Item
1.01 Entry into a Material Definitive Agreement.
IIMAK
Agreement
On
April
18, 2007, we entered into a Joint Development and Marketing Agreement with
International Imaging Materials, Inc., or IIMAK. In this agreement with IIMAK,
the parties agreed to jointly develop thermal transfer ribbons incorporating
our
SigNature DNA Markers to help prevent counterfeiting and product diversion
for
an initial six (6) month period. This period may be extended by mutual written
agreement. Upon the parties’ successful development of commercially feasible
ribbons incorporating SigNature DNA Markers, we will be paid royalties based
on
a calculation of net receipts by IIMAK from sales of such products. We will
receive the exclusive right to supply DNA taggants to IIMAK and IIMAK will
receive the exclusive right to manufacture and sell such products
worldwide.
The
foregoing description is qualified in its entirety by reference to the
Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated
herein by reference. A copy of the press release relating to the announcement
is
attached as Exhibit 99.1 and is incorporated herein by reference.
Item
2.03 Creation of a Direct Financial Obligation.
Item
3.02 Unregistered Sales of Equity Securities.
On
April
23, 2007, we issued and sold a $100,000 principal amount secured promissory
note
bearing interest at a rate of 10% per annum and a warrant to purchase 200,000
shares of our common stock to James A. Hayward, a director and the Chief
Executive Officer of the Company.
The
promissory note and accrued but unpaid interest thereon are convertible into
shares of common stock of the Company at a price of $0.50 per share by the
holder of the promissory note at any time from April 23, 2007, through April
22,
2008, and shall automatically convert on April 22, 2008 at a conversion price
of
$0.15. At any time prior to conversion, we have the right to prepay the
promissory note and accrued but unpaid interest thereon upon 3 days prior
written notice (during which period the holder can elect to convert the note).
Until the principal and interest under the promissory note is paid in full,
or
converted into our common stock, the promissory note will be secured by a
security interest in all of our assets. This security interest is pari
passu
with the
security interest granted to the
holders of $1,500,000 in aggregate principal amount secured convertible
promissory notes of the Company issued on March 8, 2006, and the holders
of
$3,950,000 in aggregate principal amount secured convertible promissory notes
of
the Company issued on May 2, 2006 and June 15, 2006.
The
warrant is exercisable for a four-year period commencing on April 23, 2008,
and
expiring on April 22, 2012, at a price of $0.50 per share. The
warrant may be redeemed at our option at a redemption price of $0.001 upon
the
earlier of (i) April 22, 2010, and (ii) the date our common stock has traded
on
The Over the Counter Bulletin Board at or above $1.00 per share for 20
consecutive trading days.
Item
8.01 Other
Events.
On
April
11, 2006, our former employee Paul Reep filed suit against us, Applied
DNA
Operations Management, Inc., APDN (B.V.I.), Inc., Jun-Jei Sheu, Ben Liang,
James
A. Hayward, Larry Lee and Peter Brocklesby in the Clark County District
Court,
Nevada (Paul Reep v. Applied DNA Sciences, et al., Clark County District
Court
Case No. A539250). The
action is a refiling of a lawsuit we previously disclosed (Paul Reep v.
Applied
DNA Sciences, Inc., U.S. District Court,
Central
District of California,
Case
No.: BC345702) in which we successfully moved the court to indefinitely
stay all
proceedings in the matter because of a forum selection clause designating
Nevada
state courts as the proper forum. The
complaint alleges causes of action for breach of written contract, breach
of
oral contract, defamation, fraud and violations of the California Labor
Code,
and seeks approximately $360,000 in specified damages, additional damages
according to proof, potential punitive damages, and fees and costs. The
Company
disputes all of the allegations and intends to vigorously defend this action.
This matter is in its early stages.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits.
Exhibit
10.1 Joint
Development and Marketing Agreement, dated April 18, 2007 by and between
Applied
DNA Sciences and International Imaging Materials, Inc.**
Exhibit
10.2 Form
of
Warrant of Applied DNA Sciences, Inc.
Exhibit
10.3 Form
of
Note of Applied DNA Sciences, Inc.
Exhibit
99.1 Press
release of Applied DNA Sciences, Inc., dated April 24, 2007.
_____________________________
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Confidential
treatment has been requested with respect to certain portions of
this
exhibit pursuant to Rule 24b-2 under the Securities Exchange Act
of 1934,
as amended.
Omitted
portions have been field separately with the
Commission.
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