Dow Jones 12582.18 -112.10 1:17 pm PST, February 28, 2008 NASDAQ 2331.57 -22.21 For info, visit access.smallcapnetwork.com S & P 500 1367.68 -12.34 Change your subscription status here Russell 2000 706.16 -10.28 VOLUME 08 : ISSUE 19 Applied DNA Gets Under My Skin If you've been around the site for a while, then you've probably already heard me say counterfeiting costs legitimate companies about $600 billion in lost business each year. Clearly it's an opportunity for the right company, which is why Applied DNA (OTCBB: APDN) caught our eye a few months ago - they appear ready and able to launch a direct frontal assault on the illegal practice. It's an enticing prospect to be sure, but frankly, it has nothing to do with today's good news...or does it? When the same anti-counterfeit company can simultaneously generate revenue with a totally different kind of product, so much the better. And when there's industry-crossover potential, I'm even more interested.  Applied DNA just shipped their second order of the recently-launched skin-care product ingredient DermalRx. It was sold to the same skin-care product company that bought the first order back on November 26th. So, it appears this un-named (so far) organization is proceeding with the R&D involved in integrating DermalRx with the end-product. Applied DNA believes this product will be launched by the customer/company sometime before the end of 2008. The impact for shareholders is as straight-forward as it seems - the revenue machine is growing in size, even if in small increments. Once the skin-care product's development is done and it's rolled out commercially, there's no telling how much DermalRx Applied DNA could start selling. Any amount, however, could have a major impact on the company's current top line...the young upstart did a little more than $100K in sales for the last two quarters. I think that's the sweet spot here for current stock owners - the potential for major and rapid revenue increases within the next 12 months.  There was something else in the press release, however, that got my brain's gears spinning.  Counterfeit cosmetics is annually a $3 billion industry? Hmmm. And DermalRx is part of a skin-care company's new product R&D? And, CEO James Hayward has a couple of decades worth of cosmetics, consumer product, and related pharma experience (not to mention industry contacts)? Maybe it's just me, but I think Applied DNA is well-positioned to really make something happen - like revenue - within the cosmetics world.  Think about it. There are two ways I see how Applied DNA could protect cosmetic companies from a tarnished name due to counterfeit products. The first (and easy) one is the anti-piracy label they've already used for other products. The really cool one would be to integrate a DNA marker into the cosmetics themselves. I know basically nothing about the logistics of an idea. But, since the current marker is DNA-based/organic, I don't know why it couldn't be done. The company alluded to something along those lines in the press release, but they didn't specifically mention putting the DNA marker into cosmetics themselves. Interesting idea.  In the meantime, APDN shares continue to consolidate between 17 cents and 20 cents.  I know we'd all love to for the stock to go ahead move to $80.00 so we could each buy our own small country. Barring that miracle, I'll be content with a move back to 21 cents or higher. Such a move would break the glass ceiling from the last two weeks, which could spark a repeat of the move we saw in mid-January.  Looking beyond that, our ultimate target is still 36 cents, with a stop still at 7 cents. Like I said with our last look at APDN though, I think I'd be a short-term profit-taker around 27 cents. That would lock in a nice gain, and avoid any short-term retreat from the former resistance level.  Today's Applied DNA press release is below.    "Four stores and seven more to go... ...our founders brought forth to this continent a new restaurant..." Sorry - I couldn't resist paying a little homage to Abraham Lincoln while at the same time describing what's going on with one of my newest favorite companies. More good news from Spicy Pickle (OTCBB: SPKL) yesterday...they now own four more of their own restaurants, with all the rights and privileges (i.e. sales and profits) thereof. That brings the total owned units up to five, and two more are under construction. So what happened to the 123 stores we were talking about a couple of weeks ago? The number is still valid. Most of those 123 restaurants were franchisee-owned; their owners pay royalties to the Spicy Pickle corporate office. The five stores (plus two more on the way) we're talking about are outright owned by the company. Technically speaking, as a franchising company Spicy Pickle is the lessor instead of the lessee, but you get the idea. The motivation here is simple ...money. Rather than collecting about 7% worth of royalties on the average store's 700K in annual sales - about $50K per store - the company now collects 100% of the sales (hello cash flow!), and benefits from 100% of whatever profits are generated. With the upside comes more responsibility too...the company also has to run and manage the stores. Clearly the trade-off is worth it to them. Let's do some simple math here. With owning five of their own stores, each of which we think is doing about $700K annually, the company's top line is improved by a net of about $3.2 million per year (we're deducting the franchise fees they used to receive from these stores, but won't anymore). That's a pretty nice improvement compared to the current annualized sales of about $1.7 million (based on 35 operational units). In fact, it's about a 200% increase. This also advances the company towards the end-goal of profitability. I doubt the four-store acquisition will carry then all the way into the black. However, with 88 more franchises signed, sealed, but so far undelivered, I do think the swing to profit is in the foreseeable future. So does 'four stores and seven more to go' mean we can expect seven more company-owned stores to soon pop up among the 88 remaining unbuilt units? Actually, yeah, something like that. The $6 million fund-raising they completed back on December 15th was enough to open somewhere between 12 and 15 new company restaurants. Five are up and running, so I think there's room for at least seven more. As for the stock, the chart is as triangular as one the restaurants' diagonally-cut sandwiches...as it has been for weeks. That's not a bad thing or a good thing, but it does put any short-term trade on the backburner. The support and resistance features of the wedge shape are currently trapping SPKL between $1.12 and $1.26, but the range is shrinking fast. I'm looking for a move one way or the other soon.  I'd be a quick buyer if the resistance line is broken. If support is broken first, I'd also be a buyer once all the dust settles and shares start to perk up. That bottom may be a little harder to define, but I think the lower entry level is worth the wait. The company is going full throttle, and I don't see that changing anytime soon. Here's the news release for Spicy Pickle. The Applied DNA release is below.   Applied DNA Sciences Ramps Up Production, Ships Additional DermalRx Order; Scheduled to Present at Annual Health and Beauty Association Meeting March 4 in New York City  Thursday February 28, 4:06 pm ET  STONY BROOK, N.Y.--(BUSINESS WIRE)--Applied DNA Sciences, Inc. (OTC Bulletin Board: APDN), a provider of DNA-based security solutions, today announced that it has begun to ramp up production and has shipped another order for DermalRx(tm). DermalRx(tm), an ingredient used to promote exfoliation without any of the negative effects (irritation or inflammation) associated with chemical peeling, is being developed for use in a new skin care product for a top selling label of a large multinational company. It is anticipated that one additional order for pilot development and evaluation will be required prior to commercialization. This product is expected to be launched before the end of 2008.  "This order highlights our continued commitment to the ingredients business as a viable means of generating income for the company," commented Dr. James A. Hayward, President and CEO of Applied DNA Sciences. "The management team has demonstrated its ability to succeed in this area in the past, and we will continue to develop this business along with our SigNature(tm) DNA and Fibertyping(tm) businesses. This will enable us to build a strong company better able to weather the different sales cycles of these industries."  Applied DNA Sciences will be presenting and exhibiting at the Annual Health and Beauty Association Meeting in New York City March 4, 2008. This meeting, which takes place at the Jacob Javits Center, brings together decision makers from the cosmetic, fragrance and personal care industries and is renowned for providing cutting edge information to the industry. Dr. Hayward's talk, scheduled for 10:20 a.m. and titled "DNA Technology Derived from Plants: Proving Authenticity, Product Integrity and Foiling Counterfeits," will introduce our SigNature(tm) DNA to this important market.  Counterfeit cosmetics, estimated to be a $3 billion market, can seriously damage the health of consumers. Diversion is an equally daunting problem for cosmetics manufacturers where many brands rely on the cache of their name to sell products. Counterfeit or diverted products can tarnish the image of the brand, often making it difficult to repair. The benefit of forensic authentication is that it can assist in tracking product and ultimately in the criminal prosecution of the offending parties. Using SigNature(tm) DNA to mark products can significantly reduce the risk of counterfeiting and diversion. SigNature(tm) DNA marked products are currently in use by an international chemical manufacturer to help protect the authenticity of a key ingredient used in skin and hair care products.  "It gives me great pleasure to be a part of a company that works to protect the intellectual property and brand identity of companies and the health and safety of their customers," commented Dr. Hayward. "I look forward to sharing our knowledge and experience to date and offering solutions to these industry leaders in their daily battle against counterfeiting and diversion."  About Applied DNA Sciences, Inc. Applied DNA Sciences, Inc. provides botanical DNA encryption, embedment and authentication solutions that can help protect companies, governments and consumers from counterfeiting, fraud, piracy, product diversion, identity theft and unauthorized intrusion into physical locations and databases. APDN's common stock is listed on the Over-The-Counter Bulletin Board under the symbol "APDN."  The statements made by APDN may be forward-looking in nature and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe APDN's future plans, projections, strategies and expectations, and are based on assumptions and involve a number of risks and uncertainties, many of which are beyond the control of APDN. Actual results could differ materially from those projected due to our short operating history, limited financial resources, limited market acceptance, market competition and various other factors detailed from time to time in APDN's SEC reports and filings, including our Annual Report on Form 10-KSB, filed on January 15, 2008 and our subsequent quarterly reports on Form 10-QSB. APDN undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date hereof to reflect the occurrence of unanticipated events.  Contact: Applied DNA Sciences, Inc.  Debbie Bailey,  631-444-8090  Fax: 631-444-8848 FCMN Contact: info@adnas.com  http://www.ADNAS.com Source: Applied DNA Sciences, Inc.    We Value Your Feedback   Got comments, questions or suggestions? Send 'em on over: Email the Editor If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 4653 Carmel Mtn Rd Suite 308 #402 San Diego, CA 92130 Subscribe Information is power and timely information is profitable. Become informed and profit from Small Cap Network Profiles and Trading Alerts by becoming a Preferred Member today. There is no cost associated with your email subscription. Add your email address below and make sure to check your email inbox and confirm your opt-in request to start receiving the Small Cap Network Email Newsletter on a regular basis. To ensure newsletter delivery, you can add any additional email addresses you may have to the Small Cap Network Member List. Receiving the Small Cap Network Newsletter in multiple locations is the best way of making sure you don't miss the next investing or trading opportunity! For web based email addresses, the Small Cap Network recommends @yahoo.com or @aol.com for timely and reliable email newsletter delivery. Subscribe Here Note: Your email address will be kept strictly confidential, and will not be shared with any other entity for any purpose at any time. If you no longer wish to receive the Small Cap Network Newsletter, simply follow the instructions located at the bottom of every Small Cap Network Newsletter Edition. Refer A Friend  If you find the Small Cap Network Newsletter informative and profitable, please forward our newsletter alert service to like-minded friends and associates who share similar market interests.   Ensure Newsletter Delivery  To ensure newsletter delivery, you can add any additional email addresses you may have to the Small Cap Network Member List. Receiving the Small Cap Network Newsletter in multiple locations is the best way of making sure you don't miss the next investing or trading opportunity! For web based email addresses, the Small Cap Network recommends @yahoo.com or @aol.com for timely and reliable email newsletter delivery. D I S C L A I M E R: The Small Cap Network, its website and email newsletter (hereafter, cumulatively referred to as "SCN") , is an independent electronic publication committed to providing its readers with factual information on select publicly traded companies. SCN is owned and operated by TGR Group, LLC ("TGR"). All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizing the upside potential for investors while minimizing the downside risk, whenever possible. Moreover, as detailed below, TGR accepts compensation from third party consultants and/or companies, which it features in the publication and circulation of SCN. To the degrees enumerated herein, SCN should not be regarded as an independent publication.  Click Here or go to http://access.smallcapnetwork.com/compensation_disclosure/ to view our compensation on every company we have ever covered, or visit the following web address: http://access.smallcapnetwork.com/profile_disclosure/ for our full profiles and http://access.smallcapnetwork.com/alert_disclosure/ for Trading Alerts.  TGR Group, LLC has been paid a fee of $30,000 cash and 1,000,000 shares of newly issued restricted stock by Applied DNA Sciences Inc. for coverage of the Company. Larry Isen, the editor and publisher of the OTC Journal, through various entities he controls, has purchased 1,200,441 shares of Spicy Pickle at an average cost of $.2125 per share. These purchases were made in Spicy Pickle private offerings. The aforementioned purchases were made between August of 2005 and August of 2006. On 12/15/07, on entity controlled by Larry Isen participated in an additional financing wherein 12 shares of convertible preferred, converting at $.85 into 120,000 shares and 90,000 warrants with an exercise price of $1.60 were purchased. In addition, Larry Isen has received 785,000 shares of Spicy Pickle common stock for consulting services. In addition, MarketByte LLC, an entity controlled by Larry Isen, has received a fee of $30,000 cash, and 300,000 newly issued restricted shares for coverage of Spicy Pickle. TGR Group LLC, the publisher of the Small Cap Network, has received $30,000 and 300,000 newly issued restricted shares for coverage of Spicy Pickle. Mr. Isen is an affiliate of TGR Group. In addition, two other individuals affiliated with TGR Group have purchased a total of 300,000 shares at $.25 per share and received an additional 70,000 for consulting services. Current positions of the aforementioned can be found at www.otcjournal.com and access.smallcapnetwork.com in the Spicy Pickle information section. From time to time TGR sells shares received as compensation for coverage of client companies. Shares received are sold in the open market. Since the shares are received as compensation for services as previously disclosed, and not for investment purposes, TGR does not view the sale of the shares as contradictory to any opinions delivered in the content. This should be viewed as a conflict of interest by shareholders or prospective shareholders of the client companies.  TGR, its Members and Members' families, are forbidden by company policy to own, buy, sell or otherwise trade stock for their own benefit in the companies who appear in the publication unless specifically disclosed.  All statements and expressions are the sole opinions of TGR and are subject to change without notice. A profile, description, or other mention of a company within SCN is neither an offer nor solicitation to buy or sell any securities mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein.  The profiles, critiques, and other editorial content of SCN may contain statements that appear foward relating to the expected capabilities of the companies mentioned herein.  THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN CONSENT OF TGR.  We encourage our readers to invest carefully and read the investor information available at the web sites of the Securities and Exchange Commission ("SEC") at http://www.sec.gov and/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com. We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at http://www.sec.gov/consumer/cyberfr.htm. Readers can review all public filings by companies at the SEC's EDGAR page. The NASD has published information on how to invest carefully at its web site.