UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 15, 2005
Applied DNA Sciences, Inc.
(Exact name of registrant as specified in its charter)
Nevada 002-90539 59-2262718
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
9229 Sunset Boulevard, Suite 83, Los Angeles, CA 90069
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code (310) 860-1362
Copies to:
Andrea Cataneo, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas
New York, New York 10018
Phone: (212) 930-9700
Fax: (212) 930-9725
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 (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
Item 1.02 Termination of a Material Definitive Agreement.
Item 2.01 Completion of Acquisition of Assets.
Item 2.03 Creation of a Direct Financial Obligation.
Acquisition of Assets
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On July 15, 2005, Applied DNA Sciences, Inc. (the "Company") closed upon
the stock purchase agreement (the "Agreement") with Biowell Technology Inc., a
Taiwan corporation ("Biowell") that was executed on January 28, 2005. Pursuant
to the Agreement, the Company, through its wholly-owned subsidiary, APDN
(B.V.I.) Inc., a British Virgin Islands company, acquired all of the issued and
outstanding shares of Rixflex Holdings Limited, a British Virgin Islands company
("Rixflex"). Pursuant to an asset purchase agreement, Biowell transferred all of
its intellectual property (the "Biowell Technology") to Rixflex prior to the
Company's acquisition of Rixflex. In exchange for all of the issued and
outstanding shares of Rixflex, we issued to the shareholders of Rixflex 36
million shares of our common stock.
The Biowell Technology is proprietary DNA-embedded biotechnology
solutions that protect corporate and intellectual property from counterfeiting,
fraud, piracy, product diversion and unauthorized intrusion. The Biowell
Technology offers a cost effective method to detect, deter, interdict and
prosecute global counterfeiting organizations. The Biowell Technology provides
proprietary DNA-embedded biotechnology solutions to companies to protect
corporate and intellectual property from counterfeiting, fraud, piracy, product
diversion and unauthorized intrusion. The Biowell Technology uses synthetically
created DNA fragments that have unique characteristics and one-of-a-kind
sequences. Using various anti-counterfeit technologies, such as ink, microchips,
glue, paints and DNA-Holograms, the Biowell Technology can authenticate the DNA
fragments to ensure that the product has not been counterfeited or tampered
with.
In connection with the closing, we terminated the license agreement that
we had entered into with Biowell in October 2002, under which we had the
exclusive right to sell, market, and sub-license Biowell's technology within the
United States, the European Union, Canada, Mexico, Colombia, Saudi Arabia and
the United Arab Emirates.
In connection with the closing, the Company entered into a license
agreement with Biowell, whereby the Company granted Biowell an exclusive license
to sell, market, and sub-license the Company's products in selected Asian
countries. The exclusive license for such selected territories is for an initial
period of until December 31, 2010, and if Biowell meets its performance goals,
the license agreement will extend for an additional five year term. The license
agreement gives Biowell the initial rights to future anti-fraud biotechnologies
developed by the Company and also new applications for the existing technology
that may be developed for the marketplace as long as the license agreement
remains in effect. In the event that Biowell shall sub-license the products
within its territories, Biowell shall pay the Company 50% of all fees, payments
or consideration or any kind received in connection with the grant of the
sublicense. Biowell is required to pay a royalty of 10% on all net sales made
and is required to meet certain minimum annual net sales in its various
territories. The territories and minimum net sales are as follows:
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COUNTRY MINIMUM ANNUAL NET SALES
(US DOLLARS)
--------------------------- -------------- -------------- --------------- -------------- --------------
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
--------------------------- -------------- -------------- --------------- -------------- --------------
AUSTRALIA 200,000 250,000 500,000 750,000 1,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
AFGHANISTAN ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
BANGLADESH ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
BHUTAN ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
BRUNEI ZERO 100,000 250,000 400,000 500,000
--------------------------- -------------- -------------- --------------- -------------- --------------
CAMBODIA ZERO 100,000 250,000 400,000 500,000
--------------------------- -------------- -------------- --------------- -------------- --------------
CHINA 1,000,000 2,000,000 4,000,000 6,000,000 8,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
INDIA 500,000 1,000,000 2,000,000 3,000,000 4,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
INDONESIA 500,000 1,000,000 2,000,000 3,000,000 4,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
JAPAN 500,000 1,000,000 2,000,000 3,000,000 4,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
KOREA 250,000 500,000 1,000,000 2,000,000 4,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
LAOS ZERO 100,000 250,000 400,000 500,000
--------------------------- -------------- -------------- --------------- -------------- --------------
MALAYSIA ZERO 250,000 500,000 1,000,000 2,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
MYANMAR ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
PAKISTAN ZERO 100,000 250,000 400,000 500,000
--------------------------- -------------- -------------- --------------- -------------- --------------
PHILIPPINES 100,000 250,000 500,000 750,000 1,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
SINGAPORE ZERO 100,000 250,000 400,000 500,000
--------------------------- -------------- -------------- --------------- -------------- --------------
SRI LANKA ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
TAIWAN 250,000 500,000 1,000,000 2,000,000 4,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
THAILAND 250,000 500,000 1,000,000 2,000,000 4,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
VIETNAM 250,000 500,000 1,000,000 2,000,000 4,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
UAE ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
BAHRAIN ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
CYPRUS ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
IRAN ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
IRAQ ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
JORDAN ZERO 100,000 250,000 500,000 750,000
--------------------------- -------------- -------------- --------------- -------------- --------------
KUWAIT ZERO 100,000 250,000 500,000 750,000
--------------------------- -------------- -------------- --------------- -------------- --------------
LEBANON ZERO 25,000 50,000 100,000 100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
OMAN ZERO 100,000 250,000 500,000 750,000
--------------------------- -------------- -------------- --------------- -------------- --------------
QATAR ZERO 100,000 250,000 500,000 750,000
--------------------------- -------------- -------------- --------------- -------------- --------------
SAUDI ARABIA ZERO 500,000 1,000,000 2,000,000 4,000,000
--------------------------- -------------- -------------- --------------- -------------- --------------
SYRIA ZERO 100,000 250,000 500,000 750,000
--------------------------- -------------- -------------- --------------- -------------- --------------
YEMEN ZERO 100,000 250,000 500,000 750,000
--------------------------- -------------- -------------- --------------- -------------- --------------
TOTAL 3,800,000 9,625,000 19,800,000 33,600,000 52,100,000
--------------------------- -------------- -------------- --------------- -------------- --------------
In addition, we entered into a consulting agreement with Timpix
International Limited for the consulting services of three former Biowell
employees, Jun-Jei Sheu, Ben Liang and Johnson Chen. The consulting agreement is
for the shorter of two years, or until all of the consultants have obtained a
visa to work in the United States and execute employment agreements with the
Company. Such consulting agreement shall automatically renew for one year
periods until terminated. Pursuant to the consulting agreement, the Company
shall pay $47,000 per month, which is apportioned at $20,000 per month for Mr.
Sheu, $15,000 per month for Mr. Liang and $12,000 per month for Mr. Chen. In the
event that either of Messrs. Sheu, Liang or Chen becomes employed by the
Company, the monthly consulting fee shall be reduced accordingly.
Engagement of Trilogy Capital Partners, Inc.
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On June 20, 2005, the Company entered into an agreement with Trilogy
Capital Partners, Inc. ("Trilogy") to provide marketing services to the Company
for a term of one year, and terminable thereafter by either party upon 30 days
prior written notice. In connection with the agreement, we agreed to pay Trilogy
a monthly fee of $12,500. The Company also issued to Trilogy a warrant to
purchase 7.5 million shares of common stock at $0.55 per share, exercisable for
a period of three years from issuance. The warrant contains a "cashless"
exercise provision. The shares underlying the warrants contain registration
rights. The holder has contractually agreed to restrict its ability to convert
or exercise the warrants and receive shares of our common stock such that the
number of shares of common stock held by it after such conversion or exercise
does not exceed 5% of the then issued and outstanding shares of common stock.
Item 4.02 Non-Reliance on Previously Issued Financial Statements
In connection with the Company's comment and response process in
connection with the registration statement on Form SB-2, the Company determined
there were errors in accounting for the valuation of equity consulting service
transactions during the January through March 2005 time period. The valuation
resulted in the overstatement of approximately $2.9 million in services
provided. As a result, our financial statements included in our Quarterly Report
on Form 10-QSB for the quarter ended March 31, 2005 should no longer be relied
upon. The new financial statements which should be relied upon will be contained
in an amended Form 10-QSB filing to be filed by the Company by the end of July
2005.
Item 5.02 Departure of Directors or Principal Officers
On July 15, 2005, Mr. Robin Hutchison, our Chief Executive Officer and
Chairman of the Board of Directors, resigned as an officer and director of the
Company. On July 15, 2005, the Board of Directors unanimously appointed Jun-Jei
Sheu as a member of the Board of Directors to fill the vacancy created by the
resignation of Mr. Hutchison and elected Mr. Sheu as Chairman of the Board.
Dr. Jun-Jei Sheu was the founder and President of Biowell Technologies
Inc. There are no arrangements or understandings between Mr. Sheu and any other
persons.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Pro forma financial information to be provided by amendment.
(c) Exhibits.
Exhibit
Number Description
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4.1 Warrant, dated as of June 20, 2005, issued to Trilogy Capital
Partners, Inc.
10.1 Stock Purchase Amendment Agreement, dated as of July 12, 2005, by
and between Applied DNA Sciences, Inc. and Biowell Technology, Inc.
10.2 License Agreement, dated as of July 12, 2005, by and between Applied
DNA Sciences, Inc. and Biowell Technology, Inc.
10.3 Consulting Agreement, dated as of July 12, 2005, by and between
Applied DNA Sciences, Inc. and Timpix International Limited
10.4 Letter of Engagement, dated as of June 20, 2005, by and between
Applied DNA Sciences, Inc. and Trilogy Capital Partners, Inc.
99.1 Letter of Resignation from Rob Hutchison
SIGNATURES
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.
Applied DNA Sciences, Inc.
Date: July 21, 2005 /s/ PETER BROCKELSBY
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Peter Brockelsby
President