U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] Quarterly report under Section 13 or 15(D) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2005
[ ] Transition report under Section 13 or 15(D) of the Exchange
Act
For the transition period from __________ to __________
Commission file number 0-15888
IGENE Biotechnology, Inc.
_________________________________________________________________
(Exact name of Small Business Issuer as Specified in its Charter)
Maryland 52-1230461
_______________________________ __________________
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
9110 Red Branch Road, Columbia, Maryland 21045-2024
___________________________________________________
(Address of Principal Executive Offices)
(410) 997-2599
________________________________________________
(Issuer's Telephone Number, Including Area Code)
None
____________________________________________________
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the Issuer: (1) filed all reports required to be filed
by Section 13 or 15(D) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes [ ] No [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [x]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
106,003,661 shares of common stock, par value $.01, as of February 1,
_____________________________________________________________________
2006.
_____
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [x]
FORM 10-QSB
IGENE Biotechnology, Inc.
INDEX
PART I - FINANCIAL INFORMATION
Page
Consolidated Balance Sheets ............................ 5-6
Consolidated Statements of Operations .................. 7
Consolidated Statements of Stockholders' Deficiency .... 8
Consolidated Statements of Cash Flows .................. 9
Notes to Consolidated Financial Statements ............. 10-16
Management's Discussion and Analysis of Financial
Conditions and Results of Operations ................... 17-20
Controls and Procedures ................................ 21
PART II - OTHER INFORMATION ........................... 22-23
SIGNATURES .................................................. 24
EXHIBIT INDEX ............................................... 25
IGENE BIOTECHNOLOGY, INC.
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
PART I
FINANCIAL INFORMATION
IGENE Biotechnology, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, December 31,
2005 2004
____________ ____________
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 47,112 $ 204,248
Accounts receivable 11,793 79,638
Prepaid expenses and other current assets 9,081 10,764
TOTAL CURRENT ASSETS 67,986 294,650
Property and equipment, net 115,280 124,904
Loans receivable from manufacturing agent 70,982 70,982
Investment in and advances to unconsolidated joint venture --- ---
Other assets 5,125 5,125
TOTAL ASSETS $ 259,374 $ 495,661
The accompanying notes are an integral part of the financial statements.
-5-
IGENE Biotechnology, Inc. and Subsidiary
Consolidated Balance Sheets
(continued)
June 30, December 31,
2005 2004
_____________ _____________
(Unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 181,265 $ 78,472
Convertible debenture 705,000 705,000
Equipment lease payable --- 11,750
TOTAL CURRENT LIABILITIES 886,265 795,222
LONG-TERM LIABILITIES
Notes payable 5,842,267 5,842,267
Convertible debentures 3,814,212 3,814,212
Accrued interest 4,539,065 4,148,681
REDEEMABLE PREFERRED STOCK
Carrying amount of redeemable preferred
stock, 8% cumulative, convertible,
voting, series A, $.01 par value per
share. Stated value was $ 18.72
and $18.40, respectively. Authorized
1,312,500 shares, issued 18,509 346,488 340,566
TOTAL LIABILITIES 15,428,299 14,940,948
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Common stock --- $.01 par value per share.
Authorized 750,000,000 shares;
issued and outstanding 103,964,926
and 101,732,453 shares, respectively. 1,039,650 1,017,325
Additional paid-in capital 25,313,660 25,138,748
Accumulated Deficit (41,522,235) (40,601,360)
TOTAL STOCKHOLDERS' DEFICIENCY (15,168,925) (14,445,287)
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY $ 259,374 $ 495,661
The accompanying notes are an integral part of the financial
statements.
-6-
IGENE Biotechnology, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
Three months ended Six months ended
__________________________ ___________________________
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
____________ ____________ ____________ ____________
EQUITY IN LOSS OF JOINT VENTURE $ (282,977) $ (169,744) $ (466,070) $ (202,060)
OPERATING EXPENSES
Marketing and selling 70,876 161,245 119,164 209,267
Research, development and pilot plant 217,082 195,522 383,089 403,932
General and administrative 246,592 210,950 435,500 360,828
Litigation expense --- 27,500 --- 40,580
Operating expenses reimbursed by Joint Venture (527,398) (380,131) (938,737) (743,175)
TOTAL OPERATING EXPENSES 7,152 215,086 (984) 271,432
OPERATING LOSS (290,129) (384,830) (465,086) (473,492)
LOSS ON DISPOSAL (50,000) --- (50,000) ---
INTEREST EXPENSE (192,709) (216,015) (405,789) (439,976)
NET LOSS $ (532,838) $ (600,845) $ (920,875) $ (913,468)
BASIC AND DILUTED NET LOSS PER COMMON SHARE $ (0.01) (0.01) $ (0.01) (0.01)
The accompanying notes are an integral part of the financial
statements.
-7-
IGENE Biotechnology, Inc. and Subsidiary
Consolidated Statements of Stockholders' Deficiency
(Unaudited)
Additional Total
Common Stock Paid-in Accumulated Stockholders'
(shares/amount) Capital Deficit Deficiency
_________________________ _____________ _____________ _____________
Balance at January 1, 2004 92,747,469 $ 927,475 $ 22,556,553 $(39,291,395) $(15,807,367)
Conversion of redeemable preferred stock 389,192 3,892 1,803,268 --- 1,807,160
Shares issued for manufacturing agreement 1,361,609 13,616 171,263 --- 184,879
Shares reissued for ProBio agreement 1,000,000 10,000 100,000 --- 110,000
Conversion of ProBio debentures 1,900,000 19,000 171,000 --- 190,000
Shares issued for payment of legal services 250,000 2,500 25,000 --- 27,500
Conversion of Notes Payable 5,000 50 325 --- 375
Exercise of employee stock options 350,000 3,500 16,250 --- 19,750
Net loss for the six months ended June 30, 2004 --- --- --- (913,468) (913,468)
============ ============ ============= ============= =============
Balance at June 30, 2004 98,003,270 $ 980,033 $ 24,843,659 $(40,204,863) $(14,381,171)
============ ============ ============= ============= =============
Balance at January 1, 2005 101,732,453 $1,017,325 $ 25,138,748 $(40,601,360) $(14,445,287)
Shares issued for manufacturing agreement 2,232,473 22,325 174,912 --- 197,237
Net loss for the six months ended June 30, 2005 --- --- --- (920,875) (920,875)
============ ============ ============= ============= =============
Balance at June 30, 2005 103,964,926 $1,039,650 $ 25,313,660 $(41,522,235) $(15,168,925)
============ ============ ============= ============= =============
The accompanying notes are an integral part of the financial
statements.
-8-
IGENE Biotechnology, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
___________________________
June 30, June 30,
2005 2004
____________ ____________
Cash flows from operating activities
Net loss $ (920,875) $ (913,468)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation 9,624 9,624
Increase in preferred stock for cumulative dividends
classified as interest 5,922 37,058
Issuance of Shares to Fermtech per ProBio agreement --- 110,000
Manufacturing cost paid in shares of common stock 197,237 184,879
Issuance of common stock for legal services --- 27,500
Equity in loss of joint venture 466,070 202,060
Loss on receivable from disposal of equipment 50,000 ---
Decrease (increase) in:
Accounts receivable 17,845 58,125
Prepaid expenses and other current assets 1,683 12,866
Increase (decrease) in:
Accounts payable and accrued expenses 481,428 428,800
____________ ____________
Net cash provided by operating activities 308,934 157,444
____________ ____________
Cash flows from investing activities
Advances to joint venture (466,070) (202,060)
____________ ____________
Cash flows from financing activities
Repayment of borrowing --- (125)
Payment of equipment lease --- (1,498)
Proceeds from exercise of employee stock options --- 19,750
____________ ____________
Net cash provided by financing activities --- 18,127
____________ ____________
Net decrease in cash and cash equivalents (157,136) (26,489)
Cash and cash equivalents at beginning of period 204,248 63,075
============ ============
Cash and cash equivalents at end of period $ 47,112 $ 36,586
============ ============
Supplementary disclosure and cash flow information
Cash paid for interest $ 21,150 $ 24,347
Cash paid for income taxes --- ---
See Note (2) for non-cash investing and financing activities.
The accompanying notes are an integral part of the financial
statements.
-9-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(1) Unaudited consolidated financial statements
The June 30, 2005 consolidated financial statements
presented herein are unaudited, and in the opinion of
management, include all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation
of financial position, results of operation and cash flows.
Such financial statements do not include all of the
information and footnote disclosures normally included in
financial statements prepared in accordance with accounting
principles generally accepted in the United States of
America. This quarterly report on Form 10-QSB should be
read in conjunction with Igene's Annual Report on Form 10-
KSB for the year ended December 31, 2004.
(2) Nature of Operations
Igene Biotechnology, Inc. (the "Company") was incorporated
under the laws of the State of Maryland on October 27, 1981
as "Industrial Genetics, Inc." Igene changed its name to
"IGI Biotechnology, Inc." on August 17, 1983 and to "Igene
Biotechnology, Inc." on April 14, 1986. Igene is located in
Columbia, Maryland and is engaged in the business of
industrial microbiology and related biotechnologies. Igene
has operational subsidiaries in Norway and Chile. IGENE
Biotechnology, Inc. (the "Company") is engaged in the
business of developing, marketing, and manufacturing
specialty ingredients for human and animal nutrition.
Igene was formed to develop, produce and market value-added
specialty biochemical products. Igene is a supplier of
natural astaxanthin, an essential nutrient in different feed
applications and as a source of pigment for coloring farmed
salmon species. Igene also supplies nutraceutical
ingredients, as well as consumer ready health food
supplements, including astaxanthin. Igene is focused on
fermentation technology, pharmacology, nutrition and health
in its marketing of products and applications worldwide.
Igene has devoted its resources to the development of
proprietary processes to convert selected agricultural raw
materials or feedstocks into commercially useful and cost
effective products for the food, feed, flavor and
agrochemical industries. In developing these processes and
products, Igene has relied on the expertise and skills of
its in-house scientific staff and, for special projects,
various consultants.
In an effort to develop a dependable source of production,
on March 19, 2003, Tate & Lyle PLC ("Tate & Lyle") and Igene
Biotechnology, Inc announced a 50:50 joint venture to
produce AstaXin(R) for the aquaculture industry. Production
utilizes Tate & Lyle's fermentation capability together with
the unique technology developed by Igene. Part of Tate &
Lyle's existing Selby, England, citric acid facility has
been modified to include the production of 1,500 tons per
annum of this product. Tate & Lyle's investment of $25
million includes certain of its facility assets currently
used in citric acid production. Commercial production has
commenced.
(3) Noncash investing and financing activities
During the six months ended June 30, 2004, the 194,596
shares of redeemable preferred stock, with a recorded
aggregate value of $1,807,160, were converted into 389,192
shares of common stock. This portion included the 8%
Cumulative Convertible Preferred Stock, Series B and has
relieved the Company of this amount from long-term debt.
During the six months ended June 30, 2004, $190,000 of the
$1,000,000 of Convertible Debentures issued as part of the
2001 ProBio purchase, were converted to common stock. These
shares were converted at $.10 per share, for a total of
1,900,000 shares. These shares were issued and the notes
cancelled. This relieved the Company of $190,000 of long-
term debt.
During the six months ended June 30, 2004, 250,000 shares
were issued to the Company's attorney as a bonus in
connection with the settlement of the ADM matter. These
shares were issued at an estimated value of $.11 per share,
aggregating $27,500. These costs were expensed in the
second quarter as part of the ADM legal expense.
-10-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)
During the six months ended June 30, 2004, $500 of Notes
Payable were converted using 5,000 warrants at $.075 per
share. The notes and warrants were cancelled and 5,000
shares of common stock were issued.
During the six months ended June 30, 2004, 350,000 shares of
common stock were issued as part of employee stock option
exercises. The Company received $19,750 based on an average
exercise price of $.056 per share.
During the six months ended June 30, 2005 and 2004, Fermic,
Igene's manufacturing agent, earned 2,232,473 and 1,361,609
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 is produced. Fermic can earn up to 20,000,000
shares in total under the contract. The 2,232,473 shares
were earned at an average price of $.085 per share for 2005,
and 1,361,609 shares were earned at an average price of
$.135 per share for 2004. Through June 30, 2005, 16,962,486
shares have been earned. Any shares earned by Fermic will
be issued on a quarterly basis. Igene relied on Section 4(2)
of the Securities Act of 1933, as amended, to issue the
shares to Fermic without registration under that act. Igene
relied on the representations and warranties of Fermic made
in the manufacturing agreement in claiming the
aforementioned exemption.
During the six months ended June 30, 2005 and 2004, the
Company recorded dividends in arrears on 8% redeemable
preferred stock cumulating at $.32 per share aggregating to
$5,922 and $37,058, respectively on preferred stock. The
accrued interest is included in the carrying value of the
redeemable preferred stock. In accordance with FASB 150, the
dividends accrued in the third quarter 2003 and thereafter
have been classified to interest expense.
In February, 2003, Igene sold its subsidiary 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 that were
placed into escrow and may be reissued 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. The escrowed 2,000,000 shares were to
be earned by Fermtech based upon Mr. Benjamin's
continued employment with the Company. As Mr. Benjaminsen
remained employed by Igene through 2003, 1,000,000 of the
escrowed shares of common stock were delivered to Fermtech.
These shares were expensed in the second quarter of 2004, as
a marketing expense of $110,000. Mr. Benjaminsen remains
employed by Igene through 2005 and the remaining 1,000,000
escrowed shares will be released from escrow and delivered
to Fermtech.
(4) Amendment to Long - Term Liabilities
As of February 15th 2006, the Company's Notes payable and
Convertible debentures (other than the ProBio Debentures in
the amount of $705,000) were in the process of being changed
from a maturity date of March 31, 2006 to March 31, 2009.
Accordingly, such notes payable and convertible debentures
have been classified as long-term on the accompanying
Consolidated Balance Sheet.
-11-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)
(5) Joint Venture
On March 18 2003, the Company entered into a Joint Venture
Agreement with Tate & Lyle Fermentation Products Ltd.
("Tate"). Pursuant to a Joint Venture Agreement, the
Company and Tate agreed to form a joint venture (the "Joint
Venture") to manufacture, market and sell Astaxanthin and
derivative products throughout the world for all uses other
than as a Nutraceutical or otherwise for direct human
consumption. Tate contributed $24,600,000 in cash to the
Joint Venture, while the Company agreed to transfer to the
Joint Venture its technology relating to the production of
Astaxanthin and assets related thereto. These assets will
continue to be used by the Joint Venture in the same manner
as historically used by the Company. The Company and Tate
each have a 50% ownership interest in the Joint Venture and
equal representation on the Board of Directors of the
Company. The value of the Company's investment in the Joint
Venture has been recorded at an amount equal to the book
value of the Company's consideration contributed at the
creation of the Joint Venture. As the cost of the Company's
technology and intellectual property has been previously
expensed and has a carrying amount of zero, the initial
investment in the Joint Venture has been recorded with a
book value of $316,869, which represents the unamortized
production costs contributed to the Joint Venture. Added to
this was a purchase of common stock in the new venture of
$6,000.
As a result of the Joint Venture, the production, sales and
marketing of Astaxanthin now takes place in the
unconsolidated Joint Venture. From inception on March 18,
2003 through June 30, 2005, Igene's portion of the Joint
Venture's net loss was $8,092,320. The loss was a result of
a 50% interest in the following: Gross profit from
inception was a negative $7,688,088 on sales of $12,517,400,
less manufacturing cost of $20,205,488. Selling and general
and administrative expenses were $7,292,077 and interest
expense was $1,204,475. The resulting loss before tax was
$16,184,640. Igene's 50% portion of the Joint Venture loss
was $8,092,320.
Because the Company accounts for its investment in the Joint
Venture under the equity method of accounting, it would
ordinarily recognize as part of loss from equity the loss of
it's 50% ownership portion of the loss of the Joint Venture.
However, losses in the Joint Venture are recognized only to
the extent of the Investment in and Advances to the Joint
Venture. Losses in excess of this amount are suspended from
recognition in the financial statements and carried forward
to offset Igene's share of the Joint Venture's future
income, if any. Igene does not expect to recognize income
from the Joint Venture until all accumulated unrecognized
losses have been eliminated.
At June 30, 2005, prior to the recognition of its portion of
the Joint Venture loss, Igene's investment in the Joint
Venture consisted of its $322,869 and its net advances to
the Joint Venture amounted to $1,151,508, for a total of
$1,474,377. Through December 31, 2004, Igene recognized
$1,008,307 of the $4,887,494 loss which existed as part of
the Joint Venture. In the first quarter of 2005, Igene
recognized losses to the extent of the increase in the
advance $183,093, the March 31, 2005 balance of $1,191,400,
less the December 31, 2004 balance of $1,008,307. For the
three months ended June 30 2005, Igene recognized a loss of
$282,977 which is the extent of the increase in the advance
for that period (the June 30, 2005 balance of $1,474,377
less the March 31, 2005 balance of $1,191,400). The
remainder of the loss, which is $1,698,500 for the quarter,
is suspended. The cumulative suspended loss at June 30,
2005 is $6,617,943 and it will be carried forward to offset
Igene's share of earnings from the Joint Venture, if any.
The balance in the Advances to and Investment in Joint
Venture account on the Company's financial statements is
zero at June 30, 2005.
-12-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)
The following condensed statement displays the activity of
the Joint Venture for the period of initial investment at
March 18, 2003 in the Joint Venture through June 30, 2005.
As shown 50% of the activity is recorded as part of Igene's
Financial Statements as loss from investment in Joint
Venture:
June 30,
2005
_____________
(Unaudited)
ASSETS
CURRENT ASSETS
Account Receivable $ 2,367,400
Inventory 1,324,000
_____________
3,691,400
OTHER ASSETS
Fixed Assets Receivable 24,074,000
Intellectual property 24,617,000
_____________
TOTAL ASSETS $ 52,382,000
=============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 14,560,600
Working capital loan 2,206,700
_____________
TOTAL LIABILITIES 16,767,300
Equity 35,614,700
_____________
TOTAL LIABILITIES AND EQUITY $ 52,382,000
=============
Period from March 18, 2003
(initial investment) to
June 30, 2005
__________________________
(unaudited)
Net Sales $ 12,517,400
Less: manufacturing cost (20,205,488)
_____________
Gross Profit (Loss) (7,688,088)
Less: selling, general and administrative (7,292,077)
_____________
Operating Loss (14,980,165)
Interest Expense (1,204,475)
_____________
Net Loss $(16,184,640)
=============
Igene's 50% equity interest in the net loss $ (8,092,320)
Igene's Investment in and Advances to the Joint Venture (1,474,377)
_____________
Igene's suspended loss at June 30, 2005 $ (6,617,943)
=============
-13-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)
The following statement displays the significant activity
for the Joint Venture for the three and six month ended
June 30, 2005. As shown, 50% of the activity is recorded as
part of Igene's Financial Statements as loss from investment
in Joint Venture:
Three Months Six Months
Ended Ended
June 30, 2005 June 30, 2005
_____________ _____________
Net Sales $ 3,379,000 $ 5,733,400
Less: manufacturing cost (5,448,000) (9,065,488)
_____________ _____________
Gross Profit (Loss) (2,069,000) (3,332,088)
Less: selling, general and admin (1,260,000) (2,024,077)
_____________ _____________
Operating Loss (3,329,000) (5,356,165)
Interest Expense (68,000) (1,053,475)
_____________ _____________
Loss before tax $ (3,397,000) $ (6,409,640)
============= =============
50% equity interest Igene $ (1,698,500) $ (3,204,820)
Igene's additional Investment in
and Advances to the Joint Venture (282,977) (466,070)
_____________ _____________
Igene's incremental suspended loss for period $ (1,415,523) $ (2,738,750)
============= =============
(6) Guarantee of Joint Venture Debt
On June 15th 2005, the Company executed a limited guarantee
for one of the debt obligations of the Joint Venture. Under
the terms of the limited guarantee, the Company will
guarantee up to 4,200,000 British pounds sterling
(approximately $7,350,000 at February 10, 2006).
The Company subsequently entered into an agreement with Tate
& Lyle (the other 50% partner in the Joint Venture) where
Tate & Lyle has agreed to arrange funds for the Joint
Venture, without recourse to Igene Biotechnology, Inc.,
until the Joint Venture produces a regular monthly cash
flow, as defined, for four consecutive months.
As of February 10, 2006, the Joint Venture has not met the
cash flow requirements, therefore Igene is not obligated for
any funding to the Joint Venture or responsible for the
guarantee mentioned above.
(7) Stockholders' Deficiency
As of June 30, 2005, 37,018 shares of authorized but
unissued common stock were reserved for issue upon
conversion of the Company's outstanding preferred stock.
As of June 30, 2005, 73,954,500 shares of authorized but
unissued common stock were reserved for issue and exercise
pursuant to the Company's Employee Stock Option Plans.
As of June 30, 2005 10,000,000 shares of authorized but
unissued common stock were reserved for distribution and
exercise pursuant to a stock option agreement with past
officers of the Company.
As of June 30, 2005, 17,565,970 shares of authorized but
unissued common stock were reserved for the conversion of
outstanding convertible promissory notes in the aggregate
amount of $1,082,500 held by directors of the Company.
As of June 30, 2005, 66,427,651 shares of authorized but
unissued common stock were reserved for the conversion of
outstanding convertible promissory notes held by directors
of the Company.
-14-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)
As of June 30, 2005, 7,050,000 shares of authorized but
unissued common stock were reserved for the conversion of
outstanding convertible promissory notes issued as part of
the purchase of ProBio.
As of June 30, 2005, 205,261,073 shares of authorized but
unissued common stock were reserved for the exercise of
outstanding warrants.
As of June 30, 2005, 3,037,514 shares of authorized but
unissued common stock were reserved for issuance to the
Company's contract manufacturer pursuant to the terms of the
current manufacturing contract.
(8) Basic and diluted net loss per common share
Basic and diluted net loss per common share for the six-
month periods ended June 30, 2005 and 2004, are based on
102,266,230 and 94,376,611 shares, respectively, of weighted
average common shares outstanding. The same figures for the
three month period then ended are based upon 102,794,142 and
95,821,138 weighted average common shares outstanding. No
adjustment has been made for any common stock equivalents
outstanding because their effects would be antidilutive.
(9) Income Taxes
The Company uses the liability method of accounting for
income taxes as required by SFAS No. 109, "Accounting for
Income Taxes". Under the liability method, deferred-tax
assets and liabilities are determined based on differences
between the financial statement carrying amounts and the tax
bases of existing assets and liabilities (i.e., temporary
differences) and are measured at the enacted rates that will
be in effect when these differences reverse. Deferred
income taxes will be recognized when it is deemed more
likely than not that the benefits of such deferred income
taxes will be realized; accordingly, all net deferred income
taxes have been eliminated by a valuation allowance.
(10) Uncertainty
Igene has incurred net losses in each year of its existence,
aggregating approximately $41,500,000 from inception to June
30, 2005 and its liabilities exceeded its assets by
approximately $15,170,000 at that date. These factors
indicate that Igene will not be able to continue in
existence unless it is able to raise additional capital and
attain profitable operations.
The continuing successful marketing of Igene's product,
AstaXin(R), has permitted Igene the opportunity to attract
additional capital through it's Joint Venture with Tate &
Lyle. Igene began manufacturing and selling AstaXin(R)
during 1998 and has continued to do so to date, attempting
to increase sales and manufacturing levels. Igene believes
this technology to be highly marketable. Igene hopes to
continue increasing sales of AstaXin(R), eventually
achieving gross profits and, subsequently, profitable
operations, although the achievement of these cannot be
assured.
(11) Stock Based Compensation
The Company accounts for its stock based compensation plans
under the recognition and measurement principles of APB
opinion No. 25, "Accounting for Stock Issued to Employees",
and related interpretations. No stock option based employee
compensation cost is reflected in net income, as all options
granted under the plan had an exercise price equal to the
market value of the underlying common stock on the date of
grant. The following table illustrates the effect on net
income and earnings per share if the Company had applied the
fair value recognition provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" and disclosure
provisions of SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure", to stock-based
employee compensation for the three and six months ended
June 30:
-15-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(continued)
Three months ended Six months ended
_________________________ _________________________
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
____________ ____________ ____________ ____________
Net loss:
As reported $ (532,838) $ (600,845) $ (920,875) $ (913,468)
Less pro forma stock-based employee
compensation expense determined under
fair value based method net of related
tax effects --- (156,892) --- (330,447)
____________ ____________ ____________ ____________
Net loss $ (532,838) $ (757,737) $ (920,875) $(1,243,915)
============ ============ ============ ============
Net loss per Share:
Basic - as reported $ (0.01) $ (0.01) $ (0.01) $ (0.01)
Basic - pro forma $ (0.01) $ (0.01) $ (0.01) $ (0.01)
Diluted - as reported $ (0.01) $ (0.01) $ (0.01) $ (0.01)
Diluted - pro forma $ (0.01) $ (0.01) $ (0.01) $ (0.01)
(12) Recent Accounting Pronouncements
In November 2004, the FASB issued SFAS No. 151, "Inventory
Costs, an amendment of ARB No.43, Chapter 4." SFAS amends
Accounting Research Bulletin ("ARB") No.43, Chapter 4, to
clarify that abnormal amounts of idle facility expense,
freight, handling costs and wasted materials (spoilage)
should be recognized as current-period charges. In
addition, SFAS No.151 requires that allocation of fixed
production overhead to inventory be based on the normal
capacity of the production facilities. SFAS No.151 is
effective for inventory costs incurred during the fiscal
years beginning after June 15, 2005. The Company is
currently assessing the impact SFAS No.151 will have on the
results of operations, financial position or cash flows.
In May 2005, the FASB issued SFAS No. 154, "Accounting
Changes and Error Corrections"("SFAS 154") which replaces
APB Opinion No. 20 Accounting Changes and SFAS No. 3,
"Reporting Accounting Changes in Interim Financial
Statements-An Amendment of APB Opinion No. 28." SFAS 154
requires retrospective application to prior periods'
financial statement of a voluntary change in accounting
principal unless it is not practical. SFAS 154 is effective
for accounting changes and corrections of errors made in
fiscal years beginning after December 15, 2005, and is
required to be adopted by the Company in the first quarter
of fiscal 2007. Although the Company will continually
evaluate its accounting policies, management does not
currently believe adoption will have a material impact on
the Company's results of operations, cash flows or financial
position.
In May 2003, the FASB issued SFAS No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both
Liabilities and Equity". SFAS No. 150 establishes standards
for how an issuer classifies and measures certain financial
instruments with characteristics of both a liability and
equity. It requires that an issuer classify certain
financial instruments as a liability, although the financial
instrument may previously have been classified as equity.
This Statement is effective for financial instruments
entered into or modified after May 31, 2003 and otherwise is
effective at the beginning of the first interim period
beginning after June 15, 2003. The effect of adopting this
pronouncement required the reclassification of $2.04 million
of redeemable preferred stock as a liability.
On December 16, 2004, the FASB issued FASB Statement No.
123(revised 2004), Share-Based Payment, which is a
revision of FASB Statement No. 123, Accounting for Stock-
Based Compensation. Statement 123(R) supersedes APB Opinion
No. 25, Accounting for Stock Issued to Employees. Generally,
the approach in Statement 123(R) is similar to the approach
described in Statement 123. However, Statement 123(R)
requires all share-based payments to employees, including
grants of employee stock options, to be recognized in the
income statement based on their fair values. Pro forma
disclosure is no longer an alternative. In April 2005, the
SEC amended the compliance dates for Statement 123(R) from
fiscal periods beginning after June 15, 2005 to fiscal years
beginning after June 15, 2005. The Company expects to adopt
Statement 123 (R) in the fiscal year commencing January 1,
2006.
-16-
IGENE Biotechnology, Inc. and Subsidiary
Management's Discussion and Analysis of
Financial Condition and Results of Operations
CAUTIONARY STATEMENTS FOR PURPOSES OF "SAFE HARBOR PROVISIONS" OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:
EXCEPT FOR HISTORICAL FACTS, ALL MATTERS DISCUSSED IN THIS
REPORT, WHICH ARE FORWARD LOOKING, INVOLVE A HIGH DEGREE OF RISK
AND UNCERTAINTY. CERTAIN STATEMENTS IN THIS REPORT SET FORTH
MANAGEMENT'S INTENTIONS, PLANS, BELIEFS, EXPECTATIONS OR
PREDICTIONS OF THE FUTURE BASED ON CURRENT FACTS AND ANALYSES.
WHEN WE USE THE WORDS "BELIEVE," "EXPECT," "ANTICIPATE,"
"ESTIMATE," "INTEND" OR SIMILAR EXPRESSIONS, WE INTEND TO
IDENTIFY FORWARD-LOOKING STATEMENTS. YOU SHOULD NOT PLACE UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE INDICATED IN SUCH STATEMENT, DUE TO
A VARIETY OF FACTORS, RISKS AND UNCERTAINTIES. POTENTIAL RISKS
AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, COMPETITIVE
PRESSURES FROM OTHER COMPANIES AND WITHIN THE BIOTECH INDUSTRY,
ECONOMIC CONDITIONS IN THE COMPANY'S PRIMARY MARKETS, EXCHANGE
RATE FLUCTUATIONS, REDUCED PRODUCT DEMAND, INCREASED COMPETITION,
INABILITY TO PRODUCE REQUIRED CAPACITY, UNAVAILABILITY OF
FINANCING, GOVERNMENT ACTION, WEATHER CONDITIONS AND OTHER
UNCERTAINTIES.
Overview of Financial Position
During the six-month periods ended June 30, 2005 and 2004, in
addition to the Joint Venture discussed in more detail below, the
following actions materially affected the Company's financial
position.
- Increases in accounts payables and accrued expenses of
$481,428 and decreases in accounts receivable of $17,845
were sources of cash. These were reduced by increases due
from Joint Venture of $466,070.
- The carrying value of redeemable preferred stock was
increased for $5,922 in 2005 and $37,058 in 2004,
reflecting cumulative unpaid dividends on redeemable
preferred stock.
- During the six months ended June 30, 2004, 194,596 shares
of redeemable preferred stock, with a recorded aggregate
value of $1,807,160, were converted into 389,192 shares of
common stock. This portion included the 8% Cumulative
Convertible Preferred Stock, Series B preferred securities
and has relieved the Company of this amount from long-term
debt.
- During the six months ended June 30, 2004, $190,000 of the
$1,000,000 of Convertible Debentures issued as part of the
2001 ProBio purchase, were converted to common stock. These
shares were converted at $.10 per share, for a total of
1,900,000 shares. These shares were issued and the notes
cancelled, which relieved the Company of $190,000 of
long-term debt.
In December 1988, as part of an overall effort to contain costs
and conserve working capital, Igene suspended payment of the
quarterly dividend on its preferred stock. Resumption of the
dividend will require significant improvements in cash flow.
Unpaid dividends cumulate for future payment or addition to the
liquidation preference or redemption value of the preferred
stock. As of June 30, 2005, total dividends in arrears on
Igene's preferred stock total $198,416 ($10.72 per share) and are
included in the carrying value of the redeemable preferred stock.
-17-
IGENE Biotechnology, Inc. and Subsidiary
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(continued)
Critical Accounting Policies
The preparation of our financial statements in conformity
with accounting principles generally accepted in the U.S.
requires management to make judgments, assumptions and estimates
that affect the amounts reported in our financial statements and
accompanying notes. Actual results could differ materially from
those estimates. The following are critical accounting policies
important to our financial condition and results presented in the
financial statements and require management to make judgments and
estimates that are inherently uncertain:
The investment in the Joint Venture is accounted for under
the equity method whereby the Company's 50% ownership percentage
in the Joint Venture's equity is reflected as an asset and the
changes in the Joint Venture's equity as a result of its
operations is reflected in the Company's consolidated statement
of operations subject to certain limitations. Igene's share of
losses in the Joint Venture are recognized only to the extent of
Igene's consideration paid for it's initial investment in the
Joint Venture and any net advances Igene has made to the Joint
Venture. Losses in excess of this amount are suspended from
recognition in the financial statements and carried forward to
offset Igene's share of the Joint Venture future income, if any.
Income in the future, if any, will only be recognized once all
previously deferred losses have been exhausted. The Company
evaluates its investment in the Joint Venture for impairment, as
it does for all other assets. The accounting policies followed
by the Joint Venture are in conformity with accounting principals
generally accepted in the United States of America.
The Joint Venture's inventories are stated at the lower of
cost or market. Cost is determined using a weighted-average
approach, which approximates the first-in first-out method. If
the cost of the inventories exceeds their expected market value,
provisions are recorded for the difference between the cost and
the market value. Inventories consist of currently marketed
products.
The Joint Venture recognizes revenue from product sales when
there is persuasive evidence that an arrangement exists, delivery
has occurred, the price is fixed and determinable, and
collectibility is reasonably assured. Allowances are established
for estimated uncollectible amounts, product returns and
discounts.
The Joint Venture entered into a lease of real property with
an affiliate of Tate & Lyle in Selby, England upon which the new
manufacturing facility has been constructed and operated by the
Joint Venture.
Results of Operations
_____________________
Sales and other revenue
As part of the Joint Venture agreement, all sales are
recognized through the Joint Venture. Therefore, Igene recorded
no sales of AstaXin(R) during the six months ended June 30, 2005
or 2004. Sales have been limited in the past quarters due to
insufficient production quantity. Management anticipates that
the Joint Venture with Tate & Lyle will provide a more dependable
product flow. However, there can be no assurance of the
dependability of production, or that any increases in sales will
occur, or that they will be material.
Cost of sales and gross profit
As with sales revenue, all cost of sales and gross profits
are recognized through the Joint Venture company. Igene reported
no gross profit on sales of AstaXin(R) for the six months ended
June 30, 2005 or 2004. The Company attributes this modest gross
profit to a combination of pricing pressure in the market and
inefficiencies in production. Management expects the level of
gross profit to improve in the future as a percentage of sales.
Demand is expected to increase as the Company increases customer
usage and market share. Management expects the level of gross
profit to improve with expected increases in production
efficiency received from the Joint Venture with Tate & Lyle
offsetting pricing competition, but can provide no assurances of
future increased production or gross profit.
-18-
IGENE Biotechnology, Inc. and Subsidiary
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(continued)
Marketing and selling expenses
For the quarters ended June 30, 2005 and 2004, Igene
recorded marketing and selling expense in the amount of $70,876
and $161,245, respectively, a decrease of $90,369 or 56%. For
the six months ended June 30, 2005 and 2004, Igene recorded
marketing and selling expense in the amount of $119,164 and
$209,267, respectively, a decrease of $90,103 or 43%. The
current period marketing and selling expense decreased as a
result of the 2004 recognition of the expense associated with the
shares issued to Fermtech. As Mr. Benjaminsen remained employed
by Igene through 2003, 1,000,000 of the escrowed shares of common
stock were delivered to Fermtech. A marketing and selling
expense of $110,000 was recognized in the second quarter of 2004
as a result of the issuance of the shares of common stock. As
Mr. Benjaminsen remained employed by Igene through 2005, the
remaining 1,000,000 escrowed shares will be released from escrow
and delivered to Fermtech. This cost will be recognized in the
latter half of 2005, leveling the costs with the 2004 expense.
As a result of the Joint Venture with Tate & Lyle, Igene is
expecting an increase in salable product with a corresponding
increase in marketing and sales costs at the point the new
facility increases its level of production. Additionally, as a
result of the Joint Venture, these expenses are reimbursed to
Igene. However, no assurances can be made in regards to increased
production from the new facility nor with regard to the
corresponding increase in marketing and selling costs.
Research, development and pilot plant expenses
For the quarter ended June 30, 2005 and 2004, Igene recorded
research and development costs in the amount of $217,082 and
$195,522, respectively, a increase of $21,560 or 11%. For the
six months ended June 30, 2005 and 2004, Igene recorded research
and development costs in the amount of $383,089 and $403,932,
respectively, a decrease of $20,843 or 5%. These costs are
expected to remain relatively constant in support of increasing
the efficiency of the manufacturing process through
experimentation in the Company's pilot plant, developing higher
yielding strains of yeast and other improvements in the Company's
AstaXin(R) technology. Igene is hoping this will lead to an
increase in salable product at a reduced cost to Igene and the
Joint Venture. However no assurances can be made in that regard.
These costs are currently funded through reimbursement from the
Joint Venture.
Operating expenses
General and administrative expenses for the quarter ended
June 30, 2005 and 2004 were $246,592 and $210,950 respectively,
an increase of $35,642 or 17%. General and administrative
expenses for the six months ended June 30, 2005 and 2004 were
$435,500 and $360,828 respectively, an increase of $74,672 or
21%. These costs are expected to remain constant at this current
level. Cost increases are due to increased reporting costs.
Igene works to keep overhead costs at a reduced level and spend
funds on research and development efforts. A portion of this
cost is funded by reimbursement through the Joint Venture and the
remainder will need to be funded through profitable operations or
through contributions from directors; though neither of these can
be assured.
Litigation expenses
Previously reported litigation (original lawsuit filed July
21, 1997, U.S. District Court, Baltimore, MD) between Archer
Daniels Midland, Inc. ("ADM") and Igene, involving allegations of
patent infringement and counterclaims concerning the theft of
trade secrets, was resolved on September 29, 2003. Resolution of
the dispute between ADM and Igene did not result in an
unfavorable outcome to Igene. Igene will continue to make and
sell its product, AstaXin(R). The Company incurred $27,500 of
litigation expenses for the three months ended June 30, 2004, and
$40,580 for the six months ended June 30, 2004. During the six
months ended June 30, 2004, 250,000 shares were issued to the
Company attorney, as a bonus in connection with the settlement of
the ADM matter. These shares were issued at an estimated value
of $.11 per share, aggregating $27,500. These costs were
expensed in the second quarter as part of the litigation expense.
With the settlement of this matter, no costs were incurred in
2005.
-19-
IGENE Biotechnology, Inc. and Subsidiary
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(continued)
Interest expense
Interest expense for the quarters ended June 30, 2005 and
2004 was $192,709 and $216,015, respectively, a decrease of
$23,306 or 11%. For the six months ended June 30, 2005 and 2004,
interest expense was $405,789 and $439,976, respectively, an
decrease of $34,187 or 8% The interest expense was almost
entirely composed of interest on the Company's long term
financing from its directors and other stockholders, and interest
on the Company's subordinated debenture in both periods. It is
expected this number may decrease due to the conversions by
holders of long term debt to equity. This decrease is due mainly
to reduced cumulative dividends accrued from preferred stock
which was recorded as interest expense
Loss on disposal
During the second quarter of 2005, Igene wrote off a portion
of a receivable for the sale of equipment it had determined would
not be of use in the new Selby facility and recorded a loss of
$50,000.
Net loss and basic and diluted net loss per common share
As a result of the foregoing, the Company reported net
losses of $532,838 and $600,845, respectively, for the quarters
ended June 30, 2005 and 2004, a decrease in the loss of $68,007
or 11%. This represents a loss of $.01 per basic and diluted
common share in the quarters ended June 30, 2005 and 2004. The
weighted average number of shares of common stock outstanding of
102,794,142 and 95,821,138 for the quarters ended June 30, 2005
and 2004, respectively, increased by 6,973,004 shares. This
resulted from the weighted average adjustments of the following
transactions: the issuance of 1,050,000 shares issued in
conversion of debentures, 4,511,656 shares issued to the
manufacturer as part of the agreement, and 400,000 shares issued
as part of employee stock option exercises.
Liquidity and Capital Resources
Historically, Igene has been funded primarily by equity
contributions and loans from stockholders. As of June 30, 2005,
Igene had negative working capital of $818,279, and cash and cash
equivalents of $47,112. Currently Igene is also funded by
research and development reimbursements from the Joint Venture.
Cash provided by operating activities during the six-month
period ended June 30, 2005 and 2004 amounted to $303,012 and
$120,386, respectively, an increase in cash provided of $182,626.
Cash used by investing activities during the six-month period
ended June 30, 2005 and 2004 amounted to $466,070 and $202,060,
respectively, an increase of $264,010, from increases in advances
to the Joint Venture.
Cash provided by financing activities for the six-month
period ended June 30, 2005 and 2004 amounted to $5,922 and
$55,185, respectively, a decrease of $49,263. Financing
activities consisted primarily of employee stock option plan
purchases and increases in preferred stock for cumulative
dividends classified as interest.
On June 15th 2005, the Company executed a limited guarantee
for one of the debt obligations of the Joint Venture,
guaranteeing up to 4,200,000 British pounds sterling and
subsequently entered into an agreement with Tate & Lyle to
arrange funds for the Joint Venture, without recourse to Igene
Biotechnology, Inc., until the Joint Venture produces a regular
monthly cash flow, the Joint Venture has not met the cash flow
requirements.
Over the next twelve months, Igene believes it will need
additional working capital. Igene hopes to achieve profits from
sales of AstaXin(R) through the Joint Venture. This funding is
expected to be received from the new venture with Tate & Lyle.
However, there can be no assurance that projected profits, if
any, from sales, or additional funding from the Joint Venture
will be sufficient for Igene to fund its continued operations.
The Company does not believe that inflation has had a
significant impact on its operations during the six-month periods
ended June 30, 2005 and 2004.
-20-
IGENE Biotechnology, Inc. and Subsidiary
Management's Discussion and Analysis of
Controls and Procedures
As of the end of the most recently completed fiscal quarter, the
Company's management, with the participation of the principal
executive officer and principal financial officer, has evaluated
the effectiveness of the Company's disclosure controls and
procedures, and has concluded that the Company's disclosure
controls and procedures are effective to ensure that information
required to be disclosed by the Company in the reports that it
files or submits under the Securities Exchange Act of 1934, as
amended, is accumulated and communicated to the Company's
management, including its principal executive officer and
principal financial officer, as appropriate to allow timely
decisions regarding required disclosure and are effective to
ensure that such information is recorded, processed, summarized
and reported within the time periods specified in the SEC's rules
and forms.
There were no changes in Igene's internal control over financial
reporting that occurred during the last fiscal quarter that has
materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
-21-
IGENE Biotechnology, Inc.
PART II
OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds.
Limitation on Payment of Dividends
Dividends on Common Stock are currently prohibited because
of the preferential rights of holders of Preferred Stock. The
Company has paid no cash dividends on its Common Stock in the
past and does not intend to declare or pay any dividends on its
Common stock in the foreseeable future.
Item 3. Defaults Upon Senior Securities.
In December 1988, as part of an overall effort to contain
costs and conserve working capital, the Company suspended payment
of the quarterly dividend on its preferred stock. Resumption of
the dividend will require significant improvements in cash flow.
Unpaid dividends cumulate for future payment or addition to the
liquidation preference or redemption value of the preferred
stock. As of June 30, 2005, total dividends in arrears on the
Company's preferred stock total $198,416 ($10.72 per share) and
are included in the carrying value of the redeemable preferred
stock.
On November 30, 2001, Igene entered into Convertible
Promissory Notes (the "Convertible Notes") with each of the
following note holders for the respective amounts (a) NorInnova
AS (formerly Forskningsparken I Tromso AS) for $106,500; (b) Knut
Gjernes for $7,500; (c) Magne Russ Simenson for $378,000; and (d)
Nord Invest AS for $313,000 (collectively, the "Convertible Note
Holders"). Each of the Convertible Notes has a maturity date of
November 1, 2004. On November 18, 2005, each of the Convertible
Note Holders provided Igene with written notice of default under
each of the Convertible Notes. Igene and the Convertible Note
Holders are currently in discussions to extend the maturity date
of each of the Convertible Notes in return for reducing the
conversion price and increasing the interest rate on each
Convertible Note, however it is not certain such amendment will
be consummated, and so long as an event of default under the
Convertible Note continues to exist, the Convertible Note Holders
have the ability to accelerate the payment of the principal and
interest due and owing on each of the Convertible Notes.
-22-
Item 6. Exhibits
(a) Exhibits
Exhibit 3.1 - Articles of Incorporation of the Registrant as
amended to date, constituting Exhibit 3.1 to
Registration Statement No. 333-41581 on Form SB-2
are incorporated herein by reference.
Exhibit 3.2 - Bylaws of the Registrant, constituting Exhibit
3.2 to the Registrant's Registration Statement No.
33-5441 on Form S-1, are hereby incorporated herein
by reference.
Exhibit 31(a) - Certification of Principal Executive Officer
pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)
Exhibit 31(b) - Certification of Principal Financial Officer
pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)
Exhibit 32(a) - Certification of Chief Executive Officer
pursuant to 18 U.S.C. SECTION 1350.
Exhibit 32(b) - Certification of Chief Financial Officer
pursuant to 18 U.S.C. SECTION 1350.
-23-
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IGENE BIOTECHNOLOGY, INC.
________________________________
(Registrant)
Date February 15, 2006 By /s/STEPHEN F. HIU
________________________________
STEPHEN F. HIU
President
Date February 15, 2006 By /s/EDWARD J. WEISBERGER
________________________________
EDWARD J. WEISBERGER
Chief Financial Officer
-24-
EXHIBIT INDEX
Exhibit 3.1 - Articles of Incorporation of the Registrant as
amended to date, constituting Exhibit 3.1 to
Registration Statement No. 333-41581 on Form SB-2
are incorporated herein by reference.
Exhibit 3.2 - Bylaws of the Registrant, constituting Exhibit
3.2 to the Registrant's Registration Statement No.
33-5441 on Form S-1, are hereby incorporated herein
by reference.
Exhibit 31(a) - Certification of Principal Executive Officer
pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)
Exhibit 31(b) - Certification of Principal Financial Officer
pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)
Exhibit 32(a) - Certification of Chief Executive Officer
pursuant to 18 U.S.C. SECTION 1350.
Exhibit 32(b) - Certification of Chief Financial Officer
pursuant to 18 U.S.C. SECTION 1350.
-25-