Dyadic Reports 2005 Third Quarter and Year to Date Financial Results

Dyadic International, Inc. (AMEX:DIL), a biotechnology
company engaged in the development, manufacture and sale of biological
products, today announced financial results for the third quarter and
nine-months ended September 30, 2005.

   Third Quarter 2005 and Subsequent Highlights:

   --  Continued to execute its business plan and made significant
        progress in meeting one of the Company's top priorities for
        2005 - to sharply expand the introduction of the Company's new
        pulp & paper enzyme products on a global basis. Currently, the
        company's enzymes are undergoing trials in a number of paper
        companies throughout the world. The trials seek to evaluate
        the economic impact the company's products have on the
        bleach-boosting, bio-refining and de-inking processes. Some of
        these potential improvements include significant cost-savings
        in the use of chemicals and energy, improvements in paper
        quality, and reduction in effluent streams.

   --  Recruited and assembled a team of seasoned sales and marketing
        executives along with technical sales personnel with extensive
        pulp & paper industry experience and contacts to implement the
        Company's global pulp and paper strategy.

   --  Continued to support its textile customers, directing the
        necessary resources to customer support and R&D innovation to
        maintain market share in this segment.

   --  Strengthened the Scientific Advisory Board, adding several
        renowned scientists, including Dr. Arnold Demain, Professor of
        Industrial Microbiology, Emeritus, Massachusetts Institute of
        Technology; Dr. Carlos Barbas, Kellogg Professor and Chair of
        Molecular Biology and Chemistry at The Scripps Research
        Institute; and Dr. Joseph Villafranca, former Executive Vice
        President, Pharmaceutical Development and Operations, Neose
        Technologies, Inc.

   Third Quarter 2005 and Year to Date Financial Results:

   Net sales for the quarter ended September 30, 2005, were
approximately $4.1 million, as compared to approximately $4.5 million
for the quarter ended September 30, 2004. The decline in net sales
reflects aggressive pricing by the Company's competitors in the
textile industry, which in turn puts pressure on gross profit and
operating margins. The Company's strategy is to decrease its
dependence on sales to the textile industry by accelerating its
investment in less competitive markets. Net sales also continue to be
adversely affected by the residual effects of the Company's inability,
between 2003 and most of 2004, to fund working capital, staffing
expansion, product registrations and product development needs.
   Third quarter 2005 net sales from higher-margin industrial enzyme
industries, such as pulp & paper, food and animal feed, increased by
39% over net sales for the three-months ended September 30, 2004, and
represented 32% of net sales, as compared to 21% of net sales in the
2004 third quarter. Net sales to the pulp & paper industry comprised
13% of total net sales for the quarter as compared with 8% for the
same period in 2004, while sales to the textile industry comprised 68%
and 79% for the corresponding periods.
   Net loss for the quarter ended September 30, 2005, was
approximately $2.5 million, or $0.11 per share (diluted), as compared
to approximately $1.3 million net loss, or $0.09 per share (diluted),
for the quarter ended September 30, 2004. The higher net loss was
primarily a result of the Company's increased selling, general and
administrative expenses to meet increased financial reporting
requirements of being a public company, and expenses associated with
hiring additional personnel to support new marketing initiatives for
the Company's Enzyme Business.
   Research and development expenses for the quarter ended September
30, 2005, were approximately $1.1 million, as compared to
approximately $1.0 million for the quarter ended September 30, 2004.
The increase was partially due to the hiring of additional R&D
personnel and outside contract labor.
   Selling, general and administrative (SG&A) expenses for the
quarter ended September 30, 2005, were approximately $2.2 million, as
compared to approximately $1.2 million for the quarter ended September
30, 2004. The increase in SG&A expenses was partially a result of the
substantial investments in personnel and other initiatives the Company
has made since November 2004 to expand its sales, marketing and
product development efforts, as well as to staff the Company to
operate as a public company.
   Cash and cash equivalents were approximately $13.8 million as of
September 30, 2005, as compared to approximately $1.8 million at
September 30, 2004.
   Net sales for the nine-months ended September 30, 2005, were
approximately $11.9 million, as compared to approximately $12.9
million for the comparable period ended September 30, 2004. The
decline in net sales reflects aggressive pricing by the Company's
competitors in the textile industry, which in turn puts pressure on
gross profit and operating margins. The Company's strategy is to
decrease its dependence on sales to the textile industry by
accelerating its investment in less competitive markets. Net sales
also continue to be adversely affected by the residual effects of the
Company's inability, between 2003 and most of 2004, to fund working
capital, staffing expansion, product registrations and product
development needs. The Company is endeavoring to transition its sales
base from the lower margin textile enzymes to higher margin areas such
as enzymes for the pulp and paper, food and animal feed industries,
and despite a decrease in the first quarter of 2005, has begun to
achieve slight growth in these other enzyme industries, increasing net
sales in these industries during the second and third quarters, for an
increase in net sales of 19% in these industries for the nine-months
ended September 30, 2005, over net sales for the nine-months ended
September 30, 2004 (or 27% of net sales versus 20%).
   Net loss for the nine-months ended September 30, 2005, was
approximately $7.9 million, or $0.36 per share (diluted), as compared
to approximately $3.4 million net loss, or $0.23 per share (diluted),
for the nine-months ended September 30, 2004. The higher loss was
primarily a result of the Company's increased selling, general and
administrative expenses to meet increased financial reporting
requirements of being a public company, expenses associated with
hiring additional personnel to support new marketing initiatives for
the Company's Enzyme Business and increased R&D expenses to continue
the development of the Company's proprietary C1 Host Technology.
   "In the third quarter of 2005, we continued our push into the pulp
& paper market while continuing to advance the C1 Host Technology,"
said Mark Emalfarb, Dyadic's President and CEO. "Having completed our
transition to a public company in the second quarter of 2005, we
managed to significantly reduce the cash burn and plan to continue to
maintain our focus on judiciously managing our cash resources while
striving to achieve our business plan's objectives. During the
remainder of 2005 and into 2006, we intend to continue to focus on the
following: execute on our pulp & paper strategy, prioritize among the
many other higher margin market opportunities and accelerate the
development of our C1 Host Technology for expression of human
antibodies and other therapeutic proteins in our fungal expression
system."

   About Dyadic

   Dyadic International, Inc., is engaged in the development,
manufacture and sale of biological products (proteins, enzymes,
peptides and other bio-molecules), as well as the licensing of its
enabling proprietary technology to business collaborators for the
discovery, development and manufacture of biological products from
genes. Dyadic markets its products and services for applications in
the textile, chemical, agricultural, pulp & paper, pharmaceutical,
biotechnology and other industries, using its proprietary C1 Host
Technology and C1 Expression and Screening Systems for the discovery,
development and production of biological products.

   Cautionary Statement for Forward-Looking Statements

   Certain statements contained in this press release are
"forward-looking statements." These forward-looking statements involve
risks and uncertainties that could cause our actual results,
performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. For a discussion of these risks and
uncertainties, please see our filings from time to time with the
Securities and Exchange Commission, which are available free of charge
on the SEC's web site at http://www.sec.gov, including our Annual
Report on Form 10-KSB for the year ended December 31, 2004, and our
Quarterly Report on Form 10-QSB for the quarter ended September 30,
2005. Except as required by law, we expressly disclaim any intent or
obligation to update any forward-looking statements.

   Our Quarterly Report on Form 10-QSB

   Information contained in this press release should be read in
conjunction with our Quarterly Report on Form 10-QSB for the quarter
ended September 30, 2005, as filed with the Securities and Exchange
Commission on November 14, 2005, which contains our unaudited
condensed consolidated financial statements and other information for
the quarter ended September 30, 2005, and the nine-months ended
September 30, 2005.
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                      Dyadic International, Inc.
            Condensed Consolidated Statements of Operations
                              (Unaudited)

                    Three-Months Ended          Nine-Months Ended
                       September 30,              September 30,
                    2005          2004          2005         2004
               -------------------------------------------------------

Net sales         $4,140,145    $4,513,024   $11,862,582  $12,944,314

Cost of goods
 sold              3,317,956     3,496,811     9,513,604    9,818,967
               -------------------------------------------------------
Gross profit         822,189     1,016,213     2,348,978    3,125,347
               -------------------------------------------------------

Expenses:
   Research
    and
    development    1,067,310       975,386     3,758,528    2,683,126
   Selling,
    general and
    adminis-
    trative        2,175,244     1,226,542     6,078,836    3,279,936
               -------------------------------------------------------
Total expenses     3,242,554     2,201,928     9,837,364    5,963,062
               -------------------------------------------------------

Loss from
 operations       (2,420,365)   (1,185,715)   (7,488,386)  (2,837,715)
               -------------------------------------------------------

Other income
 (expense):
  Interest
   expense          (177,184)     (123,412)     (526,945)    (347,086)
  Investment
   income, net       109,232           840       132,490        2,576
  Minority
   interest          (24,805)      (20,613)      (35,376)     (67,088)
  Foreign
   currency
   exchange
   (losses)
   gains, net         (9,127)       78,509        27,354      (55,752)
  Other income,
   net                 5,637         7,474         1,621       17,987
               -------------------------------------------------------
Total other
 expense             (96,247)      (57,202)     (400,856)    (449,363)
               -------------------------------------------------------

Loss before
 income taxes     (2,516,612)   (1,242,917)   (7,889,242)  (3,287,078)
Provision for
 income taxes         15,387        28,529        43,265       85,487
               -------------------------------------------------------
Net loss         $(2,531,999)  $(1,271,446)  $(7,932,507) $(3,372,565)
               =======================================================

Net (loss)
 income
 applicable to
 holders of
 common stock    $(2,531,999)  $(1,271,446)  $(7,932,507)  $7,104,737
               =======================================================

Net (loss)
 income per
 common share:
  Basic               $(0.11)       $(0.09)       $(0.36)       $0.56
               =======================================================
  Diluted             $(0.11)       $(0.09)       $(0.36)      $(0.23)
               =======================================================
Weighted
 average
 common shares
 used in
 calculating net
 (loss) income
 per share:
  Basic           22,251,105    13,453,431    22,084,352   12,794,096
               =======================================================
  Diluted         22,251,105    13,453,431    22,084,352   14,754,768
               =======================================================
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                 Condensed Consolidated Balance Sheets
                      September 30, 2005 and 2004
                              (Unaudited)




                                           September 30, September 30,
Assets                                         2005           2004
Current assets:
   Cash and cash equivalents                  $13,772,049  $1,753,199
   Restricted cash                                 34,658          --
   Accounts receivable, net of allowance for
    uncollectible accounts of $500,142         
    and $225,718 at September 30, 2005 and
    2004, respectively                          2,634,365   3,794,929
   Inventory                                    5,193,051   5,985,242
   Prepaid expenses and other current assets      557,767     927,088
                                              ------------------------
Total current assets                           22,191,890  12,460,458
                                              ------------------------

Fixed assets, net                               1,632,262     875,723
Intangible assets, net                            161,207     213,335
Goodwill                                          467,821     467,821
Other assets                                      138,038     561,089
                                              ------------------------
Total assets                                  $24,591,218 $14,578,426
                                              ========================

Liabilities and stockholders' equity
Current liabilities:
   Accounts payable                            $1,529,846  $4,503,502
   Accrued expenses                             1,542,213   1,090,762
   Accrued interest payable to stockholders        67,268          --
   Current portion of notes payable to
    stockholders                                  171,986     222,232
   Income taxes payable                            56,579      91,967
                                              ------------------------
Total current liabilities                       3,367,892   5,908,463
                                              ------------------------

Long-term liabilities:
   Notes payable to stockholders, net of
    current portion                             3,538,893   6,103,350
   Other liabilities                               34,455          --
   Minority interest                              134,542     149,268
                                              ------------------------
Total long-term liabilities                     3,707,890   6,252,618
                                              ------------------------
Total liabilities                               7,075,782  12,161,081
                                              ------------------------

Stockholders' equity:
   Preferred stock, $.0001 par value:
       Authorized shares - 5,000,000; none
        issued and outstanding                         --          --
   Common stock, $.001 par value,
       Authorized shares - 100,000,000; issued
        and outstanding - 22,251,105               22,251      13,934
   Additional paid-in capital                  49,381,339  23,439,541
   Notes receivable from exercise of stock
    options                                      (462,500)   (250,000)
   Accumulated deficit                        (31,425,654)(20,786,130)
                                              ------------------------
Total stockholders' equity                     17,515,436   2,417,345
                                              ------------------------
Total liabilities and stockholders' equity    $26,591,218 $14,578,426
                                              ========================
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