INTEGRATED BIOPHARMA, INC.
225 Long Avenue
Hillside, New Jersey 07205
October 29, 2004
To Our Stockholders:
On behalf of the Board of Directors, it is our pleasure to invite you
to attend the 2004 Annual Meeting of Stockholders of Integrated BioPharma, Inc.
(the "Company"), which will be held at 9:00 a.m. local time, on November 24,
2004 at the Company's Executive Offices, 225 Long Avenue, Hillside, New Jersey
07205.
At the Annual Meeting, you will be asked to elect three Class III
directors for a three-year term and to ratify the appointment of independent
auditors of the Company for the 2005 fiscal year. These matters are described in
detail in the accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement. A proxy is included along with the Proxy Statement. These materials
are being sent to stockholders on or about October 29, 2004.
It is important that your shares be represented at the Annual Meeting,
whether or not you are able to attend. Accordingly, you are urged to sign, date
and mail the enclosed proxy promptly. If you later decide to attend the Annual
Meeting, you may revoke your proxy and vote your shares in person.
Sincerely,
/s/ E. Gerald Kay
E. Gerald Kay
Chief Executive Officer
INTEGRATED BIOPHARMA, INC.
225 Long Avenue
Hillside, New Jersey 07205
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 24, 2004
TO THE STOCKHOLDERS OF
INTEGRATED BIOPHARMA, INC.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the
"Meeting") of Integrated BioPharma, Inc., a Delaware corporation ("INB" or the
"Company"), will be held on November 24, 2004, at 9:00 a.m., local time, at the
Company's Executive Offices, 225 Long Avenue, Hillside, New Jersey 07205, for
the purpose of considering and acting upon the following proposals:
1. To elect three Class III directors for a three-year term to
serve until the 2007 Annual Meeting of Stockholders;
2. To ratify the appointment of Amper, Politziner & Mattia, P.C.
as INB's independent accountants for the fiscal year ending
June 30, 2005; and
3. The transaction of such other business as may properly come
before the Meeting or any adjournment thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" PROPOSALS NO. 1 and NO. 2, TO BE PRESENTED TO INB STOCKHOLDERS AT THE
ANNUAL MEETING.
By order of the Board of Directors.
/s/ Eleanor DiMartino
Eleanor DiMartino
Secretary
Hillside, New Jersey
October 29, 2004
It is important that your shares be represented at this meeting in
order that a quorum may be assured. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, YOU ARE URGED TO DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED CARD IN THE
POSTAGE PREPAID ENVELOPE PROVIDED AND TO DO SO IN ADEQUATE TIME FOR YOUR
DIRECTIONS TO BE RECEIVED AND TABULATED PRIOR TO THE SCHEDULED MEETING.
INTEGRATED BIOPHARMA, INC.
225 Long Avenue
Hillside, New Jersey 07205
PROXY STATEMENT
2004 ANNUAL MEETING OF STOCKHOLDERS
To be held on November 24, 2004
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Integrated BioPharma, Inc.
("INB" or the "Company"), a Delaware corporation, to be voted at the 2004 Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held at the
Company's Executive Offices, 225 Long Avenue, Hillside, New Jersey 07205 on
November 24, 2004, at 9:00 a.m. local time, or at any postponement or
adjournment thereof. This Proxy Statement, the Notice of Annual Meeting and the
accompanying form of proxy are first being mailed to stockholders on or about
October 29, 2004.
Only holders of record of the Company's common stock, par value $.002
per share ("Common Stock"), at the close of business on October 22, 2004 (the
"Record Date"), are entitled to vote on the matters to be presented at the
Annual Meeting. The number of shares of Common Stock outstanding on such date
and entitled to vote was 12,526,290.
Holders of Common Stock are entitled to one vote on each matter to be
voted upon by the stockholders at the Annual Meeting for each share held.
At the Annual Meeting, stockholders will be asked to consider and vote
upon proposals: (1) to elect three Class III directors for a three year term to
serve until the 2007 Annual Meeting of Stockholders (the "Director Proposal")
and (2) to ratify the appointment of Amper, Politziner, & Mattia, P.C., as INB's
independent auditors for the fiscal year ending June 30, 2005 (the "Independent
Auditors Proposal"). At the Annual Meeting, stockholders may also be asked to
consider and take action with respect to such other matters as may properly come
before the Annual Meeting.
QUORUM AND VOTE REQUIREMENTS
The presence, in person or by proxy, of holders of record of a majority
of the shares of Common Stock issued and outstanding and entitled to vote is
required for a quorum to transact business at the Annual Meeting, but if a
quorum should not be present, the Annual Meeting may be adjourned from time to
time until a quorum is obtained. Directors are elected by a plurality of votes
cast. The Director Proposal, the Independent Auditors Proposal and all other
matters to properly come before the Annual Meeting will be determined by the
affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by proxy, and entitled to vote at the Annual Meeting.
Broker "non-votes" (i.e. proxies from brokers or nominees indicating that such
persons have not received instructions from the beneficial owner or other
persons entitled to vote shares as to a matter with respect to which the brokers
or nominees do not have discretionary power to vote) and shares for which duly
executed proxies have been received but with respect to which holders of shares
have abstained from voting will be treated as present for purposes of
determining the presence of a quorum at the Annual Meeting. Abstentions and
broker non-votes have no impact on the election of directors except to reduce
the number of votes for the nominees. With respect to all other proposals,
broker non-votes are not counted as votes and, therefore, will not be included
in vote totals and abstentions will have the effect of a negative vote against
such other proposals.
SOLICITATION AND REVOCATION
PROXIES IN THE FORM ENCLOSED ARE BEING SOLICITED BY, AND ON BEHALF OF,
THE BOARD OF DIRECTORS. THE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY HAVE
BEEN DESIGNATED AS PROXIES BY THE BOARD OF DIRECTORS.
All Common Stock represented by properly executed proxies which are
returned and not revoked prior to the time of the Annual Meeting will be voted
in accordance with the instructions, if any, given thereon. If no instructions
are provided in an executed proxy, it will be voted (1) FOR the Director
Proposal and (2) FOR the Independent Auditors Proposal, and in accordance with
the proxy holder's discretion as to any other business raised at the Annual
Meeting. Any stockholder who executes a proxy may revoke it at any time before
it is voted by delivering to the Company a written statement revoking such
proxy, by executing and delivering a later dated proxy, or by voting in person
at the Annual Meeting. Attendance at the Annual Meeting by a stockholder who has
executed and delivered a proxy to the Company shall not in and of itself
constitute a revocation of such proxy.
The Company will bear its own cost for the solicitation of proxies.
Proxies will be solicited initially by mail. Further solicitation may be made by
directors, officers, and employees of the Company personally, by telephone, or
otherwise, but any such person will not be specifically compensated for such
services. The Company also intends to make, through banks, brokers or other
persons, a solicitation of proxies of beneficial holders of the Common Stock.
Upon request, the Company will reimburse brokers, dealers, banks and similar
entities acting as nominees for reasonable expenses incurred in forwarding
copies of the proxy materials relating to the Annual Meeting to the beneficial
owners of Common Stock which such persons hold of record.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of nine (9)
directors divided into three classes of directors serving staggered 3-year
terms.
The members of Class I, whose terms of office expire in 2006, are
Mr. E. Gerald Kay, Ms. Riva Kay Sheppard and Mr. Carl DeSantis.
The members of Class II, whose terms of office expire in 2005, are
Ms. Christina Kay, Mr. Robert Canarick and Mr. Robert B. Kay.
The members of Class III, whose terms of office expire in 2004, are
Mr. Seymour Flug, Mr. Glenn Chang and Mr. Zarko Kraljevic.
The stockholders will consider and vote upon the election of
Mr. Seymour Flug, Mr. Glenn Chang and Mr. Zarko Kraljevic to serve their
respective terms.
2
Unless a shareholder WITHHOLDS AUTHORITY, a properly signed and dated
proxy will be voted FOR the election of the nominees, unless the proxy contains
contrary instructions. The Board of Directors knows of no reason why any of its
nominees will be unable or will refuse to accept election. If any nominee
becomes unable or refuses to accept election, the Board of Directors will either
reduce the number of directors to be elected or select a substitute nominee. If
a substitute nominee is selected, proxies will be voted in favor of such
nominee.
The following table sets forth certain information with respect to the
members of INB's Board of Directors during the fiscal year ended June 30, 2004.
Class of
Name and Biographical Information Age Directors Director Since
--------------------------------- --- --------- --------------
E. Gerald Kay 68 Class I 1980
Served as Chairman of the Board and President of the Company,
and its predecessor since 1980, and was president until May
1999. On May 9, 2003 he became Chief Executive Officer.
Riva Kay Sheppard 37 Class I 1991
Served as Vice President and director of the Company
since May 1991. Mrs. Sheppard is the daughter of
E. Gerald Kay and the sister of Christina Kay.
Carl DeSantis 65 Class I 2003
Served as a director of the Company since 2003.
Mr. DeSantis has served as Chairman of CDS International
Holdings, Inc. since June of 2001. Prior to that he was
Chairman of Rexall Sundown, Inc.
Christina Kay 34 Class II 1994
Served as Vice President and director of the Company
since December 1994. Ms. Kay is the daughter of Gerald
Kay and the sister of Riva Kay Sheppard.
Robert Canarick 54 Class II 1994
Served as a director of the Company since December 1994. From
January 1998 until August 2001, he served as general counsel
of NIA Group, LLC, an all lines independent insurance agency.
From August 2001, he has served as President of Links
Insurance Services, LLC. Mr. Canarick is a Certified
Public Accountant and attorney.
Seymour Flug 69 Class III 2000
Served as President of the Company from May 1999 until May 9,
2003. Prior to 1999, he was Chairman of the Board of Diners
Club International.
3
Robert B. Kay 64 Class II 2003
Since 2002, Mr. Kay served as Chairman of Paxis
Pharmaceuticals, Inc. Prior to that, he was a founding
partner of the New York-based law firm of Kay, Collyer &
Boose LLP. Mr. Kay is the brother of E. Gerald Kay.
Glenn Chang 56 Class III 2003
Since 1999, Mr. Chang has been Director, Executive
Vice President and Chief Financial Officer of the First
American International Bank, Brooklyn, N.Y. Prior to the
founding of the bank, he spent almost 20 years at
Citibank as Vice President. Mr. Chang is a Certified Public
Accountant.
Zarko Kraljevic 84 Class III 2003
Since 1972, Mr. Kraljevic has served as President and Chief
Executive Officer of Diners Club of Eastern Europe.
Recommendation and Vote
Approval of the election of these nominees for directors requires the
affirmative vote of a majority of the shares of Common Stock present, in person
or by proxy, at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEES
FOR DIRECTORS LISTED ABOVE.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Company's directors, executive officers and
holders of more than 10% of the Company's common stock to file reports of
ownership and changes in ownership of common stock with the Securities and
Exchange Commission. During the fiscal year ended June 30, 2004, all such
persons filed on a timely basis all reports required by Section 16(a) of the
Exchange Act, with the following exception: Carl DeSantis (a holder of more than
10% of the Company's common stock), who was late in filing a Form 3.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the number of
shares of common stock of Integrated BioPharma beneficially owned on October 1,
2004, by:
* each person who is known by Integrated BioPharma to beneficially own
5% or more of the common stock of Integrated BioPharma;
* each of the directors and executive officers of Integrated BioPharma;
and
4
* all of Integrated BioPharma's directors and executive officers, as a
group.
The address of each of the persons listed below is c/o Integrated
BioPharma Inc., 225 Long Avenue, Hillside, New Jersey 07205.
Name of Number of Shares Beneficially Percentage of Shares Beneficially
Beneficial Owner Owned (1) Owned (2)
---------------- ----------------------------- ---------------------------------
E. Gerald Kay 6,170,384(3) 53.8%
Carl DeSantis 2,135,417(4) 18.6%
Robert B. Kay 1,019,629(5) 8.7%
Seymour Flug 1,066,033(6) 8.7%
Riva Kay Sheppard 1,136,164(7) 9.4%
Christina Kay 1,136,164(7) 9.4%
Eric Friedman 563,666(8) 4.9%
Robert Canarick 128,533(9) 1.1%
Directors and executive officers as a group 13,495,596(10) 85.8%
(8 persons)
--------------------------------------------------------------------------------
* Less than 1% of outstanding shares
(1) Unless otherwise indicated, includes shares owned by a spouse, minor
children, by relatives sharing the same home, and entities owned or
controlled by the named person. Also includes shares if the named person
has the right to acquire such shares within 60 days after October 1,
2004, by the exercise of any warrant, stock option or other right. Unless
otherwise noted, shares are owned of record and beneficially by the named
person.
(2) Based upon 12,553,290 shares of common stock outstanding on October 1,
2004.
(3) Includes (i) 819,629 shares of common stock held by EGK LLC, of which Mr.
Kay is the manager, and (ii) 1,524,026 shares of common stock issuable
upon exercise of presently exercisable stock options. Shares dispositive
power with Christina Kay with respect to 169,358 shares of common stock
and with Riva Sheppard Kay with respect to 169,358 shares of common
stock.
(4) Includes 819,629 shares of common stock held by CDS Group Holdings, LLC,
of which Mr. DeSantis is the manager.
(5) Includes (i) 819,629 shares of common stock held by EVJ LLC, of which
Mr. Kay is the manager, and (ii) 200,000 shares of common stock issuable
upon exercise of presently exercisable stock options.
(6) Includes 750,000 shares of common stock issuable upon exercise of
presently exercisable stock options.
(7) Includes 516,666 shares of common stock issuable upon exercise of
presently exercisable stock options. Shares dispositive power with E.
Gerald Kay with respect to 169,358 shares of common stock.
(8) Includes 491,666 shares of common stock issuable upon exercise of
presently exercisable stock options.
5
(9) Includes 100,000 shares of common stock issuable upon exercise of
presently exercisable stock options.
(10) Includes 4,099,024 shares of common stock issuable upon exercise of
presently exercisable stock options.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table includes information as of June 30, 2004 relating
to the Company's stock option plans, which comprise all of the Company's equity
compensation plans. The table provides the number of securities to be issued
upon the exercise of outstanding options under such plans, the weighted-average
exercise price of such outstanding options and the number of securities
remaining available for future issuance under such plans.
EQUITY COMPENSATION PLAN INFORMATION
Number of securities
to be issued upon Weighted-average Number of securities remaining
exercise of exercise price of available for future issuance under
outstanding options, outstanding options, equity compensation plans (excluding
warrants and rights warrants and rights securities reflected in column (a))
(a) (b) (c)
------------------- ------------------- -----------------------------------
Equity compensation plans
approved by security holders 5,683,261 $2.41 1,869,739
Equity compensation plans
not approved by security
holders -- -- --
--------- ----- ---------
Total: 5,683,261 $2.41 1,869,739
========= ===== =========
DIRECTORS
The Board of Directors held three meetings during the fiscal year ended
June 30, 2004. All directors attended at least 75% of the meetings of the Board
and the committees on which he or she served.
No compensation was paid to any director for his or her services to the
Board of Directors or any committee. The only standing committee of the Board of
Directors is the Audit Committee, whose members are Messrs. Canarick and Chang.
The Audit Committee periodically consults with the Company's management and
independent public accountants of financial matters, including the Company's
internal financial controls and procedures. The Audit Committee met five times
in Fiscal 2004, and all members attended the meeting.
The Company does not have a standing nominating committee or
compensation committee, though it expects to establish a compensation committee
within the next year in compliance with American Stock Exchange listing
standards. With respect to nominating matters, the entire Board nominates the
6
directors for election at the Annual Meeting. The Board values the input of each
of its members and believes that input is important in determining the Board
nominees. At such time, if any, as the Board composition changes or the Board
otherwise deems appropriate, the Company may establish a separate nominating
committee. As a result, the entire Board participates in the consideration of
Board nominees and nominated the candidates for election named in this Proxy
Statement.
EXECUTIVE OFFICERS
The following individual is an executive officer of the Company but is
not a Director or Nominee for Director:
Eric Friedman, age 56, has been the Chief Financial Officer and
Treasurer of the Company since June 1996. From June 1978 through May 1996, he
was a partner in Shachat and Simson, a certified public accounting firm that
audited the Company's financial statements from June 1976 until June 1995. Mr.
Friedman was a director of Wire One Technologies, Inc., a publicly traded video
conferencing and communications company until his resignation in June 2001.
EXECUTIVE COMPENSATION
The following table shows, for the fiscal years ended June 30, 2004,
2003 and 2002, certain compensation information as to the Chief Executive
Officer and each of the next four most highly compensated executive officers of
the Company who served as an executive officer during the fiscal year ended June
30, 2004, and whose salary and bonus exceeded $100,000 in 2004 (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------- ----------------------
Name and Securities Underlying All Other
Principal Position Year Salary Bonus Stock Options Compensation
------------------ ---- ------ ----- ------------- ------------
E. Gerald Kay 2004 $ 97,500 - 100,000 14,100 (2)(3)
CEO and Chairman 2003 97,500 $ 50,000 400,000 27,817 (1)(2)(3)
of the Board 2002 97,500 - 400,000 20,142 (1)(2)(3)
Seymour Flug (4) 2004 65,130 - 100,000 1,560 (2)(3)
Former President and 2003 65,130 30,000 300,000 1,320 (3)
CEO 2002 65,130 - 300,000 - (3)
Eric Friedman 2004 200,000 - 100,000 7,767 (2)(3)
Chief Financial Officer 2003 174,664 8,500 75,000 5,103 (2)(3)
and Vice President 2002 161,250 - 75,000 4,406 (2)(3)
Riva Kay Sheppard 2004 109,980 - 100,000 7,800 (2)(3)
Vice President 2003 109,980 10,000 100,000 7,650 (2)(3)
2002 100,000 25,000 100,000 9,150 (2)(3)
Christina Kay 2004 99,994 - 100,000 8,400 (2)(3)
Vice President 2003 99,994 10,000 100,000 7,929 (2)(3)
2002 99,994 25,000 100,000 6,525 (2)(3)
7
(1) Includes the Company's portion of premiums amounting to $18,817 and $10,992
during the fiscal years ended June 30, 2003 and 2002 respectively on a
split dollar life insurance arrangement on Mr. Kay's life. The Company also
provides Mr. Kay with the use of a Company car.
(2) The disclosed amount includes the Company's matching contributions under
the Company's 401(k) plan.
(3) The Company also provides the individuals with the use of a Company car.
(4) Mr. Flug resigned his position as President on May 9, 2003.
OPTION/SAR GRANTS
DURING THE FISCAL YEAR ENDED JUNE 30, 2004
The following table sets forth individual grants of stock options by
INB pursuant to the Integrated Health Technologies, Inc. Stock Option Plan to
the Named Executive Officers during the fiscal year ended June 30, 2004.
% of Total
Granted to
Securities Options Employees in Exercise Expiration
Name Granted (#)(1) Fiscal Year Price (2) Date
---- -------------- ----------- --------- ----
E. Gerald Kay 9,182 1.0% $10.89 December 4, 2008
E. Gerald Kay 90,818 9.7% 10.89 December 4, 2013
Seymour Flug 100,000 10.7% 9.90 December 4, 2013
Eric Friedman 100,000 10.7% 9.90 December 4, 2013
Riva Sheppard 100,000 10.7% 9.90 December 4, 2013
Christina Kay 100,000 10.7% 9.90 December 4, 2013
(1) The date of grant for these options was December 4, 2003, which become
exercisable on December 4, 2004.
(2) The exercise price of the options is equal to the fair market value of
shares of Common Stock of the Company on the date of grant of the options
except for the 100,000 of stock options granted to Mr. Kay which is equal
to 110% of the fair market value on the date of grant.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
The following tables sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held at the end of the fiscal year ended June 30,
2004 based on the last sale price of a share of Common Stock on June 30, 2004 of
$8.16.
Number of Securities Value of Unexercised
Value Underlying Unexercised In-the-Money Options at
Acquired Realized Options at Fiscal Year End Fiscal Year End ($)
on Exercise (1) (#) Exercisable / Exercisable /
Name (#) ($) Unexercisable Unexercisable (2)
---- ----------- -------- -------------------------- -----------------------
E. Gerald Kay -- -- 1,524,026 / 100,000 11,345,552 / --
Seymour Flug -- -- 750,000 / 100,000 5,746,000 / --
Eric Friedman -- -- 491,666 / 100,000 3,387,245 / --
Riva Sheppard -- -- 516,666 / 100,000 3,582,995 / --
Christina Kay -- -- 516,666 / 100,000 3,582,995 / --
8
(1) Represents the aggregate market value of the shares converted by the
options on the date of exercise less the aggregate exercise price paid by
the executive.
(2) Based upon the fair market value of the shares of Common Stock on June 30,
2004 ($8.16), less the exercise price per share.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Warehouse and office facilities are leased from Vitamin Realty
Associates, L.L.C., a limited liability company, which is 90% owned by E. Gerald
Kay, Riva Kay Sheppard and Christina Kay (all stockholders and directors of the
Company) and 10% owned by Eric Friedman, the Company's Chief Financial Officer.
The lease was effective on January 10, 1997 and provides for minimum annual
rentals of $346,000 through January 10, 2002, plus increases in real estate
taxes and building operating expenses. At its option, the Company has the right
to renew the lease for an additional five-year period. On April 28, 2000 the
lease was amended, reducing the square footage and extending the lease to May
31, 2015.
On February 21, 2003, the Company completed a merger of a wholly-owned
subsidiary of the Company and NuCycle Acquisition Corp. ("Nucycle") pursuant to
which the Company acquired NuCycle in exchange for the shareholders of NuCycle
receiving from the Company 368,833 shares of common stock and twenty-five
percent (25%) of the after-tax profits of NuCycle until the shareholders of
NuCycle have received in the aggregate, an additional $5,000,000. E. Gerald Kay,
the Chief Executive Officer of the Company, Seymour Flug, a director of the
Company, and Carl DeSantis, a significant stockholder and director of the
Company, collectively owned approximately seventy-four percent (74%) of NuCycle.
On February 24, 2003, the Company completed the acquisition of the
membership interests of Natex Georgia, LLC, a limited liability company formed
under the laws of the Republic of Georgia ("Natex") from Trade Investment
Services, L.L.C. ("TIS"), representing fifty percent (50%) of the membership
interests of Natex. Pursuant to the terms of a purchase agreement dated as of
February 1, 2003 by and between the Company and TIS, TIS received 2,458,886
shares of the Company's common stock.
E. Gerald Kay, the Chief Executive Officer of the Company and
beneficial owner of approximately thirty-seven percent (37%) of the stock of the
Company (or, approximately forty percent (40%) if family trusts of which he is a
trustee are attributed to him), is the beneficial owner of one-third (1/3) of
the equity of TIS. Robert Kay, the brother of E. Gerald Kay, is also the
beneficial owner of one-third (1/3) of the equity of TIS. Carl DeSantis is the
beneficial owner of one-third (1/3) of the equity of TIS.
On July 22, 2003, the Company completed its acquisition of ninety-seven
(97%) percent of the shares of common stock of Paxis Pharmaceuticals, Inc., a
Delaware corporation ("Paxis"), based in Boulder, Colorado. Paxis was organized
to manufacture and distribute cGMP API Paclitaxel, a leading cancer therapy
drug. The Company acquired 47% of the shares of Paxis in exchange for its 50%
interest in Natex. The Company acquired 50% of the shares of Paxis from Trade
Investment Services, LLC ("TIS"), which funded Paxis' and Natex's development
pursuant to the terms of a certain Purchase Agreement dated as of February 1,
2003 (the "Purchase Agreement").
9
PROPOSAL NO. 2 - RATIFICATION OF
THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of INB has appointed the firm of Amper,
Politziner & Mattia, P.C., independent auditors, to audit the consolidated
financial statements of Integrated BioPharma, Inc. and its subsidiaries for the
fiscal year ending June 30, 2005, subject to ratification by the INB
stockholders.
A member of Amper, Politziner & Mattia, P.C. is expected to be present
at the Annual Meeting and to be provided with the opportunity to make a
statement if such member desires to do so and to be available to respond to
appropriate questions from shareholders.
Representatives of Amper, Politziner & Mattia, P.C. normally attend most
meetings of the Audit Committee. The Audit Committee's policy is to pre-approve
all audit and permissible non-audit services provided by the independent
auditors. These services may include audit services, audit-related services, tax
services and other services. Pre-approval is generally provided for up to one
fiscal quarter and any pre-approval is detailed as to the particular service or
category of services. The independent auditor and management are required to
periodically report to the Audit Committee regarding the extent of services
provided by the independent auditor in accordance with this pre-approval.
The Audit Committee on an annual basis reviews the services performed by
Amper, Politziner & Mattia, P.C., and reviews and approves the fees charged by
Amper, Politziner & Mattia, P.C.
Audit Fees
The aggregate fees billed for professional services rendered for the
audit of the Company's annual financial statements for the fiscal years ended
June 30, 2004 and 2003 and for the reviews of the financial statements included
in the Company's Quarterly Reports on Form 10-Q for that fiscal year, were
$140,000 and $69,000, respectively, all of which are attributable to Amper,
Politziner & Mattia, P.C.
Financial Information Systems Design and Implementation Fees
Amper, Politziner & Mattia, P.C. did not render professional services
relating to financial information systems design and implementation for the
fiscal year ended June 30, 2004.
All Other Fees
Amper, Politziner & Mattia, P.C. received $42,600 in fees for other
services for the fiscal year ended June 30, 2004. These fees relate to services
provided in connection with Securities and Exchange Commission Filings
(Registration Statement on Form S-3) and a Securities and Exchange Commission
comment letter and fees related to Form 8-K filings.
Recommendation and Vote
Approval of the Independent Auditors Proposal requires the affirmative
vote of a majority of the shares of Common Stock present, in person or by proxy,
at the Annual Meeting.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL
OF THE INDEPENDENT AUDITORS PROPOSAL.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors of the Company (the
"Audit Committee") is composed of two directors. Each of the two members of the
committee are independent. The Board of Directors has adopted an Audit Committee
10
Charter. Management is responsible for the Company's internal control and
financial reporting process. The Company's independent public accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and to issue a report thereon. The Audit Committee's responsibility is to
monitor and oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and the Company's independent public accountants. Management
represented to the Audit Committee that the Company's consolidated financial
statements were prepared in accordance with generally accepted accounting
principles, and the Audit Committee has reviewed and discussed the consolidated
financial statements with Management and the Company's independent public
accountants. The Audit Committee discussed with the independent public
accountants matters required to be discussed by Statement of Auditing Standards
Numbers 90 and 61 (communication with Audit Committees). The Company's
independent public accountants also provided to the Audit Committee the written
disclosures required by Independence Standard No. 1 (independence discussions
with Audit Committee), and the Audit Committee discussed with the independent
public accountants that firm's independence. The Audit Committee has also
considered whether the independent auditor's provision of information technology
and other non-audit services to the Company is compatible with the auditor's
independence.
Based upon the Audit Committee's discussions with management and the
independent public accountants and the Audit Committee's review of the
representation of management and the report of the independent public
accountants, the Audit Committee recommended that the Board of Directors include
the audited consolidated financial statements in the Company's Annual Report on
Form 10-KSB for the year ended June 30, 2004 filed with the Securities and
Exchange Commission.
The foregoing has been approved by all members of the Audit Committee.
Glenn Chang
Robert Canarick
STOCKHOLDER PROPOSALS AND COMMUNICATIONS
Stockholder proposals to be included in the Company's proxy statement
with respect to the 2005 Annual Meeting of Stockholders must be received by the
Company at its Executive Offices located at 225 Long Avenue, Hillside, New
Jersey 07205 no later than July 5, 2005. All such proposals are subject to the
applicable rules and requirements of the Securities and Exchange Commission.
The Board of Directors does not have a formal process for stockholders
to send communications (including director nominations) to the Board. Due to the
infrequency of stockholder communications to the Board, the Board does not
believe that a formal process is necessary. Written communications to the Board
may be sent to the Board at the Company's chief executive offices at Integrated
BioPharma, Inc., 225 Long Avenue, Hillside, New Jersey 07205, and the Company
will promptly circulate such communications to all members of the Board (or to
those particular directors to whom such communication is specifically
addressed). A shareholder who intends to nominate an individual for election to
the Board of Directors (other than a candidate proposed by the Board of
Directors) must do so in accordance with the foregoing procedures.
11
DISCRETIONARY AUTHORITY
A duly executed proxy given in connection with the Company's 2004
Annual Meeting of Stockholders will confer discretionary authority on the
proxies named therein, or any of them, to vote at such meeting on any matter of
which the Company does not have written notice on or before September 15, 2004,
which is forty-five (45) days prior to the date on which the Company is first
mailing its proxy materials for its 2004 Annual Meeting of Stockholders, without
advice in the Company 2004 Proxy Statement as to the nature of such matter.
OTHER BUSINESS OF THE MEETING
The Company is not aware of any matters to come before the Annual
Meeting other than those stated in this Proxy Statement. However, in as much as
matters of which management of the Company is not now aware may come before the
Annual Meeting or any adjournment, the proxies confer discretionary authority
with respect to acting thereon, and the persons named in such proxies intend to
vote, act and consent in accordance with their discretion with respect thereto.
ADDITIONAL INFORMATION
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
JUNE 30, 2004 MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER TO WHOM THIS
PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO THE CHIEF FINANCIAL OFFICER,
INTEGRATED BIOPHARMA, INC., 225 LONG AVENUE, HILLSIDE, NEW JERSEY 07205.
By order of the Board of Directors
/s/ E. Gerald Kay
E. Gerald Kay
Chief Executive Officer
October 29, 2004
12