Good afternoon, ladies and gentlemen, and thank you for holding. Welcome to Dyadic International's Second Quarter 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. My name is Dana and I'll be your conference coordinator today. As a reminder, please note that this call is being recorded. At this time, I would like to introduce your host for today's call, Tom Dubinski, Dyadic's Vice President and Chief Financial Officer.

Thank you, Dana. Good afternoon and thank you for joining today's conference call to discuss Dyadic's results for the quarter ended June 30, 2017 which were reported in the press release issued earlier today. The press release and Dyadic's quarterly report have been posted to both, the Dyadic and the OTC Markets websites. I'm joined today by Dyadic's President and Chief Executive Officer, Mark Emalfarb. On today's call, Mark will cover operating highlights, further details on our corporate strategy, and a summary of our research and development efforts. I will close with a review of our financial results in more detail. We will then provide you an opportunity to ask questions. Dr. Ronen Tchelet, our VP of Research & Development will join Mark and I during the Q&A to answer questions directed to him. 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 commentary made in this conference call may be forward-looking statements, which involve risks and uncertainties that could cause Dyadic's actual results, performance, scientific or otherwise 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 President and CEO, Mark Emalfarb.

Thank you, Tom. Good evening, everyone. We've been extremely busy over the past six months focusing on among other things strengthening our R&D capability, making good progress in improving our C1 technology, entering into two proof-of-concept research program with two of the world's largest pharmaceutical companies, raising Tier-1 profile to numerous presentations to the biopharmaceutical industry, as well as only business development in scientific collaboration meetings with interested parties including on-site, meeting with our CRO facility, to present both the CROs and C1's capability to potential collaborators fulfilling our remaining obligations relating to the transaction resulting in the release of approximately $7.4 million of sale proceeds which was previously held in escrow. The PDI pharmaceutical transaction which adds additional research and development capability and the potential for internal biologic vaccine and our more math products. I would like to briefly add some additional color on each of these items and update you on the Company's position regarding reverse split and other few [ph] considerations. We're making good progress in our research programs, as we continue to develop what we strongly believe as a potential to be disruptive next-generation protein expression and production systems based upon the proprietary C1 technology. In less than a year our research has resulted in our ability to shorten the timeframe in which we can foresee the interest and produce the correct genes such as monoclonal antibody at higher levels but better stability by using C1 strain. We've recently developed new generation C1 strains that have already proven to provide a higher yield in one example, mid-single digit gram related expression level of mat, a lower 48 background by [indiscernible] of several protégés that generate more stable math, a faster growing C1 strain to enable rapid development timeline and a shorter fermentation process. We continue to…

Thank you, Mark. At June 30, 2017, cash and cash equivalents were approximately $4.6 million, compared to $6.9 million at December 31, 2016. The carrying value of investment grade securities including interest receivable was approximately $41 million compared to $43.6 million at December 31, 20176. Subsequent to the quarter end, on July 6, 2017, the Company received the cash held in escrow for from the DuPont transaction of approximately $7.4 million. This cash is in addition to the cash and cash equivalent balance as of June 30, 2017. The net decrease in cash and cash equivalents for the six months ended June 30, 2017 of $2.3 million principally reflect cash used for the repurchase of common stock $5.7 million, the upfront payment of the BDI R&D agreement, $1.1 million, other business operations, $2.2 million; offsetting this cash outflow was cash provided by the litigation settlement net of related costs, $3.7 million; proceeds from maturities and investment grade securities in interest payments net of purchases and premium paid, $2.8 million; and the favorable effective exchange rates on cash, $200,000. The net loss for the quarter ended June 30, 2017 was approximately $1.3 million or $0.05 per basic and diluted share compared to a net gain of $600,000 or $0.01 per basic and diluted share in 2016. Please keep in mind that 2016's net gain inclusive of net proceeds from a litigation settlement of $2.1 million. Net income for the six months ended June 30, 2017 was approximately $700,000 or $0.03 per basic and diluted share, compared to a net loss of $400,000 or $0.01 per basic and diluted share in 2016. Please keep in mind that both 2017 and 2016 include the net proceeds of litigation settlements of approximately $4.4 million and $2.1 million respectively. R&D revenue and cost revenue for…

[Operator Instructions] And we'll take our first question from Richard Deut [ph] with National Securities.

Hi Mark, this is for you. Can you give us a little more information on where your principal CRO operation is located?

Well, it's located in Europe.

Spain? Where in Europe?

I'm not really at liberty to disclose that right now but of course PDI is in Spain, and that's the new CRO, the second one that we've talked about.

Okay. So the physical location of the lab is confidential, right?

Well, at the moment it is because obviously when we tell specifically in areas that we've got - in the industry we know exactly where it is and at the moment we want to make sure that we have complete control and access and obviously we're getting directly [indiscernible] and that people are going to and utilize additional finance that we may need as we grow and put more partners on. So we don't think it's in our benefit yet to disclose that.

Okay, thank you. That's all I have.

And we'll go next to [indiscernible].

Hi everyone, couple of things. You said that you're going to be burning for the remainder of the year $4.2 million through 30/12/2017, and that the cash share price is going to be at the end of - at 31/12/2017 expected to be $1.68 to $1.72; if you take those numbers that means the current share price would be about $1.85 a share today and it's trading at $1.30 - whatever, $1.32 today; that's means it's $0.50 a share under cash value, not counting any - not counting anything for the technology.

That's correct.

So my question to you is, you guys talked about uplifting; the - you guys could be doing the best things in the world and if nobody knows about it nobody can buy it, what good is that? That's the first point, that's any product; whether it's your product or anybody else's, if nobody knows about a great product then nobody is going to buy that great product. Obviously, people in the industry, these technology companies that you're talking to, the pharmaceutical companies, they are aware of the product as you're doing presentations; but as far as the Street goes and as far as shareholder value, nobody knows about it. I know multiple hedge funds that I would like to buy the stock, they can't buy the stock because there is just no volume on the stock, and as a result the shareholders are suffering for a people that want to be able to sell because we're basically $0.50 a share under present value today of cash, not counting anything for technology. With that being said, doesn't it make sense to do the reverse stock split, go through the uplifting process, so when you do create and expand your technology and when it is perceived and through these projects and when you've reached a couple of hurdles through a couple of projects, the day that happens; those hurdles happen, people can buy and sell the stock and that stock could jump up a $1, $2, $3, whatever depending on what hurdles are being made but the point is, if you did that now the costs to uplift the stock is beneficial for both, Dyadic, the Company, so that people can buy it the day that you guys announce these hurdles and the benefit of the C1; that's number one. And number two, it gives you more flexibility and gets the word out for the hedge funds or anybody else that wants to buy a lot of shares which is impossible to buy today; so I would definitely encourage you for the shareholders top list this stock right away because the cost is nothing, it's nothing but upside and there is no downside other than a little bit of cost and reported for the uplifting and I think - and it takes time to do that so why not put that time behind us now, be in position, have it uplifted so the day that you guys do bring this technology to the next level, people can start buying and the stock can move instead of waiting after you make that announcement of whatever it is, saying how good this is and how beneficial it is but nobody can buy it or sell it if it's not uplifted.

So first of all, I can assure you that we are preparing to financials and the internal controls and all the things we need to do to be able to uplift and Tom and his team, Chaco [ph] is the Chairman of the Audit Committee, they are doing that on a daily basis and have been doing that to get ready for that if and when that occasion and if words says it's time to go. But the main reason Company is uplifting NASDAQ is to gain access to capital. Now we're at the enviable position of not needing cash to executive our strategic plans since the sale to point, our main focus is to advance our technology; at the point we can create enough good data to generate new investment interest and analyst coverage. In order to conserve our resources where we're seeking funded research collaborations in the addition to making our own strategic R&D investments with regards to whether or not to uplift, we will spend many hours considering the fact that we don't need any of this money, the fact that our float will be very low depending on the conversion ratio needed to establish and maintain a NASDAQ minimum slide per share, the belief it will be difficult to attract meaningful and analysts coverage without sufficient data and better collaborations. The fact that although we've made good progress to-date, we do not currently have sufficient data to attract enough attention. The one-time cost of what first thing is approximately $500,000 to $750,000 which does not include the ongoing cost for legal, investor relations and a reporter accounting additional controls, NASDAQ listing fees, etcetera. Since the ability to attract new investor interest and meaningful analysts coverage is questionable, we must consider whether spending that money now is…

I have a follow-up. Okay, so when you sold for $75 million to DuPont, one of the things that you announced is that you were going to do a uplifting, that was almost two years ago; maybe it was more than two years ago, I think it was January of '15, is that right when you sold or was it January of…

September '16.

Okay, so it's been a year and a half. And this uplift still hasn't happened, that was one of the things you were going to buy - you want to do the share buyback program which you did but you never did the uplifting. So again, I'm going to reiterate what I just said, so you just said that it's going to cost $750,000 upfront cost plus some other costs; so you've got - let's say it's $1 million. If it's $1 million dollars and you've got $50 million, I understand you're working real hard on the technology end but you can do more than one thing at a time, you can also uplift with $1 million and you've got $50 million in cash, it puts you in position of nothing but upside and only the downside of that $1 million; that's the way the shareholders see it. And you say that with the reverse stock split that it would decrease the volume because it would - if you want four to one, and up have 28 million shares, that would be the 4*28 million, 6 million to 7 million shares on the flow but it's still going to be a lot more than what you've got being traded right now, there is nothing being traded right now and the reason is nothing being traded is because nobody can buy it.

I just want to clarify few points; so we have 7 million shares and 30% to 40% of it is controlled by insiders, you really down look out through; 4 million shares that can trade under one. But the main reason is not with $1 million because that's part of the reason; if we need the data in the partnership and to have the business in a position to have analysts want to cover it because without analysts covering it, in addition, because we don't need money, [indiscernible] in order to generate fees, obviously they want to sell stock, so we're sort of in this counting foundry and believe me, we hear your message loud and clear and we're evaluating all these things, we didn't say we're not going to it, we said we're in constant discussions about it, we don't just have a discussion of a family board meeting, we have these discussions on an ongoing basis including Wednesday this week where three board members were in New York having discussions with bankers specifically about this. So we hear you loud and clear and we're all over it, and we're considering it and we're evaluating the pluses and minuses and the timing, and we recognize that at some point we need to do this and we report that love to do it sooner than later but we have to have the foundation which is by the way where we spent the last year doing is putting the business in shape, transitioning the technology from our old lab in DuPont to new CROs that can now genetically engineer C1 equal is better than we were doing this fast, so it created better, faster, quicker, more possible streams have better capabilities. We have generated the detail to be, we have two of the Top 10 pharmaceutical companies in the world that are involved, we wish we could give you their names but quite frankly, you just take a look at the Top 10, pick any of them, it's truly irrelevant if any of those Top 10 are phenomenally successful from our business development efforts and we have several more in discussions with and as I mentioned, we hope to have at least one more than this year and then early next year and we hope it will be bigger, we hope the success from our research programs gets broader the relationships we have and at the right time at the right place, we will try to put as many eyeballs on this as possible and as many ways as possible.

Well, I think from the business side there is no question that you guys are making strides; the only point that I'm making from a shareholders point of view and I guarantee it, if you put it out to folks, the shareholders would say the uplift and that's why they approved the reverse stock split because that's what they wanted and that's what you said that you were going to do a year and a half ago and you haven't moved and that's the reason that this stock is at $1.30 a share and not a $1.80 or $2 or even $3 a share at this point right now. And that's all I'm going to end with that, that's how I feel and I think most of the shareholders would feel the same way.

We thank you for sharing your view with us and we are respecting them.

And we'll take our next question from [indiscernible].

Hi, I won't get into a debate with the prior person but I am strongly in support of your view which is we have a small or liquid stock and uplifting at this point doesn't accomplish a heck of a lot of spending some money but we're not getting into that, it's just back and forth and it's a matter of opinion. The real question is a two-fold, one - and I don't want to - but the first one is pretty quick, are we losing about a $0.25 every conference call for the end date as to when you're going to reevaluate or evaluate where we are with the technology? I believe at one point 6 to 9 months ago we ended '18 and now we're at the middle of '19, it seems that we are losing ground which means you're committing to spend more cash to get us there. And the second question which is my standard question is, why don't you give me the speech again on why would you're stock $0.50 under cash value more than $0.50, a buyback which is extraordinarily accretive to cash per share and asset value per share doesn't make any sense. Thank you.

All right, first of all if you go back to the early part of the conference call, I've said mid 2019 or sooner, and I emphasize over sooner. I can assure you that we don't want to spend money on something that's we're looking forward. We actually are getting very good data on certain of our projects and seem to looking very good but we don't know how good they will end up and I will certain hurdle still to those to come. So we're just sort of giving you what we think is a realistic timeframe and something could happen sooner than that because one of these two partners or one of the future partners may come in and decide they want to take a non-exclusive license or some type of a bigger collaboration or potentially take it all out, who knows. We may find there is one or more of the programs that we're working on with BDI and otherwise products that we developed, we can get to a certain point and then license those out. So we're very aware of the cash position, in fact, I think we probably expect less cash than we said we're all in the year. So that answers that question and I'm trying to get - the last question was, why we're - when we're $0.50 under cash, why aren't we buying more of our shares back. And I will tell you that I've had a discussion with variety of shareholders including this week, I've had the discussions with the Board, and to be honest with you, if we wanted to today put a shareholder program in place and I think I talked about this last time on the call, we've met and talked with two different law firms and because of…

Thank you, Mark.

And we'll take our next question from Robert Hoffman with Princeton Opportunity Management.

Mark, could you give us whatever details you can on the fully funded research program? So does that mean that you guys are doing the research or is the company that you're involved with? Well, why don't you answer that first before I do a follow-on questions about that.

So that means that the company is giving us money, equivalent amount of money and/or maybe a little more by putting much - or maybe a little overhead to cover the overhead. You were conducting the research because we have the experience as a CRO to work with them and get better results. Now in this particular case, the company is also doing some of their own work in addition to the money we're getting and evaluating things that they want to see on their own in addition to what we're doing.

Okay. So is there kind of signpost timelines, mile markers that are pre-established? I mean in other words, in six months are you going to be able to report to us that you've passed hurdles one, two and three; or in six months you haven't. And what are the terms of the - is there a timeline, an end date to this so that if it doesn't work we know that it's not working; I'm just trying to figure out granted that you can't tell us who the company is or the details of the financial situation but it would be helpful if we knew measures of success or like thereof.

Yes, so I can tell you that as far as we're concerned, we're actually succeeding in these programs, the two funded programs and we actually are kind of excited about some of the data that we've actually seen and I think that at least the one that's being going on since January, obviously we have data, we're sharing that data with them or producing antibodies. In some cases we're actually providing those antibodies after them for them to characterize. On the other program, we just started a month or two ago, and so we're starting to see some preliminary data and encourage what that first data - even though it's encouraging and exciting and the potential is there, we still think that we'll need to be carried on going forward to take this platform across the goal line. With these lines, the proof-of-concept programmed, put in place, [indiscernible] will test drive the car and see that actually we're heading in a direction that we said we'll keep people going, and that we're ultimately going to get to. But we hope that if more and more of these companies step up, and we believe they will, and it may not even be one to two, maybe one on one we're talking to that's just going to jump and leapfrog in because we're doing our own data on our own products; and so we believe that these programs, one or more of them will hopefully be broaden bringing more capital whether fully funding the bigger effort to speed up the timeline to get this to the marketplace but they are respective, at $50 million, approximately cash that we have given us the opportunity without really worrying about cash of doing it on our own and advancing the program so that every time…

I think everybody who's on this call understands the upside which is why we're all here but what I guess what I was trying to get a handle on is, with the May 4, the fully funded research program that you started in May 4; is there a finite dollar amount? They say that they are going to take it and give you X dollars to get to a certain point. Is it…

Yes, the answer is there they finite dollar in these programs, [indiscernible] but they are also talking about extending and dramatically feeing up and putting more resources and potentially creating technology and sooner based on the results of that data. The data that we drew in the finite number because there is a finite number, hope the we gather enough interest to create a multiplier.

I understand that we all hope for that. What I guess I'm saying is that if you get to that finite dollar amount and they don't want to do anything, is that the end of the relationship and will you announce it as such?

I don't know if it will be the end of the relationship, based on things that we're seeing today, I wouldn't think anybody would end the relationship but I don't know that because everybody does think with different reasons.

Well, but they're going to have to - once you've gone through dollar X that you've I would initially agree on, they have to agree to spend dollar Y, right?

Yes, but they do that immediately, they might do that already considering it as the progress is going on, right and talking about we need abundance [ph], number one. Or they made just - not they listed all or anywhere in between.

Well no, that's not what I understand, and that's what I'm trying to ask is, are we going to know about any of those decisions? Will you be able to share yet - you know, we've spent 75% or they've spent; we've created 75% of the initial research and they want to re-up.

Yes, they re-up, of course we will obviously [indiscernible] and then as much as we can that they allow us to do, depending on the size of the re-up, when we have no alternative but to come on up and share the main, nothing else because it becomes material, right. So we'll let you know that. If they decide to walk away like we did at Sanofi and that agreed with because quite frankly, they re-up [ph] time where they did it through a level but timely when we got to $75 million, we basically said look, either we're up in a significant way or we're taking it back in. So I don't know how to answer your question other than that we would keep you informed and educated the best we can, good and bad. We wanted the agreements that we have but somebody made the slide, hey, the data is yours, I got to go back to some senior person somewhere and get my budget decreased for me to get revenue discussions.

Got it. And I would agree that a re-up doesn't do anything for. I mean an uplift doesn't do anything for us in the short-term. Thanks.

And at the time I would like to turn the call back to Mr. Emalfarb for closing comments.

Thank you. We are very excited about our potential research and development opportunities in the pipeline, and we believe 2017 will continue to be an important year in the development of the C1 technology and for Dyadic growing the pharmaceutical sector. I want to take this opportunity to thank our very hard working employees, CROs, consultants and our dedicated Board of Directors, research partners and shareholders for their support. Thank you all for taking the time to participate on today's conference call.

Thank you. And this concludes our program for today. You may all disconnect.