CashmereCertain™ The world’s first verifiably-sourced cashmere€¦ · • India, Vietnam •...

transition to CertainT®

James A. Hayward, Ph.D., Sc.D. President & CEO December 2017

©2017 Applied DNA Sciences, Inc.

The statements made by Applied DNA Sciences, Inc. ("the Company”, or “us”) herein regarding the Company and its business 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 the Company’s future plans, projections, strategies and expectations, including statements regarding future results of operations and financial position, business strategy, prospective products, timing and likelihood of success, and objectives of management for future operations, and are based on certain assumptions and involve a number of risks and uncertainties, many of which are beyond the control of the Company, including, but not limited to, the risks detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2016, and other reports filed by the Company with the Securities and Exchange Commission. Forward-looking statements include all statements which are not historical facts, and can generally be identified by terms such as anticipates, believes, could, estimates, intends, may, plans, projects, should, will, would, or the negative of those terms and similar expressions. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and may be beyond the Company’s control, you should not rely on these statements as predictions of future events. Actual results could differ materially from those projected due to our short operating history, history of losses, lack of market acceptance of our products and services, market competition, changes in the local and national economies, and various other factors. All forward-looking statements contained herein speak only as of the date hereof, and the Company undertakes no obligation to update any forward-looking statements, whether to reflect new information, events or circumstances after the date hereof or otherwise.

Forward-Looking Statement


Corporate Overview

• Headquarters.................................. Stony Brook, N.Y.

• Ticker.............................................. Nasdaq: APDN • Shares Outstanding……………………… 27.4M • Float……………………………………………. 24.0 M shares • Market Cap…………6 Dec 2017...... $65.2 million • Employees...................................... 60+ • 9 Mos. Fiscal 2017 Revenue………… $3.6 M • Debt as of 9/30/17………………........ None

AT A GLANCE

BUILT TO SUPPORT THE MARKETS WE SERVE

• ISO 9001:2008 Certified/Registered (ANAB) – quality management

• ISO/IEC 17025:2005 Accredited (A2LA) – forensic authentication (expert witness qualifications) • cGMP – current Good Manufacturing Practices – near complete – filling Drug Master File with

FDA

3 ©2017 Applied DNA Sciences, Inc.

Dominant IP Portfolio

Proven Value

Proposition

• 53 patents issued; 75 patents pending • Using synthetic biology to enable customers to manage and ensure the integrity

of the global supply chains • Proven uncopiable by a U.S. Defense Logistics Agency ‘red team challenge’

• Technology validation by leading global companies, government agencies and consumers

• Proven ability to partner with industry leaders • Catalyzed shake-up in global cotton supply chain that is driving brands

and retailers to recapture economics and gain a competitive advantage with the use of tagged cotton; 200 mm lbs. of cotton tagged since 2014 inclusive of cotton to be tagged this harvest

Investment Thesis


• Expanding pipeline of pilot project opportunities – pilots steadily increased through each quarter of 2017

• DNA-marked home textiles can be found at Costco and Bed, Bath and Beyond • End-to-end (CertainT) licensing strategy gaining adopters – GHCL, Loftex,

Palmetto Synthetics, Techmer PM • Business and Thought leaders championing use of our technology platform -

Mehmood Khan, vice-chair of PepsiCo, Bob Catell, former chairman of U.S. National Grid and Ray Kelly, former NYPD commissioner

• Additional orders for tagged cotton • Synthetic fibers • Fertilizer • Across multiple market verticals with VideoJet, including pharmaceutical

serialization, Mil/Gov, Personal Care • Conversion of pilot projects to pre/commercial contracts, including recycled PET,

bearings

Investment Thesis

Growing Market

Awareness

Near-Term Revenue Catalyst


Our Value Propositions Ultimate Proof from Molecular Certificates that can not be falsified

Recover counterfeit

market share

Product Differentiation

Sustainability Organic Fa ir Trade Ethical Sourcing Circular Economy

Claims stay with the goods (not paper-trail or the package)

Origin Provenance Purity Authenticity

Reduce Diversion

Reduce legal supply

chain risk

Satisfy Stakeholders

/ Activists


Cotton - Authenticity is Good for Business

• Himatsingka one of many manufacturers in the marketplace

• Pricing power held by brands and retailers • Cotton manufacturers competing on price, not

innovation and quality

• With Applied DNA, Himatsingka has secured a competitive advantage in the marketplace

• Now offers brand protection to customers • Enables Himatsingka to keep current business and win

new business from competitors • Invests $250M in capacity expansion tasked primarily to

manufacture DNA-tagged textiles

Label Compliance

36 samples tested

Before Applied DNA With Applied DNA

SigNature® T DNA

Label Compliance

> 4000 samples tested


Wamsutta 500 Thread Count PimaCott Sheet Set

Reviewed: July 2017 Price When Reviewed: $60.00 +

Pros • Good fabric strength • Excellent tear-resistance • Good pill-resistance • Washed well with minimal shrinkage • Fit sample mattress with room to spare • Rated soft by testers

Cons • Wrinkled appearance

Technical Specifications Fiber: 100% Pima cotton Fabric structure: Sateen Thread count: 500 Mattress depth: Up to 18 inches Sizes available: Twin, Twin XL, Full, Queen, King or California King Colors: 14 options

This Bed Bath & Beyond-exclusive set is made of 100% Pima cotton that's been DNA-tested to ensure you're getting premium cotton. It proved to be durable in our lab tests, from fabric strength to laundering evaluations, though it had a very wrinkled appearance immediately after it was removed from the dryer. Consumer testers said they liked the feel of the soft fabric, calling it nice and smooth.

How We Tested: We evaluated the durability of each sheet set by testing its fabric strength, tear resistance, pilling resistance, shrinkage after laundering and appearance after laundering. We also examined its wrinkle resistance and fit to mattress when new and after multiple wash cycles. We then had consumer testers blindly rate the fabric for softness and their opinion of the feel.

More information: bedbathandbeyond.com


https://www.bedbathandbeyond.com/store/product/wamsutta-reg-500-thread-count-pimacott-reg-sheet-set/234926

Revenue sources: • Recurring DNA product • Recurring testing services • Recurring testing consumables • One-time development projects • Technology and trademark licensing

Raw Materials

Manufacturer Wholesale/ Distribution

Retail

Low

High

$

Value created is Applied DNA

Licensing Revenue potential

Goods Value Without Applied DNA

Goods Value With Applied DNA


DEMAND CONTINUES TO RISE FOR TAGGING AT THE GIN Cumulative SigNature® T – DNA Tagged (or to be) Cotton Fiber

10

Cumulative SigNature T - tagged cotton during ginning

(lbs.)

Certain amounts based on estimated selling price.

*2017 estimate of SigNature T - tagged cotton includes

DNA amounts purchased by customer as well as

approximately 35M lbs worth of DNA at risk for

Applied DNA.

**2018 assumes 40mm lbs worth of DNA at risk for

Applied DNA Ginning Season

2015 2016 2017 2018

2017* unaudited

2018** estimated


Fertilizer traced from Europe to Africa To detect dilution and provide traceability

Differentiation for distributor

Risk mitigation for bankers


Approaching Large Global

Markets

• Prevents diversion and dilution that lower crop yields

• Deter use in IEDs • 3 countries in West Africa • India, Vietnam • Mandated in Turkey by

legislation (5 B lb market)


• FDA regards DNA as GRAS (Generally Recognized as Safe)

• Drug Master File almost ready to file with FDA • Molecular tagging complements FDA regulation

for package serialization (parallels Videojet)


The Tablet Becomes the Barcode

Why protect leather? Verify claims: Sustainably produced No deforestation Controlled effluent discharge Responsible use of chemicals Animal welfare Ethically sourced No slave labour Traceability: Protect upstream sustainability credits beyond the split leather trading process


• 8 global brands • Manufacturers • Processors • 1 year program, from

field to finished goods

• Superb results to date

©2017 Appl ied DNA Sciences, Inc.

Innovation Through Blending: Cotton/rPet Blends


Raw Material Supplier

Manufacturer Distributor Inspector Retailer / Consumer

CertainT Molecular Certificate Chain of custody | Geo-location | Authentication records | Documents and images |Reports, queries, alerts

Track the data… CertainT Traceability Data Throughout Supply Chain

CertainT Tag and Test at Source

Authentication Every Step of the Way

Digital Track and Trace with CertainT®

17

Videojet systems easily delivery SigNature® molecular ink to transform inkjet codes into secure supply chain certification tools

Global Market Leader: Videojet • #2 market share; > 10B items per day • Mutually exclusive relationship • Taking a “volume sale” to a “value sale”

with price flexibility • Market potential

• DoD tagging of additional FSC’s (electronics, industrial hardware, etc.)

• Date/lot code for products needing traceability (food, drink, pharma, etc.)

• 325,000 machines installed (conversion opportunity)


CertainT™ enhanced Videojet systems transform inkjet codes into secure supply chain certification tools.

Secure Chip-locked DNA-Ink Cartridges only matched cartridge/device will operate


Defense and Security Industry

Providing a secure microcircuit supply chain for the Defense Logistics Agency

Over 800,000 components tagged and

secured

Opportunities to tag 65+ FCSs enhanced by Videojet DNA


Molecular Tag Accessibility

A validated, off-the-shelf solution that can be quickly adopted.


data collected from marked packages and items as they progress through the supply chain

a secure, unique identity is given to package or item through Videojet ink containing a SigNature molecular tag.

conducted in forensic laboratories or on-site with Applied DNA processes and tools


Channels to Market • Direct salesforce (11) in core industries of textiles,

government, pharmaceutical, personal care – Focus on “pull through” demand from retailers, brands, governments

• Strategic partnerships/contracts to complement core in tagging, testing and tracking

– Videojet (650 global) – contract signed Nov 2017

• Distributors for off-the-shelf products – EMEA (4 companies)

• Regional – US ~73% / Non-US ~27%


Biopharma: DNA Dx and Rx - Unique PCR-based manufacturing offers purity, simplicity and speed

“We are pleased with the technical capabilities and customer service of the Applied DNA team. PCR-production of DNA offers advantages over “plasmid produced” DNA. The goal of this pilot is to quantify those advantages for use in our animal vaccines.” Dr. Luigi Aurisicchio, Chief Executive and Scientific Officer of Evvivax srl

• Two contracts for Bulk PCR for Dx • Two new research pilots in DNA-based Rx • PCR-produced DNA is very pure compared to plasmids • Free of extraneous genetic elements intrinsic to

plasmid-based methods


Feasibility Pilots by Quarter FY2017



Annualized run rate of recurring revenue FY17

$-

$1,000,000.00

$2,000,000.00

$3,000,000.00

$4,000,000.00

$5,000,000.00

$6,000,000.00

$7,000,000.00

$8,000,000.00

Annualized View of Recurring Revenue by Quarter

Q4 Unaudited

Q3

Q2 Q1

adnas.com +1.631.240.8800

Jim Hayward


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