On October 8, 2020 Applied DNA Sciences, Inc. (NASDAQ: APDN) ("Applied DNA" or the "Company"), a leader in Polymerase Chain Reaction (PCR)-based DNA manufacturing that enables in vitro diagnostics, pre-clinical nucleic acid-based therapeutic drug candidates, supply chain security, anti-counterfeiting, and anti-theft technology, reported that it entered into an agreement (the "Agreement") with the sole holder (the "Holder") of its outstanding July 16, 2019, secured convertible notes (the "Notes") for the repayment in full of the Notes, in an aggregate amount of approximately $1.7 million, representing the outstanding amount of the Notes plus interest through the scheduled maturity of the Notes (Press release, Applied DNA Sciences, OCT 8, 2020, View Source [SID1234568222]). In conjunction, affiliates of the Holder will exercise warrants issued as part of the Company’s November 15, 2019, underwritten public offering (the "2019 Warrants") for total proceeds to the Company of approximately $1.7 million. Not all of the Holder’s 2019 Warrants will be exercised in connection with the repayment of the Notes. As a result of the repayment of the Notes, approximately $1.5 million of debt and liabilities will be extinguished from the Company’s balance sheet, leaving the Company debt-free. In addition, the security interests in the Company’s property granted to secure the Notes will be released.
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In connection with a warrant exercise agreement with affiliates of the Holder, in addition to the shares of common stock issued upon exercise of the 2019 Warrants by such affiliates, the Company will issue replacement warrants (the "Replacement Warrants") to such affiliates of the Holder in an amount equal to one half the amount of the 2019 Warrants exercised in connection with the Notes repayment. The Replacement Warrants have an exercise price equal to the closing price of the Company’s common stock on October 7, 2020. In addition, until January 5, 2021, if affiliates of the Notes holder exercise additional 2019 Warrants, the Company will issue to such affiliates additional Replacement Warrants in an amount equal to one half the amount of such exercised warrants and with an exercise price equal to the closing price of the Company’s common stock on the date the related 2019 Warrants are exercised. The Replacement Warrants will not be registered nor listed on any exchange but will be the subject of a registration rights agreement pursuant to which the Company agrees to file a registration statement with respect to the common stock underlying the Replacement Warrants.
"The opportunistic elimination of our outstanding Notes preserves our cash balance to fund the execution of our COVID-19 diagnostics and testing strategy that we believe holds the potential to impact our growth trajectory positively," said Dr. James A. Hayward, president and CEO, Applied DNA Sciences. "Having built a solid strategic foundation and following the receipt of our first commercial contract for our COVID-19 diagnostic assay kits, we are working diligently to commercialize our testing-as-a-service program at our clinical laboratory subsidiary."