Dow Jones 14093.08 +77.96 7:03 am PDT, October 13, 2007 NASDAQ 2805.68 +0.00 For info, visit access.smallcapnetwork.com S & P 500 1561.80 +7.39 Change your subscription status here Russell 2000 841.17 +0.00 VOLUME 07 : ISSUE 97 Applied DNA Inc. - Real Opportunity in Spotting Fakes  Company Name: Applied DNA Sciences Inc. Stock Symbol : APDN Coverage Initiated: October 13, 2007 Current Price: $0.12 Average Volume: 62,057 52 Week Range: $0.07 - $0.28 Suggested Target: $0.36 Suggested Stop: $0.07 Counterfeiting isn't just a nuisance anymore. It's costing you and me money, jobs, and in some cases, can even cost lives. The U.S. Chamber of Commerce estimates that counterfeiting costs the U.S. economy between $200 and $250 billion every year, in addition to eliminating 750,000 jobs. Even more alarming is how no industry is immune - even pharmaceuticals. In 2006, 46 people died in Panama before it was discovered that an expectorant contained diethylene glycol. It was supposed to contain glycerine, but a label had been maliciously switched prior to the manufacturing process. Why? Because diethylene glycol is cheaper to make. That's just the beginning, as you'll read below.  Here's the good news...our search for undiscovered small cap opportunities has turned up a company with a monetizable solution to the counterfeiting problem. Amazingly, you can own shares of this stock for about a dime a piece.  With billions of dollars at stake, you don't need me to explain how an investment in this stock could reap big rewards for shareholders who are wise enough to become an owner early in the company's growth phase.  The company's name is Applied DNA Sciences Inc. (OTCBB: APDN). They've devised a way to help spot the illegal practice of counterfeiting and piracy by marking a tag with a certain strand of DNA. If the product is real, the tag can be tested to prove it. Conversely, a negative test means the item is a fake. It's as simple as that.  While Applied DNA Sciences has everything I like in a small company, I like the price most of all. You can own this stock for about 1/20th of what you would have paid three years ago - even though it's far more viable now than it was then. Who said timing isn't everything?  As if that weren't enough of a reason to take a look, I also want to remind you the Small Cap Network has been on a roll lately. Spicy Pickle (OTCBB: SPKL) saw huge results in less than two weeks, producing gains anywhere from 65% to 82% for anybody who locked in profits at our suggested target of $1.40. We also closed out a nice 32.4% winner a couple of weeks ago with our Overstock.com (NASDAQ: OSTK) pick. Titan Global (OTCBB: TTGL) is still going strong too, up about 60% from our pick price, and looking like it's ready to make another bullish leg. If you missed out on those gains because you didn't take a swing, don't dwell on it. I think today's trading idea has just as much potential to make you some good money.    Best of Breed Technology One of the key reasons I think Applied DNA could be very rewarding for its shareholders is the company's technology, called SigNature (tm). Basically, a SigNature(tm) DNA marker can be placed on a tag (for clothing), on a label (such as a CD), in a liquid (like ink), or really anywhere. Stock certificates, artwork, collectibles, pharmaceuticals...Applied DNA's technology could have practical applications for all of those things, and more.  With that embedded DNA going wherever the product goes, a simple test can determine whether or not the goods are from the true manufacturer, or a counterfeiter. A special pen that looks like a white magic marker can be used to test for the presence of SigNature(tm) DNA. More recently, Applied DNA has designed a device that shines a certain kind of light at the label. If the right DNA is present, the tag lights up. The counterfeiter's tags will simply not test 'positive' for a SigNature(tm) DNA strand.  Where needed, a forensic authentication can be done. That's a big deal too...it means it holds up in a courtroom where other testing methods might not.  The other upside to the complex technology is how it's basically impossible to replicate the DNA. DNA segments from botanical sources are rearranged into a unique encrypted sequence, and then embedded into the product. As a result, the effort required to replicate the same DNA in a SigNature(tm) DNA marker would be so expensive that it's virtually impossible to copy. Point being, shareholders won't have to worry about APDN's technology being 'beaten'. Ultimately, that protects investor's profits.    The Vast Need  According to the U.S. Chamber of Commerce, product piracy costs the U.S. between $200 and $250 billion per year, and about 3/4 of a million jobs. Globally, counterfeits cost the world an estimated $600 billion or more. Car parts, packaged foods, software, CDs, health and beauty products are all targets...nothing is immune. And it's not just a mere inconvenience of poor quality. The FAA estimates over the last 20 years counterfeit airplane parts - which are usually of poor quality - have played a role in at least 166 aircraft incidents and malfunctions. Not good news, particularly if you're in one of those airplanes with fake parts.  Pharmaceuticals are being bootlegged too, sometimes with fatal consequences. We mentioned the mislabeling of diethylene glycol above. In 2002, some vials of Procrit (epoetin), a prescription drug designed to improve hemoglobin levels, were found to be nothing more than tap water. The list goes on and on.  Clearly there's a growing need for this kind of technology. I think Applied DNA is in the right place at the right time, and poised to capitalize on the growing demand for authentication products. Shareholders stand to greatly benefit once all these corporate victims of counterfeiting recognize just what Applied DNA can do to protect them.    The Right Time  If you like undervalued stocks, I think you're going to love APDN.  How does a stock with so much promise in 2003 move from above $3.00 then to 12 cents now? I just think the market expected huge results immediately, without acknowledging things take time. Frankly, I love taking advantage of someone else's impatience/misunderstanding. Shares are literally almost as low as we've ever seen. The irony is that the company has never been closer to fiscal success. If you're wondering why I feel the company is 'on the verge', I'm taking my cue from recent activity. The company has forged reseller agreements with Champion Thread Company, as well as Printcolor Screen Ltd. And, a couple of major consumer brands are test-driving Applied DNA's technology.  Last but not least, an arrangement with Supima has reached a major milestone (see the press release below for full details). Supima is the promotional organization for American Pima cotton - a superior quality fabric sometimes, as you may have guessed, counterfeited. The agreement with Supima laid out several stages of a DNA-test feasibility study, with each stage including substantial funding from Supima. After the second stage was completed, Supima could have walked away with no further obligation. But, they didn't. Instead, they opted to keep developing the test. Bottom line - I'm currently seeing a lot of quality business activities from Applied DNA that I wasn't seeing before. I believe something really big and investment-worthy is happening here now.   Bottom Line  As of the end of the last quarter, there were a little over 160 million shares issued and outstanding. With shares at 12 cents, the market cap is right at $19.2 million. There are also about 77 million warrants and options out there. That's a fairly good-sized number, but I don't see a major dilution risk on the horizon. The average exercise price of all of those warrants and options is around 48 cents. The only way those warrants and options would become a dilution issue is if the stock quadrupled from where it is now, and I hardly consider that a complaint for current owners. Overall, I think the capitalization is basically healthy, and typical of a small company.  The challenge here is trying to determine what shares should be worth when we have no revenue or earnings history to use as a guide. In cases like this, I like to use a price/sales ratio. My personal rule of thumb is a P/S of 3.0, meaning the market cap should be about three times annual revenues.  So, what kind of numbers do I really think Applied DNA could produce? Well, there's up to $250 billion lost in the U.S. every year due to counterfeiting and piracy. I doubt any corporation would mind spending some money on authenticity testing if it meant saving millions, or even billions, of dollars. But let's think ultra-conservatively here. Even if corporate America was only willing to spend 0.01% of their counterfeit-rooted losses on Applied DNA's anti-counterfeit technology, that's still a $25 million sales opportunity.  Using that estimated $25M in sales and a P/S ratio of 3.0 - and a little algebra - I come up with a potential market cap of $75 million, or a per share value of 47 cents. You know what though? I'm not even going to get that greedy - I'll suggest a target of 36 cents for starters. Let's try a stop level of 7 cents. (Just for the record, however, I think the global market is going to be willing to spend far more than 0.01% of their $600 billion in counterfeit-based losses.)  One final thought...  If you're one of those investors who likes to monitor the trading activities of the company's top people, you may be interested to know Jim Hayward, Applied DNA's CEO, has now invested a total of $850,000 of his own money into the company. I can't think of a bigger endorsement for a stock than a CEO who eats his own cooking, especially when it's a big chunk of change like that.  So, here's your chance to invest side-by-side with the company president in a ground-floor opportunity. You read about the massive need for authentication, and now you know how Applied DNA's technology can fulfill the need. I really believe APDN has a great shot at moving up to 36 cents over the next few months - a nice triple in its current value. Of course, if you want to benefit from it, you need to own it. The key to investing in small stocks is to decide whether or not you believe the potential reward is well worth the risk. In the case of APDN, I absolutely do.   Applied DNA Sciences Closes on Initial Bridge Financing and Receives Third Milestone Payment in Supima Agreement; CEO Increases Personal Investment in Company  STONY BROOK, N.Y., October 12, 2007 /Business Wire/ -- Applied DNA Sciences, Inc. (OTC Bulletin Board: APDN), a provider of DNA-based security solutions, today announced that it has recently closed on initial rounds of bridge financing totaling $550,000. This financing is in the form of secured convertible promissory notes and warrants to purchase shares of the company's common stock.  "The ability of APDN to continue to raise money at this critical juncture proves once again that the company is moving forward with its commercialization strategy and I believe that other investors are as optimistic as I am about the future of this company," commented Dr. James Hayward, APDN's President and CEO.  In another positive development, APDN received its third milestone payment from Supima, the promotional organization of the American Pima cotton growers. This milestone demonstrates Supima's continued commitment to this study and the organization continues to be excited by the results to date. APDN has been able to successfully amplify DNA from mature cotton cultivars, the first group in the world that has been able to do so, and patent applications have been filed to protect this important finding.  "We believe that there will be strong market demand for testing of cotton cultivars to distinguish between American Pima cotton and other cotton, once we successfully complete this feasibility study," Dr. Hayward continued. "There is an urgent need for this testing, not only in industry, but we believe also by the US government, looking to monitor and control the entry of foreign textiles into the US market. We believe this testing, which would be done solely by APDN, represents the potential to generate substantial revenue for the company. We are very encouraged by our results to date and are excited by the potential opportunity these findings represent."  Dr. Hayward has also increased his personal investment in APDN in the amount of $300,000. This is in addition to the $550,000 announced previously, bringing his total investment in the company over the past six months to $850,000.  Dr. Hayward added, "I believe that the greatest expression of my confidence in APDN is the fact that I continue to invest my personal funds into the company. We continue to make progress on a daily basis and the entire management team is committed to doing what is necessary for APDN to realize its potential."  About SigNature DNA  APDN SigNature DNA Markers are used to help fight counterfeiting, product diversion, piracy, forgery, identity theft and unauthorized intrusion into physical locations and databases. Trade in counterfeit goods accounts for approximately seven percent of world trade, or hundreds of billions of dollars annually. APDN's SigNature DNA Markers consist of botanical DNA segments custom manufactured by APDN to identify a particular class of or individual products or items. During this manufacturing process, APDN scrambles and encrypts a naturally occurring botanical DNA code segment or segments, and then encapsulates the resulting DNA segment utilizing APDN's proprietary SigNature DNA Encapsulation system. The sequence is then recorded and stored in a secure database. This SigNature DNA Marker can then be embedded into a broad variety of media. Because the portion of DNA in a SigNature DNA Marker used to identify the marker is so minute, it cannot be detected unless it is replicated billions of times over, or amplified. This amplification can only be achieved by applying matching strands of DNA, or a primer, and PCR techniques to the SigNature DNA Marker. The sequence of the relevant DNA in a SigNature DNA Marker must be known in order to manufacture the primer for that DNA. As a result, we believe the effort required to find, amplify, select and clone the relevant DNA in a SigNature DNA Marker would involve such enormous effort and expense that SigNature DNA Markers are virtually impossible to copy without APDN's proprietary systems. 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 16, 2007 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.  SOURCE: Applied DNA Sciences, Inc.  -0-10/12/2007  /CONTACT: Debbie Bailey, 631-444-8090, fax: 631-444-8848/  /FCMN Contact: info@adnas.com /  /Web site: http://www.ADNAS.com /   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. 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