BUENA, NJ April 3, 2007 - IGI, INC. (AMEX: IG) announces 2006 year end results and 2007 ongoing business plans.
The key goals of our 2007 business plan are to:
"This will be a year of transition for the Company as we implement our business plan and focus on providing packaged services and products to our customers. The future is bright for IGI and we are excited about the opportunities that lie ahead of us," Rajiv Mathur, President and CEO, stated.
Departure of a board member
IGI also announces that Mr. Gerardi, IGI's Chairman, had been appointed Managing Member of ST Advisors LLC, a hedge fund investment advisor, and ST Capital Partners LLC, a General Partner of the ST Long Short Equity Fund LP. Because of the restraints of this new position, Mr. Gerardi will not be submitting his name for re-election to the board of IGI at its annual shareholder meeting.
"I believe IGI's business plan, technology and leadership will result in a prosperous new year and I expect to add to my existing stock position", stated Frank Gerardi, Chairman of the Board.
"IGI's Board of Directors wish to thank Mr. Gerardi for his guidance and dedication he exemplified as a board member over the last several years", stated Rajiv Mathur, President and CEO.
Fourth Quarter and Fiscal 2006 Financial Results
For the fourth fiscal quarter of 2006, the company today reported net loss of $(336,000), or $(.02) per share, for the quarter ended December 31, 2006, compared to net loss of $(309,000), or $(.02) per share, for the fourth quarter of 2005.
Due to significant fourth quarter adjustments, the Company did not achieve a profitable fourth quarter as initially projected. Those adjustments were as follows:
For the fiscal year, the Company had a net loss of $(1,667,000), or $(.13) per share, in 2006 compared to a net loss of $(1,298,000), or $(.11) per share, in 2005.
Total revenues for 2006 were $2,620,000, which represented a decrease of $235,000 from revenues of $2,855,000 in 2005. Licensing and royalty income of $657,000 in 2006 decreased by $213,000 compared to 2005, primarily as a result of a decrease in Genesis Pharmaceutical royalties and a decrease in J&J Consumer royalties which were partially offset by an increased royalty revenue from Estee Lauder . The Company believes the declining royalties from J&J Consumer is related to the normal life cycle of a product and that these royalties will continue to decline.
Product sales of $1,787,000 in 2006 decreased $198,000, or 10%, compared to 2005 due mainly to a loss of product sales in 2006 from Estee Lauder partially offset by higher sales in 2006 to Albrian International and Vetoquinol USA.
Cost of sales decreased by $153,000, or 10%, in 2006 as compared to 2005. As a percentage of product sales, cost of sales increased slightly from 77.6% in 2005 to 77.7% in 2006. The cost of sales for 2006 included an inventory impairment charge of $70,000 to record our Miaj product line at the lower of cost or market. Several of the products in this product line have a limited shelf life and revenues from these products may never be recognized.
Selling, general and administrative expenses increased by $538,000, or 34%, from $1,567,000 in 2005 to $2,105,000 in 2006. These expenses were 80% of revenues for 2006 compared to 55% in 2005. The increase is primarily due to severance fees recorded in the amount of $190,000 for our former CEO, higher professional fees of $165,000, and higher Board of Directors fees of $57,000 recorded in 2006. A portion of the increase in professional fees in 2006 related to the recognition of $92,000 of legal fees related to the sale-leaseback agreement that the Company was a party to in 2006. The Company has cancelled the agreement in March 2007 and therefore, all legal fees related to the agreement with services provided in 2006 were expensed in 2006.
Product development and research expenses increased by $116,000 in 2006, or 12%, compared to 2005. The increase in 2006 relates to $100,000 of amortization of the Novasome licensing fee paid by the Company in December 2005 for the ten-year extension of the Novasome technology.
Interest expense amounted to $129,000 (net of income) in 2006 compared to interest expense of $4,000 (net of income) in 2005. The interest expense in 2006 relates to the short term notes payable recorded in December 2005.
The tax benefit of $458,000 in 2006 and $280,000 in 2005 was a result of the sales of a portion of the Company’s state tax operating loss carry forwards.
The loss related to discontinued operations for the Company amounted to $58,000 for 2006 compared to a loss of $479,000 for 2005 a decrease of $421,000, or 88%. The decrease was due to the shutdown of operations in 2006 for the metal plating segment. In 2005, there were sales of $12,000, cost of goods sold of $379,000 (including an impairment charge of $175,000) and selling, general and administrative costs of $112,000 compared to costs in 2006 consisting of depreciation for $20,000 and an impairment charge for $38,000 on the equipment.
IGI is a company committed to growth by applying proprietary technologies to achieve cost-effective solutions for varied customer needs. IGI offers the patented Novasome® nano-vesicular, transdermal delivery technology which contributes value-added qualities to cosmetics, skin care products, dermatological formulations and other consumer products, providing improved dermal absorption, controlled and sustained release as well as improved stability and greater ease of formulation.
This report contains forward-looking statements relating to IGI's hopes and expectations for the future. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "will," "possible," "one time," "provides an opportunity," "continue" and similar expressions are intended to identify forward-looking statements. Such statements involve a number of risks and uncertainties and actual future events and results could differ materially from those indicated by such forward-looking statements due to general economic conditions, and the risk factors detailed in IGI's periodic reports and registration statements filed with the Securities and Exchange Commission.
IGI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 2006
(in thousands, except share and per share information)
|
2006 |
ASSETS |
|
Current assets: |
|
Cash and cash equivalents |
$ 619 |
Restricted cash |
50 |
Accounts receivable, less allowance for doubtful accounts |
|
of $34 |
197 |
Licensing and royalty income receivable |
91 |
Inventories |
485 |
Prepaid expenses and other current assets |
45 |
Assets of discontinued operations held for sale |
350 |
Total current assets |
1,837 |
Property, plant and equipment, net |
2,396 |
License fee, net |
900 |
Other assets |
10 |
Total assets |
$ 5,143 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
Current liabilities: |
|
Note payable- related party |
1,145 |
Note payable |
306 |
Accounts payable |
505 |
Accrued expenses |
417 |
Deferred income, current |
400 |
Liabilities of discontinued operations |
118 |
Total current liabilities |
2,891 |
Deferred income, long term |
59 |
Total liabilities |
2,950 |
|
|
Commitments and contingencies |
- |
|
|
Stockholders’ equity: |
|
Common stock, $.01 par value, 50,000,000 shares authorized; |
|
Additional paid-in capital |
25,569 |
Accumulated deficit |
(22,132) |
Less treasury stock, 1,965,740 shares at cost |
(1,395) |
Total stockholders’ equity |
2,193 |
Total liabilities and stockholders' equity |
$ 5,143 |
IGI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 2006 and 2005
(in thousands, except shares and per share information)
|
2006 |
2005 |
Revenues: |
|
|
Sales, net |
$ 1,787 |
$ 1,985 |
Licensing and royalty income |
657 |
870 |
Research and development income |
176 |
- |
Total revenues |
2,620 |
2,855 |
|
|
|
Costs and Expenses: |
|
|
Cost of sales |
1,388 |
1,541 |
Selling, general and administrative expenses |
2,105 |
1,567 |
Product development and research expenses |
1,065 |
949 |
Operating (loss) |
(1,938) |
(1,202) |
Interest (expense), net |
(129) |
(4) |
(Loss) on sale of investment securities |
- |
(74) |
Other income, net |
- |
181 |
Loss from continuing operations before benefit from income taxes |
(2,067) |
(1,099) |
Benefit from income taxes |
458 |
280 |
|
|
|
Loss from continuing operations |
(1,609) |
(819) |
Discontinued operations |
|
|
Loss from discontinued operations |
(58) |
(479) |
|
|
|
Net loss |
$ (1,667) |
$ (1,298) |
|
|
|
Basic and Diluted (Loss) per Share |
|
|
Continuing operations |
$ (.13) |
$ (.07) |
Discontinued operations |
(.00) |
(.04) |
|
$ (.13) |
$ (.11) |
|
|
|
|
|
|
Weighted average shares of common stock outstanding |
|
|
Basic and diluted |
12,845,711 |
11,971,337 |
Contact:
Rajiv Mathur President & Chief Executive Officer IGI, Inc. 856-697-1441 ext. 102 www.askigi.com