SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant X
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only (as permitted by Rule 14a-6(e)(2)
X Definitive Proxy Statement
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_____ Definitive Additional Materials
_____ Soliciting Material Under Rule 14a-12
Igene Biotechnology, Inc.
________________________________________________
(Name of Registrant as Specified in Its Charter)
N/A
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if Other Than the Registrant)
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IGENE BIOTECHNOLOGY, INC.
Notice Of Annual Meeting Of Stockholders
To Be Held May 13, 2003
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of IGENE Biotechnology, Inc. (the "Company", "we"
or "us") will be held at the offices of Kimelman & Baird, LLC,
100 Park Avenue, 21st floor, New York, New York 10017 at 10:00
a.m. local time on May 13, 2003 for the following purposes:
1. To elect five (5) directors to serve for a term of one
(1) year and until their successors are elected and
qualified.
2. To ratify the selection by our board of directors of
Stegman & Company as our independent auditors for the
fiscal year ending December 31, 2003.
3. To transact such other business as may properly come
before the meeting, or any adjournment thereof.
Stockholders of record at the close of business on March 7,
2003 shall be entitled to notice of, and to vote at, the meeting.
All stockholders are cordially invited to attend the
meeting.
By order of the Board of Directors,
/s/Stephen F. Hiu
__________________________________
Stephen F. Hiu
President
Dated: Columbia, Maryland
April 11, 2003
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE
ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE PROVIDED TO ASSURE
THAT YOUR SHARES ARE REPRESENTED AT THE MEETING.
IGENE BIOTECHNOLOGY, INC.
9110 RED BRANCH ROAD
COLUMBIA, MARYLAND 21045
PROXY STATEMENT
The accompanying proxy is solicited by the board of
directors of IGENE Biotechnology, Inc., a Maryland corporation
(the "Company", "we" or "us"), for use at our annual meeting of
stockholders, which we refer to as the meeting, to be held on
May 13, 2003, or any adjournment thereof. Stockholders of
record at the close of business on March 7, 2003, which we refer
to as the record date, shall be entitled to vote. Proposals of
stockholders intended to be presented at our 2004 annual meeting
of stockholders must be received by us no later than 5:00 P.M.
local time on March 1, 2004, to be eligible for inclusion in our
proxy statement and form of proxy to be used in connection with
such meeting.
The cost of solicitation of proxies will be borne by us.
We may use the services of our directors, officers, employees
and others to solicit proxies, personally or by telephone.
Arrangements may also be made with brokerage houses and other
custodians, nominees, fiduciaries and stockholders of record to
forward solicitation material to the beneficial owners of stock
held of record by such persons. We may reimburse such solicitors
for reasonable out-of-pocket expenses incurred by them in
soliciting, but no compensation will be paid for their services.
Each proxy executed and returned by a stockholder may be
revoked at any time before it is voted by timely submission of
written notice of revocation or by submission of a duly executed
proxy bearing a later date (in either case directed to our
corporate Secretary at the above address) or, if a stockholder
is present at the meeting, he may elect to revoke his proxy by
voting his shares in person at the meeting.
There is being mailed herewith to each stockholder of
record our annual report on Form 10-KSB for the fiscal year
ended December 31, 2002. The notice, proxy statement and
enclosed form of proxy will be mailed to stockholders beginning
April 11, 2003, the date of this proxy statement.
On the record date, we had 92,943,745 shares of common
stock outstanding and entitled to vote with respect to all
matters to be acted upon at the meeting. Each holder of common
stock is entitled to one vote for each share of common stock
held by such holder.
On the record date, we also had 25,605 shares of our 8%
Cumulative Preferred Stock, which we refer to as the Series A
preferred stock, and 187,500 shares of our 8% Cumulative
Convertible Preferred Stock, Series B, which we refer to as our
Series B preferred stock, outstanding and entitled to vote with
respect to all matters to be acted upon at the meeting. Each
holder of Series A preferred stock and Series B preferred stock
is entitled to two votes for each share of such preferred stock
held by such holder. Holders of record of outstanding common
stock, Series A preferred stock and Series B preferred stock
will be entitled to vote together as a single class on all
matters to be voted on at the meeting.
Pursuant to the terms of our Series A preferred stock, as a
consequence of the non-payment of dividends on such stock for
more than the past four consecutive dividend payment dates, the
holders of Series A preferred stock voting together as a single
class are entitled to elect two directors, in accordance with
the procedures set forth in our Charter and by-laws. To date,
the holders of the Series A preferred stock have not exercised
such right.
The presence of holders representing a majority of all the
votes entitled to be cast at the meeting will constitute a
quorum at the meeting. In accordance with Maryland law,
abstentions, but not broker non-votes, are counted for purposes
of determining the presence or absence of a quorum for the
transaction of business.
The ratification of the selection of Stegman and Company as
our independent auditors for the fiscal year ending December 31,
2003 requires the affirmative vote of a majority of the voting
power voted at the meeting in
order to pass, and the affirmative vote of a plurality of the
votes cast at the meeting is required in order to elect each
Of our directors. Abstentions and broker non-votes are not
counted in determining the votes cast with respect to any of
the matters submitted to a vote of stockholders.
It is expected that the following two items of business
will be considered at the meeting and action taken thereon:
ELECTION OF DIRECTORS
Pursuant to our bylaws and as permitted by our charter, the
number of directors constituting the entire board of directors
has been set at 8. It is proposed to elect five directors at
this meeting to hold office for a one-year term, until the 2004
annual meeting of stockholders, and until their respective
successors are duly elected and qualify. Each of the persons
listed below has been nominated for election to our board of
directors at the meeting. All of the nominees listed below
presently serve on our board of directors. If some unexpected
occurrence should make necessary, in the board of directors'
judgment, the substitution of some other person or persons for
any of the nominees, shares for which proxies have been granted
will be voted for such other person or persons as the board of
directors may select. The board of directors is not aware that
any current director, or nominee, may be unable or unwilling to
serve as a director. The following table contains certain
information with respect to the nominees:
NOMINEES FOR ELECTION
Name Age Position(s) with IGENE
____ ___ ______________________
Michael G. Kimelman 64 Chairman of the Board of
Directors, member of audit
committee
Thomas L. Kempner 75 Vice Chairman of the Board
of Directors, member of
financial committee
Stephen F. Hiu 46 Director, President,
Treasurer, Chief Technical
Officer,and Director of
Research and Development
Patrick F. Monahan 52 Director, Vice-President,
Secretary, and Director of
Manufacturing
Sidney R. Knafel 72 Director , member of finance
committee
MICHAEL G. KIMELMAN was elected a director in February 1991 and
Chairman of the board of directors in March 1991. He is the
Managing Partner of Kimelman & Baird, LLC. Mr. Kimelman is
currently a director of the Harness Horse Breeders of New York
State and serves on the Board of the Hambletonian Society.
THOMAS L. KEMPNER is Vice Chairman of our board of directors and
has been a director since our inception in October 1981. He is
and has been Chairman and Chief Executive Officer of Loeb
Partners Corporation, investment bankers, New York, and its
predecessors since February 1978. He is currently a director of
Alcide Corporation, CCC Information Services Group, Inc., Dyax,
Fuel Cell Energy, Inc., Insight Communications Co., and
Intermagnetics General Corp. He is a director emeritus of
Northwest Airlines, Inc.
STEPHEN F. HIU has served as a director since August 1990. Mr.
Hiu was appointed our Chief Technical Officer in 2002, and was
appointed our President and Treasurer in March 1991. He has
been our Director of Research and Development since January 1989
and, prior thereto, was Senior Scientist since December 1985,
when he joined us. He was a post-doctoral research associate at
the Virginia Polytechnic Institute and State University,
Blacksburg, Virginia, from January 1984 until December 1985. Dr.
Hiu holds a Ph.D. degree in microbiology from Oregon State
University and a B. S. degree in biological sciences from the
University of California, Irvine.
PATRICK F. MONAHAN was appointed our Vice-President in 2002, and
has served as a director since April 1991. Mr. Monahan has
served as our Secretary since September 1998. He has managed
our fermentation pilot plant since 1982, and our manufacturing
operations since their inception in 1998. Prior to that time,
he was a technical specialist in the fermentation pilot plant of
W.R. Grace and Co. from 1975 to 1982. He received an Associate
in Arts degree in biology from Allegheny Community College and a
B. S. degree in biology with a minor in Chemistry from Frostburg
State College, Frostburg, Maryland.
SIDNEY R. KNAFEL, has served as one or our directors since 1982,
has been Managing Partner of SRK Management Company, a private
investment concern, New York, since 1981, Chairman of Insight
Communications, Inc. since 1985, and of BioReliance Corporation
since 1982. He is currently a director of General American
Investors Company, Inc., as well as a number of private
companies.
Our board of directors recommends a vote for each of the above-
listed nominees.
Committees Of The Board Of Directors
We have two standing committees of the board of directors,
our audit committee and our compensation committee. We do not
have a standing nominating committee. Set forth below is a
description of the functions of each of our standing committees
and the members of the board of directors who serve on such
committees.
Audit Committee
The responsibilities of the audit committee include
recommending to the board of directors the independent certified
public accountants to conduct the annual audit of our books and
accounts, reviewing the proposed scope of the audit and
approving the audit fees to be paid. The audit committee is
charged with reviewing, with the independent certified public
accountants and with our management, the adequacy and
effectiveness of our internal auditing, accounting and financial
controls. Mr. Kimelman served as a member of the audit
committee throughout 2002, and Messrs. Abeles and Cenerazzo
served as members of the audit committee until their resignation
from the board of directors in August 2002. We are currently
seeking to fill the vacancies on the audit committee created by
the resignation of Messrs. Abeles and Cenerazzo. None of the
members of our audit committee are independent directors as
defined in Rule 4200 (a) (14) of the NASD's listing standards.
Prior to February 1, 2001, our board of directors performed the
functions of the audit committee. On February 1, 2001, our
board of directors adopted a written charter for our audit
committee. The audit committee held one meeting in 2002 to
review the 2001 audited financial statements and held one
meeting in 2003 for the purpose of reviewing and reporting on
the 2002 financial statements as noted below.
Audit Committee Report
The audit committee has reviewed and discussed the fiscal
year 2002 audited financial statements with management, and has
discussed with the independent auditors the matters required to
be discussed by SAS 61 "Communication With Audit Committees"
issued by the Auditing Standards Board of the American Institute
of Certified Public Accountants ("AICPA"), as modified or
supplemented, and has received the written disclosures and the
letter from the independent auditors required by AICPA
Independence Standards Board Standard No. 1 "Independence
Discussions with Audit Committees", as modified or supplemented,
and has discussed with the independent auditor the auditors'
independence.
Based on the review and discussions referred to in the
previous paragraph, the audit committee recommended to the board
of directors that the audited financial statements be included
in our annual report on Form 10-KSB for the year ended December
31, 2002.
Member(s) of the audit committee:
Michael G. KimelmaN
Compensation Committee
Our compensation committee is responsible for approving the
salaries of all of our officers and certain other employees. It
also supervises the administration of all benefit plans and
Other matters affecting executive compensation, subject to
further approval of our board of directors. The members of the
compensation committee during 2002 were Messrs. Thomas L.
Kempner and Sidney R. Knafel. The compensation committee held 4
meetings during 2002 for the purposes of considering employee
salary increases and option grants and to consider the
consulting agreement with Martin Gerson.
Board of Directors Meetings and Compensation
During 2002, no directors were compensated for their board
or committee activities. The board of directors held 7 meetings
in 2002. None of our directors attended fewer than 75% of the
total number of meetings held by the board and by all committees
of the board on which he served during 2002.
Executive Compensation
The following tables show (a) the compensation paid or accrued
by us to our chief executive officer and each of the four most
highly compensated officers other than our chief executive
officer. During 2002, no directors were compensated for their
board or committee activities. Other than the 1986 and 1997,
and 2001 Stock Incentive Plans and the Simple Retirement Plan
described below, Igene has no profit sharing or incentive
compensation plans.
SUMMARY COMPENSATION TABLE
Salary
Name and Principal Compensation
Position Year ($)
_________________________ ______ ____________
Stein Ulve 2002 $100,000
Chief executive officer..
Stephen Hiu.............. 2002 $114,200
President
Patrick Monahan.......... 2002 $106,840
Director
Per Bejaminsen........... 2002 $100,000
Chief Marketing officer
Edward Weisberger........ 2002 $103,340
Chief Financial officer
Through December 2001, no executive officer's annual cash
compensation exceeded $100,000. Prior to December, 2001, the
function of chief executive officer was performed by our board
of directors (see Item 9), acting as a group. During 2000, no
directors were compensated for their board or committee
activities.
Option/SAR Grants In Last Fiscal Year
Individual Grants(a)
Percent of
Number of Total Options/
Securities SARs Granted
Underlying To
Options/SARs Employees Exercise or
Date of Granted in Fiscal Base Price
Name Grant (#) Year ($/Sh) Expiration Date
_______________ _______ ____________ ______________ ___________ ________________
Michael G. Kimelman 8/13/02 7,000,000 38.89% $.025 8/13/12
Stephen F. Hiu 8/13/02 5,000,000 27.47% $.025 8/13/12
Patrick F. Monahan 8/13/02 3,000,000 16.48% $.025 8/13/12
All Employees
as a Group (b) 18,200,000 100.00% (b) (b)
(a) Options granted under the ESOP to our executive officers
named in the Summary Compensation Table above are first
exercisable on the date of grant.
(b) Options granted under the ESOP throughout 2002 with
immediate vesting that expire in 2012. The exercise price
of all options granted to employees in 2002 is $.025.
Equity Compensation Plan Information as of December 31, 2002
Number of Secrities
remaining available for
Number of securities future issuance under
issued or to be Weighted-average equity compensation
issued upon exercise exercise price of plans (excluding
of outstanding options, outstanding options securities reflected in
Plan Category warrants and rights warrants and rights column
________________ _______________________ ___________________ _______________________
Equity compensation
plans approved by
security holders 18.2 million (1) $0.025 (2) 39.016 million (3)
Equity compensation
plans not approved
by security holders
(4) 3.26 million (5) $0.03 (5) 11.697 million (6)
Total 21.46 million $0.0257 50.713 million
(1) Total shares issued under employee stock option plan.
(2) Exercise price of outstanding options under compensation plans.
(3) All shares remaining issuable under employee option plan.
(4) Shares represent those issued under the Fermic
Manufacturing Agreement.
(5) Total shares earned by Fermic in 2002 and the average
price at which they were earned.
(6) All Shares remaining earnable under the Fermic
manufacturing agreement.
Fermic, Igene's manufacturing agent, earns shares, respectively,
of common stock as part of the manufacturing agreement. Fermic
earns 2,250 shares of common stock for each kilogram pure
astaxanthin produced and delivered as part of the agreement. The
average price is based on the market value of the shares at the
time the product was produced. Fermic can earn up to
20,000,000 shares in total under the contract. The 3,260,246
shares were earned at an average price of $.03 per share for
2002, and 5,043,019 shares were earned at an average price of
$.06 per share over the period and issued at the end of 2001.
Security Ownership Of Certain Beneficial Owners And Management
The following table sets forth information as of February
24, 2003 with respect to beneficial ownership of shares of our
outstanding common stock and preferred stock by (i) each person
known to us to own or beneficially own more than five percent of
our common stock or preferred stock, (ii) each director, and
(iii) each officer named in the Summary Compensation Table
provided in Part II Item 10 above, and (iv) all directors and
such officers as a group.
Common Stock Preferred Stock
__________________________ _______________________
Number of Number of
Name and Address ShareS Percent * Shares Percent
____________________________ ____________ __________ _________ __________
Directors and officers
____________________________
Joseph C. Abeles 15,012,789<F1> 15.19 7,375 27.93
220 E. 42nd Street
New York, NY 10017
John A. Cenerazzo 1,912,456<F2> 2.18 --- ---
PO Box 4067
Reading, PA 19606
Stephen F. Hiu 10,865,300<F3> 11.32 --- ---
9110 Red Branch Road
Columbia, MD 21045
Thomas L. Kempner 141,679,138<F4> 67.62 --- ---
61 Broadway
New York, NY 10006
Michael G. Kimelman 22,321,950<F5> 20.86 --- ---
100 Park Avenue
New York, NY 10017
Sidney R. Knafel 140,087,578<F6> 67.40 --- ---
810 Seventh Avenue
New York, NY 10019
Patrick F. Monahan 6,864,200<F7> 7.47 --- ---
9110 Red Branch Road
Columbia, MD 21045
Stein G. Ulve 3,833,333<F8> 4.29 --- ---
9110 Red Branch Road
Columbia, MD 21045
Per A. Benjaminsen 3,833,333<F9> 4.29 --- ---
9110 Red Branch Road
Columbia, MD 21045
Edward J. Weisberger 2,570,000<F10> 2.91 --- ---
9110 Red Branch Road
Columbia, MD 21045
All directors and officers 348,910,076<F11> 88.97 7,375 27.93
as a Group (10 persons)
Others
______
Fraydun Manocherian 7,905,135<F12> 8.76 --- ---
3 New York Plaza
New York, NY 10004
Fermic 8,303,265 9.66 --- ---
* Under the rules of the Securities and Exchange Commission,
the calculation of the percentage assumes for each person that
only that person's rights, warrants, options or convertible
notes or preferred stock are exercised or converted, and that no
other person exercises or converts outstanding rights, warrants,
options or convertible notes or preferred stock.
<FN>
<F1> Includes the following: 2,113,544 shares held directly or
indirectly by Mr. Abeles, 14,750 shares issuable upon the
conversion of 7,375 shares of preferred stock, 3,782,083
shares issuable upon the conversion of $311,663 of long-term
notes issued by Igene, and 9,102,412 shares issuable upon
exercise of warrants held by Mr. Abeles.
<F2> Includes the following: 283,458 shares held directly or
indirectly by Mr. Cenarazzo, 32,750 shares issuable upon
exercise of options currently exercisable, 492,321 shares
issuable upon the conversion of $40,622 of long-term notes
issued by Igene and 1,103,513 warrants held by Mr. Cenerazzo.
Also includes 414 shares held by Mr. Cenerazzo's wife.
<F3> Includes the following: 865,300 shares held directly or
indirectly by Mr. Hiu and 10,000,000 shares issuable pursuant
to options held by Dr. Hiu that are currently exercisable.
<F4> Includes 386,972 shares and 536,920 shares issuable upon
exercise of warrants held by Mr. Kempner that are currently
exercisable. Also includes 8,661,245 shares held directly by
Mr. Kempner, 18,222,978 shares issuable upon conversion of
notes issued by Igene and held by Mr. Kempner, and 58,485,630
shares issuable upon exercise of warrants held by a trust
under which Mr. Kempner is one of two trustees and the sole
beneficiary, which are currently exercisable. Also includes
8,621,247 shares held directly by Mr. Kempner, 18,222,980
shares issuable upon the conversion of notes issued by Igene
and held by Mr. Kempner and 58,442,423 shares issuable upon
exercise of warrants held a trust under which Mr. Kempner is
one of two trustees and one of his brothers is the sole
beneficiary, which are currently exercisable. Also includes
1,147,667 shares issuable upon the conversion of $79,200 of
notes issued by Igene and held by Mr. Kempner and 2,079,411
shares issuable upon exercise of warrants held by trusts under
which Mr. Kempner is one of two trustees and is a one-third
beneficiary that are currently exercisable. Also includes
243, 360 shares and 131,414 shares issuable upon exercise of
warrants held by trusts under which Mr. Kempner is executer
and is a one-third beneficiary that are currently exercisable.
Also includes 182,526 shares and 98,565 warrants held by Mr.
Kempner's wife.
<F5> Includes 1,264,360 shares held directly or indirectly by Mr.
Kimelman, 14,000,000 shares issuable upon exercise of options
currently exercisable, 804,568 shares issuable upon the
conversion of $63,070 of notes issued by Igene and held by Mr.
Kimelman, and 6,253,022 shares issuable upon exercise of
warrants held directly or indirectly by Mr. Kimelman.
<F6> Includes 18,190,551 shares, 36,929,532 shares issuable upon
the conversion of notes issued by Igene and held by Mr. Knafel
and 84,967,495 shares issuable upon the exercise of warrants
owned or beneficially owned by Mr. Knafel that are currently
exercisable.
<F7> Includes 864,200 shares held directly or indirectly by Mr.
Monahan and 6,000,000 shares issuable upon the exercise of
options held by Mr. Monahan that are currently exercisable.
<F8> Includes 500,000 shares of common stock and 3,333,333 shares
issuable upon exercise of options held by Mr. Ulve that are
currently exercisable.
<F9> Includes 500,000 shares of common stock and 3,333,333 shares
issuable upon exercise of options held by Mr. Benjaminsen that
are currently exercisable.
<F10> Includes 70,000 shares held directly by Mr. Weisberger and
2,500,000 shares issuable upon exercise of options that are
currently exercisable.
<F11> Includes 42,677,177 shares of common stock, 14,750 shares
issuable upon the conversion of 7,375 shares of preferred stock;
39,199,416 shares issuable upon exercise of options that are
currently exercisable, 79,602,129 shares issuable upon the
conversion of notes issued by Igene and 187,416,604 shares
issuable upon the exercise of warrants that are currently
exercisable.
<F12> Includes 3,625,935 shares of common stock owned directly or
indirectly by Mr. Manocherian and 4,279,200 shares issuable
upon the exercise of warrants owned directly or indirectly by
Mr. Manocherian that are currently exercisable.
</FN>
Compensation Committee Interlocks and Insider Participation
Thomas L. Kempner and Sidney R. Knafel are members of our
compensation committee. None of our executive officers has
served on the board of directors or compensation committee of
any other entity that has had any of such entity's officers
serve either on our board of directors or our compensation
committee.
Certain Relationships and Transactions
On February 22nd 2002, Igene issued and sold $1,000,000 in
aggregate principal amount of 8% convertible debentures, to Mr.
Kempner, a director of Igene, and to Mr. Knafel, also a director
of Igene, in equal amounts of $500,000 each. These debentures
are convertible into shares of Igene's common stock at $.04 per
share based on the market price of Igene's shares at the time
the purchase of the debentures was agreed to. In consideration
of the commitment to purchase the 8% convertible debenture, each
of these directors also received 12,500,000 warrants to purchase
common stock at $.04 per share. These debentures, if not
converted earlier, become due on February 22nd 2012.
On July 17th 2002, Igene issued and sold $300,000 in
aggregate principal amount of 8% convertible debentures, to Mr.
Kempner, a director of Igene, and to Mr. Knafel, also a director
of Igene, in equal amounts of $150,000 each. These debentures
are convertible into shares of Igene's common stock at $.03 per
share based on the market price of Igene's shares at the time
the purchase of the debentures was agreed to. In consideration
of the commitment to purchase the 8% convertible debenture, each
of these directors also received 5,000,000 warrants to purchase
common stock at $.03 per share. These debentures, if not
converted earlier, become due on July 17th 2012.
In August 2002, Igene issued 7,000,000 warrants to purchase
Igene common stock at $.025 per share to its Chairman of the
Board, Mr. Kimelman as part of the stock option plan, as
compensation for his services as Chairman of the Board.
On December 21st 2002, Igene issued and sold $250,000 in
aggregate principal amount of 8% demand notes to certain
directors of Igene. Should Igene be unable to pay them as they
are called these notes would become convertible into shares of
Igene's common stock based on the market price of Igene's shares
at the time they are called.
In March 2001, Igene issued $1,014,211 of 8% convertible
debentures to Mr. Kempner and Mr. Knafel, directors of Igene,
in exchange for the cancellation of $800,000 of demand notes
payable (including accrued interest of $14,212) and $200,000 in
cash. $600,000 of these demand notes were issued during 2000 and
$200,000 were issued subsequently. These debentures are
convertible into 10,142,110 shares of Igene's common stock at
$.08 per share. Messrs. Kempner and Knafel also received
10,142,110 warrants to purchase common stock at $.08 per share.
In these transactions, $507,105 of convertible debentures and
5,071,055 warrants were issued to Mr. Kempner or entities
controlled by him, and $507,105 of convertible debentures and
5,071,055 warrants were issued to Mr. Knafel or entities
controlled by him.
In March 2001, Igene issued 5,500,000 warrants to purchase
Igene common stock at $.08 per share to its Chairman of the
Board, Mr. Kimelman as part of the stock option plan, as
compensation for his services as Chairman of the Board.
In March 2001, Messrs. Kempner and Knafel, directors of
Igene, committed to provide additional funding in the form of 8%
convertible debentures in the aggregate amount of $1,500,000
over the next nine months. In consideration of this commitment,
these directors also received 18,750,000 warrants to purchase
common stock at $.08 per share. These debentures are
convertible into 18,750,000 shares of Igene's common stock at
$.08 per share. In these transactions, $750,000 of convertible
debentures and 9,375,000 warrants were issued to Mr. Kempner or
entities controlled by him and $750,000 of convertible
debentures and 9,375,000 warrants were issued to Mr. Knafel or
entities controlled by him.
In connection with the acquisition of ProBio, Igene
acquired all 10,000 issued and outstanding shares of capital
stock of ProBio from thirteen individual and corporate sellers
in exchange for $1.8 million in aggregate consideration,
consisting of $1 million in debentures convertible into our
common stock at $.10 per share (reflecting the price at which
our common stock was trading on the over-the-counter bulletin
board when we agreed as to price in June of 2001), 8,000,000
shares of our common stock, valued for the purposes of the
acquisition in December 2001 at $.05 per share, and $400,000 in
cash. The cash used to acquire ProBio constituted proceeds of
private placements of our common stock received during 2001 and
revenues from operations. Following the acquisition, Stein Ulve
and Per Benjaminsen, the managing director and director of
marketing and sales, respectively, of ProBio became our chief
executive officer and chief marketing officer, respectively,
pursuant to written employment agreements. Prior to the sale
of ProBio to Igene both Stein Ulve and Per Benjaminsen were both
owners of in excess of 10% of ProBio.
As reported on Form 8-K filed February 20, 2003, Igene, in
an effort to focus on and grow its core business, sold all
10,000 of the issued and outstanding shares of capital stock of
ProBio as of February 4, 2003 to Fermtech AS, a joint stock
company incorporated in the Kingdom of Norway and owned equally
by our former chief executive officer, Stein Ulve, and by Per
Benjaminsen, our Chief Marketing Officer. Mr. Ulve resigned as
CEO and director of Igene and Mr. Benjaminsen resigned as our
chief marketing officer, effective December 31, 2002. Mr.
Benjaminsen has agreed to continue to provide sales and
marketing services to Igene as an independent contractor.
Igene sold ProBio to Fermtech AS in exchange for aggregate
consideration valued at approximately $343,000, consisting of
7,000,000 shares of Igene common stock (including 2,000,000
shares which have been placed into escrow and may be returned to
Fermtech as described below), valued for the purposes of the
acquisition at $.03 per share, plus forgiveness of approximately
$168,000 of debt that Igene owed to ProBio at the time of
purchase in 2001. Provided Mr. Benjaminsen remains employed by
Igene through 2003, 1,000,000 of the escrowed shares of common
stock will be delivered to Fermtech. If Mr. Benjaminsen remains
employed by Igene through 2004, the remaining 1,000,000 escrowed
shares will be released from escrow and delivered to Fermtech.
Section 16(a) Beneficial Ownership Reporting Compliance
Igene believes that during 2002 and through March of 2003
all of its officers and directors of more than 10% of its common
stock, have filed all past due reports and come into compliance
with Section 16(a) reporting requirements with respect to
acquisitions and dispositions of Igene's securities.
Igene believes that, during 2001, all of its officers,
directors and holders of more than 10% of its common stock
complied with all filing requirements under Section 16(a) of the
Securities Exchange Act of 1934, as amended, except as follows:
In 1997 and 2001 certain directors of Igene made various loans
to Igene. The loans are evidenced by notes convertible into
common stock, and in 2001 received warrants in conjunction with
the loan agreement. Certain directors also received warrants to
purchase shares of common stock in 1997 and 1998 in conjunction
with the 1997 notes and with a 1998 rights offering. During 1999
and 2000, certain directors and other accredited investors also
purchased original issue stock from Igene and received warrants
in conjunction with these purchases. Igene believes that none
of the foregoing securities have been reported by Messrs.
Kimelman, Abeles, Cenerazzo or Knafel on Forms 3, 4 or Forms 5
pursuant to Section 16(a) of the Exchange Act. In making this
disclosure, Igene
has relied solely on written representations
of its directors, officers and more than 10% holders and on
copies furnished to Igene of reports that have been filed with
the Securities and Exchange Commission.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Our board of directors has selected Stegman & Company as
our independent auditors for the fiscal year ending December 31,
2003. Accordingly, the stockholders will be asked to ratify such
appointment at the meeting. A representative of Stegman &
Company is not expected to be present at the meeting and is not
expected to be available to respond to questions.
On April 30, 2001, we dismissed Berenson & Company, LLP as
our certifying accountant. Berenson performed the audit of our
financial statements for the years ended December 31, 2000 and
1999. During these periods and for the period from January 1,
2001 to April 30, 2001, there were no disagreements, whether or
not resolved, between us and Berenson on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not
resolved to Berenson's satisfaction, would have caused Berenson
to make reference to the subject matter of the disagreement(s)
in connection with its audit reports on our financial
statements. No audit report for either of the past two fiscal
years contained an adverse opinion or disclaimer of opinion, or
was modified as to audit scope or accounting principles.
However, the audit reports for each of the years ended December
31, 2000 and 1999 were modified as to uncertainty about our
ability to continue as a going concern due to our recurring
losses and limited capitalization. On April 30, 2001, we
engaged the firm of Stegman & Company to audit our financial
statements for fiscal year 2001 as our certifying accountant.
The decision to change accountants and appoint Stegman was
recommended by our audit committee of the board of directors on
April 27, 2001. There were no consultations between us and
Stegman regarding the application of accounting principles to
any matter, or as to any type of opinion that might be issued on
our financial statements.
Audit Fees
The aggregate fees billed for professional services
rendered for the audit of our annual financial statements for
2002 and the reviews of the financial statements included in our
forms 10-QSB for 2002 was approximately $21,000.
All Other Fees
Stegman & Company expects to bill approximately $3,000 for
tax preparation services to be performed during 2003 relating to
certain 2002 income tax filings.
Our board of directors recommends a vote for ratification
of the appointment Of Stegman & Company as our auditors for
fiscal year 2003.
OTHER MATTERS
Stockholder Proposals
Proposals of stockholders intended to be presented at our
2004 annual meeting of stockholders must be received by us no
later than 5:00 P.M. local time on March 3, 2004, to be eligible
for inclusion in our proxy statement and form of proxy to be
used in connection with such meeting. If you wish to submit a
proposal, the proposal must be in accordance with the provisions
of SEC Rule 14a-8 of the Exchange Act. It is suggested that the
proposal be submitted by certified mail, return receipt
requested, to IGENE Biotechnology, Inc., 9110 Red Branch Road,
Columbia, Maryland 21045, Attn: Corporate Secretary.
Financial And Other Information
Financial statements meeting the requirements of Regulation
S-X and information responsive to Item 303 of Regulation S-B
relating to management's discussion and analysis of financial
condition and results of operations are incorporated herein by
reference to our annual report on Form 10-KSB filed with the
Commission, a copy of which accompanies this Proxy Statement.
We are subject to the informational requirements of the
Exchange Act and, in accordance therewith, we file reports,
proxy or information statements and other information with the
Commission. Such reports, proxy or information statements,
exhibits and other information filed by us with the Commission
can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, NW, Washington, D.C. 20549, and at the Regional
Offices of the Commission at 233 Broadway, 13th Floor, New York,
New York 10279 and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials can be obtained by mail from the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, NW, Washington, D.C. 20549, and its public
reference facilities in New York, New York and Chicago,
Illinois, at prescribed rates. The Commission maintains an
Internet web site that contains reports, proxy and information
statements and other information regarding issuers who file
electronically with the Commission.
Other Business
At the date of this proxy statement, the only business that
the board of directors intends to present or knows that others
will present at the meeting is that hereinabove set forth. If
any other matter or matters are properly brought before the
meeting, or any adjournment thereof, it is the intention of the
persons named in the accompanying form of proxy to vote the
proxy on such matters in accordance with their judgment.
/s/Stephen F. Hiu
___________________________
Stephen F. Hiu
President and
Chief Technical Officer
APPENDIX 1 - FORM OF PROXY
Dated: April 11, 2003
IGENE BIOTECHNOLOGY, INC.
2003 Annual Meeting of Stockholders - May 13, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of IGENE BIOTECHNOLOGY, INC., a
Maryland corporation, hereby appoints Stephen F. Hiu, Michael G.
Kimelman and Thomas L. Kempner, and each of them the proxies of
the undersigned with full power of substitution to vote at the
Annual Meeting of Stockholders of the Company to be held at
10:00 a.m. on May 13, 2003, and at any adjournment or
adjournments thereof (the "Meeting"), with all the power which
the undersigned would have if personally present, hereby
revoking any proxy heretofore given. The undersigned hereby
acknowledges receipt of the proxy statement for the Meeting and
instructs the proxies to vote as directed on the reverse side.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL
PROPOSALS.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE--SEE REVERSE
SIDE. THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE
MANNER DIRECTED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES LISTED BELOW, FOR THE
RATIFICATION OF THE APPOINTMENT OF STEGMAN & COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2003 AND IN THE DISCRETION OF
THE PROXY HOLDERS AS TO ANY OTHER MATTERS WHICH MAY PROPERLY
COME BEFORE THE MEETING.
(To Be Signed on Reverse Side)
X Please mark your votes as in this example.
1. Election of Directors
FOR WITHHOLD AUTHORITY
all nominees listed below to vote for all nominees
listed below
_______________ _______________
Nominees: Stephen F. Hiu, Thomas L. Kempner, Michael G.
Kimelman, Sidney R. Knafel, Patrick F. Monahan
(Instruction: To withhold authority to vote for any
individual nominee, write that nominee's name below)
______________________________
2. To ratify the selection of Stegman & Company as independent
auditors of the Company for the fiscal year ending December
31, 2003.
FOR AGAINST ABSTAIN
__________ ___________ ___________
To transact such other business as may properly come before the
meeting, or any adjournment thereof.
PLEASE RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature: ___________________________ Date:_______________
Signature: ___________________________ Date:_______________
(SIGNATURE IF HELD JOINTLY)
Note: Please sign exactly as name appears on stock certificate.
When shares are held by joint tenants both should sign. When
signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other
authorized officer. If a partner, please sign in partnership
name by authorized person.