-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 Je8jJFgT17KD9Kaka3c3mBaR1jmNKEbyyYbaV4jvEkmbTQGnp9VITT511xgnxIti
 jOJ/zOnAjNl9SzsXAANj2Q==

<SEC-DOCUMENT>0001213809-08-000009.txt : 20080304
<SEC-HEADER>0001213809-08-000009.hdr.sgml : 20080304
<ACCEPTANCE-DATETIME>20080304133531
ACCESSION NUMBER:		0001213809-08-000009
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20080303
ITEM INFORMATION:		Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20080304
DATE AS OF CHANGE:		20080304

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DYADIC INTERNATIONAL INC
		CENTRAL INDEX KEY:			0001213809
		STANDARD INDUSTRIAL CLASSIFICATION:	INDUSTRIAL ORGANIC CHEMICALS [2860]
		IRS NUMBER:				450486747
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-32513
		FILM NUMBER:		08662826

	BUSINESS ADDRESS:	
		STREET 1:		140 INTRACOASTAL POINTE DRIVE
		STREET 2:		SUITE 404
		CITY:			JUPITER
		STATE:			FL
		ZIP:			33477
		BUSINESS PHONE:		561-743-8333

	MAIL ADDRESS:	
		STREET 1:		140 INTRACOASTAL POINTE DRIVE
		STREET 2:		SUITE 404
		CITY:			JUPITER
		STATE:			FL
		ZIP:			33477

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	CCP WORLDWIDE INC
		DATE OF NAME CHANGE:	20030110
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form8_k030408.htm
<DESCRIPTION>DYADIC INTERNATIONAL, INC. FORM 8-K 03.04.08
<TEXT>
<html>
  <head>
    <title>form8_k030408.htm</title>
<!-- Licensed to: Dyadic International, Inc.-->
<!-- Document Created using EDGARizer 4.0.5.0 -->
<!-- Copyright 1995 - 2008 EDGARfilings, Ltd., an IEC company. All rights reserved -->
</head>
    <body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
    <div>
      <hr style="COLOR: black" align="left" noshade size="3" width="100%">
    </div>
    <div align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">UNITED STATES</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">SECURITIES AND EXCHANGE
COMMISSION</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Washington, D.C.
20549</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">FORM 8-K</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">CURRENT REPORT</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Pursuant to SECTION 13 or 15(d) of
the Securities Exchange Act of 1934</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Date of
Report (Date of earliest event reported): <font style="FONT-WEIGHT: bold; TEXT-DECORATION: underline">March 4</font><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">,
2008</font></font>&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 14pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Dyadic International,
Inc.</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">(Exact
name of registrant as specified in its charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><img src="dyadic_logosmall.jpg" alt="Dyadic Logo"></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Delaware</font></font></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 153pt">&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;&#160; </font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECO
RATION: underline">333-102629</font></font></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 153pt">&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">45-0486747</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State or
other jurisdiction of incorporation)&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 153pt">&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
File Number)<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 153pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
Employer Identification No.)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 153pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 153pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">140 Intracoastal Pointe Drive, Suite
404</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;&#160;&#160; <font style="DISPLAY: inline; TEXT-DECORATION: underline">Jupiter, Florida
</font></font></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 225pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">33477</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
of principal executive offices)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 225pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Zip
Code)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registrant&#8217;s
telephone number, including area code:</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 328.5pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">(561)
743-8333</font></font></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 13.5pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
name or former address, if changed since last report.)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">see </font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General
Instruction A.2. below):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 18pt">&#160;</td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Wingdings">o</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 18pt">&#160;</td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Wingdings">      </font>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Wingdings"><font style="DISPLAY: inline;" face="Wingdings">x</font></font></div>
              </div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 18pt">&#160;</td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Wingdings"><font style="DISPLAY: inline;" face="Wingdings">      </font></font>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Wingdings">o</font></div>
              </div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td style="WIDTH: 18pt">&#160;</td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Wingdings">o</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div align="left">&#160;</div>
    <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
3.01.&#160;&#160;Notice of Delisting or Failure to Satisfy a Continued Listing
Rule or Standard; Transfer of
Listing.</font></font></font></font></font></font></font></font></div>
    <div align="left">
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
shares of common stock of Dyadic International, Inc. (the "<font style="DISPLAY: inline; TEXT-DECORATION: underline">Company</font>") have been
delisted by the American Stock Exchange ("<font style="DISPLAY: inline; TEXT-DECORATION: underline">AMEX</font>").&#160;&#160;As
a result of AMEX's application filed with the Securities and Exchange Commission
(the "SEC") on January 30, 2008 to deregister the Company's shares, the
Company's common stock will automatically be deregistered under Section 12(b) of
the Securities Exchange Act of 1934, as amended (the "<font style="DISPLAY: inline; TEXT-DECORATION: underline">Exchange Act</font>"),
effective April 29, 2008.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
          </div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I</font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">tem
8.01.&#160;&#160;&#160;Other Events.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On March
4, 2008, the Company issued a press release providing certain information, in a
"Question &amp; Answer" format, concerning the previously disclosed alleged
fraudulent and improper activities at the Company's Asian operations, the
investigation of these activities conducted by Moscowitz &amp; Moscowitz, P.A.
("<font style="DISPLAY: inline; TEXT-DECORATION: underline">Moscowitz &amp;
Moscowitz</font>"), special counsel to the Audit Committee of the Company's
Board of Directors (the "<font style="DISPLAY: inline; TEXT-DECORATION: underline">Audit Committee</font>"),
and certain related and other matters.&#160;&#160;A copy of the press release is
attached hereto as Exhibit 99.2 and is hereby incorporated by reference in this
Item 8.01.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
independent report prepared and presented by Moscowitz &amp; Moscowitz to the
Audit Committee of its findings and conclusions concerning the investigation is
available in its entirety (with exhibits) on the Company's website, at
www.dyadic.com, and is attached hereto (without exhibits) as Exhibit
99.1.</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company has checked the appropriate box&#160;on the cover page of this Current
Report on Form 8-K (this "<font style="DISPLAY: inline; TEXT-DECORATION: underline">8-K Filing</font>"), in
order&#160; simultaneously to satisfy the&#160;Company's filing obligation, if
any,&#160;under&#160;the provisions regarding&#160;soliciting material pursuant
to Rule 14a-12 under the&#160;Exchange Act.&#160; In this connection, the
Company notes that certain information included in this 8-K Filing and the
exhibits hereto may be deemed to be solicitation material&#160;in respect of the
election of certain persons who may be nominated for reelection or to replace
certain of the Company's directors whose terms have expired.&#160;&#160;If the
Company remains subject to the proxy rules of the SEC at the time any forms of
proxy, consent or authorization are furnished by the Company to stockholders,
such forms of proxy, consent or authorization will be accompanied by a
definitive proxy statement and/or related materials.&#160;&#160;STOCKHOLDERS OF
THE COMPANY ARE URGED TO READ ANY SUCH PROXY STATEMENT WHEN AND IF IT BECOMES
AVAILABLE SINCE IT WILL CONTAIN IMPORTANT INFORMATION.&#160;&#160;Investors and
stockholders will be able to obtain such proxy statement/materials, and any
other relevant documents, when and if filed with the SEC free of charge at the
SEC's website, located at http://www.sec.gov, and the Company's stockholders
will receive copies of such documents at an appropriate time from the Company
free of charge.&#160;&#160;The Company and its directors and executive officers
may be deemed to be participants in the solicitation of proxies from the
Company's stockholders in respect of the election of certain persons who may be
nominated for reelection or to replace certain of the Company's directors whose
terms have expired.&#160;&#160;Information regarding the directors and executive
officers of the Company is set forth in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2006, which was filed with the SEC on
April 2, 2007, and Current Reports on Form 8-K subsequently filed with the SEC
on April 25, 2007, June 1, 2007, July 9, 2007, September 24, 2007, October 1,
2007, October 24, 2007 and November 19, 2007.&#160;&#160;This communication does
not constitute a request for a proxy.&#160;&#160;THIS DISCLAIMER SHALL NOT BE
CONSTRUED AS AN ADMISSION BY THE COMPANY THAT THIS COMMUNICATION (OR ANY PORTION
OF IT) CONSTITUTES SOLICITATION MATERIAL OR THAT THIS COMMUNICATION (OR ANY
PORTION OF IT) IS BEING FURNISHED TO SECURITY HOLDERS UNDER CIRCUMSTANCES
CALCULATED TO RESULT IN THE PROCUREMENT, WITHHOLDING OR REVOCATION OF A PROXY OR
VOTE ON ANY MATTER.</font></div><br></div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
            <div id="FTR">
              <div id="GLFTR" style="WIDTH: 100%" align="left">
              </div>
            </div>
            <div id="PN" style="PAGE-BREAK-AFTER: always">
              <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2</font></div>
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
                <hr style="COLOR: black" noshade size="2">
              </div>
            </div>
            <div id="HDR">
              <div id="GLHDR" style="WIDTH: 100%" align="right">
              </div>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Item 9.01. Financial Statements and
Exhibits.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c) The
following exhibits&#160;are filed with this report:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div align="left">
            <table cellpadding="0" cellspacing="0" width="85%">
                <tr>
                  <td align="justify" valign="top" width="18%" style="BORDER-BOTTOM: black 2px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;
      Exhibit</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Number</font></font></div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                  </td>
                  <td align="justify" valign="top" width="82%" style="BORDER-BOTTOM: black 2px solid">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160; Description of
      Exhibit</font></font></div>
                  </td>
                </tr>
                <tr>
                  <td align="justify" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      23.1</font></td>
                  <td align="left" valign="top" width="82%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consent
      of Moscowitz &amp; Moscowitz, P.A.</font><br></font></td>
                </tr>
                <tr>
                  <td align="justify" valign="top" width="18%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      99.1</font></div>
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                  </td>
                  <td align="left" valign="top" width="82%">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
                      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation to the Audit Committee of the Board of Directors
      of Dyadic International, Inc., dated August 15, 2007, prepared and
      presented by Moscowitz &amp; Moscowitz, P.A.</font></div>
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                      </div>
                    </div>
                  </td>
                </tr>
                <tr>
                  <td align="justify" valign="top" width="18%">
                    <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">99.2</font></div>
                  </td>
                  <td align="left" valign="top" width="82%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Press
      Release of Dyadic International, Inc. dated March 4,
    2008<br></font></font></td>
                </tr>
            </table>
          </div>
          <div align="left">&#160;</div>
          <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
            <div id="FTR">
              <div id="GLFTR" style="WIDTH: 100%" align="left">
              </div>
            </div>
            <div id="PN" style="PAGE-BREAK-AFTER: always">
              <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
              <div style="WIDTH: 100%; TEXT-ALIGN: center">
                <hr style="COLOR: black" noshade size="2">
              </div>
            </div>
            <div id="HDR">
              <div id="GLHDR" style="WIDTH: 100%" align="right">
              </div>
            </div>
          </div>
        </div><br>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">SIGNATURES</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 207pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">DYADIC INTERNATIONAL,
INC.</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:
March 4, 2008&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">/s/ Lisa De La
Pointe</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 207pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Name:</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 0pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Lisa De La
Pointe</font></font></div>
        <div>
          <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
              <tr valign="top" style="LINE-HEIGHT: 1.25;">
                <td style="WIDTH: 207pt">&#160;</td>
                <td style="WIDTH: 9pt">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title:</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;Executive
      Vice President and Chief Financial
Officer</font></div>
                  </div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Index to
Exhibits</font></font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                  <div align="left">
                    <table cellpadding="0" cellspacing="0" width="85%">
                        <tr>
                          <td align="left" valign="top" width="10%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;
      Exhibit</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Number</font></font></div>
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                          </td>
                          <td align="justify" valign="top" width="45%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160; Description of
      Exhibit</font></font></div>
                          </td>
                        </tr>
                        <tr>
                          <td align="justify" valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      23.1</font></td>
                          <td align="left" valign="top" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consent
      of Moscowitz &amp; Moscowitz, P.A.<br></font></td>
                        </tr>
                        <tr>
                          <td align="justify" valign="top" width="10%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      99.1</font></div>
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
                          </td>
                          <td align="left" valign="top" width="45%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation to the Audit Committee of the Board of Directors
      of Dyadic International, Inc., dated August 15, 2007, prepared and
      presented by Moscowitz &amp; Moscowitz, P.A.</font></div>
                              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
                            </div>
                          </td>
                        </tr>
                        <tr>
                          <td align="justify" valign="top" width="10%">
                            <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">99.2</font></div>
                          </td>
                          <td align="left" valign="top" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Press
      Release of Dyadic International, Inc. dated March 4,
    2008<br></font></font></td>
                        </tr>
                    </table>
                  </div>
                </div>
                <div align="left">
                </div>
              </div>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">
            <div align="left">&#160;</div>
            <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
              <div id="FTR">
                <div id="GLFTR" style="WIDTH: 100%" align="left">
                </div>
              </div>
              <div id="PN" style="PAGE-BREAK-AFTER: always">
                <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4</font></div>
                <div style="WIDTH: 100%; TEXT-ALIGN: center">
                  <hr style="COLOR: black" noshade size="2">
                </div>
              </div>
              <div id="HDR">
                <div id="GLHDR" style="WIDTH: 100%" align="right">
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
    </div>
  </body>
</html>







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>2
<FILENAME>exhibit23_1030408.htm
<DESCRIPTION>EXHIBIT 23.1 CONSENT OF MOSCOWITZ &AMP; MOSCOWITZ, P.A.
<TEXT>
<html>
  <head>
    <title>exhibit23_1030308.htm</title>
<!-- Licensed to: Dyadic International, Inc.-->
<!-- Document Created using EDGARizer 4.0.5.0 -->
<!-- Copyright 1995 - 2008 EDGARfilings, Ltd., an IEC company. All rights reserved -->
</head>
    <body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
    <div>&#160;</div>
    <div>&#160;</div>
    <div style="TEXT-ALIGN: center"><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Exhibit
23.1</font></div>
    <div style="TEXT-ALIGN: center">&#160;</div>
    <div style="TEXT-ALIGN: center"><br><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">CONSENT
OF MOSCOWITZ &amp; MOSCOWITZ, P.A.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moscowitz
&amp; Moscowitz, P.A. does hereby consent to all references to our firm and the
use and filing of our Report of Internal Investigation to the Audit Committee of
the Board of Directors of Dyadic International, Inc. (the "Company") dated
August 15, 2007 in the Form 8-K of the Company dated March 4, 2008.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 252pt"></font>MOSCOWITZ &amp; MOSCOWITZ,
P.A.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 252pt"></font><font style="DISPLAY: inline; TEXT-DECORATION: underline">/s/ Jane </font><font style="DISPLAY: inline; TEXT-DECORATION: underline">W. </font><font style="DISPLAY: inline; TEXT-DECORATION: underline">Moscowitz</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br><br></div>
  </body>
</html>







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>exhibit99_1030408.htm
<DESCRIPTION>EXHIBIT 99.1 MOSCOWITZ REPORT
<TEXT>
<html>
  <head>
    <title>exhibit99_1030308.htm</title>
<!-- Licensed to: Dyadic International, Inc.-->
<!-- Document Created using EDGARizer 4.0.5.0 -->
<!-- Copyright 1995 - 2008 EDGARfilings, Ltd., an IEC company. All rights reserved -->
</head>
    <body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
    <div>&#160;</div>
    <div style="TEXT-ALIGN: center"><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Exhibit
99.1</font></div>
    <div style="TEXT-ALIGN: center">
      <div>
        <hr style="COLOR: black" align="left" noshade size="3" width="100%">
      </div>
    </div>
    <div style="TEXT-ALIGN: left"><br>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">REPORT OF
INTERNAL INVESTIGATION</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">TO THE
AUDIT COMMITTEE OF</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">THE BOARD
OF DIRECTORS OF</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">DYADIC
INTERNATIONAL, INC.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Submitted
by:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moscowitz
&amp; Moscowitz, P.A.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1111
Brickell Avenue, Suite 2050</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Miami, FL
33131</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Phone:
(305) 379-8300</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fax:
(305) 379-4404</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 252pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.2pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DATE:
August 15, 2007</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
          </div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a name="TOC">TAB</a>LE
OF CONTENTS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 153pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><br><br></font>

        <div align="left">
          <table cellpadding="0" cellspacing="0" width="70%">
              <tr>
                <td valign="top" width="92%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td valign="top" width="8%" style="TEXT-ALIGN: center"><font style="FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline">Page&#160;</font></td>
              </tr>
              <tr>
                <td valign="top" width="92%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><a href="#indep"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">I.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Independence
      and Scope of the
      Investigation&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></a></div>
                </td>
                <td valign="top" width="8%" style="TEXT-ALIGN: center"><font style="FONT-SIZE: 9pt; FONT-FAMILY: times new roman">3</font></td>
              </tr>
              <tr>
                <td valign="top" width="92%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><a href="#back"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">II.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Background
      Information&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></a></div>
                </td>
                <td valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="92%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><a href="#course"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">III.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
      Course of the
      Investigation&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></a></div>
                </td>
                <td valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 9pt; FONT-FAMILY: times new roman">9</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="92%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#interv">A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      Interviews&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</a></font></div>
                </td>
                <td align="left" valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="92%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#dyaddoc">B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Dyadic
      document
      reviews&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</a></font></div>
                </td>
                <td align="left" valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11</font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="92%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#audito">C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Auditor
      document
      reviews&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</a></font></div>
                </td>
                <td align="left" valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11</font></font></font></font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="92%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#comput">D.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Computer
      forensics&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</a></font></div>
                </td>
                <td align="left" valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11</font></font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="92%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><a href="#ourconc"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">IV.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      Conclusions&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></a></div>
                </td>
                <td valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="92%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><a href="#legalana"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">V.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Legal
      Analysis&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></a></div>
                </td>
                <td valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="92%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><a href="#ourfact"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">VI.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      Factual
      Findings&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></a></div>
                </td>
                <td valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="92%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#aknow">A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
      Knowledge of Improprieties at
      Puridet&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</a></font></div>
                </td>
                <td align="left" valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="92%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#bemal">B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Emalfarb's
      Failure to Investigate and ReportWhistleblower e-mails
</a></font></div>
                </td>
                <td align="left" valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">36</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="92%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#cemal">C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Emalfarb's
      Failure To Report Related Parties To Puridet And Dyadic
      Auditors&#160;&#160; </a></font></div>
                </td>
                <td align="left" valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">41</font></div>
                </td>
              </tr>
              <tr>
                <td align="left" valign="top" width="92%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#demal">D.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Emalfarb's
      Position Regarding his Knowledge of and Response to Improprieties at
      Puridet&#160; </a></font></div>
                </td>
                <td align="left" valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">48</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="92%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#improp">1)</a></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt"><a href="#improp">&#160;</a></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#improp">Improprieties at Puridet at the Time of the
      Acquisition&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
                </td>
                <td valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="92%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#southd">2)</a></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt"><a href="#southd">&#160;</a></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#southd">South
      Dragon&#160;&#160;&#160;</a>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
                </td>
                <td valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="92%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#20032004">3)</a></font><a href="#20032004"><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
      2003-2004 Whistleblower
      e-mails&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></a></div>
                </td>
                <td valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">54</font></div>
                </td>
              </tr>
              <tr>
                <td valign="top" width="92%">
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<a href="#pui">4)</a></font><a href="#pui"><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Pui
      Shing&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></a></div>
                </td>
                <td valign="top" width="8%">
                  <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">59</font></div>
                </td>
              </tr>
          </table>
        </div><br><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">2</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
              <td align="right" valign="top" width="14%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">COPY
      <font style="DISPLAY: inline">10</font></font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
report is subject to both attorney/client privilege and work product
protection.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="Indep">Indep</a>endence and Scope of the Investigation</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moscowitz
&amp; Moscowitz, P.A., was engaged by the Audit Committee<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">1</font> of the
Board of Directors of Dyadic International, Inc. ("Dyadic" or "the Company") on
May 14, 2007, to conduct an investigation as a result of its receipt of
allegations of improprieties in the operations and financial management of its
wholly-owned Asian subsidiary, Puridet (Asia) Limited ("Puridet"). The Company's
Board and management had determined that there was merit to those allegations
and decided to abandon Puridet. The Audit Committee commissioned this
investigation to determine whether any officers or employees of Dyadic
participated in these improprieties and/or failed a duty to disclose
them.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This has
been an independent investigation. Our firm had no prior attorney-client
relationship with Dyadic or with any of its officers, directors, or employees.
The Audit Committee placed no limitations on us in the conduct of this
investigation.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">II.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="Back">Back</a>ground
Information</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dyadic is
a public biotechnology company incorporated in Delaware and based in Jupiter,
Florida. Dyadic's revenues are generated primarily through the sale of enzymes
used in the textile business. Dyadic was founded in 1979 by <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mark A.
Emalfarb ("Emalfarb"),<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">2</font> who was,
until he began a leave of absence in April 2007, its CEO and Chairman of the
Board. Dyadic went public in October 2004, through a reverse merger with a
public reporting company.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">1</font> The
Audit Committee consists of three outside independent members of the Board of
Directors: Richard J. Berman, Harry Z. Rosengart and Stephen J.
Warner.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">3</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
December, 2003, Dyadic has conducted: (a) five separate capital-raising
transactions; (b) two buy-outs of minority shareholders of its indirect
wholly-owned subsidiaries; and (c) three redemption transactions, as
follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="bottom" width="19%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Transaction</font></font></div>
              </td>
              <td align="left" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Transaction
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Period</font></font></div>
              </td>
              <td align="left" valign="bottom" width="17%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Approximate
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Raised</font></font></div>
              </td>
              <td align="left" valign="bottom" width="19%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Third Parties</font></font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Private
      Placement</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">April-July
      2004</font></div>
              </td>
              <td align="left" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$3.5MM</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">High
      Net Worth individuals</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2.</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Pfd
      Stk Redemption</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">July
      2004</font></div>
              </td>
              <td align="left" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1.2MM</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Buy-out
      of VC pfd Stockholders</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3.</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Private
      Placement</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">July,
      2004</font></div>
              </td>
              <td align="left" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$1.0MM</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Stock
      for real estate</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4.</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Private
      Placement</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">July,
      2004</font></div>
              </td>
              <td align="left" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">S1.0MM</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Stock
      for R&amp;D </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Sources</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5.</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Private
      Placement</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Oct-Nov
      2004</font></div>
              </td>
              <td align="left" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">approx
      $26MM</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Institutional
      Investors and High New Worth Individuals</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6.</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Minority
      Redemption</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006</font></div>
              </td>
              <td align="left" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">approx
      $0.5MM</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Redemption
      of sole minority shareholder of Dutch
Subsidiary</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">2</font> Dyadic
is the consolidation of several entities which were formed by
Emalfarb.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">4</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7.</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Minority
      Redemption</font></div>
              </td>
              <td valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">approx
      $1MM</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Redemption
      of sole two minority shareholders of Puridet-HK</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8.</font></div>
              </td>
              <td valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Corporate
      Partnering&#160;&#160;Transaction</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Nov
      2006</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$10.0MM</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Abengoa</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9.</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">PIPE
      Transaction</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dec
      2006</font></div>
              </td>
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$13.0MM</font></div>
              </td>
              <td align="left" valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Institutional
      Investors</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
and certain family trusts own the largest shareholdings of Dyadic. The family
trusts have made substantial loans to the Company.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Puridet,
which manufactures and distributes primarily textile enzymes in Asia, is based
in Hong Kong. Puridet is now wholly-owned by Dyadic, through a holding company,
Geneva Investments Holdings Limited, a Virgin Islands corporation. Puridet owns
a PRC corporation, Dongguan Puridet Softener Company Limited ("Puridet
Dongguan"), which owns and operates a processing factory in Dongguan, PRC.
Puridet was founded by Robert Smeaton ("Smeaton") and two partners, Raymond
Tsang ("Tsang") and Raymond Chih ("Chih").<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">3</font> In
October 1998, Dyadic acquired a majority equity interest in Puridet, which
became a voting majority interest in 2003. In April, 2006, Dyadic acquired the
remaining minority interests in Puridet which were still held by Smeaton and
Tsang.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Puridet's
sales in 2005 and 2006, as reflected in the Dyadic Form 10-KSB reports for those
years, were approximately 40% of Dyadic's total sales. Puridet did not, however,
contribute materially to Dyadic's bottom line, as its reported net profit (loss)
figures after taxes<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">4</font> for the
past few years are as follows:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">3</font>&#160;&#160;&#160;Chih
was bought out in and around 2000.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">4</font>&#160;&#160;&#160;These
figures are drawn from the audited financial statements of Puridet. They have
been converted from Hong Kong dollars to U.S. dollars at the
exchange</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">5</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2003</font></div>
              </td>
              <td valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$82,074</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2004</font></div>
              </td>
              <td valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$97,408</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2005</font></div>
              </td>
              <td valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">($58,510)</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="19%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006</font></div>
              </td>
              <td valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">($56,848)</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Puridet
was run and essentially dominated by Smeaton. Tsang was also employed by Puridet
in a managerial capacity. On April 11, 2007, Smeaton, who was 44 years old,
suddenly and unexpectedly died. Shortly after Smeaton's death, on April 15,
2007, Emalfarb received and then forwarded to Wayne Moor ("Moor"), Dyadic's then
CFO, an anonymous e-mail (followed by others, collectively the "2007
whistleblower e-mails") describing certain purported fraudulent activities that
allegedly had been and were being perpetrated by Smeaton, Tsang and the factory
manager in Dongguan against Dyadic. (Exhibit l.)<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">5</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
e-mail began with a number of allegations against Yiu Man Chan, known as "Aman,"
the manager of the Puridet Dongguan plant. The e-mail alleged widespread
self-dealing by Aman, attributing his dominance to the fact that he was in
charge of all functions at the plant, including manufacturing, purchasing and
finances, and that his mistress and cousin held other vital roles. Because of
this, the e-mail alleged, Aman was able to take kickbacks from suppliers,
"rake-off&#8221; cash being transferred from the factory to Puridet Hong Kong, sell
inventory on the side and take payments from customers to allow them to purchase
without paying VAT. The e-mail also said that "Aman and Raymond [Tsang] have
several secret private companies outside," one of which got products at
favorable prices. (Ex. 1, at ME0279.)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">rate
prevailing on December 31 of each year as reported by the Bank of Canada on its
website.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">5</font> All
documents referred to in this report, with the exception of Dyadic's public
filings, are included in the volumes of exhibits accompanying this
report.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">6</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
forwarded the e-mail to Moor, who was in Hong Kong due to Smeaton's death. He
also responded to it, asking for backup paperwork to support the allegations and
giving Moor's and his cell numbers. The anonymous e-mailer responded on April
17, providing more detail and, for the first time, mentioning "Peishing," or as
it is more commonly written, "Pui Shing." (Ex. 2.) The e-mail reported
that:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
private company controlled by Aman and Raymond is called Dongguan Peishing
Washing Products Co., Ltd.&#160;&#160;The internal code in Puridet is called PS
..... PS is the major income resources of Aman and Raymond. PS can always get the
lowest price from Puridet Dongguan .... and the two accountants in Puridet
Dongguan Factory are actually Aman's people. They handle the accountants of PS
as well. Actually a lot of clients from some sales persons are lured to purchase
Puridet products from this company. Normally Aman will give people a lower price
without VAT than Puridet Dongguan.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 2,
at RS0116.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moor, who
was still in Hong Kong, began an inquiry into the events recited in these
anonymous e-mails.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">6</font> In an
interview with Michael Kent, a current Puridet employee, he learned that an
entity named "South Dragon" was a predecessor of Pui Shing and that these
entities were set up to book the accounts receivable of enzyme customers in
China who paid in cash and did not want to pay VAT so that these sales would not
appear on Puridet's books.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moor and
the informant exchanged a few more e-mails. On April 24, 2007, in response to an
e-mail in which Moor had posed a series of questions, the informant wrote:
"We're not sure the exact number of customers below the dummy company Pui Shing.
<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Basically,
all the customers who don't collect VAT are below Pui Shing .... The South
Dragon customers were merely transferred to Pui Shing when it was 'bankrupted.'"
</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 3,
at RS0122.)</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">6</font> Moor
engaged the services of Kroll International to image computer hard drives at
Puridet's offices in Hong Kong and at Puridet Dongguan, and to obtain records.
When our firm was retained, we took over the relationship with Kroll and
directed their efforts in searching the imaged computers.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">7</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On April
18, 2007, in a telephone discussion shortly after he got the first of the 2007
whistleblower e-mails, Emalfarb (who was in Florida) told Moor that he had
received an anonymous e-mail approximately a year to a year and one half before
in which similar accusations were made. Emalfarb told Moor that at that time he
had spoken to Smeaton and had been assured that there were no such problems.
Moor had never been informed of the earlier e-mails, and this greatly concerned
him. He immediately informed Dyadic's outside counsel and the Board. This led to
the question whether Emalfarb and others had failed to disclose or had concealed
these earlier e-mails from the Board, the Company's auditors and outside counsel
in violation of their duties to Dyadic.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Given the
gravity of the matter, the Audit Committee immediately called a series of
special meetings by itself and with the Board of Directors at which it requested
Emalfarb to appear and to explain what he knew and what he had done regarding
the earlier whistleblower e-mails.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">7</font> Emalfarb
initially claimed that he had told Moor about them. Emalfarb then forwarded the
earlier e-mails to the Board. These e-mails spanned the time frame of December
23, 2003 until April 20, 2004, before Moor became employed by Dyadic. They made
similar allegations to those in the April 2007 whistleblower e-mails; however,
the "dummy company" described in the earlier e-mails was "South Dragon." After
reviewing the dates of the earlier e-mails, Emalfarb acknowledged that he had
not told Moor about them as they preceded Moor's hiring in early
2005.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
result of these events and meetings, the Audit Committee recommended to the
Board that an internal investigation be commenced, and the Board, thereupon,
commissioned this investigation. The Board of </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">7</font> Minutes
of these meetings are Exhibits 77, 78 and 79, and are discussed in detail below,
<font style="DISPLAY: inline; FONT-STYLE: italic">infra, </font>at pp. 53 -
54.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">8</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Directors
also requested that Emalfarb take a paid leave of absence from all his positions
with the Company pending the completion of the investigation. The Board also
determined that the Company had to report that its financial statements could no
longer be relied upon and that trading in the Company's stock would be
voluntarily suspended. On April 24, 2007, Dyadic issued a press release
announcing, among other things, these decisions.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">III.&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="Course">The Course
</a>of the Investigation</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="Interv">A.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Interviews</font></a></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
interviewed the following persons:<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">8</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="TEXT-INDENT: 72pt" align="center">
      </div>
      <div style="TEXT-INDENT: 72pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Alexander
Bondar, Vice President, Strategy &amp; Corporate Development,
Dyadic</font></div>
      <div style="TEXT-INDENT: 72pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ciro
Buttacavoli, Partner, Ernst &amp;Young, Florida</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ray
Chandra, Senior Vice President, Dyadic</font><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div align="center">
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cindy
Chiang, audit manager, Ernst &amp;Young, Hong Kong</font></div>
        <div align="left">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lisa De
La Pointe, Interim CFO, Dyadic</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nathan
Dwyer, Asian Sales Director, Dyadic</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">8</font> Steven
Tabloff, Emalfarb's relative, who worked at Puridet in 1999-2000 in a managerial
role, declined to be interviewed. (Regarding Tabloff, <font style="DISPLAY: inline; FONT-STYLE: italic">see, infra, </font>p.26, n.17.)
Edward Demirgian, a former Dyadic controller, did not respond to requests to be
interviewed.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">9</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div align="center">
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="TEXT-INDENT: 72pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mark A.
Emalfarb, suspended CEO and Chairman of the Board</font></div>
        <div style="TEXT-INDENT: 72pt" align="left">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Joe Eng,
Accountant, Puridet</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rufus
Gardner, former Dyadic Controller</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Paul W.C.
Ho, Chartered Public Accountant, Hong Kong</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">David
Hooper, former Dyadic COO and CFO</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Michael
Kent, Sales Manager, Puridet</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Charles
W. Kling IV, Vice President, Dyadic</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rajiv
Makhija, Partner, Ernst &amp; Young, Hong Kong</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Wayne
Moor, Interim CEO of Dyadic</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
        <div style="TEXT-INDENT: 72pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Heidi
Quebedeaux, former assistant to Emalfarb and HR director,
Dyadic</font></div>
      </div>
      <div align="center">
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Robert
Schwimmer, Esq., outside counsel to Dyadic <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">9</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Daniel
Shook, Dyadic technical employee</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Jeffrey
Sparling, Partner, Ernst &amp; Young, Florida (by telephone)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kent M.
Sproat, Executive Vice President, Dyadic</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">9</font> We spoke
to Schwimmer on a number of occasions by telephone. He provided us with an
introductory memorandum.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">10</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Raymond
K.K. Tsang, Director, Puridet</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Henry
Wong, Accountant, Puridet</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Winston
Wren, former Dyadic employee</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, Emalfarb, through counsel, supplied us with a list of persons he
believed should be interviewed during our investigation. We interviewed all the
persons on that list except some Ernst &amp; Young personnel who are no longer
employed there.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="Dyaddoc">Dyadic</a>
document reviews</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
reviewed thousands of documents from the files at Dyadic's Jupiter offices.
Those documents included Puridet files, internal accounting records, documents
from auditors and other external accountants, public filings and private
placement memoranda, and correspondence.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="Audito">Audito</a>r
document reviews</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ernst
&amp; Young both in the United States and in Hong Kong ("EY United States" and
"EY Hong Kong") made certain of their work papers available to us as did Paul W.
C. Ho &amp; Co.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">D.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="Comput">Comp</a>uter
forensics</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kroll
International and its subcontractors imaged and searched the contents of Dyadic
and Puridet computers, including Emalfarb's and Rufus Gardner's laptop
computers.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">10</font> Their
actions are detailed in their report, which is attached as Exhibit 4. We
reviewed thousands of documents, primarily e-mails, culled from <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">these
computers.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">10</font> We have
made repeated, unsuccessful efforts to obtain Smeaton's
computer.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">11</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td valign="top" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="11%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="54%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
              <td valign="top" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">IV.&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="ourconc">Our
Conclusions</a></font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
concluded that Emalfarb failed duties of care and loyalty as both a corporate
officer and a director of Dyadic.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">11</font>
Emalfarb was aware of and was involved in structuring one of the dummy entities,
South Dragon, which was used by Puridet as the nominal seller of Puridet
products to Chinese customers who did not want to pay VAT.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
did not appropriately report or investigate allegations raised in anonymous
whistleblower e-mails sent to him in 2003 and 2004, which focused on the dummy
entity and made allegations of other improprieties in Puridet's operations.
Emalfarb's failures to report and investigate are continuing, at least until
April, 2007. Inquiries made by the auditors during annual audits regarding
suspected fraud and related parties should have elicited disclosures by
Emalfarb. Inquiries made by new management, starting in 2005, relating to the
South Dragon and Pui Shing receivables, should similarly have elicited full
disclosure by him.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Regarding
the extent of the information Emalfarb failed to disclose, we find no persuasive
evidence that Emalfarb was told, prior to the receipt of the 2003-2004
whistleblower e-mails, that South Dragon and Pui Shing were also being used to
facilitate frauds against Dyadic and not just as the way to increase revenues.
However, based on the fact that, beginning shortly after Dyadic's acquisition of
Puridet, Emalfarb sent Dyadic representatives to Hong Kong for extended periods
and required monthly external accounting reports, it appears he was concerned
about such risks. He also explained to us that he was always concerned about the
"dangers" of doing business in China.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">11</font>
Emalfarb was assisted in some of these failures by management employees who are
no longer with Dyadic. David Hooper, who was both CFO and COO, retired at the
end of 2002 before Dyadic was a public company. Gardner resigned as Controller
in July, 2006. Both Hooper and Gardner were entirely cooperative with us in this
investigation.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">12</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
2003-2004 whistleblower e-mails did specifically put Emalfarb on notice of
significant fraudulent conduct. There is no indication he appropriately reported
these allegations to Dyadic's auditors or took any remedial action. From that
point forward, he was in dereliction of his fiduciary duties to investigate and
to disclose.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
Emalfarb failed a duty, from 1998 forward, to report related parties, including
Smeaton's Indonesian company, P.T. Pasifik Ichsan (a customer of Puridet to
which it owed a substantial receivable) and South Dragon, to Dyadic's and
Puridet's auditors.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moreover,
we have concluded that Emalfarb has not been candid with us or with the Board
about the extent and nature of his knowledge of dummy entities at Puridet and
about the nature and extent of actions he took on Dyadic's behalf regarding
them.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There is
no direct evidence as to why Emalfarb, the founder and majority shareholder of
Dyadic, failed to disclose these facts and to investigate the allegations of
wrongdoing. We think the most likely explanation is that, with regard to what he
knew before the 2003-2004 whistleblower allegations, he believed he could not
stop the conduct (even though he sought to monitor and control it), knew that a
substantial amount of Puridet's revenues came from the customers who used South
Dragon and recognized that disclosure would negatively impact Dyadic's revenues,
its reputation and its efforts to raise capital. In addition, reporting the
2003-2004 e-mails would have revealed his failure to disclose what he knew
before that date.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
investigation has not revealed any improprieties on the part of the current
acting management of Dyadic. As described above, we have interviewed current
management and subjected their computers to the same forensic searches as we had
done on the computers of Emalfarb and Gardener. No information was disclosed
that would lead to a conclusion that any of them had knowledge of the
improprieties at Puridet until April, 2007. Emalfarb </font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">13</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">concedes
that he did not disclose the whistleblower allegations to current management
until April, 2007. The evidence is further that current management made
appropriate inquiry of Emalfarb and Puridet management regarding South Dragon
and Pui Shing, Puridet's largest receivables, but were both ignored and
misled.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Finally,
the purpose of our investigation was to "determine whether any officers or
employees of Dyadic participated in these improprieties and/or failed to
disclose them." (See, Section I, <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>at p.l.) Nonetheless,
as the report details, we found substantial evidence showing that Puridet's
management improperly conducted a material portion of its business through South
Dragon and Pui Shing and did so with an intent to conceal the true nature of
Puridet's relationship to those entities and their clients. We do not think,
however, that the effect of this business activity on Puridet's financial
statements can ever be fully quantified. First, these transactions were in cash.
Second, the books and records which may have recorded them have been hidden and
are not available. Third, current management of Puridet is continuing to conceal
and misrepresent what took place.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">V.&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="legalana">Legal
Analysis</a></font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
breached his fiduciary duties to Dyadic. Under Delaware law,<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">12</font> it is
well-settled that a corporate director or officer owes fiduciary duties of care,
loyalty and good faith to the corporation.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">____________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">12</font> We have
provided an analysis under Delaware law, as Dyadic is a Delaware, corporation
and Delaware law is applicable at all times relevant to these allegations. The
corporation first became a public company in late 2004 and many of the acts and
derelictions of duty took place before then and before Sarbanes-Oxley was
enacted or applicable. Accordingly, we have not analyzed the extent to which any
of this conduct may constitute violations of the securities laws. However, to
the extent omissions and misrepresentations in the Company's financial
statements are included in Dyadic's public filings, we do note that. See, below,
<font style="DISPLAY: inline; FONT-STYLE: italic">infra, </font>at p.39. <font size="1">13</font></font><br>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">14</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Guth v. Loft, </font>5 A.2d 503, 510
(Del. 1939) ("A public policy, existing through the years, and derived from a
profound knowledge of human characteristics and motives, has established a rule
that demands of a corporate officer or director, peremptorily and inexorably,
the most scrupulous observance of his duty, not only affirmatively to protect
the interests of the corporation committed to his charge, but also to refrain
from doing anything that would work injury to the corporation, or to deprive it
of profit or advantage which his skill and ability might properly bring to it,
or to enable it to make in the reasonable and lawful exercise of its powers.");
<font style="DISPLAY: inline; FONT-STYLE: italic">Cede &amp; Co. </font>v. <font style="DISPLAY: inline; FONT-STYLE: italic">Technicolor, Inc., </font>634 A.2d
345 (Del. 1993) (The duty of care and duty of loyalty are of equal and
independent significance; good faith is equated with loyalty.) "[W]ith respect
to the obligation of officers to their own corporation and its stockholders,
there is nothing . . . which suggests that the fiduciary duty owed is different
in the slightest from that owed by directors." David A. Drexler, <font style="DISPLAY: inline; FONT-STYLE: italic">et </font><font style="DISPLAY: inline; FONT-STYLE: italic">al,</font><font style="DISPLAY: inline; FONT-STYLE: italic"> Delaware Corporation Law and
Practice, </font>&#167; 14.02, at 14-5 to 14-6.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">____________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">13</font>
Emalfarb was at all relevant times an officer and director of Dyadic and, for
most of the time, its sole director. Other directors on Dyadic's Board were and
are, as follows:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1)
Richard van den Broek and Jeffrey W. Cardin joined the Board on July 27, 2001.
Van den Broek resigned on September 30, 2003, and Cardin on November 11,
2003.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2)
Stephen J. Warner joined the Board of Dyadic International (USA), Inc., a
wholly-owned subsidiary of Dyadic, in August, 2004, and joined the Board of
Dyadic in October, 2004.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3) Robert
B. Shapiro joined the Board in March, 2005.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4) Harry
Z. Rosengart joined the Board in April, 2005.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5) Glenn
E. Nedwin joined the Board in March, 2006.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It should
also be noted that all material times Emalfarb was a director of
Puridet.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">15</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Even
where an act or failure to act does not appear self-interested, it may still be
a breach of fiduciary duty. "[T]he universe of fiduciary misconduct is not
limited to either disloyalty in the classic sense (i.e., preferring the adverse
self-interest of the fiduciary or of a related person to the interest of the
corporation) or gross negligence. Cases have arisen where corporate directors
have no conflicting self-interest in a decision, yet engage in misconduct that
is more culpable than simple inattention or failure to be informed of all facts
material to the decision. To protect the interests of the corporation and its
shareholders, fiduciary conduct of this kind, which does not involve disloyalty
(as traditionally defined) but is qualitatively more culpable than gross
negligence, should be proscribed." <font style="DISPLAY: inline; FONT-STYLE: italic">Brehm v. Eisner (In re Walt Disney
Co. Derivative Litig), </font>906 A.2d 27, 66 (Del. 2006).</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
spelled out in Delaware cases, subsumed under the overarching duties of care,
loyalty and good faith are the following duties which are implicated by the
facts of this matter:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1. The
duty to act on an informed basis</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The duty
of the director of a company to act on an informed basis is a facet of the duty
of care. <font style="DISPLAY: inline; FONT-STYLE: italic">Cede, </font>634 A.2d
at 368 n.36.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2. The
duty to investigate allegations of wrongdoing.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In <font style="DISPLAY: inline; FONT-STYLE: italic">Graham v. Allis-Chalmers
Manufacturing Company, </font>Del. Supr., 41 Del. Ch. 78, 188 A.2d 125 (1963),
the directors of a large corporation were charged with failing to prevent
employees from violating antitrust laws. The court pointed out that "directors
are entitled to rely on the honesty and integrity of their subordinates <font style="DISPLAY: inline; FONT-WEIGHT: bold">until something occurs to put them on
suspicion that something is wrong</font>." 188 A.2d at 130. The court stated
that a director may not be liable for failure to prevent employee wrongdoing
unless the director <font style="DISPLAY: inline; FONT-WEIGHT: bold">ignores
"obvious danger signs of employee wrongdoing</font>." <font style="DISPLAY: inline; FONT-STYLE: italic">Id. </font>at 130. (Emphasis
added.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3. The
duty to avoid violations of law.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">16</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P. A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">"[O]ne
cannot act loyally as a corporate director by causing the corporation to violate
the positive laws it is obliged to obey." <font style="DISPLAY: inline; FONT-STYLE: italic">Guttman </font>v. <font style="DISPLAY: inline; FONT-STYLE: italic">Jen-Hsun Huang, </font>823 A.2d 492,
506 (Del. Ch. 2003)(citing 8 Del. C. &#167; 102(b)(7)(ii)).</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4. The
duty to disclose.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
corporate officer and director has a duty to inform the Board of pertinent
matters. <font style="DISPLAY: inline; FONT-STYLE: italic">Science Accessories
Corp. v. Summagraphics Corp., </font>425 A.2d 957, 962 (Del. 1980) (an agent has
the "duty to disclose information that is relevant to the affairs of the agency
entrusted to him."). <font style="DISPLAY: inline; FONT-STYLE: italic">O'Reilly
v. Transworld Healthcare, Inc., </font>745 A.2d 902, 916 (Del. Ch.
1999)("Corporate fiduciaries can breach their duty of disclosure under Delaware
law in a number ways -- by making a materially false statement, by omitting a
material fact, or by making a partial disclosure that is materially
misleading").</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
failure to disclose related parties to the auditor is a breach of the duty of
disclosure. Most business transactions are the result of arms length bargaining,
from which it may be assumed that prices are set fairly and objectively. When
the parties are related, that objectivity may be lost. Readers of financial
statements should have the information that parties doing business with the
company are related in order to fairly evaluate the company's financial
statements and results of operations. Disclosure of related parties to the
auditor is required under FASB 57. The Securities and Exchange Commission
recognizes the FASB's financial accounting standards as authoritative. <font style="DISPLAY: inline; FONT-STYLE: italic">PNC Bancorp, Inc. </font>v. <font style="DISPLAY: inline; FONT-STYLE: italic">Commissioner, </font>212 F.3d 822,
825 (3d Cir. 2000).</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb's
lack of candor to the Board, to the Audit Committee and to us is also a breach
of the duty of disclosure.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="ourfact">VI.&#160;&#160;&#160;&#160;</a><font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="ourfact">Our Factual
</a>Findings</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: bold"><a name="Aknow">A. </a><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline"><a name="Aknow">Knowledge </a>of Improprieties at
Puridet.</font></font></font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">17</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of die Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We find
that Emalfarb was aware of the fact that Puridet, at the time of the acquisition
by Dyadic, had been engaging in unreported sales, cash transactions, and other
conduct, which he referred to as Smeaton's "customary practices." We find that
Emalfarb should have known that such dealings could lead to abuses such as
skimming of cash.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We also
find that Emalfarb was aware of the fact, significantly before the receipt of
the 2003-2004 whistleblower e-mails, that Puridet and/or its management, Smeaton
and Tsang, had established at least one dummy company ("South Dragon"), which
appeared on the books of Puridet as a customer, in fact, its largest customer
and the one with the highest receivable balance. We find that Emalfarb knew,
also significantly before the receipt of the 2003-2004 whistleblower e-mails, at
a minimum, that South Dragon was used as a means for Puridet customers in China
to engage in cash transactions in which Chinese VAT was evaded, and that he
aided and abetted Smeaton and Tsang to make South Dragon appear as an unrelated
entity engaged in aims length transactions with Puridet when they knew that was
not the case.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There is
little direct evidence as to whether Emalfarb knew that Pui Shing functioned as
a successor to South Dragon. However, given the circumstances of his knowledge
of South Dragon, his oversight of Puridet's finances, and his close and frequent
contacts with Smeaton, we believe it is reasonable to infer that he knew what
Pui Shing was and failed to disclose it.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb's
failure to disclose these matters was continuing, at least until April,
2007.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The facts
supporting these findings are as follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">When
Emalfarb began to negotiate with Smeaton and his partners to acquire Puridet, it
was clear that Puridet was engaging in "off the books" and cash transactions
with its customers in China. David Hooper, Dyadic's then COO, went to Hong Kong
in March, 1998, to do due diligence and to begin the transaction. In his due
diligence report to Dyadic, entitled "Puridet, Information Gathered in Visit of
March 23-25, 1998" (Ex. 5, D0500-0510), </font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">18</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      Internationa], Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15,2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Hooper
wrote that audited statements for the fiscal year ended March 31, 1997, showed
sales of HK$ 43 million with profits before tax of HK$ .5 million. He then noted
additional sales from statements he had been given and provided a section
entitled "Actual including shadow accounts." Hooper confirmed in an interview
that these were off the books sales that Puridet made. Smeaton had shown him a
notebook in which he kept track of those sales. Smeaton told Hooper that he kept
those sales off the books for tax purposes, referring to the Hong Kong tax rate
of 15%. Hooper told us that he told Smeaton that all Puridet sales would have to
be on the books after the acquisition.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Hooper's
report notes, regarding Puridet Dongguan's customers, "PRC -80% - 30-40 within
80 km of plant.... Most customers pay cash with order." (Ex. 5, D0503.) It also
describes the company in Indonesia, P.T. Pasifik Ichsan as follows: "Company is
100% owned by local distributor. Side letter that Puridet owns unofficially
85%." (Ex. 5, D0506.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">An Arthur
Andersen Hong Kong memorandum of a meeting with Hooper<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">14
</font>regarding the acquisition notes that Hooper did not want Andersen to
participate in the due diligence exercise prior to acquisition. The memorandum,
dated June 11, 1998 (sent to Hooper and maintained in the Puridet files at
Dyadic), states that Andersen raised issues of tax liability issue in China,
both VAT and EIT. "We need to review the operation mode in order to determine
the PRC tax implication, if any." It then summarizes Hooper's response as
follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">David </font><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">stressed</font><font style="DISPLAY: inline; FONT-WEIGHT: bold"> that he is fully aware of [tax
issues]. However, he does </font><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">not</font><font style="DISPLAY: inline; FONT-WEIGHT: bold"> need our assistance in determining
the tax implications for the two entities and to quantify the tax liability. The
acquiring group will determine the </font><font style="DISPLAY: inline; FONT-WEIGHT: bold">risk of</font> <font style="DISPLAY: inline; FONT-WEIGHT: bold">such tax exposures on the two
entities and will seek indemnification and warranties from the seller as
appropriate. In addition, they are fully aware of the tax implications, both
Hong Kong and China on the <font style="DISPLAY: inline; FONT-STYLE: italic">unrecorded</font> sales. No audit
due diligence is required even though the acquirer is purchasing the shares of
Puridet or the BVI Co."</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 51.85pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">____________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">14
</font>Andersen was Puridet's auditor before EY Hong Kong.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">19</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Eiternal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Bolding
and underlining in original. Italics added). (Ex. 6, D0455.) Hooper confirmed to
us that he disclosed these "unrecorded" sales to Andersen and that he did not
want them to conduct further inquiry into them.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Besides
Andersen, Dyadic retained Hong Kong counsel to assist in the transaction.
However, again, Hooper excluded from the engagement any assistance regarding
legal liabilities. A memo to Hooper from Gavin Nesbitt, Dyadic's Hong Kong
counsel, also dated June 11, 1998, noted that Hooper does not want "a formal
legal due diligence exercise and that [he] would [himself] endeavor to get
further material information." (Ex. 7, D0457.) Nesbitt provided Hooper with a
checklist he could use to do the due diligence himself.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">15</font> Hooper
confirmed to us that he knew there were "problems" with Puridet, so there was no
purpose to due diligence.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Hooper
told us that he shared all of this information with Emalfarb. The documents
dealing with the Puridet acquisition - drafts, memoranda, email communications,
etc.- confirm that Emalfarb was closely involved in the transaction. Emalfarb's
knowledge of improprieties at Puridet can be seen in a purposefully vaguely
worded letter signed and sent by Emalfarb to Smeaton at the time of the Puridet
acquisition. That letter, dated October 20, 1998, the day before the closing of
the acquisition transaction (sent by fax from a hotel in Shanghai) states, as
follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 51.85pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We spoke
last night and over the telephone you attempted to disclose to me <font style="DISPLAY: inline; FONT-WEIGHT: bold">your ways of doing business in China
and your practices in handling various business activities in China in relation
to </font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">____________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 51.85pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">15</font> Nesbitt
notes Hooper's explanation being that the "sellers have 'lawyer
phobia.'"</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">20</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 51.85pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">customs
matters, import and export of goods, etc.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As we
have previously agreed the sale and purchase of the Business and Business Assets
under the Business Sale Agreement should be effective on October 19, 1998 as
planned.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due to
the immediate need to continue ongoing business operations, until further notice
you and Raymond Chih are hereby authorized to continue such <font style="DISPLAY: inline; FONT-WEIGHT: bold">customary practices</font> in doing
business in the best interests of the Company.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A review
of practices will be discussed and finalized at the next board meeting of
Puridet (Asia) Limited.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Emphasis
added.) (Ex 8, DO 101.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Veiled
communications concerning the handling of cash transactions and tax issues
continued. Their language shows that their purpose was to find a mechanism for
shielding Puridet from liability for such transactions and not, as now claimed
by Emalfarb, see, <font style="DISPLAY: inline; FONT-STYLE: italic">infra,
</font>at pp. 49 - 52, to stop such transactions. Thus, on May 17, 1999, the
following e-mail was sent by Raymond Tsang to Demirgian, the Dyadic Controller
who preceded Gardner, with copies to Hooper, Emalfarb and Smeaton:<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">16</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4. China
Administration Fee. Starting from March 1999, a local company begins to handle
the local delivery to our Local China customers either local registered company
or HK company with plant in Mainland China. We offer 2.5% on the sales of local
delivery in China to them as their remuneration. The purpose of using, this
tools is build up a safety wall between Taxation Dept./Custom Dept., and our
Factory. The other objective of this middle man is they can handle some special
rebate and discount to customers and attend entertainment with custom people in
some occasions. <font style="DISPLAY: inline; FONT-WEIGHT: bold">They can act
much more flexible than we can.</font> They also are our </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">____________________________</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">16</font> The
emails and letters excerpted contain numerous typos and grammatical errors. We
have reproduced them as typed and, for readability, have not annotated them with
"sic."</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">21</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15,2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">tools of
collecting payment in China - local to local policy. In February 1999, we paid
them HK$38,000.00 for their initial established expenses and handling special
discount with customer.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Emphasis
added.) (Ex. 9, RG-CD0001-5.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At some
point, Puridet began to book most of its local sales in China into an entity it
called South Dragon Detergent Company, or Fushing South Dragon Detergent
Company, often referred to by Puridet people as "SD" or "South Dragon," and
sometimes mistakenly referred to by Emalfarb as "Red Dragon." While, on the
state of the record, South Dragon's beginning date cannot be determined, it
appears to be sometime in 2000. An internal document from Raymond Tsang's
computer memorializes a meeting held on May 5, 2000, with Mr. Zhai, the
import/export consultant used by Puridet who came to be used as the nominal head
of South Dragon. The memo notes three objectives: 1) "Make the Operation of
Internal Sales in China and South Dragon more flexible;" 2) "Eliminate the risk
of Dongguan Puridet Softener Co., Ltd.;" and 3) "Deal with VAT invoice
transaction and VAT refund." The memo sets forth alternatives to accomplish
these objectives, including: "Zhai set up local factory and Puridet/Tsang
contract his factory to produce the goods in China and sell in China - solve the
problem of VAT invoice and VAT refund and name difference." Discussing this
alternative, the memo notes: "Zhai thinks US partner can accept this method as
there is a contract (US loves contract) and more flexible for us to run the
business and safe." (Ex. 10, TD00050A.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>In an August 14, 2000, e-mail to Emalfarb, with a copy to Hooper, Tabloff
<font style="FONT-SIZE: 70%; VERTICAL-ALIGN: super">17&#160;</font> states,
Let's discuss the plan of action that Robert and I implemented months ago and
that even your VP of sales told me in June seemed to have </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">____________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">17</font>
Tabloff, a relative of Emalfarb's, was placed by Emalfarb in a management
position at Puridet in 1999. In January, 2001, Tabloff was removed from a flight
from Chicago to Hong Kong which had been diverted to Anchorage,</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and
arrested, due to violent behavior resulting from excessive drinking. He never
returned to Puridet.</font></div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">22</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">all areas
covered. Upon Raymond Chih's resignation Puridet had to restructure it's sales
force and methods due to the Chinese governments changes in policy. Puridet lost
much of it's China customers due to these changes and the fact that Raymond Chih
wouldn't react to fix the problem. In order to recoup these sales Puridet had to
set up a chain of distributors who could handle the China business and take
whatever chances were necessary while keeping Puridet clear of any
improprieties.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex
ll,RGO0068-70.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
October, 2001, Gardner, Dyadic's then controller, traveled to Hong Kong with
Hooper where he was briefed by Smeaton and others, about Puridet's operations
and, specifically, about South Dragon.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">18</font> His
interview statements to us, and contemporaneous documents created by him,
confirm that South Dragon was an entity made to appear as a customer so that
cash transactions and transactions where customers wanted to avoid their VAT
obligation would not appear on the books of Puridet.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">19</font>
Gardner's handwritten notes of an explanation of South <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dragon,
which he recalls was given to him by Smeaton, state:</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">____________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">18</font> Gardner
was hired by Hooper in July, 2001, as a replacement for Edward
Demirgian.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">19</font>
Hooper's account in his interviews' with us of his knowledge of South Dragon was
somewhat confused. He had not recalled the issue on his first interview, but had
no problem acknowledging it at the second interview when his recollection was
refreshed with documents.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">23</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15,2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">South
Dragon-Robert set up for them to import raw material to avoid VAT and have
Puridet manufacture for them. Puridet charges 95% sale price, SD charges their
customers 100% with no VAT. They cannot do export sales. However, a Chinese
customer may request a VAT invoice so that they can sell with VAT and be clean
with government. We honor that request and therefore we give up 6% or whatever
the rate is for those sales. We bill SD for 95% and SD bills this customer 94%
sales with 6% tax; hence SD loses money here as they pay the VAT to
government.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 12,
RG0112.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gardner's
notes also contain the following description of South Dragon:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
continue with South Dragon and Puridet's business arrangements:<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>I was told that South
Dragon has been in existence since the 1<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">st</font> qtr. of
2000, established to shoulder VAT and other China government requirements so
that Puridet would be a clean importer of raw materials and exporter of finished
products.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 12,
RG0118.) </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Contrary
to his notes described above, Gardner told us that he and Hooper knew that South
Dragon needed to be shut down and that either Hooper or Emalfarb told Smeaton to
do so. While he was not certain, Gardner thought that new sales had stopped by
December 2003. However, in fact, sales went on actively until July 2004, and
Gardner received monthly reports from Hong Kong accountant Paul W. C. Ho &amp;
Co. which pointed out and analyzed the significance of the South Dragon
receivable.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Both
Hooper and Gardner told us, and it so appears from their e-mails, that they
communicated openly and freely with Emalfarb about all matters, including South
Dragon. They both also told us they never kept anything </font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">24</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">about&#160;
Puridet from him. Gardner told us that he routinely made notebooks for Emalfarb
with current financial information. Besides receiving reports from them,
Emalfarb also communicated directly with Smeaton in e-mails and in many
telephone calls.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">20</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Thus, for
example, on November 8, 2001 (shortly after Gardner and Hooper&#8217;s return from
Hong Kong), Emalfarb wrote Smeaton regarding controls that should be established
at Puridet, stating that</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we both
need to have tight financial and other controls on Puridet (Asia) Limited&#8217;s
business (including but not limited to (I) Accounts Receivables, Inventory, Bank
and other Cash Accounts as well as the accounts payables, (ii) documentation of
the business arrangements between Puridet (Asia) Limited and (a) JV with
Flemming and his company, (b) <font style="DISPLAY: inline; FONT-WEIGHT: bold">South Dragon</font> and (c) the
Indonesian Business. <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">21</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 13,
at K0787. Emphasis added.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
his October 2001 trip, Gardner became actively involved in communications with
Smeaton regarding South Dragon. On November 11, 2001, Smeaton sent an e-mail to
Gardner, with a copy to Hooper (in a message regarding sales figures), that
again makes clear that Puridet ran and kept the books for South Dragon: &#8220;I think
I will keep Henry [Wong, a Puridet accountant] and put him in charge of keeping
the South Dragon accounts updated,</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">_______________</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">20</font> Michael
Kent, who came to work at Puridet, told us that he would hear Smeaton and
Emalfarb talking on the telephone often and that they were always hollering at
each other. Moor, Heidi Quebedeaux, Emalfarb&#8217;s assistant during much of this
time, and others at Dyadic also told us that Emalfarb frequently spoke with
Smeaton by telephone.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">21
</font>Emalfarb explains in the e-mail that these &#8220;tight financial and other
controls&#8221; are necessary as &#8220;both of us need to have a comfort level that any
funds that are put into Puridet (Asia) Limited by any of us will be paid back in
a timely manner and under agreed upon terms.&#8221; (Ex 13, at
K0787.)</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">25</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">particularly
the accounts receivable info that the salesmen are complaining is not fast
enough updated, and a more clearer stock tracking system.&#8221; (Ex. 14.) On November
19,. 2001, Smeaton e-mailed Gardner, &#8220;Still working on the SD numbers as there
is actually march 2000 until now to tidy up.&#8221; (Ex.15.) On November 27, 2001,
Smeaton wrote Gardener and Hooper that</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have a
very accurate set of accounts with south Dragon (they have been checked four
times). South Dragon owes Puridet $HK 600,000 in toll manufacturing fees as at
the end of the October, how do you want to deal with this?</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex.
16.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gardner
responded, on November 29, 2001, stating:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To have
accurate accounts and financial statements for South Dragon is a key
accomplishment that you, Raymond and Henry have achieved. I would still like to
see these statements each month if that could be arranged. As to the accumulated
profits of $HK600,000, in my opinion, November invoicing from Puridet to South
Dragon should be issued since we only have two months remaining to record the
catch-up before year end. <font style="DISPLAY: inline; FONT-WEIGHT: bold">I
believe we should consider a reduction in the 5% difference between South
Dragon&#8217;s invoicing to the customer and the Puridet invoice amount to SD. This
would minimize the SD profit and cause Puridet sales to reflect amounts closer
to actual. </font>Additionally, it would create a timing problem for the Puridet
invoicing cut-off each month if the SD income statement was prepared before a
month&#8217;s sales were closed. Each month&#8217;s SD profit would be invoiced in the
subsequent month but the effect from one month to the next would not be
material. I have abandoned my thoughts of billing this profit as services
rendered by Puridet. As you pointed out, this really is a sale </font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">26</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of toll
manufacturing plus there could be some VAT issue created by billing SD for
services.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 17.
Emphasis added.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Smeaton
responded to Gardner that same day, as follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I will
get them to show you the records of SD, email them this month. Moving forward
this exercise will be done monthly actually it wont be hard as the transactions
a[re] simple.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 18,
RG-CD0006-7.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb&#8217;s
interest regarding South Dragon is shown by a communication in which he seeks to
determine whether South Dragon&#8217;s accounts receivable were &#8220;real&#8221;. On September
5, 2002 he wrote Hooper an e-mail, which stated.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It may be
useful exercise&#8230;to track the following: A/R that was in the books on March 31,
2002 to see if the outstanding invoices were (i) paid to Puridet and (ii) the
funds were deposited into Puridet&#8217;s banking account including but not limited to
Red Dragon. This will allow us to double check (a) the receivables are real (if
they were collected they were real), (b) what is the length of time from
invoicing to collection and (c) that the funds were deposited into Puridet&#8217;s
bank account.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex.
19.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb,
Hooper and Gardner dealt with the issue of South Dragon at least until the time
Hooper retired at the end of December 2002, as evidenced by their e-mail
correspondence. More significant, this correspondence shows they were
participants in an effort to facilitate South Dragon&#8217;s ongoing operation while
seeking to minimize Puridet&#8217;s exposure and liability.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">27</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
September 10, 2002, Hooper wrote to Smeaton, with a copy to Emalfarb, &#8220;It is
important that we discuss South Dragon account. Please give me a
call.&#8221;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex.
20.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
October 23, 2002, Hooper (apparently in Hong Kong) wrong Emalfarb:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The South
Dragon is a hot issue. They are in the process of setting up a Puridet Dong Guan
Company (100% owned subsidiary). Robert estimates between 60-70% of the accounts
can be transferred to this company. He however thinks this has to be done
gradually which I don&#8217;t clearly understand. The 30-40% is difficult. I have
stated we want strong walls between the two companies and I am working on legal
agreements and other things to make sure of this. I will fill you in with more
details on the telephone.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 21,
at K0400. Emphasis added.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
October 24, 2002, Hooper e-mailed Emalfarb, &#8220;Following done to date: 2. Reviewed
South Dragon - plan established. Will talk via telephone before e-mailing.&#8221; (Ex.
22.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
November 13, 2002, Hooper wrote Smeaton as follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">What is
the status of the two new entities? The one in Dongguan and the one in Shanghai?
I have completed the South Dragon contract draft and will review with mark
before forwarding to you today.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex.
23.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Smeaton
replied:</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">28</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
status of the new two entities is still in the making, however, there has been a
lot of progress but not yet fully ready to roll. I think we can have the
Dongguan entity <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">22
</font>finalised very quickly, the Shanghai/Hangzhou in theory I have covered
all issues it is just now preparing the company.&#8221;<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">23</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 23,
K0408.) Hooper forwarded a copy of the response to Emalfarb.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Hooper
acknowledged that he prepared a draft contract, using another manufacturing
agreement as a model. <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">24 </font>A draft
redlined version of the contract referred to by Hooper was, in fact, found on
Emalfarb&#8217;s laptop. It purports to setup an exclusive distribution arrangement
between Puridet and South Dragon. While it recites the relationship between
Puridet and Puridet Dongguan (as a &#8220;wholly-owned subsidiary&#8221; of Puridet), it has
no reference to South Dragon&#8217;s relation to Puridet and its directors. To the
contrary, it gives the appearance that it is memorializing an arms length
transaction between Puridet and South Dragon (See Ex. 24.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
not located an executed copy of this agreement. It appears, based on subsequent
communications between Emalfarb and Smeaton, that the creation of a formal South
Dragon entity was not accomplished. Much later, on July 31, 2003, Emalfarb wrote
in an e-mail to Smeaton.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Red
Dragon, this is a situation that last I knew David and you agreed would be
cleaned up and <font style="DISPLAY: inline; FONT-WEIGHT: bold">you were going
to set up a company</font> which can be audited and which we could all be
comfortable knowing what their A/R was, </font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">22</font> The
draft agreement between Puridet and South Dragon identifies South Dragon in the
recitals as &#8220;a company established under the laws of the People&#8217;s Republic of
China whose registered office is at [xxxxxxx] Dongguan City, Guangdong Province,
PRC.&#8221; (Ex. 24, at K408B.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">23 </font>The
Shanghai/Hangzhou entity, about which we know little, is referred to in the 2007
whistleblower e-mails.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">24 </font>This
explains date discrepancies in the draft contract.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">29</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">what the
collections were and what, if any, write offs they were going to have to take,
as these in the end would fall back on us.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 25,
at ME0142. Emphasis added.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
explained, in another e-mail to Smeaton on July 29, 2003, why his failure to
create the structure, as they had agreed to do, was a problem. They needed to
have it appear as a separate company for the purpose of dealing with external
financial institutions and investors. As he stated:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You need
to have customers along with the supporting documentation that allows you to
obtain traditional financing from local banks in Hong Kong and/or China and this
means you have to do as you said you were going to do, which as far as I know no
one had done yet, <font style="DISPLAY: inline; FONT-WEIGHT: bold">restructure
the Red Dragon situation</font>.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
to be able to have accounting standards that are acceptable to banks who we need
to lend money to, potential investors who may be interested in buying Puridet
(Asia) Limited and Dyadic who is charged with overseeing our
investment.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 26,
at RG0078. Emphasis added.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On August
19, 2003, Smeaton wrote to Emalfarb, in a lengthy e-mail, &#8220;The issues regarding
Indonesia [P.T. Pasifik Ichsan] and South Dragon I will spell all this out in
detail to show you what has been done and achieved, please remember. I am
working with limited resources but all is going well.&#8221; (Ex. 27, at
K0392.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
failure to formally &#8220;restructure&#8221; or &#8220;finalise&#8221; or build the desired &#8220;strong
walls&#8221; did not prevent South Dragon from continuing to &#8220;operate&#8221; and to be held
out as Purdiet&#8217;s largest customer until it abruptly stopped </font><br>
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">30</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;purchasing&#8221;
from Puridet in July 2004.&#160;That same month, Puridet began to &#8220;sell&#8221; to &#8220;Pui
Shing Detergent Company.&#8221;<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">25 </font>(Ex.
57, at LP0298.) Pui Shing rapidly became Puridet&#8217;s largest account receivable,
as South Dragon had been previously. South Dragon remained on the books as an
account receivable, and collections in its name were made over the next few
months and years. The South Dragon receivable was fully reserved by December 21,
2004. In Dyadic&#8217;s 2005 Form 10-KSB, Pui Shing is referred to as &#8220;one of three
customers in 2005 whose trade receivable balances equaled or exceeded 5% of
total receivables, representing approximately 16%, 7% and 6%, respectively of
total accounts receivable.&#8221; (<font style="DISPLAY: inline; FONT-STYLE: italic">See</font> Form 10-KSB, filed March
29, 2006, at F-16.) Pui Shing is the 16% &#8220;customer.&#8221;</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A review
of documents and e-mails on Tsang&#8217;s computer shows that both South Dragon and
Pui Shing were run out of Puridet. Tsang&#8217;s computer has formats for the
letterhead, logo, product label, banking information and mailing envelopes for
South Dragon (Ex. 28, Ex. 29, Ex. 30, Ex. 31, Ex. 32, Ex. 33.) and at least the
letterhead, envelopes, and banking information for Pui Shing (Ex. 34, Ex. 35,
Ex. 36.). The envelopes reflect the same address for both companies, the
seventeenth floor of the building where Puridet Hong Kong is located, a space
which is now just abandoned office space. A loan agreement found on Tsang&#8217;s
computer notes that it is between &#8220;Puridet (Asia) Limited/Fushing South Dragon
Detergent Company (hereinafter called &#8216;The Company&#8217;)&#8221; and the borrower. (Ex.
37.) There are also contracts in which South Dragon is selling goods to third
parties. Indeed, internally the accounting </font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">_________________</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">25
</font>Witnesses suggest different theories regarding the demise of South
Dragon. Zhai, who was used as the nominal head of the company, died around that
time. Puridet may have decided that the company needed to be closed at that
time. It is possible that Zhai&#8217;s wife made some demands on Puridet that Puridet
did not want to fulfill. There are also indications that there was another
whistleblower incident at about this time in which the Chinese authorities fined
Puridet for having two sets of books. That might have caused Smeaton and Tsang
to fold the company. The evidence for any of these theories is not strong. In
any event, Pui Shang immediately took South Dragon&#8217;s place and performed its
functions.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">31</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for South
Dragon appears to have been combined with Puridet&#8217;s. As an example, on January
8, 2001, Tsang sent Smeaton an e-mail in which he analyzed Puridet&#8217;s cash flow.
One of the entries under cash on hand is labeled, &#8220;PAL/SD.&#8221; (Ex. 38, at
RKKT0001.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pui
Shing&#8217;s financial statements were also found on the computer of Henry Wong,
Puridet&#8217;s internal accountant, and e-mailed to Smeaton and Tsang. (Ex. 39, Ex.
40, Ex. 41.) Its bank accounts were also considered part of Puridet&#8217;s &#8220;cash
position&#8221; (Ex. 42, at TD00028). Tsang&#8217;s computer also had e-mails discussing
shipments and bills of lading for sales by Pui Shing (Ex. 43). Most telling, in
a lengthy e-mail chain with an unrelated Chinese company, Tsang explained, on
February 16, 2006, in response to an inquiry about the name of the company: &#8220;You
can create a new account for Pui Shing Detergent Co., instead of making any
change of Puridet&#8217;s account in your system. Actually we will use these two
companies name case by case.&#8221; (Ex. 44, at TD00010.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A number
of Puridet employees confirmed the use of South Dragon and then Pui Shing as
vehicles for the sale of Puridet product to local Chinese customers who did not
want to pay their VAT obligation. Daniel Shook is a Dyadic technical employee
who went to work for Puridet in Hong Kong and Dongguan from January 2004 through
December 2005. Both Smeaton and a Puridet employee named John Zhai had told him
about South Dragon, which Shook characterized as &#8220;another company selling
product that was really Puridet.&#8221; The purpose of the company was to enable
customers to avoid the Chinese VAT obligation. Shook also saw drums labeled
&#8220;South Dragon&#8221; at both Puridet in Hong Kong and in Dongguan. Shook did not share
his knowledge with anyone at Dyadic. Shook also stated that he saw Puridet
salespeople come in with &#8220;big wads&#8221; of cash to give to Aman. Shook stated that
before he went to work at Puridet, Emalfarb asked him to let him know if he saw
things that were &#8220;not right or ethical.&#8221; Shook, however, did not report what he
learned about South Dragon.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nathan
Dwyer, who was doing sales and collections for P.T. Pasifik Ichsan in Indonesia,
knew that South Dragon was a &#8220;second company&#8221; that Smeaton had in China. In
about 2004, Dwyer had a customer who waned to do </font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">32</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">business
directly with Puridet, rather than through P.T. Pasifik Ichsan because the
customer was in a duty free zone and P.T. Pasifik Ichsan was not. According to
Dwyer, Smeaton told him that he would put the business through South Dragon, as
it could better accommodate the customer.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Michael
Kent, who had been recruited by Emalfarb, became sales manager and liaison to
Smeaton for international business development at Puridet in September 2004. At
that time South Dragon had ceased to make new sales and Pui Shing was now
selling product. Kent was told that Smeaton and John Zhai&#8217;s father had
registered South Dragon in China. He understood that South Dragon was eliminated
when Zhai&#8217;s father died, and then the business was done through Pui Shing. Kent
stated that it was common knowledge at Puridet that first South Dragon and then
Pui Shing functioned to make sales to customers who did not want to pay VAT.
According to Kent, the same salesmen sold to the same customers; the invoice
would be from either Puridet or South Dragon/Pui Shing depending upon whether
VAT was to be paid by the customer. He saw this on salesmen&#8217;s commission sheets.
While Kent got a lot of his information from drivers working for Puridet in
Dongguan, Smeaton also was very open with Kent about this. Smeaton told him that
VAT business went through Puridet, non-VAT business went through Pui
Shing.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kent did
not report this to Emalfarb. He had some conversations about the operations of
Puridet directly with Emalfarb who repeated back to Smeaton some of what Kent
had told him. Smeaton was furious, so Kent backed off and stopped reporting to
Emalfarb.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kent
confirmed other allegations of wrongdoing in the whistleblower e-mails. He
learned about the 2003-2004 whistleblower e-mails from Smeaton at just about the
time that he started working for Puridet in September 2004, Smeaton told him
that anonymous allegations had been made about him, Aman, and Aman&#8217;s girlfriend.
Smeaton thought the e-mails must have been sent by Chih.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">33</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">According
to Kent, there were certain invoices that were generated and kept at Aman&#8217;s
house. Aman&#8217;s girlfriend handled the invoicing and other accounting. Employees
would illegally transport cash collected from cash sales from Dongguan to Hong
Kong after the cash had been counted by Aman. Drivers employed by Puridet
Dongguan also told him about Aman skimming cash, taking kickbacks, and selling
off product, such as expensive enzymes, for his personal profit.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kent also
stated that he had heard that just before he came to Puridet in 2004, that the
company had been fined by the Chinese government for having two sets of books.
Smeaton told him that it cost him a lot of money to pay off officials so the
problem would go away. Dwyer also raised this incident in his interview and
stated that he understood the government audit was initiated due to an anonymous
report to the government. In an April 20, 2007, e-mail to Moor, Daniel Shook
referred to an allegation made some time around 2004 by John Zhai that Puridet
Dongguan had two sets of books. (Ex. 45, K1535-1536.) This not only bolsters the
proof that such an incident occurred but also supports the thesis that Zhai was
the second whistleblower.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
record reflects that when Moor came to Dyadic in February 2005, he was concerned
about and sought information about the South Dragon and Pui Shing receivables.
Emalfarb did not brief him at any time about South Dragon or Pui Shing. Smeaton
and Tsang misrepresented the facts to him in response to his
queries.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Thus, on
March 16, 2005, Moor wrote to Emalfarb about the South Dragon receivable. He
started:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Receivables
from the stratosphere look like they may be OK. However, what has really
happened in that Dyadic&#8217;s aging has improved and Puridet&#8217;s has become a little
worse. This is primarily due to the South Dragon receivable which is now all
well over 150 days. The balance at year end was about $396,000 (U.S.) and until
now (two and a half months after year End) only another$39,000 or so has been
collected. <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">26</font></font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">34</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 46,
ME0224.) Emalfarb did not respond to this e-mail and never fully and
appropriately discussed South Dragon with Moor.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Referencing
a Puridet management representation letter which was sent to EY Hong Kong, and
which is discussed below, Moor asked Raymond Tsang in an e-mail dated November
2, 2006, whether South Dragon and Pui Shing were the same company. (Ex. 47, at
K1520.) Tsang&#8217;s response, on November 3, 2006, misrepresented the facts. It
stated, as follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fushing
South Dragon Detergent Company (customer no. 1101015) was operated by a Dongguan
government people Mr. Zhai and his wife, it was our distributor in China. The
operation had shut down due to the Mr. Zhai&#8217;s passed away. Provision of total
outstanding from Fushing has been made. The purpose of bank account was used to
settle the account payable to Puridet.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1100841
is different customer, the full name is Pui Ching Detergent Company, also a
local registered company in China. It is our recent distributor in Dongguan and
the owner is Mr. Chow.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 47,
at K1519.) <font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">27</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moor sent
an e-mail to, among others, Smeaton and Emalfarb on November 28, 2006, noting
that the increasing Pui Shing receivable &#8220;is a real problem.&#8221; (Ex. 48, K0414 &#8211;
16.) Smeaton responded the same day, </font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">___________________</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">26</font> Moor
did not know at the time that EY Hong Kong had required the reserving of the
South Dragon receivable.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">27 </font>Tsang
stuck to this position in his recent interview, but conceded that the companies
were founded to avoid the VAT obligation. Moreover, at the end of his interview,
when asked if those companies were operated by Puridet, he stated, &#8220;officially
not. All I can say is that we worked very closely together.&#8221;</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">35</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">noting
that &#8220;Chinese Golden Week&#8221; made collections weak for September and October but
that he anticipated improvements in November. (Ex. 48, K0414.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The next
day Smeaton sent a list and a long explanation of his collections from Pui Shing
to Moor, with copies to others, including Emalfarb. As predicted the November
collections were far higher than in previous months. He stated, in
part:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">I also
since early this month <font style="DISPLAY: inline; FONT-WEIGHT: bold">when
Mark discussed the issue with me</font> been on the cash chasing mode, This can
be reflected in the November collections and I know that collections in December
should also be good, by the end of the year we should be looking in better shape
for the auditors. I have checked the outstanding as of today, all of May is
paid, there is 278,000 left in June and July has outstanding 703,000. We have
post dated cheques in hand of 1,189,000. (Pui Shing has passed to us post dated
cheques from their customers in China, I know these are of no interest to
auditors but here they are useful in our business world). It is a very common
practice to pass cheques onwards, an example being &#8220;You may owe Bill and Bill
owe me&#8221;, so Bill passes a check he got from you to me, in many cases there are
post dated cheques. (Unfortunately the attitude is take it or leave it, it is
best in most cases to accept the payment from customers that you know are
ok).</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 49,
at K0424. Emphasis added.) Smeaton&#8217;s communications all failed to disclose what
Pui Shing was.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: bold"><a name="BEmal">B. </a><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline"><a name="BEmal">Emalfarb&#8217;s </a>Failure to Investigate and Report Whistleblower
e-mails</font></font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1) We
find that Emalfarb failed to investigate adequately the allegations in the
December, 2003 &#8211; April, 2004 e-mails, and, consequently, to take any remedial
action and that such failure was continuing. (2) Emalfarb </font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">36</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">additionally
misrepresented the facts relating to these matters to Dyadic's auditors, the
Audit Committee and in his interviews with us. While the evidentiary record is
far less complete with regard to Pui Shing, South Dragon's successor, we believe
that it may reasonably be inferred that Emalfarb was similarly aware of its
nature and similarly failed to disclose and/or concealed material facts relating
to it.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The facts
supporting these findings are as follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 22, 2003, Emalfarb received an anonymous e-mail. The e-mail, sent from
"<font style="DISPLAY: inline; TEXT-DECORATION: underline">blackgg65@hotmail.com</font>"
and signed "Blue Devil code # 2003520," made a series of detailed and specific
allegations of wrongdoing by Puridet management. Those allegations included: (1)
Yiu Man Chan, also known as "Aman," the Puridet Dongguan factory manager, was
receiving bribes from raw materials suppliers in China; (2) Aman and others were
skimming raw materials to be sold on the side; (3) Smeaton owned a company in
Indonesia that owed Puridet a great deal of money; (4) there was a company
called South Dragon which was set up by Puridet management and whose payment of
its obligations to Puridet was at risk; (5) management was manipulating many
expense accounts; (6) Smeaton and Chih owned the Hong Kong office, which allowed
them to inflate the rent paid by Puridet. (Ex. 50, at MEO177-79.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
forwarded this e-mail to Gardner, Dyadic's Controller, and also responded to it,
asking for more information regarding the allegations against Aman. On January
9, 2004, Emalfarb received a response from the anonymous e-mailer, also signed
"Blue Devil code # 2003520." (Ex. 51, MEO 185-0187.) This e-mail suggested
methods of preventing the improprieties listed in the first e-mail. The sender
stated that he would not write again until April 2004.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On April
20, 2004, as promised, another anonymous e-mail was sent to Emalfarb. (Ex. 52,
ME0189-191.) This e-mail again focused on the problems at the Dongguan factory,
noted that Smeaton was selling Puridet products at low prices to his Indonesian
company and suggested that Emalfarb arrange to have <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Raymond
Tsang take over the operation of Puridet.</font></font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">37</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">According
to Emalfarb, Gardner and all the forensic evidence surveyed, the only
distribution of the 2003-2004 whistleblower e-mails was as follows: Emalfarb
forwarded each of them, at about the time of their receipt, to Gardner. Emalfarb
forwarded the original one to Smeaton, but not until August 1, 2004. (Ex. 53, at
RS0074.) Gardner confirmed to us his receipt of these e-mails.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
discussed in greater detail below, Emalfarb has given a number of different
versions of the actions he says he undertook upon receipt of these e-mails.
Those versions include having Gardner investigate, having Gardner engage Ernst
&amp; Young to investigate, and having another auditing firm investigate the
allegations. There is, however, no evidence showing that any of these
alternatives were followed. Gardner, the only person to whom Emalfarb sent these
e-mails (besides Smeaton) denies that he was asked by Emalfarb to do anything in
response to them or that he did do anything. He never discussed them with
anybody else at the Company<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">28</font> and, as
far as he knew, the matter was allowed to die after the April 2004
e-mail.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Finally,
it is important to note that although Emalfarb told us, at both interviews, that
he himself had not reported the 2003-2004 whistleblower e-mails to EY United
States, in fact, he did make such a report. The report was made in response to
an audit inquiry during the 2003 audit. However, Emalfarb's response was
misleading and meant to discourage further inquiry by claiming that he had
conducted an adequate investigation. The report minimized the whistleblower
allegations and misrepresented material facts relating to them. Ciro
Buttacavoli, who was the EY United States audit partner for the 2002 - 2003
Dyadic audits, provided us with certain EY United States </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">______________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">28</font> Gardner
told us that there was a "control group" at Dyadic, including Kent Sproat and
others in management, with whom Emalfarb and he would discuss Puridet matters on
an informal basis. He acknowledged that he and Emalfarb never discussed the
whistleblower allegations with the others in this group.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">38</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">audit
work papers. With regard to their inquiry concerning fraud/whistleblower
allegations for the 2003 audit, the work paper entry states, as
follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None,
other than recent anonymous, crank (Mark Emalfarb deems them to be so) e-mails
regarding the Company's operations in Hong Kong, alleging misappropriation of
inventory, among other accusations. Mark questioned Puridet personnel, and
believes that a disgruntled former employee sent e-mails, and that accusations
have no merit. When Mark replied to the e-mail asking for additional specific
information, no reply was received. EY Hong Kong performs a statuary [sic] audit
of Puridet. Company has concluded that all accusations were unfounded.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">29</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 54,
at EY Dyadic 03-00000121.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Buttacavoli
recalls that this entry memorializes a statement made to him by Emalfarb.
Buttacavoli told us that he took no further action regarding this report. EY
United States told us that there are no other documents concerning fraud or
whistleblower allegations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
disclosure is misleading and incomplete in the following ways:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1)
Emalfarb failed to disclose one of the most critical facets of these
allegations, namely, that they alleged that South Dragon was a vehicle for
perpetration of a fraud against Dyadic by Smeaton and Tsang, </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">______________________________
</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">29</font>
According to the document, this paragraph memorializes a discussion which took
place on either June 15, 2004, or September 1, 2004. Buttacavoli cannot
determine on which of those two dates it occurred. Significantly, on June 15,
2004, Emalfarb signed, as the sole member of the Board of Directors of Dyadic, a
Statement of Written Consent of the Board of Directors of Dyadic International,
Inc., consenting to the engagement of two investment banking firms to provide
services for a contemplated private placement and a contemplated reverse merger
with a suitable public company. (Ex. 80.)</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">39</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Puridet
directors, and that he had known for several years that it was a related entity
controlled by Puridet which was used by it as a means to conduct and distance
itself from a substantial portion of its sales, <font style="DISPLAY: inline; TEXT-DECORATION: underline">i.e.,</font> those which
involved VAT avoidance.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">30</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
suggested that he had undertaken his own investigation and determined that the
allegations had no merit. However, by his own account to us, that did not
happen. He did not question "Puridet personnel" concerning these allegations; at
most, he talked about it to Smeaton, one of the targets of the
allegations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3)</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
implied that EY Hong Kong looked into these matters and found nothing, or, at a
minimum, that Dyadic concluded from its failure to discover anything supporting
the allegations during its "statutory audit," that they had no merit. However,
in our interviews with him he gave us two inconsistent accounts of EY Hong
Kong's involvement with this issue, both of which are inconsistent with this
disclosure. At our first interview, on May 16, 2007, he told us that upon
receiving the 2003-2004 whistleblower e-mails, he asked Gardner to have EY Hong
Kong investigate the matter and report back to him. He told us that Gardner
reported back to him that the auditors found no problem. At the second
interview, on June 26th, he told us that he did not ask Gardner to have EY Hong
Kong investigate, but instead, asked Gardner to have an independent auditing or
investigative firm investigate. (His reason for having another firm investigate
was that EY Hong Kong had failed during its "statutory audit" to discover
anything amiss.) Emalfarb conceded that he never later asked Gardner for a
report on this investigation or received one from him. He told us that any
follow-up he had would have been in Fall, 2004, when, in connection the RPO, he
asked Gardner, generally, whether everything was all right at Puridet and
Gardner did not tell him of any problems. While </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">______________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">30</font> See the
next section regarding Emalfarb's failure to disclose to Puridet's and Dyadic's
auditors that South Dragon and P.T. Pasifik Ichsan, another Smeaton entity, were
related parties.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">40</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">he
conceded that he never received any report into the allegations, or undertook
any investigation himself, he eventually concluded - for a variety of reasons -
that they had no merit and paid them no mind until he received the whistleblower
e-mails in April, 2007.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At the
time that Emalfarb received the 2003-2004 whistleblower e-mails, Dyadic was not
yet a public company, and was, therefore, not yet bound by the Sarbanes-Oxley
whistleblower rules. Even so, there was a pre-existing common law duty to
disclose to the Company's directors and its auditors and to investigate the
allegations made in these e-mails, especially given the gravity and the
specificity of the allegations.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">31</font> In
addition, Emalfarb's misrepresentations to and concealment from EY United States
in the 2003 audit are reflected in the 2004 audit and in Dyadic's later public
filings. The 2004 representation letter, dated April 14, 2005, and signed by
Emalfarb, Moor and Gardner, re-affirms the representations for the 2003 audit in
connection with a restatement for 2003 to correct an error in recording certain
transactions (unrelated to these matters). (Ex. 55, at EY Dyadic 04-00000104.)
The restated 2003 Consolidated Financials are included in the Dyadic
Registration Statement for its sale of stock (Form SB-2), filed on December 30,
2004, and in the Dyadic Prospectus, dated January 28, 2005, and filed on
February 1, 2005. (See Section F, in both filings.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div align="center">
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
        <div style="TEXT-INDENT: 72pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: bold"><a name="CEmal">C.&#160;&#160;</a><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline"><a name="CEmal">Emalfarb's </a>Failure To Report Related Parties To Puridet And
Dyadic Auditors</font></font></font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We find
that Emalfarb failed to disclose and/or concealed from Puridet's auditors and
from Dyadic's board and later management that South Dragon and P.T. Pasifik
Ichsan were related entities to Puridet and to Dyadic.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Puridet
was audited first by Paul W. C. Ho &amp; Co., a Hong Kong Chartered Public
Accountant. Ho's firm was also engaged by Emalfarb to compile and send monthly
financial statements to Dyadic. EY Hong Kong </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">______________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">31</font> As
shown above, <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>at
p. 13 n. 13, in December, 2003, Emalfarb was Dyadic's sole
director.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">41</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">took over
auditing Puridet in.2002.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
interviewed representatives of EY United States in Florida and EY Hong Kong in
Hong Kong and also interviewed Paul Ho. Additionally, we reviewed certain work
papers from these accountants. None of them was ever informed that South Dragon,
Pui Shing or P.T. Pasifik Ichsan was related to Puridet or Dyadic or to any of
its officers or directors. Both EY Hong Kong and Paul Ho confirmed that related
party inquiries were made as part of their audit procedures. This is confirmed
by their audit reports which disclose a single related-party transaction, the
ownership by Puridet officers and directors of the Puridet office space in Hong
Kong.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
example, Paul W. C. Ho &amp; Co. issued an audit report entitled Puridet (Asia)
Limited, Reports and Accounts for the Year Ended 31<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">st</font>
December 2001. (Ex. 56.) The Report of the Directors, contained within the audit
report and signed by Smeaton, notes that the directors of Puridet at that time
were Emalfarb, Hooper, Smeaton, and Tsang. A section captioned "Directors'
Interest in Contracts" states, in part:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
the year, the Company had paid rent of HK$252,944(2000: HK$300) to a director
Mr. Smeaton Robert Albert for letting of office.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Except
the foregoing, no other contracts of significance to which the Company was a
party and in which a director of the Company had a material interest subsisted
at the end of the year or at any time during the year.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 56,
at LP0276.) Under "Related Party Transactions," only the rent paid to Smeaton is
listed. (Ex. 56, at LP0290.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
engaged Paul Ho's firm to conduct monthly reviews of Puridet's financials. Ho's
monthly "highlight reports" on the financial statements of Puridet spell out
that South Dragon, Pui Shing and P.T. Pasifik Ichsan owed </font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">42</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
largest receivables to Puridet. As an example, on February 1, 2005, Paul W.C. Ho
&amp; Co. sent Gardner "the highlight report on the financial statements of
Puridet (Asia) Limited for the month of December 2004." (Ex. 57, at LP0293.) The
section on accounts receivable notes that there "are 4 major debtors and the
outstanding balance of each of them was still over 10% of the total accounts
receivable. They are South Dragon Detergent Co., Pui Shing Detergent Co., P.T.
Pasifik Ichsan and Red Light Development Limited."<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">32</font> (Ex 57,
at LP0298.) The report goes on to note that South Dragon's receivable was 17.4%
of the total outstanding accounts receivable and Pui Shing's receivable was
18.99 % of the total (both at December 31, 2004). The report also notes that
there "was no sale to South Dragon Detergent Co. since July, 2004," while
Puridet "commenced to trade with Pui Shing Detergent Co. in July 2004." (Ex. 57,
at LP0298.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">When he
was interviewed, Paul Ho stated that he understood that all these companies were
third-party debtors and were not related to Puridet. He stated that he routinely
explained the concept of and asked about related parties. None of the entities
was ever stated to be a related party. Tsang told him that South Dragon was
owned by locals in China who had good contacts in local markets. Ho understood
that these companies functioned as middlemen in sales transactions.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ho stated
that he did not audit the Dongguan subsidiary and did not confirm accounts
receivable of Puridet's Chinese customers. EY Hong Kong did send accounts
receivable confirmations to South Dragon, Pui Shing and P.T. Pasifik Ichsan. The
confirmations were returned confirming accurate balances. The audit manager at
EY Hong Kong did not notice that the address of Pui Shing (and SD) was on a
different floor of the same building in which Puridet has its offices. That
office space is abandoned at this time.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Similarly,
EY Hong Kong noted only in Puridet's Report of the Directors and Audited
Financial Statements for the Year ended December 31, 2006, under "Related Party
Transactions," rental payments to directors </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">______________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">32</font> We have
no evidence that Red Light Development Limited is related to
Puridet.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">43</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Smeaton
and Tsang and transactions with the "ultimate holding company," which is Dyadic.
(Ex. 58, at LP0457.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On April
11, 2005, Tsang sent a letter to Emalfarb which enclosed Puridet's management
representation letter to EY Hong Kong for the audit of the financial statements
for the year ended December 31, 2004. (Ex. 59, RG2395-2400.)<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">33</font> The
management letter states, under the heading "Related Party Transactions," as
follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
confirm that South Dragon Detergent Co. ("SDDC") and Fushing South Dragon
Detergent Co., ("FSDDC") are not related to [Puridet (Asia)Limited]. A company
is considered to be a related company if they have common directors and/or
shareholders. Fushing South Dragon Detergent Company Co., a related company to
South Dragon Detergent Co., is an unlimited company incorporated in Hong Kong in
which Mr. Raymond Tsang, a director of [Puridet (Asia) Limited], was appointed
as a coordinator to assist in operating a bank account held in the name of
FSDDC, however Raymond Tsang is not a owner of FSDDC and has no control on the
daily operation of FSDDC.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ex. 59,
at RG2398.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
representation came about as a result of an inquiry by Cindy Chiang, the EY Hong
Kong audit manager on the Puridet audit. She stated that when she was preparing
the 2004 audit, she was told that South Dragon was winding down because the
owner was sick. Ms. Chiang decided that she had to determine whether to reserve
for "doubtful debts." Tsang volunteered to her that he was signing checks for
the company because of the owner's illness and that he functioned as a
"coordinator" for the account. (According to the EY Hong Kong auditors, that
term has no legal or accounting definition.) Ms. Chiang asked Tsang if South
Dragon was related to Puridet and he told </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">______________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">33</font>
Emalfarb told us he had no recollection of this document. However, this document
was also found on his computer. (See Ex. 60, K356 - 360.)</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">44</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">her that
it was not and that he had no decision-making authority with respect to South
Dragon. Because of this discussion, Ms. Chiang drafted the language quoted
above, which Tsang approved and signed. This language was repeated in subsequent
management representation letters.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beginning
with the Dyadic audit for the year ending December 31, 2002, Puridet's financial
statements were consolidated with Dyadic's.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">34</font>
Accordingly, as confirmed by Ciro Buttacavoli, the EY United States audit
partner for the 2002 and 2003 audits, Puridet related party transactions would
be a matter of inquiry in the Dyadic audit. For example, the "Related Party
Listing" for Dyadic International, Inc., dated December 31, 2002, included in
the 2002 work papers, lists: " . . .3. Mr. Smeaton, Robert Albert, Director
receiving rent income from the Company." (Ex. 62, EY Dyadic 02-000081. Emphasis
in original.) There is, however, no mention of South Dragon or P.T. Pasifik
Ichsan in this listing.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The same
audit work papers include schedules showing Puridet's 2002 sales and
receivables, by customer account name. (EY United States notes on these
schedules that it is using them "to identify customer concentrations for
disclosure purposes.") (Ex. 63.) On the "Sales" schedule South Dragon is shown
as the largest account (18.76%) and P.T. Pasifik Ichsan as the fifth largest
(.34%). (Ex 63, at EY Dyadic 02-0000084.) South Dragon's receivable is 50.94% of
the total and P.T. Pasifik Ichsan is 6.78%. (Ex. 63, at EY Dyadic 02-0000086.)
These sales and receivables for South Dragon were specifically identified (as
"Company B") under "Concentrations" in the 2002 Financial Statements. (Ex. 64,
at EY Dyadic 02-0000022.)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">______________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">34</font> When
Dyadic obtained a majority of the voting shares in Puridet in July, 2002, EY
United States began accounting for it as a consolidated subsidiary. <font style="DISPLAY: inline; FONT-STYLE: italic">(See </font>Ex. 61, at EY Dyadic
02-00000012, excerpted from 2002 Consolidated Financial
Statements.)</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">45</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the
2003 audit (during which Emalfarb made his disclosure of the 2003-2004
whistleblower e-mails), the only disclosed related party transaction was, again,
payment to Smeaton for Puridet's office space in Hong Kong (Ex. 65, excerpted
from 2003 Financial Statements, at EY Dyadic 03-0000035). Schedules of Puridet's
2003 sales and receivables were, again, provided to Ernst &amp; Young for the
purpose of determining concentrations. South Dragon accounted for 59% of sales
and its receivable was 55.28% of the total. P.T. Pasifik Ichsan accounted for
2.18% of sales and its receivable grew to 11.28%. (Ex. 66.) In the Financial
Statements, under "Concentrations," South Dragon is reported (again, as "Company
B") as accounting for 18% of Dyadic's sales and 29% of its receivables. (Ex. 67,
at EY Dyadic 03-000019.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
management representation letter for the 2003 audit also fails to disclose these
related transactions. Dated August 6, 2004, and signed by Emalfarb and Gardner,
it states (under "Fraud and Conflicts of Interest"):</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There are
no instances where any officer or employee of the Company has an interest in a
company with which the Company does business that would be considered a
"conflict of interest." Such an interest would be contrary to Company
policy.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 68,
at EY Dyadic 03 -00000093.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As part
of their audit procedures for the 2004 - 2006 audits, EY United States auditors
continued to make fraud/whistleblower and related party inquiries which covered
Puridet. Emalfarb, as CEO, along with others in management was questioned about
these matters. <font style="DISPLAY: inline; FONT-STYLE: italic">{See, e.g.,
</font>the 2004 "fraud inquiries," (Ex. 69, EY Dyadic 04-00000038 and
40-50);<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">35</font> the
2005 "fraud inquiries," confirming a meeting with Emalfarb on 11/12/2005,
</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">______________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">35</font> The
entiy for the inquiry relating to procedures for identifying and accounting for
related party transactions states, "Due to client's limited number of
transactions, controller is aware of all related parties. Any new clients are
reviewed by controller for related party issues." (Ex. 69, at EY Dyadic
04-00000050).</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">46</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex. 70,
at EY Dyadic 05-00000076); the 2006 "fraud inquiries," confirming a meeting with
Emalfarb on 11/8/2006 (Ex. 71, at EY Dyadic 06-00000015). They also continued to
review schedules of sales and receivables. For 2004, these schedules showed the
"Top 5 Gross Balance," in descending order to be: South Dragon Detergent Co.,
Pui Shing Detergent Co., P.T. Pasifik Ichsan, and Red Light Development Ltd.
(Ex. 72, at EY Dyadic 04-000000790.)<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">36</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Dyadic management representation letter for the 2004 audit represents that all
related party transactions have been "properly recorded or disclosed in the
financial statements." (Ex. 55, at EY Dyadic 04 - 00000107.) However, the only
related party disclosure in the 2004 audited consolidated financial statement
concerning Puridet remained the Hong Kong office lease. <font style="DISPLAY: inline; FONT-STYLE: italic">(See </font>the Form 10-KSB, filed
April 15, 2005, Consolidated Financial Statements, "Leases," F-24.) The 2005
representation letter, dated March 27, 2006, and signed by Emalfarb, Gardner,
Moor and De La Pointe makes the same representation. (Ex. 73, at EY Dyadic
05-00000101.) The 2005 audited consolidated financial statements make the same
"lease "disclosure. <font style="DISPLAY: inline; FONT-STYLE: italic">(See
</font>the Form 10-KSB, filed March 29, 2006, "Leases," F-26.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
acknowledged that he knew that South Dragon and P.T. Pasifik Ichsan were related
to Puridet.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">37</font> In a
March 2, 1998 fax from Emalfarb to Smeaton during the negotiations to acquire
Puridet, Emalfarb noted that "P.I. [sic] Pasifik Ichsan in Indonesia" was an
entity "in the family of companies in which Puridet has an equity state." He
inquired as to whether those relationships could remain unchanged in the change
of ownership. (Ex 74, at D0551.) Hooper's due diligence memorandum notes,
regarding "Indonesia," "Company is 100% owned by local distributor. Side letter
that Puridet owns unofficially 85%." (Ex. 5, at D0506.) Additionally, Tabloff
noted in an e-mail to </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">______________________________</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">36</font> The
fifth is identified in Chinese.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">37</font> Gardner
acknowledged to us as well that South Dragon was a related party and that it
should have been disclosed as such to the auditors.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">47</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
and Hooper dated August 14, 2000, encouraging them to approve new sales for P.T.
Pasifik Ichsan that "Indonesia .. . is still owned by Robert . . ." (Ex. 11, at
RG0069, pt. 6.) Emalfarb has not contested that he knew that Smeaton owned the
company. He explained to us in our first interview with him that the main reason
that he did not think that the 2003-2004 whistleblower e-mails were troubling
was that much of the information was already known to him, including the fact
that P.T. Pasifik Ichsan was owned by Smeaton.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All the
material above regarding the formation and use of South Dragon shows that
Emalfarb knew that it was a related party, if not an alter ego. Emalfarb also
told us that he knew when he received the first whistleblower e-mail that
Puridet had set up South Dragon. He told us at the June 27 interview that he
believed that South Dragon was a wholly-owned subsidiary of
Puridet.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Given
Emalfarb's obligations as a director of Puridet and Dyadic to disclose related
parties to their auditors, these admissions confirm a failure of the duty to
disclose. Moreover, as discussed above, <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>at p. 39, once Dyadic
began publicly filing its financial statements, any misrepresentations and
non-disclosures in them may have violated other disclosure
obligations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="DEmal">D.</a></font></div>
              </td>
              <td>
                <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Emalfarb's
      Position Regarding his Knowledge of and Response to Improprieties at
      Puridet</font></font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mark
Emalfarb's accounts to the Audit Committee, the Board and to us of his knowledge
and conduct are materially at odds with each other and with other evidence, both
documentary and testimonial, and are not corroborated. Despite the many changes,
his account remains consistently exculpatory. He maintains that he relied on
others to ensure that Puridet was operating properly, that he had been unaware
of what the whistleblower e-mails revealed about the ongoing operations of South
Dragon and Pui Shing and that he acted properly in response <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to his
receipt of the 2003-2004 whistleblower e-mails.</font></font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">48</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
interviewed Emalfarb on two occasions, first on May 16, 2007, shortly after we
were retained, and then again on June 27, 2007. Emalfarb, through his attorney,
Peter Unger, sought an early interview with us in the hope of an early end to
his leave of absence. Prior to the first interview Emalfarb, through counsel,
sent us a package of e-mails gleaned from his computer. He also arrived with
another package of e-mails. Both submissions contained e-mails which Emalfarb
viewed as supportive of his position. At the first interview Emalfarb was
specific in his recollection as to some matters, vague as to others. At the
second interview, Emalfarb made material changes in his recitation of events. He
stated that at his first interview, where he had been specific, those statements
had been the product of speculation. Now, upon review of documents and further
searching of his memory, he had, in general less recall. He stated that he was
now "foggy" about a number of significant matters.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
the first interview, Emalfarb made available his laptop and other related
devices for retrieval of all e-mails and documents. In that review we located
many relevant e-mails and documents excerpted in this report. It became apparent
to us during the interview, and Emalfarb conceded that he, too, had now reviewed
many of the same additional documents. The changes in his version seemed to be
an effort to take those e-mails into account. His claim at the second interview
that his recall was now diminished, despite his further document review and
professed intensive effort at recollection, appeared to us to reflect his
inability to successfully explain certain of these additional
documents.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Regarding
his portrayal of his position as CEO, Emalfarb claimed that he relied on others
to ensure that all matters were being handled properly. With respect to Puridet,
specifically, he claimed he relied upon his subordinates, auditors and lawyers
to deal with problems. As we discussed the various people who fell into these
categories, Emalfarb told us that each one of them had failed to live up to his
or her responsibilities and had failed him. Emalfarb claimed to be inattentive
to financial reporting from Puridet due to his other
responsibilities.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">49</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
appears to be substantiated to some degree by Moor, De La Pointe and Jeffery
Sparling regarding 2006.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">38</font> At the
same time, however, Emalfarb emphasized in both interviews that he was actively
interested in checking on and collecting receivables. That interest is
corroborated by the e-mails discussed above. In addition, the evidence detailed
above shows that he was informed about and was a participant in communications
and plans regarding South Dragon. See, <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>at pp. 27 - 29. He was
kept informed by Hooper and by Gardner who made notebooks for him of relevant
financial material. He concedes, and it is confirmed by others, that he was in
close and constant contact with Smeaton. Moreover, his e-mails show him
communicating with Smeaton, Gardner, Hooper and Moor over Puridet receivables,
specifically, the South Dragon, Pui Shing and P.T. Pasifik Ichsan (with Smeaton
only) balances, from at least 2001 on into late 2006. (See, <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>at pp. 28, 32 -
34.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Regarding
the audits, EY United States's work papers show that every year Emalfarb met
with them, specifically regarding the fraud-related inquiries.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">39</font> (The
2003 audit response is discussed above, <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>at pp. 37 - 39. For
2004, <font style="DISPLAY: inline; FONT-STYLE: italic">see, e.g., </font>Ex 69,
at EY Dyadic 04-00000038-40; for 2005, <font style="DISPLAY: inline; FONT-STYLE: italic">see </font>Ex 70, at EY Dyadic
05-00000076.) Moreover, it was represented to the auditors that he was primarily
responsible for oversight of Puridet. In response to inquiry concerning other
locations where a risk of fraud may be more likely to exist," the answer given
was: "Mark Emalfarb oversees Puridet (Asia) subsidiary." (Ex. 75, at EY Dyadic
04-00000101.) In the 2005 audit inquiry, it was specifically represented that
Emalfarb actively reviewed financials. In response to the inquiry on "senior
management's process for identifying and responding to the risks of fraud in the
entity, including any specific fraud risks the entity has identified or account
balances, classes of transactions, or disclosures for which a risk of fraud is
likely to exist," the response given was Senior management has a process for
reviewing production reports, financial information and </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">38</font>&#160;&#160;&#160;&#160;Sparling
was the EY United States audit partner for the 2004 &#8211; 2006 audits.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">39</font>&#160;&#160;&#160;&#160;With
regard to the 2006 audit, however, Sparling told us that he had less contact
with Emalfarb than in the previous audits.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">50</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">other
reports. Mark Emalfarb reviews financials and compares actual results with his
expectations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Ex, 76,
at EY Dyadic 06-00000016.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
respect to the issues noted in our conclusions, the main points covered in our
interviews with Emalfarb are, as follows:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="improp">Improprietie</a>s at Puridet at the Time of the
Acquisition</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
denied at both interviews knowing that there were substantial "off-the-books"
transactions at Puridet at the time of the acquisition. However, this claim is
contradicted by Hooper, who says he was told about this by Smeaton during his
due diligence visit in Spring, 1998, and fully informed Emalfarb about this.
Hooper's knowledge of this conduct is corroborated by his due diligence
memorandum and the memoranda of the auditor and attorneys that he visited at the
time. <font style="DISPLAY: inline; FONT-STYLE: italic">(See, supra, </font>at
pp. 16 - 19.) Hooper maintains that he and Emalfarb agreed that this conduct
could not continue and that he obtained Smeaton's agreement that it would cease.
Circumstantial evidence of Emalfarb's knowledge is his letter to Smeaton at the
time <font style="DISPLAY: inline; FONT-STYLE: italic">(see, </font>above, <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>pp.18 - 19.)<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">40</font> which
makes veiled references to Puridet's "ways of doing business in China and your
practices in handling various business activities in China in relation to
customs matters, import and export of goods, etc." (Ex. 8.) Emalfarb denies any
recollection of this letter.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="southD">South
Dragon</a></font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At the
first interview, Emalfarb stated unequivocally that Hooper had told him, at some
point following the acquisition, that he had learned that South Dragon was
formed to enable customers to avoid paying VAT </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">40</font>&#160;&#160;&#160;&#160;This
letter, a fax, was maintained in the Puridet files at Dyadic.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">51</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obligations,
that South Dragon would sell to cash customers and that the money would go to
Puridet. Emalfarb said that the idea was that one hundred per cent of the funds
paid by these customers would go to Puridet. He told us that he knew "Smeaton
and Tsang were South Dragon." As far as Emalfarb knew, the Chinese customers
were not paying VAT, and he and Hooper knew that was wrong. Both Hooper and
Emalfarb told Smeaton that South Dragon had to be shut down. He believed that
Hooper had successfully had it shut down. When he received the 2003-2004
whistleblower e-mails, his only surprise regarding South Dragon was the
allegation that it was still in operation at that time.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By the
time of the second interview, Emalfarb changed his story regarding South Dragon.
He still stated at the beginning of the interview that South Dragon had been set
up for customers who wanted to buy for cash in China and that one hundred per
cent of South Dragon sales went on to Puridet's books. (Later in the interview,
he backtracked and stated that he was no longer sure that all of South Dragon's
sales were in cash). He repeated that when Hooper learned that the South Dragon
customers were not paying VAT, he "went nuts." However, he amended his initial
claim that he believed it had been shut down in 2002. Now he claimed that he
told Smeaton that Smeaton had to shut South Dragon down or to cease doing
business in an improper way. He told us that he and Smeaton had heated
discussions over South Dragon. He was unable to tell us what it would mean for
South Dragon to do business in a proper way.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It should
be noted that upon his return from a lunch break during the interview, Emalfarb
returned to his claim that he thought South Dragon had been "shut down" in 2002.
It was only when his attorney reminded him that he added the new claim that it
was to be shut down or that it had to be run properly. Emalfarb then told us
that "by now" he is "totally confused" about the ownership of South Dragon and
who established it, but he does know that when it made a sale, those sales were
put on Puridet's books. Emalfarb stated that he understood that South Dragon was
either a 100% subsidiary or a "d/b/a" of Puridet. He told us that he has "no
independent recollection" of any of the e-mails regarding South Dragon on which
he was copied and that are referenced in this report. He claimed to be
unfamiliar with the draft contract between Puridet and South Dragon (Ex.
24),&#160;although he acknowledged </font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">52</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">it was
found on his computer. He similarly could not recall the 2004 Puridet management
representation letter (Ex. 59), which asserted that South Dragon was not related
to Puridet, despite the fact that it was on his computer and had been faxed to
his attention at Dyadic.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None of
these versions is credible in light of the e-mails, other documents and the
recollections of other witnesses, all of which is spelled out in detail above,
<font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>at pp. 15 - 34.
Emalfarb was actively engaged in seeking to establish South Dragon as an entity
distanced from Puridet so that Puridet would appear to be free from
improprieties. As stated in Hooper's e-mails, the goal was to erect "strong
walls" between Puridet and South Dragon. The draft contract found on Emalfarb's
laptop allegedly to establish a business relationship between South Dragon and
Puridet was to memorialize a sham. Emalfarb's July 29 and 30, 2003 e-mails to
Smeaton confirm his agreement to that plan. <font style="DISPLAY: inline; FONT-STYLE: italic">(See, supra, </font>pp. 27 - 28.)
There, Emalfarb's complaint to Smeaton was not that he had failed to "shut it
down," but that he had failed to set-up the separate South Dragon<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">41</font> entity
as he and Hooper were supposed to be doing, Moreover, Emalfarb made clear the
reason for his concern at this time: the need to have Puridet's accounting
"cleaned up" for dealing with lenders and potential investors.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb's
claim that he instructed Smeaton that South Dragon had to operate correctly is
also not credible in light of his concealment of it and another Smeaton entity,
P.T. Pasifik Ichsan, as related parties from Dyadic's and Puridet's auditors.
Emalfarb acknowledged that he always knew South Dragon was controlled by
Smeaton, <font style="DISPLAY: inline; FONT-STYLE: italic">et al. </font>He also
acknowledged that he was aware that P.T. Pasifik Ichsan, an Indonesian
"customer" of Puridet, was controlled by Smeaton. Despite that, he never
disclosed to Puridet or Dyadic's auditors that they were related parties. The
only related party transaction that was ever disclosed was the Puridet office
lease with Smeaton. <font style="DISPLAY: inline; FONT-STYLE: italic">(See,
supra, </font>at pp. 42-46.) Given the specific annual audit inquiries as to
this matter and Emalfarb's "oversight," it is not credible that this
non-disclosure was simply overlooked by him. Moreover, as noted above, in April,
2005,&#160;he received from Tsang </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">41</font> Here
referred to by Emalfarb as "Red Dragon."</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">53</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a copy of
the Puridet representation letter to EY Hong Kong in which Tsang falsely stated
that South Dragon was not a related party. <font style="DISPLAY: inline; FONT-STYLE: italic">(See, supra, </font>p. 42.)<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">42</font> That
letter, no matter when received, should have been a matter of great concern and
should have been the subject of communication by Emalfarb with the auditors.
Certainly, coming a year after the whistleblower e-mails, the only reasonable
explanation for Emalfarb's silence is that it was intentional.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At both
interviews, Emalfarb pointed to his efforts to put in additional controls over
Puridet as evidence of his unwillingness to tolerate wrongdoing.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">43 </font>Both he
and Hooper noted that they retained Paul Ho to do monthly reviews for them of
Puridet's accounting. Emalfarb also noted that he sent outsiders, including
Tabloff, Kent, and Shook to work at Puridet, in order to keep an eye on what was
going on. He may well have done so in order to keep Smeaton and others from
stealing from Puridet, an effort which, it turns out, was likely unsuccessful.
However, as the record shows, it was not done to prevent the cash sales/VAT
avoidance scheme at issue here.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3) <font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="20032004">The
2003-2004 </a>whistleblower e-mails</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Emalfarb
gave a number of differing versions to the Audit Committee, the Board and to us
of the circumstances relating to his receipt of the 2003-2004 whistleblower
e-mails.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">42</font>&#160;&#160;&#160;&#160;Emalfarb
told us that he has no recollection of this document. It was found on his
computer and a hard copy showing that it was faxed to his attention was found in
Dyadic's files.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">43</font>&#160;&#160;&#160;&#160;At
the second interview Emalfarb was careful to say he was concerned about
"improper" or "inappropriate," but not "illegal" conduct.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">54</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On April
21, 2007, at a special (telephonic) meeting of the Audit Committee Emalfarb
stated that the earlier e-mail dealt with a personnel matter. As he stated, the
e-mail "suggested that Aman and other employees at the factory were skimming
inventory. . . .It was like a buyer at K-Mart "skimming inventory." For that
reason, he said, he saw it as different from the April 2007 e-mails which
alleged fraudulent conduct. In response to a question whether he notified anyone
else at the Company or at Ernst &amp; Young, he stated only that he forwarded it
to Smeaton and spoke to him about it. Smeaton supposedly checked it out and
reprimanded Aman. He "stated that he did everything he could to check it out and
Smeaton, to his knowledge, had resolved the matter." He then stated that Moor
and Kent Sproat were told about the e-mail. (Ex. 77.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
this meeting, Emalfarb forwarded copies of the 2003-2004 e-mails to the members
of the Board. (It was acknowledged at this meeting that the scope of the
allegations in the e-mails was broader than Emalfarb had represented at the
previous meeting. These e-mails included allegations of misconduct relating to
South Dragon.) Emalfarb acknowledged that he had not forwarded the e-mails to
Moor, as earlier claimed, as they pre-dated his employment.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At a
special telephonic meeting of the Board of Directors, which began at 12:20 a.m.
on April 23, 2007, Emalfarb commented further on the e-mails. He first noted
that they were received before the Company became a Securities and Exchange
Commission reporting company and, thus, were not subject to Sarbanes-Oxley.
Emalfarb then added that shortly after his receipt of the 2003 e-mail he had
forwarded it to Gardner. He directed Gardner to go to Puridet in early 2004 in
order to investigate the allegations in the e-mails. He further claimed, also
for the first time, that he "charged" the Company's independent auditors (EY
United States) and Gardner with responsibility for "cleaning up" any problems
with Puridet and Puridet-PRC, and that he (Emalfarb) "had taken for granted"
that this had been done." (Ex 78.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At a
telephonic meeting of the Board of Directors later that morning, Emalfarb stated
that, besides Gardner, he had furnished copies of this e-mail to EY United
States and that he believed that all actions required of himself
</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">55</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and the
Company in respect of that e-mail were properly taken back then. Emalfarb
further claimed that he relied on the Company's attorneys and accountants in
taking such actions. (Ex. 79.)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
accounts to the Audit Committee and the Board were not corroborated by any other
witness or documentary evidence. As discussed above, <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>at p. 36 - 38,
Emalfarb did not provide the whistleblower e-mails to EY United States and there
is no evidence that he asked Gardner, Ernst &amp; Young or anyone to undertake
any inquiry. Indeed, his disclosure to EY United States explained why they did
not need to make any further inquiry. Moreover, had such an inquiry taken place,
there would be evidence of it. With regard to Gardner's visits to Puridet,
according to Gardner and supported by other evidence, Gardner made two trips to
Puridet, one in November 2001, and the other in early December 2003, before the
first anonymous e-mail was received. His claim that he told Kent Sproat and "his
attorneys" is also unsupported. Sproat denies that he was told. That denial is
corroborated by Gardner. (See, <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>at p. 36, n.28.)
Moreover, Emalfarb conceded to us that he did not recall telling outside
counsel.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
essence of Emalfarb's position in his first interview with us is that he took
appropriate action when he received the 2003-2004 whistleblower e-mails and made
appropriate disclosures. Emalfarb discounted the e-mails, he told us, because
most of the matters alleged were already known to him. He already knew Smeaton
and Chih owned the office space leased by Puridet and already knew that the
company in Indonesia belonged to Smeaton. As to South Dragon, he thought that
allegation was "also wrong," because he understood that South Dragon had been
shut down earlier. Emalfarb told us that he forwarded the e-mail to Gardner. He
told us that he directed Gardner to have EY Hong Kong conduct an investigation
at Puridet and that at a later date Gardner reported to him that the accountants
reported that they didn't find any problems.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Regarding
his contacts with Smeaton, Emalfarb told us that he did not speak with Smeaton
about the 2003-2004 whistleblower e-mails until after they had sent people in to
Hong Kong and China to check out the allegations. </font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">56</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">He
recalled forwarding the December 22<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">nd</font> e-mail
to Smeaton in August, 2004.<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">44</font> At a
later date, even though the auditors said they didn't find anything, he still
had a heated discussion with Smeaton because he was still
skeptical.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At his
second interview with us, Emalfarb had a change of recollection with respect to
the 2003-2004 whistleblower e-mails. He now stated at the second interview that
he was very "foggy" on this issue; however, he believed that, contrary to his
earlier account, he did not ask Gardner to have Ernst &amp; Young check out the
e-mail. Instead, he suggested that Gardner have an independent third party do
that. (He did not know who Gardner went to.) His reason was that he did not
believe that EY Hong Kong would have been able to investigate both because it
had just given Puridet a clean bill of health and because the anonymous
whistleblower had said that Ernst &amp; Young would not be
successful.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As to why
his recollection was unclear, Emalfarb emphasized that he was pre-occupied at
the time with many other crises that were facing Dyadic. When the first e-mail
came in he thought that "Indonesia" <font style="DISPLAY: inline; FONT-STYLE: italic">(i.e., </font>P.T. Pasifik Ichsan)
and South Dragon were "under control" or that South Dragon was getting "under
control." After instructing Gardner to have an investigation done, he never
followed-up specifically. His only recollection is that, at an unspecified later
date, he asked Gardner if, generally, everything was all right at the Company,
presumably including its subsidiaries. Emalfarb specifically relied on an
October 2004 e-mail that he says he sent to Gardner around the time that Dyadic
was preparing to go public, in which he asked Gardner to confirm that he had
sufficient resources to get everything filed that needed to be filed. This
reassured him that there were no problems at Puridet.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">44</font>
Emalfarb had a very specific recollection that he had forwarded it to Smeaton's
personal e-mail account. It was "kicked back" and he then faxed it to him. The
forensic evidence shows that he did forward the e-mail to Smeaton's account in
August, 2004. (See Ex. 53.)</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">57</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
successive versions all involve his claim that he gave direction to Gardner to
undertake personally and have others undertake "independent" investigations.
However, all of these variations are contradicted by Gardner who denies: 1) that
Emalfarb ever asked him to undertake any investigation, 2) that he ever
undertook any investigation, 3) that Emalfarb ever asked him to retain any
auditors or investigators to do undertake any inquiry, 4) that he ever reported
back to Emalfarb that investigation had been done, and 5) that he ever knowingly
communicated anything to Emalfarb to give him comfort that there was nothing to
the allegations. Furthermore, as detailed above, <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>at pp. 36 - 39, to the
extent there is other evidence bearing on these claims it corroborates Gardner
or, at least, fails to provide any corroboration to Emalfarb's
account.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
discussed above, <font style="DISPLAY: inline; FONT-STYLE: italic">supra,
</font>at<font style="DISPLAY: inline; FONT-STYLE: italic">&#160;</font>pp. 36 -
39, Emalfarb did make a disclosure to EY United States, contrary to his
assertion to us that he did not. However, as discussed above, this disclosure
was incomplete and misleading. Moreover, it was intended to close off further
inquiry by EY United States, not to lead to it. In addition, the South Dragon
receivable was a prominent feature of the monthly reports from Paul W. C. Ho
&amp; Co. in 2004 and later. The fact that it was a related party should also
have been a subject of disclosure to EY United States.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
failure by Emalfarb to recall this disclosure to EY United States is, on its
face, corroborative of his claim of faulty recollection. It is a disclosure
which, at first glance, is supportive of his position that he acted
appropriately. However, as shown above, this disclosure was itself misleading.
Moreover, this single failure of recollection should be considered together with
Emalfarb's other multiple, specific recollections of significant events which
are contradicted by the evidence. It is our view that Emalfarb's lack of
credibility in his dealings with us and the Board is a further indication that
he knowingly failed to disclose what he knew about South Dragon and the
2003-2004 e-mails.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Finally,
as discussed above, <font style="DISPLAY: inline; FONT-STYLE: italic">supra,
</font>at pp. 33 - 34, when Moor was hired in early 2005, he made inquiry of
Emalfarb concerning the South Dragon receivable. Emalfarb never responded to
that inquiiy or, at any time, ever told Moor about the South Dragon history.
Clearly, Moor should have been told, at a minimum, that South Dragon was not a
real receivable, that it had been set up to do business which Emalfarb, Smeaton,
<font style="DISPLAY: inline; FONT-STYLE: italic">et-al,</font><font style="DISPLAY: inline; FONT-STYLE: italic">&#160;</font>wanted to keep
separate</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">58</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FROM:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
      &amp; Moscowitz, P.A.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TO:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Audit
      Committee of the Board of Directors</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
      International, Inc.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DATE:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">August
      15, 2007</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="8%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUBJECT:</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Report
      of Internal Investigation</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;from
Puridet, and that it was the subject of the 2003-2004 e-mails. There is no
justification for Emalfarb's failure to do so. That failure constitutes a
continuing, intentional non-disclosure.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4) <font style="DISPLAY: inline; TEXT-DECORATION: underline"><a name="pui">Pui
Shing</a></font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We asked
Emalfarb at both interviews what he knew about Pui Shing. He denied having any
knowledge about it.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There is
not the same evidentiary record connecting Emalfarb to knowledge regarding Pui
Shing as there is regarding South Dragon and P.T. Pasifik Ichsan. There are
references to it in financial statements which were routinely sent to Dyadic.
(See, <font style="DISPLAY: inline; FONT-STYLE: italic">e.g., </font>Ex. 57 and
Ex. 72, and <font style="DISPLAY: inline; FONT-STYLE: italic">supra, </font>p.
29.) There were e-mails between Moor, Smeaton and Emalfarb concerning the large
and growing Pui Shing receivable, <font style="DISPLAY: inline; FONT-STYLE: italic">see, supra, </font>at pp. 33 - 34.
Emalfarb produced to us an e-mail he received which reported Puridet's largest
customers and showed the transition from South Dragon to Pui Shing as Puridet's
largest customer (Ex. 81). In the 2005 Form 10-KSB, Pui Shing is the customer
noted as having the largest receivable balance for all of Dyadic. <font style="DISPLAY: inline; FONT-STYLE: italic">(See </font>Form 10-KSB, filed March
29, 2006, at F-16.) Moreover, Emalfarb told us that he was actively concerned
about receivables and frequently questioned others, particularly Gardner, about
them. Given these facts alone, his denial of familiarity with Pui Shing is not
credible. Morever, given the evidence concerning Emalfarb's knowledge of South
Dragon, the timing of its "ceasing" operations and Pui Shing's beginning, it is
reasonable to conclude that he knew that Pui Shing was South Dragon's successor.
Accordingly, we find this denial not to be credible.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It is
important to point out that there is no evidence that Emalfarb acted in this
matter to enrich himself at the expense of Dyadic. We believe that Emalfarb
could not control Smeaton and Tsang, although he made efforts to do so.
Additionally, had Emalfarb actually enforced a rule precluding Chinese cash
sales, <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Puridet's
revenues would have plummeted. We believe that the combination of these factors
led Emalfarb to permit Puridet to use the dummy entities and then to fail to
report them to the auditors. Moreover, those same factors caused him to avoid
his obligations to investigate and to remedy the problems exposed by the
2003-2004 whistleblower e-mails.</font></font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 9pt; FONT-FAMILY: temp">59</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table Of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div>&#160;</div><br></div>
  </body>
</html>







</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>exhibit99_2030408.htm
<DESCRIPTION>EXHIBIT 99.2 PRESS RELEASE DATED 03.04.08
<TEXT>
<html>
  <head>
    <title>exhibit99_2030408.htm</title>
<!-- Licensed to: Dyadic International, Inc.-->
<!-- Document Created using EDGARizer 4.0.5.0 -->
<!-- Copyright 1995 - 2008 EDGARfilings, Ltd., an IEC company. All rights reserved -->
</head>
    <body bgcolor="#ffffff" style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
    <div>&#160;</div>
    <div style="TEXT-ALIGN: center"><font style="FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Exhibit
99.2</font></div>
    <div>&#160;</div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 11pt; FONT-FAMILY: Times New Roman">Dyadic
Provides Additional Information Regarding Facts Surrounding&#160;Investigation
and Releases Independent Investigative Report</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">JUPITER,
Fla &#8211; March 4, 2008 &#8211; Dyadic International, Inc. (the &#8220;Company&#8221;, "Dyadic", "we",
"us" or "our") today provided certain information, in a "Question&#160;&amp;
Answer" format, concerning the previously disclosed alleged fraudulent and
improper activities at the Company's Asian operations, the investigation of
those activities conducted by Moscowitz &amp; Moscowitz, P.A., special counsel
to the Audit Committee of the Company's Board of Directors, and certain related
and other matters.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Questions &amp;
Responses</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 54pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">What
      happened in April 2007?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">In
April 2007, Robert Smeaton, the managing director of the Company's wholly-owned
Asian subsidiary, Puridet (Asia) Limited ("<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">Puridet</font>"),
unexpectedly died of an apparent heart attack.&#160;&#160;Wayne Moor, then the
Chief Financial Officer of the Company, flew to Hong Kong that same week to
assist in finding a replacement managing director and to attend to related
matters.&#160;&#160;Shortly after the death of Mr. Smeaton and Mr. Moor's
arrival in Hong Kong, the Company received a series of "whistleblower" email
communications (the "<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">2007
Whistleblower Emails</font>") directed to Mark Emalfarb, the then Chief
Executive Officer and Chairman of the Board of Directors (the "<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">Board</font>")
of the Company, alleging and describing certain fraudulent and improper
activities that had been and were being perpetrated by Mr. Smeaton and other
senior management of Puridet against Dyadic.&#160;&#160;These emails made
allegations that Puridet&#8217;s Dong Guan factory was riddled with corruption, such
as value added tax ("<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">VAT</font>")
fraud, kickbacks, product theft and skimming.<font style="DISPLAY: inline; FONT-WEIGHT: normal">&#160;</font>When asked by the
Audit Committee of the Board (the "<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">Audit
Committee</font>"), Mr. Emalfarb said that he had received previous anonymous
"whistleblower" e-mail communications alleging corruption in the Company's Dong
Guan factory and the use of a company named "South Dragon" by Puridet
management.&#160;&#160;Those emails were dated December 2003 and early 2004 and
Mr. Emalfarb provided the Company with copies of them <font style="COLOR: black; FONT-FAMILY: Times New Roman">shortly <font style="DISPLAY: inline; FONT-SIZE: 10pt; COLOR: black; FONT-FAMILY: Times New Roman">after
his discussion with the Audit Committee</font></font> in April
2007.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">What
      did the Company do in response and
why?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
Audit Committee, consisting entirely of independent, non-management directors,
upon the advice of counsel, initiated an independent investigation of the facts
surrounding the possible fraud and improprieties involving
Puridet.&#160;&#160;Because Mr. Emalfarb had previously received whistleblower
email communications alleging similar fraudulent and improper activities and did
not advise the Board (or any Committee of the Board) of these communications
until after he received the 2007 Whistleblower Emails, the Audit Committee also
asked Mr. Emalfarb to take a voluntary leave of absence from all of his officer,
director and Board chairman duties pending the completion of the Audit
Committee's independent investigation.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
          </div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">b.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Who
      performed the investigation?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
Audit Committee selected and engaged Moscowitz &amp; Moscowitz, P.A. ("<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">Moscowitz
&amp; Moscowitz</font>") to conduct the investigation.&#160;&#160;Following its
investigation, Moscowitz &amp; Moscowitz produced a detailed independent report
of its findings and conclusions (the "<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">Moscowitz
Report</font>").&#160;&#160;Moscowitz &amp; Moscowitz is a highly respected law
firm based in Miami, Florida.&#160;&#160;Both of its partners, Jane W. Moscowitz
and Norman A. Moscowitz, are former federal prosecutors.&#160;&#160;They both
have conducted numerous white collar civil and criminal investigations, as well
as internal corporate investigations, during their 30-year legal
careers.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">c.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Why
      and how was Moscowitz &amp; Moscowitz hired?&#160;&#160;What was the scope
      of their engagement?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
Audit Committee interviewed a number of law firms and, on May 14, 2007, engaged
Moscowitz &amp; Moscowitz based upon its independence, relevant experience and
reputation.&#160;&#160;The Company, the Audit Committee and Moscowitz &amp;
Moscowitz performed an extensive conflict check to ensure that Moscowitz &amp;
Moscowitz was independent, had no prior attorney-client relationships or
conflicts with respect to the Company, any of its officers, directors or
employees, including Mr. Emalfarb, and the investigation.&#160;&#160;The Audit
Committee, not Company management, supervised and oversaw the Moscowitz &amp;
Moscowitz engagement and the investigation.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
&amp; Moscowitz was engaged to conduct an independent investigation regarding
the alleged improprieties concerning Puridet, including, specifically, to
determine whether any officers or employees of the Company participated in these
improprieties and/or failed to disclose them.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">d.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">How
      did Moscowitz &amp; Moscowitz obtain information for the
      investigation?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Prior
to the engagement of Moscowitz &amp; Moscowitz, the Company engaged Kroll, Inc.
("<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">Kroll</font>")
to image the Company's computers, the personal computers of the Company's
employees at its Asian operations and the computers at the Jupiter, Florida
headquarters of the Company, as well as additional work computers provided by
Mr. Emalfarb, in order to collect and preserve evidence.&#160;&#160;Moscowitz
&amp; Moscowitz engaged Kroll to search the computer records and database
established by the imaging performed earlier to facilitate the
investigation.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Kroll
is one of the world's leading risk management companies.&#160;&#160;Kroll, which
was founded as an investigation firm with corporate internal investigations at
the heart of its business, has many years of experience assisting businesses,
financial institutions and major non-profit organizations in such matters as
investigating internal fraud, as well as violations of law, regulations and
corporate policies.&#160;&#160;Kroll's worldwide presence, including a number of
Asian offices, allowed it to effectively and efficiently image and search the
computer data base of the Company and Puridet.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
&amp; Moscowitz reviewed thousands of documents, including those found on the
computers of the Company and Puridet with Kroll's
assistance.&#160;&#160;Moscowitz &amp; Moscowitz also interviewed many of the
current and former officers, directors, employees and outside professionals of
the Company and Puridet.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">e.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">What
      facts were uncovered during the
investigation?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">During
the investigation, it was discovered that Puridet's then largest customer, an
entity called "Pui Shing," was in fact a dummy company, used by Smeaton and
others to accumulate product sales to numerous small cash-paying Chinese
customers who sought to avoid the required reporting obligations associated with
the payment of VAT under the laws of China.&#160;&#160;Pui Shing represented
approximately 25% of Puridet's reported net sales for 2006 (of approximately
$6.1 million) and approximately 33% of the Company's net accounts receivable at
December 31, 2006 (of approximately $1.7 million).&#160;&#160;Pui Shing was
reflected on Puridet's books as a single customer (with the sales to the
numerous Chinese customers reflected only on Pui Shing's books).&#160;&#160;In
reality, Pui Shing was run out of Puridet:&#160;&#160;its blank letterhead and
envelope formats, as well as correspondence and certain of its financial
statements, were all found on Puridet's computers.&#160;&#160;In fact, Puridet's
financial statements showed that an entity called "South Dragon," which
previously had been Puridet&#8217;s largest customer, stopped &#8220;buying&#8221; from Puridet in
July 2004, the same month sales to Pui Shing began.&#160;&#160;The investigation
also discovered that, prior to Pui Shing, South Dragon was another dummy entity
similarly used to cover up numerous small cash sales from Chinese customers
seeking to avoid the required reporting associated with Chinese VAT
taxes.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">f.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">What
      were the conclusions of the Moscowitz
Report?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
Moscowitz Report concluded that, since 1998 (when Puridet was acquired), Mr.
Emalfarb was aware of and condoned financial improprieties, such as off-book
transactions, and was later involved in structuring one of the "dummy" customer
entities (South Dragon), which was used by Puridet as the nominal purchaser and
seller of the Company's products to Chinese customers in a scheme designed to
avoid reporting obligations regarding the payment of VAT under the laws of China
on such transactions.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
Moscowitz Report further concluded that Mr. Emalfarb failed to report these
facts to the Company's auditors and, when questioned by them, had characterized
the whistleblower email communications he received in late 2003 and 2004 in a
misleading and deceptive manner designed to avoid further inquiry or
investigation into the allegations in the emails.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
Moscowitz Report also concluded that no other current officers or employees of
the Company were aware of or participated in any of the improprieties
investigated.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">g.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">What
      did the Company do with the Moscowitz
Report?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Moscowitz
&amp; Moscowitz provided a full report and presentation to the Audit Committee
regarding its investigation and conclusions, including the written Moscowitz
Report.&#160;&#160;Based upon this (and the advice of counsel and other facts
and circumstances it deemed relevant), the Audit Committee recommended to the
full Board that Mark Emalfarb be terminated for cause under his employment
agreement with the Company.&#160;&#160;Based upon this recommendation (and the
advice of counsel, the Moscowitz Report and other facts and circumstances it
deemed relevant), on September 20, 2007, a Special Committee of the
Board,&#160;&#160;consisting entirely of independent, non-management directors
and designated specifically for this purpose (the "<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">Special
Board Committee</font>"), after providing Mr. Emalfarb and his counsel with an
opportunity to present his position on the matter, authorized Mr. Emalfarb's
termination for cause as the Company's Chief Executive Officer and President
under his employment agreement.&#160;&#160;The termination was effectuated on
September 24, 2007.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">h.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Was
      Mark Emalfarb interviewed and permitted to
  respond?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Yes.&#160;&#160;Mr.
Emalfarb was interviewed and submitted documents to Moscowitz &amp; Moscowitz in
connection with its investigation.&#160;&#160;He was interviewed by Moscowitz
&amp; Moscowitz on two separate occasions, was accompanied by his counsel in
each interview and was provided with a full and fair opportunity to respond to
questions and to present his understanding of the facts and circumstances
surrounding the alleged improprieties.&#160;&#160;Per the terms of his
employment agreement with the Company, Mr. Emalfarb and his counsel appeared at
a meeting of the Special Board Committee to present his position.&#160;&#160;Mr.
Emalfarb's counsel requested a copy of the Moscowitz Report before that
appearance and the Special Board Committee agreed to provide it to him on the
condition that a confidentiality agreement first be signed to protect the
Company and its stockholders.&#160;&#160;The Special Board Committee provided
such an agreement, but it was not signed and, as a result, the Moscowitz Report
was not delivered prior to Mr. Emalfarb's appearance before the Special Board
Committee.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">i.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Can
      I see the Moscowitz Report?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">For
the reasons noted under question "<font style="DISPLAY: inline; FONT-WEIGHT: normal">j</font>" below, the Company's
Executive Committee of the Board (the "<font style="TEXT-DECORATION: underline">Executive Committee</font>") has determined
to make the Moscowitz Report available in its entirety (including all exhibits
to the report) on the Company's website, at www.dyadic.com.&#160;&#160;In
addition, the Moscowitz Report (without exhibits) has been filed as an exhibit
to the Company's Current Report on Form 8-K filed with the Securities and
Exchange Commission on March 4, 2008.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">j.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Why
      hasn't the Moscowitz Report been made publicly available before
      now?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
Moscowitz Report was prepared and presented as an attorney-client privileged and
confidential report from Moscowitz &amp; Moscowitz (as special counsel to the
Audit Committee) to the Audit Committee (as the client of Moscowitz &amp;
Moscowitz).&#160;&#160;The findings and conclusions of the Report were
considered and utilized by the Audit Committee in making its determinations and
recommendations with respect to and as a result of the
investigation.&#160;&#160;Over the past several months, as a consequence of
audit inquiries, liability insurance questions, third party requests and the due
diligence inquiries of certain interested parties in the Company's ongoing
strategic value maximization process, the Company has made available all or
certain portions of the Moscowitz Report to selected third parties subject to
confidentiality obligations.&#160;&#160;Accordingly, counsel to the Company has
determined that the attorney-client privilege with respect to the Moscowitz
Report likely has been compromised.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
Company, by and through members of its Executive Committee and management, also
has received numerous inquiries regarding the Moscowitz Report (including
requests from stockholders to review a copy of the complete
report).&#160;&#160;The Company is also concerned that there is significant
misinformation in the market regarding the Moscowitz Report and related matters
(including some of the matters addressed in the responses to the questions
listed above).&#160;&#160;Accordingly, after due consideration, the Executive
Committee, with the concurrence of the Audit Committee, concluded that it was in
the best interests of stockholders to make the Moscowitz Report available for
review by all of the Company's stockholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 54pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">What
      lawsuits and claims have been brought by Mark Emalfarb against the
      Company?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">As
previously disclosed in the Company's Current Reports on Form 8-K filed on
October 1, 2007, October 24, 2007, November 19, 2007 and December 28, 2007, Mr.
Emalfarb has filed the following lawsuits and actions against the
Company:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 90pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Arbitration Proceeding</font> &#8211;
      In September 2007, Mr. Emalfarb commenced an arbitration proceeding
      against the Company seeking monetary damages based on his claims for
      wrongful discharge under his employment agreement and that the Company&#8217;s
      actions defamed him.&#160;&#160;An arbitrator was recently selected but no
      schedule has been set with respect to this proceeding.</font></div>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
            </tr>
        </table>
      </div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 90pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">"Books &amp; Records"
      Action</font> &#8211; Mr. Emalfarb filed an action in the Delaware Court of
      Chancery the day he was terminated for cause seeking an order compelling
      the Company to give Mr. Emalfarb access to certain documents and
      information that he contends are books and records of the Company to which
      he is entitled in his capacity as a director of the
      Company.&#160;&#160;The Company responded that it has or will provide Mr.
      Emalfarb with all documents to which he is entitled as a
      director.&#160;&#160;On February 19, 2008, the parties settled this matter
      and the Court approved a Stipulated Order canceling the trial, which was
      scheduled for February 27, 2008.&#160;&#160;As part of the Stipulated
      Order, the Company agreed to (i) provide Mr. Emalfarb with certain
      documents to the extent it had not already done so, and (ii) allow Mr.
      Emalfarb to have an outside vendor perform searches of certain
      electronically stored materials.&#160;&#160;Both the Company and Mr.
      Emalfarb reserved certain rights under the Stipulated Order, including
      their rights to seek attorneys&#8217; fees and costs incurred in connection with
      the action.</font></div>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              </td>
            </tr>
        </table>
      </div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 90pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Petition to Order Annual
      Meeting</font> &#8211; In November 2007, Mr. Emalfarb filed a petition in the
      Delaware Court of Chancery seeking an order directing the Company to call
      and hold an annual meeting of its stockholders for the election of
      directors.&#160;&#160;Delaware law permits a stockholder to file a
      petition in the Chancery Court to compel a Delaware corporation to hold an
      annual stockholders meeting if an annual meeting has not been held in 13
      months.&#160;&#160;The Company does not oppose a court order directing the
      Company to call and hold an annual meeting of stockholders to elect two
      directors.&#160;&#160;The Company, in its answer to Mr. Emalfarb&#8217;s
      petition in this action, joined in his request that the Court enter an
      order requiring the Company to hold an annual meeting.&#160;&#160;The
      parties disagree about the number of classes of directors that should be
      elected at an annual meeting and about the appropriate date for such a
      meeting, and have recently completed briefing on cross-motions for
      judgment on the pleadings with respect to those issues.&#160;&#160;The
      Court has not yet issued a ruling in this
  matter.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 54pt">
                <div><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">What
      lawsuits and claims have been brought by the Company against Mr.
      Emalfarb?&#160;&#160;Does the Company intend to pursue any claims against
      Mr. Emalfarb?</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">At
this time, the Company has not brought any lawsuits or claims against Mr.
Emalfarb (including counterclaims to the lawsuits brought by him noted
above).&#160;&#160;The Company, by and through the Executive Committee with the
advice and assistance of counsel, is investigating and considering what, if any,
claims the Company may pursue and bring against Mr. Emalfarb.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Depending
upon stockholder&#160;feedback regarding&#160;the information included in this
press release, future events and other factors, the Company&#160;may provide
additional information&#160;in a similar "Question &amp; Answer" format in the
future.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">On
March 4, 2008, the Company filed with the Securities and Exchange Commission a
Current Report on Form 8-K, which includes copies of this press release and the
Moscowitz Report as exhibits and a discussion of certain other
matters.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">IMPORTANT
NOTICES RE: THIS Q&amp;A AND PRESS RELEASE</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
foregoing Questions and Responses ("<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">Q&amp;A</font>")
constitute a summary only, do not purport to be complete and are subject to, and
qualified (as applicable and appropriate) in their entirety by, the full text of
the Moscowitz Report and the more complete disclosures, information and
statements included in Current Reports on Form 8-K filed by the Company with the
Securities and Exchange Commission (the "<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">SEC</font>")
prior to the date of this press release.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Certain
of the responses in this Q&amp;A may be deemed to be solicitation material in
respect of the election of certain persons who may be nominated for reelection
or to replace certain of Dyadic's directors whose terms have
expired.&#160;&#160;If Dyadic remains subject to the proxy rules of the
Securities and Exchange Commission (the "<font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">SEC</font>")
at the time any forms of proxy, consent or authorization are furnished by the
Company to stockholders, such forms of proxy, consent or authorization will be
accompanied by a definitive proxy statement and/or related
materials.&#160;&#160;STOCKHOLDERS OF DYADIC ARE URGED TO READ ANY SUCH PROXY
STATEMENT WHEN AND IF IT BECOMES AVAILABLE SINCE IT WILL CONTAIN IMPORTANT
INFORMATION.&#160;&#160;Investors and stockholders will be able to obtain such
proxy statement/materials, and any other relevant documents, when and if filed
with the SEC free of charge at the SEC's website, located at http://www.sec.gov,
and Dyadic's stockholders will receive copies of such documents at an
appropriate time from Dyadic free of charge.&#160;&#160;Dyadic and its directors
and executive officers may be deemed to be participants in the solicitation of
proxies from Dyadic stockholders in respect of the election of certain persons
who may be nominated for reelection or to replace certain of Dyadic's directors
whose terms have expired.&#160;&#160;Information regarding the directors and
executive officers of Dyadic is set forth in Dyadic's Annual Report on Form 10-K
for the fiscal year ended December 31, 2006, which was filed with the SEC on
April 2, 2007, and Current Reports on Form 8-K subsequently filed with the SEC
on April 25, 2007, June 1, 2007, July 9, 2007, September 24, 2007, October 1,
2007, October 24, 2007 and November 19, 2007.&#160;&#160;This communication does
not constitute a request for a proxy.&#160;&#160;THIS DISCLAIMER SHALL NOT BE
CONSTRUED AS AN ADMISSION BY THE COMPANY THAT THIS COMMUNICATION (OR ANY PORTION
OF IT) CONSTITUTES SOLICITATION MATERIAL OR THAT THIS COMMUNICATION (OR ANY
PORTION OF IT) IS BEING FURNISHED TO SECURITY HOLDERS UNDER CIRCUMSTANCES
CALCULATED TO RESULT IN THE PROCUREMENT, WITHHOLDING OR REVOCATION OF A PROXY OR
VOTE ON ANY MATTER.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">About
Dyadic International, Inc.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dyadic
International, Inc. is a biotechnology company that uses its patented and
proprietary technologies to conduct research and development activities for the
discovery, development, and manufacture of products and enabling solutions to
the bioenergy, industrial enzyme and pharmaceutical industries.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Contact:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Berkman
Associates</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Investor
Relations Counsel to Dyadic International, Inc.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Neil
Berkman, 310-826-5051</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">info@berkmanassociates.com</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
      </div><br><br></div>
    <div><br>&#160;</div>
  </body>
</html>




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>5
<FILENAME>dyadic_logosmall.jpg
<DESCRIPTION>DYADIC LOGO
<TEXT>
begin 644 dyadic_logosmall.jpg
M_]C_X``02D9)1@`!`0$`8`!@``#_X18T17AI9@``24DJ``@````'`!(!`P`!
M`````0```!H!!0`!````8@```!L!!0`!````:@```"@!`P`!`````@```#$!
M`@`=````<@```#(!`@`4````D````&F'!``!````I````,X```!(`````0``
M`$@````!````061O8F4@4&AO=&]S:&]P($-3($UA8VEN=&]S:``X,C`P-CHP
M-CHR."`Q-SHP-3HQ-0`#``&@`P`!````__\```*@!``!````)P$```.@!``!
M````Y0`````````&``,!`P`!````!@```!H!!0`!````'`$``!L!!0`!````
M)`$``"@!`P`!`````@````$"!``!````+`$```("!``!`````!4```````!(
M`````0```$@````!````_]C_X``02D9)1@`!`@$`2`!(``#_[0`,061O8F5?
M0TT``O_N``Y!9&]B90!D@`````'_VP"$``P("`@)"`P)"0P1"PH+$14/#`P/
M%1@3$Q43$Q@1#`P,#`P,$0P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P,#`P!
M#0L+#0X-$`X.$!0.#@X4%`X.#@X4$0P,#`P,$1$,#`P,#`P1#`P,#`P,#`P,
M#`P,#`P,#`P,#`P,#`P,#`P,#/_``!$(`'P`H`,!(@`"$0$#$0'_W0`$``K_
MQ`$_```!!0$!`0$!`0`````````#``$"!`4&!P@)"@L!``$%`0$!`0$!````
M``````$``@,$!08'"`D*"Q```00!`P($`@4'!@@%`PPS`0`"$0,$(1(Q!4%1
M81,B<8$R!A21H;%"(R054L%B,S1R@M%#!R624_#A\6-S-1:BLH,F1)-49$7"
MHW0V%])5XF7RLX3#TW7C\T8GE*2%M)7$U.3TI;7%U>7U5F9VAI:FML;6YO8W
M1U=G=X>7I[?'U^?W$0`"`@$"!`0#!`4&!P<&!34!``(1`R$Q$@1!46%Q(A,%
M,H&1%*&Q0B/!4M'P,R1BX7*"DD-3%6-S-/$E!A:BLH,')C7"TD235*,79$55
M-G1EXO*SA,/3=>/S1I2DA;25Q-3D]*6UQ=7E]59F=H:6IK;&UN;V)S='5V=W
MAY>GM\?_V@`,`P$``A$#$0`_`/0.M?6?H7074MZME#&=D!QI!8]^X,V[_P"9
M99M_G&_26;_XY?U(_P#+-O\`VU=_Z17)_P".K^D]'_J9/Y<98G0/\6O5NO='
MHZMBY>/55D[]M=@?N'IO?0=Q8'-^E4I8PCP@R)%K#(W0#ZQTKZU_5SK%OH].
MZA3?<=13.VPP"X[*;=EC]K6^[:U'ZSUWI70\9F7U6\8U%E@J:\M<Z7D.>UL5
M-L=]&MZ\-^L/U3Z[]5<C'LS"T![MV+FXSW0+&0_VOBNZB^OZ;/;_`,5_-KT[
MZO9M?U]^I-V'U-P.5[L;*L:-L6LVVXV8RMCF_P#`W?X.KUO5K_FD)0`H@W%(
MD3H11=[HOUHZ#UY]K.DY;<E^.&FUH:]A`=.T_IF5[OH_F+57S_\`5WJF7]4O
MK2RW*'IG&M=B=1K&OZ,N]/(^C]/TG-;DU;?I^DQ>N?7SZQ_L/ZM796.\#*RH
MQ\-PU]]@/Z9I'^AI%ES/Y>Q*6.B`.NRHRL:]%7_XQ?J9CW646]2:+*7NK>!7
M:[W-.QP:YE3FO]W[BZ1>)_XKOJX.J]>&;<V</I.VTS^=>?Z*SEO\WM=D_P#6
MJO4_G5ZY]8.JLZ-T3-ZF\C]5I<]@=,.LC;16=O\`I;G5UH3B`1$;JB219<S*
M_P`87U.Q,F[$R.HM9?CV.JM9Z=IVO8=CV[FU.;[7+HU\Q'<X%SR7%Q][CK+G
M23)_E>Y>]?XO^L?M;ZJ85SG!U^.W[+D022'T_HVE^[\^VGTK_P#KJ.3&(@$7
MXHC*R73ZSU[I/0L=F3U7(&-3:\5,>6N=+R'/VQ4VQWT6.61_XY?U(_\`+-O_
M`&U=_P"D5C_XY?\`Q/8/_AUO_GK(7$?5;Z@]2^LW3[<_$RJ:&57.H++0XDN:
MVNW=[!]'],C&$3&Y$A1D;H!];Z=]=?JKU.]N/A=2I?<\PRMQ-;G$G:&5MO;7
MO?\`R&K;7@GUF^H?7/JYCMR<T59&&]P8;Z'$AKC]!MS+&UV,WQ]/^;7HG^*[
MZU976NFW8'4+#;F=.V!MSOI64O!])UFNZRZIU;Z[;?\`B?4_3;T)0`%Q-A(D
M;HBB[%7U\^J5V>SIU74&NR[+OL[*O3M$V[O2]/>:O3^G^=NV+?7@'2?_`!>8
MG_IV'_MP5V_^-OZT9&-75]7L*PUNRJS;GN;H322:Z\;?^:V]S;/7_P""_1_S
M5UB,L>H`ZJ$M"3T>BZA_C'^I^!:ZE^>+[60'-QV/N&O_``U374?^"JWT7ZY?
M5KKEOH=.S6V9$3Z#PZJPZ;G;*[VU^KL:/?Z6]>7?5;_%EU3K^"WJ%V0SIV';
M/V<N8;+'@:>KZ.^EM=+O\'NLWO\`]%Z7IO63]9/JQU;ZJ=1JKR'_`$B;<+-H
M);)K(.]GY].13-;OY'^D1]N!T!U1Q2&I&C[+]8OK,.D658F/2,G,N;OVN<X,
MKK+Z\2NVYN/5E93_`%LO(IQZ*<?%MLNL_<]-/]6OK-7UMCV.8RK(K8VT>F\V
M5V5/=94S(QWV,Q[MOK474W57X]5V/=7Z=JYKIU%OUWZ#A];I=0[JV,!A=0HR
M6EV-DBFVK+]+);4T.JW6UX^:ST6;/TMN+;5=18NA^JWU:OZ0'9&=<V[*=4S%
MIJKW&K'QJB]]&'1;?.3?M?=8YUV0[_155UU5TIA``\5S_]"7^.K^D]'_`*F3
M^7&75?XL/_$/TW_K_P#[<9"Y7_'5_2>C_P!3)_+C+JO\6'_B'Z;\;_\`VXR%
M++^:'FM'S'R1_P"-+&JN^I>98]H<_&?3;4?W7>K72YP_ZU=:Q<M_B7R-N=U7
M%[654V_]MNMK_P#1RZK_`!HWUU?4K.8]P:Z]U-=8/=WK56%H_P"MUV/7*?XE
M\<NZCU3*[54U5?.QUEG_`*)2C_-&^Z#\X\F7^-_ZN^EDT_6''9^CR(Q\V.SV
MC]6N=_QE8^SN_P"*H_TBX?/ZQU+JF+TW`N+KF]-J.-B5M$N=O=[/:!_.>G]G
MQ6?R*&+WCZU8M&7]6NJ49#`^LXMKH/[S&.MK>/Y5=C&6,7CO^+3'IROKCT\7
ML%@K%ES0=1O96YU3_P#K;_TC/Y:=CEZ+/Z*)#U?WMWUSZG?5]OU>Z!C=/('V
M@CU<MPUW7O@VZ_G-K]M%?_!5,7,_XXNK&CH^+TFMQ#\^WU+0(_FJ(?M=_7R'
MT.;_`,4O05X7_C+ZH.I?6[*;6X.JP6MPZR/%DV9'^;DVVU?];3,8XIV?-=,U
M%M]/^JSK_P#%EG]6#2<AV2,RK:9!IQ-^*_</S=C;NH6+4_Q-]7]/+SNBV.]E
MS1ET`D1O9MIR`W]Y]C'4._ZRL[I_^,ZS!Z-3T5O2:;,.J@8[VNN<#8TMV7.=
M%?M]>7O_`+:YSZK=4'1?K!T_J+G;:J+FMN<1,56#T,@_V:;'N4AB2)`_198!
MC7D^E?XY?_$]@_\`AUO_`)ZR%+_$W_XFLS_P_9_YYQ5'_'+_`.)["_\`#K?_
M`#UD*7^)O_Q-9G_A^S_SSBJ/_)?5?^G]'I/KCBU97U4ZM5:W<T8EUC0?WZV&
M^EW]BVMCUY=_BDR35];17R,K$MK/]DUW@_\`@2]3^M^17C_57J]MC@QOV.YH
M)_>>QU53?[=CV,7E?^*7&-OUN:\<8N+;8?F:Z/\`T:C#^;DB7S1<OI/_`(O,
M3_T[-_\`;@I_K]D.S?KCU5W!%S<=H\/397C_`/5-W)ND_P#B\Q/_`$[#_P!N
M"F^O=#\/ZX=6:?I>N+Q\+&LR6_\`5J7](>2WH?-]\QL>G%QZL:AH930QM=3!
MP&L&QC?[+0J?5N@]'ZR*!U3%9E#&?ZE(?,!Q&TRUI;O:[_1V?HU<HOJR**\B
MAP?3<UME;QPYKAN8X?UFK)^LOULZ5]6:L:SJ/J.&79Z;&U-#G``;K+G-+F?H
MZ_9OV_I/?_-JL+O3=E=/#P<+!I]#!QZL6F2[TZ6-K;)Y=LK#6HZH]'ZWTOK>
M)]MZ7D#)QPXUEX#FD/;!<Q[+6LL8[:YOTFJ\@;ZJ?__1E_CJ_I/1_P"ID_EQ
MEE_5O_&=D=`Z+C=)KZ<S(;C;_P!,ZXM+O4LLO^@*G[=OJ[/IKT#ZY8_U(M?B
M'ZU%H>!9]DW/N9I^C]?^B.;_`,%_.+G/L/\`B6_>K_[>S/\`THGC+C$1&717
MM9">*(-'PMXWZT?7/K'UJMIIR&-JQZWSCX=&YVZQWL:]\^Z^_P!WIU^S^PO5
M?\7OU;M^K_U?;7EM#<[+><C):():7`-JH+X'\S4WW_\`#>ML69TCJ'^*GHMO
MK=-LQJ;NUSFVVV-T+?T=V0VVRO<UWN]-RV?_`!P/J=_Y9U_YMG_I-">:!%1(
M`\TC!D!LQD3_`'2Z/UA_Y`ZE_P"%+_\`SV]>.?XK/_%EA?\`$W?^>RO3LCZ\
M?4C*Q[<:_J-;Z;V.KL;%@EKQL>W<U@=]$K%Z5?\`XI>CYK,_IUU=&56'-99O
MR7P'#8_V7.L9]'^2E'+`1(L:^*CAR$@\$M/ZI>UZKGU]-Z9E]0L$LQ*7W%LQ
M.QI?LG^7&U>%_4SI/_.3ZTT8_4`[(JM-N3GND@N`#GN+WL+7_I<FRIFYO^D7
MJ75/K;]0.KX-O3^H9]=V)?M]2O\`3,G:YMK/?4UEGTV-_.5'HO4?\5?0<A^5
MTK(JQ[[6>F^PNR+"62'[/T_J[?<UOT4H981!U%GQ4<&0D>B6G]4NC_XV/U'_
M`/*W_P`'R/\`WH7F_P#C(^K&%]7^L45].I=3@9=&YC2YSP+&.+,AC'VN?9]!
MU%GT_P#"KU#_`,<#ZG?^6=?^:_\`])K+ZWUO_%GU]M+.K9562,<N-.M]9:70
M'^ZCTG>[:U*.8`ZRL>:I8,A'R2_Q2\M]:NK.ZM_BTZ%DV.W7UY3:+]9.^FK)
MHW/_`)=K6,N_ZXLWZH_XP+_JOTVW`JP6Y0NO=D&QUI9&YE56S8*[/]#^\NOW
M_P"*+]F_LKU:_L/K_:O2]3*_GMGH>KZF[U?YKV[-_IJM]A_Q+>-?_;V9_P"E
M$X9L5$$];W4<&6[$9;5\I>5^M7^,/J_UCQ?L5E=>%@;@]]59<YSRT[F"ZUVW
M=6Q_O;6VO^<7=?XJOJQD])Z;=U/.9Z>3U+9Z53A[ZZ&;MF^1N8_(<_U'U_Z/
MT/\`"(73;O\`%#TO(&3ANQVWM@LLL%UQ:0=S7U_:O6]-[8^G6M[_`,<#ZG?^
M6=?^;9_Z3399H5PQ(`\U#!ENS&1_P2^0])_\7F)_Z=A_[<+L_P#&Y]5[[O2^
ML6'7O%-?I=0:WD,!W4Y.T-][:]SZ\A^[V5^A_@J[%:I/^*"GJ#.I56UMRZ[A
MD,L]3*,6AWJ^IZ;G>G_.?F[-BZ`_XP/J:1!ZG40>1M?_`.DT3GC8((T\5#!D
MH@PEK_5+YS]5O\:'4>A=.;T[*QOVECT@#%<;?3LK9_H2\UW>K4S_``/^A9^C
M_F_3]/%^LWUFZI]:^J5W75D0?2P<&J7[=Y'L9INNR;G;-[]GZ3V>Q=IU+I_^
M)_.M-S<L83W&7#%-E;"?*EU5E-?_`%JNM:'0LO\`Q5]`L%^!DU?:@-OVJWU;
M+>X]CK&;:=S7;7^@RK>C[V(:BN+S1[&8Z&,J_NEZ+ZE_5_\`YO?5[&P+(^TF
M;LMP[W6>YXY=N])NRC?^?Z2W%SO_`(X/U.`G]IU_YMG_`*36]CWTY-%>30X6
M4W,;94\<.:X;V.']9I4?$)$FP4F$HC6)CYBG_]*Q_CC(%_2-8]N3^7'7G6YO
MB/O7T1F]+Z9U`L.?B499KGT_7K99MW1NV>JUVW=M5;_FQ]6O_*G"_P#8>K_T
MFHS`DVV\7-1A`1,2:?`-P\1]Z6X>(^]>_P#_`#8^K7_E3A?^P]7_`*32_P";
M'U:_\J<+_P!AZO\`TFE[97_?8_NE\`W-\1]Z6X>(^]>__P#-CZM?^5.%_P"P
M]7_I-+_FQ]6O_*G"_P#8>K_TFE[95]]C^Z7P#<WQ'WI+W_\`YL?5K_RIPO\`
MV'J_])KPOK#&5]8SV5M#&,RKVL8T!K6@6/#6L:WVM:U-E&F7#G&0D`$5W:A(
M')A+</$?>O3_`/%=T?I&?]7\B[.P<?*M;F6,;9=4RQP:*Z'!@?8USMON78?\
MV/JU_P"5.%_[#U?^DT1`D6MGS482,3$Z/@&YOB/O27OQ^K'U:C_DG"_]AZO_
M`$FO`&:M"$HTOPYQEN@17?Q7W#N4MP\1]Z]>_P`7_0NB9GU1P,C+Z?BY%[_6
MWVVTUO>8NN8W=8]CG.VM;M70_P#-CZM?^5.%_P"P]7_I-$0+'+FXQD8\)])(
M^Q\`W#Q'WI;F^(^]>_\`_-CZM?\`E3A?^P]7_I-+_FQ]6O\`RIPO_8>K_P!)
MH^V5OWV/[I?`-S?$?>EN;XC[U[__`,V/JU_Y4X7_`+#U?^DTO^;'U:_\J<+_
M`-AZO_2:7ME7WV/[I?G]SAM.HX/=?0/U;_\`$[TO_P`)X_\`YZ8F_P";'U:_
M\J<+_P!AJO\`TFM&JJNFME53&UUUM#6,:`&M:!M:QC6^UK6M1C&C;#GSC(``
M"*+_`/_3]522224I))))2DDDDE*7SUUK_EKJ/_AN_P#\^O7T*OGKK7_+74?_
M``W?_P"?7J/)T^K<Y+>?D'TW_%%_XF\G_P`/6?\`GO'7<+A_\47_`(F\G_P]
M9_Y[QUW"='8,',?SL_-8\%?-M?T!\%])'A?-M?T&_!-R=&QR7Z?^"^V_XMO_
M`!%=._Z__P"?[UTRYC_%M_XBNG?]?_\`/]ZZ=/&P\FKE_G)_WI?FI)))%8I)
M)))2DDDDE/\`_]3U5))))2DDDDE*22224I?/76O^6NH_^&[_`/SZ]?0J^>NM
M?\M=1_\`#=__`)]>H\G3ZMSDMY^0?3?\47_B;R?_``]9_P">\==PN'_Q1?\`
MB;R?_#UG_GO'7<)T?E#!S'\[/S6/"^;:_H-7TD>%\VU_0:FY.C8Y+]/_``?V
MOMO^+;_Q%=._Z_\`^?[UTRYG_%M_XBNG?]?_`//]ZZ9/&P\FKE_G)_WI?FI)
M))%8I))))2DDDDE/_]7U5))))2DDDDE*22224I?/76O^6NH_^&[_`/SZ]?0J
M^>NM?\M=1_\`#=__`)]>H\G3ZMSDMY^0?3?\47_B;R?_``]9_P">\==PN'_Q
M1?\`B;R?_#UG_GO'7<)T?E#!S'\[/S6/"^;:_H-^"^DCP5\VU_0:FY.C8Y']
M/_!_:^V_XMO_`!%=._Z__P"?[UTRYC_%M_XBNG?]?_\`/]ZZ=/&P\FKE_G)_
MWI?FI)))%8I))))2DDDDE/\`_];U5))))2DDDDE*22224I?/'6WL_;74?</Z
M7?W_`.%>OH=5G?LW<[=Z.Z3NG;,S[MR9/IJV>5E(&7#'BT'6GD/\4)!^K>21
MK^O6?^>\==PAT?9]A^S[-DZ^G$3_`&41.CL&+,2<DB11O98\%?-;'LVM]P^]
M?2JJ#]E]O0_Z";/IJS<K*8XN&/%MUIP_\6O_`(BNG?\`7_\`S_>NG4*O2],>
MCM]/\W9&WY;5-.&P:^2^.5BCQ'12222*U22222E))))*?__9_]L`0P`!`0$!
M`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!
M`0$!`0$!`0$!`0$!`0$!_]L`0P$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!
M`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!`0$!_\``$0@`
MY0$G`P$B``(1`0,1`?_$`!\```$%`0$!`0$!```````````!`@,$!08'"`D*
M"__$`+40``(!`P,"!`,%!00$```!?0$"`P`$$042(3%!!A-180<B<10R@9&A
M""-"L<$54M'P)#-B<H()"A87&!D:)28G*"DJ-#4V-S@Y.D-$149'2$E*4U15
M5E=865IC9&5F9VAI:G-T=79W>'EZ@X2%AH>(B8J2DY25EI>8F9JBHZ2EIJ>H
MJ:JRL[2UMK>XN;K"P\3%QL?(R<K2T]35UM?8V=KAXN/DY>;GZ.GJ\?+S]/7V
M]_CY^O_$`!\!``,!`0$!`0$!`0$````````!`@,$!08'"`D*"__$`+41``(!
M`@0$`P0'!00$``$"=P`!`@,1!`4A,08205$'87$3(C*!"!1"D:&QP0DC,U+P
M%6)RT0H6)#3A)?$7&!D:)B<H*2HU-C<X.3I#1$5&1TA)2E-455976%E:8V1E
M9F=H:6IS='5V=WAY>H*#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6V
MM[BYNL+#Q,7&Q\C)RM+3U-76U]C9VN+CY.7FY^CIZO+S]/7V]_CY^O_:``P#
M`0`"$0,1`#\`_OHHKQC]H+XG7'P4^`WQN^,UGI,'B&Z^$GPA^)/Q0MM`GNWT
MZ#7+GP'X,UKQ5#I$VH1P7<EC!J4NE+9R7B6EQ+;1W!F%O.8S&_\`%HO_``>&
M_%-E5O\`AACX?C*@@?\`"\O$7&0,@?\`%MN`>O4G@"OHLDX5SKB*G7JY3AJ>
M(AAIQIUG+$X>BXRG'GBDJU2#DG'6\;H\;-<_RG))48YGBGAGB%.5%>PQ%;G5
M-Q4_X%*KR\KG'XN6]]+V=O[LJ*_A0_XC#/BE_P!&,>`/_#X^(O\`YW%3V7_!
MX;\1DNHFU#]A/P5/9@_OH[+X\:Y;714#&(IY_A?=QH3ZO#)],<'VWX9\8K_F
M6TGY+'X'7[\0E][1Y/\`KYPJ_P#F9OYX+'KM_P!0O]6?E?\`NHHK^17X&?\`
M!W/^R]XP\3:9HGQZ_9G^*_P3T.^:*WN/&?A?Q7H?QATK2)I'57NM5TF'0_`O
MB(:5"&:2:?1=.UW5$CR(=)N7(%?U+?![XS_"O]H+X;^%OB_\%/'GASXE?#/Q
MKIZ:IX:\8>%=034=)U.V#O#-&6^2:PU#3[J.>PU;2-0@M-6TC4;:ZTO5K*TO
M[2XMH_G,WX=SO(O9O-<NKX2-5\M.HW3JT92LWR*O0J5://9.7LW/GY4VHV3/
M<R[.<KS93>78VABG32<X0;C4@G:TI4JBA5C%MV4G!1YKQO=-+U2BOB3_`(*%
M?M'_`!6_9$_9'^+?[2GPA^%&E?&W7_@_I-GXPU[X>ZEKVK^'I-2\!V>H6\7C
M76--U'2=$\03+=>%-$N+CQ7>17-BMJVB:-JSM<)+'`DG\E(_X/#/BF<D?L,^
M`,'G(^.7B'GL/^:;>W/X8SV[,EX1SWB##5,7E6&HXBC2K.A4;Q>%I3A44(5+
M2IUJL)I.%2,HRY>62O9MII<V:<1Y/DM:G0S+%2PU2K3]K37U7%U8SAS.+:G0
MH5(74DU*+DIQO%N*4HM_W8T5^3?_``2'_P""H7AG_@J7^SUXB^*4?A#3?AE\
M2_A[XXOO!7Q)^&=CXCF\3+H:74(U;P=XCL]2N-+T>YN=%\5:(\J6T\]A`4UO
M1?$>GH94TX32?K)7B8_`8K+,9B,!C:3H8K"U'3K4VXRY964DU*+<91E&490E
M%M2C)23::9ZF$Q6'QV&HXO"U%6P^(IQJT:B4DI0ELW&2C*,EJI0G&,X23C**
MDFD445_(C^WY_P`'0P_91_:V^,7[.?PA_9N\)_&OPQ\'M>A\%:I\1-2^*.J^
M%VU3QQI=E;KXYTJTTFR\%ZU$EIX7\2/?^%VNOM\OVV_T>\ND`MI(:[<ER'-.
M(,14PN58;ZQ5HTG7J*56E1A"GSQ@FZE:<(<TI27+#FYY)2<4U"37+F>;Y?DU
M"&)S+$+#T9U%2A+V=6K*51QE))4Z,*E1KEBVY<O+'2[5U?\`KNHK^03]A+_@
MY1_:"_;I_:P^#7[+W@O]B3P-I%Y\3/$WV?Q!XH7XP^)M6B\&^"-%M;C7?&GB
MZYLD^'EJEPNA>'=/OIK.WFN[&+4-4;3M-:ZB>\C8_P!?=/.L@S/A^O2PV:4J
M="O6I>VA3AB*%>7LN9P4Y>QJ3Y%*491CS6<G"5KV897F^`SFA/$Y=6E7H0J.
MC*HZ->BO:*,92C%5Z=-RY5.-W%-)NU[A17(>.O&?A_X;^"/&'Q#\77J:;X3\
M!>%?$/C'Q-J;IE-/\/>%M)N];UJ^9=P)6TTZPN;AEW#(C.#GI_$%<_\`!X5\
M2?M=T;#]AOP0]A]IG-B]U\<->2[DL_-?[*]S'%\.GBCN7@,?GK$S1I*SB)B@
M5EWR/A?.N(HXB64X15XX5TXUI5*]"A&,JJDX1BZU2'.[0DY*'-R^[S6YHWQS
M7/LJR3V']IXKZO\`6/:>Q2HUZSG[+DYW:A2JN*C[2.LDKW?+>SM_=917\X?_
M``1S_P""\US_`,%/_CK\2/@3XU^!OAKX(>(O"_PT_P"%D>$)=)^(M[XO;Q;;
M:9XBTS0O$VF?9=2\,>'C'<Z8FOZ-J<0MI[N26T&H220I%:M+'_1Y7%FV49AD
M>,E@,RH>PQ,84ZC@JE.K%PJJ\)1G2E.$D]4[2=I1:>QUY?F.#S7"PQN`K*OA
MZDIQC4Y*E-\U.3A).%6,*D6FGI*"NK25XR3"BBOQC_X++_\`!5'Q%_P2L^%/
MP:^(OAOX-Z+\9+GXI_$/6/!%QI6M^,K[P;#HL6E^&KCQ`NH07=EX?\0/>RS2
M1+;&V>&V2.,^9YK?*M99;EV+S;&X?+\#357%8F4H4:<IPIJ4HPE4DG.I*,(V
MA"3O*2O:RU:1IC,9A\OPM;&8NI[+#8>//5J<DY\L;J-^2G&<Y:M*T8MZ['[.
M45_"A_Q&&?%+_HQCP!_X?'Q%_P#.XH_XC#/BE_T8QX`_\/CXB_\`G<5]A_Q#
M+C'_`*%U'_POP/\`\O/F/]?.%?\`H9R_\(LP_P#F7^K/RO\`W7T5_#KX8_X/
M#]?2[`\:_L&Z5<V+9W-X6_:"O+.[CR&Y$>K_``GO8)0"1\@E@S@`R=Z_6G]A
M;_@Y,_83_;!\5:7\,_'\?B/]E/XH:[?1Z?X;TSXM7^D7WP\\37T\L$-AIFD?
M%'2C;Z78:Q>R2LD-EXPTCPG:W,T:6>FW^H7US;VC<&.X#XLR^C4Q&(RBK*C2
MCS3GAJV&Q;C'JW2PU:K6M%:RDJ?+%)MM)7.[!\6\.X^K"CALTHNK-\L(5H5L
M,Y2TM&/UBG23;;M%)WD](IO0_HAHHK`\2ZLV@>'O$&NQP"[;1=&U755MF?RE
MN&TZQN+WR&EV2-&)&A\OS`DFP.3L/%?(I.4HQ2NY-1735NR_X=_J?1&_17\)
MY_X/#/BF&(_X88\`X!*G_B^7B'/!(_Z)MR>.N,<]*_ID_P""1?\`P4-U[_@I
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M6)IX/`8:KB\35?N4:,>:32M>4GI&$(WO.<Y1A%:RDD>MBL5AL%0GB<77IX>A
M35YU:LE"$>RN]Y-Z1BKRD](IMV/U?HK_`#X_C=_P=N_MD^*=4U&#X"_`+X$?
M"/PP]P_]ER^-O^$M^*OC**U4L(C=ZE;:UX%\,F=U(>6./PM+%&Y*)+(HWMY1
MX!_X.N_^"D_AG5H[KQKX0_9J^)>CD@7&DZA\/_%'A:Y\LL"WV+5?#/CFV%M/
MMRB2W>GZE$H.Y[>0CG[NGX6<63H^UE2P-*?+?V$\9%UKVORWITYT;]/XMKK>
MUF_D9^(/#,:OLUB<1.-TO;0PE;V6N[]Y1J-+JU3=_LIG^CG17\X?_!.+_@Y&
M_9/_`&VO%VC_``=^,'AVX_93^-GB":RT[PI8^+?$UIXB^%WC[6YX[>!-%\._
M$(:9H/\`8WB'4+Y[A-)\/>+=&TN/4%%IINEZ_K.M74.G2_T<R.D2/*Y`6-&=
MV]%4$D_D#^5?&9ID^9Y+B?JF9X.KA*]N:*GRRA4C>W/2JTW.E5C?1RISDD_=
M=I)H^IP&8X'-*"Q.`Q-+$T6[<]-N\9+>%2$DITYI:\E2,96:=K-,X+X@?$_X
M:_"30&\5?%3XA^"/AGX62ZBLF\3?$'Q;H7@OP^EW,DLD%H^L^)+_`$S3ENIX
MX9Y(H?M(D=(I2BD(QIGP\^*?PQ^+N@GQ3\)_B-X%^)WA@74EDWB/X=^+]`\:
MZ"+V!$>6S.L>&=1U/3OM2++&\L'VD3(LD9=,2!F_BD^,GQ;B^,=M^SA_P4O_
M`&IQ^S)XWTG]M']HWX\?##]GSPO^W%HWC_XC?LH?L:_LT?"&W\:6'A.[_P"%
M5^!_$'AJRU[XK?$CQ+X&F;Q5XTUNTUJ&636](6#3-*9[ZXA[;X6>*;CX6?L\
M?%'_`(+`_LP_#7X1_L^:W^RA^TW;?"_XNZ+^RAI/CWX<_L;_`/!1#]DT^(?`
MGAKQ-XC\)_"3QV&_L#Q%H]]XWN;KPGXUM[3R+36/#6I,D^K:E%:II7ULN!N7
M"4W+&55C*E=8*,O94_J']IO$U,'_`&=[5U55E)8RE+"O$QA)QJ+VKPZPM\2>
M0N(+U9-4*;P\*3Q#_?MXKZI&C'$?6?8QI2@HO#SC65.52*<'[-5'B4\,O[:*
M*JVUQ#>6MO>0DM;W4$5Q$Q1E=DG19$8CJI*L,KCCUQ17Y_MH]'V>_:WWZ>I]
M)OMK_7_!7WGRS^WI_P`F,_MG_P#9I_[17_JH/&-?XYD?^KC_`-Q?_017^QG^
MWI_R8S^V?_V:?^T5_P"J@\8U_CF1_P"KC_W%_P#017[YX._\B_.?^PRA_P"F
M&?CWBE_'R;_KUCO_`$O"GU'\-/V(_P!LGXT>#]/^(7P@_92_:)^*7@/5YKZW
MTKQG\/O@YX_\7^%M1GTN]GT[4X;'7=!T&^TRZET_4+>XL;U(;EVMKNWEMY0D
ML;+6CXH_8+_;D\$6<^H^,?V-OVIO#&G6J-)<W^M_`+XI:?96\:KN:2>[N/"R
M6\4:CEG>154<DBO]$;_@VE_Y1!_L^?\`8W_'/_U<GC2OWIK'-_%3&Y7G&8Y<
MLIPU>E@<;B,*IO$U:<ZD:%65-2?[N<8RDHW:2:3;T9IEOAU@<?EN7XV68XNE
M4Q>"PV*G%4Z,H1E7HPJN,;V;C%R:5W=I:ZG^))/!/:SSVEU!-;75K,]O<VUQ
M$\%Q;3Q,4E@N()526&:-P4DBD19$8%64$''[6?\`!%G_`(*W?$/_`()M_'G1
M?#?BC7=1UK]D;XI>*--LOC1X$G:6\@\*2:@8]+7XN>"K=F<Z9XD\-1O:W7B*
MSLE6'QKX;TZ31[^)M3M/#NIZ-_8'_P`%[_\`@D?\,/VQOV:OB)^T#\*O`6B>
M'?VM/@OX?UOXBZ9XB\,:%I^FZQ\9?#>@V":AXK\`>-I-/MH;KQ/JLV@Z;<W?
M@34M0-YJNG^(K*UT6TN(=*UW44;_`#2N&7U5AW&,@CN/IU%?;9/FV4<?Y%B:
M=;"VC*^&QV"JN,YX>JXJ=.I2J\J;7PU*&(C"$HU(.RC.FTOE,TRW,N",XPU:
MAB'-->VPN)C%PC7IQE%5J%:GS26EU&K3YI)PG"2:YER_[85S;:#XNT"YLKZ#
M2_$7AGQ-H\UK=VUQ':ZIH^N:#K-DT5Q;SQ2":TU'3-4T^Y:.>-TFMKVTG\M_
M-BE(/^4#_P`%@?V!+[_@G7^V]\1_@OIMI?CX2>)MGQ-^`VK7K23M??"_Q3=W
MALM%EO65/M>I>!M9M=6\$ZG,X2>[?0[?5WACAU6V+_WK?\&\W[56I?M2?\$Q
M/@Y+XFU:?6/'7P)U#6_V>O%M]>7?VF^ND^'ZV%SX'N;EB?M!9OAKKO@RSEN+
MG?)=WEE>3M+)(TF/(?\`@Y#_`."?EU^V-^Q+/\7?A]HLVJ_&W]DI];^)/ARR
MT^W-QJ?BCX97UI:#XL^$[>*)#-<W4&DZ5IWC;28%,T\EYX0FTFQ@:XUYS7Y%
MP;F57A#B_%9+C:EL)B<5++,1)MQA[:G4:P.,2>BC-R4&Y-1C2Q+G-W@DOT[B
MG+Z?$W#5+,,)#FQ%+#PS'!V2<W3J4X3Q&'TU;E3^S%7=:C3C;<_CO_X(,?M_
M3?L'?MY>")_%6LC3O@7^T!-I?P:^,Z74YATS2;?6M25/`OQ`N2P:*W;P)XMN
MK:XU&_:-Y+?P?JWBZWAVO>!U_P!36O\`$>X(R"<$9RI(.#T((YSW!&>W7I7^
MIM_P0>_;YB_;P_8+\!:CXHUN+5?CC\"H;'X-?&F&:X5]5OM1\/V,:>#/'=Y&
M\TES*GC[PA#8ZE=:I,L<5YXML?&%M:KY>FR[/H?%K(-,+Q%AJ?\`+@LQ<5T?
M^YUY65MW.A.;;;OAX+9'@^&N=<U/$9'7G[U+FQ6"4F[N$I)8FC&^GN3<:T8K
M5\]:6T=/<O\`@KE^W/:?\$]_V&/BW\=;"ZLX_B9J-K'\-_@AIUVJ3+?_`!9\
M:P7=KX>NOLLT<D-Y;>$K"WU?QUJ5K<*(+S3/"UY8,\<EW$#_`),FHZCJ&KZA
MJ&KZM>W.I:KJM]=ZGJ>I7LSW%[J&HW]Q)=WU]>7$K-)/=7=U-+<7$TC,\LTC
MR.2S&OZ;_P#@Z)_;NMOVB?VPM"_97\"ZO%?_``U_9%MM3TOQ)-93)+::O\=?
M%<=E)XW1I(P/-'@31[/1O!H@E9I--\1IXUMP%$S9_&K_`()O_L4^+?\`@H%^
MV%\(OV:_#<6H6^A^)-:CUSXI>);&'S!X)^$GAR:WO?'?B:65]MO!<C32NB>'
MQ<R117WBO6=!TL/YM]$K?3>'^54.&^%YYICE'#U<;2EF6,J5+)T<'3A*6&IR
M>ZC&A>NX-<T*E><.B1X7&N/K9]Q%1RC!-U882I'!481^&>,JRBL1-]/<DE2E
M+:*HRELVW_9?_P`&M/\`P3PA^#'[/VN_MV?$71)(?B;^T?9W'AWX4Q7T*I<>
M'/@-I6IQ.VKP*S"6WNOB;XITHZJQE@#2>%?#OA.^LIWM=;NQ)_677+^$?"GA
MWP%X4\+>!_"&E6F@>$_!?A_1/"?A?0K%"EEH_AWP[IMMH^BZ39QDL4MM/TVS
MM;2V0EF$4,:!B00>HK\!S[.*^?9MC,TKN2>(JMT:<G_`PT/=H44MER4U'G:L
MI5'.=KR9^R93EE'*,NPN7T$N3#THQE.UI5:K7-5K2Z\U6;E+79-16D4E_/Y_
MP<G_`+4TG[.?_!,OX@>#]%U%++QI^TWXDT?X"Z*([AHKY?"^LI=^(?B3>P1*
M0\UG+X*T#4?"]](Q,<3^*[,-EI8P?\R*OZH?^#L+]IB[^)'[;GPT_9KTZ]N3
MX9_9L^%=GJNK6#2C[.WQ'^,9M?$VIW7E(Q#-#X#TWX?PP23@S1O<WXC"1SL9
M?Y_OV7?V4OB1^U=J/QKT[X<6%Q>R?`[]G7XL?M&>*3!;M/\`\4S\+=+MKVXL
M5QA5O-7O;ZSTW3XLF:YN)ECMXY9"!7]#^'N`HY)PEAL5B90HO'MYEB*DW:*A
MB.2&%O+>SP\:#2V4IRLM6W^*<;XFMG'$T\#AHNK]3A'!4:<=.:I&,JV)=FTK
MJ<IP;ZQI1WLD>Q_\$K_VJ)OV,OV_OV9?CW-?&P\,:'\1=-\+?$60JLD3?#+X
MA+)X(\=R20N565M-T#7;K7+,,RB+4=*LK@$-"I'^NVCJZJRL&5@&5E.593T(
M/0Y'/!.,_0G_`!'\!UQGAAU!QP1USVK_`%CO^"+/[4,W[7'_``35_9A^)VKW
M[:EXST#P6GPD^(4\LDLEW)XQ^$MS)X(N]1OYI6+S7_B/3-)T?Q7<2"1PS:Z#
M@'<!\GXP95>GE>=TX)N$I9=B9)7;A/FKX5MI:1A)8F+;TO5BKI_%]%X8YBVL
MPRF;;Y>7'4(OHFXT,0EU7O.@TEI=R>CO?]5*_D&_X._O^38?V0_^R^^+?_5<
MWU?U\U_(-_P=_?\`)L/[(?\`V7WQ;_ZKF^K\]\/_`/DL,D_Z_P!?_P!0\2?:
M\8?\DSF__8,O_3U(_@@L[2ZU"ZM;"QMI[R^OKF"SL[2VC>>YN[NZE2"VMK:&
M)7DFGN)I(XH88U9Y)65$!9\5]J-_P30_X*+(K,W[!_[7X"`EB?V=OBMP%&6.
M/^$6R0!W'';K7S!\*O\`DJ7PS_[*'X(_]2?2Z_VHZ_;N.>,L3PG++(X?!4,7
M]>CBW/VU2=/V?U9X7EY>1._,J\KWVLK'Y-PAPIA>(Z.-JXC%5\.\+5HTX*C&
MG)252,Y-RYTW=<B2LUHWULS_`!C?B5^S-^TA\&;0ZA\7_P!GWXW?"O3PXB.H
M?$7X5>.O!FGB0\",WWB+0M/M`^>-OG;O;I7B!`88.""/J"*_VQM9T72/$6E:
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M=VE)+]5O^#:3_@KOXM^/=C)^P#^TCXHDU_XC?#_PB=7_`&>/'6KS%]<\:?#[
MPO;1PZW\./$%]-(9-8\1^`]+6WU?PYJ$@>^U/P9:ZO#J,IE\*QW.H_UG?$7_
M`))]X[_[$WQ/_P"F2^K_`!X/V/\`]H+6?V4OVIO@!^T;H33&[^#OQ5\'^-;R
MUBFG@_M7P]I^K0)XKT&:2VDBF-IX@\+SZQHM[$K@36E]+"ZNC%3_`+`OBC6M
M*\2?"7Q%XCT&^M]5T/7OASJ^M:-JEJ^^TU#2]4\,W%_IU[;.?OV]W:7$,\3<
MEHW#=<BO@?$G(*&49]@\?@Z2I8;-I>TG3A'EIT\91J4UB'%15H1K1JTZO+9?
MO'6DO=TC]OP%G5;-<HJX?%5'5Q673C1=23YJE3#U(.6'E-MWE*+A4I.3U<:<
M6VY-M_XMC?>?_??_`-#-?Z/W_!J+_P`HP?$/_9U/Q;_]1+X75_G`M]Y_]]__
M`$,U_H_?\&HO_*,'Q#_V=3\6_P#U$OA=7Z-XJ?\`)*U/^P[!_P#I<CX3PV_Y
M*"K_`-B[$?\`IW#GZ*_\%=_^"BNC?\$T_P!C_P`3?&FWLK'7?BOXKU&'X<_`
MKPGJ&Y]/U7XD:UI]_>0:OKD$4L5S+X6\':1IVH^)==6!XVU`V-EX<2[L;G7K
M2\A_RL_B_P#%_P")?Q]^)OC3XQ_&+QCK/C[XE_$'6[KQ#XM\5Z]<&XO]3U&Z
M("HB*%M['3K&W6'3](TBPBMM+T;2K:TTS3+6UL;2WMT_H'_X.AOVN-0^.O\`
MP4$/P#T?6WN_AU^R?X0TOP?#IUK>2S:7-\4O&MC8>+_B'K+0[O)&JV=E=>%?
M!=X=K/;S^%+F%74RS*?S@_X)(_L"WO\`P4;_`&U_AU\!+Y]4T_X8:9!>_$;X
MX>(-(WQ7ND?"SPK/9#5;.RO1#.FGZOXOU>_T7P3HNH213#3M0\0Q:H;>XCT^
M2%L^!<IP7"_"SSO'1C3Q.+PCS+&8B4;U*>#<%5P^'C=*:7LN6;I)*4J]1PM)
MQII7QAF&,XAXBADF"DYT</B(X.A24K4YXN_)7KU+-JU*7-#FE_#ITYRLG*=_
M"OV9/V"/VR?VRI+P_LR?LZ?$KXM:9IMXFGZIXHT/1TT_P1I6H2(9$L-4\=^(
M;C1_!]A?^6K2&QN-;CO/+#2>04&:[K]I[_@E]^WY^QOX>/C']HS]E_XB>`/!
M*7-O9W'CJW71/&?@BPNKO>+6WU;Q9X$UCQ-H.BS731NEM'J]]8M<2(T<(D=E
M6O\`6G^%WPM^'GP3^'WA+X4_";P;H'P_^'7@;1K30/"?A#PQ81:;HVC:7:!C
M'#;V\0S)+*[2W5]>W+SW^I7TUSJ-_<W5[<W%Q+TVMZ#HGBC1M6\.>)M%TKQ%
MX;U_3KS1]=T'7M.M-7T;6M)U*"2UU'2M6TK4(KBQU+3;^TEEM[ZQO()K>[@E
MD@N(I(I&2OD*GC#COKS=/*<+_9RG94JE6JL9*FI)*7MXMT83E'5P5"I&,GR>
MTE;G?TL/##+_`*JHU,QQGUUPUK0C16&51K=4'3=64$]+?6(RDM?=>A_B>^A!
M(((964X96&"K*PP5*D;E8'(;D'T_T<?^#;3_`(*B^)?VSO@1XB_9E^..O#6O
MCS^S)H>@)HOB2\=WUKXD_!"58=!T'6]9E8NVH>)_`^IPV_A?Q3K,K)/J]KJW
MA'5+XW>MZAK-_/\`R=?\%ZOV`_"7[`?[>>M>$/A/H\NB_!7XU^%M/^,?PJ\/
MQB26S\*IK>K:KHOBSP#I,S`O-I_AOQ3I%Y/H5D?,N=,\,ZUX>TZ>:ZD@%W<?
M07_!`K]G+_@H#\+O^"@?[-W[0'@S]ESX[Q?!+5]4U/P7\3_'FL^!_$'@_P"'
M]S\*O'.E7&BZ[JTWB+Q+#HFE:W9^'+Z32?&%I9:;<:C<W>H>';$V5I<W"Q1G
M[CBRGE'%'!SQ_M:%)RPBS'*ZV)G2I5*=>-/VKP[E*5E*JHRPU:"<HJ3YU=PA
M)?*\,?VKP]Q3++_8UJU-XB.!S"&'IU*E)TIRM1Q6D?=A3YHXB,Y*+]ESQ=N:
M2/WN\;?LU>/O^">WQD^#?ACXK?`O]H+]H[_@GU^SK^T%\8?VB_V4O%W[,OPZ
MTSXV>+/AK%\=/#WBW1O'?[./[1GPGNYT\0O\.O#^L>.==\0^"/B3X7AO1<"X
M32]9M[NXU.2S\(\U\"OV7?B?^UQX8\1_L3?L[_"C]J#X"?\`!*'QS^T;'^T+
M\8==_:X\#6?PF\86?A%?%6G>/)?V2?V2O`EW=7OC&;X4>(O&_AZPUC4/&WB:
MWM;/PO#+J^G6T5U=RW,7C'^NFBOQ/_7'%N@KX6E+'Q4''%RJ2E16(IUJN(AF
M"P3BZ:S*->O6KK$QJ*'MZLZGL+2E%_K_`/8M+GY55<<*^9.@J<54=*5.E1GA
M?K%^;ZG.E1I4Y47!S<*<8^V48Q2BCBCBC2*-%2*-5C2-`%1$10JA$51M"@!5
M1<*%`QTQ14M%?''M'R?^WI_R8S^V?_V:?^T5_P"J@\8U_CF1_P"KC_W%_P#0
M17^QG^WI_P`F,_MG_P#9I_[17_JH/&-?XYD?^KC_`-Q?_017[YX._P#(OSG_
M`+#*'_IAGX]XI?Q\F_Z]8[_TO"G^GS_P;2_\HA/V>_\`L</CG_ZN/QK7[U5^
M"O\`P;2_\HA/V>_^QP^.?_JX_&M?O57Y)Q;_`,E/Q!_V-\?_`.I-0_2>'O\`
MD09)_P!BG+O_`%$HD4D<<T;Q2HKQNC))&ZAXV1@04<$8(*GYESC!P2003_C2
M_M9?#6+X,?M3?M*?"*WB$%K\,?CU\7O`5G$!@1V/A7Q_K^BV2*,#"BSLX`O`
M^7C%?[+]?Y#_`/P5=1(_^"FO[?:Q@!?^&MOCJQ`Z;W^(&M/+^/G-)GWR*_0_
M!VK*./SJBOAJ83"U9?XJ-:K&/X5I[=_4^)\3Z499;EM9VYJ>-J4X]^6K1<I?
M*]&-_.Q_4/\`\&>GQ`>;PY^W-\*9[B5H]/U[X(?$/2[1FS"CZUIOQ"\-:].B
MY^661?#_`(=C<XRZQIDC8I']JTD:2HT<BJ\;JR.CJ&5U8$%6!!R#GFOX+/\`
M@S]GE7]H7]LRT#'[//\`!KX:W$B\X,]MXWUJ.!B>@*QW5R/HV,]17]ZU?+>)
M5*-/C#,Y1_Y>PP-5KM+ZEAX/:V[I\S[N3;O<^BX&J2J<+Y6Y.[C'%4U_AAC,
M1&._:"C&Z['^4[_P7!_8+/[`G[>WQ(\%>&-$DTKX)?%AI/C'\#'C3&G6GA+Q
M3>3MKO@VS82SF(?#[Q>FL^&+6TN9C?\`_".6_AO5+I%75H&DX+_@EA_P4V^(
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M'6M1F:XO]7US6KV?4M6U2^N')>>\U"_N;B[N9G):2:5W8Y-?Z(?_``:]_L#I
M^SQ^R)JO[6GCO0'LOBS^UBUK?>&GU"!([_0?@)H5Q)_PAD%LLL8N+1/'^K_V
MAXWO&63R=5T+_A!;GRPUBC-_&;_P2<_8+UC_`(**_MJ?#3X#-%J%O\-=/DD^
M(/QQ\06"2*^@_"?PK<VDFN01WB12I9:IXNO[K2_`^@W$B2+;ZOXCM;UXI+>R
MN-O^LWH&AZ-X4T+1/#'AO3+'0_#OAS2=-T'0=%TRVBL]-T?1=)LX=/TK2].M
M(`(;:QL+&WAM+.")8TM[>%(D78H`^9\5^((X;!X?AS"U%&KBE"OCE!V]GA*<
MOW%!I;>WK0YFD[JG1Y6N6JCWO#C)95J]?/\`%1<E3=3#X.4[MSK37^TXA-ZM
MQA+V*EJI2JU4_>@;U86O:YH_AC1-:\2^(+^#2-!\/:5J6MZWJM[)Y=IIFCZ1
M9S7^HZC=R8;R[>TLX)[B9S@K$CMD\&MVOP^_X.%/VJ)?V7/^"87QM.C7S6'C
M3X]OI_[.?@]XIQ!<(OQ*M]0'CBYC0-YS+!\,M(\:(D\`)@OKBQW21AQC\3RK
M`5,TS+`9=2NIXS%4,/S*WN1J5%&I4=]+4Z;E4E?I%GZMCL73P&#Q6-J_P\+A
MZM>7FJ4'/E6CUE;E5M;M'^;_`/MJ?M%:G^UM^UI^T-^TCJ9N5_X6_P#%7Q9X
MLT:TNI'DFTKPE+J$ECX*T,M(SOLT+P?9:'H\8+';'8JH```']C__``:7_LG:
M?;?L^?M1_M/>,M#LM0@^-GB>T^!/AJ'4+=IC=>`_`FF3:EXZC,3KY,^C^*/$
M7BZRTJ\0EUEG\&RQ2!`GS?P?G*J=JYPIVJ.^!P!]<8%?Z\O_``2]_9SL/V4/
M^"?_`.RG\#[:`Q:EX:^$/AS6_%K26R6\\WCOQ["_C_QT\RJJ.?*\6>)M8M8#
M.?/6S@M4DYC(K]^\3L=#*>%\+E6%?LGC*V&PM.,&TX83!*-:7+):I*5/#TFM
M+QJ2N[73_&_#["SS+B#&YMB/?EAZ=6M*3:UQ>/G.-VG?1TWB7Y.SN?Y8'[;?
M[.FI_LD_M<_M$?LWZFDH_P"%2?%7Q7X9T:XF1XWU+P@;Y]3\$:RJRA7\O6_!
MNH:%JL>1REX`"<9/]8W_``:*?M5*K?M-_L6:]J4FYAIG[1?PULIIT$(`&E>`
M?BE:VR2OO:9G;X<:C#;VR/\`(NKWDB*%DDKY2_X.S/V8D^'?[7WP;_:@T>T,
M>C_M&_#.;PMXGG!#>9\0_@P^FZ4]W,`JM&;_`,!>(?!EC;ABPE_X1ZZ=3E6K
M\6?^"3'[5+_L:?\`!0O]F3XX7=ZMCX2M/']GX%^)$DN6MA\-OB9')X'\87EQ
M&&42C0=/UH>)[5&8*NHZ'92\^7BO4Q<%QGP!SQ2J8G%9;3Q$$MUF6":E.$6D
MK<V*H5*+:7P3::LVCAPS_P!5N.73?[O"K&RHO3W5@<>DZ3=KZ4H5:<W;7FI-
M6WB?ZY-?R#?\'?W_`";#^R'_`-E]\6_^JYOJ_KYK^0;_`(._O^38?V0_^R^^
M+?\`U7-]7X?X?_\`)89)_P!?Z_\`ZAXD_5^,/^29S?\`[!E_Z>I'\*OPJ_Y*
ME\,_^RA^"/\`U)]+K_:CK_%<^%7_`"5+X9_]E#\$?^I/I=?[4=?>>,O\3A[_
M``9I_P"E9>?(>%W^Z9O_`-A&%_\`3=8*_##_`(.-_AEIGQ'_`."1_P"TE>W<
M(EU#X87_`,+OBAX?D90[6^I:+\2O#.B:C.A.2A?POXC\1VI=",+<.N-KL:_<
M^ORF_P""X$<,O_!)W]N=;C`0?!>Z=?DW9EB\1:!+!\O'6Y6++\A/]9R4P/RS
MANI*EQ%D52#M*.;Y=\XRQ=&,XORG%N,ELT]C]$S>G&KE69TIJ\*F7XR$O26'
MJ)V?1K=-;'^3NPW*0>C`C\Q@_P`Z_P!9O_@FU\2)_BQ_P2/_`&6O&U[)Y]]<
M?L?^&_#]],2"TU]X'\$3>![Z=QN),DEUX=EFE<_,TDA)!(X_R9:_U)/^")4L
ML_\`P1!_9B:=?G'P5^,,2Y/)BM_B1\5((#]/L\<9`Y^7'T'[AXLTXO*<GJM+
MGAG=&G&7:-7#8F4E??5TH.W='Y+X83DLPS2G=\LL#";C=V<H5XI-K:Z522ON
MKOS/\MQOO/\`[[_^AFO]'[_@U%_Y1@^(?^SJ?BW_`.HE\+J_S@6^\_\`OO\`
M^AFO]&__`(-6I98/^"5_C&>`9FA_:;^,LL0`R?-C\&?#)X\#UW#^5=WBI_R2
MTEWQ^#7_`)-,XO#57S^MY9;B'_Y6PR_4_@=_;#^*%Y\;/VL_VF_B[?RF:Y^)
M/Q\^+?C,.<82VUWQUKM]86Z8.%BM;"6VMH5'RK%#&B<"OZ\?^#/CX5Z<-&_;
M:^-US9K)J\NK_"+X5:)J#`;K;3;6R\6>+_$UG&2I(2^NKWPG-,,\G3H.A"U_
M$AJ\LL^KZM/-GSIM4U&6;)R?-DO)GDR1C/SLW.!FO[^?^#0Y;<?L:?M/.N/M
M)_:<5;CY4/[E/A5X$-KAE_>$[WN#ACMSS'R7K?Q$_P!EX)QE&C[D/^$[#+EN
MK4HXK#^[IT<8<C76+:>C,N")+$\7QKU%S2:S#$1<G=J<X5$Y/75VJ26M]7?=
M)G]:]%%%?S`?OAYUK_PK^&'BSQ9X;\>^*OAMX"\2^./!T-U9^$/&>O\`A#P]
MK/BSPM;7\\-S?0>'/$.I:=<ZMH<%[<VUM/>0Z9=VR74UM;S3K++##L]%HHJI
M3G)0C.<I*"Y8*4I.,(MN3C!-M0BY-RM&RNV]VV)))MI)-N[:23;LE=]W9)7?
M1)!1114C"BBB@#Y/_;T_Y,9_;/\`^S3_`-HK_P!5!XQK_',C_P!7'_N+_P"@
MBO\`8S_;T_Y,9_;/_P"S3_VBO_50>,:_QS(_]7'_`+B_^@BOWSP=_P"1?G/_
M`&&4/_3#/Q[Q2_CY-_UZQW_I>%/]/G_@VE_Y1"?L]_\`8X?'/_U<?C6OWJK\
M%?\`@VE_Y1"?L]_]CA\<_P#U<?C6OWJK\DXM_P"2GX@_[&^/_P#4FH?I/#W_
M`"(,D_[%.7?^HE$*_P`<7]N;X@6WQ7_;5_:Y^)EC,MS8>._VE_CAXITZ=&WI
M-IFL?$KQ)=Z;(C#AD>QDMV5@!E2*_P!/G_@KA^WQX"_X)]?L9?%/XD:SXGLM
M-^*_C+PMXF\!_L^>%H[M$\0>*?BEK.C36.DZCI=@BRSOHW@:2^@\5^*=4=(M
M/T_3[*&PDO(=6UG1+.]_R869W+/*[22NS/+*[%GDD<EGD=CRS.Q+,Q.2Q)/O
M^J>#^6UJ=+-LUJ4Y1I8AX?!X:<DTJBHNI4Q$H-VYH*<J4.:-X\\)QOS0DE^=
M^)^.IM99ET)J56$JV+K04M81E&-.AS);.?[UJ[325[6DF?VN_P#!GIX%D?4_
MVZ_B9-&RP06GP'\"6,K(2LDUQ+\3?$6J1H^-I-NEMHS2H?F4741&#M-?W!5_
M/5_P;._LQZE^S[_P3,\(^,?$NF?V;XI_:9\<^(_CG*D\,D-_'X.U"UTKPE\/
M(KC?C=;ZCX9\+P>+=-*J5-IXL212QD(']"M?G''>.AF'%F<UJ<E*G3Q$,+!J
MUO\`8Z%+#5+-:23K4JDDU>]]&S[KA/"2P7#N54)IQG]6]O.+NFI8JI/$M--)
MIKVJ3B]8M<NMKA7^-1^U]HND>&_VM/VH_#N@:;9Z-H6@_M&?&[1M%TC3XEM[
M#2])TSXF>*+/3].LH%8K!9V5I!#:VT()\J**.,$A<U_LKU_C>?MM?\GF_M<_
M]G._'O\`]6KXKK[KP<;^M9\KNWU?`-K6S:J8FSMM=7=M+J[M:[O\?XH_[EE/
M_85B/_34/\D?UL_\&>'A_0Y+']O;Q5)IEF_B.TOOV>/#]KK30HVHV^AW]M\7
MM2OM*AG;YDLKN_TVPO+F%/EFGLK5Y@_V>'9_;57\6'_!G5_R*7[?_P#V,O[-
MG_II^-E?VGU\?XCMOC/.4VVD\`DFV[)Y9@G97V5VW965VWNV?4\%)+A?*;)*
M]*LW9)7;Q5=MZ=6]6^H5_!)_P=S?M+VOBGXZ?LU?LH:+>6\\/PE\$Z_\7_&Z
M6\SN\/BCXGW=OH7A?2=0B#>7%>:5X7\(W>LQ+M\TV7C."1SLF3/]YEY=VNGV
MMQ>WMQ!:6=G;3W=W=7,J16UM;01M+/<SSRL(X8(8D:665Y%1(T+OC`%?Y`/_
M``47_:;F_;&_;@_:9_:.%W<WFB_$7XIZ])X)-VY::V^&_AMH_"7PWLR"%"&W
M\#Z%H2R(BJ@G,K#)8D^UX494\9G];,9Q;I95AI2C+HL3BU.A23Z?P/K3[IJ+
MMU7D^(N8K"9&L'&257,J\:5KM2]A0<:U:2MTYU1IRZ.-1I]CY5\"^([7P?XV
M\'>+K_PYI/C"R\*>*O#_`(DN_"6O27L>A>*+;0M7L]4F\/:T^F7-GJ2Z3K4=
MJVG:D;"[M+T65S.;6Y@F$<J_U.C_`(.[_P!MQ0`O[,W[*H4<`"+XM\#_`,.)
M^M?SZ?L[_L#?MF_M:>&=<\9_LV?LX_$SXR>%/#>O'PQKOB#P9H\-YI>F^(18
M6FJOH\]S<W5HIOX].U"QO)8(O,,,%Y:M(5$\6[Z#_P"'+/\`P58_Z,4^/7_A
M/Z=_\MJ_:,YPO"N9UJ<,[GEE>M@^>-.GBL73A.A[7DE->S=:#BYJ%-RO&[48
MWT2/R[)ZW%>7T)3R?#YC##XIQJ2J4,OE6IUN12C&4:DL/44DKR2Y9<M[];GM
M'_!2S_@MM\:O^"H7PI\#_"_XT?`CX%^"G^'?CI?'7A7QI\/%\?1>)]/EGT34
MM"UG0?\`BHO%NM:9)HFO6]Y97.HQ-8_:C>Z'I,L%S$L,L<OXL$$@@$@D$`C@
MCCJ.G(ZCWK]/_P#ARS_P58_Z,4^/7_A/Z=_\MJ_//XB?#SQO\)?'7BWX9?$K
MPQJW@KQ_X$UW4/#'C#PGKUO]DUCP_K^E3-;ZAI>H6^YUCN;:52K;'DC88>-W
M1E8]N3PR3#8?ZADM7!^PI.=3ZOA,1"LJ?M97G+EC4FX*<VV]DY-M:MG#G#SW
M$5ECLZH8R-6:A1C7Q.#EAE/V:;A!/V-*$I1C>VCERJWPQ27^LO\`\$H/VG+;
M]KO_`()Y_LL_&LWD5WXBU#X8:1X.\>#[2EQ/%\0OAN)/`7C-[T*WFV\VJ:WX
M>N=>@MYQYO\`9NL6,QW1313/^#O_``=_?\FP_LA_]E]\6_\`JN;ZO%O^#1+]
MJ=)]*_:<_8NUW4F\_3[S2OVBOAO82LN&L;]-,\!?%.&!G.X+;7UO\-KV&UCR
M"^I:G=@)B=F]I_X._O\`DV']D/\`[+[XM_\`5<WU?AV794\F\4Z&"4>6C_:&
M)Q&&_E^KXK!8BO2C%[M4E-T6WO*G+T7Z_C\Q6:^']?&N2E4J9=3A7?7ZQ1K4
MZ-:ZNVN:I!RBOY91>J=W_"K\*O\`DJ7PS_[*'X(_]2?2Z_VHZ_Q7/A5_R5+X
M9_\`90_!'_J3Z77^U'7K^,O\3A[_``9I_P"E9>>5X7?[IF__`&$87_TW6"OQ
M7_X.%/'%AX(_X)$?M<R7=VEO=>+-%^'G@72(68*][J/BCXK^!K.>SBR07<:.
M-4NW507\BTE8D!>?VHK^'[_@[#_;T\%^(K+X4?L`_#KQ':ZWK_AGQ=!\9OCY
M'IKQ7$'AJ_LM$O\`2?AGX)OKV&1U_MFX@\1>(?%6N:,Z1S:9;Q>$+JX+2Z@D
M<'YYP3EM;,^)\HI4H2E##8RCCZ\DGRTZ."J1Q#E-V:C&<H0I)O>=2$5K)'VW
M$^/I9=D695ZDU&4\+6P]%-J\Z^(A*C2C%/XFI3YVE]B$I.R3:_B?)P">P!)^
M@YK_`%=/^"4W@2]^''_!&_\`94\,ZA`]I>2_LJ#Q=)!(K)(B_$+2];^(4#%3
MC:SV_BB*4\<[\YZX_P`NCX`_!GQ1^T5\<?A#\!?!<2S>*OC%\1_!_P`.-#$C
MQQ10WOBW7++1_MMQ+*5CBM-/ANI;^\FD(2*UMII&("U_L17/@O0_AS\!KCX>
M^&;?[)X;\!?".7P9X=MF(=K;0_#'@MM#TBW)"J,PV%E;1X55!,;-T-?JGBWC
M8*CD67*2=2KCIXR4;ZQC0@J$')7NE.6)FHZ:\D[6MK^>^&&%GSYMCFFJ:IT<
M)%VTE.3E6J)/>\%&FY+_`*>1?0_Q@F^\_P#OO_Z&:_T?/^#4A0__``2_\1JP
M!5OVJ/BXK*>C!O"/PO!4\$X(/..?Y5_G!M]Y_P#??_T,U_H_?\&HO_*,'Q#_
M`-G4_%O_`-1+X75[7BHO^,5GY8_"/_R::_4\CPU=L_K>>6XA?^5L,_T/\]?X
M\^"+_P"&?QR^-'PXU2W>TU+P#\6?B-X,O[6161X+OPQXQUG19HG1@&5D>R88
M(X[\U_:3_P`&?'Q"L[CX=_MN?"J6]B34-'\<?!_XA66G-)B>:Q\3:!XN\-:G
M>PQ]6BM[CPEI4%TX.(GN[7/W\5^'7_!QG^RWJ?[-_P#P4]^+_B:'3I;;P-^T
MO;Z;\?O!M^=CP7>H>)8ETSXCVAD3Y8[VT^(ND^(+^6T<+<1:=K6DW$BF.\AD
MD\]_X(2_M]^&?^"?G[>7A?QO\3=6;1?@=\7/#6H_!OXOZRT$UU#X8T?7;_3M
M6\,^-[BWMTEN#:>%O&&CZ/-K4]K%/=6OA6]\0RVEM=W`2VF[<_I2XJX$JSP4
M?;5L9EV$QU&G!<\Y5L/*CBIT(I)MU92I3H<GQ<[<=T89/4CP]QM*GBVJ5&&-
MQ>$G4FN2*I8GVD:%9ZVA3EST:CDVU&FVW;=?ZH]%96EZIINMZ;IVL:/J-EJV
MD:M96FIZ5JNF7=O?Z9JNFW]M'=6&H:??VLDUI>6-[:2Q75G>6LKP7-N\4L4L
MD<@)GNKFWLK>>[O)X+6UM8)KFYN;F:.*WMX(HS)----(4CA@@C0R2RR,L<:*
M7<^G\MVES.+34D[6L[WNU:UKWOTWOIZ_OVC2:>^J_#_/K;]#X(_;`_X*<?L=
M_L&_$#X._#W]J3XE7/PXOOC=9^+M0\+:Y_PCFM>(/#ND6O@ZXT*UNY_%]SX=
MMM3U/P_::I=^(+>TT749M*GTR>:RU-KV]TZ*R>67ZU^%OQE^$OQQ\,VOC3X.
M?$WP#\4_"=[#:SP>(_A]XJT/Q;I/EWL2SVRR7NAWU]';S21?O#;W#Q3QX*RP
MJ8WQ_F.?\%]?VY_!O[=G_!0/Q7XJ^%6M#Q%\'/@UX3TCX(?#GQ#`2-.\5Q>&
MM2UG6?%_B[2EW,DNE:UXRU_6;;1-10XUCP[I.B:H!&ETD,57_@WY^'?Q7^)?
M_!4W]FW2/AEXL\7^#](\*:[>_%3XKWGA76]8T:SO_AO\.[*36=0T#Q5'I-S;
MQZIX=\7:XV@^"[S3M32>PNSXD2&>(K(U?K]3PRP\.%Z.;U\?B,OS"CEL\?C:
M->G"I0O&$L0J3IQ5.K1JQI<M&=IU??6E)R;3_-Z?'DY\1U,HI8.EC,)5QU/!
M87$T*LHU%?DI5*LFU4IUJ2JJI-2C[&U'5RERWE_J>T445^/GZ0%%%%`'R?\`
MMZ?\F,_MG_\`9I_[17_JH/&-?XYD?^KC_P!Q?_017^S)^U/\/?$GQ:_9B_:.
M^%7@Z.RE\7?$SX#?%[X>^%HM1NA8:?+XC\:?#WQ%X<T5+^_9)4LK1]3U*T2Z
MNS%)Y%N9)3$ZQ[*_SPD_X-<O^"K@1!_PBOP*R%4$?\+GT[(.,'/_`!).Q!!Z
MC-?M/A9G64Y7@LUAF68X/`SJXJA*E'%8BG1=2*HM2E!3E%R49:-I6O;N?E_B
M'E&9YI6RIY?@J^+5&GBU5=&/,H.I+#N"EJK.2A*WHSXW_9<_X+8?\%%_V-?@
MMX:_9]_9[^,GASP?\*_"-WK]]H6@W_PD^%_BF[MKKQ/KNH>)-:EFUOQ)X6U/
M5[O[3J^IWDZ"ZO)5MXG2VMQ';Q1Q+[CK'_!R#_P6#UC3[C3O^&GM%TI;F-HG
MN]%^!OP.LM0C5@`3;W;_``_N'MI!_!+`$D4YPU>M_P#$+E_P5<_Z%;X$_P#A
MZ-._^4E3VG_!K;_P57N+F."70?@%8QNV'N[KXRPO;P#^]*EGX;N[LK[0VTK?
M[/3/W=7&>&]>M4Q->IPG6Q%6<JU6M5AEM2K4J2ESSJ3G*,I3G*3YI2DW)MZM
MMGR-/"^(%&C3P]&.>4J-*G"E2ITZM2G&G3A%0A"'+-.$8Q2C&S5DDD?AY\>/
MVD?CY^U!XT;XB?M#_%[Q]\8_&8MC96VN>/?$-]KDNF:>9#+_`&9H=I/(-.T#
M2A*3*NEZ)9V&GK(2XMMS%J^K/^"7_P#P3J^)_P#P4I_:>\,_!;P?!?Z-\.](
MGLO$?QQ^)J63SZ5\._AW#<_Z;)YK;;:?Q9XE\J70_!6B-*LVHZM.;ZX$.A:3
MK6HV']"W[,__``:(_$Z^UZQU/]K[]I[P7X<\*V[6MS>^#_V?M+UGQ/XFU>+S
MD-UIK>-O'NB^&M'\,NT&]8]1MO"'C`"4J/LJ`%Z_L"_8^_8M_9U_83^$=A\%
M/V:_A_9^"/"-O<OJ>L7LL\NJ^+/&6OSIMN/$OC;Q->[]2\0ZU/&H@BDNI1:Z
M;9)#IFCV>FZ7:VMC!X7$?B3DN68"I@N':E/%8UTW1H3H47#`X)-<JJ*4H0IU
M9033I4J49TW/2I)*+@_4R/@3-<=CH8[B#FIT.>-:K3K5_;8S&-6:A4E&<W3A
M*R5252HJO*N6,%=3C]$>$?"WA_P+X6\,^"?"FFVVB>%_!_A_1O"OAO1K1/+L
M])T#0--MM*T?3;6,#;';:?86EM:PH"RK'#&F[.374445_/,I2E*4I2<I2;E*
M4FW*4F[N4F[MMMMMMW;U9^U))*R5DM$ELEV"O\;S]MK_`)/-_:Y_[.=^/?\`
MZM7Q77^R'7^=C^TM_P`&UW_!3SXH?M&_'_XF>%/#7P3F\+?$/XW?%7QUX;FO
MOC!865Y+H'B[QUKVOZ/+>6;Z,7M;F33M0MFGMG9I+>4O$^60FOU?PKS7+,KQ
M.<RS+'X7`QK4,'&E+%5H454<*F(<U!S:4G%2BVELFC\[\0LLS#,\)EL,!A*V
M+G2Q%:52-&/,X1E3A&+EJK)O1'W_`/\`!G5_R*7[?_\`V,O[-G_II^-E?VGU
M_-K_`,&\7_!,7]JC_@FWH?[5VG?M.:7X%TVX^+NL_!N^\&#P7XSM_%RS0>"+
M#XDV^N'4F@L;,:>8Y?$^DFT5C(UTIN&4(+?,G])5?+<>8O"X_BO-L7@L12Q6
M&JO!>RKT)QJ4JG)EV$ISY)P;C+EJ0E!V>DHM/5-'T?"F&Q&#X?RW#8JE.AB*
M5*K&I2J*TX-XBM)*2Z7C)->31^3'_!;_`/:1?]E[_@F#^U3XXTW5H='\6>,?
M!'_"F_!$C`_:KCQ'\7KR'P/<?V81M9=2TKPQJGB3Q':2@$VXT1[M6/DBO\H4
M`*H'154`>P48'Y`5_I6?\'!7[!?[=/\`P44\#_L^_!G]EG2?`=S\-/!_B?Q-
M\2?B;+XR^(-KX1DU3QG#IL/AOP!:VNGS:==/=0:-I&K^-KJ6X,IA:XUF!0BR
M6@D;^9OPA_P:U?\`!3:_\6^%K'QGI/P3T7P?=^(]"MO%NL6/Q<L]0O=)\,7&
MJVL.OZG9V$.BB6^N['26O+FWLXCYEQ-''$GS.IK]-\.,SX?R/AZ4L;F^6X?&
MXW$UL55H5<31AB*5*FHT*-*4.;G5XTG6C!IR7M[6N[+X+CK+,\SG-Z%/!Y=B
MJV#PM"G2IUHQ;I2K5I>TK5$VTK).G3DTMZ3U=E;^MC_@WB_9UOOV=_\`@E=\
M`8]:M&L?$?QME\1?M":Y!):BUF2#XDWL3^#GD)9GG>?X;Z/X*N1+*$<"?R`G
MEQ)G]P:YCPAX5T'P'X2\+^"/"UA%I/ACP;X=T3PKX<TJW)^SZ;H/A[3;72='
MTZ#<2QBLM-M;>VB#9RL8+$8!KIZ_$\UQ\\TS/'YC--2QN+KXA1=KPC5J2E"&
MC:_=P<8+5Z1W>Y^J8'"PP."PF#IZPPN&HX>+_F5&G&GS.[;O+EYG=MMMMML*
M_P`UC_@Z'_9TN/@]_P`%+=0^*MGI]K:^%_VFOAAX.^(EE/8VKVUL?%GA*S3X
M;^,[.<E1'+JK_P#",Z!XBOY8L^:OB:UFF_?R2NW^E/7X"_\`!?W_`()>?$[_
M`(*4_`/X.VWP"L?"]Q\=/@S\2[W4-$7Q;X@C\,Z3>_#OQMHC:?X[TTZH]G>H
MMZ-7T/P3J]G%*$1HM+OXU;S[A$/TWA]G5').),/6Q5:%#!XNC6P6*K5)*-.E
M&HHU:4YN7NQBJ]&E&4FURQE)WW3\#C'*JF;Y%B</AZ;JXJC.EBL-3BDY2J4I
M<LHQO;WI49U8JS3;:76Q_"W_`,$8OVDV_96_X*7_`+*7Q)N]4M](\+:Y\1;/
MX3^/KJ^DDBTR/P5\7$?P%JEYJ3)R+70KO6=.\3(Y!2&ZT2VN'5EBVG^J7_@[
M^_Y-A_9#_P"R^^+?_5<WU?B%%_P:\_\`!6&WEBN+;PY\#8+BWDCGMYX?C78)
M-!-$XDBFAD710R2Q2(KQNI#(P5N,5_1]_P`%??\`@G'^WQ_P47_86_8;^'NE
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M/7I'_$+E_P`%7/\`H5O@3_X>C3O_`)24?\0N7_!5S_H5O@3_`.'HT[_Y25]9
MCLXX$S-TGF./X<Q[HJ:HO&5,%B/9*HXN?L_:\_)S\D.?EMS<L;WLCYC!93QM
MEL:D<!A,VPD:KC*HJ#E34W%-1<DI6;BFTGOKZ'S)\4?^"_?_``5M^+.AW'AW
M7/VO/$GAC2[J)X)V^%_@OX;_``NU=HW4JPB\3>"/".C>*+1B"?WEGK-O(`2%
M90<5^/\`J6I:CK.HW^L:SJ%]JVKZK>7.HZIJNJ7EQJ&IZEJ%Y,]Q>7^H7]W+
M-=7MY=SN\]S=7,LD\\KO)+([L37](7A/_@U7_P""H&OZE#::[??LV>![!I`)
MM6UOXK:UJT$,>1OD6S\*>!==OI2H/^K\F,DX!9>_[6_L0_\`!J)\`/A9J>E^
M-_VU/BA>_M&:_I]W:WMO\+O!%KJ/@3X0I-;3K+]G\1ZG+._C;QO:2^6BO:QS
M>"M/E5I+:_T_4;>1E'#4XNX$X>H5'@*^6Q<DG]6R7#TI3KRULG]6A&BGJ_>K
M5(13=G)-I/JCPQQGGE:$<P6+Y(R?[[,\4_9T;VNX4Y3G.S72E3:[V/C/_@U^
M_P""5_B76/'=G_P4C^-OANXTGP=X6L];T7]E_0];T\Q3>,/$NJVUQH/B/XNP
MP7:;CX;\-:9<:KX<\(7:0G^U_$5_JFM6-U:CPM92ZE_;]\1?^2?>._\`L3?$
M_P#Z9+ZM?0]$T7PUHND>'/#NDZ;H'A[0-,T_0]!T/1K&UTS2-%T72K2'3],T
MG2=-L8HK33M-TVRMX+.QL;2&&VM+6"&W@BBCB113\7Z9<ZUX3\4Z18A!>ZMX
M=UO3+-I9/+B%U?Z;=6EOYCX.R/S)HP[[3L0,>2.?P+B#B'$\1YT\SQ*5*FIT
MJ>&H<S<<-A:=1RA3Y[>]+WI5*L^5<U24W%1ARPC^RY)DV'R/+:67X=N?+S3K
M5I)1E7KU$N>K)+17LHP5WRTXPBY2<7)_XH[?>?\`WW_]#-?Z/W_!J+_RC!\0
M_P#9U/Q;_P#42^%U?S4'_@UR_P""KA+'_A%O@3RS'_DM&G_Q,2/^8'_GN!7]
MB/\`P0A_8>^//_!/W]B;5_@3^T58^%].\?WGQT\?>/H+?P?XDB\4Z6?#WB'0
M?`^GZ;))J=O:6BI=O<Z#J/G6FPF*(0.2QEVK^N^)'$&29CPW/#8#-<!C,0\;
MA9>QP^*I5:G)&4N:7)"3=HW5].I^:\!Y'F^79U4KX[+\1A:,L#6IJI5@HP<Y
M5*#C&]WJU&37DF<9_P`%\_\`@F9K'_!13]DBVO/A9907?[1?[/&HZU\0?A38
MM;(;OQSI%YI0M_'7PHMKMI(OL=YXMM]/T?5=`FE$L,OBKPUH>F3FSL]3O;^T
M_P`P34-/O])O[[2M6L+S3-4TN]NM-U32]2M9[+4--U"QGDM;W3]0LKE([FSO
M;.YBEMKNVN(XIK>>-X98TD0BO]M6OYT/^"K'_!O+\`OV_P#Q%XA^.OP@\1P?
ML[_M/ZU'%<:]KT&DC4OAA\4]0MXI4%[\0/"^GBVU#3?$]]FVAO/'GAN5KZXB
MMFN-;\/>*+]Q<Q?,>'W'E#)*;R;.)3CE\JDJF#Q48RG]3G4ES5:56$$Y/#U)
MR=53BI2I5)3YHRISO2]WC3@^KG,HYEEBA]?A!4Z]"<E".+IP5J<H3DU"%>"7
M):;C"<+)R@X+G_CG_8?_`."\G_!0G]A+P=H_PN\">.?"_P`5?A!X=C%OX;^&
M7QPT*_\`%^D^%;$`!-,\*>(M*UKPYXVT+1H``++P]!XDE\.:<#(+#2+;S9-W
M1?MP?\'`G_!0C]N7P!JWPC\4>)/`_P`%OA3XCB-IXK\%_`G1-<\+R>,-.>*6
M&?1_$_BO7_$GBCQ;>Z#>QS/'J>@6.L:9HNKQ*D.K6%]"OEG.^-7_``;V?\%8
M?@QK%Y8#]F6\^+&CPW$\-CXK^"_B[PGXWTK5H(I6CCO+?1WU72_&MC%<*$DC
MCUGPKIMP%<*\2/E1QOPS_P""#?\`P5F^*6KPZ5IG[&_C[PC&YS/K'Q.U?P?\
M.-&LXN"TTT_BGQ#87=PJ@[C#IMC?7;$;8[=W^6OU11X"J8A9TI\..NI>V>-]
MK@DU434O;2;FHJNI)/VDH^V4MWS)6_/G_KU##_V5[+/E0Y?8JBJ&(E'V;7)[
M-5U3;]AROE:C5]DH:/W8Z?D,2%&3A54?0`#]`!7^BQ_P;*_\$UM9_96_9WUS
M]K7XMZ.^F_&']JO0=!F\(:'?6KPZKX'^`]O*VM>&X[O>0T.I?$R^ELO&>HV3
M1G[-H>G>"8Y6AU!=2M(/*O\`@F3_`,&OGPQ^`NN^'?C/^W=XB\.?'?XE:#J-
MAKGAOX,^%%OY_@CX<OK,175K<>,[K6+#3-5^*&H6=_M<:/=:9HW@E);,Q:CI
MWBZQN<Q_UMHB1HD<:*B(H5$4`*J@8"J`!@#%?FWB%QYA,RPLLCR2JZV'J3B\
M?C8IQI584Y*4<-A^9*<X.HE*K5M&$E",(.K3J3M]SP3P;B,LK+-LUA&&*4)1
MPF%YE.5#VBY9UJSBW%57!NG"$7+DC.;DU.RB^BBBOQL_30HHHH`XWQUXT\/_
M``X\%>,?B)XMO)-/\)^`?"WB+QIXGU"*VN;Z2Q\/>%M(O==UJ\2RLHKB[O)+
M73;"[G2VM(IKJ<IY,$;SO&I_%T?\'(?_``2)=5=?VB?$I#*&4_\`"C_C0#AA
MGOX&!!P>:_3O]M3_`),W_:T_[-F^/'_JK/%5?X]5O_Q[P?\`7&+_`-`6OA>*
M^(L?DN*PU'!J@X5</[67M:;F^;VE2&C4XI*T%I;>^NUOZ;\`_!WA7Q/RWB+%
M\18G.Z%7*<=@<-AEE6+PF&A*GB:%>K4=98G+\:Y24J<5!PE323=U+2W^FW_Q
M$A?\$B_^CB?$O_AD/C/_`/,/1_Q$A?\`!(O_`*.)\2_^&0^,_P#\P]?YE5%?
M*_Z^9W_+@O\`P1/_`.6_U=^5OZ`_XE,\,_\`H8\8_P#ATRK_`.<7K_2U_P!-
M7_B)"_X)%_\`1Q/B7_PR'QG_`/F'H_XB0O\`@D7_`-'$^)?_``R'QG_^8>O\
MRJBC_7S._P"7!?\`@B?_`,M_J[\K'_$IGAG_`-#'C'_PZ95_\XO7^EK_`*:O
M_$2%_P`$B_\`HXGQ+_X9#XS_`/S#T?\`$2%_P2+_`.CB?$O_`(9#XS__`##U
M_F544?Z^9W_+@O\`P1/_`.6_U=^5C_B4SPS_`.ACQC_X=,J_^<7K_2U_TU?^
M(D+_`()%_P#1Q/B7_P`,A\9__F'H_P"(D+_@D7_T<3XE_P##(?&?_P"8>O\`
M,JHH_P!?,[_EP7_@B?\`\M_J[\K'_$IGAG_T,>,?_#IE7_SB]?Z6O^FK_P`1
M(7_!(O\`Z.)\2_\`AD/C/_\`,/1_Q$A?\$B_^CB?$O\`X9#XS_\`S#U_F544
M?Z^9W_+@O_!$_P#Y;_5WY6/^)3/#/_H8\8_^'3*O_G%Z_P!+7_35_P"(D+_@
MD7_T<3XE_P##(?&?_P"8>C_B)"_X)%_]'$^)?_#(?&?_`.8>O\RJBC_7S._Y
M<%_X(G_\M_J[\K'_`!*9X9_]#'C'_P`.F5?_`#B]?Z6O^FK_`,1(7_!(O_HX
MGQ+_`.&0^,__`,P]'_$2%_P2+_Z.)\2_^&0^,_\`\P]?YE5%'^OF=_RX+_P1
M/_Y;_5WY6/\`B4SPS_Z&/&/_`(=,J_\`G%Z_TM?]-7_B)"_X)%_]'$^)?_#(
M?&?_`.8>C_B)"_X)%_\`1Q/B7_PR'QG_`/F'K_,JHH_U\SO^7!?^")__`"W^
MKORL?\2F>&?_`$,>,?\`PZ95_P#.+U_I:_Z:O_$2%_P2+_Z.)\2_^&0^,_\`
M\P]'_$2%_P`$B_\`HXGQ+_X9#XS_`/S#U_F544?Z^9W_`"X+_P`$3_\`EO\`
M5WY6/^)3/#/_`*&/&/\`X=,J_P#G%Z_TM?\`35_XB0O^"1?_`$<3XE_\,A\9
M_P#YAZ/^(D+_`()%_P#1Q/B7_P`,A\9__F'K_,JHH_U\SO\`EP7_`((G_P#+
M?ZN_*Q_Q*9X9_P#0QXQ_\.F5?_.+U_I:_P"FK_Q$A?\`!(O_`*.)\2_^&0^,
M_P#\P]'_`!$A?\$B_P#HXGQ+_P"&0^,__P`P]?YE5%'^OF=_RX+_`,$3_P#E
MO]7?E8_XE,\,_P#H8\8_^'3*O_G%Z_TM?]-7_B)"_P""1?\`T<3XE_\`#(?&
M?_YAZ/\`B)"_X)%_]'$^)?\`PR'QG_\`F'K_`#*J*/\`7S._Y<%_X(G_`/+?
MZN_*Q_Q*9X9_]#'C'_PZ95_\XO7^EK_IJ_\`$2%_P2+_`.CB?$O_`(9#XS__
M`##T?\1(7_!(O_HXGQ+_`.&0^,__`,P]?YE5%'^OF=_RX+_P1/\`^6_U=^5C
M_B4SPS_Z&/&/_ATRK_YQ>O\`2U_TU?\`B)"_X)%_]'$^)?\`PR'QG_\`F'H_
MXB0O^"1?_1Q/B7_PR'QG_P#F'K_,JHH_U\SO^7!?^")__+?ZN_*Q_P`2F>&?
M_0QXQ_\`#IE7_P`XO7^EK_IJ_P#$2%_P2+_Z.)\2_P#AD/C/_P#,/1_Q$A?\
M$B_^CB?$O_AD/C/_`/,/7^9511_KYG?\N"_\$3_^6_U=^5C_`(E,\,_^ACQC
M_P"'3*O_`)Q>O]+7_35_XB0O^"1?_1Q/B7_PR'QG_P#F'H_XB0O^"1?_`$<3
MXE_\,A\9_P#YAZ_S*J*/]?,[_EP7_@B?_P`M_J[\K'_$IGAG_P!#'C'_`,.F
M5?\`SB]?Z6O^FK_Q$A?\$B_^CB?$O_AD/C/_`/,/7ZY?`CXX_#C]I/X1^`OC
MK\(=:N/$?PT^)F@Q>)?!VN7.E:IH<^I:1-<36R74ND:W96.JV#F:VF5H+ZSM
MYE"`[.<G_&XK_5=_X(E_\HI/V'/^R*:=_P"GS7*^EX6XES'.<QJX3%K#JE3P
M53$)TJ;A/VD*^%IQ3;G)<O+5FVK7O9II*S_#?'CP4X1\,^&LHS?A[%9[7Q6/
MSR&6UHYKC,'B:*H2P&-Q3E3AALNP4XU?:8:"4I5)QY)27)S6DOU+HHHK[\_E
M8^9?VU"!^QO^UJ2<#_AF?X\9)[#_`(59XJ'\P>!U_&O\>:":%8(098P1#%D%
MU!'R#@C/&/SZ9[9_VFM9T;2/$FCZMX?U_2]/US0-<TR_T77-$U>S@U#2M9TC
M5+66QU+2]4TZZCEM+_3]0LIYK6]L[F*2VN;>66&6-XG=#\HK_P`$[OV!5557
M]B;]E`*```/V??A4``OW0`/"F,#L.,=J^,XFX:Q.>8C#U\/7H4HTJ'LFJWM$
MVU4G/FBX4YWBU.UG;57U1_1'@EXTY7X59?GV#S#),?FT\WQF#Q-.>#Q.'H1H
MQPU&K2E&:K1DY2DZMURZ*UGJ?Y#'G0?\]H_^_H_^*H\Z#_GM'_W]'_Q5?Z]'
M_#N_]@7_`*,H_91_\1]^%7_S*T?\.[_V!?\`HRC]E'_Q'WX5?_,K7S7_`!#_
M`#'_`*#<'_X'7\O^H?R_+MK^W_\`$X'#G_1&YW_X<,!Y?]._7\/,_P`A?SH/
M^>T?_?T?_%4>=!_SVC_[^C_XJO\`7H_X=W_L"_\`1E'[*/\`XC[\*O\`YE:/
M^'=_[`O_`$91^RC_`.(^_"K_`.96C_B'^8_]!N#_`/`Z_E_U#^7Y=M3_`(G`
MX<_Z(W.__#A@/+_IWZ_AYG^0OYT'_/:/_OZ/_BJ/.@_Y[1_]_1_\57^O1_P[
MO_8%_P"C*/V4?_$??A5_\RM'_#N_]@7_`*,H_91_\1]^%7_S*T?\0_S'_H-P
M?_@=?R_ZA_+\NVI_Q.!PY_T1N=_^'#`>7_3OU_#S/\A?SH/^>T?_`']'_P`5
M1YT'_/:/_OZ/_BJ_UZ/^'=_[`O\`T91^RC_XC[\*O_F5H_X=W_L"_P#1E'[*
M/_B/OPJ_^96C_B'^8_\`0;@__`Z_E_U#^7Y=M3_B<#AS_HC<[_\`#A@/+_IW
MZ_AYG^0OYT'_`#VC_P"_H_\`BJ/.@_Y[1_\`?T?_`!5?Z]'_``[O_8%_Z,H_
M91_\1]^%7_S*T?\`#N_]@7_HRC]E'_Q'WX5?_,K1_P`0_P`Q_P"@W!_^!U_+
M_J'\OR[:G_$X'#G_`$1N=_\`APP'E_T[]?P\S_(7\Z#_`)[1_P#?T?\`Q52@
MYY'((R"#G.:_UX_^'=_[`O\`T91^RC_XC[\*O_F5K_*H_;$T?1_#O[7?[5?A
M_P`/Z5I^A>']!_:2^.>C:%HFD6=OIVD:-H^E_$WQ/8Z9I6EZ=:I%:Z?INGV4
M,%I8V=O%'!;6T444,<:1JM>#GG#N)R..&=>M1K?6754/92J/E=+V5^;GIT[7
M]HK6;T336S/UCPJ\:,L\5<7G&$R_),?E,LGP^$Q%6>,Q.'KQK+%U*U.,::HQ
MBXN#HR<G*Z:E%+6Y\Z5&TL:'#R(IQG!('3KWJ2O[EO\`@V'_`&6_V9OCE^Q)
M\9/$_P`:?V?/@G\6O$FF?M.>)M$T_7_B5\,?!?C?6K+18?AK\,KV'2+34O$>
MCZG=V^FPW=_>W45E%)':I=7=S(L9DF=AY^4Y;4S;&TL#2G"G.JJC4JCDH)4Z
M<ZCNXPF]5"RM'=ZM'U_B-QUA/#GAC$<3XW`8C,J&'Q6#PLL+A:M*C6E+&5?9
M1FIU5*"4&^:2:NUHK'\,?G0?\]H_^_H_^*H\Z#_GM'_W]'_Q5?Z]'_#N_P#8
M%_Z,H_91_P#$??A5_P#,K1_P[O\`V!?^C*/V4?\`Q'WX5?\`S*U]=_Q#_,?^
M@W!_^!U_+_J'\OR[:_SQ_P`3@<.?]$;G?_APP'E_T[]?P\S_`"%_.@_Y[1_]
M_1_\51YT'_/:/_OZ/_BJ_P!>C_AW?^P+_P!&4?LH_P#B/OPJ_P#F5H_X=W_L
M"_\`1E'[*/\`XC[\*O\`YE:/^(?YC_T&X/\`\#K^7_4/Y?EVU/\`B<#AS_HC
M<[_\.&`\O^G?K^'F?Y#BLKC<A#+ZJ<C\Q2U^T_\`P<$_#+X<_"#_`(*B_&/P
M+\*?`?@[X:>"M+\"?!B[T_PCX#\-:/X1\,65WJGPYT6]U&YM-#T&SL-,MY[Z
M^EDN[R:"V1[JYDDEG,CNSU^+%?#8JA+"XK%86;C*>%Q.(PTY1NXREAZTZ,I1
M;47RR<&U=)V:ND[I?U-PUG=+B7A[(^(:%"IAJ.=Y5@,UI8>K*,ZM"GC\+2Q,
M*-2</<E.G&JH2E'W7)-K0C>2.,8=D7/0,0`?\_XTWSH/^>T?_?T?_%5_49_P
M:X_`OX*_';]H7]J?1OC9\(OAG\7M(T'X+^#-3T33/B9X%\,>.=/TC4;GQS<6
MES?Z79^)M,U.WL;NXM1]GFN;:.&XFA$<3R;.*_M<_P"'=_[`O_1E'[*/_B/O
MPJ_^96OI<GX3QF;X3ZY1Q&'I0]K*ERU)55.\%"3=H49I?%;XGJK^1^(>(?TB
M<F\/.*<9PMC.',SS&O@Z&"KRQ>%QF$HT9QQN&I8F,8PJP<TX1J<LFW9R5UH?
MY"_G0?\`/:/_`+^C_P"*H\Z#_GM'_P!_1_\`%5_KT?\`#N_]@7_HRC]E'_Q'
MWX5?_,K1_P`.[_V!?^C*/V4?_$??A5_\RM>I_P`0_P`Q_P"@W!_^!U_+_J'\
MOR[:_$?\3@<.?]$;G?\`X<,!Y?\`3OU_#S/\A?SH/^>T?_?T?_%4>=!_SVC_
M`._H_P#BJ_UZ/^'=_P"P+_T91^RC_P"(^_"K_P"96C_AW?\`L"_]&4?LH_\`
MB/OPJ_\`F5H_XA_F/_0;@_\`P.OY?]0_E^7;4_XG`X<_Z(W._P#PX8#R_P"G
M?K^'F?Y"_G0?\]H_^_H_^*H\Z#_GM'_W]'_Q5?Z]'_#N_P#8%_Z,H_91_P#$
M??A5_P#,K1_P[O\`V!?^C*/V4?\`Q'WX5?\`S*T?\0_S'_H-P?\`X'7\O^H?
MR_+MJ?\`$X'#G_1&YW_X<,!Y?]._7\/,_P`A?SH/^>T?_?T?_%4>=!_SVC_[
M^C_XJO\`7H_X=W_L"_\`1E'[*/\`XC[\*O\`YE:/^'=_[`O_`$91^RC_`.(^
M_"K_`.96C_B'^8_]!N#_`/`Z_E_U#^7Y=M3_`(G`X<_Z(W.__#A@/+_IWZ_A
MYG^0OYT'_/:/_OZ/_BJ/.@_Y[1_]_1_\57^O1_P[O_8%_P"C*/V4?_$??A5_
M\RM'_#N_]@7_`*,H_91_\1]^%7_S*T?\0_S'_H-P?_@=?R_ZA_+\NVI_Q.!P
MY_T1N=_^'#`>7_3OU_#S/\A?SH/^>T?_`']'_P`57^K#_P`$2R#_`,$IOV'<
M'K\$]-_'&NZZ#CZ&OH?_`(=W_L"_]&4?LH_^(^_"K_YE:^E_!?@CP=\.?"^B
M^!_A]X5\.^!?!GAFS73O#OA+PEHNG^'?#6@Z<CO*EAH^B:1;V>FZ;:"2225;
M:SM(809'/EDLQ;Z#AKA?%Y)CZN+KXC#U85,'4PZA2=1R4IUL-4YGSTZ:44J+
M3U;?-&RT9^.>-/CGE7BEP_E>38#(<PRJKE^<PS.=;%XG#5Z=2$<#C,*Z48T8
MQE&?/B5.[NN6+6YU]%%%?<'\UA1110`4444`%%%%`!1110`4444`%%%%`!7^
M/I^VY_R>E^V#_P!G2_M`_P#JU_%E?[!=?X^G[;G_`">E^V#_`-G2_M`_^K7\
M65^;>(GP95ZX[_W3/[)^A[_R.>-_^Q9DW_J5C3YBK_01_P"#3'_DPKXY_P#9
MU_BC_P!5;\*J_P`^ZO\`01_X-,?^3"OCG_V=?XH_]5;\*J^;X+_Y*#"?X,3_
M`.HM8_:OI/\`_)ILR_[&^2?^IB/ZEZ***_;3_,P****`/\S?_@Y0_P"4N/QQ
M_P"R>_`C_P!5;H-?@_7[P?\`!RA_REQ^./\`V3WX$?\`JK=!K\'Z_GC./^1Q
MF_\`V-<R_P#4VN?Z]^%G_)M.`/\`LCN'/_53A#^M[_@T8_Y.:_:\_P"R$^!O
M_5@3U_>57\&O_!HQ_P`G-?M>?]D)\#?^K`GK^\JOU?@?_D1K_L*J_P#INB?P
M%])K_D[N=_\`8OR+_P!56&"BBBOL#\!"BBB@`HHHH`****`"BBB@`HHHH`**
M**`"BBB@`HHHH`****`"BBB@`HHHH`****`"O\?3]MS_`)/2_;!_[.E_:!_]
M6OXLK_8+K_'T_;<_Y/2_;!_[.E_:!_\`5K^+*_-O$3X,J]<=_P"Z9_9/T/?^
M1SQO_P!BS)O_`%*QI\Q5_H(_\&F/_)A7QS_[.O\`%'_JK?A57^?=7^@C_P`&
MF/\`R85\<_\`LZ_Q1_ZJWX55\WP7_P`E!A/\&)_]1:Q^U?2?_P"339E_V-\D
M_P#4Q']2]%%%?MI_F8%%%%`'^9O_`,'*'_*7'XX_]D]^!'_JK=!K\'Z_>#_@
MY0_Y2X_''_LGOP(_]5;H-?@_7\\9Q_R.,W_[&N9?^IM<_P!>_"S_`)-IP!_V
M1W#G_JIPA_6]_P`&C'_)S7[7G_9"?`W_`*L">O[RJ_@U_P"#1C_DYK]KS_LA
M/@;_`-6!/7]Y5?J_`_\`R(U_V%5?_3=$_@+Z37_)W<[_`.Q?D7_JJPP4445]
M@?@(4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%%
M%`!1110`5_CZ?MN?\GI?M@_]G2_M`_\`JU_%E?[!=?X^G[;G_)Z7[8/_`&=+
M^T#_`.K7\65^;>(GP95ZX[_W3/[)^A[_`,CGC?\`[%F3?^I6-/F*O]!'_@TQ
M_P"3"OCG_P!G7^*/_56_"JO\^ZO]!'_@TQ_Y,*^.?_9U_BC_`-5;\*J^;X+_
M`.2@PG^#$_\`J+6/VKZ3_P#R:;,O^QODG_J8C^I>BBBOVT_S,"BBB@#_`#-_
M^#E#_E+C\<?^R>_`C_U5N@U^#]?O!_P<H?\`*7'XX_\`9/?@1_ZJW0:_!^OY
MXSC_`)'&;_\`8US+_P!3:Y_KWX6?\FTX`_[([AS_`-5.$/ZWO^#1C_DYK]KS
M_LA/@;_U8$]?WE5_!K_P:,?\G-?M>?\`9"?`W_JP)Z_O*K]7X'_Y$:_["JO_
M`*;HG\!?2:_Y.[G?_8OR+_U588****^P/P$****`"BBB@`HHHH`****`"BBB
M@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`*_P`?3]MS_D]+]L'_`+.E
M_:!_]6OXLK_8+K_'T_;<_P"3TOVP?^SI?V@?_5K^+*_-O$3X,J]<=_[IG]D_
M0]_Y'/&__8LR;_U*QI\Q5_H(_P#!IC_R85\<_P#LZ_Q1_P"JM^%5?Y]U?Z"/
M_!IC_P`F%?'/_LZ_Q1_ZJWX55\WP7_R4&$_P8G_U%K'[5])__DTV9?\`8WR3
M_P!3$?U+T445^VG^9@4444`?YF__``<H?\I<?CC_`-D]^!'_`*JW0:_!^OW@
M_P"#E#_E+C\<?^R>_`C_`-5;H-?@_7\\9Q_R.,W_`.QKF7_J;7/]>_"S_DVG
M`'_9'<.?^JG"'];W_!HQ_P`G-?M>?]D)\#?^K`GK^\JOX-?^#1C_`).:_:\_
M[(3X&_\`5@3U_>57ZOP/_P`B-?\`855_]-T3^`OI-?\`)W<[_P"Q?D7_`*JL
M,%%%%?8'X"%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%%
M%%`!1110`4444`%?X^G[;G_)Z7[8/_9TO[0/_JU_%E?[!=?X^G[;G_)Z7[8/
M_9TO[0/_`*M?Q97YMXB?!E7KCO\`W3/[)^A[_P`CGC?_`+%F3?\`J5C3YBK_
M`$$?^#3'_DPKXY_]G7^*/_56_"JO\^ZO]!'_`(-,?^3"OCG_`-G7^*/_`%5O
MPJKYO@O_`)*#"?X,3_ZBUC]J^D__`,FFS+_L;Y)_ZF(_J7HHHK]M/\S`HHHH
M`_S-_P#@Y0_Y2X_''_LGOP(_]5;H-?@_7[P?\'*'_*7'XX_]D]^!'_JK=!K\
M'Z_GC./^1QF__8US+_U-KG^O?A9_R;3@#_LCN'/_`%4X0_K>_P"#1C_DYK]K
MS_LA/@;_`-6!/7]Y5?P:_P#!HQ_R<U^UY_V0GP-_ZL">O[RJ_5^!_P#D1K_L
M*J_^FZ)_`7TFO^3NYW_V+\B_]56&"BBBOL#\!"BBB@`HHHH`****`"BBB@`H
MHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"O\?3]MS_D]+]L'_LZ7
M]H'_`-6OXLK_`&"Z_P`?3]MS_D]+]L'_`+.E_:!_]6OXLK\V\1/@RKUQW_NF
M?V3]#W_D<\;_`/8LR;_U*QI\Q5_H(_\`!IC_`,F%?'/_`+.O\4?^JM^%5?Y]
MU?Z"/_!IC_R85\<_^SK_`!1_ZJWX55\WP7_R4&$_P8G_`-1:Q^U?2?\`^339
ME_V-\D_]3$?U+T445^VG^9@4444`?YF__!RA_P`I<?CC_P!D]^!'_JK=!K\'
MZ_>#_@Y0_P"4N/QQ_P"R>_`C_P!5;H-?@_7\\9Q_R.,W_P"QKF7_`*FUS_7O
MPL_Y-IP!_P!D=PY_ZJ<(?UO?\&C'_)S7[7G_`&0GP-_ZL">O[RJ_@U_X-&/^
M3FOVO/\`LA/@;_U8$]?WE5^K\#_\B-?]A57_`--T3^`OI-?\G=SO_L7Y%_ZJ
ML,%%%%?8'X"%%%%`!1110`4444`%%%%`!1110`4444`%%%%`!1110`4444`%
M%%%`!1110`4444`%?X^G[;G_`">E^V#_`-G2_M`_^K7\65_L%U_FX?M3?\$&
M?^"K'Q%_:>_:0^(?@[]ET:OX1\>?'SXQ>,_">J_\+=^"UB-3\-^*?B%XAUS0
MM0%EJ'Q`M;ZT^W:9?VUR+:^MK:[M_,$5U!#-')&OY]QYA,5BH99]6PV(Q#@\
M9SK#T*M;DYOJO+S^SC+E4N5VYK7L[7LS^L?HJ<0Y!P_FW&-3/L\R?)*>)R[*
M88:>;YE@\NAB)T\3C)5(4)8RM1C5E",HRG&#DXJ47*UU?^>:O]!'_@TQ_P"3
M"OCG_P!G7^*/_56_"JOYD?\`B'H_X*^?]&FC_P`/-\#/_GBU_8?_`,&\?[%_
M[2G[#O[(WQ6^&7[3_P`._P#A6GC?Q)^T+K_C?1M&'B?PEXK-YX8O?`/P\T6W
MU(W_`(-UO7]-@$FIZ+JEM]EFNH[Q#;><]NL,T3O\]PAE^/P^>86K7P.,H4HP
MQ%ZE;"UZ5-.6&J1BG.I3C%<SDDKO6344FV?KOTC.-.#\[\,,?@,FXKX;S;'3
MS3)ZD,'EF>99C\5*G3Q2E4G'#X7%5:LH4X^].2@XQCK)I'[[4445^Q'^>(44
M44`?YF__``<H?\I<?CC_`-D]^!'_`*JW0:_!^O["O^"WG_!'_P#X*(?M=_\`
M!13XJ_'3]GO]GX^/?A?XC\'?"?2M&\3'XD_"OPT+V_\`#7@'2-&UJ%=)\4>-
M=&UJ#[%J=O<6I>ZTZ*&8Q>;;O-"ZO7Y,?\0]'_!7S_HTT?\`AYO@9_\`/%K\
M&S7*\SJ9KFE2&78^<*F9YA.$H8/$RC*$\95E"<91I.,H34DX23:E%J2;33/]
M3?#7Q`X$P7A[P/@\;QKPG@\9A>%,AP^)PF*XBRBAB</7HY9AJ56C7H5<9"K2
MK4ZD7"I3J1C.$TXR2::/T[_X-&/^3FOVO/\`LA/@;_U8$]?WE5_)!_P;H_\`
M!,_]M?\`87^.G[1OC#]J3X,M\,O#OCSX4>%/#/A74!XZ^'GBT:GK.F^,)M4O
M;3[-X+\5>(+JS\BR=9C<7UO;6S#Y(Y7D(CK^M^OT[@VA7P^3*GB*-6A4^LU7
MR5J<Z4[<E))\LXQE9M-)VLVG;8_B'Z0^:Y7G/BEG&89/F6`S7`5<#DT*>-RW
M%X?'82I.EEF'IU8PQ&&J5:,Y4YQ<)QC-N$DXRM)-(HHHKZL_$`HHHH`****`
M"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`*
M***`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HHHH`****`"BBB@`HH
%HH`__]D_
`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
