INTEGRATED BIOPHARMA INC MANAGEMENT REPORT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (in thousands of dollars) (Form 10-Q)

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, 2022.


The Company is principally engaged in the manufacture, distribution, marketing and sale of vitamins, nutritional supplements and herbal products. The Company’s customers are located primarily in United States and Luxemburg.



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, 2022.



For the three months ended September 30, 2022, our net sales from operations
decreased by $425 to approximately $12,326 from approximately $12,751 in the
three months ended September 30, 2021. Our net sales in the Contract
Manufacturing Segment decreased by $774, offset by an increase in our Other
Nutraceuticals Segment of $349.  Net sales decreased in our Contract
Manufacturing Segment primarily due to decreased sales volumes to Life Extension
and Herbalife in the amount of $896 and $156, respectively.  For the three
months ended September 30, 2022 and 2021, a significant portion of our
consolidated net sales, approximately 85% and 91%, respectively, were
concentrated among two customers, Life Extension and Herbalife, in our Contract
Manufacturing Segment.  Life Extension and Herbalife, represented approximately
61% and 30% and 69% and 29%, respectively, of our Contract Manufacturing
Segment's net sales in the three months ended September 30, 2022 and 2021,
respectively. Revenues in the three months ended September 30, 2022 were higher
than the three months ended September 30, 2021 in our Other Nutraceuticals
Segment by $349, primarily due to MDC Warehousing and Distribution, Inc. from
increased business from a significant customer in this business segment
representing approximately 55% of the revenue in the three months ended
September 30, 2022 in our Other Nutraceuticals Segment.  This customer only
represented 9% of revenues in our Other Nutraceutical Segment in the three
months ended September 30, 2021.  The loss of any of these customers could have
a significant adverse impact on our financial condition and results of
operations.



For the three months ended September 30, 2022, we had operating income of
approximately $30, a decrease of approximately $555 from operating income of
approximately $585 for the three months ended September 30, 2021. Our profit
margins decreased from approximately 11.2% of net sales in the three months
ended September 30, 2021 to approximately 8.1% of net sales in the three months
ended September 30, 2022, primarily as a result of the decreased sales in our
Contract Manufacturing Segment of approximately $774.  Our consolidated selling
and administrative expenses increased by approximately $128 or approximately
15.3% in the three months ended September 30, 2022 compared to the three months
ended September 30, 2021.  Our salaries and employee benefits increased by $86
and employee stock compensation expense increased by $44.



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.





                                      -16-
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We are still experiencing supply chain disruptions relating to fuel refinery and
transportation issues as it pertains to both shipping and production of
plastics.  These issues first arose as result of the COVID-19 pandemic and other
geo-political events.  This continues to impact the supply and demand of bottles
and caps, key components in our Contract Manufacturing Segment. Transportation,
in general, continues to be an issue in the delay of receiving other raw
materials and our ability to meet promised delivery dates to our customers in
the Contract Manufacturing Segment.



Additionally, the significant outbreak of this contagious disease in the human
population has resulted in a widespread health crisis that could adversely
affect the economies and financial markets of many countries, resulting in an
economic downturn that could affect demand for the Company's products and impact
our operating results.



While we haven't, to date, seen a significant negative impact in our margins
resulting from the coronavirus outbreak, we are experiencing a negative impact
on our margins due to inflation and tightened labor markets.



During the first quarter of calendar 2022, the war in Ukraine affected our
customer's business operations in Ukraine and Russia, resulting in the
cancelation of some future orders. The war resulted in the imposition of
sanctions by the United States, the United Kingdom, and the European Union, that
affect the cross-border operations of businesses operating in Russia. In
addition, many multinational companies ceased or suspended their operations in
Russia. Therefore, the ability to continue operations in Russia by our customers
is uncertain.  Also, there may be a shortage of Sunflower Oil products in the
near future and this may cause delays in production of certain raw materials and
may require reformulation of products.



Additionally, unrelated to the war, a recent export ban of palm oil products
from Indonesia may play a role in reformulation of many products.  This may
cause delays in finished products as these items will need to be reformulated
and labels updated and printed with the changes, which may cause further delays.



While we haven't, to date, seen a significant negative impact to our margins
resulting from the coronavirus outbreak, we are experiencing a slight negative
impact on our margins due to inflation and tightened labor markets.



Significant Accounting Policies and Estimates



There have been no changes to our critical accounting policies in the three
months ended September 30, 2022, except as disclosed in Note 1. Principles of
Consolidation and Basis of Presentation of the Condensed Financial Statements of
the Company contained in this Quarterly Report on Form 10-Q. Critical accounting
policies and the significant estimates made in accordance with them are
regularly discussed by management with our Audit Committee. Those policies are
discussed under "Critical Accounting Policies" 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, 2022 and in Note
1. Principles of Consolidation and Basis of Presentation of the Condensed
Financial Statements of the Company contained in this Quarterly Report on Form
10-Q.



                                      -17-
--------------------------------------------------------------------------------

Results of operations (in thousands, except per 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
                                                 ended September 30,
                                                 2022            2021

Sales, net                                          100.0 %       100.0 %

Costs and expenses:
Cost of sales                                        91.9 %        88.8 %
Selling and administrative                            7.8 %         6.6 %
                                                     99.7 %        95.4 %
Operating income                                      0.3 %         4.6 %

Other income (expense), net
Interest expense                                    (0.1% )       (0.2% )
Unrealized loss in investment in iBio Stock         (0.0% )       (0.2% )
Other income, net                                     0.0 %         0.0 %
Other expense, net                                  (0.1% )       (0.4% )


Income before income taxes                            0.2 %         4.2 %

Income tax expense, net                               0.4 %         0.2 %

Net (loss) income                                   (0.0% )         4.0 %



For the three months ended September 30, 2022 compared to the three months ended
September 30, 2021



Sales, net. Sales, net, for the three months ended September 30, 2022 and 2021
were $12,326 and $12,751, respectively, a decrease of 3.3%, and are comprised of
the following:



                                            Three months ended             Dollar          Percentage
                                              September 30,                Change            Change
                                           2022            2021         2022 vs 2021      2022 vs 2021
                                                   (amounts in thousands)
Contract Manufacturing:
US Customers                            $     9,088     $   10,145     $       (1,057 )          (10.4% )
International Customers                       2,473          2,190                283              12.9 %
Net sales, Contract Manufacturing            11,561         12,335               (774 )           (6.3% )

Other Nutraceuticals:
US Customers                                    765            386                379              98.2 %
International Customers                           -             30                (30 )         (100.0% )
Net sales, Other Nutraceuticals                 765            416                349              83.9 %

Total net sales                         $    12,326     $   12,751     $         (425 )           (3.3% )




For the three months ended September 30, 2022 and 2021, a significant portion of
our consolidated net sales, approximately 85% and 91%, respectively, were
concentrated among two customers, Life Extension and Herbalife, in our Contract
Manufacturing Segment. Life Extension and Herbalife, represented approximately
61% and 30% and 69% and 29%, respectively, of our Contract Manufacturing
Segment's net sales in the three months ended September 30, 2022 and 2021,
respectively.  Revenues in the three months ended September 30, 2022 were higher
than the three months ended September 30, 2021 in our Other Nutraceuticals
Segment by $349, primarily due to MDC Warehousing and Distribution, Inc. from
increased business from a significant customer in this business segment
representing approximately 55% of the revenue in the three months ended
September 30, 2022 in our Other Nutraceuticals Segment.  This customer only
represented 9% of revenues in our Other Nutraceutical Segment in the three
months ended September 30, 2021.



                                      -18-
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The decrease in net sales of approximately $425 was primarily the result of
decreased net sales in our Contract Manufacturing Segment of $774 primarily due
to decreased sales volumes to Life Extension and Herbalife in the amounts of
$895 and $196, respectively.  As noted above, these decreases were offset by the
increase in the Other Nutraceutical Segment of $349.



Cost of sales. Cost of sales increased by approximately $2 to $11,329 for the
three months ended September 30, 2022, as compared to $11,327 for the three
months ended September 30, 2021 or approximately the same. Cost of sales
increased as a percentage of sales to 91.9% for the three months ended September
30, 2022 as compared to 88.8% for the three months ended September 30, 2021. The
substantially the same amount of cost of goods sold amount is due to fixed
direct costs increasing in the three months ended September 30, 2022. The
increase in the cost of goods sold as a percentage of net sales, was primarily
the result of the decreased net sales available to offset the fixed
manufacturing overhead.



Selling and Administrative Expenses. Selling and administrative expenses
increased by approximately $128 to $967, approximately 15% in the three months
ended September 30, 2022 from $839 in the three months ended September 30,
2021.  As a percentage of sales, net, selling and administrative expenses were
approximately 7.8% and 6.6% in the three months ended September 30, 2022 and
2021, respectively. Our salaries and employee benefits increased by $86 and
employee stock compensation expense increased by $44. Salaries and employee
benefits increased as a result of generally increases in base pay, approximately
6%, and employee stock compensation expense increased as a result of additional
stock option grants in the fiscal year ended June 30, 2022.



Other income (expense), net. Other income (expense), net was approximately $(14)
for the three months ended September 30, 2022 compared to $(46) for the three
months ended September 30, 2021, and is composed of:



                                                  Three months ended
                                                     September 30,
                                                 2022             2021
                                                (dollars in thousands)
Interest expense                              $       (13 )     $     (32 )
Unrealized loss on investment in iBio Stock            (4 )           (20 )
Other income                                            3               6
Other expense, net                            $       (14 )     $     (46 )




Our interest expense for the three months ended September 30, 2022 decreased by
$19 from the three month period ended September 30, 2021, primarily as the
result of lower average daily balances outstanding under the Senior Credit
Facility with PNC Bank in the three month period ended September 30, 2022 from
the three month period ended September 30, 2021.



In the three months ended September 30, 2022, and 2021, we had unrealized losses
on the remaining iBio Stock of approximately $4 and $20, respectively.  Other
income in the three months ended September 30, 2022 is primarily interest income
on the cash in the bank of $3 and in the three months ended September 30, 3021,
income from bookkeeping services provided for a third party entity that is also
a customer of MDC Warehousing.



Federal and state income tax expense, net.  For the three months ended September
30, 2022 and 2021, the Company had federal deferred income tax expense of $21,
and a deferred federal income tax benefit, net of $38, respectively and state
income tax expense, net of approximately $30 and $61, in the three months ended
September 30, 2022 and 2021, respectively.  The net federal income tax benefit
of $38 in the three months ended September 30, 2021, includes the release of
$128 of the valuation allowance on deferred tax assets.





                                      -19-
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Net (loss) income.  Our net (loss) income for the three months ended September
30, 2022 and 2021 was approximately $(35) and $516, respectively.  The decrease
of approximately $551 was primarily the result of decreased operating income of
$555.



Seasonality



The nutraceutical business can be seasonal. Due to our current customer base in
our contract manufacturing segment, our fiscal quarter ending December 31st each
year tends to be more than our average quarterly volume for the other three
fiscal quarters in the fiscal year. This increase is based on their forecast of
their customer base.



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.



Cash 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 three months ended
                                                   September 30,
                                              2022              2021
                                               (dollars in thousands)

Net cash provided by operating activities $992 $2,101 Net cash used in investing activities ($50) ($131) Net cash used in financing activities $ (105 ) ($2,123)

Cash at end of period                     $       1,168    $            57




At September 30, 2022, our working capital was approximately $11,156, a decrease
of $207 from our working capital of $11,363 at June 30, 2022. The decrease in
our working capital was the result of our current liabilities increasing by of
$644 and was offset by an increase in our current assets of $437.



Operating Activities



Net cash provided by operating activities of $992 in the three months ended
September 30, 2022 includes a net loss of approximately $35. 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 $358. Net
cash provided by our operations in the three months ended September 30, 2022
from our working capital assets and liabilities in the amount of approximately
$634 was primarily the result of cash provided from a decrease in our accounts
receivable of $1,177 and an aggregate increase in accounts payable, accrued
expenses and other liabilities of $238, offset in part, by increases in
inventories of approximately $613 and prepaid and other assets of $170.



Net cash provided by operating activities of $2,101 in the three months ended
September 30, 2021 includes net income of approximately $516. 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 $748. Net
cash provided by our operations in the three months ended September 30,
2021 from our working capital assets and liabilities in the amount of
approximately $1,353 was primarily the result of cash provided from a decrease
in our accounts receivable of $1,975 and an aggregate increase in accounts
payable, accrued expenses and other liabilities of $632, offset in part, by
increases in inventories of approximately $927 and prepaid and other assets of
$202.



                                      -20-
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Investing Activities



Cash used in investing activities in the three months ended September 30, 2022
and 2021, of approximately $50 and $131 was from the purchase of machinery and
equipment, respectively.



Financing Activities



Cash used in financing activities was approximately $105 for the three months
ended September 30, 2022, and was primarily from repayments of advances under
our revolving credit facility of $101 and principal payments under financed
lease obligations of $4.



Cash used in financing activities was approximately $2,123 for the three months
ended September 30, 2021, and was primarily from net repayments of advances
under our revolving credit facility of $801 and principal payments under our
term notes in the amount of $1,326.



As of September 30, 2022, we had cash of $1,168, funds available under our
revolving credit facility of approximately $5,237 and working capital of
approximately $11,156. We had income from operations of approximately $30 in the
three months ended September 30, 2022.  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, 2023.



Our total annual commitments at September 30, 2022 for long term non-cancelable
leases of approximately $894 consists of obligations under operating leases for
facilities and operating lease agreements for the rental of machinery and
equipment and office equipment.



Capital Expenditures



The Company's capital expenditures for the three months ended September 30, 2022
and 2021 were approximately $50 and $131, respectively. The Company has budgeted
approximately $500 for capital expenditures for fiscal year 2023. The total
amount is expected to be funded from lease financing and cash provided from the
Company's operations.


Off-balance sheet arrangements

The Company has no off-balance sheet arrangements.

Recent accounting pronouncements


None.



Impact of Inflation


The Company does not believe that inflation has had a material impact on its results of operations.

Section 3. QUANTITATIVE AND QUALITATIVE INFORMATION ON MARKET RISK


Not applicable.



                                      -21-
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Point 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures



Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed by the Company in
the reports it files or submits under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") is recorded, processed, summarized, and reported
within the time periods specified by the SEC's rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to provide reasonable assurance that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is accumulated and communicated to management, including the Co-Chief
Executive Officers and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.



Under the supervision and with the participation of management, including the
Co-Chief Executive Officers and Chief Financial Officer, the Company has
evaluated the effectiveness of its disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of
September 30, 2022, 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 changes in our internal control over financial reporting have occurred during the three months ended September 30, 2022 that has had or is reasonably likely to have a material effect on 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 in the risk factors disclosed in our Annual Report on Form 10-K for the year ended June 30, 2022.

Item 2. NON-REGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent sales of Unregistered titles


None


Purchases of Equity securities by the Issuer and the Affiliated Buyers


None


Item 3. DEFAULT ON SENIOR SECURITIES


None.



                                      -22-
--------------------------------------------------------------------------------

Item 4. MINE SAFETY DISCLOSURE



Not Applicable.



Item 5. OTHER INFORMATION



None.



Item 6. EXHIBITS



(a)     Exhibits



Exhibit

Number

   31.1      Certification pursuant to Section 302
           of the Sarbanes-Oxley Act of 2002 by
           Co-Chief Executive Officers.
   31.2      Certification 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 Co-Chief
           Executive Officers.
   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*** Online XBRL taxonomy extension scheme provided attached 101.CAL*** Online XBRL taxonomy extension provided attached

           Calculation

101.DEF*** Online XBRL taxonomy extension provided attached

           Definition

101.LAB*** Online XBRL Taxonomy Extension Tags Supplied Herewith 101.PRE*** Online XBRL Taxonomy Extension Supplied Herewith

           Presentation
   104     Cover Page Interactive Date File
           (formatted as Inline XBRL and contained
           in Exhibit 101)






                                      -23-
--------------------------------------------------------------------------------


                                   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:  November 10, 2022  By: /s/ Christina Kay
                          Christina Kay,
                          Co-Chief Executive Officer

Date:  November 10, 2022   By: /s/ Riva Sheppard
                          Riva Sheppard,
                          Co-Chief Executive Officer

Date:  November 10, 2022  By: /s/ Dina L. Masi
                          Dina L. Masi,
                          Chief Financial Officer & Senior Vice President








                                      -24-

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