A Medical Device Daily

Stericycle (Lake Forest, Illinois) reported that it has received the arbitrator’s final award in the dispute previously disclosed between it and SteriCorp (Melbourne, Australia).

The arbitrator awarded Stericycle $8.2 million on its claim against SteriCorp for payments due under certain convertible notes and awarded SteriCorp $14.5 million on its claim that Stericycle failed to supply SteriCorp with equipment conforming to specifications under an equipment supply agreement.

The final award also requires Stericycle to pay two-thirds of SteriCorp’s arbitration costs, the amount of these costs may not be determined for up to nine months.

The net effect of the two awards, before arbitration costs, will result in Stericycle recognizing a one-time after-tax expense of $6.2 million, or 7 cents a share in 4Q07, which the company said was not included in its prior guidance on its 2007 operating results.

The net effect of the two awards on Stericycle’s cash flow for the quarter will be a reduction of cash in the amount $6.3 million. The difference between the income statement and the cash flow net effect of the two awards results from a portion of the award in favor of Stericycle representing a repayment of debt and the tax effect of the one-time charges.

Stericycle said it believes that the final award contains errors in the calculation of amounts awarded to it and has applied to the arbitrator for correction. It said it cannot predict the outcome of this application, and the decision by the arbitrator may be appealed by either party within 28 days.

Stericycle and SteriCorp are medical waste disposal firms.

In other legalities: The law firm Cohen, Milstein, Hausfeld & Toll has filed a lawsuit in the U.S. District Court for the Southern District of Florida on behalf of purchasers of the common stock of Dyadic International (Jupiter, Florida) from April 5, 2006, through April 23, 2007.

The complaint charges Dyadic and one of its officers and directors with violation of U.S. Securities and Exchange rules, alleging the omission or representation of material adverse facts about the company’s financial condition, business prospects and revenues during the class period.

Dyadic is a biotech company that uses its propriety technologies to conduct R&D activities for the discovery, development, and manufacture of products enabling solutions to the bioenergy, industrial enzyme, and pharmaceutical industries, and was actively traded on the American Stock Exchange.

The complaint alleges that defendants issued numerous materially false and misleading statements which caused Dyadic’s securities to trade at artificially inflated prices, with operational and financial improprieties perpetrated by the company and its Asian subsidiaries, and knowingly and/or recklessly approved by the defendants, which culminated in an internal investigation and subsequent firing of the company’s CEO and chairman, Mark Emalfarb. As a result of the improprieties in the company’s Asian subsidiaries and the subsequent internal investigation, the company has abandoned its Asian operations and its stock has not been publicly-traded since April 24, 2007, and is at risk of being delisted, resulting in total loss of equity for owners of Dyadic’s securities.

According to the complaint, on April 24, 2007, the company said it had discovered potentially material operational and financial improprieties at its Asian subsidiaries. The complaint alleges that the company began an independent investigation and placed Emalfarb on leave.

The complaint also alleges that the company announced that its "previously filed financial statements, including those contained in its annual reports should no longer be relied upon." Finally, the complaint alleges that all trading in the company’s securities was halted because of the alleged improprieties. Thus, the complaint alleges that the company’s shares have still not yet had an opportunity to lose their artificial inflation.