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IGI, Inc. (NYSEMKT:IG)

Ongoing Business Update Call

December 17, 2007 2:30 pm ET

Executives

Rajiv Mathur - President, Chief Executive Officer, Director

Analysts

Robert Delinka - Vertex Group

Frank Gerardi - Univest Management

Myron Kohn - Stifel Nicolaus

Operator

Good day, ladies and gentlemen, and welcome to the ongoingbusiness plan conference call. My name is Tanya and I will be your coordinatorfor today. (Operator Instructions)

Before we begin today’s conference, I would like to read thefollowing statement: this webcast contains forward-looking statements relatingto IGI's hopes and expectations for the future. For this purpose, anystatements contained herein that are not statements of historical facts may bedeemed to be forward-looking statements. Without limiting, the foregoing wordssuch as will, possible, one-time, provides an opportunity, continue, andsimilar expressions are intended to identify forward-looking statements. Suchstatements involve a number of risks and uncertainties and actual future eventsand results could differ materially from those indicated by suchforward-looking statements due to the general economic conditions and the riskfactors detailed in IGI periodic reports and registration statement filed withthe Securities and Exchange Commission.

I would now like to turn the presentation over to your hostfor today’s call, Mr. Rajiv Mathur. You may proceed, sir.

Rajiv Mathur

Thank you, Tanya. Good afternoon and we welcome you all tothis webcast. Carlene Lloyd from Finance and Nadya Lawrence from Operationshave joined us to answer any questions you might have regarding our current andanticipated future business.

We are proud that we had above $1 million in sales for twoquarters in a row. The revenues at the end of third quarter surpassed the totalannual revenues for fiscal year 2006. In fourth quarter, we continue to makesignificant progress in growing our sales revenues.

We have submitted our pro forma financial statement toAmerican Stock Exchange as of December 12, 2007, our compliance period enddate. These financials deflect total shareholder equity of $4.2 million as ofDecember 12th. This was achieved by an equity investment of $500,000 from aprivate investor combined with an operating profit of $165,000 and proceeds of$523,000 from the sale of our saved net operating losses carry forward. Basedon our shareholder equity of above $4 million, we are anticipating receivingour compliance approval letter from AMEX soon.

Now, as far as the fourth quarter through December 31st isconcerned, we have confirmed orders in-house for revenues greater than $2million. We anticipate recognizing about $1.8 million of these revenues for thefourth quarter.

Based on these sales revenues, the estimated operatingincome for the fourth quarter is $185,000. The estimated net income for thequarter is $700,000, inclusive of NOLs. This will give us an earnings per sharefor the quarter of about $0.05. This may be slightly reduced by any reserve wehave to record for the [inaudible] from year 2000.

Our total revenue forecast for the year 2007 is just under$5 million, with a profitable fourth quarter. We anticipate to be close tobreak even point for the total net income for 2007.

We have had positive cash flow from operations for the lastfour months of the current fiscal year. In addition to the equity investment of$500,000, we have also received $150,000 from Univest Management.

I would now like to briefly discuss our financial goals forthe fiscal year 2008. We are hoping to continue our revenue growth of 80% to85% into next year. With a target revenue of $9.2 million, we anticipate a netincome of approximately $2 million and earnings per share of $0.12.

The recently completed agreement for the MIAJ product lineand several of the new product development agreements in process willcontribute to the above projections.

Today, we announced signing of licensing the marketingrights and manufacturing agreements for the MIAJ product line. Under thisagreement, the licensee will acquire the existing inventory of MIAJ and willguarantee annual manufacturing revenue of $1 million.

Our operating expenses in 2007 were consistent with 2006 andwe anticipate keeping them in check for 2008.

As we have mentioned earlier this year, we have applied fora new patent related to our technology and while we are waiting for the patentapproval, our scientists have initiated additional research work to secure thetechnology further.

The development work for the three topical pharmaceuticalsgeneric and branded generic product was initiated these past few months. Thiswork will continue well into 2008 and we anticipate starting related clinicalwork in early 2009.

We continue to grow our manufacturing business and foresee asignificant portion of ’08 revenues derived from it.

With the accomplishments of this past year, the IGI team hasset the foundation for continuous growth and will work hard to meet theshareholders’ expectations.

Thank you for your time and now we will entertain anyquestions.

Question-and-AnswerSession

Operator

(Operator Instructions) Our first question comes from theline of Robert [Delinka] with [Vertex] Group. You may proceed.

Robert Delinka -Vertex Group

This seems pretty good news. I was just wondering -- isthere any kind of indication of what the MIAJ revenues could be to the licenseeor what they could be to you? I know that they’ve guaranteed a certain volumebut what’s a more realistic number that investors could use?

Rajiv Mathur

In our opinion, the revenue from manufacturing of the MIAJproduct line to this new licensee will be upward of $1 million. But as for theagreement, they are going to guarantee a minimum of $1 million to maintain theexclusivity to the MIAJ brand name. But the exact number over $1 million isdifficult to give. Once the product is launched, we will have a better idea asto how much it is going to be.

Robert Delinka -Vertex Group

Okay. And is there any way that you could let us know whattype of company is the licensee?

Rajiv Mathur

Definitely. It’s basically an established cosmetic -- colorcosmetic company and they have decided to venture into skincare products now.So what they are doing is they are forming a separate company, a separateentity to do this business. But they are very well established. They are inbusiness for 25 years and they basically market their color cosmeticsthroughout the world.

Robert Delinka -Vertex Group

Is there a reason you are not disclosing their name?

Rajiv Mathur

The reason is because these people have decided to come outwith altogether a separate entity and not relate this new company with the oldcolor cosmetic company and that color cosmetic company is more geared towardspeople of color and they want to basically have this new company gearing moretowards the majority of the people -- all different skin types.

Robert Delinka -Vertex Group

Thank you.

Operator

Our next question comes from the line of Frank Gerardi withUnivest Management. You may proceed.

Frank Gerardi -Univest Management

Thank you. I just wanted to take this opportunity tocongratulate you, Rajiv, on a job well done in securing the licensing for theMIAJ product line and just a note to the investors who have been extremelypatient over the last couple of years with IGI. I think the company now hasdemonstrated that they have turned the corner, cash flow positive, havetremendous revenue growth in the coming years and is going to be profitable.

And just a note who IGI is partnering with -- if you look atthe companies that they have recently made agreements with, particularlyPharmachem, you know, Pharmachem had originally loaned the company $1 millionand they were secured by the land and the building and we were getting 10% ontheir money. They’ve given all that up to purchase 1.5 million shares at $1, soI think that’s a great vote of confidence from someone that’s in the industryand who is a great supplier, a big supplier of ingredients to the food andcosmetic industry.

Away from that, Pharmachem is a great philanthropist. Theydonate over 2 million vitamins per month to the Vitamin Angels, which is acharitable organization that distributes vitamins in 26 countries to save 4.5million children from going blind due to Vitamin 8 deficiency and we are allgoing to try and participate and help Pharmachem in that ordeal.

I see that Dr. Watts is going to start offering his line,Complexions by Dr. Watts, starting I believe it’s the 28th of December on HomeShopping Network. Dr. Watts received his training from John Hopkins University,the number one university in the world. He’s done over 14,000 surgicalprocedures.

So as you can see, the companies that are partnering withIGI are very well-established, well credible people in this industry and Ithink it’s a great honor to IGI to attract this type of clientele.

In fact, I also understand -- I’ve never met the person, butI understand that the person that just did the recent financing of IGI is apharmacist. That’s someone else that is also in the industry.

So again, job well done to everyone and keep the good workup.

Operator

(Operator Instructions) We have a question from the line of[Myron Kohn] with Stifel Nicolaus. You may proceed.

Myron Kohn - StifelNicolaus

You’ve recently signed a deal with DermWorks. Who are thesepeople? I can’t find them on the Internet or anything.

Rajiv Mathur

DermWorks is a start-up company. It’s a group of people whohave come with a lot of experience in the pharmaceutical industry sellingdermatological product and they have formed this marketing company and aregoing to launch three products to start with and we are working on twoadditional products starting in January, which will be launched in the thirdquarter. And it’s a start-up company.

Myron Kohn - StifelNicolaus

Thank you.

Operator

(Operator Instructions) I show no further questions at thistime.

Rajiv Mathur

Thank you, Tanya. Again, I would like to thank everyone fortheir support and patience during this year for IGI. Going forward, we look tomany of these profitable quarters. Thank you and have a wonderful holiday andwe wish you all a very happy new year. Thanks.

Operator

This concludes the presentation. You may now disconnect andhave a great day.

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