UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008
[ ] TRANSITION REPORT PURSUANT TO 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 registrant 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
____________________________________________________
(Registrant's telephone number, including area code)
None
____________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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 [x] No [ ]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of "large
accelerated filer," "accelerated filer" and "smaller reporting
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer
___ ___
Non-accelerated filer Smaller reporting company 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]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date:
There were 110,337,072 shares of common stock, par value $.01,
_________________________________________________________________
issued and outstanding as of August 4, 2008.
____________________________________________
FORM 10-Q
IGENE Biotechnology, Inc.
INDEX
PART I - FINANCIAL INFORMATION
Page
Consolidated Balance Sheets (Unaudited)............... 5
Consolidated Statements of Operations (Unaudited)..... 6
Consolidated Statement of Stockholders' Deficiency
(Unaudited)........................................... 7
Consolidated Statements of Cash Flows (Unaudited)..... 8
Notes to Consolidated Financial Statements
(Unaudited)........................................... 9-14
Management's Discussion and Analysis of Financial
Conditions and Results of Operations ................. 15-18
Controls and Procedures............................... 19
PART II - OTHER INFORMATION ...................... 20-21
SIGNATURES .............................................. 22
EXHIBIT INDEX ........................................... 23
IGENE BIOTECHNOLOGY, INC. QUARTERLY REPORT
UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
IGENE Biotechnology, Inc. and Subsidiary
Consolidated Balance Sheets
June 30, December 31,
2008 2007
____________ ____________
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,260,728 $ 1,026,350
Accounts receivable 1,339,966 2,718,884
Inventory 4,844,088 8,059,777
Prepaid expenses and other current assets 37,726 38,351
____________ ____________
TOTAL CURRENT ASSETS 7,482,508 11,843,362
Property and equipment, net 924,526 713,493
5 year non-compete (net of amortization
of $15,398 and $0, respectively) 138,579 153,977
Customer contracts (net of amortization
of $116,829 and $0, respectively) 116,829 233,658
Intellectual property 149,670 149,670
Other assets 5,125 5,125
____________ ____________
TOTAL ASSETS $ 8,817,237 $13,099,285
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 4,296,766 $ 7,902,625
____________ ____________
TOTAL CURRENT LIABILITIES 4,296,766 7,902,625
LONG-TERM DEBT
Notes payable (net of unamortized discount of
$685,038 and $1,198,818, respectively) 5,157,229 4,643,449
Convertible debentures (net of unamortized discount of
$1,141,938 and $1,331,548, respectively) 3,434,274 3,244,664
Contingent liability on joint venture separation 5,000,000 5,000,000
Accrued interest 6,836,829 6,442,076
REDEEMABLE PREFERRED STOCK
Carrying amount of redeemable preferred stock, 8%
cumulative, convertible, voting, series A, $.01 par
value per share. Stated value $20.64 and $20.32,
respectively. Authorized 1,312,500 shares; issued
and outstanding 11,134 shares. 229,809 226,243
____________ ____________
TOTAL LIABILITIES 24,954,907 27,459,057
____________ ____________
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIENCY
Common stock --- $.01 par value per share.
Authorized 750,000,000 shares; issued and
outstanding 110,337,072 shares. 1,103,371 1,103,371
Additional paid-in capital 33,276,687 33,276,687
Accumulated deficit (50,565,704) (48,739,830)
Other comprehensive income 47,976 ---
____________ ____________
TOTAL STOCKHOLDERS' DEFICIENCY (16,137,670) (14,359,772)
____________ ____________
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 8,817,237 $13,099,285
============ ============
The accompanying notes are an integral part of the financial
statements.
-5-
IGENE Biotechnology, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
Three months ended Six months ended
____________________________ ____________________________
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
_____________ _____________ _____________ _____________
REVENUE
_______
Sales $ 1,656,167 $ --- $ 4,527,669 $ ---
Cost of sales 1,230,096 --- 3,597,506 ---
_____________ _____________ _____________ _____________
GROSS PROFIT 426,071 --- 930,163 ---
EQUITY IN REPAID ADVANCES
OF JOINT VENTURE --- 199,672 --- 258,628
_____________ _____________ _____________ _____________
OPERATING EXPENSES
__________________
Marketing and selling 163,697 37,433 461,995 39,325
Research and development 439,434 245,172 789,538 497,286
General and administrative 227,685 275,149 404,795 478,062
Operating expenses reimbursed by Joint Venture --- (515,442) --- (960,486)
_____________ _____________ _____________ _____________
TOTAL OPERATING EXPENSES 830,816 42,312 1,656,328 54,187
_____________ _____________ _____________ _____________
OPERATING PROFIT (LOSS) (404,745) 157,360 (726,165) 204,441
_____________ _____________ _____________ _____________
OTHER INCOME --- 1,155 2,040 7,537
INTEREST EXPENSE (including amortization of debt
discount of $351,695 for the three months ended
June 30, 2008 and 2007, and $703,390 and
$703,389 for the six months ended June 30, 2008
and 2007, respectively) (550,897) (574,244) (1,101,749) (1,105,116)
_____________ _____________ _____________ _____________
NET LOSS $ (955,642) $ (415,729) $ (1,825,874) $ (893,138)
_____________ _____________ _____________ _____________
Other comprehensive income (loss)
Foreign exchange translation (171,880) --- 47,976 ---
TOTAL COMPREHENSIVE LOSS $ (1,127,522) $ (415,729) $ (1,777,898) $ (893,138)
============= ============= ============= =============
BASIC AND DILUTED NET LOSS PER COMMON SHARE $ (0.01) $ (0.00) $ (0.02) $ (0.01)
============= ============= ============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING 110,337,072 109,337,072 110,337,072 109,337,072
============= ============= ============= =============
The accompanying notes are an integral part of the financial
statements.
-6-
IGENE Biotechnology, Inc. and Subsidiary
Consolidated Statement of Stockholders' Deficiency
(Unaudited)
Additional Other Total
Common Stock Paid-in Accumulated Comprehensive Stockholders'
(shares/amount) Capital Deficit Income Deficiency
____________________________ _____________ _____________ _____________ _____________
Balance at January 1, 2008 110,337,072 $ 1,103,371 $ 33,276,687 $(48,739,830) $ --- $(14,359,772)
Gain due to currency translation --- --- --- --- 47,976 47,976
Net loss for the six months ended
June 30, 2008 --- --- --- (1,825,874) --- (1,825,874)
_____________ _____________ _____________ _____________ _____________ _____________
Balance at June 30, 2008 110,337,072 $ 1,103,371 $ 33,276,687 $(50,565,704) $ 47,976 $(16,137,670)
============= ============= ============= ============= ============= =============
The accompanying notes are an integral part of the financial
statements.
-7-
IGENE Biotechnology, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
_______________________________
June 30, June 30,
2008 2007
_____________ _____________
Cash flows from operating activities
Net loss $ (1,825,874) $ (893,138)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Amortization of debt discount 703,390 703,389
Depreciation 8,147 9,347
Increase in preferred stock for cumulative dividends
classified as interest 3,566 3,563
Amortization of customer contracts and non-compete 132,227 ---
Recoupment of payment of joint venture --- (258,628)
Decrease in:
Accounts receivable 1,378,919 ---
Inventory 3,215,689 ---
Prepaid expenses and other current assets 625 11,519
Increase (decrease) in:
Accounts payable and accrued expenses (3,211,107) 280,197
_____________ _____________
Net cash provided by (used in) operating activities 405,582 (143,751)
_____________ _____________
Cash flows from investing activities
Purchase of equipment (219,180) ---
Recoupment of payment to joint venture --- 258,628
_____________ _____________
Net cash provided by (used in) financing activities (219,180) 258,628
_____________ _____________
Cash flows from financing activities
Proceeds from issuance of convertible debenture --- 762,000
Repayment of convertible debenture --- (705,000)
_____________ _____________
Net cash provided by financing activities --- 57,000
_____________ _____________
Gain due to currency translation 47,976 ---
Net increase in cash and cash equivalents 234,378 171,877
Cash and cash equivalents at beginning of period 1,026,350 21,786
_____________ _____________
Cash and cash equivalents at end of period $ 1,260,728 $ 193,663
============= =============
Supplementary disclosure and cash flow information
__________________________________________________
Cash paid for interest $ --- $ 57,637
Cash paid for income taxes --- ---
See Note (4) for non-cash investing and financing activities.
The accompanying notes are an integral part of the financial
statements.
-8-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
(1) Unaudited Consolidated Financial Statements
The June 30, 2008 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 operations 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-Q should be read
in conjunction with the Annual Report on Form 10-KSB for
IGENE Biotechnology, Inc. ("Igene") for the year ended
December 31, 2007. The December 31, 2007 consolidated
balance sheet is derived from the audited balance sheet
included therein.
(2) Nature of Operations
IGENE Biotechnology, Inc. ("Igene" or the "Company") was
incorporated in the State of Maryland on October 27, 1981 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 a source of pigment for coloring farmed
salmon species. Igene is also venturing to supply
astaxanthin as a nutraceutical ingredient. Igene is focused
on research and development in the areas of fermentation
technology, nutrition and health and the marketing of
products and applications worldwide. Igene is the developer
of AstaXin(R), a natural astaxanthin product made from
yeast, which is used as a source of pigment for coloring
farmed salmonids.
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 2000, Igene formed a wholly-owned subsidiary, Igene Chile
Comercial, Ltda., in Chile. The subsidiary has a sales and
customer service office in Puerto Varas, Chile, and a
product warehouse in Puerto Montt, Chile.
In an effort to develop a dependable source of production,
on March 19, 2003, Tate & Lyle PLC ("Tate") and Igene
announced a 50:50 joint venture to produce AstaXin(R) for
the aquaculture industry, which we refer to as the "Joint
Venture." Production utilized Tate's fermentation
capability together with the unique technology developed by
Igene. Part of Tate's existing citric acid facility located
in Selby, England, was modified to include the production of
this product. Tate's investment of approximately $24,600,000
included certain of its facility assets that were used in
citric acid production. Igene's contribution to the Joint
Venture, including its intellectual property and its
subsidiary in Chile, was valued by the parties as
approximately equal to Tate's contribution. For accounting
purposes, Igene's accounting contribution was valued at
zero.
On October 31, 2007, Igene and Tate entered into a
Separation Agreement pursuant to which the Joint Venture
Agreement was terminated. As part of the Separation
Agreement, Igene sold to Tate its 50% interest in the Joint
Venture and the Joint Venture sold to Igene its intellectual
property, inventory and certain assets and lab equipment
utilized by the Joint Venture, as well as Igene's subsidiary
in Chile. The purchase price paid by Tate to Igene for its
50% interest in the Joint Venture was 50% of the Joint
Venture's net working capital. The purchase price paid by
Igene for the inventory was an amount equal to 50% of the
Joint Venture's net working capital, the assumption of
various liabilities and the current market price of the
inventory, less specified amounts. In addition, Igene
agreed to pay to Tate an amount equal to 5% of Igene's gross
revenues from the sale of astaxanthin up to a maximum of
$5,000,000. Tate agreed for a period of five years not to
engage in the astaxanthin business.
As a result of the Joint Venture termination, Igene is not
currently producing astaxanthin products, and is researching
several alternatives for a potential new source of
production. At the current pace, Igene expects to have
inventories of existing product necessary to meet demand
through 2008. Igene expects to be out of the market for an
uncertain period of time until a new source of production
can be identified, commence operations and yield salable
product.
-9-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
(continued)
(3) Noncash Investing and Financing Activities
During the six months ended June 30, 2008 and 2007, the
Company recorded in each quarter dividends in arrears on 8%
redeemable preferred stock accumulating at $.16 per share
aggregating to $3,566 and $3,563, respectively.
(4) Amendment to Long - Term Liabilities
Igene entered into Convertible Promissory Notes (the
"Convertible Notes") with each of the following note holders
for the following respective amounts (a) NorInnova AS
(formerly Forskningsparken I Tromso AS) for $106,500; (b)
Knut Gjernes for $7,500; (c) Magne Russ Simenson for
$278,000; and (d) Nord Invest AS for $313,000. Each of the
Convertible Notes had 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.
On November 29, 2006, the Convertible Note holders filed a
complaint against the Company in the Circuit Court of Howard
County, Maryland seeking payment of all outstanding amounts
due under the Convertible Notes, the "Notes Litigation." On
February 23, 2007, the Company paid $762,638, representing
the full amount due including interest, to the Convertible
Note holders as settlement of all claims related to the
Notes Litigation. The complaint was dismissed with
prejudice on March 6, 2007.
In an attempt to settle the matter, the Note holders were
offered the ability to extend the Convertible Notes for a
period of ten years at an interest rate of 5%. The
conversion would be changed from the original debenture rate
of $.10 (ten cents) per share to the current market rate of
$.02 (two cents) per share. They rejected the offer.
The funds to settle the Notes Litigation were provided by
two of Igene's directors through the issuance of debentures
on the terms of the offering to the Convertible Note holders
described above. On February 15, 2007, Igene issued and
sold $762,000 in aggregate principal amount of 5%
convertible debentures, 50% each to Thomas Kempner and
Sidney Knafel, directors of Igene. These debentures are
convertible into shares of Igene's common stock at $.02 per
share, based on the market price of Igene's shares at the
time the debentures were agreed to. These debentures, if
not converted earlier, become due on February 15, 2017.
(5) Previous Joint Venture
On March 18, 2003, the Company entered into a Joint Venture
Agreement with Tate & Lyle Fermentation Products Ltd.
("Tate"). Pursuant to the 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, including
certain facility assets that were used in citric acid
production, while the Company transferred to the Joint
Venture its technology relating to the production of
astaxanthin and assets related thereto. The assets
transferred by the Company were used by the Joint Venture in
the same manner as historically used by the Company. The
Company and Tate each had a 50% ownership interest in the
Joint Venture and equal representation on the Board of
Directors of the Joint Venture. The value of the Company's
initial investment in the Joint Venture was recorded at an
amount equal to Igene's historical book value. As the cost
of the Company's technology and intellectual property had
been previously expensed and had a carrying amount of zero,
the investment in the Joint Venture was originally recorded
with a book value of $316,869, which represented the
unamortized production costs contributed to the Joint
Venture. The Company also contributed $6,000 to the capital
of the Joint Venture.
Production utilized Tate's fermentation capability together
with the unique technology developed by Igene. Part of
Tate's existing Selby, England, citric acid facility was
modified to produce up to 1,500 tons per annum of
astaxanthin. Sales and cost of sales activity were recorded
as part of the earnings of the unconsolidated venture.
-10-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
(continued)
On October 31, 2007, Igene and Tate entered into a
Separation Agreement pursuant to which the Joint Venture
Agreement was terminated. As part of the Separation
Agreement, Igene sold to Tate its 50% interest in the Joint
Venture and the Joint Venture sold to Igene its intellectual
property, inventory and certain assets and lab equipment
utilized by the Joint Venture as well as the Chilean sales
subsidiary. The purchase price paid by Tate to Igene for
its 50% interest was 50% of the Joint Venture's net working
capital. The purchase price paid by Igene for the inventory
was an amount equal to 50% of the Joint Venture's net
working capital, the assumption of various liabilities and
the current market price of the inventory, less specified
amounts. In addition, Igene agreed to pay to Tate an amount
equal to 5% of Igene's gross revenues from the sale of
astaxanthin up to a maximum of $5,000,000. Tate agreed for
a period of five years not to engage in the astaxanthin
business.
Upon the termination of the Joint Venture it was determined
that the transaction should be recorded as an asset
purchase. This determination was based upon the assets
received not constituting a business in accordance with EITF
98-3. Based on that determination, an independent valuation
expert was hired to determine the fair value of the assets
received and the liabilities assumed. As the fair value
received exceeded the liabilities assumed, the fair value of
the assets received were reduced to equal the liabilities
assumed. Consistent with FASB Statement 141, in this
exchange transaction between two parties the value received
is considered to be equal to what was assumed. All
contingent liabilities were recorded at their maximum amount
along with the value of the other consideration given. The
reduction in value to arrive at the other consideration
given was allocated pro rata to the long term assets.
As a result of the Joint Venture termination, Igene is now
researching several alternatives for a potential new source
of production. At the current pace, Igene expects to have
inventories of existing product necessary to meet demand
through 2008. Igene expects to be out of the market for an
uncertain period of time until a new source of production
can be identified, commence operations and yield salable
product.
Prior to the separation, sales and marketing of astaxanthin
took place in the unconsolidated Joint Venture. From
inception on March 18, 2003 through June 30, 2007, Igene's
portion of the Joint Venture's net loss was $20,532,070.
The loss was a result of a 50% interest in the negative
gross profit from inception of $20,570,606 on sales of
$34,836,739, less manufacturing cost of $55,407,345, selling
and general and administrative expenses of $15,521,283, and
interest expense of $4,972,250. The total resulting loss
was $41,064,139, of which 50% was Igene's portion.
Because the Company accounted for its investment in the
Joint Venture under the equity method of accounting, it
would ordinarily recognize a loss representing its 50%
equity interest in the loss of the Joint Venture or the
amount that is guaranteed by the Company, if any. However,
losses in the Joint Venture were recognized only to the
extent of the investment in and advances to the Joint
Venture. Losses in excess of this amount were suspended
from recognition in the financial statements.
At June 30, 2007, prior to the recognition of its portion of
the Joint Venture loss, Igene's investment in the Joint
Venture consisted of $322,869 and its net advances to the
Joint Venture amounted to $910,484, for a total of
$1,233,353. Through December 31, 2006, Igene recognized
$1,491,981 of the $15,922,400 loss, which existed as part of
the Joint Venture. In the first quarter of 2007, the
balances of the funds due to Igene were reduced by a net
repayment of $58,956, resulting in the March 31, 2007
balance of $1,433,025. For the three months ended June 30,
2007, Igene recognized a gain for the repayment of the
advance for that period of $199,672. This repayment
increased the suspended loss in addition to the $2,753,602
loss for the quarter. The cumulative suspended loss at June
30, 2007 was $19,298,717 and was carried forward to offset
Igene's share of earnings from the Joint Venture. The
balance in the Advances to and Investment in Joint Venture
account on the Company's financial statements was zero at
June 30, 2007.
The following schedules display certain account balances of
the Joint Venture as of June 30, 2007 and the period since
initial investment at March 18, 2003 (inception):
-11-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
(continued)
June 30,
2007
_____________
ASSETS
CURRENT ASSETS
Cash $ 1,211,000
Account Receivable 5,697,000
Inventory 11,925,000
_____________
18,833,000
OTHER ASSETS
Property, plant and equipment, net 19,958,000
Intangibles 24,614,000
_____________
TOTAL ASSETS $ 63,405,000
=============
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses
(majority of which is due to one joint venturer) $ 41,947,000
Working capital loan 10,525,000
_____________
TOTAL LIABILITIES 52,472,000
Equity 10,933,000
_____________
TOTAL LIABILITIES AND EQUITY $ 63,405,000
=============
Period from
March 18, 2003
(initial investment) to
June 30, 2007
_______________________
Net Sales $ 34,836,739
Less: manufacturing cost (55,407,345)
_____________
Gross Profit (Loss) (20,570,606)
Less: selling, general and administrative (15,521,283)
_____________
Operating Loss (36,091,889)
Interest Expense (4,972,250)
_____________
Net Loss $(41,064,139)
=============
Igene's 50% equity interest in the net loss $(20,532,070)
Igene's Investment in and Advances to the Joint Venture (1,233,353)
_____________
Igene's suspended loss at June 30, 2007 $(19,298,717)
=============
The following statement displays the significant activity for the
Joint Venture for the three and six months ended June 30, 2007.
Three Months Ended Six Months Ended
____________________________ ____________________________
June 30, 2007 June 30, 2006 June 30, 2007 June 30, 2006
_____________ _____________ _____________ _____________
Net Sales $ 3,483,572 $ 2,264,600 $ 7,063,860 $ 5,454,739
Less: manufacturing cost (4,291,174) (2,591,300) (12,469,311) (5,940,194)
Gross Profit (Loss) (807,602) (326,700) (5,405,451) (485,455)
Less: selling, general and admin (1,218,744) (778,600) (2,430,995) (1,883,319)
Operating Loss (2,026,346) (1,105,300) (7,836,446) (2,368,774)
Interest Expense (727,256) (423,300) (1,383,716) (1,124,200)
Net Loss Before tax (2,753,602) (1,528,600) (9,220,162) (3,492,974)
Reversal of tax expense --- 1,205,900 --- ---
Net Loss $ (2,753,602) $ (322,700) $ (9,220,162) $ (3,492,974)
50% equity interest $ (1,376,801) $ (161,350) $ (4,610,081) $ (1,746,487)
Igene's Repayments from and additional
(Investment in and Advances to
the Joint Venture) 199,672 171,639 258,628 (18,263)
Igene's incremental suspended loss for period $ (1,576,473) $ (322,989) $ (4,868,709) $ (1,728,224)
-12-
IGENE Biotechnology, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
(continued)
(6) Stockholders' Deficiency
As of June 30, 2008, 22,268 shares of authorized but
unissued common stock were reserved for conversion of the
Company's outstanding preferred stock.
As of June 30, 2008, 72,232,334 shares of authorized but
unissued common stock were reserved for distribution and
exercise pursuant to the Company's employee stock option
plans.
As of June 30, 2008, 23,421,273 shares of authorized but
unissued common stock were reserved for the conversion of
outstanding convertible promissory notes held by directors
of the Company in the aggregate amount of $1,082,500.
As of June 30, 2008, 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.
As of June 30, 2008, 38,100,000 shares of authorized but
unissued common stock were reserved for the conversion of
outstanding convertible promissory notes issued as part of
the settlement of the ProBio notes.
As of June 30, 2008, 205,261,073 shares of authorized but
unissued common stock were reserved for the exercise of
outstanding warrants.
(7) Basic and Diluted Net Loss per Common Share
Basic and diluted net loss per common share for the six-
month periods ended June 30, 2008 and 2007, are based on
110,337,072 and 109,337,072, respectively, of weighted
average common shares outstanding. The same figures for the
three month period then ended are based upon 110,337,072 and
109,337,072 weighted average common shares outstanding. No
adjustment has been made for any common stock equivalents
outstanding because their effects would be antidilutive. As
of June 30, 2008 and 2007, potentially dilutive shares
totaled 488,414,337 and 405,614,599, respectively.
(8) Going Concern
Igene has incurred net losses in each year of its existence,
aggregating approximately $50,566,000 from inception to June
30, 2008 and as of June 30, 2008, Igene's liabilities
exceeded its assets by approximately $16,138,000. These
factors indicate that Igene may not be able to continue in
existence unless it is able to raise additional capital and
attain profitable operations.
As a result of the Joint Venture termination, Igene
maintains the salable inventory but is not currently
producing astaxanthin products, and is researching several
alternatives for a potential new source of production. At
the current pace, Igene expects to have inventories of
existing product necessary to meet demand through 2008.
Igene expects to be out of the market for an uncertain
period of time until a new source of production can be
identified, commence operations and yield salable product.
No adjustments to the financial statements have been made as
a result of this uncertainty. In the interim, Igene will
sell the existing inventory in order to maintain its
relationship with customers and use these funds to cover
expenses.
-13-
IGENE Biotechnology, Inc. and Subsidiary
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 2. 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 WITHIN THE BIOTECH AGRICULTURE AND
AQUACULTURE INDUSTRIES, 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, INCLUDING THOSE DETAILED IN
"RISK FACTORS" THAT ARE INCLUDED FROM TIME-TO-TIME IN THE
COMPANY'S SECURITIES AND EXCHANGE COMMISSION FILINGS. THE
COMPANY ASSUMES NO DUTY TO UPDATE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE OF SUCH
STATEMENTS.
The following discussion should be read in conjunction with
our unaudited consolidated interim financial statements and
related notes thereto included in this quarterly report and in
our audited consolidated financial statements and Management's
Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") contained in our Form 10-KSB for the year
ended December 31, 2007. Certain statements in the following
MD&A are "forward-looking" statements. Words such as "expects",
"anticipates", "estimates" and similar expressions are intended
to identify "forward-looking" statements. Such statements are
subject to risks and uncertainties that could cause actual
results to differ materially from those projected.
Results of Operations
_____________________
Sales and other revenue
As part of the Joint Venture Agreement, all sales of
AstaXin(R) prior to October 31, 2007 were recognized through the
Joint Venture. Therefore, Igene recorded no sales during 2006 or
in 2007 prior to October 31, 2007. For the quarter ended June
30, 2008, Igene recorded sales in the amount of $1,656,167. For
the six months ended June 30, 2008, Igene recorded sales in the
amount of $4,527,669. As a result of the Joint Venture
termination, Igene is not currently producing astaxanthin
products, and is researching several alternatives for a potential
new source of production. Sales have been limited due to
insufficient production quantity and are expected to decline to
zero sometime during the fourth quarter of 2008 and remain
negligible until a source of production can be identified and
production begins. Igene expects to be out of the market for an
uncertain period of time until a new source of production can be
identified, commence operations and yield salable product. Igene
is currently researching various alternatives for future
production but has not yet engaged any new source of production.
Management believes that this decision is of fundamental
importance to Igene and continues to seek an appropriate
production partner.
-14-
IGENE Biotechnology, Inc. and Subsidiary
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Continued)
Cost of sales and gross profit
As with sales revenue, beginning July 2003 through October
31, 2007, cost of sales and gross profit were recognized through
the Joint Venture. Therefore, Igene recorded no cost of sales or
gross profit during 2006 or in 2007 prior to October 31, 2007.
For the quarter ended June 30, 2008, Igene recorded cost of sales
in the amount of $1,230,096. For the six months ended June 30,
2008 Igene recorded cost of sales in the amount of $3,597,506.
This resulted in a gross profit for the quarter ended June 30,
2008 of $426,071 or 26%. For the six months ended June 30, 2008,
this resulted in a gross profit of $930,163 or 21%. The increase
in gross profit is due mainly to the discount on the product that
was purchased at the conclusion of the Joint Venture. With the
termination of the Joint Venture, there can be no assurance of
the continued dependability of production. As a result, future
cost of sales is expected to increase through the remainder of
2008, whereupon sales, and cost of sales, are expected to be
negligible until a source of production can be identified and
production begins. Commencement of production cannot be
predicted. Igene is currently researching various alternatives
for future production. No assurances can be provided with
regard to a new source of production.
Marketing and selling expenses
For the quarters ended June 30, 2008 and 2007, Igene
recorded marketing and selling expense in the amount of $163,697
and $37,433, respectively, an increase of $126,264 or 337%. For
the six months ended June 30, 2008 and 2007, Igene recorded
marketing and selling expense in the amount of $461,995 and
$39,325, respectively, an increase of $422,670. With the
termination of the Joint Venture, Igene has reassumed
responsibility for the marketing and selling function that was
being done by the Joint Venture. It is expected that this level
of marketing and selling expense will be constant as Igene has
reassumed the activities of the Chilean subsidiary and looks to
maintain its customer base through the period in which it engages
a new source of production. However, no assurances can be made
with regard to a new source of production or maintenance of the
customer base. Prior to October 2007, all marketing and selling
expenses incurred by Igene as part of the Joint Venture had been
reimbursed by the Joint Venture. Since October 2007, these
expenses have been funded by cash flows from operations, to the
extent available for such purposes. However, we do not expect
cash flows from operations to continue beyond the fourth quarter
of 2008 unless and until a source of production is identified and
production begins.
Research, development and pilot plant expenses
For the quarters ended June 30, 2008 and 2007, Igene
recorded research and development costs in the amount of $439,434
and $245,172, respectively, an increase of $194,262 or 79%. For
the six months ended June 30, 2008 and 2007, Igene recorded
research and development costs in the amount of $789,538 and
$497,286, respectively, an increase of $292,252 or 59%. Research
and development costs have increased as Igene works to develop
new uses for its product. It is expected these costs will remain
at current increased levels 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. Prior to October 2007, all research and development
expenses incurred by Igene as part of the Joint Venture were
reimbursed by the Joint Venture. Since October 2007 these
expenses have been funded by cash flows from operations, to the
extent available for such purposes. However, we do not expect
cash flows from operations to continue beyond the fourth quarter
of 2008 unless and until a source of production is identified and
production begins.
-15-
IGENE Biotechnology, Inc. and Subsidiary
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Continued)
General and administrative expenses
General and administrative expenses for the quarter ended
June 30, 2008 and 2007 were $227,685 and $275,149, respectively,
a decrease of $47,464 or 17%. General and administrative
expenses for the six months ended June 30, 2008 and 2007 were
$404,795 and $478,062 respectively, a decrease of $73,267 or 15%.
These costs are expected to remain constant. Igene works to
reduce overhead costs and spend funds on research and development
efforts. Prior to October 2007, all general and administrative
expenses incurred related to research and sales of product by
Igene as part of the Joint Venture had been reimbursed by the
Joint Venture. Since October 2007 these expenses have been
funded by cash flows from operations, to the extent available for
such purposes. However, we do not expect cash flows from
operations to continue beyond the fourth quarter of 2008 unless
and until a source of production is identified and production
begins.
Expenses reimbursement by Joint Venture
As part of the Joint Venture Agreement, costs incurred by
Igene related to production, research and development, as well as
those related to the marketing of AstaXin(R), and most of the
general and administrative expenses, were considered costs of the
Joint Venture and therefore were reimbursed by the Joint Venture.
For the six months ended June 30, 2007, costs reimbursed by the
Joint Venture totaled $960,486. The costs covered $39,325 of
marketing costs, $497,286 of research and development costs and
$423,875 of general and administrative costs.
Interest expense
Interest expense for the quarters ended June 30, 2008 and
2007 was $550,897 and $574,244, respectively, an decrease of
$23,347 or 4%. This includes amortization of discount on Igene's
notes and debentures of $351,695 for the quarters ended June 30,
2008 and 2007. For the six months ended June 30, 2008 and 2007,
interest expense was $1,101,749 and $1,105,116, respectively, a
decrease of $3,367 or less than 1%. This includes amortization
of discount on Igene's notes and debentures of $703,390 for the
six months ended June 30, 2008 and $703,389 for the six months
ended June 30, 2007. 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 debentures in both periods.
Equity in earnings of unconsolidated Joint Venture
Prior to the October 31, 2007 termination of the Joint
Venture, the production, sales and marketing of astaxanthin took
place in the unconsolidated Joint Venture. From inception on
March 18, 2003 through June 30, 2007, Igene's portion of the
Joint Venture's net loss was $20,532,070. The loss was a result
of a 50% interest in the negative gross profit from inception of
$20,570,606 on sales of $34,836,739, less manufacturing cost of
$55,407,345, selling and general and administrative expenses of
$15,521,283, and interest expense of $4,972,250. The total
resulting loss was $41,064,139, of which 50% was Igene's portion.
Because the Company accounted for its investment in the
Joint Venture under the equity method of accounting, it would
ordinarily recognize a loss representing its 50% equity interest
in the loss of the Joint Venture or the amount that is guaranteed
by the Company, if any. However, losses in the Joint Venture
were recognized only to the extent of the investment in and
advances to the Joint Venture. Losses in excess of this amount
were suspended from recognition in the financial statements.
-16-
IGENE Biotechnology, Inc. and Subsidiary
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Continued)
At June 30, 2007, prior to the recognition of its portion of
the Joint Venture loss, Igene's investment in the Joint Venture
consisted of $322,869 and its net advances to the Joint Venture
amounted to $910,484, for a total of $1,233,353. Through
December 31, 2006, Igene recognized $1,491,981 of the $15,922,400
loss which existed as part of the Joint Venture. In the first
quarter of 2007, the balances of the funds due to Igene were
reduced by a net repayment of $58,956, resulting in the March 31,
2007 balance of $1,433,025. For the three months ended June 30,
2007, Igene recognized a gain for the repayment of the advance
for that period of $199,672. This repayment increased the
suspended loss in addition to the $2,753,602 loss for the
quarter. The cumulative suspended loss at June 30, 2007 was
$19,298,717 and it was 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 was zero at June 30, 2007.
Net loss and basic and diluted net loss per common share
As a result of the foregoing, the Company reported
comprehensive losses of $1,127,522 and $415,729, respectively,
for the quarters ended June 30, 2008 and 2007, an increase in the
loss of $711,793 or 171%. This represents a loss of $0.01 and
$0.00 per basic and diluted common share in each of the quarters
ended June 30, 2008 and 2007, respectively. The Company reported
comprehensive losses of $1,777,898 and $893,138, respectively,
for the six months ended June 30, 2008 and 2007, an increase in
the loss of $884,760 or 99%. This represents a loss of $0.02 and
$0.01 per basic and diluted common share in each of the six
months ended June 30, 2008 and 2007, respectively. The weighted
average number of shares of common stock outstanding of
110,337,072 and 109,337,072 for the quarters and six months ended
June 30, 2008 and 2007, respectively, has increased by 1,000,000
shares. The increase in outstanding shares resulted from the
issuance of 1,000,000 shares of common stock to the Company's
Director of Manufacturing in October of 2007.
Financial Position
During the six months ended June 30, 2008 and 2007, in
addition to the matters previously discussed, the following
actions also materially affected the Company's financial
position:
o Decreases in accounts receivables, inventory and prepaid
expense for the six months ended June 30, 2008 of
$4,595,233 were a source of cash, offset by funds used to
decrease accounts payable and accrued expenses by
$3,211,107; and
o The carrying value of redeemable preferred stock was
increased and interest expense recorded in the amount of
$3,566 in 2008, reflecting cumulative unpaid dividends on
redeemable preferred stock.
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, 2008, total dividends in arrears on
Igene's preferred stock total $140,734 ($12.64 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)
Liquidity and Capital Resources
_______________________________
Historically, Igene has been funded primarily by equity
contributions and loans from stockholders. As of June 30, 2008,
Igene had working capital of $3,185,742, and cash and cash
equivalents of $1,260,728.
Cash provided by operating activities during the six-month
period ended June 30, 2008 equaled $405,582 as compared to cash
used by operating activities of $143,751 for the six-month period
ended June 30, 2007.
Cash used by investing activities during the six-month
period ended June 30, 2008 equaled $219,180 resulting from the
purchase of equipment, as compared to cash provided by investing
activities of $258,628, which was a recoupment of payment to the
Joint Venture for the six-month period ended June 30, 2007.
No cash was used or provided by financing activities during
the first six months of 2008. Cash provided by financing
activities was $57,000 during the six-months ended June 30, 2007,
and was used in connection with the settlement of the convertible
debentures and payment of interest on those notes.
Over the next twelve months, Igene believes it will need
additional working capital. Part of this funding is expected to
be received from sales of AstaXin(R), resulting in increased cash
through the fourth quarter of 2008. Thereafter sales are
expected to decline to zero and remain negligible until a source
of production is identified and production begins. There will be
additional delay between the commencement of production and the
receipt of proceeds from any sale of such product. There can be
no assurance that projected cash from sales, or additional
funding, will be sufficient for Igene to fund its continued
operations.
The Company does not believe that inflation had a
significant impact on its operations during the six-month periods
ended June 30, 2008 and 2007.
Off-Balance Sheet Arrangements
______________________________
There have been no material changes in the risks related to
off-balance sheet arrangements since the Company's disclosure in
its Annual Report on Form 10-KSB for the year ended December 31,
2007.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
The Company is a smaller reporting company as defined by
Rule 12b-2 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and is not required to provide the
information required under this item.
-18-
IGENE Biotechnology, Inc. and Subsidiary
Controls and Procedures
Item 4. Controls and Procedures
We carried out an evaluation, under the supervision and with the
participation of our management, including our principal
executive officer and principal financial officer, of the
effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act
(defined below)). Based upon that evaluation, our principal
executive officer and principal financial officer concluded that,
as of the end of the period covered in this report, our
disclosure controls and procedures were effective to ensure that
information required to be disclosed in reports filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
is recorded, processed, summarized and reported within the
required time periods and is accumulated and communicated to our
management, including our principal executive officer and
principal financial officer, as appropriate to allow timely
decisions regarding required disclosure.
Our management, including our principal executive officer and
principal financial officer, does not expect that our disclosure
controls and procedures or our internal controls will prevent all
error or fraud. A control system, no matter how well conceived
and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are
met. Further, the design of a control system must reflect the
fact that there are resource constraints and the benefits of
controls must be considered relative to their costs. Due to the
inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues
and instances of fraud, if any, have been detected. Accordingly,
management believes that the financial statements included in
this report fairly present in all material respects our financial
condition, results of operations and cash flows for the periods
presented.
(b) Changes in internal control - There were no changes in our
internal control over financial reporting during our most recent
fiscal quarter that materially affected, or were reasonably
likely to materially affect, our internal control over financial
reporting.
-19-
IGENE Biotechnology, Inc. and Subsidiary
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to which
Igene is a party or to which any of Igene's properties are
subject; nor are there pending material bankruptcy, receivership
or similar proceedings with respect to Igene; nor are there
material proceedings pending or known to be contemplated by any
governmental authority; nor are there material proceedings known
to Igene, pending or contemplated, in which any of Igene's
directors, officers, affiliates or any principal security
holders, or any associate of any of the foregoing, is a party or
has an interest adverse to us.
Item 1A. Risk Factors
The Company is a smaller reporting company as defined by
Rule 12b-2 of the Exchange Act and is not required to provide the
information required under this item.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
None.
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 August 4, 2008, total dividends in arrears on the
Company's Series A Convertible Preferred Stock total $140,734
($12.64 per share) and are included in the carrying value of the
redeemable preferred stock.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits
-20-
EXHIBIT DESCRIPTION
NO.
3.1 Articles of Incorporation of the Registrant, as
amended as of November 17, 1997, constituting
Exhibit 3.1 to the Registration Statement No. 333-
41581 on Form SB-2 filed with the SEC on December
5, 1997, are hereby incorporated by reference.
3.2 Articles of Amendment to Articles of Incorporation
of the Registrant, constituting Exhibit 3.1(b) to
the Registration Statement No. 333-76616 on Form S-
8 filed with the SEC on January 11, 2002, are
hereby incorporated by reference.
3.3 By-Laws of the Registrant, constituting Exhibit 3.2
to the Registration Statement No. 33-5441 on Form S-
1 filed with the SEC on May 6, 1986, are hereby
incorporated by reference.
31.1 Rule 13a-14(a) or 15d-14(a) Certification of the
Registrant's principal executive officer.*
31.2 Rule 13a-14(a) or 15d-14(a) Certification of the
Registrant's principal financial officer.*
32.1 Rule 13a-14(b) or 15d-14(b) Certification of the
Registrant's principal executive officer pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Rule 906 of the Sarbanes-Oxley Act of 2002.*
32.2 Rule 13a-14(b) or 15d-14(b) Certification of the
Registrant's principal financial officer pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Rule 906 of the Sarbanes-Oxley Act of 2002.*
*Filed herewith.
-21-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
IGENE BIOTECHNOLOGY, INC.
_____________________________________
(Registrant)
Date August 7, 2008 By /S/ STEPHEN F. HIU
______________ _________________________________
STEPHEN F. HIU
President
(principal executive officer)
Date August 7, 2008 By /S/ EDWARD J. WEISBERGER
______________ _________________________________
EDWARD J. WEISBERGER
Chief Financial Officer
(principal financial officer)
-22-
EXHIBIT DESCRIPTION
NO.
3.1 Articles of Incorporation of the Registrant, as
amended as of November 17, 1997, constituting
Exhibit 3.1 to the Registration Statement No. 333-
41581 on Form SB-2 filed with the SEC on December
5, 1997, are hereby incorporated by reference.
3.2 Articles of Amendment to Articles of Incorporation
of the Registrant, constituting Exhibit 3.1(b) to
the Registration Statement No. 333-76616 on Form S-
8 filed with the SEC on January 11, 2002, are
hereby incorporated by reference.
3.3 By-Laws of the Registrant, constituting Exhibit 3.2
to the Registration Statement No. 33-5441 on Form S-
1 filed with the SEC on May 6, 1986, are hereby
incorporated by reference.
31.1 Rule 13a-14(a) or 15d-14(a) Certification of the
Registrant's principal executive officer.*
31.2 Rule 13a-14(a) or 15d-14(a) Certification of the
Registrant's principal financial officer.*
32.1 Rule 13a-14(b) or 15d-14(b) Certification of the
Registrant's principal executive officer pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Rule 906 of the Sarbanes-Oxley Act of 2002.*
32.2 Rule 13a-14(b) or 15d-14(b) Certification of the
Registrant's principal financial officer pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to
Rule 906 of the Sarbanes-Oxley Act of 2002.*
*Filed herewith.
-23-