Full Press Release Details
Updates Progress of Its Investigation
announces its intent to abandon its Hong Kong and Mainland China
reports receipt of delinquency notice from the American Stock
Fla - May 21, 2007 - Dyadic International, Inc. (AMEX: DIL) today provided
update on the progress of its investigation into the potentially material
operational and financial improprieties at its Hong Kong and mainland China
operations announced on April 24, 2007.
the recent death of the managing director of the Company's Asian subsidiaries,
the Company received anonymous "whistleblower" communications alleging a number
of improprieties perpetrated against the subsidiaries by the subsidiaries'
management. The Company's investigation, which is being conducted under the
direction of independent legal counsel engaged by the Audit Committee, thus
has revealed that the Asian subsidiaries' largest customer was secretly
controlled by the Asian subsidiaries' management, including the deceased
managing director. This customer, which represented approximately 25% of the
Asian subsidiaries' reported net sales for 2006 of approximately $6.1 million
and approximately 33% of their net accounts receivable of approximately $1.7
million as of December 31, 2006, purchased products from the Asian subsidiaries
which it subsequently re-sold on a cash basis to businesses in mainland China,
apparently allowing these businesses to avoid Chinese reporting and sales tax
Board of Directors has authorized the Company to initiate the abandonment of
Asian operations. To that end, the Company is currently working with its
independent registered public accounting firm, Ernst & Young LLP, to
determine the proper accounting treatment to record the effect of abandoning
these operations. As of December 31, 2006, the assets of its Asian subsidiaries
were approximately $4.7 million, consisting of approximately $1.8 million of
goodwill and approximately $2.9 million of receivables and other
liabilities were approximately $1.0 million. The Asian subsidiaries reported
net loss for 2006 of approximately $43,000.
Emalfarb, the Company's Chief Executive Officer and Chairman of its Board of
Directors, remains on leave of absence from all of his positions and offices
with the Company pending completion of the independent
Company expects to complete the independent investigation and finalize the
accounting treatment for abandoning the operations of its Asian subsidiaries
September 1, 2007, although there can be no assurance that it will achieve
objective. The Company intends to provide further updates as the investigation
previously announced the Company's financial statements, including those
contained in its Annual Reports on Form 10-KSB and Quarterly Reports on Form
10-QSB, as previously filed with the SEC, should no longer be relied upon.
Company has suspended indefinitely the use of its previously filed registration
statement on Form S-3 covering the resale of shares of its common stock by
investors who participated in the Company's private placement completed on
December 1, 2006. During this suspension period, the Company is obligated to
liquidated damages of approximately $130,000 per month beginning on
2007, up to a maximum of $1.3 million.
17, 2007, the Company received notice from the American Stock Exchange that
Company is currently in violation of the Exchange's continuing listing standards
specified in Sections 134 and 1101 of the Exchange's Company Guide because
Company has yet to file with the SEC its quarterly report on Form 10-QSB for
quarter ended March 31, 2007. The notice further indicates that the Company
submit a plan to the Exchange by June 18, 2007, advising the Exchange of action
it has taken, or will take, that will enable the Company to regain compliance
with these continued listing standards by no later than November 16, 2007.
Company intends to submit such a plan to the Exchange in a timely manner and
take such actions necessary to regain compliance with these continued listing
standards. The Exchange will evaluate such plan and determine whether or not
Company has made a reasonable demonstration of an ability to regain compliance
with these continued listing standards. If the plan is accepted by the Exchange,
the Company will remain listed during the plan period, during which time the
Company will be subject to the Exchange's periodic review to determine whether
it is making progress consistent with the plan. If the Company does not submit
plan or submits a plan that is not accepted by the Exchange, or if it does
regain compliance with the continued listing standards or make progress
consistent with the plan, the Company will become subject to delisting
on trading in the Company's shares that went into effect, at the request of the
Registrant, on April 23, 2007, has been and, at the direction of the Exchange,
will continue to be in effect until such time as the Company has filed with
SEC it quarterly report on Form 10-QSB for the quarter ended March 31,
International, Inc. is a biotechnology company that uses its patented and
proprietary technologies to conduct research and development activities for
discovery, development, and manufacture of products and enabling solutions
the bioenergy, industrial enzyme and pharmaceutical industries.
Statement for Forward-Looking Statements
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
Exchange Commission, which are available free of charge on the SEC's web site
http://www.sec.gov, including our Annual Report on Form 10-KSB for the year
ended December 31, 2006, and our subsequent filings with the SEC. Except as
required by law, we expressly disclaim any intent or obligation to update any
forward-looking statements.
(Sasha) Bondar, 561-743-8333
Berkman, 310-826-5051