SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 10549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date of Report (Date of earliest event reported): March 5, 2002
IGENE BIOTECHNOLOGY, INC.
_____________________________________________________
(Exact name of registrant as specified in its charter)
MARYLAND 0-15888 52-1230461
____________________________ _____________ ___________________
(State or other jurisdiction (Commission IRS Employer
of incorporation) File Number) Identification No.)
9110 Red Branch Road
Columbia, MD 21045-2024
________________________________________ ______________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (410) 997-
2599
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
We are providing the following unaudited pro forma
consolidated financial statements to give you a better picture of
what the results of operations and financial position of Igene
Biotechnology, Inc. ("Igene") might have been had the acquisition
of all issued outstanding shares of common stock of ProBio
Nutraceuticals, AS, a Norwegian corporation ("ProBio") been
completed at an earlier date. The unaudited pro forma
consolidated statements of income for the three quarters ended
September 30, 2001 give effect to the purchase as if they had
been completed on January 1, 2002. The unaudited pro forma
consolidated balance sheet as of September 30, 2001 gives effect
to the offer and the purchase as if they had been completed on
that date.
Igene's acquisition of ProBio will be accounted for using
the purchase method of accounting, as prescribed by SFAS No. 141,
"Business Combinations." Accordingly, the purchase price will be
allocated to the estimated fair value of identifiable net assets
acquired. The excess purchase price remaining after this
allocation is accounted for as an expense to account for
termination of the prior sales agency agreement between Igene and
ProBio.
We have prepared these unaudited pro forma consolidated
financial statements based on available information, using
assumptions that Igene's management believes are reasonable.
These unaudited pro forma consolidated financial statements are
being provided for informational purposes only. They do not
purport to represent Igene's actual financial position or results
of operations had the purchase occurred on the dates specified
nor do they project Igene's results of operations or financial
position for any future period or date.
The unaudited pro forma consolidated statements of income do
not reflect any adjustments for nonrecurring items or operating
synergies arising as a result of the purchase. Pro forma
adjustments are based on certain assumptions and other
information that are subject to change as additional information
becomes available. Accordingly, the adjustments included in
Igene's financial statements published after the completion of
the purchase will vary from the adjustments included in the
unaudited pro forma consolidated financial statements included in
this Form 8-K/A.
The unaudited pro forma consolidated financial statements
should be read in conjunction with Igene's audited and unaudited
historical financial statements and related notes, as well as
"Management's Discussion and Analysis of Financial Condition and
Results of Operations".
IGENE Biotechnology, Inc. and Subsidiary
Unaudited Pro Forma Consolidated Balance Sheets
September 30, Pro Forma Pro Forma
2001 Adjustments(1) Combined
_____________ ____________ _____________
Historical
_____________
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 185,549 $ 1,947 (2a) $ 187,496
Accounts receivable, net 1,411,728 151,603 (2b) 1,563,331
Inventory 603,108 80,370 (2b) 683,478
Prepaid expenses
and other current assets 268,676 --- 268,676
Deferred costs, current portion 74,160 --- 74,160
_____________ ____________ _____________
2,543,221 233,920 2,777,141
OTHER ASSETS
Property and equipment, net 165,808 78,236 (2b) 244,044
Deferred costs, net of current portion 333,396 15,866 (2b) 349,262
Other assets 6,015 --- 6,015
_____________ ____________ _____________
TOTAL ASSETS $ 3,048,440 $ 328,022 $ 3,376,462
============= ============ =============
IGENE Biotechnology, Inc. and Subsidiary
Unaudited Pro Forma Consolidated Balance Sheets
(continued)
September 30, Pro Forma Pro Forma
2001 Adjustments(1) Combined
_____________ _____________ _____________
Historical
_____________
LIABILITIES, REDEEMABLE PREFERED STOCK
AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,242,299 $ 109,646 (2b) $ 1,351,945
_____________ _____________ _____________
TOTAL CURRENT LIABILITIES 1,242,299 109,646 $ 1,351,945
_____________ _____________ _____________
LONG-TERM DEBT
Notes payable 6,057,959 --- 6,057,959
Convertible debentures 2,114,212 1,000,000 (2d) 3,114,212
Variable rate subordinated debenture 1,500,000 --- 1,500,000
Lease payable 3,435 --- 3,435
Accrued interest 1,768,644 --- 1,768,644
_____________ _____________ _____________
TOTAL LIABILITIES 12,686,549 1,109,646 13,796,195
_____________ _____________ _____________
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK
Carrying amount of redeemable preferred
stock, 8% cumulative, convertible,
voting, series A, $.01 par value per
share. Redemption value $16.32.
Authorized 1,312,500 shares,
issued 26,405 shares 430,930 --- 430,930
_____________ _____________ _____________
STOCKHOLDERS' DEFICIT
Common stock, $.01 par value per share.
Authorized, 750,000,000 shares;
issued and outstanding 62,765,581
shares. 627,656 80,000 (2c) 707,656
Additional paid-in capital 21,516,179 320,000 (2c) 21,836,179
Deficit ( 32,212,874) (1,181,624)(2e) ( 33,394,498)
_____________ _____________ _____________
TOTAL STOCKHOLDERS' DEFICIT ( 10,069,039) ( 781,624) ( 10,850,663)
_____________ _____________ _____________
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 3,048,440 $ 328,022 $ 3,376,462
============= ============= =============
IGENE Biotechnology, Inc. and Subsidiary
Unaudited Pro Forma Consolidated Statements of Operations
Nine Months
Ended
September 30, Pro Forma Pro Forma
2001 Adjustments Combined
_____________ _____________ _____________
Historical
_____________
Sales $ 3,014,611 $ --- $ 3,014,611
Cost of sales 2,659,467 --- 2,659,467
_____________ _____________ _____________
Gross profit (loss) 355,144 --- 355,144
_____________ _____________ _____________
Selling, general & administrative expenses:
Marketing and selling 900,115 --- 900,115
Research, development and pilot plant 389,877 --- 389,877
General and administrative 425,433 --- 425,433
Litigation expenses --- --- ---
_____________ _____________ _____________
Total operating expenses 1,715,425 --- 1,715,425
Operating loss ( 1,360,281) --- ( 1,360,281)
_____________ _____________ _____________
Other income (expense)
Interest expense, net of
interest income of $1,700 ( 601,029) --- ( 601,029)
Expense of Contract Termination --- ( 1,181,624)(2e) ( 1,181,624)
Other income 6,000 --- 6,000
_____________ _____________ _____________
Net loss ($ 1,955,310) ($ 1,181,624) ($ 3,136,934)
============= ============= =============
Basic and diluted
net loss per common share ($ 0.03) ($ 0.02) ($ 0.05)
============= ============= =============
THE IGENE BIOTECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The following summary of pro forma adjustments is based on
available information and certain estimates and assumption.
Therefore, the actual adjustments will differ from the pro forma
adjustments. Igene believes that such assumptions provide a reasonable
basis for presenting the significant effects of the purchase and
that the pro forma adjustments give appropriate effect to those
assumptions and are properly applied in the Statements.
Igene has accounted for the purchase in accordance with the
requirements of SFAS No. 141, "Business Combinations." It was
determined that the excess purchase price paid over the
identifiable assets of ProBio would not meet the criteria under
SFAS No. 142 "Goodwill and Other Intangible Assets" to be
classified as goodwill. As a result, the excess purchase price
paid over the identifiable assets of ProBio was classified as the
cost to terminate as-then existing sales agreement contract
between Igene and ProBio.
Amounts for Igene were derived from the historical
consolidated financial statements of Igene.
2. Adjustments to the Unaudited Pro Forma Consolidated
Balance Sheet
The Unaudited Pro Forma Consolidated Balance Sheet gives
effect to the following transactions and events: (1) the
issuance of Igene common stock, convertible debentures, and cash
in exchange for all outstanding ProBio common stock; (2) the
allocation of the purchase price to the assets acquired and
liabilities assumed based on a preliminary estimate of their
respective fair values at September 30, 2001; (3) the recognition
of the expense of the termination of the earlier sales agency
agreement.
The market value of Igene common stock to be issued was
based upon the closing market price of $.05 per share at December
28, 2001, the date at which point the common stock was issued
to consummate the purchase.
IGENE BIOTECHNOLOGY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The estimated pro forma allocation of the purchase price is as
follow (in thousands):
Cash. . . . . . . . . . . . . . . . . . . . . . $ 400,000
Market value of Igene common stock
to be issued . . . . . . . . . . . . . . . . 400,000
Convertible debenture . . . . . . . . . . . . . 1,000,000
_____________
Total purchase price. . . . . . . . . . . . . . $ 1,800,000
Estimated fair value of ProBio net assets acquired:
Cash . . . . . . . . . . . . . . . . . . . . . $ 401,947
Accounts receivable . . . . . . . . . . . . . . 151,603
Property and equipment. . . . . . . . . . . . . 78,236
Inventory . . . . . . . . . . . . . . . . . . . 80,370
Deferred Assets . . . . . . . . . . . . . . . . 15,866
Accounts payable. . . . . . . . . . . . . . . . ( 109,646)
_____________
Estimated fair value
of identifiable net assets acquired. . . . . $ 618,376
_____________
Excess of purchase price
over net assets acquired
(sales agency termination fee) . . . . . . . $ 1,181,624
_____________
(a) Represents the net cash activity. Part of the purchase
price of ProBio included $400,000 in cash. As of the pro forma
date ProBio had $401,947.
(b) Represents the presumed fair value of assets received and
liabilities assume by Igene Biotechnology, Inc. as part of the
purchase.
(c) Reflects the issuance of 8 million shares of Igene common
stock, par value $0.01 per share. The excess of the $0.05 per
share fair at date of issuance value over the $0.01 per share par
value was recorded as a $0.04 per share adjustment to paid in
capital.
(d) Reflects the issuance of $1 million of three year 6%
convertible debentures issued as part of the purchase price of
ProBio.
(e) Reflects the expense of the termination of the sales agency
agreement Igene Biotechnology, Inc. had previous with ProBio.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.
IGENE Biotechnology, Inc.
(Registrant)
By: /s/ Stephen F. Hiu
_________________________
Name: Stephen F. Hiu
Title: President
Dated: March 5, 2002