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Executives

Rajiv Mathur - President, Chief Executive Officer, Director

Analysts

Robert Delinka - Vertex Group

Frank Gerardi - Univest Management

Myron Kohn - Stifel Nicolaus

IGI, Inc. (IG) Ongoing Business Update Call December 17, 2007 2:30 PM ET

Operator

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

Before we begin today’s conference, I would like to read the following statement: this webcast contains forward-looking statements relating to IGI's hopes and expectations for the future. For this purpose, any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Without limiting, the foregoing words such as will, possible, one-time, provides an opportunity, continue, and similar expressions are intended to identify forward-looking statements. Such statements involve a number of risks and uncertainties and actual future events and results could differ materially from those indicated by such forward-looking statements due to the general economic conditions and the risk factors detailed in IGI periodic reports and registration statement filed with the Securities and Exchange Commission.

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

Rajiv Mathur

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

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

We have submitted our pro forma financial statement to American Stock Exchange as of December 12, 2007, our compliance period end date. These financials deflect total shareholder equity of $4.2 million as of December 12th. This was achieved by an equity investment of $500,000 from a private 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. Based on our shareholder equity of above $4 million, we are anticipating receiving our compliance approval letter from AMEX soon.

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

Based on these sales revenues, the estimated operating income for the fourth quarter is $185,000. The estimated net income for the quarter is $700,000, inclusive of NOLs. This will give us an earnings per share for the quarter of about $0.05. This may be slightly reduced by any reserve we have 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 to break even point for the total net income for 2007.

We have had positive cash flow from operations for the last four 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 for the fiscal year 2008. We are hoping to continue our revenue growth of 80% to 85% into next year. With a target revenue of $9.2 million, we anticipate a net income of approximately $2 million and earnings per share of $0.12.

The recently completed agreement for the MIAJ product line and several of the new product development agreements in process will contribute to the above projections.

Today, we announced signing of licensing the marketing rights and manufacturing agreements for the MIAJ product line. Under this agreement, the licensee will acquire the existing inventory of MIAJ and will guarantee annual manufacturing revenue of $1 million.

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

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

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

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

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

Thank you for your time and now we will entertain any questions.

Question-and-Answer Session

Operator

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

Robert Delinka - Vertex Group

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

Rajiv Mathur

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

Robert Delinka - Vertex Group

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

Rajiv Mathur

Definitely. It’s basically an established cosmetic -- color cosmetic company and they have decided to venture into skincare products now. So what they are doing is they are forming a separate company, a separate entity to do this business. But they are very well established. They are in business for 25 years and they basically market their color cosmetics throughout 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 out with altogether a separate entity and not relate this new company with the old color cosmetic company and that color cosmetic company is more geared towards people of color and they want to basically have this new company gearing more towards 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 with Univest Management. You may proceed.

Frank Gerardi - Univest Management

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

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

Away from that, Pharmachem is a great philanthropist. They donate over 2 million vitamins per month to the Vitamin Angels, which is a charitable organization that distributes vitamins in 26 countries to save 4.5 million children from going blind due to Vitamin 8 deficiency and we are all going 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 Home Shopping Network. Dr. Watts received his training from John Hopkins University, the number one university in the world. He’s done over 14,000 surgical procedures.

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

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

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

Operator

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

Myron Kohn - Stifel Nicolaus

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

Rajiv Mathur

DermWorks is a start-up company. It’s a group of people who have come with a lot of experience in the pharmaceutical industry selling dermatological product and they have formed this marketing company and are going to launch three products to start with and we are working on two additional products starting in January, which will be launched in the third quarter. And it’s a start-up company.

Myron Kohn - Stifel Nicolaus

Thank you.

Operator

(Operator Instructions) I show no further questions at this time.

Rajiv Mathur

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

Operator

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

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