10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2019

OR

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

For the transition period from to

  Commission File Number 001-31668

INTEGRATED BIOPHARMA, INC.

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

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

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

(888) 319-6962

(Registrant’s telephone number, including Area Code)

Not Applicable

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

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

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 ____

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes __X__ No ____

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

Large accelerated filer  Accelerated filer  Non-accelerated filer  ☑ Emerging growth company  Smaller reporting company ☑

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

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

Yes         No __X__

As of February 12, 2020, there were 29,565,943 shares of common stock, $0.002 par value per share (“Common Stock”), of the registrant outstanding.

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

FORM 10-Q QUARTERLY REPORT

For the Three Months Ended December 31, 2019

INDEX

		Page
	Part I. Financial Information
Item 1.	Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2019 and 2018 (unaudited)	2
	Condensed Consolidated Balance Sheets as of December 31, 2019 and June 30, 2019 (unaudited)	3
	Condensed Consolidated Statement of Stockholders’ Equity (Deficiency) for the Six Months Ended December 31, 2019 and 2018 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2019 and 2018 (unaudited)	5
	Notes to the Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
Item 4.	Controls and Procedures	24
	Part II. Other Information
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosure	26
Item 5.	Other Information	26
Item 6.	Exhibits	26
	Other
Signatures		27

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 (collectively, 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 include, 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, 2019 (“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 Form 10-K 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

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for share and per share amounts)
(Unaudited)
	Three months ended						Six months ended
	December 31,							December 31,
	2019			2018				2019			2018
Sales, net	$	14,197		$	12,001			$	25,603		$	22,305
Cost of sales		12,171			10,671				22,178			19,756
Gross profit		2,026			1,330				3,425			2,549
Selling and administrative expenses		821			843				1,744			1,657
Operating income		1,205			487				1,681			892
Other income (expense), net
Interest expense		(109	)		(190	)			(233	)		(390	)
Change in fair value of derivative liabilities		-			-				-			9
Unrealized loss on investments		(31	)		-				(55	)		-
Other income, net		6			7				27			7
Other income (expense), net		(134	)		(183	)			(261	)		(374	)
Income before income taxes		1,071			304				1,420			518
Provision for income taxes		112			58				149			113
Net income	$	959		$	246			$	1,271		$	405
Basic earnings per common share	$	0.03		$	0.01			$	0.04		$	0.01
Diluted earnings per common share	$	0.03		$	0.01			$	0.04		$	0.01
Weighted average common shares outstanding - basic		29,565,943			29,392,030				29,565,943			28,305,408
Add: Equivalent shares outstanding		1,025,020			506,327				1,042,300			600,837
Weighted average common shares outstanding - diluted		30,590,963			29,898,357				30,608,243			28,906,245

See accompanying notes to condensed consolidated financial statements.

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INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share and per share amounts)
(Unaudited)
	Decmeber 31,			June 30,
	2019			2019
Assets
Current Assets:
Cash	$	67		$	475
Accounts receivable, net		4,879			4,439
Inventories		9,289			8,819
Other current assets		301			346
Total current assets		14,536			14,079
Property and equipment, net		1,720			1,778
Operating lease right-of-use assets (includes $3,014 and $3,236 with a related party)		3,052			3,284
Deferred tax assets, net		577			534
Security deposits and other assets		86			115
Total Assets	$	19,971		$	19,790
Liabilities and Stockholders' Equity:
Current Liabilities:
Advances under revolving credit facility	$	5,191		$	5,834
Accounts payable (includes $71 and $67 due to related party)		4,258			3,855
Accrued expenses and other current liabilities		1,220			1,147
Current portion of long term debt, net		1,146			1,047
Current portion of operating lease liabilities (includes $458 and $450 with a related party)		478			470
Total current liabilities		12,293			12,353
Operating lease liabilities (includes $2,563 and $2,793 with a related party)		2,580			2,822
Long term debt, net		1,904			2,722
Total liabilities		16,777			17,897
Commitments and Contingencies
Stockholders' Equity :
Common Stock, $0.002 par value; 50,000,000 shares authorized;
29,600,843 shares issued and 29,565,943 shares outstanding, respectively		59			59
Additional paid-in capital		50,227			50,197
Accumulated deficit		(46,993	)		(48,264	)
Less: Treasury stock, at cost, 34,900 shares		(99	)		(99	)
Total Stockholders' Equity		3,194			1,893
Total Liabilities and Stockholders' Equity	$	19,971		$	19,790

See accompanying notes to condensed consolidated financial statements.

-3-

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(in thousands, except shares)
(Unaudited)
FOR THE SIX MONTHS ENDED DECEMBER 31, 2019:
															Total
	Common Stock				Additional		Accumulated			Treasury Stock					Stockholders'
	Shares		Par Value		Paid-in-Capital		Deficit			Shares		Cost			Equity
Balance, June 30, 2019		29,600,843	$	59	$	50,197	$	(48,264	)		34,900	$	(99	)	$	1,893
Stock compensation expense for
employee stock options		-		-		15		-			-		-			15
Net income		-		-		-		312			-		-			312
Balance, September 30, 2019		29,600,843		59		50,212		(47,952	)		34,900		(99	)		2,220
Stock compensation expense for
employee stock options		-		-		15		-			-		-			15
Net income		-		-		-		959			-		-			959
Balance, December 31, 2019		29,600,843	$	59	$	50,227	$	(46,993	)		34,900	$	(99	)	$	3,194

FOR THE SIX MONTHS ENDED DECEMBER 31, 2018:
															Total Stockholders'
	Common Stock				Additional		Accumulated			Treasury Stock					(Deficiency)
	Shares		Par Value		Paid-in-Capital		Deficit			Shares		Cost			Equity
Balance, June 30, 2018		21,170,074	$	42	$	44,773	$	(49,952	)		34,900	$	(99	)	$	(5,236	)
Shares issued upon conversion of
CD Financial, LLC Convertible Note, net		8,230,769		17		5,256		-			-		-			5,273
Net income		-		-		-		159			-		-			159
Balance, September 30, 2018		29,400,843		59		50,029		(49,793	)		34,900		(99	)		196
Shares issued upon exercise of
employee stock options		200,000		-		24		-			-		-			24
Net income		-		-		-		246			-		-			246
Balance, December 31, 2018		29,600,843	$	59	$	50,053	$	(49,547	)		34,900	$	(99	)	$	466

See accompanying notes to condensed consolidated financial statements.

-4-

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share and per share amounts)
(Unaudited)
	Six months ended
	December 31,
	2019			2018
Cash flows provided by operating activities:
Net income	$	1,271		$	405
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		160			166
Amortization of operating lease right-of-use assets		233			224
Stock based compensation		30			-
Change in deferred tax assets		(43	)		12
Unrealized loss on investments		55			-
Other, net		7			23
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable		(441	)		(721	)
Inventories		(471	)		(3,794	)
Other current assets		(10	)		(47	)
Security deposits and other assets		24			(4	)
(Decrease) increase in:
Accounts payable		403			2,989
Accrued expenses and other liabilities		73			58
Operating lease obligations		(233	)		(225	)
Net cash provided by (used in) operating activities		1,058			(914	)
Cash flows from investing activities:
Purchase of property and equipment		(101	)		(287	)
Proceeds from sale of machinery and equipment		3			-
Cash contribution in AgroSport LLC		-			(7	)
Net cash used in investing activities		(98	)		(294	)
Cash flows from financing activities:
Advances under revolving credit facility		23,826			22,899
Proceeds from exercise of employee stock options		-			24
Repayments of advances under revolving credit facility		(24,469	)		(21,467	)
Repayments under term note payables		(610	)		(330	)
Repayments under finance lease obligations		(115	)		(101	)
Net cash (used in) provided by financing activities		(1,368	)		1,025
Net increase in cash		(408	)		(183	)
Cash at beginning of period		475			228
Cash at end of period	$	67		$	45

Supplemental disclosures of cash flow information:
Interest paid	$	228	$	369
Income taxes paid	$	155	$	123

See accompanying notes to condensed consolidated financial statements.

-5-

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED 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 8-03 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, 2019 (“Form 10-K”), as filed with the SEC. The June 30, 2019 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 preparation of the unaudited condensed financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Ultimate results could differ from the estimates of management. The results of operations for the three and six months ended December 31, 2019 are not necessarily indicative of the results for the full fiscal year ending June 30, 2020 or for any other period.

Reclassifications. Certain prior year amounts have been reclassified to conform to the current period presentation.

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 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 and drug and vitamin retailers, under the following brands: Peaceful Sleep, Green Envy, 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 botanicals, including multi minerals produced under a license agreement, (iii) MDC Warehousing and Distribution, Inc., a service provider for warehousing and fulfilment services and (iv) Chem International, Inc. (“Chem”), a distributor of certain raw materials for DSM Nutritional Products LLC.

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INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

Accounting Policies

Accounting Pronouncements Recently Adopted

In October, 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory,” which eliminates the requirement to defer recognition of income taxes on intra-entity transfers until the asset is sold to an outside party. The new guidance requires the recognition of current and deferred income taxes on intra-entity transfers of assets other than inventory, such as intellectual property and property, plant and equipment, when the transfer occurs. The guidance was effective for the Company on July 1, 2019. The standard requires a “modified retrospective” adoption, meaning the standard is applied through a cumulative adjustment in retained earnings as of the beginning of the period of adoption. This new guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-11, "Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives and Hedging (Topic 815)," which addresses the complexity of accounting for certain financial instruments with down round features. The amendments were effective for the Company on July 1, 2019 for the fiscal year ended June 30, 2020, and the interim periods within it. This new guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

Aside from the adoption of ASUs, as described above, there have been no material changes during fiscal year 2020 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, 2019.

Significant Accounting Policies

Revenue Recognition. The Company recognizes product sales revenue, the prices of which are fixed and determinable, when title and risk of loss have transferred to the customer, when estimated provisions for product returns, rebates, charge-backs and other sales allowances are reasonably determinable, and when collectability is reasonably assured. Accruals for these items are presented in the consolidated financial statements as reductions to sales. The Company’s net sales represent gross sales invoiced to customers, less certain related charges for discounts, returns, rebates, charge-backs and other allowances. Cost of sales includes the cost of raw materials and all labor and overhead associated with the manufacturing and packaging of the products. Gross margins are affected by, among other things, changes in the relative sales mix among our products and valuation and/or charge off of slow moving, expired or obsolete inventories. To perform revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps:

● identification of the promised goods or services in the contract;

● determination of whether the promised goods or serves are performance obligations including whether they are distinct in the context of the contract;

● measurement of the transaction price, including the constraint on variable consideration;

● allocation of the transaction price to the performance obligations based on estimated selling prices; and

● recognition of revenue when (or as) the Company satisfies each performance obligation. A performance obligation is a promise to transfer a distinct good or service to the customer and is the unit of account in ASC 606.

Leases. We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment, current portion of long term debt, and long-term debt obligation on our consolidated statement of financial condition.  

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INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component.

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 and if converted method.

The following options were not included in the computation of weighted average diluted common shares outstanding as the effect of doing so would be anti-dilutive for the three and six months ended December 31, 2019 and 2018:

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Anti-dilutive stock options		50,000		150,000		50,000		150,000
Total anti-dilutive shares		50,000		150,000		50,000		150,000

Note 2. Inventories

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

	December 31,		June 30,
	2019		2019
Raw materials	$	5,716	$	4,550
Work-in-process		2,703		2,325
Finished goods		870		1,944
Total	$	9,289	$	8,819

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INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

Note 3. Property and Equipment, net

Property and equipment, net consists of the following:

	December 31,			June 30,
	2019			2019
Land and building	$	1,250		$	1,250
Leasehold improvements		1,282			1,282
Machinery and equipment		6,376			6,280
Transportation equipment		6			6
		8,914			8,818
Less: Accumulated depreciation and amortization		(7,194	)		(7,040	)
Total	$	1,720		$	1,778

Depreciation and amortization expense recorded on property and equipment was $69 and $66 for the three months and $160 and $132 for six months ended December 31, 2019 and 2018, respectively. Additionally, the Company disposed of fully depreciated property of $6 and $38 in the six months ended December 31, 2019 and 2018, respectively and recognized a gain of $3 and $0 in the six months ended December 31, 2019 and 2018, respectivley.

Note 4. Senior Credit Facility and other Long Term Debt

As of December 31, 2019 and June 30, 2019, the Company had the following debt outstanding:

	Principal Amount						Interest Rate			Maturity Date
	As of December 31, 2019			As of June 30, 2019
Revolving advances under Senior Credit
Facility with PNC Bank, National Association	$	5,191		$	5,834			*		5/15/2024
Installment Note with PNC Bank		2,941			3,542			*		5/15/2024
Installment Note with PNC Equipment Finance		-			8			4.57	%	7/29/2019
Capitalized lease obligations		154			269			4.01% - 9.38	%	2/20/2019 - 12/9/2020
Total outstanding debt		8,286			9,653
Less:   Revolving Advances		(5,191	)		(5,834	)
Prepaid financing costs		(45	)		(50	)
Current portion of long term debt, net		(1,146	)		(1,047	)
Long term debt, net	$	1,904		$	2,722

  *  See table below

SENIOR CREDIT FACILITY

On May 15, 2019, the Company, MDC, AgroLabs, IHT, IHT Properties Corp. (“IHT Properties”) and Vitamin Factory (collectively, the “Borrowers”) amended the Revolving Credit, Term Loan and Security Agreement (the “Amended Loan Agreement”) with PNC Bank, National Association as agent and lender (“PNC”) and the other lenders party thereto entered into on June 27, 2012, as amended on February 19, 2016, and May 15, 2019.

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INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

The Amended Loan Agreement provides for a total of $11,585 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 $3,585 (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 2.50%. The Term Loan bears interest at PNC’s Base Rate or the Eurodollar Rate at Borrowers’ option, plus 3.00%.

As of December 31, 2019 and June 30, 2019, the Company had amounts outstanding utilizing the Eurodollar Rate of $4,500 and $4,250 under the Revolving Advances and $2,852 and $3,455 under the Term Note, respectively, with interest rates as of December 31, 2019 and June 30, 2019 as follows (based on the respective base rate plus 2.50% on Revolving Advances and 3.00% on the Term Note in effect as of the respective dates):

	December 31,			June 30,
	2019			2019
Revolving Credit Facility:
Base Rate Interest		4.75	%		5.50	%
Eurodollar Rate		4.30475	%		4.881	%
Term Loan:
Base Rate Interest		5.00	%		5.75	%
Eurodollar Rate	4.792% and 4.80475		%	5.381% and 5.3838		%

Upon and after the occurrence of any event of default under the Amended 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 May 15, 2024 (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 Amended Loan Agreement or earlier termination of the Amended Loan Agreement pursuant to the terms thereof. The Term Loan shall be repaid in eighty-four (84) consecutive monthly installments of principal, the first eighty-three (83) of which shall be in the amount of $43, commencing on the first business day of June, 2019, 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 Senior Maturity Date. The foregoing is subject to customary mandatory prepayment provisions and acceleration upon the occurrence of any event of default under the Amended Loan Agreement or earlier termination of the Amended Loan Agreement pursuant to the terms thereof.

The Revolving Advances are subject to the terms and conditions set forth in the Amended Loan Agreement and are made in aggregate amounts at any time equal to the lesser of (x) $8,000 or (y) an amount equal to the sum of: (i) up to 85%, subject to the provisions in the Amended Loan Agreement, of eligible accounts receivables (“Receivables Advance Rate”), plus (ii) up to the lesser of (A) 75%, subject to the provisions in the Amended 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

-10-

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

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 PNC may reasonably deem proper and necessary from time to time.

The Amended Loan Agreement contains customary mandatory prepayment provisions, including, without limitation the requirement to use any sales proceeds from the sale of iBio Stock to repay the Term Loan and to prepay the outstanding amount of the Term Note in an amount equal to twenty-five percent (25%) of Excess Cash Flow for each fiscal year commencing with the fiscal year ended June 30, 2016, payable upon delivery of the financial statements to PNC referred to in and required by the Amended 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 amount shall be applied ratably to the outstanding principal installments of the Term Loan in the inverse order of the maturities thereof. The Amended 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 Amended Loan Agreement. As of December 31, 2019, the Company was in compliance with the fixed charge coverage ratio maintenance requirement and with the required annual payments of 25% of the Excess Cash Flow for each fiscal year commencing with the fiscal year ended June 30, 2016.

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.

OTHER LONG TERM DEBT

Capitalized Lease Obligations. On November 1, 2019, the capitalized lease obligation entered into by the Company on December 22, 2017 with First American Equipment Finance in the amount of $143, which lease was secured by certain machinery and equipment, was satisfied with all payments being made under the capitalized lease obligation. The monthly lease payment was approximately $6 and had an imputed interest rate of 6.56%.

Note 5. Significant Risks and Uncertainties

(a) Major Customers. In each of the three months ended December 31, 2019 and 2018, approximately 93% of consolidated net sales were derived from two customers. These two customers are in the Company’s Contract Manufacturing Segment and represented approximately 70% and 26% and 75% and 20% in the three months ended December 31, 2019 and 2018, respectively. In the six months ended December 31, 2019 and 2018, approximately 92% and 91% of consolidated net sales, respectively, were derived from the same two customers and net sales to these two customers represented approximately 68% and 27% in the six months ended December 31, 2019 and 70% and 24% of net sales in the six months ended December 31, 2018, respectively. Accounts receivable from these two major customers represented approximately 89% and 88% of total net accounts receivable as of December 31 and June 30, 2019, respectively. The loss of any of these customers could have an adverse effect on the Company’s operations. Major customers are those customers who account for more than 10% of net sales.

(b) Other Business Risks. Approximately 73% of the Company’s employees are covered by a union contract and are employed in its New Jersey facilities. The contract was renewed on September 1, 2018 and will expire on August 31, 2021.

-11-

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

Note 6. Leases and other Commitments and Contingencies

(a) Leases. The Company has operating and finance leases for its corporate and sales offices, warehousing and packaging facilities and certain machinery and equipment, including office equipment. The Company’s leases have remaining terms of less than 1 year to less than 8 years.

The components of lease expense for the three months ended December 31, 2019 and 2018, were as follows:

	2019						2018
	Related Party - Vitamin Realty		Other Leases		Totals		Related Party - Vitamin Realty		Other Leases		Totals
Operating lease costs	$	142	$	25	$	167	$	142	$	27	$	169
Finance Operating Lease Costs:
Amortization of right-of use assets	$	-	$	2	$	2	$	-	$	16	$	16
Interest on operating lease liabilities		-		3		3		-		3		3
Total finance lease cost	$	-	$	5	$	5	$	-	$	19	$	19

The components of lease expense for the six months ended December 31, 2019 and 2018, were as follows:

	2019						2018
	Related Party - Vitamin Realty		Other Leases		Totals		Related Party - Vitamin Realty		Other Leases		Totals
Operating lease costs	$	283	$	56	$	339	$	283	$	49	$	332
Finance Operating Lease Costs:
Amortization of right-of use assets	$	-	$	29	$	29	$	-	$	33	$	33
Interest on operating lease liabilities		-		8		8		-		7		7
Total finance lease cost	$	-	$	37	$	37	$	-	$	40	$	40

Operating Lease Liabilities

Related Party Operating Lease Liabilities. Warehouse and office facilities are leased from Vitamin Realty Associates, LLC (“Vitamin Realty”), which is 100% owned by the Company’s chairman, and a major stockholder and certain of his family members, who are the Co-Chief Executive Officers and directors of the Company. On January 5, 2012, MDC 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 June 1, 2024. This additional lease provides for minimum lease payments of $27 with annual increases plus the proportionate share of operating expenses.

-12-

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

Rent expense and lease amortization costs for the three months ended December 31, 2019 and 2018 on these leases were $220 and $219, respectively and $431 and $421 for the six month periods ended December 31, 2019 and 2018, respectivley, and are included in cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. As of December 31, 2019 and June 30, 2019, the Company had outstanding current obligations to Vitamin Realty of $71 and $67, respectively, included in accounts payable in the accompanying Condensed Consolidated Balance Sheet. Additionally, the Company has operating lease obligations of $3,021 and $3,243 with Vitamin Realty as noted in the accompany Condensed Consolidated Balance Sheet as of December 31, 2019 and June 30, 2019, respectively.

Other Operating Lease Liabilities. The Company has entered into certain non-cancelable operating lease agreements expiring up through May, 2023, related to machinery and equipment and office equipment.

As of December 31, 2019, the Company’s right-of-use assets, lease obligations and remaining cash commitment on these leases were as follows:

	Right-of-use Assets		Current Portion of Operating Lease Obligations		Operating Lease Obligations		Remaining Cash Commitment
Vitamin Realty Leases	$	3,014	$	458	$	2,563	$	3,385
Machinery and equipment leases		21		11		10		22
Office equipment leases		17		9		7		18
	$	3,052	$	478	$	2,580	$	3,425

As of June 30, 2019, the Company’s ROU assets, lease obligations and remaining cash commitment on these leases were as follows:

	Right-of-use Assets		Current Portion Operating Lease Obligations		Operating Lease Obligations		Remaining Cash Commitment
Vitamin Realty Leases	$	3,236	$	450	$	2,793	$	3,668
Machinery and equipment leases		26		11		15		27
Office equipment leases		22		9		14		24
	$	3,284	$	470	$	2,822	$	3,719

As of December 31, 2019 and June 30, 2019, the Company’s weighted average discount rate and remaining term on lease liabilities were approximately 3.75% and 3.76% and 5.9 years and 6.4 years, respectively.

Supplemental cash flows information related to leases for the six months ended December 31, 2019, was as follows:

	Related Party - Vitamin Realty		Other Leases		Totals
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	283	$	47	$	330
Operating cash flows from finance leases		-		8		8
Financing cash flows from finance lease obligations		-		115		115

-13-

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

Supplemental cash flows information related to leases for the six months ended December 31, 2018, was as follows:

	Related Party - Vitamin Realty		Other Leases		Totals
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	285	$	49	$	334
Operating cash flows from finance leases		-		7		7
Financing cash flows from finance lease obligations		-		101		101

In the six months ended December 31, 2019, the Company renewed, for one year, an operating lease for office space with an annual commitment of $25.

Maturities of operating lease liabilities as of December 31, 2019 were as follows:

	Operating			Related Party			Capitalized
	Lease			Operating Lease			Lease
Year ending June 30,	Commitment			Commitment			Obligations			Total
2020, remaining	$	11		$	283		$	83		$	377
2021		21			565			77			663
2022		8			565			-			573
2023		-			565			-			565
2024		-			563			-			563
2025		-			533			-			533
Thereafter		-			311			-			311
Total minimum lease payments		40			3,385			160			3,585
Imputed interest		(3	)		(364	)		(6	)		(373	)
Total	$	37		$	3,021		$	154		$	3,212

Total rent expense, lease amortization costs and interest expense, including real estate taxes and maintenance charges, was approximately $262 and $261 and $526 and $507 for the three and six months ended December 31, 2019 and 2018, respectively. Rent and lease amortization 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.

Note 7. Related Party Transactions

See Note 6(a). Leases for related party lease transactions.

-14-

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

Note 8. Segment Information and Disaggregated Revenue

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, for the three months ended December 31, 2019 and 2018 were $2,319 and $1,274, respectively and for the six months ended December 31, 2019 and 2018 were $4,345 and $2,513, respectively.

Financial information relating to the three months ended December 31, 2019 and 2018 operations by business segment and disaggregated revenues was as follows:

		Sales, Net						Segment
		U.S.		International				Gross					Capital
		Customers		Customers		Total		Profit (loss)			Depreciation		Expenditures
Contract Manufacturing	2019	$	11,501	$	2,303	$	13,804	$	1,927		$	69	$	43
	2018		10,498		1,258		11,756		1,246			66		269
Branded Proprietary Products	2019		2		-		2		(27	)		-		-
	2018		48		12		60		21			-		-
Other Nutraceutical Businesses	2019		375		16		391		126			-		-
	2018		181		4		185		63			-		-
Total Company	2019		11,878		2,319		14,197		2,026			69		43
	2018		10,727		1,274		12,001		1,330			66		269

-15-

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 (in thousands, except share and per share amounts)

(Unaudited)

Financial information relating to the six months ended December 31, 2019 and 2018 operations by business segment and disaggregated revenues was as follows:

		Sales, Net						Segment
		U.S.		International				Gross					Capital
		Customers		Customers		Total		Profit (Loss)			Depreciation		Expenditures
Contract Manufacturing	2019	$	20,502	$	4,286	$	24,788	$	3,177		$	159	$	101
	2018		19,153		2,455		21,608		2,328			131		287
Branded Proprietary Products	2019		4		10		14		(30	)		-		-
	2018		119		19		138		42			-		-
Other Nutraceutical Businesses	2019		752		49		801		278			1		-
	2018		520		39		559		179			1		-
Total Company	2019		21,258		4,345		25,603		3,425			160		101
	2018		19,792		2,513		22,305		2,549			132		287

	Total Assets as of
	December 31,		June 30,
	2019		2019
Contract Manufacturing	$	18,017	$	17,580
Branded Proprietary Products
		395		427
Other Nutraceutical Businesses
		1,559		1,783
Total Company	$	19,971	$	19,790

-16-

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANICAL CONDITION AND RESULTS OF OPERATION (dollars in thousands)

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, 2019.

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 “Management’s Discussion and Analysis of Financial Condition and Results of Operation”, involve a number of risks and uncertainties—in particular, the statements regarding our goals and strategies, new product introductions, plans to cultivate new businesses, future economic conditions, revenue, pricing, gross margin and costs, competition, 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 the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019.

For the six months ended December 31, 2019, our net sales increased by $3,298 to approximately $25,603 from approximately $22,305 in the six months ended December 31, 2018. Substantially all of the increase in net sales was from the Contract Manufacturing Segment of $3,180, and, to a lesser extent, from our Other Nutraceuticals Segment of $242, offset by a decrease in the Branded Proprietary Products of $124. Net sales increased in our Contract Manufacturing Segment by $3,180 primarily due to increased sales volumes to Life Extension and Herbalife in the amount of $1,694 and $1,520, respectively, offset by decreases in our other customers of net $34. For the six months ended December 31, 2019, we had operating income of approximately $1,681, an increase of approximately $789 from operating income of approximately $892 for the six months ended December 31, 2018. Our profit margins increased from approximately 11.4% of net sales in the six months ended December 31, 2018 to approximately 13.4% of net sales in the six months ended December 31, 2019, primarily as a result of the increased sales in our Contract Manufacturing Segment of approximately $3,180. Our consolidated selling and administrative expenses increased by approximately $87 or approximately 5.3% in the six months ended December 31, 2019 compared to the six months ended December 31, 2018.

Our revenue from our two significant customers in our Contract Manufacturing Segment is dependent on the demand within their respective distribution channels for the products we manufacture for them. As in any competitive market, our ability to match or beat other contract manufacturers pricing for the same items may also alter our outlook and the ability to maintain or increase revenues. We will continue to focus on our core businesses and push forward in maintaining our cost structure in line with our sales and expanding our customer base.

The Covid-19, or coronavirus, outbreak has the potential to cause a disruption in our supply chain. Currently, some of our suppliers of certain materials used in the production of our supplements are located in China. Most materials may be obtained from more than one supplier, including suppliers outside of China.  However, due to port closures and other restrictions resulting from the coronavirus outbreak in China, these suppliers, located both inside and outside of China, may have limited supply of such materials, which will cause the price of such materials to increase.  As of February 12, 2020, we have not experienced any such supply chain disruptions.  We have taken measures to secure some surplus stock and have informed our customers who may be affected of the potential price increase.  We do not currently anticipate any negative impact to our margins resulting from the coronavirus outbreak; however, if we are unable to obtain the necessary materials to produce a supplement within our standard lead times, it may delay the production and shipment of those supplements, thereby shifting the timing of recognizing the resulting sale to our customer.

-17-

Critical Accounting Policies and Estimates

There have been no changes to our critical accounting policies in the six months ended December 31, 2019, except as disclosed in Note 1. Principles of Consolidation and Basis of Presentation of the Condensed Financial Statements of the Company contained in this Quarterly Report on Form 10-Q. 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, 2019 and in Note 1. Principles of Consolidation and Basis of Presentation of the Condensed Financial Statements of the Company contained in this Quarterly Report on Form 10-Q.

Results of Operations (in thousands, except share and per share amounts)

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

	For the three months						For the six months
	ended December 31,						ended December 31,
	2019			2018			2019			2018
Sales, net		100.0	%		100.0	%		100.0	%		100.0	%
Costs and expenses:
Cost of sales		85.7	%		89.0	%		86.6	%		88.6	%
Selling and administrative		5.8	%		7.0	%		6.8	%		7.4	%
		91.5	%		96.0	%		93.4	%		96.0	%
Income from operations		8.5	%		4.0	%		6.6	%		4.0	%
Other income (expense), net
Interest expense		(0.8%	)		(1.6%	)		(0.9%	)		(1.7%	)
Unrealized loss on investments		(0.2%	)		-			(0.2%	)		-
Change in fair value of derivative liabilities		-			-			-			0.0	%
Other income, net		0.1	%		0.1	%		0.1	%		0.0	%
Other expense, net		(0.9%	)		(1.5%	)		(1.0%	)		(1.7%	)
Income before income taxes		7.6	%		2.5	%		5.6	%		2.3	%
Provision for income taxes		0.8	%		1.3	%		0.6	%		1.0	%
Net income		6.8	%		1.2	%		5.0	%		1.3	%

-18-

For the Six months ended December 31, 2019 compared to the Six months ended December 31, 2018

Sales, net. Sales, net, for the six months ended December 31, 2019 and 2018 were $25,603 and $22,305, respectively, an increase of 14.8%, and were comprised of the following:

	Six months ended				Dollar			Percentage
	December 31,				Change			Change
	2019		2018		2019 vs 2018			2019 vs 2018
	(amounts in thousands)
Contract Manufacturing:
US Customers	$	20,502	$	19,153	$	1,349			7.0	%
International Customers		4,286		2,455		1,831			74.6	%
Net sales, Contract Manufacturing		24,788		21,608		3,180			14.7	%
Branded Nutraceutical Products:
US Customers		4		119		(115	)		(96.6%	)
International Customers		10		19		(9	)		(47.4%	)
Net sales, Branded Nutraceutical Products		14		138		(124	)		(89.9%	)
Other Nutraceuticals:
US Customers		752		520		232			44.6	%
International Customers		49		39		10			25.6	%
Net sales, Other Nutraceuticals		801		559		242			43.3	%
Total net sales	$	25,603	$	22,305	$	3,298			14.8	%

For the six months ended December 31, 2019 and 2018, a significant portion of our consolidated net sales, approximately 92% and 91%, respectively, were concentrated among two customers in our Contract Manufacturing Segment, Life Extension and Herbalife. Life Extension and Herbalife represented approximately 68% and 27% and 70% and 24%, respectively, of our Contract Manufacturing Segment’s net sales in the six months ended December 31, 2019 and 2018, respectively. Innophos (a customer of our Other Nutraceutical Businesses), while not a significant customer of our consolidated net sales, represented approximately 18% and 6% of the Other Nutraceutical Businesses net sales in the six months ended December 31, 2019 and 2018, respectively. The loss of any of these customers could have a significant adverse impact on our financial condition and results of operations.

The increase in net sales of approximately $3,298 was primarily the result of increased net sales in our Contract Manufacturing Segment by $3,180 primarily due to increased sales volumes to Life Extension and Herbalife in the amounts of $1,694 and $1,520, respectively, offset by a combined decrease to our other customers of net $34.

Cost of sales. Cost of sales increased by approximately $2,422 to $22,178 for the six months ended December 31, 2019, as compared to $19,756 for the six months ended December 31, 2018 or approximately 12%. Cost of sales decreased as a percentage of sales to 86.6% for the six months ended December 31, 2019 as compared to 88.6% for the six months ended December 31, 2018. The increase in the cost of goods sold amount is consistent with the increased net sales of approximately 14.8%. The decrease in the cost of goods sold as a percentage of net sales, was primarily the result of the increased net sales used to offset the fixed manufacturing overhead. There were no significant changes in the cost of goods sold in our other two segments other than the variances in sales.

Selling and Administrative Expenses. There was an increase in selling and administrative expenses of $87, approximately 5% in the six months ended December 31, 2019 as compared to the six months ended December 31, 2018. As a percentage of sales, net, selling and administrative expenses were approximately 7% in each of the six months ended December 31, 2019 and 2018. The increase of $87 was primarily from increases in (i) salaries and employees benefits of approximately $94, as the result of increases in (a) the compensation of our newly appointed Co-Chief Executive Officers in May 2019 of $43 in the six months ended December 31, 2019 compared to the six months ended December 31, 2018;  (b) other staff

-19-

salaries of $43 and (c) employee benefits due to increases in salary bases and medical insurance premium costs of $8; (ii) professional and consulting fees of approximately $16 primarily as the result of increased legal fees of approximately $21 from general legal counsel offset by a decrease of $5 in other professional consulting services; and (iii) employee stock compensation expense of $30 as a result of issuing stock options in May 2019 with no such expense in the period ended December 31, 2018. These increases were partially offset by a decrease of approximately $34 in amortization expense resulting from the full amortization of intangible assets on October 31, 2018.

Other income (expense), net. Other income (expense), net was approximately $261 for the six months ended December 31, 2019 compared to $374 for the six months ended December 31, 2018, and was composed of:

	Six months ended
	December 31,
	2019			2018
	(dollars in thousands)
Interest expense	$	(233	)	$	(390	)
Change in fair value of derivative liabilities		-			9
Unrealized loss on investments		(55	)		-
Other income		27			7
Other income (expense), net	$	(261	)	$	(374	)

During the six month period ended December 31, 2018, the derivative liability was extinguished, resulting in the carrying value as of June 30, 2018 of $9, compared to a value of $0 as of December 31, 2018, due to the fact that the related derivative liability was no longer outstanding, resulting in a change of $9 for the six months ended December 31, 2018.

Our interest expense for the six months ended December 31, 2019 decreased by $157 from the six month period ended December 31, 2018, primarily resulting from the decrease in the interest rates on our Senior Credit Facility resulting from rate cuts in the federal funds borrowing rates of 0.75% and a 0.25% rate reduction in the refinancing with PNC Bank on May 15, 2019 (total savings of approximately $32) and from the payoff of the related party debt, also on May 15, 2019, in the aggregate amount of $2,400 resulting in reduce interest costs in the six months ended December 31, 2019 of approximately $65. (See Note 4 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q).

Provision for income taxes. For the six months ended December 31, 2019 and 2018, we had a state income tax provision of approximately $158 and $101, respectively and a federal income tax benefit of $9 in the six months ended December 31, 2019, compared to a federal tax provision of $12 in the six months ended December 31, 2018. We continue to maintain a reserve on a portion of 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, it is “more likely than not” that the Company’s deferred tax assets may not be fully realized.

Net income. Our net income for the six months ended December 31, 2019 and 2018 was approximately $1,271 and $405, respectively. The increase of approximately $866 was primarily the result of increased operating income of $789 and decreased interest expense of $157, offset by an increase in selling and administrative expenses of $87.

-20-

For the Three Months Ended December 31, 2019 compared to the Three Months Ended December 31, 2018

Sales, net. Sales, net, for the three months ended December 31, 2019 and 2018 were $14,197 and $12,001, respectively, an increase of 18.3%, and were comprised of the following:

	Three months ended				Dollar			Percentage
	December 31,				Change			Change
	2019		2018		2019 vs 2018			2019 vs 2018
	(amounts in thousands)
Contract Manufacturing:
US Customers	$	11,501	$	10,498	$	1,003			9.6	%
International Customers		2,303		1,258		1,045			83.1	%
Net sales, Contract Manufacturing		13,804		11,756		2,048			17.4	%
Branded Nutraceutical Products:
US Customers		2		48		(46	)		(95.8	%)
International Customers		-		12		(12	)		(100.0	%)
Net sales, Branded Nutraceutical Products		2		60		(58	)		(96.7	%)
Other Nutraceuticals:
US Customers		375		181		194			107.2	%
International Customers		16		4		12			300.0	%
Net sales, Other Nutraceuticals		391		185		206			111.4	%
Total net sales	$	14,197	$	12,001	$	2,196			18.3	%

In each of the three months ended December 31, 2019 and 2018 a significant portion of our consolidated net sales, approximately 93%, was concentrated among two customers, Life Extension and Herbalife, customers in our Contract Manufacturing Segment. Life Extension and Herbalife represented approximately 70% and 26% in the three months ended December 31, 2019 and 75% and 20% in the three months ended December 31, 2018, respectively, of our Contract Manufacturing Segment’s net sales. The loss of any of these customers could have a significant adverse impact on our financial condition and results of operations.

The increase in net sales of approximately $2,196 was primarily the result of net sales increasing in our Contract Manufacturing Segment of $2,048, primarily due to increased sales volumes to our major customers, Herbalife of approximately $1,296 and Life Extension of approximately $732, in the three months ended December 31, 2019, compared to the comparable prior period.

Cost of sales. Cost of sales increased by $1,500, approximately 14%, to $12,171 for the three months ended December 31, 2019, as compared to $10,671 for the three months ended December 31, 2018. Cost of sales decreased as a percentage of sales to 86% for the three months ended December 31, 2019 as compared to 89% for the three months ended December 31, 2018. The increase in the cost of goods sold amount is consistent with the increased net sales of approximately 18%. The decrease in the cost of goods sold as a percentage of net sales, was primarily the result of the increased net sales used to offset the fixed manufacturing overhead. There were no significant changes in the cost of goods sold in our other two segments other than the decreased sales in each such other two segments.

Selling and Administrative Expenses. There was a slight decrease in selling and administrative expenses of $22 in the three months ended December 31, 2019 as compared to the three months ended December 31, 2018, less than 3.0%. As a percentage of sales, net, selling and administrative expenses were approximately 6% and 7% for the three months ended December 31, 2019 and 2018, respectively. The decrease was primarily due to a decrease in professional and consulting fees of approximately $36 ($25 in general legal and $11 in other professional consulting fees), as the result of timing of the performance of such services throughout the year, offset in part, by an increase in salaries and employee benefits of approximately $17. No other expense within our selling and administrative expenses changed by more than $15.

-21-

Other income (expense), net. Other income (expense), net was approximately $134 and $183 for the three months ended December 31, 2019 and 2018, respectively, and was composed of:

	Three months ended
	December 31,
	2019			2018
	(dollars in thousands)
Interest expense	$	(109	)	$	(190	)
Unrealized loss on investments		(31	)		-
Other income		6			7
Other income (expense), net	$	(134	)	$	(183	)

Our interest expense for the three months ended December 31, 2019 decreased by $81 from the three month period ended December 31, 2018, primarily resulting from the decrease in the interest rates on our Senior Credit Facility resulting from rate cuts in the federal funds borrowing rates of 0.50% and a 0.25% rate reduction in the refinancing with PNC Bank on May 15, 2019 (total savings of approximately $16) and from the payoff of the related party debt, also on May 15, 2019, in the aggregate amount of $2,400 resulting in reduce interest costs in the three months ended December 31, 2019 of approximately $33.

Provision for income taxes. For the three months ended December 31, 2019 and 2018, we had a state income provision of approximately $115 and $74, respectively, and a federal income tax benefit of $3 and $16, respectively. We continue to maintain a reserve on a portion of 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 fully realized. The state tax expense is the result of MDC and Chem using all of the state net operating losses. 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 (loss). We had net income for the three months ended December 31, 2019 and 2018 of $959 and $246, respectively. The increase in net income of approximately $713 was primarily the result of increased operating income of $718 and decreased federal and state income taxes, net of $54, offset by a decrease in other expenses of $49.

Seasonality

The Company believes that there are non-seasonal factors that 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.

The nutraceutical business can be seasonal.  Due to our current customer base in our contract manufacturing segment, our fiscal quarter ending December 31^st each year tends to be more than our average quarterly volume for the other three fiscal quarters in the fiscal year.  This increase is based on their forecast of their customer base.

-22-

 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:

	For the six months ended
	December 31,
	2019			2018
	(dollars in thousands)
Net cash provided by (used in) operating activities	$	1,058		$	(914	)
Net cash used in investing activities	$	(98	)	$	(294	)
Net cash (used in) provided by financing activities	$	(1,368	)	$	1,025
Cash at end of period	$	67		$	45

At December 31, 2019, our working capital was approximately $2,243, an increase of $517 from our working capital of $1,726 at June 30, 2019. An increase in our current assets of $457 and a decrease of $60 in our current liabilities resulted in the increase in our working capital of $517 since June 30, 2019.

Operating Activities

Net cash provided by operating activities of $1,058 in the six months ended December 31, 2019 includes net income of approximately $1,271. After excluding the effects of non-cash expenses, including depreciation and amortization, and changes in the fair value of derivative liabilities and deferred tax assets, the adjusted cash provided from operations before the effect of the changes in working capital components was $1,746. Net cash used in our operations in the six months ended December 31, 2019 from our working capital assets and liabilities in the amount of approximately $688 was primarily the result of cash used in accounts receivable of $441 and inventories of $471 and a decrease in obligations under operating leases of $234 offset by an aggregate increase in accounts payable, accrued expenses and other liabilities of $475.

Net cash used in operating activities of $914 in the six months ended December 31, 2018, includes net income of approximately $405. After excluding the effects of non-cash expenses, including depreciation and amortization, and changes in the fair value of derivative liabilities and deferred tax assets, the adjusted cash provided from operations before the effect of the changes in working capital components was $606. Net cash used in our operations in the six months ended December 31, 2018 from our working capital assets and liabilities in the amount of approximately $1,520 was primarily the result of cash used in our accounts receivable of $721 and inventories of $3,794 offset, in part, with an aggregate increase in accounts payable, accrued expenses and other liabilities of $3,047.

Investing Activities

Cash used in investing activities in the six months ended December 31, 2019 and 2018, of approximately $98 and $294, respectively, was used primarily for the purchase of machinery and equipment of $101 and $287, respectively.

Financing Activities

Cash used in financing activities was approximately $1,368 for the six months ended December 31, 2019, and was from repayments of advances under our revolving credit facility of $24,469 and principal payments under our term notes in the amount of $610, offset, in part, by advances under our revolving credit facility of approximately $23,826.

-23-

Cash provided by financing activities was approximately $1,025 for the six months ended December 31, 2018, and was from advances under our revolving credit facility of $22,899, offset in part, by repayments of advances under our revolving credit facility of $21,467, principal payments under our term notes in the amount of $330 and payments under capitalized lease obligations of $101.

As of December 31, 2019, we had cash of $67, funds available under our revolving credit facility of approximately $1,980 and working capital of approximately $2,243. Our working capital includes $5,191 outstanding under our revolving line of credit which is not due until May 2024 but classified as current due to a subjective acceleration clause that could cause the advances to become currently due. (See Note 4 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q). Additionally, we had income from operations of approximately $1,681 in the six months ended December 31, 2019. 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 at least through the period ending February 12, 2021.

Our total annual commitments at December 31, 2019 for long term non-cancelable leases of approximately $565 consisted of obligations under operating leases for facilities and operating lease agreements for the rental of warehouse equipment, office equipment and automobiles.

Capital Expenditures

The Company's capital expenditures for the six months ended December 31, 2019 and 2018 were approximately $101 and $287, respectively. The Company has budgeted approximately $450 for capital expenditures for fiscal year 2020. 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.

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 SEC’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 Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

-24-

Under the supervision and with the participation of management, including the Co-Chief Executive Officers 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 December 31, 2019, and, based upon this evaluation, the Co-Chief Executive Officers 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 December 31, 2019 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

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.

Item 1A. Risk Factors

There have been no material changes made to the risk factors listed in “Item 1A - Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, except as follows:

The coronavirus outbreak has the potential to cause a disruption in our supply chain. 

The Covid-19, or coronavirus, outbreak has the potential to cause a disruption in our supply chain.  Currently, some of our suppliers of certain materials used in the production of our supplements are located in China.  Most of these materials may be obtained by more than one supplier, including suppliers outside of China.  However, due to port closures and other restrictions resulting from the coronavirus outbreak in China, these suppliers, located both inside and outside of China, may have limited supply of the materials, which will cause the price of such materials to increase. These and other disruptions would likely impact our sales and operating results.  If we are unable to obtain the necessary materials to produce a supplement within our standard lead times, it may delay the production and shipment of those supplements, thereby shifting the timing of recognizing the resulting sale to our customer.  In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products and impact our operating results.

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

Recent Sales of Unregistered Securities

None

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None

-25-

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURE

Not Applicable.

Item 5. OTHER INFORMATION

None.

Item 6. EXHIBITS

(a)     Exhibits

Exhibit

Number

31.1	Certification of pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Co-Chief Executive Officers.
31.2	Certification of pursuant to 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 Co-Chief Executive Officers.
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 December 31, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations for the six months ended December 31, 2019 and 2018, (ii) Condensed Consolidated Balance Sheets as of December 31, 2019 and June 30, 2019, (iii) Condensed Consolidated Statement of Changes in Stockholders’ (Deficit) Equity for the six months ended December 31, 2019 and 2018, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2019 and 2018, and (v) the Notes to Condensed Consolidated Financial Statements.

-26-

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:     February 12, 2020	By: /s/ Christina Kay
	Christina Kay,
	Co-Chief Executive Officer
Date:     February 12, 2020	By: /s/ Dina L. Masi
	Dina L. Masi,
	Chief Financial Officer & Senior Vice President

-27-

EX-31.1

Exhibit 31.1

Certification of Co-Chief Executive Officers

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

We, Christina Kay and Riva Sheppard certify that:

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

2. Based on our 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 our 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 we 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 we 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.

February 12, 2020	By: /s/ Christina Kay
	Name: Christina Kay,
	Title: Co-Chief Executive Officer
February 12, 2020	By: /s/ Riva Sheppard
	Name: Riva Sheppard,
	Title: Co-Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Finacial Officer

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

We, 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 officers 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 officers 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.

February 12, 2020	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 second quarter ended December 31, 2019 of Integrated BioPharma, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Christina Kay and Riva Sheppard, Co-Chief Executive Officers of Integrated BioPharma, Inc. certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to their 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.

Dated:     February 12, 2020	By: /s/ Christina Kay
	Name: Christina Kay,
	Title: Co-Chief Executive Officer
	By: /s/ Riva Sheppard
	Name: Riva Sheppard,
	Title: Co-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 second quarter ended December 31, 2019 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.

Dated:     February 12, 2020	By: /s/ Dina L. Masi
	Name: Dina L. Masi
	Title: Chief Financial Officer & Senior Vice President

XML

Note 3 - Property and Equipment, Net (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Depreciation, Total	$ 69,000	$ 66,000	$ 160,000	$ 132,000
Property, Plant and Equipment, Disposals			6,000	38,000
Gain (Loss) on Disposition of Property Plant Equipment, Total			$ 3,000	$ 0

XML

Note 6 - Leases and Other Commitments and Contingencies (Tables)

6 Months Ended

Dec. 31, 2019

Notes Tables

Lease, Cost [Table Text Block]

	2019						2018
	Related Party - Vitamin Realty		Other Leases		Totals		Related Party - Vitamin Realty		Other Leases		Totals
Operating lease costs	$	142	$	25	$	167	$	142	$	27	$	169
Finance Operating Lease Costs:
Amortization of right-of use assets	$	-	$	2	$	2	$	-	$	16	$	16
Interest on operating lease liabilities		-		3		3		-		3		3
Total finance lease cost	$	-	$	5	$	5	$	-	$	19	$	19

	2019						2018
	Related Party - Vitamin Realty		Other Leases		Totals		Related Party - Vitamin Realty		Other Leases		Totals
Operating lease costs	$	283	$	56	$	339	$	283	$	49	$	332
Finance Operating Lease Costs:
Amortization of right-of use assets	$	-	$	29	$	29	$	-	$	33	$	33
Interest on operating lease liabilities		-		8		8		-		7		7
Total finance lease cost	$	-	$	37	$	37	$	-	$	40	$	40

Leases and Remaining Commitments [Table Text Block]

	Right-of-use Assets		Current Portion of Operating Lease Obligations		Operating Lease Obligations		Remaining Cash Commitment
Vitamin Realty Leases	$	3,014	$	458	$	2,563	$	3,385
Machinery and equipment leases		21		11		10		22
Office equipment leases		17		9		7		18
	$	3,052	$	478	$	2,580	$	3,425

	Right-of-use Assets		Current Portion Operating Lease Obligations		Operating Lease Obligations		Remaining Cash Commitment
Vitamin Realty Leases	$	3,236	$	450	$	2,793	$	3,668
Machinery and equipment leases		26		11		15		27
Office equipment leases		22		9		14		24
	$	3,284	$	470	$	2,822	$	3,719

Supplemental Cash Flow Information, Leases [Table Text Block]

	Related Party - Vitamin Realty		Other Leases		Totals
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	283	$	47	$	330
Operating cash flows from finance leases		-		8		8
Financing cash flows from finance lease obligations		-		115		115

	Related Party - Vitamin Realty		Other Leases		Totals
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	285	$	49	$	334
Operating cash flows from finance leases		-		7		7
Financing cash flows from finance lease obligations		-		101		101

Lessee, Operating Lease and Finance Lease, Liability, Maturity [Table Text Block]

	Operating			Related Party			Capitalized
	Lease			Operating Lease			Lease
Year ending June 30,	Commitment			Commitment			Obligations			Total
2020, remaining	$	11		$	283		$	83		$	377
2021		21			565			77			663
2022		8			565			-			573
2023		-			565			-			565
2024		-			563			-			563
2025		-			533			-			533
Thereafter		-			311			-			311
Total minimum lease payments		40			3,385			160			3,585
Imputed interest		(3	)		(364	)		(6	)		(373	)
Total	$	37		$	3,021		$	154		$	3,212

XML

Note 4 - Senior Credit Facility and Other Long Term Debt - Interest Rates (Details)	Dec. 31, 2019	Jun. 30, 2019
Revolving Credit Facility [Member] | Base Rate [Member]
Interest rate	4.75%	5.50%
Revolving Credit Facility [Member] | Eurodollar [Member]
Interest rate	4.30475%	4.881%
Term Loan [Member] | Base Rate [Member]
Interest rate	5.00%	5.75%
Term Loan [Member] | Eurodollar [Member] | Minimum [Member]
Interest rate	4.792%	5.381%
Term Loan [Member] | Eurodollar [Member] | Maximum [Member]
Interest rate	4.80475%	5.3838%

XML

Note 3 - Property and Equipment, Net

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

Note

3

. Property and Equipment, net

Property and equipment, net consists of the following:

	December 31,			June 30,
	2019			2019
Land and building	$	1,250		$	1,250
Leasehold improvements		1,282			1,282
Machinery and equipment		6,376			6,280
Transportation equipment		6			6
		8,914			8,818
Less: Accumulated depreciation and amortization		(7,194	)		(7,040	)
Total	$	1,720		$	1,778

Depreciation and amortization expense recorded on property and equipment was

$69

and

$66

for the

three

months and

$160

and

$132

for

six

months ended

December 31, 2019

and

2018,

respectively. Additionally, the Company disposed of fully depreciated property of

$6

and

$38

in the

six

months ended

December 31, 2019

and

2018,

respectively and recognized a gain of

$3

and

$0

in the

six

months ended

December 31, 2019

and

2018,

respectivley.

XML

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

6 Months Ended

Dec. 31, 2019

Notes Tables

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

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Anti-dilutive stock options		50,000		150,000		50,000		150,000
Total anti-dilutive shares		50,000		150,000		50,000		150,000

XML

Document And Entity Information - shares	6 Months Ended
	Dec. 31, 2019	Feb. 12, 2020
Document Information [Line Items]
Entity Registrant Name	INTEGRATED BIOPHARMA INC
Entity Central Index Key	0001016504
Current Fiscal Year End Date	--06-30
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		29,565,943
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Interactive Data Current	Yes

XML

Note 6 - Leases and Other Commitments and Contingencies

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note

6.

Leases and other Commitments and Contingencies

(a)

Leases.

The Company has operating and finance leases for its corporate and sales offices, warehousing and packaging facilities and certain machinery and equipment, including office equipment. The Company’s leases have remaining terms of less than

1

year to less than

8

years.

The components of lease expense for the

three

months ended

December 31, 2019

and

2018,

were as follows:

	2019						2018
	Related Party - Vitamin Realty		Other Leases		Totals		Related Party - Vitamin Realty		Other Leases		Totals
Operating lease costs	$	142	$	25	$	167	$	142	$	27	$	169
Finance Operating Lease Costs:
Amortization of right-of use assets	$	-	$	2	$	2	$	-	$	16	$	16
Interest on operating lease liabilities		-		3		3		-		3		3
Total finance lease cost	$	-	$	5	$	5	$	-	$	19	$	19

The components of lease expense for the

six

months ended

December 31, 2019

and

2018,

were as follows:

	2019						2018
	Related Party - Vitamin Realty		Other Leases		Totals		Related Party - Vitamin Realty		Other Leases		Totals
Operating lease costs	$	283	$	56	$	339	$	283	$	49	$	332
Finance Operating Lease Costs:
Amortization of right-of use assets	$	-	$	29	$	29	$	-	$	33	$	33
Interest on operating lease liabilities		-		8		8		-		7		7
Total finance lease cost	$	-	$	37	$	37	$	-	$	40	$	40

Operating

Lease

Liabilities

Related Party

Operating

L

e

ase

Liabilities

.

Warehouse and office facilities are leased from Vitamin Realty Associates, LLC (“Vitamin Realty”), which is

100%

owned by the Company’s chairman, and a major stockholder and certain of his family members, who are the Co-Chief Executive Officers and directors of the Company. On

January 5, 2012,

MDC 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

June 1, 2024.

This additional lease provides for minimum lease payments of

$27

with annual increases plus the proportionate share of operating expenses.

Rent expense and lease amortization costs for the

three

months ended

December 31, 2019

and

2018

on these leases were

$220

and

$219,

respectively and

$431

and

$421

for the

six

month periods ended

December 31, 2019

and

2018,

respectivley, and are included in cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. As of

December 31, 2019

and

June 30, 2019,

the Company had outstanding current obligations to Vitamin Realty of

$71

and

$67,

respectively, included in accounts payable in the accompanying Condensed Consolidated Balance Sheet. Additionally, the Company has operating lease obligations of

$3,021

and

$3,243

with Vitamin Realty as noted in the accompany Condensed Consolidated Balance Sheet as of

December 31, 2019

and

June 30, 2019,

respectively.

Other

Operating

Lease

Liabilities

.

The Company has entered into certain non-cancelable operating lease agreements expiring up through

May, 2023,

related to machinery and equipment and office equipment.

As of

December 31, 2019,

the Company’s right-of-use assets, lease obligations and remaining cash commitment on these leases were as follows:

	Right-of-use Assets		Current Portion of Operating Lease Obligations		Operating Lease Obligations		Remaining Cash Commitment
Vitamin Realty Leases	$	3,014	$	458	$	2,563	$	3,385
Machinery and equipment leases		21		11		10		22
Office equipment leases		17		9		7		18
	$	3,052	$	478	$	2,580	$	3,425

As of

June 30, 2019,

the Company’s ROU assets, lease obligations and remaining cash commitment on these leases were as follows:

	Right-of-use Assets		Current Portion Operating Lease Obligations		Operating Lease Obligations		Remaining Cash Commitment
Vitamin Realty Leases	$	3,236	$	450	$	2,793	$	3,668
Machinery and equipment leases		26		11		15		27
Office equipment leases		22		9		14		24
	$	3,284	$	470	$	2,822	$	3,719

As of

December 31, 2019

and

June 30, 2019,

the Company’s weighted average discount rate and remaining term on lease liabilities were approximately

3.75%

and

3.76%

and

5.9

 years and

6.4

years, respectively.

Supplemental cash flows information related to leases for the

six

months ended

December 31, 2019,

was as follows:

	Related Party - Vitamin Realty		Other Leases		Totals
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	283	$	47	$	330
Operating cash flows from finance leases		-		8		8
Financing cash flows from finance lease obligations		-		115		115

Supplemental cash flows information related to leases for the

six

months ended

December 31, 2018,

was as follows:

	Related Party - Vitamin Realty		Other Leases		Totals
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	285	$	49	$	334
Operating cash flows from finance leases		-		7		7
Financing cash flows from finance lease obligations		-		101		101

In the

six

months ended

December 31, 2019,

the Company renewed, for

one

year, an operating lease for office space with an annual commitment of

$25.

Maturities of operating lease liabilities as of

December 31, 2019

were as follows:

	Operating			Related Party			Capitalized
	Lease			Operating Lease			Lease
Year ending June 30,	Commitment			Commitment			Obligations			Total
2020, remaining	$	11		$	283		$	83		$	377
2021		21			565			77			663
2022		8			565			-			573
2023		-			565			-			565
2024		-			563			-			563
2025		-			533			-			533
Thereafter		-			311			-			311
Total minimum lease payments		40			3,385			160			3,585
Imputed interest		(3	)		(364	)		(6	)		(373	)
Total	$	37		$	3,021		$	154		$	3,212

Total rent expense, lease amortization costs and interest expense, including real estate taxes and maintenance charges, was approximately

$262

and

$261

 and

$526

 and

$507

for the

three

and

six

months ended

December 31, 2019

and

2018,

respectively. Rent and lease amortization 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.

XML

Condensed Consolidated Statements of Stockholders' Equity (Deficiency) (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Total
Balance (in shares) at Jun. 30, 2018	21,170,074			34,900
Balance at Jun. 30, 2018	$ 42	$ 44,773	$ (49,952)	$ (99)	$ (5,236)
Net income			159		159
Shares issued upon conversion of CD Financial, LLC Convertible Note, net (in shares)	8,230,769
Shares issued upon conversion of CD Financial, LLC Convertible Note, net	$ 17	5,256			5,273
Balance (in shares) at Sep. 30, 2018	29,400,843			34,900
Balance at Sep. 30, 2018	$ 59	50,029	(49,793)	$ (99)	196
Balance (in shares) at Jun. 30, 2018	21,170,074			34,900
Balance at Jun. 30, 2018	$ 42	44,773	(49,952)	$ (99)	(5,236)
Net income					405
Balance (in shares) at Dec. 31, 2018	29,600,843			34,900
Balance at Dec. 31, 2018	$ 59	50,053	(49,547)	$ (99)	466
Balance (in shares) at Sep. 30, 2018	29,400,843			34,900
Balance at Sep. 30, 2018	$ 59	50,029	(49,793)	$ (99)	196
Net income			246		246
Shares issued upon exercise of employee stock options (in shares)	200,000
Shares issued upon exercise of employee stock options		24			24
Balance (in shares) at Dec. 31, 2018	29,600,843			34,900
Balance at Dec. 31, 2018	$ 59	50,053	(49,547)	$ (99)	466
Balance (in shares) at Jun. 30, 2019	29,600,843			34,900
Balance at Jun. 30, 2019	$ 59	50,197	(48,264)	$ (99)	1,893
Stock compensation expense for employee stock options		15			15
Net income			312		312
Balance (in shares) at Sep. 30, 2019	29,600,843			34,900
Balance at Sep. 30, 2019	$ 59	50,212	(47,952)	$ (99)	2,220
Balance (in shares) at Jun. 30, 2019	29,600,843			34,900
Balance at Jun. 30, 2019	$ 59	50,197	(48,264)	$ (99)	1,893
Net income					1,271
Balance (in shares) at Dec. 31, 2019	29,600,843			34,900
Balance at Dec. 31, 2019	$ 59	50,227	(46,993)	$ (99)	3,194
Balance (in shares) at Sep. 30, 2019	29,600,843			34,900
Balance at Sep. 30, 2019	$ 59	50,212	(47,952)	$ (99)	2,220
Stock compensation expense for employee stock options		15			15
Net income			959		959
Balance (in shares) at Dec. 31, 2019	29,600,843			34,900
Balance at Dec. 31, 2019	$ 59	$ 50,227	$ (46,993)	$ (99)	$ 3,194

XML

Note 6 - Leases and Other Commitments and Contingencies - Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Operating lease costs	$ 167	$ 169	$ 339	$ 332
Amortization of right-of use assets	2	16	29	33
Interest on operating lease liabilities	3	3	8	7
Total finance lease cost	5	19	37	40
Unrelated Party [Member]
Operating lease costs	25	27	56	49
Amortization of right-of use assets	2	16	29	33
Interest on operating lease liabilities	3	3	8	7
Total finance lease cost	5	19	37	40
Vitamin Realty LLC [Member]
Operating lease costs	142	142	283	283
Amortization of right-of use assets
Interest on operating lease liabilities
Total finance lease cost

XML

Note 8 - Segment Information and Disaggregated Revenue (Details Textual)	3 Months Ended		6 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Number of Reportable Segments			3
Revenue from Contract with Customer, Including Assessed Tax	$ 14,197,000	$ 12,001,000	$ 25,603,000	$ 22,305,000
Europe [Member]
Revenue from Contract with Customer, Including Assessed Tax	$ 2,319	$ 1,274	$ 4,345	$ 2,513

XML

Note 2 - Inventories (Tables)

6 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	December 31,		June 30,
	2019		2019
Raw materials	$	5,716	$	4,550
Work-in-process		2,703		2,325
Finished goods		870		1,944
Total	$	9,289	$	8,819

XML

Note 7 - Related Party Transactions

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

Note

7.

Related Party Transactions

See Note

6

(a). Leases for related party lease transactions.

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Operating lease right-of-use assets	$ 3,052	$ 3,284
Accounts payable, related parties	71	67
Current portion of operating lease liabilities	478	470
Operating lease liabilities	$ 2,580	$ 2,822
Common stock, par value (in dollars per share)	$ 0.002	$ 0.002
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	29,600,843	29,600,843
Common stock, shares outstanding (in shares)	29,565,943	29,565,943
Treasury stock, shares (in shares)	34,900	34,900
Vitamin Realty LLC [Member]
Operating lease right-of-use assets	$ 3,014	$ 3,236
Current portion of operating lease liabilities	458	450
Operating lease liabilities	$ 2,563	$ 2,793

XML

Note 2 - Inventories

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Inventory Disclosure [Text Block]

Note

2

. Inventories

Inventories are stated at the lower of cost or net realizable value using the

first

-in,

first

-out method and consist of the following:

	December 31,		June 30,
	2019		2019
Raw materials	$	5,716	$	4,550
Work-in-process		2,703		2,325
Finished goods		870		1,944
Total	$	9,289	$	8,819

XML

Note 6 - Leases and Other Commitments and Contingencies (Details Textual) $ in Thousands			3 Months Ended		6 Months Ended
	May 19, 2014 USD ($) ft²	Jan. 05, 2012 USD ($) ft²	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Jun. 30, 2019 USD ($)
Operating Leases, Rent Expense, Net, Total			$ 262	$ 261	$ 507	$ 526
Unrelated Party [Member]
Operating Lease, Liability, Total			$ 37		$ 37
Lessee, Operating Lease, Discount Rate			3.75%		3.75%		3.76%
Operating Lease, Weighted Average Remaining Lease Term			5 years 328 days		5 years 328 days		6 years 146 days
Manhattan Drug Company [Member]
Payments for Rent		$ 533
AgroLabs [Member]
Area of Real Estate Property | ft²	2,700
Payments for Rent	$ 27
Chairman, Chief Executive Office and Major Stockholder [Member]
Percent of Ownership for Warehouse and Office Facilities Leased					100.00%
Vitamin Realty LLC [Member]
Operating Leases, Rent Expense, Net, Total			$ 220	$ 219	$ 431	$ 421
Due to Related Parties, Total			71		71		$ 67
Operating Lease, Liability, Total			$ 3,021		$ 3,021		$ 3,243
Vitamin Realty LLC [Member] | Operating Lease Renewed for Office Space [Member]
Lessee, Operating Lease, Term of Contract			1 year		1 year
Lessee, Operating Lease, Liability, Annual Commitment					$ 25
Minimum [Member]
Lessee, Lease, Term of Contract					1 year
Minimum [Member] | Manhattan Drug Company [Member]
Area of Real Estate Property | ft²		74,898
Maximum [Member]
Lessee, Lease, Term of Contract					8 years
Maximum [Member] | Manhattan Drug Company [Member]
Area of Real Estate Property | ft²		76,161

XML

Note 6 - Leases and Other Commitments and Contingencies - Minimum Rental Commitment for Long-term Non-cancelable Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
2020, remaining capital lease	$ 83
2020, remaining total	377
2021, Capital Lease Obligation	77
2021, Total	663
2022, Capital Lease Obligation
2022, Total	573
2023, Capital Lease Obligation
2023, Total	565
2024, Capital Lease Obligation
2024, Total	563
2025, Capital Lease Obligation
2025, Total	533
Thereafter, Capital Lease Obligation
Thereafter, Total	311
Total minimum lease payments, Capital Lease Obligation	160
Total minimum lease payments, Total	3,585
Imputed interest, Capital Lease Obligation	(6)
Imputed interest, Total	(373)
Total, Capital Lease Obligation	154
Total	3,212
Vitamin Realty LLC [Member]
2020, remaining operating lease	283
2021, Operating Lease	565
2022, Operating Lease	565
2023, Operating Lease	565
2024, Operating Lease	563
2025, Operating Lease	533
Thereafter, Operating Lease	311
Total minimum lease payments, Operating Lease	3,385
Imputed interest, Operating Lease	(364)
Total, Operating Lease	3,021	$ 3,243
Unrelated Party [Member]
2020, remaining operating lease	11
2021, Operating Lease	21
2022, Operating Lease	8
2023, Operating Lease
2024, Operating Lease
2025, Operating Lease
Thereafter, Operating Lease
Total minimum lease payments, Operating Lease	40
Imputed interest, Operating Lease	(3)
Total, Operating Lease	$ 37

XML

Note 5 - Significant Risks and Uncertainties (Details Textual)	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019
Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Number of Major Customers	2	2	2	2
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Contract Manufacturing [Member]
Number of Major Customers	2	2
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Two Customers [Member]
Concentration Risk, Percentage	93.00%	93.00%	92.00%	91.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Major Customer 1 [Member]
Concentration Risk, Percentage			68.00%	70.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Major Customer 1 [Member] | Contract Manufacturing [Member]
Concentration Risk, Percentage	70.00%	75.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Major Customer 2 [Member]
Concentration Risk, Percentage			27.00%	24.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Major Customer 2 [Member] | Contract Manufacturing [Member]
Concentration Risk, Percentage	26.00%	20.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Number of Major Customers			2		2
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Customers [Member]
Concentration Risk, Percentage			89.00%		88.00%
Number of Employees, Geographic Area [Member] | Unionized Employees Concentration Risk [Member]
Concentration Risk, Percentage			73.00%

XML

Note 3 - Property and Equipment, Net - Property and Equipment, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Property and equipment, gross	$ 8,914	$ 8,818
Less: Accumulated depreciation and amortization	(7,194)	(7,040)
Total	1,720	1,778
Land and Building [Member]
Property and equipment, gross	1,250	1,250
Leasehold Improvements [Member]
Property and equipment, gross	1,282	1,282
Machinery and Equipment [Member]
Property and equipment, gross	6,376	6,280
Transportation Equipment [Member]
Property and equipment, gross	$ 6	$ 6

XML

Note 8 - Segment Information and Disaggregated Revenue (Tables)

6 Months Ended

Dec. 31, 2019

Notes Tables

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

		Sales, Net						Segment
		U.S.		International				Gross					Capital
		Customers		Customers		Total		Profit (loss)			Depreciation		Expenditures
Contract Manufacturing	2019	$	11,501	$	2,303	$	13,804	$	1,927		$	69	$	43
	2018		10,498		1,258		11,756		1,246			66		269
Branded Proprietary Products	2019		2		-		2		(27	)		-		-
	2018		48		12		60		21			-		-
Other Nutraceutical Businesses	2019		375		16		391		126			-		-
	2018		181		4		185		63			-		-
Total Company	2019		11,878		2,319		14,197		2,026			69		43
	2018		10,727		1,274		12,001		1,330			66		269

		Sales, Net						Segment
		U.S.		International				Gross					Capital
		Customers		Customers		Total		Profit (Loss)			Depreciation		Expenditures
Contract Manufacturing	2019	$	20,502	$	4,286	$	24,788	$	3,177		$	159	$	101
	2018		19,153		2,455		21,608		2,328			131		287
Branded Proprietary Products	2019		4		10		14		(30	)		-		-
	2018		119		19		138		42			-		-
Other Nutraceutical Businesses	2019		752		49		801		278			1		-
	2018		520		39		559		179			1		-
Total Company	2019		21,258		4,345		25,603		3,425			160		101
	2018		19,792		2,513		22,305		2,549			132		287

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

	Total Assets as of
	December 31,		June 30,
	2019		2019
Contract Manufacturing	$	18,017	$	17,580
Branded Proprietary Products
		395		427
Other Nutraceutical Businesses
		1,559		1,783
Total Company	$	19,971	$	19,790

XML

Note 6 - Leases and Other Commitments and Contingencies - Leases and Commitments (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Operating lease right-of-use assets	$ 3,052	$ 3,284
Current portion operating lease obligations	478	470
Operating lease obligations	2,580	2,822
Remaining cash commitment	3,425	3,719
Machinery and Equipment Leases [Member]
Operating lease right-of-use assets	21	26
Current portion operating lease obligations	11	11
Operating lease obligations	10	15
Remaining cash commitment	22	27
Office Equipment Leases [Member]
Operating lease right-of-use assets	17	22
Current portion operating lease obligations	9	9
Operating lease obligations	7	14
Remaining cash commitment	18	24
Vitamin Realty LLC [Member]
Operating lease right-of-use assets	3,014	3,236
Current portion operating lease obligations	458	450
Operating lease obligations	2,563	2,793
Remaining cash commitment	$ 3,385	$ 3,668

XML

Note 8 - Segment Information and Disaggregated Revenue - Operations by Business Segment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Sales, net	$ 14,197,000	$ 12,001,000	$ 25,603,000	$ 22,305,000
Gross Profit	2,026,000	1,330,000	3,425,000	2,549,000
Depreciation	69,000	66,000	160,000	132,000
Capital Expenditures	43,000	269,000	101,000	287,000
Contract Manufacturing [Member]
Sales, net	13,804,000	11,756,000	24,788,000	21,608,000
Gross Profit	1,927,000	1,246,000	3,177,000	2,328,000
Depreciation	69,000	66,000	159,000	131,000
Capital Expenditures	43,000	269,000	101,000	287,000
Branded Proprietary Products [Member]
Sales, net	2,000	60,000	14,000	138,000
Gross Profit	(27,000)	21,000	(30,000)	42,000
Depreciation
Capital Expenditures
Other Nutraceutical Business [Member]
Sales, net	391,000	185,000	801,000	559,000
Gross Profit	126,000	63,000	278,000	179,000
Depreciation			1,000	1,000
Capital Expenditures
UNITED STATES
Sales, net	11,878,000	10,727,000	21,258,000	19,792,000
UNITED STATES | Contract Manufacturing [Member]
Sales, net	11,501,000	10,498,000	20,502,000	19,153,000
UNITED STATES | Branded Proprietary Products [Member]
Sales, net	2,000	48,000	4,000	119,000
UNITED STATES | Other Nutraceutical Business [Member]
Sales, net	375,000	181,000	752,000	520,000
Non-US [Member]
Sales, net	2,319,000	1,274,000	4,345,000	2,513,000
Non-US [Member] | Contract Manufacturing [Member]
Sales, net	2,303,000	1,258,000	4,286,000	2,455,000
Non-US [Member] | Branded Proprietary Products [Member]
Sales, net		12,000	10,000	19,000
Non-US [Member] | Other Nutraceutical Business [Member]
Sales, net	$ 16,000	$ 4,000	$ 49,000	$ 39,000

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Sales, net	$ 14,197	$ 12,001	$ 25,603	$ 22,305
Cost of sales	12,171	10,671	22,178	19,756
Gross profit	2,026	1,330	3,425	2,549
Selling and administrative expenses	821	843	1,744	1,657
Operating income	1,205	487	1,681	892
Other income (expense), net
Interest expense	(109)	(190)	(233)	(390)
Change in fair value of derivative liabilities				9
Unrealized loss on investments	(31)		(55)
Other income, net	6	7	27	7
Other income (expense), net	(134)	(183)	(261)	(374)
Income before income taxes	1,071	304	1,420	518
Provision for income taxes	112	58	149	113
Net income	$ 959	$ 246	$ 1,271	$ 405
Basic earnings per common share (in dollars per share)	$ 0.03	$ 0.01	$ 0.04	$ 0.01
Diluted earnings per common share (in dollars per share)	$ 0.03	$ 0.01	$ 0.04	$ 0.01
Weighted average common shares outstanding - basic (in shares)	29,565,943	29,392,030	29,565,943	28,305,408
Add: Equivalent shares outstanding (in shares)	1,025,020	506,327	1,042,300	600,837
Weighted average common shares outstanding - diluted (in shares)	30,590,963	29,898,357	30,608,243	28,906,245

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Significant Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

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

8

-

03

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, 2019 (

“Form

10

-K”), as filed with the SEC. The

June 30, 2019

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 preparation of the unaudited condensed financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Ultimate results could differ from the estimates of management. The results of operations for the

three

and

six

months ended

December 31, 2019

are

not

necessarily indicative of the results for the full fiscal year ending

June 30, 2020

or for any other period.

Reclassification, Policy [Policy Text Block]

Reclassifications.

Certain prior year amounts have been reclassified to conform to the current period presentation.

Nature of Operations [Policy Text Block]

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 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 and drug and vitamin retailers, under the following brands: Peaceful Sleep, Green Envy, 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 botanicals, including multi minerals produced under a license agreement, (iii) MDC Warehousing and Distribution, Inc., a service provider for warehousing and fulfilment services and (iv) Chem International, Inc. (“Chem”), a distributor of certain raw materials for DSM Nutritional Products LLC.

New Accounting Pronouncements, Policy [Policy Text Block]

Accounting Pronouncements Recently Adopted

In

October, 2016,

the FASB issued ASU

No.

2016

-

16,

“Income Taxes (Topic

740

): Intra-Entity Transfers of Assets Other than Inventory,” which eliminates the requirement to defer recognition of income taxes on intra-entity transfers until the asset is sold to an outside party. The new guidance requires the recognition of current and deferred income taxes on intra-entity transfers of assets other than inventory, such as intellectual property and property, plant and equipment, when the transfer occurs. The guidance was effective for the Company on

July 1, 2019.

The standard requires a “modified retrospective” adoption, meaning the standard is applied through a cumulative adjustment in retained earnings as of the beginning of the period of adoption. This new guidance did

not

have a material impact on the Company’s Condensed Consolidated Financial Statements.

In

July 2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2017

-

11,

"Earnings Per Share (Topic

260

) Distinguishing Liabilities from Equity (Topic

480

) Derivatives and Hedging (Topic

815

)," which addresses the complexity of accounting for certain financial instruments with down round features. The amendments were effective for the Company on

July 1, 2019

for the fiscal year ended

June 30, 2020,

and the interim periods within it. This new guidance did

not

have a material impact on the Company’s Condensed Consolidated Financial Statements.

Aside from the adoption of ASUs, as described above, there have been

no

material changes during fiscal year

2020

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, 2019.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition.

The Company recognizes product sales revenue, the prices of which are fixed and determinable, when title and risk of loss have transferred to the customer, when estimated provisions for product returns, rebates, charge-backs and other sales allowances are reasonably determinable, and when collectability is reasonably assured. Accruals for these items are presented in the consolidated financial statements as reductions to sales. The Company’s net sales represent gross sales invoiced to customers, less certain related charges for discounts, returns, rebates, charge-backs and other allowances. Cost of sales includes the cost of raw materials and all labor and overhead associated with the manufacturing and packaging of the products. Gross margins are affected by, among other things, changes in the relative sales mix among our products and valuation and/or charge off of slow moving, expired or obsolete inventories. To perform revenue recognition for arrangements within the scope of ASC

606,

the Company performs the following

five

steps:

● identification of the promised goods or services in the contract;

● determination of whether the promised goods or serves are performance obligations including whether they are distinct in the context of the contract;

● measurement of the transaction price, including the constraint on variable consideration;

● allocation of the transaction price to the performance obligations based on estimated selling prices; and

● recognition of revenue when (or as) the Company satisfies each performance obligation. A performance obligation is a promise to transfer a distinct good or service to the customer and is the unit of account in ASC 606.

Lessee, Leases [Policy Text Block]

Leases.

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment, current portion of long term debt, and long-term debt obligation on our consolidated statement of financial condition.  

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do

not

provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms

may

include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component.

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 and if converted method.

The following options were

not

included in the computation of weighted average diluted common shares outstanding as the effect of doing so would be anti-dilutive for the

three

and

six

months ended

December 31, 2019

and

2018:

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Anti-dilutive stock options		50,000		150,000		50,000		150,000
Total anti-dilutive shares		50,000		150,000		50,000		150,000

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash flows provided by operating activities:
Net income	$ 1,271	$ 405
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	160	166
Amortization of operating lease right-of-use assets	233	224
Stock based compensation	30
Change in deferred tax assets	(43)	12
Unrealized loss on investments	55
Other, net	7	23
Changes in operating assets and liabilities:
Accounts receivable	(441)	(721)
Inventories	(471)	(3,794)
Other current assets	(10)	(47)
Security deposits and other assets	24	(4)
Accounts payable	403	2,989
Accrued expenses and other liabilities	73	58
Operating lease obligations	(233)	(225)
Net cash provided by (used in) operating activities	1,058	(914)
Cash flows from investing activities:
Purchase of property and equipment	(101)	(287)
Proceeds from sale of machinery and equipment	3
Cash contribution in AgroSport LLC		(7)
Net cash used in investing activities	(98)	(294)
Cash flows from financing activities:
Advances under revolving credit facility	23,826	22,899
Proceeds from exercise of employee stock options		24
Repayments of advances under revolving credit facility	(24,469)	(21,467)
Repayments under term note payables	(610)	(330)
Repayments under finance lease obligations	(115)	(101)
Net cash (used in) provided by financing activities	(1,368)	1,025
Net increase in cash	(408)	(183)
Cash at beginning of period	475	228
Cash at end of period	67	45
Interest paid	228	369
Income taxes paid	$ 155	$ 123

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Note 5 - Significant Risks and Uncertainties

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

Note

5.

Significant Risks and Uncertainties

(

a

) Major Customers.

In each of the

three

months ended

December 31, 2019

and

2018,

approximately

93%

of consolidated net sales were derived from

two

customers. These

two

customers are in the Company’s Contract Manufacturing Segment and represented approximately

70%

and

26%

and

75%

and

20%

in the

three

months ended

December 31, 2019

and

2018,

respectively. In the

six

months ended

December 31, 2019

and

2018,

approximately

92%

and

91%

of consolidated net sales, respectively, were derived from the same

two

customers and net sales to these

two

customers represented approximately

68%

and

27%

in the

six

months ended

December 31, 2019

and

70%

and

24%

of net sales in the

six

months ended

December 31, 2018,

respectively. Accounts receivable from these

two

major customers represented approximately

89%

and

88%

of total net accounts receivable as of

December 31

and

June 30, 2019,

respectively. The loss of any of these customers could have an adverse effect on the Company’s operations. Major customers are those customers who account for more than

10%

of net sales.

(

b

) Other Business Risks.

Approximately

73%

of the Company’s employees are covered by a union contract and are employed in its New Jersey facilities. The contract was renewed on

September 1, 2018

and will expire on

August 31, 2021.

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Note 4 - Senior Credit Facility and Other Long Term Debt (Tables)

6 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Debt [Table Text Block]

	Principal Amount						Interest Rate			Maturity Date
	As of December 31, 2019			As of June 30, 2019
Revolving advances under Senior Credit
Facility with PNC Bank, National Association	$	5,191		$	5,834			*		5/15/2024
Installment Note with PNC Bank		2,941			3,542			*		5/15/2024
Installment Note with PNC Equipment Finance		-			8			4.57	%	7/29/2019
Capitalized lease obligations		154			269			4.01% - 9.38	%	2/20/2019 - 12/9/2020
Total outstanding debt		8,286			9,653
Less:   Revolving Advances		(5,191	)		(5,834	)
Prepaid financing costs		(45	)		(50	)
Current portion of long term debt, net		(1,146	)		(1,047	)
Long term debt, net	$	1,904		$	2,722

Schedule of Debt Interest Rates [Table Text Block]

	December 31,			June 30,
	2019			2019
Revolving Credit Facility:
Base Rate Interest		4.75	%		5.50	%
Eurodollar Rate		4.30475	%		4.881	%
Term Loan:
Base Rate Interest		5.00	%		5.75	%
Eurodollar Rate	4.792% and 4.80475		%	5.381% and 5.3838		%

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Note 4 - Senior Credit Facility and Other Long Term Debt - Debt Outstanding (Details) - USD ($) $ in Thousands		6 Months Ended
		Dec. 31, 2019	Jun. 30, 2019
Capitalized lease obligations		$ 154	$ 269
Total outstanding debt		8,286	9,653
Prepaid financing costs		(45)	(50)
Current portion of long term debt, net		(1,146)	(1,047)
Long term debt, net		1,904	2,722
Convertible Debt [Member]
Current portion of long term debt, net		$ (1,146)	(1,047)
Minimum [Member]
Capitalized lease obligations, interest rate		4.01%
Capitalized lease obligations, maturity start date		Feb. 20, 2019
Maximum [Member]
Capitalized lease obligations, interest rate		9.38%
Capitalized lease obligations, maturity end date		Dec. 09, 2020
Revolving Advances [Member]
Notes Payable		$ 5,191	5,834
Interest Rate	[1]
Maturity Date		May 15, 2024
Less: Revolving Advances		$ (5,191)	(5,834)
Installment Note with PNC Bank [Member]
Notes Payable		$ 2,941	3,542
Interest Rate	[1]
Maturity Date		May 15, 2024
PNC Equipment Finance LLC [Member]
Notes Payable			$ 8
Interest Rate		4.57%
Maturity Date		Jul. 29, 2019

[1] See table below

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Note 2 - Inventories - Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Raw materials	$ 5,716	$ 4,550
Work-in-process	2,703	2,325
Finished goods	870	1,944
Total	$ 9,289	$ 8,819

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Note 4 - Senior Credit Facility and Other Long Term Debt (Details Textual) - USD ($) $ in Thousands			6 Months Ended
	May 15, 2019	Dec. 22, 2017	Dec. 31, 2019	Jun. 30, 2019
Capital Lease Obligations, Total			$ 154	$ 269
First American Equipment Finance [Member]
Capital Lease Obligations, Total		$ 143
Sale Leaseback Transaction, Monthly Rental Payments		$ 6
Sale Leaseback Transaction, Imputed Interest Rate		6.56%
Amended Loan Agreement [Member]
Senior Notes, Total	$ 11,585
Debt Instrument, Debt Default, Interest Rate Basic Spread	2.00%
Line of Credit Facility Covenant Prepayment Provisions Percentage of Excess Cash flow			25.00%
Amended Loan Agreement [Member] | Term Loan [Member]
Debt Instrument, Face Amount	$ 3,585
Loans Payable, Noncurrent, Total			$ 2,852	3,455
Number of Consecutive Monthly Installments	84
Number of Consecutive Monthly Installments, Fixed Amount	83
Debt Instrument, Periodic Payment, Total	$ 43
Line of Credit Facility Covenant Prepayment Provisions Percentage of Excess Cash flow	25.00%
Amended Loan Agreement [Member] | Term Loan [Member] | Eurodollar [Member]
Debt Instrument, Basis Spread on Variable Rate	3.00%
Amended Loan Agreement [Member] | Term Loan [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate			3.00%
Amended Loan Agreement [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 8,000
Long-term Line of Credit, Total			$ 4,500	$ 4,250
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	75.00%
Line of Credit Facility, Covenan,t Aggregate Revolving Advance, Appraised Liquidation Value, Inventory Advance Rate	85.00%
Amended Loan Agreement [Member] | Revolving Credit Facility [Member] | Eurodollar [Member]
Debt Instrument, Basis Spread on Variable Rate	2.50%
Amended Loan Agreement [Member] | Revolving Credit Facility [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate			2.50%

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Note 1 - Principles of Consolidation and Basis of Presentation - Antidilutive Securities Excluded From Weighted Average Diluted Common Shares Outstanding (Details) - shares	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Anti-dilutive shares (in shares)	50,000	150,000	50,000	150,000
Share-based Payment Arrangement, Option [Member]
Anti-dilutive shares (in shares)	50,000	150,000	50,000	150,000

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Note 6 - Leases and Other Commitments and Contingencies - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Operating cash flows from operating leases	$ 330	$ 334
Operating cash flows from finance leases	8	7
Financing cash flows from finance lease obligations	115	101
Unrelated Party [Member]
Operating cash flows from operating leases	47	49
Operating cash flows from finance leases	8	7
Financing cash flows from finance lease obligations	115	101
Vitamin Realty LLC [Member]
Operating cash flows from operating leases	283	285
Operating cash flows from finance leases
Financing cash flows from finance lease obligations

XML

Note 8 - Segment Information and Disaggregated Revenue - Total Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Total Assets	$ 19,971	$ 19,790
Contract Manufacturing [Member]
Total Assets	18,017	17,580
Branded Proprietary Products [Member]
Total Assets	395	427
Other Nutraceutical Business [Member]
Total Assets	$ 1,559	$ 1,783

XML

Note 3 - Property and Equipment, Net (Tables)

6 Months Ended

Dec. 31, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	December 31,			June 30,
	2019			2019
Land and building	$	1,250		$	1,250
Leasehold improvements		1,282			1,282
Machinery and equipment		6,376			6,280
Transportation equipment		6			6
		8,914			8,818
Less: Accumulated depreciation and amortization		(7,194	)		(7,040	)
Total	$	1,720		$	1,778

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Current Assets:
Cash	$ 67	$ 475
Accounts receivable, net	4,879	4,439
Inventories	9,289	8,819
Other current assets	301	346
Total current assets	14,536	14,079
Property and equipment, net	1,720	1,778
Operating lease right-of-use assets	3,052	3,284
Deferred tax assets, net	577	534
Security deposits and other assets	86	115
Total Assets	19,971	19,790
Current Liabilities:
Advances under revolving credit facility	5,191	5,834
Accounts payable (includes $71 and $67 due to related party)	4,258	3,855
Accrued expenses and other current liabilities	1,220	1,147
Current portion of long term debt, net	1,146	1,047
Current portion of operating lease liabilities	478	470
Total current liabilities	12,293	12,353
Operating lease liabilities	2,580	2,822
Long term debt, net	1,904	2,722
Total liabilities	16,777	17,897
Commitments and Contingencies
Stockholders' Equity :
Common Stock, $0.002 par value; 50,000,000 shares authorized; 29,600,843 shares issued and 29,565,943 shares outstanding, respectively	59	59
Additional paid-in capital	50,227	50,197
Accumulated deficit	(46,993)	(48,264)
Less: Treasury stock, at cost, 34,900 shares	(99)	(99)
Total Stockholders' Equity	3,194	1,893
Total Liabilities and Stockholders' Equity	$ 19,971	$ 19,790

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Note 8 - Segment Information and Disaggregated Revenue

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note

8.

Segment Information

and Disaggregated Revenue

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, for the

three

months ended

December 31, 2019

and

2018

were

$2,319

and

$1,274,

respectively and for the

six

months ended

December 31, 2019

and

2018

were

$4,345

and

$2,513,

respectively.

Financial information relating to the

three

months ended

December 31, 2019

and

2018

operations by business segment and disaggregated revenues was as follows:

		Sales, Net						Segment
		U.S.		International				Gross					Capital
		Customers		Customers		Total		Profit (loss)			Depreciation		Expenditures
Contract Manufacturing	2019	$	11,501	$	2,303	$	13,804	$	1,927		$	69	$	43
	2018		10,498		1,258		11,756		1,246			66		269
Branded Proprietary Products	2019		2		-		2		(27	)		-		-
	2018		48		12		60		21			-		-
Other Nutraceutical Businesses	2019		375		16		391		126			-		-
	2018		181		4		185		63			-		-
Total Company	2019		11,878		2,319		14,197		2,026			69		43
	2018		10,727		1,274		12,001		1,330			66		269

Financial information relating to the

six

months ended

December 31, 2019

and

2018

operations by business segment and disaggregated revenues was as follows:

		Sales, Net						Segment
		U.S.		International				Gross					Capital
		Customers		Customers		Total		Profit (Loss)			Depreciation		Expenditures
Contract Manufacturing	2019	$	20,502	$	4,286	$	24,788	$	3,177		$	159	$	101
	2018		19,153		2,455		21,608		2,328			131		287
Branded Proprietary Products	2019		4		10		14		(30	)		-		-
	2018		119		19		138		42			-		-
Other Nutraceutical Businesses	2019		752		49		801		278			1		-
	2018		520		39		559		179			1		-
Total Company	2019		21,258		4,345		25,603		3,425			160		101
	2018		19,792		2,513		22,305		2,549			132		287

	Total Assets as of
	December 31,		June 30,
	2019		2019
Contract Manufacturing	$	18,017	$	17,580
Branded Proprietary Products
		395		427
Other Nutraceutical Businesses
		1,559		1,783
Total Company	$	19,971	$	19,790

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Note 1 - Principles of Consolidation and Basis of Presentation

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

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

8

-

03

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, 2019 (

“Form

10

-K”), as filed with the SEC. The

June 30, 2019

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 preparation of the unaudited condensed financial statements in conformity with these accounting principles requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Ultimate results could differ from the estimates of management. The results of operations for the

three

and

six

months ended

December 31, 2019

are

not

necessarily indicative of the results for the full fiscal year ending

June 30, 2020

or for any other period.

Reclassifications.

Certain prior year amounts have been reclassified to conform to the current period presentation.

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 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 and drug and vitamin retailers, under the following brands: Peaceful Sleep, Green Envy, 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 botanicals, including multi minerals produced under a license agreement, (iii) MDC Warehousing and Distribution, Inc., a service provider for warehousing and fulfilment services and (iv) Chem International, Inc. (“Chem”), a distributor of certain raw materials for DSM Nutritional Products LLC.

Accounting Policies

Accounting Pronouncements Recently Adopted

In

October, 2016,

the FASB issued ASU

No.

2016

-

16,

“Income Taxes (Topic

740

): Intra-Entity Transfers of Assets Other than Inventory,” which eliminates the requirement to defer recognition of income taxes on intra-entity transfers until the asset is sold to an outside party. The new guidance requires the recognition of current and deferred income taxes on intra-entity transfers of assets other than inventory, such as intellectual property and property, plant and equipment, when the transfer occurs. The guidance was effective for the Company on

July 1, 2019.

The standard requires a “modified retrospective” adoption, meaning the standard is applied through a cumulative adjustment in retained earnings as of the beginning of the period of adoption. This new guidance did

not

have a material impact on the Company’s Condensed Consolidated Financial Statements.

In

July 2017,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2017

-

11,

"Earnings Per Share (Topic

260

) Distinguishing Liabilities from Equity (Topic

480

) Derivatives and Hedging (Topic

815

)," which addresses the complexity of accounting for certain financial instruments with down round features. The amendments were effective for the Company on

July 1, 2019

for the fiscal year ended

June 30, 2020,

and the interim periods within it. This new guidance did

not

have a material impact on the Company’s Condensed Consolidated Financial Statements.

Aside from the adoption of ASUs, as described above, there have been

no

material changes during fiscal year

2020

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, 2019.

Significant Accoun

ting P

olicies

Revenue Recognition.

The Company recognizes product sales revenue, the prices of which are fixed and determinable, when title and risk of loss have transferred to the customer, when estimated provisions for product returns, rebates, charge-backs and other sales allowances are reasonably determinable, and when collectability is reasonably assured. Accruals for these items are presented in the consolidated financial statements as reductions to sales. The Company’s net sales represent gross sales invoiced to customers, less certain related charges for discounts, returns, rebates, charge-backs and other allowances. Cost of sales includes the cost of raw materials and all labor and overhead associated with the manufacturing and packaging of the products. Gross margins are affected by, among other things, changes in the relative sales mix among our products and valuation and/or charge off of slow moving, expired or obsolete inventories. To perform revenue recognition for arrangements within the scope of ASC

606,

the Company performs the following

five

steps:

● identification of the promised goods or services in the contract;

● determination of whether the promised goods or serves are performance obligations including whether they are distinct in the context of the contract;

● measurement of the transaction price, including the constraint on variable consideration;

● allocation of the transaction price to the performance obligations based on estimated selling prices; and

● recognition of revenue when (or as) the Company satisfies each performance obligation. A performance obligation is a promise to transfer a distinct good or service to the customer and is the unit of account in ASC 606.

Leases.

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other current liabilities, and operating lease liabilities on our consolidated balance sheets. Finance leases are included in property and equipment, current portion of long term debt, and long-term debt obligation on our consolidated statement of financial condition.  

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do

not

provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms

may

include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We have lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component.

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 and if converted method.

The following options were

not

included in the computation of weighted average diluted common shares outstanding as the effect of doing so would be anti-dilutive for the

three

and

six

months ended

December 31, 2019

and

2018:

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Anti-dilutive stock options		50,000		150,000		50,000		150,000
Total anti-dilutive shares		50,000		150,000		50,000		150,000

XML

Note 4 - Senior Credit Facility and Other Long Term Debt

6 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

4

.

Senior Credit Facility and other Long Term Debt

As of

December 31, 2019

and

June 30, 2019,

the Company had the following debt outstanding:

	Principal Amount						Interest Rate			Maturity Date
	As of December 31, 2019			As of June 30, 2019
Revolving advances under Senior Credit
Facility with PNC Bank, National Association	$	5,191		$	5,834			*		5/15/2024
Installment Note with PNC Bank		2,941			3,542			*		5/15/2024
Installment Note with PNC Equipment Finance		-			8			4.57	%	7/29/2019
Capitalized lease obligations		154			269			4.01% - 9.38	%	2/20/2019 - 12/9/2020
Total outstanding debt		8,286			9,653
Less:   Revolving Advances		(5,191	)		(5,834	)
Prepaid financing costs		(45	)		(50	)
Current portion of long term debt, net		(1,146	)		(1,047	)
Long term debt, net	$	1,904		$	2,722

  *  See table below

SENIOR CREDIT FACILITY

On

May 15, 2019,

the Company, MDC, AgroLabs, IHT, IHT Properties Corp. (“IHT Properties”) and Vitamin Factory (collectively, the “Borrowers”) amended the Revolving Credit, Term Loan and Security Agreement (the “Amended Loan Agreement”) with PNC Bank, National Association as agent and lender (“PNC”) and the other lenders party thereto entered into on

June 27, 2012,

as amended on

February 19, 2016,

and

May 15, 2019.

The Amended Loan Agreement provides for a total of

$11,585

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

$3,585

(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

2.50%.

The Term Loan bears interest at PNC’s Base Rate or the Eurodollar Rate at Borrowers’ option, plus

3.00%.

As of

December 31, 2019

and

June 30, 2019,

the Company had amounts outstanding utilizing the Eurodollar Rate of

$4,500

and

$4,250

under the Revolving Advances and

$2,852

and

$3,455

under the Term Note, respectively, with interest rates as of

December 31, 2019

and

June 30, 2019

as follows (based on the respective base rate plus

2.50%

on Revolving Advances and

3.00%

on the Term Note in effect as of the respective dates):

	December 31,			June 30,
	2019			2019
Revolving Credit Facility:
Base Rate Interest		4.75	%		5.50	%
Eurodollar Rate		4.30475	%		4.881	%
Term Loan:
Base Rate Interest		5.00	%		5.75	%
Eurodollar Rate	4.792% and 4.80475		%	5.381% and 5.3838		%

Upon and after the occurrence of any event of default under the Amended 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

May 15, 2024 (

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 Amended Loan Agreement or earlier termination of the Amended Loan Agreement pursuant to the terms thereof. The Term Loan shall be repaid in

eighty-four

(

84

) consecutive monthly installments of principal, the

first

eighty-three

(

83

) of which shall be in the amount of

$43,

commencing on the

first

business day of

June, 2019,

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 Senior Maturity Date. The foregoing is subject to customary mandatory prepayment provisions and acceleration upon the occurrence of any event of default under the Amended Loan Agreement or earlier termination of the Amended Loan Agreement pursuant to the terms thereof.

The Revolving Advances are subject to the terms and conditions set forth in the Amended Loan Agreement and are made in aggregate amounts at any time equal to the lesser of (

x

)

$8,000

or (y) an amount equal to the sum of: (i) up to

85%,

subject to the provisions in the Amended Loan Agreement, of eligible accounts receivables (“Receivables Advance Rate”), plus (ii) up to the lesser of (A)

75%,

subject to the provisions in the Amended 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 PNC

may

reasonably deem proper and necessary from time to time.

The Amended Loan Agreement contains customary mandatory prepayment provisions, including, without limitation the requirement to use any sales proceeds from the sale of iBio Stock to repay the Term Loan and to prepay the outstanding amount of the Term Note in an amount equal to

twenty-five

percent (

25%

) of Excess Cash Flow for each fiscal year commencing with the fiscal year ended

June 30, 2016,

payable upon delivery of the financial statements to PNC referred to in and required by the Amended 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 amount shall be applied ratably to the outstanding principal installments of the Term Loan in the inverse order of the maturities thereof. The Amended 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 Amended Loan Agreement. As of

December 31, 2019,

the Company was in compliance with the fixed charge coverage ratio maintenance requirement and with the required annual payments of

25%

of the Excess Cash Flow for each fiscal year commencing with the fiscal year ended

June 30, 2016.

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.

OTHER LONG TERM DEBT

Capitalized Lease Obligations.

On

November 1, 2019,

the capitalized lease obligation entered into by the Company on

December 22, 2017

with First American Equipment Finance in the amount of

$143,

which lease was secured by certain machinery and equipment, was satisfied with all payments being made under the capitalized lease obligation. The monthly lease payment was approximately

$6

and had an imputed interest rate of

6.56%.