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.
          -----------------                      -------------------
         September 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 October 28, 2003 is 11,355,965


<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.

      Also, during the third quarter ended September 30, 2003, the Company
entered into an employment agreement with Dr. Michael Holick to serve as the
Company's Vice President of Research and Development and Chief Scientific
Officer. In addition, the Company entered into a memorandum of agreement
with Dr. Holick to license all of his rights to the parathyroid hormone
related peptide technologies and the glycoside technologies that he had
developed for various clinical usages (the PTH and Glycoside Technologies).
Pursuant to this agreement, Dr. Holick was paid a $50,000 non-refundable
payment. The payment was originally capitalized and included with prepaid
expenses and other current assets as of September 30, 2003. Since the PTH
and Glycoside Technologies are in a preliminary development phase and do not
have any readily determinable alternative future use, it was subsequently
determined that the payment should have been expensed. Product development
and research expenses have been increased by $50,000 in the consolidated
statements of operations for the three and nine months ended September 30,
2003.

      Except as otherwise specifically noted, all information contained
herein is as of September 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 ended          Nine months ended
                                                         September 30,              September 30,
                                                   ------------------------    ------------------------
                                                       2003          2002          2003          2002
                                                       ----          ----          ----          ----
                                                  (as restated,               (as restated,
                                                   see note 2)                 see note 2)


                                                <c>           <c>           <c>           <c>
Revenues:
  Sales, net                                          $   748       $   861       $ 2,271       $ 2,604
  Licensing and royalty income                            151           285           480           669
                                                      -------       -------       -------       -------
      Total revenues                                      899         1,146         2,751         3,273

Cost and expenses:
  Cost of sales                                           326           342         1,011         1,096
  Selling, general and administrative expenses            589           567         1,941         1,895
  Product development and research expenses               225           152           528           419
                                                      -------       -------       -------       -------
Operating income (loss)                                  (241)           85          (729)         (137)
Interest income (expense), net                              -             9             8          (294)
Other income, net                                           -             -             -            58
Loss on early extinguishment of debt                        -             -             -        (2,654)
                                                      -------       -------       -------       -------
Income (loss) from continuing operations before
 provision for income taxes                              (241)           94          (721)       (3,027)
Provision for income taxes                                  1           935             3           941
                                                      -------       -------       -------       -------

Loss from continuing operations                          (242)         (841)         (724)       (3,968)
                                                      -------       -------       -------       -------

Discontinued operations:
  Loss from operations of
   discontinued business                                    -             -             -          (401)
  Gain (loss) on sale of discontinued business            (15)          (36)          154        12,432
                                                      -------       -------       -------       -------
Net income (loss)                                        (257)         (877)         (570)        8,063

Mark to market for detachable stock warrants                -             -             -          (133)
                                                      -------       -------       -------       -------
Net income (loss) attributable to common stock        $  (257)      $  (877)      $  (570)      $ 7,930
                                                      =======       =======       =======       =======

Basic and Diluted Earnings (Loss) per Common Share
  Continuing operations                               $  (.02)      $  (.07)      $  (.06)      $  (.36)
  Discontinued operations                                   -             -           .01          1.05
                                                      -------       -------       -------       -------
  Net income (loss) attributable to common stock      $  (.02)      $  (.07)      $  (.05)      $   .69
                                                      =======       =======       =======       =======

Weighted Average of Common Stock and
Common Stock Equivalents Outstanding
  Basic and diluted                                11,355,965    11,766,288    11,379,905    11,448,290
</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>

                                                               September 30, 2003    December 31, 2002
                                                               ------------------    -----------------
                                                                   (unaudited)
                                                                  (as restated,
                                                                   see note 2)


                                                                 <c>                  <c>
ASSETS
Current assets:
  Cash and cash equivalents                                         $    632             $  1,999
  Marketable securities                                                  803                    -
  Accounts receivable, less allowance for doubtful accounts
   of $21 and $35 in 2003 and 2002, respectively                         446                  460
  Licensing and royalty income receivable                                 99                  166
  Inventories                                                            202                  209
  Prepaid expenses and other current assets                               95                  146
                                                                    --------             --------
      Total current assets                                             2,277                2,980
Property, plant and equipment, net                                     2,763                2,862
Other assets                                                              75                   87
                                                                    --------             --------
      Total assets                                                  $  5,115             $  5,929
                                                                    ========             ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                                 $     18             $     18
  Accounts payable                                                       149                  115
  Accrued payroll                                                         95                   71
  Other accrued expenses                                                 330                  551
  Income taxes payable                                                    11                   16
  Deferred revenue                                                       187                  145
                                                                    --------             --------
      Total current liabilities                                          790                  916
  Deferred revenue                                                       239                  340
  Long term debt, net of current portion                                 195                  164
                                                                    --------             --------
      Total liabilities                                                1,224                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                                              (18,523)             (17,953)
  Less treasury stock at cost, 1,965,740 and 1,878,640 shares
   at cost in 2003 and 2002, respectively                             (1,395)              (1,315)
  Accumulated other comprehensive income                                   2                    -
                                                                    --------             --------
      Total stockholders' equity                                       3,891                4,509
                                                                    --------             --------
      Total liabilities and stockholders' equity                    $  5,115             $  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>

                                                               Nine months ended September 30,
                                                               -------------------------------
                                                                      2003            2002
                                                                      ----            ----
                                                                  (as restated,
                                                                   see note 2)


                                                                  <c>             <c>
Cash flows from operating activities:
Net income (loss)                                                    $  (570)        $  8,063
Reconciliation of net income (loss) to net cash used
 in operating activities:
  Gain on sale of discontinued operations                               (154)         (12,432)
  Gain on sale of marketable securities                                    -              (58)
  Write down of EVSCO facility to net realizable value                     -              632
  Depreciation and amortization                                          196              235
  Amortization of deferred financing costs and debt discount               -              275
  Extraordinary loss on early extinguishment of debt                       -            2,654
  Provision for accounts and notes receivable and inventories             17               21
  Recognition of deferred revenue                                       (101)            (101)
  Interest expense related to subordinated note agreements                 -               41
  Directors' stock issuance                                               26               41
Changes in operating assets and liabilities:
  Accounts receivable                                                     27             (203)
  Inventories                                                            (23)            (181)
  Receivables due under licensing and royalty agreements                  67               60
  Prepaid expenses and other assets                                       51               86
  Accounts payable and accrued expenses                                 (163)            (599)
  Income taxes payable                                                    (5)             926
  Deferred revenue                                                        42                -
  Change in net assets of discontinued operations                          -             (896)
                                                                     -------         --------
      Net cash used in operating activities                             (590)          (1,436)
                                                                     -------         --------
Cash flows from investing activities:
  Capital expenditures                                                   (86)             (54)
  Capital expenditures for discontinued operations                         -               (8)
  Purchase of marketable securities                                     (801)               -
  Proceeds from sale of marketable securities                              -               58
  Proceeds from sale of property, plant and equipment                      -              550
  Increase in other assets                                                 1              (32)
  Proceeds from sale of discontinued operations                          154           16,427
                                                                     -------         --------
      Net cash provided by (used in) investing activities               (732)          16,941
                                                                     -------         --------
Cash flows from financing activities:
  Borrowings under revolving credit agreement                              -            5,958
  Repayment of revolving credit agreement                                  -           (8,284)
  Repayment of debt                                                        -           (9,516)
  Borrowings from EDA loan                                                46              197
  Repayment of EDA loan                                                  (15)             (11)
  Proceeds from exercise of common stock options and
   purchase of common stock                                                4               36
  Treasury shares purchased                                              (80)          (1,315)
                                                                     -------         --------
      Net cash used in financing activities                              (45)         (12,935)
                                                                     -------         --------
Net increase (decrease) in cash and cash equivalents                  (1,367)           2,570
Cash and cash equivalents at beginning of period                       1,999               10
                                                                     -------         --------
Cash and cash equivalents at end of period                           $   632         $  2,580
                                                                     =======         ========
</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 year 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 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.

Also, during the third quarter ended September 30, 2003, the Company entered
into an employment agreement with Dr. Michael Holick to serve as the
Company's Vice President of Research and Development and Chief Scientific
Officer. In addition, the Company entered into a memorandum of agreement
with Dr. Holick to license all of his rights to the parathyroid hormone
related peptide technologies and the glycoside technologies that he had
developed for various clinical usages (the PTH and Glycoside Technologies).
Pursuant to this agreement, Dr. Holick was paid a $50,000 non-refundable
payment. The payment was originally capitalized and included with prepaid
expenses and other current assets as of September 30, 2003. Since the PTH
and Glycoside Technologies are in a preliminary development phase and do not
have any readily determinable alternative future use, it was subsequently
determined that the payment should have been expensed.

The consolidated statements of operations for the three and nine months
ended September 30, 2003, the consolidated statement of cash flows for the
nine months ended September 30, 2003, and the consolidated balance sheet as
of September 30, 2003 have been restated to reflect the adjustments to
royalty income and product development and research expenses. 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 September 30, 2003
                                                      ---------------------------------------------
                                                             As originally
Selected statement of operations data:                         reported          As restated
--------------------------------------                       -------------       -----------


                                                              <c>                <c>
Licensing and royalty income                                     $ 202              $ 151
Total revenues                                                     950                899
Product development and research expenses                          175                225
Operating loss                                                    (140)              (241)
Loss from continuing operations before
 provision for income taxes                                       (140)              (241)
Loss from continuing operations                                   (141)              (242)
Net loss                                                          (156)              (257)
Loss attributable to common stock                                 (156)              (257)

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


<PAGE>  6


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

<TABLE>
<CAPTION>

                                                      For the nine months ended September 30, 2003
                                                      --------------------------------------------
                                                             As originally
Selected statement of operations data:                         reported          As restated
--------------------------------------                       -------------       -----------


                                                             <c>                 <c>
Licensing and royalty income                                    $  573              $  480
Total revenues                                                   2,844               2,751
Product development and research expenses                          478                 528
Operating loss                                                    (586)               (729)
Loss from continuing operations before
 provision for income taxes                                       (578)               (721)
Loss from continuing operations                                   (581)               (724)
Net loss                                                          (427)               (570)
Net loss attributable to common stock                             (427)               (570)

Basic and Diluted Earnings (Loss) per Common Share
  Continuing operations                                         $ (.05)             $ (.06)
  Discontinued operations                                          .01                 .01
                                                                ------              ------
  Net income (loss) attributable to common stock                $ (.04)             $ (.05)
                                                                ======              ======
</TABLE>

<TABLE>
<CAPTION>

                                                                 As of September 30, 2003
                                                             -------------------------------
                                                             As originally
Selected balance sheet data:                                   reported          As restated
----------------------------                                 -------------       -----------


                                                            <c>                <c>
Licensing and royalty income receivable                        $    150           $     99
Prepaid expenses and other current assets                           145                 95
Total current assets                                              2,378              2,277
Total assets                                                      5,216              5,115
Deferred revenue                                                    145                187
Total current liabilities                                           748                790
Total liabilities                                                 1,182              1,224
Accumulated deficit                                             (18,380)           (18,523)
Total stockholders' equity                                        4,034              3,891
Total liabilities and stockholders' equity                        5,216              5,115
</TABLE>

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


                                                              <c>                <c>
Net loss                                                         $(427)             $(570)
Receivables due under licensing
 and royalty agreements                                             16                 67
Prepaid expenses and other assets                                    1                 51
Deferred revenue                                                     -                 42
</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 of $36,000 from the sale of the
Companion Pet Products division for the three months ended September 30,
2002 related to post-closing adjustments. For the three months ended
September 30, 2003, the Company incurred a loss of $15,000 related to
regulatory expenses at the Companion Pet Products site. For the nine months
ended September 30, 2002, the Company incurred a loss from discontinued
operations of $401,000 and a $12,432,000 gain on the sale of the Companion
Pet Products division. For the nine months ended September 30, 2003, the
Company had a net gain of $154,000, which represented an insurance
settlement, net of legal costs, of $169,000 for damages incurred by the
Company as a result of the heating oil leak at the Companion Pet Products
manufacturing site (see Note 8), reduced by the $15,000 of regulatory
expenses.


<PAGE>  7


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

4.    Marketable Securities

Marketable securities at September 30, 2003 consists of an investment in a
short term bond mutual fund. The Company currently classifies all marketable
securities as available-for-sale. Securities classified as available-for-
sale are required to be reported at fair value with unrealized gains and
losses, net of taxes, excluded from earnings and shown separately as a
component of accumulated other comprehensive income within stockholders'
equity. Realized gains and losses on the sale of securities available-for-
sale are determined using the specific-identification method.

The amortized cost, gross unrealized gains and losses and fair value of the
available-for-sale marketable securities as of September 30, 2003 are as
follows (amounts in thousands):

<TABLE>
<CAPTION>

                                      Gross         Gross
                      Amortized    Unrealized    Unrealized    Fair
                         Cost         Gains        Losses      Value
                      ---------    ----------    ----------    -----


                      <c>           <c>          <c>        <c>
Mutual Funds
2003                     $800          $3           $  -       $803
</TABLE>

There were $0 and $58,000 of sales of available-for-sale marketable
securities during the nine months ended September 30, 2003 and 2002,
respectively.

5.    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 $242,000 through September 30, 2003. The current
balance of the loan at September 30, 2003 is $213,000.

6.    Inventories

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

<TABLE>
<CAPTION>

                  September 30, 2003    December 31, 2002
                  ------------------    -----------------
                          (amounts in thousands)


                      <c>                   <c>
Finished goods           $ 32                  $ 52
Raw materials             170                   157
                         ----                  ----
Total                    $202                  $209
                         ====                  ====
</TABLE>

7.    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.


<PAGE>  8


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

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) attributable to common stock and net income (loss) per share would
have changed to the pro forma amounts indicated below (amounts in
thousands):

<TABLE>
<CAPTION>

                                             Three months ended September 30,    Nine months ended September 30,
                                             --------------------------------    -------------------------------
                                                      2003          2002                 2003         2002
                                                      ----          ----                 ----         ----
                                                 (as restated)                      (as restated)


                                                  <c>           <c>                  <c>           <c>
Net income (loss) attributable to
 common stock - as reported                          $(257)        $(877)               $(570)        $7,930
Deduct: Total stock-based employee
 and directors compensation expense
 determined under fair value based method               (5)          (14)                 (20)          (430)
                                                     -----         -----                -----         ------
Net income (loss) attributable to
 common stock - pro forma                            $(262)        $(891)               $(590)        $7,500
                                                     =====         =====                =====         ======
Net income (loss) per share - as reported
  Basic and diluted                                  $(.02)        $(.07)               $(.05)        $  .69
Net income (loss) per share - pro forma
  Basic and diluted                                  $(.02)        $(.08)               $(.05)        $  .66
</TABLE>

8.    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
penalties related to 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 $112,000 remains accrued as of September 30, 2003. The remediation has
been completed as of September 30, 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.

9.    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.

10.   Employment and License Agreements

On September 26, 2003, the Company signed an employment agreement with Dr.
Michael Holick. Dr. Holick will serve as the Company's Vice President of
Research and Development and Chief Scientific Officer for a three year term.
On the same date, the Company entered into a Memorandum of Agreement with
Dr. Holick stating that before December 31, 2003, the Company would enter
into a License Agreement with Dr. Holick, whereby Dr. Holick will grant the
Company an exclusive license to all of his rights to the parathyroid hormone
related peptide technologies


<PAGE>  9


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

and the glycoside technologies that he developed for various clinical
usages, including treatment of psoriasis, hair loss and other skin
disorders. In consideration for entering the Memorandum of Agreement, Dr.
Holick received a $50,000 non-refundable payment. The $50,000 was expensed
because the technologies are in a preliminary development phase and do not
have any readily determinable alternative future use.


<PAGE>  10


                         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.

Also, during the third quarter ended September 30, 2003, the Company entered
into an employment agreement with Dr. Michael Holick to serve as the
Company's Vice President of Research and Development and Chief Scientific
Officer. In addition, the Company entered into a memorandum of agreement
with Dr. Holick to license all of his rights to the parathyroid hormone
related peptide technologies and the glycoside technologies that he had
developed for various clinical usages (the PTH and Glycoside Technologies).
Pursuant to this agreement, Dr. Holick was paid a $50,000 non-refundable
payment. The payment was originally capitalized and included with prepaid
expenses and other current assets as of September 30, 2003. Since the PTH
and Glycoside Technologies are in a preliminary development phase and do not
have any readily determinable alternative future use, it was subsequently
determined that the payment should have been expensed. Product development
and research expenses have been increased by $50,000 in the consolidated
statements of operations for the three and nine months ended September 30,
2003.

Except as otherwise specifically noted, all information contained herein is
as of September 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 September 30, 2003 compared to September 30, 2002

The Company had a net loss attributable to common stock of $257,000, or
$(.02) per share, for the quarter ended September 30, 2003 compared to net
loss attributable to common stock of $877,000, or $(.07) per share, for the
quarter ended September 30, 2002.

Total revenues for the quarter ended September 30, 2003 were $899,000,
compared to $1,146,000 for the quarter ended September 30, 2002. The
decrease in revenues was primarily due to lower product sales to Estee
Lauder and Vetoquinol and a decrease in J&J royalty income.

As a percentage of product sales, cost of sales increased from 40% in the
quarter ended September 30, 2002 to 44% in the quarter ended September 30,
2003. The resulting decrease in gross profit from product sales from 60% in
the quarter ended September 30, 2002 to 56% in the quarter ended September
30, 2003 is due to the change in mix to lower gross profit products and
underabsorbed fixed costs.

Selling, general and administrative expenses increased $22,000, or 4%, from
$567,000 in the quarter ended September 30, 2002. As a percentage of
revenues, these expenses were 49% of revenues in the third quarter of 2002
compared to 66% in the third quarter of 2003. The increase is primarily due
to higher legal expenses offset by lower salary and travel and entertainment
expenses.

Product development and research expenses increased $73,000, or 48%,
compared to the quarter ended September 30, 2002. The increase is a result
of additional projects that are being worked on for existing and potential
new customers and a $50,000 non-refundable payment to Dr. Holick based on a
Memorandum of Agreement the Company signed with Dr. Holick on September 26,
2003 (see Note 10).

Interest income, net decreased $9,000 from interest income, net of $9,000 in
the quarter ended September 30, 2002. The decrease is a result of lower cash
reserves and interest rates.

Discontinued operations in the quarter ended September 30, 2002 consisted of
a loss of $36,000 related to post-closing adjustments from the sale of the
Companion Pet Products division, which occurred on May 31, 2002.


<PAGE>  11


                         IGI, INC. AND SUBSIDIARIES

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

The $15,000 loss on the sale of discontinued business in the quarter ended
September 30, 2003 is a result of regulatory expenses at the Company's
Companion Pet Products site.

Nine months ended September 30, 2003 compared to September 30, 2002

The Company had a net loss attributable to common stock of $570,000, or
$(.05) per share, for the nine months ended September 30, 2003 compared to
net income attributable to common stock of $7,930,000, or $.69 per share,
for the nine months ended September 30, 2002.

Total revenues for the nine months ended September 30, 2003 were $2,751,000,
which represents a decrease of $522,000, or 16%, from revenues of $3,273,000
for the nine months ended September 30, 2002. The decrease in revenues was
primarily due to lower product sales to Estee Lauder and two other customers
and lower J&J royalty income offset by increased product sales to
Vetoquinol, Genesis and new customers.

As a percentage of product sales, cost of sales increased from 42% for the
nine months ended September 30, 2002 to 45% for the nine months ended
September 30, 2003. The resulting decrease in gross profit from product
sales from 58% for the nine months ended September 30, 2002 to 55% for the
nine months ended September 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 $46,000, or 2%, from
$1,895,000 for the nine months ended September 30, 2002. As a percent of
revenues, these expenses were 58% of revenues for the first nine months of
2002 compared to 71% for the first nine 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 one of the Company's executives, 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 $109,000, or 26%,
compared to the nine months ended September 30, 2002. The increase is a
result of additional projects that are being worked on for existing and
potential new customers and a $50,000 non-refundable payment to Dr. Holick
based on a Memorandum of Agreement the Company signed with Dr. Holick on
September 26, 2003 (see Note 10).

Interest income (expense), net went from interest expense, net of $294,000
for the nine months ended September 30, 2002 to interest income, net of
$8,000 for the nine months ended September 30, 2003. The change 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 nine months ended September 30, 2002
consisted of a $401,000 loss from discontinued operations offset by a
$12,432,000 gain from the sale of the Companion Pet Products division. The
$154,000 of income from discontinued operations for the nine months ended
September 30, 2003 consists of a $169,000 insurance settlement, net of legal
costs, received for damages incurred by the Company as a result of the
heating oil leak at the Company's Companion Pet Products site, offset by
$15,000 of regulatory expenses.

Liquidity and Capital Resources

The Company's operating activities used $590,000 of cash during the nine
months ended September 30, 2003 compared to $1,436,000 used in the
comparable period in 2002. In addition to the loss from operations, payments
for environmental remediation costs were the other 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 $732,000 of cash during the nine months ended September 30,
2003 for investing activities compared to cash of $16,941,000 provided by
investing activities for the comparable period in 2002. The majority of the
2003 investing activities were for the purchase of marketable securities,
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.


<PAGE>  12


                         IGI, INC. AND SUBSIDIARIES

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

The Company's financing activities utilized $45,000 of cash in the nine
months ended September 30, 2003 compared to $12,935,000 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 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.

The Company's principal sources of liquidity are cash flows from operations,
cash and cash equivalents and marketable securities. Management believes
that existing cash and cash equivalents, marketable securities 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
penalties related to 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 $112,000 remains accrued as of September 30, 2003. The remediation has
been completed as of September 30, 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 business
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


<PAGE>  13


                         IGI, INC. AND SUBSIDIARIES

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

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 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 during the third quarter of 2002 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 and marketable securities 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 September 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 September 30, 2003 that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.


<PAGE>  14


                         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

      None.

ITEM 5.  Other Information

      None.

ITEM 6.  Exhibits and Reports on Form 8-K

      (a)   Exhibits

            *11.01  Severance Agreement between John Ambrose and IGI, Inc.
                    dated as of August 15, 2003.

            *11.02  Employment Agreement between Michael F. Holick MD, Ph.D.
                    and IGI, Inc. dated as of September 26, 2003.

            *11.03  Memorandum of Agreement between Michael F. Holick, MD,
                    Ph.D. and IGI, Inc. dated as of September 26, 2003.

            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 the stated Exhibit to the Company's
      quarterly report on Form 10-Q for the quarter ended September 30,
2003.

      (b)   Reports on Form 8-K

            None.


<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