U.S. Government Guidance Permits DNA Traceability and Isotopic Testing as Evidence under Uyghur Forced Labor Prevention Act

- Positions CertainT® Platform as a Made in the USA Solution to Prove Non-Xinjiang Provenance or If Goods May Have Benefited from Forced Labor -

Applied DNA Sciences, Inc. (NASDAQ: APDN) (the “Company”), a leader in cell-free, enzymatic DNA production, has been increasing its engagement with all stakeholders in anticipation of the June 21, 2022, effective date of the “rebuttable presumption” standard under the Uyghur Forced Labor Prevention Act (UFLPA) signed into law on December 23, 2021. Under the UFLPA, all imports that originate from China's Xinjiang Uyghur Autonomous Region (XUAR) or otherwise use Uyghur or other minorities for forced labor in China, are excluded from entry into the U.S. by the Customs and Border Protection agency (CBP) of the Department of Homeland Security (DHS).

On June 17, DHS issued its much-anticipated Implementation Strategy (the “Strategy”) for the rebuttable presumption standard under the UFLPA. In this new report, DHS has, for the first time, identified DNA traceability and isotopic testing - both central components of Applied DNA’s CertainT® authenticity platform - as evidence that importers may present to potentially prove that items do not originate in XUAR or may have benefitted from forced labor.

The UFLPA seeks to insulate U.S. companies and consumers from complicity in forced labor practices in XUAR, which produces nearly 20% of global cotton¹. Commercially available for almost a decade, Applied DNA’s CertainT® platform is a multi-layered textile traceability solution that offers proof of product origin, authenticity, and sustainability.

Catalyzed by the imminent implementation of the UFLPA, Applied DNA is acquiring DNA traceability and isotopic testing clients intent on establishing proof of origin to comply with the UFLPA in the near-term with the long-term objective of securing their global supply chains using CertainT. Louis Dreyfus Company B.V., the Company’s cotton merchant partner, recently received a request to ship the first quantities of traceable tagged cotton that is directly attributable to the UFLPA.

In GFY21, CPB used its forced labor authority to detain almost 1,500 shipments with a value of almost $500 million. The Biden Administration’s budget request for GFY23, which begins on October 1, 2022, calls for $70 million to implement the UFLPA, to hire 300 additional CBP inspectors, and screen 11.5 times as many shipments for forced labor violations as is being undertaken currently.

“CertainT is a 100% American solution that is unique in its ability to offer multiple traceability solutions, including DNA traceability and isotopic testing that are both cited (see page 49 in the link) in the Strategy. We believe that the high bar established by the UFLPA with its documentary and supply chain management requirements place a burden on importers that cannot be adequately met by fungible reporting frameworks, such as conventional paper- or electronic systems,” stated Dr. James A. Hayward, president, and CEO, Applied DNA.

“Coming on the heels of Customs and Border Protection’s budget request to fully implement the Strategy, we are pleased to see agreement at the regulatory level as a precursor to potentially broader industry adoption,” continued Dr. Hayward. “As a U.S.-based company, we applaud the imperative with which the Strategy is moving federal law towards action and, not only for its potential to be transformative to our supply chain security business, but also to deliver clear societal and ethical benefits to the American consumer. With the 2022 cotton ginning season soon upon us, we stand ready to deliver DNA-tagged American cotton to meet brand demand driven by the UFLPA.”

Andrew Samet, principal at trade consulting firm Sorini, Samet & Associates and textile lobbyist for Applied DNA, said, “It is clear from the new strategy document that Homeland Security officials and others in the U.S. government recognize that documentary traceability is insufficient. Technology solutions proving origin, such as DNA tagging and isotopic analysis, are for the first time being referenced and are the emerging framework both for authentication and enforcement – forced labor is a key driver for this secular change now officially underway.”

Learn more about the UFLPA: https://www.dhs.gov/uflpa

Footnote:

¹ https://www.supplychaindive.com/news/uighur-labor-will-be-tough-to-avoid-in-cotton-supply-chains/586217/

About Applied DNA Sciences

Applied DNA is commercializing LinearDNA™, its proprietary, large-scale polymerase chain reaction ("PCR")-based manufacturing platform that allows for the large-scale cell-free production of specific DNA sequences.

The LinearDNA platform has utility in the nucleic acid-based in vitro diagnostics and preclinical nucleic acid-based drug development and manufacturing market. The platform is used to manufacture DNA for customers as components of in vitro diagnostic tests and for preclinical nucleic acid-based drug development in the fields of adoptive cell therapies (CAR T and TCR T therapies), DNA vaccines (anti-viral and cancer), RNA therapies, clustered regularly interspaced short palindromic repeats (CRISPR) based therapies, and gene therapies.

The LinearDNA platform also has non-biologic applications, such as supply chain security, anti-counterfeiting and anti-theft technology. Key end-markets include textiles, pharmaceuticals and nutraceuticals, and cannabis, among others.

Leveraging its deep expertise in nucleic acid-based technologies, the Company has also established safeCircle™, a high-turnkey solution for population-scale COVID-19 testing. safeCircle is designed to look for infection within defined populations or communities utilizing high throughput testing methodologies that increase testing efficiencies and provide for rapid turn-around-times.

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The Company's common stock is listed on NASDAQ under the ticker symbol 'APDN,' and its publicly traded warrants are listed on OTC under the ticker symbol 'APPDW.'

Applied DNA is a member of the Russell Microcap® Index.

Forward-Looking Statements

The statements made by Applied DNA in this press release may be “forward-looking” in nature within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe Applied DNA’s future plans, projections, strategies and expectations, and are based on assumptions and involve a number of risks and uncertainties, many of which are beyond the control of Applied DNA. Actual results could differ materially from those projected due to its history of net losses, limited financial resources, limited market acceptance, our unknown ability to penetrate key markets, our ability to successfully enter into commercial contracts for the implementation of our CertainT® platform, the uncertainties inherent in research and development, our unknown ability to provide isotopic testing if our agreement with Isotech Labs is terminated, and various other factors detailed from time to time in Applied DNA’s SEC reports and filings, including our Annual Report on Form 10-K filed on December 9, 2021, its Quarterly Report on Form 10-Q filed on February 10, 2022 and May 12, 2022, and other reports it files with the SEC, which are available at www.sec.gov. Applied DNA undertakes no obligation to update publicly any forward-looking statements to reflect new information, events, or circumstances after the date hereof or to reflect the occurrence of unanticipated events, unless otherwise required by law.

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