Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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 "Part II, 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 United States and the Netherlands. We develop and commercialize scalable, non-animal protein-production platforms intended to address growing demand across the life sciences, food and nutrition, and bio-industrial markets.

Effective August 1, 2025, the Company began doing business as Dyadic Applied BioSolutions. This rebranding reflects the Company's strategic transition from a primarily research-driven organization to a commercially focused biotechnology enterprise. The new name and visual identity are intended to better communicate our focus on delivering applied biotechnology solutions through our proprietary Dapibus™ and C1 protein-production platforms.

Our Dapibus™ and C1 platforms are designed to enable the rapid, flexible, and potentially cost-effective production of high-value proteins. We are primarily focused on commercial opportunities involving non-therapeutic proteins for applications in the life sciences, food and nutrition, and industrial bioprocessing markets. Potential applications include proteins used in research and diagnostics, food and nutrition products, industrial enzymes, and other bio-based products. By focusing on selected non-therapeutic applications, we seek to address markets that may involve shorter development timelines and less regulatory complexity than therapeutic biologics, while pursuing opportunities for product sales, partnerships, licensing, and longer-term supply arrangements.

In parallel with our commercial focus, we continue to advance our biopharmaceutical capabilities through externally funded collaborations and other third-party sources of funding, including programs supported by organizations such as the Bill & Melinda Gates Foundation and the Coalition for Epidemic Preparedness Innovations ("CEPI"), as applicable. These programs support the continued development and validation of our protein-production technologies and may help expand the potential applications of the C1 platform over the longer term. Our objective is to enhance the value of the C1 platform for the development and manufacture of biologic antigens, antibodies, enzymes, and other proteins, including for potential use in biopharmaceutical, vaccine, diagnostic, and related applications.

Our business strategy is therefore focused on two complementary objectives: (1) pursuing near- and medium-term potential commercial opportunities in non-therapeutic protein markets, including life sciences, food and nutrition, and industrial bioprocessing; and (2) continuing to advance our biopharmaceutical technology base mainly through third-party-funded collaborations and other strategic programs. We believe this approach may allow us to pursue revenue-generating opportunities while preserving the longer-term potential of our platforms in broader biopharmaceutical and biologics markets.

Recent Company Developments

● Commercial Sales & Product Shipments: Advanced the recombinant protein portfolio through Q2 product shipments directly and through distribution partners. Subsequent to quarter-end, Dyadic completed shipments of six distinct recombinant protein products and generated initial pilot sales of recombinant transferrin and growth factors for cultivated-meat applications.

● OEM Distribution Progress: Initiated Q2 shipments to IBT Bioservices under Dyadic's OEM distribution agreement, with additional shipments completed after quarter-end, supporting product evaluation, qualification and commercialization across IBT's global life-science customer network.

● Proliant Health & Biologicals: Proliant has begun commercialization of Albufree™ DX recombinant human albumin for life science and diagnostic applications and announced plans to expand the Albufree™ portfolio with Albufree™ TX for cell culture and Albufree™ CGT for cell and gene therapy applications, positioning Dyadic for future royalties.

● Fermbox Bio: Scaled commercialization and initial orders for recombinant DNase I (RNase-free) and recombinant human transferrin.

● Inzymes: Confirmed initial commercial sales of non-animal bovine chymosin, with a second product in development that could trigger milestone payments and royalties.

● Cell Culture & Life-Science Products: Continued advancing animal-free recombinant proteins for cell-culture and related applications. Pilot-scale process improvements increased recombinant human transferrin productivity by approximately 80%, further supporting the potential for competitive manufacturing economics as Dyadic advances transferrin, albumin, growth factors and other recombinant animal-free proteins toward broader commercial use.

● Food & Nutrition Pipeline Expansion: Initiated scale-up activities with BRIG BIO for recombinant bovine alpha-lactalbumin under a funded development agreement. Subsequent to quarter-end, Dyadic expanded its precision-fermented dairy protein portfolio through an additional development and commercialization agreement, broadening potential opportunities to generate future product, licensing and royalty revenues.

● Global Health Programs: Advanced Gates Foundation-funded RSV and malaria monoclonal antibody ("mAb") programs, with C1-produced antibodies demonstrating high productivity and functional characteristics comparable to established mammalian-cell reference materials. Funding is in place to advance these programs, and Dyadic is working toward delivery of C1-produced material to support initiation of preclinical studies with one or both mAbs, providing an additional opportunity to support potential future clinical and commercial adoption.

Continued C1 development with CEPI/Fondazione Biotecnopolo di Siena ("FBS") to accelerate protein-vaccine antigen development and advancing NIAID-supported preclinical evaluation of C1-produced malaria antigens.

● Rapid Pandemic Response Capabilities: Demonstrated C1's platform agility by producing, purifying and delivering two Scripps-designed Bundibugyo ebolavirus ("BDBV") antigens to Scripps Research and FBS in approximately 15 days from plasmid to purified protein. The antigens are undergoing further characterization and may support future preclinical evaluation, subject to program priorities, additional evaluation and available funding.

● Government, Academic & Industry Adoption: Continued monoclonal antibody development with the Israel Institute for Biological Research ("IIBR") and expanded access to C1 strains, processes and development capabilities for academic and industry partners evaluating next-generation vaccines and therapeutics. Dyadic is also pursuing several potential monoclonal antibody programs through the European Vaccines Hub/FBS ecosystem, as well as opportunities with prospective first-time C1 collaborators.

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 of product samples for evaluation and qualification purposes 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 June 30, 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.

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.

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

We estimate accrued research and development expenses at each balance sheet date for services rendered but not yet invoiced. Estimates are based on open contracts, purchase orders, and communication with personnel, and are confirmed with service providers periodically. Most providers invoice monthly or quarterly in arrears.

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.

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 and six months ended June 30, 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 and six months ended June 30, 2026 and 2025:

		Three Months Ended
		June 30, 2026				June 30, 2025				Changes in $				Changes in %
Total revenue		$	961,138			$	966,630			$	(5,492	)			(0.6	)%
Total cost of revenue			984,165				613,591				(370,574	)			(60.4	)%
Research and development expenses			332,621				629,379				296,758				47.2	%
General and administrative expenses			1,689,863				1,436,630				(253,233	)			(17.6	)%
Foreign currency exchange loss			8,693				16,098				7,405				46.0	%
Loss from operations			(2,054,204	)			(1,729,068	)			(325,136	)			(18.8	)%
Other income (expense), net			(69,680	)			(64,706	)			(4,974	)			(7.7	)%
Net loss		$	(2,123,884	)		$	(1,793,774	)		$	(330,110	)			(18.4	)%

		Six Months Ended
		June 30, 2026				June 30, 2025				Changes in $				Changes in %
Total revenues		$	2,072,094			$	1,360,202			$	711,892				52.3	%
Total cost of revenues			1,776,005				911,249				(864,756	)			(94.9	)%
Research and development expenses			808,690				1,124,358				315,668				28.1	%
General and administrative expenses			3,445,194				3,032,968				(412,226	)			(13.6	)%
Foreign currency exchange (gain) loss			(898	)			23,170				24,068				103.9	%
Loss from operations			(3,956,897	)			(3,731,543	)			(225,354	)			(6.0	)%
Other income (expense), net			(121,670	)			(89,810	)			(31,860	)			(35.5	)%
Net loss		$	(4,078,567	)		$	(3,821,353	)		$	(257,214	)			(6.7	)%

Total revenue for the three months ended June 30, 2026 was $961,138, representing a decrease of $5,492 or 0.6% compared to $966,630 for the three months ended June 30, 2025. The slight decrease was driven by a $89,563 decrease in research and development revenue resulting from the reduction in the numbers and size of collaboration activities, and the absence of a $250,000 milestone revenue recorded in 2025, partially offset by a $334,071 increase in grant revenue from activities under the CEPI and Gates Foundation grants.

Total revenue for the six months ended June 30, 2026 was $2,072,094, representing an increase of $711,892 or 52.3% compared to $1,360,202 for the six months ended June 30, 2025. The increase was driven by a $610,965 increase in grant revenue from activities under the CEPI and Gates Foundation grants and a $130,927 increase in research and development revenue primarily related to the Proliant Agreement, partially offset by a $30,000 decrease in license and milestone revenue due to the recognition of a contract milestone under the Inzymes Agreement in the prior-year period.

Total cost of revenue for the three months period ended June 30, 2026 was $984,165, representing an increase of $370,574 or 60.4% compared to $613,591 for the three months ended June 30, 2025. The increase was due to a $395,709 increase in cost of grant revenue from activities under the CEPI and Gates Foundation grants, partially offset by a $25,135 decrease in the cost of research and development revenue.

Total cost of revenue for the six months period ended June 30, 2026 was $1,776,005, representing an increase of $864,756 or 94.9% compared to $911,249 for the six months ended June 30, 2025. The increase was driven by a $676,214 increase in cost of grant revenue from activities under the CEPI and Gates Foundation grants, and a $188,542 increase in the cost of research and development revenue.

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 June 30, 2026, were $332,621, a decrease of $296,758 or 47.2% compared to $629,379 for the same period in 2025. The decrease was due to reduction in the number of active internal research initiatives.

Research and development expenses for the six months ended June 30, 2026, were $808,690, a decrease of $315,668 or 28.1% compared to $1,124,358 for the same period in 2025. The decrease was due to reduction in the number of active internal research initiatives.

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2026, were $1,689,863, an increase of $253,233 or 17.6%, compared to $1,436,630 for the same period in 2025. The increase was due to higher rebranding and business development expenses of $322,638, increased legal and accounting expenses of $115,836, and other expenses of $43,639, partially offset by a decrease in share-based compensation expenses of $196,408 and incentives of $32,472.

General and administrative expenses for the six months ended June 30, 2026, were $3,445,194, an increase of $412,226 or 13.6%, compared to $3,032,968 for the same period in 2025. The increase was due to higher legal and accounting expenses of $337,140, increased rebranding and business development expenses of $328,550, and other expenses of $68,491, partially offset by a decrease in share-based compensation expenses of $306,789 and insurance expenses of $15,166.

Loss from Operations

Loss from operations for the three months ended June 30, 2026 was $2,054,204, an increase of $325,136 or 18.8%, compared to $1,729,068 for the same period in 2025. The increase was largely attributable to higher total cost of revenue of $370,574 and higher general and administrative expenses of $253,233, partially offset by lower research and development expenses of $296,758.

Loss from operations for the six months ended June 30, 2026 was $3,956,897, an increase of $225,354 or 6.0%, compared to $3,731,543 for the same period in 2025. The increase was largely attributable to higher total cost of revenue of $864,756 and higher general and administrative expenses of $412,226, partially offset by higher total revenue of $711,892 and lower in research and development expenses of $315,668.

Other Income (Expenses), Net

For the three months ended June 30, 2026, total other expenses, net, was $69,680, compared to $64,706 for the same period in 2025. The increase in other expenses, net is primarily due to lower interest income.

For the six months ended June 30, 2026, total other expenses, net, was $121,670, compared to $89,810 for the same period in 2025. The increase in other expenses, net is primarily due to lower interest income.

Net Loss

Net loss for the three months ended June 30, 2026 was $2,123,884, compared to $1,793,774 for the same period in 2025. The increase of $330,110 was due to an increase of $325,136 in loss from operations, and an increase in other expenses of $4,974.

Net loss for the six months ended June 30, 2026 was $4,078,567, compared to $3,821,353 for the same period in 2025. The increase of $257,214 was due to an increase of $225,354 in loss from operations, and an increase in other expenses of $31,860.

Liquidity and Capital Resources

As required under ASC 205-40, management evaluated conditions and events that could raise substantial doubt about the Company's ability to continue as a going concern for at least 12 months from the financial statement issuance date. As discussed in Note 1 to the Consolidated Financial Statements, as of June 30, 2026, our management has concluded that there is substantial doubt about our ability to continue as a going concern, which depends upon our obtaining necessary financing to meet our obligations and repay our liabilities arising from normal business operations as they come due. For more information regarding our management's mitigation plan and the associated risks, see Note 1 to the Consolidated Financial Statements and "Part II, Item 1A. Risk Factors" of this Quarterly Report. If we are unable to implement sufficient mitigation efforts, we may be forced to limit our business activities or be unable to continue as a going concern, which would have a material adverse effect on our results of operations and financial condition.

The Company expects to incur losses and have negative net cash flows from operating activities as it continues developing its Dapibus^TM and C1 microbial protein production platforms and related products, commercialization activities, 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.

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 June 30, 2026.

On November 16, 2024, Dyadic entered into an agreement with the Gates Foundation relating to the Gates Foundation Grant in the amount of $3,092,136 for the cell line development of monoclonal antibodies targeting respiratory syncytial virus and malaria utilizing the Company's C1 platform to provide globally accessible treatment options for underserved populations. Funds received in advance that have not been spent are recorded as restricted cash in the Company's consolidated balance sheets. As of June 30, 2026, the Company had received the full amount of the Gates Foundation Grant.

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 its underwritten Offering of 6,052,000 shares of the Company's common stock 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 with Craig-Hallum Capital Group LLC, allowing the Company to sell up to $4,238,000 of common stock from time to time through Craig-Hallum as sales agent, at a commission of up to 3.0% of gross proceeds. As of the date of this report, no shares have been sold under the agreement. See Note 1 for additional details.

As of June 30, 2026, cash, cash equivalents, and restricted cash were $3.0 million compared to $5.9 million as of December 31, 2025. The carrying value of investment grade securities, including accrued interest as of June 30, 2026, was $1.8 million compared to $2.7 million as of December 31, 2025.

Net cash used in operating activities for the six months ended June 30, 2026 was $3.8 million, which was principally attributable to a net loss of $4.1 million, partially offset by share-based compensation expenses of $0.3 million.

Net cash provided by investing activities for the six months ended June 30, 2026 was $0.9 million, compared to net cash used by investing activities for six months ended June 30, 2025 was $0.5 million. The change in investing activities of $1.4 million was attributable to a reduction in purchases of held-to-maturity investment securities of $3.3 million, offset by a decrease in proceeds received from maturities of investment securities of $1.9 million.

There was no financing activities for the six months ended June 30, 2026. Net cash provided by financing activities for the six months ended June 30, 2025 was related to proceeds from the exercise of stock options, and the amount was immaterial.