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, 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:

108,337,072 shares of common stock, par value $.01, as of July 13, 2006.
________________________________________________________________________

Transitional Small Business Disclosure Format (check one):

Yes                No    x
      ___               ___

                                 -1-

                             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


                               -2-


                      IGENE BIOTECHNOLOGY, INC.

             QUARTERLY REPORT UNDER SECTION 13 OR 15(D)

               OF THE SECURITIES EXCHANGE ACT OF 1934



                               -3-

                             PART I
                      FINANCIAL INFORMATION

                               -4-
<TABLE>
<CAPTION>
                  IGENE Biotechnology, Inc.  and Subsidiary
                         Consolidated Balance Sheets


                                                     June 30,      December 31,
                                                        2006              2005
                                                 _____________    _____________
                                                  (Unaudited)        (Note)
<S>                                              <C>              <C>
ASSETS
CURRENT ASSETS

  Cash and cash equivalents                      $      9,527     $    119,745
  Accounts receivable                                   8,526           15,618
  Prepaid expenses and other current assets             8,294           20,520
                                                 _____________    _____________
     TOTAL CURRENT ASSETS                              26,347          155,883

  Property and equipment, net                          40,713           50,059
  Loans receivable from manufacturing agent            19,993           19,993
  Investment in and advances to
    unconsolidated joint venture                          ---              ---
  Other assets                                          5,125            5,125
                                                 _____________    _____________

     TOTAL ASSETS                                $     92,178     $    231,060
                                                 =============    =============

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

</TABLE>

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

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

                                                    June 30,      December 31,
                                                        2006              2005
                                                 _____________    _____________
                                                  (Unaudited)        (Note)
<S>                                              <C>              <C>
LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES
  Accounts payable and accrued expenses          $    165,476     $     99,285
  Convertible debenture                               705,000          705,000
  Accrued interest                                     11,750           11,750
                                                 _____________    _____________

     TOTAL CURRENT LIABILITIES                        882,226          816,035

LONG-TERM LIABILITIES
  Notes payable                                     5,842,267        5,842,267
  Convertible debentures                            3,814,212        3,814,212
  Accrued interest                                  5,275,946        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 $ 19.36
    and $19.04, respectively.  Authorized
    1,312,500 shares, issued 11,134 and
    18,509, respectively.                             215,554          352,411
                                                 _____________    _____________

     TOTAL LIABILITIES                             16,030,205       15,727,180
                                                 _____________    _____________

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY
  Common stock --- $.01 par value per share.
     Authorized 750,000,000 shares;
     issued and outstanding 108,337,072
     and 107,456,869 shares, respectively.          1,083,371        1,074,569
  Additional paid-in capital                       25,619,696       25,445,450
  Accumulated Deficit                             (42,641,094)     (42,016,139)
                                                 _____________    _____________

     TOTAL STOCKHOLDERS' DEFICIENCY               (15,938,027)     (15,496,120)
                                                 _____________    _____________
     TOTAL LIABILITIES AND
     STOCKHOLDERS' DEFICIENCY                    $     92,178     $    231,060
                                                 =============    =============

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

</TABLE>

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          Six months ended
                                                     _________________________   _________________________
                                                        June 30,      June 30,      June 30,      June 30,
                                                           2006          2005          2006          2005
                                                     ___________   ___________   ___________   ___________
<S>                                                  <C>           <C>           <C>           <C>
EQUITY IN REPAID ADVANCES (LOSS)
  OF JOINT VENTURE                                   $  171,639    $ (282,977)   $  (18,263)   $ (466,070)

OPERATING EXPENSES
__________________

  Marketing and selling                                  47,399        70,876        90,210       119,164
  Research, development and pilot plant                 237,088       217,082       445,737       383,089
  General and administrative                            292,231       246,592       517,014       435,500
  Operating expenses reimbursed by Joint Venture       (459,917)     (527,398)     (859,860)     (938,737)
                                                     ___________   ___________   ___________   ___________
          TOTAL OPERATING EXPENSES                      116,801         7,152       193,101          (984)
                                                     ___________   ___________   ___________   ___________
          OPERATING PROFIT (LOSS)                        54,838      (290,129)     (211,364)     (465,086)

LOSS ON DISPOSAL                                            ---       (50,000)          ---       (50,000)

INTEREST EXPENSE                                       (207,192)     (192,709)     (413,591)     (405,789)
                                                     ___________   ___________   ___________   ___________

           NET LOSS                                  $ (152,354)   $ (532,838)   $ (624,955)   $ (920,875)
                                                     ===========   ===========   ===========   ===========

BASIC AND DILUTED NET LOSS PER COMMON SHARE          $    (0.00)        (0.01)   $    (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           2,232,473        22,325       174,912           ---       197,237

Net loss for the six months ended June 30, 2005           ---           ---           ---      (920,875)     (920,875)
                                                 ============= ============= ============= ============= =============
Balance at June 30, 2005                          103,964,926  $  1,039,650  $ 25,313,660  $(41,522,235) $(15,168,925)
                                                 ============= ============= ============= ============= =============

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

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

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

Net loss for the six months ended June 30, 2006           ---           ---           ---      (624,955)     (624,955)
                                                 _____________ _____________ _____________ _____________ _____________

Balance at June 30, 2006                          108,337,072  $  1,083,371  $ 25,619,696  $(42,641,094) $(15,938,027)
                                                 ============= ============= ============= ============= =============

</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)

                                                                      Six months ended
                                                                 _________________________
                                                                    June 30,      June 30,
                                                                       2006          2005
                                                                 ___________   ___________
<S>                                                              <C>           <C>
Cash flows from operating activities
  Net loss                                                       $ (624,955)   $ (920,875)
  Adjustments to reconcile net loss to net cash provided (used)
  by operating activities:
     Depreciation                                                     9,347         9,624
     Increase in preferred stock for cumulative dividends
        classified as interest                                        4,743         5,922
     Manufacturing cost paid in shares of common stock               30,360       197,237
     Equity in loss of joint venture                                 18,263       466,070
     Loss on receivable from disposal of equipment                      ---        50,000

     Decrease (increase) in:
        Accounts receivable                                           7,092        17,845
        Prepaid expenses and other current assets                    12,225         1,683

     Increase (decrease) in:
        Accounts payable and accrued expenses                       439,882       481,428
                                                                 ___________   ___________

  Net cash provided (used) by operating activities                 (103,043)      308,934
                                                                 ___________   ___________
Cash flows from investing activities
  Advances to joint venture                                         (18,263)     (466,070)
                                                                 ___________   ___________
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                        (110,218)     (157,136)

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

  Cash and cash equivalents at end of period                     $    9,527    $   47,112
                                                                 ===========   ===========

Supplementary disclosure and cash flow information
__________________________________________________

Cash paid for interest                                           $   35,250    $   21,150
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.

                               -9-

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

(1)  Unaudited consolidated financial statements

     The   June   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 six months ended June 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 six months ended June 30, 2006 and 2005, Fermic,
     Igene's  manufacturing agent, earned 545,569  and  2,232,473
     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 2,232,473 shares were earned at  an  average
     price  of  $.085 per share for 2005.  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.



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

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

     During  the  six months ended June 30, 2006  and  2005,  the
     Company  recorded  dividends in  arrears  on  8%  redeemable
     preferred stock cumulating at $.32 per share aggregating  to
     $4,743  and  $5,922,  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   and  convertible  debentures   have   been
     classified  as  long-term  on the accompanying  Consolidated
     Balance Sheet.

(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  June 30, 2006, Igene's portion of  the  Joint
     Venture's net loss was $12,565,036.  The loss was  a  result
     of  a  50%  interest  in the following:  Gross  profit  from
     inception   was   a  negative  $11,514,048   on   sales   of
     $23,199,962,   less  manufacturing  cost   of   $34,714,010.
     Selling   and  general  and  administrative  expenses   were
     $11,098,896,  and  interest  expense  was  $2,517,127.   The
     resulting  loss  before  tax was $25,130,071.   Igene's  50%
     portion of the Joint Venture loss was $12,565,036.

     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 of
     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.





                              -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 $7,820,000 at July 28, 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  July
     17,  2006,  the  Joint Venture has not  met  the  cash  flow
     requirements.

     At June 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 $1,078,228, for a  total  of
     $1,401,097.   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 first quarter  of  2006,  Igene
     recognized  losses  to the extent of  the  increase  in  the
     advance of $189,902, representing the March 31, 2006 balance
     of  $1,572,736,  less  the  December  31,  2005  balance  of
     $1,382,834.  For the three months ended June 30 2006,  Igene
     recognized a gain for the repayment of the advance for  that
     period  of  $171,639.   This  repayment  will  increase  the
     suspended  loss  in addition to the $161,350  loss  for  the
     quarter.  The cumulative suspended loss at June 30, 2006  is
     $11,163,939 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
     June 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 June 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>
                                                         June 30,
                                                            2006
                                                    _____________
                                                     (Unaudited)
     <S>                                            <C>
     ASSETS
     CURRENT ASSETS
          Cash                                      $  5,556,000
          Account Receivable                           2,209,000
          Inventory                                    8,472,000
                                                    _____________
                                                      16,237,000
     OTHER ASSETS
          Property, plant and equipment, net          21,708,000
          Intangibles                                 24,614,000
                                                    _____________
              TOTAL ASSETS                          $ 62,559,000
                                                    =============

     LIABILITIES AND EQUITY
     CURRENT LIABILITIES
          Accounts payable and accrued expenses
          (majority of which is due to
           one joint venturer)                      $ 28,006,000
          Maturities of debt                           9,035,000
                                                    _____________
              TOTAL LIABILITIES                       37,041,000

          Equity                                      25,518,000
                                                    _____________

              TOTAL LIABILITIES AND EQUITY          $ 62,559,000
                                                    =============

</TABLE>

                              -12-

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

<TABLE>
<CAPTION>
                                                              Period from March 18, 2003
                                                                 (initial investment)
                                                                   to June 30, 2006
                                                              __________________________
                                                                     (unaudited)
     <S>                                                            <C>
     Net Sales                                                      $  23,199,962
     Less: manufacturing cost                                         (34,714,010)
                                                                    ______________
     Gross Profit (Loss)                                              (11,514,048)
     Less: selling, general and administrative                        (11,098,896)
                                                                    ______________
     Operating Loss                                                   (22,612,944)
     Interest Expense                                                  (2,517,127)
                                                                    ______________
     Net Loss                                                       $ (25,130,071)
                                                                    ==============
     Igene's 50% equity interest in the net loss                    $ (12,565,036)
     Igene's Investment in and Advances to the Joint Venture           (1,401,097)
                                                                    ______________
     Igene's suspended loss at June 30, 2006                        $ (11,163,939)
                                                                    ==============
</TABLE>

     The  following  statement displays the significant  activity
     for  the  Joint Venture for the three and six  month   ended
     June 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 Ended   Six Months Ended
                                                              June 30, 2006       June 30, 2006
                                                            __________________  __________________
      <S>                                                   <C>                 <C>
      Net Sales                                             $       2,264,600   $       5,454,739
      Less: manufacturing cost                                     (2,591,300)         (5,940,194)
                                                            __________________  __________________
      Gross Profit (Loss)                                            (326,700)           (485,455)
      Less: selling, general and admin                               (778,600)         (1,883,319)
                                                            __________________  __________________

      Operating Loss                                               (1,105,300)         (2,368,774)
      Interest Expense                                               (423,300)         (1,124,200)
                                                            __________________  __________________
      Loss before taxes                                            (1,528,600)         (3,492,974)
      Reversal of tax expense                                       1,205,900                 ---
                                                            __________________  __________________
      Net Loss                                              $        (322,700)  $      (3,492,974)
                                                            ==================  ==================

      50% equity interest Igene                             $        (161,350)  $      (1,746,487)
      Igene's Repayments from and additional
        (Investment in and Advances to the Joint Venture)             171,639             (18,263)
                                                            __________________  __________________
      Igene's incremental suspended loss for period         $        (332,989)  $      (1,728,224)
                                                            ==================  ==================
</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 $7,820,000 at July 28, 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 July 17, 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  June  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  June  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  June  30,  2006 10,000,000 shares of authorized  but
     unissued  common  stock were reserved for  distribution  and
     exercise  pursuant  to a stock option  agreement  with  past
     officers of the Company.

     As  of  June  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
     amount of $1,082,500 held by directors of the Company.

     As  of  June  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  June  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  June 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  six-
     month  periods ended June 30, 2006 and 2005,  are  based  on
     107,930,385   and   102,266,230  shares,  respectively,   of
     weighted average common shares outstanding. The same figures
     for  the  three  month  period then  ended  are  based  upon
     108,295,152  and 102,794,142 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 $42,600,000 from inception to June
     30,  2006  and  its  liabilities  exceeded  its  assets   by
     approximately  $15,900,000  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 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 six months ended June 30:

<TABLE>
<CAPTION>
                                                 Three months ended   Six month ended
                                                    June 30, 2005      June 30, 2005
                                                 __________________  __________________
     <S>                                         <C>                 <C>
     Net loss:
       As reported                               $        (532,838)  $        (920,875)
     Less pro forma stock-based employee
       compensation expense determined under
       fair value based method net of related
       tax effects                                             ---                 ---
                                                 __________________  __________________

     Net loss                                    $        (532,838)  $        (920,875)
                                                 ==================  ==================
     Net loss per Share:
       Basic - as reported                       $           (0.01)  $           (0.01)
       Basic - pro forma                         $           (0.01)  $           (0.01)
       Diluted - as reported                     $           (0.01)  $           (0.01)
       Diluted - pro forma                       $           (0.01)  $           (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)


     On  December  16, 2004, the FASB issued FASB  Statement  No.
     123(revised   2004),  Share-Based   Payment,  which   is   a
     revision  of FASB Statement No. 123, Accounting  for  Stock-
     Based  Compensation. Statement 123(R) supersedes APB Opinion
     No. 25, Accounting for Stock Issued to Employees. Generally,
     the  approach in Statement 123(R) is similar to the approach
     described  in  Statement  123.  However,  Statement   123(R)
     requires  all  share-based payments to employees,  including
     grants  of employee stock options, to be  recognized in  the
     income  statement  based on their fair  values.   Pro  forma
     disclosure is no longer an alternative. In April  2005,  the
     SEC  amended the compliance dates for Statement 123(R)  from
     fiscal periods beginning after June 15, 2005 to fiscal years
     beginning after June 15, 2005. The Company adopted Statement
     123 (R) in the first quarter of fiscal 2006.




                              -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  $7,820,000  at
July  28,  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 July 17, 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 six-month periods ended June 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.

   -  Increases  in  accounts  payable  and  accrued expenses  of
      $439,882  and decreases in accounts receivable and  prepaid
      expenses  of  $19,317  were  sources of cash.   These  were
      reduced by increases due from Joint Venture of $18,263.

   -  The  carrying  value  of  redeemable  preferred  stock  was
      increased  by $4,743 in 2006 and $5,922 in 2005, reflecting
      cumulative unpaid dividends on redeemable preferred stock.

   -  During  the six months ended June 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  June  30, 2006, total dividends  in  arrears  on
Igene's preferred stock were $126,482 ($11.36 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 further  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  June 30,  2006  and  2005,  Igene
recorded  marketing and selling expense in the amount of  $47,399
and $70,876, respectively, a decrease of $23,477 or 33%.  For the
six months ended June 30, 2006 and 2005, Igene recorded marketing
and  selling  expense  in  the amount of  $90,210  and  $119,164,
respectively, a decrease of $28,954 or 24%.  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.   Additionally, as a result  of  the  Joint  Venture,
these  expenses are reimbursed to Igene. However,  no  assurances
can be made concerning increased production from the new facility
or  marketing and selling costs; though neither of these  can  be
assured.

Research, development and pilot plant expenses

     For the quarter ended June 30, 2006 and 2005, Igene recorded
research  and  development costs in the amount  of  $237,088  and
$217,082,  respectively, an increase of $20,006 or 9%.   For  the
six  months ended June 30, 2006 and 2005, Igene recorded research
and  development  costs in the amount of $445,737  and  $383,089,
respectively,  an increase of $62,648 or 16%.   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 can not be assured.

Operating expenses

     General  and  administrative expenses for the quarter  ended
June  30,  2006 and 2005 were $292,231 and $246,592 respectively,
an  increase  of  $45,639  or  19%.  General  and  administrative
expenses  for  the six months ended June 30, 2006 and  2005  were
$517,014  and  $435,500 respectively, an increase of  $81,514  or
19%.  These costs are expected to remain constant at this current
level.   Cost increases are due to increased audit and  reporting
costs.  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  none
of these can be assured.

Interest expense

     Interest  expense for the quarters ended June 30,  2006  and
2005  was  $207,192 and $192,709, respectively,  an  increase  of
$14,483 or 8%.  For the six months ended June 30, 2006 and  2005,
interest  expense  was  $413,591 and $405,789,  respectively,  an
increase  of  $7,802  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 the second quarter of 2005, Igene wrote off a portion
of a receivable for the sale of equipment it had determined would
not  be  of use in the new Selby facility and recorded a loss  of
$50,000.

Net loss and basic and diluted net loss per common share

     As  a  result  of  the foregoing, the Company  reported  net
losses  of $152,354 and $532,838, respectively, for the  quarters
ended  June 30, 2006 and 2005, a decrease in the loss of $380,484
or  71%.   This represents a loss of $.00 per basic  and  diluted
common  share in the quarters ended June 30, 2006 and 2005.   The
weighted average number of shares of common stock outstanding  of
108,295,152 and 102,794,142 for the quarters ended June 30,  2006
and  2005,  respectively,  increased by  5,501,010  shares.  This
resulted  from the weighted average adjustments of the  following
transactions: the issuance of 1,000,000 shares issued to  Probio,
3,037,512   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 June  30,  2006,
Igene had negative working capital of $855,879, and cash and cash
equivalents  of  $9,527.   Currently  Igene  is  also  funded  by
research and development reimbursements from the Joint Venture.

     Cash provided by (used for) operating activities during  the
six-month  period  ended  June 30,  2006  and  2005  amounted  to
$(103,043)  and  $308,934,  respectively,  an  increase  in  cash
provided of $411,977.

    Cash used by investing activities during the six-month period
ended  June  30, 2006 and 2005 amounted to $18,263 and  $466,070,
respectively, an decrease of $447,807, from decreases in advances
to the Joint Venture.

     Cash provided  by  financing activities  for  the  six-month
period  ended  June  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 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, 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.

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, 2005, total dividends in arrears  on  the
Company's  preferred stock total $198,416 ($10.72 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 Troms? AS) for $106,500; (b) Knut
Gjernes for $7,500; (c) Magne Russ Simenson for $378,000; and (d)
Nord  Invest AS for $313,000 (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.



                              -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     August 11, 2006     By  /S/ STEPHEN F. HIU
         _______________         ________________________________
                                     STEPHEN F. HIU
                                     President




Date     August 11, 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-