Applied DNA Sciences Inc (APDN)

[Shail]

It is not dilution till the employee actually exercises his options. Further please note these two points:

1. Companies issue employee stock options as compensation is to preserve and generate cash flow. The cash flow comes when the company issues new shares and receives the exercise price and receives a tax deduction equal to the "intrinsic value" of the ESOs when exercised.

2. Employee stock options can be said to have two components: "time value" and "intrinsic value". Any remaining "time value" component is forfeited back to the company when early exercises are made. Most top executives hold their ESOs until near expiration, thereby minimizing the penalties of early exercise.

Hence it is pretty obvious that the Dr will not exercise his options immediately.