SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                          FORM 10-KSB/A
                         (Amendment #1)
(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR  15(d)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934.

          For the fiscal year ended December 31, 2006

[ ]  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 0-15888


                   IGENE Biotechnology, Inc.
         ______________________________________________
         (Name of Small Business Issuer in Its Charter)

             Maryland                       52-1230461
  _______________________________   __________________________
  (State of other jurisdiction of   (IRS Employer
   incorporation or organization)    Identification No.)

       9110 Red Branch Road, Columbia, Maryland   21045
      ___________________________________________________
      (Address of principal executive offices) (Zip Code)


                        (410) 997-2599
        ________________________________________________
        (Issuer's telephone number, including area code)


Securities  registered  pursuant to Section 12(b) of the Exchange
Act:

 Title of Each Class  Name of Each Exchange on Which Registered
 ___________________  _________________________________________
        None                            None

Securities  registered  pursuant to Section 12(g) of the Exchange
Act:

           Common Stock (par value $.01 per share)
           _______________________________________
                     (Title of class)

     Check  whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the
past  12  months (or for such shorter period that the  registrant
was  required to file such reports), and (2) has been subject  to
such filing requirements for the past 90 days.

     YES   [X]          NO    [ ]

     Check  if  there  is no disclosure of delinquent  filers  in
response  to Item 405 of Regulation S-B contained in  this  form,
and  no disclosure will be contained, to the best of registrant's
knowledge,   in   definitive  proxy  or  information   statements
incorporated by reference in Part III of this Form 10-KSB or  any
amendment to this Form 10-KSB.  [  ]

     State  issuer's  revenues for its most  recent  fiscal  year
$ 0

     State  the  aggregate market value of the  voting  and  non-
voting common equity held by non-affiliates computed by reference
to  the price at which the common equity was sold, or the average
bid and asked price of such common equity, as of a specified date
within the past 60 days.  $1,969,867 as of December 11, 2007
                          __________________________________
(Note:   The  officers and directors of the issuer are considered
affiliates for purposes of this calculation.)

     State  the  number  of shares outstanding  of  each  of  the
issuer's  classes of common equity, as of the latest  practicable
date.    As of December 11, 2007 there were 109,437,072 shares of
         ________________________________________________________
the issuer's common stock outstanding.
_____________________________________

<PAGE>
Explanatory Note:

The purpose of this Form 10KSB/A is to amend the Annual Report on
Form 10-KSB (the "Form 10-KSB") of Igene Biotechnology, Inc. (the
"Company"  or  "Registrant" ) for its fiscal year ended  December
31, 2006, as filed with the Securities and Exchange Commission on
March 29, 2007.  The Company historically when valuing the shares
underlying the warrants of the Company, has applied a discount to
the  value of the shares based on the illiquidity of the  shares,
applying  such things as blockage discounts to the value  of  the
shares.   Based  on the application of illiquidity discounts  the
Company  felt  it  was  an  immaterial  adjustment  to  record  a
valuation to the shares underlying the warrants.  The Company has
determined to value the shares underlying the warrants from  time
to  time  in connection with the Company's issuance of promissory
notes and convertible debentures using a Black Scholes model  and
ignoring  any  discounts for illiquidity of  shares  or  blockage
discounts.

The  Company  has  historically reported the warrants  issued  in
connection  with  the  Notes as having zero  value  and  has  not
recognized any discount on the Notes but rather recorded the full
face  value  of  the Notes as Long Term Debt in its  consolidated
financial   statements.   Using  the  Black  Scholes   model   of
valuation,  the  warrants would be valued  with  a  corresponding
amount of original issue discount on the Notes.  The amortization
of  this  discount  over the term of the Notes has  required  the
Registrant  to  revise its Consolidated Financial Statements  and
the  accompanying notes thereto in order to, among other  things,
reflect an increase in Additional Paid in Capital, a decrease  in
Long  Term Debt, an increase in Accumulated Deficit, an  increase
in  Interest Expense and an increase in Net Loss and Net Loss per
Common  Share, for fiscal years 2005 and 2006, as  shown  in  the
Registrant's  Consolidated Financial Statements and  accompanying
notes  included  in this amended form 10-KSB.    These  revisions
will  also  require amendment of the Company's  previously  filed
Form 10-QSB for the Quarter ended March 31, 2007.

For  the convenience of the reader, this Form 10-KSB/A sets forth
the  Form 10-KSB originally filed with the SEC on March 29,  2007
(the "Form 10-KSB") in its entirety.  However, this Form 10-KSB/A
only  amends certain limited statements in Items 1 and 6  of  the
Form  10-KSB, and amends and restates the Registrant's  2006  and
2005 Consolidated Financial Statements previously filed with  the
Form  10-KSB, in each case, solely as a result of, and to reflect
the  changes  described above relating to the  valuation  of  the
warrants and the resulting original issue discount, and no  other
information in the Form 10-KSB is amended hereby.

Except  for  the  foregoing amended information  and  except  for
information provided on the cover page hereto, this Form 10-KSB/A
continues to speak as of the original filing date of the Form 10-
KSB,  and  the  Company has not updated the disclosure  contained
herein  to  reflect events that occurred at a later date.   Other
events  occurring after the filing of the Form  10-KSB  or  other
disclosures necessary to reflect subsequent events are addressed,
or will be addressed, in subsequent filings with the SEC.


                               -2-



CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR PROVISIONS"  OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

EXCEPT  FOR  HISTORICAL  FACTS, ALL  MATTERS  DISCUSSED  IN  THIS
REPORT, WHICH ARE FORWARD LOOKING, INVOLVE A HIGH DEGREE OF  RISK
AND  UNCERTAINTY.  CERTAIN STATEMENTS IN THIS  REPORT  SET  FORTH
MANAGEMENT'S   INTENTIONS,   PLANS,  BELIEFS,   EXPECTATIONS   OR
PREDICTIONS  OF THE FUTURE BASED ON CURRENT FACTS  AND  ANALYSES.
WHEN   WE   USE  THE  WORDS  "BELIEVE,"  "EXPECT,"  "ANTICIPATE,"
"ESTIMATE,"  "INTEND"  OR  SIMILAR  EXPRESSIONS,  WE  INTEND   TO
IDENTIFY FORWARD-LOOKING STATEMENTS.  YOU SHOULD NOT PLACE  UNDUE
RELIANCE ON THESE FORWARD-LOOKING STATEMENTS.  ACTUAL RESULTS MAY
DIFFER MATERIALLY FROM THOSE INDICATED IN SUCH STATEMENT, DUE  TO
A  VARIETY OF FACTORS, RISKS AND UNCERTAINTIES.  POTENTIAL  RISKS
AND  UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED  TO,  COMPETITIVE
PRESSURES  FROM OTHER COMPANIES AND WITHIN THE BIOTECH  INDUSTRY,
ECONOMIC  CONDITIONS IN THE COMPANY'S PRIMARY  MARKETS,  EXCHANGE
RATE FLUCTUATIONS, REDUCED PRODUCT DEMAND, INCREASED COMPETITION,
INABILITY   TO  PRODUCE  REQUIRED  CAPACITY,  UNAVAILABILITY   OF
FINANCING,  GOVERNMENT  ACTION,  WEATHER  CONDITIONS  AND   OTHER
UNCERTAINTIES,  INCLUDING THOSE DETAILED IN "RISK  FACTORS"  THAT
ARE  INCLUDED  FROM TIME-TO-TIME IN THE COMPANY'S SECURITIES  AND
EXCHANGE COMMISSION FILINGS.

                             PART I

ITEM 1.   DESCRIPTION OF BUSINESS

General

     IGENE  Biotechnology,  Inc.  ("Igene")  is  engaged  in  the
business  of  developing, marketing, and manufacturing  specialty
ingredients for human and animal nutrition.   Igene was formed on
October  27,  1981  to  develop, produce and  market  value-added
specialty  biochemical products.  Igene is a supplier of  natural
astaxanthin, an essential nutrient in different feed applications
and  a  source  of  pigment for coloring farmed  salmon  species.
Igene  is also venturing to supply astaxanthin as a nutraceutical
ingredients.   Igene  is focused on research and  development  of
fermentation technology, nutrition and health in its marketing of
products and applications worldwide.

     Igene  has  devoted  its  resources to  the  development  of
proprietary  processes  to  convert  selected  agricultural   raw
materials  or  feedstocks  into  commercially  useful  and   cost
effective  products for the food, feed, flavor  and  agrochemical
industries.   In  developing these processes and products,  Igene
has relied on the expertise and skills of its in-house scientific
staff and, for special projects, various consultants.

     In 2000, Igene formed a wholly-owned subsidiary, Igene Chile
Comercial,  Ltda.,  in Chile.  The subsidiary  has  a  sales  and
customer  service office in Puerto Varas, Chile,  and  a  product
warehouse  in  Puerto  Montt,  Chile.   Igene  currently   leases
manufacturing capacity in Mexico City, Mexico, through a contract
manufacturer on an as needed basis.

     In  an  effort to develop a dependable source of production,
on  March 19, 2003, Tate & Lyle PLC and Igene  announced a  50:50
joint venture to produce AstaXin(R) for the aquaculture industry,
which  we  refer to as the "Joint Venture".  Production  utilizes
Tate  &  Lyle's fermentation capability together with the  unique
technology  developed by Igene. Part of Tate  &  Lyle's  existing
citric  acid facility located in Selby, England, was modified  to
include the production of this product.  Tate & Lyle's investment
of  $25 million included certain of its facility assets that were
used in citric acid production.  The production facility has been
completed and is now in full production.

Government Regulation

     The  manufacturing  and marketing of most  of  the  products
Igene  has developed are, and will likely continue to be, subject
to  regulation  by various governmental agencies  in  the  United
States,  including the Food and Drug Administration ("FDA"),  the
Department  of Agriculture ("USDA"), the Environmental Protection
Agency  ("EPA"),  and  comparable agencies  in  other  countries.
Igene,  as a matter of policy, requires that its products conform

                             -3-

to  current  Good  Manufacturing Practices ("GMPs")  (as  defined
under  the Federal Food, Drug and Cosmetic Act and the rules  and
regulations thereunder) and Igene believes all of its products so
conform.  The extent of any adverse governmental regulation  that
might  arise  from  future administrative or legislative  action,
including current rules and regulations pertaining to the process
of  GRAS  (Generally Recognized as Safe) affirmations, cannot  be
predicted.

     In  a notice published in the Federal Register July 6, 2000,
the FDA announced the amendment of its color additive regulations
to provide for the safe use of Phaffia yeast, such as that in the
Company's product, AstaXin(R), as a color additive in aquaculture
feeds.   This  ruling,  which became effective  August  8,  2000,
allows Igene to  market its product, AstaXin(R), for  aquaculture
feeds  and fish produced in, or imported into, the United States.
This  ruling is available to the public in the Federal  Register.
Igene  has also previously obtained  approval for AstaXin(R) from
the Canadian Food Inspection Agency  (CFIA).  Additional  foreign
approval  applications  for AstaXin(R), including those  for  the
European  Union, are in progress.  Igene is required  to  perform
additional tests and prepare additional documentation as part  of
the   application  process.   The  initial  application  for  the
European  Union was submitted in May of 2004.  It  is  hoped  the
application will be approved in the second half of 2007.

     In  July 2000, Igene also obtained clearance from the FDA to
market its product, AstaXin(R), as a human dietary supplement  in
the  United States.  Scientific literature indicates that natural
astaxanthin, such as that in the Company's  product,  AstaXin(R),
may offer health benefits  for  humans  due  to  its  antioxidant
properties.   The FDA notification and the Company's  submissions
are  available to the public from the FDA.   Comparable  agencies
in  the European Union and other foreign countries may have their
own    additional   registration   procedures.    No   additional
applications  for  approval of AstaXin(R) as a human  nutritional
supplement have yet been submitted.

     Igene  has not incurred and does not anticipate any material
environmental compliance costs.

Research and Development

     As  of  December 31, 2006, Igene had expended  approximately
$16,290,000  on research and development since its  inception  on
October 27, 1981.  The costs listed below for 2006 and 2005  were
reimbursed  by the Joint Venture.  Sales of astaxanthin  (through
Igene  and the Joint Venture) resulted in revenues of $35,400,000
as  of  December  31,  2006, $27,700,000 of which  were  realized
through  the  Joint  Venture.    Igene  will  continue  to  incur
research and development costs in connection with improvements in
its  existing processes and products, but it does not  anticipate
development of new processes and products in 2007.

      Research and development expenditures for each of the  last
two years are as follows

     2006   $ 847,598
     2005   $ 819,782

     Igene's research and development activities have resulted in
the  development of processes to produce the products hereinafter
discussed.

Commercial Products

AstaXin(R)

     AstaXin(R)  is  Igene's  registered  trademark for its dried
yeast  product  made from a proprietary strain of yeast developed
by  Igene.   AstaXin(R) is  a  natural  source  of astaxanthin, a
pigment  which  imparts the characteristic red color to the flesh
of salmon, trout, prawns and certain  other  types  of  fish  and
shellfish.   In  the  ocean, salmon and trout obtain  astaxanthin
from  krill  and other planktonic crustaceans in their  diet.   A
krill  and  crustacean diet would be prohibitively expensive  for
farm-raised salmonids.  Without the addition of astaxanthin,  the
flesh  of  such  fish is a pale, off-white color, which  is  less
appealing  to  consumers expecting "salmon-colored"  fish.   Fish
feeding trials in Europe, Asia, and North and South America  have
demonstrated the efficacy of AstaXin(R) in pigmenting  fish.   An
estimated  1,000,000  metric  tons  of  farm-raised  salmon   are
produced  annually worldwide.  The Joint Venture derived  revenue
during 2006 and  2005 from sales of AstaXin(R), the  majority  of
which  were  to  fish  producers in the aquaculture  industry  in
Chile, as well as sales exported to Japan and Canada.

                               -4-

     On May 20, 2000, Igene renewed its manufacturing arrangement
with Fermic, S.A. de C.V., of Mexico City, Mexico ("Fermic"), for
the production of its natural astaxanthin pigment, AstaXin(R), in
Fermic's  manufacturing facility in Mexico. Commercial production
began in January of 1998.

     The  Fermic contract executed in May 2000, provides that the
manufacturer has the non-exclusive right and license  to  produce
AstaXin(R) for the  Joint Venture, is paid a cash  fee  based  on
manufacturing  capacity, and has received  20,000,000  shares  of
Igene  common  stock  in  lieu  of additional  cash  for  product
manufactured  over the six year term.  Fermic provided  equipment
and facilities necessary to manufacture and store the product and
was  responsible for purchasing raw materials.  The Joint Venture
is  responsible for sales efforts and for ensuring the quality of
the  pigment.  The Joint Venture also has a role in ensuring that
the   manufacturing  process  works  effectively.   The  contract
expired  May 20, 2006, and Fermic has not been producing  product
as  the  two  companies  are currently discussing  renewing  this
agreement.  See Item 2. Description of Property.

     On  March 18, 2003, the Company entered into a Joint Venture
Agreement  with Tate & Lyle Fermentation Products Ltd.  ("Tate").
Pursuant  to  a  Joint Venture Agreement, the  Company  and  Tate
agreed  to  form  a  joint  venture  (the  "Joint  Venture")   to
manufacture, market and sell astaxanthin and derivative  products
throughout  the world for all uses other than as a  nutraceutical
or  otherwise  for  direct human consumption.   Tate  contributed
$24,600,000  in  cash  to  the Joint Venture  primarily  for  the
modification  of its Selby, England facility, while  the  Company
transferred to the Joint Venture its technology relating  to  the
production  of  Astaxanthin  and assets  related  thereto.  These
assets will continue to be used by the Joint Venture in the  same
manner as historically used by the Company.  The Company and Tate
each have a 50% ownership interest in the Joint Venture and equal
representation  on the Board of Directors of  the  Company.   The
initial  value  of the Company's investment in the Joint  Venture
has  been  recorded at an amount equal to the book value  of  the
Company's consideration contributed at the creation of the  Joint
Venture.    As   the  cost  of  the  Company's   technology   and
intellectual  property has been previously  expensed  and  had  a
carrying amount of zero, the investment in the Joint Venture  has
been  initially  recorded with a book value  of  $316,869,  which
represents  the unamortized production costs contributed  to  the
Joint  Venture.  In addition to the Company's initial  investment
in the Joint Venture, the Company has made $1,169,112 in advances
to the Joint Venture and a $6,000 capital investment.

     On  June 15, 2005, the  Company executed a limited guarantee
for  one of the debt obligations of the Joint Venture, a copy  of
which  was  filed  with the 2005 Form 10-KSB  as  Exhibit  10.11.
Under  the terms of the limited guarantee, the Company agreed  to
guarantee  up to 4,200,000 British pounds sterling (approximately
$8,237,000  at  February  28, 2007).   The  Company  subsequently
entered into an agreement with Tate & Lyle (the other 50% partner
in  the  Joint Venture) where Tate & Lyle has agreed  to  arrange
funds   for  the  Joint  Venture,  without  recourse   to   Igene
Biotechnology, Inc., until the Joint Venture produces  a  regular
monthly cash flow, as defined, for four consecutive months.   The
Joint  Venture  has  not  met the cash flow  requirements.    The
Company  has  subsequently  received  a  full  release  from  the
guarantee.

     Production utilizes Tate's fermentation capability  together
with  the  unique technology developed by Igene. Part  of  Tate's
existing  Selby, England, citric acid facility has been  modified
to  produce  up to 1,500 tons per annum of astaxanthin.   Tate  &
Lyle's  investment of approximately $25 million included  certain
of its facility assets previously used in citric acid production.

     Based  on  estimates of worldwide production of farm  raised
salmon,  Igene  believes the market for astaxanthin  as  a  color
additive  in salmon feed exceeds $200,000,000 per year worldwide,
which  would  require   approximately   10,000  metric   tons  of
AstaXin(R) to serve 100% of the market.  A single competitor, who
produces  a  chemically  synthesized product,  presently controls
more  than  80%  of the world market for astaxanthin as a pigment
for aquaculture.

     During  2005,  the Joint Venture successfully completed  its
new production facility.  However, there can be no assurance that
the  Company and venture will be able to utilize these additional
sources of production capacity, or that, if it is able to utilize
the additional production capacity, that it will be able to do so
on  terms  favorable to Igene or that any level  of  demand  will
continue.

                               -5-


     During   2001,  Igene  began  investigating  other  possible
commercial  uses of astaxanthin, including its application  as  a
human  nutritional  supplement.   Igene  has  formulated  natural
astaxanthin  as a  super-antioxidant, AstaXin(R), for  the  North
American dietary supplement market.  Antioxidants are one of  the
largest product categories in the health and nutrition industry.

Patents and Trademarks

     It  is  Igene's policy to protect its intellectual  property
rights by a variety of means, including applying for patents  and
trademarks  in  the United States and in other countries.   Igene
also  relies  upon  trade  secrets and improvements,  un-patented
proprietary  know-how and continuing technological innovation  to
develop  and  maintain  its competitive  position.  Igene  places
restrictions in its agreements with third parties with respect to
the  use  and  disclosure  of any of its proprietary  technology.
Igene  also  has  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, trademarks on technology  and
products  with  recognized commercial value, and which  Igene  is
currently maintaining, include those for AstaXin(R), have various
remaining lives ranging from 1 to 23 years.

Competition

     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  substantial  resources.
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, Igene  has  focused
its own activities on the development of proprietary products for
use in aquaculture and nutritional supplement industries.  In the
future, however, competitors may offer products, that, by  reason
of   price,  or  efficacy,  or  more  substantial  resources  for
technology  advances,  may be superior  to  Igene's  existing  or
future products.

     A  single  large pharmaceutical company presently  dominates
the  market  for  astaxanthin pigment for  aquaculture  in  which
Igene's  product,  AstaXin(R),  is  presently marketed and  sold.
Igene believes that AstaXin(R),  which  is made from yeast,  will
compete  with  this  dominant producer, and other producers whose
products are chemically synthesized, based on its use of  natural
ingredients.   As  consumers and producers of  fish  become  more
aware of other alternatives, Igene believes that they will desire
natural ingredients, such as those in AstaXin(R).

     Several  companies  are  also known  to  be  developing  and
marketing  other  natural astaxanthin products.   Some  of  these
companies'  products are made from algae, while others  are  made
from  yeast.  Igene  believes that AstaXin(R)  will  compete with
other companies' astaxanthin  products which are made from algae,
due to Igene's  higher  production  capacity and lower production
costs, but can  provide  no  assurances in  that  regard.   Igene
also believes that AstaXin(R) will compete with other  companies'
astaxanthin products which are also made from yeast  due  to  our
proprietary  process  to  disrupt yeast  cell  walls,  which,  as
studies  have  shown,  makes AstaXin(R)  more readily absorbed by
fish.

     Igene  is  also  beginning to explore the  possible  use  of
AstaXin(R) as a  human nutritional supplement.   This  market  is
attractive  because of potentially higher profit  margins.  Other
companies   are  known  to  also  be  developing  and   marketing
astaxanthin products for the human nutritional supplement market.
Igene  cannot  yet predict how competitive it would  be  in  this
market.

Sources and Availability of Raw Materials

     Raw  materials used in the manufacture of AstaXin(R) consist
principally of agricultural commodities widely available in world
markets  from  many suppliers, which may be used interchangeably.
We  do  not anticipate material price fluctuations or changes  in
availability in these raw materials in the near future,  but  can
provide no assurances in that regard.

                                -6-

Employees

     At  December  31,  2006, Igene had 12 full  time  employees.
Three full time employees are in administration and/or marketing,
while  the remainder are engaged in research, process development
and support of manufacturing activities.  The employees are based
in  the  U.S.  Igene also utilizes various consultants on an  as-
needed or short-term basis.

     None  of Igene's employees are represented by a labor  union
and  Igene has experienced no work stoppages.  Igene believes its
relations with its employees are satisfactory.

ITEM 2.  DESCRIPTION OF PROPERTY

     Igene leases approximately 8,500 square feet of space in the
Oakland  Ridge Industrial Park located at 9110 Red  Branch  Road,
Columbia,  Maryland.   Igene occupies the  space  under  a  lease
extension expiring on January 31, 2011.  The approximate  current
annual  rental expense is $118,600.  Approximately  2,000  square
feet  of  this  space  is used for executive  and  administrative
offices  and  approximately 2,500 feet is used for  research  and
development activities. The remaining 4,000 square feet of  space
is  used  for Igene's intermediate-stage or scale-up pilot  plant
facility.

     Igene is currently renegotiating its lease which expired May
2006  for  manufacturing capacity at Fermic S.A. de C.V. (Fermic)
in  Mexico  City, Mexico as well as the lease of warehouse  space
for  product  storage  in Mexico City.  The lease  for  warehouse
space  is on an as needed basis, and Igene is under no obligation
to lease space.

     Igene  began a one year lease in December 2001, which renews
annually,  of approximately 220 square feet of office  space,  in
Chile,  to conduct marketing and technical support activities  by
its  full-time  technical  representatives.   Igene  also  leases
warehouse  space on a month-to-month basis as needed for  product
storage in Chile.

     Igene  currently  owns  or leases sufficient  equipment  and
facilities for its research operations and all of this  equipment
is  in  satisfactory condition and is adequately insured.   There
are  no  current  plans for improvement of  this  property.    If
demand for Igene's product continues to increase, Igene plans  to
lease additional warehouse space as needed in Chile.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       The Registrant's Annual Meeting was held on July 20, 2006.
At  the  Annual  Meeting,  the  five  nominees  and  then-current
directors  were  re-elected as the directors for a one year term.
The election results are as follows:

<TABLE>
<CAPTION>

                                       Votes       Against or  Votes       Non-
                                       For         Withheld    Abstained   Votes
                                       ___________ ___________ ___________ ___________
     <S>                               <C>         <C>         <C>         <C>
     (1)  Election of Directors
               Stephen F. Hiu          81,116,817     178,996        ---         ---
               Thomas L. Kempner       81,117,227     178,586        ---         ---
               Michael G. Kimelman     81,117,227     178,586        ---         ---
               Sidney R. Knafel        81,117,227     178,586        ---         ---
               Patrick F. Monahan      81,116,817     178,996        ---         ---

</TABLE>
                                 -7-

                               PART II

ITEM 5.   MARKET   FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER
          MATTERS.

Common Stock

     Commencing  on or about June 12, 1989, Igene's common  stock
began  trading on the over-the-counter market on a limited  basis
and  is  quoted on the National Quotation Bureau's OTC  "bulletin
board".   The  following  table shows, by calendar  quarter,  the
range  of representative bid prices for Igene's common stock  for
2006 and 2005.

<TABLE>
<CAPTION>

                Calendar Quarter                   High           Low
                ________________                  ______         ______
     <S>        <C>                               <C>            <C>
     2006:      First Quarter                     $.1200         $.0400
                Second Quarter                    $.1200         $.0360
                Third Quarter                     $.0600         $.0250
                Fourth Quarter                    $.0420         $.0090

     2005:      First Quarter                     $.1170         $.0650
                Second Quarter                    $.1000         $.0300
                Third Quarter                     $.0500         $.0350
                Fourth Quarter                    $.0600         $.0150

</TABLE>

     Igene  obtained the above information through  Pink  Sheets,
LLC,  a  national quotation bureau.  Such quotations  are  inter-
dealer   quotations  without  retail  mark-up,   mark-downs,   or
commissions,  and  may  not represent actual  transactions.   The
above quotations do not reflect the "asking price" quotations  of
the stock.

     The  approximate number of record holders of Igene's  common
stock  as of February 28, 2007 was 250.  As of February 28, 2007,
the  high bid and low offer prices for the common stock, as shown
on  the "over-the-counter bulletin board" were $0.030 and $0.025,
respectively.

Dividend Policy

     When  and  if  funds are legally available for such  payment
under  statutory  restrictions, Igene may pay  annual  cumulative
dividends on the preferred stock of $.64 per share on a quarterly
basis.   During 1988 Igene declared and paid a cash  dividend  of
$.16  per share on its preferred stock.  In December 1988,  Igene
suspended payment of the quarterly dividend of $.16 per share  of
preferred  stock.  No dividends have been declared or paid  since
1988.   Any  resumption of dividend payments on  preferred  stock
would  require  significant improvement in cash flow.   Preferred
stock  dividends  are  payable when and if  declared  by  Igene's
board.   Unpaid  dividends  accumulate  for  future  payment   or
addition  to the liquidation preference and redemption  price  of
the preferred stock.  As of December 31, 2006, total dividends in
arrears on Igene's preferred stock equal $130,045 (or $11.68  per
share)  on  Igene's Series A Preferred Stock and are included  in
the carrying value of the Series A Preferred Stock.

     Dividends  on common stock are currently prohibited  because
of  the preferential rights of holders of preferred stock.  Igene
has  paid  no cash dividends on its common stock in the past  and
does  not  intend to declare or pay any dividends on  its  common
stock in the foreseeable future.

8% Notes

     Pursuant to the terms of an Indenture dated as of March  31,
1998,  as  amended (the "Indenture") between the  Registrant  and
American  Stock  Transfer  &  Trust  Company,  as  Trustee   (the
"Trustee"),  the  Company issued and sold $5,000,000  of  its  8%
notes  (the "8% Notes").  Concurrently with the issuance  of  the
Securities,  the Company issued, pursuant to a Warrant  Agreement
by  and  between Registrant and American Stock Transfer  &  Trust
Company  (the  "Warrant Agent") dated as of March  31,  1998,  as
amended   (the  "Warrant  Agreement"),  50,000,000  warrants   to
purchase  shares  of the Registrants common stock  for  $.10  per
share.   The  warrant purchase price under the Warrant  Agreement
was  reduced  to $.075 per share, and the maturity  date  of  the
Securities  extended  to March 31, 2006, by  an  amendment  dated
March 18, 2003 and approved by the requisite number of holders of
the Securities.
                                 -8-

     On  March  28, 2006, the Registrant and Trustee and  Warrant
Agent  entered into a Second Amendment to Indenture,  Securities,
Warrant   Agreement   and  Warrant  Certificates   (the   "Second
Amendment") that extended the maturity date of the Securities  to
March  31, 2009, and reduced the warrant price under the  Warrant
Agreement from $.075 to $.056 per share.

      Both  the Indenture, as amended, and the Warrant Agreement,
as   amended,   have  been  filed  as  Exhibits  4.2   and   4.3,
respectively, to this Form 10-KSB.

Sales of Unregistered Securities

     During  the  course  of 2006, Fermic, Igene's  manufacturing
agent,  earned  545,569 shares of common stock  as  part  of  the
manufacturing  agreement.  Fermic earns 2,250  shares  of  common
stock  for  each kilogram pure astaxanthin produced and delivered
as  part  of  the agreement. The average price is  based  on  the
market  value of the shares at the time the product was produced.
The  545,569 shares were earned at an average price of $.056  per
share for 2006.  Through December 31, 2006, all 20,000,000 shares
have been earned.  Igene relied on Section 4(2) of the Securities
Act  of  1933, as amended, to issue the shares to Fermic  without
registration under that act.  Igene relied on the representations
and  warranties of Fermic made in the manufacturing agreement  in
claiming the aforementioned exemption.

Default Upon Senior Securities

     As  previously stated in the Registrant's third quarter Form
10-QSB,  on  November  30, 2001, Igene entered  into  Convertible
Promissory  Notes  (the "Convertible Notes")  with  each  of  the
following  note holders for the following respective amounts  (a)
NorInnova  AS  (formerly  Forskningsparken  I  Tromso   AS)   for
$106,500;  (b)  Knut Gjernes for $7,500; (c) Magne Russ  Simenson
for  $378,000; and (d) Nord Invest AS for $313,000.  Each of  the
Convertible  Notes had a maturity date of November 1,  2004.   On
November  18, 2005, each of the Convertible Note Holders provided
Igene   with  written  notice  of  default  under  each  of   the
Convertible Notes.

     On  November 29, 2006, the Convertible Note holders filed  a
complaint  against  the Company in the Circuit  Court  of  Howard
County,  Maryland seeking payment of all outstanding amounts  due
under the Convertible Notes.   On February 23, 2007, the Company,
paid  $762,638  to the Convertible Note holders as settlement  of
all  claims related to the Convertible Notes.  The complaint  was
dismissed with prejudice on March 6, 2007.

ITEM 6.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS   OR  PLAN   OF
          OPERATION

      Certain  statements in this report set  forth  management's
intentions,  plans, beliefs, expectations or predictions  of  the
future  based on current facts and analyses.  Actual results  may
differ materially from those indicated in such statements, due to
a  variety of factors including competitive pressures from  other
companies and within the biotech industry, economic conditions in
Igene's  primary  markets,  exchange rate  fluctuations,  reduced
product   demand,   increased  competition,   unavailability   of
production  capacity,  unavailability  of  financing,  government
action,  weather  conditions and other  uncertainties,  including
those  detailed in "Risk Factors" that are included from time-to-
time in Igene's Securities and Exchange Commission filings.

Results of Operations

     On  March 18, 2003, the Company entered into a Joint Venture
Agreement  with Tate & Lyle Fermentation Products Ltd.  ("Tate").
Pursuant  to  a  Joint Venture Agreement, the  Company  and  Tate
agreed  to  form  a  joint  venture  (the  "Joint  Venture")   to
manufacture, market and sell astaxanthin and derivative  products
throughout  the world for all uses other than as a  Nutraceutical
or  otherwise  for  direct human consumption.   Tate  contributed
$24,600,000  in  cash  to the Joint Venture,  while  the  Company
transferred to the Joint Venture its technology relating  to  the
production  of  Astaxanthin  and assets  related  thereto.  These
assets  continue  to  be used by the Joint Venture  in  the  same
manner as historically used by the Company.  The Company and Tate
each have a 50% ownership interest in the Joint Venture and equal
representation  on the Board of Directors of the  Joint  Venture.
The  initial  value  of  the Company's investment  in  the  Joint
Venture has been recorded at an amount equal to the book value of
the  Company's consideration contributed at the creation  of  the
Joint  Venture.   As  the  cost of the Company's  technology  and
intellectual  property had been previously  expensed  and  had  a

                                -9-

carrying amount of zero, the investment in the Joint Venture  has
been recorded with a book value of $316,869, which represents the
unamortized  production costs contributed to the  Joint  Venture.
In  addition, the Company also contributed $6,000 to the  capital
of the Joint Venture.

      Production utilizes Tate's fermentation capability together
with  the  unique technology developed by Igene.  Part  of Tate's
existing  Selby,  England, citric acid facility was  modified  to
produce  up  to  1,500  tons per annum  of  astaxanthin.   Tate's
investment of approximately $25 million includes certain  of  its
facility assets previously used in citric acid production.  Sales
and  cost  of  sales activity are now recorded  as  part  of  the
operations of the unconsolidated venture.

      As a result of the Joint Venture, the production, sales and
marketing  of  Astaxanthin now takes place in the  unconsolidated
Joint Venture.  From inception on March 18, 2003 through December
31,  2006, the Joint Venture's results of operations included the
following:    Gross  profit  from  inception   was   a   negative
$15,165,979 on sales of $27,772,879, less manufacturing  cost  of
$42,938,858.   Selling  and general and  administrative  expenses
were  $13,090,287,  and  interest expense  was  $3,588,534.   The
resulting  loss  since  inception was $31,844,800.   Igene's  50%
portion of the cumulative Joint Venture loss through December 31,
2006 was $15,922,400.

     Because the Company accounts for its investment in the Joint
Venture   under  the  equity  method  of  accounting,  it   would
ordinarily recognize a loss representing its 50% equity  interest
in  the loss of the Joint Venture.  However, losses in the  Joint
Venture  are  recognized only to the extent of the investment  in
and  advances  to the Joint Venture.  Losses in  excess  of  this
amount are suspended from recognition in the financial statements
and  are  carried forward to offset Igene's share  of  the  Joint
Venture's future income, if any.

      At  December  31,  2006, prior to the  recognition  of  its
portion  of  the  Joint Venture loss, Igene's investment  in  the
Joint Venture consisted of  $322,869 and its net advances to  the
Joint  Venture amounted to $1,169,112, for a total of $1,491,981.
For  the  year ended December 31, 2005, Igene recognized $374,527
of  its share of a $5,931,049 loss.   For the year ended December
31,  2006, Igene recognized losses to the extent of the  increase
in  advances  of  $109,147.   The remainder  of  approximately  5
million,  is  suspended  and will be carried  forward  to  offset
Igene's  share of earnings from the Joint Venture, if  any.   The
balance  in  the  advances  to and investment  in  Joint  Venture
account on the Company's financial statements is zero at December
31, 2006.

Sales and other revenue

     As  part  of  the  Joint  Venture agreement,  all  sales  of
AstaXin(R) are recognized through the Joint Venture.   Therefore,
Igene  recorded  no sales during 2006 or 2005.   Sales  had  been
limited  in  past years due to insufficient production  quantity.
The  Joint  Venture has provide a more dependable  product  flow.
However, there can be no assurance of the continued dependability
of  production, or that any increases in production or sales will
occur, or that if they occur, they will be material.

Cost of sales and gross profit

     As  with sales revenue, beginning July 2003 forward, cost of
sales  and  gross profit are recognized and will continue  to  be
recognized  through the Joint Venture.  Igene reported  no  gross
profit on sales of AstaXin(R) for 2006 or 2005.

Marketing and selling expenses

     Marketing and  selling expenses for  2006  were  $98,240,  a
decrease  of  $184,211,  or 65% from the  marketing  and  selling
expenses of $282,451 for 2005.  As a result of the Joint  Venture
with Tate, Igene is expecting an increase in salable product with
a  corresponding increase in selling expenses as the new facility
is  now  in  full  production.  As a result of Mr.  Benjaminsen's
resignation  as the Director of Sales and Marketing during  2006,
the  cost  of  the  majority  of  the  sales  activity  has  been
transferred  to  the  Joint Venture.  All marketing  and  selling
expenses  incurred  by  Igene since the inception  of  the  Joint
Venture,  with  the exception of the cost related to  the  shares
reissued  to Fermtech as part of the ProBio agreement, have  been
reimbursed  by  the Joint Venture.  All of 2006 and approximately
$240,000   of  the  2005  marketing  and  selling  expenses   was
reimbursed by the Joint Venture.

                              -10-

Research, development and pilot plant expenses

     Research, development and pilot plant expenses for 2006  and
2005  were  $847,598  and $819,782, respectively,  reflecting  an
increase of $27,816 or 3.4%.  Costs are expected to be maintained
at  this  level  to  support  increasing the  efficiency  of  the
manufacturing  process through experimentation in  the  Company's
pilot  plant, undertaken in an attempt to develop higher yielding
strains  of  yeast  and  other  improvements  in  the   Company's
AstaXin(R) technology,  as  well  as  through travel to the Selby
facility  to  aid  in further development of the plant.  Igene is
hoping  this  will  lead  to  a  reduced cost for salable product
marketed by Igene and the Joint Venture.   However, no assurances
can be made in that regard.   All  research and development costs
were funded through reimbursement from the Joint Venture.

General and administrative expenses

     General  and  administrative expenses for 2006 increased  by
$216,997,   or  27%,  from  those  in  2005,  from  $805,054   to
$1,022,051.    These  additional  costs  are  due  to   increased
reporting  costs  related to SEC and public filing  requirements,
legal  costs  related to extension of the 8% notes,  as  well  as
increased rent and salary expenses.  These costs are expected  to
drop  slightly  from  the current increased  level.   The  salary
increases included 1,000,000 shares of common stock issued to the
Joint  Venture's new Vice President of Manufacturing as  part  of
his  agreement in accepting the position.  The cost was  expensed
in  the  third quarter as payroll expense, at a cost of $.05  per
share, for a total expense of $50,000.  This is a one time  cost.
In  addition, there was $95,000 of non-reimbursed compensation in
2006.  These expenses, net of reimbursements, are expected to  be
funded by additional funding from stockholders, and by cash flows
from  operations,  to  the extent available  for  such  purposes.
However,  we  can  provide  no assurances  that  such  additional
funding  or  cash flows from operations will become available  or
that such funding, if any, will be available upon terms favorable
to  us.   Of  the  general and administrative  expenses  incurred
during  2006 approximately $715,000 were reimbursed by the  Joint
Venture.   During  2005, approximately $770,000  of  general  and
administration expenses were reimbursed by the Joint Venture.

Expenses reimbursement by Joint Venture

     As  part  of the Joint Venture agreement, costs incurred  by
Igene related to production, research and development, as well as
those  related to the marketing of AstaXin(R), and  most  of  the
general and administrative expenses, are considered costs of  the
Joint  Venture and therefore are reimbursed by the Joint Venture.
For  the  year ended December 31, 2006, costs reimbursed  by  the
Joint Venture totaled $1,660,519.  Of the reimbursement received,
approximately  $848,000  was to cover  research  and  development
costs,  $98,000 was to cover marketing and selling  expenses  and
$715,000 was to cover general and administrative costs.  For  the
year  ended  December  31, 2005, costs reimbursed  by  the  Joint
Venture   totaled  $1,830,198.   Of  the  reimbursement  received
approximately  $820,000  was to cover  research  and  development
costs,  $240,000 was to cover marketing and selling expenses  and
$770,000 was to cover general and administrative costs.

Interest expense (net of interest income)

     Interest  expense  for  2006 and  2005  was  $2,029,928  and
$1,479,941  respectively, an increase of $549,987 or  37%.   This
interest  expense  (net  of  interest  income)  was  composed  of
interest  on  Igene's long term financing from its directors  and
other  stockholders  and  interest on  Igene's  subordinated  and
convertible  debentures, as well as amortization of  discount  on
Igene's  notes and debentures of $1,276,137 for 2006 and $622,928
for  2005.   The amount recorded in 2006 was reduced by  interest
income  of $77,982 received from the Joint Venture based  on  the
outstanding balance due to Igene.

Equity in earnings of Joint Venture

     As  a result of the Joint Venture, the production, sales and
marketing  of  astaxanthin now take place in  the  unconsolidated
Joint  Venture.   For  the  years ended 2006  and  2005,  Igene's
portion  of the Joint Venture loss was $5,103,852 and $5,931,049,
respectively, a decreased loss of $827,197 or 14%.  The loss  was
a  result  of a 50% interest in the following:  Gross profit  for
2006   was   a  negative  $4,137,386  compared  with  a  negative
$6,672,593  for  2005,  a  decreased  loss  of  $2,535,207.   The
decrease   in  the  losses  was  due  mainly  to  the   increased
efficiencies associated with the development of production in the
Joint  Venture facility.  Losses are still being incurred due  to
the  reduction in sales price, due to increased competition.   As
sales  for  2006  decreased to $10,027,656 from  $10,961,223  for

                               -11-

2005, associated manufacturing costs decreased to $14,165,042 for
2006  from  $17,633,816 for 2005.  Management expects  the  Joint
Venture  to  be  able to sell product at a gross  profit  through
expected  increases  in production efficiency  derived  from  the
continued  development  of the Joint Venture  with  Tate  &  Lyle
offsetting  pricing competition, but can provide no assurances in
that regard.

     As  a condition of Igene's acceptance of the Selby facility,
Tate  and  Lyle  has  assumed a portion of the  Selby  facility's
production  costs.  These cost have been reduced from  the  Joint
Venture's cost of manufacturing in 2005 of $1,600,000.

     The  Company attributes the negative gross profit to pricing
pressure in the market.  Demand is expected to increase both  due
to  seasonal  increases in customer usage and  increases  in  our
market   share.    The  Company  believes  potential   production
efficiencies could alleviate these pricing pressures as the Joint
Venture plant continues to develop.

     Selling,  general and administrative expenses for the  years
ended  2006 and 2005 were $3,874,710 and $3,947,577, respectively
a  decrease of $72,867.  These expenses are expected to remain at
current levels.  Interest expense increased to $2,195,607 in 2006
from  $1,241,927  in  2005 as the Joint Venture  incurs  debt  to
finance its operation. The resulting losses were $10,207,703  and
$11,862,097 for the years ended 2006 and 2005, respectively.  For
2006,  Igene's 50% equity interest in the Joint Venture loss  was
$5,103,852.   Igene's 50% equity interest in  the  Joint  Venture
loss was $5,931,049 for 2005.

     Because the Company accounts for its investment in the Joint
Venture   under  the  equity  method  of  accounting,  it   would
ordinarily recognize a loss representing its 50% equity  interest
in  the loss of the Joint Venture.  However, losses in the  Joint
Venture  are  recognized only to the extent of the investment  in
and  advances  to the Joint Venture.  Losses in  excess  of  this
amount are suspended from recognition in the financial statements
and  carried  forward  to  offset  Igene's  share  of  the  Joint
Venture's future income, if any.  From the inception of the Joint
Venture   through  December  31,  2006,  $14,430,419   has   been
suspended.

      On  March  29, 2007 the Company was informed by  their  50%
partner in the Joint Venture, Tate and Lyle, that they determined
to  write  down  their  portion of the investment  in  the  Joint
Venture.   There has been no impairment charge reflected  by  the
Joint  Venture as of December 31, 2006. During the first  quarter
of  2007,  the  Joint  Venture will make  its  annual  impairment
assessment and any necessary write-downs will be recorded at that
time.

Loss on Disposal

     During 2005, Igene sold equipment and wrote off a receivable
from  the prior sale of equipment it had determined would not  be
of  use  in  the Joint Venture facility and recorded  a  loss  on
disposal of $106,150.  This is a one time occurrence.

Net loss and basic and diluted net loss per common share

     As  a  result of the foregoing results of operations,  Igene
reported  net  losses of $2,431,910 and $2,037,707 for  2006  and
2005, respectively, an increased loss of $394,203 or 19%, a  loss
of $.02 per basic and diluted common share in both 2006 and 2005.
The weighted average number of shares of common stock outstanding
was  108,387,454 and 103,384,377 for 2006 and 2005, respectively,
an  increase  of  5,003,077 shares.  The increase in  outstanding
shares resulted from primarily the weighted average adjustment of
the  issuance of 545,569 shares to Igene's manufacturer under the
manufacturing  agreement  with  Fermic,  and  the   issuance   of
1,000,000 shares of common stock to the Joint Venture's new  Vice
President of Manufacturing as part of his employment agreement in
accepting the position, as well as the weighted average effect of
the  2,453,208 shares issued at the end of 2005.  As of  December
31,   2006   and   2005,  potentially  dilutive  shares   totaled
374,414,599 and 380,841,782, respectively.

Financial Position

      During  2006 and 2005, the following also affected  Igene's
financial position:

  o   During  2006,  decreases in accounts receivable and prepaid
      expenses   and   other  assets   of  $14,619  and  $27,419,
      respectively, and increases in accounts payable and accrued
      expenses of $899,534 were sources of cash.

                                 -12-

  o   During  2006,  $109,147  was  used in advances to the Joint
      Venture, as compared with $374,527 used in 2005.

  o   During  2005,  decreases in accounts receivable of $65,009,
      and  increases in accounts payable and accrued expenses  of
      $774,386 were sources of cash.

     Since December 1988, as part of an overall effort to contain
costs  and  conserve working capital, Igene suspended payment  of
the quarterly dividend on its preferred stock.  Resumption of the
dividend  will  require significant improvements  in  cash  flow.
Unpaid  dividends cumulate for future payment or addition to  the
liquidation  preference  or redemption  value  of  the  preferred
stock.   As  of December 31, 2006, total dividends in arrears  on
Igene's  Series A preferred stock equal $130,045 (or  $11.68  per
share)  and  are  included  in the carrying  value  of  the  such
preferred stock.

Liquidity and Capital Resources

     Historically,  Igene  has been funded  primarily  by  equity
contributions  and loans from stockholders. As  of  December  31,
2006, Igene had a negative working capital of $926,115, and  cash
and cash equivalents of $21,786.

     Cash  provided by operating activities in 2006 was  $100  as
compared to $290,024 in 2005.

     Cash  used  by investing activities in 2006 was $109,147  as
compared to $374,527 used by investing activities in 2005.

     During  2005, no cash was provided by financing  activities.
During  2006  cash provided by financing activities was  $11,088.
It was comprised primarily of exercise of employee stock options.

     Over  the  next twelve months, Igene believes it  will  need
additional  working  capital.  This funding  is  expected  to  be
received from sales of AstaXin(R), resulting in income  from  the
Joint Venture.  However, there can be no assurance that projected
profits, if any, from sales, or additional funding from the Joint
Venture  will  be  sufficient for Igene  to  fund  its  continued
operations.

     Igene  does  not  believe that inflation had  a  significant
impact on its operations during 2005 and 2006.


Subsequent Event

     On  October  31,  2007,  Igene   Biotechnology,  Inc.   (the
"Company") and Tate &  Lyle  Fermentation  Products  Ltd. ("T&L")
entered into a Separation Agreement (the "Agreement") pursuant to
which  the  Joint  Venture  Agreement   dated  March 19, 2003, as
amended,   between   the   parties   (the  "Joint  Venture")  was
terminated. As part of the Agreement, the Company sold to T&L its
50% interest in the joint venture and  the  joint venture sold to
the  Company its intellectual  property,  inventory  and  certain
assets  and  lab  equipment  utilized  by the Joint Venture.  The
purchase price paid by T&L to the Company  for its  50%  interest
was  50%  of  the  Joint  Venture's  net  working  capital.   The
purchase  price  paid  by  the  Company for the inventory was  an
amount equal to  50%  of the joint venture's net working capital,
the  assumption  of various liabilities  and  the current  market
price  of  the  inventory, less specified amounts.   The purchase
price  paid  by  the  Company  for  the intellectual property was
$1.00.  The purchase price paid  by  the  Company  for the assets
and lab equipment was $1,000,000. In addition, the Company agreed
to pay  to  T&L  an  amount  equal to 5%  of  the Company's gross
revenues  from  the  sale  of  astaxanthin  up  to  a  maximum of
$5,000,000.  T&L agreed for a period  of five years not to engage
in the astaxanthin business. As a result of the above transaction
Igene will now record  all  sales  activity that had subsequently
been  recorded  by  the  JV  and  will no longer be receiving any
marketing reimbursement.

Critical Accounting Policies

      The  preparation of our financial statements in  conformity
with  accounting  principles generally  accepted  in  the  United
States  requires  management to make judgments,  assumptions  and
estimates  that  affect  the amounts reported  in  our  financial
statements  and accompanying notes.  Actual results could  differ
materially  from  those  estimates.  The following  are  critical

                              -13-

accounting  policies  important to our  financial  condition  and
results  of operations presented in the financial statements  and
require  management  to  make judgments and  estimates  that  are
inherently uncertain:

      The Joint Venture's inventories are stated at the lower  of
cost  or  market.   Cost is determined using  a  weighted-average
approach,  which approximates the first-in first-out method.   If
the  cost of the inventories exceeds their expected market value,
provisions are recorded for the difference between the  cost  and
the  market  value.   Inventories consist of  currently  marketed
products.

     The Joint Venture recognizes revenue from product sales when
there is persuasive evidence that an arrangement exists, delivery
has   occurred,   the  price  is  fixed  and  determinable,   and
collectibility is reasonably assured.  Allowances are established
for   estimated  uncollectible  amounts,  product   returns   and
discounts.

     The  Joint Venture has entered into a lease of real property
with  an affiliate of Tate & Lyle in Selby, England upon which  a
manufacturing facility has been constructed and operated  by  the
Joint  Venture.   The Joint Venture is accounted  for  under  the
equity  method  of accounting as the Company has a 50%  ownership
interest.

     The  Company cannot recognize the loss of the Joint  Venture
beyond  the investment and advances to the Joint Venture  or  the
amount  of  debt guaranteed by Igene, if any.  This excess  loss,
and  all future losses incurred as a result of the Joint Venture,
that are in excess of the Company's investment and advances, will
be  suspended  until  the point that the  profits  of  the  Joint
Venture, if any, exceed the incurred losses.

ITEM 7.   CONSOLIDATED FINANCIAL STATEMENTS

     The  consolidated financial statements appear after Part III
of this Report and are incorporated herein by reference.

ITEM 8.   CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  AND
          FINANCIAL DISCLOSURE

     As   of  February  15,  2005,  the  Company  dismissed   its
registered public accountant, Stegman & Company ("Stegman"),  due
to  the  Registrant's increased international audit  requirements
brought  about  by  the Company's 50% participation  in  a  joint
venture with Tate & Lyle PLC ("Tate & Lyle"), which joint venture
produces AstaXin(R) for the aquaculture industry at Tate & Lyle's
Selby,  England  facility.  The decision to dismiss  Stegman  was
recommended by the Board of Directors of the Registrant during  a
meeting held on February 8, 2005.     The audit reports issued by
Stegman   on  the  consolidated  financial  statements   of   the
Registrant  as  of  and for the years ended  December  31,  2003,
December  31, 2002 and prior, did not contain an adverse  opinion
or  a  disclaimer of opinion, and were not qualified or modified,
as  to  uncertainty, audit scope or accounting principles, except
as follows:

          Stegman's  reports contain explanatory paragraphs.
          The paragraph states that the Company has suffered
          recurring  losses from operations since  inception
          and  has a working capital deficiency that  raises
          substantial doubt about its ability to continue as
          a   going   concern.  The  consolidated  financial
          statements  do  not include any  adjustments  that
          might result from the outcome of that uncertainty.

     There  have  been  no  material  disagreements  between  the
Registrant and Stegman on any matter of accounting principles  or
practices, financial statement disclosure, or auditing  scope  or
procedure,   which  disagreements,  if  not   resolved   to   the
satisfaction  of  Stegman,  would have  caused  Stegman  to  make
reference  to  the subject matter thereof in its  report  on  the
Registrant's consolidated financial statements for such periods.


                                 -14-

     A letter from Stegman addressed to the Securities & Exchange
Commission   ("SEC")  stating  that  Stegman  agrees   with   the
statements contained herein has been filed as an exhibit to  this
Form 10-KSB.

     The  Registrant had appointed Berenson LLP as its registered
public  accountants  effective  as  of  February  14,  2005.  The
selection of Berenson was approved  by the Audit Committee of the
Board  of  Directors of the Registrant on February 8, 2005.   The
Registrant  has  subsequently  appointed  J.H  Cohn  LLP  as  its
registered public accountants effective as of May 3, 2007.


ITEM 8A.  CONTROLS AND PROCEDURES

     Evaluation  of  Disclosure  Controls  and  Procedures.   Our
management  has evaluated, with the participation  of  our  Chief
Executive  Officer  and  our principal financial  and  accounting
officer,  the  effectiveness  of  our  disclosure  controls   and
procedures  (as  defined in Rule 13a-15(e) under  the  Securities
Exchange Act of 1934, as amended (the "Exchange Act")) as of  the
end  of the fiscal year covered by this Annual Report on Form 10-
KSB/A.   Based  upon the evaluation, the Chief Executive  Officer
and the principal financial and accounting officer have concluded
that  as  of  the end of such fiscal year, our current disclosure
controls  and procedures were not effective, because of  material
weaknesses  in  the  internal control  over  financial  reporting
described  below.   We  have taken, and are continuing  to  take,
steps  to address these weaknesses as described below.  With  the
exception  of  such  weaknesses,  however,  the  Chief  Executive
Officer  and  principal financial and accounting officer  believe
that  our current disclosure controls and procedures are adequate
to  ensure  that  information required to  be  disclosed  in  the
reports  we  file under the Exchange Act is recorded,  processed,
summarized and reported on a timely basis.

     Material Weaknesses and Changes in Internal Controls. During
the  review  of our financial statements for the three  and  six-
month  periods  ended  June  30, 2007,  our  current  independent
registered  public  accounting  firm  identified  as  a  material
weaknesses our procedure regarding our internal controls over the
non-routine  recording  of  warrants issued  in  connection  with
certain  of our debt obligations.  The procedure of valuation  is
one that the Company has always followed and has been reported in
the   Company's   previous   audited  and   unaudited   financial
statements.    As  defined  by  the  Public  Company   Accounting
Oversight Board Auditing Standard No. 2, a material weakness is a
deficiency or a combination of deficiencies, in internal  control
over  financial  reporting,  such  that  there  is  a  reasonable
possibility that a material misstatement of the annual or interim
financial  statements will not be prevented  or  detected.  Since
this  was  identified  as  a material  weakness  by  our  current
independent registered public accounting firm in connection  with
its review of the financial statements in the June 30, 2007, Form
10-QSB,  the  transactions subject to these issues are  correctly
accounted  for  and  disclosed by us in the financial  statements
included  in  this  Form 10-KSB/A. However, on  a  going  forward
basis, management will continue to evaluate our internal controls
over  the  non-routine recording of warrants issued in connection
with  certain  of our debt obligations in order  to  prevent  the
recurrence  of  the circumstance that resulted  in  the  material
weakness  identified  in  connection  with  the  review  of   the
financial statements in this Form 10-KSB/A.

     There have been no changes in the company's internal control
over  financial  reporting,  except for  those  described  above,
during  the  quarter ended December 31, 2006 that have materially
affected,  or  are  reasonably likely to materially  affect,  the
Company's internal control over financial reporting.


                              -15-

                            PART III


ITEM 9.   DIRECTORS,  EXECUTIVE  OFFICERS,   PROMOTERS,   CONTROL
          PERSONS, AND KEY EMPLOYEES

    Igene's directors are elected annually by the stockholders of
Igene.   The  directors, executive officers and key employees  of
Igene as of December 31, 2006 are as follows:

<TABLE>
<CAPTION>

Name                          Age    Position with Igene
__________________________   _____   ____________________________
<S>                          <C>     <C>
Michael G. Kimelman           68     Chairman of the Board of
                                     Directors, member of audit
                                     committee

Thomas L. Kempner             79     Vice Chairman of the Board
                                     of Directors, member of
                                     finance committee

Stephen F. Hiu                50     Director, President, Chief
                                     Technical Officer, and
                                     Director of Research and
                                     Development

Patrick F. Monahan            56     Director, Vice-President,
                                     Secretary, and Director
                                     of Manufacturing

Sidney R. Knafel              76     Director, member of finance
                                     committee

Edward J. Weisberger          42     Chief Financial Officer

</TABLE>

Each of our directors was elected for a one-year term at our most
recent annual meeting, held in July of 2006.  Our officers  serve
at  the  pleasure  of  the  Board of Directors  and  until  their
respective successors are elected and qualified.

MICHAEL  G.  KIMELMAN  has served as a Director  of  Igene  since
February  1991  and as Chairman of the Board of  Directors  since
March 1991.  He is a founder and member of Kimelman & Baird, LLC,
as  well  as  Chairman of the Board of Directors  of  Astaxanthin
Partners  Ltd.   He  also serves on the Board and  the  Executive
Committee of the Hambletonian Society.

THOMAS L. KEMPNER is Vice Chairman of the Board of Directors  and
has been a Director of Igene since its inception in October 1981.
He  is and has been Chairman and Chief Executive Officer of  Loeb
Partners  Corporation,  investment bankers,  New  York,  and  its
predecessors since February 1978.  He is currently a Director  of
CCC Information Services Group, Inc., Dyax Corporation, Fuel Cell
Energy,    Inc.,   Insight   Communications   Co.,   Inc.,    and
Intermagnetics  General Corp and Intersections,  Inc.   He  is  a
Director Emeritus of Northwest Airlines, Inc.

STEPHEN F. HIU was appointed Chief Technical Officer in 2002, and
has  served  as  President and Treasurer since  March  1991,  and
elected  a  Director  in August 1990.  He has  been  Director  of
Research  and Development since January 1989 and, prior  thereto,
was  Senior Scientist since December 1985, when he joined  Igene.
He  was  a  post-doctoral  Research  Associate  at  the  Virginia
Polytechnic Institute and State University, Blacksburg, Virginia,
from  January  1984 until December 1985.  Dr. Hiu holds  a  Ph.D.
degree  in microbiology from Oregon State University and  a  B.S.
degree  in biological sciences from the University of California,
Irvine.

PATRICK  F. MONAHAN has served as Vice-President since 2002,  and
as  Director  of Manufacturing and as a Director of  Igene  since
April 1991.  He has served as Secretary since September 1998.  He
has  managed  Igene's fermentation pilot plant  since  1982.   He
received  an  Associate of Arts degree in biology from  Allegheny
Community  College and a B.S. degree in biology with a  minor  in
Chemistry from Frostburg State College, Frostburg, Maryland.

                              -16-


SIDNEY  R. KNAFEL, has served as a Director of Igene since  1982,
has  also  been  Managing Partner of SRK  Management  Company,  a
private investment concern located in New York City, since  1981.
He  has also served  as Chairman of Insight Communications,  Inc.
since  1985.  He is also currently a Director of General American
Investors Company, Inc. as well as a number of private companies.

EDWARD  J.  WEISBERGER was appointed Chief Financial  Officer  of
Igene  in  December  2001.  He is a CPA with  multiple  years  of
financial experience in the public and private sectors with  both
smaller and Fortune 100 companies.


Section 16(a) Beneficial Ownership Reporting Compliance

    Igene believes that during 2006 and through March of 2007 all
of  its  officers and directors of more than 10%  of  its  common
stock,  have filed all past due reports and come into  compliance
with  Section  16(a)  reporting  requirements  with  respect   to
acquisitions and dispositions of Igene's securities.    In making
this   disclosure,   Igene   has   relied   solely   on   written
representations  of its directors, officers  and  more  than  10%
holders  and  on copies furnished to Igene of reports  that  have
been filed with the Securities and Exchange Commission.


ITEM 10.  EXECUTIVE COMPENSATION

     The  following tables show the compensation paid or  accrued
by  Igene  to  each  of  the  three officers.   During  2006,  no
Directors   were  compensated  for  their  Board   or   Committee
activities.   Other than the 1986, 1997 and 2001 Stock  Incentive
Plans  and the Simple Retirement Plan described below, Igene  has
no profit sharing or incentive compensation plans.

<TABLE>
<CAPTION>

                            Summary Compensation Table

                                                           All Other
Name and                                    Option         Compensation
Principal Position   Year    Salary($)(1)   Awards($)(2)   ($)(3)         Total($)
__________________  ______  _____________  _____________  _____________  _____________
<S>                 <C>     <C>            <C>            <C>            <C>
Stephen Hiu          2006    $  142,580     $        0     $    6,575     $  149,155
President

Patrick Monahan      2006    $  129,965     $        0     $    5,838     $  135,803
Vice-President,
Secretary and
Director of
Manufacturing

Edward Weisberger    2006    $  125,817     $        0     $    5,750     $  131,567
Chief Financial
Officer

</TABLE>

(1)  Salaries   of   the  named  executive  officers  listed   on
     compensation received.

(2)  Represents  the  disclosed  fair value of options determined
     SFAS 123 for all options granted using assumptions set forth
     in the footnotes to the consolidated financial statements.

(3)  Includes  annual  taxable  compensation for health insurance
     premium and employer match of 401K.

                                -17-

Outstanding Equity Awards at Fiscal Year-End

     Outstanding  Equity Award.  The following table  sets  forth
information concerning the outstanding equity awards of  each  of
the named executive officers as of December 31, 2006:

<TABLE>
<CAPTION>
                     Number of
                     Securities
                     Underlying
                     Unexercised
                     Options (#)    Option Exercise   Option Expiration
Name                 Exercisable    Price ($/Sh)      Date
__________________   ____________   _______________   _________________
<S>                  <C>            <C>               <C>
Stephen Hiu           2,000,000     $         .10        04/16/2008
President             2,000,000               .05        01/19/2010
                         45,000               .065       01/02/2011
                      4,800,000               .025       08/13/2012
                      5,000,000               .10        06/25/2014

Patrick Monahan       1,050,000               .10        04/16/2008
Vice-President        1,317,500               .05        01/19/2010
Secretary             2,900,000               .025       08/13/2012
Director of Mfg.      2,000,000               .10        06/25/2014

Edward Weisberger     2,500,000               .05        12/01/2011
Chief Financial         500,000               .10        06/25/2014
Officer               1,500,000               .027       12/09/2015

</TABLE>

Retirement Plans

     Effective February 1, 1997 Igene adopted a Simple Retirement
Plan under Internal Revenue Code Section 408(p).  The plan was  a
defined  contribution plan, which covered  all  of  Igene's  U.S.
employees  who  receive at least $5,000 of compensation  for  the
preceding    year.    The   plan   permits   elective    employee
contributions.  Effective January 1, 2003, Igene made an elective
contribution  of 3% of each eligible employee's compensation  for
each  year.   Igene's  contributions to the plan  for  2003  were
$17,631.

      Effective  February 1, 2004 Igene discontinued use  of  the
Simple Retirement Plan and began use of a 401K savings/retirement
plan,  or  401(k)  Plan.  The 401(k) Plan  permits  our  eligible
employees  to  defer annual compensation, subject to  limitations
imposed  by the Internal Revenue Code.  All employees  that  have
been  employed for three months are eligible for the  plan.   The
plan  permits  elective contributions by the  Company's  eligible
employees  based  under  the Internal  Revenue  Code,  which  are
immediately vested and non-forfeitable upon contribution  to  the
401(k)  Plan.  Effective January 1, 2004, Igene made an  elective
contribution,  subject to limitations, of  4%  of  each  eligible
employee's compensation for each year.  Igene's contributions  to
the   plan   for   2006  and  2005  were  $25,996  and   $23,052,
respectively,  which  is  expensed  in  the  2006  statement   of
operations.

Life Insurance Plans

     Igene provides life insurance benefits to its employees that
in  the  event of an employee's death would pay to the employee's
beneficiary 2 times the employees annual salary up to $150,000.

Severance Benefit

      In cases where a termination of employment is initiated  by
the  Company  for  economic  reasons (e.g.  reduction  in  force,
reorganization  or position elimination) the terminated  employee
will  receive one week of severance at base pay for each year  of
service, up to a maximum of 12 weeks.

                             -18-

Stock Option Plans

     Igene   currently  maintains  two  stock  incentive   plans.
Igene's  2001 Stock Incentive Plan (the "2001 Plan"),  which  was
approved  by  Igene's stockholders on June 12,  2001,  authorized
55,000,000  options and shares of restricted stock  for  issuance
under  that  plan.   Igene's 1997 Stock Option  Plan  (the  "1997
Plan"),  which was approved by Igene's stockholders  on  November
17,  1997, authorized 20,000,000 options for issuance under  that
plan.  A  committee  of  the Board of Directors  administers  the
Plans.

     The  purpose  of  the  Plans  is to  further  the  long-term
stability  and  financial  success of  Igene  by  attracting  and
retaining  employees and consultants through the  use  of  stock-
based  incentives,  and to provide non-employee  members  of  the
Board  of  Directors with an additional incentive to promote  the
success of Igene.  It is believed that ownership of Igene  common
stock  will stimulate the efforts of those employees, consultants
and  non-employee  directors upon whose  judgment  and  interests
Igene is and will be largely dependent for the successful conduct
of  its  business.   It  is also believed that  incentive  awards
granted  to  employees  under these plans will  strengthen  their
desire  to  remain  employed  with Igene  and  will  further  the
identification of employees' interests with those of Igene.

     Options  are exercisable at such rates and times as  may  be
fixed by the committee.  Options also become exercisable in  full
upon  (i)  the holder's retirement on or after his 65th birthday,
(ii)  the disability or death of the holder, or (iii) under other
circumstances as determined by the Committee.  Options  generally
terminate  on  the  tenth  business day  following  cessation  of
service  as  an  employee,  director, consultant  or  independent
contractor.

     Options  may be exercised by payment in full of  the  option
price in cash or check, or by delivery of previously-owned shares
of  common stock having a total fair market value on the date  of
exercise  equal to the option price, or by such other methods  as
permitted by the Committee.

     The  Plans contain anti-dilution provisions in the event  of
certain corporate transactions.

     The  Board  of Directors may at any time withdraw  from,  or
amend,   the  Plans  and  any  options  not  heretofore  granted.
Stockholder  approval is required to (i) increase the  number  of
shares  issuable  under the Plans, (ii) increase  the  number  of
options  which  may be granted to any individual during  a  year,
(iii)  or  change  the class of persons to whom  options  may  be
granted.   No options shall be granted under the 2001 Plan  after
April  30, 2011 and under the 1997 Plan after September 19, 2007.
Igene  previously  maintained its 1986  Stock  Option  Plan,  but
additional options may no longer be granted under that plan.

     Options  to  acquire 47,873,250 shares of common stock  have
been  granted under the three Stock Option Plans and   44,845,000
options are still outstanding under the Plans as of December  31,
2006.   1,500,000  were granted during 2005,  none  were  granted
during 2006.

                               -19-

ITEM 11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND
          MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     The  following table sets forth information as of March  14,
2007  with  respect to beneficial ownership of shares of  Igene's
outstanding  common stock and preferred stock by (i) each  person
known  to Igene to own or beneficially own more than five percent
of  its common stock or preferred stock, (ii) each Director,  and
(iii)  each  officer  named  in the  Summary  Compensation  Table
provided  in  Part II Item 10 above, and (iv) all  Directors  and
executive officers  as a group.

<TABLE>
<CAPTION>

                                            Common Stock                       Preferred Stock
                                  ________________________________     ________________________________
                                   Number of                            Number of
     Name and Address              Shares           Percent *           Shares           Percent
_____________________________     _______________  _______________     _______________  _______________
<S>                               <C>              <C>                 <C>              <C>
Directors and officers
______________________

Joseph C. Abeles                    17,954,407<FN1>       14.34                 ---              ---
  220 E. 42nd Street
  New York, NY  10017

Stephen F. Hiu                      14,993,633<FN2>       12.17                 ---              ---
  9110 Red Branch Road
  Columbia, MD  21045

Thomas L. Kempner                  145,085,648<FN3>       61.39                 ---              ---
  61 Broadway
  New York, NY  10006

Michael G. Kimelman                 33,947,723<FN4>       23.90                 ---              ---
  100 Park Avenue
  New York, NY  10017

Sidney R. Knafel                   142,977,554<FN5>       61.07                 ---              ---
  810 Seventh Avenue
  New York, NY  10019

Patrick F. Monahan                   8,315,033<FN6>        7.13                 ---              ---
  9110 Red Branch Road
  Columbia, MD  21045

Edward J. Weisberger                 4,570,000<FN7>        4.01                 ---              ---
  9110 Red Branch Road
  Columbia, MD  21045

All Directors and Officers         369,343,999<FN8>       84.86                 ---              ---
  as a Group (8 persons)

Others
______

Fraydun Manocherian                  7,905,135<FN9>        7.20                 ---              ---
  3 New York Plaza
  New York, NY  10004

Fermic                              20,000,000            18.29                 ---              ---

<FN>
*  Under the rules of the Securities and Exchange Commission, the
calculation of the percentage assumes for each person  that  only
that  person's rights, warrants, options or convertible notes  or
preferred  stock are exercised or converted, and  that  no  other
person   exercises  or  converts  outstanding  rights,  warrants,
options or convertible notes or preferred stock.

<FN1>   Includes the following: 2,128,294 shares held directly or
  indirectly  by Mr. Abeles, 6,723,701 shares issuable  upon  the
  conversion of $311,663 of long-term notes issued by Igene,  and
  9,102,412 shares issuable upon exercise of warrants held by Mr.
  Abeles.

                              -20-

<FN2>   Includes the following: 1,148,633 shares held directly or
  indirectly by Dr.  Hiu and  13,845,000 shares issuable pursuant
  to options held by Dr. Hiu that are currently exercisable.

<FN3>   Includes 386,972 shares and 536,920 shares issuable  upon
  exercise  of  warrants held by Mr. Kempner that  are  currently
  exercisable.   Also  includes 8,843,771 shares held directly by
  Mr.  Kempner,  19,479,919  shares  issuable  upon conversion of
  notes  issued  by Igene and held by Mr. Kempner, and 41,680,293
  shares issuable upon exercise of warrants held by a trust under
  which  Mr.  Kempner  is  one  of  two  trustees  and  the  sole
  beneficiary,  which  are  currently exercisable.  Also includes
  8,621,247  shares  held  directly by  Mr.  Kempner,  19,479,920
  shares  issuable  upon  the conversion of notes issued by Igene
  and  held  by  Mr.  Kempner and 41,561,125 shares issuable upon
  exercise  of  warrants  held a trust under which Mr. Kempner is
  one  of  two  trustees  and one of his brothers  is   the  sole
  beneficiary,  which  are  currently exercisable.  Also includes
  2,040,296   shares  issuable  upon the conversion of $79,200 of
  notes  issued  by  Igene and held by  Mr. Kempner and 2,079,411
  shares issuable upon exercise of warrants  held by trusts under
  which Mr. Kempner is one of  two  trustees  and  is a one-third
  beneficiary  that  are  currently  exercisable.   Also includes
  243,360  shares  and  131,414  shares issuable upon exercise of
  warrants held by trusts under which Mr. Kempner is executer and
  is a one-third beneficiary that are currently exercisable.

<FN4>   Includes 1,264,360 shares held directly or indirectly  by
  Mr.  Kimelman,  14,000,000  shares  issuable  upon  exercise of
  options currently exercisable,  1,430,341  shares issuable upon
  the  conversion of $63,070 of notes issued by Igene and held by
  Mr. Kimelman,  and  17,253,022  shares issuable  upon  exercise
  of warrants held directly or indirectly by Mr. Kimelman.

<FN5>   Includes  18,190,551  shares,  39,819,509 shares issuable
  upon  the  conversion  of notes issued by Igene and held by Mr.
  Knafel  and  84,967,495  shares  issuable upon the exercise  of
  warrants  owned  or  beneficially  owned by Mr. Knafel that are
  currently exercisable.

<FN6>   Includes 1,047,533 shares held directly or indirectly  by
  Mr. Monahan  and  7,267,500 shares issuable upon  the  exercise
  of options held by Mr. Monahan that are currently exercisable.

<FN7>   Includes  70,000  shares  held directly by Mr. Weisberger
  and 4,500,000 shares issuable upon exercise of options that are
  currently exercisable.

<FN8>   Includes 43,444,721 shares of  common  stock,  39,612,500
  shares  issuable  upon exercise of options that  are  currently
  exercisable, 88,973,687 shares issuable upon the conversion  of
  notes issued by Igene and 197,313,091 shares issuable upon  the
  exercise of warrants that are currently exercisable.

<FN9>   Includes  7,375,935 shares of common stock owned directly
  or indirectly  by  Mr. Manocherian  and 529,200 shares issuable
  upon the  exercise of warrants owned directly or indirectly  by
  Mr. Manocherian that are currently exercisable.

</FN>
</TABLE>
                                 -21-
<TABLE>
<CAPTION>

                    Equity Compensation Plan Information as of December 31, 2006

                                                                              Number of securities
                                                                              remaining available for
                                                                              future issuance under
                           Number of securities to     Weighted-average       equity compensation
                           be issued upon exercise     exercise price of      plans (excluding
                           of outstanding options,     outstanding options,   securities refflected in
  Plan category            warrants and rights         warrants and rights    column)
  ______________________   _________________________   ____________________   _________________________
  <S>                      <C>                         <C>                    <C>
  Equity compensation      44.8 million <FN1>          $.059 <FN2>            27.387 million <FN3>
  plans approved by
  security holders


<FN>

<FN1>   Total shares issued under employee stock option plan.
<FN2>   Exercise  price of outstanding options under compensation
        plans.
<FN3>   All shares remaining issuable under employee option plan.

</FN>
</TABLE>

                                -22-


ITEM 13.  EXHIBITS,  FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS
          ON FORM 8-K

(a)(1)    The following financial statements relating to 2006 and
          2005 are filed as a part of this Report:

          Reports  of  Independent  Registered  Public Accounting
          Firm.

          Consolidated Balance Sheet as of December 31, 2006.

          Consolidated  Statements  of  Operations for  the years
          ended December 31, 2006 and 2005.

          Consolidated Statements of Stockholders' Deficiency for
          the years ended December 31, 2006 and 2005.

          Consolidated Statements of  Cash  Flows for  the  years
          ended December 31, 2006 and 2005.

          Notes to Consolidated Financial Statements.

(a)(2)    Exhibits  filed  herewith or incorporated  by reference
          herein are set forth in the following table prepared in
          accordance with Item 601 of Regulations S-K.

     3.1  Articles of Incorporation of the Registrant as  amended
          to  date,  constituting  Exhibit  3.1  to  Registration
          Statement No.  333-41581  on  Form  SB-1   are   hereby
          incorporated herein by reference.

     3.2  By-Laws,  constituting Exhibit 3.2 to the  Registrant's
          Registration  Statement  No.  33-5441  on Form S-1, are
          hereby incorporated herein by reference.

     4.1  Form   of   Variable   Rate  Convertible   Subordinated
          Debenture Due 2002 (Class A), constituting Exhibit  4.4
          to Registration Statement No. 33-5441 on  Form S-1,  is
          hereby incorporated herein by reference.

     4.2  Indenture dated as of March 31, 1998 by and between the
          Registrant  and American  Stock  Transfer   and   Trust
          Company, as Trustee, as amended by that First Amendment
          to Indenture, Securities, Warrant Agreement and Warrant
          Certificates dated as of March  18,  2003,  as  further
          amended  by  that   Second  Amendment   to   Indenture,
          Securities,  Warrant  Agent  and  Warrant  Certificates
          dated as of March 28, 2006.

     4.3  Warrant Agreement dated as of March  31,  1998  by  and
          between the Registrant and American Stock Transfer  and
          Trust Company, as  Warrant Agent, as  amended  by  that
          First  Amendment  to  Indenture,  Securities,   Warrant
          Agreement  and  Warrant  Certificates dated as of March
          18, 2003, as further  amended by that Second  Amendment
          to Indenture, Securities, Warrant  Agent  and   Warrant
          Certificates dated as of March 28, 2006.

    10.1  Form  of  Conversion  and  Exchange  Agreement used  in
          May 1988 in connection with the conversion and exchange
          by  certain  holders  of  shares of preferred stock for
          common stock  and Warrants, constituting Exhibit  10.19
          to Registration Statement  No.  33-5441  on  Form  S-1,
          is hereby incorporated herein by reference.

    10.2  Exchange Agreement made as of July 1, 1988 between  the
          Registrant  and  now Dow Chemical Company, Inc. (f.k.a.
          Essex Industrial Chemicals, Inc.), with respect to  the
          exchange of 187,500 shares  of preferred  stock  for  a
          Debenture,    constituting     Exhibit     10.21     to
          Registration  Statement  No.  33-5441  on  Form S-1, is
          hereby incorporated herein by reference.

    10.3  Preferred Stockholders' Waiver Agreement  dated  May 5,
          1988,  incorporated  herein   by   reference   to   the
          identically numbered exhibit in Form  S-1  Registration
          Statement No. 33-23266.

    10.4  Form of Agreement  between the Registrant  and  Certain
          Investors in Preferred Stock dated September  30, 1987,
          incorporated herein by  reference  to  the  identically
          numbered  exhibit in  Amendment  No.  1  to  Form   S-1
          Registration Statement No. 33-23266.

                                  -23-

    10.5  Letter  Agreement executed May 11, 1995 between  Archer
          Daniels  Midland,  Inc.  and IGENE Biotechnology, Inc.,
          along  with  November  11, 1995 Amendment, constituting
          Exhibit 10.11 to the Registrant's Report on Form 10-KSB
          for  the  year  ended December 31, 1995 is incorporated
          herein by reference.

    10.6  Agreement  of Lease effected December 15, 1995  between
          Columbia   Warehouse  Limited  Partnership  and   IGENE
          Biotechnology,  Inc.  constituting Exhibit 10.13 to the
          registrant's  report  on Form 10-KSB for the year ended
          December 31, 1995 is incorporated herein by reference.

    10.7  Toll  manufacturing  agreement  effective  as of May 20,
          2000  between  Igene Biotechnology, Inc. and Fermic S.A.
          de  C.V.  constituting  exhibit  10.7  to Igene's annual
          report  on  Form  10-KSB  filed  on  April  2,  2001, is
          incorporated  herein  by  reference.   Portions  of this
          exhibit  have  been  omitted  pursuant  to a request for
          confidential treatment.

    10.8  First amendment to lease made September 13, 2000 between
          Igene  Biotechnology,  Inc.  and  Red Branch Center, LLC
          constituting  Exhibit  10.8  to Igene's annual report on
          Form  10-KSB  filed  on  April 2, 2001,  is incorporated
          herein by reference.

    10.9  Consulting Agreement between Igene and Martin L. Gerson,
          Exhibit  10.9  to  Igene's  annual report on Form 10-KSB
          filed  on  March  28,  2003,  is  incorporated herein by
          reference.

    10.10 Stock  Purchase  and Severance Agreement dated as of the
          4th day of February 2003 among Igene, Fermtech AS, Stein
          Ulve and  Per Benjaminsen, constituting Exhibit 10.10 to
          Igene's  annual report on Form 10-KSB filed on March 28,
          2003, is incorporated herein by reference.

    10.11 Limited  Guarantee  dated  as  of  June 15, 2005 for the
          benefit of The Royal Bank of Scotland in connection with
          4,200,000 British pounds credit facility for Astaxanthin
          Manufacturing Limited.

    21.  Subsidiaries

         Igene Chile Comercial, Ltda.

         Igene Norway AS (divested pursuant to Stock Purchase  and
         Severance  Agreement  dated  February  4,  2003  attached
         hereto as Exhibit 10.10)

    23.a.Consent of J.H. Cohn LLP

    31.1 Rule  13a-14(a)   or  15d-14(a)   Certification   of  the
         Company's principal executive officer filed herewith.

    31.2 Rule  13a-14(a)   or  15d-14(a)   Certification   of  the
         Company's principal financial officer filed herewith.

    32.1 Rule  13a-14(b)   or  15d-14(b)   Certification   of  the
         Company's  principal  executive officer  pursuant  to  18
         U.S.C.  Section  1350 as adopted pursuant to Rule  906 of
         the Sarbanes-Oxley Act of 2002 filed herewith.

    32.2 Rule  13a-14(b)  or   15d-14(b)   Certification   of  the
         Company's  principal  financial officer  pursuant  to  18
         U.S.C.  Section 1350 as adopted pursuant to Rule  906  of
         the Sarbanes-Oxley Act of 2002 filed herewith.

                              -24-

ITEM 14. PRINCIPAL ACCOUNTANTS FEES AND SERVICES

                  REGISTERED PUBLIC ACCOUNTANTS

     The  accounting  firm  of  J.H. Cohn  LLP,  Certified  Public
Accountants, has been engaged to audit the financial statements of
the Company for the next fiscal  year.  J.H.  Cohn LLP  served  as
the  Company's registered public accountants to audit the restated
financial  statements  in  2006  and 2005. Berenson LLP originally
served as the auditor in 2006 and 2005. In May 2007, J.H. Cohn LLP
acquired Berenson LLP in a transaction that was  structured  as an
asset sale. J.H. Cohn LLP has advised the Company that neither the
accounting  firm  nor  any  of  its  members of associates has any
direct  financial interest  in  or any connection with the Company
other  than  as independent public auditors.


                     AUDIT FEES AND SERVICES

     The following table shows  the  fees  paid  or accrued by the
Company for the audit and other services provided  by Berenson LLP
for fiscal years 2006 and 2005:

<TABLE>
<CAPTION>

                             FY 2006             FY 2005
                            _________           _________
       <S>                  <C>                 <C>
       Audit Fees           $ 100,844           $  90,000
       Tax Fees                 5,000               5,000
       All Other Fees               0                   0
                            _________           _________

          TOTAL             $ 105,844           $  95,000
</TABLE>

      Audit  services of Berenson LLP for fiscal years  2006  and
2005  consisted  of  the  audit  of  the  consolidated  financial
statements  of  the  Company and quarterly reviews  of  financial
statements.  "Tax Fees" include charges primarily related to  tax
return preparation and tax consulting services.  In 2003, the SEC
adopted a rule pursuant to the Federal Sarbanes-Oxley Act of 2002
that,   except  with  respect  to  certain  de  minimis  services
discussed below, requires Audit Committee pre-approval  of  audit
and  non-audit  services  provided by the  Company's  independent
auditors.   All  of the 2006 services described above  were  pre-
approved by the Audit Committee pursuant to this SEC rule to  the
extent that rule was applicable during fiscal year 2006.

     The Audit Committee's policy is to pre-approve all audit and
permitted  non-audit services, except that de  minimis  non-audit
services,  as  defined in Section 10A(i)(1) of the Exchange  Act,
may  be  approved  prior  to the completion  of  the  independent
auditor's  audit.  The Audit Committee has reviewed summaries  of
the  services  provided and the related fees and  has  determined
that  the  provision  of non-audit services  is  compatible  with
maintaining the independence of Berenson LLP.

                              -25-

     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Audit Committee and Stockholders
IGENE Biotechnology, Inc.

We  have  audited the accompanying consolidated balance sheet  of
IGENE Biotechnology, Inc. and subsidiary as of December 31, 2006,
and   the   related   consolidated  statements   of   operations,
stockholders'  deficiency  and cash flows  for  the  years  ended
December   31,  2006  and  2005.   These  consolidated  financial
statements  are  the responsibility of the Company's  management.
Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We  conducted our audits in accordance with the standards of  the
Public  Company  Accounting  Oversight  Board   (United  States).
Those  standards require that we plan and perform  the  audit  to
obtain   reasonable  assurance  about  whether  the  consolidated
financial statements are free of material misstatement.  An audit
includes  examining,  on  a test basis, evidence  supporting  the
amounts and disclosures in the consolidated financial statements.
An  audit also includes assessing the accounting principles  used
and  significant  estimates  made  by  management,  as  well   as
evaluating  the  overall  financial statement  presentation.   We
believe  that  our  audits  provide a reasonable  basis  for  our
opinion.

In our opinion, the consolidated financial statements referred to
above  present  fairly, in all material respects,  the  financial
position  of  IGENE  Biotechnology, Inc.  and  subsidiary  as  of
December 31, 2006, and the results of their operations and  their
cash  flows  for the years ended December 31, 2006 and  2005,  in
conformity with accounting principles generally accepted  in  the
United States of America.

As  discussed  in Note 18, the consolidated financial  statements
have  been restated due to the revaluation of warrants issued  in
prior years.

The accompanying financial statements have been prepared assuming
that  the Company will continue as a going concern.  As discussed
in   Note  13  to  the  consolidated  financial  statements,  the
Company's  recurring  losses,  and limited  capitalization  raise
substantial  doubt  about its ability  to  continue  as  a  going
concern.    Management's  plans  regarding  those   matters   are
described  in Notes 13 and 17.   The financial statements do  not
include any adjustments that  might result from  the  outcome  of
this uncertainty.


                                   /S/ J. H. COHN LLP
                                   ___________________________
                                       J. H. COHN LLP
New York, New York
December 11, 2007

                                -26-
<TABLE>
<CAPTION>

                            IGENE Biotechnology, Inc. and Subsidiary
                             Consolidated Balance Sheet (Restated)
                                       December 31, 2006

<S>                                                                   <C>
ASSETS
______
CURRENT ASSETS
  Cash and cash equivalents                                            $      21,786
  Prepaid expenses and other current assets                                   14,093
                                                                       ______________
     TOTAL CURRENT ASSETS                                                     35,879

  Property and equipment, net                                                 33,571
  Investment in and advances to unconsolidated joint venture                     ---
  Other assets                                                                 5,125
                                                                       ______________
     TOTAL ASSETS                                                      $      74,575
                                                                       ==============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
________________________________________
CURRENT LIABILITIES
  Accounts payable and accrued expenses                                $     210,424
  Convertible debenture                                                      705,000
  Accrued interest                                                            46,570
                                                                       ______________
     TOTAL CURRENT LIABILITIES                                               961,994

LONG-TERM DEBT
  Notes payable (Net of unamortized discount)                              3,615,889
  Convertible Debentures (Net of unamortized discount)                     2,103,444
  Accrued interest                                                         5,655,830

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred stock, 8% cumulative,
  convertible, voting, series A, $.01 par value per share.
  Stated value $19.68 per share.   Authorized 1,312,500 shares;
  issued and outstanding 11,134 shares. Redemption amount $219,117.          219,117
                                                                       ______________
     TOTAL LIABILITIES                                                    12,556,274
                                                                       ______________

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock -- $.01 par value per share.  Authorized
    750,000,000 shares; issued and outstanding  109,337,072 shares         1,093,371
  Additional paid-in capital                                              33,265,687
  Accumulated deficit                                                    (46,840,757)
                                                                       ______________
     TOTAL STOCKHOLDERS' DEFICIENCY                                      (12,481,699)
                                                                       ______________
     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                    $      74,575
                                                                       ==============

</TABLE>

The accompanying notes are an integral part of the consolidated
financial statements.

                              -27-
<TABLE>
<CAPTION>
                                IGENE Biotechnology, Inc. and Subsidiary
                                 Consolidated Statements of Operations

                                                                     Years ended December 31,
                                                                            2006         2005
                                                                     ____________ ____________
                                                                      (Restated)   (Restated)
<S>                                                                  <C>          <C>
EQUITY IN LOSS OF JOINT VENTURE                                      $  (109,147) $  (374,527)
                                                                     ____________ ____________
OPERATING EXPENSES
__________________
     Marketing and selling                                                98,240      282,451
     Research, development and pilot plant                               847,598      819,782
     General and administrative                                        1,022,051      805,054
     Less expenses reimbursed by Joint Venture                        (1,660,519)  (1,830,198)
                                                                     ____________ ____________

     TOTAL OPERATING EXPENSES                                            307,370       77,089
                                                                     ____________ ____________
     OPERATING LOSS                                                     (416,517)    (451,616)

LOSS ON DISPOSAL                                                             ---     (106,150)

OTHER INCOME                                                              14,535          ---

INTEREST EXPENSE (net of interest income of $77,982 for 2006,
$0 for 2005)(including amortization of debt discount of
$1,276,137 for 2006, $622,928 for 2005)                               (2,029,928)  (1,479,941)
                                                                     ____________ ____________
     NET LOSS                                                        $(2,431,910) $(2,037,707)
                                                                     ============ ============

     BASIC AND DILUTED NET LOSS PER COMMON SHARE                     $     (0.02) $     (0.02)
                                                                     ============ ============

</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.

                                -28-
<TABLE>
<CAPTION>

                                       IGENE Biotechnology, Inc. and Subsidiary
                            Consolidated Statements of Stockholders' Deficiency (Restated)
                                        Years ended December 31, 2006 and 2005


                                                                       Additional                      Total
                                              Common Stock              Paid-in       Accumulated  Stockholders'
                                         # Shares       Amount          Capital         Deficit     Deficiency
                                       _____________ _____________   _____________  _____________  _____________
<S>                                    <C>           <C>             <C>            <C>            <C>
Balance at January 1, 2005
  (As Restated, see note 18)            101,732,453  $  1,017,325    $ 29,662,063   $(42,371,140)  $(11,691,752)

Re-issuance of shares held in escrow
  related to sale of ProBio               1,000,000        10,000          32,000            ---         42,000

Shares issued for manufacturing
  agreement                               4,724,416        47,244         274,702            ---        321,946

Net loss for 2005                               ---           ---             ---     (2,037,707)    (2,037,707)
                                       _____________ _____________   _____________  _____________  _____________

Balance at December 31, 2005            107,456,869     1,074,569      29,968,765    (44,408,847)   (13,365,513)

Conversion of redeemable
  preferred stock into common stock          14,750           148         141,452            ---        141,600

Conversion of warrants                        7,884            79             709            ---            788

Shares issued to VP of Manufacturing      1,000,000        10,000          40,000            ---         50,000

Additional paid-in capital
  as part of debt issuance                      ---           ---       3,082,676            ---      3,082,676

Shares issued for employee stock
  incentive program                         312,000         3,120           7,180            ---         10,300

Shares issued for manufacturing
  agreement                                 545,569         5,455          24,905            ---         30,360

Net loss for 2006                               ---           ---             ---     (2,431,910)    (2,431,910)
                                       _____________ _____________   _____________  _____________  _____________

Balance at December 31, 2006            109,337,072  $  1,093,371    $ 33,265,687   $(46,840,757)  $(12,481,699)
                                       ============= =============   =============  =============  =============

</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                  -29-
<TABLE>
<CAPTION>
                             IGENE Biotechnology, Inc. and Subsidiary
                              Consolidated Statements of Cash Flows


                                                                    Years ended December 31,
                                                                       2006           2005
                                                                  _____________  _____________
                                                                   (Restated)     (Restated)
<S>                                                               <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
____________________________________
      Net loss                                                    $ (2,431,910)  $ (2,037,707)
      Adjustments to reconcile net loss to net
      cash provided by operating activities:
         Amortization of debt discount                               1,276,137        622,928
         Depreciation                                                   16,488         18,695
         Loss on disposal of equipment                                     ---         56,150
         Loss on receivable from disposal of equipment                     ---         50,000
         Issuance of shares to Fermtech per ProBio agreement               ---         42,000
         Issuance of common stock for VP of Manufacturing               50,000            ---
         Manufacturing cost paid in shares of common stock              30,360        321,946
         Increase in preferred stock for cumulative dividend
           classified as interest                                        8,306         11,846
         Equity in loss of unconsolidated joint venture                109,147        374,527
         Decrease (increase) in:
             Accounts receivable                                        14,619         65,009
             Prepaid expenses and other assets                          27,419         (9,756)
         Increase (decrease) in:
             Accounts payable and other accrued expenses               899,534        774,386
                                                                  _____________  _____________
             NET CASH PROVIDED BY OPERATING ACTIVITIES                     100        290,024
                                                                  _____________  _____________

CASH FLOWS FROM INVESTING ACTIVITIES
____________________________________
      Advances to Joint Venture                                       (109,147)      (374,527)
                                                                  _____________  _____________
             NET CASH USED IN INVESTING ACTIVITIES                    (109,147)      (374,527)
                                                                  _____________  _____________

CASH FLOWS FROM FINANCING ACTIVITIES
____________________________________
      Proceeds from exercise of employee stock options                  10,300            ---
      Repayment from exercise of warrants                                  788            ---
                                                                  _____________  _____________
            NET CASH PROVIDED BY FINANCING ACTIVITIES                   11,088            ---
                                                                  _____________  _____________
NET DECREASE IN CASH AND CASH EQUIVALENTS                              (97,959)       (84,503)

CASH AND CASH EQUIVALENTS - BEGINNING OF THE YEAR                      119,745        204,248
                                                                  _____________  _____________

CASH AND CASH EQUIVALENTS - END OF THE YEAR                       $     21,786   $    119,745
                                                                  =============  =============
SUPPLEMENTARY DISCLOSURE AND CASH FLOW INFORMATION
__________________________________________________
  Cash paid during the year for interest                          $     35,250   $     91,594
  Cash paid during the year for income taxes                               ---            ---

</TABLE>

The accompanying notes are an integral part of the consolidated
financial statements.

                               -30-


               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


(1) Summary of Significant Accounting Policies
    __________________________________________

    Nature of Operations
    ____________________

    Igene  Biotechnology, Inc. ("Igene") was  incorporated  under
    the  laws  of  the State of Maryland on October 27,  1981  as
    "Industrial Genetics, Inc."  Igene changed its name  to  "IGI
    Biotechnology,  Inc."  on  August  17,  1983  and  to  "Igene
    Biotechnology, Inc." on April 14, 1986.  Igene is located  in
    Columbia,  Maryland  and  is  engaged  in  the  business   of
    industrial  microbiology and related biotechnologies.   Igene
    has  an  operational subsidiary in Chile and through February
    2003  had  a subsidiary in Norway.  Igene is engaged  in  the
    business   of   developing,  marketing,   and   manufacturing
    specialty   ingredients  for  human  and  animal   nutrition.
    Igene  was  formed to develop, produce and market value-added
    specialty  biochemical  products.  Igene  is  a  supplier  of
    natural astaxanthin, an essential nutrient in different  feed
    applications  and  a  source of pigment for  coloring  farmed
    salmon   species.    Igene  is  also  venturing   to   supply
    astaxanthin as a nutraceutical ingredient.  Igene is  focused
    on   fermentation  technology,  pharmacology,  nutrition  and
    health   in   its  marketing  of  products  and  applications
    worldwide.

    Igene  has  devoted  its  resources  to  the  development  of
    proprietary  processes to convert selected  agricultural  raw
    materials  or  feedstocks into commercially useful  and  cost
    effective   products   for  the  food,   feed,   flavor   and
    agrochemical  industries.  In developing these processes  and
    products,  Igene has relied on the expertise  and  skills  of
    its  in-house  scientific staff and,  for  special  projects,
    various consultants.

    In  an  effort to develop a dependable source of  production,
    on  March 18, 2003, Tate and Lyle and Igene announced a 50:50
    joint   venture  to  produce  AstaXin(R) for the  aquaculture
    industry.  Production  utilizes Tate  &  Lyle's  fermentation
    capability  together with the unique technology developed  by
    Igene.  Part of Tate & Lyle's existing Selby, England, citric
    acid  facility  was  modified to include  the  production  of
    1,500   tons  per  annum  of  astaxanthin.   Tate  &   Lyle's
    investment  of approximately $25 million includes certain  of
    its  facility assets that were previously used in citric acid
    production.

    Principles of Consolidation
    ___________________________

    The  accounts  of  our other wholly-owned  subsidiary,  Igene
    Chile,  are included in the consolidation of these  financial
    statements.    All  significant  intercompany  accounts   and
    transactions have been eliminated in consolidation.

    Cash and cash equivalents
    _________________________

    Igene  considers  cash equivalents to be  short-term,  highly
    liquid  investments  that have original  maturities  of  less
    than  90  days.  These include interest bearing money  market
    accounts.

    Accounts Receivable
    ___________________

    Accounts  receivable  are  stated at  the  amount  management
    expects   to   collect   from   the   outstanding   balances.
    Management   provides  for  probable  uncollectible   amounts
    through  a  charge to earnings and a credit  to  a  valuation
    allowance   based  upon  its  assessment   of   the   current
    collection   status  of  individual  accounts.     Delinquent
    amounts  that are outstanding after management has  conducted
    reasonable  collection  efforts, are written  off  through  a
    charge  to  the valuation allowance and a credit to  accounts
    receivable.  During 2005 assets were sold for less  then  the
    initial  agreed  upon  price with  the  distributor  and  the
    $50,000 balance remaining was written off.

                                 -31-


               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


    Investment in and advances to unconsolidated joint venture
    __________________________________________________________

    The  investment in the Joint Venture is accounted  for  under
    the   equity  method  whereby  the  Company's  50%  ownership
    percentage in the Joint Venture is reflected as an  asset  in
    the  consolidated balance sheet and the changes in the  Joint
    Venture's  equity as a result of its operations is  reflected
    in  the Company's consolidated statement of operations.   The
    Company  evaluates  its investment in the Joint  Venture  for
    impairment,  as  it  does  for all  long  term  assets.   The
    Company  can  not  recognize the loss of  the  Joint  Venture
    beyond  its  investment in and advances to the Joint  Venture
    or  the  amount of debt guaranteed by Igene,  if  any.   This
    excess  loss, and all future losses incurred as a  result  of
    the  Joint  Venture,  that  are in excess  of  the  Company's
    investment  and advances, are suspended until the point  that
    the  profits  of  the  Joint  Venture,  if  any,  exceed  the
    incurred  losses.  The accounting policies  followed  by  the
    Joint  Venture  are in conformity with accounting  principles
    generally accepted in the United States of America.

    On  June  15th 2005, the Company executed a limited guarantee
    for  one of the debt obligations of the Joint Venture.  Under
    the  terms  of the limited guarantee, the Company has  agreed
    to   guarantee  up  to  4,200,000  British  Pounds   sterling
    (approximately  $8,237,000  at  February  28,   2007).    The
    Company  subsequently entered into an agreement with  Tate  &
    Lyle  (the  other  50% partner in the Joint Venture)  whereby
    Tate  &  Lyle  has  agreed to arrange  funds  for  the  Joint
    Venture,  without recourse to Igene, until the Joint  Venture
    produces  a regular monthly cash flow, as defined,  for  four
    consecutive months.  The Joint Venture has not met  the  cash
    flow  requirements.  The Company has subsequently received  a
    full release from the guarantee.

    Research and development costs
    ______________________________

    For  financial reporting purposes, research, development  and
    pilot  plant  scale-up  costs  are  charged  to  expense   as
    incurred.

    Property and Equipment
    ______________________

    Property  and  equipment are stated at cost less  accumulated
    depreciation  and amortization computed using  the  straight-
    line  method.   Premises and equipment are  depreciated  over
    the  useful  lives of the assets, which generally range  from
    three  to  ten  years for furniture, fixtures and  equipment,
    three  to  five  years  for computer software  and  hardware.
    Leasehold  improvements are amortized over the terms  of  the
    respective  leases  or  the estimated  useful  lives  of  the
    improvements,  whichever  is  shorter.   The  cost  of  major
    renewals and betterments are capitalized, while the costs  of
    ordinary maintenance and repairs are expensed as incurred.

    Estimates
    _________

    The  preparation  of financial statements in conformity  with
    accounting  principles  generally acceptable  in  the  United
    States  of America requires management to make estimates  and
    assumptions  that affect the reported amounts of  assets  and
    liabilities   and   disclosure  of  contingent   assets   and
    liabilities at the date of the financial statements  and  the
    reported   amounts  of  revenues  and  expenses  during   the
    reporting  period.   Actual results could differ  from  those
    estimates.

    Foreign Currency Translation and Transactions
    _____________________________________________

    Since   the   day-to-day  operations   of   Igene's   foreign
    subsidiary   in   Chile  are  dependent   on   the   economic
    environment of the parent's currency, the financial  position
    and  results of operations of Igene's foreign subsidiary  are
    determined  using Igene's reporting currency (US dollars)  as
    the  functional currency.  All exchange gains and losses from
    remeasurement  of  monetary assets and liabilities  that  are
    not  denominated  in US dollars are recognized  currently  in
    income.

                                -32-


               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


    Fair value of financial instruments
    ___________________________________

    The  carrying amounts of cash and cash equivalents,  accounts
    receivable,    accounts   payable,   and   short-term    debt
    approximate  fair  value  because  of  the  relatively  short
    maturity  of  these  instruments.   Management  believes  the
    carrying  amount  of long-term debt approximates  fair  value
    because of similar current rates at which Igene could  borrow
    funds with consistent remaining maturities.

    Accounting for stock based compensation
    _______________________________________

    Prior  to  January  1, 2006, the Company  accounted  for  its
    stock  based  compensation plans under  the  recognition  and
    measurement  principles of APB opinion  No.  25,  "Accounting
    for  Stock Issued to Employees", and related interpretations.
    No   stock  option  based  employee  compensation   cost   is
    reflected  in  net income, as all options granted  under  the
    plan  had an exercise price equal to the market value of  the
    underlying common stock on the date of grant.  The  following
    table  illustrates the effect on net income and earnings  per
    share  if  the Company had applied the fair value recognition
    provisions  of  SFAS No. 123,   "Accounting  for  Stock-Based
    Compensation"  and disclosure provisions  of  SFAS  No.  148,
    "Accounting   for  Stock-Based  Compensation-Transition   and
    Disclosure",  to  stock-based employee compensation  for  the
    year ended December 31, 2005:

<TABLE>
<CAPTION>
                                                         2005
                                                    _____________
       <S>                                          <C>
       Net loss, as reported                        $ (2,037,707)

       Pro forma stock-based employee compensation
          expense determined under fair value based
          method net of related tax effects              (38,677)
                                                    _____________
       Pro forma net loss                           $ (2,076,384)
                                                    =============
       Net loss per Share:
          Basic - as reported                       $      (0.02)
          Basic - pro forma                         $      (0.02)

          Diluted - as reported                     $      (0.02)
          Diluted - pro forma                       $      (0.02)
</TABLE>

    The  fair value of each option grant is estimated on the date
    of  grant  using the Black-Scholes option-pricing model  with
    the  following weighted average assumptions used  for  grants
    during the year ended December 31, 2005:

<TABLE>
<CAPTION>
                                                         2005
                                                    _____________
       <S>                                          <C>
       Dividend yield                                        ---
       Expected volatility                                136.00%
       Risk-free interest rate                              4.63%
       Expected lives in years                                10
       Fair value of options granted                $      0.027
</TABLE>

    New accounting pronouncements
    _____________________________

    In  May  2005,  the  FASB issued SFAS  No.  154,  "Accounting
    Changes  and  Error Corrections"("SFAS 154"), which  replaces
    APB  Opinion  No.  20 Accounting Changes  and   SFAS  No.  3,
    "Reporting   Accounting   Changes   in   Interim    Financial
    Statements-An  Amendment of APB Opinion No.  28."   SFAS  154
    requires   retrospective  application   to   prior   periods'
    financial  statement  of  a voluntary  change  in  accounting
    principal  unless it is not practical.  SFAS 154 is effective
    for  accounting  changes and corrections of  errors  made  in


                                -33-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


    fiscal  years  beginning  after December  15,  2005,  and  is
    required  to  be adopted by the Company in the first  quarter
    of  fiscal  2007.   Although  the  Company  will  continually
    evaluate   its  accounting  policies,  management  does   not
    currently  believe  adoption will have a material  impact  on
    the  Company's results of operations, cash flows or financial
    position.

    In  September 2006, the Financial Accounting Standards  Board
    issued  Statement  of Financial Accounting  Standards  Number
    157 -  Fair Value Measurements ("SFAS157").  SFAS 157 defines
    fair  value, establishes a framework for measuring fair value
    in  generally  accepted accounting principles  ("GAAP"),  and
    expands disclosures about fair value measurements.

    Prior  to SFAS 157, there were different definitions of  fair
    value and limited guidance for applying those definitions  in
    GAAP.  Moreover, that guidance was dispersed among  the  many
    accounting    pronouncements   that   require   fair    value
    measurements. SFAS 157 clarifies that the exchange  price  is
    the   price   in   an  orderly  transaction  between   market
    participants  to sell the asset or transfer the liability  in
    the  market in which the reporting entity would transact  for
    the  asset  or  liability, that is,  the  principal  or  most
    advantageous market for the asset or liability.

    SFAS  157  is effective for financial statements  issued  for
    fiscal  years beginning after November 15, 2007, and  interim
    periods  within those fiscal years. The Company is  currently
    evaluating  the impact, if any, that SFAS 157  will  have  on
    its  financial  position,  results  of  operations  and  cash
    flows.

    In  June  2006,  the  Financial  Accounting  Standards  Board
    ("FASB")   issued   Financial  Accounting   Standards   Board
    Interpretation  ("FIN") No. 48, "Accounting  for  Uncertainty
    in   Income   Taxes-an  interpretation  of   FASB   Statement
    No.  109." FIN No. 48 provides a comprehensive model for  the
    recognition,  measurement  and disclosure  in  the  financial
    statements  of uncertain tax positions taken or  expected  to
    be  taken on a tax return. The Company will adopt FIN No.  48
    effective  beginning  on  January 1,  2007.  The  Company  is
    currently evaluating the impact this interpretation may  have
    on  its  future  financial position, results  of  operations,
    earnings per share, or cash flows.

    In  September  2006,  the Securities and Exchange  Commission
    issued  SAB  No. 108, "Considering the Effects of Prior  Year
    Misstatements when Quantifying Misstatements in Current  Year
    Financial  Statements." SAB No. 108  was  issued  to  address
    diversity  in  practice  in quantifying  financial  statement
    misstatements. Current practice allows for the evaluation  of
    materiality  on the basis of either (1) the error  quantified
    as  the amount by which the current year income statement was
    misstated  ("rollover  method") or (2) the  cumulative  error
    quantified  as  the  cumulative amount by which  the  current
    year  balance  sheet was misstated ("iron  curtain  method").
    The guidance provided in SAB 108 requires both methods to  be
    used   in  evaluating  materiality  ("dual  approach").   SAB
    No.  108  permits companies to initially apply its provisions
    either by (1) restating prior financial statements as if  the
    dual  approach  had  always been used or  (2)  recording  the
    cumulative  effect of initially applying the "dual  approach"
    as   adjustments  to  the  carrying  values  of  assets   and
    liabilities  as  of  January  1,  2006  with  an   offsetting
    adjustment  recorded  to  the  opening  balance  of  retained
    earnings.  There  were  no matters warranting  the  Company's
    consideration  under  the provisions  of  SAB  No.  108  and,
    therefore,  it  did  not  have an  impact  on  the  Company's
    financial  position,  results  of  operations,  earnings  per
    share or cash flows.

(2) Non-cash investing and financing activities:
    ___________________________________________

    During  2006,  7,375  shares of redeemable  preferred  stock,
    with  a  recorded aggregate value of $141,600, were converted
    into  14,750  shares of common stock.  This included  the  8%
    Cumulative  Convertible Preferred Stock,  Series  B  and  has
    relieved the Company of this amount of long-term debt.

                               -34-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


    During   the  course  of  2006  and  2005,  Fermic,   Igene's
    manufacturing  agent,  earned 545,569 and  4,724,416  shares,
    respectively,  of  common stock as part of the  manufacturing
    agreement.   Fermic earned 2,250 shares of common  stock  for
    each  kilogram  pure astaxanthin produced  and  delivered  as
    part  of  the  agreement. The average price is based  on  the
    market  value  of  the  shares at the time  the  product  was
    produced.   Fermic has earned all 20,000,000 shares available
    under  the  contract.  The 545,569 shares were earned  at  an
    average  price  of  $.056 per share for 2006,  and  4,724,416
    shares  were  earned at an average price of $.068  per  share
    for 2005.

    During  2006, 312,000 shares of common stock were  issued  as
    part   of  employee  stock  option  exercises.   The  Company
    received $10,300 based on an average exercise price of  $.033
    per share.

    During  2006, 7,884 warrants were exercised for $788.   7,884
    new  shares  of  common  stock were issued  pursuant  to  the
    exercise.

    During 2006, 1,000,000 shares of common stock were issued  to
    the  Joint  Venture's new Vice President of Manufacturing  as
    part  of  his agreement in accepting the position.  The  cost
    was expensed at a cost of $.05 per share or $50,000.

    During 2006 and 2005, Igene recorded dividends in arrears  on
    its  8%  Redeemable Preferred Stock, Series  A  at  $.64  per
    share  aggregating $8,306 and $11,846 respectively,  on  such
    preferred  stock which has been removed from paid-in  capital
    and   included  in  the  carrying  value  of  the  redeemable
    preferred stock. (see also note 9).

(3) Concentration of Credit Risk
    ____________________________

    The Joint Venture is potentially subject to the effects of  a
    concentration   of   credit  risk  in  accounts   receivable.
    Accounts  receivable is substantially composed of receivables
    from  customers  in Chile, which is an important  market  for
    Igene's product,  AstaXin(R).  Chile has  from  time  to time
    experienced   political  unrest  and  currency   instability.
    Because  of  the volume of business transacted by  the  Joint
    Venture  in  Chile, recurrence of such unrest or  instability
    could  adversely  affect the businesses of its  customers  in
    Chile   or  the  Joint  Venture's  ability  to  collect   its
    receivables  from  these customers.   In  order  to  minimize
    risk,  the Joint Venture strictly evaluates the companies  to
    which it extends credit and all prices are denominated in  US
    dollars so as to minimize currency fluctuation risk.   Losses
    due  to  credit risks in accounts receivable are expected  to
    be immaterial.

(4) Property and Equipment
    ______________________

    Property  and equipment are stated at cost and are summarized
    as follows:

<TABLE>
<CAPTION>
       <S>                                   <C>
       Laboratory equipment and fixtures     $  181,042
       Pilot plant equipment and fixtures        91,503
       Office furniture and fixtures             36,990
                                             ___________
                                                309,535
       Less accumulated depreciation           (275,964)
                                             ___________
                                             $   33,571
                                             ===========
</TABLE>

(5) Investment in Joint Venture
    ___________________________

    On  March  18 2003, the Company entered into a Joint  Venture
    Agreement  with  Tate  &  Lyle  Fermentation  Products   Ltd.
    ("Tate").   Pursuant  to  a  Joint  Venture  Agreement,   the
    Company  and Tate agreed to form a joint venture (the  "Joint
    Venture")  to  manufacture, market and sell  Astaxanthin  and
    derivative  products throughout the world for all uses  other
    than  as  a  nutraceutical  or  otherwise  for  direct  human


                                -35-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


    consumption.   Tate contributed $24,600,000 in  cash  to  the
    Joint  Venture, while the Company transferred  to  the  Joint
    Venture   its  technology  relating  to  the  production   of
    astaxanthin   and  assets  related  thereto.   These   assets
    continue  to be used by the Joint Venture in the same  manner
    as  historically used by the Company.  The Company  and  Tate
    each  have a 50% ownership interest in the Joint Venture  and
    equal  representation on the Board of Directors of the  Joint
    Venture.   The  value of the Company's initial investment  in
    the  Joint  Venture has been recorded at an amount  equal  to
    Igene's  historical book value.  As the cost of the Company's
    technology  and  intellectual property  has  been  previously
    expensed  and  has a carrying amount of zero, the  investment
    in  the  Joint Venture was originally recorded  with  a  book
    value   of   $316,869,  which  represents   the   unamortized
    production  costs  contributed to  the  Joint  Venture.   The
    Company  also contributed $6,000 to the capital of the  Joint
    Venture.

    Production  utilizes Tate's fermentation capability  together
    with  the  unique  technology developed  by  Igene.  Part  of
    Tate's  existing  Selby, England, citric  acid  facility  was
    modified  to  produce  up to 1,500 tons  per  annum  of  this
    astaxanthin.  Tate's investment of approximately $25  million
    includes  certain of its facility assets previously  used  in
    citric  acid  production.  Sales and cost of  sales  activity
    are   now   recorded  as  part  of  the   earnings   of   the
    unconsolidated venture.

    As  a result of the Joint Venture, the production, sales  and
    marketing   of   astaxanthin   now   take   place   in    the
    unconsolidated Joint Venture.  From inception  on  March  18,
    2003  through December 31, 2006, the Joint Venture's  results
    of  operations  included the following:   Gross  profit  from
    inception   was   a   negative  $15,165,979   on   sales   of
    $27,772,879,   less   manufacturing  cost   of   $42,938,858.
    Selling   and   general  and  administrative  expenses   were
    $13,090,287,  and  interest  expense  was  $3,588,534.    The
    resulting loss was $31,844,800.  Igene's 50% portion  of  the
    Joint Venture loss was $15,922,400.

    Because the Company accounts for its investment in the  Joint
    Venture  under  the  equity method of  accounting,  it  would
    ordinarily  recognize  a  loss representing  its  50%  equity
    interest in the loss of the Joint Venture or the amount  that
    is  guaranteed  by the Company, if any.  However,  losses  in
    the  Joint Venture are recognized only to the extent  of  the
    investment in and advances to the Joint Venture.   Losses  in
    excess  of this amount are suspended from recognition in  the
    financial  statements  and  are  carried  forward  to  offset
    Igene's share of the Joint Venture's future income, if any.

    On  June  15, 2005, the Company executed a limited  guarantee
    for  one of the debt obligations of the Joint Venture.  Under
    the   terms  of  the  limited  guarantee,  the  Company  will
    guarantee   up   to   4,200,000   British   Pounds   sterling
    (approximately  $8,237,000  at  February  28,   2007).    The
    Company  subsequently entered into an agreement with  Tate  &
    Lyle  (the other 50% partner in the Joint Venture) where Tate
    &  Lyle  has  agreed to arrange funds for the Joint  Venture,
    without  recourse  to Igene Biotechnology,  Inc.,  until  the
    Joint  Venture  produces  a regular  monthly  cash  flow,  as
    defined,  for  four consecutive months.    The Joint  Venture
    has  not  met  the cash flow requirements.  The  Company  has
    subsequently received a full release from the guarantee.

    At  December  31,  2006,  prior to  the  recognition  of  its
    portion of the Joint Venture loss, Igene's investment in  the
    Joint  Venture consisted of $322,869 and its net advances  to
    the  Joint  Venture amounted to $1,169,112, for  a  total  of
    $1,491,981.   For  the year ended December  31,  2005,  Igene
    recognized $374,527 of its share of a $5,931,049 loss.    For
    the year ended December 31, 2006, Igene recognized losses  to
    the  extent  of  the increase in advances of  $109,147.   The
    remainder of approximately 5 million, is suspended  and  will
    be  carried forward to offset Igene's share of earnings  from
    the  Joint  Venture, if any.  The balance in the advances  to
    and  investment  in Joint Venture account  on  the  Company's
    financial statements is zero at December 31, 2006.

                                   -36-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


    The  following  schedules display certain account balances of
    the  Joint Venture as of December 31, 2006 and for the period
    since March 18, 2003 (inception):

<TABLE>
<CAPTION>

                                                   December 31,
                                                           2006
                                                _______________
                                                    (Unaudited)
     <S>                                        <C>
     ASSETS
     CURRENT ASSETS
        Cash                                    $    2,612,000
        Accounts Receivable                          2,524,000
        Inventories                                 11,469,000
                                                _______________
                                                    16,605,000

        Fixed Assets                                20,519,000
        Intellectual Property                       24,614,000
                                                _______________
        TOTAL ASSETS                            $   61,738,000
                                                ===============

     LIABILITIES AND EQUITY

     CURRENT LIABILITIES
        Accounts payable and accrued expenses   $   30,123,000
        Working capital loan                        11,752,000
                                                _______________
        TOTAL LIABILITIES                           41,875,000

     Equity                                         19,863,000
                                                _______________
        TOTAL LIABILITIES AND EQUITY            $   61,738,000
                                                ===============

</TABLE>
<TABLE>
                                                                       Period from
                                                              initial investment to
                                                                  December 31, 2006
                                                              _____________________
                                                                        (Unaudited)
     <S>                                                      <C>

     Net Sales                                                $         27,772,879
     Less: manufacturing cost                                          (42,938,858)
                                                              _____________________
     Gross Profit (Loss)                                               (15,165,979)
     Less: selling, general and administrative                         (13,090,287)
                                                              _____________________
     Operating Loss                                                    (28,256,266)
     Interest Expense                                                   (3,588,534)
                                                              _____________________
     Net Loss                                                 $        (31,844,800)
                                                              =====================
     Igene's 50% equity interest in the net loss              $        (15,922,400)
     Igene's Investment in and Advances to the Joint Venture  $         (1,491,981)
                                                              _____________________
     Igene's suspended loss                                   $        (14,430,419)
                                                              =====================
</TABLE>

                                 -37-


               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


     The following schedule displays certain account balances  of
     the  Joint Venture for the years ended December 31, 2006 and
     2005.   As shown, 50% of the activity is recorded as  equity
     in loss of Joint Venture:

<TABLE>
<CAPTION>
                                                                    Year                  Year
                                                                   Ended                 Ended
                                                       December 31, 2006     December 31, 2005
                                                       _________________     _________________
                                                             (Unaudited)           (Unaudited)
     <S>                                               <C>                   <C>
     Net Sales                                         $     10,027,656      $     10,961,223
     Less: manufacturing cost                               (14,165,042)          (17,633,816)
                                                       _________________     _________________
     Gross Profit (Loss)                                     (4,137,386)           (6,672,593)
     Less: selling, general and admin                        (3,874,710)           (3,947,577)
                                                       _________________     _________________
     Operating Loss                                          (8,012,096)          (10,620,170)
     Interest Expense                                        (2,195,607)           (1,241,927)
                                                       _________________     _________________
     Loss before tax                                   $    (10,207,703)     $    (11,862,097)
                                                       =================     =================
     50% equity interest Igene                         $     (5,103,852)     $     (5,931,049)
                                                       =================     =================

     Igene's additional Investment in
        and Advances to the Joint Venture              $       (109,147)     $       (374,527)
                                                       _________________     _________________
        Igene's incremental suspended loss             $     (4,994,705)     $     (5,556,522)
                                                       =================     =================
</TABLE>

     As  a result of the Joint Venture, the production, sales and
     marketing   of   Astaxanthin   now   take   place   in   the
     unconsolidated Joint Venture.  For the years ended 2006  and
     2005,  Igene's  portion  of  the  Joint  Venture  loss   was
     $5,103,852 and $5,931,049, respectively.

     On  March  29,  2007 the Company was informed by  their  50%
     partner  in  the  Joint Venture, Tate and  Lyle,  that  they
     determined to write down their portion of the investment  in
     the  Joint  Venture.   There has been no  impairment  charge
     reflected by the Joint Venture as of December 31, 2006.

(6)  Convertible Debentures
     ______________________

     On  July  17,  2002,  Igene  issued  and  sold  $300,000  in
     aggregate principal amount of 8% convertible debentures, 50%
     each  to  certain directors of Igene.  These debentures  are
     convertible into shares of Igene's common stock at $.03  per
     share  based  on the market price of Igene's shares  at  the
     time the debentures were agreed to.  In consideration of the
     commitment  to purchase the 8% convertible debenture,  these
     directors also received an aggregate of 10,000,000  warrants
     to   purchase  common  stock  at  $.03  per  share.    These
     debentures, if not converted earlier, become due on July 17,
     2012.

     On  February  22, 2002, Igene issued and sold $1,000,000  in
     aggregate principal amount of 8% convertible debentures, 50%
     each  to  certain directors of Igene.  These debentures  are
     convertible into shares of Igene's common stock at $.04  per
     share  based  on the market price of Igene's shares  at  the
     time the debentures were agreed to.  In consideration of the
     commitment  to purchase the 8% convertible debenture,  these
     directors also received an aggregate of 25,000,000  warrants
     to   purchase  common  stock  at  $.04  per  share.    These
     debentures, if not converted earlier, become due on February
     22, 2012.

     In  March  2001,  Igene issued $1,014,211  of  8%,  10-year,
     convertible  debentures to certain  directors  of  Igene  in
     exchange  for  the cancellation of $800,000 of demand  notes
     payable (including accrued interest of $14,212) and $200,000
     in  cash. $600,000 of these demand notes were issued  during
     2000   and   $200,000   were  issued  subsequently.    These
     debentures are convertible into 10,142,110 shares of Igene's
     common  stock  at  $.08  per share.   These  directors  also
     received  10,142,110 warrants to purchase  common  stock  at
     $.08 per share.  Interest is payable at maturity.

                                 -38-


               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


     In  March 2001, certain directors of Igene also committed to
     provide  additional  funding in the  form  of  8%,  10-year,
     convertible  debentures  in the amount  of  $1,500,000.   In
     consideration  of  this  commitment,  these  directors  also
     received  18,750,000 warrants to purchase  common  stock  at
     $.08  per  share.   These debentures  are  convertible  into
     18,750,000 shares of Igene's common stock at $.08 per share.
     Interest is payable at maturity.

     In  December  2001, Igene issued $1,000,000  of  6%,  3-year
     convertible  debentures in connection with the  purchase  of
     ProBio,  now  known  as Igene Norway AS.  These  convertible
     debentures  are convertible into the Company's  stock  at  a
     price  of  $.10  per  share,  10,000,000  shares  in  total.
     Accrued  interest on this note is due every six  months.  Of
     these  $295,000 have been converted to common stock.   These
     notes have been repaid in full as of February 23, 2007  (see
     note 17).

     The  warrants  issued  in connection  with  the  above  debt
     totaling  66,427,651 warrants have been valued at $1,896,094
     utilizing the Black Scholes model.  In addition, there was a
     beneficial  conversion  feature due to  the  resulting  bond
     discount.   The total discount resulting from the  valuation
     of  the  warrants and the beneficial conversion feature  was
     $3,792,188  which is being amortized over the  life  of  the
     debt (ten years).

     Convertible  debentures  are summarized  as  follows  as  of
     December 31, 2006:

<TABLE>
<CAPTION>

                                                                             Accrued
                                                            Principal       Interest
                                                         ____________   ____________
     <S>                                                 <C>            <C>
     8%, 10-year, convertible debenture issued 7/17/02   $   300,000    $   106,718
     8%, 10-year, convertible debenture issued 2/22/02     1,000,000        384,877
     8%, 10-year, convertible debenture issued 3/1/01      1,014,212        473,137
     8%, 10-year, convertible debenture issued 3/27/01     1,500,000        654,180
     10%, 3-year, convertible debenture issued 11/30/01      705,000         46,570
                                                         ____________   ____________
                                                         $ 4,519,212    $ 1,665,482
     Less current maturities                                (705,000)       (46,570)
     Less unamortized debt discount                       (1,710,768)           ---
                                                         ____________   ____________
                                                         $ 2,103,444    $ 1,618,912
                                                         ============   ============
</TABLE>

(7)  Notes Payable
     _____________

     This  long  term  debt, approximately $5,800,000  which  was
     scheduled to become payable in March 2003, had been extended
     to be due March 2006.  It has been extended a second time to
     be  due March 2009.  Management felt any attempts to satisfy
     the debt on it's original due date would have had materially
     adverse effects on the Company.

     As  a  part of the terms of the first extension of the debt,
     the  exercise  prices  of the warrants  and  any  conversion
     features were discounted by 25%, thus a  $.10 warrant is now
     convertible  at $.075 cents.  As part of the  terms  of  the
     second  extension of the debt, the exercise  prices  of  the
     warrants  and any conversion features were discounted  again
     by  25%,  thus a  $.075 warrant is now convertible at  $.056
     cents.

     Beginning  November 16, 1995 and continuing through  May  8,
     1997, Igene issued promissory notes to certain directors for
     aggregate consideration of $1,082,500.  These notes  specify
     that at any time prior to repayment the holder has the right
     to  convert  the  notes to common stock of Igene  at  prices
     ranging  from $0.05 per share to $0.135 per share, based  on
     the  market  price of common shares at the respective  issue
     dates.   The notes were convertible in total into 13,174,478
     shares of common stock.  As a result of the extensions  they
     are  now convertible into 23,421,273 shares of common stock.

                                -39-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


     Concurrently,  with  each  of the $1,082,500  of  promissory
     notes, the holders also received 13,174,478 warrants for  an
     equivalent  number  of  shares at the equivalent  price  per
     share. The warrants expire ten years from the date of  issue
     of  the  notes.  As a result of the extension  of  debt  the
     warrant  exercise prices were reduced by 25%.   These  notes
     were  modified in conjunction with the 1998 rights  offering
     to  be  due  on  March 31, 2003, and have been  extended  to
     March  31,  2009 as part of the extension.  The  notes  bear
     interest at the prime rate.

     As  part of the rights offering in March 1998, Igene  issued
     $5,000,000 of its 8% Notes due March 31, 2003 and 50,000,000
     warrants  to  purchase  one share  of  common  stock  at  an
     exercise  price of $0.10 per share expiring March 31,  2008.
     The  maturity date of these notes had been extended to March
     31, 2006, and the exercise price reduced to $.075 per share.
     The maturity date of these notes have again been extended to
     March 31, 2009, and the exercise price reduced to $.056  per
     share.

     The  warrants  issued  in connection  with  the  above  debt
     totaling  65,168,639 warrants have been valued  at  $731,127
     utilizing  the Black Scholes model at March  31,  2003.   In
     addition,  as a result of the repricing of the  warrants  in
     March  2006, the warrants were re-value at $2,663,310.   The
     $1,082,500  of convertible debt has a beneficial  conversion
     feature   in  addition  to  the  valuation  of  the  related
     warrants.   The total discount resulting from the  valuation
     of the warrants and the beneficial conversion was $3,082,676
     which  is  being amortized over the life of the debt  (three
     years).

     Notes  Payable  are summarized as follows as of December 31,
     2006:

<TABLE>
<CAPTION>

                                                                                   Accrued
                                                                Principal         Interest
                                                             ____________     ____________
        <S>                                                  <C>              <C>
        Long-term unsecured notes payable, bearing interest
            at prime, scheduled to mature
            March 31, 2003, extended to March 31,
            2009, convertible into common stock              $ 1,082,500      $   702,734
        Long-term unsecured notes payable, bearing interest
            at 8%, scheduled to mature March 31, 2003,
            extended to March 31, 2009                         4,759,767        3,334,184
                                                             ____________     ____________
                                                             $ 5,842,267      $ 4,036,918
        Less unamortized debt discount                        (2,226,378)             ---
                                                             ____________     ____________
                                                             $ 3,615,889      $ 4,036,918
                                                             ============     ============
</TABLE>

    Combined  aggregate amounts of maturities for all convertible
    debentures and notes payable are as follows:

<TABLE>
<CAPTION>
                 Year                 Amount
                ______          ____________
                <S>             <C>
                 2007           $   705,000
                 2008                   ---
                 2009             5,842,267
                 2010                   ---
                 2011             2,514,212
                 2012             1,300,000
</TABLE>
                                 -40-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


(8)  Redeemable Preferred Stock
     __________________________

     Each share of redeemable preferred stock is entitled to vote
     on  all matters requiring shareholder approval as one  class
     together  with  holders  of common  stock.   Each  share  of
     redeemable preferred stock is entitled to two votes and each
     share of common stock is entitled to one vote.

     Redeemable preferred stock is convertible at the  option  of
     the  holder  at  any time, unless previously redeemed,  into
     shares of Igene's common stock at the rate of two shares  of
     common  stock for each share of preferred stock  (equivalent
     to a conversion price of $4.00 per common share), subject to
     adjustment under certain conditions.

     Shares of redeemable preferred stock are redeemable for cash
     in  whole or in part at the option of Igene at any  time  at
     the  stated value plus accrued and unpaid dividends  to  the
     redemption  date.   Dividends  are  cumulative  and  payable
     quarterly on January 1, April 1, July 1 and October 1, since
     January 1, 1988.

     Mandatory redemption of Series A preferred stock was  to  be
     made  in  October 2002.  As Igene is operating at a negative
     cash flow and negative earnings, Maryland law does not allow
     for  the  redemption of these shares.   As  such  they  will
     remain  outstanding and continue to accrue  dividends  until
     such  time as Igene is able to undertake redemption,  though
     there can be no assurance this will develop.  Igene does not
     expect  to  be  able to redeem the Series A preferred  stock
     unless,  after  giving  effect to such  redemption  (a)  the
     Company  would be able to pay its indebtedness in the  usual
     course of business and (b) the Company's total assets  would
     be  greater than the sum of its total liabilities  plus  the
     amount  that  would  be needed if the  Company  were  to  be
     dissolved as of the time of the distribution, to satisfy the
     preferential  rights upon dissolution of stockholders  whose
     preferential  rights on dissolution are  superior  to  those
     receiving the distribution.

     In  December 1988, as part of an overall effort  to  contain
     costs  and conserve working capital, Igene suspended payment
     of   the   quarterly   dividend  on  its  preferred   stock.
     Resumption   of   the  dividend  will  require   significant
     improvements  in cash flow.  Unpaid dividends  cumulate  for
     future payment or addition to the liquidation preference  or
     redemption value of the preferred stock.  As of December 31,
     2006,  total dividends in arrears on Igene's preferred stock
     equal $130,045 (or $11.68 per share) on Igene's Series A and
     are  included  in  the  carrying  value  of  the  redeemable
     preferred stock.

(9)  Stockholders' Equity
     ____________________

     Options
     _______

     In  June  of 2001, the stockholders approved the 2001  Stock
     Option Plan (the "2001 Plan"), which succeeds the 1997 Stock
     Option Plan (the "1997 Plan"), which succeeded Igene's  1986
     Stock  Option  Plan  (the  "1986 Plan"),  as  amended.   All
     outstanding, unexercised options granted under the 1997  and
     1986  Plans  remain outstanding with unchanged  terms.   The
     number of shares authorized for issuance under the 2001 Plan
     is 55,000,000.  This is in addition to the 20,000,000 shares
     authorized  for  issuance  under  the  1997  Plan,  and  the
     2,000,000  shares  authorized for issuance  under  the  1986
     Plan.
                                -41-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005

     The   following  is  a  summary  of  options   granted   and
     outstanding  under  the plans as of December  31,  2006  and
     2005:

<TABLE>
<CAPTION>

                                            2006                       2005
                                  ______________________     _______________________
     <S>                          <C>         <C>            <C>         <C>
                                                Weighted                    Weighted
                                                 Average                     Average
                                                Exercise                    Exercise
                                      Number       Price         Number        Price
                                  __________   _________     __________   __________
     Options outstanding
        and exercisable,
        beginning of year         48,427,750   $    .061     46,927,750   $     .061
     Options granted                     ---         ---      1,500,000   $     .027

     Options exercised               312,000   $    .033            ---          ---
     Options forfeited,
       or withdrawn with
       consent of holders          1,600,000   $    .100            ---          ---
     Options expired               1,670,750   $    .050            ---          ---
                                  __________   _________     __________   __________
     Options outstanding
       and exercisable,
       end of year                44,845,000   $    .059     48,427,750   $     .061
                                  ==========   =========     ==========   ==========
</TABLE>

<TABLE>
<CAPTION>

                                   Options Outstanding

                                                                 Weighted Average
            Exercise Price                  Shares          Remaining Life (Years)
            ______________          ______________          ______________________
            <S>                     <C>                     <C>
                     $.025              16,333,000                             5.6
                     $.027               1,500,000                             8.9
                     $.050               1,500,000                             2.8
                     $.050               3,837,500                             3.0
                     $.050               2,500,000                             4.9
                     $.065                  45,000                             4.0
                     $.080               5,500,000                             4.8
                     $.100              10,389,500                             7.5
                     $.100               3,240,000                             1.3
                                   _______________
                     $.059              44,845,000
                                   ===============
</TABLE>

     Warrants
     ________

     The  following table summarizes warrants issued, outstanding
     and exercisable:

<TABLE>
<CAPTION>
                                                  As of December 31,
                                   ________________________________________________
                                        2006                              2005
                                   ______________                    ______________
           <S>                     <C>                               <C>
           Issued                     205,261,073                       205,261,073
           Outstanding                205,261,073                       205,261,073
           Exercisable                205,261,073                       205,261,073

</TABLE>

                                 -42-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


     Common Stock
     ____________

     At  December 31, 2006, 205,261,073 shares of authorized  but
     unissued  common  stock  were  reserved  for  issuance  upon
     exercise  of  outstanding  warrants,  44,845,000  shares  of
     authorized  but  unissued  common stock  were  reserved  for
     exercise  pursuant to the 1997 and 2001 Stock Option  Plans,
     22,268  shares of authorized but unissued common stock  were
     reserved for issuance upon conversion of Igene's outstanding
     preferred  stock,  and 96,898,924 shares of  authorized  but
     unissued stock were reserved for issuance upon conversion of
     outstanding convertible notes.

     Preferred Stock
     _______________

     As  of  December  31, 2006, total dividends  in  arrears  on
     Igene's preferred stock equal $130,045 (or $11.68 per share)
     on  Igene's Series A preferred stock and are included in the
     carrying value of the Series A preferred stock.

(10) Net Loss Per Common Share
     _________________________

     Net  loss  per common share for 2006 and 2005  is  based  on
     108,387,454   and   103,384,377  weighted  average   shares,
     respectively.  For purposes of computing net loss per common
     share,  the  amount  of  net  loss  has  been  increased  by
     dividends  declared and cumulative undeclared  dividends  in
     arrears on preferred stock.

     Common  stock  equivalents,  including:  options,  warrants,
     convertible   debt,   convertible   preferred   stock,   and
     exercisable rights have not been included in the computation
     of  earnings  per share in 2006 and 2005 because  to  do  so
     would  have been anti-dilutive.  However, these common stock
     equivalents could have potentially dilutive effects  in  the
     future.

(11) Commitments
     ___________

     Igene is obligated for office and laboratory facilities  and
     other rentals under operating lease agreements, which expire
     in  2011. The base annual rentals are approximately $98,000,
     increasing  to $106,000 by the end of the lease  term,  plus
     the  Company's  share of taxes, insurance and  other  costs.
     Annual  rent  expense relating to the leases for  the  years
     ended  December 31, 2006 and 2005 approximated $118,600  and
     $113,400, respectively.

     Future  minimum  rental payments, in the aggregate  and  for
     each of the next five years are as follows:

<TABLE>
<CAPTION>
                   Year           Amount
                   ____        ________
                   <S>         <C>
                   2007        $ 98,000
                   2008         101,000
                   2009         103,000
                   2010         106,000
                   2011           9,000
                               ________
                  Total        $417,000
                               ========
</TABLE>

     Effective   May   20,  2000,  Igene  signed   an   exclusive
     manufacturing   agreement  with   Fermic,   S.A.   de   C.V.
     ("Fermic"),  of Mexico City, Mexico, for the  production  of
     AstaXin(R).   The   Fermic   contract   provides   that  the
     manufacturer  has  a  limited  exclusive  right  to  produce
     AstaXin(R) and is paid a monthly fee in cash, which is based
     on manufacturing capacity, plus shares of Igene common stock
     based  on  production quantities.  Fermic provides equipment
     and  facilities  necessary  to  manufacture  and  store  the
     product  and  is  responsible for purchasing raw  materials.
     The  Joint Venture is responsible for sales efforts and  for
     ensuring the quality of the pigment.  The Joint Venture also
     has  a role in ensuring that the manufacturing process works
     effectively.  The term of the contract has expired.

                               -43-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


     Based on  production of AstaXin(R), Igene  had  committed to
     issue  to  Fermic  up to a maximum of 20,000,000  shares  of
     Igene  common stock during the six year period which expired
     May 20, 2006 in accordance with the manufacturing agreement.
     Based on  quantities of AstaXin(R) produced, all shares have
     been  earned  and issued to Fermic.  Since the inception  of
     the  agreement  stock has been recorded as  a  manufacturing
     expense  and  also  as  an  increase  in  common  stock  and
     additional  paid in capital of $1,356,520.  The  expense  is
     now  recorded  on  the books of the Joint Venture  with  the
     related  receivable from the Joint Venture on the  books  of
     Igene.   This  amount has been computed based  on  the  fair
     value of the stock as of the period in which the shares were
     earned.

(12) Income Taxes
     ____________

     No  income tax benefit or deferred tax asset is reflected in
     the   financial   statements.   Deferred  tax   assets   are
     recognized  for  future deductible temporary difference  and
     tax loss carry forwards if their realization is "more likely
     than not".

     At  December  31,  2006  Igene has  federal  and  state  net
     operating loss carry-forwards of approximately   $22,400,000
     that  expire at various dates from 2006 through  2026.   The
     recorded  deferred  tax  asset,  representing  the  expected
     benefit  from  the future realization of the  net  operating
     losses, net of the valuation allowance,  was   $-0- for 2006
     and 2005.

     The  sources of the deferred tax asset are approximately  as
     follows:

     Net  operating  loss carry-forward  benefit     $ 8,850,000
     Valuation allowance                              (8,850,000)
                                                     ____________
     Deferred tax asset, net                         $       ---
                                                     ============

(13) Uncertainty
     ___________

     Igene has incurred net losses in each year of its existence,
     aggregating  approximately  $46,841,000  from  inception  to
     December 31, 2006 and its liabilities exceeded its assets by
     approximately  $12,482,000  at  that  date.   These  factors
     indicate  that  Igene  will  not  be  able  to  continue  in
     existence unless it is able to raise additional capital  and
     attain profitable operations.

     As discussed in Subsequent Event (Note 17) as of October 31,
     2007 Igene has terminated its  relationship  with  the Joint
     Venture  with  Tate & Lyle.   Igene  maintains  the saleable
     inventory   after the termination of the relationship and is
     currently  reviewing alternatives for a future manufacturing
     alternative.   In  the  interim Igene will sell the existing
     inventory  in  order  to  maintain  its  relationship   with
     customers and use these funds to cover expenses.

(14) Nature of Risks and Concentrations
     __________________________________

     Revenue  of  the  Joint Venture during 2006  and  2005  were
     derived from sales of the product, AstaXin(R).  The majority
     of  the  Joint  Venture's 2006 and 2005 sales were  to  fish
     producers in the aquaculture industry in Chile.

                                 -44-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


     The preceding concentrations subject Igene to certain risks.
     For  example, it is considered at least reasonably  possible
     that any particular customer, distributor, product line,  or
     provider of services or facilities could be lost in the near
     term.   It  is also considered at least reasonably  possible
     that  operations located outside the United States could  be
     disrupted  in the near term.  However, Igene has at  present
     no  information that would lead it to believe that  it  will
     lose  its  principal product, principal  customers,  or  its
     contracted  manufacturer; or that its operations  in  Mexico
     City or Chile will be disrupted, though this belief can  not
     be assured.

(15) Retirement Plan
     _______________

     Effective February 1, 1997 Igene adopted a Simple Retirement
     Plan  under Internal Revenue Code Section 408(p).  The  plan
     was  a  defined  contribution plan,  which  covered  all  of
     Igene's  U.S.  employees  who receive  at  least  $5,000  of
     compensation  for  the  preceding year.   The  plan  permits
     elective employee contributions.  Effective January 1, 2003,
     Igene  made an elective contribution of 3% of each  eligible
     employee's    compensation   for   each    year.     Igene's
     contributions to the plan for 2003 were $17,631.

     Effective  February 1, 2004 Igene discontinued  use  of  the
     Simple   Retirement   Plan  and  began   use   of   a   401K
     savings/retirement  plan, or 401(k) Plan.  The  401(k)  Plan
     permits our eligible employees to defer annual compensation,
     subject to limitations imposed by the Internal Revenue Code.
     All  employees that have been employed for three months  are
     eligible   for   the   plan.   The  plan  permits   elective
     contributions  by  the  Company's eligible  employees  based
     under  the  Internal  Revenue Code,  which  are  immediately
     vested  and non-forfeitable upon contribution to the  401(k)
     Plan.   Effective  January 1, 2004, Igene made  an  elective
     contribution, subject to limitations, of 4% of each eligible
     employee's    compensation   for   each    year.     Igene's
     contributions to the plan for 2006 and 2005 were $25,996 and
     $23,052,  respectively,  which  is  expensed  in  the   2006
     statement of operations.

(16) Loss on Disposal
     ________________

     During  the  year  ended  December  31,  2005,  Igene   sold
     equipment and wrote-off a receivable from the prior sale  of
     equipment.   The  resulting  loss  of  $106,150   has   been
     reflected  as  a  loss on disposal on the accompanying  2005
     statement of operations.

(17) Subsequent Event
     ________________

     On  October  31,  2007,  Igene   Biotechnology,  Inc.   (the
     "Company")  and  Tate  &  Lyle  Fermentation  Products  Ltd.
     ("T&L")   entered   into   a   Separation   Agreement   (the
     "Agreement") pursuant to which the Joint  Venture  Agreement
     dated  March 19, 2003, as amended,   between   the   parties
     (the   "Joint   Venture")  was terminated.   As  part of the
     Agreement, the Company sold to T&L  its  50% interest in the
     joint venture and  the joint venture sold to the Company its
     intellectual  property,  inventory  and  certain assets  and
     lab  equipment utilized  by the Joint Venture.  The purchase
     price  paid  by  T&L  to  the  Company  for its 50% interest
     was 50% of the Joint Venture's  net  working  capital.   The
     purchase price  paid  by  the  Company for the inventory was
     an  amount equal to  50%  of the joint venture's net working
     capital,  the  assumption  of  various liabilities  and  the
     current  market  price  of  the  inventory,  less  specified
     amounts.    The  purchase price  paid  by  the  Company  for
     the intellectual property was  $1.00.  The  purchase   price
     paid  by  the  Company  for the assets and lab equipment was
     $1,000,000. In addition, the Company agreed to  pay  to  T&L
     an amount equal to 5% of  the Company's gross revenues  from
     the  sale  of  astaxanthin  up  to  a maximum of $5,000,000.
     T&L  agreed for a period  of five years not to engage in the
     astaxanthin business.


                                 -45-


     As  previously stated in the Registrant's third quarter Form
     10-QSB, on November 30, 2001, Igene entered Into Convertible
     Promissory Notes (the "Convertible Notes") with each of  the
     following note holders for the following respective  amounts
     (a) NorInnova AS (formerly Forskningsparken I Tromso AS) for
     $106,500;  (b)  Knut  Gjernes for  $7,500;  (c)  Magne  Russ
     Simenson  for $378,000; and (d) Nord Invest AS for $313,000.
     Each  of  the  Convertible Notes  had  a  maturity  date  of
     November  1,  2004.   On  November 18,  2005,  each  of  the
     Convertible Note Holders provided Igene with written  notice
     of default under each of the Convertible Notes.

     On  November 29, 2006, the Convertible Note holders filed  a
     complaint against the Company in the Circuit Court of Howard
     County,  Maryland seeking payment of all outstanding amounts
     due under the Convertible Notes.   On February 23, 2007, the
     Company,  paid $762,638 to the Convertible Note  holders  as
     settlement  of all claims related to the Convertible  Notes.
     The complaint was dismissed with prejudice on March 6, 2007.

     In  an  attempt to settle the matter, the Note holders  were
     offered  the  ability to extend the notes they  held  for  a
     period  of  ten  years  at  an interest  rate  of  5%.   The
     conversion would be changed from the original debenture rate
     of  $.10 (ten cents) per share to the current market rate of
     $.02 (two cents) per share.  They rejected the offer.

     The  funds to settle the litigation were provided by Igene's
     directors  using  the terms offered above to  the  debenture
     holders.   On  February  15, 2007,  Igene  issued  and  sold
     $762,000  in  aggregate principal amount of  5%  convertible
     debentures,  50% each to certain directors of Igene.   These
     debentures  are  convertible into shares of  Igene's  common
     stock  at  $.02  per share based on the offer  made  to  the
     original  debenture holders as the market price  of  Igene's
     shares  at  the time the debentures were agreed  to.   These
     debentures, if not converted earlier, become due on February
     15, 2007.


(18) RESTATEMENT  - Fiscal Years Ended December 31, 2006 and 2005
     ____________________________________________________________

     The Company has historically reported the warrants issued in
     connection  with  the Notes as having zero value and has not
     recognized any discount on the Notes but rather recorded the
     full  face  value  of  the  Notes  as  Long Term Debt in its
     consolidated financial statements.  The restatement is based
     on  the  Company's  using a Black Scholes model and ignoring
     any   discounts   for  illiquidity  of  shares  or  blockage
     discounts.    The warrants  are  valued with a corresponding
     amount of discount on the  Notes.   The amortization of this
     discount  over  the  term  of  the  Notes  has  required the
     Registrant  to  revise its Consolidated Financial Statements
     and the  accompanying notes thereto in order to, among other
     things, reflect an increase in Additional Paid in Capital, a
     decrease  in  Long  Term  Debt,  an  increase in Accumulated
     Deficit,  an increase in Interest Expense and an increase in
     Net  Loss  and  Net  Loss per Common Share, for fiscal years
     2005  and  2006,  as  shown in the Registrant's Consolidated
     Financial Statements and accompanying notes included in this
     amended form 10-KSB.

                               -46-

     The following is the effect on the Stockholder's Deficiency
     at January 1, 2005.

<TABLE>
<CAPTION>

                                                             Additional                       Total
                                     Common Stock             Paid-in       Accumulated    Stockholders'
                                # Shares       Amount         Capital         Deficit       Deficiency
                              ____________  ____________   _____________   _____________   _____________
<S>                           <C>           <C>            <C>             <C>             <C>
BALANCE AT JANUARY 1, 2005
  (As originally reported)    101,732,453   $ 1,017,325    $ 25,138,748    $(40,601,360)   $(14,445,287)

Restatement                           ---           ---       4,523,315      (1,769,780)      2,753,535
                              ____________  ____________   _____________   _____________   _____________

BALANCE AT JANUARY 1, 2005
  (As restated)               101,732,453   $ 1,017,325    $ 29,662,063    $(42,371,140)   $(11,691,752)
                              ============  ============   =============   =============   =============
</TABLE>

                               -47-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


     The  following presents the effect of the restatement on the
     Consolidated Balance Sheet and Income Statements.  There was
     no  change  to the cash flows from operations for any of the
     periods.

<TABLE>
<CAPTION>

                                                              Previously reported                            Restated
                                                                     December 31,                        December 31,
                                                                             2005       Restatement              2005
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                   $          119,745                      $      119,745
  Accounts receivable                                                     15,618                              15,618
  Prepaid expenses and other current assets                               20,520                              20,520
                                                              ___________________                     _______________
  TOTAL CURRENT ASSETS                                                   155,883                             155,883

  Property and equipment, net                                             50,059                              50,059
  Loans receivable from manufacturing agent                               19,993                              19,993
  Investment in and advances to unconsolidated joint venture                 ---                                 ---
  Other assets                                                             5,125                               5,125
                                                              ___________________                     _______________
  TOTAL ASSETS                                                $          231,060                      $      231,060
                                                              ===================                     ===============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                       $           99,285                      $       99,285
  Convertible debenture                                                  705,000                             705,000
  Accrued interest                                                        11,750                              11,750
                                                              ___________________                     _______________
  TOTAL CURRENT LIABILITIES                                              816,035                             816,035

LONG-TERM DEBT
  Notes payable (Net of discount)                                      5,842,267           (40,619)        5,801,648
  Convertible debentures (Net of discount)                             3,814,212        (2,089,988)        1,724,224
  Accrued interest                                                     4,902,255                           4,902,255

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred stock, 8% cumulative,
    Convertible, voting, series A, $.01 par value per share.
    Stated value was $19.04.  Authorized 1,312,500 shares,
    issued 18,509                                                        352,411               ---           352,411
                                                              ___________________   _______________   _______________
  TOTAL LIABILITIES                                                   15,727,180        (2,130,607)       13,596,573
                                                              ___________________   _______________   _______________
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock --- $.01 par value per share. Authorized
    750,000,000 shares; issued and outstanding 107,456,869.            1,074,569                           1,074,569
  Additional paid-in capital                                          25,445,450         4,523,315        29,968,765
  Accumulated Deficit                                                (42,016,139)       (2,392,708)      (44,408,847)
                                                              ___________________   _______________   _______________
  TOTAL STOCKHOLDERS' DEFICIENCY                                     (15,496,120)        2,130,607       (13,365,513)
                                                              ___________________   _______________   _______________
  TOTAL LIABILITIES AND  DEFICIENCY                           $          231,060                      $      231,060
                                                              ===================                     ===============

</TABLE>
                               -48-


               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                              Previously Reported                            Restated
                                                                       Year Ended                          Year Ended
                                                                     December 31,                        December 31,
                                                                             2005       Restatement              2005
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>
EQUITY IN LOSS OF JOINT VENTURE                               $         (374,527)                     $     (374,527)
                                                              ___________________                     _______________
OPERATING EXPENSES
__________________
  Marketing and selling                                                  282,451                             282,451
  Research, development and pilot plant                                  819,782                             819,782
  General and administrative                                             805,054                             805,054
  Operating expenses reimbursed by Joint Venture                      (1,830,198)                         (1,830,198)
                                                              ___________________                     _______________
     TOTAL OPERATING EXPENSES                                             77,089                              77,089
                                                              ___________________                     _______________
     OPERATING LOSS                                                     (451,616)                           (451,616)
                                                              ___________________                     _______________
LOSS ON DISPOSAL                                                        (106,150)                           (106,150)

INTEREST EXPENSE
  (including amortization of debt discount of $622,928)                 (857,013)         (622,928)       (1,479,941)
                                                              ___________________   _______________   _______________
     NET LOSS                                                 $       (1,414,779)   $     (622,928)   $   (2,037,707)
                                                              ===================   ===============   ===============
BASIC AND DILUTED NET LOSS PER COMMON SHARE                   $            (0.01)   $        (0.01)   $        (0.02)
                                                              ===================   ===============   ===============
</TABLE>

                               -49-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005

<TABLE>
<CAPTION>
                                                              Previously Reported                            Restated
                                                                     December 31,                        December 31,
                                                                             2006       Restatement              2006
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                   $           21,786                      $       21,786
  Prepaid expenses and other current assets                               14,093                              14,093
                                                              ___________________                     _______________
  TOTAL CURRENT ASSETS                                                    35,879                              35,879

  Property and equipment, net                                             33,571                              33,571
  Investment in and advances to unconsolidated joint venture                 ---                                 ---
  Other assets                                                             5,125                               5,125
                                                              ___________________                     _______________
  TOTAL ASSETS                                                $           74,575                      $       74,575
                                                              ===================                     ===============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                       $          210,424                      $      210,424
  Convertible debenture                                                  705,000                             705,000
  Accrued interest                                                        46,570                              46,570
                                                              ___________________                     _______________
  TOTAL CURRENT LIABILITIES                                              961,994                             961,994

LONG-TERM DEBT
  Notes payable (Net of discount)                                      5,842,267        (2,226,378)        3,615,889
  Convertible debentures (Net of discount)                             3,814,212        (1,710,768)        2,103,444
  Accrued interest                                                     5,655,830                           5,655,830

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred stock, 8% cumulative,
  Convertible, voting, series A, $.01 par value per share.
  Stated value was $19.68.  Authorized 1,312,500 shares,
  issued 11,134                                                          219,117               ---           219,117
                                                              ___________________   _______________   _______________
  TOTAL LIABILITIES                                                   16,493,420        (3,937,146)       12,556,274
                                                              ___________________   _______________   _______________
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock --- $.01 par value per share. Authorized
  750,000,000 shares; issued and outstanding 109,337,072.              1,093,371                           1,093,371
  Additional paid-in capital                                          25,659,696         7,605,991        33,265,687
  Accumulated Deficit                                                (43,171,912)       (3,668,845)      (46,840,757)
                                                              ___________________   _______________   _______________
  TOTAL STOCKHOLDERS' DEFICIENCY                                     (16,418,845)        3,937,146       (12,481,699)
                                                              ___________________   _______________   _______________
  TOTAL LIABILITIES AND DEFICIENCY                            $           74,575                      $       74,575
                                                              ===================                     ===============

</TABLE>

                                 -50-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                              Previously Reported                            Restated
                                                                       Year Ended                          Year Ended
                                                                     December 31,                        December 31,
                                                                             2006       Restatement              2006
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>

EQUITY IN LOSS OF JOINT VENTURE                               $         (109,147)                     $     (109,147)
                                                              ___________________                     _______________

OPERATING EXPENSES
__________________
  Marketing and selling                                                   98,240                              98,240
  Research, development and pilot plant                                  847,598                             847,598
  General and administrative                                           1,022,051                           1,022,051
  Operating expenses reimbursed by Joint Venture                      (1,660,519)                         (1,660,519)
                                                              ___________________                     _______________
     TOTAL OPERATING EXPENSES                                            307,370                             307,370
                                                              ___________________                     _______________
     OPERATING LOSS                                                     (416,517)                           (416,517)
                                                              ___________________                     _______________

OTHER INCOME                                                              14,535                              14,535

INTEREST EXPENSE
  (including amortization of debt discount of $1,276,137)               (753,791)       (1,276,137)       (2,029,928)
                                                              ___________________   _______________   _______________

     NET LOSS                                                 $       (1,155,773)   $   (1,276,137)   $   (2,431,910)
                                                              ===================   ===============   ===============
BASIC AND DILUTED NET LOSS PER COMMON SHARE                   $            (0.01)   $        (0.01)   $        (0.02)
                                                              ===================   ===============   ===============
</TABLE>



(19) RESTATEMENT - Quarterly  information  for  the  Fiscal Years
     ____________________________________________________________
     Ended December 31, 2006 and 2005
     ________________________________
     (Unaudited)

     The Company has historically reported the warrants issued in
     connection with the Notes as having zero value and  has  not
     recognized any discount on the Notes but rather recorded the
     full  face  value  of the Notes as Long  Term  Debt  in  its
     consolidated financial statements.  The restatement is based
     on  the  Company's using a Black Scholes model and  ignoring
     any   discounts  for  illiquidity  of  shares  or   blockage
     discounts.   The  warrants are valued with  a  corresponding
     amount  of discount on the Notes.  The amortization of  this
     discount  over  the  term  of the  Notes  has  required  the
     Registrant  to revise its Consolidated Financial  Statements
     and  the accompanying notes thereto in order to, among other
     things, reflect an increase in Additional Paid in Capital, a
     decrease  in  Long  Term  Debt, an increase  in  Accumulated
     Deficit, an increase in Interest Expense and an increase  in
     Net  Loss  and  Net Loss per Common Share, for fiscal  years
     2005  and  2006,  as shown in the Registrant's  Consolidated
     Financial Statements and accompanying notes included in this
     amended form 10-KSB.    The following presents the effect of
     the restatement on the Consolidated Balance Sheet and Income
     Statements.   There  was no change to the  cash  flows  from
     operations for any of the periods.

                                  -51-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>

                                                                      Previously
                                                                        Reported                             Restated
                                                                  March 31, 2005       Restatement     March 31, 2005
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                   $           86,377                      $       86,377
  Accounts receivable                                                     80,075                              80,075
  Prepaid expenses and other current assets                               30,944                              30,944
                                                              ___________________                     _______________
  TOTAL CURRENT ASSETS                                                   197,396                             197,396

  Property and equipment, net                                            120,092                             120,092
  Loans receivable from manufacturing agent                               70,982                              70,982
  Investment in and advances to unconsolidated joint venture                 ---                                 ---
  Other assets                                                             5,125                               5,125
                                                              ___________________                     _______________
  TOTAL ASSETS                                                $          393,595                      $      393,595
                                                              ===================                     ===============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                       $           64,446                      $       64,446
  Convertible debenture                                                  705,000                             705,000
  Accrued interest                                                        29,375                              29,375
                                                              ___________________                     _______________
  TOTAL CURRENT LIABILITIES                                              798,821                             798,821

LONG-TERM DEBT
  Notes payable (Net of discount)                                      5,842,267          (223,400)        5,618,867
  Convertible debentures                                               3,814,212        (2,374,403)        1,439,809
  Accrued interest                                                     4,319,955                           4,319,955

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred stock, 8% cumulative,
  Convertible, voting, series A, $.01 par value per share.
  Stated value was $18.56.  Authorized 1,312,500 shares,
  issued 18,509                                                          343,527               ---           343,527
                                                              ___________________   _______________   _______________
  TOTAL LIABILITIES                                                   15,118,782        (2,597,803)       12,520,979
                                                              ___________________   _______________   _______________
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock --- $.01 par value per share. Authorized
  750,000,000 shares; issued and outstanding 102,794,142.              1,027,942                           1,027,942
  Additional paid-in capital                                          25,236,268         4,523,315        29,759,583
  Accumulated Deficit                                                (40,989,397)       (1,925,512)      (42,914,909)
                                                              ___________________   _______________   _______________
  TOTAL STOCKHOLDERS' DEFICIENCY                                     (14,725,187)        2,597,803       (12,127,384)
                                                              ___________________   _______________   _______________
  TOTAL LIABILITIES AND DEFICIENCY                            $          393,595                      $      393,595
                                                              ===================                     ===============
</TABLE>
                              -52-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                              Previously Reported                            Restated
                                                                    Quarter Ended                       Quarter Ended
                                                                   March 31, 2005       Restatement    March 31, 2005
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>

EQUITY IN LOSS OF JOINT VENTURE                               $         (183,093)                     $     (183,093)
                                                              ___________________                     _______________
OPERATING EXPENSES
__________________
  Marketing and selling                                                   48,288                              48,288
  Research, development and pilot plant                                  166,007                             166,007
  General and administrative                                             188,908                             188,908
  Operating expenses reimbursed by Joint Venture                        (411,339)                           (411,339)
                                                              ___________________                     _______________
     TOTAL OPERATING EXPENSES                                             (8,136)                             (8,136)
                                                              ___________________                     _______________
     OPERATING LOSS                                                     (174,957)                           (174,957)
                                                              ___________________                     _______________
INTEREST EXPENSE
  (including amortization of debt discount of $155,732)                 (213,080)         (155,732)         (368,812)
                                                              ___________________   _______________   _______________
     NET LOSS                                                 $         (388,037)   $     (155,732)   $     (543,769)
                                                              ===================   ===============   ===============
BASIC AND DILUTED NET LOSS PER COMMON SHARE                   $            (0.00)   $        (0.00)            (0.01)
                                                              ===================   ===============   ===============
</TABLE>

                              -53-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>

                                                              Previously Reported                            Restated
                                                                    June 30, 2005       Restatement     June 30, 2005
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                   $           47,112                      $       47,112
  Accounts receivable                                                     11,793                              11,793
  Prepaid expenses and other current assets                                9,081                               9,081
                                                              ___________________                     _______________
  TOTAL CURRENT ASSETS                                                    67,986                              67,986

  Property and equipment, net                                            115,280                             115,280
  Loans receivable from manufacturing agent                               70,982                              70,982
  Investment in and advances to unconsolidated joint venture                 ---                                 ---
  Other assets                                                             5,125                               5,125
                                                              ___________________                     _______________
  TOTAL ASSETS                                                $          259,373                      $      259,373
                                                              ===================                     ===============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                       $          181,265                      $      181,265
  Convertible debenture                                                  705,000                             705,000
  Accrued interest                                                           ---                                 ---
                                                              ___________________                     _______________
  TOTAL CURRENT LIABILITIES                                              886,265                             886,265

LONG-TERM DEBT
  Notes payable (Net of discount)                                      5,842,267          (162,473)        5,679,794
  Convertible debentures (Net of discount)                             3,814,212        (2,279,598)        1,534,614
  Accrued interest                                                     4,539,066                           4,539,066

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred stock, 8% cumulative,
  Convertible, voting, series A, $.01 par value per share.
  Stated value was $18.72. Authorized 1,312,500 shares,
  issued 18,509                                                          346,488               ---           346,488
                                                              ___________________   _______________   _______________
  TOTAL LIABILITIES                                                   15,428,298        (2,442,071)       12,986,227
                                                              ___________________   _______________   _______________
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock --- $.01 par value per share. Authorized
  750,000,000 shares; issued and outstanding 103,964,926
  shares.                                                              1,039,650                           1,039,650
  Additional paid-in capital                                          25,313,660         4,523,315        29,836,975
  Accumulated Deficit                                                (41,522,235)       (2,081,244)      (43,603,479)
                                                              ___________________   _______________   _______________
  TOTAL STOCKHOLDERS' DEFICIENCY                                     (15,168,925)        2,442,071       (12,726,854)
                                                              ___________________   _______________   _______________
  TOTAL LIABILITIES AND DEFICIENCY                            $          259,373                      $      259,373
                                                              ===================                     ===============
</TABLE>
                               -54-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                                       Previously                            Restated
                                                                 Reported Quarter                             Quarter
                                                                    June 30, 2005       Restatement     June 30, 2005
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>
EQUITY IN LOSS OF JOINT VENTURE                               $         (282,977)                     $     (282,977)
                                                              ___________________                     _______________
OPERATING EXPENSES
__________________
  Marketing and selling                                                   70,876                              70,876
  Research, development and pilot plant                                  217,082                             217,082
  General and administrative                                             246,592                             246,592
  Operating expenses reimbursed by Joint Venture                        (527,398)                           (527,398)
                                                              ___________________                     _______________
     TOTAL OPERATING EXPENSES                                              7,152                               7,152
                                                              ___________________                     _______________
     OPERATING LOSS                                                     (290,129)                           (290,129)
                                                              ___________________                     _______________
LOSS ON DISPOSAL                                                         (50,000)                            (50,000)

INTEREST EXPENSE
  (including amortization of debt discount of $155,732)                 (192,709)         (155,732)         (348,441)
                                                              ___________________   _______________   _______________
     NET LOSS                                                 $         (532,838)   $     (155,732)   $     (688,570)
                                                              ===================   ===============   ===============
BASIC AND DILUTED NET LOSS PER COMMON SHARE                   $            (0.01)   $        (0.00)            (0.01)
                                                              ===================   ===============   ===============
</TABLE>
<TABLE>
<CAPTION>
                                                              Previously Reported                             Restated
                                                                 Six months ended                     Six months ended
                                                                    June 30, 2005       Restatement      June 30, 2005
                                                              ___________________   _______________   ________________
<S>                                                           <C>                   <C>               <C>
EQUITY IN LOSS OF JOINT VENTURE                               $         (466,070)                     $      (466,070)
                                                              ___________________                     ________________
OPERATING EXPENSES
__________________
  Marketing and selling                                                  119,164                              119,164
  Research, development and pilot plant                                  383,089                              383,089
  General and administrative                                             435,500                              435,500
  Operating expenses reimbursed by Joint Venture                        (938,737)                            (938,737)
                                                              ___________________                     ________________
     TOTAL OPERATING EXPENSES                                               (984)                                (984)
                                                              ___________________                     ________________
     OPERATING LOSS                                                     (465,086)                            (465,086)
                                                              ___________________                     ________________
LOSS ON DISPOSAL                                                         (50,000)                             (50,000)

INTEREST EXPENSE
  (including amortization of debt discount of $311,464)                 (405,789)         (311,464)          (717,253)
                                                              ___________________   _______________   ________________
     NET LOSS                                                 $         (920,875)   $     (311,464)   $    (1,232,339)
                                                              ===================   ===============   ================
BASIC AND DILUTED NET LOSS PER COMMON SHARE                   $            (0.01)   $        (0.00)   $         (0.01)
                                                              ===================   ===============   ================
</TABLE>

                               -55-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                              Previously Reported                             Restated
                                                                    September 30,                        September 30,
                                                                             2005          Restated               2005
                                                              ___________________   _______________   ________________
<S>                                                           <C>                   <C>               <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                   $           30,819                      $        30,819
  Accounts receivable                                                     15,227                               15,227
  Prepaid expenses and other current assets                                9,361                                9,361
                                                              ___________________                     ________________
  TOTAL CURRENT ASSETS                                                    55,407                               55,407

  Property and equipment, net                                            110,468                              110,468
  Loans receivable from manufacturing agent                               70,982                               70,982
  Investment in and advances to unconsolidated joint venture                 ---                                  ---
  Other assets                                                             5,125                                5,125
                                                              ___________________                     ________________
  TOTAL ASSETS                                                $          241,982                      $       241,982
                                                              ===================                     ================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                       $           94,184                      $        94,184
  Convertible debenture                                                  705,000                              705,000
  Accrued interest                                                        29,375                               29,375
                                                              ___________________                     ________________
  TOTAL CURRENT LIABILITIES                                              828,559                              828,559

LONG-TERM DEBT
  Notes payable (Net of discount)                                      5,842,267          (101,546)         5,740,721
  Convertible debentures (Net of discount)                             3,814,212        (2,184,793)         1,629,419
  Accrued interest                                                     4,700,261                            4,700,261

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred stock, 8% cumulative,
  Convertible, voting, series A, $.01 par value per share.
  Stated value was $18.88. Authorized 1,312,500 shares,
  issued 18,509                                                          349,450               ---            349,450
                                                              ___________________   _______________   ________________
      TOTAL LIABILITIES                                               15,534,749        (2,286,339)        13,248,410
                                                              ___________________   _______________   ________________
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock --- $.01 par value per share. Authorized
  750,000,000 shares; issued and outstanding 105,003,661
  shares.                                                              1,050,037                            1,050,037
  Additional paid-in capital                                          25,360,926         4,523,315         29,884,241
  Accumulated Deficit                                                (41,703,730)       (2,236,976)       (43,940,706)
                                                              ___________________   _______________   ________________
  TOTAL STOCKHOLDERS' DEFICIENCY                                     (15,292,767)        2,286,339        (13,006,428)
                                                              ___________________   _______________   ________________
  TOTAL LIABILITIES AND DEFICIENCY                            $          241,982                      $       241,982
                                                              ===================                     ================
</TABLE>

                                 -56-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                                 Reported Quarter                     Restated Quarter
                                                                    September 30,                        September 30,
                                                                             2005       Restatement               2005
                                                              ___________________   _______________   ________________
<S>                                                           <C>                   <C>               <C>
EQUITY IN LOSS OF JOINT VENTURE                               $           52,886                      $        52,886
                                                              ___________________                     ________________
OPERATING EXPENSES
__________________
  Marketing and selling                                                   44,934                               44,934
  Research, development and pilot plant                                  196,072                              196,072
  General and administrative                                             186,104                              186,104
  Operating expenses reimbursed by Joint Venture                        (418,657)                            (418,657)
                                                              ___________________                     ________________
     TOTAL OPERATING EXPENSES                                              7,453                                7,453
                                                              ___________________                     ________________
     OPERATING PROFIT                                                     44,433                               44,433
                                                              ___________________                     ________________
GAIN ON DISPOSAL                                                           3,006                                3,006

INTEREST EXPENSE
  (including amortization of debt discount of $155,732)                 (228,934)         (155,732)          (384,666)
                                                              ___________________   _______________   ________________
     NET LOSS                                                 $         (181,495)   $     (155,732)   $      (337,227)
                                                              ===================   ===============   ================
BASIC AND DILUTED NET LOSS PER COMMON SHARE                   $            (0.00)   $        (0.00)   $         (0.00)
                                                              ===================   ===============   ================
</TABLE>

<TABLE>
<CAPTION>
                                                                         Reported                             Restated
                                                                Nine months ended                     Nine month ended
                                                                    September 30,                        September 30,
                                                                             2005       Restatement               2005
                                                              ___________________   _______________   ________________
<S>                                                           <C>                   <C>               <C>
EQUITY IN LOSS OF JOINT VENTURE                               $         (413,184)                     $      (413,184)
                                                              ___________________                     ________________

OPERATING EXPENSES
__________________
  Marketing and selling                                                  164,098                              164,098
  Research, development and pilot plant                                  579,161                              579,161
  General and administrative                                             621,604                              621,604
  Operating expenses reimbursed by Joint Venture                      (1,357,394)                          (1,357,394)
                                                              ___________________                     ________________
     TOTAL OPERATING EXPENSES                                              7,469                                7,469
                                                              ___________________                     ________________
     OPERATING LOSS                                                     (420,653)                            (420,653)
                                                              ___________________                     ________________
LOSS ON DISPOSAL                                                         (46,994)                             (46,994)

INTEREST EXPENSE
  (including amortization of debt discount of $467,196)                 (634,723)         (467,196)        (1,101,919)
                                                              ___________________   _______________   ________________
     NET LOSS                                                 $       (1,102,370)   $     (467,196)   $    (1,569,566)
                                                              ===================   ===============   ================
BASIC AND DILUTED NET LOSS PER COMMON SHARE                   $            (0.01)   $        (0.00)   $         (0.02)
                                                              ===================   ===============   ================
</TABLE>

                                 -57-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                              Previously Reported                             Restated
                                                                   March 31, 2006       Restatement     March 31, 2006
                                                              ___________________   _______________   ________________
<S>                                                           <C>                   <C>               <C>

ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                   $              ---                      $          ---
  Accounts receivable                                                      5,306                               5,306
  Prepaid expenses and other current assets                                8,437                               8,437
                                                              ___________________                     _______________
  TOTAL CURRENT ASSETS                                                    13,743                              13,743

  Property and equipment, net                                             45,386                              45,386
  Loans receivable from manufacturing agent                               19,993                              19,993
  Investment in and advances to unconsolidated joint venture                ---                                  ---
  Other assets                                                             5,125                               5,125
                                                              ___________________                     _______________
  TOTAL ASSETS                                                $           84,247                      $       84,247
                                                              ===================                     ===============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Bank Overdraft                                              $           61,715                      $       61,715
  Accounts payable and accrued expenses                                  120,510                             120,510
  Convertible debenture                                                  705,000                             705,000
  Accrued interest                                                        29,375                              29,375
                                                              ___________________                     _______________
  TOTAL CURRENT LIABILITIES                                              916,600                             916,600

LONG-TERM DEBT
  Notes payable (Net of discount)                                      5,842,267        (2,997,046)        2,845,221
  Convertible debentures                                               3,814,212        (1,995,183)        1,819,029
  Accrued interest                                                     5,088,068                           5,088,068

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred stock, 8% cumulative,
  Convertible, voting, series A, $.01 par value per share.
  Stated value was $19.20.  Authorized 1,312,500 shares,
  issued 18,509.                                                         355,373               ---           355,373
                                                              ___________________   _______________   _______________
  TOTAL LIABILITIES                                                   16,016,520        (4,992,229)       11,024,291
                                                              ___________________   _______________   _______________

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock --- $.01 par value per share. Authorized
  750,000,000 shares; issued and outstanding 108,222,324.              1,082,223                           1,082,223
  Additional paid-in capital                                          25,474,244         7,605,991        33,080,235
                                                              ___________________   _______________   _______________
  Accumulated Deficit                                                (42,488,740)       (2,613,762)      (45,102,502)
                                                              ___________________   _______________   _______________
  TOTAL STOCKHOLDERS' DEFICIENCY                                     (15,932,273)        4,992,229       (10,940,044)
                                                              ___________________   _______________   _______________
  TOTAL LIABILITIES AND DEFICIENCY                            $           84,247                      $       84,247
                                                              ===================                     ===============
</TABLE>

                                 -58-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                                         Reported                            Restated
                                                                   Quarter Ended,                       Quarter Ended
                                                                   March 31, 2006       Restatement    March 31, 2006
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>
EQUITY IN LOSS OF JOINT VENTURE                               $         (189,902)                     $     (189,902)
                                                              ___________________                     _______________
OPERATING EXPENSES
__________________
  Marketing and selling                                                   42,811                              42,811
  Research, development and pilot plant                                  208,649                             208,649
  General and administrative                                             224,783                             224,783
  Operating expenses reimbursed by Joint Venture                        (399,943)                           (399,943)
                                                              ___________________                     _______________
     TOTAL OPERATING EXPENSES                                             76,300                              76,300
                                                              ___________________                     _______________
     OPERATING LOSS                                                     (266,202)                           (266,202)
                                                              ___________________                     _______________
INTEREST EXPENSE
  (including amortization of debt discount of $221,054)                 (206,399)         (221,054)         (427,453)
                                                              ___________________   _______________   _______________
     NET LOSS                                                 $         (472,601)   $     (221,054)   $     (693,655)
                                                              ===================   ===============   ===============
BASIC AND DILUTED NET LOSS PER COMMON SHARE                   $            (0.00)   $        (0.00)            (0.01)
                                                              ===================   ===============   ===============
</TABLE>

                                 -59-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>
                                                              Previously Reported                            Restated
                                                                    June 30, 2006       Restatement     June 30, 2006
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                   $            9,527                      $        9,527
  Accounts receivable                                                      8,526                               8,526
  Prepaid expenses and other current assets                                8,294                               8,294
                                                              ___________________                     _______________
  TOTAL CURRENT ASSETS                                                    26,347                              26,347

  Property and equipment, net                                             40,713                              50,059
  Loans receivable from manufacturing agent                               19,993                              19,993
  Investment in and advances to unconsolidated joint venture                 ---                                 ---
  Other assets                                                             5,125                               5,125
                                                              ___________________                     _______________
  TOTAL ASSETS                                                $           92,178                      $       92,178
                                                              ===================                     ===============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                       $         165,476                       $      165,476
  Convertible debenture                                                 705,000                              705,000
  Accrued interest                                                       11,750                               11,750
                                                              __________________                      _______________
  TOTAL CURRENT LIABILITIES                                             882,226                              882,226

LONG-TERM DEBT
  Notes payable (Net of discount)                                     5,842,267         (2,740,157)        3,102,110
  Convertible debentures (Net of discount)                            3,814,212         (1,900,378)        1,913,834
  Accrued interest                                                    5,275,946                            5,275,946

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred stock, 8% cumulative,
  Convertible, voting, series A, $.01 par value per share.
  Stated value was $19.04. Authorized 1,312,500 shares,
  issued 11,134                                                         215,554                ---           215,554
                                                              __________________   ________________   _______________
     TOTAL LIABILITIES                                               16,030,205         (4,640,535)       11,389,670
                                                              __________________   ________________   _______________
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock --- $.01 par value per share. Authorized
  750,000,000 shares; issued and outstanding 108,337,072
  shares.                                                             1,083,371                            1,083,371
  Additional paid-in capital                                         25,619,696          7,605,991        33,225,687
  Accumulated Deficit                                               (42,641,094)        (2,965,456)      (45,606,550)
                                                              __________________   ________________   _______________
  TOTAL STOCKHOLDERS' DEFICIENCY                                    (15,938,027)         4,640,535       (11,297,492)
                                                              __________________   ________________   _______________
  TOTAL LIABILITIES AND DEFICIENCY                            $          92,178                       $       92,178
                                                              ==================                      ===============
</TABLE>
                                  -60-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>

                                                                         Reported                            Restated
                                                                    Quarter Ended                       Quarter Ended
                                                                    June 30, 2006       Restatement     June 30, 2006
                                                              ___________________   _______________   _______________
<S>                                                           <C>                   <C>               <C>
EQUITY IN REPAID ADVANCES OF JOINT VENTURE                    $          171,639                      $      171,639
                                                              ___________________                     _______________
OPERATING EXPENSES
__________________
  Marketing and selling                                                   47,399                              47,399
  Research, development and pilot plant                                  237,088                             237,088
  General and administrative                                             292,231                             292,231
  Operating expenses reimbursed by Joint Venture                        (459,917)                           (459,917)
                                                              ___________________                     _______________
     TOTAL OPERATING EXPENSES                                            116,801                             116,801
                                                              ___________________                     _______________
     OPERATING PROFIT                                                     54,838                              54,838
                                                              ___________________                     _______________
INTEREST EXPENSE
  (including amortization of debt discount of $351,694)                 (207,192)         (351,694)         (558,886)
                                                              ___________________   _______________   _______________
     NET LOSS                                                 $         (152,354)   $     (351,694)   $     (504,048)
                                                              ===================   ===============   ===============
BASIC AND DILUTED NET LOSS PER COMMON SHARE                   $            (0.00)   $        (0.00)   $        (0.00)
                                                              ===================   ===============   ===============
</TABLE>
<TABLE>
<CAPTION>
                                                                                                              Restated
                                                              Reported Six Months                     Six Months ended
                                                              ended June 30, 2006       Restatement      June 30, 2006
                                                              ___________________   _______________   ________________
<S>                                                           <C>                   <C>               <C>
EQUITY IN LOSS OF JOINT VENTURE                               $          (18,263)                     $       (18,263)
                                                              ___________________                     ________________
OPERATING EXPENSES
__________________
  Marketing and selling                                                   90,210                               90,210
  Research, development and pilot plant                                  445,737                              445,737
  General and administrative                                             517,014                              517,014
  Operating expenses reimbursed by Joint Venture                        (859,860)                            (859,860)
                                                              ___________________                     ________________
     TOTAL OPERATING EXPENSES                                            193,101                              193,101
                                                              ___________________                     ________________
     OPERATING LOSS                                                     (211,364)                            (211,364)
                                                              ___________________                     ________________
INTEREST EXPENSE
  (including amortization of debt discount of $572,748)                 (413,591)         (572,748)          (986,339)
                                                              ___________________   _______________   ________________
NET LOSS                                                      $         (624,955)   $     (572,748)   $    (1,197,703)
                                                              ===================   ===============   ================
BASIC AND DILUTED NET LOSS PER COMMON SHARE                   $            (0.01)   $        (0.01)   $         (0.01)
                                                              ===================   ===============   ================
</TABLE>

                                 -61-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005



<TABLE>
<CAPTION>
                                                              Previously Reported                               Restated
                                                               September 30, 2006       Restatement   September 30, 2006
                                                              ___________________   _______________   __________________
<S>                                                           <C>                   <C>               <C>
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                   $           25,279                      $          25,279
  Accounts receivable                                                      4,926                                  4,926
  Prepaid expenses and other current assets                                9,963                                  9,963
                                                              ___________________                     __________________
  TOTAL CURRENT ASSETS                                                    40,168                                 40,168

  Property and equipment, net                                             36,039                                 36,039
  Loans receivable from manufacturing agent                               19,993                                 19,993
  Investment in and advances to unconsolidated joint venture                 ---                                    ---
  Other assets                                                             5,125                                  5,125
                                                              ___________________                     __________________
  TOTAL ASSETS                                                $          101,325                      $         101,325
                                                              ===================                     ==================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                       $          140,646                      $         140,646
  Convertible debenture                                                  705,000                                705,000
  Accrued interest                                                        29,375                                 29,375
                                                              ___________________                     __________________
  TOTAL CURRENT LIABILITIES                                              875,021                                875,021

LONG-TERM DEBT
  Notes payable (Net of discount)                                      5,842,267        (2,483,267)           3,359,000
  Convertible debentures (Net of discount)                             3,814,212        (1,805,573)           2,008,639
  Accrued interest                                                     5,465,888                              5,465,888

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred stock, 8% cumulative,
  Convertible, voting, series A, $.01 par value per share.
  Stated value was $19.52. Authorized 1,312,500 shares,
  issued 11,134                                                          217,336               ---              217,336
                                                              ___________________   _______________   __________________
     TOTAL LIABILITIES                                                16,214,724        (4,288,840)          11,925,884
                                                              ___________________   _______________   __________________
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock --- $.01 par value per share. Authorized
  750,000,000 shares; issued and outstanding 109,337,072
  shares.                                                              1,093,371                              1,093,371
  Additional paid-in capital                                          25,659,696         7,605,991           33,265,687
  Accumulated Deficit                                                (42,866,466)       (3,317,151)         (46,183,617)
                                                              ___________________   _______________   __________________
  TOTAL STOCKHOLDERS' DEFICIENCY                                     (16,113,399)        4,288,840          (11,824,559)
                                                              ___________________   _______________   __________________
  TOTAL LIABILITIES AND DEFICIENCY                            $          101,325                      $         101,325
                                                              ===================                     ==================
</TABLE>

                                 -62-

               IGENE Biotechnology, Inc. and Subsidiary
              Notes to Consolidated Financial Statements
               Years ended December 31, 2006 and 2005


<TABLE>
<CAPTION>

                                                                Reported Quarter,                       Restated Quarter
                                                               September 30, 2006       Restatement   September 30, 2006
                                                               __________________   _______________   __________________
<S>                                                            <C>                  <C>               <C>
EQUITY IN REPAID ADVANCES OF JOINT VENTURE                     $          11,299                      $          11,299
                                                               __________________                     __________________
OPERATING EXPENSES
__________________
  Marketing and selling                                                    5,328                                  5,328
  Research, development and pilot plant                                  173,526                                173,526
  General and administrative                                             247,241                                247,241
  Operating expenses reimbursed by Joint Venture                        (388,421)                              (388,421)
                                                               __________________                     __________________
     TOTAL OPERATING EXPENSES                                             37,674                                 37,674
                                                               __________________                     __________________
     OPERATING LOSS                                                      (26,375)                               (26,375)
                                                               __________________                     __________________
OTHER INCOME                                                              10,305                                 10,305

INTEREST EXPENSE
  (including amortization of debt discount of $351,694)                 (209,302)         (351,694)            (560,996)
                                                               __________________                     __________________
     NET LOSS                                                  $        (225,372)   $     (351,694)   $        (577,066)
                                                               ==================   ===============   ==================
BASIC AND DILUTED NET LOSS PER COMMON SHARE                    $           (0.00)   $        (0.00)   $           (0.01)
                                                               ==================   ===============   ==================
</TABLE>
<TABLE>
<CAPTION>

                                                                         Reported                               Restated
                                                                Nine Months Ended                      Nine Months Ended
                                                               September 30, 2006       Restatement   September 30, 2006
                                                               __________________   _______________   __________________
<S>                                                            <C>                  <C>               <C>
EQUITY IN LOSS OF JOINT VENTURE                                $          (6,964)                     $          (6,964)
                                                              ___________________                     __________________
OPERATING EXPENSES
__________________
  Marketing and selling                                                   95,538                                 95,538
  Research, development and pilot plant                                  619,263                                619,263
  General and administrative                                             764,255                                764,255
  Operating expenses reimbursed by Joint Venture                      (1,248,281)                            (1,248,281)
                                                              ___________________                     __________________
     TOTAL OPERATING EXPENSES                                            230,775                                230,775
                                                              ___________________                     __________________
     OPERATING LOSS                                                     (237,739)                              (237,739)
                                                              ___________________                     __________________
OTHER INCOME                                                              10,305                                 10,305

INTEREST EXPENSE
  (including amortization of debt discount of $924,442)                 (622,893)         (924,442)          (1,547,335)
                                                               __________________   _______________   __________________
     NET LOSS                                                  $        (850,327)   $     (924,442)   $      (1,774,769)
                                                               ==================   ===============   ==================
BASIC AND DILUTED NET LOSS PER COMMON SHARE                    $           (0.01)   $        (0.01)   $           (0.02)
                                                               ==================   ===============   ==================
</TABLE>
                               -63-

                           SIGNATURES


In accordance with Section 13 or 15(d) of the Securities Exchange
Act, the registrant caused this report to be signed on its behalf
by  the undersigned, thereunto duly authorized, in Howard County,
Maryland on March 31, 2006.


                         IGENE Biotechnology, Inc.

                         _______________________________________
                         (Registrant)


                     By  /S/ STEPHEN F. HIU
                         _______________________________________
                             STEPHEN F. HIU
                             President, Chief Technical Officer
                             and Treasurer

                     Date  December 11, 2007

In  accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
<S>                           <C>                                <C>
Signature                     Title                              Date
_________                     _____                              ____

/S/ STEPHEN F. HIU            Director, President, Chief         December 11, 2007
________________________      Technical Officer
    STEPHEN F. HIU

/S/ EDWARD J. WEISBERGER      Chief Financial Officer            December 11, 2007
________________________      (principal financial and
    EDWARD J. WEISBERGER       accounting officer)

/S/ THOMAS L. KEMPNER         Vice Chairman of Board             December 11, 2007
________________________      of Directors
    THOMAS L. KEMPNER

/S/ MICHAEL G. KIMELMAN       Chairman of the Board              December 11, 2007
________________________      of Directors
    MICHAEL G. KIMELMAN

/S/ SIDNEY R. KNAFEL          Director                           December 11, 2007
________________________
    SIDNEY R. KNAFEL

/S/ PATRICK F. MONAHAN        Director, Vice President           December 11, 2007
________________________      Secretary and
    PATRICK F. MONAHAN        Director of Manufacturing

</TABLE>

                                -64-