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): March 8, 2006
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.)
25 Health Sciences Drive, Suite 113, Stony Brook, New York 11790
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code (631) 444-6862
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 2.03 Creation of a Direct Financial Obligation.
Item 3.02 Unregistered Sales of Equity Securities.
On March 8, 2006, we completed a private placement offering in which we
sold an aggregate of 30 units (the "Units") of our securities, each Unit
consisting of (i) a $50,000 Principal Amount 10% Secured Convertible Promissory
Note (the "Notes") and (ii) warrants (the "Warrants") to purchase 100,000 shares
of our common stock, or an aggregate of $1,500,000 in principal amount of Notes
and Warrants to purchase 3,000,000 shares of common stock, for aggregate gross
proceeds of $1,500,000. The Units were sold pursuant to Subscription Agreements,
by and between each of the purchasers and Applied DNA Operations Management,
Inc., our wholly owned subsidiary.
The Notes bear interest at the rate of 10% per annum and mature 18 months
after the date of issuance. The Notes, and interest accrued thereon, are
convertible into shares of our common stock at a price of $0.50 per share by the
holder anytime from issuance through the first anniversary of issuance of the
Notes and automatically convert on the maturity date at a 20% discount to the
average bid price for our common stock for the ten trading days prior to
conversion. In addition, the holders have the right anytime after the 15th month
and through the 18th month after the date of issuance to request payment of
accrued interest and principal in cash and, anytime prior to conversion, we have
the irrevocable right to repay accrued interest and principal under the Notes on
3 days notice, subject to the holders' voluntary right to convert the Notes
during such three day period. All principal and accrued interest under the Notes
will be due and payable in the event that we consolidate or merge with another
entity, unless (i) we shall be the surviving entity in such consolidation or
merger, or (ii) the other entity controls, is under common control with or is
controlled by us immediately prior to the consolidation or merger whether or not
we shall be the surviving entity in such consolidation or merger, in which event
the Notes shall remain outstanding as an obligation of the consolidated or
surviving entity. Upon an event of default under the Notes, all principal and
accrued but unpaid interest under the Notes will automatically be due and
payable, and the Notes shall bear interest until repaid at a default interest
rate of 12%. The Notes are secured by all of our assets, including, but not
limited to, our patents, trademarks, equipment, fixtures, inventory and accounts
receivable, for the benefit of the holders, subject to our right to issue up to
an additional $11,500,000 in principal amount of indebtedness with a security
interest in our assets which is pari passu with the security interest of the
holders of the Notes.
The Warrants are exercisable from March 8, 2006 until March 7, 2011 at a
price of $0.50 per share, subject to adjustment in certain events, including,
without limitation, upon our consolidation, merger or sale of all of
substantially all of our assets, a reclassification of our common stock, or any
stock splits, combinations or dividends with respect to our common stock. The
Warrants are callable at a price equal to $1.25 per share on the earlier of (i)
one year from issuance or (ii) the date that the shares of common stock issuable
upon exercise of the Warrants are registered for resale and our common stock has
traded at or above $1.25 per share for 20 consecutive trading days.
In addition, we have agreed to file a registration statement on Form SB-2
to effect the registration of 100% of our shares of common stock issuable upon
conversion of the Notes and exercise of the Warrants within 30 days of the
effective date of our pending registration statement on Form SB-2 (SEC File
333-122848) being declared effective by the SEC. We have agreed to use our
reasonable best efforts to cause the registration statement to be declared
effective no later than 180 days after the filing date. If we fail to file a
registration statement with the SEC on or before the time frame described, the
holders will be entitled to liquidated damages from Applied DNA Operations
Management, Inc. in an amount equal to 2% per month for each month that we are
delinquent in filing the registration statement.
Arjent Limited, a registered broker dealer firm, (the "Selling Agent")
acted as our selling agent in connection with the Offering. We paid the Selling
Agent: (a) a commission equal to $180,000, representing 12% of the Offering
proceeds; (b) a 3% non-accountable expense allowance in the amount of $45,000;
(c) $75,000 for the Selling Agent's legal fees; (d) shares of common stock equal
to 10% of the number of shares issuable upon conversion of the Notes on the date
of issuance of the Notes; and (e) $90,000 for consulting and management fees,
which will be paid to Vertical Capital Partners under the Selling Agent's
exclusive banking agreement with Vertical Capital Partners. In addition, we
issued 2,000,000 shares of common stock to the Selling Agent in its capacity as
our investment banker. The Selling Agent had no obligation to buy any Notes or
Warrants from us. In addition, we agreed to indemnify the Selling Agent and
other persons against specific liabilities under the Securities Act of 1933, as
amended (the "Act").
We claim an exemption from the registration requirements of the Act for the
private placement of these securities pursuant to Regulation S promulgated
thereunder since, among other things, the investors were offshore accredited
investors.
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Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
Exhibit
Number Description
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10.1 Form of Subscription Agreement by and among Applied DNA Operations
Management, Inc. and the investors named on the signature pages thereto.
10.2 Form of 10% Secured Convertible Promissory Note of Applied DNA Sciences,
Inc.
10.3 Form of Warrant Agreement of Applied DNA Sciences, Inc.
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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: March 14, 2006 /s/ JAMES HAYWARD
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James Hayward
Chief Executive Officer
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