||||||||||
| Outstanding at December 31, 2025 | $ | $ | ||||||||||||||
| Granted (1) | ||||||||||||||||
| Exercised | ||||||||||||||||
| Expired (2) | ( | ) | ||||||||||||||
| Cancelled | ||||||||||||||||
| Outstanding at March 31, 2026 | $ | $ | ||||||||||||||
| Exercisable at March 31, 2026 | $ | $ | ||||||||||||||
Notes:
| (1) |
| ● | Annual share-based compensation awards on January 2, 2026, with an exercise price of $, including: (a) stock options granted to executives and key personnel, vesting upon one year anniversary, or annually in equal installments over , (b) stock options granted to members of the Board of Directors, vesting upon one year anniversary, (c) stock options granted to employees, vesting annually in equal installments over four years, and (d) stock options granted to a consultant, vesting upon one year anniversary. |
| (2) | Options expired: |
| ● | (a) stock options with an exercise price of $ per share granted to members of the Board of Directors, (b) stock options with an exercise price of $ per share granted to a key personnel, (c) stock options with an exercise price of $ per share granted to a former employee. |
| 21 |
Restricted Stock Units
Restricted stock units (the “RSUs”) are granted subject to certain restrictions. Vesting conditions are determined at the discretion of the Board of Directors. The fair market value of RSUs is generally determined based on the closing market price of the stock on the grant date.
| Weighted-Average | ||||||||
| Grant Date | ||||||||
| Shares | Fair Value | |||||||
| Outstanding at December 31, 2025 | $ | |||||||
| Granted (1) | ||||||||
| Vested (2) | ( | ) | ||||||
| Unvested shares forfeited | ||||||||
| Outstanding at March 31, 2026 | $ | |||||||
Notes:
| (1) | |
| On March 1, 2026, the Company granted two consultants a total of restricted stock units, vesting upon the satisfaction of the applicable time and performance criteria. | |
| (2) |
Compensation Expenses
We recognize all share-based payments to employees and our Board of Directors, 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. 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. Forfeitures are recorded as they occur. For the three months ended March 31, 2026, forfeitures were recorded.
For performance-based awards, the Company recognizes related stock-based compensation expenses based upon its determination of the potential likelihood of achievement of the specified performance conditions at each reporting date.
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| General and administrative | $ | $ | ||||||
| Research and development | ||||||||
| Total | $ | $ | ||||||
The following table summarizes the Company’s non-cash share-based compensation expense allocation between options and restricted stock units:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Share based compensation expense - stock option | $ | $ | ||||||
| Share based compensation expense - restricted stock units | ||||||||
| Total | $ | $ | ||||||
Warrants
On
August 1, 2025, in connection with the services the Underwriter provided to the Company in the Offering, the Company issued to the Underwriter
warrants to purchase up to
The warrants were accounted for as equity-classified instruments under ASC 718. The fair value of the warrants, determined using the Black-Scholes option pricing model, was estimated to be $ at the issuance date and was recorded as a component of additional paid-in capital, with a corresponding reduction to offering proceeds as an offering cost. The assumptions used in the Black-Scholes model included:
| Risk-free interest rate: | % | |||
| Expected dividend yield: | % | |||
| Expected stock price volatility: | % | |||
| Expected life of warrants (in years) |
| 22 |
Note 7: Shareholders’ Equity
Public Offering of Common Stock
On July 30, 2025, the Company entered into an underwriting agreement (the “UA”) with Craig-Hallum Capital Group, in its capacity as underwriter, relating to the issuance and sale of shares of the Company’s common stock at a price of $ per share. The closing of the Offering occurred on August 1, 2025.
Total
gross proceeds from the Offering were $
Joseph Hazelton, our President and Chief Operating Officer, purchased shares of the Company’s common stock in the Offering at the public offering price.
In
consideration for Craig-Hallum serving as the underwriter of the Offering, the Company paid the Underwriter a cash fee equal to 7% of
the aggregate gross proceeds raised in the Offering, reimbursed the Underwriter for certain expenses and legal fees in the amount of
$
Issuances of Common Stock Related to Stock Options and RSU’s
For the three months ended March 31, 2026, there were shares issued from the vesting of restricted stock units with a weighted average issue price of $ per share.
Treasury Stock
As
of March 31, 2026, there were
shares of common stock held in treasury, at a cost of approximately $
Note 8: Segment
The
Company operates and manages its business as
The measure of segment assets is reported on the consolidated balance sheets as total consolidated assets. The Company operates in the U.S. and Europe. All material long-lived assets of the Company reside in the U.S. For geographic information about the Company’s product revenue, 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 spending and monitor budget versus actual results. The monitoring of budgeted versus actual results is used in assessing the performance of 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 our Annual Report on Form 10-K filed on March 25, 2026, as amended on April 30, 2026.
The
CODM reviews cash, cash equivalents and investment securities as a measure of segment assets. As of March 31, 2026 and December 31, 2025,
the Company’s cash, cash equivalents, restricted cash and cash equivalents and its investment securities, including accrued interest
were $
The following table presents information about segment revenue, significant segment expenses and segment operating loss for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| Total revenue | $ | $ | ||||||
| Total cost of revenue | ||||||||
| Research and development expenses: | ||||||||
| Outside contracted services | ||||||||
| Personnel related costs | ||||||||
| Facilities, overhead, and other | ||||||||
| General and administrative expenses: | ||||||||
| Compensation and related expenses | ||||||||
| Business consulting expenses | ||||||||
| Legal and professional services | ||||||||
| Other G&A expenses | ||||||||
| Share-based compensation expenses | ||||||||
| Foreign currency exchange (gain) loss | ( | ) | ||||||
| Other (income) expenses, net | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
Note 9: Subsequent Event
For the purpose of disclosure in the consolidated financial statements, the Company has evaluated subsequent events through May 13, 2026, the date the consolidated financial statements were available to be issued. Except for items mentioned in the notes, 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.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements appearing in this Quarterly Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks, assumptions and uncertainties. Important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis include, but are not limited to, those set forth in “Item 1A. Risk Factors” in this Quarterly Report. All forward-looking statements included in this Quarterly Report are based on information available to us as of the time we file this Quarterly Report and, except as required by law, we undertake no obligation to update publicly or revise any forward-looking statements.
Overview
Description of Business
Dyadic International, Inc. (“Dyadic”, “we”, “us”, “our”, or the “Company”) d/b/a, Dyadic Applied BioSolutions, is a global biotechnology platform company headquartered in Jupiter, Florida, with operations in the U.S. and the Netherlands. We aim to develop and commercialize scalable, non-animal protein production platforms to meet growing global demand across the life sciences, food and nutrition, and bio-industrial markets.
Effective August 1, 2025, we are doing business as Dyadic Applied BioSolutions. This rebranding initiative marks a strategic transition from a research-driven organization to a commercially focused enterprise. The new name and visual identity better reflect the emphasis on delivering applied biotechnology solutions through our patented and proprietary Dapibus™ and C1 protein production platforms.
Our proprietary platforms—Dapibus™ and C1—are designed for rapid, cost-effective, and flexible production of high-value proteins, enabling partners to reduce development timelines and manufacturing costs. Our focus is to commercialize high-value, non-therapeutic proteins in the life sciences, food, nutrition and industrial bioprocessing sectors. These proteins avoid the regulatory complexity and high costs associated with therapeutic biologics, enabling faster time to revenue, broader market reach, and long-term supply agreements. Our recent significant milestones across both food and nutrition as well as fully funded legacy collaborations, such as with the Gates Foundation, underscore our strategic shift to revenue-focused bioprocessing protein platforms from therapeutic and vaccine development.
Recent Developments
Life Sciences
● Recombinant Serum Albumin (AlbuFree™ DX): In February 2026, Proliant Health and Biologicals announced the commercial launch of AlbuFree™ DX recombinant human albumin, produced using Dyadic’s production platform. Dyadic is entitled to a share of profits from commercial sales.
● OEM Distribution Agreement with IBT Bioservices: In March 2026, Dyadic entered into an OEM distribution agreement with IBT Bioservices to support commercialization of multiple recombinant proteins and enzymes through IBT’s global distribution channels. Initial product quantities, including DNase I and transferrin, have been completed and shipped to support channel commercialization activities.
● DNase-1 (RNase-free): Dyadic completed production validation of recombinant DNase I and, together with Fermbox Bio, commercially launched DNase I (RNase-free) as the first product under their expanded collaboration.
● Recombinant Transferrin and Growth Factors: Dyadic continues advancing its animal-free transferrin and fibroblast growth factor (FGF) products for use in cell culture media, diagnostics, and research, with expanded customer interest and sampling activity for recombinant bovine transferrin within the cultivated meat industry.
● Reagent Proteins and Nucleic Acid Enzymes: Dyadic continues advancing a portfolio of enzymes for DNA and RNA manipulation, including RNase inhibitors and T7 RNA polymerase.
Food and Nutrition
● Alpha-Lactalbumin: In December 2025, Dyadic signed a development and commercialization agreement with BRIG Bio to create recombinant bovine alpha-lactalbumin for global nutrition markets. Product development activities have been initiated, including initial product quality and application testing, with customer sampling activities expected to begin in mid-2026.
● Human Lactoferrin: Dyadic has established a stable cell line for recombinant human lactoferrin production and is continuing optimization and characterization efforts supporting future nutrition applications.
● Non-Animal Dairy Enzymes: Dyadic’s partner Inzymes has commercialized recombinant non-animal bovine chymosin following achievement of development milestones under its agreement with Dyadic.
● Food and Nutrition Pipeline Expansion: Dyadic anticipates broadening both partner-led and internal development programs focused on non-animal dairy proteins, selected food and nutrition enzymes, and related baking and brewing enzyme applications.
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Bio-Industrial Products
● Expanded Fermbox Bio Collaboration: Dyadic expanded its collaboration with Fermbox Bio to support the development and manufacturing of animal-free recombinant proteins and enzymes across life sciences, food and nutrition, and bio-industrial markets.
● EN3ZYME™ Platform: Fermbox Bio previously launched EN3ZYME™, an enzyme cocktail produced using the Dapibus™ platform that converts agricultural residues into fermentable cellulosic sugars and fulfilled its first large scale order in 2025, with sampling activity now extending into the Asia Pacific region.
Biopharmaceutical Programs
● Gates Foundation-supported RSV and malaria monoclonal antibody programs and the CEPI/Fondazione Biotecnopolo di Siena (“FBS”) H5 avian influenza antigen program continued to advance toward preclinical evaluation, with C1-produced antigens and antibodies expressed at high yields while demonstrating binding and neutralization profiles virtually identical to CHO-derived clinical reference materials.
● Collaborative development activities with Fondazione Biotecnopolo di Siena (“FBS”) continue to demonstrate rapid antigen development timelines and the ability to progress from receipt of a codon-optimized plasmid to purified recombinant antigen candidates within weeks, while multiple preclinical animal studies evaluating C1-produced H5 (avian influenza), RSV and malaria antigens were initiated, with initial data readouts demonstrating high levels of neutralizing antibodies.
Corporate Development
● Expanding Commercial Efforts in Asia and Europe: Dyadic expanded its engagement with Intralink to include Europe in addition to Japan and South Korea, supporting broader commercial development activities and market entry initiatives for Dyadic’s animal-free proteins.
● Commercial Scale-Up Activities: Together with Fermbox Bio and other manufacturing partners, Dyadic continues scaling production capabilities for multiple recombinant proteins and enzymes, including transferrin and additional commercial-stage products, to support broader market launch activities and channel expansion.
● Expanding Commercial Partnerships and Distribution Channels: Dyadic continues prioritizing relationships with manufacturing, supply chain, and distribution partners to support commercialization and broaden market access for its growing portfolio of recombinant proteins and enzymes.
● Commercialization and Channel Expansion Strategy: Dyadic is focused on increasing product availability through both direct and partner-led commercialization efforts, including OEM distribution, regional business development partnerships, and strategic manufacturing collaborations designed to support long-term recurring product revenue opportunities.
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Critical Accounting Estimates
The preparation of these consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates that affect the reported amount of assets and liabilities and related disclosure of contingent assets and liabilities at the date of our consolidated financial statements and the reported amounts of revenue and expenses during the applicable period. Actual results may differ from these estimates under different assumptions or conditions. Such differences could be material to the consolidated financial statements.
We define critical accounting estimates as those that are reflective of significant judgments and uncertainties and which may potentially result in materially different results under different assumptions and conditions. In applying these critical accounting estimates, our management uses its judgment to determine the appropriate assumptions to be used in making certain estimates. These estimates are subject to an inherent degree of uncertainty. Our critical accounting estimates include the following:
Revenue Recognition
The Company has launched an initial portfolio of research-use-only products for direct sales. Early-stage manufacturing is ongoing and initial shipments to distribution partners are underway. The Company also participates in the commercialization of products developed and launched by third-party collaborators, from which it is entitled to a share of revenue or profits.
As of March 31, 2026, the Company has not recognized any revenue from product sales. All our revenue to date has been research revenue from third-party collaborations and grants, as well as revenue from sublicensing agreements and collaborative arrangements, which may include upfront payments, options to obtain a license, payment for research and development services, milestone payments and royalties, in the form of cash or non-cash considerations (e.g., minority equity interest).
Revenue related to research collaborations and agreements: The Company typically performs research and development services as specified in each respective agreement on a best-efforts basis, and recognizes revenue from research funding under collaboration agreements in accordance with the 5-step process outlined in ASC Topic 606 (“Topic 606”): (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We recognize revenue when we satisfy a performance obligation by transferring control of the service to a customer in an amount that reflects the consideration that we expect to receive. Depending on how the performance obligation under our license and collaboration agreements is satisfied, we recognize the revenue either at a point in time or over time by using the input method under Topic 606 to measure the progress toward complete satisfaction of a performance obligation.
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Under the input method, revenue will be recognized based on the entity’s efforts or inputs to the satisfaction of a performance obligation (e.g., resources consumed, labor hours expended, costs incurred, or time elapsed) relative to the total expected inputs to the satisfaction of that performance obligation. The Company believes that the cost-based input method is the best measure of progress to reflect how the Company transfers its performance obligation to a customer. In applying the cost-based input method of revenue recognition, the Company uses actual costs incurred relative to budgeted costs to fulfill the performance obligation. These costs consist primarily of full-time equivalent effort and third-party contract costs. Revenue will be recognized based on actual costs incurred as a percentage of total budgeted costs as the Company completes its performance obligations.
A cost-based input method of revenue recognition requires management to make estimates of costs to complete the Company’s performance obligations. In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates. The cumulative effect of revisions to estimated costs to complete the Company’s performance obligations will be recorded in the period in which changes are identified, and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.
Revenue related to grants: The Company receives grants from governments, agencies, and other private and not-for-profit organizations. These grants are intended to be used to fund the Company’s research collaborations partially or fully, including opportunities and projects that the Company is pursuing with certain collaborators. However, most, if not all, of such potential grant revenue, is expected to be earmarked for third parties to advance the research required, including preclinical and clinical trials for vaccines and/or antibodies candidates. Revenue related to grants are presented on a gross basis on the Consolidated Statements of Operations.
Revenue related to sublicensing agreements: If the sublicense to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue allocated to the license when technology is transferred to the customer and the customer can use and benefit from the license.
Customer options: If the sublicensing agreement includes customer options to purchase additional goods or services, the Company will evaluate if such options are considered material rights to be deemed as separate performance obligations at the inception of each arrangement.
Milestone payments: At the inception of each arrangement that includes development, commercialization, and regulatory milestone payments, the Company evaluates whether the achievement of the milestones is considered probable and estimates the amount to be included in the transaction price. 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.
Royalties: 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). To date, the Company has not recognized any royalty revenue resulting from any of its sublicensing arrangements.
We invoice customers based on our contractual arrangements with each customer, which may not be consistent with the period that revenue is recognized. When there is a timing difference between when we invoice customers and when revenue is recognized, we record either a contract asset (unbilled accounts receivable) or a contract liability (deferred research and development obligations), as appropriate. If upfront fees or considerations related to a sublicensing agreement are received prior to the technology transfer, the Company will record the amount received as deferred revenue from the licensing agreement.
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We are not required to disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
The Company adopted a practical expedient to expense sales commissions when incurred because the amortization period would be one year or less.
Accrued Research and Development Expenses
In order to properly record services that have been rendered but not yet billed to the Company, we review open contracts and purchase orders, communicate with our personnel and we estimate the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly or quarterly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and adjust if necessary. Examples of accrued research and development expenses include amounts owed to contract research organizations, to service providers in connection with research and development activities.
Stock-Based Compensation
We have granted stock options to employees, directors, and consultants. The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes model considers volatility in the price of our stock, the risk-free interest rate, the estimated life of the option, the closing market price of our stock and the exercise price. For purposes of the calculation, we assumed that no dividends would be paid during the life of the options. We also used the weighted-average vesting period and contractual term of the option as the best estimate of the expected life of a new option, except for the options granted to certain contractors (i.e., 2 to 5 years). The expected stock price volatility was calculated based on the Company’s own volatility. The Company reviews its volatility assumption on an annual basis and has used the Company’s historical volatilities since 2016.
The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management judgment. These estimates are neither predictive nor indicative of the future performance of our stock. As a result, if other assumptions had been used, our recorded share-based compensation expense could have been materially different from that reported. In addition, because some of the performance-based options issued to employees, consultants, and other third-parties vest upon the achievement of certain milestones, the total ultimate expense of share-based compensation is uncertain.
Accounting for Income Taxes
The Company accounts for income taxes under the asset and liability method in accordance with ASC Topic 740, “Income Taxes”. Under this method, income tax expense / (benefit) is recognized for: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all the deferred tax assets will not be realized.
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In determining taxable income for the Company’s consolidated financial statements, we are required to estimate income taxes in each of the jurisdictions in which we operate. This process requires the Company to make certain estimates of our actual current tax exposure and assessment of temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the Company’s ability to recover its deferred tax assets, the Company must consider all available positive and negative evidence including its past operating results, the existence of cumulative losses in the most recent years and its forecast of future taxable income. Significant management judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets.
The Company is required to evaluate the provisions of ASC 740 related to the accounting for uncertainty in income taxes recognized in a company’s financial statements. ASC 740 prescribes a comprehensive model for how a company should recognize, present, and disclose uncertain positions that the company has taken or expects to take in its tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. 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 because of applying the provision of ASC 740.
The Company classifies accrued interest and penalties related to its tax positions as a component of income tax expense. The Company currently is not subject to U.S. federal, state, and local tax examinations by tax authorities for the years before 2022.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Recent Accounting Pronouncements
See Note 1 to the Consolidated Financial Statements for information about recent accounting pronouncements.
Results of Operations
Three months ended March 31, 2026, compared to the same period in 2025
Revenue and Cost of Revenue
The following table summarizes the Company’s revenue and cost of revenue for the three months ended March 31, 2026 and 2025:
| For the three-month period ended | Changes in | |||||||||||||||
| March 31, 2026 | March 31, 2025 | $ | % | |||||||||||||
| Total revenue | $ | 1,110,956 | $ | 393,572 | $ | 717,384 | 182.3 | % | ||||||||
| Total cost of revenue | 791,840 | 297,658 | 494,182 | 166.0 | % | |||||||||||
| Research and development expense | 476,069 | 494,979 | (18,910 | ) | (3.8 | )% | ||||||||||
| General and administrative expense | 1,755,331 | 1,596,338 | 158,993 | 10.0 | % | |||||||||||
| Foreign currency exchange (gain) loss | (9,591 | ) | 7,072 | 16,663 | 235.6 | % | ||||||||||
| Loss from operations | (1,902,693 | ) | (2,002,475 | ) | (99,782 | ) | (5.0 | )% | ||||||||
| Other expenses | 51,990 | 25,104 | 26,886 | 107.1 | % | |||||||||||
| Net loss | $ | (1,954,683 | ) | $ | (2,027,579 | ) | $ | (72,896 | ) | (3.6 | )% | |||||
Total revenue for the three months ended March 31, 2026, amounted to $1,110,956 representing an increase of $717,384 or 182.3% compared to $393,572 for the three months ended March 31, 2025. The increase was driven by a $220,490 increase in research and development revenue primarily related to the Proliant Agreement. Additionally, grant revenue increased by $276,894 due to activities under grants from CEPI and the Gates Foundation and license and milestone revenue also increased by $200,000 as a result of achieving a contract milestone under the Inzymes Agreement.
Total cost of revenue for the three months period ended March 31, 2026, amounted to $791,840 representing an increase of $494,182 or 166.0% compared to $297,658 for the three months ended March 31, 2025. The increase was driven by a $213,677 increase in cost of research and development revenue. Cost of grant revenue increased by $280,505 due to activities under grants from CEPI and the Gates Foundation.
Research and Development Expenses
Research and development costs are expensed as incurred and include salary and benefits of research personnel, third-party contract research organization services and supply costs.
Research and development expenses for the three months ended March 31, 2026, decreased $18,910 or 3.8% to $476,069 compared to $494,979 for the same period a year ago. The decrease was driven by a slight decrease in the number of active internal research initiatives undertaken.
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General and Administrative Expenses
General and administrative expenses for the three months ended March 31, 2026, increased by $158,993 or 10.0% to $1,755,331 compared to $1,596,338 for the same period a year ago. The increase was related to legal and accounting expenses of $221,304, incentives of $36,258, rebranding and business development expenses of $22,196, offset by a decrease in share-based compensation expenses of $110,381 and insurance expenses of $10,384.
Loss from Operations
Loss from operations for the three months ended March 31, 2026, decreased $99,782 or 5.0% to $1,902,693 compared to $2,002,475 for the same period a year ago. The decrease in loss from operations was largely attributable to an increase in total revenue of $717,384, decrease in research and development expenses of $18,910, partially offset by an increase in total cost of revenue of $494,182, and an increase in general and administrative expenses of $158,993.
Other Income (Expenses), Net
For the three months ended March 31, 2026, total other income (expenses), net, was an expense of $51,990 compared to an expense of $25,104 for the same period a year ago. The increase in other expenses is primarily due to a reduction in interest income.
Net Loss
Net loss for the three months ended March 31, 2026, was $1,954,683 compared to $2,027,579 for the same period a year ago. The decrease of $72,896 was due to a decrease of $99,782 in loss from operations, offset by an increase in other expenses of $26,866.
Liquidity and Capital Resources
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 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 DapibusTM and C1 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, commercialization, 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 (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 Convertible Notes, after deducting offering expenses, were $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, as amended, will mature on December 31, 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 common stock, at the option of the holders of the Convertible Notes (the “Noteholders”) at any time prior to the Maturity Date.
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During the year ended December 31, 2024, $910,000 of Convertible Notes were converted into 556,623 shares of common stock. For more information regarding the Convertible Notes, including the covenants related thereto, see Note 4 to the Consolidated Financial Statements.
On May 1, 2025, the Company amended the Convertible Notes to extend the Redemption Date (as defined in the Convertible Notes) to December 1, 2026.
On September 15, 2025, the Company amended the security agreement to reflect updates to the Secured Parties (as defined in the Security Agreement) thereunder, including the addition of a trust for the benefit of the Company’s Chief Executive Officer, Mark Emalfarb, as a result of his purchase and assignment to him of one of the Notes from an existing note holder in a principal amount of $1,000,000.
On December 23, 2025, the Company entered into an additional amendment to the Convertible Notes, pursuant to which (i) the Maturity Date (as defined in the Convertible Notes) was extended from March 8, 2027 to December 31, 2027, (ii) the conversion price at which the Convertible Notes are convertible into shares of the Company’s common stock was set at $1.05 per share of common stock, and (iii) except in the case of an Event of Default (as defined in the Convertible Notes), the holders no longer have the right to elect to have the Company redeem all, or any part, of the principal amount then remaining under the Convertible Notes.
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, 2025.
On November 16, 2024, Dyadic entered into an agreement with the Gates Foundation relating to a grant in the amount of $3,092,000 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”). Funds received in advance that have not been spent are recorded as restricted cash in the Company’s consolidated balance sheets.
On March 20, 2025, the Company received a funding award (the “CEPI Grant”) from Coalition for Epidemic Preparedness (“CEPI”) to advance Dyadic’s C1 platform through a $4.5 million grant through Fondazione Biotecnopolo di Siena (“FBS”) to accelerate recombinant protein vaccine development and manufacturing. The funding will support antigen design, cell line development, optimization, characterization, and scale-up to cGMP manufacturing. If successful, the next phase will focus on selecting a CEPI-priority pathogen antigen. Dyadic, as a subcontractor, will receive up to $2.4 million of the total grant funding.
On August 1, 2025, the Company completed an underwritten offering of 6,052,000 shares of the Company’s common stock (the “Offering”) pursuant to an underwriting agreement, dated July 30, 2025, between the Company and Craig-Hallum. The public offering price in the Offering was $0.95 per share of common stock. The net proceeds to the Company from the Offering were approximately $4.9 million, after deducting legal expenses, underwriting discounts and commissions, and other offering expenses. The Company has been using the net proceeds of the Offering for working capital and general corporate purposes, such as product development, sales and marketing.
On March 6, 2026, the Company entered into an At-The-Market Issuance Sales Agreement (the “Sales Agreement”) with Craig-Hallum as sales agent (the “Sales Agent”), pursuant to which the Company may offer and sell from time to time, at its option, shares of the Company’s common stock having an aggregate offering price of up to $4,238,000 from time to time through the Sales Agent, including block trades and sales made in ordinary brokers’ transactions directly on Nasdaq or any other trading market for the Company’s common stock at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices (the “At-The-Market Equity Offering Program”). Subject to the terms and conditions of the Sales Agreement, the Sales Agent will use its commercially reasonable efforts to sell the shares of the Company’s common stock from time to time, based upon the Company’s instructions (including any price, time or size limits or other parameters or conditions the Company may impose), in exchange for a commission of up to 3.0% of the aggregate gross sale proceeds. The Company is not obligated to sell any shares of common stock under the Sales Agreement, and the Company or the Sales Agent may at any time suspend or terminate offerings of shares under the At-The-Market Equity Offering Program upon notice to the other party and subject to other conditions. As of the date of this Quarterly Report, no shares have been sold under the Sales Agreement.
The Company expects its existing cash, cash equivalents, restricted cash and its investment securities, including accrued interest, totaling approximately $6.6 million as of March 31, 2026, will be sufficient to meet its operational, business, and other liquidity requirements for at least the next twelve (12) months from the date of issuance of the financial statements contained in this Quarterly Report. However, the Company has based this estimate on assumptions that may prove to be wrong, and its operating plan may change as a result of many factors currently unknown to it. In the event our financing needs are not able to be met by our existing cash, cash equivalents and investments, we would seek to raise additional capital through strategic financial opportunities that could include, but are not limited to, future public or private equity offerings, collaboration agreements, convertible notes or other debt instruments, and/or other means. Any amount 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.
As of March 31, 2026, cash, cash equivalents, and restricted cash were $5.2 million compared to $5.9 million as of December 31, 2025. The carrying value of investment grade securities, including accrued interest as of March 31, 2026, was $1.5 million compared to $2.7 million as of December 31, 2025.
Net cash used in operating activities for the three months ended March 31, 2026 was $2.0 million, which was principally attributable to a net loss of $1.9 million, changes in operating assets and liabilities of $0.2 million, partially offset by share-based compensation expenses of $0.1 million.
Net cash provided by investing activities for the three months ended March 31, 2026 was $1.3 million, compared to $0.5 million for the three months ended March 31, 2025. The change in investing activities of $0.8 million was attributable to a reduction in purchases of held-to-maturity investment securities of $0.9 million, offset by an increase in proceeds received from maturities of investment securities of $0.1 million.
There was no financing activities for the three months ended March 31, 2026. Net cash provided by financing activities was related to proceeds from the exercise of stock options, and the amount was immaterial.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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 the end of the period covered by this report. 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. Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitation on Effectiveness of Controls
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II
Item 1. 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, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. See Note 5 to the Consolidated Financial Statements for commitments and contingencies.
Item 1A. Risk Factors
Except as set forth below, there have been no changes to our risk factors from those disclosed in our Annual Report.
If we fail to comply with listing standards of Nasdaq, our common stock may be delisted, adversely affecting the liquidity and market price of our common stock, as well as our ability to obtain sufficient additional capital to fund our operations and to continue to operate as a going concern.
Our common stock is currently listed on the Nasdaq Capital Market, which has minimum requirements that a company must meet in order to remain listed. As previously disclosed, we are currently not in compliance with various of these requirements.
We are currently not in compliance with the requirement that our common stock maintain a minimum bid price per share of $1.00 (such that the share price of the common stock close not below $1.00 for 30 consecutive business days) (the “Minimum Bid Price Rule”). We would regain compliance with the Minimum Bid Price Rule if our common stock reached a closing price of at least $1.00 for a minimum of ten consecutive business days by the end of the applicable compliance deadline. In May, 2026, we filed a definitive proxy statement soliciting shareholder approval at our annual meeting for authorization for our Board to effect a reverse stock split, as a possible way to cure our Minimum Bid Price Rule deficiency (to the extent deemed by Board as in the best interests of us and our shareholders). However, given the timing of that meeting, we will be unable to cure the Minimum Bid Price Rule by Nasdaq’s initial compliance deadline of June 17, 2026, unless our common stock price independently increases to the required level by then. We intend to take all steps, provided in the best interests of us and our shareholders, to preserve our eligibility under Nasdaq rules for an additional period of up to 180 days to regain compliance with the Minimum Bid Price Rule, through December 15, 2026 (the “Additional Compliance Period”). Nasdaq may grant this extension in its discretion if on June 17, 2026, we meet the applicable market value of publicly held shares requirement for continued listing and applicable standards for initial listing on the Nasdaq Capital Market, including shareholders’ equity of $5 million. There can be no assurance that we will meet the requirements to receive an Additional Compliance Period, or that actions we taken to meet these requirements, including potential capital raises, will be executed on favorable terms or will not be dilutive to existing shareholders. To the extent that we do not obtain an Additional Compliance Period, and the closing price of the common stock price does not increase independently to allow us to regain compliance with the Minimum Bid Price Rule by June 17, 2026, Nasdaq will begin delisting proceedings for our common stock, subject to our right to appeal to a Nasdaq hearing panel. The Board may then determine to effect a reverse stock split (assuming such split is approved by shareholders) during the pendency of the delisting proceedings, as support for the Company’s contention on appeal before the Nasdaq hearing panel that Nasdaq should not delist the common stock. There can be no assurance that Nasdaq will not then determine to delist our common stock, even if we have cured the Minimum Bid Price Rule deficiency during the pendency of the listing proceedings. To the extent that we successfully obtain an Additional Compliance Period, and the closing price of the common stock price does not increase independently to allow us to regain compliance with the Minimum Bid Price Rule by December 15, 2026, the Board may determine to effect a reverse stock split (assuming such split is approved by shareholders) before the end of the Additional Compliance Period.
We are also not in compliance with a separate Nasdaq continued listing requirement, which requires us to meet any of the following minimum conditions: $2.5 million in shareholders’ equity; $35 million in market value of listed securities; or $500,000 of net income from continuing operations (the “Continued Listing Standards”). We have until September 23, 2026 (provided that Nasdaq accepts our recently-submitted compliance plan) to regain compliance with this rule. Thus, even if we cure the Minimum Bid Price Rule through a reverse stock split, we may also be unable to cure or remain in compliance with the Continued Listing Standards, which could also result in us receiving a delisting notice, subject to appeal, or we may fail to maintain compliance with other Nasdaq rules. There can be no assurance that, if we decide to appeal any delisting determination by Nasdaq to the panel, such appeal would be successful.
If our common stock is delisted from Nasdaq as a result of our failure to comply with the Minimum Bid Price Requirement, the Continued Listing Standards or any other requirement for continued listing on Nasdaq, trading of our common stock could be conducted in the over-the-counter market established for unlisted securities such as the OTCQX, the OTCQB, the OTCID Basic Market or the Pink Limited Market, but there can be no assurance that our common stock will be eligible for trading on any such alternative market. Additionally, the liquidity of our common stock would be adversely affected, the market price of our common stock could decrease, our ability to obtain sufficient additional capital to fund our operations and to continue to operate as a going concern would be substantially impaired and transactions in our common stock could lose federal preemption of state securities laws. Furthermore, there could be a reduction in our coverage by securities analysts, and broker-dealers may be deterred from making a market in or otherwise seeking or generating interest in our common stock, which could cause the price of our common stock to decline further. Moreover, delisting may also negatively affect our collaborators’, vendors’, suppliers’ and employees’ confidence in us and employee morale. If we effected a reverse stock split (assuming such split is approved by our shareholders), the liquidity of our common stock could be harmed, given the reduced number of shares of common stock that would be outstanding afterward, particularly if the share price does not increase as a result thereof.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
(a) None.
(b) None.
(c)
For the quarter ended March 31, 2026, none of our directors or officers (as defined in Section 16 of the Exchange Act)
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Item 6. Exhibits
The following Exhibits are filed as part of this report pursuant to Item 601 of Regulation S-K:
| Incorporated by Reference | ||||||||||
Exhibit No. |
Description of Exhibit | Form | Original No. | Date Filed | Filed Herewith | |||||
| 3.1 | Restated Certificate of Incorporation dated November 1, 2004 | 10-12G | 3.1 | January 14, 2019 | ||||||
| 3.3 | Fourth Amended and Restated Bylaws of Dyadic International, Inc., effective May 29, 2025 | 8-K | 3.1 | June 2, 2025 | ||||||
| 31.1 | Certification of Principal Executive Officer of Dyadic Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||
| 31.2 | Certification of Principal Financial Officer of Dyadic Pursuant to Exchange Act Rules13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||
| 32.1 | Certification of Principal Executive Officer of Dyadic Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1) | |||||||||
| 32.2 | Certification of Principal Financial Officer of Dyadic Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (1) | |||||||||
| 101.INS | Inline XBRL Instance Document | |||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document | |||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) | |||||||||
(1) Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| May 13, 2026 | DYADIC INTERNATIONAL, INC. | |
| By: | /s/ Mark A. Emalfarb | |
| Mark A. Emalfarb | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| May 13, 2026 | By: | /s/ Ping W. Rawson |
| Ping W. Rawson | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) |
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