##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 1-31642
 INTERNATIONAL ABSORBENTS INC.
  Province of British Columbia, Canada
(State or other jurisdiction of 
incorporation or organization)
    
    98-0487410
(I.R.S. Employer
Identification No.)1569 Dempsey Road 
North Vancouver, British Columbia, Canada
    
    V7K 1S8(Address of principal executive offices)
    
    (Zip Code)
 (604) 681-6181
 None
  þ o
  o o þ
  o þ
  Class
    
    Outstanding at August 31, 2007Common Shares, no par value per share
    
    6,410,328 shares




---



##### 



PART I            FINANCIAL INFORMATION
ITEM 1.           FINANCIAL STATEMENTS
 INTERNATIONAL ABSORBENTS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 As at
    
    
    As atJuly 31,
    
    
    January 31,2007
    
    
    2007(unaudited)
    
    
    (audited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    1,485
    
    
    $
    2,277Restricted cash
    
    
    
    
    
    
    1,146Accounts receivable, net
    
    
    2,347
    
    
    
    2,373Inventories, net
    
    
    4,098
    
    
    
    3,221Prepaid expenses
    
    
    142
    
    
    
    126Deferred income tax asset
    
    
    73
    
    
    
    186Total current assets
    
    
    8,145
    
    
    
    9,329Property, plant and equipment, net
    
    
    19,813
    
    
    
    18,096Other assets, net
    
    
    251
    
    
    
    266Total assets
    
    $
    28,209
    
    
    $
    27,691Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    2,558
    
    
    $
    2,933Related party payable
    
    
    6
    
    
    
    5Current portion of long-term debt
    
    
    847
    
    
    
    805Income taxes payable
    
    
    247
    
    
    
    202Total current liabilities
    
    
    3,658
    
    
    
    3,945Deferred income tax liability
    
    
    955
    
    
    
    835Long-term debt
    
    
    7,345
    
    
    
    7,521Total liabilities
    
    
    11,958
    
    
    
    12,301Stockholders equity:Common stock, no par value;
100,000,000 shares authorized,
6,410,328 issued and outstanding at July 31, 2007 and January 31, 2007
    
    
    8,487
    
    
    
    8,487Additional paid in capital
    
    
    1,194
    
    
    
    999Retained earnings
    
    
    6,570
    
    
    
    5,904Total stockholders equity
    
    
    16,251
    
    
    
    15,390Total liabilities and stockholders equity
    
    $
    28,209
    
    
    $
    27,691
 2




---



##### 



INTERNATIONAL ABSORBENTS INC.
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Six Months Ended
    
    
    Three Months EndedJuly 31,
    
    
    July 31,
    
    
    July 31,
    
    
    July 31,2007
    
    
    2006
    
    
    2007
    
    
    2006(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)Sales, net
    
    $
    15,766
    
    
    $
    13,921
    
    
    $
    7,401
    
    
    $
    7,300Cost of goods sold
    
    
    10,963
    
    
    
    9,708
    
    
    
    5,365
    
    
    
    5,1424,803
    
    
    
    4,213
    
    
    
    2,036
    
    
    
    2,158Selling, general and administrative expenses
    
    
    3,391
    
    
    
    3,370
    
    
    
    1,721
    
    
    
    1,656Income from operations
    
    
    1,412
    
    
    
    843
    
    
    
    315
    
    
    
    502Interest expense
    
    
    (188
    )
    
    
    (177
    )
    
    
    (101
    )
    
    
    (91
    )Interest income
    
    
    47
    
    
    
    53
    
    
    
    23
    
    
    
    35Income before provision for income tax
    
    
    1,271
    
    
    
    719
    
    
    
    237
    
    
    
    446Income tax provision
    
    
    (522
    )
    
    
    (315
    )
    
    
    (111
    )
    
    
    (184
    )Net income
    
    $
    749
    
    
    $
    404
    
    
    $
    126
    
    
    $
    262Basic earnings per share
    
    $
    .12
    
    
    $
    .06
    
    
    $
    .02
    
    
    $
    .04Fully diluted earnings per share
    
    $
    .12
    
    
    $
    .06
    
    
    $
    .02
    
    
    $
    .04Weighted average number of shares outstanding
(in thousands)Basic
    
    
    6,410
    
    
    
    6,397
    
    
    
    6,410
    
    
    
    6,410Diluted
    
    
    6,464
    
    
    
    6,401
    
    
    
    6,511
    
    
    
    6,410
 3




---



##### 



INTERNATIONAL ABSORBENTS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJuly 31,
    
    
    July 31,2007
    
    
    2006(unaudited)
    
    
    (unaudited)Cash flows from operating activitiesNet income
    
    $
    749
    
    
    $
    404Adjustments to reconcile net income to net cash
from operating activitiesDepreciation and amortization
    
    
    779
    
    
    
    743Loss on disposal of assets
    
    
    164
    
    
    
    Stock-based compensation
    
    
    195
    
    
    
    202Deferred tax
    
    
    150
    
    
    
    65Changes in operating assets and liabilitiesAccounts receivable
    
    
    26
    
    
    
    49Inventory
    
    
    (877
    )
    
    
    (120
    )Prepaid expenses
    
    
    (16
    )
    
    
    (46
    )Accounts payable and accrued liabilities
    
    
    (420
    )
    
    
    12Income tax receivable/payable
    
    
    45
    
    
    
    87Due to related party
    
    
    1
    
    
    
    Net cash flows from operating activities
    
    
    796
    
    
    
    1,396Cash flows from investing activitiesPurchase of short-term investments
    
    
    
    
    
    
    (2
    )Purchase of property, plant and equipment
    
    
    (2,600
    )
    
    
    (1,176
    )Purchase of other assets
    
    
    
    
    
    
    (19
    )Changes in restricted cash
    
    
    1,146
    
    
    
    Net cash flows from investing activities
    
    
    (1,454
    )
    
    
    (1,197
    )Cash flows from financing activitiesRepayment of long-term debt
    
    
    (134
    )
    
    
    (67
    )Proceeds from exercise of stock options
    
    
    
    
    
    
    188Net cash flows from financing activities
    
    
    (134
    )
    
    
    121Net change in cash
    
    
    (792
    )
    
    
    320Cash and cash equivalents, beginning of period
    
    
    2,277
    
    
    
    2,198Cash and cash equivalents, end of period
    
    $
    1,485
    
    
    $
    2,518Supplemental Cash flow InformationCash paid for interest
    
    $
    193
    
    
    $
    78Cash paid for income taxes
    
    $
    330
    
    
    $
    154Non-cash investing activitiesChange in property, plant and equipment and accounts
payable for purchase of plant and equipment
    
    $
    45
    
    
    $
    7
 4




---



##### 



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Significant Accounting Policies
 Basis of consolidation and presentation
   Use of estimates
  New Accounting Pronouncements
 ,
   Stock-based employee compensation
  5




---



##### 



2008
    
    2007a) risk free interest rate
    
    
    4.68
    %
    
    
    4.93
    %b) expected volatility
    
    
    106.0
    %
    
    
    128.5
    %c) expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %d) estimated average life (in years)
    
    
    5.80
    
    
    
    5.80e) weighted-average fair value per
share
    
    $
    2.97
    
    
    $
    2.87
  Other stock-based compensation
  6




---



##### 



Options
  2. Share Capital
 Common Shares
 Shares
    
    CapitalCommon shares outstanding, January 31, 2007
    
    
    6,410
    
    
    $
    8,487Common shares outstanding, July 31, 2007
    
    
    6,410
    
    
    $
    8,487
 3. Segmented Information
    Business Segment Data  Six Months Ended July 31, 2007
 Animal(U.S. dollars, in thousands)
    
    Care
    
    
    Industrial
    
    
    ConsolidatedRevenues
    
    $
    15,353
    
    
    $
    413
    
    
    $
    15,766Operating cost and expenses
    
    
    13,134
    
    
    
    441
    
    
    
    13,575Operating income (loss) before
depreciation and amortization
    
    
    2,219
    
    
    
    (28
    )
    
    
    2,191Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (779
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (188
    )Interest Income
    
    
    
    
    
    
    
    
    
    
    47Net income before taxes
    
    
    
    
    
    
    
    
    
    $
    1,271
 7




---



##### 



Business Segment Data  Six Months Ended July 31, 2006
 Animal(U.S. dollars, in thousands)
    
    Care
    
    
    Industrial
    
    
    ConsolidatedRevenues
    
    $
    13,314
    
    
    $
    607
    
    
    $
    13,921Operating cost and expenses
    
    
    11,707
    
    
    
    628
    
    
    
    12,335Operating income (loss) before
depreciation and amortization
    
    
    1,607
    
    
    
    (21
    )
    
    
    1,586Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (743
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (177
    )Interest Income
    
    
    
    
    
    
    
    
    
    
    53Net income before taxes
    
    
    
    
    
    
    
    
    
    $
    719
 Business Segment Data  Three Months Ended July 31, 2007
 Animal(U.S. dollars, in thousands)
    
    Care
    
    
    Industrial
    
    
    ConsolidatedRevenues
    
    $
    7,189
    
    
    $
    212
    
    
    $
    7,401Operating cost and expenses
    
    
    6,437
    
    
    
    222
    
    
    
    6,659Operating income (loss) before
depreciation and amortization
    
    
    752
    
    
    
    (10
    )
    
    
    742Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (427
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (101
    )Interest income
    
    
    
    
    
    
    
    
    
    
    23Net income before taxes
    
    
    
    
    
    
    
    
    
    $
    237
 Business Segment Data  Three Months Ended July 31, 2006
 Animal(U.S. dollars, in thousands)
    
    Care
    
    
    Industrial
    
    
    ConsolidatedRevenues
    
    $
    6,938
    
    
    $
    362
    
    
    $
    7,300Operating cost and expenses
    
    
    6,050
    
    
    
    352
    
    
    
    6,402Operating income (loss) before
depreciation and amortization
    
    
    888
    
    
    
    10
    
    
    
    898Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (396
    )Interest Expense
    
    
    
    
    
    
    
    
    
    
    (91
    )Interest Income
    
    
    
    
    
    
    
    
    
    
    35Net income before taxes
    
    
    
    
    
    
    
    
    
    $
    446
 8




---



##### 



4. Inventories components
 July 31,
    
    
    January 31,(U.S. dollars, in thousands)
    
    2007
    
    
    2007Raw materials and supplies
    
    $
    2,059
    
    
    $
    1,569Finished goods
    
    
    2,039
    
    
    
    1,652$
    4,098
    
    
    $
    3,221
 5. Property, Plant and Equipment
 July 31,
    
    
    January 31,(U.S. dollars, in thousands)
    
    2007
    
    
    2007Property, plant and equipmentLand
    
    $
    1,547
    
    
    $
    1,547Buildings
    
    
    8,732
    
    
    
    8,534Leasehold improvements
    
    
    
    
    
    
    630Equipment
    
    
    14,649
    
    
    
    10,996Construction in progress
    
    
    246
    
    
    
    2,313$
    25,174
    
    
    $
    24,020Less: Accumulated depreciation
    
    
    (5,361
    )
    
    
    (5,924
    )$
    19,813
    
    
    $
    18,096
 6. Credit arrangements
  7. Long-term debt
    9




---



##### 



8. Earnings per share
 For the six months endedJuly 31, 2007Net Income
    
    
    Shares
    
    
    Per share(U.S. dollars)
    
    (numerator)
    
    
    (denominator)
    
    
    amountBasic earnings per shareNet income available to stockholders
    
    $
    749,000
    
    
    
    6,410,328
    
    
    $
    0.12Effect of dilutive securitiesStock options to purchase common stock
    
    
    
    
    
    
    53,511Diluted earnings per sharesNet income available to stockholders
    
    $
    749,000
    
    
    
    6,463,839
    
    
    $
    0.12
 For the six months endedJuly 31, 2006Net Income
    
    
    Shares
    
    
    Per share(numerator)
    
    
    (denominator)
    
    
    amountBasic earnings per shareNet income available to stockholders
    
    $
    404,000
    
    
    
    6,397,287
    
    
    $
    0.06Effect of dilutive securitiesStock options to purchase common stock
    
    
    
    
    
    
    4,024Diluted earnings per sharesNet income available to stockholders
    
    $
    404,000
    
    
    
    6,401,311
    
    
    $
    0.06
 10




---



##### 



July 31, 2007Net Income
    
    
    Shares
    
    
    Per share(numerator)
    
    
    (denominator)
    
    
    amountBasic earnings per shareNet income available to stockholders
    
    $
    126,000
    
    
    
    6,410,328
    
    
    $
    0.02Effect of dilutive securitiesStock options to purchase common stock
    
    
    
    
    
    
    100,682Diluted earnings per sharesNet income available to stockholders
    
    $
    126,000
    
    
    
    6,511,010
    
    
    $
    0.02
 For the three months endedJuly 31, 2006Net Income
    
    
    Shares
    
    
    Per share(numerator)
    
    
    (denominator)
    
    
    amountBasic earnings per shareNet income available to stockholders
    
    $
    262,000
    
    
    
    6,410,328
    
    
    $
    0.04Effect of dilutive securitiesStock options to purchase common stock
    
    
    
    
    
    
    Diluted earnings per sharesNet income available to stockholders
    
    $
    262,000
    
    
    
    6,410,328
    
    
    $
    0.04
  For the six months endedJuly 31,2007
    
    2006Stock options
excluded from
the computation
of diluted net
income per
share, other
than those used
in the
determination of
common stock
equivalents
disclosed above
    
    
    284,150
    
    
    
    539,450
 For the three months endedJuly 31,2007
    
    2006Stock options
excluded from
the computation
of diluted net
income per
share, other
than those used
in the
determination of
common stock
equivalents
disclosed above
    
    
    
    
    
    
    539,450
 11




---



##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Overview
  Care FRESH ® Care FRESH ® Care FRESH ®
  Care FRESH ® Care FRESH ® Ultra Care FRESH ® Colors Healthy Pet  Healthy Pet 
  12




---



##### 



Results of Operations
  July 31,
    
    Percent
    
    July 31,
    
    Percent
    
    Percentage2007
    
    of Sales
    
    2006
    
    of Sales
    
    ChangeSales
    
    
    7,401
    
    
    
    100
    %
    
    
    7,300
    
    
    
    100
    %
    
    
    1
    %COGS
    
    
    5,365
    
    
    
    72
    %
    
    
    5,142
    
    
    
    70
    %
    
    
    4
    %Gross Profit
    
    
    2,036
    
    
    
    28
    %
    
    
    2,158
    
    
    
    30
    %
    
    
    -6
    %S G & A
    
    
    1,721
    
    
    
    23
    %
    
    
    1,656
    
    
    
    23
    %
    
    
    4
    %Income from
operations
    
    
    315
    
    
    
    4
    %
    
    
    502
    
    
    
    7
    %
    
    
    -37
    %Interest Income
    
    
    23
    
    
    
    0
    %
    
    
    35
    
    
    
    0
    %
    
    
    -34
    %Interest Expense
    
    
    (101
    )
    
    
    -1
    %
    
    
    (91
    )
    
    
    -1
    %
    
    
    11
    %Profit before taxes
    
    
    237
    
    
    
    3
    %
    
    
    446
    
    
    
    6
    %
    
    
    -47
    %Income Taxes
    
    
    (111
    )
    
    
    0
    %
    
    
    (184
    )
    
    
    -3
    %
    
    
    -40
    %Net Income
    
    
    126
    
    
    
    3
    %
    
    
    262
    
    
    
    4
    %
    
    
    -52
    %
  July 31,
    
    Percent
    
    July 31,
    
    Percent
    
    Percentage2007
    
    of Sales
    
    2006
    
    of Sales
    
    ChangeSales
    
    
    15,766
    
    
    
    100
    %
    
    
    13,921
    
    
    
    100
    %
    
    
    13
    %COGS
    
    
    10,963
    
    
    
    70
    %
    
    
    9,708
    
    
    
    70
    %
    
    
    13
    %Gross Profit
    
    
    4,803
    
    
    
    30
    %
    
    
    4,213
    
    
    
    30
    %
    
    
    14
    %S G & A
    
    
    3,391
    
    
    
    22
    %
    
    
    3,370
    
    
    
    24
    %
    
    
    1
    %Income from
operations
    
    
    1,412
    
    
    
    9
    %
    
    
    843
    
    
    
    6
    %
    
    
    67
    %Interest Income
    
    
    47
    
    
    
    0
    %
    
    
    53
    
    
    
    0
    %
    
    
    -11
    %Interest Expense
    
    
    (188
    )
    
    
    -1
    %
    
    
    (177
    )
    
    
    -1
    %
    
    
    6
    %Profit before taxes
    
    
    1,271
    
    
    
    8
    %
    
    
    719
    
    
    
    5
    %
    
    
    77
    %Income Taxes
    
    
    (522
    )
    
    
    -3
    %
    
    
    (315
    )
    
    
    -2
    %
    
    
    66
    %Net Income
    
    
    749
    
    
    
    5
    %
    
    
    404
    
    
    
    3
    %
    
    
    85
    %
 Net Sales
  13




---



##### 



Care FRESH ® Ultra Care FRESH ® Colors
 Care FRESH ® Care FRESH Ultra Care FRESH ® Colors. Care FRESH ® Care FRESH ®
 Gross Profit
     14




---



##### 



Selling, Administrative and General Expenses
     July 31,
    
    
    Percent
    
    
    July 31,
    
    
    Percent
    
    
    Percentage2007
    
    
    of Sales
    
    
    2006
    
    
    of Sales
    
    
    ChangeSelling,
administrative and
general expenses
    
    
    1,721
    
    
    
    23
    %
    
    
    1,656
    
    
    
    23
    %
    
    
    4
    %Retirement of assets
    
    
    164
    
    
    
    2
    %
    
    
    0
    
    
    
    0
    %Selling,
administrative and
general expenses
adjusted for
retirement of
assets
    
    
    1,557
    
    
    
    21
    %
    
    
    1,656
    
    
    
    23
    %
    
    
    -6
    %
  July 31,
    
    
    Percent
    
    
    July 31,
    
    
    Percent
    
    
    Percentage2007
    
    
    of Sales
    
    
    2006
    
    
    of Sales
    
    
    ChangeSelling,
administrative and
general expenses
    
    
    3,391
    
    
    
    22
    %
    
    
    3,370
    
    
    
    24
    %
    
    
    -1
    %Retirement of assets
    
    
    164
    
    
    
    1
    %
    
    
    0
    
    
    
    0
    %Selling,
administrative and
general expenses
adjusted for
retirement of
assets
    
    
    3,227
    
    
    
    21
    %
    
    
    3,370
    
    
    
    24
    %
    
    
    -4
    %
 15




---



##### 



Interest Expense
  Income Tax
  Net Income
   Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
  16




---



##### 



For the quarter ended(U.S. dollars in thousands)
    
    July 31, 2007
    
    July 31, 2006
    
    Percentage ChangeNet Income (Loss) (as
reported on Condensed
Consolidated Statement of
Operations)
    
    $
    126
    
    
    $
    262Interest expense
    
    
    101
    
    
    
    91Interest income
    
    
    (23
    )
    
    
    (35
    )Income tax provision
    
    
    111
    
    
    
    184Depreciation & amortization
    
    
    427
    
    
    
    396EBITDA
    
    $
    742
    
    
    $
    898
    
    
    
    -17
    %
 For the six months ended(U.S. dollars in thousands)
    
    July 31, 2007
    
    July 31, 2006
    
    Percentage ChangeNet Income (Loss) (as
reported on Condensed
Consolidated Statement of
Operations)
    
    $
    749
    
    
    $
    404Interest expense
    
    
    188
    
    
    
    177Interest income
    
    
    (47
    )
    
    
    (53
    )Income tax provision
    
    
    522
    
    
    
    315Depreciation & amortization
    
    
    779
    
    
    
    743EBITDA
    
    $
    2,191
    
    
    $
    1,586
    
    
    
    38
    %
  Liquidity and Capital Resources
   As of July 31,
    
    As of January 31,2007
    
    2007Financial ConditionTotal Assets
    
    $
    28,209
    
    
    $
    27,691Total Liabilities
    
    
    11,958
    
    
    
    12,301Total Equity
    
    $
    16,251
    
    
    $
    15,390Debt/equity ratio
    
    
    0.74
    
    
    
    0.80Assets/debt ratio
    
    
    2.36
    
    
    
    2.25
 17




---



##### 



As of July 31,
    
    As of January 31,2007
    
    2007Working CapitalCurrent assets
    
    $
    8,145
    
    
    $
    9,329Current liabilities
    
    $
    3,658
    
    
    $
    3,945Current ratio
    
    
    2.23
    
    
    
    2.36Cash PositionCash, restricted cash & short term
investments
    
    $
    1,485
    
    
    $
    3,423Cash generated from operations
    
    $
    796
    
    
    $
    2,416
    *
 
 *
    
    for the entire year ended January 31, 2007 Financial Condition
     Working Capital
   Cash Position
  18




---



##### 



Cash Generated from Operations
  Financing and Investing Activities
      Environmental Matters
  Off-Balance Sheet Arrangements
  19




---



##### 



Critical Accounting Policies
   FORWARD-LOOKING STATEMENTS
  ITEM 4. CONTROLS AND PROCEDURES
   PART II  OTHER INFORMATION
 ITEM 1. LEGAL PROCEEDINGS
  20




---



##### 



ITEM 1A. RISK FACTORS
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    Election of the following directors, who will serve until their successors are elected and
qualified, or their earlier death or resignation:
 Number of SharesFor
    
    WithheldJohn J. Sutherland
    
    
    5,785,566
    
    
    
    119,294Lionel G. Dodd
    
    
    5,784,876
    
    
    
    119,984Daniel J. Whittle
    
    
    5,785,581
    
    
    
    119,279
 The Companys other directors include Gordon L. Ellis and Michael P. Bentley each of whose terms
will expire in 2008 unless re-elected.2.
    
    The selection of Moss Adams, LLP to continue as the auditors for International Absorbents,
Inc., was ratified by the following vote: For 5,805,612; Withheld  99,208.
 21




---



##### 



ITEM 6. EXHIBITS
 ExhibitNumber
    
    Exhibit Description3.1
    
    Altered Memorandum of Company (Amended) (incorporated by reference to Exhibit 3.1
to the Companys Form 10-KSB filed on April 3, 2003).3.2
    
    Articles of the Company (incorporated by reference to the exhibits to the Company
registration statement filed on February 24, 1992, as amended (No. 33-45020)).4.1
    
    Shareholder Rights Plan dated May 1, 2007 (incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K filed May 4, 2007)31.1
    
    Certification of Gordon Ellis, President and Chief Executive Officer of International
Absorbents Inc., pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.31.2
    
    Certification of David Thompson, Chief Financial Officer of International Absorbents Inc.,
pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.32.1
    
    Certification of Gordon Ellis, President and Chief Executive Officer of International
Absorbents Inc., pursuant to 18 U.S.C. Section 1350.32.2
    
    Certification of David Thompson, Chief Financial Officer of International Absorbents Inc.,
pursuant to 18 U.S.C. Section 1350.
 22




---



##### 



SIGNATURES
  INTERNATIONAL ABSORBENTS INC.
(Registrant)Date: September 11, 2007
    
    /s/ GORDON L. ELLIS

Gordon L. EllisPresident and Chief Executive Officer(Principal Executive Officer)Date: September 11, 2007
    
    /s/ DAVID H. THOMPSON

David H. ThompsonSecretary and Chief Financial Officer(Principal Financial Officer)
 23