SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
May 1, 1998
------------------------------------------------
Date of Report (Date of earliest event reported)
IGI, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-8568 01-0355758
- --------------- ------------ --------------
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification
Incorporation) Number)
WHEAT ROAD AND
LINCOLN AVENUE
BUENA, NJ 08310
----------------------------------------
(Address of Principal Executive Offices,
Including Zip Code)
(609) 697-1441
-------------------------------
(Registrant's telephone number,
including area code)
NOT APPLICABLE
-------------------------------
(Former name or Former Address,
if Changed Since last Report)
<PAGE>
Item 5. Other Events
On May 4, 1998, the Company announced that on May 1, 1998 it was advised by its
former independent accountants, Coopers & Lybrand L.L.P., that the reports of
Coopers & Lybrand with respect to the consolidated financial statements of IGI,
Inc. and its subsidiaries as of and for the years ended December 31, 1996 and
1995 should no longer be relied upon. The Company has not been advised by
Coopers & Lybrand of the basis for its action at this time.
The Company also announced that it commenced a lawsuit on April 21, 1998 against
its former President and Chief Operating Officer, John P. Gallo, in the Superior
Court of New Jersey. In its complaint, IGI alleges, among other matters, that
Mr. Gallo caused the Company to violate Department of Agriculture statutes and
regulations, made false and inaccurate representations with respect to shipments
and inventory, improperly converted Company funds and assets for his personal
benefit and knowingly engaged in misconduct in the performance of his duties and
responsibilities, all in violation of his employment agreement and of his
fiduciary duty to the Company.
On April 28, 1998, Mr. Gallo commenced a lawsuit against the Company and two of
its Directors, including the Company's Chairman of the Board, Dr. Edward B.
Hager, alleging, among other matters, that they improperly caused the
termination of his employment with the Company in November 1997, wrongfully
terminated his compensation in violation of his employment agreement and defamed
his reputation.
In addition, IGI announced that it entered into a definitive Extension Agreement
with Fleet Bank-NH and Mellon Bank as of April 29, 1998 pursuant to which its
existing credit agreement with the banks was extended through March 31, 1999 and
its defaults under certain of the credit agreement covenants were waived by the
banks.
The foregoing description of events is qualified by the Press Release dated May
4, 1998, which is filed as Exhibit 99 to this Current Report on Form 8-K and
incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) and (b) N/A
(b) Exhibits: The following exhibits are filed with this report:
Exhibit No. Description
----------- -----------
99 Press Release dated May 4, 1998
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 hereunto duly authorized.
IGI, INC.
Date: May 6, 1998 By: /s/ Kevin J. Bratton
-------------------------------
Kevin J. Bratton
Vice President and Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit No Description
---------- -----------
99 Press Release dated May 4, 1998
<PAGE>
May 4, 1998 Thomas Redington
(203) 222-7399
IGI ANNOUNCES LITIGATION WITH FORMER
PRESIDENT; COOPERS & LYBRAND WITHDRAWS
REPORTS ON 1995 AND 1996 FINANCIAL
STATEMENTS; LOAN AGREEMENT EXTENDED
BUENA, NJ, MAY 4, 1998 - IGI, INC. (AMEX:IG) announced today that it commenced a
lawsuit on April 21, 1998 against its former President and Chief Operating
Officer, John P. Gallo, in the Superior Court of New Jersey. In its complaint,
IGI alleges, among other matters, that Mr. Gallo caused the Company to violate
Department of Agriculture statutes and regulations, made false and inaccurate
representations with respect to shipments and inventory, improperly converted
Company funds and assets for his personal benefit and knowingly engaged in
misconduct in the performance of his duties and responsibilities, all in
violation of his employment agreement and of his fiduciary duty to the Company.
The Company is seeking recovery of damages resulting from Mr. Gallo's alleged
misconduct and recovery of funds and assets that the Company alleges were
improperly diverted by him.
On April 28, 1998, Mr. Gallo commenced a lawsuit against the Company and two of
its Directors, including the Company's Chairman of the Board, Dr. Edward B.
Hager, alleging, among other matters that they improperly caused the termination
of his employment with the Company in November 1997, wrongfully terminated his
compensation in violation of his employment agreement and defamed his
reputation. Mr. Gallo is seeking recovery against the defendants for his alleged
actual damages as well as consequential and punitive damages.
In addition, IGI stated that on May 1, 1998, it was advised by its former
independent accountants, Coopers & Lybrand L.L.P., that the reports of Coopers &
Lybrand with respect to the consolidated financial statements of IGI, Inc. and
its subsidiaries as of and for the years ended December 31, 1996 and 1995 should
no longer be relied upon. As previously reported, the Company was not able to
file its 1997 Annual Report on Form 10-K with the Securities and Exchange
Commission and the American Stock Exchange by the due date of that report, March
31, 1998, because of the additional work required by its current independent
accountants, Price Waterhouse, to complete the audit for the year ended December
31, 1997. Price Waterhouse has advised Coopers & Lybrand of the results of its
additional work which the Company believes has led to the withdrawal by Coopers
& Lybrand of its reports with respect to the 1995 and 1996 financial statements
of the Company. However, the Company has not been advised by Coopers & Lybrand
of the basis for its action at this time.
<PAGE>
IGI also announced that it entered into a definitive Extension Agreement with
Fleet Bank-NH and Mellon Bank as of April 29, 1998 pursuant to which its
existing credit agreement with the banks was extended through March 31, 1999 and
its defaults under certain of the credit agreement covenants were waived by the
banks. In connection with the extension of the credit agreement, the Company has
agreed to certain modifications of the terms of the agreement, including
provisions which obligate the Company to make scheduled quarterly payments of
its revolving credit notes during the next 12 months, to pay higher annual
interest rate on the bank indebtedness as well as additional bank fees, and to
issue to the banks warrants for the purchase of up to 540,000 shares of common
stock of the Company at an exercise price of $3.50 per share.
###
IGI is a diversified company segmented into two business areas: Animal Health
and Skin Care and Consumer Products. The Company's growing Skin Care and
Consumer Products business is primarily based on the Patented Novasome
technology. Licensed from a former subsidiary, the technology offers value-added
qualities to cosmetics, skin care products, vaccines, medicines, foods,
beverages, and other products.
