Item 1.01. Entry into a Material Definitive Agreement.
On December 20, 2017, Applied DNA Sciences,
Inc. (the “Company,” “we” or “us”) entered into a placement agency agreement (the “Placement
Agreement”) with Maxim Group LLC (the “Placement Agent”) pursuant to which the Placement Agent agreed to serve
as the sole placement agent, on a “reasonable best efforts” basis, in connection with the registered direct public
offering of 2,735,000 shares (the “Shares”) of our common stock, par value $0.001 (the “Common Stock”),
and warrants to purchase 2,735,000 shares of our Common Stock (the “Purchase Warrants”). Each Share will be sold with
a Purchase Warrant to purchase one share of Common Stock at a combined purchase price of $1.75 per share of Common Stock and accompanying
Purchase Warrant (the “Public Offering Price”) through the Placement Agent (the “Registered Direct Offering”).
Also on December 20, 2017, to effect the Registered Direct Offering, we entered into a securities purchase agreement (the “Securities
Purchase Agreement”) with certain institutional investors named in the signature pages thereto (the “Purchasers”)
pursuant to which we agreed to issue and sell the Shares and Purchase Warrants directly to the Purchasers at the Public Offering
Price.
We expect to receive aggregate net proceeds,
after deducting Placement Agent fees and other estimated expenses related to the Registered Direct Offering, in the amount of approximately
$4.2 million. We intend to use the net proceeds from this offering for working capital, capital expenditures, business development
and research and development expenditures and acquisitions of new technologies or businesses.
The closing of the Registered Direct Offering
is expected to take place on December 22, 2017, subject to customary closing conditions.
The Shares are being offered and sold to
the public pursuant to our shelf registration statement on Form S-3 (File No. 333-218158) initially filed with the Securities and
Exchange Commission (the “Commission”) on May 22, 2017 and declared effective on May 26, 2017 (the “Registration
Statement”). A prospectus supplement relating to the Registered Direct Offering will be filed with the Commission on or about
December 20, 2017.
The Securities Purchase Agreement contains
customary representations, warranties and agreements by us and customary conditions to closing. Under the Securities Purchase Agreement,
we have agreed not to enter into any agreement to issue or announce the issuance or proposed issuance of any Common Stock or Common
Stock equivalents for a period of 90 days following the closing of the offering.
In connection with this offering, we and
each of our executive officers, directors and certain stockholders have agreed, subject to certain exceptions set forth in the
lock-up agreements, not to sell, offer, agree to sell, contract to sell, hypothecate, pledge, grant any option to purchase, make
any short sale of, or otherwise dispose of, directly or indirectly, any shares of our Common Stock, or any securities convertible
into or exercisable or exchangeable for shares of our Common Stock, for 90 days from the date of the prospectus supplement relating
to this offering without the prior written consent of the Placement Agent. Notwithstanding the foregoing, if (a) we issue an earnings
release or material news, or a material event relating to our Company occurs, during the last 17 days of the lock-up period, or
(b) prior to the expiration of the lock-up period, we announce that we will release earnings results during the 16-day period beginning
on the last day of the lock-up period, the restrictions described above shall continue to apply until the expiration of the 18-day
period beginning on the issuance of the earnings releases or the occurrence of the material news or material event, unless the
placement agent waives that extension.
Pursuant to the Placement Agreement, we
have agreed to pay the Placement Agent a cash placement fee equal to 6.5% of the aggregate gross proceeds raised in this offering
from sales arranged for by the Placement Agent. Subject to certain conditions, we also have agreed to reimburse all travel and
other out-of-pocket expenses of the Placement Agent in connection with this offering, including but not limited to legal fees,
up to a maximum of $45,000.
If we elect to terminate this offering
for any reason, and, if within six months following the termination, we complete any financing of equity, equity-linked or debt
or other capital raising activity, then we will be required to pay to the Placement Agent upon the closing of the financing the
cash placement fee described above.
The Placement Agreement contains customary
representations, warranties and agreements by us and customary conditions to closing. We have agreed to indemnify the Placement
Agent against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”),
and liabilities arising from breaches of representations and warranties contained in the Placement Agreement, or to contribute
to payments that the Placement Agent may be required to make in respect of those liabilities. The Company has agreed not to effect
any issuance of Common Stock or securities convertible into Common Stock involving a Variable Rate Transaction, as defined in the
Securities Purchase Agreement, while any Purchaser holds any Purchase Warrants. The Purchase Warrants are subject to a call provision
whereby the Company may, subject to certain provisions including that the volume weighted average price of the Company’s
Common Stock has exceeded $5.00 for twenty consecutive trading days, call for cancellation of all or any portion of the Purchase
Warrants not yet exercised.
Each Purchase Warrant will be exercisable
beginning on the initial exercise date that is the date of issuance (the “Initial Exercise Date”) at an exercise price
of $2.00 per share, subject to adjustment as provided therein. The Purchase Warrants will be exercisable for five years from the
Initial Exercise Date, but not thereafter. The Purchase Warrants include an adjustment provision that, subject to certain exceptions,
reduces their exercise price if the Company issues Common Stock or Common Stock equivalents at a price lower than the then-current
exercise price of the Purchase Warrants, subject to a minimum exercise price of $0.44 per share. Subject to limited exceptions,
a holder of Purchase Warrants will not have the right to exercise any portion of its Purchase Warrants if the holder, together
with its affiliates, would beneficially own in excess of 4.99% (or, at the election of the holder, 9.99%) of the number of shares
of our Common Stock outstanding immediately after giving effect to such exercise (the “Beneficial Ownership Limitation”);
provided, however, that upon 61 days’ prior notice to us, the holder may increase the Beneficial Ownership Limitation, provided
that in no event shall the Beneficial Ownership Limitation exceed 9.99%.
The exercise price and number of the shares
of our Common Stock issuable upon the exercise of the Purchase Warrants will be subject to adjustment in the event of any stock
dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Purchase
Warrants.
After the Initial Exercise Date, if and
only if there is no effective registration statement registering, or no current prospectus available for, the resale of the Purchase
Warrants, the Purchasers may exercise the Purchase Warrants by means of a “cashless exercise.”
The foregoing descriptions of the Placement
Agreement, the Securities Purchase Agreement and the Purchase Warrants are qualified in their entirety by reference to the full
text of the Form of Purchase Warrant, the Placement Agreement and the Form of Securities Purchase Agreement, which are attached
to this Current Report on Form 8-K as Exhibits 4.1, 10.1 and 10.2, respectively, and incorporated herein by reference in their
entirety.
We note that the representations, warranties
and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated by reference in the
prospectus supplement or the accompanying base prospectus were made solely for the benefit of the parties to such agreement, including,
in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation,
warranty or covenant to or in favor of any stockholder or potential stockholder of the Company other than the parties thereto.
In addition, the assertions embodied in any representations, warranties and covenants contained in such agreements may be subject
to qualifications with respect to knowledge and materiality different from those applicable to security holders generally. Moreover,
such representations, warranties or covenants were accurate only as of the date when made, except where expressly stated otherwise.
Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state
of our affairs at any time.
This report contains forward-looking statements.
Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies,
predictions or any other statements related to our future activities, or future events or conditions. These statements are based
on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These
statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements
due to numerous factors, including those risks discussed in our Annual Report on Form 10-K and in other documents that we file
from time to time with the SEC. Any forward-looking statements speak only as of the date on which they are made, and we do not
undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this report,
except as required by law.
The prospectus supplement relating to the
Registered Direct Offering will be filed with the Commission and will be available on the Commission’s web site at http://www.sec.gov.
Copies of the prospectus supplement may also be obtained from Maxim Group LLC, 405 Lexington Avenue, New York, NY 10174, at (212)
895-3745.
This report does not constitute an offer
to sell or the solicitation of an offer to buy, and these securities cannot be sold in any state or jurisdiction in which this
offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any state or
jurisdiction. Any offer will be made only by means of a prospectus, including a prospectus supplement, forming a part of the effective
registration statement.