UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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 endedMarch 31, 2006

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

For the transition period from: ________________ to
________________

Commission file number:000-51294METAMORPHIX, INC.(Exact name of registrant as specified in its charter)

|Delaware                                                      |  | 52-1923417         
|------------------------------------------------------------- |  | -------------------
|(State or other jurisdiction of                               |  | (IRS Employer      
|incorporation or organization)                                |  | Identification No.)
|                                                             
|                                                             
|8000
    Virginia Manor Road, Suite 140, Beltsville, Maryland |  | 20705              
|(Address of principal executive offices)                      |  | (Zip Code)         
|                                                             
|Registrant's telephone number, including area code:           |  | 301-617-9080       

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 o Nox

Check whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).  Yes o Nox

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

|Class                         |  | Outstanding as of October 31, 2006
|----------------------------- |  | ----------------------------------
|Common Stock, $.001 par value |  | 21,035,141 Shares                 

Transitional Small Business Disclosure Format (Check one):  Yes o Nox

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|                                                                    |                                                                                  |    | Page No.
|------------------------------------------------------------------- | -------------------------------------------------------------------------------- | -- | --------
|PART I. FINANCIAL INFORMATION                                       |                                                                                  |   
|                                                                    |                                                                                  |   
|ITEM 1.
Consolidated Condensed Financial Statements (Unaudited)     |                                                                                  |   
|                                                                    |                                                                                  |   
|                                                                    | Consolidated Condensed Balance Sheets as of March 31, 2006 and December 31, 2005 |    | 5       
|                                                                    |                                                                                  |    |         
|                                                                    | Consolidated Condensed Statements of Operations for the Three Months             |    |         
|                                                                    | Ended March 31, 2006 and 2005                                                    |    | 6       
|                                                                    |                                                                                  |    |         
|                                                                    | Consolidated Condensed Statements of Cash Flows for the Three Months Ended       |    |         
|                                                                    | March 31, 2006 and 2005                                                          |    | 7       
|                                                                    |                                                                                  |    |         
|                                                                    | Notes to Consolidated Condensed Financial Statements                             |    | 8       
|                                                                    |                                                                                  |    |         
|ITEM 2.
Management's Discussion and Analysis or Plan of Operation   |                                                                                  | 14
|                                                                    |                                                                                  |   
|ITEM 3.
Controls and Procedures                                     |                                                                                  | 16
|                                                                    |                                                                                  |   
|PART II. OTHER INFORMATION                                          |                                                                                  |   
|                                                                    |                                                                                  |   
|ITEM 1.
Legal Proceedings                                           |                                                                                  | 17
|                                                                    |                                                                                  |   
|ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds |                                                                                  | 17
|                                                                    |                                                                                  |   
|ITEM 3.
Defaults Upon Senior Securities                             |                                                                                  | 17
|                                                                    |                                                                                  |   
|ITEM 6.
Exhibits                                                    |                                                                                  | 18
|                                                                    |                                                                                  |   
|SIGNATURES                                                          |                                                                                  | 19

2

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EXPLANATORY NOTE

We
are filing this Form 10-QSB/A (Amendment No. 1) for the quarterly period ended
March 31, 2006 in response to the SECs comments on the filing of our Amendment
No. 1 to Form 10-SB which are applicable to this filing.  The changes made are
reflected in Part I, Note 8 to the Notes to Consolidated Financial Statements
under Director and Officer Indemnification; Part II, Item 1 under Legal Proceedings;
and Part II, Item 3 under Defaults Upon Senior  Securities.

INTRODUCTION

We are a life science company. We use our two fundamental proprietary technologiesanimal genomics and growth and differentiation factors, or GDFs, to discover, develop and commercialize products that we believe will
increase livestock quality and production efficiency, improve companion animal health and potentially treat human muscle degenerative diseases and metabolic disorders.

Genomics refers to the sequencing and analysis of the genetic makeup of an organism. Our proprietary animal genomics technologies are intended to provide trait identification and predictive diagnostic tools for producers
and breeders of beef and dairy cattle, swine, and poultry.  We believe that these tools will enable livestock producers and breeders and feedlot operators to improve substantially their production efficiency and help them meet consumer demand for
high quality meat products. We believe that animal genomics also has potential for diagnostic use in companion animals, including dogs, cats and horses, to detect disease predisposition, and behavioral and performance traits.  Commercialization of
these diagnostic products for livestock production and animal health does not require FDA approval. Our near-term products are tools that do not involve any animal pharmaceutical drugs or genetic altering of the animal.

We have established several relationships through which we expect to commercialize our animal genomics technology. We have exclusive development and marketing agreements with Cargill Incorporated, or Cargill, the
worlds second largest beef processor and feedlot operator, and the Monsanto Company, or Monsanto, the worlds second largest swine breeder.  We describe these agreements in more detail under Licenses, Acquisitions, and Collaborative
Agreements. We also have agreements to provide DNA testing services for the American Kennel Club, the worlds largest canine registry, United Kennel Club, American Angus Association, the worlds largest beef cattle registry, Red
Angus Association, American Limousin Association, and American Bucking Bull Association.

GDFs are proteins that bind
to receptors on the cell surface, with the primary result of activating cellular
proliferation and/or differentiation. Our GDF development activities are focused
on  GDF-8, also known as Myostatin, a naturally occurring protein that acts to
limit skeletal muscle development. Myostatin is one of eight GDFs to which we
have exclusive rights for use in animals. We believe the inhibition of Myostatin
has use in the  livestock industry to facilitate the production of beef cattle,
swine and poultry with more meat and less waste. We also believe that Myostatin
can potentially be used in humans to treat muscle degenerative diseases, including
muscular dystrophy,  muscle wasting (Cachexia), age-related muscle loss (Sarcopenia),
Lou Gehrigs disease (ALS), and metabolic disorders, such as Type II Diabetes
and obesity.

We have entered into relationships
to commercialize both agricultural and human therapeutic applications of our
GDF technology. We have entered into collaborative agreements with the top two
 chicken producer-processors in the United States, and have formed a joint venture
with Willmar Poultry Company, Inc., or Willmar, the worlds largest supplier
of day old poults, for the development of Myostatin applications in turkeys.
We have  granted an exclusive license to Wyeth for the GDF technology including
Myostatin, under which Wyeth has completed Phase II clinical trials to evaluate
a Myostatin-based product as a therapeutic for forms of muscular dystrophy.

3

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School of Medicine to focus on the discovery, characterization, development and commercialization of GDFs. Dr. Lees research was funded by Genetics Institute, Inc., or GI, a wholly-owned subsidiary of American Home
Products Corporation (now Wyeth). After Dr. Lee published a paper on Myostatin in 1997, we began to explore business opportunities to use the Myostatin technology for human and agricultural applications.  In 1999, we licensed to Wyeth human
therapeutic applications of our GDF technology in exchange for which we acquired Wyeths equity interest in us and the right to receive, milestone and royalty payments. Between 2000 and 2002, we granted options to license our Myostatin
technology to the top two U.S. chicken producers and entered into a joint venture with a leading supplier of turkeys to commercialize Myostatin in the North American chicken and turkey markets.

Our business activities in the area of animal genomics commenced in February 2002, when we acquired some of the animal-related assets of the Celera Genomics Group of Applera Corporation, or Celera, and licensed
Celeras chicken, swine and cattle genome databases for agricultural use within specified fields. In May 2002, we entered into our joint development and marketing agreement with Cargill Incorporated and in June 2004, we entered into our Swine
Improvement Agreement with Monsanto.

Our principal executive office is located at 8000 Virginia Manor Road, Suite 140, Beltsville, Maryland 20705, and our telephone number at that address is (301) 617-9080. We have a corporate internet website athttp://www.metamorphixinc.com. The reference to this website address does not constitute incorporation by reference of the information contained therein.

FORWARD LOOKING STATEMENTS

Statements in this Form 10-QSB/A (Amendment No. 1)
that are not descriptions of historical facts are forward-looking statements
within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995.  Reference is made in particular to
the description of our plans and objectives for future operations, assumptions
underlying such plans and objectives, and other forward looking terminology such
as
may, expects, believes, anticipates, intends, estimates, projects, or
similar terms, variations of such terms or the negative of such terms. Forward-looking
 statements are based on managements current expectations. Actual results
 could differ materially from those currently anticipated due to a number of
 factors, including those set forth under Description of Business.
 The safe harbors  for forward looking statements provided by Section 21E of
 the Exchange Act do not apply to statements made in this Form 10-QSB/A (Amendment No. 1). Except
 as required by applicable law, we do not plan to publicly update or revise any
 forward-looking statements, whether  as a result of new information, future
 events or otherwise. Although we believe that the expectations reflected in
 the forward-looking statements are reasonable, we cannot guarantee future results,
 levels of activity, performance or achievements.

4

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PART I. FINANCIAL INFORMATION

ITEM
      1.           Consolidated
  Condensed Financial Statements (Unaudited)

|METAMORPHIX, INC. AND SUBSIDIARIES                                 
|-------------------------------------------------------------------
|CONSOLIDATED CONDENSED BALANCE SHEETS                              
|(Unaudited)                                                        
|                                                                   
|                                                                   
|                                                                   
|ASSETS                                                             
|CURRENT ASSETS:                                                    
|Cash and cash equivalents                                          
|Accounts receivable                                                
|Prepaid expenses and other current assets                          
|Total current assets                                               
|                                                                   
|PROPERTY AND EQUIPMENTNet                                         
|GOODWILL                                                           
|LEASE SECURITY DEPOSITS                                            
|DEFERRED DEBT ISSUE COSTS                                          
|                                                                   
|TOTAL ASSETS                                                       
|                                                                   
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)                     
|CURRENT LIABILITIES:                                               
|Accounts payable and accrued expenses                              
|Accrued compensation                                               
|Accrued dividends                                                  
|Short-term notes payable                                           
|Notes payable to officers and directors                            
|Deferred revenue                                                   
|Celera purchase obligation                                         
|Derivative liability                                               
|Accrued interest                                                   
|Total current liabilities                                          
|                                                                   
|LONG-TERM NOTES PAYABLE, net of discount of $5,430,785 and         
|$5,610,299 at March 31, 2006 and December 31, 2005, respectively   
|CELERA PURCHASE OBLIGATION                                         
|ACCRUED INTEREST                                                   
|OTHER LONG-TERM LIABILITIES                                        
|Total liabilities                                                  
|                                                                   
|COMMITMENTS AND CONTINGENCIES (Note 8)                             
|                                                                   
|STOCKHOLDERS EQUITY (DEFICIT):                                    
|Convertible Preferred stock, $0.001 par value22,000,000 shares    
|authorized and 7,326,715 shares issued and outstanding as of March 
|31, 2006 and December 31, 2005, respectively                       
|Common stock, $0.001 par value75,000,000 shares authorized as of  
|March 31, 2006 and December 31, 2005, 20,858,149 and 20,369,719    
|shares issued and outstanding as of March 31, 2006 and December 31,
|2005, respectively                                                 
|Additional paid-in capital                                         
|Accumulated other comprehensive loss                               
|Accumulated deficit                                                
|Total stockholders equity (deficit)                               
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)               

See notes to consolidated condensed financial statements.

5

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METAMORPHIX, INC. AND SUBSIDIARIES 
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

|                                       |  | Three Months Ended   |           
|-------------------------------------- |  | -------------------- | ----------
|                                      
|                                       |  | March
      31, 2006 |           
|                                      
|REVENUE                                |  | $                    | 846,017   
|OPERATING COSTS AND                    |  |                      |           
|EXPENSES:                              |  |                      |           
|Cost of revenue                        |  |                      | 600,477   
|Research and development               |  |                      | 579,699   
|General and administrative             |  |                      | 1,636,780 
|Depreciation and amortization          |  |                      | 77,121    
|Total operating costs and expenses     |  |                      | 2,894,077 
|OTHER INCOME (EXPENSE):                |  |                      |           
|Interest expense and accretion of debt |  |                      |           
|discount                               |  |                      | (1,533,891
|Debt issue costs                       |  |                      | (473,289  
|Debt conversion expense                |  |                      | -         
|Other (expense) income                 |  |                      | (30,503   
|NET LOSS                               |  |                      | (4,085,743
|Preferred stock dividends and          |  |                      |           
|accretion of beneficial conversion     |  |                      |           
|features                               |  |                      | (343,961  
|NET LOSS ATTRIBUTABLE TO               |  |                      |           
|COMMON STOCKHOLDERS                    |  | $                    | (4,429,704
|Net loss per common share:             |  |                      |           
|Basic and diluted                      |  | $                    | (0.22     
|Weighted average number of shares      |  |                      |           
|outstanding:                           |  |                      |           
|Basic and diluted                      |  |                      | 20,375,146

See notes to consolidated condensed financial statements.

6

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METAMORPHIX, INC. AND SUBSIDIARIESCONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

|(Unaudited)                                            
|-------------------------------------------------------
|                                                       
|                                                       
|                                                       
|                                                       
|                                                       
|CASH FLOWS FROM OPERATING ACTIVITIES:                  
|Net loss                                               
|Adjustments to reconcile net loss to net cash flows    
|used in operating activities:                          
|Depreciation and amortization                          
|Accretion of debt discount                             
|Amortization of deferred debt issue costs              
|Share-based payment expense                            
|Induced conversion expense                             
|Fair value change in embedded derivative               
|(Gain) loss on disposal of fixed assets                
|Changes in assets and liabilities:                     
|Accounts receivable                                    
|Prepaid expenses and other current assets              
|Lease security deposits                                
|Accounts payable and accrued expenses                  
|Accrued compensation                                   
|Deferred purchase obligation                           
|Deferred revenue                                       
|Accrued interest                                       
|Other, net                                             
|Net cash flows used in operating activities            
|CASH FLOWS FROM INVESTING ACTIVITIES:                  
|Purchases of property and equipment                    
|Net cash flows used in investing activities            
|CASH FLOWS FROM FINANCING ACTIVITIES:                  
|Proceeds from debt issuances                           
|Principal payments on notes                            
|Proceeds from stock issuances                          
|Net cash flows provided by financing activities        
|Effects of exchange rate differences on cash and cash  
|equivalents                                            
|NET (DECREASE) INCREASE IN CASH AND CASH               
|EQUIVALENTS                                            
|CASH AND CASH EQUIVALENTSBeginning of year            
|CASH AND CASH EQUIVALENTSEnd of year                  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW                  
|INFORMATION:                                           
|Cash paid during the period for interest               
|NON-CASH INVESTING AND FINANCING ACTIVITIES:           
|Debt converted into equity                             
|Conversion of notes and accrued interest into new notes

See notes to consolidated condensed financial statements.

7

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METAMORPHIX, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1.           NATURE OF THE BUSINESS

MetaMorphix, Inc. (the Company)
      is a biopharmaceutical company focused on discovering, acquiring, developing,
      and commercializing products and technologies to improve animal health,
      livestock production, and human health. The Company was incorporated on
      September 1, 1994. The Company has two key technology
      platforms: a) livestock genomics and b) growth differentiation factors.
      These technologies are commercially employed to both increase livestock
      meat quality and production efficiency and to potentially treat muscle-wasting
      diseases in humans, such as Muscular Dystrophy and Sarcopenia. These consolidated condensed
      financial statements include the accounts of MetaMorphix, Inc. and its
      wholly-owned subsidiaries: MMI Genomics, Inc., MMI Canada Inc., MetaMorphix
      International, Inc., and MetaMorphix Holdings, Inc. All intercompany transactions
      and balances have been eliminated in consolidation. Going Concern  Managements
          Plans In the course of its operations,
      the Company has sustained operating losses and negative cash flows from
      operations and expects such losses to continue in the foreseeable future.
      As of March 31, 2006 the Company had a working capital deficiency of $23,140,854
      and an accumulated deficit of $180,212,126. The Company intends and
      is currently working to finance its operations primarily through future
      debt and equity financings and future revenues. On June 28, 2004, the Companys
      Board of Directors granted approval to Company management to pursue applicable
      steps to undertake the initial public offering, or IPO, process. This process
      is currently proceeding, although no completion date can be estimated at
      this time. If we are unable to generate positive operating cash flow prior
      to an IPO, we anticipate that the proceeds from the IPO will be sufficient
      to become cash flow positive from operations. However, we may be unable
      to successfully complete the IPO process. In addition, on June 8, 2005,
      the Companys Board of Directors granted approval to Company management
      to pursue additional financings through the issuance of a new private placement
      of promissory notes. Management is currently working with an investment
      banker to secure a note offering with terms acceptable to the Company.
      To date, no final offering has been completed. While we anticipate that
      the proceeds from additional financings will be sufficient to fund our
      operations until we can generate positive cash flow from operations, they
      may be insufficient. Although the Company recognizes
      the need to raise funds in the near future, there can be no assurance that
      it will be successful in consummating any such transaction, or, if it did
      consummate such a transaction, that the terms and conditions of such financing
      will be favorable to the Company. The Company believes that its current
      assets will not be sufficient to fund operations in 2006. This uncertainty
      raises substantial doubt about the Companys ability to continue as
      a going concern. The accompanying consolidated condensed financial statements
      do not include any adjustments that might result from the outcome of this
      uncertainty.


8

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2.           SIGNIFICANT ACCOUNTING POLICIES

Unaudited Interim Financial
          StatementsThe interim
          financial statements of the Company for the three months ended March
          31, 2006 and March 31, 2005 included herein have been prepared by the
          Company, without audit, pursuant to the rules and regulations of the
          Securities and Exchange Commission. Certain information and footnote
          disclosures normally included in the financial statements prepared
          in accordance with accounting principles generally accepted in the
          United States have been condensed or omitted pursuant to such rules
          and regulations relating to interim financial statements. In the opinion
          of management, the accompanying unaudited interim financial statements
          reflect all adjustments, consisting only of normal recurring adjustments,
          necessary to present fairly the financial position of the Company as
          of March 31, 2006 and the results of its operations and its cash flows
          for the three months ended March 31, 2006 and March 31, 2005. The interim
          results of operations for the three months ended March 31, 2006 and
          March 31, 2005, respectively, are not necessarily indicative of the
          results that may be achieved for the full year. Recent Accounting PronouncementsIn
      September 2006, the Financial Accounting Standard Board issued a Statement
      of Financial Accounting Standards (SFAS) No. 157,Fair
      Value Measurement. The Statement defines
      fair value, establishes a framework for measuring fair value in generally
      accepted accounting principles (GAAP), and expands disclosures about fair
      value measurements. This Statement is effective for financial statements
      issued for fiscal years beginning after November 15, 2007, and interim
      periods within those fiscal years. The Company is currently evaluating
      the impact of adopting SFAS No. 157 on its financial statements. In June 2006, the Financial Accounting
      Standards Board, or FASB, issued FASB Interpretation, or FIN, No. 48,Accounting
      for Uncertainty in Income Taxes, which
      is effective for fiscal years beginning after December 15, 2006. FIN No.
      48 clarifies the accounting for uncertainty in income taxes recognized
      in the financial statements in accordance with SFAS Statement No. 109,
      Accounting for Income Taxes. This Interpretation prescribes a comprehensive
      model for how a company should recognize, measure, present, and disclose
      in its financial statements uncertain tax positions that the company has
      taken or expects to take on a tax return. The Company is currently evaluating
      the impact of adopting FIN No. 48 on its results of operations, financial
      position and cash flows. In February 2006, the FASB issued
      SFAS No. 155,Accounting for Certain
      Hybrid Financial Instruments, an amendment of FASB Statements No. 133 and
      140. SFAS No. 155 clarifies certain
      issues relating to embedded derivatives and beneficial interests in securitized
      financial assets. The provisions of SFAS No. 155 are effective for all
      financial instruments acquired or issued after fiscal year beginning after
      September 15, 2006. The Company is currently assessing the impact that
      the adoption of SFAS No. 155 will have on its operations, financial position
      and cash flows.


9

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3.           SHARE-BASED PAYMENT EXPENSE

The consolidated condensed statements
      of operations include the following share-based payment expense as calculated
      pursuant to the provisions of SFAS No. 123(R) for the three months ended
      March 31, 2006 and 2005:


|                           |  | Three months ended
|-------------------------- |  | ------------------
|                           |  | March 31,         
|                           |  | 2006              
|                          
|Research and development   |  | $                 
|                           |  |                   
|General and administrative |  |                   
|                           |  |                   
|Interest expense and       |  |                   
|accretion of debt discount |  |                   
|Total                      |  | $                 

Share-based payments in the expense
      categories above include expense associated with stock options granted
      to employees and directors as compensation and to outsiders for services
      performed. In addition, share-based payment expense includes the expense
      recorded from the calculated value of warrants granted in connection with
      debt securities being issued and the expense recorded from the calculated
      value of penalty warrants granted, which is included in interest expense
      and accretion of debt discount. Penalty warrants are contractually granted
      when the Company fails to meet certain specified criteria, such as failure
      to repay the obligation when due, or failure to consummate an IPO within
      one year of the debt being issued.


4.          PREPAID
EXPENSES AND OTHER CURRENT ASSETS

|                   |  |           |        |             
|------------------ |  | --------- | ------ | ------------
|                   |  | March 31, |        | December 31,
|                   |  | 2006      |        | 2005        
|                  
|                  
|Prepaid expenses   |  |           | 41,082 |             
|Supplies inventory |  |           | 44,469 |             
|                  
|Total              |  | $         | 85,551 |             

10

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5.          PROPERTY
  AND EQUIPMENTNET

Property
    and equipment consists of the following:

|                               |  |           |            |              |  |  
|------------------------------ |  | --------- | ---------- | ------------ |  | -
|                               |  | March 31, |            | December 31,
|                               |  | 2006      |            | 2005        
|                              
|Office equipment               |  | $         | 1,199,596  |              |  | $
|Production equipment           |  |           | 1,816,059  |              |  |  
|Office equipment under capital |  |           |            |              |  |  
|lease                          |  |           | 213,224    |              |  |  
|Leasehold improvements         |  |           | 129,062    |              |  |  
|                              
|                               |  |           | 3,357,941  |              |  |  
|Less: Accumulated depreciation |  |           | (1,396,160 | )            |  |  
|                              
|Total                          |  | $         | 1,961,781  |              |  | $

6.           INTELLECTUAL PROPERTY RIGHTS

Acquired intangible assets subject
      to amortization as of March 31, 2006 and December 31, 2005 are as follows: The Company recorded depreciation
      expense of $117,250 and $119,463 for the three months ended March
      31, 2006 and 2005, respectively. Accumulated depreciation for equipment
      under capital leases was $53,447 and $47,380 as of March 31, 2006
      and December 31, 2005, respectively.


|                      |  |   | March 31,   |   |  |   | December 31, |  
|--------------------- |  | - | ----------- | - |  | - | ------------ | -
|                      |  |   | 2006        |   |  |   | 2005         |  
|                     
|Intellectual property |  |   |             |   |  |   |              |  
|rights                |  | $ | 38,268,051  |   |  | $ | 38,268,051   |  
|Less: Accumulated     |  |   |             |   |  |   |              |  
|amortization          |  |   | (38,268,051 | ) |  |   | (38,268,051  | )
|                     
|Total                 |  | $ | -           |   |  | $ | -            |  

Amortization expense related to
      intangible assets was $0 and $2,126,003 for the three months ended
      March 31, 2006 and 2005, respectively.


7.           LONG-TERM DEFERRED DEBT ISSUE COSTS

The long-term deferred debt issue
      cost activity during the three months ended March 31, 2006 is as follows: Balance at January
          1, 2006
      
      $
      5,396,050Calculated value
          of warrants granted
      
      
      15,725Other debt issue
          costs
      
      
      92,470Amortization
          to debt issue costs
      
      
      (473,289
      )Balance at March
          31, 2006
      
      $
      5,030,956




11

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8.           COMMITMENTS AND CONTINGENCIES

Leases and Royalty AgreementsThe
      Company has office facilities and equipment under capital and operating
      leases. In addition, the Company has certain agreements that provide for
      minimum future royalty payments and sublease income. Future minimum payments
      for capital leases, noncancelable operating leases, and royalty agreements
      with terms in excess of one year, as well as expected minimum payments
      to be received from subleases with terms in excess of one year at March
      31, 2006, are as follows: Capital
      
      
      
      Operating
      
      
      
      RoyaltyLeases
      
      
      
      Leases
      
      
      
      AgreementsApril 1, 2006 through
          December31, 2006
      
      $
      31,793
      
      
      $
      506,537
      
      
      $
      128,5202007
      
      
      42,390
      
      
      
      579,228
      
      
      
      171,3602008
      
      
      42,390
      
      
      
      437,825
      
      
      
      171,3602009
      
      
      29,155
      
      
      
      488,913
      
      
      
      171,3602010
      
      
      17,480
      
      
      
      504,104
      
      
      
      171,3602011
      
      
      17,480
      
      
      
      519,752
      
      
      
      Thereafter
      
      
      7,283
      
      
      
      176,249
      
      
      
      Total payments/(receipts)
      
      
      187,971
      
      
      
      3,212,608
      
      
      
      813,960Less: Amounts representing
          interest
      
      
      (28,226
      )
      
      
      
      
      
      
      Net payments/(receipts)
      
      $
      159,745
      
      
      $
      3,212,608
      
      
      $
      813,960  The commitments for capital leases
      and operating leases set forth in the above table have not been reduced
      for anticipated sublease income. Rent expense under operating
      leases was $199,838 and $285,329 for the three months ended March
      31, 2006 and 2005, respectively. Sublease income was $0 and $54,789
      for the three months ended March 31, 2006 and 2005, respectively. The Company is currently leasing
      space in Savage, Maryland which it no longer occupies. This lease commenced
      on January 1, 2002 and will terminate on December 31, 2011. The Company
      currently subleases this space. This sublease commenced on December 1,
      2004 and will terminate on December 31, 2011. The sublease covers the primary
      lease obligation. MetaMorphix, Inc. has the option and intends to assign
      the lease to the sublessee and effectively terminate the lease on December
      31, 2006. In 2006, the sublessee no longer pays rent to the Company but
      instead pays directly to the lessor. LitigationFrom
      time to time, the Company and its subsidiaries face lawsuits and claims
      related to commercial, employment and patent-related matters. Although
      the possible loss or range of loss for these matters cannot be estimated,
      management of the Company, after reviewing developments to date with legal
      counsel, is of the opinion that the outcome of such matters will not have
      a material adverse effect on the Companys consolidated financial
      position or results of operations. Director and Officer IndemnificationThe
      Companys certificate of incorporation provides that it will indemnify
      and hold harmless its officers, directors and others serving the corporation
      in various capacities to the fullest extent permitted by the Delaware General
      Corporation Law (DGCL). Section 145 of the DGCL provides that
      a Delaware corporation has the power to indemnify officers and directors
      in specified circumstances. On June 20, 2005, the Company
      became aware of a lawsuit and claim against us from Regions Bank for $731,000.
      Samuel R. Dunlap, a former Company director, who is now in bankruptcy,
      pledged a $731,000


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Promissory Note made by us to
      Mr. Dunlap as security for a $5.0 million loan from Regions Bank. Regions
      Bank has sued us for payment of this Note. The amount that is owed is in
      dispute (due to offsets made at Mr. Dunlaps direction prior to the
      bankruptcy). We also contend that the conditions precedent to the maturity
      of the loan have not occurred. We note that our March 31, 2006 consolidated
      condensed financial statements reflect principal of $625,498 being
      owed as of such date (reflecting the offsets). Regions Bank asserts that
      we (in the operation of our securities transfer function) and our legal
      counsel enabled Mr. Dunlap to pledge one of his several Warrants to another
      creditor in breach of an already existing Commercial Pledge Agreement between
      the Bank and Mr. Dunlap. We will indemnify and hold harmless our legal
      counsel, who is also the Secretary of the Company, in this matter. Management CompensationThe
      Company has entered into agreements with four employees, including three
      executives and one scientist, which require payments by the Company totaling
      approximately $1,009,000 annually based on their current salaries.


9.DEBT

The Company issued promissory
      bridge loans for a total of $750,000 to Mr. Peter Meyer, a member of
      our board of directors, during the first quarter of 2006. The loans have
      a 10% interest rate and are payable in six months. The Company repaid $350,000
      of these bridge loans during the first quarter of 2006, with the remaining $400,000
      outstanding as of March 31, 2006. The Company issued additional
      10% Secured Convertible Promissory Notes which totaled $3,345,000 during
      the three months ended March 31, 2006. These notes have a three year maturity. In connection with the issuance
      of the 10% Secured Convertible Promissory Notes in 2006, the Company granted
      warrants to purchase 564,575 shares of common stock. These warrants had
      an exercise price of $4.00 per share, expire in 2011, and had an allocated
      value of $336,090 in 2006. The value of these warrants was recorded
      as a debt discount to be amortized over the life of the debt. The Company also issued warrants
      to purchase 25,238 shares of common stock in the three months ended March
      31, 2006 for advisory services in connection with obtaining the 10% Secured
      Convertible Promissory Note financing. The warrants had an exercise price
      of $4.00 per share, expire in 2011, had a calculated value of $15,756
      and were recorded as deferred financing costs in the three months ended
      March 31, 2006, to be amortized over the life of the debt. The Company, with the assistance
      from a valuation specialist, recalculated the fair value of the embedded
      derivative associated with the 10% Notes for the first quarter of 2006.
      The value was determined to be $73,070 at March 31, 2006. The change
      in value was recorded as other income or expense during the quarter. Amortization expense relating
      to the 10% Secured Convertible Promissory Note and 12.5% Convertible Secured
      Promissory Note debt discount was $512,003 and $450,268 for the
      three months ended March 31, 2006 and 2005, respectively.


10.EQUITY

In the three months ended March
      31, 2006, the holders of warrants to purchase 976,834 shares common stock
      exchanged their warrants for 488,417 actual shares of common stock. There
      was no expense associated with this exchange.


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ITEM 2.           Management's Discussion and Analysis or Plan of Operation

Material Changes in Results of Operations - Comparison of the Three Months Ended March 31, 2006 and 2005

The following table quantifies the amount of revenue earned during the periods presented for each of our principal sources of revenues:

|                             
|-----------------------------
|                             
|                             
|Type of Revenue              
|                             
|Parentage and identification 
|genotyping service revenue   
|Feedlot sample testing       
|License fee revenue          
|Other genomic service revenue
|                             
|Total revenue                
|                             

Revenue.Our revenue for the three months ended March 31, 2006 was $846,017, which was an increase of $116,206, or 15.9%, from the $729,811 during the first
quarter of 2005, primarily due to the introduction of various new product lines.  The Company began its feedlot commercialization study as the next step in commercializing the product developed in the Cargill collaborative research project.  That
testing generated $31,574 during the first quarter of 2006. New products included in other genomic service revenue were canine data archiving, which generated $79,334 for the quarter, and Tru-Polled testing, which generated $73,170
during the quarter.

Cost of Revenues.Cost of revenues for the first quarter of 2006 was $600,447, a $154,784, or 34.7% increase from the $445,663 for the first quarter of 2005.  This
increase was primarily related to the increased level of revenue generated for the quarter, considering lower volumes of the new product lines. The Company expects the gross margin from the new product lines to improve as volumes increase and labor
costs decrease. The decrease in labor costs is expected to result from production efficiencies as well as from personnel mix, as production moves from scientists to technicians.

Research and Development.Research and development costs were $579,699 for the first quarter of 2006 compared to $1,213,092 for the same quarter in 2005. This
$633,393, or 52.2% decrease was primarily due to a reduction in employment related costs of approximately $516,000.  This reflects the closure of our Canadian facility in the third quarter of 2005, as well as a reduction in our Beltsville
research team.

General and Administrative.General and administrative costs were $1,636,780 for the first quarter of 2006 compared to $3,260,182 for the same quarter of 2005. This
$1,623,402, or 49.8% decrease was primarily due to the decrease in our employee related costs of $920,701. This includes the reduction in salaries and related taxes due to changes in staff (including a consolidation of finance and
administration staff in Beltsville and Davis, CA), a reduction in the accrual relating to the bonus program, and a reduction in stock option expense due to fewer grants. Additionally, professional service fees decreased $501,839 due to the
timing of our audit, valuation and legal work.

Depreciation and Amortization.Depreciation and amortization decreased $2,130,441, or 96.5%, to $77,121 for the first quarter of 2006 from $2,207,562 for the first
quarter of 2005 primarily due to the completion of the intangible asset amortization in February 2005.  The intangible assets related to the intellectual property

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associated with the Celera genomics acquisition in February 2002, which were being amortized at a rate of $3,189,000 per quarter.

Interest Expense.Interest expense and accretion of debt discount increased $78,215, or 5.4% to $1,533,891 for the first quarter of 2006 from $1,455,676 for the
same quarter in 2005. This increase was primarily due to the increase in the average debt balance for the quarter.

Debt Conversion Expense.In the first quarter of 2005, holders of our 10.9% Secured Convertible Promissory Notes converted $99,790 into our Series G convertible preferred
stock, with warrants attached. The $65,221 of expense represents the fair value of the securities and warrants issued in excess of the fair value of securities issuable pursuant to the original conversion terms. There were no debt conversions
during the first three months of 2006.

Debt Issue Costs.Debt issue costs decreased $206,315, or 30.4% to $473,290 for the first quarter of 2006 from $679,605 for the first quarter of 2005.  This is due
to the decrease in commissions paid and amortization of deferred financing costs.

Other Expense.Other expense of $30,503 for the quarter ended March 31, 2006 primarily relates to the change in fair value of the
embedded derivative associated with the liquidated damages clause in the registration rights section of the subscription agreement for our 10% Secured Convertible Promissory Notes.

Net Loss.Net loss decreased $4,510,322, or 52.5%, for the three months ended March 31, 2006 from the three months ended March 31, 2005, due to a combination of the factors
described above.

Material Changes in Financial Position - Liquidity and Capital Resources

The Companys primary sources of liquidity are its revenues and the sale of debt and equity securities. At March 31, 2006 the Company had cash and cash equivalents of $253,325 and a working capital deficiency of
approximately $23.1 million.

In the first three months of 2006 cash used in operating activities was $4.8 million compared to $1.4 million for the three months ended March 31, 2005. This increase was primarily due to a $4.5 million decrease
in net loss, partially offset by a decrease in depreciation and amortization of $2.1 million and a decrease in the change in accounts payable and accrued compensation of $5.6 million. Cash used in investing activities was $1,132 and
$440 for the three months ended March 31, 2006 and 2005, respectively.  Net cash provided by financing activities totaled $3.6 million for the three months ended March 31, 2006 compared to $1.5 million for the same period in 2005. This
increase was primarily due to higher net proceeds from debt and stock issuances of $2.6 million, partially offset by higher principal payments of $0.5 million.

The Company does not have any other significant commitments or guarantees, except for rental commitments and employee related obligations.

On June 28, 2004, the Companys Board of Directors granted approval to Company management to pursue applicable steps to undertake the IPO process. This process is currently proceeding, although no completion date can
be estimated at this time. While we anticipate that the proceeds from the IPO will be sufficient to fund our operations until we can generate positive cash flow from operations, there can be no assurance of that, nor that the IPO will ever occur.

In addition, on June 8, 2005, the Companys Board of Directors granted approval to Company management to pursue additional financings through the issuance of a new private placement of promissory notes. Management is
currently working with an investment banker to secure a note offering with terms acceptable to the Company. To date, no final offering has been completed. While we anticipate that the proceeds from additional financings will be sufficient to fund
our operations until we can generate positive cash flow from operations, there can be no assurance of that.

Although the Company recognizes the need to raise funds in the near future, there can be no assurance that it will be successful in consummating any such transaction, or, if it did consummate such a transaction, that the
terms

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and conditions of such financing will be favorable to the Company. The Company believes that its current assets will not be sufficient to fund operations in 2006. However, this uncertainty raises substantial doubt about the
Companys ability to continue as a going concern.  The accompanying consolidated condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Continuing Operations

Our priorities for the next twelve months of operations are to continue to develop and subsequently market our products and services to establish our business in the genomics and growth factors technology industry. We are
focused on our organizational activities, raising capital and establishing a business presence with vendors, business owners and referral sources.

We may be unable to compete successfully, and the competitive pressures we face might have an adverse effect on our business, results of operations and financial condition. We require additional capital, which we intend to
raise through one or more public or private offerings of equity and/or debt.  There are no preliminary loan agreements or understandings between us, our officers, director affiliates or lending institutions.  We cannot guarantee any such financing
can be obtained or, if obtained, that it will be on adequate or reasonable terms.

ITEM 3.           Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the management, including the Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon the evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, as of the end of the period, the Company's disclosure controls and procedures were effective.

During the period covered by this report, there were no changes in the Company's internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the internal controls
over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.Legal Proceedings

On June 20, 2005, the Company became aware of a lawsuit and claim against us from Regions Bank for $731,000.  Samuel R. Dunlap, a former Company director, who is now in bankruptcy, pledged a $731,000 Promissory Note
made by us to Mr. Dunlap as security for a $5.0 million loan from Regions Bank. Regions Bank has sued us for payment of this Note. The amount that is owed is in dispute (due to offsets made at Mr. Dunlaps direction prior to the
bankruptcy). We also contend that the conditions precedent to the maturity of the loan have not occurred. We note that our March 31, 2006 consolidated condensed financial statements reflect principal of $625,498 being owed as of such date
(reflecting the offsets). Regions Bank asserts that we (in the operation of our securities transfer function) and our legal counsel enabled Mr. Dunlap to pledge one of his several Warrants to another creditor in breach of an already existing
Commercial Pledge Agreement between the Bank and Mr. Dunlap. We will indemnify and hold harmless our legal counsel, who is also the Secretary of the Company, in this matter.

In addition, during 2005, we settled and dismissed four lawsuits for a total cost of $105,640. There are no such cases presently pending.

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

The Company issued promissory bridge loans for a total of $750,000 to Mr. Peter Meyer, a member of our board of directors, during the first quarter of 2006. The loans have a 10% interest rate and are payable in six
months. The Company repaid $350,000 of these bridge loans during the first quarter of 2006, with the remaining $400,000 outstanding as of March 31, 2006.

The Company issued additional 10% Secured Convertible Promissory Notes which totaled $3,345,000 during the three months ended March 31, 2006. These notes have a three year maturity.

In connection with the issuance of the 10% Secured Convertible Promissory Notes in 2006, the Company granted warrants to purchase 564,575 shares of common stock. These warrants had an exercise price of $4.00 per share,
expire in 2011, and had an allocated value of $336,090 in 2006. The value of these warrants was recorded as a debt discount to be amortized over the life of the debt.

The Company also issued warrants to purchase 25,238 shares of common stock in the three months ended March 31, 2006 for advisory services in connection with obtaining the 10% Secured Convertible Promissory Note financing.
The warrants had an exercise price of $4.00 per share, expire in 2011, had a calculated value of $15,756 and were recorded as deferred financing costs in the three months ended March 31, 2006, to be amortized over the life of the debt.

The Company, with the assistance from a valuation specialist, recalculated the fair value of the embedded derivative associated with the 10% Notes for the first quarter of 2006. The value was determined to be $73,070 at
March 31, 2006. The change in value was recorded as other income or expense during the quarter.

ITEM 3.           Defaults Upon Senior Securities

At March 31, 2006, $76,401 of outstanding principal under our 8% Secured Convertible Promissory Notes and $147,405 of outstanding principal under our 10.9% Secured Convertible Promissory Notes were past due. The
original due dates for these notes range from September 2001 to July 2005. There are no amended terms to these past due notes as a result of the default.

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ITEM 6.Exhibits

|31.1 | Section 302 Certifications of Principal Executive Officer
|---- | ---------------------------------------------------------
|31.2 | Section 302 Certifications of Principal Financial Officer
|32.1 | Section 906 Certification of Chief Executive Officer     
|32.2 | Section 906 Certification of Chief Financial Officer     
|    

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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.

| |                   | METAMORPHIX, INC.
| | ----------------- | -----------------
| |                   |                  
| |                   |                  
| |                   |                  
| | December 15, 2006 |                  
| | Date              |                  
| |                   |                  
| |                   |                  
| |                   |                  
|
|
| | December 15, 2006 |                  
| | Date              |                  
| |                   |                  
| |                   |                  
| |                   |                  
| |                   |                  

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