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 September 30, 2006

[ ]  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
      ___              ___

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).

Yes               No    X
      ___              ___

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
                      THE PRECEEDING FIVE YEARS

Check whether the registrant filed all documents and reports required
to  be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.

Yes               No
      ___              ___

State  the  number  of  shares  outstanding  of  each of the issuer's
classes of common equity, as of the latest practicable date:
109,337,072 shares of common stock, par value $.01, as of November 5,
_____________________________________________________________________
2006.
_____

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' Deficiency..  8

     Consolidated Statements of Cash Flows ...............  9

     Notes to Consolidated Financial Statements ..........  10-16

     Management's Discussion and Analysis of Financial
     Conditions and Results of Operations ................  17-20

     Controls and Procedures..............................  21

PART II   -    OTHER INFORMATION .........................  22-23

SIGNATURES ...............................................  24

EXHIBIT INDEX ............................................  25

<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 Subsidiary
                        Consolidated Balance Sheets


                                               September 30,   December 31,
                                                       2006           2005
                                               _____________  _____________
                                                (Unaudited)      (Note)
<S>                                            <C>            <C>

ASSETS
CURRENT ASSETS

  Cash and cash equivalents                    $     25,279   $    119,745
  Accounts receivable                                 4,926         15,618
  Prepaid expenses and other current assets           9,963         20,520
                                               _____________  _____________

     TOTAL CURRENT ASSETS                            40,168        155,883


  Property and equipment, net                        36,039         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                              $    101,325   $    231,060
                                               =============  =============



</TABLE>

Note:  The Balance Sheet at December 31, 2005 has been derived
       from the audited financial statements at that date.

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

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

                                                              September 30,   December 31,
                                                                      2006           2005
                                                              _____________  _____________
                                                               (Unaudited)      (Note)

<S>                                                           <C>            <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Accounts payable and accrued expenses                       $    140,646   $     99,285
  Convertible debenture                                            705,000        705,000
  Accrued interest                                                  29,375         11,750
                                                              _____________  _____________

     TOTAL CURRENT LIABILITIES                                     875,021        816,035

LONG-TERM LIABILITIES
  Notes payable                                                  5,842,267      5,842,267
  Convertible debentures                                         3,814,212      3,814,212
  Accrued interest                                               5,465,888      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 $ 19.52
     and $19.04, respectively.  Authorized 1,312,500
     shares, issued 11,134 and 18,509, respectively.               217,336        352,411
                                                              _____________  _____________

     TOTAL LIABILITIES                                          16,214,724     15,727,180
                                                              _____________  _____________

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock --- $.01 par value per share.
     Authorized 750,000,000 shares;
     issued and outstanding 109,337,072
     and 107,456,869 shares, respectively.                       1,093,371      1,074,569
  Additional paid-in capital                                    25,659,696     25,445,450
  Accumulated Deficit                                          (42,866,466)   (42,016,139)
                                                              _____________  _____________

     TOTAL STOCKHOLDERS' DEFICIENCY                            (16,113,399)   (15,496,120)
                                                              _____________  _____________

     TOTAL LIABILITIES AND
     STOCKHOLDERS' DEFICIENCY                                 $    101,325   $    231,060
                                                              =============  =============

</TABLE>

Note:  The Balance Sheet at December 31, 2005 has been derived
from the audited financial statements at that date.

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

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


                                                            Three months ended             Nine months ended
                                                       ____________________________   ____________________________
                                                       September 30,  September 30,   September 30,  September 30,
                                                               2006           2005            2006           2005
                                                       _____________  _____________   _____________  _____________
<S>                                                    <C>            <C>             <C>            <C>
EQUITY IN REPAID ADVANCES (LOSS) OF JOINT VENTURE      $     11,299   $     52,886    $     (6,964)  $   (413,184)

OPERATING EXPENSES
__________________

  Marketing and selling                                       5,328         44,934          95,538        164,098
  Research, development and pilot plant                     173,526        196,072         619,263        579,161
  General and administrative                                247,241        186,104         764,255        621,604
  Operating expenses reimbursed by Joint Venture           (388,421)      (418,657)     (1,248,281)    (1,357,394)
                                                       _____________  _____________   _____________  _____________

          TOTAL OPERATING EXPENSES                           37,674          8,453         230,775          7,469
                                                       _____________  _____________   _____________  _____________

          OPERATING PROFIT (LOSS)                           (26,375)        44,433        (237,739)      (420,653)

GAIN (LOSS) ON DISPOSAL                                         ---          3,006             ---        (46,994)

OTHER INCOME                                                 10,305            ---          10,305            ---

INTEREST EXPENSE                                           (209,302)      (228,934)       (622,893)      (634,723)
                                                       _____________  _____________   _____________  _____________

          NET LOSS                                     $   (225,372)  $   (181,495)   $   (850,327)  $ (1,102,370)
                                                       =============  =============   =============  =============

BASIC AND DILUTED NET LOSS PER COMMON SHARE            $      (0.00)  $      (0.00)   $      (0.01)  $      (0.01)
                                                       =============  =============   =============  =============
</TABLE>



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

                               -7-

<TABLE>
<CAPTION>
                                      IGENE Biotechnology, Inc. and Subsidiary
                                Consolidated Statements of Stockholders' Deficiency
                                                     (Unaudited)

                                                                           Additional                   Total
                                                        Common Stock       Paid-in       Accumulated    Stockholders'
                                                      (shares/amount)      Capital       Deficit        Deficiency
                                                 ________________________  ____________  _____________  _____________
<S>                                              <C>          <C>          <C>           <C>            <C>
Balance at January 1, 2005                       101,732,453  $ 1,017,325  $ 25,138,748  $(40,601,360)  $(14,445,287)

Shares issued for manufacturing agreement          3,271,208       32,712       222,178           ---        254,890

Net loss for the nine months
  ended September 30, 2005                               ---          ---           ---    (1,102,370)    (1,102,370)
                                                 ___________  ___________  ____________  _____________  _____________

Balance at September 30, 2005                    105,003,661  $ 1,050,037  $ 25,360,926  $(41,703,730)  $(15,292,767)
                                                 ===========  ===========  ============  =============  =============

Balance at January 1, 2006                       107,456,869  $ 1,074,569  $ 25,445,450  $(42,016,139)  $(15,496,120)

Shares issued for manufacturing agreement            545,569        5,456        24,904           ---         30,360

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

Shares issued to new manufacturing Vice
     President of the Joint Venture                1,000,000       10,000        40,000           ---         50,000

Employee stock option purchase                       312,000        3,120         7,180           ---         10,300

Exercise of warrants                                   7,884           78           710           ---            788

Net loss for the nine months
  ended September 30, 2006                               ---          ---           ---      (850,327)      (850,327)
                                                 ___________  ___________  ____________  _____________  _____________

Balance at September 30, 2006                    109,337,072  $ 1,093,371  $ 25,659,696  $(42,866,466)  $(16,113,399)
                                                 ===========  ===========  ============  =============  =============

</TABLE>



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

                               -8-
<TABLE>
<CAPTION>
                               IGENE Biotechnology, Inc. and Subsidiary
                                 Consolidated Statements of Cash Flows
                                              (Unaudited)

                                                                           Nine months ended
                                                                    _______________________________
                                                                    September 30,     September 30,
                                                                            2006              2005
                                                                    _____________     _____________
<S>                                                                 <C>               <C>
Cash flows from operating activities
  Net loss                                                          $   (850,327)     $ (1,102,370)
  Adjustments to reconcile net loss to net cash provided
  by (used in) operating activities:
     Depreciation                                                         14,020            14,436
     Manufacturing cost paid in shares of common stock                    30,360           254,890
     Shares issued to new manufacturing Vice President                    50,000               ---
     Equity in loss of joint venture                                       6,964           413,184
     Increase in preferred stock for cumulative dividend
     classified as interest                                                6,524             8,884
     Loss on receivable form disposal of equipment                           ---            46,994

     Decrease (increase) in:
        Accounts receivable                                               10,692            17,418
        Prepaid expenses and other current assets                         10,557             1,403

     Increase (decrease) in:
        Accounts payable and accrued expenses                            622,620           584,916
                                                                    _____________     _____________

  Net cash provided by (used in) operating activities                    (98,590)          239,755
                                                                    _____________     _____________

Cash flows from investing activities
  Advances to joint venture                                               (6,964)         (413,184)
                                                                    _____________     _____________

  Net cash used in investing activities                                   (6,964)         (413,184)
                                                                    _____________     _____________

Cash flows from financing activities
  Proceeds from exercise of warrants                                         788               ---
  Proceeds from exercise of employee stock options                        10,300               ---
                                                                    _____________     _____________

  Net cash provided by financing activities                               11,088               ---
                                                                    _____________     _____________

  Net decrease in cash and cash equivalents                              (94,466)         (173,429)

  Cash and cash equivalents at beginning of period                       119,745           204,248
                                                                    _____________     _____________

  Cash and cash equivalents at end of period                        $     25,279      $     30,819
                                                                    =============     =============

Supplementary disclosure and cash flow information
__________________________________________________

Cash paid for interest                                              $     35,250      $     21,150
Cash paid for income taxes                                                   ---               ---

See Note (3) for non-cash investing and financing activities.

</TABLE>

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

                               -9-

            IGENE Biotechnology, Inc. and Subsidiary
           Notes to Consolidated Financial Statements

(1)  Unaudited consolidated financial statements

     The  September  30,  2006 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, 2005.

(2)  Nature of Operations

     Igene  Biotechnology, Inc. (the "Company"  or  "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  operational  subsidiaries  in
     Norway and Chile.  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   various   feed
     applications  and  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,
     on  March 19, 2003, Tate & Lyle PLC ("Tate & Lyle") and  the
     Company   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  has  been
     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   has
     commenced.

(3)  Noncash investing and financing activities

     During  the  nine  months ended September  30,  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 from long-term debt.

     During  the nine months ended September 30, 2006  and  2005,
     Fermic,  Igene's  manufacturing agent,  earned  545,569  and
     3,271,208 shares, respectively, of common stock as  part  of
     the  manufacturing agreement. Fermic earns 2,250  shares  of
     common  stock for each kilogram of 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 has earned  the  20,000,000
     shares  in total available under the contract.  The  545,569
     shares  were earned at an average price of $.056  per  share
     for  2006,  and 3,271,208 shares were earned at  an  average
     price  of $.076 per share for 2005.  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.



                              -10-
            IGENE Biotechnology, Inc. and Subsidiary
           Notes to Consolidated Financial Statements
                           (continued)

     During  the  nine months ended September 30,  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  the  nine  months ended September  30,  2006,  7,884
     warrants  were  exercised for $788.   7,884  new  shares  of
     common stock were issued pursuant to the exercise.

     During  the  nine months ended September 30, 2006  1,000,000
     shares of common stock were issued to the company'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,
     total expense $50,000.

     During  the nine months ended September 30, 2006  and  2005,
     the  Company recorded dividends in arrears on 8%  redeemable
     preferred stock cumulating at $.48 per share aggregating  to
     $6,524  and  $8,884,  respectively on preferred  stock.  The
     accrued  interest is included in the carrying value  of  the
     redeemable preferred stock.

(4)  Amendment to Long - Term Liabilities

     The  maturity  date  of  the  Company's  Notes  payable  and
     Convertible debentures (other than the ProBio Debentures  in
     the  amount  of $705,000) has been amended from  a  maturity
     date of March 31, 2006 to March 31, 2009.  Accordingly, such
     notes  payable, convertible debentures and accrued  interest
     thereon have been classified as long-term liabilities on the
     accompanying Consolidated Balance Sheets.

 (5) Joint Venture

     On  March 18, 2003, the Company entered into a Joint Venture
     Agreement  with  Tate  &  Lyle  Fermentation  Products  Ltd.
     ("Tate & Lyle").  Pursuant to a Joint Venture Agreement, the
     Company and Tate & Lyle 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 & Lyle contributed $24,600,000 in cash to
     the  Joint Venture, while the Company 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 &
     Lyle 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 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  has  a carrying amount of zero,  the  initial
     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.  Added to
     this was a purchase of common stock in the Joint Venture  of
     $6,000.

     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  September 30, 2006, Igene's  portion  of  the
     Joint  Venture's net loss was $13,396,836.  The loss  was  a
     result  of  a  50% interest in the following:  Gross  profit
     from  inception  was  a  negative $11,785,548  on  sales  of
     $25,195,762,   less  manufacturing  cost   of   $36,981,310.
     Selling   and  general  and  administrative  expenses   were
     $11,995,896,  and  interest  expense  was  $3,012,227.   The
     resulting loss was $26,793,671.  Igene's 50% portion of  the
     Joint Venture loss was $13,396,836.

     Because the Company accounts for its investment in the Joint
     Venture  under  the  equity method of accounting,  it  would
     ordinarily  recognize as part of loss from equity  the  loss
     attributable to it's 50% ownership portion of  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.  Igene does  not
     expect to recognize income from the Joint Venture until  all
     accumulated unrecognized losses have been eliminated  for  a
     period in which advances are repaid.

                              -11-

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

     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  will
     guarantee   up   to   4,200,000  British   pounds   sterling
     (approximately $7,630,000 at November 2, 2006).

     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  Biotechnology,  Inc.,
     until  the  Joint  Venture produces a regular  monthly  cash
     flow,  as  defined,  for  four consecutive  months.   As  of
     October  25,  2006, the Joint Venture has not met  the  cash
     flow requirements.

     At  September  30,  2006, prior to the  recognition  of  its
     portion of the Joint Venture loss, Igene's investment in the
     Joint Venture consisted of its $322,869 and its net advances
     to  the Joint Venture amounted to $1,066,929, for a total of
     $1,389,798.   Through  December 31, 2005,  Igene  recognized
     $1,382,834 of the $10,818,549 loss, which existed as part of
     the  Joint Venture.  In the six months ended June 30,  2006,
     Igene recognized losses to the extent of the increase in the
     advance  of $18,263, representing the June 30, 2006  balance
     of  $1,401,097,  less  the  December  31,  2005  balance  of
     $1,382,834.  For the three months ended September  30  2006,
     Igene recognized a gain for the repayment of the advance for
     that  period  of $11,299.  This repayment will increase  the
     suspended  loss  in addition to the $831,800  loss  for  the
     quarter.   The  cumulative suspended loss at  September  30,
     2006 is $12,007,038 and it 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 September 30, 2006.

     The  following condensed statement displays the activity  of
     the  Joint  Venture for the period of initial investment  at
     March  18,  2003 in the Joint Venture through September  30,
     2006.   As shown 50% of the activity is recorded as part  of
     Igene's Financial Statements as loss from investment in  the
     Joint Venture:

<TABLE>
<CAPTION>
                                                              September 30,
                                                                      2006
                                                              _____________
                                                               (Unaudited)
          <S>                                                 <C>
          ASSETS
          CURRENT ASSETS
            Cash                                              $  4,044,000
            Account Receivable                                   3,042,000
            Inventory                                           12,302,000
                                                              _____________
                                                                19,388,000

          OTHER ASSETS
            Property, plant and equipment, net                  20,030,000
            Intangibles                                         24,614,000
                                                              _____________
                TOTAL ASSETS                                  $ 64,032,000
                                                              =============

          LIABILITIES AND EQUITY
          CURRENT LIABILITIES
            Accounts payable and accrued expenses
            (majority of which is due to one joint venturer)  $ 28,269,000
            Maturities of debt                                  11,868,000
                                                              _____________
               TOTAL LIABILITIES                                40,137,000

            Equity                                              23,895,000
                                                              _____________
              TOTAL LIABILITIES AND EQUITY                    $ 64,032,000
                                                              =============

</TABLE>





                              -12-

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


<TABLE>
<CAPTION>
                                                                 Period from March 18, 2003
                                                                  (initial investment) to
                                                                     September 30, 2006
                                                                     __________________
                                                                         (unaudited)
     <S>                                                             <C>
     Net Sales                                                       $      25,195,762
     Less: manufacturing cost                                              (36,981,310)
                                                                     __________________
     Gross Loss                                                            (11,785,548)
     Less: selling, general and administrative                             (11,995,896)
                                                                     __________________
     Operating Loss                                                        (23,781,444)
     Interest Expense                                                       (3,012,227)
                                                                     __________________
     Net Loss                                                        $     (26,793,671)
                                                                     ==================
     Igene's 50% equity interest in the net loss                     $     (13,396,836)
     Igene's Investment in and Advances to the Joint Venture                (1,389,798)
                                                                     __________________
    Igene's suspended loss at September 30, 2006                     $     (12,007,038)
                                                                     ==================
</TABLE>

     The  following  statement displays the significant  activity
     for  the  Joint Venture for the three and nine month   ended
     September  30,  2006.   As shown, 50%  of  the  activity  is
     recorded  as  part of Igene's Financial Statements  as  loss
     from investment in Joint Venture:

<TABLE>
<CAPTION>
                                                                Three Months        Nine Months
                                                                    Ended              Ended
                                                             September 30, 2006  September 30, 2006
                                                             __________________  __________________
     <S>                                                     <C>                 <C>
     Net Sales                                               $       1,995,800   $       7,450,539
     Less: manufacturing cost                                       (2,267,300)         (8,207,494)
                                                             __________________  __________________
     Gross Loss                                                       (271,500)           (756,955)
     Less: selling, general and administrative                        (897,000)         (2,780,319)
                                                             __________________  __________________
     Operating Loss                                                 (1,168,500)         (3,537,274)
     Interest Expense                                                 (495,100)         (1,619,300)
                                                             __________________  __________________
     Net Loss                                                $      (1,663,600)  $      (5,156,574)
                                                             ==================  ==================
     50% equity interest Igene                               $        (831,800)  $      (2,578,287)
     Igene's Repayments from and additional (Investment in
          and Advances to the Joint Venture)                            11,299              (6,964)
                                                             __________________  __________________
     Igene's incremental suspended loss for period           $        (843,099)  $      (2,571,323)
                                                             ==================  ==================
</TABLE>

(6)  Guarantee of Joint Venture Debt

     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  will
     guarantee   up   to   4,200,000  British   pounds   sterling
     (approximately $7,630,000 at November 2, 2006).

     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.

     As  of  November 2, 2006, the Joint Venture has not met  the
     cash flow requirements, therefore Igene is not yet obligated
     for any funding to the Joint Venture.



                              -13-

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

(7)  Stockholders' Deficiency

     As  of  September 30, 2006, 22,268 shares of authorized  but
     unissued   common  stock  were  reserved  for   issue   upon
     conversion of the Company's outstanding preferred stock.

     As  of  September 30, 2006, 73,642,500 shares of  authorized
     but  unissued  common  stock were  reserved  for  issue  and
     exercise  pursuant  to the Company's Employee  Stock  Option
     Plans.

     As  of  September 30, 2006, 17,565,970 shares of  authorized
     but  unissued common stock were reserved for the  conversion
     of outstanding convertible promissory notes in the aggregate
     principal  amount  of $1,082,500 held by  directors  of  the
     Company.

     As  of  September 30, 2006, 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 September 30, 2006, 7,050,000 shares 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  September 30, 2006, 205,261,073 shares of authorized
     but unissued common stock were reserved for the exercise  of
     outstanding warrants.

(8)  Basic and diluted net loss per common share

     Basic  and  diluted net loss per common share for  the  nine
     month  periods ended September 30, 2006 and 2005, are  based
     on  108,067,437  and  102,838,685 shares,  respectively,  of
     weighted average common shares outstanding. The same figures
     for  the  three  month  period then  ended  are  based  upon
     108,337,072  and 105,107,398 weighted average common  shares
     outstanding.   No adjustment has been made  for  any  common
     stock equivalents outstanding because their effects would be
     antidilutive.

(9)  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.

(10) Uncertainty

     Igene has incurred net losses in each year of its existence,
     aggregating  approximately  $42,900,000  from  inception  to
     September  30, 2006 and its liabilities exceeded its  assets
     by  approximately $16,100,000 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 its Joint Venture  with  Tate  &
     Lyle.   Igene  began  manufacturing  and  selling AstaXin(R)
     during  1998.  Igene  will  aid  the Joint Venture with  the
     manufacturing process, but will focus on research and sales,
     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 Consolidated Financial Statements
                           (continued)

(11) Stock Based Compensation

     Prior to January 1, 2006, 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 nine months ended September 30:

<TABLE>
<CAPTION>

                                                    Three months ended   Nine month ended
                                                    September 30, 2005   September 30, 2005
                                                    __________________   __________________

     <S>                                            <C>                  <C>
     Net loss:
       As reported                                  $        (181,495)   $      (1,102,370)
     Less pro forma stock-based employee
       compensation expense determined under
       fair value based method net of related
       tax effects                                                ---                  ---
                                                    __________________   __________________

     Net loss                                       $        (181,495)   $      (1,102,370)
                                                    ==================   ==================
     Net loss per Share:
       Basic - as reported                          $           (0.00)   $           (0.01)
       Basic - pro forma                            $           (0.00)   $           (0.01)
       Diluted - as reported                        $           (0.00)   $           (0.01)
       Diluted - pro forma                          $           (0.00)   $           (0.01)

</TABLE>

(12) Recent Accounting Pronouncements

     In  November 2004, the FASB issued SFAS No. 151,  "Inventory
     Costs,  an amendment of ARB No.43, Chapter 4."  SFAS  amends
     Accounting  Research Bulletin ("ARB") No.43, Chapter  4,  to
     clarify  that  abnormal  amounts of idle  facility  expense,
     freight,  handling  costs  and wasted  materials  (spoilage)
     should   be   recognized  as  current-period  charges.    In
     addition,  SFAS  No.151 requires that  allocation  of  fixed
     production  overhead  to inventory be based  on  the  normal
     capacity  of  the production  facilities.   SFAS  No.151  is
     effective  for  inventory costs incurred during  the  fiscal
     years   beginning  after  June  15,  2005.   Assessing   and
     recording   the  impact  SFAS  No.151  on  the  results   of
     operations,  financial position or cash flows  is  currently
     the responsibility of the Joint Venture.

     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
     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.




                              -15-
            IGENE Biotechnology, Inc. and Subsidiary
           Notes to Consolidated Financial Statements
                           (continued)


     In  September 2006, the Financial Accounting Standards Board
     issued  Statement  of Financial Accounting Standards  Number
     157 - Fair Value Measurements ("SFAS 157"). 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.



                              -16-

           IGENE Biotechnology, Inc. and Subsidiary
             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.

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 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  investment in the Joint Venture is accounted for under
the  equity method whereby the Company's 50% ownership percentage
in  the  Joint Venture's equity is reflected as an asset 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 subject to certain limitations.  Igene's share  of
losses in the Joint Venture are recognized only to the extent  of
Igene's  consideration  paid for its initial  investment  in  the
Joint  Venture and any net advances Igene has made 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 future income, if  any.
Income  in the future, if any, will only be recognized  once  all
previously  deferred  losses have been  exhausted.   The  Company
evaluates its investment in the Joint Venture for impairment,  as
it  does  for all other assets.  The accounting policies followed
by the Joint Venture are in conformity with accounting principals
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 will guarantee up  to
4,200,000  British pounds sterling (approximately  $7,630,000  at
November  2,  2006).  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.  As of October  26,  2006,
the Joint Venture has not met the cash flow requirements.

     The Joint Venture entered into a lease of real property with
an  affiliate  of Tate & Lyle in Selby, England  upon  which  the
manufacturing facility is being operated by the Joint Venture.

                              -17-
            IGENE Biotechnology, Inc. and Subsidiary
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

Overview of Financial Position
______________________________

     During  the nine-month periods ended September 30, 2006  and
2005,  in addition to the Joint Venture discussed in more  detail
below,  the  following actions materially affected the  Company's
financial position.

     o  Increases  in  accounts payable and accrued  expenses  of
        $622,620 and decreases in accounts receivable and prepaid
        expenses  of  $21,249  were  sources of cash.  These were
        reduced by increases due from Joint Venture of $6,964.

     o  The  carrying  value  of redeemable preferred  stock  was
        increased   by   $6,524  in  2006  and  $8,884  in  2005,
        reflecting  cumulative  unpaid  dividends  on  redeemable
        preferred stock.

     o  During  the  nine months ended September 30, 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   preferred
        securities  and  has  relieved the Company of this amount
        from long-term debt.

     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 September 30, 2006, total dividends in arrears  on
Igene's preferred stock were $128,264 ($11.52 per share) and  are
included in the carrying value of the redeemable preferred stock.

Results of Operations
_____________________

Sales and other revenue

     As part  of  the  Joint  Venture agreement,  all  sales  are
recognized through the Joint Venture.  Therefore, Igene  recorded
no  sales  of AstaXin(R) since the inception of the Joint Venture
on March 18, 2003.   Sales have been limited in the  past due  to
insufficient production quantity.

     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 production or sales will occur, or that if they
occur, they will be material.

Cost of sales and gross profit

     As with  Sales  Revenue, Cost of Sales and Gross  Profit  is
recognized  through  the  Joint  Venture.   As  a  result,  Igene
reported  no  gross  profit  on  sales  of  AstaXin(R)  since the
inception of  the  Joint Venture.  The Company attributes poor or
negative gross profit to a combination of pricing pressure in the
market and inefficiencies in production.  Management expects that
sales   and   gross   profits   may   continue to be  limited  by
production  efficiency   resulting  from   process  research  and
development.   Management  expects  the  level of gross profit to
improve in the future as production efficiency is  realized  from
the   Joint   Venture   with  Tate  &  Lyle  offsetting   pricing
competition, but  can  provide  no assurances of future increased
production or future increased margin.

     Additionally no cost of sales were recorded as they are also
recorded as part of the Joint Venture activity.


                              -18-

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

Marketing and selling expenses

     For  the  quarters ended September 30, 2006 and 2005,  Igene
recorded  marketing and selling expense in the amount  of  $5,328
and $44,934, respectively, a decrease of $39,606 or 88%.  For the
nine  months  ended September 30, 2006 and 2005,  Igene  recorded
marketing  and  selling  expense in the  amount  of  $95,538  and
$164,098,  respectively, a decrease of  $68,560  or  42%.   As  a
result  of the Joint Venture with Tate & 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.  During the second quarter of  2006,  a
Director  of Marketing had been hired directly through the  Joint
Venture, as a result the majority of the marketing cost  will  be
incurred  directly  through the Joint Venture rather  than  being
incurred  by  Igene then being reimbursed by the  Joint  Venture.
The company believes that marketing and selling costs incurred by
Igene will continue to be reimbursed. However, no assurances  can
be  made concerning increased production from the new facility or
reimbursement of marketing and selling costs.

Research, development and pilot plant expenses

     For  the  quarter ended September 30, 2006 and  2005,  Igene
recorded research and development costs in the amount of $173,526
and  $196,072, respectively, a decrease of $22,546 or  11%.   For
the nine months ended September 30, 2006 and 2005, Igene recorded
research  and  development costs in the amount  of  $619,263  and
$579,161,  respectively, an increase of  $40,102  or  7%.   These
costs  are expected to remain relatively constant at the  current
level   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 though  these
fundings cannot be assured.

Operating expenses

     General  and  administrative expenses for the quarter  ended
September   30,  2006  and  2005  were  $247,241   and   $186,104
respectively,  an  increase  of  $61,137  or  33%.   General  and
administrative expenses for the nine months ended  September  30,
2006  and  2005  were  $764,255  and  $621,604  respectively,  an
increase  of $142,651 or 23%.  These costs are expected  to  drop
slightly  from  the current increased level.  Cost  increases  in
general,  are  due  to increased audit and reporting  costs.   In
addition,  during  the  nine  months ended  September  30,  2006,
1,000,000 shares of common stock were issued to the Company'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.  Igene works
to  keep  overhead costs at a reduced level and spends  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 none of these can be
assured.

Interest expense

     Interest  expense for the quarters ended September 30,  2006
and  2005 was $209,302 and $228,934, respectively, a decrease  of
$19,632 or 8%.  For the nine months ended September 30, 2006  and
2005, interest expense was $622,893 and $634,723, respectively, a
decrease  of  $11,830  or 2%.  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.








                              -19-

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

Loss on disposal

     During  2005,  Igene sold equipment it had determined  would
not  be  of use in the new Selby facility and recorded a loss  on
disposal of $46,994. This is a one time occurrence.

Other income

     In  an  attempt to increase the sales of astaxanthin,  Igene
has   been   developing  the  marketing  of  astaxanthin   as   a
nutraceutical.   During the third quarter  of  2006,  $10,305  in
sales  were  recorded.  Discussions have been made to incorporate
the  sale  of  astaxanthin as a nutraceutical  within  the  Joint
Venture  and  increase  the  sales  efforts  in  this  area.   No
decisions have yet been made in this area, and no future sales in
this area can be assured.

Net loss and basic and diluted net loss per common share

     As  a  result  of  the foregoing, the Company  reported  net
losses  of $225,372 and $181,495, respectively, for the  quarters
ended  September 30, 2006 and 2005, an increase in  the  loss  of
$43,877  or  24%.  This represents a loss of $.00 per  basic  and
diluted common share in the quarters ended September 30, 2006 and
2005.   The  weighted average number of shares  of  common  stock
outstanding of 108,337,072 and 105,107,398 for the quarters ended
September 30, 2006 and 2005, respectively, increased by 3,229,674
shares.  This  resulted from the weighted average adjustments  of
the  following transactions: the issuance of 1,000,000 shares  to
Probio,  1,998,777 shares issued to Fermic as part of  a  written
manufacturing  agreement, and 312,000 shares issued  as  part  of
employee stock option exercises.

Liquidity and Capital Resources

     Historically, Igene  has  been funded  primarily  by  equity
contributions  and loans from stockholders. As of  September  30,
2006,  Igene had negative working capital of $834,853,  and  cash
and  cash equivalents of $25,279.  Currently Igene's research and
development and marketing expenses, as well as a portions of  its
general and administrative cost are also funded by reimbursements
from the Joint Venture.

     Cash provided by (used for) operating activities during  the
nine-month  period ended September 30, 2006 and 2005 amounted  to
$(98,590) and $239,755, respectively, a decrease in cash provided
of $338,345.

     Cash  used  by  investing activities during  the  nine-month
period  ended September 30, 2006 and 2005 amounted to $6,964  and
$413,184,  respectively, a decrease of $406,220, of decreases  in
advances to the Joint Venture.

     Cash provided  by  financing activities for  the  nine-month
period  ended September 30, 2006 amounted to $11,088.   Financing
activities  consisted  primarily of employee  stock  option  plan
purchases and exercise of warrants.

     On June  15th 2005, the Company executed a limited guarantee
for   one   of  the  debt  obligations  of  the  Joint   Venture,
guaranteeing   up  to  4,200,000  British  pounds  sterling   and
subsequently  entered  into an agreement  with  Tate  &  Lyle  to
arrange  funds for the Joint Venture, without recourse  to  Igene
Biotechnology, Inc., until the Joint Venture produces  a  regular
monthly  cash flow.  The Joint Venture has not met the cash  flow
requirements.

     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 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  nine-month
periods ended September 30, 2006 and 2005.



                              -20-

            IGENE Biotechnology, Inc. and Subsidiary
             Management's Discussion and Analysis of
                     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.



                              -21-

                    IGENE Biotechnology, Inc.
                             PART II
                        OTHER INFORMATION


Item 2.   Unregistered  Sales  of  Equity  Securities and Use of
          Proceeds.

     During  the  nine  months ended September 30, 2006 1,000,000
shares  of  common  stock  were  issued to the Company's new Vice
President  of Manufacturing as part of his agreement in accepting
the position.    The  cost  per  share  was expensed in the third
quarter  as  payroll  expense, at a cost of $.05 per share, for a
total expense of $50,000.

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 accumulate for future payment or addition to the
liquidation  preference  or redemption  value  of  the  preferred
stock.   As of September 30, 2006, total dividends in arrears  on
the  Company's preferred stock were $128,264 ($11.52  per  share)
and  are  included  in  the  carrying  value  of  the  redeemable
preferred stock.

     On   November  30,  2001,  Igene  entered  into  Convertible
Promissory  Notes  (the "Convertible Notes")  with  each  of  the
following  note holders for the respective amounts (a)  NorInnova
AS (formerly Forskningsparken I Tromso AS) for $106,500; (b) Knut
Gjernes for $7,500; (c) Magne Russ Simenson for $278,000; and (d)
Nord  Invest AS for $313,000 (collectively, the "Convertible Note
Holders").  Each of the Convertible Notes has 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.  Igene and the Convertible  Note
Holders have had discussions to extend the maturity date of  each
of  the  Convertible Notes in return for reducing the  conversion
price  and increasing the interest rate on each Convertible Note,
however it is not certain such amendment will be consummated, and
so  long  as  an  event  of default under  the  Convertible  Note
continues to exist, the Convertible Note Holders have the ability
to  accelerate the payment of the principal and interest due  and
owing on each of the Convertible Notes.

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

     At the annual meeting of stockholders held on July 20, 2006,
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>
                                                                               Broker
                                        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>

                              -22-
Item 6.  Exhibits

(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.



                              -23-

                           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   November 13, 2006          By  /S/ STEPHEN F. HIU
       _________________              ___________________________
                                          STEPHEN F. HIU
                                          President




Date   November 13, 2006          By  /S/ EDWARD J. WEISBERGER
       _________________              ____________________________
                                          EDWARD J. WEISBERGER
                                          Chief Financial Officer



                              -24-

                          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.


                              -25-