##### 



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, 2006
 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
    
    98-0487410(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1569 Dempsey RoadNorth 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, 2006Common Shares, no par value per share
    
    6,410,328 shares




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##### 



TABLE OF CONTENTS  PART I FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 1A. RISK FACTORSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 6. EXHIBITSSIGNATURES 
 PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 INTERNATIONAL ABSORBENTS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 As at
    
    
    As atJuly 31,
    
    
    January 31,2006
    
    
    2006(unaudited)
    
    
    (audited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,518
    
    
    $
    2,198Short term investments
    
    
    611
    
    
    
    609Accounts receivable, net
    
    
    2,111
    
    
    
    2,160Inventories
    
    
    2,766
    
    
    
    2,646Prepaid expenses
    
    
    159
    
    
    
    113Deferred income tax asset
    
    
    96
    
    
    
    96Total current assets
    
    
    8,261
    
    
    
    7,822Property, plant and equipment, net
    
    
    16,883
    
    
    
    16,430Other assets, net
    
    
    267
    
    
    
    261Total assets
    
    $
    25,411
    
    
    $
    24,513Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    2,262
    
    
    $
    2,243Related party payable
    
    
    6
    
    
    
    6Current portion of long-term debt
    
    
    541
    
    
    
    537Income taxes payable
    
    
    149
    
    
    
    62Total current liabilities
    
    
    2,958
    
    
    
    2,848Deferred income tax liability
    
    
    850
    
    
    
    785Long-term debt
    
    
    6,655
    
    
    
    6,726Total liabilities
    
    
    10,463
    
    
    
    10,359Stockholders equity:Common stock, no par value;
100,000,000 shares authorized,
6,410,328 and 6,320,768 issued and outstanding at
July 31, 2006 and January 31, 2006, respectively
    
    
    8,487
    
    
    
    8,299Additional paid in capital
    
    
    854
    
    
    
    652Retained earnings
    
    
    5,607
    
    
    
    5,203Total stockholders equity
    
    
    14,948
    
    
    
    14,154Total liabilities and stockholders equity
    
    $
    25,411
    
    
    $
    24,513
 2




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##### 



INTERNATIONAL ABSORBENTS INC.
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Six Months Ended
    
    
    Three Months EndedJuly 31,
    
    
    July 31,
    
    
    July 31,
    
    
    July 31,2006
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)Sales, net
    
    $
    13,921
    
    
    $
    11,966
    
    
    $
    7,300
    
    
    $
    6,074Cost of goods sold
    
    
    9,708
    
    
    
    8,280
    
    
    
    5,142
    
    
    
    4,3474,213
    
    
    
    3,686
    
    
    
    2,158
    
    
    
    1,727Selling, general and administrative expenses
    
    
    3,370
    
    
    
    3,229
    
    
    
    1,656
    
    
    
    1,558Income from operations
    
    
    843
    
    
    
    457
    
    
    
    502
    
    
    
    169Interest expense
    
    
    (177
    )
    
    
    (161
    )
    
    
    (91
    )
    
    
    (83
    )Interest income
    
    
    53
    
    
    
    33
    
    
    
    35
    
    
    
    17Income before provision for income tax
    
    
    719
    
    
    
    329
    
    
    
    446
    
    
    
    103Income tax provision
    
    
    (315
    )
    
    
    (115
    )
    
    
    (184
    )
    
    
    (55
    )Net income
    
    $
    404
    
    
    $
    214
    
    
    $
    262
    
    
    $
    48Basic earnings per share
    
    $
    .06
    
    
    $
    .03
    
    
    $
    .04
    
    
    $
    .01Fully diluted earnings per share
    
    $
    .06
    
    
    $
    .03
    
    
    $
    .04
    
    
    $
    .01Weighted average number of shares outstanding
(in thousands)Basic
    
    
    6,397
    
    
    
    6,257
    
    
    
    6,410
    
    
    
    6,261Diluted
    
    
    6,401
    
    
    
    6,351
    
    
    
    6,410
    
    
    
    6,346
 3




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##### 



INTERNATIONAL ABSORBENTS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Six Months EndedJuly 31,
    
    
    July 31,2006
    
    
    2005(unaudited)
    
    
    (unaudited)Cash flows from operating activitiesNet income
    
    $
    404
    
    
    $
    214Adjustments to reconcile net income to net cash
from operating activitiesDepreciation and amortization
    
    
    743
    
    
    
    638Stock-based compensation
    
    
    202
    
    
    
    4Deferred tax
    
    
    65
    
    
    
    22Changes in operating assets and liabilitiesAccounts receivable
    
    
    49
    
    
    
    (301
    )Inventory
    
    
    (120
    )
    
    
    (1,162
    )Prepaid expenses
    
    
    (46
    )
    
    
    21Accounts payable and accrued liabilities
    
    
    12
    
    
    
    (278
    )Income tax receivable/payable
    
    
    87
    
    
    
    (37
    )Due to related party
    
    
    
    
    
    
    1Net cash flows from operating activities
    
    
    1,396
    
    
    
    (878
    )Cash flows from investing activitiesPurchase of short-term investments
    
    
    (2
    )
    
    
    (109
    )Proceeds from short-term investments
    
    
    
    
    
    
    220Purchase of property, plant and equipment
    
    
    (1,176
    )
    
    
    (1,108
    )Purchase of other assets
    
    
    (19
    )Proceeds from restricted cash
    
    
    
    
    
    
    437Net cash flows from investing activities
    
    
    (1,197
    )
    
    
    (560
    )Cash flows from financing activitiesProceeds from long-term debt
    
    
    
    
    
    
    Repayment of long-term debt
    
    
    (67
    )
    
    
    (63
    )Proceeds from exercise of stock options
    
    
    188
    
    
    
    19Net cash flows from financing activities
    
    
    121
    
    
    
    (44
    )Net change in cash
    
    
    320
    
    
    
    (1,482
    )Cash and cash equivalents, beginning of period
    
    
    2,198
    
    
    
    3,520Cash and cash equivalents, end of period
    
    $
    2,518
    
    
    $
    2,038Supplemental Cash flow InformationCash paid for interest
    
    $
    78
    
    
    $
    71Cash paid for income taxes
    
    $
    154
    
    
    $
    130Non-cash investing activitiesChange in property, plant and equipment and accounts
payable for purchase of plant and equipment
    
    $
    7
    
    
    $
    33
 4




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##### 



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




---



##### 



Six months ended
    
    
    Three months endedJuly 31,
    
    
    July 31,2005
    
    
    2005Net income
    
    $
    214
    
    
    $
    48Stock-based compensation recognized
under APB No. 25, net of related tax effects
    
    
    
    
    
    
    Compensation expense calculated in accordance
with SFAS 123, net of related tax effects
    
    
    (127
    )
    
    
    (43
    )Pro forma net income
    
    $
    87
    
    
    $
    5Basic earnings per shareAs reported
    
    $
    0.03
    
    
    $
    0.01Pro forma
    
    $
    0.01
    
    
    $
    0.00Diluted earnings per shareAs reported
    
    $
    0.03
    
    
    $
    0.01Pro forma
    
    $
    0.01
    
    
    $
    0.00
   6




---



##### 



2007
    
    2006a) risk free interest rate
    
    
    4.93
    %
    
    
    3.70
    %b) expected volatility
    
    
    128.5
    %
    
    
    126.1
    %c) expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %d) estimated average life (in years)
    
    
    5.8
    
    
    
    7.00e) weighted-average fair value per
share
    
    $
    2.87
    
    
    $
    4.22
  Other stock-based compensation
  Options
  2. Segmented Information
    7




---



##### 



Business
Segment Data  Six Months Ended July 31, 2006
 (U.S. dollars, in thousands)
    
    AnimalCare
    
    
    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  Six Months Ended July 31, 2005
 (U.S. dollars, in thousands)
    
    AnimalCare
    
    
    Industrial
    
    
    ConsolidatedRevenues
    
    $
    11,361
    
    
    $
    605
    
    
    $
    11,966Operating cost and expenses
    
    
    10,211
    
    
    
    660
    
    
    
    10,871Operating income (loss) before
depreciation and amortization
    
    
    1,150
    
    
    
    (55
    )
    
    
    1,095Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (638
    )Interest expense
    
    
    
    
    
    
    
    
    
    
    (161
    )Interest Income
    
    
    
    
    
    
    
    
    
    
    33Net income before taxes
    
    
    
    
    
    
    
    
    
    $
    329
 Business
Segment Data  Three Months Ended July 31, 2006
 (U.S. dollars, in thousands)
    
    AnimalCare
    
    
    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




---



##### 



Business
Segment Data  Three Months Ended July 31, 2005
 (U.S. dollars, in thousands)
    
    AnimalCare
    
    
    Industrial
    
    
    ConsolidatedRevenues
    
    $
    5,813
    
    
    $
    261
    
    
    $
    6,074Operating cost and expenses
    
    
    5,293
    
    
    
    286
    
    
    
    5,579Operating income (loss) before
depreciation and amortization
    
    
    520
    
    
    
    (25
    )
    
    
    495Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    (326
    )Interest Expense
    
    
    
    
    
    
    
    
    
    
    (83
    )Interest Income
    
    
    
    
    
    
    
    
    
    
    17Net income before taxes
    
    
    
    
    
    
    
    
    
    $
    103
 3. Inventories components
 (U.S. dollars, in thousands)
    
    July 31,
    
    
    January 31,2006
    
    
    2006Raw materials and supplies
    
    $
    1,438
    
    
    $
    1,351Finished goods
    
    
    1,328
    
    
    
    1,295$
    2,766
    
    
    $
    2,646
 4. Property, Plant and Equipment
 (U.S. dollars, in thousands)
    
    July 31,
    
    
    January 31,2006
    
    
    2006Property, plant and equipmentLand
    
    $
    1,547
    
    
    $
    1,547Buildings
    
    
    8,506
    
    
    
    8,474Leashold improvements
    
    
    630
    
    
    
    630Equipment
    
    
    10,921
    
    
    
    10,127Construction in progress
    
    
    504
    
    
    
    147$
    22,108
    
    
    $
    20,925Less: Accumulated depreciation
    
    
    (5,225
    )
    
    
    (4,495
    )$
    16,883
    
    
    $
    16,430
 5. Credit arrangements
  6. Long-term debt
  9




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##### 



7. Legal Matters
 et.al.
 8. Earnings per share
 (U.S. dollars)
    

    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
 For the six months endedJuly 31, 2005Net Income
    
    
    Shares
    
    
    Per share(numerator)
    
    
    (denominator)
    
    
    amountBasic earnings per shareNet income available to stockholders
    
    $
    214,000
    
    
    
    6,257,063
    
    
    $
    0.03Effect of dilutive securitiesWarrants to purchase common stock
    
    
    
    
    
    
    Stock options to purchase common stock
    
    
    
    
    
    
    94,105Diluted earnings per sharesNet income available to stockholders
    
    $
    214,000
    
    
    
    6,351,168
    
    
    $
    0.03
 10




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##### 



(U.S. dollars)
    
    
    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 three months endedJuly 31, 2005Net Income
    
    
    Shares
    
    
    Per share(numerator)
    
    
    (denominator)
    
    
    amountBasic earnings per shareNet income available to stockholders
    
    $
    48,000
    
    
    
    6,260,527
    
    
    $
    0.01Effect of dilutive securitiesStock options to purchase common stock
    
    
    
    
    
    
    85,311Diluted earnings per sharesNet income available to stockholders
    
    $
    48,000
    
    
    
    6,345,838
    
    
    $
    0.01
  For the six months endedJuly 31,2006
    
    2005Stock 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
    
    
    
    318,250
 For the three months endedJuly 31,2006
    
    2005Stock 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
    
    
    
    318,250
 11




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##### 



9. Subsequent event
  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 Care FRESH ® Colors Care FRESH ® Colors Care FRESH ® Ultra Care FRESH ® Colors Healthy Pet  Healthy Pet 
  12




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##### 



RESULTS OF OPERATIONS
  July 31,
    
    
    Percent
    
    
    July 31,
    
    
    Percent
    
    
    Percentage2006
    
    
    of Sales
    
    
    2005
    
    
    of Sales
    
    
    ChangeSales, net
    
    $
    7,300
    
    
    
    100
    %
    
    $
    6,074
    
    
    
    100
    %
    
    
    20
    %Costs of goods sold
    
    
    5,142
    
    
    
    70
    %
    
    
    4,347
    
    
    
    72
    %
    
    
    18
    %Gross Profit
    
    
    2,158
    
    
    
    30
    %
    
    
    1,727
    
    
    
    28
    %
    
    
    25
    %Selling,
administrative and
general expenses
    
    
    1,656
    
    
    
    23
    %
    
    
    1,558
    
    
    
    26
    %
    
    
    6
    %Income from operations
    
    
    502
    
    
    
    7
    %
    
    
    169
    
    
    
    3
    %
    
    
    197
    %Interest income
    
    
    35
    
    
    
    0
    %
    
    
    17
    
    
    
    0
    %
    
    
    106
    %Interest expense
    
    
    (91
    )
    
    
    -1
    %
    
    
    (83
    )
    
    
    -1
    %
    
    
    10
    %Income before
provision for income
tax
    
    
    446
    
    
    
    6
    %
    
    
    103
    
    
    
    2
    %
    
    
    333
    %Income taxes
    
    
    (184
    )
    
    
    -3
    %
    
    
    (55
    )
    
    
    -1
    %
    
    
    235
    %Net income
    
    $
    262
    
    
    
    3
    %
    
    $
    48
    
    
    
    1
    %
    
    
    446
    %
  July 31,
    
    
    Percent
    
    
    July 31,
    
    
    Percent
    
    
    Percentage2006
    
    
    of Sales
    
    
    2005
    
    
    of Sales
    
    
    ChangeSales, net
    
    $
    13,921
    
    
    
    100
    %
    
    $
    11,966
    
    
    
    100
    %
    
    
    16
    %Costs of goods sold
    
    
    9,708
    
    
    
    70
    %
    
    
    8,280
    
    
    
    69
    %
    
    
    17
    %Gross Profit
    
    
    4,213
    
    
    
    30
    %
    
    
    3,686
    
    
    
    31
    %
    
    
    14
    %Selling,
administrative and
general expenses
    
    
    3,370
    
    
    
    24
    %
    
    
    3,229
    
    
    
    27
    %
    
    
    4
    %Income from operations
    
    
    843
    
    
    
    6
    %
    
    
    457
    
    
    
    4
    %
    
    
    84
    %Interest income
    
    
    53
    
    
    
    0
    %
    
    
    33
    
    
    
    0
    %
    
    
    61
    %Interest expense
    
    
    (177
    )
    
    
    -1
    %
    
    
    (161
    )
    
    
    -1
    %
    
    
    10
    %Income before
provision for income
tax
    
    
    719
    
    
    
    5
    %
    
    
    329
    
    
    
    3
    %
    
    
    119
    %Income taxes
    
    
    (315
    )
    
    
    -2
    %
    
    
    (115
    )
    
    
    -1
    %
    
    
    174
    %Net income
    
    $
    404
    
    
    
    3
    %
    
    $
    214
    
    
    
    2
    %
    
    
    89
    %
 Net Sales
  13




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##### 



Care FRESH ® Care FRESH ® Ultra Critter Care,
 Care FRESH ® Care FRESH Ultra Care FRESH ® Colors. Care FRESH ®
 Gross Profit
 ,
   Selling, General and Administrative Expenses
  14




---



##### 



Interest Expense
  Income Tax
  Net Income
   15




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
   As of July 31,
    
    As of January 31,2006
    
    2006Financial ConditionTotal Assets
    
    $
    25,411
    
    
    $
    24,513Total Liabilities
    
    
    10,463
    
    
    
    10,359Total Equity
    
    $
    14,948
    
    
    $
    14,154Debt/equity ratio
    
    
    0.70
    
    
    
    0.73Assets/debt ratio
    
    
    2.43
    
    
    
    2.37Working CapitalCurrent assets
    
    $
    8,261
    
    
    $
    7,822Current liabilities
    
    $
    2,958
    
    
    $
    2,848Current ratio
    
    
    2.79
    
    
    
    2.75Cash PositionCash and short term investments
    
    $
    3,129
    
    
    $
    2,807Cash generated from operations
    
    $
    1,396
    
    
    $
    667
    *
 
 *
    
    for the entire year ended January 31, 2006 Financial Condition
    Working Capital
  16




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Cash Position
    Cash Generated from Operations
  Financing and Investing Activities
     17




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Environmental Matters
  Off-Balance Sheet Arrangements
   CRITICAL ACCOUNTING POLICIES
   FORWARD-LOOKING STATEMENTS
  18




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
       
 ITEM 4. CONTROLS AND PROCEDURES
   
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   
 ITEM 1A. RISK FACTORS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  19




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1.
    
    The election of the following directors, who will serve until their successors are elected
and qualified, or their earlier death or resignation:
 Number of SharesFor
    
    WithheldGordon L. Ellis
    
    
    5,592,647
    
    
    
    233,818Michael P .Bentley
    
    
    5,592,647
    
    
    
    233,818
 The Companys other directors include Lionel G. Dodd, John J. Sutherland and Daniel J. Whittle,
each of whose terms will expire in 2007 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 5,751,210; Withheld  75,255.3.
    
    A special resolution to alter the Companys Notice of Articles by increasing the Number
authorized Common Shares of the Company from 100,000 Common Shares without par value to an
unlimited number of Common Shares without par value was passed by the following vote: For 
4,943,153; Against  850,819; Withheld  32,492.4.
    
    A special resolution that the Companys Notice of Articles be altered to remove the
application of the Pre-existing Company provisions and the new Articles be adopted as the
Articles of the Company was passed by the following vote: For  2,024,863; Against  495,057;
Withheld  137,106; Not Voted  3,169,439.5.
    
    A proposal to ratify the adoption by the Company of the Shareholder Rights Plan dated May 1,
2006, an agreement entered into between the Company and Pacific Corporate Trust Company, of
which share purchase rights were issued as of the close of business on May 1, 2006 to holders
of Common Shares of the Company at the rate of one Right for each share outstanding, was
passed by the following vote: For  1,876,210; Against  756,961; Withheld  23,855; Not
Voted  3,169,439.
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ITEM 6. EXHIBITS
 ExhibitNumber
    
    Exhibit Description3.1
    
    Notice of Articles of the Company3.2
    
    Articles of the Company4.1
    
    Shareholder Rights Plan dated May 1, 2006 (incorporated by reference to Exhibit 10.1 to
Current Report on Form 8-K filed May 4, 2006)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.
 21




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SIGNATURES
  INTERNATIONAL ABSORBENTS INC.(Registrant)Date: September 11, 2006
    
    /s/ GORDON L. ELLISGordon L. EllisPresident and Chief Executive Officer(Principal Executive Officer)Date: September 11, 2006
    
    /s/ DAVID H. THOMPSONDavid H. ThompsonSecretary and Chief Financial Officer(Principal Financial Officer)
 22