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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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



For the quarter ended December 31, 2005



or



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



Commission File Number 001-16185



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GEOPHARMA, INC.

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



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|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



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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 January 26, 2005 was 9,202,105 net of 339,600 treasury shares.



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



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PART I  FINANCIAL INFORMATION



Item 1. CONSOLIDATED FINANCIAL STATEMENTS.



GEOPHARMA, INC. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS



ASSETS



|                                               |  |                               |            |                          |   |           
|---------------------------------------------- |  | ----------------------------- | ---------- | ------------------------ | - | ----------
|                                               |  | December 31, 2005 (unaudited) |            | March 31, 2005 (audited)
|Current assets:                                |  |                               |            |                          |   |           
|Cash and cash equivalents                      |  | $                             | 3,775,218  |                          | $ | 6,433,011 
|Certificate of deposit                         |  |                               | 433,273    |                          |   | 425,927   
|Accounts receivable, net                       |  |                               | 6,667,624  |                          |   | 2,256,189 
|Accounts receivable, other                     |  |                               | 114,874    |                          |   | 586,164   
|Inventories, net                               |  |                               | 5,350,249  |                          |   | 3,743,063 
|Prepaid expenses and other current assets      |  |                               | 1,191,516  |                          |   | 655,786   
|Due from affiliates                            |  |                               | 1,430,606  |                          |   | 867,007   
|Deferred tax asset                             |  |                               |           |                          |   | 38,000    
|                                               |  |                               |            |                          |   |           
|Total current assets                           |  | $                             | 18,963,360 |                          | $ | 15,005,147
|Property, plant, leaseholds and equipment, net |  |                               | 9,550,620  |                          |   | 4,485,767 
|Goodwill, net                                  |  |                               | 728,896    |                          |   | 728,896   
|Intangible assets, net                         |  |                               | 707,257    |                          |   | 521,499   
|Media credits, net                             |  |                               | 799,748    |                          |   | 799,748   
|Other assets, net                              |  |                               | 169,431    |                          |   | 130,886   
|                                               |  |                               |            |                          |   |           
|Total assets                                   |  | $                             | 30,919,312 |                          | $ | 21,671,943
|                                               |  |                               |            |                          |   |           



See accompanying notes
to condensed consolidated financial statements



2



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LIABILITIES AND SHAREHOLDERS EQUITY



|                                                                                                                                                           |  |                               |             |   |                          |   |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ----------- | - | ------------------------ | - | ----------- | -
|                                                                                                                                                           |  | December 31, 2005 (unaudited) |             |   | March 31, 2005 (audited) |  
|Current liabilities:                                                                                                                                       |  |                               |             |   |                          |   |             |  
|Accounts payable                                                                                                                                           |  | $                             | 4,281,946   |   |                          | $ | 1,759,512   |  
|Current portion of long-term obligations                                                                                                                   |  |                               | 2,759,108   |   |                          |   | 1,972,792   |  
|Accrued expenses and related party obligations                                                                                                             |  |                               | 3,296,281   |   |                          |   | 701,384     |  
|                                                                                                                                                           |  |                               |             |   |                          |   |             |  
|Total current liabilities                                                                                                                                  |  | $                             | 10,337,335  |   |                          | $ | 4,433,688   |  
|                                                                                                                                                           |  |                              
|Deferred tax liability                                                                                                                                     |  |                               | 206,300     |   |                          |   |            |  
|Long-term obligations, less current portion                                                                                                                |  |                               | 2,183,942   |   |                          |   | 1,562,569   |  
|                                                                                                                                                           |  |                               |             |   |                          |   |             |  
|Total liabilities                                                                                                                                          |  | $                             | 12,727,577  |   |                          | $ | 5,996,257   |  
|                                                                                                                                                           |  |                               |             |   |                          |   |             |  
|Minority interest                                                                                                                                          |  |                               | (292,406    | ) |                          |   |            |  
|                                                                                                                                                           |  |                              
|Commitments and contingencies                                                                                                                              |  |                               |             |   |                          |   |             |  
|                                                                                                                                                           |  |                              
|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; 9,365,536 and 9,181,481 shares issued and outstanding                                          |  |                               | 93,655      |   |                          |   | 91,815      |  
|Treasury stock (339,600 and 483,020 common shares, $.01 par value)                                                                                         |  |                               | (3,396      | ) |                          |   | (4,830      | )
|Additional paid-in capital                                                                                                                                 |  |                               | 43,860,879  |   |                          |   | 42,367,115  |  
|Retained earnings (deficit)                                                                                                                                |  |                               | (25,467,047 | ) |                          |   | (26,778,464 | )
|                                                                                                                                                           |  |                               |             |   |                          |   |             |  
|Total shareholders equity                                                                                                                                 |  | $                             | 18,484,141  |   |                          | $ | 15,675,686  |  
|                                                                                                                                                           |  |                               |             |   |                          |   |             |  
|Total liabilities and shareholders equity                                                                                                                 |  | $                             | 30,919,312  |   |                          | $ | 21,671,943  |  
|                                                                                                                                                           |  |                               |             |   |                          |   |             |  



See accompanying notes
to condensed consolidated financial statements.



3



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GEOPHARMA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|----------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ------------------------------ | - | --------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                                        |  | Three Months Ended December 31, |            |   | Nine Months Ended December 31, |  
|                                                                        |  | 2005                            |            |   | 2004                           |   |           | 2005 |  |   | 2004       |  
|Revenues:                                                               |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|PBM (a related party activity)                                          |  | $                               | 4,005,797  |   |                                | $ | 3,346,134 |      |  | $ | 12,190,203 |   |  | $ | 7,965,660  |  
|Distribution                                                            |  |                                 | 4,211,370  |   |                                |   | 726,594   |      |  |   | 11,097,986 |   |  |   | 3,008,725  |  
|Manufacturing                                                           |  |                                 | 4,052,681  |   |                                |   | 2,505,865 |      |  |   | 12,706,466 |   |  |   | 8,607,133  |  
|Pharmaceutical                                                          |  |                                 | 99,473     |   |                                |   | 352,128   |      |  |   | 318,375    |   |  |   | 442,593    |  
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Total revenues                                                          |  | $                               | 12,369,321 |   |                                | $ | 6,930,721 |      |  | $ | 36,313,030 |   |  | $ | 20,024,111 |  
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Cost of goods sold:                                                     |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|PBM                                                                     |  |                                 | 3,970,449  |   |                                |   | 3,319,303 |      |  |   | 12,092,374 |   |  |   | 7,646,184  |  
|Distribution                                                            |  |                                 | 2,389,624  |   |                                |   | 552,918   |      |  |   | 6,976,251  |   |  |   | 2,110,476  |  
|Manufacturing (excluding depreciation and amortization presented below) |  |                                 | 2,655,082  |   |                                |   | 1,892,842 |      |  |   | 7,781,634  |   |  |   | 5,912,029  |  
|Pharmaceutical                                                          |  |                                 | 56,769     |   |                                |   | 177,459   |      |  |   | 181,466    |   |  |   | 228,155    |  
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Total cost of goods sold                                                |  | $                               | 9,071,924  |   |                                | $ | 5,942,522 |      |  | $ | 27,031,725 |   |  | $ | 15,896,844 |  
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Gross profit:                                                           |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|PBM                                                                     |  |                                 | 35,348     |   |                                |   | 26,831    |      |  |   | 97,829     |   |  |   | 319,476    |  
|Distribution                                                            |  |                                 | 1,821,746  |   |                                |   | 173,676   |      |  |   | 4,121,735  |   |  |   | 898,249    |  
|Manufacturing                                                           |  |                                 | 1,397,599  |   |                                |   | 613,023   |      |  |   | 4,924,832  |   |  |   | 2,695,104  |  
|Pharmaceutical                                                          |  |                                 | 42,704     |   |                                |   | 174,669   |      |  |   | 136,909    |   |  |   | 214,438    |  
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Total gross profit                                                      |  | $                               | 3,297,397  |   |                                | $ | 988,199   |      |  | $ | 9,281,305  |   |  | $ | 4,127,267  |  
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Selling, general and administrative expenses:                           |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Depreciation and amortization                                           |  |                                 | 195,947    |   |                                |   | 156,038   |      |  |   | 530,508    |   |  |   | 448,244    |  
|Selling, general and administrative expenses                            |  |                                 | 2,188,404  |   |                                |   | 1,561,884 |      |  |   | 7,236,094  |   |  |   | 4,242,002  |  
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Operating income (loss) before other income and expense                 |  | $                               | 913,046    |   |                                | $ | (729,723  | )    |  | $ | 1,514,703  |   |  | $ | (562,979   | )
|Other income (expense), net:                                            |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Other income (expense), net                                             |  |                                 | 16,123     |   |                                |   | 26,888    |      |  |   | 896,804    |   |  |   | 242,577    |  
|Interest expense, net                                                   |  |                                 | (129,903   | ) |                                |   | (131,713  | )    |  |   | (305,838   | ) |  |   | (373,799   | )
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Total other income (expense), net                                       |  | $                               | (113,780   | ) |                                | $ | (104,825  | )    |  | $ | 590,966    |   |  | $ | (131,222   | )
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Income (loss) before income taxes                                       |  | $                               | 799,266    |   |                                | $ | (834,548  | )    |  | $ | 2,105,669  |   |  | $ | (694,201   | )
|Minority interest benefit (expense)                                     |  |                                 | 207,445    |   |                                |   |          |      |  |   | 292,406    |   |  |   |           |  
|Income tax benefit (expense)                                            |  |                                 | (567,193   | ) |                                |   |          |      |  |   | (851,298   | ) |  |   | (14,442    | )
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Net income (loss)                                                       |  | $                               | 439,518    |   |                                | $ | (834,548  | )    |  | $ | 1,546,777  |   |  | $ | (708,643   | )
|Preferred stock dividends                                               |  |                                 | 75,000     |   |                                |   | 125,833   |      |  |   | 225,000    |   |  |   | 446,762    |  
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Net income (loss) available to common shareholders                      |  | $                               | 364,518    |   |                                | $ | (960,381  | )    |  | $ | 1,321,777  |   |  | $ | (1,155,405 | )
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Basic income (loss) per share                                           |  | $                               | .04        |   |                                | $ | (.12      | )    |  | $ | .15        |   |  | $ | (.15       | )
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Basic weighted average number of common shares outstanding              |  |                                 | 9,005,134  |   |                                |   | 8,188,452 |      |  |   | 8,884,866  |   |  |   | 7,876,197  |  
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Diluted income (loss) per share                                         |  | $                               | .03        |   |                                | $ | (.12      | )    |  | $ | .11        |   |  | $ | (.15       | )
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  
|Diluted weighted average number of common shares outstanding            |  |                                 | 12,826,152 |   |                                |   | 8,188,452 |      |  |   | 12,630,224 |   |  |   | 7,876,197  |  
|                                                                        |  |                                 |            |   |                                |   |           |      |  |   |            |   |  |   |            |  



See accompanying notes
to condensed consolidated financial statements.



4



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GEOPHARMA, INC. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS



|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|------------------------------------------------------------------------------------------------------------ |  | ----------------------------------- | ---------- | - | ----------------------------------- | - | ---------- | -
|                                                                                                             |  | Nine Months Ended December 31,      |           
|                                                                                                             |  | 2005                                |            |   | 2004                                |  
|                                                                                                             |  | (Unaudited)                         |            |   | (Unaudited)                         |  
|Cash flows from operating activities:                                                                        |  |                                     |            |   |                                     |   |            |  
|Net income (loss)                                                                                            |  | $                                   | 1,546,777  |   |                                     | $ | (708,643   | )
|Adjustments to reconcile net income (loss) to net cash from operating activities:                            |  |                                     |            |   |                                     |   |            |  
|Depreciation and amortization                                                                                |  |                                     | 530,500    |   |                                     |   | 448,244    |  
|Certificate of deposit accrued interest                                                                      |  |                                     | (7,346     | ) |                                     |   | (786       | )
|Amortization of stock option deferred compensation                                                           |  |                                     | 33,593     |   |                                     |   | 33,593     |  
|Income tax expense, current                                                                                  |  |                                     | 751,298    |   |                                     |   | 14,442     |  
|(Increase) decrease in net deferred income tax asset                                                         |  |                                     | 138,000    |   |                                     |   |           |  
|Changes in operating assets and liabilities:                                                                 |  |                                     |            |   |                                     |   |            |  
|Accounts receivable, trade, net                                                                              |  |                                     | (4,411,434 | ) |                                     |   | (907,490   | )
|Accounts receivable, other                                                                                   |  |                                     | 471,290    |   |                                     |   | (233,348   | )
|Inventory, net                                                                                               |  |                                     | (1,607,186 | ) |                                     |   | (1,164,590 | )
|Prepaid expenses and other current assets                                                                    |  |                                     | (535,730   | ) |                                     |   | (97,062    | )
|Other assets, net                                                                                            |  |                                     | (274,536   | ) |                                     |   | 20,259     |  
|Accounts payable                                                                                             |  |                                     | 2,522,433  |   |                                     |   | 237,334    |  
|Accrued expenses                                                                                             |  |                                     | 2,371,010  |   |                                     |   | 303,438    |  
|Due from affiliates, net                                                                                     |  |                                     | (562,996   | ) |                                     |   | (63,623    | )
|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|Net cash provided (used) by operating activities                                                             |  | $                                   | 965,673    |   |                                     | $ | (2,118,232 | )
|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|Cash flows from investing activities:                                                                        |  |                                     |            |   |                                     |   |            |  
|Purchases of property, plant, leaseholds and equipment                                                       |  | $                                   | (5,545,126 | ) |                                     | $ | (2,775,363 | )
|Proceeds from minority interest, net                                                                         |  |                                     | 687,594    |   |                                     |   |           |  
|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|Net cash used by investing activities                                                                        |  | $                                   | (4,857,532 | ) |                                     | $ | (2,775,363 | )
|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|Cash flows from financing activities:                                                                        |  |                                     |            |   |                                     |   |            |  
|Proceeds from issuance of long-term obligations                                                              |  | $                                   | 3,000,000  |   |                                     | $ |           |  
|Payments of long-term obligations                                                                            |  |                                     | (2,023,820 | ) |                                     |   | (657,140   | )
|Payments of preferred stock dividends                                                                        |  |                                     |           |   |                                     |   | (152,500   | )
|Proceeds from stock options exercised                                                                        |  |                                     | 80,138     |   |                                     |   | 285,491    |  
|Purchase of treasury shares                                                                                  |  |                                     |           |   |                                     |   | (718,891   | )
|Amortization of debt discount to interest expense                                                            |  |                                     | 177,748    |   |                                     |   | 231,341    |  
|Payments of private placement fees                                                                           |  |                                     |           |   |                                     |   | (6,000     | )
|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|Net cash provided (used) by financing activities                                                             |  | $                                   | 1,234,066  |   |                                     | $ | (1,017,699 | )
|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|Net increase (decrease) in cash                                                                              |  |                                     | (2,657,793 | ) |                                     |   | (5,911,294 | )
|Cash at beginning of period                                                                                  |  |                                     | 6,433,011  |   |                                     |   | 13,167,765 |  
|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|Cash at end of period                                                                                        |  | $                                   | 3,775,218  |   |                                     | $ | 7,256,471  |  
|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|                                                                                                             |  |                                    
|                                                                                                             |  | Nine months ended December 31, 2005 |            |   | Nine months ended December 31, 2004 |  
|Supplemental disclosure of cash flow information:                                                            |  |                                     |            |   |                                     |   |            |  
|Cash paid during the period for interest                                                                     |  | $                                   | 102,325    |   |                                     | $ | 125,135    |  
|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|Cash paid during the period for income taxes                                                                 |  | $                                   |           |   |                                     | $ | 40,000     |  
|                                                                                                             |  |                                     |            |   |                                     |   |            |  
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                                                                 |  |                                     |            |   |                                     |   |            |  
|Value of common stock issued to pay preferred stock dividend                                                 |  | $                                   | 225,000    |   |                                     | $ | 269,263    |  
|Value of common stock issued to pay convertible debt interest                                                |  | $                                   |           |   |                                     | $ | 49,477     |  
|Value of common stock issued upon conversion of 5 million shares of Series A, 6% convertible preferred stock |  | $                                   |           |   |                                     | $ | 5,000,000  |  
|Value of common stock issued to pay convertible debt principle                                               |  | $                                   |           |   |                                     | $ | 262,500    |  



See accompanying notes
to condensed consolidated financial statements.



5



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GEOPHARMA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE
MONTHS ENDED DECEMBER 31, 2005 AND 2004

(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-QSB and Article 10 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, 2005 and 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2006. 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, 2005 and 2004 as filed with the Securities and Exchange Commission on June 29, 2005.



NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



a. Principles of Consolidation



The condensed consolidated financial statements as of December 31, and March 31, 2005 and for the three and nine months ended December 31,
2005 and 2004 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), 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 Significant 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, 2005 and March 31, 2005, the Company had four industry segments in addition to corporate: manufacturing, distribution, pharmacy benefit management and pharmaceutical. The $30,919,312 of total assets as of December 31,
2005 were comprised of $2,811,268 attributable to corporate, $14,916,113 attributable to manufacturing, $6,683,648 attributable to distribution, $1,825,298 attributable to pharmacy benefit management and $4,682,985 attributable to pharmaceutical.
The $21,671,943 of total assets as of March 31, 2005 were comprised of $6,352,631 attributable to corporate, $11,853,060 attributable to manufacturing, $2,573,787 attributable to distribution, $817,099 attributable to pharmacy benefit
management and $75,366 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.



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



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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. 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.



For the three and nine months ended December 31, 2005 and 2004,
amortization expense associated with goodwill was $0. The unamortized balance of goodwill at December 31, and March 31, 2005 was $728,896 with the unamortized balance of intellectual property for the same periods was $228,305. No
impairment loss was required to be recorded.



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.



7



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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) 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, 2005 and 2004. The reconciliation between basic and fully diluted shares are as follows:



|                                              |  |                                             |            |                                              |   |           |                                             |  |                                            |            |  |   |            |  
|--------------------------------------------- |  | ------------------------------------------- | ---------- | -------------------------------------------- | - | --------- | ------------------------------------------- |  | ------------------------------------------ | ---------- |  | - | ---------- | -
|                                              |  | For the ThreeMonths Ended December 31, 2005 |            | For the Three Months Ended December 31, 2004 |   |           | For the Nine Months Ended December 31, 2005 |  | For the NineMonths Ended December 31, 2004 |           
|Net income (loss) per share  basic:          |  |                                             |            |                                              |   |           |                                             |  |                                            |            |  |   |            |  
|Net income (loss)                             |  | $                                           | 364,518    |                                              | $ | (960,381  | )                                           |  | $                                          | 1,321,777  |  | $ | (1,155,405 | )
|Weighted average shares  basic               |  |                                             | 9,005,134  |                                              |   | 8,188,452 |                                             |  |                                            | 8,884,866  |  |   | 7,876,197  |  
|Net income (loss) per share  basic           |  | $                                           | .04        |                                              | $ | (.12      | )                                           |  | $                                          | .15        |  | $ | (.15       | )
|Net income (loss) per share  diluted:        |  |                                             |            |                                              |   |           |                                             |  |                                            |            |  |   |            |  
|Net income (loss)                             |  | $                                           | 364,518    |                                              | $ | (960,381  | )                                           |  | $                                          | 1,321,777  |  | $ | (1,155,405 | )
|Preferred stock dividend                      |  |                                             | 75,000     |                                              |   |          |                                             |  |                                            | 225,000    |  |   |           |  
|                                              |  |                                             |            |                                              |   |           |                                             |  |                                            |            |  |   |            |  
|                                              |  | $                                           | 439,518    |                                              | $ | (960,381  | )                                           |  | $                                          | 1,546,777  |  | $ | (1,155,405 | )
|Weighted average shares  basic               |  |                                             | 9,005,134  |                                              |   | 8,188,452 |                                             |  |                                            | 8,884,866  |  |   | 7,876,197  |  
|Effect of preferred stock prior to conversion |  |                                             | 833,333    |                                              |   |          |                                             |  |                                            | 833,333    |  |   |           |  
|Effect of warrants prior to conversion        |  |                                             | 562,500    |                                              |   |          |                                             |  |                                            | 562,500    |  |   |           |  
|Effect of stock options                       |  |                                             | 2,425,185  |                                              |   |          |                                             |  |                                            | 2,425,185  |  |   |           |  
|Effect of convertible term note               |  |                                             |           |                                              |   |          |                                             |  |                                            |           |  |   |           |  
|Weighted average shares-diluted               |  |                                             | 12,826,152 |                                              |   | 8,188,452 |                                             |  |                                            | 12,630,224 |  |   | 7,876,197  |  
|Net income (loss) per share  diluted         |  | $                                           | .03        |                                              | $ | (.12      | )                                           |  | $                                          | .11        |  | $ | (.15       | )
|Antidilutive items not included               |  |                                             | 1,170,000  |                                              |   | 4,044,950 |                                             |  |                                            | 1,170,000  |  |   | 4,044,950  |  



j. Use of Estimates



The preparation of financial statements in conformity with generally accepted accounting
principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at December 31 and March 31, 2005, as well as the reported
amounts of revenues and expenses for the three and nine months ended December 31, 2005 and 2004. The actual outcome of the estimates could differ from the estimates made in the preparation of the financial statements.



k. Concentration of Credit and Sales Risk



Concentrations of credit risk with respect to trade accounts receivable are limited due to
the distribution of sales over a large customer base as of December 31, and March 31, 2005. For the three months ended December 31, 2005, four customers accounted for 32.4%, CarePlus, a related party, 27.1% General Nutrition
Distributors, 6.6%, Spectrum Group, 6.5% Berkeley Premium Nutraceuticals. For the nine months ended December 31, 2005, five customers accounted for 33.6%, CarePlus, a related party, 13.9%, General Nutrition Distributors, 11.8%, Spectrum Group,
5.2% Berkeley Premium Nutraceuticals and 5.1%, Direct Marketing Concepts.



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 Recognition



In accordance with SAB 101, Revenue Recognition, revenues are recognized by the Company when the merchandise is shipped to the customer which is when title and risk of
loss has passed to the customer. Revenues from sales of inventory on consignment are recognized when consigned inventory is sold with title and risk of loss passing to the ultimate customer.



m. Advertising Costs



The Company charges advertising costs to expense as incurred. Advertising expense was $216,506 and $148,031 for the three months ended
December 31, 2005 and 2004 and $1,474,359 and $259,269 for the nine months ended December 31, 2005 and 2004, respectively.



8



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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, 2005 were $112,271 and $248,447, respectively and was $180,857 and $387,691 for the three and nine months ended December 31, 2004.



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, 2005, 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. Reclassifications



Certain reclassifications have been made to the financial statements for the three and nine months ended December 31, 2004 to conform to the presentation for the
three and nine months ended December 31, 2005.



NOTE 3INCOME
TAXES



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



|                                                    |  |   |          |  
|--------------------------------------------------- |  | - | -------- | -
|Computed tax expense at the statutory rate (37.63%) |  | $ | 888,000  |  
|Increase (decrease) in taxes resulting from:        |  |   |          |  
|Effect of permanent differences:                    |  |   |          |  
|Non deductible                                      |  |   | 58,000   |  
|Other, net                                          |  |   | 5,298    |  
|Change in valuation allowance                       |  |   | (100,000 | )
|                                                    |  |   |          |  
|Income tax (benefit) expense                        |  | $ | 851,298  |  
|                                                    |  |   |          |  



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



|                                            |  |   |          |  
|------------------------------------------- |  | - | -------- | -
|Deferred tax assets:                        |  |   |          |  
|Bad debts                                   |  | $ | 47,400   |  
|Inventories                                 |  |   | 51,000   |  
|Accrued vacation                            |  |   | 16,000   |  
|Deposits                                    |  |   | 57,000   |  
|Amortization                                |  |   |         |  
|Net operating loss carryforwards            |  |   |         |  
|                                            |  |   |          |  
|Deferred tax asset                          |  | $ | 171,400  |  
|                                            |  |   |          |  
|Deferred tax liabilities:                   |  |   |          |  
|Fixed asset basis differences               |  |   | (324,700 | )
|Amortization                                |  |   | (53,000  | )
|                                            |  |   |          |  
|                                            |  |   |          |  
|                                            |  |   |          |  
|Net deferred tax asset (liability) recorded |  | $ | (206,300 | )
|                                            |  |   |          |  



9



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NOTE 4-STOCK OPTION PLANS



The Company has adopted only the disclosure provision of SFAS No. 123, Accounting for Stock Based Compensation,
as it relates to employee awards. Accounting Principles Board Opinion No. 25 is applied in accounting for the plan. Accordingly, no compensation expense is recognized related to the stock based compensation plans. The pro forma net earnings (loss)
per common share, if the Company had elected to account for its plan consistent with the methodology prescribed by SFAS No. 123, are shown in the following:



|                                    |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  
|----------------------------------- |  | ------------------ | -------- | - | ----------------- | - | ---------- | ---------------- |  | ---------------- | --------- |  | - | ---------- | -
|                                    |  | Three months ended |          |   | Nine months ended |  
|                                    |  | December 31,2005   |          |   | December 31,2004  |   |            | December 31,2005 |  | December 31,2004 |          
|Net income (loss)                   |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  
|As reported                         |  | $                  | 364,518  |   |                   | $ | (960,381   | )                |  | $                | 1,321,777 |  | $ | (1,155,405 | )
|                                    |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  
|Pro forma                           |  | $                  | (101,189 | ) |                   | $ | (1,126,917 | )                |  | $                | 585,537   |  | $ | (361,507   | )
|                                    |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  
|Net income (loss) per common share: |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  
|Basic income (loss) per share:      |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  
|As reported                         |  | $                  | .04      |   |                   | $ | (.12       | )                |  | $                | .15       |  | $ | (.15       | )
|                                    |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  
|Pro forma                           |  | $                  | (.01     | ) |                   | $ | (.14       | )                |  | $                | .10       |  | $ | (.18       | )
|                                    |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  
|Diluted income (loss) per share:    |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  
|As reported                         |  | $                  | .03      |   |                   | $ | (.12       | )                |  | $                | .11       |  | $ | (.15       | )
|                                    |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  
|Pro forma                           |  | $                  | (.01     | ) |                   | $ | (.14       | )                |  | $                | .08       |  | $ | (.18       | )
|                                    |  |                    |          |   |                   |   |            |                  |  |                  |           |  |   |            |  



Effective April 1,
2006, the Company will adopt the provisions of SFAS No. 123R, Share-Based Payment. The Company has not yet completed its evaluation of the effect of this pronouncement.



NOTE 5-RELATED PARTY TRANSACTIONS



Revenues: For the three months ended December 31, 2005 and 2004, manufacturing revenues of approximately $48,355 and $50,263 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, 2005 and 2004,
manufacturing revenues of $192,942 and $88,774, 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, 2005 and 2004, distribution
revenues of approximately $0 and $19,440 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, 2005 and
2004, pharmacy benefit management revenues of approximately $4,005,797 and $3,346,134 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, 2005 and 2004, manufacturing revenues of approximately $150,631 and $369,217 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, 2005 and 2004, manufacturing revenues of $0 and $27,141,
respectively, were recorded from sales by the Company to DrugMax, Inc., 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, 2005
and 2004, manufacturing revenues of $496,926 and $304,711, 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 nine months ended December 31, 2005 and 2004,
distribution revenues of approximately $0 and $19,440 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, 2005 and 2004, pharmacy benefit management revenues of approximately $12,190,203 and $7,965,660 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.



10



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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 due to these affiliates are in the nature of trade receivables or payables and fluctuate based on sales volume and
payments received/made.



As of March 31, and December 31, 2005, for
the manufacturing segment, $51,460 and $52,095 was due from subsidiaries of Dynamic Health Products. $57,363 and $203,420, respectively, was due from VerticalHealth, Inc.



As of March 31, and December 31, 2005, for the pharmacy benefit management segment, $743,801 and $1,174,851 was due from CarePlus
Health.



NOTE 6- LEGAL PROCEEDINGS



In December 2004 and January 2005 five securities class action lawsuits were
filed in the Federal District Court, Southern District of New York against GeoPharma and certain of its officers, alleging violations of federal securities laws in connection with certain press releases issued by the Company relating to Belcher
Pharmaceuticals planned introduction of Mucotrol: Mat eVentures v. Kotha Sekharam and GeoPharma, Inc. (SDNY 04 Civ. 9463); Moshayedi v. GeoPharma, Inc., Jugal Taneja, Mihir Taneja, and Kotha Sekharam (SDNY 04 Civ. 9736); Sarno v. Mihir Taneja,
Kotha Sekharam, and GeoPharma, Inc. (SDNY 04 Civ. 9975); Farwell v. Kotha Sekharam and GeoPharma, Inc. (SDNY 05 Civ. 188); and Taylor v. Kotha Sekharam and GeoPharma, Inc. (SDNY 05 Civ. 258). Plaintiffs, on behalf of themselves and all others
similarly situated, seek unspecified damages allegedly suffered in connection with their respective purchases and sales of the Companys securities during the Class period. On March 9, 2005 the Court consolidated the actions and appointed
lead plaintiff and lead counsel. On April 18, 2005 plaintiffs filed a Consolidated Amended Class Action Complaint. On June 6, 2005 defendants filed a Motion to Dismiss the action. By Opinion and Order dated September 30, 2005 the
Court granted defendents motion and dismissed the action without prejudice, with leave to replead. On October 24, 2005 plaintiffs filed a Consolidated Second Amended Class Action Complaint in the action. The Company again moved to dismiss
the Second Amended Consolidated Complaint, and after the issues were fully briefed by the parties, by Opinion and Order dated January 27, 2006 the Court again dismissed Plaintiffs action, this time with prejudice.



The company received a letter dated April 11, 2005 addressed to its
Board of Directors, constituting a shareholder demand pursuant to Florida Statute Sec. 607.07401 from a San Diego law firm representing an alleged shareholder of GeoPharma, Inc. Such letter demanded that the company commence legal proceedings
against each Board member and each officer of the company for alleged breaches of fiduciary duty arising out of and/or evidenced by the same actions and circumstances involved in the class action referred to above. At its Board meeting of
June 7, 2005, the Board of Directors appointed a committee of independent directors to investigate the allegations outlined in such letter and as such, the investigation is currently underway. On December 29, 2005, Imelda Hoeft,
derivatively on behalf of the Company, instituted an action in the Circuit Court of the 6th Judicial Circuit in and for Pinellas County, Florida against the Company and all the Companys officers and directors asserting claims for breach
of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment. The action seeks unspecified damages and other relief. It is not possible to predict with certainty the ultimate outcome of these
lawsuits. Although the Company has certain insurance, if these matters are resolved unfavorably, they could have a material adverse effect on the Companys operating results or cash flows.



NOTE 7-AMERICAN ANTIBIOTICS LLC



On Friday, August 12, 2005, the Company, through American Antibiotics LLC, a
newly-formed subsidiary which is 51% owned by the Company, acquired substantially all of the assets of Consolidated Pharmaceutical Group, Inc., an antibiotic manufacturer located in Baltimore, Maryland. The acquisition was made through American
Antibiotics LLC, a newly formed Florida limited liability company. GeoPharma has a 51% controlling interest in American Antibiotics LLC in exchange for $3,000,000. In accordance with the Purchase Agreement, the $3,000,000 note was immediately
reduced based on a $500,000



11



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cash down payment with the balance due of $2,500,000 note amortized over three years at 5% interest with principal and
interest serviced annually. In addition, the manufacturing facility located Baltimore, Maryland remains rent free for the longer of twelve months or until the Sellers have brought the Facility to current FDA and cGMP standards.



Commercial production is expected to commence during the second quarter of 2006. American
Antibiotics will begin production with five ANDAs in 10 dosage forms; Amoxicillin 250mg and 500mg oral capsule, Amoxicillin 125mg / 5ml and 250mg / 5ml suspensions, Ampicillin 250mg and 500mg oral capsule, Ampicillin 125mg / 5ml and 250mg / 5ml
suspensions, and Penicillin V. Potassium 125mg / 5ml and 250mg / 5ml suspension.



NOTE 8-SUBSEQUENT EVENTS



On February 1,
2006, the Company paid the remaining $2,424,000 6% convertible debt balance outstanding by the issuance of 530,469 shares of its $0.01 par value common stock which satisfied all principle, interest and any and all prepayment and conversion fees.The company filed their Form 8-K with the Securities and Exchange Commission on February 6, 2006 and filed Form 424(b)(3) on February 8, 2006.



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



We derive our revenues from developing, manufacturing and distributing a wide variety of cosmetics, over-the-counter, pharmaceutical and generic drugs,
and prescription and non-prescription products. We also derive revenues from the distribution of our branded product lines, CarbSlim, Lean Protein and from our branded dietary supplement product lines that this year include Oxylene and Hoodia DEX
L-10. Revenues are billed and recognized as product is produced and shipped, net of discounts, allowances, returns and credits. In addition, we derive revenues from the services provided in connection with pharmacy benefit management. Service
revenues are billed and recognized once the service has been provided. The PBMs revenues are comprised of amounts billed and recognized based on the number of eligible plan members enrolled in the HMO insurance programs, plan member claims
caused by the fulfillment of an eligible HMO members drug prescription and related administration costs for pharmacys fulfilling drug prescriptions for the number of members and the number of claims for the period.



Cost of goods sold is comprised of direct manufacturing and manufacturing and
distribution material product costs, contracted service fees, direct personnel compensation and other statutory benefits and indirect costs relating to labor to support product manufacture, distribution and the warehousing of production and other
manufacturing overhead. In addition, for the distribution segment, the cost of all free goods for the purpose of product introduction or other incentive-based product costs are also charged. The PBM cost of sales amounts recognized represent the
direct and indirect costs of the prescription drug claims arising from the pharmacys fulfillment of HMO member drug prescriptions that were filled, completed and received by eligible HMO insurance plan members for the period.



Research and development expenses that benefit us and that benefit our
customers are charged against either cost of goods sold or included within selling, general and administrative expenses as incurred dependent upon whether the R&D relates to direct product materials expended, direct laboratory and manufacturing
production costs or whether it relates to indirect or more facility and administrative type costs representing indirect salaries.



Selling, general and administrative expenses include management and general office salaries, advertising and promotional expenses, depreciation and
amortization, insurance expenses, legal and accounting costs, sales and marketing and other indirect operating costs.



12



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Interest expense, net, consists primarily of interest expense associated with borrowings to finance
capital equipment expenditures and other working capital needs as partially offset by interest income earned on our funds held at banks.



Three Months Ended December 31, 2005 Compared To Three Months Ended December 31, 2004



Revenues. Total revenues increased approximately $5,438,000, or 78.4%, to approximately $12,369,000 for the three months ended
December 31, 2005, as compared to approximately $6,931,000 for the three months ended December 31, 2004. Pharmacy benefit management revenues increased approximately $660,000, or 20.0%, to approximately $4,006,000 for the three months
ended December 31, 2005, as compared to $3,346,000 for the three months ended December 31, 2004. Pharmacy benefit management revenues increased for the three months ended December 31, 2005 due to the increase of participating plan
members and related pharmacy claims based on the PBM activity derived from two HMO health plans. Distribution revenues increased approximately $3,485,000, or 479.6%, to approximately $4,211,000 for the three months ended December 31, 2005, as
compared to $727,000 for the three months ended December 31, 2004. For the three months ended December 31, 2005, revenues were derived from sales volume from three product lines that included 1,176 cases of CarbSlim, 862 cases of Lean
Protein Bites, our consumer foods products, and 7,138 cases of dietary supplements sold under our branded label as compared to revenues from three product lines that included 4,918 cases of CarbSlim, 1,017 cases of Lean Protein Bites and 867 cases
of dietary supplements sold under our branded label. The increase in case sales of our dietary supplement products increased based on our increased advertising dollars spent promoting our products in addition to increases in the number of retail
outlets selling the products. The total distribution revenues for the current three month period were derived from 98% dietary supplement sales with only 2% of total distribution revenues being derived from consumer foods as compared to the
corresponding period in 2004 whereas 67% of distribution revenues were derived from dietary supplement case sales with 33% of distribution revenues being derived from our consumer food products. Manufacturing revenues increased approximately
$1,547,000, or 61.7%, to approximately $4,053,000 for the three months ended December 31, 2005, as compared to approximately $2,505,000 for the corresponding period. Increases in manufacturing segment revenues in the current period as compared
to the corresponding period in 2004 was primarily caused by increased customer base and the increased size and frequency in certain of our key customers orders. Pharmaceutical revenues decreased $253,000 or 71.8% to $99,000 in the current
three month period ended December 31, 2005 as compared to $352,000 the prior corresponding period in 2004. The decline was caused due to the prior periods revenues were derived from initial pipeline fill orders as compared to the current
three month period which were derived from reorders.



Gross
profit. Total gross profit increased approximately $2,309,000, or 233.7%, to approximately $3,297,000 for the three months ended December 31, 2005, as compared to approximately $988,000 for the three months ended December 31, 2004.
Total consolidated gross margins increased to 26.7% for the three month period ended December 31, 2005 as compared to 14.3% for the corresponding three months in 2004. Pharmacy benefit management gross profits increased approximately $8,000, or
31.7%, to approximately $35,000 for the three months ended December 31, 2005, as compared to $26,000 for the three months ended December 31, 2004. Pharmacy benefit management gross margin increased to 0.9% for the three months ended
December 31, 2005 as compared to .8% for the three months ended December 31, 2004. Although sales revenues have continued to increase, gross profit dollars and gross margins remain consistent due to continuing increases in costs of
prescriptions and increases in the costs to administer pharmacy claims which translate into higher net claims dollars incurred and paid per member as compared to the corresponding three-month period. Distribution gross profit increased approximately
$1,648,000, or 948.9%, to approximately $1,822,000 for the three months ended December 31, 2005, as compared to $174,000 for the three months ended December 31, 2004. Distribution gross margins increased to 43.3% for the three months ended
December 31, 2005 as compared to 23.9% in the corresponding period in 2004. With increased sales revenues, gross profit dollars and gross margins also increased due to the change in the mix of sales in the current three month period as
influenced by increases in case sales of our dietary supplements that carry a higher gross margin than do the sales of CarbSlim and Lean Protein Bites, our reduced carbohydrate consumer food products. The demand for these consumer food products has
slowed in the United States. Further, the current three month period sales mix for the higher margined dietary supplements has increased significantly. Although all products are sold to the national mass chains that generally have a lower gross
margin due to required outside broker fees, slotting fees, free-product fills and volume discounts, the per case profit margin for our dietary supplements are higher than consumer food products. Manufacturing gross profit increased approximately
$784,000, or 128%, to approximately $1,398,000 for the three months ended December 31, 2005, as compared to approximately $613,000 in the corresponding three-month period in 2004. For the three months ended December 31, 2005, manufacturing
gross margin increased to 34.5%, from 24.5% in the corresponding three-month period in 2004. The increases in gross margins and gross profit dollars are primarily attributable to change in our customer profile which has focused on higher margin
private-label and OTC contract manufacturing orders. Pharmaceutical gross profit decreased approximately $132,000, or 75.5%, to approximately $43,000 for the three months ended December 31, 2005, as compared to approximately $174,000 in the
corresponding three-month period in 2004. For the three months ended December 31, 2005, pharmaceutical gross margin decreased to 42.9%, from 49.5% in the corresponding three-month period in 2004. The decreases in gross margins and gross profit
dollars are primarily attributable to the decrease in sales revenues as well as overall short-term promotional-based decreases in our customers reorder pricing.



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Selling, general and administrative expenses. Selling, general and administrative expenses consist
primarily of advertising and promotional expenses; 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; and depreciation and leasehold amortization expense. Selling, general and administrative expenses increased approximately $666,000, or 38.8%, to approximately $2,384,000 for the three months ended December 31, 2005, as compared to
approximately $1,718,000 in the corresponding period. The increase is primarily attributable to research and development expenses, higher legal expenses in addition to increases in advertising and promotional expenses associated with our
distribution segment, rents, as well as payroll expenses and costs associated with fringe benefits to support our distribution, manufacturing growth. As a percentage of sales, selling, general and administrative expenses decreased to 19.3% for the
three months ended December 31, 2005 from 24.8% in the corresponding three-month period in 2004.



Interest income (expense), net. Interest expense, net of interest income, decreased approximately $2,000 to approximately $(130,000) for the three
months ended December 31, 2005, from approximately $(132,000) for the three months ended December 31, 2004. The small decrease in net interest expense is primarily attributable to the decreases in long-term obligations outstanding due to
continued principle payments on obligations outstanding as partially offset by decreases in amounts earned on funds held at banks.



Income taxes. As of and for the three months ended December 31, 2005, income tax expense increased to $567,000 as compared to no tax expense
or benefit in the corresponding three month period in 2004. The increase in expense is primarily due to lack of available favorable net operating loss carryforwards or available benefit as derived from recorded deferred tax assets. The Company has
$46,000 and $206,000 recorded as a current and deferred tax liability, respectively based on current and future expected net taxable income.



Nine Months Ended December 31, 2005 Compared To Nine Months Ended December 31, 2004



Revenues. Total revenues increased approximately $16,289,000, or 81.4%, to approximately $36,313,000 for the nine months ended
December 31, 2005, as compared to approximately $20,024,000 for the nine months ended December 31, 2004. Pharmacy benefit management revenues increased approximately $4,225,000, or 53.0%, to approximately $12,190,000 for the nine months
ended December 31, 2005, as compared to $7,966,000 for the nine months ended December 31, 2004. Pharmacy benefit management revenues increased for the nine months ended December 31, 2005 due to the increase of participating plan
members and related pharmacy claims based on the PBM activity derived from two HMO health plans. Distribution revenues increased approximately $8,089,000, or 268.9%, to approximately $11,098,000 for the nine months ended December 31, 2005, as
compared to $3,009,000 for the nine months ended December 31, 2004. For the nine months ended December 31, 2005, revenues were derived from sales volume from three product lines that included 8,506 cases of CarbSlim, 3,274 cases of Lean
Protein Bites, our consumer foods products, and 9,341 cases of dietary supplements sold under our branded label as compared to revenues from three product lines that included 48,701 cases of CarbSlim, 4,426 cases of Lean Protein Bites and 1,469
cases of dietary supplements sold under our branded label. The increase in case sales of our dietary supplement products increased based on our increased advertising dollars spent promoting our products in addition to increases in the number of
retail outlets selling the products. The total distribution revenues for the current nine month period were derived from 97% dietary supplement sales with only 3% of total distribution revenues being derived from consumer foods as compared to the
corresponding period in 2004 whereas 41% of distribution revenues were derived from dietary supplement case sales with 59% of distribution revenues being derived from our consumer food products. Manufacturing revenues increased approximately
$4,099,000, or 47.6%, to approximately $12,706,000 for the nine months ended December 31, 2005, as compared to approximately $8,607,000 for the corresponding period. Increases in manufacturing segment revenues in the current period as compared
to the corresponding period in 2004 was primarily caused by increased customer base and the increased size and frequency in certain of our key customers orders. Pharmaceutical revenues decreased $124,000 or 28.1% to 318,000 in the current nine
month period ended December 31, 2005 as compared to $443,000 the prior corresponding period in 2004. The decline was caused due to the prior periods revenues were derived from initial pipeline fill orders as compared to the current nine
month period which were derived from reorders.



Gross
profit. Total gross profit increased approximately $5,140,000, or 124.1%, to approximately $9,281,000 for the nine months ended December 31, 2005, as compared to approximately $4,127,000 for the nine months ended December 31, 2004.
Total consolidated gross margins increased to 25.6% for the nine month period ended December 31, 2005 as compared to 20.6% for the corresponding nine months in 2004. Pharmacy benefit management gross profits decreased approximately $222,000, or
69.4%, to approximately $98,000 for the nine months ended December 31, 2005, as compared to $319,000 for the nine months ended December 31, 2004. Pharmacy benefit management gross margin decreased to 0.8% for the nine months ended
December 31, 2005 as compared to 4% for the nine months ended December 31, 2004. Although sales



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revenues have continued to increase, gross profit dollars and gross margins decreased due to continuing increases in
costs of prescriptions and increases in the costs to administer pharmacy claims which translate into higher net claims dollars incurred and paid per member as compared to the corresponding nine-month period as partially offset by the nonrecurring
$225,000 contract renewal revenue collected in the 2004 period. Distribution gross profit increased approximately $3,223,000, or 358.9%, to approximately $4,122,000 for the nine months ended December 31, 2005, as compared to $898,000 for the
nine months ended December 31, 2004. Distribution gross margins increased to 37.1% for the nine months ended December 31, 2005 as compared to 29.9% in the corresponding period in 2004. With increased sales revenues, gross profit dollars
and gross margins also increased due to the change in the mix of sales in the current nine month period as influenced by increases in case sales of our dietary supplements that carry a higher gross margin than do the sales of CarbSlim and Lean
Protein Bites, our reduced carbohydrate consumer food products. The demand for these consumer food products has slowed in the United States. Further, the current nine month period sales mix for the higher margined dietary supplements has increased
significantly. Although all products are sold to the national mass chains that generally have a lower gross margin due to required outside broker fees, slotting fees, free-product fills and volume discounts, the per case profit margin for our
dietary supplements are higher than consumer food products. Manufacturing gross profit increased approximately $2,230,000, or 82.7%, to approximately $4,925,000 for the nine months ended December 31, 2005, as compared to approximately
$2,695,000 in the corresponding nine-month period in 2004. For the nine months ended December 31, 2005, manufacturing gross margin increased to 38.8%, from 31.3% in the corresponding nine-month period in 2004. The increases in gross margins and
gross profit dollars are primarily attributable to change in our customer profile which has focused on higher margin private-label and OTC contract manufacturing orders. Pharmaceutical gross profit decreased approximately $78,000, or 36.2%, to
approximately $137,000 for the nine months ended December 31, 2005, as compared to approximately $214,000 in the corresponding nine-month period in 2004. For the nine months ended December 31, 2005, pharmaceutical gross margin decreased to
43.0%, from 48.5% in the corresponding nine-month period in 2004. The decreases in gross margins and gross profit dollars are primarily attributable to the decrease in sales revenues as well as overall short-term promotional-based decreases in our
customers reorder pricing.



Selling, general and
administrative expenses. Selling, general and administrative expenses consist primarily of advertising and promotional expenses; 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; and depreciation and leasehold amortization expense. Selling, general and administrative expenses increased approximately $3,076,000, or 65.6%, to
approximately $7,767,000 for the nine months ended December 31, 2005, as compared to approximately $4,690,000 in the corresponding period. The increase is primarily attributable to research and development expenses, higher legal expenses in
addition to increases in advertising and promotional expenses associated with our distribution segment, rents, as well as payroll expenses and costs associated with fringe benefits to support our distribution, manufacturing growth. As a percentage
of sales, selling, general and administrative expenses decreased to 21.4% for the nine months ended December 31, 2005 from 23.4% in the corresponding nine-month period in 2004.



Interest income (expense), net. Interest expense, net of interest income, decreased approximately $68,000 to
approximately $(306,000) for the nine months ended December 31, 2005, from approximately $(374,000) for the nine months ended December 31, 2004. The decrease in net interest expense is primarily attributable to the decreases in long-term
obligations outstanding due to continued principle payments on obligations outstanding as partially offset by decreases in amounts earned on funds held at banks.



Income taxes. For the nine months ended December 31, 2005, income tax expense increased to $851,000 as compared
to 14,000 of tax expense in the corresponding nine month period in 2004. The increase in expense is primarily due to lack of available net operating loss carryforwards or available benefit as derived from recorded deferred tax assets. The Company
has $46,000 and $206,000 recorded as a current and deferred tax liability, respectively based on current and future expected net taxable income.



Financial Condition, Liquidity and Capital Resources



The Company had working capital of approximately $8,626,000 at December 31, 2005, inclusive of current portion of long-term obligations and credit
facilities, as compared to working capital of approximately $10,571,000 at March 31, 2005. The decrease in working capital is primarily attributable to net increases in inventories based on increases in purchasing activity in order to support
our distribution product available to meet open national chain and mass retail purchase orders and increases in accounts receivable based on increased credit sales as offset by increases in accounts payable and accrued expenses associated with
increased purchases and increases in accruals surrounding legal and salary-related expenses including wages, taxes, fringe benefits, insurances and commissions and as offset by the increase in current portion of long-term obligations directly
associated with our controlling interest investment in American Antibiotics LLC.



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Net cash provided by operating activities was approximately $966,000 for the nine months ended
December 31, 2005, as compared to net cash used by operating activities of $(2,118,000) for the nine months ended December 31, 2004. Cash provided was primarily attributable to net income of $1,322,000 based on consolidated gross profit
increases of approximately $5.1 million, increases in trade accounts payable representing net credit purchases of approximately $2.5 million, increases in accrued expenses of $2.6 million, changes in current and deferred taxes of $505,000, decreases
of other accounts receivable of $471,000 directly attributable to the $1.2 million net proceeds received from the final insurance settlement relating to the Companys August 2002 fire, depreciation and amortization of $530,000 all of which is
partially offset by increases in trade accounts receivable of approximately $4.4 million based on increases in credit sales, and increases in inventory of $1.6 million in order to meet manufacturing and distribution open orders and prepaid and other
asset purchases of approximately $275,000.



Net cash used in
investing activities was $(4,858,000) for the nine months ended December 31, 2005 as compared to the net cash used of $(2,775,000) for the nine months ended December 31, 2004. Investing activities represented purchases and upgrades of
plant and laboratory equipment for generic drug manufacturing and distribution plant, Belcher Pharmaceuticals as offset by $688,000 of net proceeds received from the American Antibiotics 49% minority interest as partially offset by payments of $2
million on long-term obligations.



Net cash provided by
financing activities was approximately $1.2 million for the nine months ended December 31, 2005 as compared to cash used by financing activities of approximately $1.0 million for the corresponding 2004 period. The cash provided was primarily
due to issuance of $3 million of long-term obligations directly relating to the Companys purchasing the majority interest in the American Antibiotic Beta-Lactum manufacturing plant located in Baltimore, Maryland.



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 its operations as presently conducted. The Companys future liquidity and cash
requirements will depend on a wide range of factors, including the level of business in existing operations, expansion of facilities, expected results from recent procedural changes surrounding the acceptance of manufacturing sales orders, 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. If cash flows from operations, current cash reserves and available credit
facilities are not sufficient, it will be necessary for the Company to seek additional financing. There can be no assurance that 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.



In December
2004 and January 2005 five securities class action lawsuits were filed in the Federal District Court, Southern District of New York against GeoPharma and certain of its officers, alleging violations of federal securities laws in connection with
certain press releases issued by the Company relating to Belcher Pharmaceuticals planned introduction of Mucotrol: Mat eVentures v. Kotha Sekharam and GeoPharma, Inc. (SDNY 04 Civ. 9463); Moshayedi v. GeoPharma, Inc., Jugal Taneja, Mihir
Taneja, and Kotha Sekharam (SDNY 04 Civ. 9736); Sarno v. Mihir Taneja, Kotha Sekharam, and



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GeoPharma, Inc. (SDNY 04 Civ. 9975); Farwell v. Kotha Sekharam and GeoPharma, Inc. (SDNY 05 Civ. 188); and Taylor v.
Kotha Sekharam and GeoPharma, Inc. (SDNY 05 Civ. 258). Plaintiffs, on behalf of themselves and all others similarly situated, seek unspecified damages allegedly suffered in connection with their respective purchases and sales of the Companys
securities during the Class period. On March 9, 2005 the Court consolidated the actions and appointed lead plaintiff and lead counsel. On April 18, 2005 plaintiffs filed a Consolidated Amended Class Action Complaint. On June 6, 2005
defendants filed a Motion to Dismiss the action. By Opinion and Order dated September 30, 2005 the Court granted defendents motion and dismissed the action without prejudice, with leave to replead. On October 24, 2005 plaintiffs
filed a Consolidated Second Amended Class Action Complaint in the action. The Company again moved to dismiss the Second Amended Consolidated Complaint, and after the issues were fully briefed by the parties, by Opinion and Order dated
January 27, 2006 the Court again dismissed Plaintiffs action, this time with prejudice.



The company received a letter dated April 11, 2005 addressed to its Board of Directors, constituting a shareholder demand pursuant to Florida Statute
Sec. 607.07401 from a San Diego law firm representing an alleged shareholder of GeoPharma, Inc. Such letter demanded that the company commence legal proceedings against each Board member and each officer of the company for alleged breaches of
fiduciary duty arising out of and/or evidenced by the same actions and circumstances involved in the class action referred to above. At its Board meeting of June 7, 2005, the Board of Directors appointed a committee of independent directors to
investigate the allegations outlined in such letter and as such, the investigation is currently underway. On December 29, 2005, Imelda Hoeft, derivatively on behalf of the Company, instituted an action in the Circuit Court of the 6th Judicial
Circuit in and for Pinellas County, Florida against the Company and all the Companys officers and directors asserting claims for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust
enrichment. The action seeks unspecified damages and other relief. It is not possible to predict with certainty the ultimate outcome of these lawsuits. Although the Company has certain insurance, if these matters are resolved unfavorably, they
could have a material adverse effect on the Companys operating results or cash flows.



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



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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, 2006 |  | By:             |  | /s/ Mihir K. Taneja                            
|                        |  |                 |  | Mihir K. Taneja                                
|                        |  |                 |  | Chief Executive Officer, Secretary and Director
|                        |  |                
|Date: February 14, 2006 |  | By:             |  | /s/ Carol Dore-Falcone                         
|                        |  |                 |  | Carol Dore-Falcone                             
|                        |  |                 |  | Vice President and Chief Financial Officer     



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