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Applied DNA sees benefits in military's new no-fakes law

Applied DNA Sciences technology

Applied DNA Sciences technology Photo Credit: Handout

Stony Brook-based Applied DNA Sciences Inc., a maker of genetic anti-counterfeiting technology, said Wednesday that it is ready to immediately ramp up its production in response to a defense procurement law signed last week by President Barack Obama.

“As you undoubtedly have noticed, the president's signing of the $700 [billion] National Defense Authorization Act on New Year's Eve has caused an uproar,”  Applied DNA chief executive James Hayward said Wednesday in an email.

The company makes unique botanical DNA markers for a variety of products. The markers can be woven into fine wool suits, injected into anti-robbery dye packs for banks, or inlaid in serial-number panels on computer chips.

One aspect of the bill could have major implications for Applied DNA’s appeal to computer-chip makers and other defense contractors who must now ensure their products are genuine.

“It is the stunning piece of news that, packed into the act, is an amendment which requires defense contractors to eliminate counterfeit parts from their operations,” Hayward said.

In early trading Wednesday, Applied DNA, a penny stock that trades over the counter, saw its shares rise 1 cent to 6 cents. Its share price range for the past year ranged from 6 cents to 10 cents.

“Companies are legally and financially liable if they sell counterfeits into the military supply — even if they did not produce the fakes, and even if that sale was inadvertent.”

The act sets new penalties for contractors who fail to detect and avoid counterfeit products.

Hayward said the law “will shake up the semiconductor, aerospace, and other industries in a dramatic way."

The company said in a Wednesday news release that it has already contacted electronics suppliers to help them comply with the new law.

Applied DNA last month reported a $10.5-million annual loss. In a filing with the Securities and Exchange Commission, the company said its independent auditors "have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing."

With 18 employees, the company, however, said it has $2.7 million in cash on hand and has enough resources to fund its operations through May 2012, when it may have to seek additional funding, Applied DNA said in its annual report.

Above, an Applied DNA graphic showing some applications of its technology.

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