INBP 10-K & 10-Q changes, risk factors and insider trading

A significant portion of our revenues are concentrated among sixthree customers, Life Extension and Herbalife (customers in our Contract Manufacturing Segment) and TrustedLife Influencers Inc.Tech (Hotpacka Global, Inc. in 2024), Thermosource Tooling and Manufacturing, Life Technologies, Inc. and Eastern Drayage (customerscustomer of our Other Business Lines Segment). In the fiscal years ended June 30, 20252026 and 2024,2025, approximately 84%90% and 90%84% of our consolidated net sales, respectively, were derived from the two major customers in our Contract Manufacturing Segment. The loss of any of these customers could have a significant adverse impact on our financial condition and results of operations.

Supply chain disruptions resulting from geo-politicalgeopolitical events could have an impact on our financial results and ability to timely ship products to our customers.

These issues first arose as result of the COVID-19 pandemic and continued with other geo-politicalgeopolitical events. Transportation, in general, continues to be an issue in the delay of receiving raw materials and the rising cost of fuel and our ability to meet promised delivery dates to our customers in the Contract Manufacturing Segment.Segment as well as passing on these rising costs.

We presently are dependent upon the executive abilities of our Co-Chief Executive Officers, Christina Kay and Riva Sheppard, and our Chief Financial Officer, Dina L. Masi and the Vice President of Operations for Manhattan Drug Company, Inc., Mireille Antinozzi.Masi. Our business and operations to date chiefly have been implemented under the direction of these individuals, who presently are, and in the future will be, responsible for the implementation of our anticipated plans and programs. The loss or unavailability of the services of one or more of our principal executives would have an adverse effect on us. We may encounter difficulty in our ability to recruit and ultimately hire any replacement or additional executive officers having similar background, experience and qualifications as those of our current executive officers.

A cybersecurity breach could result in the loss or theft of investor data or funds, the inability to access electronic systems, loss or theft of proprietary information or corporate data, disruption of our operations, physical damage to a computer or network system, or costs associated with system repairs. Such incidents could cause the Company to incur regulatory penalties, reputational damage, remediation costs, litigation costs, additional compliance costs, or financial loss. Intentional cybersecurity breaches include: unauthorized access to systems, networks, or devices (such as through “hacking” activity); infection from computer viruses or other malicious software code; and attacks that shut down, disable, slow, or otherwise disrupt operations, business processes, or website access or functionality. In addition, unintentional incidents can occur, such as the inadvertent release of confidential information (possibly resulting in the violation of applicable privacy laws.laws).

Collectively, our Executive Officers, Directors and twoone other significant stockholders,stockholder, beneficially own approximately 82%72% of our outstanding shares of common stock as of September 23,25, 2025.2026. If these stockholders act together, they would be able to exert significant control over our management and affairs since significant corporate transactions require stockholder approval. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of all our stockholders.

Furthermore, in March 2024, the U.S. Securities and Exchange Commission (the “SEC”) announced rules that, among other matters, establish a framework for reporting climate-related risks. As a result of these additional reporting obligations, which we will have to comply with starting with our disclosures for the year ending June 30, 2027, we could face increased costs. Separately, the SEC has also announced that it is scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege our existing climate disclosures are misleading or deficient.

In the fiscal year ended June 30, 2025,2026, our net sales from operations increaseddecreased by $4,036$10,481 to approximately $54,353$43,872 from approximately $50,317$54,353 in the fiscal year ended June 30, 2024.2025. Our net sales increaseddecreased by approximately $3,114$9,294 and $922$1,187 in our Contract Manufacturing Segment and Other Business Lines Segment, respectively. These increasesdecreases were primarily from net increaseddecreased sales to the two major customers and all other customers in the Contract Manufacturing Segment in the amounts of $763$6,310 and $2,351,$2,984, respectively. The increasedecrease in all others was concentrated in one customer in the amount of $2,612 offset by a decrease of $261 to all other customers in this segment.$2,045. The increasedecrease in the Other Business Lines Segment was the result of increasedthe salesloss toof newthree major customers in thethis amountssegment which amounted to $1,509 and was offset by a net increase in other customers of $849 and $275 and increased sales to a third customer$322 in the amountfiscal year ended June 30, 2026 compared to the fiscal year ended June 30, 2025. As a result of $139the decline in sales our profit margins decreased by 8.4% in the fiscal year ended June 30, 2026, from 10.2% in the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024. These increases were offset by the loss of one customer with sales in the amount of $2461.8% in the fiscal year ended June 30, 20242026. andWhile a decline inour sales ofdeclined, $81our tofixed amanufacturing secondcosts customerremained inapproximately the fiscalsame year endedover June 30, 2025 compared to the fiscal year ended June 30, 2024. Our profit margins increased by 2.5% in the fiscal year ended June 30, 2025, from 7.7% in the fiscal year ended June 30, 2024 to 10.2% in the fiscal year ended June 30, 2025, primarily as a result of the increased sales volume in the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024.year.

We had consolidated selling and administrative expenses of approximately $3,542$3,505 and $3,633$3,542 in the fiscal years ended June 30, 20252026 and 2024,2025, respectively. The decrease in the consolidated selling and administrative expenses of $91,$37, or approximately 2.5%,1.1%, was primarily from decreases in salaries and employee benefits,benefits non-cashof stock$99 compensationoffset by increases in professional and consulting fees and all other generalselling and administrative expenses of $60, $66$36 and $44,$25, respectively. TheseOur decreasessalaries weredecreased by $127 and was offset by an increase in employee benefits of $80$28. The major decrease in professionalsalaries was from lower commission payouts of $104 which are based on a percentage of sales and consultinga fees.net Ourdecrease legal,of auditing$23 andresulting otherfrom consultingdecreases costsin increasedsalaries from layoffs of $69, offset by $58,a $17net andincrease $5,in respectively.salaries of $46 for the remaining employees. The employee benefit increase was primarily from increases in our medical insurance premiums for our non-union employees.

In the fiscal years ended June 30, 20252026 and 2024,2025, we had an operating loss of $2,705 and operating income of approximately $2,020 and $251,$2,020, respectively.

We have seen a slight negative impact in our margins due to inflationinflation, tariffs and to a lesser extent, tightened labor markets as we strive to increase prices to our customers as our operating costs increase. These declines were offset by an increase in sales volumes to offset the fixed overhead costs in the Contract Manufacturing Segment. 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.

● inventory valuation; and

If the historical data we use to calculate the allowance provided for credit losses does not reflect the future ability to collect outstanding receivables, additional provisions for credit losses may be needed and the future results of operations could be materially affected. In recording any additional allowances, a respective charge against income is reflected in the general and administrative expenses; and would reduce the operating results in the period in which the increase is recorded. Amounts determined to be uncollectible are written off against the credit loss or other reserve accounts. In each of the fiscal years ended June 30, 20252026 and 2024,2025, we had an allowance for credit losses of less than $20 and $1, respectively.$20.

Sales, net. Net sales for the fiscal year ended June 30, 20252026 and 20242025 were $54,353$43,482 and $50,317,$54,353, respectively, ana increasedecrease of $4,036$10,481 or 8.0%.19.3%. The increasedecrease is comprised of the following:

In the fiscal years ended June 30, 20252026 and 2024,2025, a significant portion of our consolidated net sales, approximately 84%90% and 90%,84%, respectively, were concentrated among two customers, Life Extension and Herbalife, customers in our Contract Manufacturing Segment. Life Extension and Herbalife represented approximately 68% and 25% and 62% and 26% and 71% and 23%,26%, respectively, of our Contract Manufacturing Segment’s net sales in the fiscal years ended June 30, 20252026 and 2024,2025, respectively. FourOne othercustomer, Life Technologies, Inc. (“Life Tech”) and four customers, Trusted Influencers Inc. (Hotpack Global, Inc. in 2024),Inc., Thermosource Tooling and Manufacturing, Life Technologies, Inc.Tech and Eastern Drayage (customers of our Other Business Lines Segment), while not significant customers of our consolidated net sales, represented 29% and 32%, 25%, 11%11%, and 10% and 14%, 43%, 10%, and 0%, respectively, of the Other Business Lines Segment net sales in the fiscal years ended June 30, 20252026 and 2024,2025, respectively. The loss of any of these customers could have a significant adverse impact on our financial condition and results of operations.

The increasedecrease in net sales of approximately $4,036$10,481 was the result of increaseddecreased sales of approximately $3,114$9,294 and $922$1,187 in our Contract Manufacturing and Other Business Lines Segments, respectively. These increasesdecreases were primarily from net increaseddecreased sales to the two major customers and all other customers in the Contract Manufacturing Segment in the amounts of $763$6,310 and $2,351,$2,984, respectively. The increasedecrease in all others was concentrated in one customer in the amount of $2,612 offset by a decrease of $261 to all other customers in this segment.$2,045. The increasedecrease in the Other Business Lines Segment was the result of increasedthe salesloss toof newthree major customers in thethis amountssegment which amounted to $1,509 and was offset by a net increase in other customers of $849 and $275 and increased sales to a third customer in the amount of $139$322 in the fiscal year ended June 30, 2025 compared the fiscal year ended June 30, 2024. These increases were offset by the loss of one customer with sales in the amount of $246 in the fiscal year ended June 30, 2024 and a decline in sales of $81 to a second customer in the fiscal year ended June 30, 20252026 compared to the fiscal year ended June 30, 2024.2025.

Cost of sales. Cost of sales increaseddecreased by $2,358$5,719 to $43,072 for the fiscal year ended June 30, 2026, as compared to $48,791 for the fiscal year ended June 30, 2025, asa compared to $46,433 for the fiscal year ended June 30, 2024, an increasedecrease of approximately 5.1%.11.7%. Cost of sales as a percentage of sales was approximately 89.8%98.2% and 92.3%89.8% for the fiscal years ended June 30, 20252026 and 2024,2025, respectively. The increasedecrease in the cost of goods sold amount is consistent and expected with the increasedecrease in net sales as well as the decreaseincrease in the cost of goods sold as a percentage of net sales.sales as our fixed manufacturing costs remained approximately the same year over year.

Other income, net. Other income, net was approximately $142 and $42 for the fiscal yearyears ended June 30, 20252026 comparedand to2025, $17 for the fiscal year ended June 30, 2024respectively and is composed of:

Our interest income, net increased by $21$115 in the fiscal year ended June 30 20252026 primarily due to higher average daily cash balances in our cash operating accounts resulting in increased interest credited to our account in fiscal year ended June 30, 20252026 compared to priorthe comparable prior period. Interest income was offset by interest expense of $46$14 and $52$46 in the fiscal years ended June 30, 20252026 and 2024,2025, respectively.

Federal and state income tax,tax expense, net. In the fiscal year ended June 30, 20252026 and 2024,2025, we had deferreda federal and state income taxestax expense, net of $1,386$279 and $124,$1,254, respectively. Included in theThe fiscal year ended June 30, 2026 and 2025 federal income tax expense of $1,386 is the recognition of an $830 valuation allowance on our federal net operating loss carryovers. We also had current state tax expense of approximately $18 and $31, respectively and deferred state tax benefit of $150 and state income tax expense ofincludes $1,changes in the fiscalvaluation yearsallowance endedon Junedeferred 30,tax 2025assets in the amounts of $779 and 2024,$505, respectively.

Net (loss) income. Our net income forIn the fiscal yearsyear ended June 30, 20252026, andwe 2024had wasa approximatelynet loss of $2,842 compared to net income of $808 andin $112,the respectively.fiscal year ended June 30, 2025. The increasedecrease of approximately $696$3,650 was primarily the result of increaseddecreased operating income of $1,769$4,725, offset by anthe increasedecrease in income taxes,tax netexpense of $1,098.$975.

At June 30, 20252026 and 2024,2025, the Companywe had working capital of $14,515$11,577 and $11,752,$14,515, respectively. Our current assets increaseddecreased by $888$1,384 and our current liabilities decreasedincreased by $1,875,$1,554, respectively, from June 30, 20242025 to June 30, 2025.2026. The increasedecrease in current assets was primarily from increasesdecreases in cash and accounts receivable and inventories of $1,938$2,096 and $762,$220, respectively, offset by aan decreaseincrease in inventoriescash of $1,882.$856. Our current liabilities decreasedincreased primarily from the decreasesincreases of $1,359$933 and $243$527 in accruedaccounts expensespayable and otherthe current liabilitiesportion andof accountsour payable,operating lease liabilities, respectively.

TheOur Loan Agreement provides a committed revolving line of credit under which we may request, and PNC will make advances to us from time to time until April 5,14, 2026,2027, in an aggregate amount outstanding at any time not to exceedof $4,000 (the "“Line of Credit"”) and a Convertible Equipment Line of Credit Note (Daily SOFR) payable to the order of PNC in an aggregate amount outstandingin the aggregate at any time outstanding not to exceed $500$250 (the "Convertible ELOC"). Advances under the Convertible ELOC will be used for the purchase of equipment and/or vehicles.

Net cash provided by operating activities of $2,065$1,241 in the fiscal year ended June 30, 20252026 includes a net incomeloss of approximately $808.$2,842. After excludingadjusting the effectsnet ofloss non-cashfor expensesnoncash andexpenses, income, such asincluding depreciation and amortization, compensation expense for employee stock options, allowances for credit losses and changes in deferred tax assets, the adjusted cash used in operations before the effect of the changes in working capital components was ana increasedecrease of approximately $3,567.$968. Cash in the amount of approximately $1,502$2,209 from our working capital assets and liabilities was usedprovided for in our operating activities and was primarily the result of decreases in accruedaccounts expensesreceivable and other liabilitiesinventories of $1,355,$2,096 and $220, respectively and an increase in accounts payable of $933. These increases were offset, in part, by a decrease in operating lease obligations of approximately $945, accounts payable of $211$1,034 and increasesan increase in accounts receivable of $781 and other assets of $92, offset by a decrease in inventories of 1,882.$89.

Net cash provided by operating activities of $943$2,065 in the fiscal year ended June 30, 20242025 includes a net income of approximately $112.$808. After excluding the effects of non-cash expenses and income, such as depreciation and amortization, compensation expense for employee stock options, allowances for credit losses and changes in deferred tax assets, the adjusted cash used in operations before the effect of the changes in working capital components was an increase of approximately $1,721.$3,567. Cash in the amount of approximately $744$1,502 from our working capital assets and liabilities was used in our operating activities and was primarily the result of decreases in operating lease obligations of approximately $902 and increases in inventories and accounts receivable of $983 and $120, respectively, offset, by increases in accounts payable of $244 and accrued expenses and other liabilities of $1,029.$1,355, operating lease obligations of approximately $945, accounts payable of $211 and increases in accounts receivable of $781 and other assets of $92, offset by a decrease in inventories of $1,882.

Cash used in investing activities was used for the purchase of machinery and equipment for approximately $205$346 and $553$205 in the fiscal years ended June 30, 20252026 and 2024,2025, respectively. Additionally, in the fiscal year ended June 30, 2026, we received cash proceeds of $6 for the sale of machinery and equipment.

As of June 30, 2025,2026, we had cash of approximately $3,615,$4,471, funds available under our Line of Credit and Convertible ELOC of approximately $4,500,$4,250 and working capital of $14,515.$11,577. We had incomea loss from operations of approximately $2,020$2,705 in the fiscal year ended June 30, 20252026 and a net incomeloss of approximately $808. Net income includes a net tax provision of $1,254, of which $1,232 is a non-cash item due to our Federal and state net operating loss carryforwards and deferred tax assets offsetting the amounts owed.$2,842. After taking into consideration our interim results and current projections, management believes that operations, together with our credit facilities and equipment financing will support our working capital requirements at least through the twelve-month period ending in September 18, 2026.2027.

The Company's capital expenditures in the fiscal years ended June 30, 20252026 and 20242025 were approximately $205$346 and $553,$205, respectively. The Company has budgeted approximately $500 for capital expenditures for the fiscal year ending June 30, 2026.2027. The total amount is expected to be funded from cash provided from the Company’s operations and from lease financing.financing or use of the Convertible ELOC.

For the sixnine months ended DecemberMarch 31, 2025,2026, our net sales from operations decreased by $2,262$6,102 to approximately $23,969$34,076 from approximately $26,231$40,178 in the sixnine months ended DecemberMarch 31, 2024,2025, or approximately 9%.15%. Our net sales in the Contract Manufacturing Segment decreased by $1,556$5,192 or approximately 6%,14%, and our Other Business Lines Segment decreased by $706$910 or approximately 45%.44%. 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$2,267 and a net decrease of $136$2,925 from our two major customers. Net sales in the sixnine months ended DecemberMarch 31, 20252026 were also lower by approximately $706$910 from the sixnine months ended DecemberMarch 31, 20242025 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,$778, which customer represented 51%38% of net sales in the sixnine months ended DecemberMarch 31, 20242025 compared to 2%1% of net sales in the sixnine months ended DecemberMarch 31, 2025.2026. The loss of any of these customers could have a significant adverse impact on our financial condition and results of operations.

For the sixnine months ended DecemberMarch 31, 2025,2026, we had an operating loss of approximately $751,$1,836, a decrease of approximately $1,443$3,267 from operating income of approximately $692$1,431 for the sixnine months ended DecemberMarch 31, 2024.2025. Our profit margins decreased from approximately 9.7%10.2% of net sales in the sixnine months ended DecemberMarch 31, 20242025 to approximately 4.4%2.3% of net sales in the sixnine months ended DecemberMarch 31, 2025,2026, primarily as a result of the decreased sales of $2,262$6,102 and a decrease in cost of sales of $768.$2,781. Our consolidated selling and administrative expenses were lower,lower $1,799by approximately 2% or $54, $2,608 and $1,850$2,662 in the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, a decrease of $51 or approximately 3%.respectively. Salaries and employee benefits and warehousing expenses decreased by approximately $75 and $28,$102, offset, in part, by an increase in professional fees and all other selling and administrative expenses of $47.$18 and $30, respectively.

We have seen a slight negative impact in our margins due to inflationinflation, tariffs and to a lesser extent, 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.

There have been no changes to our critical accounting estimates in the sixnine months ended DecemberMarch 31, 2025.2026. 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.

For the SixNine Months Ended DecemberMarch 31, 20252026 compared to the SixNine Months Ended DecemberMarch 31, 20242025

Sales, net. Sales, net, for the sixnine months ended DecemberMarch 31,202531, 2026 and 20242025 were $23,969$34,076 and $26,231,$40,178, respectively, a decrease of 8.6%,15.2%, and were comprised of the following:

In each of the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, a significant portion of our consolidated net sales, approximately 89% and 82%,90%, were concentrated among two customers in our Contract Manufacturing Segment, Life Extension and Herbalife. Life Extension and Herbalife represented approximately 68%69% and 25%24% and 64%62% and 23%,26%, respectively, of our Contract Manufacturing Segment’s net sales in the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively.

The decrease in net sales of approximately $2,262$6,102 in the sixnine months ended DecemberMarch 31, 20252026 was the result of decreased sales in both of our segments. Our Contract Manufacturing Segment decrease of $1,556$5,192 from the sixnine months ended DecemberMarch 31, 20242025 was primarily from existing and new customers otheras thanwell as our two major customers of $1,420,$2,268 and a$2,925, net decrease of $136 with our two major customers.respectively. The decrease in the Other Business Lines Segment of approximately $910 was primarily from a major customer in this segment in the amount of $784,$778, which customer represented 51%38% of net sales in the sixnine months ended DecemberMarch 31, 20242025 compared to 2%1% of net sales in the sixnine months ended DecemberMarch 31, 2025.2026.

Cost of sales. Cost of sales decreased by approximately $768$2,781 to $22,921$33,304 for the sixnine months ended DecemberMarch 31, 2025,2026, as compared to $23,689$36,085 for the sixnine months ended DecemberMarch 31, 2024,2025, or approximately 3.2%.7.7%. Cost of sales increased as a percentage of sales to 95.6%97.7% for the sixnine months ended DecemberMarch 31, 20252026 as compared to 90.3%89.8% for the sixnine months ended DecemberMarch 31, 2024.2025. The decrease of $768$2,781 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,$54, $1,799$2,608 and $1,850$2,662 in the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively. As a percentage of sales, net, selling and administrative expenses were approximately 7.5%7.7% and 7.1%6.6% in the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively. We had ana 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 decreasesdecrease in employee salaries and benefit costs of $75$102 and warehousingincreases costsin professional fees and all other general and administrative expenses of $28.$18 and $30, respectively.

Other income (expense),income, net. Other income (expense),income, net was approximately $73$123 and $36 for the sixnine months ended DecemberMarch 31, 20252026 comparedand to2025, $(3) for the six months ended December 31, 2024,respectively and was composed of:

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 sixnine months ended DecemberMarch 31, 20252026 compared to the same period in the prior year. In the sixnine months ended DecemberMarch 31, 2024,2025, we recognized a permanent impairment in our machinery and equipment of $28.$28 offset by a gain on disposal of assets of $34 and in the nine months ended March 31, 2026, recognized a gain on sale of machinery and equipment of $6 and had other income of $5.

Income tax expense (benefit), net. For the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, we had federal income tax (benefit) expense of $5$(108) and $236,$651, respectively and a state income tax benefit,benefits, net of approximately $44$129 and $170 in the sixnine months ended DecemberMarch 31, 20252026 comparedand to2025, arespectively. state income tax expense of $78 inIn the sixnine months ended DecemberMarch 31, 2024.2025, we released the valuation allowance on our state net operating losses as they became available to offset current state taxable income.

Net (loss) income. In the sixnine months ended DecemberMarch 31, 20252026, we had a net loss of $640$1,476 compared to net income of $375$986 in the sixnine months ended DecemberMarch 31, 2024.2025. The decrease of approximately $1,015$2,462 was primarily the result of decreased operating income of $1,443,$3,267, offset by the decrease in income tax expense of $353.$718.

For the Three Months Ended DecemberMarch 31, 20252026 compared to the Three Months Ended DecemberMarch 31, 20242025

Sales, net. Sales, net, for the three months ended DecemberMarch 31, 20252026 and 20242025 were $11,280$10,107 and $12,614,$13,947, respectively, a decrease of 10.6%,27.5%, and are comprised of the following:

For the three months ended DecemberMarch 31, 20252026 and 2024,2025, a significant portion of our consolidated net sales, approximately 92%90% and 79%,85%, respectively, were concentrated among two customers, Life Extension and Herbalife, in our Contract Manufacturing Segment. Life Extension and Herbalife, represented approximately 65%70% and 30%23% and 60%58% and 26%,31%, respectively, of our Contract Manufacturing Segment’s net sales in the three months ended DecemberMarch 31, 20252026 and 2024,2025, respectively.

The decrease in net sales of approximately $1,334$3,840 in the three months ended DecemberMarch 31, 2025,2026, was primarily the result of decreased net sales in our Contract Manufacturing Segment of $750$3,636 due to decreased sales volumes to customers other thanfrom our two major customers in the amount of $1,135, offset by a net increase in sales to Herbalife$2,788 and Lifeall Extensionother customers of $385.$847. Sales, net in the Other Business Lines Segment decreased by $584$204 compared to the same period in the prior year and was primarily the result of the lackloss of any special projects for one of ourtwo 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.$193. These two customers represented 58%approximately and 17%,20% of net sales in this segment,segment in the three months ended DecemberMarch 31, 2024, respectively.2025.

Cost of sales. Cost of sales decreased by approximately $192$2,013 to $11,251$10,383 for the three months ended DecemberMarch 31, 2025,2026, as compared to $11,443$12,396 for the three months ended DecemberMarch 31, 20242025 or approximately 2%.16.2%. Cost of sales decreased as a percentage of sales to 99.7%102.7% for the three months ended DecemberMarch 31, 20252026 as compared to 90.7%88.9% for the three months ended DecemberMarch 31, 2024.2025. 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 lowersubstantially the same in the three months ended DecemberMarch 31, 20252026 byand 2025, approximately $26 from the three months ended December 31, 2024$809 and were approximately $943 and $969,$812, respectively. As a percentage of sales, net, selling and administrative expenses were approximately 7.5%8.0% and 7.1%7.7% in the three months ended DecemberMarch 31, 20252026 and 2024,2025, 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),income, net. Other income (expense),income, net was approximately $40 for the three months ended DecemberMarch 31, 20252026 comparedand to2025, $(17)was forapproximately the$50 threeand months$39, ended December 31, 2024,respectively, and is composed of:

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 DecemberMarch 31, 20252026 compared to the same period in the prior year. In the three months ended DecemberMarch 31, 2024,2026 and 2025, we had a permanent impairmentgain on disposal of machinery of $6 and equipmenta gain on disposals of $28.assets of $34, respectively. In the three months ended March 31, 2026 we also had other income of $5.

Income tax (benefit) expense, net. For the three months ended DecemberMarch 31, 20252026 we had a federal and state tax net benefit of $46$113 and $66,$85, respectively, compared to federal and state income tax expense, net of $46$415 and $23,a state income tax benefit of $248, in the three months ended DecemberMarch 31, 2024,2025. respectively.In the three months ended March 31, 2025, we released the valuation allowance on our state net operating losses as they became available to offset current state taxable income.

Net (loss) income. For the three months ended DecemberMarch 31, 20252026 we had a net loss of $763$837 compared to net income of $116$611 in the three months ended DecemberMarch 31, 2024.2025. The change of approximately $879$1,448 was primarily the result of decreased operating income of $1,116,$1,824, offset by the change from income tax expense, net to income tax benefit, net of $181.$365.

As of DecemberMarch 31, 2025,2026, our working capital was approximately $14,278,$12,447, a decrease of $237$2,068 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$789 offsetand byan a decreaseincrease in our current liabilities of $707.$1,279. The decrease in our currents assets was from decreases in accounts receivable and inventories of $1,838$1,775 and $999,$1,243, respectively, offset by increases in cash and other current assets of $1,699$2,211 and $194,$18, respectively. The increase in our current liabilities was primarily from the increases in accounts payable and accrued expenses and other liabilities of $772 and current lease obligations of $507.

Net cash provided by operating activities of $1,918$2,435 in the sixnine months ended DecemberMarch 31, 20252026 includes a net loss of approximately $639.$1,476. After excluding the effects of non-cash expenses, including depreciation and amortization, and changes in deferred tax assets, the adjusted cash providedused fromin operations before the effect of the changes in working capital components was $66.$569. Net cash providedused byin our operations in the sixnine months ended DecemberMarch 31, 20252026 was offset by cash provided by our working capital assets and liabilities in the amount of approximately $1,850$3,004 and was primarily the result of an decreases in accounts receivable and inventories of $1,838$1,775 and $999,$1,243, respectively offset by a decrease in prepaid expenses and other assets of $201 and decreasesincreases in accounts payable, accrued expenses and other liabilities of $295$771. andThese sources of cash were offset by a decrease in operating lease obligationsleases of $489.$755.

Net cash provided by operating activities of $858$1,474 in the sixnine months ended DecemberMarch 31, 2024,2025 includes net income of approximately $375.$986. After excluding the effects of non-cash expenses, including depreciation and amortization, and changes in deferred tax assets, the adjusted cash provided from operations before the effect of the changes in working capital components was $1,391.$2,564. Net cash provided by our operations in the sixnine months ended DecemberMarch 31, 20242025 was offset by cash used in our working capital assets and liabilities in the amount of approximately $533$1,090 and was primarily the result of an increaseincreases in our accounts receivable of $412 and prepaid expenses and other assets of $124,$152, the decrease in operating lease obligations of $468$696 and accounts payable and other liabilities of $560$1,024 offset by decreasesa decrease in accounts receivable of $440 and inventory of $178.$1,167.

Cash used in investing activities of $197$191 and $85$201 in the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, was primarily for the purchase of machinery and equipment.

Cash used in financing activities was approximately $22$33 for the sixnine months ended DecemberMarch 31, 2025,2026, and was primarily from principal payments under our financed lease obligations.

Cash provided by financing activities was approximately $11 for the sixnine months ended DecemberMarch 31, 2024,2025, 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 DecemberMarch 31, 2025,2026, we had cash of $5,314,$5,826, funds available under our credit lines of approximately $4,500 and working capital of approximately $14,278$12,448 and an operating loss of $751$1,836 in the sixnine months ended DecemberMarch 31, 2025.2026. 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 theMay period ending February 11,8, 2027.

Our current total annual commitments as of DecemberMarch 31, 20252026 for long term non-cancelable leases of approximately $225$1,340 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 FebruaryApril x,27, 2026, we renewedentered ourinto an operating lease extendingof theoffice termination date from January 31, 2026 to January 31, 2031equipment 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.$5.

The Company's capital expenditures for the sixnine months ended DecemberMarch 31, 20252026 and 20242025 were approximately $197 and $85,$201, respectively. The Company has budgeted approximately $500$200 for capital expenditures for the remaining fiscal year 2026. The total amount is expected to be funded from lease financing and cash provided from the Company’s operations.