U.S. SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C. 20549
                            FORM 10-QSB/A
                          (Amendment No. 1)

(Mark One)

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

            For the quarterly period ended June 30, 2004

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

      For the transition period from __________ to __________


                   Commission file number 0-15888
                   ______________________________

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


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


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

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

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



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

Yes                No    x
      ___               ___


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

Transitional Small Business Disclosure Format (check one):

Yes                No    x
      ___               ___

<PAGE>
Explanatory Note:

As  disclosed  in  the  Notification of Late Filing  filed  by  Igene
Biotechnology, Inc. (the "Registrant") with the Commission  on  April
1,   2005  (the  "Notification"),  Berenson  LLP  ("Berenson"),   the
Registrant's  independent  registered  public  accounting  firm,  has
questioned the Registrant's historical method of recording the  value
of  its  50% interest in its joint venture with Tate & Lyle PLC  (the
"Joint  Venture"), as reflected in the Registrant's previously issued
consolidated  financial  statements  contained  in  the  Registrant's
Annual Report on Form 10-KSB for the year ended December 31, 2003 and
consolidated   interim   financial  statements   contained   in   the
Registrant's  Quarterly  Reports on Form  10-QSB  for  the  quarterly
periods  ended March 31, 2004, June 30, 2003 and 2004, and  September
30, 2003 and 2004 (collectively, the "Financial Statements").

As disclosed in the Notification, the Registrant contacted the Office
of  Chief Accountant of the Commission requesting further guidance on
this  accounting matter.  The Registrant engaged in discussions  with
the  Staff of the Commission relating to the accounting treatment  of
the  Registrant's  interest  in the Joint  Venture.   The  Commission
advised  the registrant that the historical accounting treatment  was
not appropriate.  In a letter dated May 12, 2005, and received by the
Company  on the same date, Berenson notified the Registrant that  the
Financial  Statements  should no longer be  relied  upon  because  of
errors  in those Financial Statements.  The Registrant is now in  the
process  of  correcting and restating the Financial  Statements  (the
"Restatement").   The  Registrant  has  filed  restatements  for  the
quarterly periods ended June 30, 2003 and September 30, 2003 and  the
annual  report for the year ended December 31, 2003.  The  registrant
plans  to file the remainder of the restated Financial Statements  as
soon  as  is  practicable after the necessary corrections  have  been
made.

The historical Financial Statements filed with the Commission treated
the  Registrant's  investment in the Joint Venture under  the  equity
method  of  accounting  as  a one-line caption  on  its  consolidated
balance  sheet  and  consolidated statement of  operations  with  the
excess of fair value of such investment in the Joint Venture over the
historical  cost  basis  of consideration paid  for  such  investment
reflected as an adjustment to additional paid-in capital.

The Restatement of the Financial Statements pertains primarily to the
manner  in which the Registrant recorded the investment in the  Joint
Venture  in the Financial Statements. The Registrant has been advised
that  while the Registrant's investment in the Joint Venture has been
correctly  accounted for under the equity method of accounting  as  a
one-line  caption on its consolidated balance sheets and consolidated
statements  of operations, the Registrant's investment in  the  Joint
Venture should have been recorded at an amount equal to the value  of
the  Registrant's consideration contributed at the  creation  of  the
Joint  Venture  (not as the excess of fair value of the  Registrant's
investment in the Joint Venture over the historical cost basis).   As
a  result,  the  investment  in the Joint Venture  should  have  been
initially  recorded  with  a  value  of  $316,869;  rather  than  the
$12,300,000 initially recorded in the Financial Statements.

The  Company can not recognize losses of the Joint Venture beyond its
investment  in  the Joint Venture (including advances).   As  of  the
second  quarter of 2004 the Company had an initial investment of  and
amounts  due from the Joint Venture of $1,020,112.  Igene's share  of
the  loss  through  June 30, 2004 equaled $2,676,500,  exceeding  the
total  investment by $1,656,388.  This excess loss,  and  all  future
losses  incurred as a result of the Joint Venture, that are in excess
of the Company's investment and advances, will be suspended until the
point  that  the  profits of the Joint Venture, if  any,  exceed  the
incurred losses.

As  in  the  originally  issued financial statements,  the  Company's
preferred  stock has been classified as liabilities in  the  restated
financial  statement  in accordance with the Statement  of  Financial
Accounting  Standards  No.  150  "Accounting  for  Certain  Financial
Instruments  with  Characteristics of both  Liabilities  and  Equity"
("FASB  150").   However the amounts previously stated  as  dividends
after  the effective date of FASB 150, which was at the beginning  of
the  third  quarter of 2003,  have been recharacterized  as  interest
expense    in    the    restated    financial    statements.      The
recharacterization increases interest expense by $34,225 and  $37,058
for   the   three  months  and  six  months  ended  June  30,   2004,
respectively.

For  the convenience of the reader, this Form 10-QSB/A sets forth the
Form  10-QSB  originally filed with the SEC on August 14,  2004  (the
"Form  10-QSB")  in its entirety.  However, this Form  10-QSB/A  only
amends and restates Items [1 and 2 of Part I] of the Form 10-QSB,  in
each case, solely as a result of, and to reflect the Restatement  and
no  other  information  in the Form 10-QSB is  amended  hereby.   The
foregoing  items  have  not  been updated  to  reflect  other  events
occurring  after the original filing date of the Form  10-QSB  or  to
modify or update those disclosures affected by subsequent events.  In
<PAGE>
addition, pursuant to the rules of the SEC, Item 6 of Part II of  the
Form   10-QSB   has   been   amended   to   contain   currently-dated
certifications from the Company's Chief Executive Officer  and  Chief
Financial  Officer,  as  required by Sections  302  and  906  of  the
Sarbanes-Oxley  Act  of 2002.  The certifications  of  the  Company's
Chief  Executive Officer and Chief Financial Officer are attached  to
this Form 10-QSB/A as Exhibits 31(a), 31(b), 32(a) and 32(b).

Except  for  the  foregoing amended information, this  Form  10-QSB/A
continues to speak as of the original filing date of the Form 10-QSB,
and  the  Company has not updated the disclosure contained herein  to
reflect events that occurred at a later date.  Other events occurring
after the filing of the Form 10-QSB or other disclosures necessary to
reflect  subsequent events are addressed, or will  be  addressed,  in
subsequent filings with the SEC.
<PAGE>
                            FORM 10-QSB/A
                      IGENE Biotechnology, Inc.


                                INDEX



PART I    -    FINANCIAL INFORMATION

                                                            Page

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

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

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

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

     Notes to Consolidated Financial Statements ........... 11-18

     Management's Discussion and Analysis of Financial
     Conditions and Results of Operations ................. 19-25

PART II    -    OTHER INFORMATION ......................... 26-27

SIGNATURES ................................................ 28

EXHIBIT INDEX .................................   29
<PAGE>

                      IGENE BIOTECHNOLOGY, INC.

             QUARTERLY REPORT UNDER SECTION 13 OR 15(D)

             OF THE SECURITIES EXCHANGE ACT OF 1934
<PAGE>
                             PART I
                      FINANCIAL INFORMATION
<PAGE>
<TABLE>
<CAPTION>
                IGENE Biotechnology, Inc.  and Subsidiaries
                        Consolidated Balance Sheets


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

  Cash and cash equivalents                        $     36,586    $     63,075
  Accounts receivable                                   102,333         156,458
  Prepaid expenses and other current assets              30,499          43,675
                                                   _____________   _____________

                                                        169,418         263,208
OTHER ASSETS
  Property and equipment, net                           139,307         148,931
  Loans receivable from manufacturing agent             118,965         122,964
  Other assets                                            5,195           4,886
                                                   _____________   _____________

     TOTAL ASSETS                                  $    432,885    $    539,989
                                                   =============   =============
</TABLE>

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

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

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

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

     TOTAL CURRENT LIABILITIES                                               212,035         187,360

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

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

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

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

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Common stock --- $.01 par value per share.
     Authorized 750,000,000 shares;
     issued and outstanding 98,003,270
     and 92,747,469 shares, respectively.                                    980,033         927,475
  Additional paid-in capital                                              24,843,659      22,556,553
  Deficit                                                                (40,204,863)    (39,291,395)
                                                                        _____________   _____________

     TOTAL STOCKHOLDERS' DEFICIT                                         (14,381,171)    (15,807,367)
                                                                        _____________   _____________

     TOTAL LIABILITIES AND
     STOCKHOLDERS' DEFICIT                                              $    432,885    $    539,989
                                                                        =============   =============
</TABLE>




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

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

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

  Sales - AstaXin(R)                              $       ---   $   152,705      $       ---   $   463,486
  Cost of sales - AstaXin(R)                              ---       143,962              ---       444,946
                                                  ____________  ____________     ____________  ____________
          GROSS PROFIT                                    ---         8,743              ---        18,540
                                                  ____________  ____________     ____________  ____________

OPERATING EXPENSES
__________________

  Marketing and selling                               161,245       118,569          209,267       219,855
  Research, development and pilot plant               195,522       223,004          403,932       378,401
  General and administrative                          210,950       242,388          360,828       384,327
  Litigation expense                                   27,500           ---           40,580           ---
  Operating expenses reimbursed by Joint Venture     (380,131)     (564,381)        (743,175)     (564,381)
                                                  ____________  ____________     ____________  ____________
          TOTAL OPERATING EXPENSES                    215,086        19,580          271,432       418,202
                                                  ____________  ____________     ____________  ____________

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

EQUITY IN LOSS OF UNCONSOLIDATED SUB                 (169,744)     (347,000)        (202,060)     (347,000)
INTEREST EXPENSE                                     (216,015)     (177,901)        (439,976)     (383,132)
                                                  ____________  ____________     ____________  ____________

  NET LOSS FROM CONTINUING OPERATIONS                (600,845)     (535,738)        (913,468)   (1,129,794)

DISCONTINUED OPERATIONS
_______________________

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

           NET LOSS                               $  (600,845)  $  (535,738)     $  (913,468)  $  (892,357)
                                                  ============  ============     ============  ============

BASIC AND DILUTED NET LOSS
  PER COMMON SHARE
  FROM CONTINUING OPERATIONS                      $     (0.01)        (0.01)     $     (0.01)        (0.01)
                                                  ____________  ____________     ____________  ____________

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

BASIC AND DILUTED NET LOSS PER COMMON SHARE       $     (0.01)        (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 Subsidiaries
                  Consolidated Statements of Stockholders' Deficit
                                     (Unaudited)


                                                              Redeemable Preferred Stock
                                                                    (shares/amount)
                                                             _____________________________
<S>                                                          <C>              <C>
Balance at January 1, 2003                                       213,655      $ 1,947,774

Cumulative undeclared dividends
  on redeemable preferred stock                                      ---           98,194

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

Exercise of warrants                                                 ---              ---

Net loss for the six months ended June 30, 2003                      ---              ---
                                                             ============     ============
Balance at June 30, 2003                                         213,105      $ 2,036,552
                                                             ============     ============
Balance at January 1, 2004                                       213,105      $ 2,104,745

Cumulative undeclared dividends
  on redeemable preferred stock                                      ---           37,058

Conversion of preferred stock to common                         (194,596)      (1,807,160)

Exercise of warrants                                                 ---              ---

Net loss for the six months ended  June 30, 2004                     ---              ---
                                                             ============     ============
Balance at June 30, 2004 (Restated)                               18,509      $   334,643
                                                             ============     ============
</TABLE>

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

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


                                                                                Additional                  Total
                                                           Common Stock         Paid-in                     Stockholders'
                                                          (shares/amount)       Capital       Deficit       Deficit
                                                   _____________ _____________  ____________  ____________  _____________
<S>                                                <C>           <C>            <C>           <C>           <C>

Balance at January 1, 2003                           92,943,746  $    929,437   $ 22,387,604  $(37,120,502) $(13,803,461)

Cumulative undeclared dividends
  on redeemable preferred stock                             ---           ---        (98,194)          ---       (98,194)

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

Conversion of preferred stock to common                   1,100            11          9,405           ---         9,416

Shares issued for manufacturing agreement             1,130,023        11,301         33,436           ---        44,737

Net loss for the six months ended June 30, 2003             ---           ---            ---      (892,357)     (892,357)
                                                   ============= =============  ============= ============= =============
Balance at June 30, 2003                             87,074,869  $    870,749   $ 22,192,251  $(38,012,859) $(14,949,859)
                                                   ============= =============  ============= ============= =============

Balance at January 1, 2004                           92,747,469  $    927,475   $ 22,556,553  $(39,291,395) $(15,807,367)

Conversion of redeemable preferred stock                389,192         3,892      1,803,268           ---     1,807,160

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

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

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

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

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

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

Net loss for the six months ended June 30, 2004             ---           ---            ---      (913,468)     (913,468)
                                                   ============= =============  ============= ============= =============
Balance at June 30, 2004 (Restated)                  98,003,270  $    980,033   $ 24,843,659  $(40,204,863) $(14,381,171)
                                                   ============= =============  ============= ============= =============
</TABLE>


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

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

                                                                          Six months ended
                                                                   _______________________________
                                                                        June 30,          June 30,
                                                                           2004              2003
                                                                   _____________     _____________
                                                                     (Restated)
<S>                                                                <C>               <C>
Cash flows from operating activities
  Net loss                                                         $   (913,468)     $   (892,357)
  Adjustments to reconcile net loss to net cash used
  by operating activities:
     Depreciation                                                         9,624            11,784
     Amortization                                                           ---            54,729
     Issuance of Shares to Fermtech per ProBio agreement                110,000               ---
     Manufacturing cost paid in shares of common stock                  184,879            44,736
     Issuance of common stock for legal services                         27,500               ---
     Equity in loss of unconsolidated sub                               202,060           347,000

     Decrease (increase) in:
        Accounts receivable                                              58,125           373,067
        Inventory                                                           ---           374,709
        Prepaid expenses and other current assets                        12,866            43,729

     Increase (decrease) in:
        Accounts payable and accrued expenses                           428,800            29,974
                                                                   =============     =============
  Net cash provided by operating activities                             120,386           387,371

Cash flows from investing activities
  Advances to joint venture                                            (202,060)         (421,657)
  Capital (expenditures) and sales                                          ---             3,209

  Net cash used in investing activities                                (202,060)         (418,448)
                                                                   =============     =============
Cash flows from financing activities
  Proceeds (repayment) from borrowing                                      (125)         (100,000)
  Increase in preferred stock for cumulative dividends
            classified as interest                                       37,058               ---
  Payment of equipment lease                                             (1,498)              ---
  Proceeds from exercise of employee stock options                       19,750               ---

  Net cash (used) provided by financing activities                       55,185          (100,000)
                                                                   =============     =============
  Net decrease in cash and cash equivalents                             (26,489)         (131,077)

  Cash and cash equivalents at beginning of period                       63,075           497,711
                                                                   =============     =============
  Cash and cash equivalents at end of period                        $    36,586        $   366,634
                                                                   =============     =============
Supplementary disclosure and cash flow information
__________________________________________________

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

See Note (2) for non-cash investing and financing activities.
</TABLE>
The accompanying notes are an integral part of the financial statements.

                              -10-
            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements

(1)  Unaudited consolidated financial statements

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

(2)  Nature of Operations

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

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

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

(3)  Noncash investing and financing activities

     During  the  six  months ended June 30,  2004,  the  194,596
     shares  of  redeemable  preferred  stock,  with  a  recorded
     aggregate  value of $1,807,160, were converted into  389,192
     shares  of  common  stock.   This portion  included  the  8%
     Cumulative  Convertible Preferred Stock, Series  B  and  has
     relieved the company of this amount from long-term debt.

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

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


                              -11-
            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)

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

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

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

     During  the  six months ended June 30, 2004  and  2003,  the
     Company  recorded in dividends in arrears on  8%  redeemable
     preferred stock cumulating at $.32 per share aggregating  to
     $37,058  and $98,149, respectively on preferred  stock.  The
     accrued  interest is included in the carrying value  of  the
     redeemable preferred stock. In accordance with FASB 150, the
     dividends  accrued in the third quarter 2003 and  thereafter
     have   been   reclassified   to  interest   expense.    This
     reclassification increases interest expense by  $37,058  for
     the six months ended June 30, 2004.

     On  March 18, 2003, the Company entered into a Joint Venture
     Agreement  with  Tate  &  Lyle  Fermentation  Products  Ltd.
     ("Tate") Pursuant to a Joint Venture Agreement, the  Company
     and  Tate  agreed  to  form  a  joint  venture  (the  "Joint
     Venture")  to  manufacture, market and sell Astaxanthin  and
     derivative products throughout the world for all uses  other
     than  as  a  Nutraceutical  or otherwise  for  direct  human
     consumption.  Tate contributed $24,600,000 in  cash  to  the
     Joint  Venture, while the Company transferred to  the  Joint
     Venture  its  technology  relating  to  the  production   of
     Astaxanthin  and assets related thereto. These  assets  will
     continue to be used by the Joint Venture in the same  manner
     as  historically used by the Company.  The Company and  Tate
     each have a 50% ownership interest in the Joint Venture  and
     equal  representation  on  the Board  of  Directors  of  the
     Company.  The value of the Company's investment in the Joint
     Venture  has  been recorded at an amount equal to  the  book
     value  of the Registrant'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  investment
     in the Joint Venture has been initially recorded with a book
     value   of   $316,869,  which  represents  the   unamortized
     production  costs  contributed to  the  Joint  Venture.   In
     addition  to the Company's initial investment in  the  Joint
     Venture,  the Company has made $697,243 in advances  to  the
     Joint Venture and a $6,000 capital investment.

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




                              -12-
            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)

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

(4)  Foreign Currency Translation and Transactions

     Since   the   day-to-day  operations  of   Igene's   foreign
     subsidiary   in   Chile  are  dependent  on   the   economic
     environment of the parent's currency, the financial position
     and  results  of  operations of Igene Chile  are  determined
     using  Igene's  reporting  currency  (US  dollars)  as   the
     functional  currency.  All exchange gains  and  losses  from
     remeasurement  of monetary assets and liabilities  that  are
     not  denominated in US dollars are recognized  currently  in
     income.   These  losses and gains occurred  primarily  as  a
     result  of  the effect of valuation of the Chilean  Peso  on
     Igene's  accounts receivables, which are mostly  denominated
     in Pesos.

(5)  Joint Venture

     March  18  2003,  the Company entered into a  Joint  Venture
     Agreement  with  Tate  &  Lyle  Fermentation  Products  Ltd.
     ("Tate") Pursuant to a Joint Venture Agreement, the  Company
     and  Tate  agreed  to  form  a  joint  venture  (the  "Joint
     Venture")  to  manufacture, market and sell Astaxanthin  and
     derivative products throughout the world for all uses  other
     than  as  a  Nutraceutical  or otherwise  for  direct  human
     consumption.  Tate contributed $24,600,000 in  cash  to  the
     Joint  Venture, while the Company has agreed to transfer  to
     the  Joint Venture its technology relating to the production
     of Astaxanthin and assets related thereto. These assets will
     continue to be used by the Joint Venture in the same  manner
     as  historically used by the Company.  The Company and  Tate
     each have a 50% ownership interest in the Joint Venture  and
     equal  representation  on  the Board  of  Directors  of  the
     Company.  The value of the Company's investment in the Joint
     Venture  has  been recorded at an amount equal to  the  book
     value  of the Registrant'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 new 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 subsidiary.  From inception  on
     March 18, 2003 through June 30, 2004, Igene's portion of the
     Joint  Venture's net loss was $2,676,500.  The  loss  was  a
     result  of  a  50% interest in the following:  Gross  profit
     from  inception  was  a  negative  $1,999,000  on  sales  of
     $3,140,000, less manufacturing cost of $5,139,000.   Selling
     and  general and administrative expenses were $3,360,000 and
     interest  income was $6,000.  The resulting loss before  tax
     was  $5,353,000.  Igene's 50% portion of the  Joint  Venture
     loss was $2,676,500.

     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 will be recognized only
     to the extent of the Investment in and Advances to the Joint
     Venture.   Losses in excess of this amount will be suspended
     from  recognition  in  the financial statement  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.

     At June 30, 2004, 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 $697,243,  for  a  total  of
     $1,020,112.   For  the year ended December 31,  2003,  Igene
     recognized  $818,052 of the $914,494 loss which  existed  as
     part  of  the  Joint  venture in that year.   In  the  first
     quarter  of 2004, Igene recognized losses to the  extent  of
     the  increase  in the advance $32,316, the  March  31,  2004
     balance  of $850,368, less the December 31, 2003 balance  of
     $818,052.   For the three months ended June 30  2004,  Igene
     will recognize a loss of $169,744 which is the extent of the
     increase in the advance for that period (the June  30,



                              -13-
           Notes to Consolidated Financial Statements
           IGENE Biotechnology, Inc. and Subsidiaries
                           (continued)


     2004  balance of $1,020,112 less the March 31, 2004  balance
     of  $850,368).  The remainder of the loss, which is $918,256
     for   the   quarter,  will  be  suspended.   The  cumulative
     suspended loss at June 30, 2004 is $1,656,388 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, 2004.

(6)  Stockholders' Equity (Deficit)

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

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

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

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

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

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

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

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

(7)  Basic and diluted net loss per common share

     Basic  and  diluted net loss per common share for  the  six-
     month  periods ended June 30, 2004 and 2003,  are  based  on
     94,376,611 and 87,435,688 shares, respectively, of  weighted
     average common shares outstanding. The same figures for  the
     three month period then ended are based upon 95,821,138  and
     86,525,557  weighted average common shares outstanding.  For
     purposes of computing net loss per common share, the  amount
     of  net  loss  has  been increased by cumulative  undeclared
     dividends  in  arrears on preferred stock in the  amount  of
     $98,194  for  the  six  months  ended  June  30,  2003.   No
     adjustment  has  been made for any common stock  equivalents
     outstanding because their effects would be antidilutive.









                              -14-
            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)

(8)  Income Taxes

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

(9)  Uncertainty

     Igene has incurred net losses in each year of its existence,
     aggregating approximately $40,200,000 from inception to June
     30,  2004 and its liabilities and redeemable preferred stock
     exceeded  its  assets by approximately $14,381,000  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  and
     Lyle.  Igene  began  manufacturing  and  selling  AstaXin(R)
     during 1998 and has continued to do so to  date,  attempting
     to increase sales and manufacturing levels.  Igene  believes
     this  technology to be highly marketable.   Igene  hopes  to
     continue   increasing   sales   of   AstaXin(R),  eventually
     achieving   gross  profits   and,  subsequently,  profitable
     operations,   although  the  achievement  of  these   cannot
     be assured.

(10) Stock Based Compensation

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

<TABLE>
<CAPTION>
                                                      Three months ended             Six months ended
                                                 __________________________     __________________________
                                                     June 30,      June 30,         June 30,      June 30,
                                                        2004          2003             2004          2003
                                                 ____________  ____________     ____________  ____________
     <S>                                         <C>           <C>              <C>           <C>
     Net loss:
       As reported                               $  (600,845)  $  (535,738)     $  (913,468)  $  (829,357)
     Less pro forma stock-based employee
       compensation expense determined under
       fair value based method net of related
       tax effects                                  (156,892)     (159,578)        (330,447)     (264,162)
                                                 ____________  ____________     ____________  ____________

     Net loss                                    $  (757,737)  $  (695,316)     $(1,243,915)  $(1,156,519)
                                                 ============  ============     ============  ============
     Net loss per Share:
       Basic - as reported                       $     (0.01)  $     (0.01)     $     (0.01)  $     (0.01)
       Basic - pro forma                         $     (0.01)  $     (0.01)     $     (0.01)  $     (0.01)

       Diluted - as reported                     $     (0.01)  $     (0.01)     $     (0.01)  $     (0.01)
       Diluted - pro forma                       $     (0.01)  $     (0.01)     $     (0.01)  $     (0.01)
</TABLE>




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



(11) Recent Accounting Pronouncements

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

     In  May  2003,  the  Financial  Accounting  Standards  Board
     ("FASB")  issued  SFAS  No.  150,  "Accounting  for  Certain
     Financial   Instruments   with   Characteristics   of   Both
     Liabilities and Equity".  SFAS No. 150 establishes standards
     for  how an issuer classifies and measures certain financial
     instruments  with  characteristics of both  liabilities  and
     equity.     It  requires  that an  issuer  classify  certain
     financial instruments as a liability, although the financial
     instrument  may  previously  have been classified as equity.
     This  statement  is  effective  for  financial   instruments
     entered  into or  modified  after May 31, 2003 and otherwise
     is  effective at the  beginning  of the first interim period
     beginning after June 15,  2003.  The effect of adopting this
     pronouncement  required  the reclassification of $.3 million
     of  redeemable preferred stock as a liability as of June 30,
     2004.

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

(12) Summary of Significant Activity of Joint Venture

     March  18  2003,  the Company entered into a  Joint  Venture
     Agreement  with  Tate  &  Lyle  Fermentation  Products  Ltd.
     ("Tate") Pursuant to a Joint Venture Agreement, the  Company
     and  Tate  agreed  to  form  a  joint  venture  (the  "Joint
     Venture")  to  manufacture, market and sell Astaxanthin  and
     derivative products throughout the world for all uses  other
     than  as  a  Nutraceutical  or otherwise  for  direct  human
     consumption.  Tate contributed $24,600,000 in  cash  to  the
     Joint  Venture, while the Company has agreed to transfer  to
     the  Joint Venture its technology relating to the production
     of Astaxanthin and assets related thereto. These assets will
     continue to be used by the Joint Venture in the same  manner
     as  historically used by the Company.  The Company and  Tate
     each have a 50% ownership interest in the Joint Venture  and
     equal  representation  on  the Board  of  Directors  of  the
     Company.  The value of the Company's investment in the Joint
     Venture  has  been recorded at an amount equal to  the  book
     value  of the Registrant'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 new venture  of
     $6,000.







                              -16-
            IGENE Biotechnology, Inc. and Subsidiary
                  Notes to Financial Statements
                           (continued)

    As  a  result of the Joint Venture, the production, sales and
    marketing   of   Astaxanthin   now   takes   place   in   the
    unconsolidated Joint Venture subsidiary.  From  inception  on
    March  18,  2003 through March 31, 2004, Igene's  portion  of
    the Joint Venture's net loss was $2,676,500.  The loss was  a
    result  of  a  50% interest in the following:   Gross  profit
    from  inception  was  a  negative  $1,999,000  on  sales   of
    $3,140,000,  less manufacturing cost of $5,139,000.   Selling
    and  general and administrative expenses were $3,360,000  and
    interest  income was $6,000.  The resulting loss  before  tax
    was  $5,353,000.   Igene's 50% portion of the  Joint  Venture
    loss was $2,676,500.

    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 will be recognized  only
    to  the extent of the Investment in and Advances to the Joint
    Venture.   Losses in excess of this amount will be  suspended
    from  recognition  in  the financial  statement  and  carried
    forward  to  offset  Igene's share  of  the  Joint  Venture's
    future  income,  if any.  The Company's cumulative  suspended
    loss from the Joint Venture is $1,656,388 at June 30, 2004.

    At  June 30, 2004, 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 $697,243,  for  a  total  of
    $1,020,112.   For  the year ended December  31,  2003,  Igene
    recognized  $818,052 of the $914,494 loss  which  existed  as
    part  of  the  Joint  venture in that  year.   In  the  first
    quarter  of  2004, Igene recognized losses to the  extent  of
    the  increase  in  the advance $32,316, the  March  31,  2004
    balance  of  $850,368, less the December 31, 2003 balance  of
    $818,052.   For  the three months ended June 30  2004,  Igene
    recognized  a  loss  to the extent of  the  increase  in  the
    advance  for that period, $169,744 (the June 30, 2004 balance
    of  $1,020,112 less the March 31, 2004 balance of  $850,368).
    The  remainder  of  the  loss,  which  is  $918,256  will  be
    suspended.  The Company's cumulative suspended loss  at  June
    30,  2004 is $1,656,388 and will be carried forward to offset
    Igene's  share  of earnings from the Joint Venture,  if  any.
    The  balance  in  the  Advances to and  Investment  in  Joint
    Venture  account  on  the Company's financial  statements  is
    zero at June 30, 2004.

    The  following  statement displays the  significant  activity
    for  the  joint venture from the initial investment at  March
    18,  2003  in  the Joint Venture through June 30,  2004.   As
    shown  50%  of  the activity is recorded as part  of  Igene's
    Financial  Statements  as  income from  investment  in  Joint
    Venture:

<TABLE>
<CAPTION>
                                                      June 30,
                                                         2004
                                                  _____________
                                                   (Unaudited)
       <S>                                        <C>
       ASSETS
       CURRENT ASSETS
           Account Receivable                     $  1,028,000
           Inventory                                   112,000
                                                  _____________
                                                     1,140,000
       OTHER ASSETS
           Fixed Assets Receivable                  21,614,000
           Intellectual property                    24,614,000
                                                  _____________
               TOTAL ASSETS                       $ 47,368,000
                                                  =============
       LIABILITIES AND EQUITY

       CURRENT LIABILITIES
           Accounts payable and accrued expenses  $  3,263,000
           Working capital loan                        224,000
                                                  _____________
       TOTAL LIABILITIES                             3,487,000
           Equity                                   43,881,000
                                                  _____________
       TOTAL LIABILITIES AND EQUITY               $ 47,368,000
                                                  =============
</TABLE>
                              -17-
<TABLE>
<CAPTION>
                           Notes to Consolidated Financial Statements
                           IGENE Biotechnology, Inc. and Subsidiaries
                                          (continued)

                                                              Period from March 18,2003
                                                               (initial investment) to
                                                                    June 30, 2004
                                                              _________________________
                                                                     (unaudited)
     <S>                                                           <C>
     Net Sales                                                     $  3,140,000
     Less: manufacturing cost                                        (5,139,000)
     Gross Profit (Loss)                                             (1,999,000)
     Less: selling, general and administrative                       (3,360,000)
     Operating Loss                                                  (5,359,000)
     Interest Income                                                      6,000
     Net Loss                                                      $ (5,353,000)
     Igene's 50% equity interest in the net loss                   $ (2,676,500)
     Igene's Investment in and Advances to the Joint Venture         (1,020,112)
     Igene's suspended loss at June 30, 2005                       $ (1,656,388)

</TABLE>

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



<TABLE>
<CAPTION>
                                                              Three Months     Six Months
                                                                  Ended          Ended
                                                              June 30, 2004   June 30, 2004
                                                              _____________   _____________
     <S>                                                      <C>             <C>
     Net Sales                                                $    862,000    $  2,006,000
     Less: manufacturing cost                                   (2,125,000)     (3,998,000)
                                                              _____________   _____________
     Gross Profit (Loss)                                        (1,263,000)     (1,982,000)
     Less: selling, general and admin                             (910,000)     (1,532,000)
                                                              _____________   _____________
     Operating Loss                                             (2,173,000)     (3,514,000)
     Interest Expense                                               (3,000)        (10,000)
                                                              _____________   _____________
     Loss before tax                                          $ (2,176,000)   $ (3,524,000)
                                                              =============   =============
     50% equity interest Igene                                $ (1,088,000)   $ (1,762,000)
     Igene's additional Investment in
       and Advances to the Joint Venture                          (169,744)       (202,060)
                                                              _____________   _____________
     Igene's incremental suspended loss for period            $   (918,256)   $ (1,559,940)
                                                              =============   =============

</TABLE>












                              -18-
           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations


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

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

Overview of Financial Position
______________________________

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

   o During the six months ended June 30, 2004, 194,596 shares of
     redeemable  preferred stock, with a recorded aggregate value
     of  $1,807,160, were converted into 389,192 shares of common
     stock.   This portion included the 8% Cumulative Convertible
     Preferred  Stock,  Series  B  preferred  securities  and has
     relieved the company of this amount from long-term debt.

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

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

   o The  carrying  value  of  redeemable  preferred   stock  was
     increased   for   $37,058  in  2004  and  $98,149  in  2003,
     reflecting  cumulative   unpaid   dividends  on   redeemable
     preferred stock.

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


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








                              -19-
           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

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  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 will be recognized only to the extent
of  Igene's consideration paid for it's initial investment in the
Joint  Venture and any net advances Igene has made to  the  Joint
Venture.  Losses in excess of this amount will be suspended  from
recognition  in  the financial statement 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.

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

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

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

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

Cost of sales and gross profit

    As  with  sales  revenue,  future cost  of  sales  and  gross
profits  will  be  recognized through the Joint Venture  company.
Igene reported no gross profit on sales of AstaXin(R) for the six
months ended June 30, 2004.  Gross profit on sales of  AstaXin(R)
was  $8,743  for the quarter ended June 30, 2003 and was  $18,540
for the six month period ended June 30, 2003. Gross profit was 4%
of  sales  for the six months ended June 30, 2003.   The  Company
attributes  this modest gross profit to a combination of  pricing
pressure in the market and inefficiencies in production.




                              -20-
           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

     Management  expects  the level of gross profit to improve in
the  future  as  a  percentage  of  sales.  Demand is expected to
increase as the  Company  increases  customer  usage  and  market
share. Management expects  the level of gross profit  to  improve
with expected  increases in production efficiency  received  from
the   Joint   Venture   with   Tate  &  Lyle  offsetting  pricing
competition, but can provide no assurances as to future increased
production or gross profit.

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

Marketing and selling expenses

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

Research, development and pilot plant expenses

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

Operating expenses

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






                              -21-
           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)
Litigation expenses

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

Interest expense

     Interest  expense for the quarters ended June 30,  2004  and
2003  was  $216,015 and $177,901, respectively,  an  increase  of
$38,114 or 21%.  For the six months ended June 30, 2004 and 2003,
interest  expense  was  $439,976 and $383,132,  respectively,  an
increase  of  $56,844  or 15%  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.  This increase is due mainly
to  the  $37,058  in cumulative dividends accrued from  preferred
stock which was recorded as interest expense

Equity in earnings of unconsolidated subsidiary

     March  18  2003,  the Company entered into a  Joint  Venture
Agreement  with Tate & Lyle Fermentation Products Ltd.   ("Tate")
Pursuant  to  a  Joint Venture Agreement, the  Company  and  Tate
agreed  to  form  a  joint  venture  (the  "Joint  Venture")   to
manufacture, market and sell Astaxanthin and derivative  products
throughout  the world for all uses other than as a  Nutraceutical
or  otherwise  for  direct human consumption.   Tate  contributed
$24,600,000  in cash to the Joint Venture, while the Company  has
agreed  to transfer to the Joint Venture its technology  relating
to  the  production  of Astaxanthin and assets  related  thereto.
These assets will continue to be used by the Joint Venture in the
same manner as historically used by the Company.  The Company and
Tate each have a 50% ownership interest in the Joint Venture  and
equal  representation on the Board of Directors of  the  Company.
The  value  of the Company's investment in the Joint Venture  has
been  recorded  at  an  amount equal to the  book  value  of  the
Registrant'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 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 new  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  subsidiary.  From inception  on  March  18,  2003
through  March  31, 2004, Igene's portion of the Joint  Venture's
net loss was $2,676,500.  The loss was a result of a 50% interest
in  the  following:  Gross profit from inception was  a  negative
$1,999,000  on  sales of $3,140,000, less manufacturing  cost  of
$5,139,000.  Selling and general and administrative expenses were
$3,360,000  and  interest income was $6,000.  The resulting  loss
before  tax  was $5,353,000.  Igene's 50% portion  of  the  Joint
Venture loss was $2,676,500.

     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 will be recognized only to the extent
of  the  Investment in and Advances to the Joint Venture.  Losses
in  excess  of this amount will be suspended from recognition  in
the  financial  statement and carried forward to  offset  Igene's
share of the Joint Venture's future income, if any.




                              -22-
           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

     At June 30, 2004, 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 $697,243, for a total of $1,020,112.  For the
year  ended December 31, 2003, Igene recognized $818,052  of  the
$914,494 loss which existed as part of the Joint venture in  that
year.   In the first quarter of 2004, Igene recognized losses  to
the  extent of the increase in the advance $32,316, the March 31,
2004  balance of $850,368, less the December 31, 2003 balance  of
$818,052.   For  the  three  months ended  June  30  2004,  Igene
recognized  a loss to the extent of the increase in  the  advance
for  that  period,  $169,744  (the  June  30,  2004  balance   of
$1,020,112  less  the March 31, 2004 balance of  $850,368).   The
remainder of the loss, which is $918,256 will be suspended.   The
Company's  cumulative  suspended  loss  at  June  30,   2004   is
$1,656,388 and will be carried forward to offset Igene's share of
earnings  from  the Joint Venture, if any.  The  balance  in  the
Advances  to  and  Investment in Joint  Venture  account  on  the
Company's financial statements is zero at June 30, 2004.

     The  following  statement displays the significant  activity
from  the  joint venture for the initial investment at March  18,
2003 in the Joint Venture through June 30, 2004.  As shown 50% of
the  activity is recorded as part of Igene's Financial Statements
as income from investment in Joint Venture:

<TABLE>

                                                                     June 30,
                                                                        2004
                                                                 _____________
                                                                   (Unaudited)
     <S>                                                         <C>
     ASSETS
     CURRENT ASSETS
          Account Receivable                                     $  1,028,000
          Inventory                                                   112,000
                                                                 _____________
                                                                    1,140,000
     OTHER ASSETS
          Fixed Assets Receivable                                  21,614,000
          Intellectual property                                    24,614,000
                                                                 _____________
              TOTAL ASSETS                                       $ 47,368,000
                                                                 =============

     LIABILITIES AND EQUITY
     CURRENT LIABILITIES
          Accounts payable and accrued expenses                  $  3,263,000
                                                                 _____________
          Working capital loan                                        224,000
              TOTAL LIABILITIES                                     3,487,000
          Equity                                                   43,881,000
                                                                 _____________
              TOTAL LIABILITIES AND EQUITY                       $ 47,368,000
                                                                 =============
</TABLE>
<TABLE>
<CAPTION>

                                                             Period from March 18, 2003
                                                               (initial investment) to
                                                                   June 30, 2004
                                                             __________________________
                                                                    (unaudited)
     <S>                                                          <C>
     Net Sales                                                    $  3,140,000
     Less: manufacturing cost                                       (5,139,000)
                                                                  _____________
     Gross Profit (Loss)                                            (1,999,000)
     Less: selling, general and administrative                      (3,360,000)
                                                                  _____________

     Operating Loss                                                 (5,359,000)
     Interest Income                                                     6,000
                                                                  _____________

     Net Loss                                                     $ (5,353,000)
                                                                  =============

     Igene's 50% equity interest in the net loss                  $ (2,676,500)
     Igene's Investment in and Advances to the Joint Venture        (1,020,112)
                                                                  _____________

     Igene's suspended loss                                       $ (1,656,388)
                                                                  =============
</TABLE>

                              -23-
           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

    The  following  statement displays the  significant  activity
for the Joint Venture for the three and six month  ended June 30,
2004.   As  shown,  50% of the activity is recorded  as  part  of
Igene's  Financial Statements as income from investment in  Joint
Venture:
<TABLE>
<CAPTION>
                                                      Three Months      Six Months
                                                         Ended             Ended
                                                     June 30, 2004     June 30, 2004
                                                     _____________     _____________
     <S>                                             <C>               <C>
     Net Sales                                       $    862,000      $  2,006,000
     Less: manufacturing cost                          (2,125,000)       (3,998,000)
                                                     _____________     _____________
     Gross Profit (Loss)                               (1,263,000)       (1,982,000)
     Less: selling, general and admin                    (910,000)       (1,532,000)
                                                     _____________     _____________
     Operating Loss                                    (2,173,000)       (3,514,000)
     Interest Expense                                      (3,000)          (10,000)
                                                     _____________     _____________
     Loss before tax                                 $ (2,176,000)     $ (3,524,000)
                                                     =============     =============

     50% equity interest Igene                       $ (1,088,000)     $ (1,762,000)
     Igene's additional Investment in
       and Advances to the Joint Venture                 (169,744)         (202,060)
                                                     _____________     _____________
     Igene's incremental suspended loss for period   $   (918,256)     $ (1,559,940)
                                                     =============     =============
</TABLE>
Disposition of ProBio Subsidiary

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

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

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

Gain on disposition

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



                              -24-
           IGENE Biotechnology, Inc. and Subsidiaries
             Management's Discussion and Analysis of
          Financial Condition and Results of Operations
                           (continued)

Net loss and basic and diluted net loss per common share

    As  a  result  of  the  foregoing, the Company  reported  net
losses  of $600,845 and $535,738, respectively, for the  quarters
ended  June 30, 2004 and 2003, an increase in the loss of $65,107
or  12%.   This represents a loss of $.01 per basic  and  diluted
common  share in the quarters ended June 30, 2004 and 2003.   The
weighted average number of shares of common stock outstanding  of
94,376,611 and 86,692,223, for the quarters ended June  30,  2004
and  2003,  respectively,  increased by  7,684,388  shares.  This
resulted  from the weighted average adjustments of the  following
transactions:  the  issuance  of  1,905,000  shares   issued   in
conversion  of  debentures, 389,192 shares  of  common  stock  in
conversion  of  preferred stock, 3,017,543 shares issued  to  the
manufacturer as part of the agreement, 1,000,000 shares issued to
Fermtech as part of the ProBio disposition agreement, and 450,000
shares  issued  as part of employee stock option  exercises,  and
250,000 shares issued as a bonus to the Company attorney  in  the
ADM matter.

Liquidity and Capital Resources

    Historically,  Igene  has  been funded  primarily  by  equity
contributions and loans from stockholders. As of June  30,  2004,
Igene  had  working  capital  of  $42,617,  and  cash  and   cash
equivalents  of  $36,586.   Currently Igene  is  also  funded  by
research and development reimbursements from the Joint Venture.

    Cash  provided  by operating activities during the  six-month
period  ended  June 30, 2004 and 2003 amounted  to  $120,386  and
$387,371, respectively, a decrease in cash provided of $266,985.

    Cash used by investing activities during the six-month period
ended  June 30, 2004 and 2003 amounted to $202,060 and  $418,448,
respectively, a decrease of $216,388, from reductions in advances
to the joint venture.

    Cash  was used by financing activities in repayment of  loans
in the amount of $100,000 for the six-month period ended June 30,
2003,  as opposed to the $55,185 provided by financing activities
for   the  six-month  period  ended  June  30,  2004.   Financing
activities  consisted  primarily of employee  stock  option  plan
purchases   and  increases  in  preferred  stock  for  cumulative
dividends classified as interest.

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

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

Item 3.  Controls and Procedures

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

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




                              -25-
                    IGENE Biotechnology, Inc.
                             PART II
                        OTHER INFORMATION

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

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

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

Limitation on Payment of Dividends
__________________________________

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

Item 3.  Defaults Upon Senior Securities.

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

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

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

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





                              -26-
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.

                              -27-
                           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   September 28, 2005    By /s/STEPHEN F. HIU
            __________________       __________________________
                                        STEPHEN F. HIU
                                        President




     Date   September 28, 2005    By /s/EDWARD J. WEISBERGER
            __________________       __________________________
                                        EDWARD J. WEISBERGER
                                        Chief Financial Officer




                              -28-
                          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.




                              -29-