##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: June 30, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-31533
 DUSA PHARMACEUTICALS, INC.
  New Jersey
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    22-3103129
(I.R.S. Employer Identification No.)25 Upton Drive, Wilmington, MA
(Address of Principal Executive Offices)
    
    01887
(Zip Code)
 
 
  þ o
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o  o þ




---



##### 



DUSA PHARMACEUTICALS, INC.  TABLE OF CONTENTS TO FORM 10-Q
 PageNumberPART I. FINANCIAL INFORMATIONItem 1. Financial Statements- Condensed Consolidated Balance Sheets at June 30, 2008 and December 31, 2007
(Unaudited)
    
    
    3- Condensed Consolidated Statements of Operations for the three and six-month periods
ended June 30, 2008 and 2007 (Unaudited)
    
    
    5- Condensed Consolidated Statements of Cash Flows for the six-month periods ended June
30, 2008 and 2007 (Unaudited)
    
    
    6- Notes to the Condensed Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    27PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    28Item 1A. Risk Factors
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3. Defaults Upon Senior Securities
    
    
    40Item 4. Submission of Matters to a Vote of Security Holders
    
    
    40Item 5. Other Information
    
    
    40Item 6. Exhibits
    
    
    40SIGNATURES
    
    
    42Exhibit Index
    
    
    43EX-31(A) SECTION 302 CERTIFICATION OF THE C.E.O.EX-31(B) SECTION 302 CERTIFICATION OF THE C.F.O.EX-32(A) SECTION 906 CERTIFICATION OF THE C.E.O.EX-32(B) SECTION 906 CERTIFICATION OF THE C.F.O.EX-99.1 Press ReleaseEX-31.A: CERTIFICATIONEX-31.B: CERTIFICATIONEX-32.A: CERTIFICATIONEX-32.B: CERTIFICATIONEX-99.1: PRESS RELEASE
  -2-




---



##### Table of Contents



PART I.
 
 ITEM 1. FINANCIAL STATEMENTS
 
 DUSA PHARMACEUTICALS, INC.  CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 June 30,
    
    December 31,2008
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    2,978,722
    
    
    $
    4,713,619Marketable securities
    
    
    19,721,895
    
    
    
    18,311,650Accrued interest receivable
    
    
    175,535
    
    
    
    97,243Accounts receivable, net of allowance for
doubtful accounts of $152,000 and
$158,000 in 2008 and 2007, respectively
    
    
    2,205,451
    
    
    
    2,667,178Inventory
    
    
    2,831,488
    
    
    
    2,672,105Prepaid and other current assets
    
    
    1,669,375
    
    
    
    1,843,873TOTAL CURRENT ASSETS
    
    
    29,582,466
    
    
    
    30,305,668Restricted cash
    
    
    172,418
    
    
    
    170,510Property, plant and equipment, net
    
    
    2,123,288
    
    
    
    2,142,658Deferred charges and other assets
    
    
    215,861
    
    
    
    273,404TOTAL ASSETS
    
    $
    32,094,033
    
    
    $
    32,892,240LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    104,872
    
    
    $
    1,213,867Accrued compensation
    
    
    677,587
    
    
    
    491,529Other accrued expenses
    
    
    3,343,535
    
    
    
    3,322,642Deferred revenue
    
    
    937,269
    
    
    
    1,256,494TOTAL CURRENT LIABILITIES
    
    
    5,063,263
    
    
    
    6,284,532Deferred revenues
    
    
    4,241,844
    
    
    
    2,918,850Warrant liability
    
    
    1,138,733
    
    
    
    1,262,600Other liabilities
    
    
    285,729
    
    
    
    319,736TOTAL LIABILITIES
    
    
    10,729,569
    
    
    
    10,785,718COMMITMENTS AND CONTINGENCIES (NOTE 17)SHAREHOLDERS EQUITYCapital StockAuthorized: 100,000,000 shares;
40,000,000 shares designated as common
stock, no par, and 60,000,000 shares
issuable in Series or classes; and 40,000
junior Series A preferred shares. Issued
and outstanding: 24,078,610 and
24,076,110 shares of common stock, no
par, at June 30, 2008 and December 31,
2007, respectively
    
    
    151,652,943
    
    
    
    151,648,943Additional paid-in capital
    
    
    6,574,903
    
    
    
    5,885,353
 -3-




---



##### Table of Contents



June 30,
    
    December 31,2008
    
    2007Accumulated deficit
    
    
    (137,023,416
    )
    
    
    (135,600,484
    )Accumulated other comprehensive income
    
    
    160,034
    
    
    
    172,710TOTAL SHAREHOLDERS EQUITY
    
    
    21,364,464
    
    
    
    22,106,522TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    32,094,033
    
    
    $
    32,892,240
  -4-




---



##### Table of Contents



DUSA
PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 Three-months ended
    
    Six-months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Product revenues
    
    $
    8,112,239
    
    
    $
    6,862,198
    
    
    $
    16,041,739
    
    
    $
    13,539,038Cost of product revenues
and royalties
    
    
    1,787,694
    
    
    
    1,776,491
    
    
    
    3,488,011
    
    
    
    3,932,643GROSS MARGIN
    
    
    6,324,545
    
    
    
    5,085,707
    
    
    
    12,553,728
    
    
    
    9,606,395Operating costs:Research and development
    
    
    1,375,302
    
    
    
    1,576,909
    
    
    
    3,561,511
    
    
    
    3,103,013Marketing and sales
    
    
    3,496,233
    
    
    
    3,309,583
    
    
    
    6,553,434
    
    
    
    6,840,290General and administrative
    
    
    2,325,137
    
    
    
    2,832,576
    
    
    
    4,692,961
    
    
    
    5,856,025Net gain from settlement
of litigation
    
    
    (47,825
    )
    
    
    
    
    
    
    (283,425
    )
    
    
    TOTAL OPERATING COSTS
    
    
    7,148,847
    
    
    
    7,719,068
    
    
    
    14,524,481
    
    
    
    15,799,328LOSS FROM OPERATIONS
    
    
    (824,302
    )
    
    
    (2,633,361
    )
    
    
    (1,970,753
    )
    
    
    (6,192,933
    )Other income, net
    
    
    217,100
    
    
    
    155,954
    
    
    
    423,952
    
    
    
    344,598Gain on change in fair
value of warrants
    
    
    468,411
    
    
    
    
    
    
    
    123,869
    
    
    
    NET LOSS
    
    $
    (138,791
    )
    
    $
    (2,477,407
    )
    
    $
    (1,422,932
    )
    
    $
    (5,848,335
    )BASIC AND DILUTED NET
LOSS PER
COMMON SHARE
    
    $
    (0.01
    )
    
    $
    (0.13
    )
    
    $
    (0.06
    )
    
    $
    (0.30
    )WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING, BASIC AND
DILUTED
    
    
    24,078,610
    
    
    
    19,487,485
    
    
    
    24,078,514
    
    
    
    19,483,796
  -5-




---



##### Table of Contents



DUSA
PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Six-months endedJune 30,2008
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (1,422,932
    )
    
    $
    (5,848,335
    )Adjustments to reconcile net loss to net cash used in
operating activities:Amortization of premiums and discounts on marketable securities
    
    
    (108,441
    )
    
    
    (98,092
    )Realized loss/(gain) on sales of marketable securities
    
    
    13,488
    
    
    
    (7,113
    )Share-based compensation
    
    
    689,550
    
    
    
    717,698Inventory reserve
    
    
    (3,000
    )
    
    
    4,000Depreciation and amortization
    
    
    311,191
    
    
    
    349,667Gain on change in fair value of warrants
    
    
    (123,869
    )
    
    
    Deferred revenues recognized
    
    
    (640,168
    )
    
    
    (203,300
    )Changes in other assets and liabilities impacting cash flows
used in operationsAccrued interest receivable
    
    
    (78,292
    )
    
    
    81,534Accounts receivable
    
    
    461,727
    
    
    
    202,295Inventory
    
    
    (156,383
    )
    
    
    (572,694
    )Prepaid and other current assets
    
    
    174,498
    
    
    
    457,410Deferred charges and other assets
    
    
    57,543
    
    
    
    (81,552
    )Accounts payable
    
    
    (1,108,995
    )
    
    
    517,955Accrued compensation and other accrued expenses
    
    
    456,951
    
    
    
    (1,732,859
    )Deferred revenues
    
    
    1,643,937
    
    
    
    1,504,586Other liabilities
    
    
    (34,005
    )
    
    
    98,504NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
    
    
    132,800
    
    
    
    (4,610,296
    )CASH FLOWS FROM INVESTING ACTIVITIESCash paid for business acquisition
    
    
    (250,000
    )
    
    
    (500,000
    )Purchases of marketable securities
    
    
    (19,406,775
    )
    
    
    (11,399,203
    )Proceeds from maturing and sales of marketable securities
    
    
    18,078,809
    
    
    
    16,438,627Restricted cash
    
    
    (1,908
    )
    
    
    (4,008
    )Purchases of property, plant and equipment
    
    
    (291,823
    )
    
    
    (203,909
    )NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES
    
    
    (1,871,697
    )
    
    
    4,331,507CASH FLOWS FROM FINANCING ACTIVITIESProceeds from exercise of options
    
    
    4,000
    
    
    
    40,650NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    4,000
    
    
    
    40,650NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1,734,897
    )
    
    
    (238,139
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    4,713,619
    
    
    
    3,267,071CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    2,978,722
    
    
    $
    3,028,932
  -6-




---



##### Table of Contents



DUSA PHARMACEUTICALS, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 1) BASIS OF PRESENTATION
   2) NEW ACCOUNTING PRONOUNCEMENTS
 Business
Combinations
 Noncontrolling Interests in Consolidated Financial
Statements, an amendment of ARB No. 51
 Disclosures about Derivative Instruments
and Hedging Activities
 Accounting for Collaborative Arrangements Reporting Revenue Gross as a
Principal versus Net as an Agent
 -7-




---



##### Table of Contents



3) FAIR VALUE MEASUREMENTS
 Fair
Value Measurement
        Level 2Assets:United States government-backed securities
    
    $
    14,675,000Corporate debt securities
    
    
    5,047,000Total assets
    
    $
    19,722,000Liabilities:Warrant liability
    
    
    1,139,000Total liabilities
    
    $
    1,139,000
 4) WARRANTS
  -8-




---



##### Table of Contents



June 30,
    
    December 31,2008
    
    2007Expected volatility
    
    
    67.1
    %
    
    
    67.3
    %Remaining contractual term (years)
    
    
    4.83
    
    
    
    5.33Risk-free interest rate
    
    
    3.34
    %
    
    
    3.45
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %Common stock price
    
    $
    2.01
    
    
    $
    2.07
 5) MARKETABLE SECURITIES
  June 30, 2008Amortized
    
    Unrealized
    
    FairCost
    
    Gains
    
    ValueUnited States government-backed securities
    
    $
    14,528,220
    
    
    $
    146,440
    
    
    $
    14,674,660Corporate securities
    
    
    5,033,641
    
    
    
    13,594
    
    
    
    5,047,235Total marketable securities available-for-sale
    
    $
    19,561,861
    
    
    $
    160,034
    
    
    $
    19,721,895
 December 31, 2007Amortized
    
    Unrealized
    
    FairCost
    
    Gains
    
    ValueUnited States government-backed securities
    
    $
    16,429,249
    
    
    $
    162,619
    
    
    $
    16,591,868Corporate securities
    
    
    1,709,691
    
    
    
    10,091
    
    
    
    1,719,782Total marketable securities available-for-sale
    
    $
    18,138,940
    
    
    $
    172,710
    
    
    $
    18,311,650
  6) BUSINESS ACQUISITION
  -9-




---



##### Table of Contents



AdditionalCumulative Sales Milestone:
    
    Consideration:$25.0 million
    
    $1.5 million35.0 million
    
    $1.0 million45.0 million
    
    $1.0 millionTotal
    
    $3.5 million
  7) CONCENTRATIONS
  % of revenue
    
    % of revenuethree months ended
    
    six months ended
    
    % of accounts receivableJune 30,
    
    June 30,
    
    June 30,
    
    June 30,
    
    June 30,
    
    December 31,2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007Customer A
    
    
    3
    %
    
    
    7
    %
    
    
    2
    %
    
    
    6
    %
    
    
    7
    %
    
    
    5
    %Customer B
    
    
    12
    %
    
    
    12
    %
    
    
    12
    %
    
    
    11
    %
    
    
    19
    %
    
    
    10
    %Customer C
    
    
    15
    %
    
    
    20
    %
    
    
    11
    %
    
    
    18
    %
    
    
    24
    %
    
    
    12
    %Customer D
    
    
    5
    %
    
    
    7
    %
    
    
    5
    %
    
    
    5
    %
    
    
    6
    %
    
    
    7
    %Customer E
    
    
    2
    %
    
    
    
    
    
    
    3
    %
    
    
    
    
    
    
    
    
    
    
    26
    %Other customers
    
    
    63
    %
    
    
    54
    %
    
    
    67
    %
    
    
    60
    %
    
    
    44
    %
    
    
    40
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
   -10-




---



##### Table of Contents



8) INVENTORY
  June 30,
    
    December 31,2008
    
    2007Finished goods
    
    $
    1,449,000
    
    
    $
    1,625,000BLU-U® evaluation units
    
    
    166,000
    
    
    
    131,000Work in process
    
    
    655,000
    
    
    
    409,000Raw materials
    
    
    561,000
    
    
    
    507,000Total
    
    $
    2,831,000
    
    
    $
    2,672,000
   9) OTHER ACCRUED EXPENSES
  June 30,
    
    December 31,2008
    
    2007Research and development costs
    
    $
    122,000
    
    
    $
    293,000Marketing and sales costs
    
    
    363,000
    
    
    
    334,000Reserve for sales returns and allowances
    
    
    630,000
    
    
    
    546,000Accrued FDA fees
    
    
    589,000
    
    
    
    Reserve for chargebacks and rebates
    
    
    150,000
    
    
    
    200,000Other product related costs
    
    
    723,000
    
    
    
    873,000Legal and other professional fees
    
    
    435,000
    
    
    
    484,000Employee benefits
    
    
    277,000
    
    
    
    236,000Other expenses
    
    
    55,000
    
    
    
    357,000Total
    
    $
    3,344,000
    
    
    $
    3,323,000
 10) SHARE-BASED COMPENSATION
  Three-months ended
    
    Six-months endedJune 30, 2008
    
    June 30, 2007
    
    June 30, 2008
    
    June 30, 2007Cost of product revenues
    
    $
    17,000
    
    
    $
    24,000
    
    
    $
    41,000
    
    
    $
    50,000Research and development
    
    
    69,000
    
    
    
    92,000
    
    
    
    190,000
    
    
    
    186,000Marketing and sales
    
    
    34,000
    
    
    
    75,000
    
    
    
    (27,000
    )
    
    
    18,000General & administrative
    
    
    238,000
    
    
    
    285,000
    
    
    
    486,000
    
    
    
    464,000Share-based compensation expense
    
    $
    358,000
    
    
    $
    476,000
    
    
    $
    690,000
    
    
    $
    718,000
  -11-




---



##### Table of Contents



Three-months ended
    
    Six-months endedJune 30, 2008
    
    June 30, 2007
    
    June 30, 2008
    
    June 30, 2007Volatility-directors and officers
    
    
    70.2
    %
    
    
    62.2
    %
    
    
    70.2
    %
    
    
    62.2
    %Volatility-non-officer employees
    
    
    70.8
    %
    
    
    62.2
    %
    
    
    70.8
    %
    
    
    
    %Risk-free interest rate
    
    
    2.98-3.61
    %
    
    
    4.92
    %
    
    
    2.98-3.61
    %
    
    
    4.53
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected life-directors and officers
    
    6.3 years
    
    5.9 years
    
    6.3 years
    
    5.9 yearsExpected life-non-officer employees
    
    5.9 years
    
    5.5 years
    
    5.9 years
    
    5.5 years
  Six-month period
    
    Weighted averageended June 30, 2008
    
    exercise priceOutstanding, beginning of period
    
    
    2,855,125
    
    
    $
    10.76Options-granted
    
    
    309,500
    
    
    
    2.17Options-forfeited
    
    
    (5,000
    )
    
    
    10.34Options expired
    
    
    (112,625
    )
    
    
    11.73Options exercised
    
    
    (2,500
    )
    
    
    1.60Outstanding, end of period
    
    
    3,044,500
    
    
    
    9.86Exercisable, end of period
    
    
    2,274,189
    
    
    $
    11.66Options vested and expected to vest, end of period
    
    
    2,942,941
    
    
    $
    10.07
    11) BASIC AND DILUTED NET LOSS PER SHARE
  12) SEGMENT REPORTING
  -12-




---



##### Table of Contents



Three-month period ended
    
    Six-month period endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007REVENUESPDT drug and device product revenues
    
    $
    5,429,000
    
    
    $
    4,062,000
    
    
    $
    11,259,000
    
    
    $
    8,618,000Non-PDT product revenues
    
    
    2,683,000
    
    
    
    2,800,000
    
    
    
    4,783,000
    
    
    
    4,921,000Total revenues
    
    
    8,112,000
    
    
    
    6,862,000
    
    
    
    16,042,000
    
    
    
    13,539,000COSTS OF REVENUESPDT drug and device cost of product
revenues
    
    
    1,169,000
    
    
    
    1,144,000
    
    
    
    2,443,000
    
    
    
    2,453,000Non-PDT cost of product revenues
    
    
    618,000
    
    
    
    632,000
    
    
    
    1,045,000
    
    
    
    1,480,000Total costs of product revenues
    
    
    1,787,000
    
    
    
    1,776,000
    
    
    
    3,488,000
    
    
    
    3,933,000GROSS MARGINPDT drug and device product gross margin
    
    
    4,260,000
    
    
    
    2,918,000
    
    
    
    8,816,000
    
    
    
    6,165,000Non-PDT product gross margin
    
    
    2,065,000
    
    
    
    2,168,000
    
    
    
    3,738,000
    
    
    
    3,441,000Total gross margin
    
    $
    6,325,000
    
    
    $
    5,086,000
    
    
    $
    12,554,000
    
    
    $
    9,606,000
  Three-months ended
    
    Six-months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007United States
    
    
    93
    %
    
    
    97
    %
    
    
    94
    %
    
    
    96
    %Canada
    
    
    3
    %
    
    
    3
    %
    
    
    2
    %
    
    
    4
    %Korea
    
    
    2
    %
    
    
    
    
    
    
    3
    %
    
    
    Other
    
    
    2
    %
    
    
    
    
    
    
    1
    %
    
    
    Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  13) COMPREHENSIVE LOSS
  Three-months ended
    
    Six-months endedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007NET LOSS
    
    $
    (138,791
    )
    
    $
    (2,477,407
    )
    
    $
    (1,422,932
    )
    
    $
    (5,848,335
    )Change in net
unrealized gains on
marketable
securities
available-for-sale
    
    
    (179,938
    )
    
    
    (8,675
    )
    
    
    (12,676
    )
    
    
    12,004COMPREHENSIVE LOSS
    
    $
    (318,729
    )
    
    $
    (2,486,082
    )
    
    $
    (1,435,608
    )
    
    $
    (5,836,331
    )
 14) STIEFEL AGREEMENT
 ®
 -13-




---



##### Table of Contents



15) DAEWOONG AGREEMENT
  16) DEFERRED COMPENSATION PLAN
  17) COMMITMENTS AND CONTINGENCIES
 LEGAL MATTERS:
 RIVERS EDGE LITIGATION SETTLEMENT
  -14-




---



##### Table of Contents



Three-months ended
    
    Six-months endedJune 30, 2008
    
    June 30, 2008Excess prescriptions of NIC 750
filled
    
    $
    47,825
    
    
    $
    283,425Net gain from settlement of
litigation
    
    $
    47,825
    
    
    $
    283,425
   18) SUBSEQUENT EVENTS
  -15-




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OVERVIEW
       -16-




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES
  RESULTS OF OPERATIONS  THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 2008 VERSUS THREE AND SIX-MONTH
PERIODS ENDED JUNE 30, 2007
 REVENUES
 Three months ended
    
    
    
    
    
    Six months endedJune 30,
    
    
    
    
    
    June 30,INCREASE/
    
    
    
    
    
    
    
    
    
    INCREASE/2008
    
    2007
    
    (DECREASE)
    
    2008
    
    2007
    
    (DECREASE)PDT PRODUCT REVENUESLEVULAN® KERASTICK®
PRODUCT REVENUESUnited States
    
    $
    4,572,000
    
    
    $
    3,461,000
    
    
    $
    1,111,000
    
    
    $
    9,346,000
    
    
    $
    7,185,000
    
    
    $
    2,161,000Canada
    
    
    218,000
    
    
    
    192,000
    
    
    
    26,000
    
    
    
    377,000
    
    
    
    393,000
    
    
    
    (16,000
    )Korea
    
    
    159,000
    
    
    
    
    
    
    
    159,000
    
    
    
    524,000
    
    
    
    
    
    
    
    524,000Rest of World
    
    
    133,000
    
    
    
    
    
    
    
    133,000
    
    
    
    190,000
    
    
    
    
    
    
    
    190,000Subtotal Levulan®
Kerastick® product
revenues
    
    
    5,082,000
    
    
    
    3,653,000
    
    
    
    1,429,000
    
    
    
    10,437,000
    
    
    
    7,578,000
    
    
    
    2,859,000
 -17-




---



##### Table of Contents



Three months ended
    
    
    
    
    
    Six months endedJune 30,
    
    
    
    
    
    June 30,INCREASE/
    
    
    
    
    
    
    
    
    
    INCREASE/2008
    
    2007
    
    (DECREASE)
    
    2008
    
    2007
    
    (DECREASE)BLU-U® PRODUCT
REVENUESUnited States
    
    
    347,000
    
    
    
    380,000
    
    
    
    (33,000
    )
    
    
    822,000
    
    
    
    946,000
    
    
    
    (124,000
    )Canada
    
    
    
    
    
    
    29,000
    
    
    
    (29,000
    )
    
    
    
    
    
    
    94,000
    
    
    
    (94,000
    )Subtotal BLU-U®
product revenues
    
    
    347,000
    
    
    
    409,000
    
    
    
    (62,000
    )
    
    
    822,000
    
    
    
    1,040,000
    
    
    
    (218,000
    )TOTAL PDT PRODUCT
REVENUES
    
    
    5,429,000
    
    
    
    4,062,000
    
    
    
    1,367,000
    
    
    
    11,259,000
    
    
    
    8,618,000
    
    
    
    2,641,000TOTAL NON-PDT
PRODUCT REVENUES
    
    
    2,683,000
    
    
    
    2,800,000
    
    
    
    (117,000
    )
    
    
    4,783,000
    
    
    
    4,921,000
    
    
    
    (138,000
    )TOTAL PRODUCT
REVENUES
    
    $
    8,112,000
    
    
    $
    6,862,000
    
    
    $
    1,250,000
    
    
    $
    16,042,000
    
    
    $
    13,539,000
    
    
    $
    2,503,000
    -18-




---



##### Table of Contents



COST OF PRODUCT REVENUES
 THREE MONTHS ENDED JUNE 30,INCREASE/2008
    
    2007
    
    (DECREASE)Levulan® Kerastick® cost of product
revenues and royaltiesDirect Levulan® Kerastick® product costs
    
    $
    594,000
    
    
    $
    519,000
    
    
    $
    75,000Other Levulan® Kerastick® production
costs
including internal costs assigned to
support products, net
    
    
    (8,000
    )
    
    
    97,000
    
    
    
    (105,000
    )Royalty and supply fees (1)
    
    
    223,000
    
    
    
    168,000
    
    
    
    55,000Subtotal Levulan® Kerastick® cost of
product revenues and royalties
    
    $
    809,000
    
    
    $
    784,000
    
    
    $
    25,000
 -19-




---



##### Table of Contents



THREE MONTHS ENDED JUNE 30,INCREASE/2008
    
    2007
    
    (DECREASE)BLU-U® cost of product revenuesDirect BLU-U® product costs
    
    $
    147,000
    
    
    $
    160,000
    
    
    $
    (13,000
    )Other BLU-U® product costs including
internal costs assigned to support
products; as well as, costs incurred to
ship, install and service the BLU-U® in
physicians offices
    
    
    213,000
    
    
    
    200,000
    
    
    
    13,000Subtotal BLU-U® cost of product revenues
    
    $
    360,000
    
    
    $
    360,000
    
    
    $
    TOTAL PDT DRUG AND DEVICE COST OF
PRODUCT REVENUES AND ROYALTIES
    
    $
    1,169,000
    
    
    $
    1,144,000
    
    
    $
    25,000Non-PDT cost of product revenues and
royalties
    
    $
    618,000
    
    
    $
    632,000
    
    
    $
    (14,000
    )TOTAL COST OF PRODUCT REVENUES AND
ROYALTIES
    
    $
    1,787,000
    
    
    $
    1,776,000
    
    
    $
    11,000
 SIX MONTHS ENDED JUNE 30,INCREASE/2008
    
    2007
    
    (DECREASE)Levulan® Kerastick® cost of product
revenues and royaltiesDirect Levulan® Kerastick® product costs
    
    $
    1,232,000
    
    
    $
    1,075,000
    
    
    $
    157,000Other Levulan® Kerastick® production
costs
including internal costs assigned to
support products, net
    
    
    2,000
    
    
    
    155,000
    
    
    
    (153,000
    )Royalty and supply fees (1)
    
    
    471,000
    
    
    
    348,000
    
    
    
    123,000Subtotal Levulan® Kerastick® cost of
product revenues and royalties
    
    $
    1,705,000
    
    
    $
    1,578,000
    
    
    $
    127,000BLU-U® cost of product revenuesDirect BLU-U® product costs
    
    $
    348,000
    
    
    $
    422,000
    
    
    $
    (74,000
    )Other BLU-U® product costs including
internal costs assigned to support
products; as well as, costs incurred to
ship, install and service the BLU-U® in
physicians offices
    
    
    390,000
    
    
    
    454,000
    
    
    
    (64,000
    )Subtotal BLU-U® cost of product revenues
    
    $
    738,000
    
    
    $
    876,000
    
    
    $
    (138,000
    )TOTAL PDT DRUG AND DEVICE COST OF
PRODUCT REVENUES AND ROYALTIES
    
    $
    2,443,000
    
    
    $
    2,454,000
    
    
    $
    (11,000
    )Non-PDT Cost of Product Revenues and
Royalties
    
    $
    1,045,000
    
    
    $
    1,479,000
    
    
    $
    (434,000
    )TOTAL COST OF PRODUCT REVENUES AND
ROYALTIES
    
    $
    3,488,000
    
    
    $
    3,933,000
    
    
    $
    (445,000
    )
 
 1)
    
    Royalty and supply fees reflect amounts paid to our licensor, PARTEQ
Research and Development Innovations, the licensing arm of Queens
University, Kingston, Ontario, and amortization of an upfront fee and
ongoing royalties paid to Draxis Health, Inc., on sales of the
Levulan® Kerastick® in Canada. -20-




---



##### Table of Contents



MARGINS
 THREE MONTHS ENDED JUNE 30,INCREASE/2008
    
    
    
    
    
    
    2007
    
    
    
    
    
    
    (DECREASE)Levulan® Kerastick® gross margin
    
    $
    4,273,000
    
    
    
    84
    %
    
    $
    2,869,000
    
    
    
    79
    %
    
    $
    1,404,000BLU-U® gross margin
    
    
    (13,000
    )
    
    
    (4
    )%
    
    
    49,000
    
    
    
    12
    %
    
    
    (62,000
    )Total PDT drug & device gross margin
    
    $
    4,260,000
    
    
    
    78
    %
    
    $
    2,918,000
    
    
    
    72
    %
    
    $
    1,342,000Total Non-PDT gross margin
    
    
    2,065,000
    
    
    
    77
    %
    
    
    2,168,000
    
    
    
    77
    %
    
    $
    (103,000
    )TOTAL GROSS MARGIN
    
    $
    6,325,000
    
    
    
    78
    %
    
    $
    5,086,000
    
    
    
    74
    %
    
    $
    1,239,000
 SIX MONTHS ENDED JUNE 30,INCREASE/2008
    
    
    
    
    
    
    2007
    
    
    
    
    
    
    (DECREASE)Levulan® Kerastick® gross margin
    
    $
    8,731,000
    
    
    
    84
    %
    
    $
    6,001,000
    
    
    
    79
    %
    
    $
    2,730,000BLU-U® gross margin
    
    
    85,000
    
    
    
    10
    %
    
    
    164,000
    
    
    
    16
    %
    
    
    (79,000
    )Total PDT drug & device gross margin
    
    $
    8,816,000
    
    
    
    78
    %
    
    $
    6,165,000
    
    
    
    72
    %
    
    $
    2,651,000Total Non-PDT gross margin
    
    
    3,738,000
    
    
    
    78
    %
    
    
    3,441,000
    
    
    
    70
    %
    
    $
    297,000TOTAL GROSS MARGIN
    
    $
    12,554,000
    
    
    
    78
    %
    
    $
    9,606,000
    
    
    
    71
    %
    
    $
    2,948,000
      -21-




---



##### Table of Contents



® ®
 RESEARCH AND DEVELOPMENT COSTS
 ® ®
   MARKETING AND SALES COSTS
 GENERAL AND ADMINISTRATIVE COSTS
 NET GAIN FROM SETTLEMENT OF LITIGATION ® ®
 -22-




---



##### Table of Contents



OTHER INCOME, NET
 GAIN ON CHANGE IN FAIR VALUE OF WARRANTS
 NET LOSS ®
 LIQUIDITY AND CAPITAL RESOURCES
    AdditionalCumulative Sales Milestone:
    
    Consideration:$25.0 million
    
    $1.5 million35.0 million
    
    $1.0 million45.0 million
    
    $1.0 millionTotal
    
    $3.5 million
  -23-




---



##### Table of Contents



® ® ® ®
 CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS
 ACTAVIS TOTOWA, LLC
 ® ® ® ® ® ® ®
 L. PERRIGO COMPANY
  MERGER WITH SIRIUS LABORATORIES, INC.
  PHOTOCURE ASA
 ® ® ® ® ® ® ® ® ®
 -24-




---



##### Table of Contents



WINSTON LABORATORIES, INC.
 ® ® ® ®
 PARTEQ AGREEMENT
 ®
  NATIONAL BIOLOGICAL CORPORATION AMENDED AND RESTATED PURCHASE AND SUPPLY AGREEMENT
 ®
 SOCHINAZ SA
 ®
 LEASE AGREEMENTS
  -25-




---



##### Table of Contents



RESEARCH AGREEMENTS
   1 Year or
    
    
    
    
    
    
    
    
    
    
    After 5Total
    
    
    less
    
    
    2-3 Years
    
    
    4-5 Years
    
    
    YearsOperating lease obligations (1)
    
    $
    1,897,000
    
    
    $
    459,000
    
    
    $
    929,000
    
    
    $
    509,000
    
    
    $
    0Purchase obligations (2, 3)
    
    
    3,014,000
    
    
    
    2,813,000
    
    
    
    201,000
    
    
    
    
    
    
    
    Minimum royalty obligations
(4)
    
    
    1,140,000
    
    
    
    348,000
    
    
    
    571,000
    
    
    
    196,000
    
    
    
    25,000Total obligations
    
    $
    6,051,000
    
    
    $
    3,620,000
    
    
    $
    1,701,000
    
    
    $
    705,000
    
    
    $
    25,000
 
 1)
    
    Approximately $85,000 of future operating lease commitments relate to
the Toronto and Valhalla offices, which will be closed during 2008.2)
    
    Research and development projects include various commitments
including obligations for our Phase II clinical study for moderate to
severe acne.3)
    
    In addition to the obligations disclosed above, we have contracted
with Therapeutics, Inc., a clinical research organization, to manage
the clinical development of our products in the field of dermatology.
This organization has the opportunity for additional stock grants,
bonuses, and other incentives for each product indication ranging from
$250,000 to $1,250,000, depending on the regulatory phase of
development of products under Therapeutics management.4)
    
    Minimum royalty obligations relate to our agreements with PARTEQ,
Winston and Perrigo described above.  INFLATION
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  -26-




---



##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
   Forward-Looking Statements Safe Harbor
 ® ® ® ® ® ® ® ® ® ® ® ® ® ®
 -27-




---



##### Table of Contents



® ® ® ® ®
 
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS.
 None.
 
 ITEM 1A. RISK FACTORS
    Risks Related To DUSA
 We Are Not Currently Profitable And May Not Be Profitable In The Future Unless We Can Successfully
Market And Sell Significantly Higher Quantities Of Our Products.
 If Product Sales Do Not Increase Significantly, We May Not Be Able To Advance Development Of Our
Other Potential Products As Quickly As We Would Like To, Which Would Delay The Approval Process And
Marketing Of New Potential Products.
  -28-




---



##### Table of Contents



Our Ability To Become Profitable Will Be Delayed Since We Will No Longer Promote Nicomide® As A
Prescription Product, And Since Other Generic Products Entered the Market.
 ® ® ® ®
 ®
 ® ® ® ® ® ® ®
 We Have Not Yet Secured A Manufacturer for a DSHEA Nicomide Product, And, As A Result, Our Revenues
From Nicomide® Sales May Suffer.
  Any Failure To Comply With Ongoing Governmental Regulations In The United States And Elsewhere Will
Limit Our Ability To Market Our Products And Become Profitable.
  
    
    approval of manufacturing facilities, including adherence to good manufacturing and laboratory
practices during production and storage,
    
    controlled research and testing of some of these products even after approval, and
    
    control of marketing activities, including advertising and labeling.
 -29-




---



##### Table of Contents




    
    send warning letters, as recently received by the manufacturer of our BLU-U®,
    
    impose fines and other civil penalties on us,
    
    seize our products,
    
    suspend our regulatory approvals,
    
    cease the manufacture of our products, as Actavis Totowa is doing with Nicomide®,
    
    refuse to approve pending applications or supplements to approved applications filed by us,
    
    refuse to permit exports of our products from the United States,
    
    require us to recall products,
    
    require us to notify physicians of labeling changes and/or product related problems,
    
    impose restrictions on our operations, and/or
    
    criminally prosecute us.
  ® ® ® ®
 ® ® ® ®
 -30-




---



##### Table of Contents



Patent Litigation Is Expensive And We May Not Be Able To Afford The Costs.
   If We Are Unable To Obtain The Necessary Capital To Fund Our Operations, We Will Have To Delay Our
Development Programs And May Not Be Able To Complete Our Clinical Trials.
   Since We Now Operate The Only FDA Approved Manufacturing Facility For The Kerastick® And Continue
To Rely Heavily On Sole Suppliers For The Manufacture Of Levulan®, The BLU-U®, And Meted®, Any
Supply Or Manufacturing Problems Could Negatively Impact Our Sales As With Nicomide®.
 ® ® ® ® ® ® ®
 ® ® ® ® ®
 -31-




---



##### Table of Contents



® ®
  
    
    product yields,
    
    quality control,
    
    component and service availability,
    
    compliance with FDA regulations, and
    
    the need for further FDA approval if manufacturers make material changes to
manufacturing processes and/or facilities.
  We Have Only Limited Experience Marketing And Selling Pharmaceutical Products And No Experience
Marketing Dietary Supplements, As A Result, Our Revenues From Product Sales May Suffer.
 ® ® ® ® ®
 The Commercial Success Of Any Products That We May Develop Will Depend Upon The Degree Of Market
Acceptance Of Our Products Among Physicians, Patients, Health Care Payors, Private Health Insurers
And The Medical Community.
  
    
    the effectiveness, or perceived effectiveness, of our products in comparison to competing products;
    
    the existence of any significant side effects, as well as their severity in comparison to
any competing products;
    
    potential advantages over alternative treatments;
    
    the ability to offer our products for sale at competitive prices;
    
    relative convenience and ease of administration;
    
    the strength of marketing and distribution support; and
    
    sufficient third-party coverage or reimbursement.
 -32-




---



##### Table of Contents



If We Cannot Improve Physician Reimbursement And/Or Convince More Private Insurance Carriers To
Adequately Reimburse Physicians For Our Product Sales May Suffer.
 ® ®
 ®
 We Have Significant Losses And Anticipate Continued Losses
  We Have Limited Patent Protection, And If We Are Unable To Protect Our Proprietary Rights,
Competitors Might Be Able To Develop Similar Products To Compete With Our Products And Technology.
 ®
 
    
    methods of using ALA and its unique physical forms in combination with light,
    
    compositions and apparatus for those methods, and
    
    unique physical forms of ALA.
  ®
 -33-




---



##### Table of Contents



® ® ® ® ®
 ® ® ® ® ®
  
    
    these persons or entities might breach the agreements,
    
    we might not have adequate remedies for a breach, and/or
    
    our competitors will independently develop or otherwise discover our trade secrets;
  We Have Only Three Therapies That Have Received Regulatory Approval Or Clearance, And We Cannot
Predict Whether We Will Ever Develop Or Commercialize Any Other Levulan® Products.
 Our Potential Products Are In Early Stages Of Development And May Never Result In Any Commercially
Successful Products.
 ® ® ®
 
    
    delays in product development, clinical testing or manufacturing,
    
    unplanned expenditures in product development, clinical testing or manufacturing,
    
    failure in clinical trials or failure to receive regulatory approvals,
    
    emergence of superior or equivalent products,
    
    inability to market products due to third-party proprietary rights, and
    
    failure to achieve market acceptance.
 ®
 -34-




---



##### Table of Contents



We Must Receive Separate Approval For Each Of Our Potential Products Before We Can Sell Them
Commercially In The United States Or Abroad.
 ® ® ®
 ®
 ® ® ® ® ® ® ®
 Because Of The Nature Of Our Business, The Loss Of Key Members Of Our Management Team Could Delay
Achievement Of Our Goals.
  -35-




---



##### Table of Contents



Collaborations With Outside Scientists May Be Subject To Restriction And Change.
  Risks Related To Our Industry
 Product Liability And Other Claims Against Us May Reduce Demand For Our Products Or Result In
Damages.
 We Are Subject To Risk From Potential Product Liability Lawsuits Which Could Negatively Affect Our
Business.
  Our Business Involves Environmental Risks And We May Incur Significant Costs Complying With
Environmental Laws And Regulations.
 ®
 We May Not Be Able To Compete Against Traditional Treatment Methods Or Keep Up With Rapid Changes
In The Biotechnology And Pharmaceutical Industries That Could Make Some Or All Of Our Products
Non-Competitive Or Obsolete.
 Competing Products And Technologies Based On Traditional Treatment Methods May Make Some Or All Of
Our Programs Or Potential Products Noncompetitive Or Obsolete.
   -36-




---



##### Table of Contents




    
    price reductions,
    
    lower levels of third-party reimbursements,
    
    failure to achieve market acceptance, and
    
    loss of market share, any of which could adversely affect our business. Further, we cannot
give any assurance that developments by our competitors or future competitors will
not render our technology obsolete.
 ® ® ® ® ®
 We Have Learned That Some Compounding Pharmacies Are Producing A Form Of Aminolevulinic Acid HCl
And Are Marketing It To The Medical Community.
 ®
 Generic Manufacturers May Launch Products at Risk of Patent Infringement.
 ®
 Our Competitors In The Biotechnology And Pharmaceutical Industries May Have Better Products,
Manufacturing Capabilities Or Marketing Expertise.
 ®
 -37-




---



##### Table of Contents



®
 ®
  
    
    the ease of administration of our method of PDT,
    
    the degree of generalized skin sensitivity to light,
    
    the number of required doses,
    
    the selectivity of our drug for the target lesion or tissue of interest, and
    
    the type and cost of our light systems.
 ®
 Risks Related To Our Stock
 If Outstanding Options, Warrants And Rights Are Converted, The Value Of Those Shares Of Common
Stock Outstanding Just Prior To The Conversion Will Be Diluted.
  Our Results Of Operations And General Market Conditions For Specialty Pharmaceutical And
Biotechnology Stocks Could Result In Sudden Changes In The Market Value Of Our Stock.
  
    
    quarterly levels of product sales;
    
    clinical trial results;
    
    general market conditions;
 -38-




---



##### Table of Contents




    
    patent litigation;
    
    increased marketing activities or press releases; and
    
    changes in third-party payor reimbursement for our therapy.
  Significant Fluctuations In Orders For Our Products, On A Monthly And Quarterly Basis, Are Common
Based On External Factors And Sales Promotion Activities. These Fluctuations Could Increase The
Volatility Of Our Stock Price.
  Effecting A Change Of Control Of DUSA Would Be Difficult, Which May Discourage Offers For Shares Of
Our Common Stock.
     
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
  -39-




---



##### Table of Contents



ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
   Votes
    
    
    
    
    
    BrokerVotes Cast For
    
    Withheld
    
    Abstained
    
    Non-votesJohn H. Abeles
    
    
    14,041,654
    
    
    
    4,730,919
    
    
    
    -0-
    
    
    
    -0-David M. Bartash
    
    
    14,083,933
    
    
    
    4,688,640
    
    
    
    -0-
    
    
    
    -0-Robert F. Doman
    
    
    17,478,005
    
    
    
    1,294,568
    
    
    
    -0-
    
    
    
    -0-Jay M. Haft
    
    
    14,059,822
    
    
    
    4,712,751
    
    
    
    -0-
    
    
    
    -0-Richard C. Lufkin
    
    
    14,083,970
    
    
    
    4,688,603
    
    
    
    -0-
    
    
    
    -0-Magnus Moliteus
    
    
    14,082,913
    
    
    
    4,689,660
    
    
    
    -0-
    
    
    
    -0-D. Geoffrey Shulman
    
    
    17,244,442
    
    
    
    1,528,131
    
    
    
    -0-
    
    
    
    -0-
  Votes Cast
    
    
    
    BrokerVotes Cast For
    
    Against
    
    Abstained
    
    Non-votes8,950,044
    
    5,322,226
    
    397,534
    
    4,102,769
  Votes Cast
    
    
    
    
    
    BrokerVotes Cast For
    
    Against
    
    Abstained
    
    Non-votesDeloitte & Touche LLP
    
    
    18,600,040
    
    
    
    160,663
    
    
    
    11,869
    
    
    
    -0-
 
 ITEM 5. OTHER INFORMATION.
  
 ITEM 6. EXHIBITS.
 EXHIBIT NO.
    
    DESCRIPTION OF EXHIBIT3(a.1)
    
    Certificate of Incorporation, as amended, filed as Exhibit 3(a) to the Registrants Form
10-K for the fiscal year ended December 31, 1998, and is incorporated herein by
reference.3(a.2)
    
    Certificate of Amendment to the Certificate of Incorporation, as amended, dated October
28, 2002 and filed as Exhibit 99.3 to the Registrants Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 2002, filed November 12, 2002, and is incorporated
herein by reference3(b)
    
    By-laws of the Registrant, filed as Exhibit 3.1 to the Registrants current report on
Form 8-K, filed on November 2, 2007, and is incorporated herein by reference.
 -40-




---



##### Table of Contents



EXHIBIT NO.
    
    DESCRIPTION OF EXHIBIT31(a)
    
    Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.31(b)
    
    Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.32(a)
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32(b)
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.99.1
    
    Press Release dated August 8, 2008
 -41-




---



##### Table of Contents



SIGNATURES
  DUSA Pharmaceuticals, Inc.By:
    /s/ Robert F. DomanRobert DomanPresident and Chief Executive Officer (principal executive officer)  By:
    /s/ Richard C. ChristopherRichard C. ChristopherVice President, Finance and Chief Financial Officer (principal financial officer)  -42-




---



##### Table of Contents



EXHIBIT INDEX
 3(a.1)
    
    Certificate of Incorporation, as amended, filed as Exhibit 3(a) to the Registrants Form
10-K for the fiscal year ended December 31, 1998, and is incorporated herein by
reference.3(a.2)
    
    Certificate of Amendment to the Certificate of Incorporation, as amended, dated October
28, 2002 and filed as Exhibit 99.3 to the Registrants Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 2002, filed November 12, 2002, and is incorporated
herein by reference.3(b)
    
    By-laws of the Registrant, filed as Exhibit 3.1 to the Registrants current report on
Form 8-K, filed on November 2, 2007, and is incorporated herein by reference.31(a)
    
    Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.31(b)
    
    Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.32(a)
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.32(b)
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.99.1
    
    Press Release dated August 8, 2008.
 -43-