10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

____________

FORM 10-Q

 X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2014

OR

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from        to

Commission File Number 001-31668

INTEGRATED BIOPHARMA, INC.

(Exact name of registrant, as specified in its charter)

Delaware	22-2407475
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

225 Long Ave., Hillside, New Jersey	07205
(Address of principal executive offices)	(Zip Code)

(888) 319-6962

(Registrant’s telephone number, including Area Code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 and 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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  Accelerated filer  Non-accelerated filer  Smaller reporting company þ

Indicate by check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Applicable only to Corporate Issuers:

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

Class	Outstanding at May 14, 2014
Common Stock, $0.002 par value	21,080,174 Shares

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

FORM 10-Q QUARTERLY REPORT

For the Nine Months Ended March 31, 2014

INDEX

		Page
	Part I. Financial Information
Item 1.	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2014 and 2013 (unaudited)	2
	Condensed Consolidated Balance Sheets as of March 31, 2014 and June 30, 2013 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months ended March 31, 2014 and 2013 (unaudited)	4
	Notes to Condensed Consolidated Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23
	Part II. Other Information
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosure	24
Item 5.	Other Information	24
Item 6.	Exhibits	24
	Other
Signatures		25

Disclosure Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking” statements as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Act of 1934, as amended (the “Exchange Act”), the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) or in releases made by the Securities and Exchange Commission, all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Integrated BioPharma, Inc. (the “Company”) or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words, “plan”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “project”, “may”, “will”, “would”, “could”, “should”, “seeks”, or “scheduled to”, or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the “safe harbor” provisions of such laws. The Company cautions investors that any forward-looking statements made by the Company are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to the Company, include, but are not limited to, the risks and uncertainties affecting its businesses described in Items 1 and 1A of the Company’s Annual Report filed on Form 10-K for the year ended June 30, 2013 and in registration statements and other securities filings by the Company. Although the Company believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any of the forward-looking statements and are subject to change due inherent risks and uncertainties. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made only as of the date hereof and the Company does not have or undertake any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.

1

ITEM 1. FINANCIAL STATEMENTS

2

3

4

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 1. Principles of Consolidation and Basis of Presentation

Basis of Presentation of Interim Financial Statements

The accompanying condensed consolidated financial statements for the interim periods are unaudited and include the accounts of Integrated BioPharma, Inc., a Delaware corporation (together with its subsidiaries, the “Company”). The interim condensed consolidated financial statements have been prepared in conformity with Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and therefore do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. However, all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the periods presented have been included. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013 (“Form 10-K”), as filed with the SEC. The June 30, 2013 balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the three and nine months ended March 31, 2014 are not necessarily indicative of the results for the full fiscal year ending June 30, 2014 or for any other period.

Nature of Operations

The Company is engaged primarily in manufacturing, distributing, marketing and sales of vitamins, nutritional supplements and herbal products.  The Company’s customers are located primarily in the United States, Luxembourg and Canada. The Company was previously known as Integrated Health Technologies, Inc. and, prior to that, as Chem International, Inc. The Company was reincorporated in its current form in Delaware in 1995. The Company continues to do business as Chem International, Inc. with certain of its customers and certain vendors.

The Company’s business segments include: (a) Contract Manufacturing operated by InB:Manhattan Drug Company, Inc. (“MDC”), which manufactures vitamins and nutritional supplements for sale to distributors, multilevel marketers and specialized health-care providers; (b) Branded Proprietary Products operated by AgroLabs, Inc. (“AgroLabs”), which distributes healthful nutritional products for sale through major mass market, grocery, drug and vitamin retailers,  under the following brands: Naturally Noni, Coconut Water, Aloe Pure, Peaceful Sleep, Green Envy, ACAI Extra, ACAI Cleanse, Wheatgrass and other products which are being introduced into the market (these are referred to as our branded proprietary nutraceutical business and/or products); and (c) Other Nutraceutical Businesses which includes the operations of (i) The Vitamin Factory (the “Vitamin Factory”), which sells private label MDC products, as well as our AgroLabs products, through the Internet,  (ii) IHT Health Products, Inc. (“IHT”) a distributor of fine natural botanicals, including multi minerals produced under a license agreement and (iii) Chem International, Inc., a distributor of certain raw materials for DSM Nutritional Products, Inc.

Significant Accounting Policies

There have been no material changes during fiscal year 2014 in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013.

Investment in iBio, Inc.- Restricted. The Company accounts for its investment in iBio, Inc. (“iBio”) common stock on the cost basis as it retained approximately 6% of its interest in iBio (1,266,706 common shares) (the “iBio Stock”) at the time of the spin-off of this subsidiary in August 2008.  The Company reviews its investment in iBio for impairment and records a loss when there is deemed to be an impairment of the investment.  There was an impairment charge of $139 recorded in the three and nine months ended March 31, 2013.  Pursuant to the Company’s Loan Agreement with PNC Bank, National Association (“PNC”), the Company is required to sell the iBio Stock when the trading price of the iBio Stock is less than $0.88 per share for a period of fifteen (15) consecutive trading days on the applicable exchange and utilize all proceeds from such sale to prepay the outstanding principal of the term loan outstanding under the Loan Agreement at such time. In the fiscal year ended June 30, 2013, the trading price of the iBio Stock was less than $0.88 for a period of fifteen (15) consecutive trading days and has continued to have a trading price less than $0.88 through May 14, 2014. (See Note 5. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt).  As of March 31, 2014, the Company has not sold any shares of the iBio Stock.  As of May 14, 2014, PNC has not required the Company to sell any of the iBio Stock but reserves the right to do so at any time in the future.

5

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Earnings Per Share. Basic earnings per common share amounts are based on the weighted average number of common shares outstanding. Diluted earnings per share amounts are based on the weighted average number of common shares outstanding, plus the incremental shares that would have been outstanding upon the assumed exercise of all potentially dilutive stock options, and warrants, subject to anti-dilution limitations using the treasury stock method and the assumed conversion shares of all potentially dilutive convertible notes payable subject to anti-dilution limitations using the if converted method.

The following options, warrants and potentially dilutive shares for convertible notes payable (see Note 5. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt) were not included in the computation of weighted average diluted common shares outstanding as the effect of doing so would be anti-dilutive for the three and nine months ended March 31, 2014 and 2013:

Note 2. Inventories

Inventories are stated at the lower of cost or market using the first-in, first-out method and consist of the following as of:

6

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 3. Intangible Assets, net

Intangible assets consist of trade names, license fees from the Branded Proprietary Products Segment, and unpatented technology from the Other Nutraceutical Businesses Segment.  The carrying amount of intangible assets, net is as follows as of:

Amortization expense recorded on intangible assets for each of the three and nine months ended March 31, 2014 and 2013 was $34 and $103, respectively.  Amortization expense is recorded on the straight-line basis over periods ranging from 10 years to 20 years based on contractual or estimated lives and is included in selling and administrative expenses.

The estimated annual amortization expense for intangible assets for the five succeeding fiscal years is as follows:

Note 4. Property and Equipment, net

Property and equipment, net consists of the following as of:

7

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Depreciation and amortization expense was $60 and $71 for the three months ended March 31, 2014 and 2013, respectively and $195 and $215 for the nine months ended March 31, 2014 and 2013, respectively.  In the nine months ended March 31, 2014, the Company traded in property and equipment with an original cost of $72 for a cash discount of $4 on the replacement property, resulting in a gain on disposal of $4.  In the nine months ended March 31, 2013, the Company disposed of property and equipment with an original cost of $188 for net proceeds of $18.

Note 5. Senior Credit Facility, Subordinated Convertible Note, net - CD Financial, LLC and other Long Term Debt

As of March 31, 2014 and June 30, 2013, the Company had the following debt outstanding:

SENIOR CREDIT FACILITY

On June 27, 2012, the Company, MDC, AgroLabs, IHT, IHT Properties Corp. (“IHT Properties”) and Vitamin Factory (collectively, the “Borrowers”) entered into a Revolving Credit, Term Loan and Security Agreement (the “Loan Agreement”) with PNC as agent and lender and the other lenders party thereto.

The Loan Agreement provides for a total of $11,727 in senior secured financing (the “Senior Credit Facility”) as follows: (i) discretionary advances (“Revolving Advances”) based on eligible accounts receivable and eligible inventory in the maximum amount of $8,000 (the “Revolving Credit Facility”) and (ii) a term loan in the amount of $3,727 (the “Term Loan”). The Senior Credit Facility is secured by all assets of the Borrowers, including, without limitation, machinery and equipment, real estate owned by IHT Properties, and the iBio Stock owned by the Company. Revolving Advances bear interest at PNC’s Base Rate or the Eurodollar Rate, at Borrowers’ option, plus 2.75% (3.25% as of March 31, 2014 and June 30, 2013). The Term Loan bears interest at PNC’s Base Rate or the Eurodollar Rate, at Borrowers’ option, plus 3.25% (3.75% as of March 31, 2014 and June 30, 2013).  Upon and after the occurrence of any event of default under the Loan Agreement, and during the continuation thereof, interest shall be payable at the interest rate then applicable plus 2%.  The Senior Credit Facility matures on June 27, 2017 (the “Senior Maturity Date”).

8

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The principal balance of the Revolving Advances is payable on the Senior Maturity Date, subject to acceleration, based upon a material adverse event clause, as defined, subjective accelerations for borrowing base reserves, as defined or upon the occurrence of any event of default under the Loan Agreement or earlier termination of the Loan Agreement pursuant to the terms thereof.  The Term Loan shall be repaid in sixty (60) consecutive monthly installments of principal, the first fifty nine (59) of which shall be in the amount of $44, commencing on the first business day of August, 2012, and continuing on the first business day of each month thereafter, with a final payment of any unpaid balance of principal and interest payable on the first business day of July, 2017. The foregoing is subject to customary mandatory prepayment provisions and acceleration upon the occurrence of any event of default under the Loan Agreement or earlier termination of the Loan Agreement pursuant to the terms thereof.

The Revolving Advances are subject to the terms and conditions set forth in the Loan Agreement and are made in aggregate amounts at any time equal to the lesser of (x) $8.0 million or (y) an amount equal to the sum of: (i) up to 85%, subject to the provisions in the Loan Agreement, of eligible accounts receivables (“Receivables Advance Rate”), plus (ii) up to the lesser of (A) 65%, subject to the provisions in the Loan Agreement, of the value of the eligible inventory (“Inventory Advance Rate” and together with the Receivables Advance Rate, collectively, the “Advance Rates”), (B) 85% of the appraised net orderly liquidation value of eligible inventory (as evidenced by the most recent inventory appraisal reasonably satisfactory to PNC in its sole discretion exercised in good faith) and (C) the inventory sublimit in the aggregate at any one time (“Inventory Advance Rate” and together with the Receivables Advance Rate, collectively, the “Advance Rates”), minus (iii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus (iv) such reserves as Agent may reasonably deem proper and necessary from time to time.

The Loan Agreement contains customary mandatory prepayment provisions, including, without limitation, (i) the requirement that if the trading price per share of the iBio Stock falls below a certain amount, the Company shall sell the iBio Stock and use the proceeds to repay the Term Loan and (ii) the requirement to prepay loans in an amount equal to fifty percent (50%) of Excess Cash Flow for each fiscal year commencing with the fiscal year ending June 30, 2013, payable upon delivery of the financial statements to PNC referred to in and required by the Loan Agreement for such fiscal year but in any event not later than one hundred twenty (120) days after the end of each such fiscal year, which prepayment amount shall be applied ratably to the outstanding principal installments of the Term Loan in the inverse order of the maturities thereof until the aggregate amount of payments made with regard to the Term Loan pursuant to Loan Agreement equals $1.0 million.  The Loan Agreement also contains customary representations and warranties, covenants and events of default, including, without limitation, (i) a fixed charge coverage ratio maintenance requirement and (ii) an event of default tied to any change of control as defined in the Loan Agreement.  As of March 31, 2014, the Company is in compliance with the fixed charge coverage ratio maintenance requirement.

During certain periods in the fiscal year ended June 30, 2013 and continuing into the nine months ended March 31, 2014, the trading price of the iBio Stock was less than $0.88 for a period of fifteen (15) consecutive trading days.  However, PNC temporarily waived the requirement to sell the iBio Stock due to certain trading rules and restrictions under Rule 144 under the Securities Act of 1933, as amended.  As of May 14, 2014, PNC has not required the Company to sell any of the iBio Stock but reserves the right to do so at any time in the future.

In October, 2013, when the Company delivered its annual financial statements for the fiscal year ended June 30, 2013 to PNC, as required under the Loan Agreement, the Company was required to make a prepayment in respect of loans outstanding under the Loan Agreement of approximately $293, representing 50% of Excess Cash Flows for the fiscal year ended June 30, 2013.  This payment, along with the scheduled monthly principal payments of $44 made by the Company in respect of the Term Loan through November 1, 2013 provided for principal payments of $1.0 million in the aggregate.

9

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)
 

In connection with the Senior Credit Facility, each of E. Gerald Kay, an officer, director and major stockholder of the Company, and Carl DeSantis, a director and major stockholder of the Company (collectively, the “Guarantors”), entered into Continuing Limited Guarantees (collectively, the “Individual Guarantees”) with PNC whereby each Guarantor irrevocably and unconditionally guarantees the full, prompt and unconditional payment, when due, whether by acceleration or otherwise, of any and all obligations of the Borrowers under the Loan Agreement and the other loan documents. The liability of each Guarantor under his respective Individual Guarantee is limited to a maximum of $1.0 million. The Individual Guarantees automatically terminate upon the satisfaction of certain conditions set forth in the Loan Agreement.  These conditions included the Company repaying an aggregate amount of $1.0 million of principal on the Term Loan and the Company meeting a minimum EBITDA, as defined in the Loan Agreement, of $1.5 million for the fiscal year ended June 30, 2013.  The Company met these requirements on November 1, 2013 and Mr. DeSantis and Mr. Kay were released as guarantors under the Individual Guarantees.

Also, in connection with the Senior Credit Facility, PNC and CD Financial, LLC (“CD Financial”) entered into the Intercreditor and Subordination Agreement (the “Intercreditor Agreement”), which was acknowledged by the Borrowers, pursuant to which, among other things, (a) the lien of CD Financial on assets of the Borrowers is subordinated to the lien of PNC on such assets during the effectiveness of the Senior Credit Facility, and (b) priorities for payment of the debt for the Company and its subsidiaries (as described in this Note 5) are established.

In addition, in connection with the Senior Credit Facility, the following loan documents were executed: (i) the Company has entered into a Stock Pledge Agreement with PNC, pursuant to which the Company pledged to PNC the iBio Stock; (ii) IHT Properties has entered into a Mortgage and Security Agreement with PNC; and (iii) the Borrowers have entered into an Environmental Indemnity Agreement with PNC.

CD FINANCIAL, LLC DEBT

On June 27, 2012, the Company also entered into an Amended and Restated Securities Purchase Agreement (the “CD SPA”) with CD Financial, which amended and restated the Securities Purchase Agreement, dated as of February 21, 2008, between the Company and CD Financial, pursuant to which the Company issued to CD Financial a 9.5% Convertible Senior Secured Note in the original principal amount of $4,500 (the “Original CD Note”).  Pursuant to the CD SPA,  the Company issued to CD Financial (i) the Amended and Restated Convertible Promissory Note in the principal amount of $5,350 (the “CD Convertible Note”) and (ii) the Promissory Note in the principal amount of $1,714 (the “Liquidity Note”, and collectively with the CD Convertible Note, the “CD Notes”). The CD Notes mature on July 7, 2017.

The CD Notes are secured by all assets of the Borrowers, including, without limitation, machinery and equipment, real estate owned by IHT Properties, and iBio Stock owned by the Company. The CD Notes bear interest at an annual rate of 6% and have a default rate of 10%.

The CD Convertible Note is convertible at the option of CD Financial into common stock of the Company at a conversion price of $0.65 per share, subject to customary adjustments including conversion price protection provisions.

Pursuant to the terms of the Loan Agreement and the Intercreditor Agreement, during the effectiveness of the Senior Credit Facility, (i) the principal of the CD Convertible Note may not be repaid, (ii) the principal of the Liquidity Note may only be repaid if certain conditions under the Loan Agreement are satisfied, and (iii) interest in respect of the CD Notes may only be paid if certain conditions under the Intercreditor Agreement are satisfied.

10

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The CD SPA contains customary representations and warranties, covenants and events of default, including, without limitation, an event of default tied to any change of control as defined in the CD SPA.

In connection with the CD SPA, the Borrowers entered into an Amended and Restated Security Agreement and Amended and Restated Subsidiary Guaranty.

As of March 31, 2014 and June 30, 2013, the related embedded derivative liability with respect to conversion price protection provisions on the CD Convertible Note has an estimated fair value of $677 and $696, respectively.

The Company used the following assumptions to calculate the fair value of the derivative liability using the Black-Scholes option pricing model:

OTHER LONG TERM DEBT

On June 27, 2012, MDC and the Company entered into separate promissory notes with (i) Vitamin Realty Associates, LLC (“Vitamin Realty”), which is 90% owned by E. Gerald Kay, the Company’s Chairman of the Board, President and major shareholder and certain of his family members, who are also executive officers and directors of the Company, and (ii) E. Gerald Kay, in the principal amounts of approximately $686 (the “Vitamin Note”) and $27 (the “Kay Note”), respectively (collectively the “Related Party Notes”). The principal amount of the Vitamin Note represents the aggregate amount of unpaid, past due rent owing by MDC under the Lease Agreement, dated as of January 10, 1997, between MDC, as lessor, and Vitamin Realty, as landlord, pertaining to the real property located at 225 Long Avenue, Hillside, New Jersey.  (See Note 7. Commitments and Contingencies (a) Leases – Related Parties).  The Kay Note represents amounts owed to Mr. Kay for unreimbursed business expenses incurred by Mr. Kay in the fiscal year ended June 30, 2008.  The Related Party Notes mature on July 7, 2017 and accrue interest at an annual rate of 4% per annum. Interest in respect of the Related Party Notes is payable on the first business day of each calendar month.  Pursuant to the terms of the Loan Agreement, during the effectiveness of the Senior Credit Facility, the Related Party Notes may only be repaid or prepaid if certain conditions set forth in the Loan Agreement are satisfied.

Note 6. Significant Risks and Uncertainties

(a) Major Customers. For the three and nine months ended March 31, 2014, approximately 78% and 80%, respectively of total net sales were derived from two customers as compared to approximately 80% and 74% of total net sales derived from the same two customers in the three and nine months ended March 31, 2013, respectively. Accounts receivable as of March 31, 2014 from these customers represented approximately 66% of total accounts receivable. The loss of any of these customers would have an adverse affect on the Company’s operations.  Major customers are those customers who account for more than 10% of net sales.

(b) Other Business Risks. Approximately 62% of the Company’s employees are covered by a union contract and are employed in its New Jersey facilities. The union contract was renewed in May 2012 and expires in August 2015.

11

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

Note 7. Commitments and Contingencies

(a) Leases

Related Party Leases. Warehouse and office facilities are leased from Vitamin Realty.  On January 5, 2012, MDC, a wholly-owned subsidiary of the Company, entered into a second amendment of lease (the “Second Lease Amendment”) with Vitamin Realty for its office and warehouse space in New Jersey increasing its rentable square footage from an aggregate of 74,898 square feet to 76,161 square feet and extending the expiration date to January 31, 2026.  This Second Lease Amendment provides for minimum annual rental payments of $533, plus increases in real estate taxes and building operating expenses.  Also on January 5, 2012, AgroLabs entered into a lease agreement with Vitamin Realty for an additional 2,700 square feet of warehouse space in New Jersey, the term of which expires on January 31, 2019.  This additional lease provides for minimum lease payments of $27 with annual increases plus the proportionate share of operating expenses.

Rent expense for the three and nine months ended March 31, 2014 and 2013 on these leases were $215 and $207 and $622 and $605, respectively, and are included in both cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. As of March 31, 2014 and June 30, 2013, the Company had an outstanding obligation to Vitamin Realty of $892 and $918, respectively, included in accounts payable, accrued expenses and long term debt in the accompanying Condensed Consolidated Balance Sheet.

Other Lease Commitments. The Company has entered into certain non-cancelable operating lease agreements expiring up through January 31, 2026, related to office and warehouse space, equipment and vehicles.

The minimum rental commitment for long-term non-cancelable leases is as follows:

Total rent expense, including real estate taxes and maintenance charges, was approximately $258 and $251 and $749 and $751 for the three and nine months ended March 31, 2014 and 2013, respectively. Rent expense is included in cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.

12

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(b) Legal Proceedings.

The Company is subject, from time to time, to claims by third parties under various legal theories.  The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows.

(c) Other Claims.

On May 15, 2012, Cedarburg Pharmaceuticals, Inc. ("Cedarburg") sent the Company a letter (the "Demand Letter") setting forth a demand for indemnification under the Stock Purchase Agreement, dated March 17, 2009 (the "Cedarburg SPA"), by and among Cedarburg, InB: Hauser Pharmaceutical Services, Inc., InB: Paxis Pharmaceuticals, Inc. and the Company.  In the Demand Letter, Cedarburg demanded payment by the Company of $0.6 million in respect of the Company's indemnification obligations under the Cedarburg SPA.  In addition, in the Demand Letter, Cedarburg informed the Company that there are also environmental issues pending which may lead to additional costs to Cedarburg which will likely be in excess of $0.3 million.

On May 30, 2012, the Company sent a letter responding to the Demand Letter and setting forth the Company’s position that it has no obligation to indemnify Cedarburg as demanded.  On June 18, 2012, Cedarburg responded to the Company’s letter and, on July 27, 2012, the Company sent another letter to Cedarburg reiterating its position that the Company has no obligation to indemnify Cedarburg as demanded.  On December 18, 2012, Cedarburg responded to the Company’s letter and, on January 15, 2013, the Company sent another letter to Cedarburg reiterating its position that the Company has no obligation to indemnify Cedarburg as demanded.   As of May 14, 2014, the Company has not received any further communication from Cedarburg with respect to its demand for indemnification as set forth in the Demand Letter.  The Company intends to vigorously contest Cedarburg's demand as set forth in the Demand Letter.

Note 8. Related Party Transactions

On June 27, 2012, Carl DeSantis, a director and major shareholder of the Company and a member of CD Financial and E. Gerald Kay, the Company’s Chief Executive Officer, Chairman of the Board, President and a major shareholder each entered into Limited Guaranty Agreements with PNC in the amount of $1.0 million each. (See Note 5. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt).

Neither Mr. DeSantis nor Mr. Kay received any compensation from the Company in connection with these guarantees.  The Individual Guarantees automatically terminate upon the satisfaction of certain conditions set forth in the Loan Agreement.  These conditions included the Company repaying an aggregate amount of $1.0 million of principal on the Term Loan and the Company meeting a minimum EBITDA, as defined in the Loan Agreement, of $1.5 million for the fiscal year ended June 30, 2013.  These two conditions were met by the Company on November 1, 2013 and Mr. DeSantis and Mr. Kay were released as guarantors under the Individual Guarantees.

See Note 5. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt for related party securities transactions.

See Note 7(a). Leases for related party lease transactions.

Note 9. Segment Information

The basis for presenting segment results generally is consistent with overall Company reporting. The Company reports information about its operating segments in accordance with GAAP which establishes standards for reporting information about a company’s operating segments.

13

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

The Company has divided its operations into three reportable segments as follows: Contract Manufacturing, Branded Proprietary Products and Other Nutraceutical Businesses.  The international sales, concentrated primarily in Europe and Canada, for the three months ended March 31, 2014 and 2013 were $2,113 and $3,040, respectively and for the nine months ended March 31, 2014 and 2013 were $8,369 and $9,353, respectively.

Financial information relating to the three months ended March 31, 2014 and 2013 operations by business segment are as follows:

Financial information relating to the nine months ended March 31, 2014 and 2013 operations by business segment are as follows:

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Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANICAL CONDITION AND RESULTS OF OPERATION

Certain statements set forth under this caption constitute “forward-looking statements.” See “Disclosure Regarding Forward-Looking Statements” on page 1 of this Quarterly Report on Form 10-Q for additional factors relating to such statements. The following discussion should also be read in conjunction with the condensed consolidated financial statements of the Company and Notes thereto included herein and the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013.

The Company is engaged primarily in the manufacturing, distributing, marketing and sales of vitamins, nutritional supplements and herbal products. The Company’s customers are located primarily in the United States, Luxembourg and Canada.

Business Outlook

Our future results of operations and the other forward-looking statements contained in this Quarterly Report on Form 10-Q, including this MD&A, involve a number of risks and uncertainties, in particular, the statements regarding our goals and strategies, new product introductions, plans to cultivate new businesses, pending divestitures, future economic conditions, revenue, pricing, gross margin and costs, the tax rate, and potential legal proceedings. We are focusing our efforts to improve operational efficiency and reduce spending that may have an impact on expense levels and gross margin. In addition to the various important factors discussed above, a number of other important factors could cause actual results to differ significantly from our expectations. See the risks described in “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.

We continue to focus on our core businesses and maintaining our cost structure in line with our sales.  In our branded product segment, we continue to maintain and strengthen the relationships developed in the fiscal year ended June 30, 2013, which were focused primarily in the international markets of Canada, Mexico and Asia.  We are also developing new products, including branded products for solid dosage, which will be manufactured by MDC and sold using our AgroLabs brand. We believe that this will increase sales and further leverage our fixed manufacturing and selling costs in each of these segments as we diversify our branded product offerings to our existing and prospective customers.

In the nine months ended March 31, 2014, our income from operations was approximately $1.1 million, which covered our debt service requirements and provided cash flows to pay the required principal payments on our Term Note with PNC ($0.7 million) as well as pay our suppliers on a more timely basis than we have been able to in the past.

Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies in the nine months ended March 31, 2014. Critical accounting policies and the significant estimates made in accordance with them are regularly discussed by management with our Audit Committee. Those policies are discussed under “Critical Accounting Policies” in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of our Annual Report on Form 10-K for the year ended June 30, 2013.

Results of Operations

Our financial performance in the three months ended March 31, 2014 was negatively impacted by the inclement weather in the northeast of the United States during January and February 2014.  Our manufacturing facilities and corporate headquarters, located in New Jersey, were closed for business for seven business days, including paid holidays during the quarter ended March 31, 2014.  These closures and the inclement weather resulted in decreased revenues and delays in shipments of raw materials needed for manufacturing in our Contract Manufacturing Segment, resulting in lost production time, which resulted in delayed shipments to our customers.  Sales in our two other segments were not as negatively impacted by the inclement weather as the type of product sold by these segments was able to be procured and shipped within days of the orders being received.

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Our results from operations in the following table, sets forth the income statement data of our results as a percentage of net sales for the periods indicated:

For the Nine months ended March 31, 2014 compared to the Nine months ended March 31, 2013

Sales, net.Sales, net, for the nine months ended March 31, 2014 and 2013 were $25.5 million and $24.0 million, respectively, an increase of 6%, and are comprised of the following:

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For the nine months ended March 31, 2014, approximately 80% of total net sales were derived from two customers in our contract manufacturing segment as compared to approximately 74% of total net sales from the same two customers in our contract manufacturing segment for the nine months ended March 31, 2013.  The loss of either of these customers could have an adverse effect on our operations.

The increase in our net sales is primarily the result of an increase of approximately $2.0 million in our contract manufacturing segment primarily due to increased sales volumes to our major customers in the nine months ended March 31, 2014, approximately $2.5 million compared to the prior period, offset in part, by a decrease in the volume of sales in our branded proprietary products segment of $0.9 million, primarily from our club store distribution channel located in Canada.  Our sales in our other nutraceuticals segment increased by nearly 23% primarily from increased sales volume, approximately $0.2 million, from multi minerals produced under our license agreement with iBio and approximately $0.1 million from the sales of certain raw materials as a distributor for DSM Nutritional Products, Inc.

Cost of sales.  Cost of sales increased by $1.6 million to $21.7 million for the nine months ended March 31, 2014, as compared to $20.1 million for the nine months ended March 31, 2013.  Cost of sales as a percentage of net sales were approximately 85% and 84% for the nine months ended March 31, 2014 and 2013, respectively. The increase in the cost of sales amount was primarily the result of increased sales, 6.1%, with cost of sales increasing by approximately 8%.  The primary reason for the increase in cost of sales as a percentage of sales was the nearly 50% decline in sales in our branded nutraceutical products segment with an offsetting increase in the contract manufacturing segment of nearly 10%.  Generally, the cost of sales in our contract manufacturing segment is higher than in our other segments (usually 85%) as compared to the branded nutraceutical products segment (historically 60% to 71%).

Selling and Administrative Expenses.  Selling and administrative expenses were $2.7 million for the nine months ended March 31, 2014, as compared to $3.4 million for the nine months ended March 31, 2013, a decrease of approximately $0.7 million or 20%.  As a percentage of sales, net, selling and administrative expenses were 10.6% for the nine months ended March 31, 2014 and 14.1% for the prior comparable period.

The net decrease in selling and administrative expenses of $0.7 million is mainly due to decreases in advertising and other marketing expenses of $0.3 million, compensation and employee benefits of $0.1 million and warehouse and other office expenses of $0.2 million. These decreases were primarily in the branded nutraceutical products segment and were primarily the result of decreased sales and from further headcount reductions. Other selling and administrative expenses such as professional fees, travel, entertainment and other expenses, as a group decreased by approximately $0.1 million, each individual classification increased or decreased by less than $55,000 from the prior comparable period.

Our advertising and other marketing costs decreased by approximately $0.3 million in the nine months ended March 31, 2014 compared to the nine months ended March 31, 2013 primarily as a result of a decrease in in-store demonstrations (“demos”) of our products at one of our customer’s store locations (in the branded nutraceutical products segment).  We had no such expenses in the nine months ended March 31, 2014 due to the lack of sales to this customer during this period.

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Other income (expense), net. Other income (expense), net was approximately $0.7 million for the nine months ended March 31, 2014 compared to $1.2 million for the nine months ended March 31, 2013, and is composed of:

The change in fair value of derivative liabilities was mainly the result of the increase in the trading price of our common stock from $0.15 as of June 30, 2013 to $0.20 as of March 31, 2014.  The closing trading price of our stock is one of the variables used to calculate the estimated fair value of our derivative liabilities associated with the underlying derivative instruments.  The impairment charge on the investment in common stock of iBio, Inc. (“iBio Stock”) was the result of our review of our carry value of iBio Stock in March, 2013, at which time there was deemed to be an impairment of the carrying value in the amount of approximately $0.1 million.  In the nine months ended March 31, 2013, we recovered approximately $0.2 million in gross profits as a result of manufacturing defects in our products purchased from the contract manufacturer that we could not sell through to our customers.

Federal and state income tax, net. For the nine months ended March 31, 2014 and 2013, we had a minimal amount of state tax expenses, $131,000 and $18,000, respectively.  We continue to maintain a full reserve on our deferred tax assets as it has been determined that based upon past losses, our past liquidity concerns and the current economic environment, that it is “more likely than not” our deferred tax assets may not be realized.  A significant portion of our deferred tax assets relate to our federal net operating loss carryforwards.  We file consolidated federal tax returns and although we currently have net income for book purposes, we have not been able to determine whether it is more likely than not that we will be able to use this asset in the future taxable years.  For the nine months ended March 31, 2014, the current federal tax provision was offset by the utilization of the federal net operating loss carryforwards and a corresponding release of the related valuation reserve.  The increasing state tax expense is the result of the projected utilization by MDC of all of its state operating losses in the tax year ending June 30, 2014, as we file separate state tax returns for each of our subsidiaries and are not able to use any of the operating losses of other subsidiaries to offset MDC’s taxable income in its state tax filings.
 

Net income (loss).  Our net income for the nine months ended March 31, 2014 was $0.3 million as compared to a net loss of $0.7 million for the nine months ended March 31, 2013.  The change from a net loss to net income of approximately $1.0 million was primarily the result of increased operating income of $0.6 million and a decrease in other expense, net of $0.5 million, offset by an increase in Federal and state income taxes, net of $0.1 million.

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For the three months ended March 31, 2014 compared to the three months ended March 31, 2013

Sales, net.Sales, net, for the three months ended March 31, 2014 and 2013 were $7.5 million and $8.2 million, respectively, a decrease of 8%, and are comprised of the following:

For the three months ended March 31, 2014, approximately 78% of total net sales were derived from two customers in our contract manufacturing segment as compared to approximately 80% of total net sales from these two customers in our contract manufacturing segment for the three months ended March 31, 2013.  The loss of either of these customers could have an adverse affect on our operations.

The decrease in our net sales of approximately $0.6 million is primarily the result of decreased sales of our contract manufacturing segment of approximately $0.7 million offset in part by an increase in the volume of sales of $0.1 million in our other nutraceuticals segment.   The decrease in net sales for the three months ended March 31, 2014 was the result of the inclement weather in the northeast of the United States during January and February 2014.  Our manufacturing facilities and corporate headquarters, located in New Jersey, were closed for business for seven business days, including paid holidays during the three months ended March 31, 2014.  These closures and the inclement weather resulted in decreased revenues and delays in shipments of raw materials for manufacturing in our Contract Manufacturing Segment resulting in lost production, which resulted in delayed shipments to our customers.

Cost of sales.  Cost of sales decreased by $0.1 million to $6.8 million for the three months ended March 31, 2014, from $6.9 million for the three months ended March 31, 2013.  Cost of sales increased as a percentage of sales to 90.3% for the three months ended March 31, 2014 as compared to 84.8% for the three months ended March 31, 2013.  The cost of sales as a percentage of sales increased as a result of the contract manufacturing segment being closed for several days during the three months ended March 31, 2014. The cost of sales for this segment in the three months ended March 31, 2014 was approximately 91% as compared to the usual 85%, the incremental difference of 6% was the result of the fixed manufacturing costs, including but not limited to, rent, insurance, holiday pay and employee benefits.
 

Selling and Administrative Expenses.  Selling and administrative expenses were $0.9 million for the three months ended March 31, 2014, as compared to $1.1 million for the three months ended March 31, 2013, a decrease of approximately $0.2 million or 14%. As a percentage of sales, net, selling and administrative expenses were 12.3% for the three months ended March 31, 2014 and 13.2% for the prior comparable period.

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The net decrease in selling and administrative expenses of $0.2 million is mainly due to decreases in salaries and employee benefits of $0.1 million.  Other selling and administrative expenses such as advertising and marketing, professional fees, warehouse, office expenses, commissions and other expenses as a group decreased by approximately $0.1 million, with each individual classification increasing or decreasing by less than $31,000 from the prior comparable period.

Salaries and employee benefits decreased by approximately $0.1 million due to a slight decrease in head count in the branded nutraceutical segment and from changing our professional employer organization (“PEO”) effective on December 1, 2013.  The current PEO provider offered decreases in our medical health care premiums while offering comparable plans from the previous provider.

Other income (expense), net. Other income (expense), net was approximately $0.2 million of other income, net for the three months ended March 31, 2014 compared to approximately $0.7 million other expense, net for the three months ended March 31, 2013, and is composed of:

The change in fair value of derivative instruments was mainly the result of the increase in the trading price of our common stock from $0.19 as of December 31, 2013 to $0.20 as of March 31, 2014.  The closing trading price of our stock is one of the variables used to calculate the estimated fair value of our derivative liabilities associated with the underlying derivative instruments.  The impairment charge on the investment in iBio Stock was the result of our review of our carry value of iBio Stock in March, 2013, at which time there was deemed to be an impairment of the carrying value in the amount of approximately $0.1 million.   In the three months ended March 31, 2013, we adjusted the estimate of our recovery of approximately $0.3 million in gross profits, as a result of manufacturing defects in our products purchased from the contract manufacturer that we could not sell through to our customers by $0.1 million as a result of the final reconciliation of the amounts recovered from the event that occurred in the three months ended December 31, 2012.

Federal and state income tax, net. For the three months ended March 31, 2014 and 2013, we had a minimal amount of state tax expenses, $27,000 and $5,000, respectively.  We continue to maintain a full reserve on our deferred tax assets as it has been determined that based upon past losses, our past liquidity concerns and the current economic environment, that it is “more likely than not” our deferred tax assets may not be realized.  A significant portion of our deferred tax assets relate to our federal net operating loss carryforwards.  We file consolidated federal tax returns and although we currently have net income for book purposes, we have not been able to determine whether it is more likely than not that we will be able to use this asset in the future taxable years.  For the three months ended March 31, 2014, the current federal tax provision was offset by the utilization of the federal net operating loss carryforwards and a corresponding release of the related valuation reserve.

Net loss. Our net loss for each of the three months ended March 31, 2014 and 2013 was approximately $0.5 million. The slight decrease in the net loss of approximately $82,000 or 15% from the three months ended March 31, 2013 to the three months ended March 31, 2014 was primarily the result of the decrease in income from operations of approximately $0.4 million offset, in part, by a decrease in other expense, net of $0.5 million.

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Seasonality

The nutraceutical business tends to be seasonal. We have found that in our first fiscal quarter ending on September 30th of each year, orders for our branded proprietary nutraceutical products usually slow (absent the addition of new customers or a new product launch with a significant first time order), as buyers in various markets may have purchased sufficient inventory to carry them through the summer months. Conversely, in our second fiscal quarter, ending on December 31st of each year, orders for our products increase as the demand for our branded nutraceutical products seems to increase in late December to early January as consumers become health conscious as they enter the new year.

The Company believes that there are other non-seasonal factors that also may also influence the variability of quarterly results including, but not limited to, general economic and industry conditions that affect consumer spending, changing consumer demands and current news on nutritional supplements. Accordingly, a comparison of the Company’s results of operations from consecutive periods is not necessarily meaningful, and the Company’s results of operations for any period are not necessarily indicative of future periods.

Liquidity and Capital Resources

The following table sets forth, for the periods indicated, the Company’s net cash flows used in operating, investing and financing activities, its period end cash and cash equivalents and other operating measures:

At March 31, 2014, our working capital deficit was approximately $2.4 million, a decrease of approximately $0.1 million in our working capital deficit of approximately $2.5 million at June 30, 2013. Our current assets decreased by approximately $2.1 million and our current liabilities decreased by approximately $2.2 million.

Net cash provided by operating activities of $2.1 million in the nine months ended March 31, 2014, includes net income of approximately $0.2 million.  After excluding the effects of non-cash expenses, including depreciation and amortization, and changes in the fair value of derivative instruments, the adjusted cash provided from operations before the effect of the changes in working capital components was $0.7 million. Cash was provided by operations from our working capital assets and liabilities in the amount of approximately $1.4 million and was primarily the result of decreases in accounts receivable of $0.5 million and inventories of $1.8 million offset, in part, by a net decrease in accounts payable and accrued expenses and other liabilities of approximately $0.8 million.

Net cash used in operating activities of $0.9 million in the nine months ended March 31, 2013, includes net loss of approximately $0.7 million.  After excluding the effects of non-cash expenses, including depreciation and amortization, and changes in the fair value of derivative liabilities and carrying value of iBio Stock, the adjusted cash provided from operations before the effect of the changes in working capital components was $0.5 million. Cash was used in operations from our working capital assets and liabilities in the amount of approximately $1.4 million and was primarily the result of an increase in inventories of $1.5 million and a net decrease in accounts payable and accrued expenses and other liabilities of approximately $0.2 million offset, in part, by a decrease in accounts receivable of approximately $0.2 million.

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Cash used in investing activities of $115,000 in the nine months ended March 31, 2014 was for the purchase of property and equipment primarily in our contract manufacturing segment.  Net cash used in investing activities in the period ended March 31, 2013 of $3,000 was from the sale of machinery and equipment of $18,000 (in our branded nutraceutical products segment), offset by the use of cash for the purchase of fixed assets of approximately $21,000 in our contract manufacturing segment.
 

Cash used in financing activities was approximately $1.9 million for the nine months ended March 31, 2014, $25.3 million for payments under our revolving credit facility and repayments of principal under our term note in the amount of $0.7 million (including $0.3 million of principal prepaid, which represented 50% of Excess Cash Flows for the fiscal year ended June 30, 2013 as required under the term note with PNC), offset by advances under our revolving credit facility of $24.1 million.

Cash provided by financing activities was approximately $1.0 million for the nine months ended March 31, 2013, $25.4 million from advances under our revolving credit facility offset by payments under our revolving credit facility of $24.0 million and repayments of principal under our term note in the amount of $0.4 million.

As of March 31, 2014, we had cash of $0.2 million, funds available under our revolving credit facility of approximately $0.6 million and a working capital deficit of $2.4 million. Our working capital deficit includes $3.4 million outstanding under our revolving line of credit which is not due until July 2017 but classified as current due to a subjective acceleration clause that could cause the advances to become currently due. (See Note 5 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q).  Furthermore, we had income from operations of approximately $1.1 million in the nine months ended March 31, 2014.  After taking into consideration our interim results and current projections, management believes that operations, together with the revolving credit facility will support our working capital requirements through the period ending March 31, 2015.

Our total annual commitments at March 31, 2014 for long term non-cancelable leases of approximately $608,000 consists of obligations under operating leases for facilities and operating lease agreements for the rental of warehouse equipment, office equipment and automobiles.

On May 15, 2012, Cedarburg Pharmaceuticals, Inc. ("Cedarburg") sent us a letter (the "Demand Letter") setting forth a demand for indemnification under the Stock Purchase Agreement, dated March 17, 2009 (the "Cedarburg SPA"), by and among Cedarburg, InB: Hauser Pharmaceutical Services, Inc., InB: Paxis Pharmaceuticals, Inc. and the Company.  In the Demand Letter, Cedarburg demanded payment by us of $0.6 million in respect of the Company's indemnification obligations under the Cedarburg SPA.  In addition, in the Demand Letter, Cedarburg informed us that there are also environmental issues pending which may lead to additional costs to Cedarburg which will likely be in excess of $0.3 million.

On May 30, 2012, we sent a letter responding to the Demand Letter and setting forth our position that we have no obligation to indemnify Cedarburg as demanded.  On June 18, 2012, Cedarburg responded to our letter and, on July 27, 2012, we sent another letter to Cedarburg reiterating our position that we have no obligation to indemnify Cedarburg as demanded.  On December 18, 2012, Cedarburg responded to our letter and, on January 15, 2013, we sent another letter to Cedarburg reiterating our position that we have no obligation to indemnify Cedarburg as demanded. As of May 14, 2014, we have not received any further communication from Cedarburg with respect to its demand for indemnification as set forth in the Demand Letter.  We intend to vigorously contest Cedarburg's demand as set forth in the Demand Letter.

Capital Expenditures

The Company's capital expenditures for the nine months ended March 31, 2014 and 2013 were approximately $191,000 ($76,000 funded with capitalized lease financing) and $89,000 ($68,000 funded with capitalized lease financing), respectively. The Company has budgeted approximately $0.5 million for capital expenditures for fiscal 2014, however expects to only spend approximately $0.3 million against that budget.  The total amount is expected to be funded from cash provided from the Company’s operations and from lease financing.

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Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Recent Accounting Pronouncements
 

None.
 

Impact of Inflation

The Company does not believe that inflation has significantly affected its results of operations.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2014, and, based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these controls and procedures are effective in providing reasonable assurance of compliance.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the three and nine months ended March 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. Risk Factors

The risks described in Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended June 30, 2013, could materially and adversely affect our business, financial condition and results of operations. The risk factors discussed in that Form 10-K do not identify all risks that we face because our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations. There have been no material changes to our risk factors from those disclosed in our Form 10-K for the year ended June 30, 2013.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURE

Not Applicable.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS

(a)           Exhibits

Exhibit

Number

31.1	Certification of pursuant to Section 302 of Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
31.2	Certification of pursuant to Section 302 of Section 302 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
32.1	Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Executive Officer.
32.2	Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
101	The following financial information from Integrated BioPharma, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three and Nine months ended March 31, 2014 and 2013, (ii) Condensed Consolidated Balance Sheets as of March 31, 2014 and June 30, 2013, (iii) Condensed Consolidated Statements of Cash Flows for the Nine months ended March 31, 2014 and 2013, and (iv) the Notes to Condensed Consolidated Statements.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

INTEGRATED BIOPHARMA, INC.

Date:  May 14, 2014	By: /s/ E. Gerald Kay
	E. Gerald Kay,
	President and Chief Executive Officer

Date: May 14, 2014	By: /s/ Dina L. Masi
	Dina L. Masi,
	Chief Financial Officer & Senior Vice President

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EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, E. Gerald Kay certify that:

1. I have reviewed this quarterly report on Form 10-Q of Integrated BioPharma, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;  

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;  

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;  

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;  

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.  

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and  

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 14, 2014	By: /s/ E Gerald Kay
	Name:  E. Gerald Kay
	Title:  President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Dina L. Masi, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Integrated BioPharma, Inc.;  

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;  

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;  

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:  

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;  

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;  

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.  

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 14, 2014	By: /s/ Dina L. Masi
	Name:  Dina L. Masi
	Title:  Chief Financial Officer & Senior Vice President

EX-32.1

Exhibit 32.1

CERTIFICATION OF PERIODIC REPORT

As adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the third quarter ended March 31, 2014 of Integrated BioPharma, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), E. Gerald Kay, the President and Chief Executive Officer of Integrated BioPharma, Inc.certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certification accompanies the Report pursuant to Section 906 of Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: May 14, 2014	By: /s/ E Gerald Kay
	E. Gerald Kay
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF PERIODIC REPORT

As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the third quarter ended March 31, 2014 of Integrated BioPharma, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Dina L. Masi, the Senior Vice President and Chief Financial Officer of Integrated BioPharma, Inc.certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to her knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This certification accompanies the Report pursuant to Section 906 of Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: May 14, 2014	By: /s/ Dina L. Masi
	Dina L. Masi
	Chief Financial Officer & Senior Vice President

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Note 9 - Segment Information (Details) - Operations by Business Segment (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Segment Reporting Information [Line Items]
Gross Profit	$ 727	$ 1,237	$ 3,793	$ 3,941
Depreciation	60	71	195	215
Capital Expenditures			115	21
Operating Segments [Member] | Contract Manufacturing [Member] | U. S. Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	4,713	4,505	15,115	12,934
Operating Segments [Member] | Contract Manufacturing [Member] | International Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	2,058	2,997	7,739	7,878
Operating Segments [Member] | Contract Manufacturing [Member]
Segment Reporting Information [Line Items]
Sales, Net	6,771	7,502	22,854	20,812
Gross Profit	643	1,145	3,217	3,082
Depreciation	57	54	185	198
Capital Expenditures	86	60	166	68
Operating Segments [Member] | Branded Proprietary Products [Member] | U. S. Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	147	178	409	467
Operating Segments [Member] | Branded Proprietary Products [Member] | International Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	45	20	527	1,356
Operating Segments [Member] | Branded Proprietary Products [Member]
Segment Reporting Information [Line Items]
Sales, Net	192	198	936	1,823
Gross Profit	(64)	(14)	100	529
Depreciation	1	1	2	6
Operating Segments [Member] | Other Nutraceutical Business [Member] | U. S. Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	549	429	1,608	1,273
Operating Segments [Member] | Other Nutraceutical Business [Member] | International Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	10	23	103	119
Operating Segments [Member] | Other Nutraceutical Business [Member]
Segment Reporting Information [Line Items]
Sales, Net	559	452	1,711	1,392
Gross Profit	148	106	476	330
Depreciation	2	6	8	11
Capital Expenditures		3	2	3
Operating Segments [Member] | U. S. Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	5,409	5,112	17,132	14,674
Operating Segments [Member] | International Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	2,113	3,040	8,369	9,353
Operating Segments [Member]
Segment Reporting Information [Line Items]
Sales, Net	7,522	8,152	25,501	24,027
Gross Profit	727	1,237	3,793	3,941
Depreciation	60	61	195	215
Capital Expenditures	$ 86	$ 63	$ 168	$ 71

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Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Calculation of Fair Value of Derivative Liability (USD $)	6 Months Ended		9 Months Ended
	Jun. 30, 2013	Jun. 27, 2012	Mar. 31, 2014
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Calculation of Fair Value of Derivative Liability [Line Items]
Closing Price of Common Stock (in Dollars per share)	$ 0.15	$ 0.09	$ 0.20
Derivative [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Calculation of Fair Value of Derivative Liability [Line Items]
Risk Free Interest Rate	0.66%	0.72%	0.90%
Volatility	118.50%	144.10%	100.40%
Term (years)	4 years	5 years	3 years 3 months
Dividend Rate	0.00%	0.00%	0.00%

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Note 2 - Inventories (Details) - Inventory (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Jun. 30, 2013
Inventory [Abstract]
Raw materials	$ 2,526	$ 2,512
Work-in-process	665	1,979
Finished goods	1,477	1,940
Total	$ 4,668	$ 6,431

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Note 8 - Related Party Transactions (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Jun. 27, 2012 Director [Member]	Jun. 27, 2012 Chief Executive Officer [Member]	Jun. 30, 2013 Term Loan [Member]
Note 8 - Related Party Transactions (Details) [Line Items]
Guarantor Obligations, Current Carrying Value		$ 1.0	$ 1.0
Due to Related Parties				1.0
Earnings Before Interest, Taxes, Depreciation and Amortization	$ 1.5

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Note 4 - Property and Equipment, Net

9 Months Ended

Mar. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Note 4. Property and Equipment, net

Property and equipment, net consists of the following as of:

	March 31,			June 30,
	2014			2013
Land and building	$	1,250		$	1,250
Leasehold improvements		1,141			1,132
Machinery and equipment		5,023			4,918
Transportation equipment		64			59
		7,478			7,359
Less: Accumulated depreciation and amortization		(6,247	)		(6,124	)
Total	$	1,231		$	1,235

Depreciation and amortization expense was $60 and $71 for the three months ended March 31, 2014 and 2013, respectively and $195 and $215 for the nine months ended March 31, 2014 and 2013, respectively. In the nine months ended March 31, 2014, the Company traded in property and equipment with an original cost of $72 for a cash discount of $4 on the replacement property, resulting in a gain on disposal of $4. In the nine months ended March 31, 2013, the Company disposed of property and equipment with an original cost of $188 for net proceeds of $18.

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Note 4 - Property and Equipment, Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Property, Plant and Equipment [Abstract]
Depreciation	$ 60	$ 71	$ 195	$ 215
Property, Plant and Equipment, Disposals			72	188
Cash Discount on Property			4
Gain (Loss) on Sale of Properties			4
Proceeds from Sale of Property, Plant, and Equipment				$ 18

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Note 3 - Intangible Assets, Net (Details) - Estimated Annual Amortization Expense for Intangible Assets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Jun. 30, 2013
Estimated Annual Amortization Expense for Intangible Assets [Abstract]
2014, remaining	$ 34
2015	137
2016	104
2017	97
2018	97
2019	97
Thereafter	348
Total	$ 914	$ 1,017

XML

Note 4 - Property and Equipment, Net (Details) - Property and Equipment, Net (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Jun. 30, 2013
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	$ 7,478	$ 7,359
Less: Accumulated depreciation and amortization	(6,247)	(6,124)
Total	1,231	1,235
Land and Building [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	1,250	1,250
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	1,141	1,132
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	5,023	4,918
Transportation Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	$ 64	$ 59

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Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) (USD $)	9 Months Ended	12 Months Ended			9 Months Ended				1 Months Ended									9 Months Ended		8 Months Ended	9 Months Ended
	Mar. 31, 2014	Jun. 30, 2013	Oct. 31, 2013	Jun. 27, 2012	Mar. 31, 2014 Scenario, Event of Default [Member] Term Loan [Member]	Jun. 27, 2012 Default Rate [Member] CD Financial LLC [Member]	Jun. 27, 2012 E Gerald Kay [Member] Vitamin Realty LLC [Member]	Mar. 31, 2014 iBio, Inc. [Member]	Oct. 31, 2013 PNC Bank [Member]	Jun. 27, 2012 CD Financial LLC [Member] Promissory Note [Member]	Mar. 31, 2014 CD Financial LLC [Member]	Jun. 30, 2013 CD Financial LLC [Member]	Jun. 27, 2012 CD Financial LLC [Member]	Feb. 21, 2008 CD Financial LLC [Member]	Mar. 31, 2014 Vitamin Realty LLC [Member] E Gerald Kay [Member]	Mar. 31, 2014 Vitamin Realty LLC [Member]	Mar. 31, 2014 E Gerald Kay [Member]	Mar. 31, 2014 Term Loan [Member]	Jun. 30, 2013 Term Loan [Member]	Mar. 31, 2014 Revolving Advances [Member]	Mar. 31, 2014 Revolving Credit Facility [Member]	Jun. 30, 2013 Revolving Credit Facility [Member]	Jun. 27, 2012 Revolving Credit Facility [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) [Line Items]
Senior Notes				$ 11,727,000
Line of Credit Facility, Maximum Borrowing Capacity																							8,000,000
Loans Payable, Noncurrent				3,727,000
Debt Instrument, Basis Spread on Variable Rate																		3.25%			2.75%
Line of Credit Facility, Interest Rate at Period End	3.25%																	3.75%	3.75%		3.25%	3.25%
Debt Instrument, Interest Rate, Increase (Decrease)					2.00%
Debt Instrument, Periodic Payment	44,000
Line of Credit Facility, Covenant, Maximum Aggregate Revolving Advance																				8,000,000
Line of Credit Facility, Covenant, Aggregate Revolving Advance, Receivables Advance Rate																				85.00%
Line of Credit Facility, Covenant, Aggregate Revolving Advance, Inventory Advance Rate																				65.00%
Line of Credit Facility, Covenant, Aggregate Revolving Advance, Percentage of Appraised Net Orderly Liquidation Value of Eligible Inventory																				85.00%
Line of Credit Facility, Covenant, Prepayment Provisions, Percentage of Excess Cashflow																				50.00%
Loan Agreement, Mandatory Repayment Amount																				1,000,000
Share Price	$ 0.20	$ 0.15		$ 0.09				$ 0.88
Prepayment of Loans Outstanding									293,000
Guarantor Obligations, Maximum Exposure, Undiscounted			1,000,000
Minimum EBITDA		1,500,000
Debt Instrument, Interest Rate, Stated Percentage						10.00%							6.00%	9.50%	4.00%
Debt Instrument, Face Amount										1,714,000				4,500,000		686,000	27,000
Convertible Notes Payable													5,350,000
Debt Instrument, Convertible, Conversion Price													$ 0.65
Embedded Derivative, Fair Value of Embedded Derivative Liability											$ 677,000	$ 696,000
Related Party Transaction, Related Party Investment, Ownership Percentage							90.00%

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Note 3 - Intangible Assets, Net

9 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

Note 3. Intangible Assets, net 

Intangible assets consist of trade names, license fees from the Branded Proprietary Products Segment, and unpatented technology from the Other Nutraceutical Businesses Segment. The carrying amount of intangible assets, net is as follows as of:

	March 31, 2014						June 30, 2013
	Gross Carrying		Accumulated				Gross Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net
Trade names	$	1,525	$	796	$	729	$	1,525	$	739	$	786
Unpatented technology		547		490		57		547		460		87
License agreement		347		219		128		347		203		144
Total	$	2,419	$	1,505	$	914	$	2,419	$	1,402	$	1,017

Amortization expense recorded on intangible assets for each of the three and nine months ended March 31, 2014 and 2013 was $34 and $103, respectively. Amortization expense is recorded on the straight-line basis over periods ranging from 10 years to 20 years based on contractual or estimated lives and is included in selling and administrative expenses.

The estimated annual amortization expense for intangible assets for the five succeeding fiscal years is as follows:

Year ending	Amortization
June 30,	Expense
2014, remaining	$	34
2015		137
2016		104
2017		97
2018		97
2019		97
Thereafter		348
Total	$	914

XML

Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Mar. 31, 2014	Jun. 30, 2013
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Revolving advances under Senior Credit Facility with PNC Bank, National Association	$ 3,421	$ 4,543
Revolving advances under Senior Credit Facility with PNC Bank, National Association	3.25%
Revolving advances under Senior Credit Facility with PNC Bank, National Association	Jun. 27, 2017
Discount for embedded derivative	(368)	(449)
Convertible Note payable, net - CD Financial, LLC	4,982	4,901
Total outstanding debt	8,517	10,299
Less: Revolving Advances	(3,421)	(4,543)
Current portion of long term debt	(596)	(868)
Long term debt	4,500	4,888
PNC Bank [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Principal Amount	2,546	3,239
Interest Rate	3.75%
Maturity Date	Jun. 27, 2017
CD Financial LLC [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Principal Amount	1,714	1,714
Interest Rate	6.00%
Maturity Date	Jul. 07, 2017
Vitamin Realty LLC [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Principal Amount	686	686
Interest Rate	4.00%
Maturity Date	Jul. 07, 2017
E Gerald Kay [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Principal Amount	27	27
Interest Rate	4.00%
Maturity Date	Jul. 07, 2017
Acura Financial Services [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Principal Amount	26	32
Interest Rate	1.90%
Maturity Date	Apr. 15, 2017
Convertible Debt [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Principal Amount	5,350	5,350
Interest Rate	6.00%
Maturity Date	Jul. 07, 2017
Minimum [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Capitalized lease obligations	$ 97	$ 58
Capitalized lease obligations	5.30%
Capitalized lease obligations	Feb. 28, 2015
	5.30%
	Feb. 28, 2015
Maximum [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Capitalized lease obligations	7.10%
Capitalized lease obligations	Nov. 20, 2016
	7.10%
	Nov. 20, 2016

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Note 9 - Segment Information (Details) - Reconciliation of Assets from Segment to Consolidated (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Jun. 30, 2013
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	$ 10,322	$ 12,611
Operating Segments [Member] | Contract Manufacturing [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	6,669	8,524
Operating Segments [Member] | Branded Proprietary Products [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	1,942	2,186
Operating Segments [Member] | Other Nutraceutical Business [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	$ 1,711	$ 1,901

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Sales, net	$ 7,522	$ 8,152	$ 25,501	$ 24,027
Cost of sales	6,795	6,915	21,708	20,086
Gross profit	727	1,237	3,793	3,941
Selling and administrative expenses	923	1,072	2,710	3,377
Operating (loss) income	(196)	165	1,083	564
Other income (expense), net
Change in fair value of derivative liabilities	10	(174)	19	(602)
Impairment charge on investment in iBio, Inc.		(139)		(139)
Other income (expense), net		(131)	5	244
Interest expense	(237)	(248)	(731)	(736)
Other expense, net	(227)	(692)	(707)	(1,233)
(Loss) income before income taxes	(423)	(527)	376	(669)
Income tax expense, net	27	5	131	18
Net (loss) income	$ (450)	$ (532)	$ 245	$ (687)
Basic net (loss) income per common share (in Dollars per share)	$ (0.02)	$ (0.03)	$ 0.01	$ (0.03)
Diluted net (loss) income per common share (in Dollars per share)	$ (0.02)	$ (0.03)	$ 0.01	$ (0.03)
Weighted average common shares outstanding - basic (in Shares)	21,080,174	21,080,174	21,080,174	21,080,174
Add: Stock options (in Shares)			79,745
Weighted average common shares outstanding - diluted (in Shares)	21,080,174	21,080,174	21,159,919	21,080,174

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Note 1 - Principles of Consolidation and Basis of Presentation

9 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1. Principles of Consolidation and Basis of Presentation

Basis of Presentation of Interim Financial Statements

The accompanying condensed consolidated financial statements for the interim periods are unaudited and include the accounts of Integrated BioPharma, Inc., a Delaware corporation (together with its subsidiaries, the “Company”). The interim condensed consolidated financial statements have been prepared in conformity with Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and therefore do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. However, all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the periods presented have been included. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013 (“Form 10-K”), as filed with the SEC. The June 30, 2013 balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The results of operations for the three and nine months ended March 31, 2014 are not necessarily indicative of the results for the full fiscal year ending June 30, 2014 or for any other period.

Nature of Operations

The Company is engaged primarily in manufacturing, distributing, marketing and sales of vitamins, nutritional supplements and herbal products. The Company’s customers are located primarily in the United States, Luxembourg and Canada. The Company was previously known as Integrated Health Technologies, Inc. and, prior to that, as Chem International, Inc. The Company was reincorporated in its current form in Delaware in 1995. The Company continues to do business as Chem International, Inc. with certain of its customers and certain vendors.

The Company’s business segments include: (a) Contract Manufacturing operated by InB:Manhattan Drug Company, Inc. (“MDC”), which manufactures vitamins and nutritional supplements for sale to distributors, multilevel marketers and specialized health-care providers; (b) Branded Proprietary Products operated by AgroLabs, Inc. (“AgroLabs”), which distributes healthful nutritional products for sale through major mass market, grocery, drug and vitamin retailers, under the following brands: Naturally Noni, Coconut Water, Aloe Pure, Peaceful Sleep, Green Envy, ACAI Extra, ACAI Cleanse, Wheatgrass and other products which are being introduced into the market (these are referred to as our branded proprietary nutraceutical business and/or products); and (c) Other Nutraceutical Businesses which includes the operations of (i) The Vitamin Factory (the “Vitamin Factory”), which sells private label MDC products, as well as our AgroLabs products, through the Internet, (ii) IHT Health Products, Inc. (“IHT”) a distributor of fine natural botanicals, including multi minerals produced under a license agreement and (iii) Chem International, Inc., a distributor of certain raw materials for DSM Nutritional Products, Inc.

Significant Accounting Policies

There have been no material changes during fiscal year 2014 in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013.

Investment in iBio, Inc.- Restricted. The Company accounts for its investment in iBio, Inc. (“iBio”) common stock on the cost basis as it retained approximately 6% of its interest in iBio (1,266,706 common shares) (the “iBio Stock”) at the time of the spin-off of this subsidiary in August 2008.  The Company reviews its investment in iBio for impairment and records a loss when there is deemed to be an impairment of the investment. There was an impairment charge of $139 recorded in the three and nine months ended March 31, 2013. Pursuant to the Company’s Loan Agreement with PNC Bank, National Association (“PNC”), the Company is required to sell the iBio Stock when the trading price of the iBio Stock is less than $0.88 per share for a period of fifteen (15) consecutive trading days on the applicable exchange and utilize all proceeds from such sale to prepay the outstanding principal of the term loan outstanding under the Loan Agreement at such time. In the fiscal year ended June 30, 2013, the trading price of the iBio Stock was less than $0.88 for a period of fifteen (15) consecutive trading days and has continued to have a trading price less than $0.88 through May 14, 2014. (See Note 5. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt). As of March 31, 2014, the Company has not sold any shares of the iBio Stock. As of May 14, 2014, PNC has not required the Company to sell any of the iBio Stock but reserves the right to do so at any time in the future.

Earnings Per Share. Basic earnings per common share amounts are based on the weighted average number of common shares outstanding. Diluted earnings per share amounts are based on the weighted average number of common shares outstanding, plus the incremental shares that would have been outstanding upon the assumed exercise of all potentially dilutive stock options, and warrants, subject to anti-dilution limitations using the treasury stock method and the assumed conversion shares of all potentially dilutive convertible notes payable subject to anti-dilution limitations using the if converted method.

The following options, warrants and potentially dilutive shares for convertible notes payable (see Note 5. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt) were not included in the computation of weighted average diluted common shares outstanding as the effect of doing so would be anti-dilutive for the three and nine months ended March 31, 2014 and 2013:

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2014		2013		2014		2013
Anti-dilutive stock options		1,782,520		2,808,088		1,252,770		2,808,088
Anti-dilutive warrants		-		500,000		-		500,000
Potentially dilutive shares for convertible notes payable		8,230,769		8,230,769		8,230,769		8,230,769
Total anti-dilutive shares		10,013,289		11,538,857		9,483,539		11,538,857

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Note 7 - Commitments and Contingencies (Details) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended	21 Months Ended	9 Months Ended			9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014 Principal Owner [Member]	Mar. 31, 2013 Principal Owner [Member]	Mar. 31, 2013 Principal Owner [Member]	Mar. 31, 2014 Principal Owner [Member]	Mar. 31, 2014 Manhattan Drug Company [Member]	Jan. 05, 2012 Manhattan Drug Company [Member] sqft	Jan. 04, 2012 Manhattan Drug Company [Member] sqft	Mar. 31, 2014 AgroLabs [Member]	Mar. 31, 2014 Vitamin Realty LLC [Member]	Jun. 30, 2013 Vitamin Realty LLC [Member]	May 15, 2012 Stock Purchase Agreement [Member]	May 15, 2012 Environmental Issues [Member]
Note 7 - Commitments and Contingencies (Details) [Line Items]
Area of Real Estate Property (in Square Feet)										76,161	74,898
Payments for Rent									$ 533,000			$ 27,000
Operating Leases, Rent Expense	258,000	251,000	749,000	751,000	215,000	207,000	605,000	622,000
Capital Lease Obligations													892,000	918,000
Loss Contingency, Estimate of Possible Loss															$ 600,000	$ 300,000

XML

Note 9 - Segment Information (Tables)

9 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

		Sales, Net
		U.S.		International				Gross					Capital
		Customers		Customers		Total		Profit (Loss)			Depreciation		Expenditures
Contract Manufacturing	2014	$	4,713	$	2,058	$	6,771	$	643		$	57	$	86
	2013		4,505		2,997		7,502		1,145			54		60
Branded Proprietary Products	2014		147		45		192		(64	)		1		-
	2013		178		20		198		(14	)		1		-
Other Nutraceutical Businesses	2014		549		10		559		148			2		-
	2013		429		23		452		106			6		3
Total Company	2014		5,409		2,113		7,522		727			60		86
	2013		5,112		3,040		8,152		1,237			61		63

		Sales, Net						Segment
		U.S.		International				Gross				Capital
		Customers		Customers		Total		Profit		Depreciation		Expenditures
Contract Manufacturing	2014	$	15,115	$	7,739	$	22,854	$	3,217	$	185	$	166
	2013		12,934		7,878		20,812		3,082		198		68
Branded Proprietary Products	2014		409		527		936		100		2		-
	2013		467		1,356		1,823		529		6		-
Other Nutraceutical Businesses	2014		1,608		103		1,711		476		8		2
	2013		1,273		119		1,392		330		11		3
Total Company	2014		17,132		8,369		25,501		3,793		195		168
	2013		14,674		9,353		24,027		3,941		215		71

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	Total Assets as of
	March 31,		June 30,
	2014		2013
Contract Manufacturing	$	6,669	$	8,524
Branded Proprietary Products		1,942		2,186
Other Nutraceutical Businesses		1,711		1,901
Total Company	$	10,322	$	12,611

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Note 7 - Commitments and Contingencies (Details) - Minimum Rental Commitment for Long-term Non-cancelable Leases (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Note 7 - Commitments and Contingencies (Details) - Minimum Rental Commitment for Long-term Non-cancelable Leases [Line Items]
2014, remaining	$ 154
2015	608
2016	598
2017	578
2018	571
2019	550
Thereafter	3,510
Total	6,569
Principal Owner [Member] | Capital Lease Obligations [Member]
Note 7 - Commitments and Contingencies (Details) - Minimum Rental Commitment for Long-term Non-cancelable Leases [Line Items]
2014, remaining	141
2015	563
2016	563
2017	563
2018	563
2019	550
Thereafter	3,510
Total	6,453
Capital Lease Obligations [Member]
Note 7 - Commitments and Contingencies (Details) - Minimum Rental Commitment for Long-term Non-cancelable Leases [Line Items]
2014, remaining	13
2015	45
2016	35
2017	15
2018	8
Total	$ 116

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Note 1 - Principles of Consolidation and Basis of Presentation (Details) - Antidilutive Securities Excluded from Computation of Earnings Per Share	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares	10,013,289	11,538,857	9,483,539	11,538,857
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares	1,782,520	2,808,088	1,252,770	2,808,088
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares		500,000		500,000
Convertible Debt Securities [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares	8,230,769	8,230,769	8,230,769	8,230,769

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Note 2 - Inventories

9 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Inventory Disclosure [Text Block]

Note 2. Inventories

Inventories are stated at the lower of cost or market using the first-in, first-out method and consist of the following as of:

	March 31,		June 30,
	2014		2013
Raw materials	$	2,526	$	2,512
Work-in-process		665		1,979
Finished goods		1,477		1,940
Total	$	4,668	$	6,431

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Jun. 30, 2013
Current Assets:
Cash	$ 184	$ 55
Accounts receivable, net	1,940	2,419
Inventories	4,668	6,431
Investment in iBio, Inc. - restricted	684	684
Other current assets	370	339
Total current assets	7,846	9,928
Intangible assets, net	914	1,017
Property and equipment, net	1,231	1,235
Security deposits and other assets	331	431
Total Assets	10,322	12,611
Current Liabilities:
Advances under revolving credit facility	3,421	4,543
Accounts payable (includes $169 and $186 due to related party)	4,906	5,883
Accrued expenses and other current liabilities	1,284	1,122
Current portion of long term debt	596	868
Total current liabilities	10,207	12,416
Long term debt	4,500	4,888
Subordinated convertible note, net - CD Financial, LLC	4,982	4,901
Derivative liabilities	677	696
Total liabilities	20,366	22,901
Commitments and Contingencies
Stockholders' Deficiency:
Common Stock, $0.002 par value; 50,000,000 shares authorized; 21,115,074 and 21,080,174 shares issued and outstanding, respectively	42	42
Additional paid-in capital	44,568	44,568
Accumulated deficit	(54,555)	(54,801)
Less: Treasury stock, at cost, 34,900 shares	(99)	(99)
Total Stockholders' Deficiency	(10,044)	(10,290)
Total Liabilities and Stockholders' Deficiency	$ 10,322	$ 12,611

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Note 2 - Inventories (Tables)

9 Months Ended

Mar. 31, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

	March 31,		June 30,
	2014		2013
Raw materials	$	2,526	$	2,512
Work-in-process		665		1,979
Finished goods		1,477		1,940
Total	$	4,668	$	6,431

XML

Document And Entity Information	9 Months Ended
	Mar. 31, 2014	May 14, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	INTEGRATED BIOPHARMA INC
Document Type	10-Q
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		21,080,174
Amendment Flag	false
Entity Central Index Key	0001016504
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Note 3 - Intangible Assets, Net (Tables)

9 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	March 31, 2014						June 30, 2013
	Gross Carrying		Accumulated				Gross Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net
Trade names	$	1,525	$	796	$	729	$	1,525	$	739	$	786
Unpatented technology		547		490		57		547		460		87
License agreement		347		219		128		347		203		144
Total	$	2,419	$	1,505	$	914	$	2,419	$	1,402	$	1,017

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

Year ending	Amortization
June 30,	Expense
2014, remaining	$	34
2015		137
2016		104
2017		97
2018		97
2019		97
Thereafter		348
Total	$	914

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Jun. 30, 2013
Accounts payable, related party (in Dollars)	$ 169	$ 186
Common Stock, par value (in Dollars per share)	$ 0.002	$ 0.002
Common Stock, shares authorized	50,000,000	50,000,000
Common Stock, shares issued	21,115,074	21,080,174
Common Stock, shares outstanding	21,115,074	21,080,174
Treasury stock, shares	34,900	34,900

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Note 7 - Commitments and Contingencies

9 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 7. Commitments and Contingencies

(a) Leases

Related Party Leases. Warehouse and office facilities are leased from Vitamin Realty. On January 5, 2012, MDC, a wholly-owned subsidiary of the Company, entered into a second amendment of lease (the “Second Lease Amendment”) with Vitamin Realty for its office and warehouse space in New Jersey increasing its rentable square footage from an aggregate of 74,898 square feet to 76,161 square feet and extending the expiration date to January 31, 2026. This Second Lease Amendment provides for minimum annual rental payments of $533, plus increases in real estate taxes and building operating expenses. Also on January 5, 2012, AgroLabs entered into a lease agreement with Vitamin Realty for an additional 2,700 square feet of warehouse space in New Jersey, the term of which expires on January 31, 2019. This additional lease provides for minimum lease payments of $27 with annual increases plus the proportionate share of operating expenses.

Rent expense for the three and nine months ended March 31, 2014 and 2013 on these leases were $215 and $207 and $622 and $605, respectively, and are included in both cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. As of March 31, 2014 and June 30, 2013, the Company had an outstanding obligation to Vitamin Realty of $892 and $918, respectively, included in accounts payable, accrued expenses and long term debt in the accompanying Condensed Consolidated Balance Sheet.

Other Lease Commitments. The Company has entered into certain non-cancelable operating lease agreements expiring up through January 31, 2026, related to office and warehouse space, equipment and vehicles.

The minimum rental commitment for long-term non-cancelable leases is as follows:

			Related Party
Year ending	Lease		Lease
June 30,	Commitment		Commitment		Total
2014, remaining	$	13	$	141	$	154
2015		45		563		608
2016		35		563		598
2017		15		563		578
2018		8		563		571
2019		-		550		550
Thereafter		-		3,510		3,510
Total	$	116	$	6,453	$	6,569

Total rent expense, including real estate taxes and maintenance charges, was approximately $258 and $251 and $749 and $751 for the three and nine months ended March 31, 2014 and 2013, respectively. Rent expense is included in cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.

(b) Legal Proceedings.

The Company is subject, from time to time, to claims by third parties under various legal theories. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows.

(c) Other Claims.

On May 15, 2012, Cedarburg Pharmaceuticals, Inc. ("Cedarburg") sent the Company a letter (the "Demand Letter") setting forth a demand for indemnification under the Stock Purchase Agreement, dated March 17, 2009 (the "Cedarburg SPA"), by and among Cedarburg, InB: Hauser Pharmaceutical Services, Inc., InB: Paxis Pharmaceuticals, Inc. and the Company. In the Demand Letter, Cedarburg demanded payment by the Company of $0.6 million in respect of the Company's indemnification obligations under the Cedarburg SPA. In addition, in the Demand Letter, Cedarburg informed the Company that there are also environmental issues pending which may lead to additional costs to Cedarburg which will likely be in excess of $0.3 million.

On May 30, 2012, the Company sent a letter responding to the Demand Letter and setting forth the Company’s position that it has no obligation to indemnify Cedarburg as demanded. On June 18, 2012, Cedarburg responded to the Company’s letter and, on July 27, 2012, the Company sent another letter to Cedarburg reiterating its position that the Company has no obligation to indemnify Cedarburg as demanded. On December 18, 2012, Cedarburg responded to the Company’s letter and, on January 15, 2013, the Company sent another letter to Cedarburg reiterating its position that the Company has no obligation to indemnify Cedarburg as demanded. As of May 14, 2014, the Company has not received any further communication from Cedarburg with respect to its demand for indemnification as set forth in the Demand Letter. The Company intends to vigorously contest Cedarburg's demand as set forth in the Demand Letter.

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Note 6 - Significant Risks and Uncertainties

9 Months Ended

Mar. 31, 2014

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

Note 6. Significant Risks and Uncertainties

(a) Major Customers. For the three and nine months ended March 31, 2014, approximately 78% and 80%, respectively of total net sales were derived from two customers as compared to approximately 80% and 74% of total net sales derived from the same two customers in the three and nine months ended March 31, 2013, respectively. Accounts receivable as of March 31, 2014 from these customers represented approximately 66% of total accounts receivable. The loss of any of these customers would have an adverse affect on the Company’s operations. Major customers are those customers who account for more than 10% of net sales.

(b) Other Business Risks. Approximately 62% of the Company’s employees are covered by a union contract and are employed in its New Jersey facilities. The union contract was renewed in May 2012 and expires in August 2015.

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Note 1 - Principles of Consolidation and Basis of Presentation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	9 Months Ended					3 Months Ended	9 Months Ended
	Mar. 31, 2013	Mar. 31, 2013	Mar. 31, 2014	Jun. 30, 2013	Jun. 27, 2012	Mar. 31, 2013 Minimum Share Price Acceptable Before Required to Sell [Member] iBio, Inc. [Member]	Mar. 31, 2013 iBio, Inc. [Member]	Mar. 31, 2013 iBio, Inc. [Member]	Aug. 31, 2008 iBio, Inc. [Member]
Note 1 - Principles of Consolidation and Basis of Presentation (Details) [Line Items]
Equity Method Investment, Ownership Percentage									6.00%
Investment Owned, Balance, Shares (in Shares)									1,266,706
Gain (Loss) on Investments	$ (139)	$ (139)					$ (139)	$ (139)
Share Price (in Dollars per share)			$ 0.20	$ 0.15	$ 0.09	$ 0.88

XML

Note 4 - Property and Equipment, Net (Tables)

9 Months Ended

Mar. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	March 31,			June 30,
	2014			2013
Land and building	$	1,250		$	1,250
Leasehold improvements		1,141			1,132
Machinery and equipment		5,023			4,918
Transportation equipment		64			59
		7,478			7,359
Less: Accumulated depreciation and amortization		(6,247	)		(6,124	)
Total	$	1,231		$	1,235

XML

Accounting Policies, by Policy (Policies)

9 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Investment, Policy [Policy Text Block]

Investment in iBio, Inc.- Restricted. The Company accounts for its investment in iBio, Inc. (“iBio”) common stock on the cost basis as it retained approximately 6% of its interest in iBio (1,266,706 common shares) (the “iBio Stock”) at the time of the spin-off of this subsidiary in August 2008.  The Company reviews its investment in iBio for impairment and records a loss when there is deemed to be an impairment of the investment. There was an impairment charge of $139 recorded in the three and nine months ended March 31, 2013. Pursuant to the Company’s Loan Agreement with PNC Bank, National Association (“PNC”), the Company is required to sell the iBio Stock when the trading price of the iBio Stock is less than $0.88 per share for a period of fifteen (15) consecutive trading days on the applicable exchange and utilize all proceeds from such sale to prepay the outstanding principal of the term loan outstanding under the Loan Agreement at such time. In the fiscal year ended June 30, 2013, the trading price of the iBio Stock was less than $0.88 for a period of fifteen (15) consecutive trading days and has continued to have a trading price less than $0.88 through May 14, 2014. (See Note 5. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt). As of March 31, 2014, the Company has not sold any shares of the iBio Stock. As of May 14, 2014, PNC has not required the Company to sell any of the iBio Stock but reserves the right to do so at any time in the future.

Earnings Per Share, Policy [Policy Text Block]

Earnings Per Share. Basic earnings per common share amounts are based on the weighted average number of common shares outstanding. Diluted earnings per share amounts are based on the weighted average number of common shares outstanding, plus the incremental shares that would have been outstanding upon the assumed exercise of all potentially dilutive stock options, and warrants, subject to anti-dilution limitations using the treasury stock method and the assumed conversion shares of all potentially dilutive convertible notes payable subject to anti-dilution limitations using the if converted method.

The following options, warrants and potentially dilutive shares for convertible notes payable (see Note 5. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt) were not included in the computation of weighted average diluted common shares outstanding as the effect of doing so would be anti-dilutive for the three and nine months ended March 31, 2014 and 2013:

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2014		2013		2014		2013
Anti-dilutive stock options		1,782,520		2,808,088		1,252,770		2,808,088
Anti-dilutive warrants		-		500,000		-		500,000
Potentially dilutive shares for convertible notes payable		8,230,769		8,230,769		8,230,769		8,230,769
Total anti-dilutive shares		10,013,289		11,538,857		9,483,539		11,538,857

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Note 8 - Related Party Transactions

9 Months Ended

Mar. 31, 2014

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

Note 8. Related Party Transactions

On June 27, 2012, Carl DeSantis, a director and major shareholder of the Company and a member of CD Financial and E. Gerald Kay, the Company’s Chief Executive Officer, Chairman of the Board, President and a major shareholder each entered into Limited Guaranty Agreements with PNC in the amount of $1.0 million each. (See Note 5. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt).

Neither Mr. DeSantis nor Mr. Kay received any compensation from the Company in connection with these guarantees. The Individual Guarantees automatically terminate upon the satisfaction of certain conditions set forth in the Loan Agreement. These conditions included the Company repaying an aggregate amount of $1.0 million of principal on the Term Loan and the Company meeting a minimum EBITDA, as defined in the Loan Agreement, of $1.5 million for the fiscal year ended June 30, 2013. These two conditions were met by the Company on November 1, 2013 and Mr. DeSantis and Mr. Kay were released as guarantors under the Individual Guarantees.

See Note 5. Senior Credit Facility, Subordinated Convertible Note Payable, net - CD Financial, LLC and other Long Term Debt for related party securities transactions.

See Note 7(a). Leases for related party lease transactions.

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Note 9 - Segment Information

9 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 9. Segment Information

The basis for presenting segment results generally is consistent with overall Company reporting. The Company reports information about its operating segments in accordance with GAAP which establishes standards for reporting information about a company’s operating segments.

The Company has divided its operations into three reportable segments as follows: Contract Manufacturing, Branded Proprietary Products and Other Nutraceutical Businesses. The international sales, concentrated primarily in Europe and Canada, for the three months ended March 31, 2014 and 2013 were $2,113 and $3,040, respectively and for the nine months ended March 31, 2014 and 2013 were $8,369 and $9,353, respectively.

Financial information relating to the three months ended March 31, 2014 and 2013 operations by business segment are as follows:

		Sales, Net
		U.S.		International				Gross					Capital
		Customers		Customers		Total		Profit (Loss)			Depreciation		Expenditures
Contract Manufacturing	2014	$	4,713	$	2,058	$	6,771	$	643		$	57	$	86
	2013		4,505		2,997		7,502		1,145			54		60
Branded Proprietary Products	2014		147		45		192		(64	)		1		-
	2013		178		20		198		(14	)		1		-
Other Nutraceutical Businesses	2014		549		10		559		148			2		-
	2013		429		23		452		106			6		3
Total Company	2014		5,409		2,113		7,522		727			60		86
	2013		5,112		3,040		8,152		1,237			61		63

Financial information relating to the nine months ended March 31, 2014 and 2013 operations by business segment are as follows:

		Sales, Net						Segment
		U.S.		International				Gross				Capital
		Customers		Customers		Total		Profit		Depreciation		Expenditures
Contract Manufacturing	2014	$	15,115	$	7,739	$	22,854	$	3,217	$	185	$	166
	2013		12,934		7,878		20,812		3,082		198		68
Branded Proprietary Products	2014		409		527		936		100		2		-
	2013		467		1,356		1,823		529		6		-
Other Nutraceutical Businesses	2014		1,608		103		1,711		476		8		2
	2013		1,273		119		1,392		330		11		3
Total Company	2014		17,132		8,369		25,501		3,793		195		168
	2013		14,674		9,353		24,027		3,941		215		71

	Total Assets as of
	March 31,		June 30,
	2014		2013
Contract Manufacturing	$	6,669	$	8,524
Branded Proprietary Products		1,942		2,186
Other Nutraceutical Businesses		1,711		1,901
Total Company	$	10,322	$	12,611

XML

Note 1 - Principles of Consolidation and Basis of Presentation (Tables)

9 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2014		2013		2014		2013
Anti-dilutive stock options		1,782,520		2,808,088		1,252,770		2,808,088
Anti-dilutive warrants		-		500,000		-		500,000
Potentially dilutive shares for convertible notes payable		8,230,769		8,230,769		8,230,769		8,230,769
Total anti-dilutive shares		10,013,289		11,538,857		9,483,539		11,538,857

XML

Note 6 - Significant Risks and Uncertainties (Details)	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Two Customers [Member] | Sales Revenue, Goods, Net [Member]
Note 6 - Significant Risks and Uncertainties (Details) [Line Items]
Concentration Risk, Percentage	78.00%	80.00%	80.00%	74.00%
Two Customers [Member] | Accounts Receivable [Member]
Note 6 - Significant Risks and Uncertainties (Details) [Line Items]
Concentration Risk, Percentage			66.00%
Number of Employees, Geographic Area [Member]
Note 6 - Significant Risks and Uncertainties (Details) [Line Items]
Concentration Risk, Percentage			62.00%
Maximum [Member] | Sales Revenue, Goods, Net [Member]
Note 6 - Significant Risks and Uncertainties (Details) [Line Items]
Concentration Risk, Percentage			10.00%

XML

Note 7 - Commitments and Contingencies (Tables)

9 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block]

			Related Party
Year ending	Lease		Lease
June 30,	Commitment		Commitment		Total
2014, remaining	$	13	$	141	$	154
2015		45		563		608
2016		35		563		598
2017		15		563		578
2018		8		563		571
2019		-		550		550
Thereafter		-		3,510		3,510
Total	$	116	$	6,453	$	6,569

XML

Note 3 - Intangible Assets, Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Note 3 - Intangible Assets, Net (Details) [Line Items]
Amortization of Intangible Assets	$ 34	$ 34	$ 103	$ 103
Minimum [Member]
Note 3 - Intangible Assets, Net (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life			10 years
Maximum [Member]
Note 3 - Intangible Assets, Net (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life			20 years

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows provided by (used in) operating activities:
Net income (loss)	$ 245	$ (687)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	297	318
Accretion of financing instruments	177	160
Change in fair value of derivative instruments	(19)	602
Impairment charge on investment in iBio, Inc.		139
(Gain) loss on sale of fixed assets	(4)	6
Decrease (increase) in:
Accounts receivable	479	176
Inventories	1,763	(1,456)
Other current assets	(30)	47
Security deposits and other assets	4	50
(Decrease) increase in:
Accounts payable	(977)	39
Accrued expenses and other liabilities	162	(252)
Net cash provided by (used in) operating activities	2,097	(858)
Cash flows from investing activities:
Purchase of property and equipment	(115)	(21)
Proceeds from sale of property and equipment		18
Net cash used in investing activities	(115)	(3)
Cash flows from financing activities:
Advances under revolving credit facility	24,133	25,342
Repayments under revolving credit facility	(25,255)	(23,977)
Payments under term notes	(699)	(361)
Payments under capital lease obligations	(32)	(3)
Net cash (used in) provided by financing activities	(1,853)	1,001
Net increase in cash	129	140
Cash at beginning of period	55	145
Cash at end of period	184	285
Cash paid during the periods for:
Interest	537	486
Income taxes	7	15
Financing on capitalized lease obligations	$ 76	$ 68

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Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt

9 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 5. Senior Credit Facility, Subordinated Convertible Note, net - CD Financial, LLC and other Long Term Debt

As of March 31, 2014 and June 30, 2013, the Company had the following debt outstanding:

	Principal Amount						Interest Rate			Maturity Date
	As of March 31, 2014			As of June 30, 2013
Revolving advances under Senior Credit Facility with PNC Bank, National Association	$	3,421		$	4,543			3.25	%	6/27/2017
Installment Note with PNC Bank		2,546			3,239			3.75	%	6/27/2017
Promissory Note with CD Financial, LLC		1,714			1,714			6.00	%	7/7/2017
Promissory Note with Vitamin Realty, LLC		686			686			4.00	%	7/7/2017
Capitalized lease obligations		97			58			5.30	%	2/28/2015
								7.10	%	11/20/2016
Promissory Note with E. Gerald Kay		27			27			4.00	%	7/7/2017
Promissory Note with Acura Financial Services		26			32			1.90	%	4/15/2017
Total outstanding debt		8,517			10,299
Less: Revolving Advances		(3,421	)		(4,543	)
Current portion of long term debt		(596	)		(868	)
Long term debt	$	4,500		$	4,888
Convertible Note payable - CD Financial, LLC	$	5,350		$	5,350			6.00	%	7/7/2017
Discount for embedded derivative		(368	)		(449	)
Convertible Note payable, net - CD Financial, LLC	$	4,982		$	4,901

SENIOR CREDIT FACILITY

On June 27, 2012, the Company, MDC, AgroLabs, IHT, IHT Properties Corp. (“IHT Properties”) and Vitamin Factory (collectively, the “Borrowers”) entered into a Revolving Credit, Term Loan and Security Agreement (the “Loan Agreement”) with PNC as agent and lender and the other lenders party thereto.

The Loan Agreement provides for a total of $11,727 in senior secured financing (the “Senior Credit Facility”) as follows: (i) discretionary advances (“Revolving Advances”) based on eligible accounts receivable and eligible inventory in the maximum amount of $8,000 (the “Revolving Credit Facility”) and (ii) a term loan in the amount of $3,727 (the “Term Loan”). The Senior Credit Facility is secured by all assets of the Borrowers, including, without limitation, machinery and equipment, real estate owned by IHT Properties, and the iBio Stock owned by the Company. Revolving Advances bear interest at PNC’s Base Rate or the Eurodollar Rate, at Borrowers’ option, plus 2.75% (3.25% as of March 31, 2014 and June 30, 2013). The Term Loan bears interest at PNC’s Base Rate or the Eurodollar Rate, at Borrowers’ option, plus 3.25% (3.75% as of March 31, 2014 and June 30, 2013). Upon and after the occurrence of any event of default under the Loan Agreement, and during the continuation thereof, interest shall be payable at the interest rate then applicable plus 2%. The Senior Credit Facility matures on June 27, 2017 (the “Senior Maturity Date”).

The principal balance of the Revolving Advances is payable on the Senior Maturity Date, subject to acceleration, based upon a material adverse event clause, as defined, subjective accelerations for borrowing base reserves, as defined or upon the occurrence of any event of default under the Loan Agreement or earlier termination of the Loan Agreement pursuant to the terms thereof. The Term Loan shall be repaid in sixty (60) consecutive monthly installments of principal, the first fifty nine (59) of which shall be in the amount of $44, commencing on the first business day of August, 2012, and continuing on the first business day of each month thereafter, with a final payment of any unpaid balance of principal and interest payable on the first business day of July, 2017. The foregoing is subject to customary mandatory prepayment provisions and acceleration upon the occurrence of any event of default under the Loan Agreement or earlier termination of the Loan Agreement pursuant to the terms thereof.

The Revolving Advances are subject to the terms and conditions set forth in the Loan Agreement and are made in aggregate amounts at any time equal to the lesser of (x) $8.0 million or (y) an amount equal to the sum of: (i) up to 85%, subject to the provisions in the Loan Agreement, of eligible accounts receivables (“Receivables Advance Rate”), plus (ii) up to the lesser of (A) 65%, subject to the provisions in the Loan Agreement, of the value of the eligible inventory (“Inventory Advance Rate” and together with the Receivables Advance Rate, collectively, the “Advance Rates”), (B) 85% of the appraised net orderly liquidation value of eligible inventory (as evidenced by the most recent inventory appraisal reasonably satisfactory to PNC in its sole discretion exercised in good faith) and (C) the inventory sublimit in the aggregate at any one time (“Inventory Advance Rate” and together with the Receivables Advance Rate, collectively, the “Advance Rates”), minus (iii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, minus (iv) such reserves as Agent may reasonably deem proper and necessary from time to time.

The Loan Agreement contains customary mandatory prepayment provisions, including, without limitation, (i) the requirement that if the trading price per share of the iBio Stock falls below a certain amount, the Company shall sell the iBio Stock and use the proceeds to repay the Term Loan and (ii) the requirement to prepay loans in an amount equal to fifty percent (50%) of Excess Cash Flow for each fiscal year commencing with the fiscal year ending June 30, 2013, payable upon delivery of the financial statements to PNC referred to in and required by the Loan Agreement for such fiscal year but in any event not later than one hundred twenty (120) days after the end of each such fiscal year, which prepayment amount shall be applied ratably to the outstanding principal installments of the Term Loan in the inverse order of the maturities thereof until the aggregate amount of payments made with regard to the Term Loan pursuant to Loan Agreement equals $1.0 million. The Loan Agreement also contains customary representations and warranties, covenants and events of default, including, without limitation, (i) a fixed charge coverage ratio maintenance requirement and (ii) an event of default tied to any change of control as defined in the Loan Agreement. As of March 31, 2014, the Company is in compliance with the fixed charge coverage ratio maintenance requirement.

During certain periods in the fiscal year ended June 30, 2013 and continuing into the nine months ended March 31, 2014, the trading price of the iBio Stock was less than $0.88 for a period of fifteen (15) consecutive trading days. However, PNC temporarily waived the requirement to sell the iBio Stock due to certain trading rules and restrictions under Rule 144 under the Securities Act of 1933, as amended. As of May 14, 2014, PNC has not required the Company to sell any of the iBio Stock but reserves the right to do so at any time in the future.

In October, 2013, when the Company delivered its annual financial statements for the fiscal year ended June 30, 2013 to PNC, as required under the Loan Agreement, the Company was required to make a prepayment in respect of loans outstanding under the Loan Agreement of approximately $293, representing 50% of Excess Cash Flows for the fiscal year ended June 30, 2013. This payment, along with the scheduled monthly principal payments of $44 made by the Company in respect of the Term Loan through November 1, 2013 provided for principal payments of $1.0 million in the aggregate.

In connection with the Senior Credit Facility, each of E. Gerald Kay, an officer, director and major stockholder of the Company, and Carl DeSantis, a director and major stockholder of the Company (collectively, the “Guarantors”), entered into Continuing Limited Guarantees (collectively, the “Individual Guarantees”) with PNC whereby each Guarantor irrevocably and unconditionally guarantees the full, prompt and unconditional payment, when due, whether by acceleration or otherwise, of any and all obligations of the Borrowers under the Loan Agreement and the other loan documents. The liability of each Guarantor under his respective Individual Guarantee is limited to a maximum of $1.0 million. The Individual Guarantees automatically terminate upon the satisfaction of certain conditions set forth in the Loan Agreement. These conditions included the Company repaying an aggregate amount of $1.0 million of principal on the Term Loan and the Company meeting a minimum EBITDA, as defined in the Loan Agreement, of $1.5 million for the fiscal year ended June 30, 2013. The Company met these requirements on November 1, 2013 and Mr. DeSantis and Mr. Kay were released as guarantors under the Individual Guarantees.

Also, in connection with the Senior Credit Facility, PNC and CD Financial, LLC (“CD Financial”) entered into the Intercreditor and Subordination Agreement (the “Intercreditor Agreement”), which was acknowledged by the Borrowers, pursuant to which, among other things, (a) the lien of CD Financial on assets of the Borrowers is subordinated to the lien of PNC on such assets during the effectiveness of the Senior Credit Facility, and (b) priorities for payment of the debt for the Company and its subsidiaries (as described in this Note 5) are established.

In addition, in connection with the Senior Credit Facility, the following loan documents were executed: (i) the Company has entered into a Stock Pledge Agreement with PNC, pursuant to which the Company pledged to PNC the iBio Stock; (ii) IHT Properties has entered into a Mortgage and Security Agreement with PNC; and (iii) the Borrowers have entered into an Environmental Indemnity Agreement with PNC.

CD FINANCIAL, LLC DEBT

On June 27, 2012, the Company also entered into an Amended and Restated Securities Purchase Agreement (the “CD SPA”) with CD Financial, which amended and restated the Securities Purchase Agreement, dated as of February 21, 2008, between the Company and CD Financial, pursuant to which the Company issued to CD Financial a 9.5% Convertible Senior Secured Note in the original principal amount of $4,500 (the “Original CD Note”). Pursuant to the CD SPA, the Company issued to CD Financial (i) the Amended and Restated Convertible Promissory Note in the principal amount of $5,350 (the “CD Convertible Note”) and (ii) the Promissory Note in the principal amount of $1,714 (the “Liquidity Note”, and collectively with the CD Convertible Note, the “CD Notes”). The CD Notes mature on July 7, 2017.

The CD Notes are secured by all assets of the Borrowers, including, without limitation, machinery and equipment, real estate owned by IHT Properties, and iBio Stock owned by the Company. The CD Notes bear interest at an annual rate of 6% and have a default rate of 10%.

The CD Convertible Note is convertible at the option of CD Financial into common stock of the Company at a conversion price of $0.65 per share, subject to customary adjustments including conversion price protection provisions.

Pursuant to the terms of the Loan Agreement and the Intercreditor Agreement, during the effectiveness of the Senior Credit Facility, (i) the principal of the CD Convertible Note may not be repaid, (ii) the principal of the Liquidity Note may only be repaid if certain conditions under the Loan Agreement are satisfied, and (iii) interest in respect of the CD Notes may only be paid if certain conditions under the Intercreditor Agreement are satisfied.

The CD SPA contains customary representations and warranties, covenants and events of default, including, without limitation, an event of default tied to any change of control as defined in the CD SPA.

In connection with the CD SPA, the Borrowers entered into an Amended and Restated Security Agreement and Amended and Restated Subsidiary Guaranty.

As of March 31, 2014 and June 30, 2013, the related embedded derivative liability with respect to conversion price protection provisions on the CD Convertible Note has an estimated fair value of $677 and $696, respectively.

The Company used the following assumptions to calculate the fair value of the derivative liability using the Black-Scholes option pricing model:

							Issuance Date-
	March 31,			June 30,			June 27,
	2014			2013			2012
Risk Free Interest Rate		0.90	%		0.66	%		0.72	%
Volatility		100.40	%		118.50	%		144.10	%
Term (years)	3.25			4			5
Dividend Rate		0.00	%		0.00	%		0.00	%
Closing Price of Common Stock	$	0.20		$	0.15		$	0.09

OTHER LONG TERM DEBT

On June 27, 2012, MDC and the Company entered into separate promissory notes with (i) Vitamin Realty Associates, LLC (“Vitamin Realty”), which is 90% owned by E. Gerald Kay, the Company’s Chairman of the Board, President and major shareholder and certain of his family members, who are also executive officers and directors of the Company, and (ii) E. Gerald Kay, in the principal amounts of approximately $686 (the “Vitamin Note”) and $27 (the “Kay Note”), respectively (collectively the “Related Party Notes”). The principal amount of the Vitamin Note represents the aggregate amount of unpaid, past due rent owing by MDC under the Lease Agreement, dated as of January 10, 1997, between MDC, as lessor, and Vitamin Realty, as landlord, pertaining to the real property located at 225 Long Avenue, Hillside, New Jersey. (See Note 7. Commitments and Contingencies (a) Leases – Related Parties). The Kay Note represents amounts owed to Mr. Kay for unreimbursed business expenses incurred by Mr. Kay in the fiscal year ended June 30, 2008. The Related Party Notes mature on July 7, 2017 and accrue interest at an annual rate of 4% per annum. Interest in respect of the Related Party Notes is payable on the first business day of each calendar month. Pursuant to the terms of the Loan Agreement, during the effectiveness of the Senior Credit Facility, the Related Party Notes may only be repaid or prepaid if certain conditions set forth in the Loan Agreement are satisfied.

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Note 3 - Intangible Assets, Net (Details) - Finite-Lived Intangible Assets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Jun. 30, 2013
Finite-Lived Intangible Assets [Line Items]
Gross Carring Amount	$ 2,419	$ 2,419
Accumulated Amortization	1,505	1,402
Net	914	1,017
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carring Amount	1,525	1,525
Accumulated Amortization	796	739
Net	729	786
Unpatented Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carring Amount	547	547
Accumulated Amortization	490	460
Net	57	87
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carring Amount	347	347
Accumulated Amortization	219	203
Net	$ 128	$ 144

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Note 9 - Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Note 9 - Segment Information (Details) [Line Items]
Number of Reportable Segments			3
Europe and Canada [Member]
Note 9 - Segment Information (Details) [Line Items]
Revenues	$ 2,113	$ 3,040	$ 8,369	$ 9,353

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Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Tables)

9 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

	Principal Amount						Interest Rate			Maturity Date
	As of March 31, 2014			As of June 30, 2013
Revolving advances under Senior Credit Facility with PNC Bank, National Association	$	3,421		$	4,543			3.25	%	6/27/2017
Installment Note with PNC Bank		2,546			3,239			3.75	%	6/27/2017
Promissory Note with CD Financial, LLC		1,714			1,714			6.00	%	7/7/2017
Promissory Note with Vitamin Realty, LLC		686			686			4.00	%	7/7/2017
Capitalized lease obligations		97			58			5.30	%	2/28/2015
								7.10	%	11/20/2016
Promissory Note with E. Gerald Kay		27			27			4.00	%	7/7/2017
Promissory Note with Acura Financial Services		26			32			1.90	%	4/15/2017
Total outstanding debt		8,517			10,299
Less: Revolving Advances		(3,421	)		(4,543	)
Current portion of long term debt		(596	)		(868	)
Long term debt	$	4,500		$	4,888
Convertible Note payable - CD Financial, LLC	$	5,350		$	5,350			6.00	%	7/7/2017
Discount for embedded derivative		(368	)		(449	)
Convertible Note payable, net - CD Financial, LLC	$	4,982		$	4,901

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

							Issuance Date-
	March 31,			June 30,			June 27,
	2014			2013			2012
Risk Free Interest Rate		0.90	%		0.66	%		0.72	%
Volatility		100.40	%		118.50	%		144.10	%
Term (years)	3.25			4			5
Dividend Rate		0.00	%		0.00	%		0.00	%
Closing Price of Common Stock	$	0.20		$	0.15		$	0.09