Commission File No. 333-45218
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 10549
FORM S-3/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
IGENE Biotechnology, Inc.
(Exact name of Small Business Issuer as Specified in its
Charter)
Maryland 52-1230461
(State or Other Jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
9110 Red Branch Road
Columbia, Maryland 21045-2024
(410) 997-2599
(Address, including zip code, and telephone
number, including area code, of Registrant's
principal executive offices)
Stephen F. Hiu
President and Treasurer
9110 Red Branch Road
Columbia, Maryland 21045-2024
(410) 997-2599
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
JOHN J. WOLOSZYN, ESQ.
CECIL E. MARTIN, III, ESQ.
MCGUIREWOODS LLP
7 Saint Paul Street
Baltimore, Maryland, 21202
(410) 659-4400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE
PUBLIC: From time to time after the effective date of this
registration statement.
<PAGE>
If the only securities being registered on this Form
are being offered pursuant to dividend or interest
reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this Form
are to be offered on a delayed or continuous basis pursuant
to Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or
interest-reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities
Act, please check the following box and list the Securities
Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, please
check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be
made pursuant to Rule 434, please check the following box. [ ]
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed
Maximum Proposed
Title of Each Class of Amount To Offering Maximum Amount Of
Securities Be Price Aggregate Registration
To Be Registered Registered (1) Per Unit Offering Price Fee
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
common stock, par
value $0.01 per share 46,002,800 (2) $0.10 (3) $4,600,280 $1,215.00
================================================================================
</TABLE>
(1) Number of shares of common stock of IGENE registered
represents all shares issuable upon the exercise of up to
46,002,800 common stock purchase warrants issued pursuant to
a registration statement on Form SB-2, as amended, filed
with the Commission on February 17, 1998.
(2) In the event of a stock split, stock dividend, or
similar transaction involving the Registrant's common stock,
in order to prevent dilution, the number of shares
registered shall automatically be increased to cover the
additional shares in accordance with Rule 416(a) under the
Securities Act.
(3) The proposed maximum offering price corresponds to the
exercise price stated in each warrant, and such price is the
actual price to be paid for the common stock offered
hereunder.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE TIME UNTIL THE REGISTRANT SHALL FILE A FURTHER
AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE
AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
================================================================================
<PAGE>
September 21, 2000
PROSPECTUS
IGENE Biotechnology, Inc.
46,002,800 SHARES OF COMMON STOCK
This is an offering of up to 46,002,800 shares of our
common stock, par value $0.01, to holders of 46,002,800
warrants currently issued and outstanding which, when
exercised, shall give the holders of such warrants the right
to purchase for $0.10, as adjusted, up to 46,002,800 shares
of common stock, as adjusted in accordance with the terms of
the Warrant Agreement. Upon the exercise for cash of each of
the warrants, we will receive ten cents ($0.10) for a total
of $4,600,280 if all 46,002,800 warrants are exercised.
Alternatively, the warrants may, at the option of the
holder, be exercised on a cashless basis or for other
securities of the Company as is permitted by the terms of
the warrants.
Our common stock is traded on the over-the-counter
market on a limited basis and is quoted on the Over-the-
Counter Bulletin Board (the "OTCBB") under the symbol
"IGNE". On August 28, 2000, the closing bid and ask prices
of the common stock on the OTCBB were $0.095 and $0.099 per
share, respectively. As of that date, 59,708,881 shares of
common stock and 26,467 shares of preferred stock were
issued and outstanding and 215,943,888 shares of common
stock were issued on a fully diluted basis. We have
250,000,000 shares of common stock and 1,312,500 shares of
preferred stock authorized under our charter.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
SHARES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The information in this prospectus is not complete and
may be changed. We may not sell these securities until the
registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer
or sale is not permitted.
No dealer, salesman, or any other person has been
authorized to give any information or to make any
representations other than those contained in this
prospectus in connection with the offering herein contained
and, if given or made, such information or representations
must not be relied upon as having been authorized by us.
Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create an
implication that there has been no change in the facts
herein set forth since the date hereof.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PROSPECTUS SUMMARY 5
RISK FACTORS 5
FORWARD LOOKING STATEMENTS 10
USE OF PROCEEDS 11
DETERMINATION OF OFFERING PRICE 11
PLAN OF DISTRIBUTION 11
LEGAL MATTERS 11
EXPERTS 11
WHERE YOU CAN FIND MORE INFORMATION 11
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 12
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES 13
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS II-1
SIGNATURES II-2
POWER OF ATTORNEY II-3
OPINION AND CONSENT OF MCGUIREWOODS LLP i
CONSENT OF BERENSON & COMPANY LLP ii
</TABLE>
<PAGE>
PROSPECTUS SUMMARY
ABOUT IGENE BIOTECHNOLOGY, INC.
IGENE was incorporated under the laws of the State of
Maryland on October 27, 1981. Our executive offices,
laboratories and pilot plant unit are located at 9110 Red
Branch Road, Columbia, Maryland 21045, and our telephone
number is (410) 997-2599.
We are engaged in the business of industrial
microbiology and related biotechnologies. We formed the
company to develop, produce, and market value-added
specialty biochemical products derived from abundant,
inexpensive and renewable agricultural residues and wastes
through the use of state-of-the-art fermentation technology,
physical and chemical separation technology, and related
chemical and biochemical engineering technologies.
We have devoted our 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, we have relied on the expertise and skills of our
in-house scientific staff and, for special projects, various
consultants.
ABOUT THE OFFERING
This prospectus may be used only in connection with the
issuance of up to 46,002,800 shares of our common stock from
time to time upon exercise of up to 46,002,800 outstanding
warrants issued by us in April, 1998 in a public offering
registered on Form SB-2, as amended, filed with the
Commission on February 17, 1998.
If all of the warrants are exercised using cash, we
will receive proceeds in the amount of $4,600,280,
corresponding to the exercise price of the warrants of $0.10
per share, multiplied by the number of warrants exercised.
The terms of the warrants permit the holder to exercise the
warrants on a "cashless" basis or in exchange for other
securities of IGENE, neither of which methods would result
in proceeds to us. We anticipate that the proceeds from the
exercise of the warrants, if any, will be used to for
repayment of long-term debt and for general working capital
purposes.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE YOU
DECIDE TO BUY OUR COMMON STOCK. THE RISKS AND UNCERTAINTIES
DESCRIBED BELOW ARE THE MATERIAL ONES FACING OUR COMPANY. IF
ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS WOULD LIKELY
SUFFER. IF THIS OCCURS, THE TRADING PRICE OF OUR COMMON
STOCK COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF THE
MONEY YOU PAID TO BUY OUR COMMON STOCK.
The shares of common stock offered by this prospectus
involve a high degree of risk. Prospective investors should
review the entire prospectus and carefully consider, among
other factors, the following matters:
Our business is difficult to evaluate because we have a
limited operating history.
We began research and development in the industrial
microbiology industry in 1981, but did not begin commercial
operations until 1998, and therefore have only a limited
operating history upon which an evaluation of our business
and our business prospects can be based. You should
consider our prospects in light of the heightened risks and
unexpected expenses and difficulties frequently encountered
by companies
<PAGE>
in an early stage of development. These risks,expenses and
difficulties, which are described below, apply particularly
to us because the biotechnology market, and the microbiology
sector in particular, is fairly new and rapidly evolving.
Due to our limited operating history, it will be difficult
for you to evaluate whether we will successfully address
these risks.
We have a history of losses and anticipate continued losses.
Since our formation, we have incurred operating losses
and negative cash flow. To the extent that we are unable to
achieve profitability in the future, our business,
prospects, financial condition and results of operations
will suffer. In 1999, we incurred a net loss of $2,525,340,
and have incurred accumulated net losses through December
31, 1999 of $28,002,249. For the second quarter ended June
30, 2000, we incurred a net loss of $562,167, and have
incurred accumulated net losses during the first half of
2000 of $1,012,515. We cannot assure you that we will ever
achieve or sustain profitability or that our operating
losses will not increase in the future.
We expect that our current strategy will result in
continuing net losses for the foreseeable future.
Our current focus is on expanding our client base in
our current markets for fish feed additives, expanding our
market for fish feed additives to other countries, and
beginning to market our product globally as a human
nutritional supplement. As a result, we will continue to
make capital expenditures and incur substantial marketing
and operating costs and increase our expenses in order to
hire additional personnel to provide adequate levels of
support to management. Our current strategy can be expected
to have an adverse impact on our profit margins for at least
the near-term, and we cannot assure you that we can increase
our revenues and customer base sufficiently to recover the
costs of these anticipated expenses. In addition,
acceleration in the growth of our client base or changes in
the way our clients use our products may also increase costs
as a percentage of revenues.
We have a history of negative cash flows, and will need to
raise additional capital to continue as a going concern.
Negative cash flow from operations for the year ended
December 31, 1999 was $1,670,094, and negative cash flow
from operations for the six months ended June 30, 2000 was
$665,222. Our operating activities continue to consume net
cash. We believe that we will have sufficient cash
liquidity to operate through September 30, 2000.
In order for cash flow from operating activities to be
sufficient to sustain our operations beyond that date, we
will likely be required to achieve an increase in revenue or
raise additional financing. There can be no assurance that
such an increase in revenue will occur or that it will be
sufficient to maintain adequate cash to continue operations
beyond that date. Nor can we provide any assurance that we
will obtain additional financing on terms favorable to us or
at all. Any failure to obtain additional required financing
would have a material adverse effect on our business,
prospects, financial condition and results of operations,
and may impair our ability to continue as a going concern.
We are not generating sufficient revenues from operations to
make scheduled dividend payments on our preferred stock.
We are not generating sufficient revenues from
operations to cover our fixed charges, including scheduled
dividend payments on our preferred stock, or to fund the
ultimate redemption of all of the preferred stock.
In December 1988, we suspended payment of the fourth
quarter dividend payable on our preferred stock and have not
paid any such dividends since that date. Any resumption of
dividend payments on our preferred stock would require
significant improvements in cash flow. As of June 30, 2000,
total dividends in arrears on our preferred stock was
$199,032. Until we pay our accrued dividends, we cannot pay
any dividends on our common stock. We cannot provide any
assurance that our cash flow will improve, that
<PAGE>
we will resume dividend payments on the preferred stock, be
able to redeem the preferred stock at the required mandatory
redemption date of October 2002, or pay dividends on our
common stock. The aggregate amount expected to be required
to redeem the preferred stock in October 2002, is $449,000.
In any event, we do not intend to pay dividends on our
common stock in the foreseeable future.
We received a "going concern" opinion from our independent
auditors.
Due to our past history of losses, the independent
auditors' report for the year ended December 31, 1999
contains an explanatory paragraph that states that our
recurring losses and limited capitalization raise
substantial doubt about our ability to continue as a going
concern. In addition, the auditor issued a going concern
opinion for IGENE.
We have substantial debt obligations, which we may not be
able to service.
We have debt obligations of approximately $7,163,000 as
of June 30, 2000 (assuming that we exercise our right to
repay the principal and interest due under our subordinated
debenture using shares of our common stock), and will
continue to have significant preferred stock dividend
obligations, and an obligation to redeem all of the
preferred stock for approximately $449,000 by the mandatory
redemption date of October 1, 2002. Even if all 46,002,800
warrants are exercised for cash, generating proceeds of
$4,600,280, our ability to meet its debt service obligations
will depend on a number of factors, including its ability to
generate operating cash flow. There can be no assurance that
targeted levels of operating cash flow, or any cash flow,
will actually be achieved. We had a negative debt to
capitalization ratio as of December 31, 1999 and as of June
30, 2000.
The issuance of all 46,002,800 shares of common stock upon
exercise of all warrants could adversely affect the market
price of our common stock.
The issuance of up to 46,002,800 shares of common stock
pursuant to this offering would represent approximately 21%
of our total equity on a fully diluted basis, and
approximately 44% of our total equity based on our issued
and outstanding stock as of August 28, 2000. All 46,002,800
shares may be freely tradable and could adversely affect the
market price of our common stock.
We do not anticipate paying dividends on common stock in the
foreseeable future.
We do not anticipate paying any cash dividends in the
foreseeable future. In addition, unless full cumulative
dividends have been paid on the outstanding preferred stock,
we will not be entitled to pay dividends on the common
stock.
Your investment may have limited liquidity if an active
trading market does not develop and continue and the price
of our common stock may fall.
The trading market for, and liquidity of, our common
stock is limited. The average daily trading volume for the
common stock during the period from July 1, 1999 through
June 30, 2000 was approximately 170,000 shares. This
represents approximately 0.3% of our presently issued and
outstanding common stock.
Your purchase of our common stock may not be a liquid
investment because our securities trade over the counter
with quotes on the bulletin board. You should consider
carefully the limited liquidity of your investment before
purchasing any shares of our common stock. We have no
obligation and do not plan to apply for quotation of our
common stock on the NASDAQ Stock Market or for listing of
our common stock on any national securities exchange. An
active and liquid market for our common stock may not
develop or if it does develop, continue, and investors in
our common stock may not be able to resell their shares as a
result of:
-- our limited earnings history,
<PAGE>
-- the absence of reasonable expectations of
dividends in the near future, or
-- the fact that our common stock will not be listed.
In addition, the free transferability of the common
stock will depend on the securities laws of the various
states in which it is proposed that a sale of the common
stock be made.
Volatility in our stock price may adversely affect our
business.
Fluctuations in the market price of our stock may
adversely affect our ability to complete any acquisitions,
our access to capital and financing and our ability to
attract and retain qualified personnel. Our common stock
price and trading volume has fluctuated widely, with a
closing price range over the past 52 weeks of $0.640 to
$0.045, as of August 28, 2000. The price of our common
stock may decline in future quarters if:
-- we fail to meet market expectations of our
quarterly or annual revenues, net income or
earnings per share,
-- we lose significant customers,
-- we or our competitors announce new products or
technological innovations, or
-- our products do not gain market acceptance.
In addition, technology stocks such as ours experience
significant price and volume fluctuations that are often
unrelated to operating performance.
We rely on one product for 100% of our revenues.
Our success is dependent upon the successful
development and sale of AstaXin(R), a yeast product used as
a feed supplement in aquaculture, and which may also be used
as a human nutritional supplement. We believe AstaXin(R)
will be profitable based on material costs, manufacturing
costs, selling price and estimated global demand. However,
no assurance can be given that sufficient quantities of
AstaXin(R) will be available to meet demand or that such
demand will materialize. To date, we have sold commercial
quantities of AstaXin(R) as a feed supplement in aquaculture
in the amount of $481,158, through June 30, 2000. We have
not produced or sold significant commercial quantities of
any other products. Expenses associated with research and
product development and manufacturing and marketing
activities will continue to impact profitability in the near
future.
We are dependent on others to manufacture our primary
product.
We have no manufacturing facilities other than our
pilot plant facility in Columbia, Maryland. Thus, to
manufacture commercial quantities of our product, we have
entered into production arrangements with a third-party
manufacturer. This manufacturer currently has the ability,
and the obligation under contract with us, to increase its
capacity as necessary to meet increased demand for our
product.
The manufacture of our product by a single contract
manufacturer, in a single location outside the United
States, subjects the Company to certain risks. For example,
it is possible that this contract manufacturer may become
unable or unwilling to fulfill its production obligations
for reasons beyond our control. This production facility is
located outside the United States, in Mexico City, Mexico,
and it is also possible that political, legal,
environmental, weather or other factors may cause us to be
unable to continue production arrangements with this
manufacturer. However, we have not thus far experienced any
of the preceding problems and have no information that would
lead us to believe that the manufacturing operations will be
disrupted. We do not plan, in the near-term, to construct
our own manufacturing facilities.
<PAGE>
Technological change may profoundly affect our business.
We expect technological developments in the
biotechnology field to continue at a rapid pace and that our
commercial success will depend upon our ability to be at the
leading edge of specialized biotechnologies and to attain a
competitive technological position in specialized product
areas.
We face intense competition with greater resources than
ours.
Competitors in the biotechnology field in the United
States and elsewhere are numerous and include major
chemical, pharmaceutical and food companies, as well as
specialized biotechnology companies. Competition can be
expected to increase as small biotechnology companies
continue to be purchased by major multinational corporations
with resources much greater than ours. Competition is also
expected to increase with the introduction of more diverse
products developed by biotechnology firms, increasing
research cooperation among academic institutions and large
corporations, and continued government funding of research
and development activities in the biotechnology field, both
in the United States and overseas. Unlike the majority of
biotechnology companies, which are developing products
principally for the pharmaceutical industry, we have focused
our own activities on the development of proprietary
products for use in food, fermentation and agricultural
industries. In the future, however, competitors may offer
products, which by reason of price or efficacy or more
adequate resources for technology advances, may be superior
to our existing or future products.
A single large pharmaceutical company presently
dominates the market for feed supplements used for
pigmentation in aquaculture. The market into which our
product, AstaXin(R), will be sold is highly competitive
worldwide and several other companies are presently known to
be developing and marketing competitive products.
We rely upon patents and proprietary information.
It is our policy to protect our intellectual property
rights by a variety of means, including applying for patents
and trademarks in the United States and other countries. We
also rely upon trade secrets and improvements, unpatented
proprietary know-how and continuing technological innovation
to develop and maintain our competitive position. In this
regard, we place restrictions on our agreements with third
parties with respect to the use and disclosure of any of our
proprietary technology. We also have internal nondisclosure
safeguards, including confidentiality agreements with
employees and consultants. All patents and trademarks are
carefully reviewed and those with no foreseeable commercial
value are abandoned to eliminate costly maintenance fees.
Patents (and applications) and/or trademarks on technology
with potential commercial value, and which we maintain,
include those for AstaXin(R) and ClandoSan(R). U.S. and
foreign patents for AstaXin(R) and related technology have
already been obtained, and additional applications for
patents and trademarks for AstaXin(R) and related technology
have been submitted and are in process.
We may face stringent government regulation.
The manufacturing and marketing of the products we have
developed or intend to develop will likely be subject to
regulation by various governmental agencies in the United
States, including the Food and Drug Administration, the
Department of Agriculture, the Environmental Protection
Agency, and comparable agencies in other countries.
AstaXin(R) has to date been approved by the FDA and by its
Canadian counterpart agency as a color additive in
aquaculture feeds. AstaXin(R) has also obtained market
clearance from the FDA as a human nutritional supplement.
Our product must conform to current Good Manufacturing
Practices (as defined under the Federal Food, Drug and
Cosmetic Act and the rules and regulations thereunder), and
we believe our product so conforms. There can he no
assurance, however, that such assertions and affirmations
will not be reversed by the FDA, the USDA or the EPA and
that we will not then be required to obtain costly and time-
consuming approvals from these agencies or comparable
agencies in foreign countries. The extent of any adverse
governmental regulation that might arise from future
administrative or legislative action, including current
rules and regulations, cannot be predicted.
<PAGE>
We must attract and retain key personnel to be successful.
Our ability to develop marketable products and to
maintain a competitive position in light of technological
developments will depend, in part, on our ability to attract
and retain highly qualified scientific, technical and
management personnel. Intense present competition for such
personnel is expected to continue into the future. We
believe that we have been successful in attracting skilled
and experienced personnel. Retention of such personnel
will depend on our ability to provide such personnel with
competitive compensation arrangements, equity participation
and other benefits.
Litigation with Archer Daniels Midland may affect our
business.
Archer Daniels Midland, Inc. has sued us, alleging
patent infringement and requesting injunctive relief as well
as an unspecified amount of damages. We have filed a
$300,450,000 counterclaim concerning the alleged theft of
trade secrets. The court denied ADM's request for
preliminary injunctive relief. Mediation efforts during
1999 did not resolve this dispute, which has been returned
to the court for a judicial disposition. Presently, a stay
on all discovery remains in effect while a court-appointed
expert analyzes the yeast products of both parties. We
believe that it is not probable that this dispute will
result in an unfavorable outcome to IGENE. Nonetheless,
should ADM prevail, we could be liable for damages, and we
could also lose the right to use a particular strain of
yeast. However, we expect that this will not affect our
ability to make and sell our product, AstaXin(R).
Trading in our common stock is subject to additional
regulation because of its low trading price.
Trading in our common stock is subject to a Commission
rule that imposes additional sales practice requirements on
broker-dealers who sell such securities to persons other
than established customers and accredited investors. "Penny
Stock" is defined as a stock that trades below $5 per share.
For transactions covered by this rule, the broker-dealer
must make a special suitability determination for the
purchaser and have received the purchaser's written consent
to the transaction prior to sale. The rules require the
delivery, prior to any transaction involving a penny stock,
of a disclosure schedule prepared by the Commission
explaining important concepts involving the penny stock
market, the nature of such market, terms used in such
market, broker-dealer's duties to the customer, a toll-free
telephone number for inquiries about the broker-dealer's
disciplinary history and the customer's rights and remedies
in case of fraud or abuse in the sale. Disclosure must also
be made about commissions payable to both the broker-dealer
and the registered representative, and current quotations
for the securities. Finally, monthly statements must be sent
disclosing recent price information for penny stock held in
the account and information on the limited market in penny
stocks.
FORWARD-LOOKING STATEMENTS
This prospectus contains statements that constitute
forward-looking statements within the meaning of Section 21E
of the Exchange Act of 1934, as amended, and Section 27A of
the Securities Act of 1933. The words "expect," "estimate,"
"anticipate," "predict," "believe" and similar expressions
and variations thereof are intended to identify forward-
looking statements. Such statements appear in a number of
places in this prospectus and include statements regarding
our intent, belief or current expectations regarding our
strategies, plans and objectives, our product release
schedules, our ability to design, develop, manufacture and
market products, our intentions with respect to strategic
acquisitions, and the ability of our products to achieve or
maintain commercial acceptance. Any forward-looking
statements are not guarantees of future performance and
involve risks and uncertainties. Actual results may differ
materially from those projected in this prospectus, for the
reasons, among others, described in the Risk Factors section
beginning on page 4. You should read the Risk Factors
section carefully, and should not place undue reliance on
any forward-looking statements, which speak only as of the
date of this prospectus. We undertake no obligation to
release publicly any updated information about forward-
looking statements to reflect events or circumstances
occurring after the date of this prospectus or to reflect
the occurrence of unanticipated events.
<PAGE>
USE OF PROCEEDS
The purpose of this offering is to register common stock
which may be issued from time to time upon exercise of
warrants issued in a public offering registered on Form SB-
2, as amended, filed with the Commission on February 17,
1998. We intend that the proceeds of this offering, if any,
will be applied to reduce our long-term debt and fund our
working capital needs. We may receive net cash proceeds
from the sale of the shares of common stock offered by us
under this prospectus in the maximum amount of approximately
$4,586,065. Alternatively, warrant holders may also pay the
exercise price under the warrants by tendering our debt
securities or may exercise the warrants on a "cashless"
basis. Under either of these circumstances, we would not
receive cash upon exercise of the warrants. Use of our debt
securities to pay the exercise price of the warrants would,
however, reduce long-term debt by the amount of debt
securities used to pay the exercise price.
DETERMINATION OF OFFERING PRICE
The offering price of the common stock registered by
this prospectus is $0.10. This offering price represents the
exercise price stated in the warrants and does not bear any
direct or indirect relationship to the market price or fair
market value of our common stock.
PLAN OF DISTRIBUTION
The common stock registered pursuant to this prospectus
will be issued to the warrant holders upon the exercise of
their warrants. As such, no underwriter, finder or broker-
dealer will receive a commission for any distribution of the
shares registered hereunder. If any material arrangement is
entered by us with an underwriter, finder or broker-dealer,
for the sale of the shares, then, to the extent required
under the Securities Act of 1933 or the rules of the
Commission, a supplemental prospectus will be filed to
disclose the following information as we believe
appropriate:
-- the name of the participating underwriter;
-- the number of the shares involved;
-- the price at which such shares are to be sold, the
commissions to be paid or discounts or concessions to be
allowed to such underwriter; and
-- other facts material to the transaction.
We will bear all costs and expenses of the registration
of the securities to which this prospectus relates. The
warrants may be exercised by tendering cash, other
securities of IGENE, or through a "cashless" exercise.
LEGAL MATTERS
McGuireWoods LLP has passed upon the validity of the
shares of common stock offered herein.
EXPERTS
The financial statements incorporated in this
prospectus by reference to our Annual Report on Form 10-KSB
for the year ended December 31, 1999 have been audited by
Berenson & Company LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and
has been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes part of a registration
statement on Form S-3 filed with the Commission under the
Securities Act of 1933. It omits some of the information
contained in the registration statement,
<PAGE>
and you should refer to the registration statement for
further information about us and about the securities
offered by this prospectus. When we make statements in
this prospectus concerning the provisions of any document
filed as an exhibit to the registration statement or
otherwise filed with the Commission which is not attached
in full, then in each such instance you should refer to a
copy of the document filed.
In addition, we file annual, quarterly and current
reports, proxy statements and other information with the
Commission. You may read and copy any reports, proxy
statements and other information filed by us at the
Commission Public Reference Rooms at:
450 Fifth Street, NW 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois 60661-2511
Please call the Commission at 1-800-SEC-0330 for
further information on the Public Reference Rooms.
You may also request copies of these documents, upon
payment of a duplicating fee, by writing to the Public
Reference Section of the Commission at 450 Fifth Street, NW
Room 1024, Washington, D.C. 20549. The Commission also
maintains an Internet site that contains reports, proxy and
information statements, and other information about issuers,
including us, who file electronically with the Commission.
The address of that site is www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Commission allows us to disclose important
information to you by referring you to documents we have
filed or will file with the Commission. The information
"incorporated by reference" is an important part of this
prospectus, and information that we file later with the
Commission will automatically update and supersede
previously filed information. We incorporate by reference
the documents listed below and any future filing made by us
with the Commission under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 until the offering of
all of the shares which are the subject of this prospectus
is completed.
-- Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1999;
-- Quarterly Reports on Form 10-QSB for the periods
ended March 31, 2000 and June 30, 2000; and
-- The description of the common stock contained in
our registration statement on Form 8-A filed under the
Securities Exchange Act of 1934, as amended, including any
amendment or report filed for the purpose of updating such
description.
You can obtain any of the documents incorporated by
reference in this document from the Commission through the
Commission's website at the address provided above. You can
also obtain any of the documents incorporated by reference
from us, excluding any exhibits to those documents unless
the exhibit is specifically incorporated by reference as an
exhibit in this document, at no cost, by requesting them in
writing at the following address:
IGENE Biotechnology, Inc.
Investor Relations
9110 Red Branch Road
Columbia, Maryland 21045-2024
Telephone: (410) 997-2599
You should rely only on the information incorporated by
reference or provided in this prospectus or any supplement
to this prospectus. We have not authorized anyone else to
provide you with different information. You should not
assume that the information in this prospectus or any
supplement to this
<PAGE>
prospectus is accurate as of any date other than the date
on the cover page of this prospectus or any supplement.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
We are a Maryland corporation. Our articles of
incorporation contain a provision limiting the liability of
the directors and officers to the fullest extent permitted
by Section 5-349 of the Courts and Judicial Proceedings Code
of Maryland. Our articles of incorporation also contain a
provision permitted under Maryland General Corporation Law
eliminating (with limited exceptions) each director's
personal liability for monetary damages for breach of any
duty as a director. In addition, our articles of
incorporation and bylaws provide for indemnification of our
directors and officers from certain liabilities and
expenses, as well as advancement of costs, expenses and
attorneys' fees, to the fullest extent permitted under
Maryland General Corporation Law. Such rights are contract
rights fully enforceable by each beneficiary thereof, and
are in addition to, and not exclusive of, any other right to
indemnification.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table itemizes the expenses incurred by
the Registrant in connection with the offering. All the
amounts shown are estimates except the Securities and
Exchange Commission registration fee.
Registration fee - Securities and Exchange Commission $ 1,215
Legal Fees and Expenses 10,000
Accounting Fees and Expenses 1,000
Miscellaneous Expenses 2,000
---------
TOTAL $14,215
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Information responsive to this Item 15 is incorporated
herein by reference to the section of the prospectus
entitled "DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES".
ITEM 16. EXHIBITS
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
4.1 Warrant Agreement between the Company and American
Stock Transfer & Trust Company, as Warrant Agent
relating to warrants issued April 17, 2000,
constituting Exhibit 4.3 to Registration Statement
No. 333-41581 on Form SB-2.
5.1 Opinion and Consent of McGuireWoods LLP
23.1 Consent of Berenson & Company LLP.
23.3 Consent of McGuire Woods LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement to include any additional or changed
material information with respect to the plan of
distribution;
(2) That, for the purpose of determining liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering; and
<PAGE>
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the
end of the offering.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act)
that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
registrant issuer pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that, in the
opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is,
therefore, unenforceable.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for
filing on Form S-3 and authorized this registration
statement to be signed on its behalf by the undersigned, in
the City of Columbia, State of Maryland, on August 31, 2000.
IGENE Biotechnology, Inc.
(the registrant)
By: /s/ Stephen F. Hiu
---------------------------------------
Stephen F. Hiu
President (Principal Executive Officer)
By: /s/ Melissa M. Stump
---------------------------------------
Melissa M. Stump
Controller (Principal Accounting Officer)
<PAGE>
Exhibit 24.1
POWER OF ATTORNEY
Each person whose signature appears below
constitutes and appoints Stephen F. Hiu as his true and
lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and his name, place
and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this
registration statement and a new registration statement
filed pursuant to Rule 462(b) of the Securities Act of 1933
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in
and about the foregoing, as fully to all intents and
purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or
his substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act
of 1933, this registration statement has been signed by the
following persons in the capacities and on the dates stated.
SIGNATURE TITLE DATE
/s/ Michael G. Kimelman Chairman of the August 31, 2000
------------------------- Board of Directors
Michael G. Kimelman
/s/ Thomas L. Kempner Vice Chairman of the August 31, 2000
------------------------- Board of Directors
Thomas L. Kempner
/s/ Stephen F. Hiu Director, President, August 31, 2000
------------------------- Treasurer, and Director
Stephen F. Hiu of Research and Development
/s/ Patrick F. Monahan Director, Secretary and August 31, 2000
------------------------- Director of Manufacturing
Patrick F. Monahan
/s/ Joseph C. Abeles Director August 31, 2000
-------------------------
Joseph C. Abeles
/s/ John A. Cenerazzo Director August 31, 2000
-------------------------
John A. Cenerazzo
/s/ Sidney R. Knafel Director August 31, 2000
-------------------------
Sidney R. Knafel
<PAGE>
Exhibit 5.1
[Letterhead of McGuire Woods LLP]
August 31, 2000
IGENE Biotechnology, Inc.
Ladies/Gentlemen:
At your request, we have examined the Registration
Statement on Form S-3 (the "Registration Statement") to
which this letter is attached as Exhibit 5.1 filed by IGENE
Biotechnology, Inc., a Maryland corporation (the "Company"),
in order to register under the Securities Act of 1933, as
amended (the "Act"), 46,002,800 shares of common stock of
the Company and any additional shares of common stock of the
Company which may be registered pursuant to Rule 462(b)
under the Act (the "Shares") upon exercise of up to
46,002,800 common stock purchase warrants (the "Warrants").
We are of the opinion that the Shares have been duly
authorized and, upon issuance of the Shares in accordance
with the warrants, will be legally and validly issued, fully
paid and non-assessable.
We consent to the use of this opinion as an Exhibit to
the Registration Statement and to use of our name in the
Prospectus constituting a part thereof.
Respectfully submitted,
/s/ McGuireWoods LLP
<PAGE>
Exhibit 23.1
[Letterhead of Berenson & Company LLP]
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated
February 25, 2000, relating to the financial statements,
which appears in IGENE Biotechnology, Inc.'s Annual Report
on Form 10-KSB for the year ended December 31, 1999. We also
consent to the reference to us under the heading "Experts"
in such Registration Statement.
/s/ BERENSON & COMPANY LLP
New York, NY
August 29, 2000
