SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549


                                 FORM 10-Q/A
                             FIRST AMENDMENT TO

                 QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934


      For Quarter Ended                         Commission File No.
      -----------------                         -------------------
        June 30, 2000                                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.)


Wheat Road and 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  [ ]

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

                Common Shares Outstanding at August 11, 2000

                                 10,247,442


                            PRELIMINARY STATEMENT


      IGI, Inc. ("IGI" or the "Company") is hereby amending its Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2000 to reclassify
certain of the Company's long-term debt, outstanding as of June 30, 2000, as
short-term debt and to provide relevant information with respect to such
reclassification.  These actions are taken in respect of certain amendments
to the Company's debt agreements at the end of June, 2000.  In connection
with these amendments, the Company's independent accountants have determined
that substantial doubt exists about the Company's ability to continue as a
going concern and, accordingly, have amended the audit report on the
Company's 1999 financial statements.



                        Item 1.  Financial Statements

                        PART I  FINANCIAL INFORMATION

                         IGI, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)

<TABLE>
<CAPTION>
(thousands, except share and
 per share information)                  Three months ended June 30,    Six months ended June 30,
                                         ---------------------------    -------------------------
                                              2000        1999              2000         1999
                                              ----        ----              ----         ----

<S>                                          <C>         <C>              <C>          <C>
Revenues:
  Sales, net                                 $7,694      $8,504           $15,354      $16,832
  Licensing and royalty income                  717         358             1,511          773
                                             -------------------------------------------------
      Total revenues                          8,411       8,862            16,865       17,605

Cost and expenses:
  Cost of sales                               4,970       4,335             9,287        8,780
  Selling, general and administrative
   expenses                                   3,210       3,553             6,510        7,168
  Product development and research
   expenses                                     433         320               865          636
                                             -------------------------------------------------
Operating profit (loss)                        (202)        654               203        1,021
Interest expense (income), net                 (564)        843             1,335        1,665
                                             -------------------------------------------------

Income (loss) before provision for
 income taxes                                   362        (189)           (1,132)        (644)
Benefit for income taxes                        148          57               596          193
                                             -------------------------------------------------

Net income (loss)                            $  510      $ (132)          $  (536)     $  (451)
                                             =================================================

Basic and diluted income (loss) per
 common share                                $  .05      $ (.02)          $  (.05)     $  (.05)

Basic and diluted weighted average
 number of Common shares outstanding     10,181,873    9,550,191       10,154,386    9,534,883

</TABLE>

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


                         IGI, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                 June 30, 2000   December 31, 1999
                                                                   (restated)        (restated)
                                                                   (unaudited)
                                                                 -------------   -----------------
                                                                      (amounts in thousands)


<S>                                                                 <C>               <C>
ASSETS
Current assets:
  Cash and equivalents                                              $    443          $    416
  Accounts receivable, less allowance for doubtful accounts
   of $431 and $354 in 2000 and 1999, respectively                     6,701             6,061
  Licensing and royalty receivable                                       720               432
  Inventories, net                                                     9,905             8,762
  Current deferred taxes, net                                          1,096             1,096
  Prepaid and other current assets                                       766               348
                                                                    --------------------------
     Total current assets                                             19,631            17,115
Property, plant and equipment, net                                     9,858             9,781
Deferred income taxes, net                                             5,349             4,754
Deferred financing costs                                               1,566             1,678
Investments                                                              263               144
Other assets                                                             477               390
                                                                    --------------------------
      Total Assets                                                  $ 37,144          $ 33,862
                                                                    ==========================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Revolving credit facility                                            7,364             5,708
  Current portion of long-term debt, net of discount                  11,686            11,225
  Current portion of notes payable                                       829               408
  Accounts payable                                                     5,468             4,268
  Accrued payroll                                                        296               253
  Due to stockholder                                                       -               115
  Accrued interest                                                       536               164
  Other accrued expenses                                               2,001             2,150
  Income taxes payable                                                    10                15
                                                                    --------------------------
      Total current liabilities                                       28,190            24,306

Long-term debt, net of discount and current portion                        -(a)              -(a)

Deferred income                                                          298               327
Detachable stock warrants                                                  -             3,696
                                                                    --------------------------
      Total Liabilities                                               28,488            28,329
                                                                    --------------------------

Commitments and contingencies                                              -                 -

Stockholders' equity:
  Preferred stock $.01 par value, 1,000,000 authorized,
   none outstanding                                                        -                 -
  Common stock $.01 par value, 50,000,000 shares authorized;
   10,314,140 and 10,133,183 shares issued in 2000 and 1999,
   respectively                                                          103               102
  Additional paid-in capital                                          24,286            20,628
  Accumulated deficit                                                (14,092)          (13,556)
Less treasury stock, 105,510 shares at cost in
 2000 and 1999, respectively                                          (1,641)           (1,641)
                                                                    --------------------------
      Total stockholders' equity                                       8,656             5,533
                                                                    --------------------------
      Total Liabilities and Stockholders' Equity                    $ 37,144          $ 33,862
                                                                    ==========================

<FN>

 (a)   The adjustment reflects the correction of a typographical error on the
      Form 10-Q, whereby an amount was listed in the column adjacent to
      "Long term debt. . ." but never included in or added to the "Total
      Liabilities" amount presented.

</FN>
</TABLE>

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


                         IGI, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (unaudited)

<TABLE>
<CAPTION>
                                                        Six months ended June 30,
                                                        -------------------------
                                                           2000           1999
                                                           ----           ----
                                                          (amounts in thousands)

<S>                                                      <C>            <C>
Cash flows from operating activities:
  Net loss                                               $   (536)      $   (451)

  Reconciliation of net loss to net cash (used by)
   provided by operating Activities:

    Depreciation and amortization                             550            474
    Amortization of deferred financing costs and debt
     discount                                                 112              -
    Write-off of other assets                                   -             70
    Provision for loss on accounts receivable and
     inventories                                              792            231
    Recognition of deferred revenue                          (148)           (70)
    Benefit for deferred income taxes                        (595)          (194)
    Accrued interest expense relating to put feature
     of warrants                                             (154)             -
    Stock compensation expense:
      Non employee stock options                               36             44
      Directors' stock issuance                                50            168
    Changes in operating assets and liabilities:
      Accounts receivable                                    (650)          (125)
      Inventories                                          (1,925)          (259)
      Receivables under royalty agreements                   (288)           (43)
      Prepaid and other assets                                332             41
      Accounts payable and accrued expenses                 1,466            826
      Income taxes payable                                     (5)             -
      Short-term notes payable, operating                    (329)          (275)
                                                         -----------------------

        Net cash (used by) provided by operating
         activities:                                       (1,292)           437
                                                         -----------------------

Cash flows from investing activities:
  Capital expenditures                                       (548)          (461)
  (Increase) in other assets                                 (166)          (185)
                                                         -----------------------
      Net cash used by investing activities                  (714)          (646)
                                                         -----------------------

Cash flows from financing activities:
  Borrowings under capital expenditures facility              257              -
  Borrowings under revolving credit agreement              17,800              -
  Repayments of revolving credit agreement                (16,144)             -
  Proceeds from exercise of common stock options and
   purchase of common stock                                   120              -
                                                         -----------------------
      Net cash provided by financing activities             2,033              -
                                                         -----------------------

Net decrease in cash and equivalents                           27           (209)
Cash and equivalents at beginning of period                   416          1,068
                                                         -----------------------
Cash and equivalents at end of period                    $    443       $    859
                                                         =======================
</TABLE>

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


                         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 statement of
the results for the interim periods presented.  All such adjustments are of
a normal recurring nature.  Certain previously reported amounts have been
reclassified to conform with the current period presentation.


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 the disclosures are
adequate to make the information presented not misleading.  These financial
statements should be read in conjunction with the financial statements and
the notes thereto included in the Company's Annual Report on Form 10-K, as
amended by Form 10-K/A, for the year ended December 31, 1999 (the "1999 10-K
Annual Report").


2.    Debt and Stock Warrants

On October 29, 1999, the Company entered into a $22 million senior bank
credit agreement ("Senior Debt Agreement") with Fleet Capital Corporation
("Fleet") and a $7 million subordinated debt agreement ("Subordinated Debt
Agreement") with American Capital Strategies, Ltd., ("ACS").

On April 12, 2000, ACS amended its Subordinated Debt Agreement with the
Company whereby the "put" provision associated with the original warrants
granted to purchase 1,907,543 shares of the Company's common stock was
replaced by a "make-whole" feature.  The "make-whole" feature requires the
Company to compensate ACS, in either Common Stock or cash, at the option of
the Company, in the event that ACS ultimately realizes proceeds from the
sale of its Common Stock obtained upon exercise of its warrants that are
less than the fair value of the Common Stock upon exercise of such warrants.
Fair value of the Common Stock upon exercise is defined as the 30-day
average value prior to notice of intent to sell.  ACS must exercise
reasonable effort to sell or place its shares in the marketplace over a 180-
day period, beginning with the date of notice by ACS, before it can invoke
the make-whole provision.

The Company recorded a non-taxable $1,073,000 provision reflected as
interest expense for the mark-to-market adjustment for the fair value of the
"put" warrant for the three month period ended March 31, 2000.  A non-
taxable reduction of interest expense of $1,431,000 was recognized in the
second quarter ended June 30, 2000, reflecting a decrease in the fair value
of the warrants from April 1 to April 12, 2000.  As a result of the April
12, 2000 amendment, the remaining liability at April 12, 2000 of $3,338,000
was reclassified to paid in capital.  The April 12, 2000 amendment required
the Company to file a shelf Registration Statement with respect to resales
of shares acquired by ACS by October 9, 2000.  If the registration is not
filed by this date, the Company will be required to reverse the $1,431,000
interest expense reduction.

In connection with the amendment to the Subordinated Debt Agreement, ACS
also agreed to defer the payment by the Company of the cash portion of
interest on subordinated debt for the period April 1, 2000 to July 31, 2000.
Payment of the cash portion of interest on subordinated debt will be due at
the end of each subsequent three month period thereafter.  Furthermore, the
existing additional interest component at the rate of 2% was increased to
2.25%, which is payable at the Company's election in cash or in Company
Common Stock.  The increase of .25% in the additional interest component
will be in effect through March 2001, at which time the additional interest
component rate will be adjusted back down to 2%.

      Subsequent Events
      -----------------


In May, 2000, the federal Food and Drug Administration (the "FDA") initiated
an inspection of the Company's Companion Pet Products division and issued an
inspection report on Form FDA 483 on July 5, 2000.  The July 5, 2000 FDA
report includes several unfavorable observations of manufacturing and
quality assurance practices and products of the division.  The Company is
currently compiling its responses to the July 5, 2000 FDA report.  In an
effort to address a number of the FDA's stated concerns, on May 24, 2000,
the Company discontinued production and shipment of Liquichlor and on June
1, 2000 temporarily stopped production of Cerumite, both products of the Pet
Products Division.   The aggregate annual sales volume for these products
for the fiscal year ended December 31, 1999 was $1,059,000. The Company has
incurred $634,000 year to date in related expenses to improve production, to
meet documentation, procedural and regulatory compliance.   After accounting
for this cessation of production and combining these results with continued
operating losses in the poultry vaccine business, the Company determined
that it was not in compliance with the financial covenants in the debt
agreements, as amended.

On June 26, 2000, the Company entered into an Asset Purchase Agreement dated
as of June 19, 2000 (the "Vineland Agreement"), with Vineland International,
a general partnership which has changed its name to Lohmann Animal Health
International (the "Buyer").  The Vineland Agreement provides for the sale
(the "Vineland Sale") by the Company to the Buyer of the assets associated
with the business of manufacturing, marketing, licensing and selling poultry
vaccines and related equipment conducted by the Vineland Laboratories
division of the Company.  In exchange for receipt of such assets, the Buyer
will assume certain Company liabilities, in the aggregate, equal to
approximately $2,300,000 and will pay the Company cash in the amount of
$12,500,000, of which $500,000 will be placed in an escrow fund to secure
potential obligations of the Company relating to final purchase price
adjustments and indemnification. The consummation of the sale is contingent
on receipt by September 19, 2000 of the approval of the Vineland Sale by the
holders of a majority of the outstanding shares of the Company's stock. The
Company projects a $98,000 after tax gain on the Vineland Sale offset by a
$528,000 after tax extraordinary loss on the early extinguishment of debt.

On June 26, 2000, the Company entered into Amendment No. 2 to Note and
Equity Purchase Agreement ("Second Subordinated Amendment") with ACS.
Pursuant to the Second Subordinated Amendment, the Company received $500,000
and issued to ACS $500,000 of Series C Senior Subordinated Notes due
September 30, 2000 (the "Series C Notes"); and ACS waived compliance with
certain financial covenants applicable to Borrower contained in the
Subordinated Debt Agreement and modified certain interest payment dates with
respect to the Notes.  In addition, the Second Subordinated Amendment
permits the Company to issue additional Series C Notes on July 31, 2000 to
pay the interest then due and payable on the Notes and the Series C Notes.
The Company will issue, in the beginning of August 2000, to ACS an
additional Series C Note in the aggregate principal amount of approximately
$300,000 for the interest due.

Also, on June 26, 2000, the Company entered into a Second Amendment to Loan
and Security Agreement dated as of June 23, 2000 (the "Second Senior
Amendment") with Fleet.  Pursuant to the Second Senior Amendment, the
Company obtained an "overadvance" of $500,000 under the senior revolving
line of credit (the "Overadvance"), repayable in full on the earlier to
occur of September 22, 2000 or the date of the consummation of the Vineland
Sale.  Under the Second Senior Amendment, Fleet agreed to forbear from
exercising its right to accelerate the maturity of the Senior Loans upon the
default by the Borrower under certain financial covenants (the "Forbearance
Covenants") until the first to occur of:  (a) September 22, 2000, (b) the
date on which any default, other than a default under the Forbearance
Covenants, occurs under the Senior Debt Agreement, as amended; or (c) the
date of the termination of the Vineland Agreement. The Vineland Agreement
may be terminated prior to the closing if any of the following occurs:

1.    The Buyer and the Company mutually consent to the termination,
      or Vineland Sale is not consummated on or before the date that is
      three (3) months after the date of the Vineland Agreement (the date
      that is three months after the Vineland Agreement date is September
      19, 2000), unless the failure to consummate the transaction is the
      result of a material breach of the Vineland Agreement by the party
      seeking to terminate the Vineland Agreement; provided, however, that
      the passage of such period shall be tolled for any part thereof (but
      not exceeding ninety (90) days in the aggregate) during which any
      party shall be subject to a non-final order, decree, ruling or action
      restraining, enjoining or otherwise prohibiting the consummation of
      the transaction;

2.    A governmental entity issues an order, decree or ruling or takes any
      other action permanently enjoining, restraining or otherwise
      prohibiting the transaction and such order, decree, ruling or other
      action shall have become final and non-appealable;

3.    The stockholders of the Company do not approve the Vineland Agreement
      and transaction.

Due to the terms of the Second Senior Amendment and the Second Subordinated
Amendment discussed above, the Company has classified all debt owed to ACS
and Fleet as short-term debt. In connection with these amendments, the
Company's independent accountants have determined that substantial doubt
exists about the Company's ability to continue as a going concern and,
accordingly, have amended the audit report on the Company's 1999 financial
statements.   The Company has scheduled a special meeting of stockholders
and has filed a Preliminary Proxy Statement with the Securities and Exchange
Commission with respect to Stockholder consideration of the Vineland Sale.


3.    Per Share Data

Per share data is computed based upon the weighted average number of shares
of common stock, adjusted for the potential conversion of dilutive common
stock equivalents.  The fully dilutive earnings per share data is not shown
since the dilutive and basic are equal on June 30, 2000.

4.    Inventories

Inventories are valued at the lower of cost, using the first-in, first-out
("FIFO") method, or market.

Inventories at June 30, 2000 and December 31, 1999 consist of:

<TABLE>
<CAPTION>
                                    June 30, 2000      December 31, 1999
                                    -------------      -----------------
                                           (amounts in thousands)

<S>                                     <C>                 <C>
Finished goods                          $4,010              $2,445
Work-in-process                          3,676               3,853
Raw materials                            2,219               2,464
                                        ------              ------
Total                                   $9,905              $8,762
                                        ======              ======
</TABLE>

5.    Regulatory Proceedings and Legal Proceedings

The Company is subject to review, oversight and periodic inspections by
governmental regulatory agencies such as the U.S. Securities and Exchange
Commission (the "SEC"), the U.S. Department of Agriculture ("USDA"), the
federal Food and Drug Administration ("FDA") and the New Jersey Department
of Environmental Protection ("NJDEP") and the local department of health.

      FDA Inspection Observations


In May, 2000, the FDA initiated an inspection of the Company's Companion Pet
Products division and issued an inspection report on Form FDA 483 on July 5,
2000.  The July 5, 2000 FDA report includes several unfavorable observations
of manufacturing and quality assurance practices and products of the
division.  The Company is currently compiling its responses to the July 5,
2000 FDA report.  In an effort to address a number of the FDA's stated
concerns, on May 24, 2000, the Company discontinued production and shipment
of Liquichlor and on June 1, 2000 temporarily stopped production of
Cerumite, both products of the Pet Products Division.   The aggregate annual
sales volume for these products for the fiscal year ended December 31, 1999
was $1,059,000.

Upon receipt of the Company's formal response to the July 5, 2000
observations, the FDA will evaluate the Company's response and will
determine the ultimate outcome of the FDA inspection.  An unfavorable
outcome could result in fines, penalties and the potential halt of the sale
of certain regulated products, any or all of which could have a material,
adverse effect on the Company.  The Company has incurred $634,000 year to
date in related expenses to improve production, to meet documentation,
procedural and regulatory compliance.  On July 5, 2000, the FDA completed
its inspection of the Company's Companion Pet Products division and issued
an inspection report on Form FDA 483.  The July 5, 2000 FDA report includes
several unfavorable observations of manufacturing and quality assurance
practices and products of the division.  The Company is currently compiling
its responses to the July 5, 2000 FDA report.  In an effort to address a
number of the FDA's stated concerns, on May 24, 2000, the Company
discontinued production and shipment of Liquichlor and on June 1, 2000
temporarily stopped production of Cerumite, both products of the Pet
Products Division.   The aggregate annual sales volume for these products
for the fiscal year ended December 31, 1999 was $1,059,000.

      SEC Investigation

On July 26, 2000, the Company reached an agreement in principle with the
staff of the SEC to resolve matters arising with respect to the informal
investigation of the Company commenced by the SEC in April 1998.  Under the
agreement, which will not be final until approved by the SEC, the Company
neither admits nor denies that the Company violated the financial reporting
and record-keeping requirements of Section 13 of the Securities Exchange Act
of 1934, as amended, for the fiscal years 1995, 1996 and 1997.  Further, in
the agreement, the Company agrees to the entry of an order to cease and
desist from any such violation in the future.  No monetary penalty is
expected.


The investigation and settlement focus on fraudulent actions taken by former
members of the company's management.  Upon becoming aware of the fraudulent
activity, IGI, through its Board of Directors, immediately commenced an
internal investigation which led to the termination of employment of those
responsible.  IGI then cooperated fully with the staff of the SEC and
disclosed to the Commission the results of the internal investigation.

      NJDEP Action

On April 6, 2000, officials of the New Jersey Department of Environmental
Protection inspected a company storage site in Buena, New Jersey and issued
a Notice of Violation relating to the storage of waste materials in a number
of trailers at the site.  The Company has established a disposal and cleanup
schedule and has commenced operations to remove materials from the site.
Small amounts of hazardous waste were discovered and the Company was issued
a notice of violation relating to the storage of these materials.  The
Company is cooperating with the authorities and expects the assessment of
fines or penalties. The Company has expensed the full cost of $160,000
related to the disposal and cleanup.


On or around, May 17, 2000, the Company became aware of a spill at its
Vineland Laboratories facility of about 965 gallons of #2 fuel oil.   By May
26, 2000 the Company had completed remediation of the soil and nearby creek
that were affected by the heating oil spill.  To assure that the nearby
groundwater was not contaminated by the spill, the Company's environmental
consultants advised the Company to drill a test well.  The well is being
drilled and the Company expects to have analytical results by the end of
September, 2000.  The Company has expensed the costs of the initial
remediation and accrued the costs of drilling the test well.

Accruals for environmental remediation are recorded when it is probable a
liability has been incurred and costs are reasonably estimable.  The
estimated liabilities are recorded at undiscounted amounts.  It is the
Company's practice to reflect environmental insurance recoveries in the
results of operations for the quarter in which the litigation is resolved
through settlement or other appropriate legal process.

      Cohanzick Partners, LP Action

On April 14, 1999, a lawsuit was filed in the U.S. District Court for the
Southern District of New York by Cohanzick Partners, LP, against IGI, Inc.,
Edward B. Hager, the Company's Chairman, the following directors of the
Company: Terrence D. Daniels, Jane E. Hager, Constantine L. Hampers and
Terrence O'Donnell and the following former directors and officers of the
Company: Kevin J. Bratton, Stephen G. Hoch, Surendra Kumar, Donald J.
Machpee, Lawrence N. Zitto, Paul D. Paganucci, David G. Pinosky and John O.
Marsh (collectively, the "IGI Defendants") and John P. Gallo, the Company's
former President.  The suit which seeks approximately $420,000 in actual
damages together with fees, costs and interest, alleges violations of the
securities laws, fraud, and negligent misrepresentation concerning certain
disclosures made and other actions taken by the Company in 1996 and 1997.
The IGI Defendants settled the matter pursuant to a Stipulation and Order of
Dismissal signed by the Court on July 19, 2000.  In exchange for the
plaintiff's agreement to dismiss its claims against the IGI Defendants, the
Company issued to the plaintiff 35,000 shares of unregistered Common Stock
of the Company, $.01 par value per share, and the Company's insurer agreed
to pay $97,500 to the plaintiff. The Company issued the 35,000 shares of
Common Stock in June, 2000 and recorded the issuance at the fair market
value of  the Common Stock on the date of issuance ($1.375 per share) or
$48,125 in the aggregate.  As of December 31, 1999, the Company established
a reserve with respect the Cohanzick suit of $88,750.  The Company intends
to record the $48,125 upon issuance of stock as an offset to its reserve in
the third quarter 2000.


6.    Business Segments

Summary data related to the Company's reportable segments for the six-month
periods ended June 30, 2000 and 1999 appear below:

<TABLE>
<CAPTION>
                               Poultry      Companion      Consumer
                               Vaccines    Pet Products    Products    Corporate*    Consolidated
                               --------    ------------    --------    ----------    ------------
                                                        (in thousands)

<S>                             <C>           <C>           <C>          <C>            <C>
Three months ended June 30:
2000
Revenues                        $3,203        $3,374        $1,834       $     -        $8,411

Operating profit (loss)            (98)          (79)        1,167        (1,192)         (202)


1999
Revenues                         3,261         3,608         1,993             -         8,862
Operating profit (loss)           (287)        1,161         1,155        (1,375)          654

Six months ended June 30:
2000
Revenues                         6,392         6,703         3,770             -        16,865
Operating profit (loss)           (479)          573         2,419        (2,310)          203

1999
Revenues                         7,127         6,927         3,551             -        17,605
Operating profit (loss)           (414)        2,170         2,005        (2,740)        1,021

<FN>
*Notes:
(A)   Unallocated corporate expenses are principally general and
      administrative expenses.
(B)   Transactions between reportable segments are not material.
</FN>
</TABLE>


                          IGI, INC. AND SUBSIDIARIES
              Management's Discussion and Analysis of Financial
                     Condition and Results of Operations

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

The following discussion and analysis may contain forward-looking
statements.  Such statements are subject to certain risks and uncertainties,
including those discussed below or in the Company's 1999 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 1999 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
release the results of any revision to these forward-looking statements
which may be made to reflect events or circumstances after the date hereof
or to reflect the occurrence of anticipated events.

Results Of Operations

Three months ended June 30, 2000 compared to June 30, 1999

The Company had net income of $510,000 or $.05 per share, for the three
months ended June 30, 2000 as compared to a net loss of $132,000, or $.02
per share, for the second quarter ended June 30, 1999. The increase in net
income was primarily the result of the reduction of interest expense of
$1,431,000 reflecting the decrease from April 1, 2000 to April 12, 2000 in
the fair value of a "put" provision related to warrants granted to ACS.  On
April 12, 2000 the ACS Subordinated notes were amended, whereby the "put"
provision was replaced by a "make-whole" feature.

Total revenues for the quarter ended June 30, 2000 were $8,411,000, which
represents a decrease of $451,000 or 5%, compared to revenues $8,862,000,
for the quarter ended June 30, 1999. The decrease is due to lower Companion
Pet and Consumer Product revenues. Companion Pet Product revenue decreased
$234,000 or 7% primarily due to lost revenues from a product recall and a
decrease in shipments by distributors who are reducing inventory to increase
their inventory turnover. Consumer Product revenue decreased $159,000 or 8%
mainly from reduced sales to Estee Lauder of $508,000 offset by higher
licensing and royalty income of $358,000 primarily from Johnson & Johnson
due to new product introductions by it. Poultry Vaccine revenue decreased
$58,000 or 2% as a result of lost customers of the Company's Vineland
Division.

Cost of sales increased by $635,000, or 15%, from the quarter ending June
30, 1999. As a percentage of revenues, cost of sales increased from 49% in
the quarter ended June 30, 1999 to 59% in the quarter ended June 30, 2000.
The resulting decrease in gross profit from 51% in 1999 to 41% in 2000 is
the result of unusual charges of $536,000 for consulting and other related
costs for Petcare Products documentation, procedural and regulatory
compliance issues, $154,000 for hazardous waste removal and $335,000 for Pet
Product recall and inventory related reserve.  In addition, on May 17, 2000,
an oil tank spill occurred at the Poultry Vaccine Vineland facility, in
which $167,000 in expenses were incurred to clean up the oil spill.
Excluding the unusual charges above of $1,192,000, this would have resulted
in a 55% gross profit for the quarter.

Selling, general and administrative expenses decreased by $343,000, or 10 %,
from $3,553,000 in the quarter ended June 30, 1999 to $3,210,000 in the
quarter ended June 30, 2000.  As a percentage of revenues, these expenses
were 40% of revenues for the quarter ended June 30, 1999 compared to 38% in
the quarter ended June 30, 2000.  Selling and marketing expenses decreased
by $38,000 compared to the same period last year principally related to
lower vaccine selling expenses.  General and administrative expenses
decreased by $305,000, or 22% compared to the second quarter 1999, primarily
as a result of decreased professional fees, management compensation and
additional cost saving measures implemented.

Product development and research expenses increased by $113,000 or 35%,
compared to the quarter ended June 30, 1999.  The increase is mainly for
additional research staff to work on new and existing projects.


Net interest expense changed by $1,407,000, from $843,000 net interest
expense for the three months ended June 30, 1999 to net interest income of
$564,000 for the three months ended June 30, 2000. The decrease is a result
of the amendment of the ACS Subordinated notes, whereby the "put" provision
associated with the original warrants granted to purchase 1,907,543 shares
of the Company's stock was replaced by a "make-whole" feature. The interest
expense reduction of non-taxable $1,431,000 reflects the decrease in the
fair value of the warrants from April 1, 2000 to April 12, 2000.


Results Of Operations

Six months ended June 30, 2000 compared to June 30, 1999

The Company had a net loss of $536,000, or $.05 per share, for the six
months ended June 30, 2000 as compared to a net loss of $451,000, or $.05
per share, for the six months ended June 30, 1999.  The  increase in the net
loss compared to the prior year was primarily due to decreased revenues and
increased cost of sales offset by decreased operating expenses and decreased
interest expense.

Total revenues for the six months ended June 30, 2000 were $16,865,000,
which represents a decrease of $740,000, or 4%, from revenues of $17,605,000
for the six months ended June 30, 1999. The decrease in revenues was
primarily attributable to decreased Poultry Vaccine and Companion Pet sales
partially offset by increased Consumer revenues.  Poultry Vaccine revenue
decreased by $735,000 or 10% as a result of limited production capacity and
lost customers at the Company's Vineland business.  Management has sought to
modernize its Vineland poultry vaccine equipment and facilities and to
increase production capacity.  Limited production capacity and old
equipment, combined with increased requirements for higher super potency and
larger volume vaccines has continued to limit Vineland's ability to produce
sufficient quantities of vaccines.  Companion Pet Products revenues
decreased $224,000 or 3% under the comparable six months in 1999 due to lost
revenues from a product recall and a decrease in shipments by distributors
who are reducing inventory to increase their inventory turnover.  Consumer
Products revenues increased $219,000, or 6%, for the six months of 2000 as a
result of licensing and royalty income. Licensing and royalty income
increased by $738,000 or 95% over the comparable period last year as a
result of increased license revenue from Johnson & Johnson due to it's new
product introductions.

Cost of sales increased by $507,000, or 6%, from the six months ended June
30, 1999.  As a percentage of revenues, cost of sales increased from 50% in
the six months ended June 30, 1999 to 55% in the six months ended June 30,
2000.  The resulting decrease in gross profit from 50% in 1999 to 45% in
2000 is the result of unusual charges of $634,000 for consulting and other
related costs for Petcare Products documentation, procedural and regulatory
compliance issues, $160,000 for hazardous waste removal and $335,000 for Pet
Product recall and inventory related reserve.  In addition, on May 17, 2000,
an oil tank spill occurred at the Poultry Vaccine Vineland facility.
$167,000 in expenses was incurred to clean up the oil spill.  Excluding the
unusual charges above of $1,296, 000, this would have resulted in a 53%
gross profit for the six months ended June 30, 2000.

Selling, general and administrative expenses decreased by $658,000, or 9%,
from $7,168,000 in the six months ended June 30, 1999 to $6,510,000 in the
six months ended June 30, 2000.  As a percentage of revenues, these expenses
were 41% of revenues for the six months ended June 30, 1999 compared to 39%
in the six months ended June 30, 2000.  Selling and marketing expenses
decreased by $65,000 compared to the same period last year principally
related to lower vaccine selling expenses.  General and administrative
expenses decreased by $593,000, or 22% compared to the six months ended
1999, primarily as a result of decreased professional fees, management
compensation and director fees and additional cost saving measures
implemented.

Product development and research expenses increased by $229,000, or 36%,
compared to the six months ended June 30, 1999.  The increase is principally
for additional research staff to work on new and existing projects.

Net interest expense decreased $330,000, or 20%, from $1,665,00 for the six
months ended June 30, 1999 to $1,335,000 in the six months ended June 30,
2000. The decrease is a result of the amendment of the ACS Subordinated
notes, whereby the "put" provision associated with the original warrants
granted to purchase 1,907,543 shares of the Company's stock were replaced by
a "make-whole" feature. The non-taxable interest expense reduction of
$1,431,000 reflects the decrease in the fair value of the warrants from
April 1, 2000 to April 12, 2000.

Liquidity and Capital Resources

On April 12, 2000, ACS amended its Subordinated Debt Agreement with the
Company whereby the "put" provision associated with the original warrants
granted to purchase 1,907,543 shares of the Company's common stock was
replaced by a "make-whole" feature.  The "make-whole" feature requires the
Company to compensate ACS, in either Common Stock or cash, at the option of
the Company, in the event that ACS ultimately realizes proceeds from the
sale of its Common Stock obtained upon exercise of its warrants that are
less than the fair value of the Common Stock upon exercise of such warrants.
Fair value of the Common Stock upon exercise is defined as the 30-day
average value prior to notice of intent to sell.  ACS must exercise
reasonable effort to sell or place its shares in the marketplace over a 180-
day period before it can invoke the make-whole provision.


The Company recorded a non-taxable $1,073,000 provision reflected as
interest expense for the mark-to-market adjustment for the fair value of the
"put" warrant for the three month period ended March 31, 2000.  As a result
of the amendment, the liability recognized related to the warrants was
reclassified as a component of equity without a future mark-to-market
adjustment effective April 12, 2000.  A nontaxable reduction of interest
expense of approximately $1,431,000 was recognized in the second quarter
reflecting a decrease in the fair value of the warrants from April 1 to 12,
2000.


In connection with the amendment to the Subordinated Debt Agreement, ACS
also agreed to defer the payment by the Company of the cash portion of
interest on subordinated debt for the period April 1, 2000 to July 31, 2000
until July 31, 2000.  Payment of the cash portion of interest on
subordinated debt will be payable at the end of each subsequent three month
period thereafter.  Furthermore, the existing additional interest component
at the rate of 2% was increased to 2.25%, which is payable at the Company's
election in cash or in Company Common Stock.  The increase of .25% in the
additional interest component is in effect through March 2001, at which time
the additional interest component rate is adjusted back down to 2%.

The debt agreements contain various affirmative and negative covenants, such
as minimum tangible net worth and minimum fixed charge coverage ratios.  The
covenants under the debt agreements were further amended on April 12, 2000.
The financial covenants are dependent upon continued improved operating
results.  The Company remains highly leveraged and as a result, access to
additional funding sources is limited.  The Company's available borrowings
under the revolving line of credit facility are dependent on the level of
qualifying accounts receivable and inventory.  Unfavorable product sales
performance since April 1, 2000 has limited the available borrowing capacity
of the Company under the revolving line of credit facility.  If the
Company's operating results deteriorate or product sales do not improve or
the Company is not successful in meeting its financial obligations, it could
result in a default under its loan agreements and any such default, not
resolved, could lead to curtailment of certain of its business operations,
sale of certain assets or the commencement of insolvency proceedings by its
creditors.


In May, 2000, the FDA initiated an inspection of the Company's Companion Pet
Products division and issued an inspection report on Form FDA 483 on July 5,
2000.  The July 5, 2000 FDA report includes several unfavorable observations
of manufacturing and quality assurance practices and products of the
division.  The Company is currently compiling its responses to the July 5,
2000 FDA report.  In an effort to address a number of the FDA's stated
concerns, on May 24, 2000, the Company discontinued production and shipment
of Liquichlor and on June 1, 2000 temporarily stopped production of
Cerumite, both products of the Pet Products Division.   The aggregate annual
sales volume for these products for the fiscal year ended December 31, 1999
was $1,059,000. The Company has incurred $634,000 year to date in related
expenses to improve production, to meet documentation, procedural and
regulatory compliance.   After accounting for this cessation of production
and combining these results with continued operating losses in the poultry
vaccine business, the Company determined that it was not in compliance with
the financial covenants in the debt agreements, as amended.

On June 26, 2000, the Company entered into the Second Subordinated Amendment
with ACS.  Pursuant to the Second Subordinated Amendment, the Company
received $500,000 and issued to ACS $500,000 of Series C Senior Subordinated
Notes due September 30, 2000; and ACS waived compliance with certain
financial covenants applicable to Borrower contained in the Subordinated
Debt Agreement and modified certain interest payment dates with respect to
the Notes.  In addition, the Second Subordinated Amendment permits the
Company to issue additional Series C Notes on July 31, 2000 to pay the
interest then due and payable on the Notes and the Series C Notes.  The
Company will issue, in the beginning of August 2000, to ACS an additional
Series C Note in the aggregate principal amount of approximately $300,000
for the interest due.

Also, on June 26, 2000, the Company entered into a Second Senior Amendment
dated as of June 23, 2000 with Fleet.  Pursuant to the Second Senior
Amendment, the Company obtained an "Overadvance" of $500,000 under the
senior revolving line of credit, repayable in full on the earlier to occur
of September 22, 2000 or the date of the consummation of the Vineland Sale.
Under the Second Senior Amendment, Fleet agreed to forbear from exercising
its right to accelerate the maturity of the senior loans upon the default by
the Borrower under certain financial covenants (the Forbearance Covenants)
until the first to occur of:  (a) September 22, 2000, (b) the date on which
any default, other than a default under the Forbearance Covenants, occurs
under the Senior Debt Agreement, as amended; or (c) the date of the
termination of the Vineland Agreement.

On June 26, 2000, the Company entered into the Vineland Agreement with
Buyer.  The Vineland Agreement provides for the sale (the Vineland Sale) by
the Company to the Buyer of the assets associated with the business of
manufacturing, marketing, licensing and selling poultry vaccines and related
equipment conducted by the Vineland Laboratories division of the Company.
In exchange for receipt of such assets, the Buyer will assume certain
Company liabilities, in the aggregate, equal to approximately $2,300,000 and
will pay the Company cash in the amount of $12,500,000, of which $500,000
will be placed in an escrow fund to secure potential obligations of the
Company relating to final purchase price adjustments and indemnification.
The Company projects a $98,000 after tax gain on the Vineland Sale offset by
a $528,000 after tax extraordinary loss on the early extinguishment of debt.
The Vineland Agreement may be terminated prior to the closing if any of the
following occurs:

      1.    The Buyer and the Company mutually consent to the termination,
            or the Vineland Sale is not consummated on or before the date
            (September 19, 2000) that is three (3) months after the date of
            the Vineland Agreement (June 19, 2000), unless the failure to
            consummate the transaction is the result of a material breach of
            the Vineland Agreement by the party seeking to terminate the
            Vineland Agreement; provided, however, that the passage of such
            period shall be tolled for any part thereof (but not exceeding
            ninety (90) days in the aggregate) during which any party shall
            be subject to a non-final order, decree, ruling or action
            restraining, enjoining or otherwise prohibiting the consummation
            of the transaction;

      2.    A governmental entity issues an order, decree or ruling or takes
            any other action permanently enjoining, restraining or otherwise
            prohibiting the transaction and such order, decree, ruling or
            other action shall have become final and non-appealable;

      3.    The stockholders of the Company do not approve the Vineland
            Agreement and transaction.

The Company has scheduled a special meeting of stockholders and filed a
Preliminary Proxy Statement with the SEC with respect to stockholder
consideration of the Vineland Sale.

Due to the terms of the Second Senior Amendment and the Second Subordinated
Amendment discussed above, the Company has classified all debt owed to ACS
and Fleet as short-term debt.  In this connection, the Company's independent
accountants have determined that substantial doubt exists about the
Company's ability to continue as a going concern.  Even if the Company
timely consummates the Vineland Sale and repays the Overadvance and the
Series C Notes, the Company remains highly leveraged; furthermore,
availability for borrowings under the revolving line of credit facility is
dependent on the level of its qualifying accounts receivable and inventory.

Under the Second Senior Amendment, Fleet agreed to release its security
interests in and liens on all property to be transferred by the Company to
Buyer pursuant to the Vineland Sale (the "Vineland Collateral") upon
consummation of the Vineland Sale.  The release of the Vineland Collateral
is conditioned upon the application of the proceeds of the Vineland Sale,
net of certain closing and other costs approved by Fleet, to repay the
senior loans, the Overadvance and the Series C Notes as follows:  (i) first
to repay the Overadvance in full; (ii) second, to repay that amount of the
outstanding Revolving Loan equal to 85% of certain of the accounts
receivable transferred to the Buyer pursuant to the Vineland Sale; (iii)
third, to repay that amount of the revolving line of credit equal to 100% of
the Revolving Loan made with respect to inventory transferred pursuant to
the Vineland Sale; (iv) fourth, to repay in full the total amount of capital
expenditure loans then outstanding; (v) fifth, to repay in full the total
amount of the $350,000 term loan then outstanding; (vi) sixth, to repay the
portion of the $6,750,000 term loan in an amount sufficient to reduce the
outstanding principal balance of that term loan to $2,705,000; (vii)
seventh, to pay the Series C Notes in an amount not to exceed $826,798.93;
and (viii) eighth, to repay any portion of the then outstanding revolving
line of credit.

The Company remains highly leveraged and as a result, access to additional
funding sources is limited.  The Company's available borrowings under the
revolving line of credit facility are dependent on the level of qualifying
accounts receivable and inventory.  Unfavorable product sales performance
since April 1, 2000 has limited the available borrowing capacity of the
Company under the revolving line of credit facility.  If the Company's
operating results deteriorate or product sales do not improve or the Company
is not successful in meeting its financial obligations, it could result in a
default under its loan agreements and any such default, not resolved, could
lead to curtailment of certain of its business operations, sale of certain
assets or the commencement of insolvency proceedings by its creditors.


The Company's operating activities used $1.3 million of cash during the six-
month period ended June 30, 2000.  The Company utilized approximately
$714,000 cash in investing activities, primarily for capital expenditures
for the Company's manufacturing operations.  Cash utilized in the Company's
operating and investing activities were provided by the Company's financing
activities, which primarily related to increased borrowings under the line
of credit facility and capital expenditures facility.

Regulatory Proceeding and Legal Proceedings

The Company is subject to review, oversight and periodic inspections by
governmental regulatory agencies such as the U.S. Securities and Exchange
Commission (the "SEC"), the U.S. Department of Agriculture ("USDA"), the
Federal Food and Drug Administration ("FDA") and the New Jersey Department
of Environmental Protection ("NJDEP") and the local department of health.

      FDA Inspection Observations


In May, 2000, the FDA initiated an inspection of the Company's Companion Pet
Products division and issued an inspection report on Form FDA 483 on July 5,
2000.  The July 5, 2000 FDA report includes several unfavorable observations
of manufacturing and quality assurance practices and products of the
division.  The Company is currently compiling its responses to the July 5,
2000 FDA report.  In an effort to address a number of the FDA's stated
concerns, on May 24, 2000, the Company discontinued production and shipment
of Liquichlor and on June 1, 2000 temporarily stopped production of
Cerumite, both products of the Pet Products Division.   The aggregate annual
sales volume for these products for the fiscal year ended December 31, 1999
was $1,059,000.

Upon receipt of the Company's formal response to the July 5, 2000
observations, the FDA will evaluate the Company's response and will
determine the ultimate outcome of the FDA inspection.  An unfavorable
outcome could result in fines, penalties and the potential halt of the sale
of certain regulated products, any or all of which could have a material,
adverse effect on the Company.  The Company has incurred $634,000 year to
date in related expenses to improve production, to meet documentation,
procedural and regulatory compliance.  On July 5, 2000, the FDA completed
its inspection of the Company's Companion Pet Products division and issued
an inspection report on Form FDA 483.  The July 5, 2000 FDA report includes
several unfavorable observations of manufacturing and quality assurance
practices and products of the division.  The Company is currently compiling
its responses to the July 5, 2000 FDA report.  In an effort to address a
number of the FDA's stated concerns, on May 24, 2000, the Company
discontinued production and shipment of Liquichlor and on June 1, 2000
temporarily stopped production of Cerumite, both products of the Pet
Products Division.   The aggregate annual sales volume for these products
for the fiscal year ended December 31, 1999 was $1,059,000.

      SEC Investigation

On July 26, 2000, the Company reached an agreement in principle with the
staff of the SEC to resolve matters arising with respect to the informal
investigation of the Company commenced by the SEC in April 1998.  Under the
agreement, which will not be final until approved by the SEC, the Company
neither admits nor denies that the Company violated the financial reporting
and record-keeping requirements of Section 13 of the Securities Exchange Act
of 1934, as amended, for the fiscal years 1995, 1996 and 1997.  Further, in
the agreement, the Company agrees to the entry of an order to cease and
desist from any such violation in the future.  No monetary penalty is
expected.


The investigation and settlement focus on fraudulent actions taken by former
members of the company's management.  Upon becoming aware of the fraudulent
activity, IGI, through its Board of Directors, immediately commenced an
internal investigation which led to the termination of employment of those
responsible.  IGI then cooperated fully with the staff of the SEC and
disclosed to the Commission the results of the internal investigation.

      NJDEP Action


On April 6, 2000, officials of the New Jersey Department of Environmental
Protection inspected a company storage site in Buena, New Jersey and issued
a Notice of Violation relating to the storage of waste materials in a number
of trailers at the site.  The Company has established a disposal and cleanup
schedule and has commenced operations to remove materials from the site.
Small amounts of hazardous waste were discovered and the Company was issued
a notice of violation relating to the storage of these materials.  The
Company is cooperating with the authorities and expects the assessment of
fines or penalties. The Company has expensed the full cost of $160,000
related to the disposal and cleanup.

On or around, May 17, 2000, the Company became aware of a spill at its
Vineland Laboratories facility of about 965 gallons of #2 fuel oil.   By May
26, 2000 the Company had completed remediation of the soil and nearby creek
that were affected by the heating oil spill.  To assure that the nearby
groundwater was not contaminated by the spill, the Company's environmental
consultants advised the Company to drill a test well.  The well is being
drilled and the Company expects to have analytical results by the end of
September, 2000.  The Company has expensed the costs of the initial
remediation and accrued the costs of drilling the test well.

Accruals for environmental remediation are recorded when it is probable a
liability has been incurred and costs are reasonably estimable.  The
estimated liabilities are recorded at undiscounted amounts.  It is the
Company's practice to reflect environmental insurance recoveries in the
results of operations for the quarter in which the litigation is resolved
through settlement or other appropriate legal process.

      Cohanzick Partners, LP Action

On April 14, 1999, a lawsuit was filed in the U.S. District Court for the
Southern District of New York by Cohanzick Partners, LP, against IGI, Inc.,
Edward B. Hager, the Company's Chairman, the following directors of the
Company: Terrence D. Daniels, Jane E. Hager, Constantine L. Hampers and
Terrence O'Donnell and the following former directors and officers of the
Company: Kevin J. Bratton, Stephen G. Hoch, Surendra Kumar, Donald J.
Machpee, Lawrence N. Zitto, Paul D. Paganucci, David G. Pinosky and John O.
Marsh (collectively, the "IGI Defendents") and John P. Gallo, the Company's
former President.  The suit which seeks approximately $420,000 in actual
damages together with fees, costs and interest, alleges violations of the
securities laws, fraud, and negligent misrepresentation concerning certain
disclosures made and other actions taken by the Company in 1996 and 1997.
The IGI Defendants settled the matter pursuant to a Stipulation and Order of
Dismissal signed by the Court on July 19, 2000.  In exchange for the
plaintiff's agreement to dismiss its claims against the IGI Defendants, the
Company issued to the plaintiff 35,000 shares of unregistered Common Stock
of the Company, $.01 par value per share, and the Company's insurer agreed
to pay $97,500 to the plaintiff. The Company issued the 35,000 shares of
Common Stock in June, 2000 and recorded the issuance at the fair market
value of the Common Stock on the date of issuance ($1.375 per share) or
$48,125 in the aggregate.  As of December 31, 1999, the Company established
a reserve with respect the Cohanzick suit of $88,750.  The Company intends
to record the $48,125 upon issuance of stock as an offset to its reserve in
the third quarter 2000.

Factors Which May Affect Future Results

Highly Leveraged and Debt Covenant Compliance

The ability of the Company to repay the Overadvance and the Series C Notes
pursuant to the June, 2000, amendments to the Company's debt agreements is
dependent upon the consummation of the Vineland Sale or another similar
transaction on or before September 19, 2000.  There can be no assurance that
the Company will be successful in doing so.    Further, in connection with
the June, 2000 amendments to the Company's debt agreements, the Company
reclassified its long-term debt, outstanding as of December 31, 1999 as
short-term debt.  In response these events, the Company's independent
accountants have determined that substantial doubt exists about the
Company's ability to continue as a going concern.

Even if the Vineland Sale is timely consummated and the Overadvance and
Series C Notes are timely repaid, the Company is very highly leveraged and
subject to restrictive covenants and restraints which are contained in its
Senior Debt Agreement, as amended, and its Subordinated Debt Agreement, as
amended.

The debt agreements contain various affirmative and negative covenants, such
as requirements to achieve minimum tangible net worth and minimum fixed
charge coverage ratios.  Furthermore, the Company's available borrowings
under the revolving line of credit are dependent upon the level of the
Company's qualifying accounts receivable and inventory.


If the Company is not successful in meeting its financial covenants and
timely closing the Vineland Sale, a default could occur under the debt
agreements and any such default, if not resolved, could lead to curtailment
of certain the Company's business operations, sale of certain assets or
commencement of insolvency proceedings by the Company's creditors.

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 experienced in the industry and possess far greater
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.

Competition in Poultry Vaccine Business

The Company is encountering increased price competition from other producers
of poultry vaccines.

Foreign Regulatory and Economic Considerations

The Company's business may be adversely affected by foreign import
restrictions and additional regulatory requirements.  Also, unstable or
adverse economic conditions and fiscal and monetary policies in certain
Latin American and Far Eastern countries, increasingly important markets for
the Company's animal health products, could adversely affect the Company's
future business in these countries.

Rapidly Changing Marketplace for Pet Products

The emergence of pet superstores, the consolidation of distribution channels
into fewer, more powerful companies and the diminishing traditional role of
veterinarians in the distribution of pet products could adversely affect the
Company's ability to expand its animal health business or to operate at
acceptable gross margin levels.

Effect of Rapidly Changing Technologies

The Company expects to license its technologies to third parties which would
manufacture and market products incorporating these technologies.  However,
if its competitors develop new and improved technologies that are superior
to the Company's technologies, its technologies could be less acceptable in
the marketplace and therefore the Company's planned technology licensing
could be materially adversely affected.

Regulatory Considerations

The Company's poultry vaccines and pet products are regulated by the USDA
and the FDA respectively which subject the Company to review, oversight and
periodic inspections.  Any new products are subject to expensive and
sometimes protracted USDA and FDA regulatory approval, which ultimately may
not be granted.  Also, certain of the Company's products may not be approved
for sales overseas on a timely basis, thereby limiting the Company's ability
to expand its foreign sales.

Income Taxes

The Company had net deferred tax assets in the amount of approximately $5.9
million as of December 31, 1999 and $6.1 million as of June 30, 2000.  The
largest deferred tax asset relates to $3.7 million of net operating loss
carryforwards.  After considering a $955,000 valuation allowance at June 30,
2000, management believes the Company's remaining net deferred tax assets
are more likely than not to be realized through the reversal of existing
taxable temporary differences, the sale of certain state net operating
losses, and the generation of sufficient future taxable operating income to
ensure utilization of remaining deductible temporary differences, net
operating losses and tax credits.  The minimum level of future taxable
income necessary to realize the Company's net deferred tax assets at June
30, 2000, was approximately $21 million.  There can be no assurance,
however, that the Company will be able to achieve the minimum levels of
taxable income necessary to realize its net deferred tax assets.  Federal
net operating loss carryforwards expire through 2019.  Significant
components expire in 2007, 2018 and 2019.  Also federal research credits
expire in varying amounts through the year 2019.

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk

On April 12, 2000, ACS amended its Subordinated Debt Agreement with the
Company whereby the "put" provision associated with the original warrants
granted to purchase 1,907,543 shares of the Company's common stock was
replaced by a "make-whole" feature.  The "make-whole" feature requires the
Company to compensate ACS, in either Common Stock or cash, at the option of
the Company, in the event that ACS ultimately realizes proceeds from the
sale of its Common Stock obtained upon exercise of its warrants that are
less than the fair value of the Common Stock upon exercise of such warrants.
Fair value of the Common Stock upon exercise is defined as the 30-day
average value prior to notice of intent to sell.  ACS must exercise
reasonable effort to sell or place its shares in the marketplace over a 180-
day period before it can invoke the make-whole provision.

As a result of the amendment, the liability recognized related to the
warrants was reclassified as a component of equity without a future mark-to-
market adjustment effective April 12, 2000.  A reduction of interest expense
of $1,431,000 was recognized in the second quarter reflecting a decrease in
the fair value of the warrants from April 1 to April 12, 2000.


                         IGI, INC. AND SUBSIDIARIES
                             Financial Schedules

                         PART II  OTHER INFORMATION


Item 1 - Legal Proceedings

SEC Investigation

On July 26, 2000, the Company reached an agreement in principle with the
staff of the SEC to resolve matters arising with respect to the informal
investigation of the Company commenced by the SEC in April 1998.  Under the
agreement, which will not be final until approved by the SEC, the Company
neither admits nor denies that the Company violated the financial reporting
and record-keeping requirements of Section 13 of the Securities Exchange Act
of 1934, as amended, for the fiscal years 1995, 1996 and 1997.  Further, in
the agreement, the Company agrees to the entry of an order to cease and
desist from any such violation in the future.  No monetary penalty is
expected.


The investigation and settlement focus on fraudulent actions taken by former
members of the company's management.  Upon becoming aware of the fraudulent
activity, IGI, through its Board of Directors, immediately commenced an
internal investigation which led to the termination of employment of those
responsible.  IGI then cooperated fully with the staff of the SEC and
disclosed to the Commission the results of the internal investigation.


Cohanzick Partners, LP Action

On April 14, 1999, a lawsuit was filed in the U.S. District Court for the
Southern District of New York by Cohanzick Partners, LP, against IGI, Inc.,
Edward B. Hager, the Company's Chairman, the following directors of the
Company: Terrence D. Daniels, Jane E. Hager, Constantine L. Hampers and
Terrence O'Donnell and the following former directors and officers of the
Company: Kevin J. Bratton, Stephen G. Hoch, Surendra Kumar, Donald J.
Machpee, Lawrence N. Zitto, Paul D. Paganucci, David G. Pinosky and John O.
Marsh (collectively, the "IGI Defendents") and John P. Gallo, the Company's
former President.  The suit, which seeks approximately $420,000 in actual
damages together with fees, costs and interest, alleges violations of the
securities laws, fraud, and negligent misrepresentation concerning certain
disclosures made and other actions taken by the Company in 1996 and 1997.
The IGI Defendants settled the matter pursuant to a Stipulation and Order of
Dismissal signed by the Court on July 19, 2000.  In exchange for the
plaintiff's agreement to dismiss its claims against the IGI Defendants, the
Company issued to the plaintiff 35,000 shares of unregistered Common Stock
of the Company, $.01 par value per share, and the Company's insurer agreed
to pay $97,500 to the plaintiff.



                                 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:   August 30, 2000                By:  /s/Paul Woitach
                                            Paul Woitach
                                            President and Chief Executive
                                            Officer

Date    August 30, 2000                By:  /s/Domenic N. Golato
                                            Domenic N. Golato
                                            Senior Vice President and Chief
                                            Financial Officer