Integrated BioPharma (INBP) swings to loss as sales fall and margins tighten

Rhea-AI Filing Summary

Integrated BioPharma, Inc. reported weaker results for the quarter and six months ended December 31, 2025, as lower sales and thinner margins led to losses. Quarterly net sales fell to $11.3 million from $12.6 million, and the company swung to a net loss of $0.8 million versus prior-year profit.

For the six-month period, net sales declined to $24.0 million from $26.2 million, while net income of $0.4 million a year earlier turned into a net loss of about $0.6 million. Gross margin compressed significantly as cost of sales rose as a percentage of revenue, reflecting lower volumes to cover fixed manufacturing costs and pressure from inflation and labor markets.

The business remains highly concentrated, with two contract manufacturing customers accounting for roughly 89% of six‑month net sales. Despite the loss, liquidity improved: cash increased to $5.3 million, operating cash flow reached $1.9 million, and the company had no borrowings under its up to $4.5 million credit facilities, supporting working capital of about $14.3 million.

Insights

Equity analyst – small-cap nutraceuticals

Revenue declined and margins compressed, but cash flow and liquidity remained solid.

Integrated BioPharma saw six‑month net sales fall to $23,969 from $26,231, with gross profit dropping sharply to $1,048. Cost of sales climbed to 95.6% of revenue, turning prior operating income into a loss of $751.

The pressure stems from lower volumes in both segments and heavy reliance on two contract manufacturing customers, which supplied about 89% of six‑month sales. Management also highlights inflation and tight labor markets as headwinds that make it harder to pass through cost increases.

On the positive side, operating cash flow improved to $1,918, cash rose to $5,314, and there was no debt outstanding under the $4,000 revolving line and $500 equipment line as of December 31, 2025. Subsequent filings may clarify how customer demand and margin trends evolve through the fiscal year ending June 30, 2026.

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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 December 31, 2025

OR

☐ 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 February 11, 2026, there were 31,059,610 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 Quarter Ended December 31, 2025

INDEX

		Page
	Part I. Financial Information
Item 1.	Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2025 and 2024 (unaudited)	2
	Condensed Consolidated Balance Sheets as of December 31, 2025 and June 30, 2025 (unaudited)	3
	Condensed Consolidated Statement of Stockholders’ Equity for the Three and Six Months Ended December 31, 2025 and 2024 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 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	24
Item 4.	Mine Safety Disclosure	24
Item 5.	Other Information	24
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 Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025 (“Form 10-K”) 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.

1

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								Six months ended
		December 31,								December 31,
		2025				2024				2025				2024
Sales, net		$	11,280			$	12,614			$	23,969			$	26,231
Cost of sales			11,251				11,443				22,921				23,689
Gross profit			29				1,171				1,048				2,542
Selling and administrative expenses			943				969				1,799				1,850
Operating (loss) income			(914	)			202				(751	)			692
Other income (expense), net
Interest income, net			40				11				73				25
Other expense, net			-				(28	)			-				(28	)
Other income (expense), net			40				(17	)			73				(3	)
(Loss) income before income taxes			(874	)			185				(678	)			689
Income tax (benefit) expense, net			(112	)			69				(39	)			314
Net (loss) income		$	(762	)		$	116			$	(639	)		$	375
Basic net (loss) income per common share		$	(0.03	)		$	0.00			$	(0.02	)		$	0.01
Diluted net (loss) income per common share		$	(0.03	)		$	0.01			$	(0.02	)		$	0.01
Weighted average common shares outstanding - basic			31,059,610				30,174,664				31,059,610				30,137,137
Add: Equivalent shares outstanding - Stock Options			-				1,128,347				-				673,264
Weighted average common shares outstanding - diluted			31,059,610				31,303,011				31,059,610				30,810,401

                     See accompanying notes to unaudited condensed consolidated financial statements.

2

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(Unaudited)

		December 31,				June 30,
		2025				2025
Assets
Current Assets:
Cash		$	5,314			$	3,615
Accounts receivable, net			3,592				5,430
Inventories			8,363				9,362
Other current assets			550				356
Total current assets			17,819				18,763
Property and equipment, net			1,765				1,723
Operating lease right-of-use assets (includes $70 and $485 with a related party)			366				855
Finance lease right-of-use assets			157				171
Deferred tax assets, net			3,388				3,337
Security deposits and other assets			52				52
Total Assets		$	23,547			$	24,901
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable		$	2,144			$	2,267
Accrued expenses and other current liabilities			1,130				1,302
Current portion of finance lease obligations			46				45
Current portion of operating lease liabilities (includes $70 and $485 with a related party)			221				634
Total current liabilities			3,541				4,248
Financed lease obligations			92				115
Operating lease liabilities (includes $0 with a related party)			145				221
Total liabilities			3,778				4,584
Commitments and Contingencies (Note 6)
Stockholders' Equity :
Common Stock, $0.002 par value; 50,000,000 shares authorized;
31,094,510 and 31,059,610 shares issued and outstanding, respectively			61				62
Additional paid-in capital			51,864				51,773
Accumulated deficit			(32,058	)			(31,419	)
Less: Treasury stock, at cost, 34,900 shares			(99	)			(99	)
Total Stockholders' Equity			19,769				20,317
Total Liabilities and Stockholders' Equity		$	23,547			$	24,901

  See accompanying notes to unaudited condensed consolidated financial statements.

3

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2025 AND 2024

(in thousands, except share and per share amounts)

(Unaudited)

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31,  2025:

																										Total
		Common Stock								Additional				Accumulated				Treasury Stock								Stockholders'
		Shares				Par Value				Paid-in-Capital				Deficit				Shares				Cost				Equity
Balance, July 1, 2025			31,094,510			$	62			$	51,773			$	(31,419	)			34,900			$	(99	)		$	20,317
Stock compensation expense for employee stock options			-				-				49				-				-				-				49
Net income			-				-				-				123				-				-				123
Balance, September 30, 2025			31,094,510				62				51,822				(31,296	)			34,900				(99	)			20,489
Stock compensation for employee stock options			-				-				42				-				-				-				42
Net loss			-				-				-				(762	)			-				-				(762	)
Balance, December 31, 2025			31,094,510			$	62			$	51,864			$	(32,058	)			34,900			$	(99	)		$	19,769

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31,  2024:

		Common Stock								Additional				Accumulated				Treasury Stock								Total 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 loss			-				-				-				259				-				-				259
Balance, September 30, 2024			30,134,510				60				51,557				(31,968	)			34,900				(99	)			18,550
Stock compensation expense for employee stock options			-				-				43				-				-				-				43
Shares issued upon exercise of stock options			201,110				1				17				-				-				-				18
Net loss			-				-				-				116				-				-				116
Balance, December 31, 2024			30,335,620			$	61			$	51,617			$	(31,852	)			34,900			$	(99	)		$	19,727

See accompanying notes to unaudited condensed consolidated financial statements.

4

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except share and per share amounts)

(Unaudited)

		Six months ended
		December 31,
		2025				2024
Cash flows provided by operating activities:
Net (loss) income		$	(639	)		$	375
Adjustments to reconcile net (loss) income to net cash from operating activities:
Amortization of right-of-use assets			503				470
Depreciation and amortization			155				168
Stock based compensation			91				96
Change in deferred tax assets			(51	)			248
Impairment charge on equipment			-				28
Other, net			7				6
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable, net			1,838				440
Inventories			999				178
Other assets			(201	)			(118	)
Security deposits and other assets			-				(5	)
(Decrease) increase in:
Accounts payable			(123	)			298
Accrued expenses and other liabilities			(172	)			(858	)
Operating lease obligations			(489	)			(468	)
Net cash provided by operating activities			1,918				858
Cash flows from investing activities:
Purchase of property and equipment			(197	)			(85	)
Net cash used in investing activities			(197	)			(85	)
Cash flows from financing activities:
Proceeds from exercise of employee stock options			-				18
Repayments under finance lease obligations			(22	)			(7	)
Net cash provided by (used in) financing activities			(22	)			11
Net increase in cash			1,699				784
Cash at beginning of period			3,615				1,677
Cash at end of period		$	5,314			$	2,461

Supplemental disclosures of cash flow information:
Interest paid		$	5			$	20
Income taxes paid		$	-			$	100
Supplemental disclosures of non-cash flow transactions:
Transfer of finance right-of-use asset, net to property and equipment, net		$	-			$	80

   See accompanying notes to unaudited condensed consolidated financial statements.

5

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 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, 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 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 the 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 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, 2025 (“Form 10-K”), as filed with the SEC. The June 30, 2025 balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. The preparation of the unaudited condensed 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 six months ended December 31, 2025 are not necessarily indicative of the results for the full fiscal year ending June 30, 2026 or for any other period.

6

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 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 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 December 31, 2025 and 2024, the Company had a federal income tax benefit of $46 and a federal income tax expense of $46, respectively and a state income tax benefit, net of approximately $66 and a state income tax expense, net of $23, respectively.  For the six months ended December 31, 2025 and 2024, the Company had a federal income tax expense of approximately $5 and $236, respectively and a state income tax net benefit of approximately $44 and state income expense, net of approximately $78, 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 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.

7

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

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 six months ended December 31, 2025 and 2024:

		Three Months Ended								Six Months Ended
		December 31,								December 31,
		2025				2024				2025				2024
Anti-dilutive stock options			4,942,517				2,268,600				4,942,517				2,568,600
Total anti-dilutive shares			4,942,517				2,268,600				4,942,517				2,568,600

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued Accounting Standards Update (“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 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 ASU 2024-03.

In July 2025, the FASB issued ASU 2025-05 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides for an election for practical expedient to assume that current conditions as of the balance sheet date do not 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 is permitted. The Company is currently evaluating the impact of adopting ASU 2025-05.

8

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:

		December 31,				June 30,
		2025				2025
Raw materials		$	5,638			$	5,725
Work-in-process			1,321				2,736
Finished goods			1,404				901
Total		$	8,363			$	9,362

Note 3. Property and Equipment, net

Property and equipment, net consists of the following:

		December 31,				June 30,
		2025				2025
Land and building		$	1,250			$	1,250
Leasehold improvements			1,423				1,414
Machinery and equipment			7,437				7,249
			10,110				9,913
Less: Accumulated depreciation and amortization			(8,345	)			(8,190	)
Total		$	1,765			$	1,723

Depreciation and amortization expense recorded on property and equipment was $78 and $83 and $155 and $171 for the three and six months ended December 31,2025 and 2024, respectively.  Additionally, the Company recognized a permanent impairment of $0 and $28 in the three and six months ended December 31, 2025 and 2024, respectively.

Note 4. 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 December 31, 2025 and June 30, 2025, the Company had no debt outstanding under its Lines of Credit.

The Loan Agreement provides a committed revolving line of credit under which the Company may request, 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 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.

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.

9

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

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.

Note 5. Significant Risks and Uncertainties

(a) Major Customers.  In the three months ended December 31, 2025 and 2024, approximately 92% and 79%, respectively, of consolidated net sales were derived from two customers. These two customers are in the Company’s Contract Manufacturing Segment and represented approximately 65% and 30% and 60% and 26% in the three months ended December 31, 2025 and 2024, respectively of the Contract Manufacturing Segment net sales.  In the six months ended December 31, 2025 and 2024, approximately 89% and 82% of consolidated net sales, respectively, were derived from the same two customers and net sales to these two customers represented approximately 68% and 25% in the six months ended December 31, 2025 and 64% and 23% of net sales in the six months ended December 31, 2024, respectively, of the Contract Manufacturing Segment net sales. Accounts receivable from these two major customers represented approximately 82% and 76% of total net accounts receivable as of December 31, 2025 and June 30, 2025, respectively.  Two other customers in the Other Business Lines Segment, while not significant customers of the Company’s consolidated net sales, represented approximately 19% and 18% and 58% and 17% of net sales of the Other Business Lines Segment in the three months ended December 31, 2025 and 2024, respectively.  In the six months ended December 31, 2025, three other customers represented 23%, 16% and 15% of net sales of the Other Business Lines Segment and in the six months ended December 31, 2024, two other customers represented 51% and 22% of the net sales of the Other Business Lines Segment.

.

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 77% 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.

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.

10

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

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

		Three months ended December 31,
		2025												2024
		Related Party - Vitamin Realty				Other Leases				Totals				Related Party - Vitamin Realty				Other Leases				Totals
Operating lease costs		$	210			$	43			$	253			$	210			$	42			$	252
Finance lease costs:
Amortization of right-of use assets		$	-			$	7			$	7			$	-			$	-			$	-
Interest on lease liabilities			-				2				2				-				-				-
Total finance lease costs		$	-			$	9			$	9			$	-			$	-			$	-

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

		Six months ended December 31,
		2025												2024
		Related Party - Vitamin Realty				Other Leases				Totals				Related Party - Vitamin Realty				Other Leases				Totals
Operating lease costs		$	421			$	86			$	507			$	421			$	84			$	505
Finance lease costs:
Amortization of right-of use assets		$	-			$	14			$	14			$	-			$	3			$	3
Interest on lease liabilities			-				5				5				-				-				-
Total finance lease costs		$	-			$	19			$	19			$	-			$	3			$	3

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 December 31, 2025 and 2024 on this lease was $347 and $324, respectively, and for the six months ended December 31,2025 and 2024 was $710 and $652, respectively, and are included in cost of sales and selling and administrative expenses in the accompanying Condensed Consolidated Statements of Operations. As of December 31, 2025 and June 30, 2025, the Company had no current obligations to Vitamin Realty.  Additionally, the Company has operating lease obligations of $70 and $485 with Vitamin Realty, as noted in the accompanying Condensed Consolidated Balance Sheet as of December 31, 2025 and June 30, 2025, respectively.

As of February 11, 2026, MDC continues to occupy and use its existing warehouse and office space in a holdover tenancy and will continue to pay rent on a month-to-month basis until such time it completes the negotiations with Vitamin Realty for a long-term lease renewal.

11

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 December 31, 2025, the Company’s right-of-use assets, 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		$	70			$	70			$	-			$	70
Warehouse lease			256				129				126				283
Transportation lease			30				19				12				33
Office equipment leases			10				3				7				12
		$	366			$	221			$	145			$	398

As of June 30, 2025, 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		$	485			$	485			$	-			$	491
Warehouse lease			317				125				192				354
Transportation lease			39				18				21				43
Office equipment leases			14				6				8				16
		$	855			$	634			$	221			$	904

As of December 31, 2025 and June 30, 2025, the Company’s weighted average discount rate and remaining term on operating lease liabilities were approximately 6.29% and 5.31% and 1.6 years and 1.4 years, respectively. 

Financed Lease Obligations. 

As of December 31, 2025, the Company’s ROU assets, lease obligations and remaining cash commitment on such leases is as follows:

		Right-of-use Assets				Current Portion Finance Lease Obligations				Finance Lease Obligations				Remaining Cash Commitment
US Bank		$	123			$	38			$	63			$	111
ByLine Financial Group			34				8				29				41
		$	157			$	46			$	92			$	152

12

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

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

		Right-of-use Assets				Current Portion Finance Lease Obligations				Finance Lease Obligations				Remaining Cash Commitment
US Bank		$	133			$	38			$	83			$	133
ByLine Financial Group			38				7				32				46
		$	171			$	45			$	115			$	179

As of December 31, 2025 and 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 2.9 years and 3.4 years, respectively.

Supplemental cash flows information related to leases for the six months ended December 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		$	421			$	86			$	507
Operating cash flows from finance leases			-				5				5
Financing cash flows from finance lease obligations			-				22				22

Supplemental cash flows information related to leases for the six months ended December 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		$	421			$	86			$	507
Operating cash flows from finance leases			-				-				-
Financing cash flows from finance lease obligations			-				7				7

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

		Operating				Related Party					Finance
Year ending		Lease				Operating Lease					Lease
June 30,		Commitments				Commitment					Commitments			Total
2026, remaining		$	86			$	70			$	27			$	183
2027			171				-				54				225
2028			67				-				53				121
2029			2				-				9				11
2030			2				-				8				10
Total minimum lease payments			328				70				152				550
Imputed interest			(32	)			-				(14	)			(46	)
Total		$	296			$	70			$	138			$	504

13

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

(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.

Note 8. Equity Transactions and Stock-Based Compensation

In December 2025, the Board of Directors Adopted the Integrated BioPharma, Inc. Equity Incentive Plan (the “Plan”) which authorized the issuance of 7,500,000 shares of the Company’s Common Stock.

In December 2025, the Board of Directors authorized the issuance of up to 534,000 stock options to the Company officers and employees. The Company issued 526,500 stock options with an exercise price ranging from $0.31 to $0.35, vesting over three years, with expiration terms of ten years from the date of grant. 

For the three and six months ended December 31, 2025 and 2024, the Company incurred stock-based compensation expenses of $42 and $43, and $91 and $96, respectively.  The Company expects to record additional stock-based compensation of $303 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 six months ended December 31, 2025:

Risk Free Interest Rate			3.94% to 4.17	%
Volatility			96.9% to 110.9	%
Term		7.5 to 10 years
Dividend Rate			0.00	%
Closing Price of Common Stock			$0.32

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.

14

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

A summary of the Company’s stock option activity, and related information for the six months ended December 31, 2025, is as follows:

						Weighted
						Average
						Exercise
		Options				Price
Outstanding as of June 30, 2025			4,481,350			$	0.39
Granted			526,500				0.33
Exercised			-				-
Terminated			(51,666	)			0.30
Expired			(13,667	)			0.43
Outstanding as of December 31, 2025			4,942,517			$	0.38
Exercisable at December 31, 2025			3,828,517			$	0.40

Note 9. 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.

International sales, concentrated primarily in Europe, for the three months ended December 31, 2025 and 2024 were $2,575 and $2,355, respectively and for the six months ended December 31,2025 and 2024 were $4,611 and $4,540, respectively.

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

			Sales, Net
			U.S.				International								Cost of								Gross								Capital
			Customers				Customers				Total				Sales								Profit				Depreciation				Expenditures
Contract Manufacturing	2025		$	8,345			$	2,575			$	10,920			$	10,897							$	23			$	77			$	17
	2024			9,315				2,355				11,670				10,873								797				83				29
Other Business Lines	2025			360				-				360				354								6				1				7
	2024			944				-				944				570								374				-				-
Total Company	2025			8,705				2,575				11,280				11,251								29				78				24
	2024			10,259				2,355				12,614				11,443								1,171				83				29

15

INTEGRATED BIOPHARMA, INC. AND ITS SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share amounts)

(Unaudited)

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

			Sales, Net
			U.S.				International								Cost of								Gross								Capital
			Customers				Customers				Total				Sales								Profit				Depreciation				Expenditures
Contract Manufacturing	2025		$	18,476			$	4,611			$	23,087	75		$	22,090							$	997			$	154			$	182
	2024			20,103				4,450				24,643				22,668								1,975				170				85
Other Business Lines	2025			882				-				882				831								51				1				15
	2024			1,588				-				1,588				1,021								567				1				-
Total Company	2025			19,358				4,611				23,969				22,921								1,048				155				197
	2024			21,691				4,450				26,231				23,689								2,542				171				85

		Total Assets as of
		December 31,				June 30,
		2025				2025
Contract Manufacturing		$	18,917			$	20,278
Other Business Lines			4,630				4,623
Total Company		$	23,547			$	24,901

16

 

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, 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 six months ended December 31, 2025, our net sales from operations decreased by $2,262 to approximately $23,969 from approximately $26,231 in the six months ended December 31, 2024, or approximately 9%. Our net sales in the Contract Manufacturing Segment decreased by $1,556 or approximately 6%, and our Other Business Lines Segment decreased by $706 or approximately 45%. Net sales decreased in our Contract Manufacturing Segment primarily due to decreased sales volumes to customers other than our two major customers, of $1,420 and a net decrease of $136 from our two major customers.  Net sales in the six months ended December 31, 2025 were also lower by approximately $706 from the six months ended December 31, 2024 in our Other Business Lines Segment, primarily due to decreased sales for MDC Warehousing.  The decrease in the Other Business Lines Segment was primarily from a major customer in this segment in the amount of $784, which customer represented 51% of net sales in the six months ended December 31, 2024 compared to 2% of net sales in the six months ended December 31, 2025. The loss of any of these customers could have a significant adverse impact on our financial condition and results of operations. 

For the six months ended December 31, 2025, we had an operating loss of approximately $751, a decrease of approximately $1,443 from operating income of approximately $692 for the six months ended December 31, 2024.  Our profit margins decreased from approximately 9.7% of net sales in the six months ended December 31, 2024 to approximately 4.4% of net sales in the six months ended December 31, 2025, primarily as a result of the decreased sales of $2,262 and a decrease in cost of sales of $768. Our consolidated selling and administrative expenses were lower, $1,799 and $1,850 in the six months ended December 31, 2025 and 2024, respectively, a decrease of $51 or approximately 3%. Salaries and employee benefits and warehousing expenses decreased by approximately $75 and $28, offset, in part, by an increase in professional fees of $47.

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 may reduce our reliance on our two significant customers.

17

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 six months ended December 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, 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:

		For the three months								For the six months
		ended December 31,								ended December 31,
		2025				2024				2025				2024
Sales, net			100.0	%			100.0	%			100.0	%			100.0	%
Costs and expenses:
Cost of sales			99.7	%			90.7	%			95.6	%			90.3	%
Selling and administrative			8.4	%			7.7	%			7.5	%			7.1	%
			108.1	%			98.4	%			103.1	%			97.4	%
(Loss) income from operations			(8.1%	)			1.6	%			(3.1%	)			2.6	%
Other income (expense), net
Interest income (expense)			0.3	%			0.1	%			0.3	%			0.1	%
Other income (expense), net			-				(0.2%	)			-				(0.1%	)
Other income (expense), net			0.3	%			(0.1%	)			0.3	%			(0.0%	)
(Loss) income before income taxes			(7.8%	)			1.5	%			(2.8%	)			2.5	%
Income tax (benefit) expense, net			(1.0%	)			0.6	%			(0.1%	)			1.2	%
Net (loss) income			(6.8%	)			0.9	%			(2.7%	)			1.3	%

18

For the Six Months Ended December 31, 2025 compared to the Six Months Ended December 31, 2024

Sales, net. Sales, net, for the six months ended December 31,2025 and 2024 were $23,969 and $26,231, respectively, a decrease of 8.6%, and were comprised of the following:

		Six months ended								Dollar				Percentage
		December 31,								Change				Change
		2025				2024				2025 vs 2024				2025 vs 2024
		(amounts in thousands)
Contract Manufacturing:
US Customers		$	18,476			$	20,103			$	(1,627	)			(8.1%	)
International Customers			4,611				4,540				71				1.6	%
Net sales, Contract Manufacturing			23,087				24,643				(1,556	)			(6.3%	)
Other Nutraceuticals:
US Customers			882				1,588				(706)				(44.5%	)
International Customers			-				-				-				-
Net sales, Other Nutraceuticals			882				1,588				654				(44.5%	)
Total net sales		$	26,231			$	26,231			$	(2,262	)			(8.6%	)

In the six months ended December 31, 2025 and 2024, a significant portion of our consolidated net sales, approximately 89% and 82%, were concentrated among two customers in our Contract Manufacturing Segment, Life Extension and Herbalife.  Life Extension and Herbalife represented approximately 68% and 25% and 64% and 23%, respectively, of our Contract Manufacturing Segment’s net sales in the six months ended December 31, 2025 and 2024, respectively. 

The decrease in net sales of approximately $2,262 in the six months ended December 31, 2025 was the result of decreased sales in both of our segments. Our Contract Manufacturing Segment decrease of $1,556 from the six months ended December 31, 2024 was primarily from existing and new customers other than our two major customers of $1,420, and a net decrease of $136 with our two major customers.  The decrease in the Other Business Lines Segment was primarily from a major customer in this segment in the amount of $784, which customer represented 51% of net sales in the six months ended December 31, 2024 compared to 2% of net sales in the six months ended December 31, 2025. 

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 decreased by approximately $768 to $22,921 for the six months ended December 31, 2025, as compared to $23,689 for the six months ended December 31, 2024, or approximately 3.2%.  Cost of sales increased as a percentage of sales to 95.6% for the six months ended December 31, 2025 as compared to 90.3% for the six months ended December 31, 2024. The decrease of $768 in the cost of goods sold is primarily a result of the decreased sales.  The increase in the cost of goods sold as a percentage of net sales, was primarily the result of the decrease in net sales in both segments used to offset the fixed manufacturing costs in the Contract Manufacturing Segment and the cost of sales in the Other Business Lines Segment.

Selling and Administrative Expenses.  Our selling and administrative expenses were lower by $51, $1,799 and $1,850 in the six months ended December 31, 2025 and 2024, respectively. As a percentage of sales, net, selling and administrative expenses were approximately 7.5% and 7.1% in the six months ended December 31, 2025 and 2024, respectively.  We had an increase in professional fees of $47, primarily from increased legal fees of $14, other consulting fees of $30, and all other selling and administrative expenses of $5, offset by decreases in employee salaries and benefit costs of $75 and warehousing costs of $28.

19

Other income (expense), net. Other income (expense), net was approximately $73 for the six months ended December 31, 2025 compared to $(3) for the six months ended December 31, 2024, and was composed of:

		Six months ended
		December 31,
		2025				2024
		(dollars in thousands)
Interest income, net		$	73			$	25
Other expense, net			-				(28	)
Other income (expense), net		$	73			$	(3	)

Interest income, net increased due to the lower cost of financing following the renewal of the PNC Credit Facility in May 2025, as well as higher cash balances during the six months ended December 31, 2025 compared to the same period in the prior year. In the six months ended December 31, 2024, we recognized a permanent impairment in our machinery and equipment of $28.

Income tax expense (benefit), net. For the six months ended December 31, 2025 and 2024, we had federal income tax expense of $5 and $236, respectively and a state income tax benefit, net of approximately $44 in the six months ended December 31, 2025 compared to a state income tax expense of $78 in the six months ended December 31, 2024.

Net (loss) income. In the six months ended December 31, 2025 we had a net loss of $640 compared to net income of $375 in the six months ended December 31, 2024.  The decrease of approximately $1,015 was primarily the result of decreased operating income of $1,443, offset by the decrease in income tax expense of $353.

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

Sales, net. Sales, net, for the three months ended December 31, 2025 and 2024 were $11,280 and $12,614, respectively, a decrease of 10.6%, and are comprised of the following:

		Three months ended								Dollar				Percentage
		December 31,								Change				Change
		2025				2024				2025 vs 2024				2025 vs 2024
		(amounts in thousands)
Contract Manufacturing:
US Customers		$	8,345			$	9,315			$	(970	)			(10.4%	)
International Customers			2,575				2,355				220				9.3	%
Net sales, Contract Manufacturing			10,920				11,670				(750	)			(6.4%	)
Other Nutraceuticals:
US Customers			360				944				(584	)			(61.9)	%
International Customers			-				-				-				-
Net sales, Other Nutraceuticals			360				944				(584	)			(61.9%	)
Total net sales		$	11,280			$	12,614			$	(1,334	)			(10.6%	)

For the three months ended December 31, 2025 and 2024, a significant portion of our consolidated net sales, approximately 92% and 79%, respectively, were concentrated among two customers, Life Extension and Herbalife, in our Contract Manufacturing Segment.  Life Extension and Herbalife, represented approximately 65% and 30% and 60% and 26%, respectively, of our Contract Manufacturing Segment’s net sales in the three months ended December 31, 2025 and 2024, respectively. 

The decrease in net sales of approximately $1,334 in the three months ended December 31, 2025, was primarily the result of decreased net sales in our Contract Manufacturing Segment of $750 due to decreased sales volumes to customers other than our two major customers in the amount of $1,135, offset by a net increase in sales to Herbalife and Life Extension of $385. Sales, net in the Other Business Lines Segment decreased by $584 compared to the same period in the prior year and was primarily the result of the lack of any special projects for one of our major customers coupled with the loss of a different major customer in this segment, resulting in lower sales in this segment of $545 and $154, respectively.  These two customers represented 58% and 17%, of net sales in this segment, in the three months ended December 31, 2024, respectively.

20

Two other customers in the Other Business Lines Segment, while not significant customers of the Company’s consolidated net sales, represented approximately 19%, and 18% and 8%, and 2%, respectively, of net sales of the Other Business Lines Segment in the three months ended December 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 decreased by approximately $192 to $11,251 for the three months ended December 31, 2025, as compared to $11,443 for the three months ended December 31, 2024 or approximately 2%.  Cost of sales decreased as a percentage of sales to 99.7% for the three months ended December 31, 2025 as compared to 90.7% for the three months ended December 31, 2024. The increase in the cost of goods sold as a percentage of net sales, was primarily the result of decreased net sales used to offset the fixed manufacturing overhead and cost of sales. 

Selling and Administrative Expenses.  Selling and administrative expenses were lower in the three months ended December 31, 2025 by approximately $26 from the three months ended December 31, 2024 and were approximately $943 and $969, respectively. As a percentage of sales, net, selling and administrative expenses were approximately 7.5% and 7.1% in the three months ended December 31, 2025 and 2024, respectively. The decrease of $26 was primarily from a decrease in salaries and employee benefits of $32 offset by an increase of $6 in other selling and administrative expenses.

Other income (expense), net. Other income (expense), net was approximately $40 for the three months ended December 31, 2025 compared to $(17) for the three months ended December 31, 2024, and is composed of:

		Three months ended
		December 31,
		2025				2024
		(dollars in thousands)
Interest income, net		$	40			$	11
Other expense, net			-				(28	)
Other income (expense), net		$	40			$	(17	)

Interest income, net increased due to the lower cost of financing following the renewal of the PNC Credit Facility in May 2025, as well as higher cash balances during the three months ended December 31, 2025 compared to the same period in the prior year.   In the three months ended December 31, 2024, we had a permanent impairment on machinery and equipment of $28.

Income tax (benefit) expense, net. For the three months ended December 31, 2025 we had a federal and state tax net benefit of $46 and $66, respectively, compared to federal and state income tax expense, net of $46 and $23, in the three months ended December 31, 2024, respectively. 

Net (loss) income. For the three months ended December 31, 2025 we had a net loss of $763 compared to net income of $116 in the three months ended December 31, 2024.  The change of approximately $879 was primarily the result of decreased operating income of $1,116, offset by the change from income tax expense, net to income tax benefit, net of $181.

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.

21

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 six months ended
		December 31,
		2025				2024
		(dollars in thousands)
Net cash provided by operating activities		$	1,918			$	858
Net cash used in investing activities		$	(197	)		$	(85	)
Net cash (used in) provided by financing activities		$	(22	)		$	11
Cash at end of period		$	5,314			$	2,461

As of December 31, 2025, our working capital was approximately $14,278, a decrease of $237 from our working capital of $14,515 as of June 30, 2025.  The decrease in our working capital was the result of our current assets decreasing by $944 offset by a decrease in our current liabilities of $707. The decrease in our currents assets was from decreases in accounts receivable and inventories of $1,838 and $999, respectively, offset by increases in cash and other current assets of $1,699 and $194, respectively.

Net cash provided by operating activities of $1,918 in the six months ended December 31, 2025 includes a net loss of approximately $639. 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 $66. Net cash provided by our operations in the six months ended December 31, 2025 was offset by cash provided by our working capital assets and liabilities in the amount of approximately $1,850 and was primarily the result of an decreases in  accounts receivable and inventories of $1,838 and $999, respectively offset by a decrease in prepaid expenses and other assets of $201 and decreases in accounts payable, accrued expenses and other liabilities of $295 and operating lease obligations of $489.

Net cash provided by operating activities of $858 in the six months ended December 31, 2024, includes net income of approximately $375.  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 $1,391. Net cash provided by our operations in the six months ended December 31, 2024 was offset by cash used in our working capital assets and liabilities in the amount of approximately $533 and was primarily the result of an increase in our prepaid expenses and other assets of $124, the decrease in operating lease obligations of $468 and accounts payable and other liabilities of $560 offset by  decreases in accounts receivable of $440 and inventory of $178.

Investing Activities

Cash used in investing activities of $197 and $85 in the six months ended December 31, 2025 and 2024, respectively, was for the purchase of machinery and equipment.

Financing Activities

Cash used in financing activities was approximately $22 for the six months ended December 31, 2025, and was primarily from principal payments under our financed lease obligations.

22

Cash provided by financing activities was approximately $11 for the six months ended December 31, 2024, and was primarily from proceeds from exercises of stock options of $18, offset by principal payments under our financed lease obligations of $7.

As of December 31, 2025, we had cash of $5,314, funds available under our credit lines of approximately $4,500 and working capital of approximately $14,278 and an operating loss of $751 in the six months ended December 31, 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 the period ending February 11, 2027.

Our current total annual commitments as of December 31, 2025 for long term non-cancelable leases of approximately $225 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. Additionally, on February x, 2026, we renewed our lease extending the termination date from January 31, 2026 to January 31, 2031 with Vitamin Realty, see Note 6. - Leases and other Commitments and Contingencies, providing an additional annual commitment of approximately $1,101 in the first year.

Capital Expenditures

The Company's capital expenditures for the six months ended December 31, 2025 and 2024 were approximately $197 and $85, 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.

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.

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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 December 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 December 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

There have been no material changes to the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

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

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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)

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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:         February 11, 2026	By: /s/ Christina Kay
	Christina Kay,
	Co-Chief Executive Officer
Date:         February 11, 2026	By: /s/ Riva Sheppard
	Riva Sheppard,
	Co-Chief Executive Officer
	By: /s/ Dina L. Masi
Date:         February 11, 2026	Dina L. Masi,
	Chief Financial Officer & Senior Vice President

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FAQ

How did Integrated BioPharma (INBP) perform in the quarter ended December 31, 2025?

Integrated BioPharma posted weaker quarterly results, with net sales of $11.3 million versus $12.6 million a year earlier and a net loss of about $0.8 million instead of prior profit. Lower volumes and higher relative costs drove the swing to loss.

What drove Integrated BioPharma (INBP) revenue changes for the six months ended December 31, 2025?

Six‑month net sales decreased to $23.97 million from $26.23 million, mainly from lower volumes in both Contract Manufacturing and Other Business Lines. Reduced orders from customers other than the two largest accounts and weaker warehousing activity particularly hurt sales.

How are Integrated BioPharma’s profit margins and expenses trending?

Gross margin deteriorated as cost of sales rose to 95.6% of six‑month net sales from 90.3% a year earlier, reflecting lower volume absorption and inflationary pressures. Selling and administrative expenses were modestly lower in dollars, but slightly higher as a percentage of sales.

What is Integrated BioPharma’s customer concentration risk?

The company is highly dependent on two Contract Manufacturing customers, Life Extension and Herbalife, which together contributed about 89% of consolidated net sales for the six months ended December 31, 2025. Management notes that losing any of these customers could significantly affect results.

What is Integrated BioPharma’s liquidity and debt position as of December 31, 2025?

Integrated BioPharma held $5.3 million in cash, generated $1.9 million of operating cash flow in six months, and reported working capital of about $14.3 million. It had no borrowings outstanding under its $4.0 million revolving line and $0.5 million equipment credit facility.

Did Integrated BioPharma (INBP) make any notable equity or compensation changes in this period?

Yes. In December 2025, the board adopted an Equity Incentive Plan authorizing up to 7.5 million shares. It granted about 526,500 stock options with exercise prices between $0.31 and $0.35, vesting over three years, contributing to stock‑based compensation expense.