INTEGRATED BIOPHARMA INC

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share amounts)

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CONDENSED CONSOLIDATED STATEMENTS OF****FINANCIAL CONDITION

(in thousands, except share and per share amounts)

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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF STOCKHOLDERS’** EQUITY**

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2025 and 2024

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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Note1. 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 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. The Company was originally incorporated in the state of Delaware on* August 31, 1995under the name Chem International, Inc., on December 5, 2000,changed its name to Integrated Health Technologies, Inc. and on January 29, 2003changed 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 Business Lines which includes the operations of (i) MDC Warehousing and Distribution, Inc. (“MDCWHD”), a service provider for warehousing and fulfillment services, (ii) Chem International, Inc. (“Chem”), a distributor of certain raw materials for DSM Nutritional Products LLC and the holding entity of the Company and (iii) all other inactive subsidiaries of the Company.

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.

Reclassifications

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

Basis of Presentation of Interim Financial Statements

The accompanying condensed consolidated financial statements for the interim periods are unaudited and include the accounts of Integrated BioPharma, Inc., a Delaware corporation (together with its subsidiaries, the “Company”). The interim condensed consolidated financial statements have been prepared in conformity with Rule8-03 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and therefore donot 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 Form10-K for the fiscal year ended* June 30, 2025 (“Form10*-K”), as filed with the SEC. The* June 30, 2025balance sheet was derived from audited financial statements, but doesnot* include all disclosures required by GAAP.

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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 thethree months ended* September 30, 2025arenot* necessarily indicative of the results for the full fiscal year ending* June 30, 2026*or for any other period.

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. The Company also recognizes revenue for warehousing and fulfillment services provided to MDCWH customers. To perform revenue recognition for arrangements within the scope of ASC606, the Company performs the followingfive steps:

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 thannot that all or a portion of a deferred tax asset willnot be realized. For thethree months ended* September 30, 2025and2024,* the Company had federal income tax expense of $51 and $190, respectively and state income tax expense, net of approximately $22 and $55, respectively.

Leases. The Company determines if an arrangement is a lease at inception. Operating and finance leases are included in right-of-use (“ROU”) assets, other current liabilities, and lease obligations on its condensed consolidated balance sheets.

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 donot 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.

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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 werenot included in the computation of weighted average diluted common shares outstanding as the effect of doing so would be anti-dilutive for thethree months ended* September 30, 2025and2024:*

Accounting PronouncementsNot Yet Adopted**

In* December 2023,the FASB issued Accounting Standards Update ("ASU")2023-09 - Income Taxes (Topic740*): 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 ASU2024*-03 (updated ASU2025-01 issued in* January 2025),Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220*-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,and interim periods thereafter, on a prospective basis, with a retrospective option, and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU2024*-03.

In* July 2025,the FASB issued ASU2025*-05 - Financial Instruments - Credit Losses (Topic326): Measurement of Credit Losses for Accounts Receivable and Contract Assets which will provide an election for practical expedient to assume that current conditions as of the balance sheet date donot change for the remaining life of the asset. The update is effective for the Company’s annual periods beginning* July 1, 2027,and interim periods thereafter, on a prospective basis, with a retrospective option, and early adoption permitted. The Company is currently evaluating the impact of adopting ASU2025*-05.

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Note2. Inventories**

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

Note3. Property and Equipment, net**

Property and equipment, net consists of the following:

Depreciation and amortization expense recorded on property and equipment for thethree months ended* September 30, 2025and2024* was $77 and $85, respectively.

Note4*****. Lines of Credit***

On* April 15, 2025,the Company entered into a Loan Agreement (the “Loan Agreement”) with PNC Bank, National Association (“PNC”). As of September 30, 2025and June 30, 2025,*the Company hadno debt outstanding under its Lines of Credit.

The Loan Agreement provides a committed revolving line of credit under which the Company* mayrequest, and the PNC will make advances to the Company from time to time until April 5, 2026, (the "Expiration Date"), in an aggregate amount outstanding at any timenot* to exceed $4,000 (the "Line of Credit") and a Convertible Equipment Line of Credit in an aggregate amount outstanding at any timenot to exceed $500 (the "Convertible ELOC"). Advances under the Convertible ELOC will be used for the purchase of equipment and/or vehicles.

The Line of Credit bears interest at a rate per annum which is equal to the sum of (A) Dailyone-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.

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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) Dailyone-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* mayrequest the issuance ofone* 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.

Note5. Significant Risks and Uncertainties**

(a) Major Customers. For thethree months ended* September 30, 2025and2024,* approximately 87% and 85% of consolidated net sales, respectively, were derived fromtwo customers. Thesetwo customers are in the Company’s Contract Manufacturing Segment and represented approximately 71% and 20% and 68% and 21% in thethree months ended* September 30, 2025and2024,* respectively. Accounts receivable from thesetwo major customers represented approximately 79% and 76% of total net accounts receivable as of* September 30, 2025and June 30, 2025,respectively. Three other different customers in the Other Business Lines Segment, whilenot* significant customers of the Company’s consolidated net sales, represented approximately 21%,19% and 12% and 10%,28% and 39%, respectively, of net sales of the Other Business Lines Segment in thethree months ended* September 30, 2025and2024,* 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 than10% of net sales.

**(b) Other Business Risks.Approximately 77% of the Company’s full time employees are covered by a union contract and are employed in its New Jersey facilities. The contract was renewed effective September 1, 2022and 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* mayalso 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.

Note6. 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.

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The components of lease expense for thethree months ended* September 30, 2025and2024* were as follows:

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

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 asecond* amendment to the 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 athird* amendment to 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.*

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Rent expense and lease amortization costs for thethree months ended* September 30, 2025and2024* on these leases were $363 and $328 respectively, and are included in cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Income. As of* September 30, 2025and June 30, 2025,the Company hadno outstanding current obligations to Vitamin Realty. The Company has operating lease obligations of $278 and $485 with Vitamin Realty as noted in the accompanying Condensed Consolidated Balance Sheet as of September 30, 2025and June 30, 2025,*respectively.

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

As of* September 30, 2025,*the Company’s right-of-use assets, lease obligations and remaining cash commitment on these leases were as follows:

As of* June 30, 2025,*the Company’s ROU assets, lease obligations and remaining cash commitment on these leases were as follows:

As of* September 30, 2025and June 30, 2025,*the Company’s weighted average discount rate for operating leases was approximately 6.09% and 5.31%, respectively, and the remaining term on lease liabilities is approximately 1.3 years and 1.4 years, respectively.

Financed Lease Obligations.

As of* September 30, 2025,*the Company’s ROU assets, lease obligations and remaining cash commitment on such leases is as follows:

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As of* June 30, 2025,*the Company’s ROU assets, lease obligations and remaining cash commitment on such leases is as follows:

As of* September 30, 2025and June 30, 2025,*the Company’s weighted average discount rate is 6.88% and 4.51% for the fiscal years then ended, respectively, and the remaining term on lease liabilities is approximately 3.2 years and 3.4 years, respectively.

Supplemental cash flows information related to leases for thethree months ended* September 30, 2025*is as follows:

Supplemental cash flows information related to leases for thethree months ended* September 30, 2024,*is as follows:

Maturities of operating lease liabilities as of* September 30, 2025*were as follows:

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(b) Legal Proceedings.

The Company is subject, from time to time, to claims bythird 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.

Note7. Related Party Transactions**

Information related to related party transactions are disclosed in Note6(a). Leases for related party lease transactions.

Note8. Equity Transactions and Stock-Based Compensation**

For thethree months ended* September 30, 2025and2024,* the Company incurred stock-based compensation expenses of $49 and $53, respectively. The Company expects to record additional stock-based compensation of $203 over the remaining vesting periods of approximatelyone tothree years for all non-vested stock options.

The Company had the following stock options outstanding as of* June 30, 2025and September 30, 2025and exercisable as of September 30, 2025:*

Note9. Segment Information*** *and Disaggregated Revenue

In its operation of the business, management, including its chief operating decision makers (“CODMs”), who are also the Company’s Co-Chief Executive Officers, review certain financial information, including segmented internal profit and loss statements. The primary profitability measure used by the CODMs to review segment operating results is gross profit. The CODM uses gross profit to allocate resources during our annual planning process and throughout the year, as well as to assess the performance of the Company’s segments, primarily by monitoring actual results compared to prior periods and expected results. During the periods presented, the Company reported its financial performance based on the following segments: Contract Manufacturing and Other Business Lines.

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 international sales, concentrated primarily in Europe, for thethree months ended* September 30, 2025and2024* were $2,036 and $2,185, respectively.

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Financial information relating to thethree months ended* September 30, 2025and2024* operations by business segment and disaggregated revenues was as follows:

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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, 2025.

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, 2025.

For the three months ended September 30, 2025, our net sales from operations decreased by $928 to approximately $12,689 from approximately $13,617 in the three months ended September 30, 2024. Our net sales in the Contract Manufacturing Segment and in Other Business Lines decreased by $806 and $122, respectively. The decrease in net sales in our Contract Manufacturing Segment of $806 was primarily due to decreased sales volumes to Herbalife and Life Extension in the amounts of $307 and $215 and other customers of $284. For the three months ended September 30, 2025 and 2024, a significant portion of our consolidated net sales, approximately 87% and 85%, respectively, were concentrated among two customers, Life Extension and Herbalife, in our Contract Manufacturing Segment. Life Extension and Herbalife represented approximately 71% and 20% and 68% and 21%, respectively, of our Contract Manufacturing Segment’s net sales in the three months ended September 30, 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. Revenues in the three months ended September 30, 2025 were lower than the three months ended September 30, 2024 in our Other Business Lines Segment by $122 due to decreased sales in MDC WHD in the amount of $175, offset by an increase in sales from Chem’s distributor business in the amount of $53.

Our net income for the three months ended September 30, 2025 was approximately $123 compared to a net income of approximately $259 in the three months ended September 30, 2024, a decrease of approximately $136. The decrease was primarily the result of decreased operating income of $327, offset by the decrease in income tax expense of $172. Our profit margins decreased from approximately 10.1% of net sales in the three months ended September 30, 2024 to approximately 8.0% of net sales in the three months ended September 30, 2025, primarily as a result of the decrease in net sales of approximately 6.8% while our cost of goods sold decreased by approximately 4.7%, resulting in less sales available to cover our fixed manufacturing expenses. Our selling and administrative expenses were substantially the same for the three months ended September 30 2025 and 2024, approximately $856 to $881, respectively.

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.

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We have seen a slight negative impact in our margins due to inflation and tightened labor markets as we strive to increase prices to our customers as our operating costs increase. We may not be able to timely increase our selling prices to our customers 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 September 30, 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, 2025.

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:

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For the Three Months Ended September 30, 2025 compared to the Three Months Ended September 30, 2024

Sales, net. Sales, net, for the three months ended September 30, 2025 and 2024 were $12,689 and $13,617, respectively, a decrease of 6.8%, and are comprised of the following:

For the three months ended September 30, 2025 and 2024, a significant portion of our consolidated net sales, approximately 87% and 85%, respectively, were concentrated among two customers, Life Extension and Herbalife, in our Contract Manufacturing Segment. Life Extension and Herbalife, represented approximately 71% and 20% and 68% and 21%, respectively, of our Contract Manufacturing Segment’s net sales in the three months ended September 30, 2025 and 2024, respectively.

The decrease in net sales in our Contract Manufacturing Segment of $806 was primarily due to decreased sales volumes to Herbalife and Life Extension in the amounts of $307 and $215 and other customers of $284.

Revenues in the three months ended September 30, 2025 were lower than the three months ended September 30, 2024 in our Other Business Lines Segment by $122 due to decreased sales in MDC WHD in the amount of $175, offset by an increase in sales from Chem’s distributor business in the amount of $53. Three other different customers in the Other Business Lines Segment, while not significant customers of the Company’s consolidated net sales, represented approximately 21%, 19% and 12% and 10%, 28% and 39%, respectively, of net sales of the Other Business Lines Segment in the three months ended September 30, 2025 and 2024, respectively.

Cost of sales. Cost of sales decreased by approximately $576 to $11,670 for the three months ended September 30, 2025, as compared to $12,246 for the three months ended September 30, 2024, or approximately 4.7%. Cost of sales increased as a percentage of sales to 92.0% for the three months ended September 30, 2025 as compared to 89.9% for the three months ended September 30, 2024. The increase in the cost of sales as a percentage of sales of approximately 2.1% increased primarily as the result of decreased sales while our cost to manufacture increased by approximately 2.5%.

Selling and Administrative Expenses. Selling and administrative expenses were substantially the same for the three months ended September 30 2025 and 2024, approximately $856 to $881, respectively. As a percentage of sales, net, selling and administrative expenses were approximately 6.7% and 6.5% in the three months ended September 30, 2025 and 2024, respectively. The decrease of $25 was primarily from decreases in our employee salaries and benefits in the amount of $43 and all other general expenses in the amount of $28, offset by an increase in professional and consulting fees of $46. No other general expense decreased or increased by more than $14.

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Interest Income, net. Interest income, net was approximately $33 and $14 for the three months ended September 30, 2025 and 2024 and represents interest earned on our cash in the bank offset by interest expense and other financing costs under our Lines of Credit with PNC.

Income tax expense, net. For the three months ended September 30, 2025 and 2024, the Company had federal income tax expense of $51 and $190, respectively and state income tax expense, net of approximately $22 and $55, in the three months ended September 30, 2025 and 2024, respectively.

Net income. Our net income for the three months ended September 30, 2025 and 2024 was approximately $123 and $259, respectively, a decrease of approximately $136. The decrease of approximately $136 was primarily the result of decreased operating income of $327, offset by the decrease income tax expense of $172.

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:

As of September 30, 2025, our working capital was approximately $14,860, an increase of $345 from our working capital of $14,515 as of June 30, 2025. The increase in our working capital was the result of our current assets increasing by $861 and our current liabilities decreasing by $516. The increase in our currents assets was from $1,117, $1,107, and $84 in cash, inventories and other current assets, respectively, offset by a decrease in accounts receivable of $1,447.

Operating Activities

Net cash provided by operating activities of $1,301 in the three months ended September 30, 2025 includes net income of approximately $123. 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 $570. Net cash provided from our operations in the three months ended September 30, 2025 from our working capital assets and liabilities was approximately $731 and was primarily the result of cash provided by a decrease in accounts receivable of $1,447 and an aggregate increase in accounts payable, accrued expenses and other liabilities of $721, offset by increases in our inventories and other current assets of $1,107 and $87, respectively and a decrease in obligations under operating leases of $243.

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Net cash provided by operating activities of $657 in the three months ended September 30, 2024 includes net income of approximately $259. 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 $832. Net cash used in our operations in the three months ended September 30, 2024 from our working capital assets and liabilities was approximately $175 and was primarily the result of cash used from an aggregate decrease in accounts payable, accrued expenses and other liabilities of $329, offset by a decrease in our accounts receivable and inventories of $283 and $20, respectively.

Investing Activities

Cash used in investing activities in the three months ended September 30, 2025 and 2024, of approximately $173 and $56 was for the purchase of machinery and equipment, respectively.

Financing Activities

Cash used in financing activities was approximately $11 and $7 of principal payments under financed lease obligations for the three months ended September 30, 2025 and 2024, respectively.

As of September 30, 2025, we had cash of $4,732, funds available under our credit lines of approximately $4,500 and working capital of approximately $14,860 and operating income of $163 in the three months ended September 30, 2025. After taking into consideration our interim results and current projections, management believes that operations, together with the revolving credit facility will support our working capital requirements at least through the period ending November 10, 2026.

Our current total annual commitments as of September 30, 2025 for long term non-cancelable leases of approximately $505 consists of obligations under operating leases for office and warehouse facilities and for the rental of machinery, transportation and office equipment.

Capital Expenditures

The Company's capital expenditures for the three months ended September 30, 2025 and 2024 were approximately $173 and $56, respectively. The Company has budgeted approximately $500 for capital expenditures for fiscal year 2026. 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

See Note 1. Nature of Operations, Principles of Consolidation and Basis of Presentation of Interim Financial Statements to the Condensed Consolidated Financial Statements in Item 1 in this Quarterly Report,

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.

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