SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended December 31, 2006

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-16185

GEOPHARMA, INC.

(Name of small business issuer as specified in its charter)

STATE OF FLORIDA	59-2600232
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

6950 Bryan Dairy Road, Largo, Florida	33777
(Address of principal executive offices)	(Zip Code)

Issuer’s telephone number, including area code: (727) 544-8866

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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.    x  Yes    ¨  No

The number of shares outstanding of the Issuer’s common stock at $.01 par value as of February 2, 2006 was 9,858,049 net of treasury.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes  ¨    No  x

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

GEOPHARMA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

	December 31, 2006		March 31, 2006
	(Unaudited)		(Audited)
Current assets:
Cash and cash equivalents	$	793,879	$	1,206,017
Certificate of deposit		448,949		433,273
Accounts receivable, net		8,695,927		7,465,025
Accounts receivable, other		513,476		634,684
Inventories, net		5,603,296		5,767,056
Prepaid expenses and other current assets		2,440,893		1,324,339
Due from affiliates		1,072,782		1,162,416
Total current assets	$	19,569,202	$	17,992,810
Property, plant, leaseholds and equipment, net		9,375,134		8,024,651
Goodwill, net		728,896		728,896
Intangible assets, net		4,674,303		4,384,842
Media credits, net		533,166		799,748
Deferred tax asset		656,800		—
Other assets, net		197,183		166,194
Total assets	$	35,734,684	$	32,097,141

See accompanying notes to condensed consolidated financial statements

2

LIABILITIES AND SHAREHOLDERS’ EQUITY

	December 31, 2006			March 31, 2006
	(Unaudited)			(Audited)
Current liabilities:
Accounts payable	$	4,149,851		$	4,882,107
Current portion of long-term obligations		1,203,107			1,016,789
Accrued expenses, other liabilities and related party obligations		5,035,342			3,711,153
Total current liabilities	$	10,388,300		$	9,610,049
Long-term obligations, less current portion		2,327,748			1,666,667
Total liabilities	$	12,716,048		$	11,276,716
Commitments and contingencies
Minority interest		(984,327	)		(582,610	)
Shareholders’ equity:
6% convertible preferred stock, Series B, $.01 par value (5,000 shares authorized, 5,000 shares issued and outstanding (liquidation preference $5,000,000)		50			50
Common stock, $.01 par value; 24,000,000 shares authorized; 10,197,666, and 10,051,775 shares issued and outstanding		101,977			100,518
Treasury stock (339,617 and 189,617 common shares, $.01 par value)		(3,396	)		(1,896	)
Additional paid-in capital		48,143,588			46,593,630
Retained earnings (deficit)		(24,239,256	)		(25,289,267	)
Total shareholders’ equity	$	24,002,963		$	21,403,035
Total liabilities and shareholders’ equity	$	35,734,684		$	32,097,141

See accompanying notes to condensed consolidated financial statements.

3

GEOPHARMA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2006			2005			2006			2005
Revenues:
PBM (a related party activity)	$	5,078,738		$	4,005,797		$	14,630,131		$	12,190,203
Distribution		3,374,219			4,211,370			9,869,392			11,097,986
Manufacturing		5,831,536			4,052,681			20,860,036			12,706,466
Pharmaceutical		—			99,473			251,845			318,375
Total revenues	$	14,284,493		$	12,369,321		$	45,611,404		$	36,313,030
Cost of goods sold:
PBM		5,039,582			3,970,449			14,515,619			12,092,374
Distribution		1,224,369			2,389,624			3,986,597			6,976,251
Manufacturing (excluding depreciation and amortization presented below)		2,849,473			2,655,082			13,607,561			7,781,634
Pharmaceutical		654,640			56,769			813,571			181,466
Total cost of goods sold	$	9,768,064		$	9,071,924		$	32,923,348		$	27,031,725
Gross profit:
PBM		39,156			35,348			114,512			97,829
Distribution		2,149,850			1,821,746			5,882,795			4,121,735
Manufacturing		2,982,063			1,397,599			7,252,475			4,924,832
Pharmaceutical		(654,640	)		42,704			(561,726	)		136,909
Total gross profit	$	4,516,429		$	3,297,397		$	12,688,056		$	9,281,305
Selling, general and administrative expenses:
Selling, general and administrative expenses		2,967,892			2,188,404			8,899,103			7,236,094
Stock option compensation expense		427,675			—			1,283,025			—
Depreciation and amortization		347,385			195,947			829,013			530,508
Operating income (loss) before other income and expense	$	773,477		$	913,046		$	1,676,915		$	1,514,703
Other income (expense), net:
Other income (expense), net		(410	)		16,123			163,889			896,804
Interest expense, net		(33,790	)		(129,903	)		(62,406	)		(305,838	)
Total other income (expense), net	$	(34,200	)	$	(113,780	)	$	101,483		$	590,966
Income (loss) before income taxes	$	739,277		$	799,266		$	1,778,398		$	2,105,669
Minority interest benefit (expense)		319,998			207,445			984,328			292,406
Income tax benefit (expense)		(300,000	)		(567,193	)		(888,000	)		(851,298	)
Net income (loss)	$	759,275		$	439,518		$	1,874,726		$	1,546,777
Preferred stock dividends		75,000			75,000			225,000			225,000
Net income (loss) available to common shareholders	$	684,275		$	364,518		$	1,649,726		$	1,321,777
Basic income (loss) per share	$	.07		$	.04		$	.17		$	.15
Basic weighted average number of common shares outstanding		9,818,924			9,005,134			9,877,749			8,884,866
Diluted income (loss) per share	$	.06		$	.03		$	.14		$	.11
Diluted weighted average number of common shares outstanding		13,191,605			12,826,152			13,290,210			12,630,224

See accompanying notes to condensed consolidated financial statements.

4

GEOPHARMA, INC. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

	Nine Months Ended December 31,
	2006			2005
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income	$	1,874,726		$	1,546,777
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		829,013			530,500
Certificate of deposit accrued interest		(15,676	)		(7,346	)
Amortization of stock option deferred compensation		1,283,025			33,593
Income tax expense, current		888,000			751,298
Amortization of debt discount to interest expense		—			177,748
(Increase) decrease in net deferred income tax asset		(656,800	)		138,000
Changes in operating assets and liabilities:
Accounts receivable, trade, net		(1,230,902	)		(4,411,434	)
Accounts receivable, other		121,208			471,290
Inventory, net		437,342			(1,607,186	)
Prepaid expenses and other current assets		(1,116,798	)		(535,730	)
Other assets, net		(384,243	)		(274,536	)
Accounts payable		(732,256	)		2,522,433
Accrued expenses		(218,126	)		2,371,010
Due from affiliates, net		90,248			(562,996	)
Net cash provided by operating activities	$	1,168,761		$	1,143,421
Cash flows from investing activities:
Purchases of property, plant, leaseholds and equipment	$	(2,122,701	)	$	(5,545,126	)
Proceeds (uses) from minority interest, net		(401,717	)		687,594
Net cash used by investing activities	$	(2,524,418	)	$	(4,857,532	)
Cash flows from financing activities:
Proceeds from issuance of short-term and long-term obligations	$	1,078,572		$	3,000,000
Payments of long-term obligations		(231,172	)		(2,023,820	)
Payments of preferred stock dividends		—			—
Proceeds from stock options exercised		96,119			80,138
Net cash provided by financing activities	$	943,519		$	1,056,318
Net increase (decrease) in cash		(412,138	)		(2,657,793	)
Cash at beginning of period		1,206,017			6,433,011
Cash at end of period	$	793,879		$	3,775,218

	Nine Months Ended December 31,
	2006		2005
	(Unaudited)		(Unaudited)
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	43,494	$	102,325
Cash paid during the period for income taxes	$	140,000	$	—
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Value of common stock issued to pay preferred stock dividends	$	225,000	$	225,000

See accompanying notes to condensed consolidated financial statements.

5

GEOPHARMA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2006 AND 2005

(UNAUDITED)

NOTE 1—BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instruction to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended December 31, 2006 and 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2007. For further information, refer to the consolidated financial statements and footnotes included in the Company’s Form-10KSB as of and for the years ended March 31, 2006 and 2005 as filed with the Securities and Exchange Commission on June 29, 2006.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Principles of Consolidation

The condensed consolidated financial statements as of December 31, and March 31, 2006 and for the three and nine months ended December 31, 2006 and 2005 include the accounts of GeoPharma, Inc. (the “Company”), (“GeoPharma”), which is continuing to do manufacturing business as Innovative Health Products, Inc. (“Innovative”), and its Florida wholly-owned subsidiaries Breakthrough Engineered Nutrition, Inc. (“Breakthrough”), Libi Labs, Inc. (“Libi”), Belcher Pharmaceuticals, Inc., (“Belcher”), Breakthrough Marketing Inc., (“B-Marketing”), IHP Marketing, Inc., (“IHP-Marketing”), and Go2PBM Services, Inc. (“PBM”) and its Delaware wholly-owned subsidiary, Belcher Capital Corporation, (“Belcher Capital”). Effective August 2005, the Company has a 51% controlling interest in our new Florida-incorporated subsidiary, American Antibiotics, LLC ( “American”), which is accounted for given the consideration of the 49% minority interest. All transactions relating to intercompany balances and transactions have been eliminated in consolidation.

b. Industry Segment

In accordance with the provisions of Statement of Financial Accounting Standards No. 131, (SFAS 131), Disclosures about Segments of an Enterprise and Related Information, a company is required to disclose selected financial and other related information about its operating segments. Operating segments are components of an enterprise about which separate financial information is available and is utilized by the chief operating decision maker related to the allocation of resources and in the resulting assessment of the segment’s overall performance. As of December 31, 2006 and March 31, 2006, the Company had four industry segments in addition to corporate: manufacturing, distribution, pharmacy benefit management and pharmaceutical. The $35,734,684 of total assets as of December 31, 2006 were comprised of $1,831,316 attributable to corporate, $13,111,480 attributable to manufacturing, $6,427,641 attributable to distribution, $834,686 attributable to pharmacy benefit management and $13,529,561 attributable to pharmaceutical. The $32,097,141 of total assets as of March 31, 2006 were comprised of $1,367,236 attributable to corporate, $10,735,828 attributable to manufacturing, $6,540,047 attributable to distribution, $1,496,380 attributable to pharmacy benefit management and $11,957,650 attributable to pharmaceutical.

c. Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

d. Inventories

Inventories are stated at lower of cost or market. Cost is determined using the first-in, first-out method (“FIFO”).

e. Property, Leasehold Improvements and Equipment

Depreciation is provided for using the straight-line method, in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives (asset categories range from three to seven years). Leasehold improvements are amortized using the straight-line method over the lives of the respective leases or the service lives of the improvements, whichever is shorter. Leased equipment under capital leases is amortized using the straight-line method over the lives of the respective leases or over the service lives of the assets, whichever is shorter, for those leases that substantially transfer ownership. Accelerated depreciation methods are used for tax purposes.

6

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

f. Intangible Assets

Intangible assets consist primarily of goodwill and intellectual property. FAS 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. The Company has selected January 1 as the annual date to test these assets for impairment. For the three and nine months ended December 31, 2006 and 2005, amortization expense associated with goodwill was $0. The unamortized balance of goodwill at December 31, and March 31, 2006 was $728,896 with the unamortized balance of intellectual property for the same periods was $1,280,956 and $828,305, respectively. No impairment loss was required to be recorded for assets with indefinite lives.

FAS 142 also requires the intangible assets with definite useful lives be amortized over their respective estimated useful lives, and reviewed for impairment in accordance with SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of”. At December 31, 2006, the $799,748 media credit balance, net, was evaluated for impairment given the consideration of its three year life that expires March 31, 2008. The Company wrote off approximately $267,000 with a charge to the distribution segment’s cost of sales and thus reduced the net media credit asset at December 31, 2006 to $533,166, an amount that the Company believes can be utilized prior to its expiry.

g. Impairment of Assets

In accordance with the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company’s policy is to evaluate whether there has been a permanent impairment in the value of long-lived assets, certain identifiable intangibles and goodwill when certain events have taken place that indicate the remaining unamortized balance may not be recoverable. When factors indicate that the intangible assets should be evaluated for possible impairment, the Company uses an estimate of related undiscounted cash flows. There have been no impairment losses recorded.

h. Income Taxes

The Company utilizes the guidance provided by Statement of Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes. Under the liability method specified by SFAS 109, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities.

i. Earnings (Loss) Per Common Share

Earnings (loss) per share are computed using the basic and diluted calculations on the face of the statement of operations. Basic earnings (loss) per share are calculated by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) before preferred dividends by the weighted average number of shares of common stock outstanding for the period, adjusted for the dilutive effect of common stock equivalents, using the treasury stock method. Convertible debt and preferred stock warrants, officer, employee and nonemployee stock options that are considered potentially dilutive are included in the fully diluted share calculation at December 31, 2006 and 2005. The reconciliation between basic and fully diluted shares are as follows:

	For the Three Months Ended December 31, 2006		For the Three Months Ended December 31, 2005		For the Nine Months Ended December 31, 2006		For the Nine Months Ended December 31, 2005
Net income (loss) per share – basic:
Net income (loss)	$	684,275	$	364,518	$	1,649,726	$	1,321,777
Weighted average shares – basic		9,818,924		9,005,134		9,877,749		8,884,866
Net income (loss) per share – basic	$	.07	$	.04	$	.17	$	.15
Net income (loss) per share – diluted:
Net income (loss)	$	684,275	$	364,518	$	1,649,726	$	1,321,777
Preferred stock dividend		75,000		75,000		225,000		225,000
	$	759,275	$	439,518	$	1,874,726	$	1,546,777
Weighted average shares – basic		9,818,924		9,005,134		9,877,749		8,884,866
Effect of preferred stock prior to conversion		833,333		833,333		833,333		833,333
Effect of warrants prior to conversion		562,500		562,500		562,500		562,500
Effect of stock options		1,976,848		2,425,185		2,016,628		2,425,185
Weighted average shares – diluted		13,191,605		12,826,152		13,290,210		12,630,224
Net income (loss) per share – diluted	$	.06	$	.03	$	.14	$	.11
Antidilutive items not included		1,170,000		1,170,000		1,170,000		1,170,000

7

j. Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles, requires management to make estimates, assumptions and apply certain critical accounting policies that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at December 31, 2006 and March 31, 2006, as well as the reported amounts of revenues and expenses for the three and nine months ended December 31, 2006 and 2005. Estimates and assumptions used in our financial statements are based on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. These estimates and assumptions also require the application of certain accounting policies, many of which require estimates and assumptions about future events and their effect on amounts reported in the financial statements and related notes. We periodically review our accounting policies and estimates and makes adjustments when facts and circumstances dictate. Actual results may differ from these estimates under different assumptions or conditions. Any differences may have a material impact on our financial condition, results of operations and cash flows.

k. Concentration of Credit Risk

Concentrations of credit risk with respect to trade accounts receivable are customers with balances that exceed 5% of total consolidated trade accounts receivable, net at December 31, 2006. Six customers, General Nutrition Distribution with 23.2%, Spectrum Group with 21.2%, Berkeley Premium Nutraceuticals with 10.1%, Walgreens with 7.9%, Rite Aid Corporation with 8% and CarePlus, a related party with 8.7% of the total of trade accounts receivable. As of March 31, 2006, four customers, General Nutrition Distribution with 31.4%, Spectrum Group with 21.4%, NutraCea with 10% and Rite Aid Corporation with 7.9% of the total of trade accounts receivable.

For the three months ended December 31, 2006, four customers individually exceeded 5% of our total consolidated revenues which included General Nutrition Distribution for 18.0%, 9.0% for Berkeley Premium Nutraceuticals, 7.6% for Spectrum Group, and 35.6% for CarePlus Health, a related party, in relation to total consolidated revenues and for the three months ended December 31, 2005, four customers exceeded 5% of our total consolidated revenues, General Nutrition Distribution for 27.1%, 6.6% for Spectrum Group, 6.5% for Berkeley Premium Nutraceuticals, and 32.4% for CarePlus, a related party.

For the nine months ended December 31, 2006, five customers individually exceeded 5% of our total consolidated revenues which included General Nutrition Distribution for 15.8%, 12.0% for Spectrum Group, 7.3% for both NutraCea and Berkeley Premium Nutraceuticals and 32.1% for CarePlus Health, a related party, in relation to total consolidated revenues and for the nine months ended December 31, 2005, four customers exceeded 5% of our total consolidated revenues, General Nutrition Distribution for 13.9%, 11.8% for Spectrum Group, 5.2% for Berkeley Premium Nutraceuticals , and 33.6% for CarePlus, a related party.

8

The Company has no concentration of customers within specific geographic areas outside the United States that would give rise to significant geographic credit risk.

l. Revenue and Cost of Sales Recognition

In accordance with SAB 101, Revenue Recognition, revenues are recognized by the Company when the merchandise is shipped which is when title and risk of loss has passed to the external customer. The Company analyzes the status of the allowance for uncollectible accounts based on historical experience, customer history and overall credit outstanding. For our distribution segment, any charge backs or other sales allowances immediately reduce the gross receivable with the corresponding reduction effected through increases in sales allowances which directly reduce sales revenue. For our PBM segment, service revenues are recognized once the member service of completing and fulfilling delivery of the members’ prescription.

Cost of Sales is recognized for the manufacturing and distribution business segments simultaneously with the recognition of revenues with a direct charge to cost of goods sold and with an equal reduction to inventory at FIFO cost. For the PBM segment, cost of sales is recognized based on actual costs incurred and are recognized as the related revenue is recognized.

m. Advertising Costs

The Company charges advertising costs to expense as incurred. Advertising expense was $180,654 and $216,506 for the three months ended December 31, 2006 and 2005 and $525,733 and $1,474,359 for the nine months ended December 31, 2006 and 2005, respectively.

n. Research and Development Costs

Costs incurred to develop our generic pharmaceutical products are expensed as incurred and charged to research and development (“R&D”). R&D expensed for the three and nine months ended December 31, 2006 were $308,528 and $942,275, respectively and was $112,217 and $248,447 for the three and nine months ended December 31, 2005.

o. Fair Value of Financial Instruments

The Company, in estimating its fair value disclosures for financial instruments, uses the following methods and assumptions:

Cash, Accounts Receivable, Accounts Payable and Accrued Expenses: The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable and accrued expenses approximate their fair value due to their relatively short maturity.

Long-term Obligations: The fair value of the Company’s fixed-rate long-term obligations is estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. At December 31 and March 31, 2006, the fair value of the Company’s long-term obligations approximated its carrying value.

Credit Lines Payable: The carrying amount of the Company’s credit lines payable approximates fair market value since the interest rate on these instruments corresponds to market interest rates.

p. Stock-Based Compensation

Effective April 1, 2006, the Company was required to adopt Statement of Financial Accounting Standards (“SFAS”) No. 123R “Share-Based Payment” (“SFAS 123R”) which replaces SFAS 123 and SFAS 148, and supersedes Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires the cost relating to share-based payment transactions in which an entity exchanges its equity instruments for goods and services from either employees or non-employees be recognized in the financial statements as the goods are received or when the services are rendered. That cost will be measured based on the fair value of the equity instrument issued. We will no longer be permitted to follow the previously-followed intrinsic value accounting method that APB No. 25 allowed which resulted in no expense being recorded for stock option grants where the exercise price was equal to or greater than the fair market value of the underlying stock on the date of grant and further permitted disclosure-only proforma compensation expense effects on net income.

SFAS 123R now applies to all of our existing outstanding unvested share-based payment stock option awards as well as any and all future awards. We have elected to use the modified prospective transition as opposed to the modified retrospective transition method such that financial statements prior to adoption remain unchanged. The Black-Scholes model will continue to be the Company’s method of compensation expense valuation as was used by the Company previously in the proforma disclosures. See further consideration in Footnote 6.

9

q. Accounting for Financial Instruments

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” (“SFAS 150”), SFAS 150 requires that certain financial instruments, which under previous guidance were accounted for as equity, must now be accounted for as liabilities. The financial instruments effected include mandatory redeemable stock, certain financial instruments that require or may require the issuer to buy back some of its shares in exchange for cash or other assets and certain obligations that can be settled with shares of stock. SFAS 150 is effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company adopted SFAS 150 and its related adoption provisions as reflected and as applicable to the January 29, 2004, $5,000,000 6% convertible debt, the February 10, 2004 $5,000,000 convertible preferred stock Series A and the March 5, 2004 $5,000,000 convertible preferred stock Series B.

In June 2005, the Financial Accounting Standards Board Emerging Issues Task Force issued EITF 05-04, “The Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument Subject to EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”. Under EITF 05-04, liquidated damages clauses may qualify as freestanding financial instruments for treatment as a derivative liability. Furthermore, EITF 05-04 addresses the question of whether a registration rights agreement should be combined as a unit with the underlying financial instruments and be evaluated as a single instrument. EITF 05-04 does not reach a consensus on this question and allows for treatment as a combined unit (Views A and B) as well as separate freestanding financial instruments (View C). On September 15, 2005, the FASB staff postponed further discussion of EITF 05-04. In conjunction with our issuance of convertible debentures, preferred stock Series A and B, and the related warrants and registration rights, we adopted View C of EITF 05-04. Accordingly, the registration rights agreements, preferred stock Series A and B, the warrants associated with the convertible debentures, convertible preferred stock the debentures themselves, as well as certain features of the debentures convertible preferred stock were evaluated as stand alone financial instruments. This treatment resulted in classification of the warrants and certain features of the debentures and preferred stock as equity while the registration rights agreements were treated as derivative liabilities. Derivative liability treatment requires adjusting the carrying value of the instrument to its fair value at each balance sheet date and recognizes any change since the prior balance sheet date as a component of other income/(expense). The recorded value of such derivative liabilities can fluctuate significantly based on fluctuations of the market value of the underlying securities of the Company, as well as on the volatility of the Company’s stock price during the term used for observation and the term remaining for the underlying financial instruments. We believe that should the FASB staff reach a consensus on EITF 05-04 and select combined unit treatment (View A or B), the debt features of the debentures convertible and associated warrants previously classified as equity will have to be evaluated as a combined unit with the registration rights agreements. This combination will result in these instruments being treated as derivative liabilities requiring periodic reevaluation of fair value with potentially significant fluctuation in fair value from period to period. Accordingly, this consensus could have a significant effect on our financial statements. The Company entered into registration rights agreements with regard to the January 29, 2004 convertible debt financing on January 29, 2004, and with regard to the February 10, 2004 convertible preferred stock Series A financing on February 10, 2004 and with regard to the March 5, 2004 convertible stock Series B on March 5, 2004. Pursuant to all of the registration rights agreements, we agreed to file a resale registration statement covering the resale of the shares issuable to the investors upon the exercise of their warrants and conversion of their debentures and preferred stock by February 29, 2004, March 10, 2004 and April 5, 2004 respectively. At inception, the registration rights agreements required us to pay monthly liquidated damages if a registration statement was not declared effective on or prior to April 29, 2004, May 10, 2004 and September 5, 2004 respectively or after declared effective if the registration statements cease for any reason to remain continuously effective as to all registrable securities for which it is required to be effective or the investors are not permitted to utilize the prospectus therein to resell such registrable securities for 20 consecutive calendar days but no more than an aggregate of 30 calendar days during any 12 month period. The amount of monthly liquidating damages equals 1%, 1% and 2% respectively of the aggregate purchase price paid by the investors for any registrable securities held by the investors. Any late payment beyond seven days is subject to interest at an annual rate of 18%. We evaluated the liquidated damages feature of the registration rights agreements in accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended (“SFAS 133”). The liquidated damages qualify as embedded derivative instruments at issuance and, because they do not qualify for any scope exception within SFAS 133, they were required by SFAS 133 to be recorded as derivative financial instruments. Further, in accordance with EITF 05-04, “The Effect of a Liquidated Damages Clause on a Freestanding Financial Instrument Subject to EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”, we also evaluated whether the registration rights agreements, the senior and convertible debentures, and convertible preferred stock Series A and B and associated warrants should be combined into and accounted for as a single unit or accounted for as separate financial agreements. In considering

10

the appropriate treatment of these instruments, we observed that although entered into contemporaneously, the agreements are nevertheless separate legal agreements. Payment of the liquidated damages penalty under the registration rights agreements does not alter the investor’s rights under either the warrant or debenture agreements. The debentures, preferred stock and warrants have values which are based on their interest rate and the relation between their conversion price or exercise price and the value of our common stock. This value is independent of any payment for liquidated damages under the registration rights agreements, which is based on how long the shares are unregistered. The various agreements do not relate to the same risk. The risk inherent in the debentures relates to our ability to repay these instruments as and when they come due or to the extent converted into common stock, to the price of our common stock. The warrants similarly bear risk related to the value of our common stock. The liquidated damages penalty under the registration rights agreements relates to the risk of the Company filing a registration statement and whether it will be declared effective. In light of the above facts and circumstances and accordance with guidance in EITF 05-4, View C, we evaluated and treated the registration rights agreements, convertible debentures, preferred stock and associated warrants as separate free standing agreements. Upon execution, the registration rights agreements had no initial fair value. In subsequent periods, the carrying value of the derivative financial instrument related to the registration rights agreements will be adjusted to its fair value at each balance sheet date and any change since the prior balance sheet date will be recognized as a component of other income/(expense). The estimated fair value of the registration rights agreements was determined using the discounted value of the expected future cash flows. The Company filed its registration statement with regard to the Series A and B preferred stock, the convertible debt and debentures on April 2, 2004 and it was declared effective on April 23, 2004. Therefore, the Company has met the registration requirements and will continue to do so in the future. Should an event occur to cause the registration to not be effective, we believe the holders of the debentures and preferred stock (Series A and B) will waive the liquidated damages required under the registration rights agreements. As a result, at March 31, 2004 and at all subsequent periods we assigned no value to the potential liquidating damages. EITF 05-04 offers multiple views on the question of whether a registration rights agreements should be combined as a unit with the underlying financial instruments and be evaluated as a single instrument. EITF 05-04 does not reach a consensus on this question and allows for treatment as a combined unit (Views A and B) as well as separate freestanding financial instruments (View C). In conjunction with our issuance of convertible debentures, preferred stock Series A and B, and the related warrants and registration rights, we adopted View C of EITF 05-04. Accordingly, the registration rights agreements, the warrants associated with the convertible debentures, preferred stock Series A and B, the debentures themselves, as well as certain features of the debentures and preferred stock were evaluated as stand alone financial instruments. This treatment resulted in classification of the warrants and certain features of the debentures and preferred stock as equity while the registration rights agreements and other features of the debentures were treated as derivative liabilities. Derivative liability treatment requires adjusting the carrying value of the instrument to its fair value at each balance sheet date and recognizes any change since the prior balance sheet date as a component of other income/(expense). The recorded value of such derivative liabilities can fluctuate significantly based on fluctuations of the market value of our underlying securities, as well as on the volatility of our stock price during the term used for observation and the term remaining for the underlying financial instruments. We believe that should the FASB staff reach a consensus on EITF 05-04 and select combined unit treatment (View A or B), the debt features of the debentures and associated warrants previously classified as equity will have to be evaluated as a combined unit with the registration rights agreements. This combination will result in these instruments being treated as derivative liabilities requiring periodic reevaluation of fair value with potentially significant fluctuation in fair value from period to period. Accordingly, this consensus could have a significant effect on our financial statements.

The instruments each have detachable warrants that have a “cashless” exercise feature. The feature permits the warrant holders to net settle the warrant in the event the price of the stock exceeds the strike price of the warrant which meets the criteria of paragraph 6 of FAS 133. DIG A 17 states that the right to net settle an obligation is equivalent to a cashless exercise feature. However, paragraph 11a of FAS 133 states that not withstanding paragraphs 6-10 of FAS 133 an item will not be considered a derivative if it is a contract issued by that entity that is both (1) indexed to its own stock and (2) classified in stockholders’ equity.

The warrants meet test 1 since they are settleable in stock of the Company. They also meet test 2 under EITF 00-19 since they are not combined with the registration rights agreements as the Company has elected to treat the registration rights agreement as a standalone derivative under EITF 05-04 View C. Therefore, the warrants are classified as equity and are scoped out under paragraph 11a of FAS 133.

On December 1, 2004, the Company entered into an agreement and converted 800,000 common shares in full satisfaction of the $5,000,000 Series A 6%, convertible preferred stock outstanding.

On February 1, 2006, the Company entered into an agreement and converted 530,469 common shares in full satisfaction of the principle and interest outstanding as related to the $2,424,000 6% convertible debt.

11

r. Reclassifications

Certain reclassifications have been made to the financial statements for the three and nine months ended December 31, 2005 to conform to the presentation for the three and nine months ended December 31, 2006.

NOTE 3—ACCOUNTS RECEIVABLE, NET

Accounts receivable, net, consist of the following:

	December 31, 2006			March 31, 2006
Trade accounts receivable	$	8,930,613		$	7,557,309
Less allowance for uncollectible accounts		(234,686	)		(92,284	)
	$	8,695,927		$	7,465,025

As of December 31, 2006, the total accounts receivable balance of $8,930,613 includes $4,882,590 related to the Company’s manufacturing segment and $4,048,023 as related to the Company’s distribution segment. As of March 31, 2006, the total accounts receivable balance of $7,557,309 includes $3,545,079 related to the Company’s manufacturing segment and $4,012,230 related to the Company’s distribution segment.

The Company recognizes revenues for product sales when title and risk of loss pass to its external customers and analyzes the status of the allowance for uncollectible accounts based on historical experience, customer history and overall credit outstanding. For our distribution segment, any charge backs or other sales allowances immediately reduce the gross receivable with the corresponding reduction effected through increases in sales allowances which directly reduce sales revenue.

NOTE 4—INVENTORIES, NET

Inventories, net, consist of the following:

	December 31, 2006			March 31, 2006
Processed raw materials and packaging	$	3,594,152		$	4,517,472
Work in process		369,203			318,462
Finished goods		1,821,802			1,094,862
	$	5,785,157		$	5,930,796
Less reserve for obsolescence		(181,861	)		(163,740	)
	$	5,603,296		$	5,767,056

As of December 31, 2006, the total inventory balance of $5,785,157 includes $4,353,797 related to the Company’s manufacturing segment, $803,246 related to the Company’s distribution segment and $628,114 related to the Company’s pharmaceutical segment. As of March 31, 2006, the total inventory balance of $5,930,796 includes $4,840,536 related to the Company’s manufacturing segment, $697,073 related to the Company’s distribution segment and $393,187 as related to the pharmaceutical segment.

NOTE 5—INCOME TAXES

Income taxes for the nine months ended December 31, 2006 and 2005 differ from the amounts computed by applying the effective income tax rates to income before income taxes as a result of the following:

	2006			2005
Computed tax expense at the statutory rate (37.63%)	$	1,040,000		$	888,000
Increase (decrease) in taxes resulting from:
Effect of permanent differences:
Non deductible		26,000			58,000
Other, net		(221,000	)		5,298
Change in net operating loss estimate		(200,000	)		—
Change in valuation allowance		243,000			(100,000	)
Income tax (benefit) expense	$	888,000		$	851,298

12

Temporary differences that give rise to deferred tax assets and liabilities are as follows:

	2006			2005
Deferred tax assets:
Bad debts	$	156,000		$	47,400
Inventories		68,000			51,000
Accrued vacation		39,000			16,000
Deposits		119,000			57,000
Deferred rent		140,000			—
Stock options		487,000			—
Net operating loss carryforwards		181,000			—
Deferred tax asset	$	1,190,000		$	171,400
Deferred tax asset valuation		(243,000	)		—
Deferred tax asset	$	947,000		$	171,400
Deferred tax liabilities:
Fixed asset basis differences	$	(233,000	)	$	(324,700	)
Amortization		(57,200	)		(53,000	)
	$	(290,200	)	$	(377,700	)
Net deferred tax asset (liability) recorded	$	656,800		$	(206,300	)

At December 31, 2006, the Company has a tax net operating loss of approximately $500,000 which begins to expire in 2018.

NOTE 6—STOCK OPTION PLANS

Effective April 1, 2006, the Company adopted SFAS 123R, Share-based Payments, which requires the cost relating to share-based payment transactions in which an entity exchanges its equity instruments for goods and services from either employees or non-employees be recognized in the financial statements as the goods are received or when the services are rendered. That cost will be measured based on the fair value of the equity instrument issued.

SFAS 123R now applies to all of our existing outstanding unvested share-based payment stock option awards as well as any and all future awards. We have elected to use the modified prospective transition as opposed to the modified retrospective transition method such that financial statements prior to adoption remain unchanged. The Black-Scholes model will continue to be the Company’s method of compensation expense valuation as was used by the Company previously in the proforma disclosures. For the three and nine months ended December 31, 2006, the Company recorded $427,675 and $1,283,025, respectively, as compensation expense representing unvested employee and nonemployee stock options and is classified as a selling, general and administrative (“SGA”) expense based on the implementing SFAS 123R effective April 1, 2006 as compared to the proforma-only requirement for the corresponding three and nine month periods ended December 31, 2006. The pro forma net earnings per common share, as if the Company had elected to account for its employee and nonemployee stock options consistent with the methodology prescribed by SFAS No. 123R, are shown as follows:

	Three months ended					Nine months ended
	December 31, 2006		December 31, 2005			December 31, 2006		December 31, 2005
Net income (loss)
As reported	$	684,275	$	364,518		$	1,649,726	$	1,321,777
Pro forma	$	—	$	(101,189	)	$	—	$	585,537
Net income (loss) per common share:
Basic income (loss) per share:
As reported	$	.07	$	.04		$	.17	$	.15
Pro forma	$	—	$	(.01	)	$	—	$	.10
Diluted income (loss) per share:
As reported	$	.06	$	.03		$	.14	$	.11
Pro forma	$	—	$	(.01	)	$	—	$	.08

13

NOTE 7—RELATED PARTY TRANSACTIONS

Revenues: For the three months ended December 31, 2006 and 2005, manufacturing revenues of approximately $19,613 and $48,355 respectively, were recorded from sales by the Company to subsidiaries of Dynamic Health Products, an affiliate of the Company, and of which Jugal K. Taneja, the Chairman of the Board of the Company, is a principal shareholder. For the three months ended December 31, 2006 and 2005, manufacturing revenues of $177,867 and $192,942, respectively, were recorded from sales by the Company to VerticalHealth Inc., an affiliate of the Company, and of which Jugal K. Taneja, the Chairman of the Board of the Company, is a shareholder.

For the three months ended December 31, 2006 and 2005, pharmacy benefit management revenues of approximately $5,078,746 and $4,005,797 respectively, were recorded from sales by the Company to CarePlus Health Plan, an affiliate of the Company’s greater than 10% shareholder Mssr. Zappala. Our wholly-owned subsidiary, Go2PBM Services, Inc., derives 100% of its revenues from this contract.

Revenues: For the nine months ended December 31, 2006 and 2005, manufacturing revenues of approximately $79,736 and $150,631 respectively, were recorded from sales by the Company to subsidiaries of Dynamic Health Products, an affiliate of the Company, and of which Jugal K. Taneja, the Chairman of the Board of the Company, is a principal shareholder. For the nine months ended December 31, 2006 and 2005, manufacturing revenues of $590,111 and $496,926, respectively, were recorded from sales by the Company to VerticalHealth Inc., an affiliate of the Company, and of which Jugal K. Taneja, the Chairman of the Board of the Company, is a shareholder.

14

For the nine months ended December 31, 2006 and 2005, pharmacy benefit management revenues of approximately $14,630,156 and $12,190,203 respectively, were recorded from sales by the Company to CarePlus Health Plan, an affiliate of the Company’s greater than 10% shareholder Mssr. Zappala. Our wholly-owned subsidiary, Go2PBM Services, Inc., derives 100% of its revenues from this contract.

Trade Accounts Receivable/ Trade Accounts Payable—Amounts due from affiliates and amounts due to affiliates represent balances owed to or amounts owed by the Company for sales occurring in the normal course of business. Amounts due from and amounts to these affiliates are in the nature of trade receivables or payables and fluctuate based on sales volume and payments received.

As of December 31, and March 31, 2006, for the manufacturing segment, $25,569 and $25,888 was due from subsidiaries of Dynamic Health Products and $288,165 and $140,038 was due from Vertical Health, Inc.

As of December 31, and March 31, 2006, for the pharmacy benefit management segment, $759,048 and $995,452 was due from CarePlus.

NOTE 8—LEGAL

On September 29, 2006, Schering Corporation (“Schering”) filed an action in the United States District Court for the District of New Jersey, against Belcher Pharmaceuticals, Inc. and GeoPharma, Inc. (along with nineteen other defendants) alleging that the filing of Belcher Pharmaceuticals’ Abbreviated new Drug Application (“ANDA”) for 5 mg Desloratadine Tablets, AB-rated to Clarinex^®, infringed U.S. Patent No. 6,100,274 (“the ‘274 patent”) Case No. 3:06-cv-04715-MLC-TJB. On November 8, 2006, Belcher filed a motion to dismiss in the New Jersey case for lack of jurisdiction. On October 5, 2006 Schering filed an action in the United States District Court for the Middle District of Florida, Tampa Division, Case No. 8:06-cv-01843-SCB-EAJ, against Belcher Pharmaceuticals, Inc. and Geopharma, Inc. alleging that the filing of Belcher Pharmaceuticals’ ANDA for 5 mg Desloratadine Tablets, AB-rated to Clarinex^®, infringed the ‘274 patent. Company management and Belcher disputes Schering’s claims in the two actions and believes its proposed desloratadine product does not infringe the ‘274 patent. The possible outcome cannot be determined at this time.

From time to time the Company is subject to litigation incidental to its business. Such claims, if successful, could exceed applicable insurance coverage. The Company is not currently a party to any material legal proceedings other than what is currently disclosed herein.

15

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The statements contained in this Report that are not historical are forward-looking statements, including statements regarding the Company’s expectations, intentions, beliefs or strategies regarding the future. Forward-looking statements include the Company’s statements regarding liquidity, anticipated cash needs and availability and anticipated expense levels. All forward-looking statements included in this Report are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statement. It is important to note that the Company’s actual results could differ materially from those in such forward-looking statements. Additionally, the following discussion and analysis should be read in conjunction with the Financial Statements and notes thereto appearing elsewhere in this Report. The discussion is based upon such financial statements which have been prepared in accordance with U.S. Generally Accepted Accounting Principles and the Standards of the Public Company Accounting Oversight Board (United States).

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following table sets forth selected consolidated statements of operations data as a percentage of revenues for the periods indicated.

	Three months ended December 31,				Nine months ended December 31,
	2006		2005		2006		2005
Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold (excluding depreciation and amortization)	68.4	%	73.3	%	72.2	%	74.4	%
Gross profit	31.6	%	26.7	%	27.8	%	25.6	%
Selling, general and administrative expenses (including depreciation and amortization)	23.2	%	19.3	%	21.3	%	21.4	%
Stock option compensation expense	3.0	%	—		2.8	%	—
Other income (expense), net	(0.2	)%	(0.9	)%	0.2	%	1.6	%
Income before minority interest, income taxes and preferred dividends	5.2	%	6.5	%	3.9	%	5.8	%
Minority interest benefit	2.2	%	1.7		2.2	%	0.8	%
Income tax (expense) / benefit	(2.1	)%	(4.6	)%	(2.0	)%	(2.3	)%
Preferred dividends	0.5	%	0.6	%	0.5	%	0.6	%
Net income (loss)	4.8	%	3.0	%	3.6	%	3.6	%

Three Months Ended December 31, 2006, Compared to the Three Months Ended December 31, 2005

Revenues. Total consolidated revenues increased approximately $1.9 million, or 15.5%, to approximately $14.3 million for the three months ended December 31, 2006, as compared to approximately $12.4 million for the three months ended December 31, 2005.

Manufacturing revenues increased approximately $1.7 million, or 43.9%, to approximately $5.8 million for the three months ended December 31, 2006, as compared to approximately $4.1 million for the corresponding period. Overall, manufacturing capacities and capabilities continue to be increased as we have added additional more advanced, higher speed production equipment. Our customer base and their relate order volumes are increasing also.

Distribution revenues decreased approximately $837,000 or 19.9% to approximately $3.4 million for the three months ended December 31, 2006, as compared to $4.2 million for the three months ended December 31, 2005. Overall, sales prices vary for all product lines dependent upon a customer’s individual as well as aggregate purchase volumes in addition to the number of distribution points of sale and advertising dollars projected to be spent. For the three months ended December 31, 2006, 5,643 cases of Hoodia Dex-L10 were sold versus 5,565 cases sold for the three months ended December 31, 2005 based on the product introduction and the transfer of the brand from an unrelated third party during February 2006. Although the number of Hoodia cases sold appears comparable for both periods, due to the change in ownership in the brand, sales revenues and related sales pricing structure was not comparable. Hoodia Dex-L10 is comprised of four SKUs; Dex-L10, Dex-L10 complete, Dex-L10 chocolate chews and Dex-L10 lemon-lime chews. For the three months ended December 31, 2006, no cases of CarbSlim were sold versus 1,176 cases sold for the three months ended December 31, 2005, a 100% case-sale decrease. CarbSlim is comprised of ten SKUs, two sizes of: peanut butter crunch, chocolate caramel crunch, mint, peanut butter cookie dough, chocolate chip cookie dough. The Lean Protein Bites product line is comprised of four SKUs, milk

16

chocolate, white chocolate, peanut butter and lemon. For the three months ended December 31, 2006, no cases were sold as compared to the three months ended December 31, 2005, where 862 total cases were sold, a case-sale decline of 100%. The decrease in both food product case sales are due to the decrease in the number of national and regional distribution points in addition to the Company has shifted its focus more towards their branded Dex-L10 dietary supplements rather than its food product lines based on more favorable margins. The total distribution revenues for the three months ended December 31, 2006 were derived from 100% dietary supplement sales with none of the total distribution revenues being derived from consumer foods as compared to the corresponding period in 2005 whereas 97.7% of distribution revenues were derived from dietary supplement case sales with 2.3% of distribution revenues being derived from our consumer food products.

Pharmacy benefit management revenues increased 26.8% or approximately $1.1 million to $5.1 million for the three months ended December 31, 2006, as compared to $4.0 million for the three months ended December 31, 2005. The increase results from the increase in overall membership and prescriptions filled in the two health plans as compared to the corresponding 2005 period. Revenue per member remained constant for both of the fiscal years.

Pharmaceutical revenues decreased $99,000 as there were no pharmaceutical sales for the three months ended December 31, 2006 as compared to $99,000 in sales for this business segment for the corresponding 2005 period. The Company expects to generate pharmaceutical revenues for the quarter ending March 31, 2007 but such estimate is solely based on receiving an FDA approval which is not under the Company’s control.

Gross Profit. Total gross profit increased approximately $1.2 million or 37%, to $4.5 million for the three months ended December 31, 2006, as compared to $3.3 million for the three months ended December 31, 2005. Total gross margins increased to 31.6% for the three months ended December 31, 2006 from 26.7% for the three months ended December 31, 2005.

Manufacturing gross profit increased approximately $1.6 million, or 113.4%, to approximately $3.0 million for the three months ended December 31, 2006, as compared to approximately $1.4 million in the corresponding period in 2005. For the three months ended December 31, 2006 manufacturing gross margin increased to 51.1%, from 34.5% in the corresponding period in 2005. Sales, gross profits and gross margins have increased due to a higher concentration of higher margin contract cosmetic-related products versus contract nutraceutical dietary supplement sales.

Distribution gross profits increased 18% or approximately $328,000 to approximately $2.1 million for the three months ended December 31, 2006, as compared to approximately $1.8 million for the three months ended December 31, 2005, with distribution gross margins increasing to 63.7% for the three months ended December 31, 2006 as compared to 43.3% for the three months ended December 31, 2005. Although sales revenues have declined, gross profits and gross margins improved based on a change in the sales mix from food products to branded dietary supplements which have a higher per unit sales prices and higher gross margins in addition to the fact that the Company had brand ownership effective February 2006 which allowed for higher sales revenues in addition to lower product costs and reduced commissions.

Pharmacy Benefit Management gross profit increased approximately $4,000 or 10.8% to approximately $39,000 for the three months ended December 31, 2006, as compared to approximately $35,000 for the three months ended December 31, 2005. Pharmacy benefit management gross margin was 0.8% for both of the three month periods ended December 31, 2006 and 2005. Gross profit and margins remain constant based on continued industry pressure on controlling per member and per claim revenues as they continue to decline coupled with growing membership, rising number of claims in addition to the rising prescription costs.

Pharmaceutical gross profits decreased $698,000 to a deficit of $(655,000) for the three months ended December 31, 2006 as compared to approximately $43,000 in gross profits for this business segment for the three months ended December 31, 2005. Pharmaceutical gross margins were at a deficit for the three month period ended December 31, 2006 as compared to 42.9% for the three months ended December 31, 2005. This was based primarily on the Beta-Lactam facility located in Baltimore, Maryland and both our Tampa Bay, Florida facilities for Cephalosporin and the other for generic pharmaceuticals have no revenue stream but have costs associated with product development and production and laboratory direct labor costs. The Baltimore facility incurred $205,000 of costs with no revenue offset with the Tampa facilities together incurring $450,000 of costs with no revenue offset.

17

Selling, General and Administrative Expenses. Selling, general and administrative (“SGA”) expenses consist of advertising and promotional expenses; insurance costs, research and development costs associated with the generic drug segment, personnel costs related to general management functions, finance, accounting and information systems, payroll expenses and sales commissions; professional fees related to legal, audit and tax matters; stock option compensation expense and depreciation and amortization expenses. Selling, general and administrative expenses, inclusive of stock option compensation expense, depreciation and amortization, increased approximately $1.3 million, or 57.0%, to approximately $3.7 million for the three months ended December 31, 2006, as compared to approximately $2.4 million in the corresponding 2005 period. Approximately $428,000 of the $1.4 million increase was directly attributable to the implementation of SFAS 123R, Share-Based Payments, which required the valuation of and expense recognition for all unvested stock options outstanding. The remaining increase is primarily attributable to additional expenses associated with increased insurance costs, including health, general and product liability insurances; health insurance increased primarily due to an increase in the cost per employee and the number of employees; in addition to external insurance market influences surrounding higher premium costs for all of the Company’s business segments based on our increasing sales revenues, increased rents due to facility expansion, officer and employee salaries have increased in total based on increases in the number of personnel in addition to merit increases. As a percentage of sales, selling, general and administrative expenses increased to 26.2% for the three months ended December 31, 2006 from 19.3% in the corresponding period in 2005.

Other Income (Expense), Net. For the three months ended December 31, 2006, the balance in other income/(expense), net, decreased approximately $80,000 to ($34,000) as compared to ($114,000) for the corresponding 2005 period. For the three months ended 2006 and 2005, the balance was primarily interest expense and the decrease is due to lower amounts of debt outstanding since the Company paid off the remaining balance of the 6% interest convertible debt due to Laurus in the amount of $2.4 million during February 2006.

Income Tax (Expense) Benefit. At December 31, 2006, the Company had recorded $(300,000) of income tax expense as compared to $(567,000) expense for the three months ended December 31, 2005. The decrease in tax expense is based on the current period receiving a reduction in tax expense from loss carryforwards. The expense is based on effective rate calculations as applied to our net income earned based on temporary and permanent differences using the effective tax rates applied to our net income amounts this fiscal year and possible changes in information gained related to underlying assumptions about the future operations of the Company.

Management believes that there was no material effect on operations or the financial condition of the Company as a result of inflation as of and for the three months ended December 31, 2006. Management also believes that its business is not seasonal, however significant promotional activities can have a direct impact on sales volume in any given quarter.

Nine Months Ended December 31, 2006, Compared to the Nine Months Ended December 31, 2005

Revenues. Total consolidated revenues increased approximately $9.3 million, or 25.6%, to approximately $45.6 million for the nine months ended December 31, 2006, as compared to approximately $36.3 million for the three months ended December 31, 2005.

Manufacturing revenues increased approximately $8.2 million, or 64.2%, to approximately $20.9 million for the nine months ended December 31, 2006, as compared to approximately $12.7 million for the corresponding period. Overall, manufacturing capacities and capabilities continue to be increased as we have added additional more advanced, higher speed production equipment. Our customer base and their relate order volumes are increasing also.

Distribution revenues decreased approximately $1.2 million or 11.1% to approximately $9.9 million for the nine months ended December 31, 2006, as compared to $11.1 million for the nine months ended December 31, 2005. Overall, sales prices vary for all product lines dependent upon a customer’s individual as well as aggregate purchase volumes in addition to the number of distribution points of sale and advertising dollars projected to be spent. For the nine months ended December 31, 2006, 16,390 cases of Hoodia Dex-L10 were sold versus 7,401 cases sold for the three months ended December 31, 2005 based on the product introduction and the transfer of the brand from an unrelated third party during February 2006. Hoodia Dex-L10 is comprised of four SKUs; Dex-L10, Dex -L10 complete, Dex-L10 chocolate chews and Dex-L10 lemon-lime chews. For the nine months ended December 31, 2006, 167 cases of CarbSlim were sold versus 8,506 cases sold for the nine months ended December 31, 2005, a 98% case-sale decrease. CarbSlim is comprised of ten SKUs, two sizes of: peanut butter crunch, chocolate caramel crunch, mint, peanut butter cookie dough, chocolate chip cookie dough. The Lean Protein Bites product line is comprised of four SKUs, milk chocolate, white chocolate, peanut butter and lemon. For the nine months ended December 31, 2006, 109 cases were sold as compared to the nine months ended December 31, 2005, where 3,274 total cases were sold, a case-sale decline of 97%. The decrease in both food product case sales are due to the

18

decrease in the number of national and regional distribution points in addition to the Company has shifted its focus more towards their branded Dex-L10 dietary supplements rather than its food product lines based on more favorable margins. The total distribution revenues for the nine months ended December 31, 2006 were derived from 99% dietary supplement sales with less than 1% of the total distribution revenues being derived from consumer foods as compared to the corresponding period in 2005 whereas 97.7% of distribution revenues were derived from dietary supplement case sales with 2.3% of distribution revenues being derived from our consumer food products.

Pharmacy benefit management revenues increased 20% or approximately $2.4 million to $14.6 million for the nine months ended December 31, 2006, as compared to $12.2 million for the nine months ended December 31, 2005. The increase results from the increase in overall membership and prescriptions filled in the two health plans as compared to the corresponding 2005 period. Revenue per member remained constant for both of the fiscal years.

Pharmaceutical revenues decreased $66,000 to $252,000 for the nine months ended December 31, 2006 as compared to $318,000 in sales for this business segment for the corresponding 2005 period. The Company did not generate any pharmaceutical sales during the three months ended December 31, 2006 and expects to generate pharmaceutical revenues for the quarter ending March 31, 2007 but such estimate is solely based on receiving an FDA approval which is not under the Company’s control.

Gross Profit. Total gross profit increased approximately $3.4 million or 36.7%, to $12.7 million for the nine months ended December 31, 2006, as compared to $9.3 million for the nine months ended December 31, 2005. Total gross margins increased to 27.8% for the nine months ended December 31, 2006 from 25.6% for the nine months ended December 31, 2005.

Manufacturing gross profit increased approximately $2.4 million, or 47.3%, to approximately $7.3 million for the nine months ended December 31, 2006, as compared to approximately $4.9 million in the corresponding period in 2005. For the nine months ended December 31, 2006, manufacturing gross margin decreased to 34.8%, from 38.8% in the corresponding period in 2005. Although gross margins did not increase, sales and gross profits have increased due to increased sales.

Distribution gross profits increased 42.7% or approximately $1.8 million to approximately $5.9 million for the nine months ended December 31, 2006, as compared to approximately $4.1 million for the nine months ended December 31, 2005, with distribution gross margins increasing to 59.6% for the nine months ended December 31, 2006 as compared to 37.1% for the nine months ended December 31, 2005. Although sales revenues have declined, gross profits and gross margins improved based on a change in the sales mix from food products to branded dietary supplements which have a higher per unit sales prices and higher gross margins in addition to the fact that the Company had brand ownership effective February 2006 which allowed for higher sales revenues in addition to lower product costs and reduced commissions.

Pharmacy Benefit Management gross profit increased approximately $17,000 or 17.1% to approximately $115,000 for the nine months ended December 31, 2006, as compared to approximately $98,000 for the nine months ended December 31, 2005. Pharmacy benefit management gross margin was 0.8% for both of the nine month periods ended December 31, 2006 and 2005. Gross profit and margins remain constant based on continued industry pressure on controlling per member and per claim revenues as they continue to decline coupled with growing membership, rising number of claims in addition to the rising prescription costs.

Pharmaceutical gross profits decreased $699,000 to a deficit of $(562,000) for the nine months ended December 31, 2006 as compared to approximately $137,000 in gross profits for this business segment for the nine months ended December 31, 2005. Pharmaceutical gross margins were at a deficit for the nine month period ended December 31, 2006 as compared to 43% for the nine months ended December 31, 2005. This was based primarily on the Beta-Lactam facility located in Baltimore, Maryland and both our Tampa Bay, Florida facilities for Cephalosporin and the other for generic pharmaceuticals have no revenue stream but have costs associated with product development and production and laboratory direct labor costs. The Baltimore facility incurred $686,000 of costs with no revenue offset with the Tampa facilities together incurring approximately $1.2 million of costs with no revenue offset.

19

Selling, General and Administrative Expenses. Selling, general and administrative (“SGA”) expenses consist of advertising and promotional expenses; insurance costs, research and development costs associated with the generic drug segment, personnel costs related to general management functions, finance, accounting and information systems, payroll expenses and sales commissions; professional fees related to legal, audit and tax matters; stock option compensation expense and depreciation and amortization expenses. Selling, general and administrative expenses, inclusive of stock option compensation expense, depreciation and amortization, increased approximately $3.2 million to approximately $11.0 million for the nine months ended December 31, 2006, as compared to approximately $7.8 million in the corresponding 2005 period. Approximately $1.3 million of the $3.2 million increase was directly attributable to the implementation of SFAS 123R, Share-Based Payments, which required the valuation of and expense recognition for all unvested stock options outstanding. The remaining increase is primarily attributable to additional expenses associated with increased insurance costs, including health, general and product liability insurances; health insurance increased primarily due to an increase in the cost per employee and the number of employees; in addition to external insurance market influences surrounding higher premium costs for all of the Company’s business segments based on our increasing sales revenues, increased rents due to facility expansion, officer and employee salaries have increased in total based on increases in the number of personnel in addition to merit increases and legal expenses as partially offset by $900,000 in decreased spending for our distribution segment advertising. As a percentage of sales, selling, general and administrative expenses increased to 24.1% for the nine months ended December 31, 2006 from 21.4% in the corresponding period in 2005.

Other Income (Expense), Net. For the nine months ended December 31, 2006, the balance in other income/(expense), net, decreased approximately $490,000 to $101,000 as compared to $591,000 for the corresponding 2005 period. The decline in other income was primarily due to the 2005 period including the final settlement balance of our fire insurance settlement as partially offset by interest expense of $306,000 as compared to the current nine month period where no insurance proceeds were received and interest expense was $62,000. The decrease in interest expense is due to lower amounts of debt outstanding since the Company paid off the remaining balance of the 6% interest convertible debt due to Laurus in the amount of $2.4 million during February 2006.

Income Tax (Expense) Benefit. For the nine months ended December 31, 2006, the Company had recorded $(888,000) of income tax expense as compared to $(851,000) expense for the nine months ended December 31, 2005. The change in tax expense in consideration of higher taxable income for the current period is based on the current period receiving a reduction in tax expense from loss carryforwards. The expense is based on effective rate calculations as applied to our net income earned based on temporary and permanent differences using the effective tax rates applied to our net income amounts this fiscal year and possible changes in information gained related to underlying assumptions about the future operations of the Company.

Management believes that there was no material effect on operations or the financial condition of the Company as a result of inflation as of and for the nine months ended December 31, 2006. Management also believes that its business is not seasonal, however significant promotional activities can have a direct impact on sales volume in any given quarter.

Financial Condition, Liquidity and Capital Resources

The Company has funded its operational needs from its cash provided from operations and its January through March 2004 receipt of $15 million of gross private placement proceeds based on a $10 million 6% convertible preferred stock private placement and a $5 million convertible 6%, three-year term debt. During December 2004, the holders of the $5 million Series A convertible preferred stock converted all of their preferred shares outstanding in exchange for 800,000 of the Company’s $.01 par value common stock. During February 2006, the Company paid off the remaining $2.4 million 6% interest convertible debt balance along with all fees and penalties by issuing approximately 530,000 shares and simultaneously wrote-off approximate $300,000 to interest expense representing the debt discount remaining balance.

The Company had working capital of approximately $9.2 million at December 31, 2006, inclusive of current portion of long-term obligations, as compared to a working capital of approximately $8.4 at March 31, 2006. The increase in working capital in primarily due to increases in accounts receivable and prepaid expenses and decreases in accounts payable as partially offset by decreases in inventory and cash. All such fluctuations are supported by the increases in credit sales by selling inventory and the continuance of the operational cycle that includes paying outstanding accounts payable representing inventory purchases.

Net cash provided by operating activities was approximately $1.17 million for the nine months ended December 31, 2006, as compared to net cash provided by operating activities of $1.14 million for the nine months ended December 31, 2005. Cash provided was primarily attributable to a net income before preferred dividends of approximately $1.9 million based on consolidated gross profits increases of approximately $3.4 million, noncash charges of $1.3 million for stock option

20

compensation expense, a $888,000 charge to income tax expense and $829,000 related to depreciation and amortization, decreases in inventory, inclusive of the $267,000 media credit impairment charge, of $437,000 based on net usage of inventories on hand and $121,000 decrease in other accounts receivable based on net cash collections all of which is partially offset by increases in trade accounts receivable of $1.3 million as related to increased credit sales, increases in deferred tax asset of $657,000, $1.1 million in increases in prepaid expenses based on future advertising and insurance premiums and decreases in accounts payable and accrued expenses of approximately $950,000 based on net payments and amortization of amounts due for inventory, commissions and insurances and approximately $384,000 related to other assets as specifically spent on generic drug-related intellectual property.

Net cash used in investing activities was approximately $(2.5) million for the nine months ended December 31, 2006 as compared to the net cash used of $(4.9) million for the nine months ended December 31, 2005. Investing activities represented the R&D related purchases and upgrades of plant and laboratory equipment for generic drug manufacturing and distribution plants, Belcher Pharmaceuticals and American Antibiotics, of $(2.1) million in addition to the net usage of $(402,000) related to the minority interest associated with American Antibiotics.

Net cash provided by financing activities was $944,000 for the nine months ended December 31, 2006 as compared to cash provided by financing activities of $1.1 million for the nine months ended December 31, 2005. The 2006 financing activity cash provided was primarily attributable to $1.1 million of short-term borrowings for insurances and drug manufacturing equipment purchases, $96,000 of proceeds received from vested stock option exercises as partially offset by payments of $231,000 on short- and long-term obligations.

Management believes that cash expected to be generated from operations, current cash reserves, and existing financial arrangements will be sufficient for the Company to meet its capital expenditures and working capital needs for the its short-term operational plans as presently conducted. In consideration of the Company’s long-term strategic plans, the Company is currently evaluating long-term debt financing and other funding options in order to expedite our generic drug, Beta-Lactam and Cephalosporin facilities and research and development expansion plans. The Company’s future liquidity and cash requirements will depend on a wide range of factors, including the level of business in our existing operations, the timing and related outcomes in our drug research and development efforts including when we will receive FDA approvals of any pending ANDAs filed, any continued expansion of manufacturing equipment lines and related facilities and possible acquisitions. In particular, we have added additional manufacturing lines and have purchased additional fully automated manufacturing equipment to meet our present and future growth. Our plans may require the leasing of additional facilities and/or the leasing or purchase of additional equipment in the future to accommodate further expansion of our manufacturing, warehousing and related storage needs. There can be no assurance that any such financing would be available in amounts and on terms acceptable to the Company.

Item 3. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures. An evaluation was performed under the supervision and with the participation of our management, including the chief executive officer or CEO, and the chief financial officer, or CFO, of the effectiveness of the design and operation of our disclosure procedures. Based on management’s evaluation as the end of the period covered by this report, our principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures (an defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), were effective to ensure that the information required to the disclosed by us in the reports that we filed under the Exchange Act gathered, analyzed and disclosed with adequate timelines, accuracy and completeness and to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

Changes in internal controls. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation referred to above, nor were there any significant deficiencies or material weaknesses in our internal controls. Accordingly, no corrective actions were required or undertaken.

Part II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

On September 29, 2006, Schering Corporation (“Schering”) filed an action in the United States District Court for the District of New Jersey, against Belcher Pharmaceuticals, Inc. and GeoPharma, Inc. (along with nineteen other defendants) alleging that the filing of Belcher Pharmaceuticals’ Abbreviated new Drug Application (“ANDA”) for 5 mg Desloratadine Tablets, AB-rated to Clarinex^®, infringed U.S. Patent No. 6,100,274 (“the ‘274 patent”) Case No. 3:06-cv-04715-MLC-TJB. On November 8, 2006, Belcher filed a motion to dismiss in the New Jersey case for lack of jurisdiction. On October 5, 2006 Schering filed an action in the United States District Court for the Middle District of Florida, Tampa Division, Case

21

No. 8:06-cv-01843-SCB-EAJ, against Belcher Pharmaceuticals, Inc. and Geopharma, Inc. alleging that the filing of Belcher Pharmaceuticals’ ANDA for 5 mg Desloratadine Tablets, AB-rated to Clarinex^®, infringed the ‘274 patent. Company management and Belcher disputes Schering’s claims in the two actions and believes its proposed desloratadine product does not infringe the ‘274 patent. The possible outcome cannot be determined at this time.

From time to time the Company is subject to litigation incidental to its business. Such claims, if successful, could exceed applicable insurance coverage. The Company is not currently a party to any material legal proceedings other than what is currently disclosed herein.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

Item 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

Item 5. OTHER INFORMATION.

Not applicable.

Item 6. EXHIBITS

Exhibits.
Exhibit 31.1	Certification of Principal Financial Officer
Exhibit 31.2	Certification of Principal Executive Officer
Exhibit 32.1	Certification Pursuant to 18 U.S.C. Section 1350
Exhibit 32.2	Certification Pursuant to 18 U.S.C. Section 1350

22

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GeoPharma, Inc.
Date: February 14, 2007	By:	/s/ Mihir K. Taneja
		Mihir K. Taneja
		Chief Executive Officer, Secretary and Director
Date: February 14, 2007	By:	/s/ Carol Dore-Falcone
		Carol Dore-Falcone
		Vice President and Chief Financial Officer

23