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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 June 30, 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 ofincorporation or organization) |  | (IRS EmployerIdentification 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 August 5, 2005 was 8,870,503 net of 353,020 treasury shares.

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PART I  FINANCIAL INFORMATION



Item 1. CONSOLIDATED FINANCIAL STATEMENTS.



GEOPHARMA, INC. AND SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS



ASSETS



|                                               |  |                           |            |                          |   |           
|---------------------------------------------- |  | ------------------------- | ---------- | ------------------------ | - | ----------
|                                               |  | (unaudited) June 30, 2005 |            | (audited) March 31, 2005
|Current assets:                                |  |                           |            |                          |   |           
|Cash and cash equivalents                      |  | $                         | 5,836,930  |                          | $ | 6,433,011 
|Certificate of deposit                         |  |                           | 425,927    |                          |   | 425,927   
|Accounts receivable, net                       |  |                           | 3,442,240  |                          |   | 2,256,189 
|Accounts receivable, other                     |  |                           | 687,277    |                          |   | 586,164   
|Inventories, net                               |  |                           | 4,767,812  |                          |   | 3,743,063 
|Prepaid expenses and other current assets      |  |                           | 701,821    |                          |   | 655,786   
|Due from affiliates                            |  |                           | 815,747    |                          |   | 867,007   
|Deferred tax asset                             |  |                           |           |                          |   | 38,000    
|                                               |  |                           |            |                          |   |           
|Total current assets                           |  | $                         | 16,677,754 |                          | $ | 15,005,147
|                                               |  |                          
|Property, plant, leaseholds and equipment, net |  |                           | 4,884,459  |                          |   | 4,485,767 
|                                               |  |                          
|Goodwill, net                                  |  |                           | 728,896    |                          |   | 728,896   
|Intangible assets, net                         |  |                           | 511,385    |                          |   | 521,499   
|Media credits, net                             |  |                           | 799,748    |                          |   | 799,748   
|Other assets, net                              |  |                           | 181,741    |                          |   | 130,886   
|                                               |  |                           |            |                          |   |           
|Total assets                                   |  | $                         | 23,783,983 |                          | $ | 21,671,943
|                                               |  |                           |            |                          |   |           



See accompanying notes
to condensed consolidated financial statements



2



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LIABILITIES AND SHAREHOLDERS EQUITY



|                                                                                                                                                           |  |                           |             |   |                          |   |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ----------- | - | ------------------------ | - | ----------- | -
|                                                                                                                                                           |  | (unaudited) June 30, 2005 |             |   | (audited) March 31, 2005 |  
|Current liabilities:                                                                                                                                       |  |                           |             |   |                          |   |             |  
|Accounts payable                                                                                                                                           |  | $                         | 3,261,739   |   |                          | $ | 1,759,512   |  
|Current portion of long-term obligations                                                                                                                   |  |                           | 1,877,109   |   |                          |   | 1,972,792   |  
|Accrued expenses and related party obligations                                                                                                             |  |                           | 1,164,919   |   |                          |   | 701,384     |  
|Deferred tax liability                                                                                                                                     |  |                           | 34,000      |   |                          |   |            |  
|                                                                                                                                                           |  |                           |             |   |                          |   |             |  
|Total current liabilities                                                                                                                                  |  | $                         | 6,337,767   |   |                          | $ | 4,433,688   |  
|                                                                                                                                                           |  |                          
|Long-term obligations, less current portion                                                                                                                |  |                           | 1,185,138   |   |                          |   | 1,562,569   |  
|                                                                                                                                                           |  |                           |             |   |                          |   |             |  
|Total liabilities                                                                                                                                          |  | $                         | 7,522,905   |   |                          | $ | 5,996,257   |  
|                                                                                                                                                           |  |                          
|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; 9,223,481 and 9,181,551 shares issued and outstanding                                          |  |                           | 92,235      |   |                          |   | 91,815      |  
|Treasury stock (483,020 and 960 common shares, $.01 par value)                                                                                             |  |                           | (4,830      | ) |                          |   | (4,830      | )
|Additional paid-in capital                                                                                                                                 |  |                           | 42,442,544  |   |                          |   | 42,367,115  |  
|Retained earnings (deficit)                                                                                                                                |  |                           | (26,268,921 | ) |                          |   | (26,778,464 | )
|                                                                                                                                                           |  |                           |             |   |                          |   |             |  
|Total shareholders equity                                                                                                                                 |  | $                         | 16,261,078  |   |                          | $ | 15,675,686  |  
|                                                                                                                                                           |  |                           |             |   |                          |   |             |  
|Total liabilities and shareholders equity                                                                                                                 |  | $                         | 23,783,983  |   |                          | $ | 21,671,943  |  
|                                                                                                                                                           |  |                           |             |   |                          |   |             |  



See accompanying notes
to condensed consolidated financial statements.



3



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GEOPHARMA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS



|                                                             |  |                             |            |   |             |   |            |  
|------------------------------------------------------------ |  | --------------------------- | ---------- | - | ----------- | - | ---------- | -
|                                                             |  | Three Months Ended June 30, |           
|                                                             |  | 2005                        |            |   | 2004        |  
|                                                             |  | (unaudited)                 |            |   | (unaudited) |  
|Revenues:                                                    |  |                             |            |   |             |   |            |  
|PBM (a related party activity)                               |  | $                           | 4,123,811  |   |             | $ | 2,139,888  |  
|Distribution                                                 |  |                             | 3,648,431  |   |             |   | 1,422,388  |  
|Manufacturing                                                |  |                             | 3,982,312  |   |             |   | 3,302,535  |  
|Pharmaceutical                                               |  |                             | 16,192     |   |             |   | 48,805     |  
|                                                             |  |                             |            |   |             |   |            |  
|Total revenues                                               |  | $                           | 11,770,746 |   |             | $ | 6,913,616  |  
|Cost of goods sold:                                          |  |                             |            |   |             |   |            |  
|PBM                                                          |  | $                           | 4,095,067  |   |             | $ | 2,109,615  |  
|Distribution                                                 |  |                             | 2,083,006  |   |             |   | 965,293    |  
|Manufacturing (excluding depreciation presented below)       |  |                             | 2,298,773  |   |             |   | 2,189,134  |  
|Pharmaceutical                                               |  |                             | 8,602      |   |             |   | 22,197     |  
|                                                             |  |                             |            |   |             |   |            |  
|Total cost of goods sold                                     |  | $                           | 8,485,448  |   |             | $ | 5,286,239  |  
|                                                             |  |                             |            |   |             |   |            |  
|Gross profit:                                                |  |                             |            |   |             |   |            |  
|PBM                                                          |  | $                           | 28,744     |   |             | $ | 30,273     |  
|Distribution                                                 |  |                             | 1,565,425  |   |             |   | 457,095    |  
|Manufacturing                                                |  |                             | 1,683,539  |   |             |   | 1,113,401  |  
|Pharmaceutical                                               |  |                             | 7,590      |   |             |   | 26,608     |  
|                                                             |  |                             |            |   |             |   |            |  
|Total gross profit                                           |  | $                           | 3,285,298  |   |             | $ | 1,627,377  |  
|                                                             |  |                             |            |   |             |   |            |  
|Selling, general and administrative expenses:                |  |                             |            |   |             |   |            |  
|Selling, general and administrative expenses                 |  | $                           | 2,453,465  |   |             | $ | 1,197,917  |  
|Depreciation and amortization                                |  |                             | 161,635    |   |             |   | 144,975    |  
|                                                             |  |                             |            |   |             |   |            |  
|Operating income (loss) before other income and expense      |  | $                           | 670,198    |   |             | $ | 284,485    |  
|Other income (expense), net:                                 |  |                             |            |   |             |   |            |  
|Other income, net                                            |  |                             | 56,500     |   |             |   | 19,159     |  
|Interest expense, net                                        |  |                             | (63,752    | ) |             |   | (122,293   | )
|                                                             |  |                             |            |   |             |   |            |  
|Total other income (expense), net                            |  | $                           | (7,252     | ) |             | $ | (103,134   | )
|                                                             |  |                             |            |   |             |   |            |  
|Income before income taxes                                   |  | $                           | 662,946    |   |             | $ | 181,351    |  
|Income tax expense (benefit)                                 |  |                             | 72,000     |   |             |   | 14,442     |  
|                                                             |  |                             |            |   |             |   |            |  
|Net income                                                   |  | $                           | 590,946    |   |             | $ | 166,909    |  
|Preferred stock dividends                                    |  |                             | 75,000     |   |             |   | 150,833    |  
|                                                             |  |                             |            |   |             |   |            |  
|Net income available to common shareholders                  |  | $                           | 515,946    |   |             | $ | 16,076     |  
|                                                             |  |                             |            |   |             |   |            |  
|Basic income per share                                       |  | $                           | 0.06       |   |             | $ | 0.00       |  
|                                                             |  |                             |            |   |             |   |            |  
|Basic weighted average number of common shares outstanding   |  |                             | 8,746,145  |   |             |   | 7,713,899  |  
|                                                             |  |                             |            |   |             |   |            |  
|Diluted income per share                                     |  | $                           | 0.04       |   |             | $ | 0.00       |  
|                                                             |  |                             |            |   |             |   |            |  
|Diluted weighted average number of common shares outstanding |  |                             | 12,581,495 |   |             |   | 11,449,815 |  



See accompanying notes
to condensed consolidated financial statements.



4



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GEOPHARMA, INC. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS



|                                                                           |  |                             |            |   |  |  |             |   |            |  
|-------------------------------------------------------------------------- |  | --------------------------- | ---------- | - |  |  | ----------- | - | ---------- | -
|                                                                           |  | Three Months Ended June 30, |           
|                                                                           |  | 2005                        |            |   |  |  | 2004        |  
|                                                                           |  | (Unaudited)                 |            |   |  |  | (Unaudited) |  
|Cash flows from operating activities:                                      |  |                             |            |   |  |  |             |   |            |  
|Net income                                                                 |  | $                           | 590,946    |   |  |  |             | $ | 166,909    |  
|Adjustments to reconcile net income to net cash from operating activities: |  |                             |            |   |  |  |             |   |            |  
|Depreciation and amortization                                              |  |                             | 161,633    |   |  |  |             |   | 133,777    |  
|Amortization of stock option deferred compensation                         |  |                             | 11,196     |   |  |  |             |   | 11,198     |  
|Change in net deferred taxes                                               |  |                             | 72,000     |   |  |  |             |   | 14,442     |  
|Changes in operating assets and liabilities:                               |  |                             |            |   |  |  |             |   |            |  
|Accounts receivable, net                                                   |  |                             | (1,186,050 | ) |  |  |             |   | (211,073   | )
|Accounts receivable, other                                                 |  |                             | (101,113   | ) |  |  |             |   | (56,581    | )
|Inventory, net                                                             |  |                             | (1,024,749 | ) |  |  |             |   | (632,652   | )
|Prepaid expenses and other current assets                                  |  |                             | (46,035    | ) |  |  |             |   | 36,926     |  
|Other assets                                                               |  |                             | (71,685    | ) |  |  |             |   | 3,844      |  
|Accounts payable                                                           |  |                             | 1,502,226  |   |  |  |             |   | (145,378   | )
|Accrued expenses                                                           |  |                             | 441,142    |   |  |  |             |   | 81,037     |  
|Due from affiliates, net                                                   |  |                             | 73,652     |   |  |  |             |   | 42,352     |  
|                                                                           |  |                             |            |   |  |  |             |   |            |  
|Net cash provided by (used in) operating activities                        |  | $                           | 423,163    |   |  |  |             | $ | (555,199   | )
|                                                                           |  |                             |            |   |  |  |             |   |            |  
|Cash flows from investing activities:                                      |  |                             |            |   |  |  |             |   |            |  
|Purchases of property, leaseholds and equipment                            |  | $                           | (543,575   | ) |  |  |             | $ | (298,481   | )
|                                                                           |  |                             |            |   |  |  |             |   |            |  
|Net cash used in investing activities                                      |  | $                           | (543,575   | ) |  |  |             | $ | (298,481   | )
|                                                                           |  |                             |            |   |  |  |             |   |            |  
|Cash flows from financing activities:                                      |  |                             |            |   |  |  |             |   |            |  
|Payments of long-term obligations                                          |  | $                           | (550,227   | ) |  |  |             | $ | (88,370    | )
|Payments of preferred stock dividends                                      |  |                             |           |   |  |  |             |   | (25,000    | )
|Amortization of debt discount to interest expense                          |  |                             | 73,708     |   |  |  |             |   | 77,114     |  
|Payments for private placement fees                                        |  |                             |           |   |  |  |             |   | (6,000     | )
|Proceeds from stock option exercise                                        |  |                             | 850        |   |  |  |             |   | 75,193     |  
|                                                                           |  |                             |            |   |  |  |             |   |            |  
|Net cash provided by (used in) financing activities                        |  | $                           | (475,669   | ) |  |  |             | $ | 32,937     |  
|                                                                           |  |                             |            |   |  |  |             |   |            |  
|Net increase (decrease) in cash                                            |  |                             | (596,081   | ) |  |  |             |   | (820,743   | )
|Cash at beginning of period                                                |  |                             | 6,433,011  |   |  |  |             |   | 13,167,765 |  
|                                                                           |  |                             |            |   |  |  |             |   |            |  
|Cash at end of period                                                      |  | $                           | 5,836,930  |   |  |  |             | $ | 12,347,022 |  
|                                                                           |  |                             |            |   |  |  |             |   |            |  
|SUPPLEMENTAL INFORMATION:                                                  |  |                             |            |   |  |  |             |   |            |  
|Cash paid during the period for interest                                   |  | $                           | 51,900     |   |  |  |             | $ | 26,012     |  
|                                                                           |  |                             |            |   |  |  |             |   |            |  
|Cash paid during the period for income taxes                               |  | $                           |           |   |  |  |             | $ | 40,000     |  
|                                                                           |  |                             |            |   |  |  |             |   |            |  



5



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|                                                               |  |                                 |        |                                 |   |        
|-------------------------------------------------------------- |  | ------------------------------- | ------ | ------------------------------- | - | -------
|                                                               |  | Three monthsended June 30, 2005 |        | Three monthsended June 30, 2004
|NON-CASH INVESTING AND FINANCING ACTIVITIES:                   |  |                                 |        |                                 |   |        
|Value of common stock issued to pay preferred stock dividend   |  | $                               | 75,000 |                                 | $ | 125,833
|Value of common stock issued to pay convertible debt interest  |  | $                               |       |                                 | $ | 49,477 
|Value of common stock issued to pay convertible debt principle |  | $                               |       |                                 | $ | 262,500



See accompanying notes
to condensed consolidated financial statements.



6



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GEOPHARMA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

FOR THE THREE MONTHS ENDED JUNE 30, 2005 AND 2004



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 month period ended June 30,
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 June 30, and March 31, 2005 and for the three months ended June 30, 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). 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 June 30, 2005 and March 31, 2005, the Company had four industry
segments in addition to corporate: manufacturing, distribution, pharmacy benefit management and pharmaceutical. The $23,783,983 of total assets as of June 30, 2005 were comprised of $5,352,039 attributable to corporate, $13,588,496 attributable to
manufacturing, $3,953,921 attributable to distribution, $1,190,250 attributable to pharmacy benefit management and $181,230 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.



7



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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 months ended June 30, 2005 and 2004, amortization expense
associated with goodwill was $0. The unamortized balance of goodwill at June 30 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.



h. 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.



i. 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.



j. Earnings (Loss) Per Common Share



Earnings per share are computed using the basic and diluted calculations on the face of the
statement of operations. Basic earnings per share are calculated by dividing net income available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share is calculated by
dividing net income 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 are considered potentially dilutive and are included in the fully diluted share calculations as presented. The reconciliation between basic and fully diluted shares are as follows:



|                                                      |  |                            |            |               |   |           
|----------------------------------------------------- |  | -------------------------- | ---------- | ------------- | - | ----------
|                                                      |  | For the Three Months Ended
|                                                      |  | June 30, 2005              |            | June 30, 2004
|Net income per share  basic:                         |  |                            |            |               |   |           
|Net income                                            |  | $                          | 515,946    |               | $ | 16,076    
|Weighted average shares  basic                       |  |                            | 8,746,145  |               |   | 7,713,899 
|Net income per share  basic                          |  | $                          | 0.06       |               | $ | 00        
|Net income per share  diluted:                       |  |                            |            |               |   |           
|Net income                                            |  | $                          | 515,946    |               | $ | 16,076    
|Preferred stock dividend                              |  |                            | 75,000     |               |   | 150,833   
|                                                      |  |                            |            |               |   |           
|                                                      |  | $                          | 590,946    |               | $ | 166,909   
|Weighted average shares  basic                       |  |                            | 8,746,145  |               |   | 7,713,899 
|Effect of convertible instruments prior to conversion |  |                            | 1,095,833  |               |   | 1,895,833 
|Effect of warrants prior to conversion                |  |                            | 300,000    |               |   | 300,000   
|Effect of stock options                               |  |                            | 2,439,517  |               |   | 1,540,083 
|                                                      |  |                            |            |               |   |           
|Weighted average shares-diluted                       |  |                            | 12,581,495 |               |   | 11,449,815
|Net income per share  diluted                        |  | $                          | 0.04       |               | $ | 00        



k. 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 June 30 and March 31, 2005, as well as the reported amounts of
revenues and expenses for the three months ended June 30, 2005 and 2004. The actual outcome of the estimates could differ from the estimates made in the preparation of the financial statements.



8



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l. 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 June 30, and March 31, 2005. For the three months ended June 30, 2005, two customers accounted for 35%, CarePlus, a related party, and 14.7%, Spectrum Group. For the three months ended June 30, 2004, three customers accounted for 31%,
CarePlus, a related party, 13.6%, Spectrum Group, and 5.9%, BDI.



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



m. 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.



n. Advertising Costs



The Company charges advertising costs to expense as incurred. Advertising expense was $649,829 and $34,380 for the three months ended June 30, 2005 and 2004, respectively.



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 June 30 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 months ended June 30, 2004 to conform to the presentation for the three months ended June 30, 2005.



NOTE 3-STOCK OPTION PLANS



On June 7, 2005, the board of directors received a total of 650,000 stock options for
serving as directors for the fiscal term ended March 31, 2006 and approved the granting a total of 375,000 stock options to be allocated to the Companys officers of record as of that date. The exercise price was $1.95 per share based on the
closing price on the date of grant.



The Non-Employee Plan



The following summarizes the non-employee common stock options outstanding as of June 30,
2005:



|                            |  |                  |  |                                 |     
|--------------------------- |  | ---------------- |  | ------------------------------- | ----
|                            |  | 2005            
|Non-Employee Stock Options  |  | Number of Shares |  | Weighted Average Exercise Price
|Outstanding, April 1, 2005  |  | 866,665          |  | $                               | 4.31
|Granted                     |  | 650,000          |  | $                               | 1.95
|Exercised                   |  |                 |  |                                 |    
|Forfeited                   |  |                 |  |                                 |    
|                            |  |                  |  |                                 |     
|Outstanding, June 30, 2005  |  | 1,516,665        |  | $                               | 4.17
|                            |  |                  |  |                                 |     
|Options vested, end of year |  | 234,328          |  | $                               | 1.52
|                            |  |                  |  |                                 |     



The pro forma net
earnings (loss) per common share, if the Company had elected to account for its stock option plan consistent with the methodology prescribed by SFAS No. 123, are shown as follows:



|                             |  |                    |         |              |   |          |  
|---------------------------- |  | ------------------ | ------- | ------------ | - | -------- | -
|                             |  | Three months ended |        
|                             |  | June 30,2005       |         | June 30,2004 |  
|Net income                   |  |                    |         |              |   |          |  
|As reported                  |  | $                  | 515,946 |              | $ | 16,076   |  
|                             |  |                    |         |              |   |          |  
|Pro forma                    |  | $                  | 50,239  |              | $ | (150,460 | )
|                             |  |                    |         |              |   |          |  
|Net income per common share: |  |                    |         |              |   |          |  
|Basic income per share:      |  |                    |         |              |   |          |  
|As reported                  |  | $                  | .06     |              | $ | .00      |  
|                             |  |                    |         |              |   |          |  
|Pro forma                    |  | $                  | .01     |              | $ | (.02     | )
|                             |  |                    |         |              |   |          |  
|Diluted income per share:    |  |                    |         |              |   |          |  
|As reported:                 |  | $                  | .04     |              | $ | .00      |  
|                             |  |                    |         |              |   |          |  
|Pro forma:                   |  | $                  | .01     |              | $ | (.02     | )
|                             |  |                    |         |              |   |          |  



9



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GEOPHARMA, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                               |  |                  |  |                                 |     
|------------------------------ |  | ---------------- |  | ------------------------------- | ----
|Officer Stock Options          |  | Number of Shares |  | Weighted Average Exercise Price
|Outstanding, beginning of year |  | 769,933          |  | $                               | 1.71
|Granted                        |  | 375,000          |  | $                               | 1.95
|Exercised                      |  |                 |  |                                 |    
|Forfeited                      |  |                 |  |                                 |    
|                               |  |                  |  |                                 |     
|Outstanding, end of year       |  | 1,144,933        |  | $                               | 1.87
|                               |  |                  |  |                                 |     
|Options vested, end of year    |  | 319,933          |  | $                               | 1.41
|                               |  |                  |  |                                 |     



NOTE 4INCOME TAXES



Income taxes for the three months ended June 30, 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%) |  | $ | 249,700  
|Increase (decrease) in taxes resulting from:        |  |   |          
|Effect of permanent differences:                    |  |   |          
|Non deductible                                      |  |   | 10,000   
|Other, net                                          |  |   | (37,700) 
|Change in valuation allowance                       |  |   | (150,000)
|                                                    |  |   |          
|Income tax (benefit) expense                        |  | $ | 72,000   
|                                                    |  |   |          



10



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GEOPHARMA, INC. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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



|                                            |  |   |          |  
|------------------------------------------- |  | - | -------- | -
|Deferred tax assets:                        |  |   |          |  
|Bad debts                                   |  | $ | 40,600   |  
|Inventories                                 |  |   | 13,200   |  
|Accrued vacation                            |  |   | 25,500   |  
|Deposits                                    |  |   | 56,500   |  
|Amortization                                |  |   |         |  
|Research credit carryforward                |  |   | 85,000   |  
|Net operating loss carryforwards            |  |   | 273,900  |  
|                                            |  |   |          |  
|                                            |  | $ | 494,700  |  
|Valuation Allowance                         |  |   | (100,000 | )
|                                            |  |   |          |  
|Deferred tax asset                          |  | $ | 394,700  |  
|                                            |  |   |          |  
|Deferred tax liabilities:                   |  |   |          |  
|Fixed asset basis differences               |  | $ | (379,700 | )
|Amortization                                |  |   | (49,000  | )
|                                            |  |   |          |  
|                                            |  | $ | (428,700 | )
|                                            |  |   |          |  
|Net deferred tax asset (liability) recorded |  | $ | (34,000  | )
|                                            |  |   |          |  



A valuation allowance
has been established in the amount of $100,000 to reduce the deferred tax asset from $494,700 to $394,700 as it is uncertain whether the deferred asset can be recognized in the future.



At June 30, 2005, the Company has a tax net operating loss carryforward of approximately $600,000 to offset future taxable
income. In addition, the Company has research and development credit carryforwards of approximately $85,000 to offset future tax liability. The tax net operating loss and research and development credit carryforwards begin to expire in 2021.



NOTE 4-RELATED PARTY TRANSACTIONS



Revenues: For the three months ended June 30, 2005 and 2004, manufacturing revenues of
approximately $83,469 and $137,687 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 June 30, 2005 and 2004, manufacturing revenues of $0 and $48,805, respectively, were recorded from sales by the Company to DrugMax, Inc., an affiliate of the Chairman of the Board. For the three months ended
June 30, 2005 and 2004, manufacturing revenues of $184,053 and $88,603, 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 June 30, 2005 and 2004,
pharmacy benefit management revenues of $4,123,811 and $2,139,888 respectively, were recorded from sales by the Company to CarePlus Health Plan, an affiliate of the Companys former board member Mssr. Zappala. Our wholly-owned subsidiary,
Go2PBMServices, Inc., derives 100% of its revenues from this contract.



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



As of June 30, and March 31, 2005, for the manufacturing segment, $69,222 and $51,460 was due from subsidiaries of Dynamic Health Products. $195,522 and $57,363 was due
from VerticalHealth, Inc.



As of June 30, and March 31, 2005, for the pharmacy
benefit management segment, $536,400 and $743,801 was due from CarePlus Health.





11



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NOTE 5- 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. Plaintiffs Opposition papers are due to be filed by July 8, 2005, and defendants Reply papers are due to be
filed by July 25, 2005. 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.



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.



NOTE 6-SUBSEQUENT EVENT



On Friday, August 12, 2005, the Company, through a newly-formed subsidiary, has 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 the controlling interest in American Antibiotics.



The 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. The Company will file its Form 8-K with the Securities and Exchange Commission on August 18, 2005.



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.



12



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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.



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 June 30, 2005 Compared to Three Months Ended June 30, 2004



Revenues. Total consolidated revenues increased approximately $4.8 million, or 70.2%, to approximately $11,771,000 for the three months ended June 30, 2005, as compared to approximately $6,914,000
for the three months ended June 30, 2004.



Manufacturing
revenues increased approximately $679,000, or 20.6%, to approximately $3,982,000 for the three months ended June 30, 2005, as compared to approximately $3,302,000 for the corresponding period. The increase was primarily due to the increased order
volumes from our larger customers based on their new product introductions. Overall, manufacturing capacities and capabilities continue to be increased as we have added additional more advanced, higher speed production equipment.



Distribution revenues increased approximately $2,226,000 or 156.5% to
approximately $3,648,000 for the three months ended June 30, 2005, as compared to $1,422,000 for the three months ended June 30, 2004. Overall, sales prices vary for all product lines dependent upon a customers individual as well as aggregate
purchase volumes in addition to the number of distribution points of sale and advertising dollars projected to be spent. For the three months ended June 30, 2005 as compared to the corresponding period in 2004 where no sales were consummated, two
new branded products were sold, both of which are dietary supplements, Oxylene and Hoodia DEX L-10 where 1,983 and 1,913 cases were sold respectively. For the three months ended June 30, 2005, 5,548 cases of CarbSlim were sold versus 32,576 cases
sold for the three months ended June 30, 2004. The decrease in case sales are due to the decline in the low-carb category and a decrease in the number of national and regional distribution points. CarbSlim is comprised of ten SKUs, two sizes of:
peanut butter crunch, chocolate caramel crunch, mint, peanut butter cookie dough, chocolate chip cookie dough. The Lean Protein Bites product line is comprised of four SKUs, milk chocolate, white chocolate, peanut butter and lemon. For the three
months ended June 30,2005, 1,600 total cases were sold as compared to the three months ended June 30, 2004, where 2,236 total cases were sold. The decline in sales was primarily due to the Company spending higher advertising dollars on the
Companys other product lines.



Pharmacy benefit
management revenues increased 92.7% or approximately $1,984,000 to $4,124,000 for the three months ended June 30, 2005, as compared to $2,140,000 for the three months ended June 30, 2004. The increase results from the increase in overall membership
and prescriptions filled in the two health plans as compared to the three months ended June 30, 2004. Revenue per member remained constant for both of the fiscal periods.



Gross Profit. Total gross profit increased approximately $1,658,000 or 101.9%, to $3,285,000 for the
three months ended June 30, 2005, as compared to $1,627,000 for the three months ended June 30, 2004. Total gross margins increased to 27.9% for the three months ended June 30, 2005 from 23.5% for the three months ended June 30, 2004.



Manufacturing gross profit increased approximately $570,000, or 51.2%, to
approximately $1,684,000 for the three months ended June 30, 2005, as compared to approximately $1,113,000 in the corresponding period in 2004. For the three months ended June 30, 2005 manufacturing gross margin increased to 42.3%, from 33.7% in the
corresponding period in 2004. Sales and gross profits have increased due to increased orders in addition to maintaining reduced costs due more efficient manufacturing equipment as partially offset by increased labor costs due to increases in the
number of direct-labor personnel. Current increases in these type of labor-based direct overhead costs are in line with the Companys planned improvements surrounding enhanced standard operating and manufacturing procedures in both its
manufacturing plants. The Company expects that these improvements will continue to increase the Companys visibility in the marketplaces that the Company competes in for new and expanded business.



Distribution gross profits increased 242.5% or approximately $1.1 million to
approximately $1,565,000 for the three months ended June 30, 2005, as compared to approximately $457,000 for the corresponding period ended June 30, 2004, with distribution gross margins increasing to 42.9% for the three months in 2005 as compared
to 32.1% for the three months in 2004. The increases were primarily due to the new dietary supplement brands sold in 2005 that were not sold in 2004 that have a higher sales price and a better gross profit margin.



Pharmacy Benefit Management gross profit decreased approximately $1,500 or
5.1% to approximately $28,000 for the three months ended June 30, 2005, as compared to approximately $30,000 for the corresponding period in 2004. Pharmacy benefit management gross margin was 0.7% for three months in 2005 as compared to 1.4% for the
three months ended 2004. Gross profit and margin decreased based on continued industry pressure on controlling per member and per claim revenues coupled with growing membership, rising number of claims in addition to the rising prescription costs.



13



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Selling, General and Administrative Expenses. Selling, general and administrative
(SGA) expenses consist of advertising and promotional expenses; insurance costs, research and development costs associated with the generic drug segment, personnel costs related to general management functions, finance, accounting and
information systems, payroll and bonus expenses and sales commissions; professional fees related to legal, audit and tax matters; and depreciation and amortization expenses. Selling, general and administrative expenses, inclusive of depreciation and
amortization, increased approximately $1,271,000, or 94.5%, to approximately $2,614,000 for the three months ended June 30, 2005, as compared to approximately $1,343,000 in the corresponding 2004 period. The increase is primarily attributable to
increased insurance costs, rents, salary expenses, additional advertising and promotional expenses. The advertising and promotional increases are associated with promoting our distribution segment and related branded product lines, including
CarbSlim, Lean Protein, Hoodia DEX L-10 and Oxylene; additional legal expenses associated with our outstanding class action lawsuit. All insurance costs have increased, including health, general and product liability insurances; health insurance
increased primarily due to an increase in the cost per employee and the number of employees; in addition to external insurance market influences surrounding higher premium costs for all of the Companys business segments based on our increasing
sales revenues. Officer and employee salaries have increased in total based on increases in the number of personnel in addition to merit increases and bonuses. Rents increased based on the additional warehousing and distribution square footage
required with growing manufacturing and distribution segments. As a percentage of sales, selling, general and administrative expenses increased to 22.2% for the three months ended June 30, 2005 from 19.4% in the corresponding period in 2004.



Interest Expense, net. For the three months
ended June 30, 2005, interest expense, net, has decreased approximately $58,000 primarily due to total debt balance declining based on continued principal payments in addition to decreased interest expense charged due $57,000 interest that was
capitalized as a cost of construction due to manufacturing construction that is in progress during the three month period ended June 30, 2005 that was not in progress in the corresponding 2004 period.



Income Taxes. For the three months ended June 30, 2005, the
Company has recorded $72,000 of income tax expense based on the effective tax rate as applied to earnings for the 2005 period. A $100,000 deferred tax valuation allowance reduced the deferred tax asset to $394,700 as related to underlying
assumptions about the future operations of the Company as well as the utilization of available operating loss carryforwards.



Management believes that there was no material effect on operations or the financial condition of the Company as a result of inflation as of and for the
three months ended June 30, 2005. Management also believes that its business is not seasonal, however significant promotional activities can have a direct impact on sales volume in any given quarter.



Financial Condition, Liquidity and Capital Resources



The Company had working capital of approximately $10,339,000 at June 30,
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.



Net cash provided by operating activities was $423,163 for the three months
ended June 30, 2005, as compared to net cash used by operating activities of $(555,199) for the three months ended June 30, 2004. Cash provided was primarily attributable to net income of $590,000 based on consolidated gross profit increases of
approximately $1.6 million, increases in trade accounts payable representing net credit purchases of approximately $1.5 million, increases in accrued expenses of $441,000, changes in deferred taxes of $72,000, and depreciation and amortization of
$160,000 all of which is partially offset by increases in trade accounts receivable of approximately $1.2 million based on increases in credit sales, and increases in inventory of $1.0 million in order to meet manufacturing and distribution open
orders and other asset purchases of approximately $72,000.



Net
cash used in investing activities was $(543,575) for the three months ended June 30, 2005 as compared to the net cash used of $(298,481) for the three months ended June 30, 2004. Investing activities represented purchases and upgrades of plant and
laboratory equipment for generic drug manufacturing and distribution plant, Belcher Pharmaceuticals.



Net cash used by financing activities was $(475,670) for the three months ended June 30, 2005 as compared to cash provided by financing activities of
$32,937 for the corresponding 2004 period. The cash used was primarily due to long-term obligation payments.



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



14



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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
has concluded that our disclosure controls and procedures (an defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the Exchange Act), were sufficiently effective to ensure that the information
required to the disclosed by us in the reports that we file under the Exchange Act gathered, analyze and disclosed with adequate timelines, accuracy and completeness.



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 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. Plaintiffs Opposition papers are due to be filed by July 8, 2005,
and defendants Reply papers are due to be filed by July 25, 2005. 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.



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.



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





15



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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: August 15, 2005 |  | By:             |  | /s/Mihir K. Taneja                             
|                      |  |                 |  | Mihir K. Taneja                                
|                      |  |                 |  | Chief Executive Officer, Secretary and Director
|                      |  |                
|Date: August 15, 2005 |  | By:             |  | /s/ Carol Dore-Falcone                         
|                      |  |                 |  | Carol Dore-Falcone                             
|                      |  |                 |  | Vice President and Chief Financial Officer     



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