UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
Commission File Number: 002-78682
NOTIFICATION OF LATE FILING
|_| Form 10-K |_| Form 20-F |_| Form 11-K |X| Form 10-Q
|_| Form 10-D |_| Form N-SAR
For Period Ended: June 30, 2006
|_| Transition Report on Form 10-K
|_| Transition Report on Form 20-F
|_| Transition Report on Form 11-k
|_| Transition Report on Form 10-Q
|_| Transition Report on Form N-SAR
For the Transition Period Ended: _____________________
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above, identify
the item(s) to which the notification relates:
PART I - REGISTRANT INFORMATION
Applied DNA Sciences, Inc.
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Full name of registrant
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Former name if applicable
25 Health Sciences Drive, Suite 113
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Address of principal executive office
Stony Brook, New York 11790
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City, state and zip code
PART II - RULE 12b-25 (b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate)
| (a) The reasons described in reasonable detail in Part III of this
| form could not be eliminated without unreasonable effort or expense;
|
| (b) The subject annual report, semi-annual report, transition report
[X]| on Form 10-K, Form 20-F, Form 11-K, Form n-SAR or Form N-CSR, or
| portion thereof, will be filed on or before the fifteenth calendar day
| following the prescribed due date; or the subject quarterly report or
| transition report on Form 10-Q or subject distribution report on Form
| 10-D, or portion thereof, will be filed on or before the fifth
| calendar day following the prescribed due date; and
|
| (c) The accountant's statement or other exhibit required by Rule
| 12b-25(c) has been attached if applicable.
PART III - NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q,
10-D, N-SAR, N-CSR, or the transition report, or portion thereof, could not be
filed within the prescribed time period.
As previously disclosed, Applied DNA Sciences, Inc. (the "Company" or "we"
or "us") will be restating its financial statements as of and for the fiscal
year ended September 30, 2005 and as of and for the fiscal quarters ended March
31, 2005, June 30, 2005 and December 31, 2005. The Company will also be
restating its financial statements as of and for the fiscal quarter ended
December 31, 2004. Because the analysis and preparation of the financial
statements for the periods affected by the restatement are not yet complete, we
will not be in a position to timely file our Quarterly Report on Form 10-Q for
the quarter ended June 30, 2006 without undue hardship and expense.
PART IV -OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
James A. Hayward (631) 444-6862
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of
1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If the answer is no,
identify report(s).
|X| Yes |_| No
(3) Is it anticipated that any significant change in results of operations from
the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion thereof?
|X| Yes |_| No
If so, attach an explanation of the anticipated change, both narratively and
quantitatively, and, if appropriate, state the reasons why a reasonable estimate
of the results cannot be made.
On January 28, 2005 and February 11, 2005, we closed on a private
placement of our securities in which we sold $7,371,000 in aggregate principal
amount of 10% secured convertible promissory notes (the "Notes") and warrants to
purchase 14,742,000 shares of our common stock (the "Warrants").
On May 16, 2006, our Board of Directors concluded that its previously
issued financial statements as of and for (i) the fiscal year ended September
30, 2005, and (ii) the three month periods ended March 31, 2005, June 30, 2005
and December 31, 2005, should no longer be relied upon as a result of the
Company having erroneously recorded the Warrants, and the common stock issued
upon the conversion of all of the Notes in February, 2005, as "permanent
equity."
Accordingly, we will restate our financial statements as of and for the
fiscal year ended September 30, 2005, and as of and for the quarters ended
December 31, 2004, March 31, 2005, June 30, 2005 and December 31, 2005 by
disclosing the effect of these errors in an amended Form 10-KSB for the fiscal
year ended September 30, 2005 and an amended Form 10-QSB for the fiscal quarters
ended December 31, 2004, March 31, 2005, June 30, 2005, December 31, 2005 and
March 31, 2006.
These errors were discovered in connection with comments raised by the
Securities and Exchange Commission (the "SEC") in their review and comment on
the Registration Statement on Form SB-2, as amended, that we filed with the SEC
on February 15, 2005 (the "Registration Statement") pursuant to the Registration
Rights Agreement (the "Registration Rights Agreement") by and between the
Company and VC Arjent Ltd., on behalf of the holders of the Registrable
Securities (as defined in such agreement), in connection with our private
placement in January and February, 2005 described above. These comments related
to the Company's accounting for the Warrants and the common stock issued upon
conversion of the Notes (pursuant to their terms, the Notes automatically
converted into shares of our common stock upon the filing of the Registration
Statement) considering the rights provided by the Registration Rights Agreement
to the holders of these securities. Pursuant to the terms of the Registration
Rights Agreement, if the Registration Statement was not declared effective on or
before June 15, 2005, we are obligated to pay liquidated damages in the amount
of 3.5% of the face amount of the Notes per month until the Registration
Statement is declared effective. The Registration Statement has not been
declared effective by the SEC, and we have been obligated to pay the liquidated
damages set forth in the Registration Rights Agreement. The Registration Rights
Agreement provides that, at our option, these liquidated damages can be paid in
cash or restricted shares of our common stock. We paid liquidated damages in the
form of restricted shares of our common stock for the period from June 15, 2005
to December 15, 2005. Based on the closing market prices of $0.66, $0.58, $0.70,
$0.49, $0.32 and $0.20 for our common stock on July 15, 2005, August 15, 2005,
September 15, 2005, October 17, 2005, November 15, 2005 and December 15, 2005,
respectively, we issued a total of 3,806,240 shares of common stock in
liquidated damages from August, 2005 to January, 2006.
The Emerging Issues Task Force ("EITF") is currently reviewing the
accounting for securities with such liquidated damages provisions as stated in
EITF 05-04, "The Effect of a Liquidated Damages Clause on a Freestanding
Financial Instrument Subject to EITF 00-19." There are currently several views
as to how to account for this type of transaction and the EITF has not yet
reached a consensus. For instance, one could conclude that taken together, EITF
00-19, "Accounting for Derivative Financial Instruments Indexed To, and
Potentially Settled in the Company's Own Stock," and EITF 05-04 provide that
because the maximum potential liquidated damages for the failure to have the
Registration Statement declared effective by June 15, 2005 is greater than the
difference between the fair value of registered and unregistered shares of our
common stock, the value of our common stock issued upon conversion of the Notes
should be classified as temporary, rather than permanent equity. Similarly, one
could conclude that given the terms of the Warrants, under EITF 00-19 the fair
value of the Warrants should be recorded as a liability, with an offsetting
reduction to shareholders' equity, rather than permanent equity. This warrant
liability would initially be measured at fair value using the Black-Scholes
option pricing model, and then re-valued at each reporting date, with changes in
the fair value reported as non-cash charges or credits to earnings.
The Company concluded that for agreements containing registration rights
where significant liquidated damages could be required to be paid to the holder
of the instrument in the event the issuer fails to obtain or maintain the
effectiveness of a registration statement for a preset time period, the common
stock subject to such liquidated damages does not meet the tests required for
shareholders' equity classification, and accordingly must be treated as
temporary equity, or reflected between liabilities and shareholders' equity in
the balance sheet until requirements for treatment as permanent equity are
satisfied. In analyzing instruments under EITF 00-19, the Company concluded that
the likelihood or probability of the Company's failure to have the Registration
Statement declared effective is not a factor.
Historically, we classified the Warrants and the common stock issued upon
conversion of the Notes as shareholders' equity, as we believed these securities
met the requirements necessary to record them as shareholders' equity. After
further review of EITF 00-19 as it relates to the Warrants and the common stock
issued upon conversion of the Notes, we have concluded that our financial
statements for the fiscal year ended September 30, 2005, and interim periods
ended December 31, 2004, March 31, 2005, June 30, 2005, and December 31, 2005,
will be restated. The restatement will include the reclassification of the
common stock issued upon conversion of the Notes from shareholders' equity to
temporary equity, and the reclassification of the liability for the fair value
of the Warrants from shareholders' equity and to warrant liability as of the
date they were issued.
We are still completing our analysis of the effects of the change in the
accounting for the Warrants and have not quantified the change in the results of
operations for the period ended June 30, 2005 that will be included in the
earnings statements to be reflected in the Form 10-QSB for the interim period
ended June 30, 2006. Accordingly, we are not yet providing a reasonable
estimate of the change in previously reported results.
Our Board of Directors discussed this matter with the Company's
independent public accounting firm who agreed that the Company's annual and
quarterly financial statements could not be relied upon and needed to be
restated as described above.
Applied DNA Sciences, Inc.
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Name of Registrant as Specified in Charter.
Has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Dated: August 15, 2006 By: /s/ JAMES A. HAYWARD
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James A. Hayward
Title: Chief Executive Officer