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 September 30, 2014

OR

o 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 November 7, 2014
Common Stock, $0.002 par value	21,105,174 Shares

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

FORM 10-Q QUARTERLY REPORT

For the Three Months Ended September 30, 2014

INDEX

		Page
	Part I. Financial Information
Item 1.	Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2014 and 2013 (unaudited)	2
	Condensed Consolidated Balance Sheets as of September 30, 2014 and June 30, 2014 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 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	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23
	Part II. Other Information
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
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

Cautionary Statement 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 (“SEC”), all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Integrated BioPharma, Inc. and its subsidiaries (the “Company”) or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors including, among others, changes in general economic and business conditions; loss of market share through competition; introduction of competing products by other companies; the timing of regulatory approval and the introduction of new products by the Company; changes in industry capacity; pressure on prices from competition or from purchasers of the Company's products; regulatory changes in the pharmaceutical manufacturing industry and nutraceutical industry; regulatory obstacles to the introduction of new technologies or products that are important to the Company; availability of qualified personnel; the loss of any significant customers or suppliers; and other factors both referenced and not referenced in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014 (“Form 10-K”), as filed with the SEC. 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 Item 1 of the Company’s Annual Report filed on Form 10-K for the year ended June 30, 2014 and in 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.  The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and 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 ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

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, 2014 (“Form 10-K”), as filed with the SEC. The June 30, 2014 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 months ended September 30, 2014 are not necessarily indicative of the results for the full fiscal year ending June 30, 2015 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 LLC.

Significant Accounting Policies

There have been no material changes during fiscal year 2015 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, 2014.

Investment in iBio, Inc. The Company accounts for its investment in iBio, Inc. (“iBio”) common stock on the cost basis as it initially 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.  To date, there were cumulative impairment charges of $298.  The market value of the iBio Stock as of September 30, 2014 was approximately $0.7 million.  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 years ended June 30, 2014 and 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 October 10, 2014.  Since then and through November 7, 2014, the trading price of the iBio Stock has traded above $0.88.  (See Note 5. Senior Credit Facility, Subordinated Convertible Note, net - CD Financial, LLC and other Long Term Debt).  As of November 7, 2014, the Company has not sold any shares of the iBio Stock and PNC has not required the Company to sell any of the iBio Stock but continues to reserve the right to do so at any time in the future.

5

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

Earnings Per Share. Basic earnings per common share amounts are based on 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, warrants and convertible debt, subject to anti-dilution limitations using the treasury stock method.

The following options, warrants and potentially dilutive shares for convertible notes payable (see Note 5. Senior Credit Facility, Subordinated Convertible Note, 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 months ended September 30, 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:

6

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)
 

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 months ended September 30, 2014 and 2013 was $34.  Amortization expense is recorded on the straight-line basis over periods ranging from 13 years to 20 years based on contractual or estimated lives and is included in selling and administrative expenses. Tests for impairment or recoverability are performed at least annually and require significant management judgment and the use of estimates which the Company believes are reasonable and appropriate at the time of the impairment test.  Future unanticipated events affecting cash flows and changes in market conditions could affect such estimates and result in the need for an impairment charge.  The Company also re-evaluates the periods of amortization to determine whether circumstances warrant revised estimates of current useful lives.  No impairment losses were identified or recorded in the three months ended September 30, 2014 and 2013 on the Company’s intangible assets.

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

7

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)
 

Note 4. Property and Equipment, net

Property and equipment, net consists of the following:

Depreciation and amortization expense recorded on property and equipment for the three months ended September 30, 2014 and 2013 was $61 and $69, respectively.

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

As of September 30, 2014 and June 30, 2014, the Company had the following debt outstanding:

8

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

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 Bank, National Association as agent and lender (“PNC”) 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 common stock of iBio 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 September 30, 2014 and June 30, 2014). The Term Loan bears interest at PNC’s Base Rate or the Eurodollar Rate, at Borrowers’ option, plus 3.25% (3.75% as of September 30, 2014 and June 30, 2014).  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 must sell the iBio Stock and use the proceeds to repay the Term Loan and (ii) the requirement to prepay the outstanding amount of all 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, 2014, 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 the 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 September 30, 2014, the Company is in compliance with the fixed charge coverage ratio maintenance requirement.

9

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

During certain periods in the fiscal year ended June 30, 2013 and continuing through the quarter ended September 30, 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 November 7, 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 and a member of CD Financial, LLC (“CD Financial”) (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 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) a Stock Pledge Agreement with PNC, pursuant to which the Company pledged to PNC the iBio Stock; (ii) a Mortgage and Security Agreement with PNC with IHT Properties; and (iii) an Environmental Indemnity Agreement with PNC.

CD FINANCIAL, LLC TROUBLED DEBT RESTRUCTURING

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.

10

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

The proceeds of the CD Notes were used to refinance (a) the Original CD Note, (b) a $300,000 note issued by MDC to CD Financial which was assigned by MDC to the Company, (c) past due interest in the aggregate amount of $333 and (d) other expenses owed to CD Financial by the Company in the aggregate amount of approximately $217.

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 September 30, 2014 and June 30, 2014, the related embedded derivative liability with respect to conversion price protection provisions on the CD Convertible Note has an estimated fair value of $503 and $717, respectively.

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

11

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

OTHER LONG TERM DEBT

Related Party Debt.  On June 27, 2012, MDC and the Company entered into separate promissory notes with (i) Vitamin Realty Associates, LLC (“Vitamin Realty”), which is 100% 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 Party Leases).  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.

Capitalized Lease Obligations.  On August 22, 2014, the Company entered into a capitalized lease obligation with Marlin Leasing in the amount of $47, which lease is secured by a certain machinery and equipment and matures on August 28, 2016.  The lease payment amount of approximately $2 is payable monthly and has an imputed interest rate of 5.6%.

On August 28, 2014, the Company entered into a capitalized lease obligation with Quantum Analytics in the amount of $138, which lease is secured by a certain machinery and equipment and matures on February 27, 2016.  The lease payment amount of approximately $8 is payable monthly and has an imputed interest rate of 0%.

Equipment Financing Note.  On September 22, 2014, MDC entered into a Convertible Line of Credit Note (the “LC Note”) in the amount of $350 with PNC Equipment Finance, LLC (“PNCEF”).  The LC Note is convertible into a term note upon completion of the advances under the LC Note.  During the period from September 22, 2014 to and including the Conversion Date (defined below), the Company may borrow up to the full value of the LC Note ($350).  The “Conversion Date” is the earliest to occur of (i) July 31, 2015 or (ii) the date when the Company notifies PNCEF that no more advances will be requested or (iii) the date when PNCEF has made advances in an aggregate amount of $350.  As of September 30, 2014, the Company has requested and received advances under the LC Note in the amount of $205.  Prior to the Conversion Date, amounts outstanding under the LC Note bear interest at a rate per annum (“Floating Rate”) which is at all times equal to the sum of LIBOR Rate plus 325 basis points (3.25%).  As of September 30, 2014, the Floating Rate was 3.4%.  On October 15, 2014, PNCEF advanced an additional $68 under the LC Note.  The Company is expecting to complete the advances no later than the fiscal quarter ending March 31, 2015 and convert the LC Note to a three year term note, at which time the Company will have the option to elect a fixed rate of interest as offered by PNCEF on the Conversion Date.

In addition, in connection with the LC Note, the following loan documents were executed: (i) a Security Agreement with PNCEF and MDC; (ii) a Guaranty and Security Agreement with PNCEF and the Company; and (iii) a Cross Collateralization Agreement with PNC, PNCEF and MDC.

12

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

Note 6. Significant Risks and Uncertainties

(a) Major Customers. For the three months ended September 30, 2014 and 2013, approximately 81% and 79%, respectively of consolidated net sales, were derived from two customers. These two customers are in the Company’s Contract Manufacturing Segment and represent approximately 63% and 26% and 72% and 15% of this Segment’s net sales in the three months ended September 30, 2014 and 2013, respectively.  A third customer in the Branded Nutraceutical Segment, while not a significant customer of the Company’s consolidated net sales, represented approximately 78% and 39% of net sales in the three months ended September 30, 2014 and 2013, respectively, of the Branded Nutraceutical Segment. Accounts receivable from these customers represented approximately 81% and 74% of total net accounts receivable as of September 30 and June 30, 2014, respectively. The loss of any of these customers could 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 63% of the Company’s employees are covered by a union contract and are employed in its New Jersey facilities. The contract was renewed in May 2012 and expires in August 2015.

Note 7. Commitments and Contingencies

(a) Leases

Related Party Leases. Warehouse and office facilities are leased from Vitamin Realty, which is 100% owned by the Company’s chairman, president and major stockholder and certain of his family members, who are also executive officers and directors of the Company.  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.  On May 19, 2014, AgroLabs entered into an Amendment to the lease agreement entered into on January 5, 2012, with Vitamin Realty for an additional 2,700 square feet of warehouse space in New Jersey, the term of which was to expire on January 31, 2019 to extend the expiration date to January 1, 2024.  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 months ended September 30, 2014 and 2013 on these leases were $210 and $206 respectively, and are included in both cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. As of September 30, 2014 and June 30, 2014, the Company had an outstanding obligation to Vitamin Realty of $858 and $902, respectively, included in accounts payable, accrued expenses and other liabilities 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 (inclusive of the related party lease with Vitamin Realty).

13

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

The minimum rental commitments for long-term non-cancelable leases are as follows:

Total rent expense, including real estate taxes and maintenance charges, was approximately $252 and $247 for the three months ended September 30, 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 November 7, 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, net - CD Financial, LLC and other Long Term Debt).

14

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

Neither Mr. DeSantis nor Mr. Kay received any compensation from the Company in connection with these guarantees.  The Individual Guarantees automatically terminated upon the satisfaction of certain conditions set forth in the Loan Agreement which 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, 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.

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 September 30, 2014 and 2013 were $2,283 and $3,085, respectively.

15

 

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)
 

Financial information relating to the three months ended September 30, 2014 and 2013 operations by business segment are as follows:

16

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, 2014.

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.  Our selling and administrative expenses were slightly lower in the three months ended September 30, 2014, by $85,000, compared to the same period a year ago.  This represents a decline of 9%, whereas our sales in the three months ended September 30, 2014 declined approximately 7% compared to the three months ended September 30, 2013.  The decrease of approximately $0.6 million was primarily in our Contract Manufacturing Segment ($0.5 million) due to lower sales to our major customer, Herbalife in the amount of $1.1 million which was offset, in part, by an increase in sales to our other major customer in this segment, Life Extensions, of $0.8 million.  Our sales to one of our largest customers has been adversely affected by currency controls in their Venezuelan business and product import controls in their Argentina business. At this time our customer does not expect the situation in either market to improve in the foreseeable future.

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.  We forecasted that we would sell new items in our Canada market this three month period ended September 30, 2014, however, due to delays in the approval process of the labels and other artwork, the sales of these new items are expected to ship in our quarter ending on December 31, 2014.  Although we are not expecting the dollar amount to be significant to our consolidated net sales, this segment was successful in introducing new products to its existing customer base which should result in additional exposure of the AgroLabs brand.  For the three months ended September 30, 2014, our net sales in the Branded Product Segment increased by 16%, however, the margins on these sales decreased from approximately 20% to 2% due to the nature of these sales, as they were primarily to liquidators at reduced margins in order to sell through expiring products in our inventory.

In the three months ended September 30, 2014, our income from operations was approximately $0.4 million, which covered our debt service requirements and assists us in continuing to improve our days past due to suppliers and to pay our vendors on a more timely basis than we have been able to in the past.

17

Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies in the three months ended September 30, 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, 2014.

Results of Operations

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:

 

18

For the Three Months Ended September 30, 2014 compared to the Three Months Ended September 30, 2013

Sales, net.Sales, net, for the three months ended September 30, 2014 and 2013 were $8.6 million and $9.2 million, respectively, a decrease of 6.6%, and are comprised of the following:

For the three months ended September 30, 2014 and 2013 a significant portion of our consolidated net sales, approximately 81% and 79%, respectively, were concentrated among two customers, Herbalife and Life Extensions, customers in our Contract Manufacturing Segment.  Herbalife and Life Extensions represented approximately 63% and 26% and 72% and 15%, respectively of our Contract Manufacturing Segment’s net sales in the three months ended September 30, 2014 and 2013, respectively.  The loss of any of these customers could have a significant adverse impact on our financial condition and results of operations.  Costco Wholesale Corporation (“Costco”) (a customer of our Branded Proprietary Products Segment), while not a significant customer of our consolidated net sales represented approximately 78% and 39% of net sales in the three months ended September 30, 2014 and 2013, respectively of the Branded Propriety Products Segment.

The decrease in net sales of approximately $0.6 million was primarily the result of:

·   Net sales decreased in our Contract Manufacturing Segment by $0.5 million primarily due to a decrease in net sales volume to Herbalife of approximately $1.1 million (primarily in the international markets for Herbalife) offset by, in part, increased sales volumes to one of our major customers, Life Extensions, in the three months ended September 30, 2014, of approximately $0.8 million compared to the comparable prior period.

·   Net sales in our Branded Nutraceutical Segment increased by approximately $47,000 in the three months ended September 30, 2014, primarily as the result of the increased sales volume of $0.2 million to Costco.  These sales were offset by promotional costs and resulted in an increase of $150,000 in net sales from Costco.  Other customer sales in this segment decreased by approximately $90,000 as we were selling through short dated products at reduced pricing.

·   Net sales in our Other Nutraceutical segments decreased by $0.1 million primarily as a result of decreased sales volumes to customers of IHT Health Products.

Cost of sales.  Cost of sales decreased by $0.3 million to $7.3 million for the three months ended September 30, 2014, as compared to $7.6 million for the three months ended September 30, 2013.  Cost of sales increased as a percentage of sales to 84.8% for the three months ended September 30, 2014 as compared to 82.6% for the three months ended September 30, 2013. The decrease in the cost of goods sold amount, as well as the increase in the cost of goods sold as a percentage of net sales, was primarily the result of the increased sales to Life Extension.  The cost of the raw materials for the Life Extension finished goods, on average, cost more per bottle than our other customers in the Contract Manufacturing Segment as they tend to use raw materials with trademarked characteristics which limits the ability to negotiate pricing.  A secondary cause is the production of more capsules than tablets.  There is a higher loss factor in the production of capsules than in tablets.  Our Contract Manufacturing Segment had a $0.3 million decrease in the cost of goods sold with the Branded Nutraceutical Segment increasing by $0.1 million (primarily as the result of increased sales and secondarily as the result of increased markdowns to inventory) and a decrease of $0.1 million in the Other Nutraceutical Segment as a result of decreased sales.

19

Selling and Administrative Expenses. There was a slight decrease in selling and administrative expenses of $85,000 in the three months ended September 30, 2014 as compared to the three months ended September 30, 2013. As a percentage of sales, net, selling and administrative expenses were approximately 10% for each of the three months ended September 30, 2014 and 2013. No one expense within our selling and administrative expenses changed by more than $24,000.

Other income (expense), net. Other income (expense), net was approximately $17,000 for the three months ended September 30, 2014 compared to $0.3 million for the three months ended September 30, 2013, and is composed of:

The change in fair value of derivative liabilities was mainly the result of the decreased volatility in the closing trading price of our common stock from 88.5% as of June 30, 2014 to 79.4% of September 30, 2014.  The volatility of 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.

Federal and state income tax, net. For the three months ended September 30, 2014 and 2013, we had a state tax expense of approximately $29 and $43, respectively.  We continue to maintain a full reserve on our deferred tax assets as it has been determined that based upon past losses, the Company’s past liquidity concerns and the current economic environment, that it is “more likely than not” the Company’s deferred tax assets may not be realized.  The increase in the state tax expense from 2013 to 2014 was the result of MDC using all of its state net operating losses in the fiscal year ended 2013 tax period, all of our other subsidiaries still have adequate net operating losses for state income tax purposes to absorb any taxable income for state tax purposes.

Net income. Our net income for the three months ended September 30, 2014 and 2013 was approximately $0.4 million and $0.3 million, respectively.

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, as well as sales orders from our customers in our contract manufacturing segment,  seem to increase in late December to early January as consumers become health conscious as they enter the new year.

20

The Company believes that there are other non-seasonal factors that also may 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 September 30, 2014 and June 30, 2104, our working capital deficit was approximately $2.5 million. Our current assets and current liabilities each increased by approximately $1.3 million.

Net cash used in operating activities of $0.5 million in the three months ended September 30, 2014, includes net income of approximately $0.4 million.  After excluding the effects of non-cash expenses, including depreciation and amortization, and changes in the fair value of derivative liabilities, the adjusted cash provided from operations before the effect of the changes in working capital components was $0.3 million. Cash used in operations from our working capital assets and liabilities in the amount of approximately $0.8 million and was primarily the result of increases in inventories of $1.3 million and $0.1 million in each of accounts receivable and other current assets and offset, in part, by a net increase in accounts payable and accrued expenses and other liabilities of approximately $0.7 million each.

Net cash provided by operating activities of $0.8 million in the three months ended September 30, 2013, includes net income of approximately $0.3 million.  After excluding the effects of non-cash expenses, including depreciation and amortization, and changes in the fair value of derivative liabilities, the adjusted cash provided from operations before the effect of the changes in working capital components was $0.5 million. Cash was provided by operations from our working capital assets and liabilities in the amount of approximately $0.2 million and was the result of a decrease in accounts receivable of $0.4 million and offset, in part, by a net decrease in accounts payable and accrued expenses and other liabilities and an increase in inventories of approximately $0.1 million each.

21

Cash used in investing activities was used for the purchase of machinery and equipment for approximately $0.2 million in the three months ended September 30, 2014, compared to using approximately $2,000 for the purchase of machinery and equipment in the three months ended September 30, 2013.

Cash provided from financing activities was approximately $0.5 million for the three months ended September 30, 2014, $8.8 million from advances under our revolving credit facility and $0.2 million from proceeds under our convertible line of credit for equipment financing offset, in part, by repayments of advances under our revolving credit facility of $8.3 million and principal under our term note in the amount of $0.1 million.  Cash used in financing activities was approximately $0.3 million for the three months ended September 30, 2013, $9.1 million for repayments under our revolving credit facility and repayments of principal under our term note in the amount of $0.1 million, offset by advances under our revolving credit facility of $8.9 million

As of September 30, 2014, we had cash of $0.3 million, funds available under our revolving credit facility of approximately $0.9 million and a working capital deficit of approximately $2.5 million. Our working capital deficit includes $4.6 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 $0.4 million in the three months ended September 30, 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 September 30, 2015.

Our total annual commitments at September 30, 2014 for long term non-cancelable leases of approximately $599,000 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 November 7, 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 three months ended September 30, 2014 and 2013 were approximately $0.4 million ($0.2 million funded with capitalized lease financing) and $2,000, respectively.  The Company has budgeted approximately $0.5 million for capital expenditures for fiscal year 2015.  The total amount is expected to be funded from lease financing and cash provided from the Company’s operations.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

22

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 September 30, 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 months ended September 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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, 2014, 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, 2014.

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

None.

23

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

10.1	Convertible Line of Credit Note, dated September 22, 2014, by and among INB: Manhattan Drug Company and PNC Equipment Finance LLC in the original principal amount of $350,000
10.2	Cross Collateralization Agreement, dated September 22, 2014, by and among INB: Manhattan Drug Company, PNC Bank National Association and PNC Equipment Finance LLC
10.3	Security Agreement, dated September 22, 2014 by and among INB: Manhattan Drug Company and PNC Equipment Finance LLC
10.4	Guaranty and Suretyship Agreement, dated September 30, 2014, by and among Integrated BioPharma, Inc. and PNC Equipment Finance LLC
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 September 30, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the three months ended September 30, 2014 and 2013, (ii) Condensed Consolidated Balance Sheets as of September 30, 2014 and June 30, 2014, (iii) Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2014 and 2013, and (iv) the Notes to Condensed Consolidated Statements.

24

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:  November 7, 2014	By: /s/ E Gerald Kay
	E. Gerald Kay,
	President and Chief Executive Officer

Date: November 7, 2014	By: /s/ Dina L. Masi
	Dina L. Masi,
	Chief Financial Officer & Senior Vice President

25

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: November 7, 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: November 7, 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 September 30, 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: November 7, 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 September 30, 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: November 7, 2014	By: /s/ Dina L. Masi
	Dina L. Masi,
	Chief Financial Officer & Senior Vice President

EX-10.1

    exhibit10_1.htm
    
    
    

EX-10.2

Exhibit 10.2

Cross Collateralization Agreement

THIS CROSS COLLATERALIZATION AGREEMENT (this “Agreement”) is made as of this 22nd  day of September, 2014, by and among INB:MANHATTAN DRUG COMPANY, INC.  (the “Grantor”), PNC BANK, NATIONAL ASSOCIATION (“Creditor A”) and PNC EQUIPMENT FINANCE, LLC (“Creditor B”).

WHEREAS, the Grantor and Creditor A have entered into, or may hereafter enter into, certain financing arrangements, as evidenced by one or more promissory notes, loan agreements or other agreements, instruments and documents (collectively, the “Creditor A Documents”); and

WHEREAS, the Grantor’s obligations to Creditor A under the Creditor A Documents are secured by one or more mortgage liens, Uniform Commercial Code security interests, pledges of personal property or other collateral security arrangements in the Grantor’s real or personal property, as set forth in the Creditor A Documents (the “Creditor A Collateral”); and

WHEREAS, the Grantor and Creditor B have entered into, or may hereafter enter into, certain financing arrangements, as evidenced by one or more promissory notes, loan agreements or other agreements, instruments and documents (collectively, the “Creditor B Documents”); and

WHEREAS, the Grantor’s obligations to Creditor B under the Creditor B Documents are secured by one or more mortgage liens, Uniform Commercial Code security interests, pledges of personal property or other collateral security arrangements in the Grantor’s real or personal property, as set forth in the Creditor B Documents (the “Creditor B Collateral”); and

WHEREAS, Creditor A and Creditor B are affiliates under the common control of The PNC Financial Services Group, Inc.; and

WHEREAS, the parties hereto desire to further secure all obligations of the Grantor to both Creditor A and Creditor B (collectively, the “Secured Parties”) with both the Creditor A Collateral and the Creditor B Collateral;

NOW, THEREFORE, in consideration of the mutual undertakings described herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto covenant and agree as follows:

1.           Security for Financing Arrangements.  The obligations secured by the Creditor A Collateral and by the Creditor B Collateral shall include all loans, advances, debts, liabilities, obligations, covenants and duties owing by the Grantor to Creditor A or Creditor B (whether held jointly or severally), of any kind or nature, present or future (including any interest accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to the Grantor, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, whether or not (i) evidenced by any note, guaranty, or other instrument,  (ii) arising under any agreement, instrument or document,  (iii) for the payment of money,  (iv) arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, (v) under any interest or currency swap, future, option or other interest rate protection or similar agreement, (vi) under or by reason of any foreign currency transaction, forward, option or other similar transaction providing for the purchase of one currency in exchange for the sale of another currency, or in any other manner,  (vii) arising out of overdrafts on deposits or other accounts or out of electronic funds transfers (whether by wire transfer or through automated clearing houses or otherwise) or out of the return unpaid of, or other failure of the Bank to receive final payment for any check, item, instrument, payment order or other deposit or credit to a deposit or other account, or out of the Bank’s non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository  or other similar arrangements,  and any amendments, extensions, renewals or increases of or to any of the foregoing, and all costs and expenses of Creditor A or Creditor B incurred in the documentation, negotiation, modification, enforcement, collection and  otherwise in connection with any of the foregoing, including reasonable attorneys’ fees and expenses (collectively, the “Obligations”).

2.           Effect on Creditor A Documents and Creditor B Documents.  This Agreement is deemed incorporated into each of the Creditor A Documents and the Creditor B Documents.  To the extent that any term or provision of this Agreement is or may be deemed expressly inconsistent with any term or provision in any Creditor A Document or any Creditor B Document, the terms and provisions hereof shall control.  The Grantor hereby confirms and ratifies each of the liens, security interests, mortgages or pledges granted in the Creditor A Collateral and the Creditor B Collateral, all of which shall continue unimpaired and in full force and effect.  Except as modified hereby, the terms and provisions of the Creditor A Documents and the Creditor B Documents remain unchanged and in full force and effect.  Except as expressly provided herein, this Agreement shall not constitute an amendment, waiver, consent or release with respect to any provision of the Creditor A Documents or the Creditor B Documents, a waiver of any default or Event of Default thereunder, or a waiver or release of any of the Secured Parties’ rights and remedies (all of which are hereby reserved).  The Grantor hereby ratifies and confirms the confession of judgment and waiver of jury trial provisions (if applicable) contained in the Creditor A Documents or the Creditor B Documents.

3.           Further Assurances.  By its signature hereon, the Grantor irrevocably authorizes  either Secured Party to execute (on behalf of the Grantor) and file against the Grantor one or more  financing , continuation  or amendment statements pursuant to the Uniform Commercial Code, or any other instrument, document or agreement in form satisfactory to  such Secured Party that such Secured Party may consider necessary or desirable to create, preserve, continue, perfect or validate the cross-collateralized security interests granted hereunder or to enable such Secured Party to exercise or enforce its rights hereunder, under the Creditor A Documents or under the Creditor B Documents with respect to such security interests.

4.           Rights and Obligations Absolute.  All rights of the Secured Parties and the security interests hereunder and the obligations of the Grantor hereunder and under the Creditor A Documents and the Creditor B Documents shall be absolute and unconditional and will not be affected by any amendment, renewal, waiver of or increase in the Obligations, any surrender, exchange, acceptance, compromise or release by the Secured Parties of any other party, or any guarantee or any security held by either of them for any of the Obligations, by any delay or omission of the Secured Parties in exercising any right or power with respect to any of the Obligations or any guarantee or collateral held by either of them for any of the Obligations, by any failure of the Secured Parties to take any steps to perfect or maintain their lien or security interest in or to preserve their rights to any security or other collateral for any of the Obligations or any guarantee, by any irregularity, unenforceability or invalidity of any of the Obligations or any part thereof or any security or other guarantee thereof, or by any other circumstance which might otherwise constitute a defense available to or a discharge of the Grantor or a third party pledgor.  Nothing herein shall prevent or otherwise limit either Secured Party from exercising all remedies otherwise permitted by applicable law or under the terms of the documents evidencing the Obligations owed to such Secured Party.

5.           Obligations of Secured Parties Regarding Enforcement of Remedies.  Either of the Secured Parties may exercise their remedies against the Creditor A Collateral or the Creditor B Collateral at any time following the occurrence of an Event of Default (as defined in any Creditor A Document or any Creditor B Document), without the consent of the other Secured Party.   Nothing herein shall require either Secured Party to declare an Event of Default or to enforce its remedies under the Creditor A Documents or the Creditor B Documents at any time, but each Secured Party shall notify the other Secured Party when any such action is taken.  Neither of the Secured Parties shall be under any obligation to marshal any assets in favor of the Grantor or any other person or entity or against or in payment of any or all of the Obligations due the Secured Parties.

2

6.           Repayments or Recovery from Secured Parties.  If any demand is made at any time upon either Secured Party for the repayment or recovery of any amount received by it in payment or on account of any of the Obligations and if such Secured Party repays all or any part of such amount by reason of any judgment, decree or order of any court or administrative body or any settlement or compromise of any such demand, then (a) the Grantor will be and remain liable hereunder for the amount so repaid or recovered to the same extent as if such amount had never been received originally by such Secured Party and (b) if one Secured Party realized upon Creditor A Collateral or Creditor B Collateral and paid over a portion of the proceeds to the other Secured Party, the Secured Party receiving such proceeds from the Secured Party which originally received such proceeds shall restore to the Secured Party which originally received such proceeds the amount required to be restored, without interest.  The provisions of this section will be and remain effective notwithstanding any contrary action which may have been taken by the Grantor in reliance upon such payment, and any such contrary action so taken will be without prejudice to the Secured Parties’ rights under this Agreement, the Creditor A Documents and the Creditor B Documents, and will be deemed to have been conditioned upon such payment having become final and irrevocable.

7.           Changes in Writing.  No modification, amendment or waiver of, or  consent to any departure by the Grantor from,  any provision of this Agreement will be effective unless made in a writing signed by the Secured Parties, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  No notice to or demand on the Grantor  will entitle the Grantor to any other or further notice or demand in the same, similar or other circumstance.

8.           Entire Agreement.  This Agreement (including the documents and instruments referred to herein) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.

9.           Counterparts.  This Agreement may be signed in any number of counterpart copies and by the parties hereto on separate counterparts, but all such copies shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart.  Any party so executing this Agreement by facsimile transmission shall promptly deliver a manually executed counterpart, provided that any failure to do so shall not affect the validity of the counterpart executed by facsimile transmission.

10.           Successors and Assigns.  This Agreement will be binding upon and inure to the benefit of the Grantor and the Secured Parties and their respective heirs, executors, administrators, successors and assigns; provided, however, that the Grantor may not assign this Agreement in whole or in part without the Secured Parties’ prior written consent and either Secured Party at any time may assign this Agreement in whole or in part.

11.           Interpretation.  In this Agreement, unless the parties otherwise agree in writing, the singular includes the plural and the plural the singular; the word “or” shall be deemed to include “and/or”, the words “including”, “includes” and “include” shall be deemed to be followed by the words “without limitation”; references to sections or exhibits are to those of this Agreement; and references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications not prohibited by the terms of this Agreement. Section headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.  Unless otherwise specified in this Agreement, all accounting terms shall be interpreted and all accounting determinations shall be made in accordance with generally accepted accounting procedures.  If this Agreement is executed by more than one party as the Grantor, the obligations of such persons or entities will be joint and several.

3

WITNESS the due execution hereof as a document under seal, as of the date first written above.

WITNESS / ATTEST: /s/ Christina Kay Print Name:  Christina Kay Title:  Vice President (Include title only if an officer of entity signing to the right) INB:MANHATTAN DRUG COMPANY, INC. (a New York corporation) By:  /s/ Dina L. Masi                                                             (SEAL) Print Name:  Dina L. Masi Title:  Chief Financial Officer   PNC Bank, National Association By:  /s/ Joanne Fu                                                             (SEAL) Print Name:  Joanne Fu Title:  Assistant Vice President   PNC Equipment Finance, LLC By:  /s/ Jill M. Woods                                                              (SEAL) Print Name:  Jill M. Woods Title:  Vice President

4

CONSENT OF GUARANTOR

The undersigned guarantor hereby consents to the provisions of the foregoing Cross Collateralization Agreement and confirms and agrees that the undersigned’s obligations under the Guaranty and Suretyship Agreement dated September 22, 2014 (the “Guaranty”), relating to some or all of the Obligations of the Grantor mentioned in the foregoing Cross Collateralization Agreement shall be unimpaired by the Cross Collateralization Agreement and that the undersigned has no defenses or set offs against Creditor A, Creditor B or their respective officers, directors, employees, agents or attorneys with respect to the Guaranty and that all of the terms, conditions and covenants in the Guaranty remain unaltered and in full force and effect and are hereby ratified and confirmed.  The undersigned hereby certifies that the representations and warranties made in the Guaranty are true and correct.  The undersigned hereby ratifies and confirms the confession of judgment and waiver of jury trial provisions (if applicable) contained in the Guaranty.

WITNESS the due execution hereof as a document under seal, as of September ____, 2014, intending to be legally bound hereby.

WITNESS / ATTEST: /s/ Christina Kay Print Name:  Christina Kay Title:  Executive Vice President (Include title only if an officer of entity signing to the right) INTEGRATED BIOPHARMA, INC. (a Delaware corporation)   By:  /s/ E. Gerald Kay                                                (SEAL) Print Name:  E. Gerald Kay   Title:  Chief Executive Officer and President

5

EX-10.3

Exhibit 10.3

SECURITY AGREEMENT

(All Personal Property and Fixtures)

Borrower/Lessee Grantor

This Security Agreement (together with all amendments, supplements and other modifications, this "Agreement") executed in Hillside, New Jersey, as of this 22nd day of September, 2014, by INB:MANHATTAN DRUG COMPANY, INC.  (together with its permitted successors and assigns, heirs and personal representatives, "Grantor") whose mailing address is 225 Long Ave., Hillside, NJ 07205 toPNC Equipment Finance, LLC ("PNCEF"), with its principal office at 995 Dalton Avenue, Cincinnati, OH 45203.

1.           Grant of Interest.  Grantor hereby grants to PNCEF a security interest in all of Grantor's right, title and interest in the following property of Grantor (excluding Consumer Goods) wherever located and whether now existing or hereafter acquired or created (collectively, the "Collateral"), including, without limitation:

(a)           all Accounts, all Equipment, all Inventory, all Chattel Paper, all General Intangibles, all Deposit Accounts, all Documents, all Instruments, all Goods, all Fixtures, all Letter-of-Credit Rights, all Supporting Obligations;

(b)           all property, tangible or intangible, in which Grantor now has or hereafter acquires any rights, including, without limitation, all property which now or hereafter is in PNCEF's control (by document of title or otherwise) or possession or is owed by PNCEF to Grantor; and for all of the foregoing Collateral, all books and records, Software, attachments, accessories, replacements, additions and substitutions therefor (whether now or hereafter installed therein or affixed thereto) and all Proceeds thereof.

This Collateral secures the full and prompt payment to PNCEF of all obligations of Grantor to PNCEF, or to any other direct or indirect subsidiary of The PNC Financial Services Group, Inc. (“PNCEF Affiliate”), whether incurred directly or acquired by purchase, pledge, or otherwise and whether participated to or from PNCEF or PNCEF Affiliate in whole or in part, including, without limitation, (a)every such obligation of Grantor whether owing by Grantor alone or with one or more Persons in a joint, several, or joint and several capacity, whether now owing or existing or later arising or created, whether owed absolutely or contingently, whether created by lease, loan, overdraft, guaranty of payment, or other contract, quasi-contract, tort, statute, other operation of law or otherwise and (b) any and all obligations and liabilities of Grantor, whether absolute or contingent, whether now owing or existing or later arising or created, whether evidenced or acquired (including all renewals, extensions, and modifications thereof or substitutions), under (i) any agreement, device or arrangement designed to protect Grantor from fluctuations of interest rates, exchange rates or forward rates, including, but not limited to, dollar-denominated or cross-currency exchange agreements, forward currency exchange agreements, interest rate caps, collars or floors, forward rate currency or interest rate options, puts, warrants, swaps, swaptions, U.S. Treasury locks and U.S. Treasury options, (ii) any other interest rate hedging transactions, such as, but not limited to, managing Grantor's interest rate risk associated with any pending or potential capital market transactions such as fixed rate bond issues and (iii) any and all cancellations, buybacks, reversals, terminations or assignments of any of the foregoing (collectively, the "Subject Obligations").

2.           Representations and Warranties.  Grantor represents and warrants to PNCEF as follows:

(a)           Existence.  Grantor's legal name is exactly as set forth in the first paragraph of this Agreement.  Grantor is a corporation organized and in good standing under New York law.

(b)           Location.  Grantor's chief executive office is located at 225 Long Ave., Hillside, NJ 07205.  All Goods in which Grantor has any rights are, and for the past five (5) years have been, kept at Grantor's chief executive office and at the locations, if any, set forth on Schedule A hereto.

(c)           Ownership.  Grantor owns all of the presently existing Collateral, free and clear of any and all adverse claims, assignments, attachments, leases, mortgages, security interests or other liens of any kind or nature ("Encumbrances") except those in favor of PNCEF and those consented to in writing by PNCEF (collectively, the "Permitted Encumbrances").  Each Encumbrance granted hereby, when duly and properly perfected, will be a first priority security interest in the Collateral, prior to all Encumbrances except for Permitted Encumbrances and will secure the payment of the Subject Obligations.  There exists no default under any Collateral consisting of Instruments or contracts by any party thereto.

(d)           Authority; No Consent.  Grantor has all right, power and authority to enter into and deliver this Agreement and grant to PNCEF the Encumbrances on the Collateral.  This Agreement is a valid obligation of Grantor, enforceable in accordance with its terms.  No consent, authorization, approval or other action of any third party is required for the grant by Grantor of the Encumbrances hereunder.

 3.           Covenants.

(a)           No Transfer or Encumbrance.  Grantor agrees that it will not, without in each case obtaining PNCEF's prior written consent, (i)sell, lease, transfer or otherwise dispose of all or any part of the Collateral or license any of the Collateral except as otherwise permitted herein, or (ii)grant any Encumbrances in or permit any Collateral to be or become subject to any Encumbrance except for Permitted Encumbrances.  Grantor shall comply with all applicable laws, rules and regulations related to the Collateral.  Grantor agrees to join PNCEF to take all steps necessary to preserve, protect and defend PNCEF's security interest in the Collateral, at Grantor's expense, as PNCEF may from time to time require.

(b)           Insurance.  Grantor will keep the Collateral consisting of Inventory, Equipment, Goods and Fixtures insured with such insurers, in such amounts and against all risks to which they may be exposed, as each shall be reasonably acceptable to PNCEF, which policies shall name PNCEF as an additional insured and shall contain satisfactory loss payable clauses in favor of PNCEF and contain insurer's agreement that any loss thereunder shall be payable to PNCEF notwithstanding any action, inaction, or breach of representation or warranty by Grantor.  Annually and upon PNCEF's request, Grantor will deliver to PNCEF certificates evidencing such policies and, upon request, include copies of such policies.  Grantor hereby assigns to PNCEF any returned or unearned premium due upon cancellation of any such insurance and directs any insurer to pay to PNCEF all amounts so due.  Each policy for liability insurance shall provide for all losses to be paid on behalf of Grantor and PNCEF as their interests may appear and each policy for property damage shall provide for losses to be paid to PNCEF.  All amounts received by PNCEF in payment of insurance losses or returned or unearned premiums may, at PNCEF's option, be applied either to the Subject Obligations (with such allocation as to item and maturity as PNCEF may deem advisable) or to the repair, replacement or restoration of the Collateral or either thereof.

2

(c)           Inspection.  Grantor will at all times keep accurate and complete records of the Collateral.  PNCEF and its agents shall have the right at all reasonable times to examine and inspect the Collateral and to make extracts from the books and records related to the Collateral, and to examine, appraise and protect the Collateral.

(d)           Preservation of Collateral; Risk of Loss.  The Collateral shall remain personal property at all times and shall not be affixed.  Grantor will maintain the Collateral in good condition and repair, ordinary wear and tear excepted.  Grantor will pay promptly all taxes, levies and all costs of repair, maintenance and preservation.  Grantor bears the risk of loss of the Collateral.

(e)           Merger; Consolidation.  Grantor will preserve its existence and will not, in one transaction or in a series of related transactions, merge into or consolidate with any other entity.

(f)           Notice.  Grantor agrees to give PNCEF:

(i)           not less than thirty (30) days' prior written notice of any change in Grantor's name, in the location of its chief executive office or personal residence, or any other information provided under subsection 2(a) or of any other change in circumstances which affects or may affect the continuing efficacy of any financing statement filed by Grantor and PNCEF, or the continuing status of PNCEF's security interest as the first and prior lien on the Collateral,

(ii)           immediate written notice if any third party claims any Encumbrance on any of the Collateral or claims that Grantor's use thereof infringes or unlawfully conflicts with any rights of such party, and

(iii)           from time to time, upon PNCEF's request, statements and schedules further identifying and describing the Collateral, in form and substance satisfactory to PNCEF.

(g)           Further Assurances.  Grantor agrees to execute and deliver from time to time upon request of PNCEF such other instruments of assignment, conveyance and transfer and take such other action as PNCEF may reasonably request for the purpose of perfecting, continuing, amending, protecting or further evidencing the arrangements contemplated hereby or to enable PNCEF to exercise and enforce its rights and remedies hereunder.  Grantor will, at Grantor's expense, upon each request of PNCEF (i) file and hereby authorizes PNCEF to file, from time to time, financing statements or other Records in such public offices as PNCEF may require, together with continuation statements thereof and amendments thereto, containing, among other things, (A) a collateral description of "all personal property and assets" of Grantor or such other description of the Collateral as PNCEF may require, whether expanded or reduced, (B) an indication of any Agricultural Liens or other statutory liens held by PNCEF, and (C) Grantor's federal taxpayer identification number, social security number and/or state organizational number, if any, and any other identifying information as PNCEF may require, (ii) place a legend on all Chattel Paper indicating that PNCEF has a security interest in such Chattel Paper, (iii) where the Collateral is in the possession of a third party, join with PNCEF in notifying the third party of PNCEF's security interest and obtaining an acknowledgement from the third party that it is holding the Collateral for the benefit of PNCEF, (iv)if the Collateral is an Instrument, Chattel Paper or Collateral that requires possession to perfect PNCEF's lien thereon or the possession of which grants priority over a person filing a financing statement with respect thereto, deliver such Collateral to PNCEF, (v) execute control agreements in form and substance satisfactory to PNCEF evidencing PNCEF's control with respect to Collateral, the control of which perfects PNCEF's security interest therein, and (vi)comply with every other requirement deemed necessary by PNCEF for the perfection of its security interest in the Collateral. Without diminishing or impairing any of Grantor's obligations hereunder, a photographic, electronic or other reproduction of this Agreement shall be sufficient as a financing statement.

3

 4.           Provisions Applicable to Accounts.

(a)           Unless and until PNCEF shall have made demand upon Account Debtors to make their payments directly to PNCEF, Grantor shall have the right in the ordinary course of business to collect the Accounts and to grant such waivers and consents to, and to enter into such compromises with, and otherwise deal with Account Debtors in respect of the Accounts as Grantor in good faith may from time to time deem advisable.

(b)           Grantor will provide PNCEF immediate written notice whenever any Account (i) arises out of a contract with or order from the United States of America or any department, agency or instrumentality thereof or (ii) does not take the form of an "account" and is evidenced by a promissory note, letter of credit, lease or any similar instrument, Chattel Paper or General Intangible.

(c)           PNCEF may arrange for verification of Accounts with Account Debtors.

(d)           At any time and from time to time by giving prior written notice to Grantor, PNCEF shall have the right to:

(i)           enforce all of Grantor's rights against Account Debtors, including, without limitation, instructing Account Debtors, at Grantor's expense, to make their payments directly to PNCEF; and

(ii)           require Grantor to instruct Account Debtors to mail their payments to a post office lockbox which PNCEF shall maintain at Grantor's expense and to which only PNCEF shall have access and control.  If Grantor shall receive any payment on such Account, it will hold the amount so received in trust for the benefit of PNCEF and promptly remit it to PNCEF in the form received with necessary endorsements.

(e)           All payments received by PNCEF in respect of the Accounts shall be deposited either to (i) any of Grantor's general checking accounts with PNCEF or (ii) a cash collateral account which shall bear no interest and over which PNCEF shall have sole dominion and control and from which only PNCEF may withdraw funds, whichever option PNCEF shall from time to time elect by giving Grantor written notice thereof.  PNCEF shall have no responsibility to determine if payment is the correct amount owing.  Each such deposit shall be subject to PNCEF's general rules and regulations except to the extent, if any, inconsistent with this Agreement.

(f)           PNCEF may withdraw all funds from the cash collateral account as are from time to time "collected."  All funds so withdrawn shall be applied to the payment of the Subject Obligations with such allocation as to item and maturity as PNCEF in its discretion may deem advisable (except that so long as no Event of Default exists or no demand has been made, PNCEF shall not apply any such withdrawal to any Subject Obligations that is not then due and payable without first obtaining Grantor's consent).  If any funds so withdrawn and applied are recovered from PNCEF by any trustee in bankruptcy or anyone else or are discovered not to have been "collected" and collection thereof is denied to PNCEF, PNCEF shall reverse any such application to the extent the funds are recovered from or not collected by PNCEF.  PNCEF in its discretion may from time to time release to Grantor (or to Grantor's order) all or any of the funds then held in the cash collateral account, but no such release or releases shall commit PNCEF thereafter to make any further or other such releases.

4

(g)           Grantor irrevocably authorizes and directs each Account Debtor to honor any demand by PNCEF that all payments in respect of the Accounts thereafter be paid directly to PNCEF.  In each such case Account Debtor may continue directing all such payments to PNCEF until Account Debtor shall have received written notice from PNCEF either that the Subject Obligations has been paid in full or that PNCEF has released its security interest.  No Account Debtor shall have any responsibility to inquire into PNCEF's right to make any such demand or to follow PNCEF's disposition of any moneys paid to PNCEF by Account Debtor.

(h)           PNCEF may enforce payment, at Grantor's expense, of the Accounts by suit or otherwise (at Grantor's expense), but PNCEF shall have no duty to institute any suit or to take any other action to enforce the Accounts (or take action against or realize on any security therefor) or, having started any such suit or action, thereafter to continue the same.  PNCEF shall have full power and authority to execute and deliver such vouchers and receipts in respect of the Accounts, such endorsements of checks and such other writings in respect of the foregoing as PNCEF may from time to time deem advisable and shall have full power and authority to sign Grantor's signature to all such vouchers, receipts, endorsements and other writings whenever PNCEF deems such action advisable.

 5.           Provisions Applicable to Inventory.

(a)           Grantor shall not sell, transfer or otherwise dispose of all or any part of the Inventory; provided, however, that so long as no Event of Default exists or PNCEF has not made demand, Grantor shall have the right, in the ordinary course of business, to process and sell Inventory in arm's-length transactions; provided,however, that Grantor shall immediately deposit the proceeds thereof into the cash collateral account, if any then exists, or if none then exists, to any of Grantor's general checking accounts with PNCEF; and

(b)           Grantor shall not permit any Inventory to be evidenced by any warehouse receipt or other document of title (other than any bill of lading or similar document covering merchandise that has been sold in the ordinary course of business) or by any lease, conditional sales agreement or other Chattel Paper of any kind.

 6.           Provisions Applicable to Motor Vehicles. If any part of the Collateral shall be a motor vehicle for which a certificate of title may or must be issued, Grantor shall deliver to PNCEF (together with any other documentation requested by PNCEF), promptly after such certificate of title is issued to Grantor, the certificate of title together with such other documentation requested by PNCEF appropriately executed by Grantor so that PNCEF may cause its Encumbrance to be noted on the certificate of title by the appropriate authorities.

 7.           Additional Authorizations.  PNCEF is hereby appointed Grantor's attorney-in-fact to make adjustments of all insurance losses, to sign all applications, receipts, releases and other papers necessary for the collection of any such loss and any return or unearned premium, to execute proofs of loss, to make settlements, to endorse and collect any check or other item payable to Grantor issued in connection therewith, and to apply the same to the Subject Obligations.

 8.           Remedies.  If any Event of Default occurs or after demand is made by PNCEF, PNCEF has the right, at its option at any time and from time to time, without notice to Grantor to exercise the following rights and remedies which may be exercised simultaneously:

(a)           PNCEF shall have full power and right to exercise any and all rights and remedies available at law (including, without limitation, those afforded by the UCC) or in equity to collect, enforce or satisfy any of the Subject Obligations and exercise any or all of the rights and remedies in respect of the Collateral, including, without limitation, those provided herein or in any Related Writing.

5

(b)           PNCEF may enter any premises where the Collateral is located, and take possession of the Collateral or remove the Collateral from such premises.  On PNCEF's demand, Grantor will assemble and make the Collateral available to PNCEF at such place or places as PNCEF may reasonably require, all at Grantor's expense.

(c)           PNCEF may attach, execute or levy on any of the Collateral.

(d)           PNCEF may take over, collect and demand payment of all of Grantor's Accounts.

(e)           PNCEF may endorse in Grantor's name any checks, drafts, orders, notes or other instruments payable to Grantor which Grantor or PNCEF may receive in connection with the Collateral.  PNCEF shall also have the right to settle, adjust and compromise all present and future claims arising out of the Collateral.

(f)           PNCEF may retain, take control of or manage all or any Collateral.

(g)           PNCEF may do all acts and things necessary, in PNCEF's sole discretion, to fulfill Grantor's obligations under the Related Writings.

(h)           PNCEF shall have the right to sell, transfer or otherwise dispose of all or any of the Collateral at any time, or from time to time.  PNCEF shall give Grantor commercially reasonable prior notice of either the date after which any intended private sale is to be made or the time and place of any intended public sale, provided that PNCEF need give no such notice in the case of Collateral which PNCEF determines to be declining speedily in value or which is customarily sold on a recognized market.  Grantor waives advertisement of any such sale and (except only to the extent notice is specifically required by the next preceding sentence) waives notice of any kind in respect of such sale.  PNCEF shall have the right to conduct such sales on Grantor's premises, without charge therefor, and such sales may be adjourned from time to time in accordance with applicable law without further requirement of notice to Grantor.  At any public sale PNCEF may purchase the Collateral or any part thereof free from any right of redemption, which right Grantor hereby waives.  After deducting all expenses and attorneys' fees incurred in assembling, taking, repairing, storing and selling and delivering the Collateral or any part thereof, PNCEF may apply the net proceeds of the sale to the Subject Obligations with such allocation as to item and maturity as PNCEF in its sole discretion deems advisable, and shall refund the surplus, if any, to Grantor, who shall be liable for any deficiency.  PNCEF may sell or otherwise dispose of the Collateral without giving any warranties as to the Collateral and may specifically disclaim any warranties of title or the like, any or all of which will not be considered adversely to affect the commercial reasonableness of any sale or other disposition of the Collateral.  Grantor permits PNCEF to disclaim all representations and warranties provided under the UCC in any foreclosure sale contracts.

 9.           Indemnity; Fees and Expenses.  Grantor agrees to indemnify PNCEF from and against any and all claims, losses, and liabilities, except claims, losses, or liabilities resulting from PNCEF's gross negligence or willful misconduct.  Grantor will reimburse PNCEF, on demand, for any and all fees, costs, and expenses (including, without limitation, reasonable attorneys' fees) incurred by PNCEF prior to trial, at trial and at all post trial and appellate proceedings, including post petition fees incurred in a bankruptcy or similar insolvency or liquidation proceeding, whether or not suit be brought, in (a) administration of this Agreement, (b) custody, preservation, sale, use, collection or realization of the Collateral, (c) protection or enforcement of its rights in the Collateral or under this Agreement including, without limitation, uniform commercial code searches, judgment and tax lien searches for Grantor and each guarantor of the Subject Obligations, recordation taxes, documentary stamp taxes, transfer taxes and filing and recording fees or (d) failure of Grantor to perform or observe any provisions hereof.

6

10.           PNCEF May Perform.  If Grantor fails to perform any agreement contained herein, PNCEF may itself perform (but is not required to perform) or cause performance of, such agreement, and the expenses of PNCEF incurred in connection therewith shall be payable by Grantor upon PNCEF's demand.  If Grantor does not reimburse PNCEF, such amounts paid will become part of the Subject Obligations and will be secured hereunder.  The powers conferred on PNCEF hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.

11.           Notices.  Each notice to Grantor shall be in writing and shall be deemed to have been given or made when sent to Grantor, by certified mail, return receipt requested, or nationally recognized overnight courier service to the address of Grantor set forth herein or at such other address as Grantor may furnish to PNCEF from time to time.  Every notice to PNCEF shall be effective when delivered to PNCEF at its office (at the address set forth above) or at such other address as PNCEF may furnish to Grantor.  Grantor assumes all risks arising out of or in connection with each notice given hereunder.

12.           Definitions. As used in this Agreement, the following terms shall have the following meanings:  (a) "Event of Default" means any event of default as defined and occurring under any Related Writing; (b) "Record" means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form; (c) "Related Writing" means a Record of any kind that (i) evidences the Subject Obligations or pursuant to which any Subject Obligations is issued, (ii) evidences any Collateral or any interest therein or Proceeds thereof or which otherwise relates thereto in any manner and includes, without limitation, any warehouse receipt, bill of lading, certificate or affidavit, assignment, endorsement, trust receipt, contract of sale, lease, invoice or check, or (iii)is a financial statement, audit report, opinion, notice, certificate or other Record of any kind that is furnished to PNCEF by Grantor or by any officer, partner, employee, agent, auditor or counsel of Grantor; and (d) "UCC" means the Uniform Commercial Code as currently in effect in the jurisdiction as indicated in Section 13 hereof and as the Uniform Commercial Code may hereafter be amended, adopted and effective in such jurisdiction.  All terms used in this Agreement which are defined under the UCC and not otherwise defined herein, including, without limitation, all terms relating to the Collateral, shall have the meaning as set forth in the UCC.

13.           General Provisions.  The provisions of this Agreement shall be binding upon the successors, assigns, heirs and personal representatives of the parties hereto.  No single or partial exercise of any right, power or privilege shall preclude any further or other exercise thereof or of any other right, power or privilege, as each such right, power or privilege may be exercised either independently or concurrently with others and as often and in such order as PNCEF may deem expedient.  This Agreement contains the entire security agreement between Grantor and PNCEF and may be in addition to other security agreements executed by Grantor in favor of PNCEF.  If any one or more of the provisions hereof should be invalid, illegal or unenforceable in any respect, the finding shall only affect the provisions found to be void and the remaining provisions shall not be impaired.  No course of dealing in respect of, nor any omission or delay in the exercise of, any right, power or privilege by PNCEF under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any further or other exercise thereof or of any other right, power or privilege, as each such right, power or privilege may be exercised either independently or concurrently with others and in such order as PNCEF may deem expedient.  The provisions of this Agreement may be modified, altered or amended only by written agreement signed by PNCEF and Grantor.  PNCEF shall be entitled to equitable remedies with respect to each breach of any provision of this Agreement, and Grantor hereby waives any defense that might be asserted to bar any such equitable remedy.  PNCEF shall have the right to apply proceeds and payments in respect of the Subject Obligations with such allocation to the respective parts thereof and the respective due dates thereof as PNCEF in its sole discretion may from time to time deem advisable.  Each right, power or privilege is in addition to and not in limitation of any other rights, powers and privileges that PNCEF may otherwise have or acquire by operation of law (including, without limitation, the right of offset), by other contract or otherwise.  This Agreement shall be governed by the laws of the State of New Jersey without regard to its conflicts of law provisions that would give effect to the laws of another jurisdiction.

7

14.           Counterparts; Facsimile Signatures; Non-Paper Records.  This Agreement may be signed or otherwise authenticated in any number of counterparts and by different parties to this Agreement on separate counterparts, each of which, when so authenticated, shall be deemed an original, but all such counterparts shall constitute one and the same Agreement.  Any signature or other authentication delivered by facsimile or electronic transmission shall be deemed to be an original signature hereto.  Each party who signs or otherwise authenticates this Agreement hereby (a) agrees that PNCEF may create a duplicate of this Agreement by storing an image of it in an electronic or other medium (a "Non-Paper Record"); (b) agrees that, after creating the Non-Paper Record, PNCEF may discard or destroy the original in reliance on this paragraph; (c) agrees that the Non-Paper Record and any perceivable form of the Non-Paper Record shall be treated as the original for all purposes; and (d) expresses its present intent to adopt and accept the Non-Paper Record as an authenticated record of this Agreement.  This Agreement, when signed or authenticated pursuant to this section, shall be evidence of the existence of this Agreement and may be received in all courts and public places as conclusive evidence of the existence of this Agreement and that this Agreement was duly executed by the parties of this Agreement.

15.           Defeasance.  PNCEF's security interest in the Collateral shall remain in effect in accordance with this Agreement until the Subject Obligations has been fully satisfied and shall not be affected by the lapse of time or by the fact that there may be a time or times when no Subject Obligations is outstanding.  If and when PNCEF's security interest shall have terminated in accordance with the provisions of this Agreement, Grantor agrees to pay to PNCEF, on demand, an amount equal to all reasonable costs and expenses incurred by PNCEF in terminating its security interests or in notifying Account Debtors of any such termination.

16.           Jurisdiction and Venue; Waiver of Jury Trial.  Grantor and PNCEF, to the fullest extent permissible under applicable law, and for all purposes of this Agreement and any Related Writing, each hereby irrevocably submits to the nonexclusive jurisdiction of the state or federal courts sitting in the State of New Jersey, and irrevocably waives any objection to venue in any such court.  GRANTOR HEREBY, AND EACH HOLDER OF THIS AGREEMENT, BY TAKING POSSESSION THEREOF, KNOWINGLY AND VOLUNTARILY WAIVES JURY TRIAL IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED WRITING.  EACH HEREBY CERTIFIES THAT THE FOREGOING JURY WAIVER IS A MATERIAL INDUCEMENT TO PNCEF TO ENTER INTO THE TRANSACTION EVIDENCED BY THIS AGREEMENT, AND EACH OF THEM CERTIFIES THAT NO REPRESENTATIVE OF THE OTHER HAS REPRESENTED (EXPRESSLY OR OTHERWISE) THAT THE OTHER WOULD NOT OR MIGHT NOT ENFORCE THIS JURY WAIVER.

8

This Agreement is executed as of the date first written above, with the intent to be legally bound hereby.

                                                                                  Grantor:  INB:MANHATTAN DRUG COMPANY, INC.

                                                                  By:  /s/ Dina L. Masi (SEAL)

                                                                                 Name: Dina L. Masi

                                                                                 Title: Chief Financial Officer

9

SCHEDULE A

ADDITIONAL COLLATERAL LOCATIONS (subsection 2(b))

Street Address	County or Parish	State
201 Route 22 West, Hillside	Union	New Jersey
225 Long Ave, Bldg 15, Hillside	Union	New Jersey

EX-10.4

Exhibit 10.4

Guaranty and Suretyship                                                                           

Agreement

THIS GUARANTY AND SURETYSHIP AGREEMENT (this “Guaranty”) is made and entered into as of this 22nd day of September, 2014, by INTEGRATED BIOPHARMA,  INC. (the “Guarantor”), with an address at 225 Long Ave., Hillside, NJ 07205, in consideration of the extension of credit by PNC EQUIPMENT FINANCE, LLC (“PNCEF”), with an address at 995 Dalton Ave, Cincinnati, Ohio 45203, to INB:MANHATTAN DRUG COMPANY, INC.  (the “Obligor”), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

1. Guaranty of Obligations.

(a)           The Guarantor hereby unconditionally guarantees, as a primary obligor, and becomes surety for, (i) the prompt payment and performance of the Obligations and (ii) the prompt payment of all costs and expenses of PNCEF (including reasonable attorneys’ fees and expenses) incurred in the documentation, negotiation, modification, enforcement, collection and otherwise in connection with the Obligations (collectively, the “Guaranteed Obligations”).  As used herein, “Obligations” means all loans, leases, advances, debts, liabilities, obligations, covenants and duties owing by the Obligor to PNCEF or to any other direct or indirect subsidiary of The PNC Financial Services Group, Inc., of any kind or nature, present or future (including any interest accruing thereon after maturity, or after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to the Obligor, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), whether direct or indirect (including those acquired by assignment or participation), absolute or contingent, joint or several, due or to become due, now existing or hereafter arising, whether or not (i) evidenced by any note, guaranty or other instrument, (ii) arising under any agreement, instrument or document, (iii) for the payment of money, (iv) arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease or guarantee, (v) under any interest or currency swap, future, option or other interest rate protection or similar agreement, (vi) under or by reason of any foreign currency transaction, forward, option or other similar transaction providing for the purchase of one currency in exchange for the sale of another currency, or in any other manner, (vii) arising out of overdrafts on deposit or other accounts or out of electronic funds transfers (whether by wire transfer or through automated clearing houses or otherwise) or out of the return unpaid of, or other failure of PNCEF to receive final payment for, any check, item, instrument, payment order or other deposit or credit to a deposit or other account, or out of PNCEF's non-receipt of or inability to collect funds or otherwise not being made whole in connection with depository or other similar arrangements, or (viii) arising from any amendments, extensions, renewals and increases of or to any of the foregoing.

(b)           Notwithstanding anything to the contrary contained herein, the definition of “Obligations” shall specifically exclude any and all Excluded Swap Obligations.  The foregoing limitation of the definition of Obligations shall only be deemed applicable to the obligations of the Guarantor (or solely any particular Guarantor(s) if there is more than one Guarantor) under the particular Swap (or Swaps), or, if arising under a master agreement governing more than one Swap, the portion thereof, that constitute Excluded Swap Obligations.  As used herein, (i) “Excluded Swap Obligations” means, with respect to each Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap if, and to the extent that, all or any portion of this Guaranty that relates to the obligations under such Swap is or becomes illegal as to such Guarantor under the Commodity Exchange Act (7 U.S.C.§1 et seq.), as amended from time to time, and any successor statute (the “CEA”), or any rule, regulation, or order of the Commodity Futures Trading Commission (the “CFTC”), by virtue of such Guarantor’s failure for any reason to qualify as an “eligible contract participant” (as defined in the CEA and regulations promulgated thereunder) on the Eligibility Date for such Swap; (ii) “Eligibility Date” means the date on which this Guaranty becomes effective with respect to the particular Swap (for the avoidance of doubt, the Eligibility Date shall be the date of the execution of the particular Swap if this Guaranty is then in effect, and otherwise it shall be the date of execution and delivery of this Guaranty); and (iii) “Swap” means any “swap” as defined in Section 1a(47) of the CEA and regulations thereunder between the Borrower and PNC Bank, National Association other than (A) a swap entered into on, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the CEA, or (B) a commodity option entered into pursuant to CFTC Regulation 32.3(a).

1

(c)           If the Borrower defaults under any Obligations, the Guarantor will pay the Guaranteed Obligations due to PNCEF.

2.           Nature of Guaranty; Waivers.  This is a guaranty of payment and performance, and not merely of collection and PNCEF shall not be required or obligated, as a condition of the Guarantor's liability, to make any demand upon or to pursue any of its rights against the Obligor, or to pursue any rights which may be available to it with respect to any other person who may be liable for the payment of the Obligations.

This is an absolute, unconditional, irrevocable and continuing guaranty and will remain in full force and effect until all of the Obligations have been indefeasibly paid in full, and PNCEF has terminated this Guaranty.  This Guaranty will remain in full force and effect even if there is no principal balance outstanding under the Obligations at a particular time or from time to time.  This Guaranty will not be affected by any surrender, exchange, acceptance, compromise or release by PNCEF of any other party, or any other guaranty or any security held by it for any of the Obligations, by any failure of PNCEF to take any steps to perfect or maintain its lien or security interest in or to preserve its rights to any security or other collateral for any of the Obligations or any guaranty, or by any irregularity, unenforceability or invalidity of any of the Obligations or any part thereof or any security or other guaranty thereof.  The Guarantor's obligations hereunder shall not be affected, modified or impaired by any counterclaim, set-off, recoupment, deduction or defense based upon any claim the Guarantor may have (directly or indirectly) against the Obligor or PNCEF, except payment or performance of the Obligations.

Notice of acceptance of this Guaranty, notice of extensions of credit to the Obligor from time to time, notice of default, diligence, presentment, notice of dishonor, protest, demand for payment, and any defense based upon PNCEF's failure to comply with the notice requirements under Sections 9-611 and 9-612 of the Uniform Commercial Code as in effect from time to time are hereby waived.  The Guarantor waives all defenses based on suretyship or impairment of collateral.

PNCEF at any time and from time to time, without notice to or the consent of the Guarantor, and without impairing or releasing, discharging or modifying the Guarantor's liabilities hereunder, may (a) change the manner, place, time or terms of payment or performance of or interest rates on, or other terms relating to, any of the Obligations; (b) renew, substitute, modify, amend or alter, or grant consents or waivers relating to any of the Obligations, any other guaranties, or any security for any Obligations or guaranties; (c) apply any and all payments by whomever paid or however realized including any proceeds of any collateral, to any Obligations of the Obligor in such order, manner and amount as PNCEF may determine in its sole discretion; (d) settle, compromise or deal with any other person, including the Obligor or the Guarantor, with respect to any Obligations in such manner as PNCEF deems appropriate in its sole discretion; (e) substitute, exchange or release any security or guaranty; or (f) take such actions and exercise such remedies hereunder as provided herein.

3.           Repayments or Recovery from PNCEF.  If any demand is made at any time upon PNCEF for the repayment or recovery of any amount received by it in payment or on account of any of the Obligations and if PNCEF repays all or any part of such amount by reason of any judgment, decree or order of any court or administrative body or by reason of any settlement or compromise of any such demand, the Guarantor will be and remain liable hereunder for the amount so repaid or recovered to the same extent as if such amount had never been received originally by PNCEF.  The provisions of this section will be and remain effective notwithstanding any contrary action which may have been taken by the Guarantor in reliance upon such payment, and any such contrary action so taken will be without prejudice to PNCEF's rights hereunder and will be deemed to have been conditioned upon such payment having become final and irrevocable.

2

4.           Financial Statements.  Unless compliance is waived in writing by PNCEF or until all of the Obligations have been paid in full, the Guarantor will promptly submit to PNCEF such information relating to the Guarantor’s affairs (including but not limited to annual financial statements and tax returns for the Guarantor) or any security for the Guaranty as PNCEF may reasonably request.

5.           Enforceability of Obligations.  No modification, limitation or discharge of the Obligations arising out of or by virtue of any bankruptcy, reorganization or similar proceeding for relief of debtors under federal or state law will affect, modify, limit or discharge the Guarantor's liability in any manner whatsoever and this Guaranty will remain and continue in full force and effect and will be enforceable against the Guarantor to the same extent and with the same force and effect as if any such proceeding had not been instituted.  The Guarantor waives all rights and benefits which might accrue to it by reason of any such proceeding and will be liable to the full extent hereunder, irrespective of any modification, limitation or discharge of the liability of the Obligor that may result from any such proceeding.

6.           Events of Default.  The occurrence of any of the following shall be an “Event of Default”:  (i) any Event of Default (as defined in any of the Obligations); (ii) any default under any of the Obligations that does not have a defined set of “Events of Default” and the lapse of any notice or cure period provided in such Obligations with respect to such default; (iii) demand by PNCEF under any of the Obligations that have a demand feature; (iv) the Guarantor’s failure to perform any of its obligations hereunder; (v) the falsity, inaccuracy or material breach by the Guarantor of any written warranty, representation or statement made or furnished to PNCEF by or on behalf of the Guarantor; or (vi) the termination or attempted termination of this Guaranty.  Upon the occurrence of any Event of Default, (a) the Guarantor shall pay to PNCEF the amount of the Guaranteed Obligations; or (b) on demand of PNCEF, the Guarantor shall immediately deposit with PNCEF, in U.S. dollars, all amounts due or to become due under the Guaranteed Obligations, and PNCEF may at any time use such funds to repay the Guaranteed Obligations; or (c) PNCEF in its discretion may exercise with respect to any collateral any one or more of the rights and remedies provided a secured party under the applicable version of the Uniform Commercial Code; or (d) PNCEF in its discretion may exercise from time to time any other rights and remedies available to it at law, in equity or otherwise.

7.           Right of Setoff.  In addition to all liens upon and rights of setoff against the Guarantor’s money, securities or other property given to PNCEF by law, PNCEF shall have, with respect to the Guarantor's obligations to PNCEF under this Guaranty and to the extent permitted by law, a contractual possessory security interest in and a contractual right of setoff against, and the Guarantor hereby grants PNCEF a security interest in, and hereby assigns, conveys, delivers, pledges and transfers to PNCEF all of the Guarantor's right, title and interest in and to, all of the Guarantor’s deposits, moneys, securities and other property now or hereafter in the possession of or on deposit with, or in transit to, PNCEF or any other direct or indirect subsidiary of The PNC Financial Services Group, Inc., whether held in a general or special account or deposit, whether held jointly with someone else, or whether held for safekeeping or otherwise, excluding, however, all IRA, Keogh, and trust accounts.  Every such security interest and right of setoff may be exercised without demand upon or notice to the Guarantor.  Every such right of setoff shall be deemed to have been exercised immediately upon the occurrence of an Event of Default hereunder without any action of PNCEF, although PNCEF may enter such setoff on its books and records at a later time.

8.           Collateral.  This Guaranty is secured by the property described in any collateral security documents which the Guarantor executes and delivers to PNCEF and by such other collateral as previously may have been or may in the future be granted to PNCEF to secure any obligations of the Guarantor to PNCEF.

9.           Costs.  To the extent that PNCEF incurs any costs or expenses in protecting or enforcing its rights under the Obligations or this Guaranty, including reasonable attorneys' fees and the costs and expenses of litigation, such costs and expenses will be due on demand, will be included in the Guaranteed Obligations and will bear interest from the incurring or payment thereof at the Default Rate (as defined in any of the Obligations).

3

10.           Postponement of Subrogation.  Until the Obligations are indefeasibly paid in full, expire, are terminated and are not subject to any right of revocation or rescission, the Guarantor postpones and subordinates in favor of PNCEF or its designee (and any assignee or potential assignee) any and all rights which the Guarantor may have to (a) assert any claim whatsoever against the Obligor based on subrogation, exoneration, reimbursement, or indemnity or any right of recourse to security for the Obligations with respect to payments made hereunder, and (b) any realization on any property of the Obligor, including participation in any marshalling of the Obligor's assets.

11.           Power to Confess Judgment.  The Guarantor hereby empowers any attorney of any court of record, after the occurrence of any Event of Default hereunder, to appear for the Guarantor and, with or without complaint filed, confess judgment, or a series of judgments, against the Guarantor in favor of PNCEF or any holder hereof for the amount of the Guaranteed Obligations and an attorney's commission of the greater of 10% of such principal and interest or $1,000 added as a reasonable attorney's fee, and for doing so, this Guaranty or a copy verified by affidavit shall be a sufficient warrant.  The Guarantor hereby forever waives and releases all errors in said proceedings and all rights of appeal and all relief from any and all appraisement, stay or exemption laws of any state now in force or hereafter enacted.

No single exercise of the foregoing power to confess judgment, or a series of judgments, shall be deemed to exhaust the power, whether or not any such exercise shall be held by any court to be invalid, voidable, or void, but the power shall continue undiminished and it may be exercised from time to time as often as PNCEF shall elect until such time as PNCEF shall have received payment in full of the Guaranteed Obligations and costs.  Notwithstanding the attorney’s commission provided for in the preceding paragraph (which is included in the warrant for purposes of establishing a sum certain), the amount of attorneys’ fees that PNCEF may recover from the Guarantor shall not exceed the actual attorneys’ fees incurred by PNCEF.

12.           Notices.  All notices, demands, requests, consents, approvals and other communications required or permitted hereunder (“Notices”) must be in writing and will be effective upon receipt.  Notices may be given in any manner to which PNCEF and the Guarantor may separately agree, including electronic mail.  Without limiting the foregoing, first-class mail, facsimile transmission and commercial courier service are hereby agreed to as acceptable methods for giving Notices.  Regardless of the manner in which provided, Notices may be sent to  addresses for PNCEF and the Guarantor as set forth above or to such other address as either may give to the other  for such purpose in accordance with this section.

13.           Preservation of Rights.  No delay or omission on PNCEF's part to exercise any right or power arising hereunder will impair any such right or power or be considered a waiver of any such right or power, nor will PNCEF's action or inaction impair any such right or power.  PNCEF's rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which PNCEF may have under other agreements, at law or in equity.  PNCEF may proceed in any order against the Obligor, the Guarantor or any other obligor of, or any collateral securing, the Obligations.

14.           Illegality.  If any provision contained in this Guaranty should be invalid, illegal or unenforceable in any respect, it shall not affect or impair the validity, legality and enforceability of the remaining provisions of this Guaranty.

15.           Changes in Writing.  No modification, amendment or waiver of, or consent to any departure by the Guarantor from, any provision of this Guaranty will be effective unless made in a writing signed by PNCEF, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Notwithstanding the foregoing, PNCEF may modify this Guaranty for the purposes of completing missing content or correcting erroneous content, without the need for a written amendment, provided that PNCEF shall send a copy of any such modification to the Guarantor (which notice may be given by electronic mail).  No notice to or demand on the Guarantor will entitle the Guarantor to any other or further notice or demand in the same, similar or other circumstance.

4

16.           Entire Agreement.  This Guaranty (including the documents and instruments referred to herein) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, between the Guarantor and PNCEF with respect to the subject matter hereof; provided, however, that this Guaranty is in addition to, and not in substitution for, any other guarantees from the Guarantor to PNCEF.

17.           Successors and Assigns.  This Guaranty will be binding upon and inure to the benefit of the Guarantor and PNCEF and their respective heirs, executors, administrators, successors and assigns; provided, however, that the Guarantor may not assign this Guaranty in whole or in part without PNCEF's prior written consent and PNCEF at any time may assign this Guaranty in whole or in part.

18.           Interpretation.  In this Guaranty, unless PNCEF and the Guarantor otherwise agree in writing, the singular includes the plural and the plural the singular; references to statutes are to be construed as including all statutory provisions consolidating, amending or replacing the statute referred to; the word “or” shall be deemed to include “and/or”, the words “including”, “includes” and “include” shall be deemed to be followed by the words “without limitation”; and references to sections or exhibits are to those of this Guaranty.  Section headings in this Guaranty are included for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose.  If this Guaranty is executed by more than one party as Guarantor, the obligations of such persons or entities will be joint and several.

19.           Anti-Money Laundering/International Trade Law Compliance.  The Guarantor represents and warrants to PNCEF, as of the date of this Guaranty, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any loan, and at all times any Obligations exist that:  (A) no Guarantor (i) is listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person or entity, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejections of transactions) under any order or directive of any Compliance Authority; (ii) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person; or (iii) does business in or with, or derives any of its operating income from investments in or transactions with, any Sanctioned Person or Sanctioned Country in violation of any law or regulation enforced by any Compliance Authority; (B) the proceeds of any loan will not be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Country; and (C) each Guarantor is in compliance with, and no Guarantor engages in any dealings or transactions prohibited by, any laws of the United States including the USA Patriot Act, the Trading with the Enemy Act, or the U.S. Foreign Corrupt Practices Act of 1977, all as amended, supplemented or replaced from time to time.  As used herein: “Compliance Authority” means each and all of the (a) U.S. Department of the Treasury’s Office of Foreign Asset Control; (b) U.S. Treasury Department/Financial Crimes Enforcement Network; (c) U.S. State Department/Directorate of Defense Trade Controls; (d) U.S. Commerce Department/Bureau of Industry and Security; (e) U.S. Internal Revenue Service; (f) U.S. Justice Department; and (g) U.S. Securities and Exchange Commission.  “Sanctioned Country” means a country subject to a sanctions program maintained by any Compliance Authority.  “Sanctioned Person” means any individual person, a group, regime, entity or thing subject to, or specially designated under, any sanctions program maintained by any Compliance Authority.

20.           Indemnity.  The Guarantor agrees to indemnify each of PNCEF, each legal entity, if any, who controls, is controlled by or is under common control with PNCEF and each of their respective directors, officers and employees (the “Indemnified Parties”), and to defend and hold each Indemnified Party harmless from and against, any and all claims, damages, losses, liabilities and expenses (including all fees and charges of internal or external counsel with whom any Indemnified Party may consult and all expenses of litigation  and preparation therefor) which any Indemnified Party may incur or which may be asserted against any Indemnified Party by any person, entity or governmental authority (including any person or entity claiming derivatively on behalf of the Guarantor), in connection with or arising out of or relating to the matters referred to in this Guaranty, whether (a) arising from or incurred in connection with any breach of a representation, warranty or covenant by the Guarantor, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental investigation, pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before any court or governmental authority; provided, however, that the foregoing indemnity agreement shall not apply to any claims, damages, losses, liabilities and expenses solely attributable to an Indemnified Party's gross negligence or willful misconduct.  The indemnity agreement contained in this Section shall survive the termination of this Guaranty and assignment of any rights hereunder.  The Guarantor may participate at its expense in the defense of any such claim.

5

21.           Governing Law and Jurisdiction.  This Guaranty has been delivered to and accepted by PNCEF and will be deemed to be made in the State of Delaware (the “State”).  This Guaranty will be interpreted and the rights and liabilities of PNCEF and the Guarantor determined in accordance with the laws of the State, excluding its conflict of laws rules.  The Guarantor hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in the county or judicial district of the State; provided that nothing contained in this Guaranty will prevent PNCEF from bringing any action, enforcing any award or judgment or exercising any rights against the Guarantor individually, against any security or against any property of the Guarantor within any other county, state or other foreign or domestic jurisdiction.  The Guarantor acknowledges and agrees that the venue provided above is the most convenient forum for both PNCEF and the Guarantor.  The Guarantor waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Guaranty.

22.           Limitation of Personal Liability.  Notwithstanding anything contained herein to the contrary, it is agreed that, unless an exception to the requirements of Regulation B of the Board of Governors of the Federal Reserve System applies in connection with the extension of the Obligations and the execution of this Guaranty, the spouse who is deemed not to be the applicant for purposes of such regulation shall not be personally liable under this Guaranty, provided that this provision will not limit PNCEF’s right to obtain such judgment, order or other relief against such individual as may be necessary for PNCEF to exercise all of its rights and remedies with respect to assets held jointly as of the date of the Guarantor's most recent financial statement delivered prior to the date hereof or thereafter acquired.

23.           Equal Credit Opportunity Act.  If the Guarantor is not an “applicant for credit” under Section 202.2 (e) of the Equal Credit Opportunity Act of 1974 (“ECOA”), the Guarantor acknowledges that (i) this Guaranty has been executed to provide credit support for the Obligations, and (ii) the Guarantor was not required to execute this Guaranty in violation of Section 202.7(d) of the ECOA.

24.           Authorization to Obtain Credit Reports.  By signing below, each Guarantor who is an individual provides written authorization to PNCEF or its designee (and any assignee or potential assignee) to obtain the Guarantor’s personal credit profile from one or more national credit bureaus.  Such authorization shall extend to obtaining a credit profile in considering this Guaranty and subsequently for the purposes of update, renewal or extension of such credit or additional credit and for reviewing or collecting the resulting account.

25.           Waiver of Jury Trial.  The Guarantor irrevocably waives any and all right the Guarantor may have to a trial by jury in any action, proceeding or claim of any nature relating to this Guaranty, any documents executed in connection with this Guaranty or any transaction contemplated in any of such documents.  The Guarantor acknowledges that the foregoing waiver is knowing and voluntary.

The Guarantor acknowledges that it has read and understood all the provisions of this Guaranty, including the confession of judgment and waiver of jury trial, and has been advised by counsel as necessary or appropriate.

6

WITNESS the due execution hereof as a document under seal, as of the date first written above, with the intent to be legally bound hereby.

WITNESS / ATTEST: /s/ Christina Kay Print Name:  Christina Kay Title:  Executive Vice President (Include title only if an officer of entity signing to the right) INTEGRATED BIOPHARMA,  INC.   By:  /s/ E. Gerald Kay                                            (SEAL) Print Name:  E. Gerald Kay   Title:  Chief Executive Officer and President

7

Disclosure for Confession of Judgment

(GUARANTOR)

Undersigned:                        INTEGRATED BIOPHARMA,  INC.

225 Long Avenue

Hillside, NJ 07205

Lender:                                 PNC Equipment Finance, LLC

995 Dalton Avenue

Cincinnati, OH 45203

The undersigned has executed, and/or is executing, on or about the date hereof, a Guaranty and Suretyship Agreement, in respect of the obligations owed to Lender by INB:MANHATTAN DRUG COMPANY, INC., under which the undersigned is obligated to repay monies to Lender.

A.           The undersigned acknowledges and agrees that the above document contains provisions under which Lender may enter judgment by confession against the undersigned.  Being fully aware of its rights to prior notice and a hearing on the validity of any judgment or other claims that may be asserted against it by Lender thereunder before judgment is entered, the undersigned hereby freely, knowingly and intelligently waives these rights and expressly agrees and consents to Lender’s entering judgment against it by confession pursuant to the terms thereof.

B.           The undersigned also acknowledges and agrees that the above document contains provisions under which Lender may, after entry of judgment and without either notice or a hearing, foreclose upon, attach, levy, take possession of or otherwise seize property of the undersigned in full or partial payment of the judgment.  Being fully aware of its rights after judgment is entered (including the right to move to open or strike the judgment), the undersigned hereby freely, knowingly and intelligently waives its rights to notice and a hearing and expressly agrees and consents to Lender’s taking such actions as may be permitted under applicable state and federal law without prior notice to the undersigned.

C. The undersigned certifies that a representative of Lender specifically called the confession of judgment provisions in the above document to the attention of the undersigned, and/or that the undersigned was represented by legal counsel in connection with the above document.

Remainder of page intentionally left blank

8

D.           The undersigned hereby certifies:  that its annual income exceeds $10,000; that all references to “the undersigned” above refer to all persons and entities signing below; and that the undersigned received a copy hereof at the time of signing.

Dated:____________ , 2014 INTEGRATED BIOPHARMA,  INC. By:____________________________________                                                                  (SEAL) Print Name:_____________________________ Title:__________________________________

9

XML

Note 9 - Segment Information (Details) - Operations by Business Segment (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Segment Reporting Information [Line Items]
Gross Profit	$ 1,301	$ 1,597
Depreciation	61	69
Capital Expenditures	168	2
Operating Segments [Member] | Contract Manufacturing [Member] | U. S. Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	5,743	5,429
Operating Segments [Member] | Contract Manufacturing [Member] | International Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	2,065	2,862
Operating Segments [Member] | Contract Manufacturing [Member]
Segment Reporting Information [Line Items]
Sales, Net	7,808	8,291
Gross Profit	1,151	1,366
Depreciation	60	66
Capital Expenditures	351
Operating Segments [Member] | Branded Proprietary Products [Member] | U. S. Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	129	132
Operating Segments [Member] | Branded Proprietary Products [Member] | International Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	210	160
Operating Segments [Member] | Branded Proprietary Products [Member]
Segment Reporting Information [Line Items]
Sales, Net	339	292
Gross Profit	6	57
Depreciation		1
Capital Expenditures	1
Operating Segments [Member] | Other Nutraceutical Business [Member] | U. S. Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	427	545
Operating Segments [Member] | Other Nutraceutical Business [Member] | International Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	8	63
Operating Segments [Member] | Other Nutraceutical Business [Member]
Segment Reporting Information [Line Items]
Sales, Net	435	608
Gross Profit	144	174
Depreciation	1	2
Capital Expenditures		2
Operating Segments [Member] | U. S. Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	6,299	6,106
Operating Segments [Member] | International Customers [Member]
Segment Reporting Information [Line Items]
Sales, Net	2,283	3,085
Operating Segments [Member]
Segment Reporting Information [Line Items]
Sales, Net	8,582	9,191
Gross Profit	1,301	1,597
Depreciation	61	69
Capital Expenditures	$ 352	$ 2

XML

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 $)	3 Months Ended	12 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Jun. 27, 2012
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)	$ 0.24	$ 0.25	$ 0.09
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	1.07%	0.88%	0.72%
Volatility	79.40%	88.50%	144.10%
Term (years)	2 years 9 months	3 years	5 years
Dividend Rate	0.00%	0.00%	0.00%

XML

Note 2 - Inventories (Details) - Inventory (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Inventory [Abstract]
Raw materials	$ 3,573	$ 2,851
Work-in-process	1,165	1,216
Finished goods	2,236	1,631
Total	$ 6,974	$ 5,698

XML

Note 8 - Related Party Transactions (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jun. 30, 2013	Sep. 30, 2014 Term Loan [Member]	Jun. 27, 2012 Chief Executive Officer [Member]	Jun. 27, 2012 Director [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

XML

Note 4 - Property and Equipment, Net

3 Months Ended

Sep. 30, 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:

	September 30,			June 30,
	2014			2014
Land and building	$	1,250		$	1,250
Leasehold improvements		1,164			1,135
Machinery and equipment		5,420			5,096
Transportation equipment		63			63
		7,897			7,544
Less: Accumulated depreciation and amortization		(6,366	)		(6,305	)
Total	$	1,531		$	1,239

Depreciation and amortization expense recorded on property and equipment for the three months ended September 30, 2014 and 2013 was $61 and $69, respectively.

XML

Note 4 - Property and Equipment, Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Property, Plant and Equipment [Abstract]
Depreciation	$ 61	$ 69

XML

Note 3 - Intangible Assets, Net (Details) - Estimated Annual Amortization Expense for Intangible Assets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Estimated Annual Amortization Expense for Intangible Assets [Abstract]
2015, remaining	$ 103
2016	104
2017	97
2018	97
2019	97
2020	93
Thereafter	255
Total	$ 846	$ 880

XML

Note 4 - Property and Equipment, Net (Details) - Property and Equipment, Net (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	$ 7,897	$ 7,544
Less: Accumulated depreciation and amortization	(6,366)	(6,305)
Total	1,531	1,239
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	1,164	1,135
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	5,420	5,096
Transportation Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	$ 63	$ 63

XML

Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) (USD $)	0 Months Ended	3 Months Ended		12 Months Ended					0 Months Ended	3 Months Ended				3 Months Ended	12 Months Ended		3 Months Ended		0 Months Ended			3 Months Ended			0 Months Ended		0 Months Ended		0 Months Ended		0 Months Ended		1 Months Ended
	Jun. 27, 2012	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2013	Jun. 30, 2014	Oct. 31, 2013	Jun. 27, 2012	Jun. 27, 2012 Default Rate [Member] CD Financial LLC [Member]	Oct. 15, 2014 Subsequent Event [Member] Convertible Line of Credit Note [Member]	Sep. 30, 2014 Scenario, Event of Default [Member] Term Loan [Member]	Aug. 22, 2014 Capital Lease Obligations [Member] Marlin Leasing [Member]	Aug. 28, 2014 Capital Lease Obligations [Member] Quantum Analytics [Member]	Sep. 30, 2014 iBio, Inc. [Member] Minimum [Member]	Sep. 30, 2014 Term Loan [Member]	Jun. 30, 2013 Term Loan [Member]	Jun. 30, 2014 Term Loan [Member]	Sep. 30, 2014 Revolving Advances [Member]	Jun. 27, 2012 Promissory Note [Member] CD Financial LLC [Member]	Jun. 27, 2012 CD MDC Note [Member]	Sep. 30, 2014 E Gerald Kay [Member] Vitamin Realty LLC [Member]	Sep. 30, 2014 Revolving Credit Facility [Member] PNC Bank [Member]	Sep. 30, 2014 Revolving Credit Facility [Member]	Jun. 30, 2014 Revolving Credit Facility [Member]	Jun. 27, 2012 Revolving Credit Facility [Member]	Sep. 22, 2014 Convertible Line of Credit Note [Member] London Interbank Offered Rate (LIBOR) [Member]	Sep. 30, 2014 Convertible Line of Credit Note [Member] PNC Bank [Member]	Sep. 30, 2014 Convertible Line of Credit Note [Member]	Sep. 22, 2014 Convertible Line of Credit Note [Member]	Aug. 22, 2014 Marlin Leasing [Member]	Aug. 22, 2014 Marlin Leasing [Member]	Aug. 28, 2014 Quantum Analytics [Member]	Aug. 28, 2014 Quantum Analytics [Member]	Oct. 31, 2013 PNC Bank [Member]	Sep. 30, 2014 CD Financial LLC [Member]	Jun. 30, 2014 CD Financial LLC [Member]	Jun. 27, 2012 CD Financial LLC [Member]	Feb. 21, 2008 CD Financial LLC [Member]	Sep. 30, 2014 Vitamin Realty LLC [Member]	Sep. 30, 2014 E Gerald Kay [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				350,000
Loans Payable, Noncurrent							3,727,000
Debt Instrument, Basis Spread on Variable Rate														3.25%								2.75%			3.25%
Line of Credit Facility, Interest Rate at Period End														3.75%		3.75%					3.25%	3.25%	3.25%			3.40%	3.40%
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 (in Dollars per share)		$ 0.24			$ 0.25		$ 0.09						$ 0.88
Prepayment of Loans Outstanding																																	293,000
Guarantor Obligations, Maximum Exposure, Undiscounted						1,000,000
Repayments of Debt															1,000,000
Minimum EBITDA				1,500,000
Debt Instrument, Interest Rate, Stated Percentage								10.00%			5.60%	0.00%								4.00%																6.00%	9.50%
Debt Instrument, Face Amount																		1,714,000																			4,500,000	686,000	27,000
Convertible Notes Payable																																				5,350,000
Repayments of Notes Payable		135,000	135,000																300,000
Interest Paid	333,000	174,000	183,000
Other Expenses	217,000
Debt Instrument, Convertible, Conversion Price (in Dollars per share)																																				$ 0.65
Embedded Derivative, Fair Value of Embedded Derivative Liability																																		503,000	717,000
Capital Lease Obligations		243,000			83,000																									47,000		138,000
Capital Lease Obligation, Monthly Lease Payment																													2,000		8,000
Debt Instrument, Convertible, Aggregate Amount Advanced Trigger																												350,000
Proceeds from Convertible Debt									$ 68,000																		$ 205,000

XML

Note 3 - Intangible Assets, Net

3 Months Ended

Sep. 30, 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:

	September 30, 2014						June 30, 2014
	Gross Carrying		Accumulated				Gross Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net
Trade names	$	1,525	$	834	$	691	$	1,525	$	815	$	710
Unpatented technology		547		510		37		547		500		47
License agreement		347		229		118		347		224		123
Total	$	2,419	$	1,573	$	846	$	2,419	$	1,539	$	880

Amortization expense recorded on intangible assets for each of the three months ended September 30, 2014 and 2013 was $34. Amortization expense is recorded on the straight-line basis over periods ranging from 13 years to 20 years based on contractual or estimated lives and is included in selling and administrative expenses. Tests for impairment or recoverability are performed at least annually and require significant management judgment and the use of estimates which the Company believes are reasonable and appropriate at the time of the impairment test. Future unanticipated events affecting cash flows and changes in market conditions could affect such estimates and result in the need for an impairment charge. The Company also re-evaluates the periods of amortization to determine whether circumstances warrant revised estimates of current useful lives. No impairment losses were identified or recorded in the three months ended September 30, 2014 and 2013 on the Company’s intangible assets.

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

Year ending	Amortization
June 30,	Expense
2015, remaining	$	103
2016		104
2017		97
2018		97
2019		97
2020		93
Thereafter		255
Total	$	846

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	3 Months Ended
	Sep. 30, 2014	Jun. 30, 2014
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Principal Amount	$ 4,581	$ 4,121
Current portion of long term debt	(754)	(588)
Discount for embedded derivative	(313)	(341)
Convertible Note payable, net - CD Financial, LLC	5,037	5,009
Total outstanding debt	9,758	9,068
Less: Revolving Advances	(4,581)	(4,121)
Current portion of long term debt	(754)	(588)
Long term debt	4,423	4,359
Capitalized lease obligations	243	83
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
Revolving Credit Facility [Member] | 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	4,581	4,121
Interest Rate	3.25%
Maturity Date	Jun. 27, 2017
Less: Revolving Advances	(4,581)	(4,121)
Revolving Credit Facility [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Interest Rate	3.25%	3.25%
Convertible Line of Credit Note [Member] | 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	205
Interest Rate	3.40%
Maturity Date	Mar. 31, 2018
Less: Revolving Advances	(205)
Convertible Line of Credit Note [Member]
Note 5 - Senior Credit Facility, Subordinated Convertible Note, Net - CD Financial, LLC and other Long Term Debt (Details) - Debt Outstanding [Line Items]
Interest Rate	3.40%
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	0.00%
Capitalized lease obligations	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
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	2,280	2,413
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	$ 22	$ 24
Interest Rate	1.90%
Maturity Date	Apr. 15, 2017

XML

Note 9 - Segment Information (Details) - Reconciliation of Assets from Segment to Consolidated (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	$ 13,144	$ 11,583
Operating Segments [Member] | Contract Manufacturing [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	9,683	7,752
Operating Segments [Member] | Branded Proprietary Products [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	1,553	1,781
Operating Segments [Member] | Other Nutraceutical Business [Member]
Segment Reporting, Asset Reconciling Item [Line Items]
Assets	$ 1,908	$ 2,050

XML

Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Sales, net	$ 8,582	$ 9,191
Cost of sales	7,281	7,594
Gross profit	1,301	1,597
Selling and administrative expenses	852	937
Operating income	449	660
Other income (expense), net:
Interest expense	(240)	(248)
Change in fair value of derivative liabilities	214	(73)
Other income, net	9	2
Other expense, net	(17)	(319)
Income before income taxes	432	341
Income tax expense, net	29	43
Net income	403	298
Interest expense on Convertible debt - CD Financial, LLC	82	82
Accretion of Convertible debt - CD Financial, LLC	28	27
Change in fair value of derivative liabilities	(214)	73
Diluted net income	$ 299	$ 480
Basic net income per common share (in Dollars per share)	$ 0.02	$ 0.01
Diluted net income per common share (in Dollars per share)	$ 0.01	$ 0.01
Weighted average common shares outstanding - basic (in Shares)	21,105,174	21,080,174
Add: Stock options (in Shares)	199,775	89,857
Shares issuable upon conversion of Convertible Debt - CD Financial, LLC (in Shares)	8,230,769	8,230,769
Weighted average common shares outstanding - diluted (in Shares)	29,535,718	29,400,800

XML

Note 1 - Principles of Consolidation and Basis of Presentation

3 Months Ended

Sep. 30, 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, 2014 (“Form 10-K”), as filed with the SEC. The June 30, 2014 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 months ended September 30, 2014 are not necessarily indicative of the results for the full fiscal year ending June 30, 2015 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 LLC.

Significant Accounting Policies

There have been no material changes during fiscal year 2015 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, 2014.

Investment in iBio, Inc.The Company accounts for its investment in iBio, Inc. (“iBio”) common stock on the cost basis as it initially 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. To date, there were cumulative impairment charges of $298. The market value of the iBio Stock as of September 30, 2014 was approximately $0.7 million. 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 years ended June 30, 2014 and 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 October 10, 2014. Since then and through November 7, 2014, the trading price of the iBio Stock has traded above $0.88. (See Note 5. Senior Credit Facility, Subordinated Convertible Note, net - CD Financial, LLC and other Long Term Debt). As of November 7, 2014, the Company has not sold any shares of the iBio Stock and PNC has not required the Company to sell any of the iBio Stock but continues to reserve the right to do so at any time in the future.

Earnings Per Share. Basic earnings per common share amounts are based on 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, warrants and convertible debt, subject to anti-dilution limitations using the treasury stock method.

The following options, warrants and potentially dilutive shares for convertible notes payable (see Note 5. Senior Credit Facility, Subordinated Convertible Note, 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 months ended September 30, 2014 and 2013:

	Three Months Ended
	September 30,
	2014		2013
Anti-dilutive stock options		401,200		2,173,588
Anti-dilutive warrants		-		500,000
Total anti-dilutive shares		401,200		2,673,588

XML

Note 7 - Commitments and Contingencies (Details) (USD $)	3 Months Ended			3 Months Ended						3 Months Ended			3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014	Sep. 30, 2014 Principal Owner [Member]	Sep. 30, 2013 Principal Owner [Member]	May 15, 2012 Stock Purchase Agreement [Member]	May 15, 2012 Environmental Issues [Member]	Sep. 30, 2014 Vitamin Realty LLC [Member]	Jun. 30, 2014 Vitamin Realty LLC [Member]	Sep. 30, 2014 Manhattan Drug Company [Member]	Jan. 05, 2012 Manhattan Drug Company [Member] sqft	Jan. 04, 2012 Manhattan Drug Company [Member] sqft	Sep. 30, 2014 AgroLabs [Member]	May 19, 2014 AgroLabs [Member] sqft
Note 7 - Commitments and Contingencies (Details) [Line Items]
Area of Real Estate Property (in Square Feet)											76,161	74,898		2,700
Payments for Rent										$ 533,000			$ 27,000
Operating Leases, Rent Expense	252,000	247,000		210,000	206,000
Capital Lease Obligations	243,000		83,000					858,000	902,000
Loss Contingency, Estimate of Possible Loss						$ 600,000	$ 300,000

XML

Note 9 - Segment Information (Tables)

3 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

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

		Sales, Net						Segment
		U.S.		International				Gross				Capital
		Customers		Customers		Total		Profit		Depreciation		Expenditures
Contract Manufacturing	2014	$	5,743	$	2,065	$	7,808	$	1,151	$	60	$	351
	2013		5,429		2,862		8,291		1,366		66		-
Branded Proprietary Products	2014		129		210		339		6		-		1
	2013		132		160		292		57		1		-
Other Nutraceutical Businesses	2014		427		8		435		144		1		-
	2013		545		63		608		174		2		2
Total Company	2014		6,299		2,283		8,582		1,301		61		352
	2013		6,106		3,085		9,191		1,597		69		2

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

	Total Assets as of
	September 30,		June 30,
	2014		2014
Contract Manufacturing	$	9,683	$	7,752
Branded Proprietary Products		1,553		1,781
Other Nutraceutical Businesses		1,908		2,050
Total Company	$	13,144	$	11,583

XML

Note 7 - Commitments and Contingencies (Details) - Minimum Rental Commitment for Long-term Non-cancelable Leases (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Note 7 - Commitments and Contingencies (Details) - Minimum Rental Commitment for Long-term Non-cancelable Leases [Line Items]
2015, remaining	$ 457
2016	599
2017	578
2018	571
2019	563
2020	563
Thereafter	3,080
Total	6,411
Principal Owner [Member] | Capital Lease Obligations [Member]
Note 7 - Commitments and Contingencies (Details) - Minimum Rental Commitment for Long-term Non-cancelable Leases [Line Items]
2015, remaining	422
2016	563
2017	563
2018	563
2019	563
2020	563
Thereafter	3,080
Total	6,317
Capital Lease Obligations [Member]
Note 7 - Commitments and Contingencies (Details) - Minimum Rental Commitment for Long-term Non-cancelable Leases [Line Items]
2015, remaining	35
2016	36
2017	15
2018	8
2019	0
2020	0
Thereafter	0
Total	$ 94

XML

Note 1 - Principles of Consolidation and Basis of Presentation (Details) - Antidilutive Securities Excluded from Computation of Earnings Per Share	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares	401,200	2,673,588
Equity Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares	401,200	2,173,588
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares		500,000

XML

Note 2 - Inventories

3 Months Ended

Sep. 30, 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:

	September 30,		June 30,
	2014		2014
Raw materials	$	3,573	$	2,851
Work-in-process		1,165		1,216
Finished goods		2,236		1,631
Total	$	6,974	$	5,698

XML

Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Current Assets:
Cash	$ 294	$ 451
Accounts receivable, net	2,297	2,179
Inventories	6,974	5,698
Investment in iBio, Inc.	532	532
Other current assets	389	306
Total current assets	10,486	9,166
Intangible assets, net	846	880
Property and equipment, net	1,531	1,239
Security deposits and other assets	281	298
Total Assets	13,144	11,583
Current Liabilities:
Advances under revolving credit facility	4,581	4,121
Accounts payable (includes $133 and $184 due to related party)	6,399	5,635
Accrued expenses and other current liabilities	1,199	1,309
Current portion of long term debt	754	588
Total current liabilities	12,933	11,653
Long term debt	4,423	4,359
Subordinated convertible note, net - CD Financial, LLC	5,037	5,009
Derivative liabilities	503	717
Total liabilities	22,896	21,738
Commitments and Contingencies
Stockholders' Deficiency:
Common Stock, $0.002 par value; 50,000,000 shares authorized; 21,140,074 and 21,105,174 shares issued and outstanding, respectively	42	42
Additional paid-in capital	44,572	44,572
Accumulated deficit	(54,267)	(54,670)
Less: Treasury stock, at cost, 34,900 shares	(99)	(99)
Total Stockholders' Deficiency	(9,752)	(10,155)
Total Liabilities and Stockholders' Deficiency	$ 13,144	$ 11,583

XML

Note 2 - Inventories (Tables)

3 Months Ended

Sep. 30, 2014

Inventory Disclosure [Abstract]

Schedule of Inventory, Current [Table Text Block]

	September 30,		June 30,
	2014		2014
Raw materials	$	3,573	$	2,851
Work-in-process		1,165		1,216
Finished goods		2,236		1,631
Total	$	6,974	$	5,698

XML

Document And Entity Information	3 Months Ended
	Sep. 30, 2014	Nov. 07, 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		21,105,174
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	Sep. 30, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1

XML

Note 3 - Intangible Assets, Net (Tables)

3 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

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

	September 30, 2014						June 30, 2014
	Gross Carrying		Accumulated				Gross Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net
Trade names	$	1,525	$	834	$	691	$	1,525	$	815	$	710
Unpatented technology		547		510		37		547		500		47
License agreement		347		229		118		347		224		123
Total	$	2,419	$	1,573	$	846	$	2,419	$	1,539	$	880

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

Year ending	Amortization
June 30,	Expense
2015, remaining	$	103
2016		104
2017		97
2018		97
2019		97
2020		93
Thereafter		255
Total	$	846

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Accounts payable, related party (in Dollars)	$ 133	$ 184
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	21,140,074	21,140,074
Common Stock, shares outstanding	21,105,174	21,105,174
Treasury stock, shares	34,900	34,900

XML

Note 7 - Commitments and Contingencies

3 Months Ended

Sep. 30, 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, which is 100% owned by the Company’s chairman, president and major stockholder and certain of his family members, who are also executive officers and directors of the Company. 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. On May 19, 2014, AgroLabs entered into an Amendment to the lease agreement entered into on January 5, 2012, with Vitamin Realty for an additional 2,700 square feet of warehouse space in New Jersey, the term of which was to expire on January 31, 2019, to extend the expiration date to January 1, 2024. 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 months ended September 30, 2014 and 2013 on these leases were $210 and $206 respectively, and are included in both cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. As of September 30, 2014 and June 30, 2014, the Company had an outstanding obligation to Vitamin Realty of $858 and $902, respectively, included in accounts payable, accrued expenses and other liabilities 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 (inclusive of the related party lease with Vitamin Realty).

The minimum rental commitments for long-term non-cancelable leases are as follows:

	Operating		Related Party
Year ending	Lease		Lease
June 30,	Commitment		Commitment		Total
2015, remaining	$	35	$	422	$	457
2016		36		563		599
2017		15		563		578
2018		8		563		571
2019		-		563		563
2020		-		563		563
Thereafter		-		3,080		3,080
Total	$	94	$	6,317	$	6,411

Total rent expense, including real estate taxes and maintenance charges, was approximately $252 and $247 for the three months ended September 30, 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 November 7, 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.

XML

Note 6 - Significant Risks and Uncertainties

3 Months Ended

Sep. 30, 2014

Risks and Uncertainties [Abstract]

Concentration Risk Disclosure [Text Block]

Note 6. Significant Risks and Uncertainties

(a) Major Customers. For the three months ended September 30, 2014 and 2013, approximately 81% and 79%, respectively of consolidated net sales, were derived from two customers. These two customers are in the Company’s Contract Manufacturing Segment and represent approximately 63% and 26% and 72% and 15% of this Segment’s net sales in the three months ended September 30, 2014 and 2013, respectively. A third customer in the Branded Nutraceutical Segment, while not a significant customer of the Company’s consolidated net sales, represented approximately 78% and 39% of net sales in the three months ended September 30, 2014 and 2013, respectively, of the Branded Nutraceutical Segment. Accounts receivable from these customers represented approximately 81% and 74% of total net accounts receivable as of September 30 and June 30, 2014, respectively. The loss of any of these customers could 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 63% of the Company’s employees are covered by a union contract and are employed in its New Jersey facilities. The contract was renewed in May 2012 and expires in August 2015.

XML

Note 1 - Principles of Consolidation and Basis of Presentation (Details) (USD $)					3 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Jun. 27, 2012	Sep. 30, 2014 Minimum Share Price Acceptable Before Required to Sell [Member] iBio, Inc. [Member]	Sep. 30, 2014 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
Asset Impairment Charges					$ 298,000
Investment Owned, at Fair Value					$ 700,000
Share Price (in Dollars per share)	$ 0.24	$ 0.25	$ 0.09	$ 0.88

XML

Note 4 - Property and Equipment, Net (Tables)

3 Months Ended

Sep. 30, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

	September 30,			June 30,
	2014			2014
Land and building	$	1,250		$	1,250
Leasehold improvements		1,164			1,135
Machinery and equipment		5,420			5,096
Transportation equipment		63			63
		7,897			7,544
Less: Accumulated depreciation and amortization		(6,366	)		(6,305	)
Total	$	1,531		$	1,239

XML

Accounting Policies, by Policy (Policies)

3 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Equity Method Investments, Policy [Policy Text Block]

Investment in iBio, Inc.The Company accounts for its investment in iBio, Inc. (“iBio”) common stock on the cost basis as it initially 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. To date, there were cumulative impairment charges of $298. The market value of the iBio Stock as of September 30, 2014 was approximately $0.7 million. 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 years ended June 30, 2014 and 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 October 10, 2014. Since then and through November 7, 2014, the trading price of the iBio Stock has traded above $0.88. (See Note 5. Senior Credit Facility, Subordinated Convertible Note, net - CD Financial, LLC and other Long Term Debt). As of November 7, 2014, the Company has not sold any shares of the iBio Stock and PNC has not required the Company to sell any of the iBio Stock but continues to reserve 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 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, warrants and convertible debt, subject to anti-dilution limitations using the treasury stock method.

The following options, warrants and potentially dilutive shares for convertible notes payable (see Note 5. Senior Credit Facility, Subordinated Convertible Note, 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 months ended September 30, 2014 and 2013:

	Three Months Ended
	September 30,
	2014		2013
Anti-dilutive stock options		401,200		2,173,588
Anti-dilutive warrants		-		500,000
Total anti-dilutive shares		401,200		2,673,588

XML

Note 8 - Related Party Transactions

3 Months Ended

Sep. 30, 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, 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 terminated upon the satisfaction of certain conditions set forth in the Loan Agreement which 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, net - CD Financial, LLC and other Long Term Debt for related party securities transactions.

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

XML

Note 9 - Segment Information

3 Months Ended

Sep. 30, 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 September 30, 2014 and 2013 were $2,283 and $3,085, respectively.

Financial information relating to the three months ended September 30, 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	$	5,743	$	2,065	$	7,808	$	1,151	$	60	$	351
	2013		5,429		2,862		8,291		1,366		66		-
Branded Proprietary Products	2014		129		210		339		6		-		1
	2013		132		160		292		57		1		-
Other Nutraceutical Businesses	2014		427		8		435		144		1		-
	2013		545		63		608		174		2		2
Total Company	2014		6,299		2,283		8,582		1,301		61		352
	2013		6,106		3,085		9,191		1,597		69		2

	Total Assets as of
	September 30,		June 30,
	2014		2014
Contract Manufacturing	$	9,683	$	7,752
Branded Proprietary Products		1,553		1,781
Other Nutraceutical Businesses		1,908		2,050
Total Company	$	13,144	$	11,583

XML

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

3 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

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

	Three Months Ended
	September 30,
	2014		2013
Anti-dilutive stock options		401,200		2,173,588
Anti-dilutive warrants		-		500,000
Total anti-dilutive shares		401,200		2,673,588

XML

Note 6 - Significant Risks and Uncertainties (Details)	3 Months Ended									12 Months Ended	3 Months Ended
	Sep. 30, 2014 Two Customers [Member] Sales Revenue, Goods, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2013 Two Customers [Member] Sales Revenue, Goods, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Major Customer 1 [Member] Contract Manufacturing [Member] Sales Revenue, Goods, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2013 Major Customer 1 [Member] Contract Manufacturing [Member] Sales Revenue, Goods, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Major Customer 2 [Member] Contract Manufacturing [Member] Sales Revenue, Goods, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2013 Major Customer 2 [Member] Contract Manufacturing [Member] Sales Revenue, Goods, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Non-Major Customer [Member] Branded Proprietary Products [Member] Sales Revenue, Goods, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2013 Non-Major Customer [Member] Branded Proprietary Products [Member] Sales Revenue, Goods, Net [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Three Customers [Member] Accounts Receivable [Member] Customer Concentration Risk [Member]	Jun. 30, 2014 Three Customers [Member] Accounts Receivable [Member] Customer Concentration Risk [Member]	Sep. 30, 2014 Number of Employees, Geographic Area [Member] Unionized Employees Concentration Risk [Member]
Note 6 - Significant Risks and Uncertainties (Details) [Line Items]
Concentration Risk, Percentage	81.00%	79.00%	63.00%	26.00%	72.00%	15.00%	78.00%	39.00%	81.00%	74.00%	63.00%

XML

Note 7 - Commitments and Contingencies (Tables)

3 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

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

	Operating		Related Party
Year ending	Lease		Lease
June 30,	Commitment		Commitment		Total
2015, remaining	$	35	$	422	$	457
2016		36		563		599
2017		15		563		578
2018		8		563		571
2019		-		563		563
2020		-		563		563
Thereafter		-		3,080		3,080
Total	$	94	$	6,317	$	6,411

XML

Note 3 - Intangible Assets, Net (Details) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Note 3 - Intangible Assets, Net (Details) [Line Items]
Amortization of Intangible Assets	$ 34,000	$ 34,000
Impairment of Intangible Assets (Excluding Goodwill)	$ 0	$ 0
Minimum [Member]
Note 3 - Intangible Assets, Net (Details) [Line Items]
Finite-Lived Intangible Asset, Useful Life	13 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	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows provided by operating activities:
Net income	$ 403	$ 298
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	95	103
Accretion of financing instruments and other non cash interest	60	59
Change in fair value of derivative liabilities	(214)	73
Decrease (increase) in:
Accounts receivable	(119)	441
Inventories	(1,276)	(94)
Other current assets	(83)	(2)
Security deposits and other assets	(15)	(8)
(Decrease) increase in:
Accounts payable	763	(258)
Accrued expenses and other liabilities	(109)	157
Net cash (used in) provided by operating activities	(495)	769
Cash flows from investing activities:
Purchase of property and equipment	(168)	(2)
Net cash used in investing activities	(168)	(2)
Cash flows from financing activities:
Advances under revolving credit facility	8,792	8,890
Proceeds from Line of Credit Note	205
Repayments of advances under revolving credit facility	(8,332)	(9,089)
Repayments under term note payables	(135)	(135)
Repayments under capitalized lease obligations	(24)	(8)
Net cash provided by (used in) financing activities	506	(342)
Net (decrease) increase in cash	(157)	425
Cash at beginning of period	451	55
Cash at end of period	294	480
Cash paid during the periods for:
Interest	174	183
Supplemental disclosures of non-cash transactions:
Accretion on embedded derivative feature of convertible note payable	28	27
Amortization of prepaid financing costs	32	32
Financing on capitalized lease obligations	$ 185

XML

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

3 Months Ended

Sep. 30, 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 September 30, 2014 and June 30, 2014, the Company had the following debt outstanding:

	Principal Amount						Interest Rate			Maturity Date
	As of September 30, 2014			As of June 30, 2014
Revolving advances under Senior Credit Facility with PNC Bank, National Association	$	4,581		$	4,121			3.25	%		6/27/2017
Installment Note with PNC Bank		2,280			2,413			3.75	%		6/27/2017
Line of Credit Note with PNC Equipment Finance		205			-			3.40	%		3/31/2018
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		243			83			0.00% - 7.10	%	2/28/2015	-	11/20/2016
Promissory Note with E. Gerald Kay		27			27			4.00	%		7/7/2017
Promissory Note with Acura Financial Services		22			24			1.90	%		4/15/2017
Total outstanding debt		9,758			9,068
Less: Revolving Advances		(4,581	)		(4,121	)
Current portion of long term debt		(754	)		(588	)
Long term debt	$	4,423		$	4,359
Convertible Note payable - CD Financial, LLC	$	5,350		$	5,350			6.00	%		7/7/2017
Discount for embedded derivative		(313	)		(341	)
Convertible Note payable, net - CD Financial, LLC	$	5,037		$	5,009

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 Bank, National Association as agent and lender (“PNC”) 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 common stock of iBio 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 September 30, 2014 and June 30, 2014). The Term Loan bears interest at PNC’s Base Rate or the Eurodollar Rate, at Borrowers’ option, plus 3.25% (3.75% as of September 30, 2014 and June 30, 2014). 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 must sell the iBio Stock and use the proceeds to repay the Term Loan and (ii) the requirement to prepay the outstanding amount of all 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, 2014, 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 the 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 September 30, 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 through the quarter ended September 30, 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 November 7, 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 and a member of CD Financial, LLC (“CD Financial”) (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 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) a Stock Pledge Agreement with PNC, pursuant to which the Company pledged to PNC the iBio Stock; (ii) a Mortgage and Security Agreement with PNC with IHT Properties; and (iii) an Environmental Indemnity Agreement with PNC.

CD FINANCIAL, LLC TROUBLED DEBT RESTRUCTURING

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 proceeds of the CD Notes were used to refinance (a) the Original CD Note, (b) a $300,000 note issued by MDC to CD Financial which was assigned by MDC to the Company, (c) past due interest in the aggregate amount of $333 and (d) other expenses owed to CD Financial by the Company in the aggregate amount of approximately $217.

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 September 30, 2014 and June 30, 2014, the related embedded derivative liability with respect to conversion price protection provisions on the CD Convertible Note has an estimated fair value of $503 and $717, respectively.

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

	September 30,			June 30,			June 27,
	2014			2014			2012
Risk Free Interest Rate		1.07	%		0.88	%		0.72	%
Volatility		79.40	%		88.50	%		144.10	%
Term (years)		2.75			3			5
Dividend Rate		0.00	%		0.00	%		0.00	%
Closing Price of Common Stock	$	0.24		$	0.25		$	0.09

OTHER LONG TERM DEBT

Related Party Debt. On June 27, 2012, MDC and the Company entered into separate promissory notes with (i) Vitamin Realty Associates, LLC (“Vitamin Realty”), which is 100% 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 Party Leases). 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.

Capitalized Lease Obligations.On August 22, 2014, the Company entered into a capitalized lease obligation with Marlin Leasing in the amount of $47, which lease is secured by a certain machinery and equipment and matures on August 28, 2016. The lease payment amount of approximately $2 is payable monthly and has an imputed interest rate of 5.6%.

On August 28, 2014, the Company entered into a capitalized lease obligation with Quantum Analytics in the amount of $138, which lease is secured by a certain machinery and equipment and matures on February 27, 2016. The lease payment amount of approximately $8 is payable monthly and has an imputed interest rate of 0%.

Equipment Financing Note. On September 22, 2014, MDC entered into a Convertible Line of Credit Note (the “LC Note”) in the amount of $350 with PNC Equipment Finance, LLC (“PNCEF”). The LC Note is convertible into a term note upon completion of the advances under the LC Note. During the period from September 22, 2014 to and including the Conversion Date, (defined below), the Company may borrow up to the full value of the LC Note ($350). The “Conversion Date” is the earliest to occur of (i) July 31, 2015 or (ii) the date when the Company notifies PNCEF that no more advances will be requested or (iii) the date when PNCEF has made advances in an aggregate amount of $350. As of September 30, 2014, the Company has requested and received advances under the LC Note in the amount of $205. Prior to the Conversion Date, amounts outstanding under the LC Note bear interest at a rate per annum (“Floating Rate”) which is at all times equal to the sum of LIBOR Rate plus 325 basis points (3.25%). As of September 30, 2014, the Floating Rate was 3.4%. On October 15, 2014, PNCEF advanced an additional $68 under the LC Note. The Company is expecting to complete the advances no later than the fiscal quarter ending March 31, 2015 and convert the LC Note to a three year term note, at which time the Company will have the option to elect a fixed rate of interest as offered by PNCEF on the Conversion Date.

In addition, in connection with the LC Note, the following loan documents were executed: (i) a Security Agreement with PNCEF and MDC; (ii) a Guaranty and Security Agreement with PNCEF and the Company; and (iii) a Cross Collateralization Agreement with PNC, PNCEF and MDC.

XML

Note 3 - Intangible Assets, Net (Details) - Finite-Lived Intangible Assets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Gross Carring Amount	$ 2,419	$ 2,419
Accumulated Amortization	1,573	1,539
Net	846	880
Trade Names and Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carring Amount	1,525	1,525
Accumulated Amortization	834	815
Net	691	710
Unpatented Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carring Amount	547	547
Accumulated Amortization	510	500
Net	37	47
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carring Amount	347	347
Accumulated Amortization	229	224
Net	$ 118	$ 123

XML

Note 9 - Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Sep. 30, 2014	Sep. 30, 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	$ 2,283	$ 3,085

XML

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

3 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

	Principal Amount						Interest Rate			Maturity Date
	As of September 30, 2014			As of June 30, 2014
Revolving advances under Senior Credit Facility with PNC Bank, National Association	$	4,581		$	4,121			3.25	%		6/27/2017
Installment Note with PNC Bank		2,280			2,413			3.75	%		6/27/2017
Line of Credit Note with PNC Equipment Finance		205			-			3.40	%		3/31/2018
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		243			83			0.00% - 7.10	%	2/28/2015	-	11/20/2016
Promissory Note with E. Gerald Kay		27			27			4.00	%		7/7/2017
Promissory Note with Acura Financial Services		22			24			1.90	%		4/15/2017
Total outstanding debt		9,758			9,068
Less: Revolving Advances		(4,581	)		(4,121	)
Current portion of long term debt		(754	)		(588	)
Long term debt	$	4,423		$	4,359
Convertible Note payable - CD Financial, LLC	$	5,350		$	5,350			6.00	%		7/7/2017
Discount for embedded derivative		(313	)		(341	)
Convertible Note payable, net - CD Financial, LLC	$	5,037		$	5,009

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

	September 30,			June 30,			June 27,
	2014			2014			2012
Risk Free Interest Rate		1.07	%		0.88	%		0.72	%
Volatility		79.40	%		88.50	%		144.10	%
Term (years)		2.75			3			5
Dividend Rate		0.00	%		0.00	%		0.00	%
Closing Price of Common Stock	$	0.24		$	0.25		$	0.09