Item 1.01 Entry into a Material Definitive Agreement.
On August 6, 2019, LineaRX, Inc., a Delaware
corporation (“
LineaRX
”) and wholly-owned subsidiary of Applied DNA Sciences, Inc., a Delaware corporation (the
“
Company
”), entered into an Asset Purchase Agreement (the “
Asset Purchase Agreement
”) effective
as of July 29, 2019 with Vitatex Inc., a Delaware corporation (“
Vitatex
”). The Asset Purchase Agreement contains
the terms and conditions with respect to the acquisition by LineaRX of substantially all of Vitatex’s assets relating to
its business of advancing personalized medicine with a solution that isolates Invasive Circulating Tumor Cells (iCTC) from standard
patient blood samples for the treatment, research and diagnosis of cancer (the “
Assets
”). LineaRX did not assume
any liabilities of Vitatex. LineaRX consummated the acquisition and acquired the Assets, free and clear of all liens or other third-party
interests (the “
Vitatex Asset Acquisition
”) on August 7, 2019 (the “
Closing Date
”). The Assets
acquired by LineaRX also included Vitatex’s rights under a patent license agreement between The Research Foundation for the
State University of New York (the “
Research Foundation
”) and Vitatex. In connection with the Vitatex Asset Acquisition,
LineaRX entered into the Amended and Restated Exclusive License Agreement (the “
License Agreement
”) with the
Research Foundation and Vitatex on August 7, 2019, pursuant to which LineaRX assumed the rights and obligation of Vitatex.
The purchase price for the Assets consists
of $500,000 in cash and common stock of LineaRX and up to an additional $500,000 of LineaRX common stock as performance-based contingent
consideration, which was determined through arms-length negotiation. Of this amount, (i) an initial payment comprised of $300,000
in shares of common stock of LineaRX (based on the then-current market capitalization of $25 million of LineaRX) must be made to
the shareholders of Vitatex within 14 days of the Closing Date, (ii) $100,000 in cash must be paid to Vitatex on or before September
30, 2019 and (iii) $100,000 in cash must be paid to Vitatex on or before December 31, 2019. The Research Foundation will receive
cash instead of shares of LineaRX. The purchase price will be reduced by an amount equal to any payment required to be made by
LineaRX to pay off and satisfy Vitatex’s outstanding cash and/or equity obligations owed to the Research Foundation under
the License Agreement. Pursuant to the License Agreement, LineaRX will pay approximately $11,710 to the Research Foundation, thereby
reducing the cash payment due to Vitatex on or before September 30, 2019 to approximately $88,290. In addition, the shareholders
of Vitatex are also entitled to additional performance-based equity distributions of up to $500,000 in shares of common stock of
LineaRX (based on the then-current market capitalization of LineaRX) with (i) $250,000 of LineaRX common stock becoming due upon
the occurrence of LineaRX completing the National Cancer Institute Small Business Innovation Research (NIC SBIR) program filings
due on or before August 9, 2019 or the next SBIR program filings due on September 5, 2019, (ii) $100,000 of LineaRX common stock
becoming due if the Assets yield more than $100,000 in gross revenue by July 29, 2020 and (iii) $150,000 of LineaRX common stock
becoming due if the Assets yield an additional $200,000 in gross revenue. The Research Foundation will receive cash instead of
shares of LineaRX upon the completion of any such performance-based events.
The Asset Purchase Agreement contains certain
customary representations, warranties and covenants, which are made solely for the purposes of the Asset Purchase Agreement and
as of specific dates, and were solely for the benefit of the parties to the Asset Purchase Agreement. In addition, Vitatex has
agreed that (i) after the Closing Date it will not undertake any commercial activities except for dealing with post-closing matters
and (ii) on or before December 31, 2019 after the $100,000 cash payment due by LineaRX is made to Vitatex, it will cease to do
business and consummate the corporate dissolution of Vitatex in accordance with Delaware law.
In addition, Dr. Wen-Tien Chen, the founder
of Vitatex, also entered into a consulting agreement with LineaRX for a term of twelve (12) months subject to earlier termination
by either party upon thirty (30) days’ notice.
The foregoing descriptions of the Asset
Purchase Agreement and the Vitatex Asset Acquisition do not purport to be complete and are subject to, and qualified in their entirety
by, the full text of the Asset Purchase Agreement, which is attached hereto as Exhibit 10.1, and incorporated herein by reference
in its entirety.