Found This On Yahoo Message Board
September 4, 2012
ALERT
We have been following this company and their breakthrough technology for awhile, but a
recent event has us thinking this company has definite Big Stock potential.
U.S. manufacturing has been leaving this country for many years now. Cheap labor, along with
low or nonexistent regulatory guidelines in third world countries have enabled U.S. companies
to drastically reduce their cost of goods sold. Of course the whole strategy behind this exodus
was to allow them to remain competitive.
Apple is a perfect example. You would be hard pressed to find an American that doesn't
have at least one piece of Apple hardware. And yet, not one piece of hardware is made in the
States. Manufacturing in remote locations have kept prices in check, but the COST has risen
dramatically!
The World Customs Organization has estimated the annual global trade in illegitimate goods
to approach $1.2T; yes... that’s $trillion$ by 2014. This represents 5 to 7% of ALL worldwide
trade.
I'm sure Apple would be upset to know some of their products are being manufactured illegally.
Producers of fake American goods are getting very good at imitating the real thing. Chances are
you may never know if you bought a fake iPhone. If you're using your fake iPhone and it starts
acting up, it certainly is an inconvenience. But let's consider other situations that are much
more than inconvenient, or more like life threatening.
Imagine you're a U.S. military pilot flying over Iraq in your F16 at Mach 3 and the chip that
processes your altitude starts acting up. How about the chip that processes his radar beginning
to malfunction. Or consider this...he suddenly encounters heavy fire and the chip that processes
his ejection seat begins to go haywire. The chip that processes his parachute altitude also hasa flaw. When you actually think about it, just this one plane, pilot and his gear probably have
hundreds of chips. Verifying that they are ALL authentic is not something you scrimp on!
Let's look at another example that might be closer to home. Joe is playing a softball game and
suddenly starts having chest pains. The players know he has a pacemaker and summon for
the defibrillator at the front office. Can you imagine the liability if Joe passes away and they
determine both the pacemaker and or the defibrillator have fake chips inside? Both brands don't
just lose business, they go out of business.
Imagine the cost of doing a “recall” if the pacemaker company finds out JUST ONE of the chips
used was fake.
We have discovered a breakthrough solution to the growing deluge of MILLIONS of counterfeit
chips that threaten the U.S. military and the general public.
This technology has already been adopted by some companies, but what really triggered
our interest came when probably the strictest most demanding agency in the world hired an
independent national laboratory to defeat this technology. This national laboratory, with some
of the world's greatest scientific minds and assets at their disposal, could not duplicate or
transfer the these key DNA marks used in this unique process. In turn, the U. S. Department
of Defense Defense Logistics Agency named this company as THE provider of authentication
services for microcircuits supplied by defense contractors. Readers of our book How To Find
Big Stocks, already know that we that we call key events like these “rupts”... our term for
disruptive! Here is the “rupt”:
"DLA is implementing new requirements for deoxyribonucleic acid (DNA) authentication marking on items
falling within Federal Supply Class (FSC) 5962, Electronic Microcircuits, which have been determined to
be at high risk for counterfeiting. A new clause at Defense Logistics Acquisition Directive (DLAD) 52.211-
9074, Deoxyribonucleic Acid (DNA) Marking on High Risk Items, will be included in new solicitations and
contracts for FSC 5962 items when the item description states that the item requires DNA marking. The
clause requires contractors to provide items that have been marked with botanically-generated DNA
produced by Applied DNA Sciences or its authorized licensees, if any."
“Nature’s barcode”
The DNA marking can be applied with an invisible DNA mark on the part, or the
contractor’s ink utilized for part marking can be mixed with the DNA marking material. The
authentication DNA used shall be unique to the contractor. Contractors will be required to retain
traceability documentation that demonstrates the items provided under the contract have been
marked with DNA material produced by Applied DNA Sciences or an authorized licensee, and
that the DNA marking is unique to the contractor.Think of this as a DNA barcode that can be sprayed, printed or embedded in ANY product
and can be visible or invisible depending on the manufacturer’s choice.
This requires NO change in tooling for the manufacturer, they simply add the unique DNA code
to the ink they are ALREADY using in their assembly line.
In Fiscal 2011 alone, the DLA provided $46.1B in revenue. This figure in itself, along with the
dollar value of services provided, ranks the agency in the top 10 percentile of the Fortune 500!
In other words, if you want to sell microcircuits to the Department of Defense, you must
use Applied DNA Science’s (APDN) SigNature DNA marking on ANY microcircuit. This
government mandate will make hundreds of chip companies customers of APDN, including
many of the largest microcircuit manufacturers in the world. Consider the following:
By reprogramming plants' genetic material, Stony Brook, N.Y.-based Applied DNA Sciences
can create a tiny marker that can be embedded on computer chips, mixed in with the ink used to
print cash, or woven into clothing.
The military can then use a device similar to a barcode scanner to instantly "read back" that
DNA, verifying the parts are authentic.
The new tracking technology uses plant DNA because plants thrive in sunlight, whereas
animals' DNA can break down from ultraviolet rays.
Applied DNA starts with botanical genomic sequences, then scrambles the genetic code using
a proprietary technique. It then synthesizes DNA with the scrambled code and incorporates that
into a product or its packaging say, by mixing it with ink and stamping it on a package. Once the
DNA mark is applied to a product, users can detect it because it fluoresces under certain light.
Products can also be checked by swabbing the DNA mark and sending the sample to Applied
DNA, which authenticates the mark using standard genetic-sequencing techniques. Only those
with knowledge of the scrambled sequence can verify the mark, making it impossible to fake.
“Everyone along the supply chain is guaranteed authenticity—the manufacturer, the
distributor, the board builders,” says Janice Meraglia, vice president of military and government
programs at Applied DNA.
The CEO of APDN, Dr James Hayward had this to say about the deal on their latest conference
call:
The number of companies directly affected by the DLA directive is in the hundreds, and includes many of
the largest microcircuit manufacturers and distributors in the world. We are already receiving numerous
inquiries from interested parties, as you can imagine. Beyond that, in our opinion, looms the overall
semiconductor industry, including commercial sales, which alone represent a total addressable market of
about $300 billion, as of last year.
We can see not only these chip companies using this technology to protect their brand, but we can also
see OTHER agencies requiring Applied’s SigNature DNA to be used to authenticate products. The
medical device industry (MDMA Medical Device Manufacturer Assoc) as well as the FAA (Federal
Aviation Administration) commercial airline come to mind.
Those of you following our web site will realize that the directive is in line with a larger push by the
federal government to eliminate all electronic counterfeits from the military supply chain. In fact, the key
milestone in this push is at the end of September, when the new strict anti-counterfeiting law, the National
Defense Authorization Act for Fiscal Year 2012 is due to come into effect. So the potential of the current
mandate to affect us positively is great indeed.
We previously experienced relatively long periods of development of our applications, long cycles of
R&D, apha and beta testing, building IP, carrying out customer training, and the like. This takes a
bit of time. We derive revenue from selling DNA for marking, but also from authentication licensing.
So "populating" an industry with DNA marks can take some time. But when we commercialize, the home
run potential is there.
Given the different versions of and methods of application for APDN’s patented botanical DNA
technology, we can see numerous applications for government use, as well as commercial.
This technology can be sprayed on, or embedded in almost ANY product. As the company
stated, we have yet to find a product that couldn’t be marked with our technology.
SigNature DNA uses the DNA from plants to mark and authenticate products in a unique
manner that essentially cannot be copied. We create customized, unique SigNature DNA
markers that are applied into an ink, or directly on the package or product itself. “Green” and safe, SigNature DNA is compatible with many different types and forms of ink, varnish,
adhesives and textile treatments. It works with a range of flexographic, offset and screen
printing processes.
Here is the definition of their technology with each brand:
We are a provider of botanical-DNA based security and authentication solutions that can
help protect products, brands and intellectual property of companies, governments and
consumers from theft, counterfeiting, fraud and diversion. SigNature® DNA, SmartDNA,
Cashield™, DNANet™, BioMaterial™ Genotyping and digitalDNA™, our principal anticounterfeiting product authentication and crime prevention solutions, can be used in numerous
industries, including but not limited to cash-in-transit (transport and storage of banknotes),
textiles and apparel, semiconductors, identity cards and other secure documents,
pharmaceuticals, wine, and luxury consumer goods.
SigNature DNA . We use the DNA of plants to manufacture highly customized and
encrypted botanical DNA markers, or SigNature DNA Markers, which we believe are virtually
impossible to replicate. We have embedded SigNature DNA Markers into a range of our
customers’ products, including various inks, dyes, textile treatments, thermal ribbon, thread,
varnishes and adhesives. These items can then be tested for the presence of SigNature DNA
Markers through an instant field detection or a forensic level authentication. Our SigNature DNA
solution provides a secure, accurate and cost-effective means for users to incorporate our
SigNature DNA Markers in, and then quickly and reliably authenticate and identify, a broad
range of items, such as recovered banknotes, branded textiles and apparel products,
semiconductors, pharmaceuticals and cosmetic products, identity cards and other secure
documents, digital media, artwork and collectibles and fine wine. Having the ability to reliably
authenticate and identify counterfeit versions of such items enables companies and
governments to detect, deter, interdict and prosecute counterfeiting enterprises and individuals.
SmartDNA. SmartDNA is a unique and patented security system based on botanical
DNA, a new and effective crime protection system for stores, warehouses, banks, pharmacies,
ATMs and the protection of valuables. The system contains a water-based, non-toxic spray
which may be triggered during a crime, marking the perpetrator and remaining on their person
for weeks after the crime. Each SmartDNA product is designed to be unique to each store,
warehouse or sting operation allowing the police and prosecutors to link criminals to the crimes.
Cashield . Cashield is a family of cash degradation inks that permanently stain
banknotes stolen from cash-handling or ATM systems. Cashield extends our offering beyond
our prior singular product, AzSure®, to a family of security inks that include Red, Violet, Green,
Teal, Indigo, and the original AzSure® Blue. Current degradation dyes suffer from a critical
technical weakness, as the dyes may be removed by the use of solvents. We initiated the
development of Cashield in response to demand for a more effective carrier for our SigNature
DNA markers. Cashield has been certified for use in the EU by the Laboratoire National de
Métrologie et d’Essais (LNE) and passed all 47 individual dye penetration and wash-outresistance tests. Additionally, a CViT study presented by the University of Leeds cited Cashield
AzSure Blue ink as having improved performance versus staining inks from other suppliers. In
this study, the AzSure blue ink was tested across a range of currencies, including British
pounds, Euros, and U.S. dollars. The evaluation involved exposure to numerous industrial
solvents. Final analysis of the results concluded that the AzSure blue ink was bound strongly in
five seconds or less to a variety of banknotes, and could not be removed with any solvent.
DNANet . In 2010, we developed DNANet tactical DNA products for law enforcement, in
the form of DNA-marked fixative sprays and liquids as well as transferable grease. These products, being marketed to global police forces were created to help link criminals to crimes.
DNANet is a tactical forensic system providing unique DNA codes for covert operations that
require absolute proof of authentication.
BioMaterial GenoTyping . Our BioMaterial GenoTyping solution refers to the
development of genetic assays to distinguish between varieties or strains of biomaterials, such
as cotton, wool, tobacco, fermented beverages, natural drugs and foods, that contain their own
source DNA. We have developed two proprietary genetic tests (FiberTyping™ and
PimaTyping™) to track American Pima cotton from the field to finished garments. These genetic
assays provide the cotton industry with what we believe to be the first authentication tools that
can be applied throughout the U.S. and worldwide cotton industry from cotton growers, mills,
wholesalers, distributors, manufacturers and retailers through trade groups and government
agencies.
digitalDNA . We have launched a new product called digitalDNA, which is a DNAsecured form of the QR (“quick read”) code. digitalDNA is a new security tool that utilizes the
flexibility of mobile communications, the instant accessibility of secure, cloud-based data, and
the absolute certainty of DNA to make item tracking and authentication fast, easy and definitive,
while providing the opportunity to create a new and exciting customer interface. The product
uses forensic authentication of a botanical DNA marker, sequence-encrypted within a secure
QR code, and physically included within the ink used to digitally print the code. The resulting
pattern or “rune” can be scanned via an Apple-approved app with an iPhone to assure
originality. These mobile scans can be performed anywhere along the supply chain without
limit. Tracking information is fed into “tunable algorithms” that use pattern recognition to
automatically identify supply-chain risks, for counterfeits or product diversion. Rapid-reading
reporters, associated with the DNA marker, are also embedded in the ink, and prevent the
secure code from being digitally copied.
The digitalDNA platform is designed to meet compliance specifications defined by the
PCI (Payment Card Industry) Security Standards Council, the new and strict standards
developed for handling credit card transactions, and HIPAA (Health Insurance Portability and
Accountability Act), the stringent requirements for protecting personal health information.
We acquired rights to certain software and intellectual property pursuant to an
agreement we entered into with DivineRune Inc., a secure cloud-computing specialist, in
January this year. DivineRune was issued a 3 year warrant to purchase one million shares of
our common stock, par value $.001 per share (“Common Stock”) as compensation for a license
to DivineRune’s patent portfolio. We will also share revenues on any future sales of products
generated as a result of this agreement. We expect that the partnership will enhance and
extend our core anti-counterfeiting, anti-diversion, and security systems into the digital trackand-trace sphere. James A. Hayward, our President, Chairman and Chief Executive Officer,
and Yacov Shamash, a member of our Board of Directors, were among the early investors in
DivineRune where Mr. Sayan is the founder and CEO. In addition, Dr. Hayward and Dr.
Shamash both serve on the Board of Directors of Softheon, a document security company,
where Mr. Sayan is the Founder, CEO and Chairman of the Board.
