U.S. SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C. 20549
                             FORM 10-QSB


(Mark One)

[x]     Quarterly report under Section 13 or 15(D) of the
        Securities Exchange Act of 1934

            For the quarterly period ended June 30, 2004

[ ]     Transition report under Section 13 or 15(D) of the Exchange
        Act

        For the transition period from _______ to _______


                   Commission file number 0-15888
                                          _______


                      IGENE Biotechnology, Inc.
   _________________________________________________________________
   (Exact name of Small Business Issuer as Specified in its Charter)


             Maryland                             52-1230461
 _______________________________              ___________________
 (State or Other Jurisdiction of               (I.R.S. Employer
  Incorporation or organization)              Identification No.)


         9110 Red Branch Road, Columbia, Maryland 21045-2024
         ___________________________________________________
              (Address of Principal Executive Offices)

                          (410) 997-2599
          ________________________________________________
          (Issuer's Telephone Number, Including Area Code)

                              None
        ____________________________________________________
        (Former Name, Former Address and Former Fiscal Year,
                    if Changed Since Last Report)



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

Yes     x          No
       ___               ___


State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
97,047,020 shares as of August 10, 2004.
_______________________________________

Transitional Small Business Disclosure Format (check one):

Yes                No     x
       ___               ___

<PAGE>

                             FORM 10-QSB
                      IGENE Biotechnology, Inc.


                                INDEX



PART I    -    FINANCIAL INFORMATION

                                                            Page

     Consolidated Balance Sheets .........................  5-6

     Consolidated Statements of Operations ...............  7

     Consolidated Statements of Stockholders' Deficit.....  8-9

     Consolidated Statements of Cash Flows ...............  10

     Notes to Consolidated Financial Statements ..........  11-16

     Management's Discussion and Analysis of Financial
     Conditions and Results of Operations ................  17-22

PART II   -    OTHER INFORMATION .........................  23-24

SIGNATURES ...............................................  25

EXHIBIT INDEX ............................................  26

<PAGE>

                      IGENE BIOTECHNOLOGY, INC.

             QUARTERLY REPORT UNDER SECTION 13 OR 15(D)

               OF THE SECURITIES EXCHANGE ACT OF 1934
<PAGE>

                               PART I
                        FINANCIAL INFORMATION
<PAGE>
<TABLE>
<CAPTION>
           IGENE Biotechnology, Inc. and Subsidiaries
                   Consolidated Balance Sheets


                                                June 30,   December 31,
                                                   2004           2003
                                              ____________ ____________
                                              (Unaudited)
<S>                                           <C>          <C>
ASSETS
CURRENT ASSETS

  Cash and cash equivalents                   $    36,586  $    63,075
  Accounts receivable                             102,333      156,458
  Due From Joint Venture                          697,243      495,183
  Prepaid expenses and other current assets        30,499       43,675
                                              ____________ ____________

                                                  866,661      758,391


OTHER ASSETS
  Property and equipment, net                     139,307      148,931
  Loans receivable from manufacturing agent       118,965      122,964
  Investment in unconsolidated joint venture    9,629,506   11,391,506
  Other assets                                      5,195        4,886
                                              ____________ ____________

     TOTAL ASSETS                             $10,759,634  $12,426,678
                                              ============ ============


</TABLE>





















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



                               -5-
<TABLE>
<CAPTION>
                              IGENE Biotechnology, Inc. and Subsidiaries
                                     Consolidated Balance Sheets
                                           (continued)

                                                                       June 30,    December 31,
                                                                          2004            2003
                                                                  _____________   _____________
                                                                   (Unaudited)
<S>                                                               <C>             <C>
LIABILITIES, REDEEMABLE PREFERED STOCK
  AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accounts payable and accrued expenses                           $    212,035    $    185,862
  Equipment lease payable                                                  ---           1,498
                                                                  _____________   _____________

     TOTAL CURRENT LIABILITIES                                         212,035         187,360

LONG-TERM LIABILITIES
  Notes payable                                                      5,842,267       5,842,767
  Convertible debentures                                             4,624,212       4,814,212
  Accrued interest                                                   3,800,899       3,398,272

REDEEMABLE PREFERRED STOCK
  Carrying amount of redeemable preferred
     stock, 8% cumulative, convertible,
     voting, series A, $.01 par value per
     share. Stated value was $ 18.08
     and $17.44, respectively.  Authorized
     1,312,500 shares, issued 18,509 and 25,605 respectively           334,643         454,745
                                                                  _____________   _____________

  Carrying amount of redeemable preferred stock,
     8% cumulative, convertible, voting, series B,
     $.01 par value per share.  Stated value $8.80 per share.
     Authorized, issued and outstanding zero and 187,500 shares,
     respectively, Redemption amount $1,500,000                            ---       1,650,000
                                                                  _____________   _____________

     TOTAL LIABILITIES                                              14,814,056      16,347,356
                                                                  _____________   _____________

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Common stock --- $.01 par value per share.
     Authorized 750,000,000 shares;
     issued and outstanding 98,003,270
     and 92,747,469 shares, respectively.                              980,033         927,475
  Additional paid-in capital                                        36,721,538      34,471,490
  Deficit                                                          (41,755,993)    (39,319,643)
                                                                  _____________   _____________

     TOTAL STOCKHOLDERS' DEFICIT                                    (4,054,422)     (3,920,678)
                                                                  _____________   _____________
     TOTAL LIABILITIES AND
     STOCKHOLDERS' DEFICIT                                        $ 10,759,634    $ 12,426,678
                                                                  =============   =============
</TABLE>
                    The accompanying notes are an integral part of the financial
                                            statements.

                                               -6-
<TABLE>
<CAPTION>
                                      IGENE Biotechnology, Inc. and Subsidiaries
                                        Consolidated Statements of Operations
                                                      (Unaudited)

                                                            Three months ended             Six months ended
                                                         __________________________   __________________________
                                                           June 30,      June 30,       June 30,      June 30,
                                                              2004          2003           2004          2003
                                                         ____________  ____________   ____________  ____________
<S>                                                      <C>           <C>            <C>           <C>
REVENUE
_______

  Sales - AstaXin(R)                                     $       ---   $   152,705    $       ---   $   463,486
  Cost of sales - AstaXin(R)                                     ---       143,962            ---       444,946
                                                         ____________  ____________   ____________  ____________

          GROSS PROFIT                                           ---         8,743            ---        18,540
                                                         ____________  ____________   ____________  ____________

OPERATING EXPENSES
__________________

  Marketing and selling                                      161,245       118,569        209,267       219,855
  Research, development and pilot plant                      195,522       223,004        403,932       378,401
  General and administrative                                 210,950       242,388        360,828       384,327
  Litigation expense                                          27,500           ---         40,580           ---
  Operating expenses reimbursed by Joint Venture            (380,131)     (564,381)      (743,175)     (564,381)
                                                         ____________  ____________   ____________  ____________

          TOTAL OPERATING EXPENSES                           215,086        19,580        271,432       418,202
                                                         ____________  ____________   ____________  ____________

          OPERATING LOSS                                    (215,086)      (10,837)      (271,432)     (399,662)

EQUITY IN LOSS OF UNCONSOLIDATED SUBSIDIARY               (1,088,000)     (347,000)    (1,762,000)     (347,000)

INTEREST EXPENSE                                            (213,182)     (177,901)      (402,918)     (383,132)
                                                         ____________  ____________   ____________  ____________

  NET LOSS FROM CONTINUING OPERATIONS                     (1,516,268)     (535,738)    (2,436,350)   (1,129,794)

DISCONTINUED OPERATIONS
_______________________

Gain on disposal of discontinued operations                      ---           ---            ---       237,437
                                                         ____________  ____________   ____________  ____________

           NET LOSS                                      $(1,516,268)  $  (535,738)   $(2,436,350)  $  (892,357)
                                                         ============  ============   ============  ============
BASIC AND DILUTED NET LOSS PER COMMON SHARE
  FROM CONTINUING OPERATIONS                             $     (0.02)        (0.01)   $     (0.03)        (0.01)
                                                         ____________  ____________   ____________  ____________

BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE
  FROM DISCONTINUED OPERATIONS                           $     (0.00)        (0.00)   $     (0.00)        (0.00)
                                                         ____________  ____________   ____________  ____________

BASIC AND DILUTED NET LOSS PER COMMON SHARE              $     (0.02)        (0.00)   $     (0.03)        (0.01)
                                                         ============  ============   ============  ============

</TABLE>







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

                                                         -7-
<TABLE>
<CAPTION>
               IGENE Biotechnology, Inc. and Subsidiaries
            Consolidated Statements of Stockholders' Deficit
                               (Unaudited)


                                                 Redeemable Preferred Stock
                                                       (shares/amount)
                                                 __________________________

<S>                                              <C>             <C>
Balance at January 1, 2003                          213,655      $1,947,774

Cumulative undeclared dividends
  on redeemable preferred stock                         ---           8,194

Conversion of preferred stock to common                 550          (9,416)

Exercise of warrants                                    ---             ---

Net loss for the six months ended June 30, 2003         ---             ---
                                                 ===========     ===========

Balance at June 30, 2003                            213,105      $1,946,552
                                                 ===========     ===========

Balance at January 1, 2004                          213,105      $2,104,745

Cumulative undeclared dividends
  on redeemable preferred stock                         ---           7,058

Conversion of preferred stock to common            (194,596)     (1,777,160)

Exercise of warrants                                    ---             ---

Net loss for the six months ended June 30, 2004         ---             ---
                                                 ===========     ===========

Balance at June 30, 2004                             18,509      $  334,643
                                                 ===========     ===========


</TABLE>


















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

                               -8-
<TABLE>
<CAPTION>
                                        IGENE Biotechnology, Inc. and Subsidiaries
                                     Consolidated Statements of Stockholders' Deficit
                                                 (Unaudited - Continued)

                                                                               Additional                  Total
                                                           Common Stock        Paid-in                     Stockholders'
                                                          (shares/amount)      Capital       Deficit       Deficit
                                                     _________________________ _____________ _____________ _____________
<S>                                                  <C>          <C>          <C>           <C>           <C>
Balance at January 1, 2003                            92,943,746  $   929,437  $ 22,387,604  $(37,120,502) $(13,803,461)

Cumulative undeclared dividends
  on redeemable preferred stock                              ---          ---        (8,450)          ---        (8,450)

Shares received and retired in ProBio Sale            (7,000,000)     (70,000)     (140,000)          ---      (210,000)

Investment in unconsolidated joint venture                   ---          ---    11,983,131           ---    11,983,131

Shares issued for manufacturing agreement              1,130,023       11,301        33,435           ---        44,736

Net loss for the six months ended June 30, 2003              ---          ---           ---      (892,357)     (892,357)
                                                     ============ ============ ============= ============= =============

Balance at June 30, 2003                              87,073,769  $   870,738  $ 34,255,721  $(38,012,859) $ (2,886,400)
                                                     ============ ============ ============= ============= =============

Balance at January 1, 2004                            92,747,469  $   927,475  $ 34,471,490  $(39,319,643) $ (3,920,678)

Cumulative undeclared dividends
  on redeemable preferred stock                              ---          ---        (7,058)          ---        (7,058)

Conversion of redeemable preferred stock                 389,192        3,892     1,773,268           ---     1,777,160

Shares issued for manufacturing agreement              1,361,609       13,616       171,263           ---       184,879

Shares reissued for ProBio agreement                   1,000,000       10,000       100,000           ---       110,000

Conversion of ProBio debentures                        1,900,000       19,000       171,000           ---       190,000

Shares issued for payment of legal services              250,000        2,500        25,000           ---        27,500

Conversion of Notes Payable                                5,000           50           325           ---           375

Exercise of employee stock options                       350,000        3,500        16,250           ---        19,750

Net loss for the six months ended June 30, 2004              ---          ---           ---    (2,436,350)   (2,436,350)
                                                     ============ ============ ============= ============= =============

Balance at June 30, 2004                              98,003,270  $   980,033  $ 36,721,538  $(41,755,993) $ (4,054,422)
                                                     ============ ============ ============= ============= =============

</TABLE>










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

                               -9-
<TABLE>
<CAPTION>
                            IGENE Biotechnology, Inc. and Subsidiaries
                              Consolidated Statements of Cash Flows
                                         (Unaudited)

                                                                        Six months ended
                                                                      June 30,       June 30,
                                                                         2004           2003
                                                                   ____________   ____________
<S>                                                                <C>            <C>
Cash flows from operating activities
  Net loss                                                         $(2,436,350)   $  (892,357)
  Adjustments to reconcile net loss to net cash used
  by operating activities:
     Depreciation                                                        9,624         11,784
     Amortization                                                          ---         54,729
     Issuance of Shares to Fermtech per ProBio agreement               110,000            ---
     Manufacturing cost paid in shares of common stock                 184,879         44,736
     Issuance of common stock for legal services                        27,500            ---
     Equity in loss of unconsolidated sub                            1,762,000        347,000

     Decrease (increase) in:
        Accounts receivable                                             58,125        (48,590)
        Inventory                                                          ---        374,709
        Due from Joint Venture                                        (202,060)           ---
        Prepaid expenses and other current assets                       12,866         43,729

     Increase (decrease) in:
        Accounts payable and accrued expenses                          428,800         29,974
                                                                   ============   ============

  Net cash used in operating activities                                (44,616)       (34,286)
                                                                   ============   ============

Cash flows from investing activities
  Capital (expenditures) and sales                                         ---          3,209
                                                                   ============   ============

  Net cash provided by investing activities                                ---          3,209
                                                                   ============   ============

Cash flows from financing activities
  Proceeds (repayment) from borrowing                                     (125)      (100,000)
  Payment of equipment lease                                            (1,498)           ---
  Proceeds from exercise of employee stock options                      19,750            ---
                                                                   ============   ============

  Net cash (used) provided by financing activities                      18,127       (100,000)
                                                                   ============   ============

  Net decrease in cash and cash equivalents                            (26,489)      (131,077)

  Cash and cash equivalents at beginning of period                      63,075        497,711
                                                                   ============   ============

  Cash and cash equivalents at end of period                       $    36,586    $   366,634
                                                                   ============   ============
Supplementary disclosure and cash flow information
__________________________________________________

Cash paid for interest                                             $    24,347    $    30,994
Cash paid for income taxes                                                 ---            ---

See Note (2) for non-cash investing and financing activities.
</TABLE>


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

                              -10-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements

(1)  Unaudited consolidated financial statements

     The   June   30,  2004,  consolidated  financial  statements
     presented  herein  are  unaudited, and  in  the  opinion  of
     management,  include  all adjustments  (consisting  only  of
     normal recurring accruals) necessary for a fair presentation
     of  financial position, results of operation and cash flows.
     Such  financial  statements  do  not  include  all  of   the
     information  and footnote disclosures normally  included  in
     financial  statements prepared in accordance with accounting
     principles  generally  accepted  in  the  United  States  of
     America.   This  quarterly report on Form 10-QSB  should  be
     read  in conjunction with Igene's Annual Report on Form  10-
     KSB for the year ended December 31, 2003.

(2)  Nature of Operations

     Igene  Biotechnology, Inc. (the "Company") was  incorporated
     under the laws of the State of Maryland on October 27,  1981
     as  "Industrial Genetics, Inc."  Igene changed its  name  to
     "IGI  Biotechnology, Inc." on August 17, 1983 and to  "Igene
     Biotechnology, Inc." on April 14, 1986.  Igene is located in
     Columbia,  Maryland  and  is  engaged  in  the  business  of
     industrial microbiology and related biotechnologies.   As  a
     result of the stock purchase, ProBio became our wholly-owned
     subsidiary.   Igene has operational subsidiaries  in  Norway
     and  Chile.   IGENE Biotechnology, Inc. (the  "Company")  is
     engaged  in  the  business  of  developing,  marketing,  and
     manufacturing  specialty ingredients for  human  and  animal
     nutrition.   Igene was formed to develop, produce and market
     value-added  specialty biochemical  products.   Igene  is  a
     supplier  of  natural astaxanthin, an essential nutrient  in
     different  feed applications and as a source of pigment  for
     coloring   farmed  salmon  species.   Igene  also   supplies
     nutraceutical ingredients, as well as consumer ready  health
     food  supplements, including astaxanthin.  Igene is  focused
     on  fermentation  technology,  pharmacology,  nutrition  and
     health   in  its  marketing  of  products  and  applications
     worldwide.

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

     In  an  effort to develop a dependable source of production,
     March  19,  2003,  Tate & Lyle PLC and  Igene Biotechnology,
     Inc.  announced  a 50:50 joint venture to produce AstaXin(R)
     for the aquaculture industry.   Production will utilize Tate
     & Lyle's  fermentation  capability  together with the unique
     technology  developed  by  Igene.  Part  of  Tate  &  Lyle's
     existing  Selby,  England,  citric  acid  facility  will  be
     modified  to  include the production of 1,500 tons per annum
     of  this  product.  Tate & Lyle's investment of  $25 million
     includes certain of its facility assets  currently  used  in
     citric acid production. Commercial production is expected to
     commence in the calendar year 2004.

(3)  Noncash investing and financing activities

     During  the  six  months ended June 30,  2004,  the  194,596
     shares  of  redeemable  preferred  stock,  with  a  recorded
     aggregate  value of $1,777,160, were converted into  389,192
     shares  of  common  stock.   This portion  included  the  8%
     Cumulative  Convertible Preferred Stock, Series  B  and  has
     relieved the company of this amount from long-term debt.

     During  the six months ended June 30, 2004, $190,000 of  the
     $1,000,000 of Convertible Debentures issued as part  of  the
     2001 ProBio purchase, were converted to common stock.  These
     shares  were  converted at $.10 per share, for  a  total  of
     1,900,000  shares.  These shares were issued and  the  notes
     cancelled.  This relieved the Company of $190,000  of  long-
     term debt.


                              -11-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)

     During  the  six months ended June 30, 2004, 250,000  shares
     were  issued  to  the  Company's   attorney  as  a  bonus in
     connection  with  the  settlement of the ADM matter.   These
     shares  were issued at an estimated value of $.11 per share,
     aggregating  to $27,500.  These costs were expensed  in  the
     second quarter as part of the ADM legal expense.

     During  the  six months ended June 30, 2004, $500  of  Notes
     Payable  were  converted using 5,000 warrants at  $.075  per
     share.   The  notes  and warrants were cancelled  and  5,000
     shares of common stock were issued.

     During the six months ended June 30, 2004, 350,000 shares of
     common  stock  were issued as part of employee stock  option
     exercises.  The Company received $19,750 based on an average
     exercise price of $.056 per share.

     During  the six months ended June 30, 2004 and 2003, Fermic,
     Igene's  manufacturing agent, earned 1,361,609 and 1,130,023
     shares,  respectively,  of  common  stock  as  part  of  the
     manufacturing agreement. Fermic earns 2,250 shares of common
     stock  for  each  kilogram  pure  Astaxanthin  produced  and
     delivered  as  part of the agreement. The average  price  is
     based  on  the  market value of the shares at the  time  the
     product  is  produced.   Fermic can earn  up  to  20,000,000
     shares  in  total under the contract.  The 1,361,609  shares
     were earned at an average price of $.135 per share for 2004,
     and 1,130,023 shares were earned at an average price of $.05
     per  share  for  2003.   Through June 30,  2004,  12,450,832
     shares  have been earned.  Any shares earned by Fermic  will
     be issued on a quarterly basis. Igene relied on Section 4(2)
     of  the  Securities Act of 1933, as amended,  to  issue  the
     shares to Fermic without registration under that act.  Igene
     relied on the representations and warranties of Fermic  made
     in    the   manufacturing   agreement   in   claiming    the
     aforementioned exemption.

     During  the  six months ended June 30, 2004  and  2003,  the
     Company recorded in each quarter dividends in arrears on  8%
     redeemable  preferred stock cumulating  at  $.16  per  share
     aggregating  to $7,058 and $8,449, respectively,  which  has
     been  removed  from  paid-in capital  and  included  in  the
     carrying value of the redeemable preferred stock.

     On  March 11, 2003, the Company entered into a Joint Venture
     Agreement  with  Tate  &  Lyle  Fermentation  Products  Ltd.
     ("Tate").  Pursuant  to  the Joint  Venture  Agreement,  the
     Company and Tate agreed to form a joint venture (the  "Joint
     Venture")  to  manufacture, market and sell Astaxanthin  and
     derivative products throughout the world for all uses  other
     than  as  a  Nutraceutical  or otherwise  for  direct  human
     consumption.  Tate contributed $24,600,000 in  cash  to  the
     Joint  Venture, while the Company has agreed to transfer  to
     the  Joint Venture its technology relating to the production
     of Astaxanthin and assets related thereto. These assets will
     continue to be used by the Joint Venture in the same  manner
     as  historically used by the Company.  The Company and  Tate
     each have a 50% ownership interest in the Joint Venture  and
     equal  representation  on  the Board  of  Directors  of  the
     Company.   The value of the Company's technology  investment
     was  deemed equivalent to the cash contribution made by Tate
     &  Lyle.   Unamortized production costs  in  the  amount  of
     $316,869 were contributed to the Joint Venture reducing  the
     adjustment to additional paid in capital.

     In  February,  2003,  Igene sold its  subsidiary  ProBio  to
     Fermtech  AS in exchange for aggregate consideration  valued
     at approximately $343,000, consisting of 7,000,000 shares of
     Igene  common  stock (including 2,000,000 shares  that  were
     placed  into  escrow  and  may be reissued  to  Fermtech  as
     described below), valued for the purposes of the acquisition
     at   $.03  per  share,  plus  forgiveness  of  approximately
     $168,000  of debt that Igene owed to ProBio at the  time  of
     purchase in 2001.  The escrowed 2,000,000 shares   were   to
     be earned by  Fermtech  based upon Mr.  Benjamin's continued


                              -12-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)


     employment with the Company.   As  Mr.  Benjaminsen remained
     employed  by Igene through  2003,  1,000,000 of the escrowed
     shares  of  common stock were delivered to Fermtech.   These
     shares were  expensed  in  the  second quarter of 2004, as a
     marketing expense of $110,000.   If Mr.  Benjaminsen remains
     employed  by  Igene   through  2004, the remaining 1,000,000
     escrowed shares  will  be released from escrow and delivered
     to Fermtech.

     During  the  six  months ended June 30,  2003,  the  Company
     elected  to  extend repayment on demand notes of  $6,043,659
     and  related accrued interest of $2,865,810 until March  31,
     2006.

(4)  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 Chile  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.   These  losses and gains occurred  primarily  as  a
     result  of  the effect of valuation of the Chilean  Peso  on
     Igene's  accounts receivables, which are mostly  denominated
     in Pesos.

(5)  Joint Venture

     On  March 18, 2003, the Company entered into a Joint Venture
     Agreement  with  Tate  &  Lyle  Fermentation  Products  Ltd.
     ("Tate").   Pursuant  to  a  Joint  Venture  Agreement,  the
     Company  and  Tate  agreed  to form  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 has agreed to contribute  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 Joint
     Venture Company.  Unamortized production costs in the amount
     of  $316,869 were contributed to the Joint Venture  reducing
     the adjustment to additional paid in capital.

     The  Joint Venture is accounted for under the equity method.
     Astaxanthin  revenue is recorded on the books of  the  Joint
     Venture.  Certain costs incurred by Igene are reimbursed  by
     the  Joint Venture.  These reimbursements are reported as  a
     contra  amount  in  the  Operating Expense  section  of  the
     Igene's Consolidated Statements of Operations.

(6)  Stockholders' Equity (Deficit)

     As  of  June  30,  2004 and 2003, 37,018 and 52,310  shares,
     respectively, of authorized but unissued common  stock  were
     reserved   for  issue  upon  conversion  of  the   Company's
     outstanding preferred stock.

     As  of  June  30,  2004 and 2003, 74,354,500 and  74,604,500
     shares,  respectively,  of authorized  but  unissued  common
     stock  were reserved for issue and exercise pursuant to  the
     Company's Employee Stock Option Plans.

     As  of  June  30,  2004 and 2003, 10,000,000  and  6,666,666
     shares,  respectively,  of authorized  but  unissued  common
     stock  were reserved for distribution and exercise  pursuant
     to  a  stock  option  agreement with past  officers  of  the
     Company.


                              -13-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)

     As   of  June  30,  2004  and  2003,  17,565,970  shares  of
     authorized but unissued common stock were reserved  for  the
     conversion  of outstanding convertible promissory  notes  in
     the  aggregate amount of $1,082,500 held by directors of the
     Company.

     As   of  June  30,  2004  and  2003,  66,427,651  shares  of
     authorized but unissued common stock were reserved  for  the
     conversion of outstanding convertible promissory notes  held
     by directors of the Company.

     As  of  June  30,  2004 and 2003, 8,100,000  and  10,000,000
     shares,  respectively,  of authorized  but  unissued  common
     stock  were  reserved  for  the  conversion  of  outstanding
     convertible promissory notes issued as part of the  purchase
     of ProBio.

     As  of  June  30, 2004 and 2003, 205,261,073 and 198,016,073
     shares,  respectively,  of authorized  but  unissued  common
     stock   were   reserved  for  the  exercise  of  outstanding
     warrants.

     As  of  June  30,  2004 and 2003, 7,549,168  and  10,566,708
     shares,  respectively,  of authorized  but  unissued  common
     stock  were reserved for issuance to the Company's  contract
     manufacturer   pursuant  to  the  terms   of   the   current
     manufacturing contract.

(7)  Basic and diluted net loss per common share

     Basic  and  diluted net loss per common share for  the  six-
     month  periods  ended June 30, 2004 and 2003,  is  based  on
     94,871,391 and 86,524,457 shares, respectively, of  weighted
     average   common  shares  outstanding.   For   purposes   of
     computing net loss per common share, the amount of net  loss
     has  been  increased by cumulative undeclared  dividends  in
     arrears  on  preferred  stock in the amount  of  $7,058  and
     $8,449  for  the  six months ended June 30, 2004  and  2003,
     respectively.   No adjustment has been made for  any  common
     stock equivalents outstanding because their effects would be
     antidilutive.

(8)  Income Taxes

     The  Company  uses  the liability method of  accounting  for
     income  taxes  as required by SFAS No. 109, "Accounting  for
     Income  Taxes".   Under  the liability method,  deferred-tax
     assets  and  liabilities are determined based on differences
     between the financial statement carrying amounts and the tax
     bases  of  existing assets and liabilities (i.e.,  temporary
     differences) and are measured at the enacted rates that will
     be  in  effect  when  these differences  reverse.   Deferred
     income  taxes  will  be recognized when it  is  deemed  more
     likely  than  not that the benefits of such deferred  income
     taxes will be realized; accordingly, all net deferred income
     taxes have been eliminated by a valuation allowance.

(9)  Uncertainty

     Igene has incurred net losses in each year of its existence,
     aggregating approximately $41,700,000 from inception to June
     30,  2004 and its liabilities and redeemable preferred stock
     exceeded  its  assets by approximately  $4,054,000  at  that
     date.  These factors indicate that Igene will not be able to
     continue  in existence unless it is able to raise additional
     capital and attain profitable operations.

     The  continuing  successful marketing  of  Igene's  product,
     AstaXin(R),   has   permitted  Igene   the  opportunity   to
     attract  additional  capital  through it's venture with Tate
     and  Lyle. Igene  began manufacturing and selling AstaXin(R)
     during  1998 and  has continued to do so to date, attempting
     to increase sales and manufacturing levels.  Igene  believes
     this technology  to  be  highly  marketable.  Igene hopes to
     continue   increasing   sales   of   AstaXin(R),  eventually
     achieving   gross   profits   and,  subsequently, profitable
     operations,   although  the  achievement  of these cannot be
     assured.
                              -14-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)

(10) Stock Based Compensation

     The  Company accounts for its stock based compensation plans
     under  the  recognition and measurement  principles  of  APB
     opinion  No. 25, "Accounting for Stock Issued to Employees",
     and related interpretations.  No stock option based employee
     compensation cost is reflected in net income, as all options
     granted  under the plan had an exercise price equal  to  the
     market  value of the underlying common stock on the date  of
     grant.   The following table illustrates the effect  on  net
     income and earnings per share if the Company had applied the
     fair   value  recognition  provisions  of  SFAS   No.   123,
     "Accounting  for  Stock-Based Compensation"  and  disclosure
     provisions  of  SFAS  No. 148, "Accounting  for  Stock-Based
     Compensation-Transition  and  Disclosure",  to   stock-based
     employee  compensation for the three and  six  months  ended
     June 30:

<TABLE>
<CAPTION>
                                                            Three months ended         Six months ended
                                                        _________________________  _________________________
                                                           June 30,     June 30,      June 30,     June 30,
                                                              2004         2003          2004         2003
                                                        ____________ ____________  ____________ ____________
     <S>                                                <C>          <C>           <C>          <C>
     Net loss:
       As reported                                      $(1,516,268) $  (535,738)  $(2,436,350) $  (829,357)
     Less pro forma stock-based employee
       compensation expense determined under
       fair value based method net of related
       tax effects                                         (156,892)    (159,578)     (330,447)    (264,162)
                                                        ____________ ____________  ____________ ____________

     Net loss                                           $(1,673,160) $  (695,316)  $(2,766,797) $(1,156,519)
                                                        ============ ============  ============ ============
     Net loss per Share:
       Basic - as reported                              $     (0.01) $     (0.01)  $     (0.03) $     (0.01)
       Basic - pro forma                                $     (0.01) $     (0.01)  $     (0.03) $     (0.01)

       Diluted - as reported                            $     (0.01) $     (0.01)  $     (0.03) $     (0.01)
       Diluted - pro forma                              $     (0.01) $     (0.01)  $     (0.03) $     (0.01)

</TABLE>

(11) Recent Accounting Pronouncements

     In  April  2003,  the Financial Accounting  Standards  Board
     ("FASB") issued Statements of Financial Accounting Standards
     ("SFAS") No. 149, "Amendment of  Statement 133 on Derivative
     Instruments and Hedging Activities". SFAS No. 149 amends and
     clarifies  financial accounting and reporting for derivative
     instruments,   including   certain  derivative   instruments
     embedded  in  other  contracts, and for  hedging  activities
     under  SFAS  No. 133, "Accounting for Derivative Instruments
     and  Hedging  Activities".  This statement is effective  for
     contracts entered into or modified after June 30,  2003  and
     for  hedging relationships designated after June  30,  2003.
     There  was  no  material impact on the  Company's  financial
     condition  or  results of operations upon adoption  of  this
     statement.

     In  May  2003,  the  Financial  Accounting  Standards  Board
     ("FASB")  issued  SFAS  No.  150,  "Accounting  for  Certain
     Financial   Instruments   with   Characteristics   of   Both
     Liabilities and Equity".  SFAS No. 150 establishes standards
     for  how an issuer classifies and measures certain financial
     instruments  with  characteristics of both  liabilities  and
     equity.     It  requires  that an  issuer  classify  certain
     financial   instruments   as   a  liability,  although   the
     financial instrument may previously  have been classified as
     equity.   This  statement  is   effective   for    financial
     instruments  entered  into  or  modified  after May 31, 2003
     and otherwise is  effective  at the  beginning  of the first
     interim period beginning  after June  15,  2003.  The effect
     of adopting this pronouncement required the reclassification
     of  $2.04  million  of  redeemable  preferred  stock  as   a
     liability as of December 31, 2003.


                              -15-

            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)


     In  January  2003,  the  FASB issued Interpretation  No.  46
     "Consolidation  of  Variable Interest Entities"  ("FIN  46")
     which  explains identification of variable interest entities
     and  the  assessment of whether to consolidate the entities.
     FIN  46  requires existing unconsolidated variable  interest
     entities  to  be consolidated by their primary beneficiaries
     if  the entities do not effectively disperse risk among  the
     involved  parties.  The provisions of FIN 46  are  effective
     for  all financial statements issued after January 1,  2003.
     The  Company  had  no significant variable interest  in  any
     entities  which  would require disclosure or  consolidation.
     The  Company's investment in the Joint Venture does not meet
     the criteria of a variable interest entity under Fin 46.

(12) Summary of Significant Activity of Joint Venture

     The  following  statement displays the significant  activity
     for  the  Joint Venture for the three and six  month   ended
     June 30, 2004.  As shown, 50% of the activity is recorded as
     part   of  Igene's  Financial  Statements  as  income   from
     investment in Joint Venture:

<TABLE>
<CAPTION>
                                        Three Months      Six Months
                                           Ended            Ended
                                        June 30, 2004   June 30, 2004
                                        _____________   _____________
<S>                                     <C>             <C>
     Net Sales                          $    862,000    $  2,006,000
     Less: manufacturing cost             (2,125,000)     (3,998,000)
                                        _____________   _____________

     Gross Profit                         (1,263,000)     (1,982,000)
     Less: selling, general and admin       (910,000)     (1,532,000)
                                        _____________   _____________

     Operating Loss                       (2,173,000)     (3,514,000)
     Interest Expense                         (3,000)        (10,000)
                                        _____________   _____________

     Loss before tax                    $ (2,176,000)   $ (3,524,000)
                                        =============   =============

     50% equity interest Igene          $ (1,088,000)   $ (1,762,000)
                                        =============   =============

</TABLE>


















                              -16-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations


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

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

Overview of Financial Position
______________________________

    During the six-month periods ended June 30, 2004 and 2003, in
addition to the Joint Venture discussed in more detail below, the
following  actions  materially affected the  Company's  financial
position.

During the six months ended June 30, 2004,  194,596  shares
      of  redeemable  preferred  stock, with a recorded aggregate
      value of $1,777,160,  were converted into 389,192 shares of
      common  stock.   This  portion  included  the 8% Cumulative
      Convertible Preferred Stock, Series B preferred  securities
      and  has relieved the company of this amount from long-term
      debt.

During the six months ended June 30, 2004, $190,000 dollars
      of the  $1,000,000 of Convertible Debentures issued as part
      of  the  2001  ProBio  purchase,  were  converted to common
      stock. These shares were converted at $.10 per share, for a
      total of 1,900,000 shares. These shares were issued and the
      notes cancelled, which relieved the  Company  of  $190,000,
      of long-term debt.

Increases in  accounts  payables  and  accrued expenses  of
      $428,800 and  decreases  in  accounts receivable of $58,125
      were sources of cash.   These were reduced by increases due
      from Joint Venture of $202,060.

The  carrying  value  of redeemable  preferred   stock  was
      increased   and   paid-in  capital   available   to  common
      shareholders was  decreased by $7,058 in 2004 and $8,194 in
      2003, reflecting  cumulative unpaid dividends on redeemable
      preferred stock.

Proceeds of employee stock options provided $19,750 in cash
      flows.

During  the  quarter  ended  June 30,  2004,  the  Joint  Venture
commissioned the Selby Production facility.  Through  the  second
quarter  this  plant has been in the start-up  phase.   This  has
resulted  in the reported losses for the quarter as equipment  is
brought  on-line and initially utilized for production  activity.

                              -17-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

      In  December 1988, as part of an overall effort to  contain
costs  and  conserve working capital, Igene suspended payment  of
the quarterly dividend on its preferred stock.  Resumption of the
dividend  will  require significant improvements  in  cash  flow.
Unpaid  dividends cumulate for future payment or addition to  the
liquidation  preference  or redemption  value  of  the  preferred
stock.   As  of  June  30, 2004, total dividends  in  arrears  on
Igene's preferred stock total $186,571 ($10.08 per share) and are
included in the carrying value of the redeemable preferred stock.

Critical Accounting Policies
____________________________

      The  preparation of our financial statements in  conformity
with   accounting  principles  generally  accepted  in  the  U.S.
requires  management to make judgments, assumptions and estimates
that affect the amounts reported in our financial statements  and
accompanying notes.  Actual results could differ materially  from
those  estimates.  The following are critical accounting policies
important to our financial condition and results presented in the
financial statements and require management to make judgments and
estimates that are inherently uncertain:

      The 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 will enter into a lease of real  property
with  an affiliate of Tate & Lyle in Selby, England upon which  a
new  manufacturing facility will be 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.

Results of Operations
_____________________

Sales and other revenue

    As  part  of  the Joint Venture agreement, all further  sales
are  recognized  through the venture company.   Therefore,  Igene
recorded no sales of AstaXin(R) during the six months ended  June
30, 2004.  Sales of AstaXin(R) during the quarter ended 2003 were
$152,705 and sales for the six-month periods ended June 30,  2003
were  $463,486.  Sales activity for the Joint Venture are  report
below.   Sales  have  been limited in the past  quarters  due  to
insufficient production quantity.  As of June 30, 2003, Igene had
sold  the remaining inventory in the Company's possession to  the
Joint  Venture  per  the  Joint  Venture  Agreement.   Management
anticipates that the Joint Venture with Tate & Lyle will  provide
a  more  dependable  product flow.   However,  there  can  be  no
assurance  of  the  dependability  of  production,  or  that  any
increases in sales will occur, or that they will be material.









                              -18-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

Cost of sales and gross profit

     As with  sales  revenue,  future cost  of  sales  and  gross
profits  will  be recognized through the venture company.   Igene
reported  no  gross  profit  on  sales  of AstaXin(R) for the six
months ended June 30, 2004.  Gross profit on sales of  AstaXin(R)
was  $8,743  for  the quarter ended June 30, 2003 and was $18,540
for the six month period ended June 30, 2003. Gross profit was 4%
of sales for the six  months ended June 30,  2003.   The  Company
attributes  the fall in gross profit to a combination of  pricing
pressure   in   the  market  and  inefficiencies  in  production.
Management  expects the level of gross profit to improve  in  the
future  as a percentage of sales.  Demand is expected to increase
as  the  Company  increases  customer  usage  and  market  share.
Management  expects  the level of gross profit  to  improve  with
expected  increases in production efficiency  received  from  the
Joint  Venture  with Tate & Lyle offsetting pricing  competition,
but  can  provide no assurances as to future increased production
or gross profit.

     Cost of  sales  for  the quarter ended June  30,  2003,  was
$143,962.  Cost of sales for quarter ended June 30, 2004 was $0.

Marketing and selling expenses

     For  the  quarters  ended  June 30,  2004  and  2003,  Igene
recorded  marketing and selling expense in the amount of $161,245
and  $118,569, respectively, an increase of $42,676 or 36%.   For
the  six  months  ended  June 30, 2004 and 2003,  Igene  recorded
marketing  and  selling  expense in the amount  of  $209,267  and
$219,855, respectively, a decrease of $10,588 or 5%.  As a result
of  the  disposition of it's ProBio subsidiary in February  2003,
Igene  had expected reduced marketing and selling costs  incurred
as  part  of the prior combination with ProBio, such as increased
sales  force.   In  addition, the reduction  of  salable  product
currently  available to Igene from its current  manufacturer  was
expected  to  cause a corresponding reduction  in  marketing  and
selling  expense.   The  current  period  marketing  and  selling
expense   increased  as  a  result  of  recognizing  the  expense
associated   with  the  shares  issued  to  Fermtech.    As   Mr.
Benjaminsen remained employed by Igene through 2003, 1,000,000 of
the  escrowed shares of common stock were delivered to  Fermtech.
A marketing and selling expense of $110,000 was recognized in the
second  quarter  as a result of the issuance  of  the  shares  of
common  stock.   If  Mr. Benjaminsen remains  employed  by  Igene
through  2004,  the remaining 1,000,000 escrowed shares  will  be
released from escrow and delivered to Fermtech.   As a result  of
the  Joint  Venture  with Tate and Lyle, Igene  is  expecting  an
increase  in  salable  product with a corresponding  increase  in
marketing and sales costs at the point the new facility increases
its  level of production.  Additionally, as a result of the Joint
Venture,  these  expenses are reimbursed to  Igene.  However,  no
assurances  can  be made in regards to increased production  from
the new facility nor with regard to the corresponding increase in
marketing and selling costs.

Research, development and pilot plant expenses

     For the quarter ended June 30, 2004 and 2003, Igene recorded
research  and  development costs in the amount  of  $195,522  and
$223,004,  respectively, a decrease of $27,482 or 12%.   For  the
six  months ended June 30, 2004 and 2003, Igene recorded research
and  development  costs in the amount of $403,932  and  $378,401,
respectively,  an  increase of $25,531 or 7%.   These  costs  are
expected  to remain relatively constant in support of  increasing
the    efficiency   of   the   manufacturing   process    through
experimentation  in the Company's pilot plant, developing  higher
yielding strains of yeast and other improvements in the Company's
AstaXin(R)  technology.  Igene is hoping  this will  lead  to  an
increase  in salable product at a reduced cost to Igene  and  the
Joint Venture.  However no assurances can be made in that regard.
These  costs are currently funded through reimbursement from  the
Joint Venture.



                              -19-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

Operating expenses

     General  and  administrative expenses for the quarter  ended
June 30, 2004 and 2003 were $210,950 and $242,388 respectively, a
decrease  of $31,438 or 13%.  General and administrative expenses
for the six months ended June 30, 2004 and 2003 were $360,828 and
$384,327 respectively, a decrease of $23,499 or 6%.  These  costs
are  expected to remain constant, as Igene works to keep overhead
costs  at  a  reduced  level  and spend  funds  on  research  and
development  efforts.   A  portion of  this  cost  is  funded  by
reimbursement  through the Joint Venture and the  remainder  will
need  to  be  funded  through profitable  operations  or  through
contributions  from directors; though neither  of  these  can  be
assured.

Litigation expenses

     Previously reported litigation (original lawsuit filed  July
21,  1997,  U.S.  District Court, Baltimore, MD)  between  Archer
Daniels Midland, Inc. ("ADM") and Igene, involving allegations of
patent  infringement and counterclaims concerning  the  theft  of
trade secrets, was resolved on September 29, 2003.  Resolution of
the  dispute  between  ADM  and  Igene  did  not  result  in   an
unfavorable  outcome to Igene.  Igene will continue to  make  and
sell  its  product, AstaXin(R).  The Company incurred $27,500  of
litigation expenses for the three months ended June 30, 2004, and
$40,580  for the six months ended June 30, 2004.  During the  six
months  ended  June 30, 2004, 250,000 shares were issued  to  the
Company attorney, as a bonus in connection with the settlement of
the  ADM matter.  These shares were issued at an estimated  value
of  $.11  per  share,  aggregating  $27,500.   These  costs  were
expensed in the second quarter as part of the litigation expense.
With  the  settlement  of  this matter,  the  related  costs  are
expected to cease.

Interest expense

     Interest  expense for the quarters ended June 30,  2004  and
2003  was  $213,182 and $177,901, respectively,  an  increase  of
$35,281 or 20%.  For the six months ended June 30, 2004 and 2003,
interest  expense  was  $402,918 and $383,132,  respectively,  an
increase  of  $19,786  or  5%  The interest  expense  was  almost
entirely  composed  of  interest  on  the  Company's  long   term
financing from its directors and other stockholders, and interest
on  the Company's subordinated debenture in both periods.  It  is
expected  this  number  may decrease due to  the  conversions  by
holders of long term debt to equity.

Equity in earnings of unconsolidated subsidiary

     The  following  statement displays the significant  activity
for the Joint Venture for the three and six month  ended June 30,
2004.   As  shown,  50% of the activity is recorded  as  part  of
Igene's  Financial Statements as income from investment in  Joint
Venture:

<TABLE>
<CAPTION>
                                        Three Months      Six Months
                                           Ended            Ended
                                        June 30, 2004   June 30, 2004
                                        _____________   _____________
<S>                                     <C>             <C>
     Net Sales                          $    862,000    $  2,006,000
     Less: manufacturing cost             (2,125,000)     (3,998,000)
                                        _____________   _____________

     Gross Profit                         (1,263,000)     (1,982,000)
     Less: selling, general and admin       (910,000)     (1,532,000)
                                        _____________   _____________

     Operating Loss                       (2,173,000)     (3,514,000)
     Interest Expense                         (3,000)        (10,000)
                                        _____________   _____________

     Loss before tax                    $ (2,176,000)   $ (3,524,000)
                                        =============   =============

     50% equity interest Igene          $ (1,088,000)   $ (1,762,000)
                                        =============   =============

</TABLE>

                              -20-


           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

     As  a result of the Joint Venture, the production, sales and
marketing  of  Astaxanthin now take place in  the  unconsolidated
Joint  Venture subsidiary.  For the quarter ended June 30,  2004,
Igene's  portion  of the Joint Venture loss was $1,088,000.   The
loss  was  a  result of a 50% interest in the  following:   Gross
profit  (loss)  for  the  quarter was $(1,263,000)  on  sales  of
$862,000,  less  manufacturing cost of $2,125,000.   Selling  and
general  and administrative expenses for the period were $910,000
and  interest income (expense) was $(3,000).  The resulting  loss
before tax was $2,176,000.  For the quarter ended June 30,  2004,
Igene's 50% portion of the Joint Venture loss was $1,088,000.

     During  the  quarter ended June 30, 2004, the Joint  Venture
commissioned the Selby Production facility.  Through  the  second
quarter  this  plant has been in the start-up  phase.   This  has
resulted  in the reported losses for the quarter as equipment  is
brought  on-line and initially utilized for production  activity.

Disposition of ProBio Subsidiary

     As  reported  on Form 8-K filed on February  20,  2003,  the
Company,  in  an  effort to focus on and grow its core  business,
disposed  of all 10,000 of the issued and outstanding  shares  of
capital  stock  of its former subsidiary, ProBio  Nutraceuticals,
AS,  a Norwegian corporation.  Fermtech AS, a joint stock company
incorporated  in the Kingdom of Norway and owned equally  by  our
then  chief  executive officer, Stein Ulve  and  our  then  chief
marketing  officer,  Per  Benjaminsen, purchased  the  shares  of
ProBio.   Effective December 31, 2002, Mr. Ulve resigned  as  CEO
and  director of Igene and Mr. Benjaminsen ceased acting  as  our
chief marketing officer, though Mr. Benjaminsen has maintained  a
position with Igene.

     The  amount  of consideration paid for ProBio was determined
through  arms-length  negotiations between Igene  management,  on
behalf  of  Igene,  and  Mr. Ulve, on behalf  of  Fermtech.   The
principles followed in determining the amount paid for the ProBio
shares  involved  consideration  of  ProBio's  cash  flow,   cash
position, revenue and revenue prospects.

     The  equipment  and  other  physical  property  disposed  of
belonging to ProBio included inventory, personal computers, a web
site  and  trademark, other office equipment and  furniture,  and
accounts   receivables   and   accounts   payables   related   to
nutraceuticals.   For the nine months ended September  30,  2002,
the  net operating loss of the division being sold as ProBio  was
$340,632,  on  sales  of  $1,555,014, and  is  reflected  on  the
September  30,  2002 income statement of Igene  as  a  loss  from
discontinued operations.

Gain on disposition

     Igene  sold ProBio to Fermtech AS in exchange for  aggregate
consideration  valued  at approximately $343,000,  consisting  of
7,000,000  shares of Igene common stock that was owned by  ProBio
(including 2,000,000 shares that were placed into escrow and  may
be  reissued  to  Fermtech as described below),  valued  for  the
purposes  of  the acquisition at $.03 per share, plus forgiveness
of  approximately $168,000 of debt that Igene owed to  ProBio  at
the  time  of  purchase  in  2001. As  Mr.  Benjaminsen  remained
employed by Igene through 2003, 1,000,000 of the escrowed  shares
of  common  stock were delivered to Fermtech. These  shares  were
expensed in the second quarter of 2004, as a marketing expense of
$110,000.   If Mr. Benjaminsen remains employed by Igene  through
2004,  the  remaining 1,000,000 escrowed shares will be  released
from  escrow and delivered to Fermtech.  Gain on disposal  during
the first quarter of 2003 was $237,427.  This gain was a one-time
occurrence  as  a  result of the disposition of  the  assets  and
liabilities associated with ProBio.



                              -21-

           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

Net loss and basic and diluted net loss per common share

     As a  result  of  the  foregoing, the Company  reported  net
losses of $1,516,268 and $535,738, respectively, for the quarters
ended June 30, 2004 and 2003, an increase in the loss of $980,530
or  183%.  This represents a loss of $.02 and $.01 per basic  and
diluted  common  share in the quarters ended June  30,  2004  and
2003,  respectively.  The weighted average number  of  shares  of
common  stock outstanding of 94,871,391 and 86,524,457,  for  the
quarters ended June 30, 2004 and 2003, respectively, increased by
8,012,212  shares.  This  resulted  from  the  weighted   average
adjustments  of  the  following  transactions:  the  issuance  of
1,905,000  shares  issued in conversion  of  debentures,  389,192
shares   of  common  stock  in  conversion  of  preferred  stock,
3,017,543  shares  issued  to the manufacturer  as  part  of  the
agreement,  1,000,000 shares issued to Fermtech as  part  of  the
ProBio  disposition agreement, and 450,000 shares issued as  part
of  employee stock option exercises, and 250,000 shares issued as
a bonus to the Company attorney in the ADM matter.

Liquidity and Capital Resources

     Historically, Igene  has  been funded  primarily  by  equity
contributions and loans from stockholders. As of June  30,  2004,
Igene  had  working  capital  of  $654,626,  and  cash  and  cash
equivalents  of  $36,586.   Currently Igene  is  also  funded  by
research and development reimbursements from the Joint Venture.

     Cash used  by  operating  activities  during  the  six-month
period  ended  June  30, 2004 and 2003 amounted  to  $44,616  and
$34,286, respectively, an increase in cash used of $10,330.

     Cash of $3,209 was provided by investing activities on asset
sales  for  the six months ended June 30, 2003, and no  cash  was
provided for the six-month period ended June 30, 2004.

    Cash  was used by financing activities in repayment of  loans
in the amount of $100,000 for the six-month period ended June 30,
2003,  as opposed to the $18,127 provided by financing activities
for   the  six-month  period  ended  June  30,  2002.   Financing
activities  consisted  primarily of employee  stock  option  plan
purchases.

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

     The  Company  does  not believe that  inflation  has  had  a
significant impact on its operations during the six-month periods
ended June 30, 2004 and 2003.

Item 3.  Controls and Procedures

As  of the end of the most recently completed fiscal quarter, the
Company's  management, with the participation  of  the  principal
executive  officer and principal financial officer, has evaluated
the  effectiveness  of  the  Company's  disclosure  controls  and
procedures,  and  has  concluded that  the  Company's  disclosure
controls  and procedures are effective to ensure that information
required  to be disclosed by the Company in the reports  that  it
files  or  submits under the Securities Exchange Act of 1934,  as
amended,   is  accumulated  and  communicated  to  the  Company's
management,   including  its  principal  executive  officer   and
principal  financial  officer, as  appropriate  to  allow  timely
decisions  regarding  required disclosure and  are  effective  to
ensure  that such information is recorded, processed,  summarized
and reported within the time periods specified in the SEC's rules
and forms.

There  were no changes in Igene's internal control over financial
reporting that occurred during the last fiscal quarter  that  has
materially  affected,  or  is  reasonably  likely  to  materially
affect, the Company's internal control over financial reporting.

                              -22-

                    IGENE Biotechnology, Inc.
                             PART II
                        OTHER INFORMATION

Item 2.  Changes in Securities and Small Business Issuer
         Purchases of Equity Securities.

     During  the  six months ended June 30, 2004, 250,000  shares
were  issued to the Company's attorney as  a bonus  in connection
with the settlement of the ADM matter.  These  shares were issued
at an estimated value of $.11 per share, aggregating to  $27,500.
These  costs  were  expensed in the second quarter as part of the
ADM legal expense.

     In  February,  2003,  Igene sold its  subsidiary  ProBio  to
Fermtech  AS  in exchange for aggregate consideration  valued  at
approximately $343,000, consisting of 7,000,000 shares  of  Igene
common  stock (including 2,000,000 shares that were  placed  into
escrow  and  may  be  reissued to Fermtech as  described  below),
valued  for  the purposes of the acquisition at $.03  per  share,
plus  forgiveness of approximately $168,000 of  debt  that  Igene
owed  to  ProBio at the time of purchase in 2001.   The  escrowed
2,000,000  shares were to be earned by Fermtech  based  upon  Mr.
Benjamin's  continued  employment  with  the  Company.   As   Mr.
Benjaminsen remained employed by Igene through 2003, 1,000,000 of
the  escrowed shares of common stock were delivered to  Fermtech.
These  shares were expensed in the second quarter of 2004,  as  a
marketing  expense  of  $110,000.   If  Mr.  Benjaminsen  remains
employed  by Igene through 2004, the remaining 1,000,000 escrowed
shares will be released from escrow and delivered to Fermtech.

Limitation on Payment of Dividends
__________________________________

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

Item 3.  Defaults Upon Senior Securities.

     In  December 1988, as part of an overall effort  to  contain
costs and conserve working capital, the Company suspended payment
of  the quarterly dividend on its preferred stock.  Resumption of
the  dividend will require significant improvements in cash flow.
Unpaid  dividends cumulate for future payment or addition to  the
liquidation  preference  or redemption  value  of  the  preferred
stock.   As of June 30, 2004, total dividends in arrears  on  the
Company's  preferred stock total $186,571 ($10.08 per  share) and
are  included  in the carrying value of the redeemable  preferred
stock.

Item 4.  Submission of Matters to a Vote of Security Holders.

     At  the annual meeting of stockholders held on June 8, 2004,
the  following matter was submitted for a stockholders' vote  and
was  approved by the requisite number of votes: the  election  of
five  directors  of  the  Company. The  directors  nominees  were
Stephen F. Hiu, Thomas L. Kempner, Michael G. Kimelman, Sidney R.
Knafel, and Patrick F. Monahan.

     Results of the voting were as follows:
<TABLE>
<CAPTION>
                                                    Votes                         Broker
                                     Votes          Against or     Votes          Non-
                                     For            Withheld       Abstained      Votes
                                     __________     __________     __________     __________
     <S>                             <C>            <C>            <C>            <C>
     (1)  Election of Directors
          Stephen F. Hiu             73,185,546         98,950          ---             ---
          Thomas L. Kempner          73,185,546         98,950          ---             ---
          Michael G. Kimelman        73,185,546         98,950          ---             ---
          Sidney R. Knafel           73,185,546         98,950          ---             ---
          Patrick F. Monahan         73,185,546         98,950          ---             ---

</TABLE>
                              -23-

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     Exhibit 3.1 - Articles of Incorporation of the Registrant as
             amended  to  date,  constituting  Exhibit   3.1   to
             Registration  Statement No. 333-41581 on  Form  SB-2
             are incorporated herein by reference.

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

     Exhibit 31(a) - Certification of Principal Executive Officer
     	       pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)

     Exhibit 31(b) - Certification of Principal Financial Officer
             pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)

     Exhibit  32(a)  -  Certification of Chief Executive  Officer
             pursuant to 18 U.S.C. SECTION 1350.

     Exhibit  32(b)  -  Certification of Chief Financial  Officer
             pursuant to 18 U.S.C. SECTION 1350.




































                              -24-

                           SIGNATURES


In  accordance  with  the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



                                 IGENE Biotechnology, Inc.
                                 ______________________________
                                 (Registrant)




Date   August 13, 2004           By  /s/ STEPHEN F. HIU
       _______________               __________________________
                                         STEPHEN F. HIU
                                         President




Date   August 13, 2004          By  /s/ EDWARD J. WEISBERGER
       _______________              ___________________________
                                        EDWARD J. WEISBERGER
                                        Chief Financial Officer





























                              -25-

                          EXHIBIT INDEX


     Exhibit 3.1 - Articles of Incorporation of the Registrant as
             amended  to  date,  constituting  Exhibit   3.1   to
             Registration  Statement No. 333-41581 on  Form  SB-2
             are incorporated herein by reference.

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

     Exhibit 31(a) - Certification of Principal Executive Officer
             pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)

     Exhibit 31(b) - Certification of Principal Financial Officer
             pursuant to Rule 13a-14(a) or Rule 15(d)-14(a)

     Exhibit  32(a)  -  Certification of Chief Executive  Officer
             pursuant to 18 U.S.C. SECTION 1350.

     Exhibit  32(b)  -  Certification of Chief Financial  Officer
             pursuant to 18 U.S.C. SECTION 1350.





































                              -26-