SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549

                                 FORM 10-Q/A
                 QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934


         For Quarter Ended                      Commission File No.
         -----------------                      -------------------
           June 30, 2003                             001-08568


                                  IGI, Inc.
           ------------------------------------------------------
           (Exact name of registrant as specified in its charter)


                Delaware                                  01-0355758
    -------------------------------                  -------------------
    (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                  Identification No.)


      105 Lincoln Avenue, Buena, NJ                         08310
----------------------------------------                  ----------
(Address of principal executive offices)                  (Zip Code)


                                856-697-1441
             --------------------------------------------------
             Registrant's telephone number, including area code


Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.

                             Yes  X      No
                                 ---        ---

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

                             Yes         No  X
                                 ---        ---

The number of shares outstanding of the issuer's class of common stock, as
of the latest practicable date:

          Common Shares Outstanding at July 24, 2003 is 11,396,865.


<PAGE>


                            EXPLANATORY STATEMENT

      Prior to filing its Form 10-K for the fiscal year ended December 31,
2003, IGI, Inc. was informed by Johnson & Johnson Consumer Products, Inc.
("J&J") that there was an error in the calculation of the 2003 royalty due
to the Company by J&J. The correction of the error resulted in a reduction
of revenues, with a corresponding impact on net loss, of $42,000 in the
second quarter of 2003 and $51,000 in the third quarter of 2003. The impact
of the J&J error on the first quarter of 2003 was immaterial, and has been
included in the second quarter adjustment.

      Except as otherwise specifically noted, all information contained
herein is as of June 30, 2003 and does not reflect any events or changes in
information that may have occurred subsequent to that date.


<PAGE>  2


ITEM 1.  Financial Statements

                        PART I  FINANCIAL INFORMATION

                         IGI, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
           (in thousands, except share and per share information)
                                 (Unaudited)

<TABLE>
<CAPTION>
                                                        Three months                  Six months
                                                        ended June 30,              ended June 30,
                                                   ------------------------    ------------------------
                                                       2003          2002          2003          2002
                                                       ----          ----          ----          ----
                                                  (as restated,               (as restated,
                                                   see Note 2)                 see Note 2)


                                                <c>           <c>           <c>           <c>
Revenues:
  Product sales, net                                  $   718       $   889       $ 1,523       $ 1,743
  Licensing and royalty income                            126           175           329           384
                                                      -------       -------       -------       -------
      Total revenues                                      844         1,064         1,852         2,127

Cost and expenses:
  Cost of sales                                           355           359           685           754
  Selling, general and administrative expenses            852           671         1,352         1,328
  Product development and research expenses               157           143           303           267
                                                      -------       -------       -------       -------
Operating loss                                           (520)         (109)         (488)         (222)
Interest income (expense)                                   2          (119)            8          (303)
Other income, net                                           -             -             -            58
Loss on early extinguishment of debt                        -        (2,654)            -        (2,654)
                                                      -------       -------       -------       -------

Loss from continuing operations before
 provision for income taxes                              (518)       (2,882)         (480)       (3,121)
Provision for income taxes                                  -             -             2             6
                                                      -------       -------       -------       -------

Loss from continuing operations                          (518)       (2,882)         (482)       (3,127)
                                                      -------       -------       -------       -------

Discontinued operations:
  Income (loss) from operations of
   discontinued business                                    -          (521)           -           (401)
  Gain on disposal of discontinued business               169        12,468           169        12,468
                                                      -------       -------       -------       -------
Net income (loss)                                        (349)        9,065          (313)        8,940

Mark to market for detachable stock warrants                -           229             -          (133)
                                                      -------       -------       -------       -------
Net income (loss) attributable to common stock        $  (349)      $ 9,294       $  (313)      $ 8,807
                                                      =======       =======       =======       =======

Basic and Diluted Earnings (Loss) Per Common Share
  Continuing operations                               $  (.05)      $  (.24)      $  (.04)      $  (.29)
  Discontinued operations                                 .02          1.06           .01          1.07
                                                      -------       -------       -------       -------
  Net income (loss) per share                         $  (.03)      $   .82       $  (.03)      $   .78
                                                      =======       =======       =======       =======

Weighted Average of Common Stock and
Common Stock Equivalents Outstanding
 Basic and diluted                                 11,400,449    11,300,454    11,392,063    11,286,574
</TABLE>

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


<PAGE>  3


                         IGI, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
           (in thousands, except share and per share information)

<TABLE>
<CAPTION>
                                                               June 30, 2003   December 31, 2002
                                                               -------------   -----------------
                                                                (unaudited)
                                                               (as restated,
                                                                see Note 2)


                                                               <c>              <c>
ASSETS
Current assets:
  Cash and cash equivalents                                       $  1,572         $  1,999
  Accounts receivable, less allowance for doubtful accounts
   of $21 and $35 in 2003 and 2002, respectively 422 460
  Licensing and royalty income receivable                              104              166
  Inventories                                                          175              209
  Prepaid expenses and other current assets                            328              146
                                                                  --------         --------
      Total current assets                                           2,601            2,980
Property, plant and equipment, net                                   2,786            2,862
Other assets                                                            79               87
                                                                  --------         --------
      Total assets                                                $  5,466         $  5,929
                                                                  ========         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                               $     18         $     18
  Accounts payable                                                      82              115
  Accrued payroll                                                       68               71
  Other accrued expenses                                               517              551
  Income taxes payable                                                  10               16
  Deferred revenue                                                     145              145
                                                                  --------         --------
      Total current liabilities                                        840              916
Deferred revenue                                                       273              340
Long-term debt                                                         166              164
                                                                  --------         --------
      Total liabilities                                              1,279            1,420
                                                                  --------         --------

Stockholders' equity:
  Common stock $.01 par value, 50,000,000 shares authorized;
   13,321,705 and 13,262,657 shares issued in 2003 and 2002,
   respectively                                                        133              133
    Additional paid-in capital                                      23,674           23,644
    Accumulated deficit                                            (18,266)         (17,953)
  Less treasury stock, 1,924,840 and 1,878,640 shares at cost
   in 2003 and 2002, respectively                                   (1,354)          (1,315)
                                                                  --------         --------
      Total stockholders' equity                                     4,187            4,509
                                                                  --------         --------
      Total liabilities and stockholders' equity                  $  5,466         $  5,929
                                                                  ========         ========
</TABLE>

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


<PAGE>  4


                         IGI, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)
                                 (Unaudited)

<TABLE>
<CAPTION>
                                                               Six months ended June 30,
                                                               -------------------------
                                                                   2003          2002
                                                              (as restated,
                                                               see Note 2)


                                                              <c>           <c>
Cash flows from operating activities:
Net income (loss)                                                $   (313)     $  8,940
Reconciliation of net income (loss) to net cash used
 in operating activities:
  Gain on disposal of discontinued operations                        (169)      (12,468)
  Depreciation and amortization                                       128           182
  Gain on sale of marketable securities                                 -           (58)
  Write down of EVSCO facility to net realizable value                  -           632
  Amortization of deferred financing costs and debt discount            -           275
  Loss on early extinguishment of debt                                  -         2,654
  Provision for accounts receivable and inventories                     7            11
  Recognition of deferred revenue                                     (67)          (67)
  Interest expense related to subordinated note agreement               -            41
  Stock-based compensation expense - Directors' stock issuance         26            32
Changes in operating assets and liabilities:
  Accounts receivable                                                  51          (153)
  Inventories                                                          14           647
  Receivables due under licensing and royalty agreements               62            95
  Prepaid expenses and other assets                                    (7)           44
  Accounts payable and accrued expenses                               (70)       (2,295)
  Income taxes payable                                                 (6)           (4)
  Discontinued operations - working capital changes and
   non-cash charges                                                    (6)           (8)
                                                                 --------      --------
      Net cash used in operating activities                          (350)       (1,500)
                                                                 --------      --------

Cash flows from investing activities:
  Capital expenditures                                                (45)          (46)
  Proceeds from sale of assets                                          -           550
  Proceeds from sale of marketable securities                           -            58
  Decrease (increase) in other assets                                   1           (46)
  Proceeds from sale of discontinued operations, net of
   direct costs                                                         -        16,700
                                                                 --------      --------
      Net cash provided by (used in) investing activities             (44)       17,216
                                                                 --------      --------

Cash flows from financing activities:
  Borrowings under revolving credit agreement                           -         5,958
  Repayment of revolving credit agreement                               -        (8,284)
  Prepayment fees on paydown of debt                                    -          (273)
  Repayment of debt                                                     -        (9,516)
  Borrowings from EDA loan                                             11           182
  Repayments of EDA loan                                               (9)           (6)
  Proceeds from exercise of common stock options and
   purchase of common stock                                             4            16
  Purchase of treasury shares                                         (39)            -
                                                                 --------      --------
      Net cash used in financing activities                           (33)      (11,923)
                                                                 --------      --------

Net increase (decrease) in cash and equivalents                      (427)        3,793
Cash and equivalents at beginning of period                         1,999            10
                                                                 --------      --------
Cash and equivalents at end of period                            $  1,572      $  3,803
                                                                 ========      ========
</TABLE>

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


<PAGE>  5


                         IGI, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)

1.    Basis of Presentation

The accompanying consolidated financial statements have been prepared by
IGI, Inc. without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"), and reflect all adjustments
which, in the opinion of management, are necessary for a fair presentation
of the results for the interim periods presented. All such adjustments are
of a normal recurring nature.

Certain information in footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations of the SEC, although the Company believes that the disclosures
contained herein are adequate to make the information presented not
misleading. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 (the "2002 10-K Annual Report").

Certain previously reported amounts have been reclassified to conform with
the current period presentation.

2.    Restatement

Prior to filing its Form 10-K for the fiscal year ended December 31, 2003,
the Company was informed by Johnson & Johnson Consumer Products, Inc.
("J&J") that there was an error in the calculation of the 2003 royalty due
to the Company by J&J. The correction of the error resulted in a reduction
of revenues, with a corresponding impact on net loss, of $42,000 in the
second quarter of 2003. The impact of the J&J error on the first quarter of
2003 was immaterial, and has been included in the second quarter adjustment.
The consolidated statements of operations for the three and six months ended
June 30, 2003, the consolidated statement of cash flows for the six months
ended June 30, 2003, and the consolidated balance sheet as of June 30, 2003
have been restated to reflect the adjustment to royalty income. The
following tables set forth the line items impacted in the consolidated
statements of operations, consolidated balance sheet and the consolidated
statement of cash flows.

<TABLE>
<CAPTION>
                                               For the three months ended June 30, 2003
                                               ----------------------------------------
                                                    As originally
Selected statement of operations data:                reported         As restated
--------------------------------------              -------------      -----------


                                                    <c>                <c>
Licensing and royalty income                           $ 168              $ 126
Total revenues                                           886                844
Operating loss                                          (478)              (520)
Loss from continuing operations before
 provision for income taxes                             (476)              (518)
Loss from continuing operations                         (476)              (518)
Net loss                                                (307)              (349)
Net loss attributable to common stock                   (307)              (349)

Basic and Diluted Earnings (Loss) per Common Share
  Continuing operations                                $(.04)             $(.05)
  Discontinued operations                                .01                .02
                                                       -----              -----
  Net income (loss) attributable to common stock       $(.03)             $(.03)
                                                       =====              =====
</TABLE>


<PAGE>  6


                         IGI, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited), Continued

<TABLE>
<CAPTION>
                                                For the six months ended June 30, 2003
                                                --------------------------------------
                                                    As originally
Selected statement of operations data:                reported         As restated
--------------------------------------              -------------      -----------


                                                    <c>                <c>
Licensing and royalty income                           $  371             $  329
Total revenues                                          1,894              1,852
Operating loss                                           (446)              (488)
Loss from continuing operations before
 provision for income taxes                              (438)              (480)
Loss from continuing operations                          (440)              (482)
Net loss                                                 (271)              (313)
Net loss attributable to common stock                    (271)              (313)

Basic and Diluted Earnings (Loss) per Common Share
  Continuing operations                                $ (.04)            $ (.04)
  Discontinued operations                                 .02                .01
                                                       ------             ------
  Net income (loss) attributable to common stock       $ (.02)            $ (.03)
                                                       ======             ======
</TABLE>

<TABLE>
<CAPTION>
                                                         As of June 30, 2003
                                                    ------------------------------
                                                    As originally
Selected balance sheet data:                          reported         As restated
----------------------------                        -------------      -----------


                                                   <c>                <c>
Licensing and royalty income receivable               $    146           $    104
Total current assets                                     2,643              2,601
Total assets                                             5,508              5,466
Accumulated deficit                                    (18,224)           (18,266)
Total stockholders' equity                               4,229              4,187
Total liabilities and stockholders' equity               5,508              5,466

<CAPTION>
                                                For the six months ended June 30, 2003
                                                --------------------------------------
                                                    As originally
Selected statement of cash flows data:                reported         As restated
--------------------------------------              -------------      -----------

Net loss                                              $ (271)            $ (313)
Receivables due under licensing and royalty
 agreements                                               20                 62
</TABLE>

3.    Discontinued Operations

On May 31, 2002, the shareholders of the Company approved, and the Company
consummated, the sale of the assets and transfer of the liabilities of the
Companion Pet Products division, which marketed companion pet care related
products. The Companion Pet Products division, which is presented as a
discontinued operation, incurred a loss from operations of $521,000 and a
gain of $12,468,000 from the sale of the Companion Pet Products division for
the three months ended June 30, 2002. During the three months ended June 30,
2003, the Company received an insurance settlement of $169,000, net of legal
costs, for damages incurred by the Company as a result of the heating oil
leak at the Companion Pet Products site (see Note 7). For the six months
ended June 30, 2002, the Company incurred a loss from continuing operations
of $401,000 and a $12,468,000 gain on the sale of the Companion Pet Products
division. A $169,000 profit from the settlement mentioned above was realized
for the comparable period in 2003.

4.    Debt

In the prior year, the Company received a $246,000 loan commitment from
NJEDA to provide partial funding for the costs of investigation and
remediation of the environmental contamination discovered at the Companion
Pet Products facility in March 2001. The loan requires monthly principal
payments over a term of ten years at a rate of interest of 5%. The Company
has received funding of $207,000 through June 30, 2003.


<PAGE>  7


                         IGI, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited), Continued

5.    Inventories

Inventories are valued at the lower of cost, using the first-in, first-out
("FIFO") method, or market. Inventories at June 30, 2003 and December 31,
2002 consist of:

<TABLE>
<CAPTION>
                          June 30, 2003    December 31, 2002
                          -------------    -----------------
                                (amounts in thousands)


                            <c>                <c>
Finished goods                 $ 19               $ 52
Raw materials                   156                157
                               ----               ----
Total                          $175               $209
                               ====               ====
</TABLE>

6.    Stock-Based Compensation

Compensation costs attributable to stock option and similar plans are
recognized based on any difference between the quoted market price of the
stock on the date of grant over the amount the employees and directors are
required to pay to acquire the stock (the intrinsic value method). No stock-
based employee or director compensation cost is reflected in net income
(loss) for options that have been granted, as all options granted under the
plans had an exercise price equal to the market value of the underlying
common stock on the date of grant. Since the Company uses the intrinsic
value method, it makes pro forma disclosures of net income (loss) and net
income (loss) per share as if the fair-value based method of accounting had
been applied.

If compensation cost for all grants under the Company's stock option plans
had been determined based on the fair value at the grant date consistent
with the provisions of Statement of Financial Accounting Standards (SFAS)
No. 123, "Accounting for Stock-Based Compensation," the Company's net income
(loss) and net income (loss) per share would have changed to the pro forma
amounts indicated below:

<TABLE>
<CAPTION>
                                         Three months ended June 30,    Six months ended June 30,
                                         ---------------------------    -------------------------
                                               2003        2002              2003       2002
                                               ----        ----              ----       ----
                                          (as restated)                 (as restated)


                                           <c>         <c>               <c>        <c>
Net income (loss) - as reported               $(349)      $9,294            $(313)     $8,807

Deduct: Total stock-based employee
 and directors compensation expense
 determined under fair value based method       (10)        (285)             (15)       (416)
                                              -----       ------            -----      ------
Net income (loss) - pro forma                 $(359)      $9,009            $(328)     $8,391
                                              =====       ======            =====      ======

Income (loss) per share-as reported
  Basic and diluted                           $(.03)      $  .82            $(.03)     $  .78
Income (loss) per share - pro forma
  Basic and diluted                           $(.03)      $  .80            $(.03)     $  .74
</TABLE>

7.    Regulatory Proceedings and Legal Proceedings

On April 6, 2000, officials of the New Jersey Department of Environmental
Protection inspected the Company's storage site in Buena, New Jersey and
issued Notices of Violation (NOV's) relating to the storage of waste
materials in a number of trailers at the site. The Company established a
disposal and cleanup schedule and completed the removal of materials from
the site. The Company continues to discuss with the authorities a resolution
of any potential assessment under the NOV's and has accrued the estimated
expense of the penalties that may be assessed under such NOV's.

On March 2, 2001, the Company discovered the presence of environmental
contamination resulting from a heating oil leak at its Companion Pet
Products site. The Company immediately notified the New Jersey Department of
Environmental Protection and the local authorities, and hired a certified
environmental contractor to assess the exposure and required clean up. Based
on the initial information from the contractor, the Company originally
estimated the cost for the cleanup and remediation to be $310,000. In
September 2001, the contractor updated the estimated total cost for the
cleanup and remediation to be $550,000. A further update was performed in
December 2002 and the final estimated cost was increased to $620,000, of
which $149,000 remains accrued as of June 30, 2003. It is currently
anticipated that the majority of the remediation will be completed by the
end of the summer of 2003. Subsequently, there will be periodic testing and
removal performed, which is projected to span over the next five years. The
estimated cost of such future monitoring is included in the accrual.


<PAGE>  8


                         IGI, INC. AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Unaudited), Continued

8.    Recent Pronouncements

The Company adopted SFAS No. 145, "Rescission of FASB Statements No. 4, 44
and 64, Amendment of FASB Statement No. 13 and Technical Corrections",
effective January 1, 2003. As a result of adoption, the Company's loss from
early extinguishment of debt realized in the second quarter of 2002 has been
presented within continuing operations, rather than presented as an
extraordinary item.

The Company adopted SFAS No. 146, "Accounting for Costs Associated with Exit
or Disposal Activities" effective January 1, 2003. SFAS No. 146 addresses
the financial accounting and reporting of expenses related to restructurings
initiated after 2002, and applies to costs associated with an exit activity
(including a restructuring) or with a disposal of long-lived assets. Those
activities can include eliminating or reducing product lines, terminating
employees and contracts, and relocating plant facilities or personnel. Under
SFAS No. 146, a company will record a liability for a cost associated with
an exit or disposal activity when the liability is incurred and can be
measured at fair value. The provisions of SFAS No. 146 are effective
prospectively for exit or disposal activities initiated after December 31,
2002, and therefore did not have an impact on the Company's consolidated
financial statements.


<PAGE>  9


                         IGI, INC. AND SUBSIDIARIES

ITEM 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

Prior to filing its Form 10-K for the fiscal year ended December 31, 2003,
IGI, Inc. was informed by J&J that there was an error in the calculation of
the 2003 royalty due to the Company by J&J. The correction of the error
resulted in a reduction of revenues, with a corresponding impact on net
loss, of $42,000 in the second quarter of 2003 and $51,000 in the third
quarter of 2003. The impact of the J&J error on the first quarter of 2003
was immaterial, and has been included in the second quarter adjustment.

Except as otherwise specifically noted, all information contained herein is
as of June 30, 2003 and does not reflect any events or changes in
information that may have occurred subsequent to that date.

The following discussion and analysis may contain forward-looking
statements. Such statements are subject to certain risks and uncertainties,
including without limitation those discussed below or in the Company's 2002
10-K Annual Report, that could cause actual results to differ materially
from the Company's expectations. See "Factors Which May Affect Future
Results" below and in the 2002 10-K Annual Report. Readers are cautioned not
to place undue reliance on any forward-looking statements, as they reflect
management's analysis as of the date hereof. The Company undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.

Results of Operations

Three months ended June 30, 2003 compared to June 30, 2002

The Company had a net loss attributable to common stock of $349,000, or
($.03) per share, for the quarter ended June 30, 2003 compared to net income
attributable to common stock of $9,294,000, or $.82 per share, for the
quarter ended June 30, 2002.

Total revenues for the quarter ended June 30, 2003 were $844,000, compared
to $1,064,000 for the quarter ended June 30, 2002. The decrease in revenues
was primarily due to lower product sales to Estee Lauder and a decrease in
J&J royalty income offset by increased product sales to Vetoquinol and new
customers.

As a percentage of product sales, cost of sales increased from 40% in the
quarter ended June 30, 2002 to 49% in the quarter ended June 30, 2003. The
resulting decrease in gross profit from 60% in the quarter ended June 30,
2002 to 51% in the quarter ended June 30, 2003 is due to the change in mix
to lower gross profit products and underabsorbed fixed costs.

Selling, general and administrative expenses increased $181,000, or 27%,
from $671,000 in the quarter ended June 30, 2002. As a percentage of
revenues, these expenses were 63% of revenues in the second quarter of 2002
compared to 101% in the second quarter of 2003. The increase is primarily
due to a $202,000 severance expense accrued in the quarter ended June 30,
2003 for the cost of the benefits to be provided by the Company under a
severance package to the Company's current President and Chief Executive
Officer upon his resignation from office.

Product development and research expenses increased $14,000, or 10%,
compared to the quarter ended June 30, 2002. The increase is a result of
additional projects that are being worked on for existing and potential new
customers.

Interest expense decreased $121,000 from interest expense of $119,000 in the
quarter ended June 30, 2002 to interest income of $2,000 in the quarter
ended June 30, 2003. The decrease was a result of the pay-down of debt in
the prior year using the proceeds from the sale of the Companion Pet
Products division.

Discontinued operations in the quarter ended June 30, 2002 consisted of a
loss of $521,000 from operations from the Companion Pet Products division,
offset by the gain of $12,468,000 from the sale of the Companion Pet
Products division, which occurred on May 31, 2002. The $169,000 of income
from discontinued operations in the quarter ended June 30, 2003 is a result
of an insurance settlement, net of legal costs, received for the damages
arising from the heating oil leak at the Company's Companion Pet Products
site.


<PAGE>  10


                         IGI, INC. AND SUBSIDIARIES

ITEM 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations
         (Continued)

Six months ended June 30, 2003 compared to June 30, 2002

The Company had a net loss attributable to common stock of $313,000, or
($.03) per share, for the six months ended June 30, 2003 compared to net
income attributable to common stock of $8,807,000, or $.78 per share, for
the six months ended June 30, 2002.

Total revenues for the six months ended June 30, 2003 were $1,852,000, which
represents a decrease of $275,000, or 13%, from revenues of $2,127,000 for
the six months ended June 30, 2002. The decrease in revenues was primarily
due to lower product sales to Estee Lauder and two other customers and a
decrease in J&J royalty income offset by increased product sales to
Vetoquinol and new customers.

Cost of sales, as a percent of product sales, increased from 43% for the six
months ended June 30, 2002 to 45% for the six months ended June 30, 2003.
The resulting decrease in gross profit from 57% in the six months ended
June 30, 2002 to 55% in the six months ended June 30, 2003 is the result of
the change in mix to lower gross profit products and underabsorbed fixed
costs.

Selling, general and administrative expenses increased $24,000, or 2%, from
$1,328,000 for the six months ended June 30, 2002. As a percent of revenues,
these expenses were 62% of revenues for the first six months of 2002
compared to 73% for the first six months of 2003. The increase is primarily
due to a $202,000 severance expense accrued in the second quarter of 2003
for the cost of the benefits to be provided by the Company under a severance
package to the Company's current President and Chief Executive Officer upon
his resignation from office, offset by a decline in salary expense due to
staff reductions after the sale of the Companion Pet Products division.

Product development and research expenses increased $36,000, or 13%,
compared to the six months ended June 30, 2002. The increase is a result of
additional projects that are being worked on for existing and potential new
customers.

Interest expense decreased $311,000 from interest expense of $303,000 for
the six months ended June 30, 2002 to interest income of $8,000 for the six
months ended June 30, 2003. The decrease is due to lower interest rates and
the pay down of the Company's debt on May 31, 2002 using the proceeds from
the sale of the Companion Pet Products division.

Discontinued operations for the six months ended June 30, 2002 consisted of
a $401,000 loss from discontinued operations offset by a $12,468,000 gain
from the sale of the Companion Pet Products division. The $169,000 of income
from discontinued operations for the six months ended June 30, 2003 is a
result of an insurance settlement, net of legal costs, received for damages
arising from the heating oil leak at the Company's Companion Pet Products
site.

Liquidity and Capital Resources

The Company's operating activities used $350,000 of cash during the six
months ended June 30, 2003 compared to $1,500,000 used in the comparable
period in 2002. Payments for environmental remediation costs and prepaid
insurance premiums were the major use of cash in 2003. In 2002, cash from
the proceeds from the sale of the Companion Pet Products division was
utilized to pay down accounts payable and accrued expenses.

The Company used $44,000 of cash during the six months ended June 30, 2003
for investing activities compared to cash generated of $17,216,000 from
investing activities for the comparable period in 2002. The majority of
2003's investing activities was for the purchase of computers and machinery
and equipment, while 2002's activity primarily was cash generated from the
sale of the Companion Pet Products division, a former corporate office
building and marketable securities.

The Company's financing activities utilized $33,000 of cash in the six
months ended June 30, 2003 compared to $11,923,000 used in the comparable
period in 2002. The cash utilized in 2003 was primarily for the purchase of
Company stock as part of a stock buy-back program which was authorized in
December 2002, offset by funding and payments of the EDA loan. In 2002 cash
was utilized to payoff the Fleet Capital Bank and American Capital
Strategies debt using the proceeds from the sale of the Companion Pet
Products division.


<PAGE>  11


                         IGI, INC. AND SUBSIDIARIES

ITEM 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations
         (Continued)

The Company's principal sources of liquidity are cash from operations and
cash and cash equivalents. Management believes that existing cash and cash
equivalents and cash flows from operations will be sufficient to meet the
Company's foreseeable cash needs for at least the next year. However, there
may be acquisition and other growth opportunities that require additional
external financing. Management may, from time to time, seek to obtain
additional funds from the public or private issuances of equity or debt
securities. There can be no assurance that such financings will be available
or available on terms acceptable to the Company.

There have been no material changes to the Company's contractual commitments
as reflected in the 2002 10-K Annual Report.

Regulatory Proceeding and Legal Proceedings

On April 6, 2000, officials of the New Jersey Department of Environmental
Protection inspected the Company's storage site in Buena, New Jersey and
issued Notices of Violation (NOV's) relating to the storage of waste
materials in a number of trailers at the site. The Company established a
disposal and cleanup schedule and completed the removal of materials from
the site. The Company continues to discuss with the authorities a resolution
of any potential assessment under the NOV's and has accrued the estimated
expense of the penalties that may be assessed under such NOV's.

On March 2, 2001, the Company discovered the presence of environmental
contamination resulting from a heating oil leak at its Companion Pet
Products site. The Company immediately notified the New Jersey Department of
Environmental Protection and the local authorities, and hired a certified
environmental contractor to assess the exposure and required clean up. Based
on the initial information from the contractor, the Company originally
estimated the cost for the cleanup and remediation to be $310,000. In
September 2001, the contractor updated the estimated total cost for the
cleanup and remediation to be $550,000. A further update was performed in
December 2002 and the final estimated cost was increased to $620,000, of
which $149,000 remains accrued as of June 30, 2003. It is currently
anticipated that the majority of the remediation will be completed by the
end of the summer of 2003. Subsequently, there will be periodic testing and
removal performed, which is projected to span over the next five years. The
estimated cost of such future monitoring is included in the accrual.

Factors Which May Affect Future Results

The industry in which the Company competes is subject to intense competitive
pressures. The following sets forth some of the risks which the Company
faces.

Intense Competition in Consumer Products Business
-------------------------------------------------

The Company's Consumer Products business competes with large, well-financed
cosmetics and consumer products companies with development and marketing
groups that are well established and experienced in the industry and possess
far greater financial and other resources than those available to the
Company. There is no assurance that the Company's consumer products can
compete successfully against its competitors or that it can develop and
market new products that will be favorably received in the marketplace. In
addition, certain of the Company's customers that use the Company's
Novasome(r) lipid vesicles in their products may decide to reduce their
purchases from the Company or shift their business to other suppliers.

Effect of Rapidly Changing Technologies
---------------------------------------

In the future, the Company expects to sublicense its Novasome(r) technologies
to third parties, who would manufacture and market products incorporating
the technologies. If the Company's competitors develop superior
technologies, the Company's technologies could be less acceptable in the
marketplace and therefore the Company's planned technology sublicensing
could be materially adversely affected.

American Stock Exchange (AMEX) Continuing Listing Standards
-----------------------------------------------------------

On March 28, 2002, the Company was notified by AMEX that it was below
certain of the Exchange's standards for continued listing. Specifically,
under applicable AMEX listing standards, in order to remain listed the
Company was required to reflect income from continuing operations and net
income for 2002 and a minimum of $4,000,000


<PAGE>  12


                         IGI, INC. AND SUBSIDIARIES

ITEM 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations
         (Continued)

in stockholders' equity by December 31, 2002. On April 25, 2002, the Company
submitted a plan of compliance to AMEX. On June 12, 2002, AMEX notified the
Company that it had accepted the Company's plan of compliance and had
granted the Company an extension of time to regain compliance with the
continued listing standards by December 31, 2002. The loss from continuing
operations for the year ended December 31, 2002 reflected tax expense
resulting from a change in the New Jersey tax law that was retroactive to
January 1, 2002. As a result of this tax expense, the Company determined
that it would have a loss from continuing operations for 2002. The Company
notified AMEX of this issue on November 14, 2002 after release of the
Company's 2002 third quarter results.

In February 2003, the Company contacted AMEX after release of the Company's
2002 year-end results. On April 14, 2003, the Company received formal
notification from AMEX that the Company was deemed to be in compliance with
all AMEX requirements for continued listing on AMEX.

Critical Accounting Policies

There have been no material changes to the Company's critical accounting
policies as reflected in the 2002 10-K Annual Report.

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

The Company does not utilize financial instruments for trading purposes and
holds no derivative financial instruments which could expose the Company to
significant market risk. The Company's primary market risk exposure with
regard to financial instruments is changes in interest rates. The Company's
cash equivalents consist primarily of investments in mutual funds.
Management believes, based on the current interest rate environment, that a
100 basis point change in interest rates would have an immaterial impact on
interest income.

ITEM 4.  Controls and Procedures

The Company's Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures as of June 30, 2003, and based on their evaluation,
the Chief Executive Officer and Chief Financial Officer have concluded that
these disclosure controls and procedures are effective.

The evaluation referred to above did not identify any changes in the
Company's internal control over financial reporting that occurred during the
quarter ended June 30, 2003 that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.


<PAGE>  13


                         IGI, INC. AND SUBSIDIARIES
                         PART II  OTHER INFORMATION

ITEM 1.  Legal Proceedings

      None.

ITEM 2.  Changes in Securities and Use of Proceeds

      None.

ITEM 3.  Defaults Upon Senior Securities

      None.

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

      The Company held its 2003 Annual Meeting of Stockholders on May 20,
2003 to vote on two proposals. Proxy statements were sent to all
shareholders. The first proposal was for the election as directors of the
following seven people: Earl K. Lewis, John F. Ambrose, Stephen J. Morris,
Terrence O'Donnell, Constantine L. Hampers, Donald W. Joseph, and Frank
Gerardi. All seven directors were elected with the following votes
tabulated:

                                 Total votes          Total votes withheld
      Name of director        for each director        from each director
      ----------------        -----------------       --------------------

      Mr. Lewis                  9,086,063                 1,925,662
      Mr. Ambrose                8,162,363                 2,849,362
      Mr. Morris                 9,086,063                 1,925,662
      Mr. O'Donnell              9,086,063                 1,925,662
      Dr. Hampers                8,162,363                 2,849,362
      Mr. Joseph                 9,086,063                 1,925,662
      Mr. Gerardi               10,811,925                   199,800

      The second proposal was for the ratification of the appointment of
independent auditors for the year 2003. The appointment of the current
auditors, KPMG LLP, was ratified, with the following votes tabulated:

         For             Against             Abstain
         ---             -------             -------

      9,432,042          327,948            1,251,735

ITEM 5.  Other Information

      None.

ITEM 6.  Exhibits and Reports on Form 8-K

      (a)   Exhibits

            *10.99    Settlement Agreement and Release

             31.1     Certification of the Chief Executive Officer pursuant
                      to Section 302 of the Sarbanes-Oxley Act of 2002.

             31.2     Certification of the Chief Financial Officer pursuant
                      to Section 302 of the Sarbanes-Oxley Act of 2002.

             32.1     Certification of the Chief Executive Officer pursuant
                      to 18 U.S.C. Section 1350, as enacted under Section
                      906 of the Sarbanes-Oxley Act of 2002.

             32.2     Certification of the Chief Financial Officer pursuant
                      to 18 U.S.C. Section 1350, as enacted under Section
                      906 of the Sarbanes-Oxley Act of 2002.

*     Incorporated by reference to Exhibit 10.99 to the Company's quarterly
      report on Form 10-Q for the quarter ended June 30, 2003.


<PAGE>  14


                         IGI, INC. AND SUBSIDIARIES
                    PART II  OTHER INFORMATION, continued

      (b)   Reports on Form 8-K

      A report on Form 8-K was filed on July 2, 2003, reporting that on June
27, 2003, IGI's Board of Directors unanimously elected Frank Gerardi as
Chairman of the Board of Directors to fill the vacancy in office resulting
from the resignation of Earl Lewis. Separately, on June 27, 2003, John
Ambrose, the Company's President and Chief Executive Officer, announced his
intention to step down as President and Chief Executive Officer on December
31, 2003, or at such earlier date as the Chairman of the Board determines is
appropriate.


<PAGE>  15


                         IGI, INC. AND SUBSIDIARIES


                                 SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                       IGI, Inc.
                                       (Registrant)


Date:  May 14, 2004                    By:  /s/ Frank Gerardi
                                            -------------------------------
                                            Frank Gerardi
                                            Chairman and Chief Executive
                                            Officer


Date:  May 14, 2004                    By:  /s/ Domenic N. Golato
                                            -------------------------------
                                            Domenic N. Golato
                                            Senior Vice President and Chief
                                            Financial Officer


<PAGE>  16