inbp20220331

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 March 31, 2025

☐ 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 ☑ 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 ☑ 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.

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

As of May 14, 2025, there were 30,300,720 shares of common stock, $0.002 par value per share, of the registrant outstanding.

INTEGRATED BIOPHARMA, INC. AND SUBSIDIARIES

FORM 10-Q QUARTERLY REPORT

For the Three Months Ended March 31, 2025

INDEX

		Page
	Part I. Financial Information
Item 1.	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2025 and 2024 (unaudited)	2
	Condensed Consolidated Balance Sheets as of March 31, 2025 (unaudited) and June 30, 2024	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2025 and 2024 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2025 and 2024 (unaudited)	5
	Notes to 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	23

Item 4.	Controls and Procedures	23

	Part II. Other Information

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	25

Item 4.	Mine Safety Disclosure	25

Item 5.	Other Information	25

Item 6.	Exhibits	25
	Other
Signatures		26

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 Exchange 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; inflation (including those caused by tariffs) and tightened labor markets; and other factors both referenced and not referenced in the (i) Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (“Form 10-K”), and (ii) the Company’s Quarterly Reports on 10-Q for the quarters ended September 30, 2024 and December 31, 2024, all 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 their businesses described in Item 1A of the Company’s Form 10-K and in other filings by the Company with the SEC. 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 its 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.

ITEM 1. FINANCIAL STATEMENTS

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)

	Three months ended					Nine months ended
	March 31,					March 31,
	2025		2024			2025		2024

Sales, net	$	13,947	$	13,147		$	40,178	$	37,571
Cost of sales		12,396		11,899			36,085		34,971

Gross profit		1,551		1,248			4,093		2,600
Selling and administrative expenses		812		893			2,662		2,751

Operating income (loss)		739		355			1,431		(151	)

Other income (expense), net
Interest income (expense), net		5		(4	)		30		6
Other income (expense), net		34		1			6		(1	)
Other income (expense), net		39		(3	)		36		5

Income (loss) before income taxes		778		352			1,467		(146	)

Income tax expense, net		167		67			481		10

Net income (loss)	$	611	$	285		$	986	$	(156	)

Basic net income (loss) per common share	$	0.02	$	0.01		$	0.03	$	(0.01	)

Diluted net income (loss) per common share	$	0.02	$	0.01		$	0.03	$	(0.01)

Weighted average common shares outstanding - basic		30,300,720		30,099,610			30,190,869		30,054,883
Add: Equivalent shares outstanding - Stock Options		1,213,871		644,612			770,047		-
Weighted average common shares outstanding - diluted		31,514,591		30,744,222			30,960,916		30,054,883

See accompanying notes to unaudited condensed consolidated financial statements.

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(Unaudited)

	March 31,			June 30,
	2025			2024
Assets
Current Assets:
Cash	$	2,961		$	1,677
Accounts receivable, net		5,080			4,668
Inventories		10,077			11,244
Other current assets		428			286
Total current assets		18,546			17,875

Property and equipment, net		1,811			1,885
Operating lease right-of-use assets (includes $689 and $1,289 with a related party)		1,095			1,790
Finance lease right-of-use asset		41			-
Deferred tax assets, net		4,109			4,601
Security deposits and other assets		54			56
Total Assets	$	25,656		$	26,207

Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable	$	2,501		$	2,510
Accrued expenses and other current liabilities		1,636			2,661
Current portion of financed lease obligations		7			7
Current portion of operating lease liabilities (includes $689 and $804 with a related party)		837			945
Total current liabilities		4,981			6,123

Operating lease liabilities (includes $0 and $485 with a related party)		258			846
Financed lease obligation		34			-
Total liabilities		5,273			6,969

Commitments and Contingencies (Note 6)

Stockholders' Equity :
Common Stock, $0.002 par value; 50,000,000 shares authorized;
30,335,620 and 30,134,510 shares issued, respectively, and
30,300,720 and 30,099,610 shares outstanding, respectively		61			60
Additional paid-in capital		51,662			51,504
Accumulated deficit		(31,241	)		(32,227	)
Less: Treasury stock, at cost, 34,900 shares		(99	)		(99	)
Total Stockholders' Equity		20,383			19,238
Total Liabilities and Stockholders' Equity	$	25,656		$	26,207

See accompanying notes to unaudited condensed consolidated financial statements.

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2025 AND 2024

(in thousands, except share and per share amounts)

(Unaudited)

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2025:

															Total
	Common Stock				Additional		Accumulated			Treasury Stock					Stockholders'
	Shares		Par Value		Paid-in-Capital		Deficit			Shares		Cost			Equity

Balance, July 1, 2024		30,134,510	$	60	$	51,504	$	(32,227	)		34,900	$	(99	)	$	19,238
Stock compensation expense for employee stock options		-		-		53		-			-		-			53
Net income		-		-		-		259			-		-			259
Balance, September 30, 2024		30,134,510		60		51,557		(31,968	)		34,900		(99	)		19,550
Stock compensation for employee stock options		-		-		43		-			-		-			43
Shares issued upon exercise of stock options		201,110		1		17		-			-		-			18
Net income		-		-		-		116			-		-			116
Balance, December 31, 2024		30,335,620		61		51,617		(31,852	)		34,900		(99	)		19,727
Stock compensation expense for employee stock options		-		-		45		-			-		-			45
Net income		-		-		-		611			-		-			611
Balance, March 31, 2025		30,335,620	$	61	$	5,662	$	(31,241	)		34,900	$	(99	)	$	20,383

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2024:

	Common Stock				Additional		Accumulated			Treasury Stock					Total Stockholders'
	Shares		Par Value		Paid-in-Capital		Deficit			Shares		Cost			Equity

Balance, July 1, 2023		29,984,510	$	60	$	51,239	$	(32,339	)		34,900	$	(99	)	$	18,861
Stock compensation expense for employee stock options		-		-		71		-			-		-			71
Shares issued upon exercise of stock options		150,000		-		13		-			-		-			13
Net loss		-		-		-		(59	)		-		-			(59	)
Balance, September 30, 2023		30,134,510		60		51,323		(32,398	)		34,900		(99	)		18,886
Stock compensation expense for employee stock options		-		-		62		-			-		-			62
Net loss		-		-		-		(382	)		-		-			(382	)
Balance, December 31, 2023		30,134,510		60		51,385		(32,780	)		34,900		(99	)		18,566
Stock compensation expense for employee stock options		-		-		60		-			-		-			60
Net income		-		-		-		285			-		-			285
Balance, March 31, 2024		30,134,510	$	60	$	51,445	$	(32,495	)		34,900	$	(99	)	$	18,911

See accompanying notes to unaudited condensed consolidated financial statements.

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except share and per share amounts)

(Unaudited)

	Nine months ended
	March 31,
	2025			2024
Cash flows provided by operating activities:
Net income (loss)	$	986		$	(156	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization		247			232
Amortization of operating lease right-of-use assets		695			672
Stock based compensation		141			193
Change in deferred tax assets		492			12
Impairment charge on equipment		28			-
Other, net		(25	)		10
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable, net		(412	)		(206	)
Inventories		1,167			(908	)
Other assets		(152	)		(77	)
(Decrease) increase in:
Accounts payable		27			1,342
Accrued expenses and other liabilities		(1,024	)		687
Operating lease obligations		(696	)		(672	)
Net cash provided by operating activities		1,474			1,129

Cash flows from investing activities:
Purchase of property and equipment		(201	)		(407	)
Net cash used in investing activities		(201	)		(407	)

Cash flows from financing activities:
Proceeds from exercise of employee stock options		18			13
Repayments under finance lease obligations		(7	)		(31	)
Net cash provided by (used in) financing activities		11			(18	)

Net increase (decrease) in cash		1,284			704
Cash at beginning of period		1,677			1,316
Cash at end of period	$	2,961		$	2,020

Supplemental disclosures of cash flow information:
Interest paid	$	26	$	21
Income taxes paid	$	100	$	37

Supplemental disclosures of non-cash flow transactions:
Acquisition of right-of-use assets, net and operating lease liability, net	$	10	$	69
Acquisition of right-of-use assets, net and financed lease obligation, net		41		-

See accompanying notes to unaudited condensed consolidated financial statements.

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

Note 1. Nature of Operations, Principles of Consolidation and Basis of Presentation of Interim Financial Statements

Nature of Operations

Integrated BioPharma, Inc., a Delaware corporation (together with its subsidiaries, 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 and Luxembourg. The Company was originally incorporated in the state of Delaware on August 31, 1995 under the name Chem International, Inc., on December 5, 2000, changed its name to Integrated Health Technologies, Inc. and on January 29, 2003 changed its name to Integrated BioPharma, Inc. The Company restated its certificate of incorporation in Delaware in June 2006. 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 and (b) Other Nutraceutical Businesses which includes the operations of (i) AgroLabs, Inc. (“AgroLabs”), which distributed healthful nutritional products for sale through major mass market, grocery and drug and vitamin retailers under the following brands: Peaceful Sleep, and Wheatgrass and other products introduced into the market using the AgroLabs name (these are referred to as our branded products); (ii) The Vitamin Factory (the “Vitamin Factory”), which sells private label MDC products, as well as our AgroLabs products, through the Internet, (iii) IHT Health Products, Inc. (“IHT”) a distributor of fine natural botanicals, including multi minerals produced under a license agreement, (iv) MDC Warehousing and Distribution, Inc. (“MDC Warehousing”), a service provider for warehousing and fulfilment services and (v) Chem International, Inc., a distributor of certain raw materials for DSM Nutritional Products LLC. The Vitamin Factory had no products available for sale and AgroLabs had no sales of its branded products in the three and nine months ended March 31, 2025 and 2024.

Principles of Consolidation

The accompanying condensed consolidated financial statements for the interim periods are unaudited and include the accounts of Company. Intercompany transactions and accounts have been eliminated in consolidation.

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 (“GAAP”). 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, 2024 (“Form 10-K”), as filed with the SEC. The June 30, 2024 balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. The preparation of the unaudited condensed consolidated 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 nine months ended March 31, 2025 are not necessarily indicative of the results for the full fiscal year ending June 30, 2025 or for any other period.

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

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 condensed 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.

Income Taxes. The Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change is effective. Tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more likely than not that all or a portion of a deferred tax asset will not be realized.

For the three months ended March 31, 2025 and 2024, the Company had federal income tax expense of $415 and $81, respectively and state income tax benefit, net of approximately $248 and $14, respectively. For the nine months ended March 31, 2025 and 2024, the Company had a federal income tax expense of $651 and $11, respectively and state income tax benefit, net of approximately $170 and $1, respectively. In the nine months ended March 31, 2025, we released the valuation allowance on our state net operating losses as they became available to offset current state taxable income.

Leases. The Company determines 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 its consolidated condensed balance sheets. Finance leases are included in right-of-use asset, current portion of financed lease obligation, and financed lease obligation on the condensed consolidated balance sheets.

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.

The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For certain equipment leases, such as vehicles, the Company accounts 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, subject to anti-dilution limitations using the treasury stock method.

The following options and potentially dilutive shares for stock 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 nine months ended March 31, 2025 and 2024:

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2025		2024		2025		2024

Anti-dilutive stock options		1,817,517		2,393,183		2,247,517		4,758,183
Total anti-dilutive shares		1,817,517		2,393,183		2,247,517		4,758,183

Accounting Pronouncements Not Yet Adopted

In November 2023, FASB issued ASU 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities with a single reportable segment to provide all the disclosures required by this standard and all existing segment disclosures in Topic 280 on an interim and annual basis, including new requirements to disclose significant segment expenses that are regularly provided to the CODM and included within the reported measure(s) of a segment's profit or loss, the amount and composition of any other segment items, the title and position of the CODM, and how the CODM uses the reported measure(s) of a segment's profit or loss to assess performance and decide how to allocate resources. The guidance is effective for our annual period beginning July 1, 2024, and interim periods thereafter, applied retrospectively with early adoption permitted. The Company is currently evaluating the impact of adoption of this standard on its condensed consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities to provide greater disaggregation within their annual rate reconciliation, including new requirements to present reconciling items on a gross basis in specified categories, disclose both percentages and dollar amounts, and disaggregate individual reconciling items by jurisdiction and nature when the effect of the items meet a quantitative threshold. The guidance also requires disaggregating the annual disclosure of income taxes paid, net of refunds received, by federal (national), state, and foreign taxes, with separate presentation of individual jurisdictions that meet a quantitative threshold. The guidance is effective for the Company's annual periods beginning July 1, 2025 on a prospective basis, with a retrospective option, and early adoption is permitted. The Company is currently evaluating the impact of adoption of this standard on its condensed consolidated financial statements and disclosures.

In November 2024, the FASB issued ASU 2024-03 (updated ASU 2025-01 issued in January 2025), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements to provide enhanced transparency into the expense captions presented on the face of the income statement. The guidance is effective for the Company’s annual periods beginning July 1, 2027, on a prospective basis, with a retrospective option, and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

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:

	March 31,		June 30,
	2025		2024

Raw materials	$	6,419	$	7,888
Work-in-process		2,343		2,449
Finished goods		1,315		907
Total	$	10,077	$	11,244

Note 3. Property and Equipment, net

Property and equipment, net consists of the following:

	March 31,			June 30,
	2025			2024

Land and building	$	1,250		$	1,250
Leasehold improvements		1,341			1,341
Machinery and equipment		7,264			7,224
		9,928			9,815
Less: Accumulated depreciation and amortization		(8,117	)		(7,930	)
Total	$	1,811		$	1,885

Depreciation and amortization expense recorded on property and equipment was $76 and $77 for the three months and $247 and $232 for nine months ended March 31, 2025 and 2024, respectively. Additionally, the Company disposed of property of $60 and $85 in the nine months ended March 31, 2025 and 2024, respectively and in the three months ended March 31, 2024, had a gain on disposals of fixed assets of $1. In the nine months ended March 31, 2025 and 2024, the Company recognized a permanent impairment of $28 and a net loss on disposal of fixed assets of $1, respectively.

Note 4. Senior Credit Facility and Lines of Credit

As of April 15, 2025, the Company paid off its outstanding obligations under its Senior Credit Facility, terminating the Credit Facility and entered into a Loan Agreement (the “Loan Agreement”) with PNC Bank, National Association (“PNC”). As of March 31, 2025 and June 30, 2024, the Company had no debt outstanding under its Senior Credit Facility.

Loan Agreement

The Loan Agreement provides a committed revolving line of credit under which the Borrower may request and PNC will make advances to the Borrower from time to time until April 5, 2026, (the "Expiration Date"), in an aggregate amount outstanding at any time not to exceed $4,000 (the "Line of Credit") and a Convertible Equipment Line of Credit in an aggregate amount outstanding at any time not to exceed $500 (the "Convertible ELOC"). Advances under the Convertible ELOC will be used for the purchase of equipment and/or vehicles.

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

The Line of Credit bears interest at a rate per annum which is equal to the sum of (A) Daily one-month SOFR plus (B) 250 basis points (2.50%). Accrued interest will be due and payable on the same day of each month, beginning with the payment due on May 15, 2025. The outstanding principal balance and any accrued but unpaid interest shall be due and payable on the Expiration Date.

Prior to any Conversion Date, amounts outstanding under the Convertible ELOC will bear interest at a rate per annum (the "Daily Rate”) equal to the sum of (i) Daily one-month SOFR plus (ii) 250 basis points (2.50%) and from and after the Conversion Date, amounts outstanding under this Convertible ELOC will bear interest for the remaining term at either: (i) a rate per annum equal to the Daily Rate; or (ii) a fixed rate of interest per annum as offered to the Borrower by PNC in its sole discretion and agreed upon in writing between the Borrower and PNC.

The Company also entered into a Reimbursement Agreement for Standby and Commercial Letter(s) of Credit whereby, from time to time, the Borrower may request the issuance of one or more letters of credit (each a "Credit"). The Credit bears interest at the same rate as the Line of Credit under the Loan Agreement as described above.

In addition, in connection with the Loan Agreement, the Company and MDC (collectively, the "Grantors") each entered into a Security Agreement with PNC, pursuant to which each of the Grantors assigned and granted to PNC, as secured party, a continuing lien on and security interest in all right, title and interest of such Grantor in, to, and under all of the assets of such Grantor.

Senior Credit Facility

On April 15, 2025, the Company, MDC, AgroLabs, IHT, IHT Properties Corp. (“IHT Properties”) and Vitamin Factory (collectively, the “Borrowers”) terminated 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, May 15, 2019, June 28, 2019, March 16, 2023 and May 9, 2024.

The Amended Loan Agreement provided for a total of $5,000 in senior secured financing (the “Senior Credit Facility”) as follows: (i) discretionary advances (“Revolving Advances”) based on eligible accounts receivable and (ii) eligible inventory in the maximum amount of $5,000 (the “Revolving Credit Facility”). The Senior Credit Facility was secured by all assets of the Borrowers, including, without limitation, machinery and equipment, and real estate owned by IHT Properties. Revolving Advances bore interest at PNC’s Base Rate (7.50% and 8.50% as of March 31, 2025 and June 30, 2024, respectively) or the Term SOFR Rate plus the SOFR Adjustment. The Term SOFR Rate, for any day, shall be equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate). The SOFR Adjustment is defined as 10 basis points (0.10%).

Upon and after the occurrence of any event of default under the Amended Loan Agreement, and during the continuation thereof, interest was payable at the interest rate then applicable plus 2%. The Senior Credit Facility was paid off on April 15, 2025, prior to its maturity date of May 15, 2026 (the “Senior Maturity Date”).

The principal balance of the Revolving Advances was payable on the Senior Maturity Date, (i) subject to acceleration, based upon a material adverse event clause, as defined in the Amended Loan Agreement, (ii) subject to accelerations for borrowing base reserves, as defined in the Amended Loan Agreement, (iii) upon the occurrence of any event of default under the Amended Loan Agreement or (iv) upon the earlier termination of the Amended Loan Agreement pursuant to the terms thereof.

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

The Revolving Advances were subject to the terms and conditions set forth in the Amended Loan Agreement and were made in aggregate amounts at any time equal to the lesser of (x) $5,000 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, as defined in the Amended Loan Agreement, of all outstanding letters of credit, minus (iv) such reserves as PNC reasonably deemed proper and necessary from time to time.

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 shares of common stock that it owned of iBio, Inc.; (ii) a Mortgage and Security Agreement with PNC and IHT Properties; and (iii) an Environmental Indemnity Agreement with PNC.

Note 5. Significant Risks and Uncertainties

(a) Major Customers. In the three months ended March 31, 2025 and 2024, approximately 85% and 90%, respectively, of consolidated net sales were derived from two customers. These two customers are in the Company’s Contract Manufacturing Segment and represented approximately 58% and 31% and 72% and 20% in the three months ended March 31, 2025 and 2024, respectively of the Contract Manufacturing Segment net sales. In the nine months ended March 31, 2025 and 2024, approximately 83% and 90% of consolidated net sales, respectively, were derived from the same two customers and net sales to these two customers represented approximately 62% and 26% and 73% and 21% of net sales of the Contract Manufacturing Segment net sales in the nine months ended March 31, 2025 and 2024, respectively. Accounts receivable from these two major customers represented approximately 74% and 84% of total net accounts receivable as of March 31, 2025 and June 30, 2024, respectively. Two other customers in the Other Nutraceutical Segment, while not significant customers of the Company’s consolidated net sales, represented approximately 40% and 20% and 40% and 23% of net sales of the Other Nutraceutical Segment in the three months ended March 31, 2025 and 2024, respectively. In the nine months ended March 31, 2025 and 2024, three customers represented 38%, 26% and 12% and 43%, 10% and 10%, of net sales of the Other Nutraceutical Segment, 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 78% of the Company’s employees are covered by a union contract and are employed in its New Jersey facilities. The contract was renewed effective September 1, 2022 and will expire on August 31, 2026.

The Company has seen a slight negative impact in its margins due to inflation and tightened labor markets as the Company strives to increase prices to customers as its operating costs increase. The Company may not be able to timely increase its selling prices to its customer resulting from price increases from its suppliers due to various economic factors, including tariffs and other inflationary costs, labor and shipping costs and its own increases in shipping, labor and other operating costs. The Company’s results of operations may also be affected by economic conditions, including tariffs and other inflationary pressures, that can impact consumer disposable income levels and spending habits, thereby reducing the orders it may receive from the Company’s significant customers.

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 5 years.

The components of lease expense for the three months ended March 31, 2025 and 2024, were as follows:

	Three months ended March 31,
	2025						2024
	Related Party - Vitamin Realty		Other Leases		Totals		Related Party - Vitamin Realty		Other Leases		Totals

Operating lease costs	$	211	$	43	$	256	$	211	$	42	$	253

Finance Lease Costs:
Amortization of right-of use assets	$	-	$	-	$	-	$	-	$	3	$	3
Total finance lease cost	$	-	$	-	$	-	$	-	$	3	$	3

The components of lease expense for the nine months ended March 31,2024 and 2024, were as follows:

	Nine months ended March 31,
	2025						2024
	Related Party - Vitamin Realty		Other Leases		Totals		Related Party - Vitamin Realty		Other Leases		Totals

Operating lease costs	$	632	$	127	$	761	$	632	$	123	$	755

Finance Operating Lease Costs:
Amortization of right-of use assets	$	-	$	3	$	3	$	-	$	9	$	9
Total finance lease cost	$	-	$	3	$	3	$	-	$	6	$	6

Rent and lease amortization costs are included in cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations.

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 estate of the Company’s former 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 provided for minimum annual rental payments of $533, plus increases in real estate taxes and building operating expenses. On July 15, 2022, MDC entered into a third amendment of the lease (the “Third Lease Amendment”) with Vitamin Realty, increasing its rentable square footage to 116,175. The Third Lease Amendment provides for minimum annual rental payments of $842, plus increases in real estate taxes and the building operating expenses allocation percentage and is effective as of July 1, 2022.

Rent expense and lease amortization costs for the three months ended March 31, 2025 and 2024 on this lease were $348 and $332 respectively, and for the nine months ended March 31, 2025 and 2024 were $1,000 and $974, respectively, and are included in cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. As of March 31, 2025 and June 30, 2024, the Company had no current obligations to Vitamin Realty. Additionally, the Company has operating lease obligations of $689 and $1,289 with Vitamin Realty as noted in the accompanying Condensed Consolidated Balance Sheet as of March 31, 2025 and June 30, 2024, respectively.

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

Other Operating Lease Liabilities. The Company has entered into certain non-cancelable operating lease agreements expiring up through May 9, 2027 related to office equipment.

As of March 31, 2025, the Company’s RSUs, 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 lease	$	689	$	689	$	-	$	702
Warehouse lease		347		122		224		389
Transportation lease		43		18		26		48
Office equipment leases		16		8		8		19
	$	1,095	$	837	$	258	$	1,158

As of June 30, 2024, 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 lease	$	1,289	$	804	$	485	$	1,334
Warehouse lease		433		116		317		494
Transportation lease		55		17		39		63
Office equipment leases		13		8		5		14
	$	1,790	$	945	$	846	$	1,905

As of March 31, 2025 and June 30, 2024, the Company’s weighted average discount rate and remaining term on operating lease liabilities were approximately 5.27% and 5.00% and 1.5 years and 2.0 years, respectively.

Financed Lease Obligation. On March 27, 2025, the Company entered into a financing lease obligation with ByLine Financial Group in the amount of $41. The monthly payments commenced on May 1, 2025 in the amount of $1 and matures on April 1, 2030. The ROU related to this finance lease obligation is included in ROUs on the accompanying Condensed Consolidated Balance Sheet as of March 31, 2025.

The Company’s finance lease obligation with LEAF Capital Funding LLC matured on August 15, 2024. The ROU asset related to the finance lease obligation is included in Property and equipment, net in the accompanying Condensed Consolidated Balance Sheet as of June 30, 2024.

As of March 31, 2025 and June 30, 2024, the Company’s weighted average discount rate for the outstanding finance lease obligations of $41 and $7 was 5.9% and 0%, respectively and the remaining term on the finance lease obligation was approximately 5.2 and 0.2 years, respectively.

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 nine months ended March 31, 2025, is 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	$	632	$	141	$	773
Operating cash flows from finance leases		-		-		-
Financing cash flows from finance lease obligations		-		7		7

Supplemental cash flows information related to leases for the nine months ended March 31, 2024, is 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	$	632	$	166	$	798
Operating cash flows from finance leases		-		-		-
Financing cash flows from finance lease obligations		-		31		31

Maturities of operating lease liabilities as of March 31, 2025 were as follows:

	Operating			Related Party				Finance
Year ending	Lease			Operating Lease				Lease
June 30,	Commitments			Commitment				Commitment	Total

2025, remaining	$	40		$	211		$	2	$	256
2026		172			491			9		672
2027		171			-			9		180
2028		67			-			10		77
2029		2			-			10		12
2030		2			-			7		9
Total minimum lease payments		457			702			47		1,206
Imputed interest		(50	)		(13	)		(6)		(69	)
*Total*	$	407		$	689			41	$	1,137

(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

Information related to related party transactions are disclosed in Note 6(a). Leases for related party lease transactions.

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

Note 8. Equity Transactions and Stock-Based Compensation

In December 2024, the Board of Directors authorized the issuance of up to 490,000 stock options to Company officers and employees. The Company issued 490,000 stock options with an exercise price ranging from $0.31 to $0.34, vesting over three years, with expiration terms of ten years from the date of grant.

Additionally, in August 2024, the Board of Directors authorized the issuance of 200,000 stock options (50,000 each) to the non-executive directors with an exercise price of $0.18 and $0.20, vesting over one year, 25% at the end of each quarter ending September 30, 2024, December 31, 2024, March 31, 2025 and June 30, 2025.

For the three and nine months ended March 31, 2025 and 2024, the Company incurred stock-based compensation expenses of $44 and $61, and $141 and $193, respectively. The Company expects to record additional stock-based compensation of $241 over the remaining vesting periods of approximately one to three years for all non-vested stock options.

The Company used the following assumptions to calculate the fair value of the stock option grants using the Black-Scholes option pricing model on the measurement date during the nine months ended March 31, 2025:

Risk Free Interest Rate		3.96% to 4.23	%
Volatility		105.6% to 131.7	%
Term	7.5 to 10 years
Dividend Rate		0.00	%
Closing Price of Common Stock		0.188 to0.3434

The Company calculates expected volatility for a stock-based grant based on historic daily stock price observations of its common stock during the period immediately preceding the grant that is equal in length to the expected term of the grant. The expected term of the options is estimated based on the Company’s historical exercise rate and forfeiture rates are estimated based on employment termination experience. The risk free interest rate is based on U.S. Treasury yields for securities in effect at the time of grants with terms approximating the term of the grants. The assumptions used in the Black-Scholes option valuation model are highly subjective, and can materially affect the resulting valuations.

A summary of the Company’s stock option activity, and related information for the nine months ended March 31, 2025 follows:

				Weighted
				Average
				Exercise
	Options			Price

Outstanding as of June 30, 2024		4,749,183		$	0.34
Granted		690,000			0.28
Exercised		(201,110	)		0.09
Terminated		(11,834	)		0.33
Expired		(149,333	)		0.26
Outstanding as of March 31, 2025		5,076,906		$	0.41
Exercisable at March 31, 2025		4,023,073		$	0.36

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

Note 9. 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 two reportable segments as follows: Contract Manufacturing, and Other Nutraceutical Businesses. International sales, concentrated primarily in Europe, for the three months ended March 31, 2025 and 2024 were $3,228 and $1,980, respectively and for the nine months ended March 31, 2025 and 2024 were $7,768 and $5,245, respectively.

Financial information relating to the three months ended March 31, 2025 and 2024 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	*2025*	$	10,231	$	3,228	$	13,459	$	1,522		$	76	$	116
	2024		10,770		1,980		12,750		1,250			77		345

Other Nutraceutical Businesses	*2025*		488		-		488		29			-		-
	2024		397		-		397		(2	)		-		-

Total Company	*2025*		10,719		3,228		13,947		1,551			76		116
	2024		11,167		1,980		13,147		1,248			77		345

Financial information relating to the nine months ended March 31, 2025 and 2024 operations by business segment and disaggregated revenues was as follows:

		Sales, Net						Segment
		U.S.		International				Gross				Capital
		Customers		Customers		Total		Profit		Depreciation		Expenditures
Contract Manufacturing	*2025*	$	30,334	$	7,768	$	38,102	$	3,497	$	246	$	201
	2024		31,022		5,218		36,240		2,563		231		404

Other Nutraceutical Businesses	*2025*		2,076		-		2,076		596		1		-
	2024		1,304		27		1,331		37		1		3

Total Company	*2025*		32,410		7,768		40,178		4,093		247		201
	2024		32,326		5,245		37,571		2,600		232		407

	Total Assets as of
	March 31,		June 30,
	2025		2024

Contract Manufacturing	$	19,880	$	20,830
Other Nutraceutical Businesses		5,776		5,377
Total Company	$	25,656	$	26,207

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, 2024.

The Company is engaged primarily in the business of manufacturing, distributing, marketing and sales of vitamins, nutritional supplements and herbal products. The Company’s customers are located primarily in the United States and Luxembourg.

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, 2024.

For the nine months ended March 31, 2025, our net sales from operations increased by $2,607 to approximately $40,178 from approximately $37,571 in the nine months ended March 31, 2024, or approximately 7%. Our net sales in the Contract Manufacturing Segment increased by $1,862 or approximately 5%, and our Other Nutraceuticals Segment increased by $745 or approximately 2%. Net sales increased in our Contract Manufacturing Segment primarily due to increased sales volumes to customers other than our two major customers, of $1,970, offset by a net decrease of $108 from our two major customers. Net sales in the nine months ended March 31, 2025 were higher by approximately $745 from the nine months ended March 31, 2024 in our Other Nutraceuticals Segment, primarily due to increased sales for MDC Warehousing and CII in the amounts of $660 and $80, respectively. The increase was due to a new major customer in this segment, which represented 38% in the nine months ended March 31, 2025 compared to no sales in the three months ended March 31, 2024. This customer replaced a customer that had represented 14% in the nine months ended March 31, 2024. The loss of any of these customers could have a significant adverse impact on our financial condition and results of operations.

For the nine months ended March 31, 2025, we had operating income of approximately $1,431, an increase of approximately $1,582 from the operating loss of approximately $151 for the nine months ended March 31, 2024. Our profit margins increased from approximately 6.9% of net sales in the nine months ended March 31, 2024 to approximately 10.2% of net sales in the nine months ended March 31, 2025, primarily as a result of the increased sales of $2,607 with the cost of sales increasing $1,114. Our consolidated selling and administrative expenses were approximately the same, $2,662 and $2,751 in the nine months ended March 31, 2025 and 2024, respectively, a decrease of $89.

Our revenue from our two significant customers in our Contract Manufacturing Segment is dependent on their 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. We believe that this focus will produce a reduction of the reliance on our two significant customers in our fiscal year ending June 30, 2025.

We have seen a slight negative impact in its margins due to inflation and tightened labor markets as we strive to increase prices to customers as our operating costs increase. We may not be able to timely increase our selling prices to our customer resulting from price increases from our suppliers due to various economic factors, including tariffs and other inflationary costs, labor and shipping costs and our own increases in shipping, labor and other operating costs. Our results of operations may also be affected by economic conditions, including tariffs and other inflationary pressures, that can impact consumer disposable income levels and spending habits, thereby reducing the orders we may receive from our significant customers.

Critical Accounting Estimates

There have been no changes to our critical accounting estimates in the three months ended March 31, 2025. Critical accounting estimates made in accordance with our accounting policies are regularly discussed by management with our Audit Committee. Those estimates are discussed under “Critical Accounting Estimates” 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, 2024.

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 March 31,						ended March 31,
	2024			2023			2024			2023

Sales, net		100.0	%		100.0	%		100.0	%		100.0	%

Costs and expenses:
Cost of sales		88.9	%		90.5	%		89.8	%		93.1	%
Selling and administrative		5.8	%		6.8	%		6.6	%		7.3	%
		94.7	%		97.3	%		96.4	%		100.4	%
Income (loss) from operations		5.3	%		2.7	%		3.6	%		(0.4%	)

Other income (expense), net
Interest income (expense)		0.0	%		(0.0%	)		0.1	%		0.0	%
Other income (expense), net		0.3	%		0.0	%		0.0	%		(0.0%	)
Other income (expense), net		0.3	%		0.0	%		0.1	%		0.0	%


Income (loss) before income taxes		5.6	%		2.7	%		3.7	%		(0.4%	)

Income tax expense, net		1.2	%		0.5	%		1.2	%		0.0

Net income (loss)		4.4	%		2.2	%		2.5	%		(0.4%	)

For the Nine Months Ended March 31, 2025 compared to the Nine Months Ended March 31, 2024

Sales, net. Sales, net, for the nine months ended March 31, 2025 and 2024 were $40,178 and $37,571, respectively, an increase of 6.9%, and were comprised of the following:

	Six months ended				Dollar			Percentage
	March 31,				Change			Change
	2025		2024		2025 vs 2024			2025 vs 2024
	(amounts in thousands)
Contract Manufacturing:
US Customers	$	30,334	$	31,022	$	(688	)		(2.2%	)
International Customers		7,768		5,218		2,550			48.9	%
Net sales, Contract Manufacturing		38,102		36,240		1,862			5.1	%

Other Nutraceuticals:
US Customers		2,076		1,304		772			59.2	%
International Customers		-		27		(27	)		(100.0%	)
Net sales, Other Nutraceuticals		2,076		1,331		745			56.0	%

*Total net sales*	$	40,178	$	37,571	$	2,607			6.9	%

In the nine months ended March 31, 2025 and 2024, a significant portion of our consolidated net sales, approximately 83% and 90%, was concentrated among two customers in our Contract Manufacturing Segment, Life Extension and Herbalife. Life Extension and Herbalife represented approximately 62% and 26% and 73% and 21%, respectively, of our Contract Manufacturing Segment’s net sales in the nine months ended March 31, 2025 and 2024, respectively.

The increase in net sales of approximately $2,607 in the nine months ended March 31, 2025 was the result of increased sales in both of our segments. Our Contract Manufacturing Segment increase of $1,862 from the nine months ended March 31, 2024 was primarily from existing and new customers other than our two major customers of $1,970, which was offset by a net decrease of $108 with our two major customers. The increase in our Other Nutraceuticals Segment of $745, was primarily due to MDC Warehousing replacing one of its major customers that represented 14% in the nine months ended March 31, 2024, with one that represented 38% in the nine months ended March 31, 2025. This segment’s three major customers represented 38%, 26% and 12% in the nine months ended March 31, 2025 compared to 14%, 43% and 10% in the nine months ended March 31, 2024.

The loss of any of these customers could have a significant adverse impact on our financial condition and results of operations.

Cost of sales. Cost of sales increased by approximately $1,114 to $36,085 for the nine months ended March 31, 2025, as compared to $34,971 for the nine months ended March 31, 2024, or approximately 3.2%. Cost of sales decreased as a percentage of sales to 89.8% for the nine months ended March 31, 2025 as compared to 93.1% for the nine months ended March 31, 2024. The increase of $1,114 in the cost of goods sold amount is from increased manufacturing costs and other cost of goods sold expense of $929 and $185 in our Contract Manufacturing Segment and Other Nutraceuticals Segment, respectively. The decrease in the cost of goods sold as a percentage of net sales, was primarily the result of the increase in net sales in both segments used to offset the increased manufacturing costs and the cost of sales in the Other Nutraceutical Segment.

Selling and Administrative Expenses. Our selling and administrative expenses were approximately the same, $2,662 and $2,751, in the nine months ended March 31, 2025 and 2024, respectively, a decrease of $89. As a percentage of sales, net, selling and administrative expenses were approximately 6.6% and 7.3% in the nine months ended March 31, 2025 and 2024, respectively. We had an increase in professional fees of $50, from increased legal fees of $29, audit fees of $12 and other consulting fees of $8, offset by decreases in stock compensation expense of $53, salary and employee benefits of $24 and all other selling and administrative expenses of $62.

Other income, net.

Other income, net for the nine months ended March 31, 2025 and 2024, was approximately $36 and $5, respectively and was composed of:

	Nine months ended
	March 31,
	2025		2024
	(dollars in thousands)
Interest income, net	$	30	$	6
Other income (expense), net		6		(1	)
Other income, net	$	36	$	5

In the nine months ended March 31, 2025, we recognized a permanent impairment in our machinery and equipment of $28 offset by a gain on disposal of assets of $34 compared to a loss on disposal of machinery and equipment of $1 in the nine months ended March 31, 2024. Interest income, net increased by $24 due to our increased cash position earning interest to cover our financing costs related to the Credit Facility.

Income tax expense, net. For the nine months ended March 31, 2025 and 2024, we had a state income tax benefit of approximately $170 and $1, respectively and federal income tax expense of $651 and $11, in the nine months ended March 31, 2025 and 2024, respectively. In the nine months ended March 31, 2025, we released the valuation allowance on our state net operating losses as they became available to offset current state taxable income.

Net income (loss). Our net income for the nine months ended March 31, 2025 was approximately $986 compared to a net loss of approximately $156 in the nine months ended March 31, 2024. The change of approximately $1,142 was primarily the result of increased operating income of $1,582, offset by the increase income tax expense of $471.

For the Three Months Ended March 31, 2025 compared to the Three Months Ended March 31, 2024

Sales, net. Sales, net, for the three months ended March 31, 2025 and 2024 were $13,947 and $13,147, respectively, an increase of 6.1%, and are comprised of the following:

	Three months ended				Dollar			Percentage
	March 31,				Change			Change
	2025		2024		2025 vs 2024			2025 vs 2024
	(amounts in thousands)
Contract Manufacturing:
US Customers	$	10,231	$	10,770	$	(539	)		(5.0%	)
International Customers		3,228		1,980		1,248			63.0	%
Net sales, Contract Manufacturing		13,459		12,750		709			5.6	%

Other Nutraceuticals:
US Customers		488		397		91			22.9	%
International Customers		-		-		-			(100.0%	)
Net sales, Other Nutraceuticals		488		397		91			22.9	%

*Total net sales*	$	13,947	$	13,147	$	800			6.1	%

For the three months ended March 31, 2025 and 2024, a significant portion of our consolidated net sales, approximately 85% and 90%, respectively, were concentrated among two customers, Life Extension and Herbalife, in our Contract Manufacturing Segment. Life Extension and Herbalife, represented approximately 58% and 31% and 72% and 20%, respectively, of our Contract Manufacturing Segment’s net sales in the three months ended March 31, 2025 and 2024, respectively.

The increase in net sales of approximately $800 in the three months ended March 31, 2025, was primarily the result of increased net sales in our Contract Manufacturing Segment of $709 primarily due to increased sales volumes to Herbalife and Life Extension of $414 and to customers other than our two major customers in the amount of $295 and an increase of sales in the other Nutraceuticals Segment of $91 compared to the year ago comparable period.

Revenues in the three months ended March 31, 2025 were higher than the three months ended March 31, 2024 in our Other Nutraceuticals Segment by $91, primarily due to increased sales in MDC Warehousing in the amount of $128. Two other customers in the Other Nutraceutical Segment, while not significant customers of consolidated net sales, represented approximately 40%, and 20% and 40%, and 23%, respectively, of net sales of the Other Nutraceutical Segment in the three months ended March 31, 2025 and 2024, respectively.

The loss of any of these customers could have a significant adverse impact on our financial condition and results of operations.

Cost of sales. Cost of sales increased by approximately $497 to $12,396 for the three months ended March 31, 2025, as compared to $11,899 for the three months ended March 31, 2024 or approximately 4%. Cost of sales decreased as a percentage of sales to 88.9% for the three months ended March 31, 2025 as compared to 90.5% for the three months ended March 31, 2024. The decrease in the cost of goods sold as a percentage of net sales, was primarily the result of increased net sales used to offset the fixed manufacturing overhead.

Selling and Administrative Expenses. Selling and administrative expenses were substantially the same in each of the three months ended March 31, 2025 and 2024, approximately $812 and $893, respectively. As a percentage of sales, net, selling and administrative expenses were approximately 5.8% and 6.8% in the three months ended March 31, 2025 and 2024, respectively. The decrease of $81 was primarily from decreases in salaries and employee benefits of $21, stock compensation expense of $16, other warehouse expense of $28 and all other operating expenses of $16.

Other income (expense), net. Other income (expense), net was approximately $39 for the three months ended March 31, 2025 compared to $(3) for the three months ended March 31, 2024, and is composed of:

	Three months ended
	March 31,
	2025		2024
	(dollars in thousands)
Interest income (expense), net	$	5	$	(4	)
Other income		34		1
Other income (expense), net	$	39	$	(3	)

In the three months ended March 31, 2025 and 2024, we had a gain on disposal of assets $34 and a gain on disposals of machinery of $1, respectively.

Income tax expense, net. For the three months ended March 31, 2025 and 2024, we had federal income tax expense of $415 and $81, respectively and state income tax benefit, net of approximately $248 and $14, in the three months ended March 31, 2025 and 2024, respectively. In the three months ended March 31, 2025, we released the valuation allowance on our state net operating losses as they became available to offset current state taxable income.

Net income. Our net income for the three months ended March 31, 2025 and 2024 was approximately $611 and $285, respectively. The increase of approximately $326 was primarily the result of increased operating income and other income, net of $384 and $42, respectively, offset by the increase income tax expense of $100.

Seasonality

The nutraceutical business can be seasonal. Due to our current customer base in our contract manufacturing segment, we have not experienced a seasonality impact on our sales volumes as we had seen in the past. In the past we had experienced some seasonality in the December quarters based on the demands of our customer base at the time.

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.

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 nine months ended
	March 31,
	2025			2024
	(dollars in thousands)

Net cash provided by operating activities	$	1,474		$	1,129
Net cash used in investing activities	$	(201	)	$	(407	)
Net cash provided by (used in) financing activities	$	11		$	(18	)

Cash at end of period	$	2,961		$	2,020

At March 31, 2025, our working capital was approximately $13,565, an increase of $1,813 from our working capital of $11,752 at June 30, 2024. The increase in our working capital was the result of an increase in our current assets of $671 and a decrease in our current liabilities of $1,142. The decrease in current liabilities was primarily from shipping against customer deposits and fulfilling our obligations under the customer purchase orders.

Operating Activities

Net cash provided by operating activities of $1,474 in the nine months ended March 31, 2025 includes net income of approximately $986. After excluding the effects of non-cash expenses, including depreciation and amortization, and changes in deferred tax assets, the adjusted cash provided from operations before the effect of the changes in working capital components was $2,564. Net cash provided by our operations in the nine months ended March 31, 2025 was offset by cash used in our working capital assets and liabilities in the amount of approximately $1,090 and was primarily the result of an increases in our accounts receivable of $412 and prepaid expenses and other assets of $152, the decrease in operating lease obligations of $69 and accounts payable and other liabilities of $1,024 offset by a decrease in inventory of $1,167.

Net cash provided by operating activities of $1,129 in the nine months ended March 31, 2024 includes net loss of approximately $156. After excluding the effects of non-cash expenses, including depreciation and amortization, and changes in deferred tax assets, the adjusted cash provided from operations before the effect of the changes in working capital components was $963. Net cash provided from operations in the nine months ended March 31, 2024 included cash from our working capital assets and liabilities in the amount of approximately $166 and was primarily the result of decreases in our accounts payable and accrued expenses and other liabilities of $2,029 offset by, increases accounts receivable, inventories and other current assets of $208, $908 and $77, respectively, and the decrease in operating lease obligations of $672.

Investing Activities

Cash used in investing activities of $201 and $407 in the nine months ended March 31, 2025 and 2024, respectively, was for the purchase of machinery and equipment.

Financing Activities

Cash provided by financing activities was approximately $11 for the nine months ended March 31, 2025, and was primarily from proceeds from exercises of stock options of $18, offset by principal payments under our financed lease obligations of $7.

Cash used in financing activities was approximately $18 for the nine months ended March 31, 2024, and was primarily from principal payments under our financed lease obligations of $31, offset by proceeds from exercises of stock options of $13.

As of March 31, 2025, we had cash of $2,961, funds available under our credit lines of approximately $5,000 and working capital of approximately $13,565. We had operating income of $986 in the nine months ended March 31, 2025, which included non-cash expenses of $1,579 such as amortization, depreciation and employee stock compensation expense. After taking into consideration our interim results and current projections, management believes that operations, together with the credit facilities in place of $4,500 with PNC (Note 4. Senior Credit Facility and Lines of Credit to the Condensed Consolidated Financial Statements in Item 1 in this Quarterly Report), will support our working capital requirements at least through the period ending May 14, 2026.

Our current total annual commitments at March 31, 2025 for long term non-cancelable leases of approximately $672 consists of obligations under operating leases for office and warehouse facilities and operating and finance lease obligations for the rental of machinery, transportation and office equipment.

Capital Expenditures

The Company's capital expenditures for the nine months ended March 31, 2025 and 2024 were approximately $201 and $407, respectively. The Company has budgeted approximately $500 for capital expenditures for fiscal year 2025. 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 may not be able to timely increase its selling prices to its customer resulting from price increases from its suppliers due to various economic factors, including tariffs and other inflationary factors, labor and shipping costs and its own increases in shipping, labor and other operating costs. The Company’s results of operations may also be affected by economic conditions, including tariffs and other inflationary pressures, that can impact consumer disposable income levels and spending habits, thereby reducing the orders it may receive from the Company’s significant customers.

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.

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 March 31, 2025, 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 March 31, 2025 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

Inflation and Tightened Labor Markets

The Company has seen a slight negative impact in its margins due to inflation and tightened labor markets as the Company strives to increase prices to customers as its operating costs increase. The Company may not be able to timely increase its selling prices to its customer resulting from price increases from its suppliers due to various economic factors, including tariffs and other inflationary costs, labor and shipping costs and its own increases in shipping, labor and other operating costs. The Company’s results of operations may also be affected by economic conditions, including tariffs and other inflationary pressures, that can impact consumer disposable income levels and spending habits, thereby reducing the orders it may receive from the Company’s significant customers.

There have been no additional material changes to the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

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

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 Chief Executive Officer.
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 Chief Executive Officer.
32.2	Certification of periodic financial report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Chief Financial Officer.
101.INS***	Inline XBRL Instance	Furnished herewith
101.SCH***	Inline XBRL Taxonomy Extension Schema	Furnished herewith
101.CAL***	Inline XBRL Taxonomy Extension Calculation	Furnished herewith
101.DEF***	Inline XBRL Taxonomy Extension Definition	Furnished herewith
101.LAB***	Inline XBRL Taxonomy Extension Labels	Furnished herewith
101.PRE***	Inline XBRL Taxonomy Extension Presentation	Furnished herewith
104	Cover Page Interactive Date File (formatted as Inline XBRL and contained in Exhibit 101)

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: May 14, 2025	By: /s/ Christina Kay
	Christina Kay,
	Co-Chief Executive Officer

Date: May 14, 2025	By: /s/ Riva Sheppard
	Riva Sheppard,
	Co-Chief Executive Officer

	By: /s/ Dina L. Masi
Date: May 14, 2025	Dina L. Masi,
	Chief Financial Officer & Senior Vice President