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Executives

Michael Faby – VP and CFO

Mark Emalfarb – President and CEO

Danai Brooks – EVP and COO

Analysts

Richard Deutsch – Ladenburg Thalman & Co.

Luke Smith – Chapin Davis

Dyadic International, Inc. (OTCQX:DYAI) Q2 2013 Earnings Call August 8, 2013 5:00 PM ET

Operator

Good afternoon, ladies and gentlemen and thank you for standing by. Welcome to Dyadic International’s Second Quarter 2013 Financial Results Conference Call. (Operator Instructions). My name is Doris and I will be your conference coordinator for today.

As a reminder please note this call is being recorded. At this time I would like to introduce your host for today’s call, Michael Faby, Dyadic’s Chief Financial Officer.

Michael Faby

Thank you, Doris. Good afternoon and thank you for joining today’s conference call to discuss Dyadic’s financial and operating results for the three and six months ended June 30, 2013, which were reported in a press release issued earlier this afternoon. The press release and Dyadic’s quarterly financial statements have been posted to both the Dyadic and OTC Markets websites.

I’m joined today by Dyadic’s Chairman, President, and Chief Executive Officer, Mark Emalfarb and our Chief Operating Officer, Danai Brooks. On today’s call Mark and Danai will cover operating highlights, business development and corporate strategy and I will review our financial results in more detail. We will then give you an opportunity to ask questions. Each caller will be allowed one question and one follow-up question in order to provide all callers an opportunity to participate. If time permits the operator will allow additional questions from those who have already spoken.

Before we begin we would like to remind you that certain statements made in this conference call may be forward-looking statements, which involve risks and uncertainties that could cause Dyadic’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Dyadic expressly disclaims any intent or obligation to update any forward-looking statements except as required by law.

I will now turn the call over to our Chairman, President and CEO, Mark Emalfarb.

Mark Emalfarb

Thank you Mike , I want to thank all of you for joining us on today’s call. The second quarter was a milestone quarter for Dyadic in many respects and we are proud of the direction the company has taken. We have solid financial performance, a major new licensee, expanded R&D capabilities, refined corporate strategy and hired an important new addition to our management team.

In fact I believe the foundation we have laid during the past few months marks a turning point for Dyadic in achieving robust growth in the years ahead.

As we announced in the spring BASF became our latest non-exclusive licensee further validating our technology’s ability to accelerate product development and commercialization of new products for large multinational partners. Now that we’ve signed the agreement with BASF we are finalizing the process of transferring the technology and providing initial training to BASF scientists. In addition we’ve already begun a major paid research project with BASF to develop an exciting new product that will compete against the current leading enzyme in the market.

Over time we hope to continue this relationship and collaborate on additional projects. To supplement projects with Dyadic BASF will ultimately have full capabilities to develop their own products which will lead to additional royalties for us. BASF has broad but not all encompassing rights to their technology. So there is also the potential that they may want to expand their rights in the future if these projects are successful.

As an update on Sanofi and the biopharmaceutical field Dyadic is nearing its next milestone which is expected to enable the product to move into the preclinical testing phase with specific vaccine. The protein of interest has been successfully expressed and Dyadic’s R&D lab team is making progress on a purification step that represents the final preclinical milestone.

As you know Dyadic has invested years of efforts and millions of dollars to develop our C1 Gene expression technology. Between our own R&D and the advances of our licensees the technology is producing more efficacious enzymes with higher fermentation yields in a broader diversity of applications.

BASF and Abengoa could access Sanofi and our other licensees continue to play a major part in improving the C1 platform and they have all invested significant resources alongside us. We are seeing trends with our licensees making high levels investment in C1 and expressing interest in obtaining broader rights in the geography, new fields of interest in a way that our technology can be used.

For example Abengoa has all the tools and capabilities required for them to complete their scientific work. They have a team of 40 scientists working on additional refinement of the enzyme for use breaking down cellulosic biomass. Our recent payments form Abengoa represents an expansion rights in their field of interest.

During the past quarter Dyadic has made a strategic shift to expand and accelerate our new product development capabilities. We’ve approved an expansion of our research and development facility in the Netherland, hired additional scientists and purchased new equipment. We also retooled our new product development process. Note that we have done all these changes in a cost conscious manner, are re-allocating resources within the company and carefully selecting our investments such that our expected profitability this year should not be impacted. These efforts should over the course of the coming years accelerate the growth of our industrial enzyme business and keep us at the forefront of the biofuel industry.

We’ve already identified several promising new products that should address niches in several key markets. Our biofuel enzymes are among the best in the world and with these investments we expect to keep pace with or surpass our competitors. In order to successfully pursue this strategy of both licensing our technology to strategic partners and developing new products for our own use we need a high quality team.

You already know about the phenomenal scientific team that we have in the Netherlands. Here in the U.S. we hired Danai Brooks as Chief Operating Officer. Danai begin working at Dyadic in June and he is already having an impact. Let me turn the call over to Danai to introduce himself and discuss our corporate strategy in more detail.

Danai Brooks

Thank you Mark for the introduction. My first few months at Dyadics have been both exciting and productive. I am thrilled to see the enormous opportunities that are available to our company and have been working very hard with the team to analyze and prioritize a variety of the initiatives so that Dyadic is well positioned for rapid growth and improved margins. At our core Dyadic is an enzyme company with one of the best protein expression systems in the world.

The power of the C1 system is that we can express a huge variety of enzymes and other proteins of interest found in nature at commercial scale. As such the end markets we address are extremely diverse; biofuels, animal feed, food, textiles, pulp and paper, pharmaceuticals and others.

Each of these end markets is unique with a distinct customer need and competitive dynamic. The needs of a bio-refinery using our enzymes to breakdown feed stock to make bio-fuels are completely different from that of our pharmaceutical company using our expression system to develop a vaccine or a firm that uses our enzymes to improve nutrition for chickens and pigs.

We require unique and specific go-to-market strategies for each of these. As such we will continue to pursue our dual-track strategy of selling enzymes directly to certain markets and licensing our C1 platform to strategic partners.

Meeting our customer needs is of utmost priority. So when I joined Dyadic one of the first things I did was to begin meeting with key customers, to really listen and understand what they want. With that knowledge I am working with Mark, Wim, Tom, Rich and other members of the team to reevaluate our strategy in each of the key markets and refine our efforts in many of them accordingly.

Dyadic will continue its policy of being conservative with our cash so the implementation of many of these new efforts will be done through reallocation of our resources. However additional investments will be considered if they meet a very high investment hurdle rate.

In the biofuel space, we recently improved a program to increase our biofuel R&D with a focus on both strain development and fermentation optimization. As Mark mentioned we are expanding our R&D facility, hiring new scientists and purchasing new equipment to support this and other initiatives. We have a detailed business strategy for bio-fuels that you will see unfold in the coming quarters.

For industrial enzymes, we have an exciting new C1-based product line that is currently in application testing for several end markets including animal feed, pulp and paper and food. You will see this as first in the new salvo of C1-based products that we are designing to expand our commercial product offerings.

The product development testing and registration cycle takes anywhere from six months for several years. So the benefit of these programs will be medium to long term. To prepare for these new products we are currently also planning an expansion of our distribution and sales capabilities, both through the hiring of new sales staff, developing the new distribution partnerships and implementing new IT systems.

On the business development front I would like to cover themes of partner quality and emerging markets. There is an enormous interest in the C1 platform from around the world. As you know we can’t get into specifics but in the past quarter we had meaningful licensing and other strategic dialogue with over two dozen companies. Our strategy is to seek high quality partners like BASF, Blue Chip companies that have the ability to: One, contribute to further improving the C1 platform; two, protect our intellectual property; and three, allow us to share in the widespread commercialization of C1 products.

Regarding emerging markets, if you look at our current roster of major licensees and partners they are all based in Europe and North America. While we would continue to pursue opportunities in these regions our new focus for Dyadic is in the emerging markets, specifically China, India and Brazil. We believe that a number of companies exist in these countries that meet our partnership criteria. Having lived personally overseas from years I understand that developing relationship in these regions can take time. But we believe the investment in time will be worthwhile and essential for our long term success.

Let me now turn over the call to our CFO, Mike Faby to discuss our second quarter financial results.

Michael Faby

Thank you Danai. Before reviewing the 2013 second quarter financial results I would like to refer you again to our 2013 second quarter press release and the 2012 year-end financial statements which are posted on the Dyadic and OTC Markets websites.

For the quarter ended June 30, 2013, total revenue decreased to $7.1 million. All three revenue line items were down year-over-year. As noted in the past licensing revenue is deal specific and highly variable. Research and development revenues are also variable as they track the start and completion of various projects. So you should not read any particular trends into the decline.

For example recently BASF initiated a research project at Dyadic Netherlands, which will flow through to the research and development revenue line this year. As this project started later than originally expected some of the revenues have shifted from what we may have originally anticipated in the second quarter into the third and fourth quarters. BASF is also expected to pay Dyadic an additional $1 million in the third quarter on the completion of the transfer of certain technology. This will bring the total license fee revenue to at least $6 million in 2013.

Net product related revenue for the second quarter decreased 11% year-over-year to $1.7 million. This decrease was due to a number of factors primarily caused by the slowdown in the animal feed market segment which suffered from the bird flu in Asia and the resulting flock elimination. Orders have started to return. In fact July 2013 was a very strong month with orders received from nearly all of our key customers in this sector.

Gross profit decreased 14% to $5.1 million in the second quarter of 2013, down from $6 million in the second quarter of 2012. This decrease was due mainly to the lower license fee revenue since that contributes 100% to gross profit. The lower product related revenue was the main contributor to the balance of the gross profit decline. Product margins were somewhat lower due to volume discounts being given at some of our larger customers and changes to our product mix which was discussed last quarter.

Operating expenses for the quarter were down 9% to $1.6 million, due largely to the recovery of a $300,000 doubtful account which was previously reserved but paid in full during the quarter. Our fee for legal and expert support for the lawsuit against our outside former legal counsel is expected to continue to outpace last year, which was anticipated. This increased spending is expected to continue through trial which we anticipate will be sometime in 2014.

To briefly update you on the status of this lawsuit against our formal counsel at the end of July Dyadic’s lawyers filed a notice with the court that the lawsuit is now ready to be set for trial and we are waiting for a trial order from the court setting that date.

Research and development expense for the six months ended June 30th was up 23% from the prior year as additional resources were reallocated in support of our shift to expand our new product development strategies. Exchange rates swings between the U.S. dollar and euro resulted in a $27,000 gain for the quarter as a U.S. dollar strengthened against the euro. These swings had a positive impact of a $131,000 when compared to the same period last year.

The net income for the quarter ended June 30, 2013 was $3.3 million or $0.10 per basic and diluted share as compared to a net income of $4 million or $0.13 and $0.12 per basic and diluted share respectively for the same period last year.

As of June 30, 2013 cash and cash equivalents were $7 million compared to $4 million as of December 31, 2012, an increase of 77%. During the six months ended June 30, 2013 the company generated approximately $3 million in cash against $1.4 million used for the same period last year.

During the quarter we collected a portion of the upfront fee from BASF related to the licensing agreement bringing our cash balance to over $7 million at quarter-end. We expect the remainder of the upfront fee from BASF in the third or possibly the fourth quarter based on the terms of the license. In January 2013 the company received a second installment of $1 million due under the Abengoa license agreement announced in April 2012. Subsequent to June 30, 2013 the company received the final $2.5 million due under this agreement.

Total convertible subordinated debt as of June 30, 2013 was $6.8 million down from $7 million at the end of last year. In January 2013, a $182,000 of the debt was converted into shares of common stock. Our total debt as of June 30, 2012 was $8.2 million. All of our debt matures on January 1, 2014. With our improved cash position we remained comfortable that the remaining debt will be either converted, repaid or extended to a later maturity date if requested by Dyadic.

Capital expenditures for the six months ended June 30 were $100,000 and cash generated from the exercise of warrants and stock options was a $126,000 for the same period. Based on these and other expectations the company expects to be in the strong financial position as we enter next year.

Looking forward we are comfortable that our current cash position and combination with cash generated from the $2.5 million Abengoa payment just received in July and the remaining $1.8 million from the BASF agreement along with cash from ongoing operations and potential future licensing deals will be more than sufficient for Dyadic to conduct its operations for the next several years.

As always we are committed to not diluting our stock holders if possible. Therefore we intend to rely on the funds generated by Dyadic’s operations and the growth of its business segments including product sales, research and development revenues, licensing transactions to fund operations. We currently have no plans to raise additional capital at any time in the near future.

Let me conclude with our outlook. We do not offer specific guidance but we are reiterating that the signing of the BASF license transaction and the associated upfront fees as well as expected continued growth and product-related revenues and research and development revenues in the BASF project as well as other R&D collaborations, we do expect 2013 total revenues to increase versus 2012 and we expect to be profitable for the full 2013 year.

Now I’d like to turn the call back to Mark Emalfarb for some additional comments. Mark.

Mark Emalfarb

Thanks Mike. I want to make a couple additional comments and then we’ll go to Q&A.

First I want to reiterate our commitment to creating a better trading environment for our stock which we believe can add shareholder value. In near term we will be up listing from the OTC Pink Sheet to the OTC QX. The QX is a higher tier market that reflects greater financial and reporting standards. We believe we are qualified for the QX based on our financial strength and current disclosure practices and are working on this process as we speak. We should us to be moved to the QX tier within the next few months.

Furthermore we discuss at our annual meeting that we are working toward listing on the NASDAQ market in 2014. This is a higher commitment from a time, resource and cost perspective. Over the coming months we will continue to put in place infrastructure necessary to become an SEC reporting company. There are other financial and procedural hurdles that we need to address as well. Nonetheless barring unforeseen issues we believe that becoming an SEC filing company and listing on the NASDAQ next year is achievable.

The other thing I wish to address is our relationship with Codexis, one of our early licenses. As you saw in the new wires we recently sent a notice of breach and intend to terminate our license with Codexis if the breach is not cured. Dyadic remains committed to the success of our licensees. However as a publicly trading company and as a licensure of valuable technology we have a duty to ensure that our agreements are upheld. Though we [want to] comment on a legal merits of this matter we are in an open dialogue with Codexis and hope to resolve the matter amicably.

Now I’d like to turn the call back to our operator to take your questions.

Question-and-Answer Session

Operator

Thank you, Mr. Emalfarb. (Operator Instructions). And our first question comes from David Jacobs, private investor.

Mark Emalfarb

Hi David.

Unidentified Analyst

Hi, thank you for taking my call. Quick question so that I understand a little better. At the end of the previous presentation on finances the gentlemen said that it is the determined intention of the company not to dilute shareholders. But I thought he said two sentences before that one of the things that you might do is convert the debt into shares.

Michael Faby

Well that’s already in our cap table. We can’t do anything about that, the people that have those convertible debts…

Unidentified Analyst

Have the right to convert.

Michael Faby

Right so it’s not something that we check up, it’s nothing new.

Unidentified Analyst

Okay than I understand fully and thank you.

Michael Faby

Thank you.

Operator

Our next question comes from Joseph Lavateno with Talisman.

Unidentified Analyst

Yes thank you very much. My question is about business development. Is there any application of the C1 platform in the fraccing industry?

Mark Emalfarb

There is a potential obviously for enzymes in fraccing and that would mean that we could take genes and encode for enzymes and proteins that could be useful there and express them at high levels and offer them either directly or through some type of collaboration with somebody that’s already in that field.

Unidentified Analyst

Are there any, is there anything, is Dyadic pursuing anything in the fraccing industry?

Mark Emalfarb

We are not actively pursuing anything in the fraccing industry but we don’t have our eyes shut. They are wide open and we are looking for what opportunities there may be and there are other people pursuing that market opportunity and if that market looks like in fact it be profitable it wouldn’t take us too long into jump in and do it again.

Unidentified Analyst

Thank you.

Operator

(Operator Instructions). And we’ll go next to Richard Deutsch with Ladenburg Thalman.

Richard Deutsch – Ladenburg Thalman & Co.

Thank you for taking my call. With the near term commercialization and the multiplicity of major Blue Chip clients you have the market cap for your stock is the de minimus and that’s because we’ve been not able to really significant identify and add the value that’s potentially stored up and the progress you’ve made over the last decade and all the hundreds and millions of dollars that you’ve mentioned has not only been invested by yourself but also by your several significant parties.

And I’d like to see if you can, at least give us some comfort with some opportunities, one of which is with Sanofi which is in bio-pharmaceuticals. There are companies, in fact the company went public today in [Tucson] with over a $2 billion market cap and they are five years away from having a commercial product. So I’d like to see if you could comment about the progress you’ve made over the last two years with Sanofi and just tell us specifically what the best case, not what you can guarantee but if this works out to their satisfaction and they were to take this thing on, what would be the financial impact to Dyadic if you win that lottery?

Mark Emalfarb

Rick I mean we can all speculate but the best case would be that they are so enamored with the great work that we’ve done and the performance that C1 has done in expressing this particular protein and they see the applicability of expressing proteins across not only Sanofi Pasteur but across a myriad of other companies they have like Genzyme et cetera. And that they bring this in-house to develop and produce vaccines, antibodies, other therapeutic protein and enzymes.

So that would be the holy grail and off-course take it in a license ship or they can actually buy that division or buy the whole company. But we have no idea if any of those things are going to happen. All we know is that progress we’ve made and we think has been fairly significant, especially for the amount of resources that we’ve applied to it together. We’ve been able to express this very difficult protein in the quantities that they would like it in. We’ve had a few issues in trying to purify the protein.

We think we’ve overcome that and will know that in one or two months. And if we deliver this protein in the right form of terms of purity and it performs in the way that they expect or would hope it would then we hope that would lead to a much broader more diverse application of C1 across all of Sanofi. But that would be the best outcome.

And then in addition to Sanofi we would then have data to demonstrate to other companies in the pharmaceutical industry and the biotech industry as to the power of C1 for producing vaccines and other proteins.

Richard Deutsch – Ladenburg Thalman & Co.

So is it your strategy to wait to see if Sanofi is successful to try to market to other bio-pharmaceutical companies or are you actively seeking other bio-pharmaceutical licensees right now?

Danai Brooks

It’s Danai Brooks. We are in discussion with a number of other pharmaceutical companies but I think the success with Sanofi would create a lot of momentum for bio-pharmaceutical efforts. And so the number of parties that are looking closely at what we can do at Sanofi I think may decide to progress with certain projects if we can show additional success with our Sanofi project.

Mark Emalfarb

And to add to that Rick we talked about in the conference call that we are now shifting some of our resource where we are applying some of our R&D efforts to third parties, we are now shifting some of our R&D effort to apply to our own internal projects and those own internal products include making the C1 system more amenable maybe to making therapeutic proteins.

So some of that work that we are going to be doing to make C1 more robust more versatile will I think certainly correspond right to some of the issues that we faced in the pharmaceutical industry.

Richard Deutsch – Ladenburg Thalman & Co.

Okay well thank you.

Danai Brooks

I think the other point may be to make on Sanofi is that we’ve learned a tremendous amount about how to apply C1 in the pharmaceutical industry doing the project. And so that’s then a huge benefit to us and I think applicable to a number of other areas in the field.

Richard Deutsch – Ladenburg Thalman & Co.

Okay and you’ve answered my question. Thanks a lot.

Operator

(Operator Instructions). And we’ll go next to Luke Smith with Chapin Davis

Luke Smith – Chapin Davis

Hi Mark I was going to ask about other bio-pharmaceutical potential but since that was answered how about the outlook for additional licenses in the other areas you, last fall you said you were in some final stage discussions with people besides what you are referring to was the BASF deal. Could you make any comments about bio-fuels and some of the other areas?

Mark Emalfarb

Just briefly I’ll make a comment and I am going to let Danai answer that. You we have a plethora of people that we are in discussions with for a variety of different applications in different industries and having Danai on board is helping us to one, address those needs in a much more efficient manner because obviously more than one person doing it creates more value and his background. And I’ll let Danai speak to what he sees in that picture going forward.

Danai Brooks

Yeah so I am not going to go through specific names, but I will say that we are spending a lot of time as I mentioned in emerging markets with I think we would consider Blue Chip companies in India, China and Brazil.

We are also spending a lot of time and I think making a lot of progress in the bio-fuel space. We have a great product in the space and we’ve decided to invest more our new resources into it. And I think that’s going to be very promising for us in number of fronts in the coming quarters.

I think also the final comment is with the BASF deal in seeing a larger company interested in C1, and that really sparks additional interest from other chemical companies and I think increased the volume of at least discussion with that, I can see one in how our technology might be applicable to them.

So on a number of fronts, the business development is keeping Mark and myself and others very busy within the company. And I feel quite good that we are going to continue with the progress that we’ve made with BASF and other deals recently in the coming years.

Luke Smith – Chapin Davis

Okay, thank you.

Operator

And we’ll go to our next to a follow question from Richard Deutsch with Ladenburg Thalman.

Richard Deutsch – Ladenburg Thalman & Co.

Yeah hi thanks. You’ve got three other license deals that have actually been worked on for as much as two to three years and you don’t say anything about them. And I’d like to see if you can give us some progress report just to whether they are hitting milestones, proceeding as expected. When we can expect an end point or significant update on these other deals?

Mark Emalfarb

Hey Rick. So I mean I would say a myriad of all of those things that are happening. Some are hitting milestones, some are not hitting milestones. But the one that we’ve been at longest is in animal feed studies where they’ve taken the product we’ve developed with them. I [know it concludes] at higher levels but a new actual enzyme mixture that actually they think will perform better than existing product they have and that we can produce for less money.

And then running animal feed studies as we speak. As those studies looks like they think they should look. They are ready to move towards registration and start launching their products. So that’s the furthest along one of those. The other two quite frankly one is on I think six or seven months old and the other one I think is may be a year old or nine months old, I don’t remember the exact timing. But I would say that the first one we’ve started to work on has great potential. We expect to deliver on the performance. We’ve already delivered on the productivity and if they way picked the right enzymes then we should both be good to go. So hopefully that answers your question.

Richard Deutsch – Ladenburg Thalman & Co.

Well to a certain degree, but what’s always been an issue here is the financial framework that we got to look forward to. It seems as if we are not getting any credit for the potential impact because you are not willing to give us any kind of numbers to look. If this animal feed deal does continue to progress towards commercialization is this going to be a $1million impact or $5 million impact, $10 million impact. What is the scope that we are looking at, are we swimming in an ocean or a bath tub?

Mark Emalfarb

Well we are fairly swimming somewhere in between, okay. So we are not in a bath tub.

Richard Deutsch – Ladenburg Thalman & Co.

You are in $80 million all in, everything you’ve got market cap company. My opinion has always been that, that significantly under values the likelihood of your prospects of being successful. I like you to be able to stand up there and tell us that we are going to be able to play with the big boys and have a market valuation that’s going to be significant if we are successful in the next couple of years.

Mark Emalfarb

Well first of all we are playing with the big boys. We are playing with the largest chemical company on earth, BASF. We are playing with the largest solar company in the world and one of the largest alternative energy companies in the world in Abengoa. We are playing with Sanofi Pasteur one of our largest pharmaceutical companies in world. So I would say we are playing with the big boys.

And…

Richard Deutsch – Ladenburg Thalman & Co.

Well, how big could this animal feed deal be in terms of impacting the company?

Mark Emalfarb

Again Rick we’ve gone through this. This is a confidential relationship where this company itself has asked us for confidential treatment. And we’ve told that the people are in the market place already. This is a product that going to swap out for another one they have with one of the leading companies in that space. And that they don’t have to they don’t have to develop the market if the product performance is better and its’ cheaper they will just replace it with their existing product with their existing customers.

Richard Deutsch – Ladenburg Thalman & Co.

Can you actually say that it would have a substantial impact versus your current financial status? Is that possible to pass your lips here?

Mark Emalfarb

It will have a very meaningful impact in terms of how many dollars ultimately we can earn from that in the royalties and the milestones but more importantly it also validates the technology platform with another product the commercialization that could lead us to more BASF deals with multibillion dollar companies across diverse industries. And as importantly we are focusing some of our own R&D efforts into that same area.

So we can actually generate our own products and in fact I think we’ve talked about it. We have a new product that we’ve actually developed and we are in the middle of testing and evaluating in the animal feeds space ourselves to see if in fact our enzymes can perform equally better than those in the markets at lower cost. But we could have a more significant share of the value chain.

Richard Deutsch – Ladenburg Thalman & Co.

Well so relative to your market cap it sounds like it could be very substantial, that’s all I wanted to here. Thank you Mark.

Operator

And we’ll have a follow up question from Joseph Lavationo with Talisman.

Unidentified Analyst

Yes thank you. My question really does relate in to what we’ve just the question that was just asked and the answer that was just given. But here is my version of that question. Is there some undisclosed relationship or undisclosed relationship within undisclosed company large in size, that if was made public it would blow the doors off your stock price.

Mark Emalfarb

You know I don’t know what blows the doors on or off our stock price so I won’t answer that question. I am not in the business of selling stock, I am in the business of building a company and building revenues and profits and then hopefully the staff will follow that.

But it is a substantial company in the space. It is not the size of BASF because there are very few people that are. But it’s a lot bigger than Codexis and they are very well known in the space, had a great reputation in space. So unfortunately it is an unknown name to you because they’ve replaced to that and they have reasons for that and it’s probably good reasons from a commercial perspective and we are honoring our confidential agreement.

Unidentified Analyst

I understand that and I am not challenging that, not asking you to reveal that. Is this what was talked in the previous question is it related to animal feeds or is it something else?

Mark Emalfarb

Yeah that’s exactly what it was.

Unidentified Analyst

Okay thank you.

Operator

And at this time there are no further questions. I’ll turn the call back to Mr. Emalfarb for closing comments.

Mark Emalfarb

I want thank all of you for being shareholders and supporters of DYAI and participating in today’s conference call. We look forward to reporting our progress to you during our third quarter call in early November and thank you for joining us.

Operator

This concludes our program for today. You may all disconnect.

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