10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2023 

or

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

For the transition period from            to             .

000-15701

(Commission file number)

NATURAL ALTERNATIVES INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	84-1007839
(State of incorporation)	(IRS Employer Identification No.)
1535 Faraday Ave Carlsbad, CA 92008	(760) 736-7700
(Address of principal executive offices)	(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share	NAII	Nasdaq Stock Market

Indicate by check mark whether NAI (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 NAI was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes     ☐  No

Indicate by check mark whether NAI has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that NAI was required to submit such files).    ☒  Yes     ☐  No

Indicate by check mark whether NAI is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

Large accelerated filer	☐	Accelerated filer	☐	Emerging Growth Company	☐
Non-accelerated filer	☒	Smaller reporting company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of May 15, 2023, 6,077,213 shares of NAI's common stock were outstanding, net of 3,232,193 treasury shares.

TABLE OF CONTENTS

		Page
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS		1
PART I	FINANCIAL INFORMATION	2
Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Income and Comprehensive Income	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 4.	Controls and Procedures	24
PART II	OTHER INFORMATION	25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
SIGNATURES		27

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

Certain statements in this report, including information incorporated by reference, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect current views about future events and financial performance based on certain assumptions. They include opinions, forecasts, intentions, plans, goals, projections, guidance, expectations, beliefs, or other statements that are not statements of historical fact. Words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “believe,” “anticipate,” “intend,” “estimate,” “approximate,” “predict,” “forecast,” “project,”, “future”, or “likely”, or the negative or other variation of such words, and similar expressions may identify a statement as a forward-looking statement. Any statements that refer to projections of our future financial performance, our anticipated growth and trends in our business, our goals, strategies, focus and plans, and other characterizations of future events or circumstances, including statements expressing general optimism or pessimism about future operating results, are forward-looking statements. Forward-looking statements in this report may include statements about:

• our ability to develop market acceptance for and increase sales of new products, develop relationships with new customers and maintain or improve existing customer relationships;

• future financial and operating results, including projections of net sales, revenue, income or loss, net income or loss per share, profit margins, expenditures, liquidity, and other financial items;

• our ability to maintain or increase our patent and trademark licensing revenues;

• our ability to attract and retain sufficient labor to successfully execute our business strategies and achieve our goals and objectives;

• inventory levels, including the adequacy of quality raw material and other inventory levels to meet future customer demand;

• our ability to price our products to achieve profit margin targets, especially in the current volatile raw material and labor environment;

• our ability to protect our intellectual property;

• future economic and political conditions;

• our ability to improve operating efficiencies, manage costs and business risks, and improve or maintain profitability;

• currency exchange rates and their effect on our results of operations (including amounts that we may reclassify as earnings), the availability of foreign exchange facilities, our ability to effectively hedge against foreign exchange risks and the extent to which we may seek to hedge against such risks;

• the outcome of litigation, regulatory and tax matters we may become involved in, the costs associated with such matters and the effect of such matters on our business and results of operations;

• sources, availability and quality of raw materials, including the limited number of suppliers of beta-alanine meeting our quality requirements;

• the impact of the Covid-19 Pandemic ("COVID-19") and other external factors both within and outside of our control, on our business and results in operations including variations in our quarterly net sales, out employees, supply chain, vendors and customers;

• the future adequacy and intended use of our facilities, including obtaining certifications for our new manufacturing facility in Carlsbad, CA, which began commercial production in April 2023;

• potential manufacturing and distribution channels, product returns, and potential product recalls;

• future customer orders;

• the impact of external factors on our business and results of operations, especially, for example, variations in quarterly net sales from seasonal and other external factors;

• our ability to operate within the standards set by the U.S. Food and Drug Administration’s (FDA) Good Manufacturing Practices (GMPs);

• our ability to successfully expand our operations, including outside the United States (U.S.);

• the adequacy of our financial reserves and allowances;

• the sufficiency of our available cash, cash equivalents, and potential cash flows from our operations to fund our working capital and capital expenditure needs through the next 12 months and longer;

• the impact of accounting pronouncements and our adoption of certain accounting guidance; and

• other assumptions described in this Report underlying or relating to any forward-looking statements.

Forward-looking statements in this Report speak only as of the date of this Report based on information available to us at that time and caution should be taken not to place undue reliance on any such forward-looking statements. Forward-looking statements are subject to certain future events, risks, and uncertainties that are or may be outside of our control. When considering forward-looking statements, you should carefully review the risks, uncertainties and other cautionary statements in this Report as they identify certain important factors that could cause actual results to differ materially from those expressed in, or implied by, the forward-looking statements. These factors include, among others, the risks described under Item 1A of Part I of our fiscal 2023 Annual Report, as well as in other reports and documents we have filed and will file with the United States Securities and Exchange Commission (SEC).

1

PART I – FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

Natural Alternatives International, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

	March 31, 2023			June 30, 2022
Assets
Current assets:
Cash and cash equivalents	$	15,560		$	21,833
Accounts receivable – less allowance for doubtful accounts of $757 at March 31, 2023 and $3,383 at June 30, 2022		7,611			17,422
Inventories, net		39,309			32,475
Income tax receivable		637			67
Forward contracts		911			3,144
Prepaids and other current assets		2,258			1,805
Total current assets		66,286			76,746
Property and equipment, net		54,757			44,573
Operating lease right-of-use assets		19,958			21,701
Other noncurrent assets, net		2,926			2,983
Total assets	$	143,927		$	146,003
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	10,890		$	16,185
Accrued liabilities		1,718			2,787
Accrued compensation and employee benefits		3,059			3,673
Customer deposits		326			140
Income taxes payable		166			174
Mortgage note payable, current portion		309			302
Line of credit - current		9,100			—
Total current liabilities		25,568			23,261
Long-term liability – operating leases		20,786			22,047
Long-term pension liability		419			344
Deferred tax liability		284			1,220
Mortgage note payable, net of current portion		9,277			9,493
Income taxes payable, noncurrent		987			1,118
Total liabilities		57,321			57,483
Commitments and contingencies (Notes E, F, and L)
Stockholders’ equity:
Preferred stock; $.01 par value; 500,000 shares authorized; none issued or outstanding		—			—
Common stock; $.01 par value; 20,000,000 shares authorized at March 31, 2023 and June 30, 2022, issued and outstanding (net of treasury shares) 6,077,213 at March 31, 2023 and 6,129,611 at June 30, 2022		91			89
Additional paid-in capital		31,146			30,423
Retained earnings		78,146			77,661
Treasury stock, at cost, 3,232,193 shares at March 31, 2023 and 3,061,795 at June 30, 2022		(22,855	)		(21,352	)
Accumulated other comprehensive income		78			1,699
Total stockholders’ equity		86,606			88,520
Total liabilities and stockholders’ equity	$	143,927		$	146,003

See accompanying notes to condensed consolidated financial statements.

2

Natural Alternatives International, Inc.

Condensed Consolidated Statements of Income and Comprehensive Income

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2023			2022			2023			2022
Net sales	$	32,699		$	42,373		$	118,121		$	118,440
Cost of goods sold		31,323			34,980			105,160			96,220
Gross profit		1,376			7,393			12,961			22,220
Selling, general and administrative		3,864			4,119			11,422			12,317
(Loss) income from operations		(2,488	)		3,274			1,539			9,903
Other (expense) income:
Interest income		12			—			25			—
Interest expense		(116	)		(19	)		(246	)		(45	)
Foreign exchange loss		(194	)		(40	)		(484	)		(35	)
Other, net		(2	)		(29	)		(18	)		(43	)
Total other expense		(300	)		(88	)		(723	)		(123	)
(Loss) income before income taxes		(2,788	)		3,186			816			9,780
(Benefit) provision for income taxes		(407	)		682			331			2,173
Net (loss) income	$	(2,381	)	$	2,504		$	485		$	7,607
Unrealized (loss) gain resulting from change in fair value of derivative instruments, net of tax		(357	)		474			(1,621	)		1,759
Comprehensive (loss) income	$	(2,738	)	$	2,978		$	(1,136	)	$	9,366
Net (loss) income per common share:
Basic	$	(0.41	)	$	0.42		$	0.08		$	1.23
Diluted	$	(0.41	)	$	0.41		$	0.08		$	1.22
Weighted average common shares outstanding
Basic		5,816,058			6,003,036			5,867,400			6,167,539
Diluted		5,816,058			6,041,424			5,885,116			6,216,422

See accompanying notes to condensed consolidated financial statements.

3

Natural Alternatives International, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

Three-Month Period Ended March 31, 2023 and 2022

(Dollars in thousands)

(Unaudited)

	Common Stock				Additional Paid-in			Retained			Treasury Stock					Accumulated Other Comprehensive
	Shares		Amount		Capital			Earnings			Shares		Amount			Income (Loss)			Total
Balance, December 31, 2022		9,191,406	$	89	$	30,890		$	80,527			3,177,160	$	(22,411	)	$	435		$	89,530
Compensation expense related to stock compensation plans		—		—		258			—			—		—			—			258
Issuance of common stock for restricted stock grants		118,000		2		(2	)		—			—		—			—			—
Repurchase of common stock		—		—		—			—			49,034		(444	)		—			(444	)
Forfeiture of restricted stock		—		—		—			—			5,999		—			—			—
Unrealized loss resulting from change in fair value of derivative instruments, net of tax		—		—		—			—			—		—			(357	)		(357	)
Net loss		—		—		—			(2,381	)		—		—			—			(2,381	)
Balance, March 31, 2023		9,309,406	$	91	$	31,146		$	78,146			3,232,193	$	(22,855	)	$	78		$	86,606
Balance, December 31, 2021		9,004,365	$	88	$	29,923		$	72,052			2,776,623	$	(18,386	)	$	724		$	84,401
Compensation expense related to stock compensation plans		—		—		266			—			—		—			—			266
Issuance of common stock for restricted stock grants		126,850		1		(1	)		—			—		—			—			—
Repurchase of common stock		—		—		—			—			206,971		(2,568	)		—			(2,568	)
Forfeiture of restricted stock		—		—		—			—			1,400		—			—			—
Unrealized gain resulting from change in fair value of derivative instruments, net of tax		—		—		—			—			—		—			474			474
Net income		—		—		—			2,504			—		—			—			2,504
Balance, March 31, 2022		9,131,215	$	89	$	30,188		$	74,556			2,984,994	$	(20,954	)	$	1,198		$	85,077

See accompanying notes to condensed consolidated financial statements.

4

Natural Alternatives International, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

Nine-Month Period Ended March 31, 2023 and 2022

(Dollars in thousands)

(Unaudited)

	Common Stock				Additional Paid-in			Retained		Treasury Stock					Accumulated Other Comprehensive
	Shares		Amount		Capital			Earnings		Shares		Amount			Income (Loss)			Total
Balance, June 30, 2022		9,191,406	$	89	$	30,423		$	77,661		3,061,795	$	(21,352	)	$	1,699		$	88,520
Compensation expense related to stock compensation plans		—		—		725			—		—		—			—			725
Issuance of common stock for restricted stock grants		118,000		2		(2	)		—		—		—			—			—
Repurchase of common stock		—		—		—			—		164,399		(1,503	)		—			(1,503	)
Forfeiture of restricted stock		—		—		—			—		5,999		—			—			—
Unrealized loss resulting from change in fair value of derivative instruments, net of tax		—		—		—			—		—		—			(1,621	)		(1,621	)
Net income		—		—		—			485		—		—			—			485
Balance, March 31, 2023		9,309,406	$	91	$	31,146		$	78,146		3,232,193	$	(22,855	)	$	78		$	86,606
Balance, June 30, 2021		9,004,365	$	88	$	29,456		$	66,949		2,567,797	$	(15,849	)	$	(561	)	$	80,083
Compensation expense related to stock compensation plans		—		—		733			—		—		—			—			733
Issuance of common stock for restricted stock grants		126,850		1		(1	)		—		—		—			—			—
Repurchase of common stock		—		—		—			—		397,365		(5,105	)		—			(5,105	)
Forfeiture of restricted stock		—		—		—			—		19,832		—			—			—
Unrealized gain resulting from change in fair value of derivative instruments, net of tax		—		—		—			—		—		—			1,759			1,759
Net income		—		—		—			7,607		—		—			—			7,607
Balance, March 31, 2022		9,131,215	$	89	$	30,188		$	74,556		2,984,994	$	(20,954	)	$	1,198		$	85,077

See accompanying notes to condensed consolidated financial statements.

5

Natural Alternatives International, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended March 31,
	2023			2022
Cash flows from operating activities
Net income	$	485		$	7,607
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Recovery of uncollectible accounts receivable		(18	)		(48	)
Depreciation and amortization		3,050			3,318
Non-cash compensation		725			733
Non-cash lease expenses		2,937			2,355
Pension expense, net of contributions		75			26
Gain on disposal of assets		(43	)		(9	)
Changes in operating assets and liabilities:
Accounts receivable		9,829			1,257
Inventories, net		(6,834	)		(9,794	)
Prepaids and other assets		(868	)		(2,019	)
Accounts payable and accrued liabilities		(6,178	)		4,390
Forward contracts		517			(1,654	)
Accrued compensation and employee benefits		(614	)		(1,474	)
Operating lease liabilities		(2,455	)		(2,423	)
Income taxes		(1,078	)		857
Net cash (used in) provided by operating activities		(470	)		3,122
Cash flows from investing activities
Proceeds from sale of property and equipment		48			30
Purchases of property and equipment		(13,239	)		(21,468	)
Net cash used in investing activities		(13,191	)		(21,438	)
Cash flows from financing activities
Borrowings on line of credit		9,100			—
Borrowings on long-term debt		—			10,000
Payments on long-term debt		(209	)		(137	)
Repurchase of common stock		(1,503	)		(5,105	)
Net cash provided by financing activities		7,388			4,758
Net decrease in cash and cash equivalents		(6,273	)		(13,558	)
Cash and cash equivalents at beginning of period		21,833			32,133
Cash and cash equivalents at end of period	$	15,560		$	18,575
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	507		$	173
Income taxes	$	1,321		$	2,169

See accompanying notes to condensed consolidated financial statements.

6

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

A. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and with applicable rules and regulations. Pursuant to such rules and regulations, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) have been condensed or omitted. In management’s opinion, all adjustments necessary for a fair presentation of the financial position, results of operations, stockholders’ equity, and cash flows have been included and are of a normal, recurring nature. The results of operations for the three and nine months ended March 31, 2023 are not necessarily indicative of the operating results for the full fiscal year or for any future periods.

You should read the financial statements and these notes, which notes are an integral part of the financial statements, together with our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 (“2022 Annual Report”). The accounting policies used to prepare the financial statements included in this Report are the same policies described in the notes to the consolidated financial statements in our 2022 Annual Report unless otherwise noted below.

Recently Adopted Accounting Pronouncements

We did not adopt any accounting pronouncements during the three and nine months ended March 31, 2023.

Recently Issued Accounting and Regulatory Pronouncements

Other recently issued accounting pronouncements are not discussed in this Report as such pronouncements did not have, and are not believed by management to have, a material impact on our present or future financial statements.

Net (Loss) Income per Common Share

We compute net income per common share using the weighted average number of common shares outstanding during the period, and diluted net income per common share using the additional dilutive effect of all dilutive securities. The dilutive impact of unvested restricted shares account for the additional weighted average shares of common stock outstanding for our diluted net income per common share computation. We calculated basic and diluted net (loss) income per common share as follows (in thousands, except per share data):

	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2023			2022		2023		2022
Numerator
Net (loss) income	$	(2,381	)	$	2,504	$	485	$	7,607
Denominator
Basic weighted average common shares outstanding		5,816			6,003		5,867		6,168
Dilutive effect of restricted stock		—			38		18		48
Diluted weighted average common shares outstanding		5,816			6,041		5,885		6,216
Basic net (loss) income per common share	$	(0.41	)	$	0.42	$	0.08	$	1.23
Diluted net (loss) income per common share	$	(0.41	)	$	0.41	$	0.08	$	1.22

We exclude the impact of restricted stock from the calculation of diluted net loss per common share in periods where we have a net loss or when their inclusion would be antidilutive. During the three months ended March 31, 2023, we excluded 227,082 shares of restricted stock. During the nine months ended March 31, 2023, we excluded 151,585 shares of restricted stock. During the three and nine months ended March 31, 2022, we excluded 126,850 shares of restricted stock.

7

 

Revenue Recognition

We record revenue based on a five-step model which includes: (1) identifying a contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price among the performance obligations; and (5) recognizing revenue as each of the various performance obligations are satisfied.

Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling one or more performance obligations. We identify purchase orders from customers as contracts. The amount of consideration expected to be received and revenue recognized includes estimates of variable consideration, including estimates for early payment discounts and volume rebates. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. We review and update these estimates at the end of each reporting period and the impact of any adjustments is recognized in the period the adjustments are identified. In assessing whether collection of consideration from a customer is probable, we consider both the customer's ability and intent to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, which is typically 30 days from the invoice date. Invoices are generally issued on the date of transfer of control of the products ordered to the customer.

Revenue is recognized at the point in time that each of our performance obligations is fulfilled, and control of the ordered products is transferred to the customer. This transfer occurs when the product is shipped, or in some cases, when the product is delivered to the customer.

We recognize revenue in certain circumstances before delivery to the customer has occurred (commonly referred to as bill-and-hold transactions). Products sold under bill-and-hold arrangements are recorded as revenue when risk of ownership has been transferred to the customer, but the product has not shipped due to a substantive reason, typically at the customer’s request. The product must be separately identified as belonging to the customer, ready for physical transfer to the customer, and we cannot have the ability to redirect the product to another customer.

We provide early payment discounts to certain customers. Based on historical payment trends, we expect that these customers will take advantage of these early payment discounts. The cost of these discounts is reported as a reduction to the transaction price. If the actual discounts differ from those estimated, the difference is also reported as a change in the transaction price. We require prepayment from certain customers. We record any payments received in advance of contract fulfillment as a contract liability and they are classified as customer deposits on the consolidated balance sheet.

Contract liabilities and revenue recognized were as follows (in thousands):

	June 30, 2022		Additions		Revenue Recognized			Customer Refunds			March 31, 2023
Contract Liabilities (Customer Deposits)	$	140	$	326	$	(137	)	$	(3	)	$	326

	June 30, 2021		Additions		Revenue Recognized			Customer Refunds		March 31, 2022
Contract Liabilities (Customer Deposits)	$	1,721	$	372	$	(1,721	)	$	—	$	372

Except for product defects, no right of return exists on the sale of our products. We estimate returns based on historical experience and recognize a returns liability for any estimated returns. As of March 31, 2023, we have no estimated returns liability.

We currently own certain U.S. patents, and each patent’s corresponding foreign patent applications. All of these patents and patent rights relate to the ingredient known as beta-alanine marketed and sold under our CarnoSyn® and SR CarnoSyn® trade names. We recorded beta-alanine raw material sales and royalty and licensing income as a component of revenue in the amount of $2.3 million during the three months ended March 31, 2023, and $5.2 million during the nine months ended March 31, 2023. We similarly recorded $4.8 million during the three months ended March 31, 2022, and $13.5 million during the nine months ended March 31, 2022. These royalty income and raw material sale amounts resulted in royalty expense paid to the original patent holders from whom NAI acquired its patents and patent rights. We recognized royalty expense as a component of cost of goods sold in the amount of $107,000 during the three months ended March 31, 2023, and $213,000 during the nine months ended March 31, 2023. We recorded $200,000 of royalty expense during the three months ended March 31, 2022, and $600,000 during the nine months ended March 31, 2022.

8

 

Stock-Based Compensation

The Board of Directors approved our current omnibus equity incentive plan that became effective January 1, 2021 (the “2020 Plan”), which was approved by our stockholders at the Annual Meeting of Stockholders on December 4, 2020. Under the 2020 Plan, we may grant nonqualified and incentive stock options, restricted stock grants, restricted stock units, stock appreciation rights, and other stock-based awards to employees, non-employee directors and consultants.

We did not have any option activity or options outstanding during the three and nine month periods ended March 31, 2023 or March 31, 2022.

During the three and nine months ended March 31, 2023, we granted a total of 118,000 restricted stock shares to members of our Board of Directors and certain key members of our management team. During the three months ended March 31, 2022, we granted a total of 126,850 restricted stock shares to members of our Board of Directors and certain key members of our management team. During the three and nine months ended March 31, 2023, 5,999 restricted stock shares were forfeited. During the three months ended March 31, 2022, 1,400 restricted stock shares were forfeited. During the nine months ended March 31, 2022, 19,832 restricted stock shares were forfeited. Our net income included stock-based compensation expense with the vesting of prior restricted stock grants of approximately $0.3 million for the three months ended March 31, 2023 and $0.7 million for the nine month ended March 31, 2023. Our net income included stock based compensation expense in connection with the vesting of prior restricted stock grants of approximately $0.3 million for the three months ended March 31, 2022 and $0.7 million for the nine months ended March 31, 2022.

Deferred Compensation Plan

Effective July 16, 2020, the Board of Directors approved and adopted a Non-Qualified Incentive Plan (the “Incentive Plan”). Pursuant to the Incentive Plan, the Human Resources Committee and the Board of Directors may make deferred cash payments or other cash awards (“Awards”) to directors, officers, employees and eligible consultants of NAI (“Participants”). These Awards are made subject to conditions precedent that must be met before NAI is obligated to make the payment. The purpose of the Incentive Plan is to enhance the long-term stockholder value of NAI by providing the Human Resources Committee and the Board of Directors the ability to make deferred cash payments or other cash awards to encourage Participants to serve NAI or to remain in the service of NAI, or to assist NAI to achieve results determined by the Human Resources Committee or the Board of Directors to be in NAI's best interest.

The Incentive Plan authorizes the Human Resources Committee or the Board of Directors to grant to, and administer, unsecured and deferred cash Awards to Participants and to subject each Award to whatever conditions are determined appropriate by the Human Resources Committee or the Board of Directors. The terms of each Award, including the amount and any conditions that must be met to be entitled to payment of the Award are set forth in an Award Agreement between each Participant and NAI. The Incentive Plan provides the Board of Directors with the discretion to set aside assets to fund the Incentive Plan although that has not been done to date.

During the three and nine months ended March 31, 2023, we granted a total of $0.6 million in deferred cash awards to members of our Board of Directors and certain key members of our management team. During the three and nine months ended March 31, 2022, we granted a total of $0.3 million in deferred cash awards to members of our Board of Directors and certain key members of our management team. Each deferred cash award provides for three equal cash payments to the applicable Participant to be paid on the one year, two year, and three year anniversaries of the date of the grant of such Awards, (the “Award Date”); provided on the date of each payment (the “Payment Date”), the Participant has been since Award Date, and continues to be through the Payment Date, a member of our Board of Directors or an employee of NAI. In the event a Participant ceases to be an employee of NAI or a member of our Board of Directors prior to any Payment Date, no further payments are to be made in connection with the Award.

No deferred cash awards were forfeited during the three and nine month periods ended March 31, 2023. No deferred cash awards were forfeited during the three months ended March 31, 2022. Awards totaling $191,000 were forfeited during the nine months ended March 31, 2022.

Fair Value of Financial Instruments

Except for cash and cash equivalents, as of March 31, 2023, and June 30, 2022, we did not have any financial assets or liabilities classified as Level 1. We classify derivative forward exchange and interest rate swap contracts as Level 2 assets and liabilities. The fair values were determined by obtaining pricing from our bank and corroborating those values with a third party bank or pricing service.

9

 

Fair value of derivative instruments classified as Level 2 assets and liabilities consisted of the following (in thousands):

	March 31, 2023		June 30, 2022
Euro Forward Contract– Current Assets	$	593	$	3,144
Swiss Franc Forward Contract – Current Assets		318		109
Total Derivative Contracts – Current Assets		911		3,253
Interest Swap – Other noncurrent Assets		542		453
Euro Forward Contract– Other noncurrent Assets		—		561
Total Derivative Contracts – Other noncurrent Assets		542		1,014
Euro Forward Contract– Current Liabilities	$		$	—
Swiss Franc Forward Contract – Current Liabilities		—		—
Total Derivative Contracts – Current Liabilities				—
Fair Value Net Asset – all Derivative Contracts	$	1,453	$	4,267

We also classify any outstanding line of credit and term loan balance as a Level 2 liability. As of March 31, 2023, and June 30, 2022, we did not have any financial assets or liabilities classified as Level 3. We did not transfer any assets or liabilities between these levels during fiscal 2022 or the three and nine months ended March 31, 2023. 

B. Inventories, net

Inventories, net consisted of the following (in thousands):

	March 31, 2023			June 30, 2022
Raw materials	$	24,880		$	28,196
Work in progress		6,955			1,948
Finished goods		8,117			2,842
Reserve		(643	)		(511	)
	$	39,309		$	32,475

C. Property and Equipment

Property and equipment consisted of the following (in thousands):

	Depreciable Life In Years			March 31, 2023			June 30, 2022
Land	NA			$	7,645		$	7,645
Building and building improvements	7	–	39		25,817			17,415
Machinery and equipment	3	–	12		41,715			40,131
Office equipment and furniture	3	–	5		6,288			5,970
Vehicles		3			265			211
Leasehold improvements	1	–	15		22,540			21,626
Total property and equipment					104,270			92,998
Less: accumulated depreciation and amortization					(49,513	)		(48,425	)
Property and equipment, net				$	54,757		$	44,573

Depreciation expense was approximately $1.0 million during the three months ended March 31, 2023 and $3.1 million for the nine months ended March 31, 2023. Depreciation expense was approximately $1.2 million during the three months ended March 31, 2022 and $3.3 million for the nine months ended March 31, 2022. Construction in progress is included in the building and building improvements line.

10

  

D. Other Comprehensive (Loss) Income

Other comprehensive (loss) income ( “OCL” and “OCI”) consisted of the following during the three and nine months ended March 31, 2023 and March 31, 2022 (in thousands):

	Three Months Ended
	March 31, 2023
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative			Total
Beginning Balance	$	(444	)	$	391		$	488		$	435
OCI/OCL before reclassifications		—			713			(90	)		623
Amounts reclassified from OCI to Sales		—			(1,181	)		—			(1,181	)
Tax effect of OCI activity		—			122			79			201
Net current period OCI/OCL		—			(346	)		(11	)		(357	)
Ending Balance	$	(444	)	$	45		$	477		$	78

	Nine Months Ended
	March 31, 2023
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative		Total
Beginning Balance	$	(444	)	$	1,795		$	348	$	1,699
OCI/OCL before reclassifications		—			1,328			88		1,416
Amounts reclassified from OCI to Sales		—			(3,604	)		41		(3,563	)
Tax effect of OCI activity		—			526			—		526
Net current period OCI/OCL		—			(1,750	)		129		(1,621	)
Ending Balance	$	(444	)	$	45		$	477	$	78

	Three Months Ended
	March 31, 2022
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative			Total
Beginning Balance	$	(538	)	$	1,200		$	62		$	724
OCI/OCL before reclassifications		—			1,064			299			1,363
Amounts reclassified from OCI to Sales		—			(685	)		—			(685	)
Tax effect of OCI activity		—			(120	)		(84	)		(204	)
Net current period OCI/OCL		—			259			215			474
Ending Balance	$	(538	)	$	1,459		$	277		$	1,198

11

 

	Nine Months Ended
	March 31, 2022
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative			Total
Beginning Balance	$	(538	)	$	(23	)	$	—		$	(561	)
OCI/OCL before reclassifications		—			3,308			361			3,669
Amounts reclassified from OCI to Sales		—			(1,335	)		—			(1,335	)
Tax effect of OCI activity		—			(491	)		(84	)		(575	)
Net current period OCI/OCL		—			1,482			277			1,759	)
Ending Balance	$	(538	)	$	1,459		$	277		$	1,198

E. Leases

We currently lease our Vista, CA and Lugano, Switzerland product manufacturing and support facilities.

Leases are classified as operating leases. Substantially all our operating leases are comprised of payments for the use of manufacturing and office space. We have no leases classified as finance leases. As of March 31, 2023, the weighted average remaining lease term for our operating leases was 5.8 years and the weighted average discount rate for our operating leases was 4.15%. As of June 30, 2022, the weighted average remaining lease term for our operating leases was 6.3 years and the weighted average discount rate was 4.12%.

Other information related to leases as of March 31, 2023 and March 31, 2022 was as follows (in thousands):

Supplemental Cash Flows Information	Nine Months Ended March 31, 2023		Nine Months Ended March 31, 2022
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,433	$	2,495
Operating lease liabilities arising from obtaining Right of Use Assets for new leases		—	$	182

F. Debt

On May 24, 2021, we entered into a new credit facility with Wells Fargo Bank, N.A (“Wells Fargo”) to extend the maturity for our working line of credit from November 1, 2022 to May 24, 2024. This new credit facility provides total lending capacity of up to $20.0 million and allows us to use the credit facility for working capital as well as potential acquisitions. On August 18, 2021, we entered into an amendment of our credit facility with Wells Fargo. The amended credit facility added a $10.0 million term loan to the existing $20.0 million credit facility, and permitted us to use the $10.0 million term loan as part of the $17.5 million purchase consideration for the acquisition of our new manufacturing and warehouse property in Carlsbad, California. The amended credit agreement also increased the allowed capital expenditures from $10.0 million to $15.0 million for fiscal 2022 (exclusive of the amount paid for the acquisition of the new Carlsbad property noted above). In addition, the new credit notes now reflect a change in the interest rate reference from LIBOR to Secured Overnight Financing Rate (SOFR). The Credit Agreement was amended and a new Revolving Line of Credit Note, and Security Agreement were entered into. A Term Note and real property security documents were added to secure the Term Note by the new Carlsbad property. Additionally, we entered into a second amendment to our credit facility with Wells Fargo on February 8, 2022 that was effective January 31, 2022 and modified the annual limit imposed upon our ability to repurchase stock and issue dividends. This amendment increased this limit from $5.0 million annually to $7.0 million annually. Effective September 19, 2022, we entered into a third amendment to our credit facility with Wells Fargo. The third amendment extends the maturity date from May 24, 2024 to May 23, 2025 and also increased the allowed capital expenditures from $7.5 million to $25.0 million for the fiscal year ending June 30, 2023.

12

 

Under the terms of the Credit Agreement, borrowings are subject to eligibility requirements including maintaining (i) a ratio of total liabilities to tangible net worth of not greater than 1.50 to 1.0 at any time; (ii) a ratio of total current assets to total current liabilities of not less than 1.75 to 1.0 at each fiscal quarter end (iii) net income after taxes not less than $1.00, determined on a trailing four quarter basis with no two consecutive quarterly losses, determined as of each quarter end and (iv) a rolling 4-quarter fixed charge coverage ratio not less than 1.25 to 1.0 as of each fiscal quarter end. The credit agreement also includes a limitation on the amount of capital expenditures that can be made in a given fiscal year, with such limitation set at $25.0 million for our fiscal year ending June 30, 2023 and $7.5 million for all fiscal years thereafter. Any amounts outstanding under the line of credit will bear interest at a fixed or fluctuating interest rate as elected by us from time to time; provided, however, that if the outstanding principal amount is less than $100,000 such amount shall bear interest at the then applicable fluctuating rate of interest. If elected, the fluctuating rate per annum would be equal to 1.29% above the daily simple SOFR rate as in effect from time to time. If a fixed rate is elected, it would equal a per annum rate of 1.29% above the SOFR rolling 30-day average rate in effect on the first day of the applicable fixed rate term. Any amounts outstanding under the line of credit must be paid in full on or before the maturity date. Amounts outstanding that are subject to a fluctuating interest rate may be prepaid at any time without penalty. Amounts outstanding that are subject to a fixed interest rate may be prepaid at any time in minimum amounts of $100,000, subject to a prepayment fee equal to the sum of the discounted monthly differences between payment under a fixed rate versus payment under the variable rate for each month from the month of prepayment through the month in which the then applicable fixed rate term matures. There is an unused commitment fee of 0.125% required as part of the line of credit.

The Term Note used as part of the purchase consideration of our new manufacturing and warehouse property in Carlsbad, California referenced above, is for the original principal amount of $10.0 million, and is a seven year term note with payments fully amortized based on a twenty five year assumed term. Installment payments under this loan commenced October 1, 2021 and continue through August 1, 2028 with a final installment consisting of all remaining amounts due to be paid in full on September 1, 2028. Amounts outstanding on this note during the term of the agreement will bear interest equal to 1.8% above the SOFR rolling 30-day average. In connection with our term loan, we entered into an interest rate swap with Wells Fargo that effectively fixes our interest rate on our term loan at 2.4% for the first three years of the term of the note.

Our obligations under the Credit Agreement are secured by our accounts receivable and other rights to payment, general intangibles, inventory, equipment and fixtures. We also have credit approval with Wells Fargo Bank, which allows us to hedge foreign currency exposures up to 30 months in the future. We also have credit approval with Bank of America which allows us to hedge foreign currency exposures up to 24 months in the future.

On March 31, 2023, we were in compliance with all of the financial and other covenants required under the Amended Credit Agreement.

As of March 31, 2023, we had $10.9 million available for borrowing under our credit facility with Wells Fargo Bank.

As of March 31, 2023, we had $9.6 million outstanding under the Term Note used in the purchase of the Carlsbad, California warehouse in August 2021.

G. Economic Dependency

We had substantial net sales to certain customers during the periods shown in the following table. The loss of any of these customers, or a significant decline in (i) sales to these customers, (ii) the growth rate of sales to these customers, or (iii) these customers’ ability to make payments when due, each individually could have a material adverse impact on our net sales and net income. Net sales to any one customer representing 10% or more of the respective period's consolidated net sales were as follows (in thousands):

	Three Months Ended March 31,					Nine Months Ended March 31,
	2023			2022		2023			2022
Customer 1	$	15,962		$	10,673	$	46,948		$	19,795
Customer 2		9,558			13,846		38,823			40,110
Customer 3	(a		)		6,773	(a		)		22,761
	$	25,520		$	31,292	$	85,771		$	82,666

(a) Sales were less than 10% of the respective period’s total net sales.

13

 

Accounts receivable from these customers totaled $5.2 million at March 31, 2023 and $10.7 million at June 30, 2022.

We buy certain products, including beta-alanine, from a limited number of raw material suppliers who meet our quality standards. The loss of any of these suppliers could have a material adverse impact on our net sales and net income. Raw material purchases from any one supplier representing 10% or more of the respective period’s total raw material purchases were as follows (dollars in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Supplier 1	$	3,916		2,946	$	11,394		10,800
	$	3,916		2,946	$	11,394		10,800

H. Segment Information

Our business consists of two segments for financial reporting purposes. The two segments are identified as (i) private-label contract manufacturing, which primarily relates to the provision of private-label contract manufacturing services to companies that market and distribute nutritional supplements and other health care products, and (ii) patent and trademark licensing, which primarily includes direct raw material sales and royalty income from our license and supply agreements associated with the sale and use of beta-alanine under our CarnoSyn® and SR CarnoSyn® trade names.

We evaluate performance of these segments based on a number of factors. The primary performance measures for each segment are net sales and income or loss from operations before the allocation of certain corporate level expenses. Operating income or loss for each segment does not include corporate general and administrative expenses, interest expense and other miscellaneous income and expense items. Corporate general and administrative expenses include, but are not limited to human resources, corporate legal, finance, information technology, and other corporate level related expenses, which are not allocated to any segment. Transfers of raw materials between segments are recorded at cost. The accounting policies of our segments are the same as those described in the summary of significant accounting policies in Note A above and in the consolidated financial statements included in our 2022 Annual Report.

14

 

Our operating results by business segment were as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Net Sales
Private label contract manufacturing	$	30,354	$	37,623	$	112,969	$	104,894
Patent and trademark licensing		2,345		4,750		5,152		13,546
Total Net Sales	$	32,699	$	42,373	$	118,121	$	118,440

	Three Months Ended March 31,						Nine Months Ended March 31,
	2023			2022			2023			2022
(Loss) Income from Operations
Private label contract manufacturing	$	(1,243	)	$	3,605		$	6,264		$	10,065
Patent and trademark licensing		790			1,813			1,485			6,206
(Loss) income from operations of reportable segments		(453	)		5,418			7,749			16,271
Corporate expenses not allocated to segments		(2,035	)		(2,144	)		(6,210	)		(6,368	)
Total (Loss) Income from Operations	$	(2,488	)	$	3,274		$	1,539		$	9,903

	March 31, 2023		June 30, 2022
Total Assets
Private-label contract manufacturing	$	113,098	$	115,649
Patent and trademark licensing		30,829		30,354
	$	143,927	$	146,003

Our private-label contract manufacturing products are sold both in the U.S. and in markets outside the U.S., including Europe, Canada, Australia, New Zealand, Mexico, and Asia. Our primary markets outside the U.S. are Europe and Asia. Our patent and trademark licensing activities are primarily based in the U.S.

15

 

Net sales by geographic region, based on the customers’ location, were as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
United States	$	24,254	$	29,382	$	82,995	$	78,279
Markets outside of the United States		8,445		12,991		35,126		40,161
Total	$	32,699	$	42,373	$	118,121	$	118,440

Products manufactured by our Swiss subsidiary ("NAIE") accounted for 81% of net sales in markets outside the U.S. for the three months ended March 31, 2023 and 76% for the nine months ended March 31, 2023. Products manufactured by our Swiss subsidiary ("NAIE") accounted for 85% of net sales in markets outside the U.S. for the three months ended March 31, 2022 and 84% for the nine months ended March 31, 2022.

Long-lived assets by geographic region, based on the location of the company or subsidiary at which they were located or made, were as follows (in thousands):

	March 31, 2023		June 30, 2022
United States	$	54,305	$	43,769
Europe		20,411		22,505
Total Long-Lived Assets	$	74,716	$	66,274

Total assets by geographic region, based on the location of the company or subsidiary at which they were located or made, were as follows (in thousands):

	March 31, 2023		June 30, 2022
United States	$	92,149	$	83,443
Europe		51,778		62,560
Total Assets	$	143,927	$	146,003

Capital expenditures by geographic region, based on the location of the company or subsidiary at which they were located or made, were as follows (in thousands):

	Nine Months Ended March 31,
	2023		2022
United States	$	12,983	$	20,766
Europe		256		702
Total Capital Expenditures	$	13,239	$	21,468

I. Income Taxes

To determine our quarterly provision for income taxes, we use an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions to which we are subject. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rate from quarter to quarter. We recognize interest and penalties related to uncertain tax positions, if any, as an income tax expense.

Our effective tax rate for the three months ended March 31, 2023 was 14.6% and our effective tax rate for the three months ended March 31, 2022 was 21.4%. Our effective tax rate for the nine months ended March 31, 2023 was 40.6% and our effective tax rate for the nine months ended March 31, 2022 was 22.2%. Our effective tax rates for the three and nine months ended March 31, 2023 differ from the fiscal 2023 U.S. federal statutory rate of 21% primarily due to due to foreign income tax rate differential, the recognition of a prior year bad debt reserve as a tax loss in the current year, the timing of other forecasted permanent tax items, and discrete tax items related to employee stock vesting and return-to-provision adjustments. Our effective tax rates for the three and nine months ended March 31, 2022 differ from the fiscal 2022 U.S. federal statutory rate of 21% primarily due to foreign income tax rate differential and other tax credits.

16

 

We record valuation allowances to reduce our deferred tax assets to an amount we believe is more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. During the three and nine months ended March 31, 2023, there was no change to our valuation allowance for our deferred tax assets.

J. Treasury Stock

We purchase shares under a stock repurchase plan (“Repurchase Plan”) authorized by the Board of Directors. On December 2, 2022, the Board of Directors authorized a $1.0 million increase to the Repurchase Plan, thus bringing the total authorized repurchase to $19.0 million. Under the Repurchase Plan, we may, from time to time, purchase shares of our common stock, depending upon market conditions, in open market or privately negotiated transactions.

Stock repurchases for the three months ended March 31, 2023 were as follows:

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		25,447	$	9.23	$	235
Shares acquired from employees for restricted stock vesting		23,587		8.86		209
Total		49,034			$	444

Stock repurchases for the nine months ended March 31, 2023 were as follows:

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		140,812	$	9.19	$	1,294
Shares acquired from employees for restricted stock vesting		23,587		8.86		209
Total		164,399			$	1,503

Stock repurchases for the three months ended March 31, 2022 were as follows:

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		179,810	$	12.62	$	2,269
Shares acquired from employees for restricted stock vesting		27,161		11.00		299
Total		206,971			$	2,568

Stock repurchases for the nine months ended March 31, 2022 were as follows:

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		369,512	$	12.98	$	4,796
Shares acquired from employees for restricted stock vesting		27,853		11.08		309
Total		397,365			$	5,105

Stock repurchase costs include commissions and fees.

Shares acquired from employees for restricted stock vesting were returned to us by the related employees and in return we paid each employee’s required tax withholding resulting from the vesting of restricted shares. The valuation of the shares acquired and thereby the number of shares returned to us was calculated based on the closing share price on the date the shares vested.

17

  

K. Derivatives and Hedging

We are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to forecasted product sales denominated in foreign currencies and to other transactions of NAIE, our foreign subsidiary. As part of our overall strategy to manage the level of exposure to the risk of fluctuations in foreign currency exchange rates, we may use foreign exchange contracts in the form of forward contracts. To the extent we enter into such contracts, there can be no guarantee any such contracts will be effective hedges against our foreign currency exchange risk.

As of March 31, 2023, we had forward contracts designated as cash flow hedges primarily to protect against the foreign exchange risks inherent in our forecasted sales of products at prices denominated in currencies other than the U.S. Dollar. These contracts are expected to be settled through September 2024. For derivative instruments that are designated and qualify as cash flow hedges, we record the effective portion of the gain or loss on the derivative in accumulated other comprehensive income (“OCI”) as a separate component of stockholders’ equity and subsequently reclassify these amounts into earnings in the period during which the hedged transaction is recognized in earnings.

For foreign currency contracts designated as cash flow hedges, hedge effectiveness is measured using the spot rate. Changes in the spot-forward differential are excluded from the test of hedge effectiveness and are recorded currently in earnings as revenue. We measure effectiveness by comparing the cumulative change in the hedge contract with the cumulative change in the hedged item. No hedging relationships were terminated as a result of ineffective hedging for the three and nine months ended March 31, 2023 and March 31, 2022.

We monitor the probability of forecasted transactions as part of the hedge effectiveness testing on a quarterly basis. During the three and nine months ended March 31, 2023 and March 31, 2022, we did not have any losses or gains related to the ineffective portion of our hedging instruments.

As of March 31, 2023, the notional amounts of our foreign exchange contracts designated as cash flow hedges were approximately $24.0 million (EUR 21.4 million). As of March 31, 2023, a net gain of approximately $50,000, offset by $6,000 of deferred taxes, related to derivative instruments designated as cash flow hedges was recorded in OCI. It is expected that $50,000 will be reclassified into earnings in the next 12 months along with the earnings effects of the related forecasted transactions.

For foreign currency contracts not designated as cash flow hedges, changes in the fair value of the hedge are recorded directly to foreign exchange gain or loss in other income in an effort to offset the change in valuation of the underlying hedged item. During the three and nine months ended March 31, 2023, we entered into forward contracts in order to hedge foreign exchange risk associated with our lease liability at NAIE, which is denominated in Swiss Francs (CHF). As of March 31, 2023, the notional amounts of our foreign exchange contracts not designated as cash flow hedges were approximately $12.2 million (CHF 11.4 million).

We are exposed to interest rate fluctuations related to our $10.0 million Term Note with Wells Fargo, which carries a variable interest rate of 1.80% above the SOFR rolling 30-day average. To manage our exposure to this variable rate, on August 23, 2021, we entered into a floored interest rate swap that fixes our all-in rate on this loan to 2.4% for the first three years of the term loan. Fluctuations in the relation of our contractual swap rate to current market rates are recorded as an asset or liability with an offset to OCI at the end of each reporting period. Interest expense is adjusted for the difference between the actual SOFR spread and the swap contractual rate such that our effective interest expense for each period is equal to our hedged rate of 2.4%.

L. Contingencies

From time to time, we become involved in various investigations, claims and legal proceedings that arise in the ordinary course of our business. These matters may relate to product liability, employment, intellectual property, regulatory, contract or other matters. The resolution of these matters as they arise may be subject to various uncertainties and, even if such claims are without merit, could result in the expenditure of significant financial and managerial resources. While unfavorable outcomes are possible, based on available information, we currently do not believe the resolution of these matters will result in a material adverse effect on our business, consolidated financial condition, or results of operations. However, a settlement payment or unfavorable outcome could be greater than we currently anticipate and if so, could adversely impact our results of operations. Our evaluation of the likely impact of these actions could change in the future and we could have unfavorable outcomes we do not expect.

COVID-19 Pandemic

We continue to monitor and evaluate the risks to public health and the impact on overall global business activity related to the COVID-19 pandemic, including its potential impacts on our employees, customers, suppliers and financial results. As the situation remains fluid, it is difficult to predict the duration and scope of the pandemic and its impact on our business. However, it may result in a material adverse impact to our financial position, operations and cash flows if conditions persist or worsen.

18

  

ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to help you understand our financial condition and results of operations for the three and nine months ended March 31, 2023. You should read the following discussion and analysis together with our unaudited condensed consolidated financial statements and the notes to the condensed consolidated financial statements included under Item 1 in this Report, as well as the risk factors and other information included in our 2022 Annual Report and other reports and documents we file with the SEC. Our future financial condition and results of operations will vary from our historical financial condition and results of operations described below based on a variety of factors.

Executive Overview

The following overview does not address all of the matters covered in the other sections of this Item 2 or other items in this Report nor does it contain all of the information that may be important to our stockholders or the investing public. You should read this overview in conjunction with the other sections of this Item 2 and this Report.

Our primary business activity is providing private-label contract manufacturing services to companies that market and distribute vitamins, minerals, herbal and other nutritional supplements, as well as other health care products, to consumers both within and outside the U.S. Historically, our revenue has been largely dependent on sales to two or three private-label contract manufacturing customers and subject to variations in the timing of such customers’ orders, which in turn is impacted by such customers’ internal marketing programs, supply chain management, entry into new markets, new product introductions, the demand for such customers’ products, and general industry and economic conditions. Our revenue also includes raw material sales and royalty and licensing revenue generated from license and supply agreements with third parties, granting them the right to use our patents, trademarks and other intellectual property in connection with the distribution and use of the ingredient known as beta-alanine sold under our CarnoSyn® and SR CarnoSyn® trademarks.

A cornerstone of our business strategy is to achieve long-term growth and profitability and to diversify our sales base. We have sought and expect to continue to seek to diversify our sales by developing relationships with additional, quality-oriented, private-label contract manufacturing customers, and commercializing our patent estate through sales of beta-alanine under our CarnoSyn® and SR CarnoSyn® trade names, royalties from license agreements, and potentially additional contract manufacturing opportunities with licensees.

During the nine months ended March 31, 2023, our net sales were 0.3% lower than in the nine months ended March 31, 2022. Private-label contract manufacturing sales increased 7.7% primarily due to higher sales to our largest customer, partially offset by decreased sales to other customers and lower average exchange rates applied to sales denominated in Euro as compared to the prior year period. Our foreign exchange rates as applied to sales denominated in Euro decreased to a weighted average of 1.13 EUR/USD in the nine months ended March 31, 2023 compared to a weighted average of 1.18 EUR/USD during the nine months ended March 31, 2022. Revenue concentration for our largest private-label contract manufacturing customer as a percentage of total net sales for the nine months ended March 31, 2023 was 40%, and revenue concentration for our largest private-label contract manufacturing customer as a percentage of total net sales for the nine months ended March 31, 2022 was 34%. We expect our annualized fiscal 2023 revenue concentration for our largest customer to increase compared to our revenue concentration for our largest customer in fiscal 2022.    

During the nine months ended March 31, 2023, patent and trademark licensing revenue decreased 62.0% to $5.2 million, compared to revenue of $13.5 million for the nine months ended March 31, 2022. The decrease in patent and trademark licensing revenue during the nine months ended March 31, 2023 was primarily due to a decrease in orders from existing customers as a result of market and inflationary factors along with a general slowdown in the Sports Nutrition sales channel. Included in the market factors is the fact that the nine months ended March 31, 2022 benefited from a ramp up of Sports Nutrition sales activity due to easing COVID restrictions on athletic activities with no corresponding activity in the nine months ended March 31, 2023.

We continue to invest in research and development for our SR CarnoSyn® sustained release delivery system. We believe SR CarnoSyn® may provide a unique opportunity within the growing Wellness and Healthy Aging markets. We believe our recent efforts to refine our formulations and product offerings will be positively received and result in significant opportunity for increased SR CarnoSyn® sales.

19

To protect our CarnoSyn® business and our patents, trademarks and other intellectual property, we incurred legal expenses of approximately $0.1 million during the first nine months of fiscal 2023 as compared to $0.3 million during the comparable period in fiscal 2022. Our legal expense associated with our CarnoSyn® business has remained low as we have no active litigation and the current run-rate of expenses is primarily related to maintenance of our patent and trademark estate. Our ability to maintain or further increase our beta-alanine royalty and licensing revenue will depend in large part on our ability to develop a market for our sustained release form of beta-alanine marketed under our SR CarnoSyn® trademark, maintain our patent rights, obtain the raw material beta-alanine when and in the amounts needed, expand distribution of beta-alanine to new and existing customers, and continued compliance by third parties with our license agreements and our patent, trademark and other intellectual property rights. During the remainder of fiscal 2023, we will continue our sales and marketing activities to consumers, customers, potential customers, and brand owners on multiple platforms to promote and reinforce the features and benefits of utilizing CarnoSyn® and SR CarnoSyn® beta-alanine.

We experienced a loss from operations during the three months ended March 31, 2023. This was primarily due to a slowdown in sales across both of our operating segments. While we previously anticipated a slight decrease in fiscal 2023 consolidated net sales compared to fiscal 2022, sales decreased further than expected during the third quarter of fiscal 2023 as compared to the same quarter in the prior year. We expect our sales during the fourth quarter of fiscal 2023 will increase as compared to the third quarter of fiscal 2023. The primary driver for our sales decline relates to excess on-hand inventory levels for several of our key customers associated with softening consumer demand. In addition, the majority of our customers maintained larger inventory balances during the previous twelve months related to supply constraints and have now begun to release these excess inventory positions associated with improving supply chain conditions. We believe this decline in near term demand from our customer base is consistent with the overall economic trends in our industry.

Based on our current sales order volumes and forecasts we have received from our customers, we now anticipate our fiscal 2023 consolidated net sales will decrease between 10% to 12% compared to fiscal 2022. We also anticipate we will generate net operating income for our fourth quarter of fiscal 2023 and for the fiscal year ended June 30, 2023. Changes in sales mix, unfavorable foreign exchange rates, and inflationary factors including increased operational costs, increased labor rates, raw material, freight and supply chain costs are anticipated to negatively impact our near-term financial results.

In March 2023, due to reduced orders and forecasts from our customers, we implemented a workforce restructuring plan by eliminating 32 employee positions, representing approximately 9% of our global workforce. The reduction in workforce impacted all of our global locations and is expected to result in reduced operating expenses of approximately $1.8 million on an annualized basis. During the quarter ended March 31, 2023, we recognized restructuring charges of $449,000, primarily related to severance payments associated with this workforce restructuring plan.

We continue to evaluate further cost reduction opportunities, including working with both suppliers and customers, to mitigate the impact of these order reductions and higher operational costs on our financial results. There can be no assurance our expectations will result in the currently anticipated net sales or financial results.

During the remainder of fiscal year 2023, we also plan to continue our focus on:

• Leveraging our state-of-the-art, certified facilities to increase the value of the goods and services we provide to our highly valued private-label contract manufacturing customers, and to assist us in developing relationships with additional quality oriented customers;

• Beginning commercial production in our new high-volume powder blending and packaging facility, which was fully opened in April 2023;

• Expanding the commercialization of our beta-alanine patent estate through raw material sales, developing a new sales distribution channel under the Wellness and Healthy Aging category for our sustained release form of beta-alanine marketed under our SR CarnoSyn® trademark, exploiting new contract manufacturing opportunities license and royalty agreements, and protecting our proprietary rights; and

• Improving operational efficiencies and managing costs and business risks to improve profitability.

20

Impact of COVID-19 on Our Business

The COVID-19 pandemic has resulted, and may continue to result, in significant economic disruption and has and may continue to have some effect on our business. Our facilities, located both in the United States and Europe, maintained operations throughout the duration of the COVID-19 pandemic, however, there can be no assurance our facilities will continue to operate without interruption.

We will continue to monitor the situation and may take further actions to alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders.

Discussion of Critical Accounting Estimates

We have identified the following as our most critical accounting estimates, which are those that are most important to the portrayal of the Company’s financial condition and results, and that require management’s most subjective and complex judgments. Information regarding our other significant accounting estimates and policies is disclosed in Note 1 of Item 1 of this report and as disclosed in the 2022 Annual Report.

Revenue Recognition — Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling one or more performance obligations. For certain contracts with volume rebates and discounts, our estimates of future sales used to assess the volume rebate and discount estimates are subject to a high degree of judgement and may differ from actual sales due to, among other things, changes in customer orders and raw material availability. 

Results of Operations

The results of our operations for the three and nine months ended March 31 were as follows (dollars in thousands):

	Three Months Ended									Nine Months Ended
	March 31,									March 31,
	2023			2022			% Change			2023			2022			% Change
Private label contract manufacturing	$	30,354		$	37,623			(19	)%	$	112,969		$	104,894			8	%
Patent and trademark licensing		2,345			4,750			(51	)%		5,152			13,546			(62	)%
Total net sales		32,699			42,373			(23	)%		118,121			118,440			0	%
Cost of goods sold		31,323			34,980			(10	)%		105,160			96,220			9	%
Gross profit		1,376			7,393			(81	)%		12,961			22,220			(42	)%
Gross profit %		4.2	%		17.4	%					11.0	%		18.8	%
Selling, general and administrative expenses		3,864			4,119			(6	)%		11,422			12,317			(7	)%
% of net sales		11.8	%		9.7	%					9.7	%		10.4	%
(Loss) income from operations		(2,488	)		3,274			(176	)%		1,539			9,903			(85	)%
% of net sales		(7.6	)%		7.7	%					1.3	%		8.4	%
Other expense		(300	)		(88	)		241	%		(723	)		(123	)		488	%
(Loss) income before income taxes		(2,788	)		3,186			(188	)%		816			9,780			(92	)%
% of net sales		(8.5	)%		7.5	%					0.7	%		8.3	%
(Benefit) provision for income taxes		(407	)		682			(160	)%		331			2,173			(85	)%
Net (loss) income	$	(2,381	)	$	2,504			(195	)%	$	485		$	7,607			(94	)%
% of net sales		(7.3	)%		5.9	%					0.4	%		6.4	%

21

Private-label contract manufacturing net sales decreased 19% during the three months ended March 31, 2023, and increased 8% for the nine months ended March 31, 2023, when compared to the same periods in the prior year. The decrease in sales during the three months ended March 31, 2023 was primarily due to decreased sales to two of our three largest customers, partially offset by increased sales to our largest customer. The decline in sales to two of our largest customers is due to reduced orders due to their efforts to reduce excess on-hand inventory. Sales were also negatively impacted by Euro to USD foreign exchange rates. Our foreign exchange rates as applied to sales denominated in Euro decreased to a weighted average of 1.14 EUR/USD in the three months ended March 31, 2023 compared to a weighted average of 1.17 EUR/USD during the three months ended March 31, 2022.

The increase in sales during the nine months ended March 31, 2023 was primarily due to increased sales to our largest customer, partially offset by decreased sales to other customers and unfavorable Euro to USD foreign exchange rates. Our foreign exchange rates as applied to sales denominated in Euro decreased to a weighted average of 1.13 EUR/USD in the nine months ended March 31, 2023 compared to a weighted average of 1.18 EUR/USD during the nine months ended March 31, 2022.

Net sales from our patent and trademark licensing segment decreased 51% during the three months ended March 31, 2023, and 62% for the nine months ended March 31, 2023, when compared to the same periods in the prior year. The decrease in patent and trademark licensing revenue during the three and nine months ended March 31, 2023 was primarily due to a decrease in orders from existing customers as a result of market and inflationary factors along with a general slowdown in the Sports Nutrition sales channel. Included in the market factors is the fact that the three and nine months ended March 31, 2022 benefited from a ramp up of Sports Nutrition sales activity due to easing COVID restrictions on athletic activities with no corresponding activity in the three and nine months ended March 31, 2023.

The change in gross profit margin for the three and nine months ended March 31, 2023, was as follows:

	Three Months			Nine Months
	Ended			Ended
Contract manufacturing(1)		(11.5	)%		(3.6	)%
Patent and trademark licensing(2)		(1.7	)		(4.2	)
Total change in gross profit margin		(13.2	)%		(7.8	)%

1 Private-label contract manufacturing gross profit margin as a percentage of consolidated net sales decreased 11.5 percentage points during the three months ended March 31, 2023 when compared to the comparable prior year periods. The decrease in gross profit as a percentage of sales for private-label contract manufacturing during the three months ended March 31, 2023 is primarily due to lower sales and unfavorable sales mix, increased costs related to labor, utilities, operating supplies, freight and other costs resulting in an increase in per-unit manufacturing costs. Included in the increased labor costs for the three months ended March 31, 2023 is a restructuring charge of $300,000 due to a workforce restructuring plan completed in March of 2023.   For the nine months ended March 31, 2023, the contract manufacturing gross profit margin as a percentage of consolidated net sales decreased 3.6 percentage points as compared to the comparable prior year period, primarily due to an increase in per-unit manufacturing costs driven by increased labor costs and other overhead costs, including operating supplies, utilities, freight, and depreciation. Included in the increased labor costs for the nine months ended March 31, 2023 is a restructuring charge of $300,000.

2 Patent and trademark licensing gross profit margin as a percentage of consolidated net sales decreased 1.7 percentage points during the three months ended March 31, 2023 and 4.2 percentage points for the nine months ended March 31, 2023 when compared to the comparable prior year periods. The decrease in margin contribution was primarily due to decreased patent and trademark licensing net sales as a percentage of total consolidated net sales, as patent and trademark licensing historically provides higher profit margins than our private-label contract manufacturing business. The nine months ended March 31, 2022 also included a favorable change in our estimates of certain volume rebate programs while the nine months ended March 31, 2023 included an unfavorable change in our estimates of certain volume rebate programs.

Selling, general and administrative expenses decreased $0.3 million, or 6%, during the three months ended March 31, 2023 and $0.9 million, or 7%, as compared to the comparable prior year periods. The decrease during the three months ended March 31, 2023 as compared to the same period in the prior fiscal year is primarily related to a partial recovery of accounts receivable that had been reserved as uncollectible in a prior fiscal year and lower legal expenses. The decrease during the nine months ended March 31, 2023 as compared to the same period in the prior fiscal year is primarily related to a partial recovery of accounts receivable that had been reserved for in a prior fiscal year and lower legal expenses.

Other expense increased $0.2 million during the three months ended March 31, 2023 and $0.6 million during the nine months ended March 31, 2023 when compared to the comparable periods during the prior year. The increase in both the three and nine month periods is primarily associated with increased expenses related to our CHF balance sheet hedge and interest expense related to usage of our line of credit.

Our income tax (benefit) expense decreased $1.1 million to a benefit of $0.4 million for the three months ended March 31, 2023 when compared to the same period in fiscal 2022. The change in tax rate is primarily due to a pre-tax loss in the third quarter of fiscal 2023 as compared to pre-tax income in the third quarter of fiscal 2022. There was also a difference in the effective tax rate recorded in the third quarter of fiscal 2023 as compared to the same period in fiscal 2022 due to foreign income tax rate differential, the recognition of a prior year bad debt reserve as a tax loss in the current year, the timing of other forecasted permanent tax items, and discrete tax items related to employee stock vesting and return-to-provision adjustments.

Our income tax expense decreased $1.8 million for the nine months ended March 31, 2023 when compared to the same period in 2022. The decrease in income tax expense for the nine months was primarily related to lower pre-tax income partially offset by an unfavorable effective tax rate due primarily to foreign income tax rate differential, the recognition of a prior year bad debt reserve as a tax loss in the current year, the timing of other forecasted permanent tax items, and discrete tax items related to employee stock vesting and return-to-provision adjustments.

22

Liquidity and Capital Resources

Our primary sources of liquidity and capital resources are cash flows provided by operating activities and the availability of borrowings under our credit facilities. Net cash used by operating activities was $0.5 million for the nine months ended March 31, 2023 compared to net cash provided by operating activities of $3.1 million in the comparable period during the prior fiscal year.

At March 31, 2023, changes in accounts receivable, consisting of amounts due from our private-label contract manufacturing customers and our patent and trademark licensing activities, provided $9.8 million in cash compared to providing $1.2 million of cash during the comparable nine month period in the prior year. The increase in cash provided by accounts receivable during the nine months ended March 31, 2023 primarily resulted from the timing of sales and related collections and a partial recovery of one account receivable that had been reserved as uncollectible in a prior fiscal year. Days sales outstanding was 29 days during the nine months ended March 31, 2023 as compared to 40 days for the prior year period.

Changes in inventory used $6.8 million in cash during the nine months ended March 31, 2023 compared to using $9.8 million in the comparable prior year period. The change in cash related to inventory during the nine months ended March 31, 2023 was primarily related to the difference in the amount and timing of orders and anticipated sales as compared to same period in the prior year. Changes in accounts payable and accrued liabilities used $6.2 million in cash during the nine months ended March 31, 2023 compared to providing $4.4 million during the nine months ended March 31, 2022. The change in cash flow activity related to accounts payable and accrued liabilities was primarily due to the timing of inventory receipts and payments.

Cash used in investing activities in the nine months ended March 31, 2023 was $13.2 million compared to $21.4 million in the comparable prior year period. The primary reason for the change was due to the purchase of a new manufacturing and warehouse facility in Carlsbad, CA during the nine months ended March 31, 2022 while the nine months ended March 31, 2023 included capital improvement costs and equipment purchases associated with the on-going project to improve the new facility to become a high capacity powder processing and storage facility.

Cash provided by financing activities for the nine months ended March 31, 2023, was $7.4 million, compared to $4.8 million provided in the comparable prior year period. The difference is primarily due to higher treasury stock repurchase activity during the nine months ended March 31, 2022.

At March 31, 2023, we had $9.6 million outstanding under the Term Note we used to purchase our new Carlsbad, California warehouse and manufacturing facility in August 2021. We had $9.1 million outstanding on our working capital line of credit with Wells Fargo Bank, with $10.9 million remaining available for borrowing. During the nine months ended March 31, 2023, we were in compliance with all of the financial and other covenants required under the Credit Agreement for this credit line. Refer to Item 1, Note F., "Debt," in this Quarterly Report, for the terms of this Credit Agreement.

As of March 31, 2023, we had $15.6 million in cash and cash equivalents. We believe our available cash, cash equivalents, credit facility and potential cash flows from operations will be sufficient to fund our current working capital needs, capital expenditures, and minimum debt and interest payments through the next 12 months. Our planned improvements to our powder blending, packaging and storage facility we purchased in August 2021 were substantially complete as of March 31, 2023 and we anticipate capital expenditures to be minimal for the remainder of the fiscal year.

Off-Balance Sheet Arrangements

As of March 31, 2023, we did not have any off-balance sheet debt nor did we have any transactions, arrangements, obligations (including contingent obligations) or other relationships with any unconsolidated entities or other persons that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenue or expenses material to investors.

Recent Accounting Pronouncements

Recent accounting pronouncements are discussed in the notes to our consolidated financial statements included under Item 1, Note A. of this Report. Other than those pronouncements, we are not aware of any other pronouncements that materially affect our financial position or results of operations.

23

ITEM 4. CONTROLS AND PROCEDURES

We maintain certain disclosure controls and procedures as defined under the Securities Exchange Act of 1934. They are designed to help ensure that material information: (1) is gathered and communicated to our management, including our principal executive and financial officers, in a manner that allows for timely decisions regarding required disclosures; and (2) recorded, processed, summarized, reported and filed with the SEC as required under the Securities Exchange Act of 1934 and within the time periods specified by the SEC.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (principal financial and accounting officer), evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2023. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective for their intended purpose as of March 31, 2023.

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarterly period ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

24

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we become involved in various investigations, claims and legal proceedings that arise in the ordinary course of our business. These matters may relate to intellectual property, product liability, employment, tax, regulation, contract or other matters. The resolution of these matters as they arise will be subject to various uncertainties and, even if such claims are without merit, could result in the expenditure of significant financial and managerial resources. While unfavorable outcomes are possible, based on available information, we currently do not believe the resolution of these matters, even if unfavorable, will result in a material adverse effect on our business, consolidated financial condition, or results of operations. However, a settlement payment or unfavorable outcome could adversely impact our results of operations. Our evaluation of the likely impact of these actions could change in the future and we could have unfavorable outcomes we do not expect. An unexpected settlement expense or an unexpected unfavorable outcome of a matter could adversely impact our results of operations.

As of May 12, 2023, neither NAI nor NAIE were a party to any material pending legal proceeding nor was any of our property the subject of any material pending legal proceeding. We are often involved in up to several matters in the ordinary course of our business. 

There is no assurance NAI will prevail in litigation matters or in similar proceedings NAI or others may initiate or that litigation expenses will not be greater than anticipated.

ITEM 1A. RISK FACTORS

When evaluating our business and future prospects you should carefully consider the risks described under Item 1A of our 2022 Annual Report, as well as the other information in our 2022 Annual Report, this Report and other reports and documents we file with the SEC. If any of the identified risks actually occur, our business, financial condition and results of operations could be seriously harmed. In that event, the market price of our common stock could decline, and you could lose all or a portion of the value of your investment in our common stock.

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

We did not sell any unregistered equity securities during the three and nine month periods ended March 31, 2023 and March 31, 2022.

Repurchases

During the three months ended March 31, 2023 we repurchased 25,447 shares of our common stock at a total cost of $0.2 million (including commissions and transaction fees) as set forth below:

Period	Total Number of Shares Purchased		Average Price Paid per Share  (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (as of March 31, 2023) (in thousands)
January 1, 2023 to January 31, 2023		24,662	$	9.24		24,662		—
February 1, 2023 to February 28, 2023		785	$	8.97		785		—
March 1, 2023 to March 31, 2023		—		—		—		—
Total		25,447				25,447	$	714

⁽¹⁾ Average price paid per share includes costs associated with the repurchases

Refer to Note J, "Treasury Stock," in this Quarterly Report, for terms of repurchase plan and additional information.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 5. OTHER INFORMATION

None.

25

ITEM 6. EXHIBITS

The following exhibit index shows those exhibits filed with this Report and those incorporated by reference:

EXHIBIT INDEX

Exhibit Number	Description	Incorporated By Reference To
3(i)	Amended and Restated Certificate of Incorporation of Natural Alternatives International, Inc. filed with the Delaware Secretary of State on January 14, 2005	Exhibit 3(i) of NAI’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2004, filed with the commission on February 14, 2005
3(ii)	Amended and Restated By-laws of Natural Alternatives International, Inc. dated as of February 9, 2009	Exhibit 3(ii) of NAI’s Current Report on Form 8-K dated February 9, 2009, filed with the commission on February 13, 2009
4(i)	Form of NAI’s Common Stock Certificate	Exhibit 4(i) of NAI’s Annual Report on Form 10-K for the fiscal year ended June 30, 2005, filed with the commission on December 8, 2005
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer	Filed herewith
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer	Filed herewith
32	Section 1350 Certification	Filed herewith
101.INS	Inline XBRL Instance Document	Filed herewith
101.SCH	Inline XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	Filed herewith

26

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Natural Alternatives International, Inc., the registrant, has duly caused this Report to be signed on its behalf by the undersigned, duly authorized officers.

Date: May 12, 2023

NATURAL ALTERNATIVES INTERNATIONAL, INC.
By:	/s/ Mark A. LeDoux
	Mark A. LeDoux, Chief Executive Officer
	(principal executive officer)
By:	/s/ Michael E. Fortin
	Michael E. Fortin, Chief Financial Officer
	(principal financial and accounting officer)

27

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to

Rule 13a-14(a)/15d-14(a)

I, Mark A. LeDoux, Chief Executive Officer of Natural Alternatives International, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Natural Alternatives International, Inc.;

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d) disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2023

/s/ Mark A. LeDoux

Mark A. LeDoux, Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to

Rule 13a-14(a)/15d-14(a)

I, Michael Fortin, Chief Financial Officer of Natural Alternatives International, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Natural Alternatives International, Inc. (the “Report”);

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d) disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 12, 2023

/s/ Michael E. Fortin

Michael E. Fortin, Chief Financial Officer

EX-32

Exhibit 32

Certification

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Natural Alternatives International, Inc., a Delaware corporation, does hereby certify, that the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 of Natural Alternatives International, Inc. fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and that information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Natural Alternatives International, Inc.

Date: May 12, 2023	/s/ Mark A. LeDoux
	Mark A. LeDoux, Chief Executive Officer
Date: May 12, 2023	/s/ Michael E. Fortin
	Michael E. Fortin, Chief Financial Officer

The foregoing certification is furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

XML

Document And Entity Information - shares	9 Months Ended
	Mar. 31, 2023	May 15, 2023
Document Information [Line Items]
Entity Central Index Key	0000787253
Entity Registrant Name	NATURAL ALTERNATIVES INTERNATIONAL INC
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	000-15701
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	84-1007839
Entity Address, Address Line One	1535 Faraday Ave
Entity Address, City or Town	Carlsbad
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92008
City Area Code	760
Local Phone Number	736-7700
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	NAII
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,077,213

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2023	Jun. 30, 2022
Current assets:
Cash and cash equivalents	$ 15,560	$ 21,833
Accounts receivable – less allowance for doubtful accounts of $757 at March 31, 2023 and $3,383 at June 30, 2022	7,611	17,422
Inventories, net	39,309	32,475
Income tax receivable	637	67
Derivative assets, current asset	911	3,144
Prepaids and other current assets	2,258	1,805
Total current assets	66,286	76,746
Property and equipment, net	54,757	44,573
Operating lease right-of-use assets	19,958	21,701
Other noncurrent assets, net	2,926	2,983
Total assets	143,927	146,003
Current liabilities:
Accounts payable	10,890	16,185
Accrued liabilities	1,718	2,787
Accrued compensation and employee benefits	3,059	3,673
Customer deposits	326	140
Income taxes payable	166	174
Mortgage note payable, current portion	309	302
Line of credit - current	9,100	0
Total current liabilities	25,568	23,261
Long-term liability – operating leases	20,786	22,047
Long-term pension liability	419	344
Deferred tax liability	284	1,220
Mortgage note payable, net of current portion	9,277	9,493
Income taxes payable, noncurrent	987	1,118
Total liabilities	57,321	57,483
Commitments and contingencies (Notes E, F, and L)
Stockholders’ equity:
Preferred stock; $.01 par value; 500,000 shares authorized; none issued or outstanding	0	0
Common stock; $.01 par value; 20,000,000 shares authorized at March 31, 2023 and June 30, 2022, issued and outstanding (net of treasury shares) 6,077,213 at March 31, 2023 and 6,129,611 at June 30, 2022	91	89
Additional paid-in capital	31,146	30,423
Retained earnings	78,146	77,661
Treasury stock, at cost, 3,232,193 shares at March 31, 2023 and 3,061,795 at June 30, 2022	(22,855)	(21,352)
Accumulated other comprehensive income	78	1,699
Total stockholders’ equity	86,606	88,520
Total liabilities and stockholders’ equity	$ 143,927	$ 146,003

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Mar. 31, 2023	Jun. 30, 2022
Accounts receivable, allowance for doubtful accounts	$ 757	$ 3,383
Preferred stock par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	500,000	500,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares outstanding (in shares)	6,077,213	6,129,611
Treasury stock, shares (in shares)	3,232,193	3,061,795

XML

Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended		105 Months Ended
	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022	Sep. 25, 2031
Net sales	$ 42,373	$ 118,121	$ 118,440	$ 32,699
Cost of goods sold	34,980	105,160	96,220	31,323
Gross profit	7,393	12,961	22,220	1,376
Selling, general and administrative	4,119	11,422	12,317	3,864
(Loss) income from operations	3,274	1,539	9,903	(2,488)
Other (expense) income:
Interest income	0	25	0	12
Interest expense	(19)	(246)	(45)	(116)
Foreign exchange loss	(40)	(484)	(35)	(194)
Other, net	(29)	(18)	(43)	(2)
Total other expense	(88)	(723)	(123)	(300)
(Loss) income before income taxes	3,186	816	9,780	(2,788)
(Benefit) provision for income taxes	682	331	2,173	(407)
Net (loss) income	2,504	485	7,607	(2,381)
Unrealized (loss) gain resulting from change in fair value of derivative instruments, net of tax	474	(1,621)	1,759	(357)
Comprehensive (loss) income	$ 2,978	$ (1,136)	$ 9,366	$ (2,738)
Net (loss) income per common share:
Basic (in dollars per share)	$ 0.42	$ 0.08	$ 1.23	$ (0.41)
Diluted (in dollars per share)	$ 0.41	$ 0.08	$ 1.22	$ (0.41)
Weighted average common shares outstanding
Basic (in shares)	6,003,036	5,867,400	6,167,539	5,816,058
Diluted (in shares)	6,041,424	5,885,116	6,216,422	5,816,058

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock, Common [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Jun. 30, 2021	9,004,365			2,567,797
Balance at Jun. 30, 2021	$ 88	$ 29,456	$ 66,949	$ (15,849)	$ (561)	$ 80,083
Compensation expense related to stock compensation plans	$ 0	733	0	$ 0	0	733
Issuance of common stock for restricted stock grants (in shares)	126,850			0
Issuance of common stock for restricted stock grants	$ 1	(1)	0	$ 0	0	$ 0
Treasury Stock Acquired, Shares (in shares)	0			397,365		397,365
Repurchase of common stock	$ 0	0	0	$ (5,105)	0	$ (5,105)
Forfeiture of restricted stock (in shares)	0			19,832
Forfeiture of restricted stock	$ (0)	(0)	(0)	$ (0)	(0)	(0)
Unrealized loss resulting from change in fair value of derivative instruments, net of tax	0	0	0	0	1,759	1,759
Net income (loss)	0	0	7,607	0	0	7,607
Forfeiture of restricted stock	$ 0	0	0	$ 0	0	0
Balance (in shares) at Mar. 31, 2022	9,131,215			2,984,994
Balance at Mar. 31, 2022	$ 89	30,188	74,556	$ (20,954)	1,198	85,077
Balance (in shares) at Dec. 31, 2021	9,004,365			2,776,623
Balance at Dec. 31, 2021	$ 88	29,923	72,052	$ (18,386)	724	84,401
Compensation expense related to stock compensation plans	$ 0	266	0	$ 0	0	266
Issuance of common stock for restricted stock grants (in shares)	126,850			0
Issuance of common stock for restricted stock grants	$ 1	(1)	0	$ 0	0	$ 0
Treasury Stock Acquired, Shares (in shares)	0			206,971		206,971
Repurchase of common stock	$ 0	0	0	$ (2,568)	0	$ (2,568)
Forfeiture of restricted stock (in shares)	0			1,400
Forfeiture of restricted stock	$ (0)	(0)	(0)	$ (0)	(0)	(0)
Unrealized loss resulting from change in fair value of derivative instruments, net of tax	0	0	0	0	474	474
Net income (loss)	0	0	2,504	0	0	2,504
Forfeiture of restricted stock	$ 0	0	0	$ 0	0	0
Balance (in shares) at Mar. 31, 2022	9,131,215			2,984,994
Balance at Mar. 31, 2022	$ 89	30,188	74,556	$ (20,954)	1,198	85,077
Balance (in shares) at Jun. 30, 2022	9,191,406			3,061,795
Balance at Jun. 30, 2022	$ 89	30,423	77,661	$ (21,352)	1,699	88,520
Compensation expense related to stock compensation plans	$ 0	725	0	$ 0	0	725
Issuance of common stock for restricted stock grants (in shares)	118,000			0
Issuance of common stock for restricted stock grants	$ 2	(2)	0	$ 0	0	$ 0
Treasury Stock Acquired, Shares (in shares)	0			164,399		164,399
Repurchase of common stock	$ 0	0	0	$ (1,503)	0	$ (1,503)
Forfeiture of restricted stock (in shares)	0			5,999
Forfeiture of restricted stock	$ (0)	(0)	(0)	$ (0)	(0)	(0)
Unrealized loss resulting from change in fair value of derivative instruments, net of tax	0	0	0	0	(1,621)	(1,621)
Net income (loss)	0	0	485	0	0	485
Forfeiture of restricted stock	$ 0	0	0	$ 0	0	0
Balance (in shares) at Mar. 31, 2023	9,309,406			3,232,193
Balance at Mar. 31, 2023	$ 91	31,146	78,146	$ (22,855)	78	86,606
Balance (in shares) at Dec. 31, 2022	9,191,406			3,177,160
Balance at Dec. 31, 2022	$ 89	30,890	80,527	$ (22,411)	435	89,530
Compensation expense related to stock compensation plans	$ 0	258	0	$ 0	0	258
Issuance of common stock for restricted stock grants (in shares)	118,000			0
Issuance of common stock for restricted stock grants	$ 2	(2)	0	$ 0	0	$ 0
Treasury Stock Acquired, Shares (in shares)	0			49,034		49,034
Repurchase of common stock	$ 0	0	0	$ (444)	0	$ (444)
Forfeiture of restricted stock (in shares)	0			5,999
Forfeiture of restricted stock	$ 0	0	0	$ 0	0	0
Unrealized loss resulting from change in fair value of derivative instruments, net of tax	0	0	0	0	(357)	(357)
Net income (loss)	0	0	(2,381)	0	0	(2,381)
Forfeiture of restricted stock	$ 0	0	0	$ 0	0	0
Balance (in shares) at Mar. 31, 2023	9,309,406			3,232,193
Balance at Mar. 31, 2023	$ 91	$ 31,146	$ 78,146	$ (22,855)	$ 78	$ 86,606

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities
Net income	$ 485	$ 7,607
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Recovery of uncollectible accounts receivable	(18)	(48)
Depreciation and amortization	3,050	3,318
Non-cash compensation	725	733
Non-cash lease expenses	2,937	2,355
Pension expense, net of contributions	75	26
Gain on disposal of assets	(43)	(9)
Changes in operating assets and liabilities:
Accounts receivable	9,829	1,257
Inventories, net	(6,834)	(9,794)
Prepaids and other assets	(868)	(2,019)
Accounts payable and accrued liabilities	(6,178)	4,390
Forward contracts	517	(1,654)
Accrued compensation and employee benefits	(614)	(1,474)
Operating lease liabilities	(2,455)	(2,423)
Income taxes	(1,078)	857
Net cash (used in) provided by operating activities	(470)	3,122
Cash flows from investing activities
Proceeds from sale of property and equipment	48	30
Purchases of property and equipment	(13,239)	(21,468)
Net cash used in investing activities	(13,191)	(21,438)
Cash flows from financing activities
Borrowings on line of credit	9,100	0
Borrowings on long-term debt	0	10,000
Payments on long-term debt	(209)	(137)
Repurchase of common stock	(1,503)	(5,105)
Net cash provided by financing activities	7,388	4,758
Net decrease in cash and cash equivalents	(6,273)	(13,558)
Cash and cash equivalents at beginning of period	21,833	32,133
Cash and cash equivalents at end of period	15,560	18,575
Supplemental disclosures of cash flow information
Interest	507	173
Income taxes	$ 1,321	$ 2,169

XML

Note A - Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

A. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and with applicable rules and regulations. Pursuant to such rules and regulations, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) have been condensed or omitted. In management’s opinion, all adjustments necessary for a fair presentation of the financial position, results of operations, stockholders’ equity, and cash flows have been included and are of a normal, recurring nature. The results of operations for the three and nine months ended March 31, 2023 are not necessarily indicative of the operating results for the full fiscal year or for any future periods.

You should read the financial statements and these notes, which notes are an integral part of the financial statements, together with our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022 (“2022 Annual Report”). The accounting policies used to prepare the financial statements included in this Report are the same policies described in the notes to the consolidated financial statements in our 2022 Annual Report unless otherwise noted below.

Recently Adopted Accounting Pronouncements

We did not adopt any accounting pronouncements during the three and nine months ended March 31, 2023.

Recently Issued Accounting and Regulatory Pronouncements

Other recently issued accounting pronouncements are not discussed in this Report as such pronouncements did not have, and are not believed by management to have, a material impact on our present or future financial statements.

Net (Loss) Income per Common Share

We compute net income per common share using the weighted average number of common shares outstanding during the period, and diluted net income per common share using the additional dilutive effect of all dilutive securities. The dilutive impact of unvested restricted shares account for the additional weighted average shares of common stock outstanding for our diluted net income per common share computation. We calculated basic and diluted net (loss) income per common share as follows (in thousands, except per share data):

	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2023			2022		2023		2022
Numerator
Net (loss) income	$	(2,381	)	$	2,504	$	485	$	7,607
Denominator
Basic weighted average common shares outstanding		5,816			6,003		5,867		6,168
Dilutive effect of restricted stock		—			38		18		48
Diluted weighted average common shares outstanding		5,816			6,041		5,885		6,216
Basic net (loss) income per common share	$	(0.41	)	$	0.42	$	0.08	$	1.23
Diluted net (loss) income per common share	$	(0.41	)	$	0.41	$	0.08	$	1.22

We exclude the impact of restricted stock from the calculation of diluted net loss per common share in periods where we have a net loss or when their inclusion would be antidilutive. During the three months ended March 31, 2023, we excluded 227,082 shares of restricted stock. During the nine months ended March 31, 2023, we excluded 151,585 shares of restricted stock. During the three and nine months ended March 31, 2022, we excluded 126,850 shares of restricted stock.

Revenue Recognition

We record revenue based on a five-step model which includes: (1) identifying a contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price among the performance obligations; and (5) recognizing revenue as each of the various performance obligations are satisfied.

Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling one or more performance obligations. We identify purchase orders from customers as contracts. The amount of consideration expected to be received and revenue recognized includes estimates of variable consideration, including estimates for early payment discounts and volume rebates. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. We review and update these estimates at the end of each reporting period and the impact of any adjustments is recognized in the period the adjustments are identified. In assessing whether collection of consideration from a customer is probable, we consider both the customer's ability and intent to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, which is typically 30 days from the invoice date. Invoices are generally issued on the date of transfer of control of the products ordered to the customer.

Revenue is recognized at the point in time that each of our performance obligations is fulfilled, and control of the ordered products is transferred to the customer. This transfer occurs when the product is shipped, or in some cases, when the product is delivered to the customer.

We recognize revenue in certain circumstances before delivery to the customer has occurred (commonly referred to as bill-and-hold transactions). Products sold under bill-and-hold arrangements are recorded as revenue when risk of ownership has been transferred to the customer, but the product has not shipped due to a substantive reason, typically at the customer’s request. The product must be separately identified as belonging to the customer, ready for physical transfer to the customer, and we cannot have the ability to redirect the product to another customer.

We provide early payment discounts to certain customers. Based on historical payment trends, we expect that these customers will take advantage of these early payment discounts. The cost of these discounts is reported as a reduction to the transaction price. If the actual discounts differ from those estimated, the difference is also reported as a change in the transaction price. We require prepayment from certain customers. We record any payments received in advance of contract fulfillment as a contract liability and they are classified as customer deposits on the consolidated balance sheet.

Contract liabilities and revenue recognized were as follows (in thousands):

	June 30, 2022		Additions		Revenue Recognized			Customer Refunds			March 31, 2023
Contract Liabilities (Customer Deposits)	$	140	$	326	$	(137	)	$	(3	)	$	326

	June 30, 2021		Additions		Revenue Recognized			Customer Refunds		March 31, 2022
Contract Liabilities (Customer Deposits)	$	1,721	$	372	$	(1,721	)	$	—	$	372

Except for product defects, no right of return exists on the sale of our products. We estimate returns based on historical experience and recognize a returns liability for any estimated returns. As of March 31, 2023, we have no estimated returns liability.

We currently own certain U.S. patents, and each patent’s corresponding foreign patent applications. All of these patents and patent rights relate to the ingredient known as beta-alanine marketed and sold under our CarnoSyn® and SR CarnoSyn® trade names. We recorded beta-alanine raw material sales and royalty and licensing income as a component of revenue in the amount of $2.3 million during the three months ended March 31, 2023, and $5.2 million during the nine months ended March 31, 2023. We similarly recorded $4.8 million during the three months ended March 31, 2022, and $13.5 million during the nine months ended March 31, 2022. These royalty income and raw material sale amounts resulted in royalty expense paid to the original patent holders from whom NAI acquired its patents and patent rights. We recognized royalty expense as a component of cost of goods sold in the amount of $107,000 during the three months ended March 31, 2023, and $213,000 during the nine months ended March 31, 2023. We recorded $200,000 of royalty expense during the three months ended March 31, 2022, and $600,000 during the nine months ended March 31, 2022.

Stock-Based Compensation

The Board of Directors approved our current omnibus equity incentive plan that became effective January 1, 2021 (the “2020 Plan”), which was approved by our stockholders at the Annual Meeting of Stockholders on December 4, 2020. Under the 2020 Plan, we may grant nonqualified and incentive stock options, restricted stock grants, restricted stock units, stock appreciation rights, and other stock-based awards to employees, non-employee directors and consultants.

We did not have any option activity or options outstanding during the three and nine month periods ended March 31, 2023 or March 31, 2022.

During the three and nine months ended March 31, 2023, we granted a total of 118,000 restricted stock shares to members of our Board of Directors and certain key members of our management team. During the three months ended March 31, 2022, we granted a total of 126,850 restricted stock shares to members of our Board of Directors and certain key members of our management team. During the three and nine months ended March 31, 2023, 5,999 restricted stock shares were forfeited. During the three months ended March 31, 2022, 1,400 restricted stock shares were forfeited. During the nine months ended March 31, 2022, 19,832 restricted stock shares were forfeited. Our net income included stock-based compensation expense with the vesting of prior restricted stock grants of approximately $0.3 million for the three months ended March 31, 2023 and $0.7 million for the nine month ended March 31, 2023. Our net income included stock based compensation expense in connection with the vesting of prior restricted stock grants of approximately $0.3 million for the three months ended March 31, 2022 and $0.7 million for the nine months ended March 31, 2022.

Deferred Compensation Plan

Effective July 16, 2020, the Board of Directors approved and adopted a Non-Qualified Incentive Plan (the “Incentive Plan”). Pursuant to the Incentive Plan, the Human Resources Committee and the Board of Directors may make deferred cash payments or other cash awards (“Awards”) to directors, officers, employees and eligible consultants of NAI (“Participants”). These Awards are made subject to conditions precedent that must be met before NAI is obligated to make the payment. The purpose of the Incentive Plan is to enhance the long-term stockholder value of NAI by providing the Human Resources Committee and the Board of Directors the ability to make deferred cash payments or other cash awards to encourage Participants to serve NAI or to remain in the service of NAI, or to assist NAI to achieve results determined by the Human Resources Committee or the Board of Directors to be in NAI's best interest.

The Incentive Plan authorizes the Human Resources Committee or the Board of Directors to grant to, and administer, unsecured and deferred cash Awards to Participants and to subject each Award to whatever conditions are determined appropriate by the Human Resources Committee or the Board of Directors. The terms of each Award, including the amount and any conditions that must be met to be entitled to payment of the Award are set forth in an Award Agreement between each Participant and NAI. The Incentive Plan provides the Board of Directors with the discretion to set aside assets to fund the Incentive Plan although that has not been done to date.

During the three and nine months ended March 31, 2023, we granted a total of $0.6 million in deferred cash awards to members of our Board of Directors and certain key members of our management team. During the three and nine months ended March 31, 2022, we granted a total of $0.3 million in deferred cash awards to members of our Board of Directors and certain key members of our management team. Each deferred cash award provides for three equal cash payments to the applicable Participant to be paid on the one year, two year, and three year anniversaries of the date of the grant of such Awards, (the “Award Date”); provided on the date of each payment (the “Payment Date”), the Participant has been since Award Date, and continues to be through the Payment Date, a member of our Board of Directors or an employee of NAI. In the event a Participant ceases to be an employee of NAI or a member of our Board of Directors prior to any Payment Date, no further payments are to be made in connection with the Award.

No deferred cash awards were forfeited during the three and nine month periods ended March 31, 2023. No deferred cash awards were forfeited during the three months ended March 31, 2022. Awards totaling $191,000 were forfeited during the nine months ended March 31, 2022.

Fair Value of Financial Instruments

Except for cash and cash equivalents, as of March 31, 2023, and June 30, 2022, we did not have any financial assets or liabilities classified as Level 1. We classify derivative forward exchange and interest rate swap contracts as Level 2 assets and liabilities. The fair values were determined by obtaining pricing from our bank and corroborating those values with a third party bank or pricing service.

Fair value of derivative instruments classified as Level 2 assets and liabilities consisted of the following (in thousands):

	March 31, 2023		June 30, 2022
Euro Forward Contract– Current Assets	$	593	$	3,144
Swiss Franc Forward Contract – Current Assets		318		109
Total Derivative Contracts – Current Assets		911		3,253
Interest Swap – Other noncurrent Assets		542		453
Euro Forward Contract– Other noncurrent Assets		—		561
Total Derivative Contracts – Other noncurrent Assets		542		1,014
Euro Forward Contract– Current Liabilities	$		$	—
Swiss Franc Forward Contract – Current Liabilities		—		—
Total Derivative Contracts – Current Liabilities				—
Fair Value Net Asset – all Derivative Contracts	$	1,453	$	4,267

We also classify any outstanding line of credit and term loan balance as a Level 2 liability. As of March 31, 2023, and June 30, 2022, we did not have any financial assets or liabilities classified as Level 3. We did not transfer any assets or liabilities between these levels during fiscal 2022 or the three and nine months ended March 31, 2023. 

XML

Note B - Inventories, Net

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Inventory Disclosure [Text Block]

B. Inventories, net

Inventories, net consisted of the following (in thousands):

	March 31, 2023			June 30, 2022
Raw materials	$	24,880		$	28,196
Work in progress		6,955			1,948
Finished goods		8,117			2,842
Reserve		(643	)		(511	)
	$	39,309		$	32,475

XML

Note C - Property and Equipment

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

C. Property and Equipment

Property and equipment consisted of the following (in thousands):

	Depreciable Life In Years			March 31, 2023			June 30, 2022
Land	NA			$	7,645		$	7,645
Building and building improvements	7	–	39		25,817			17,415
Machinery and equipment	3	–	12		41,715			40,131
Office equipment and furniture	3	–	5		6,288			5,970
Vehicles		3			265			211
Leasehold improvements	1	–	15		22,540			21,626
Total property and equipment					104,270			92,998
Less: accumulated depreciation and amortization					(49,513	)		(48,425	)
Property and equipment, net				$	54,757		$	44,573

Depreciation expense was approximately $1.0 million during the three months ended March 31, 2023 and $3.1 million for the nine months ended March 31, 2023. Depreciation expense was approximately $1.2 million during the three months ended March 31, 2022 and $3.3 million for the nine months ended March 31, 2022. Construction in progress is included in the building and building improvements line.

XML

Note D - Other Comprehensive (Loss) Income

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

D. Other Comprehensive (Loss) Income

Other comprehensive (loss) income ( “OCL” and “OCI”) consisted of the following during the three and nine months ended March 31, 2023 and March 31, 2022 (in thousands):

	Three Months Ended
	March 31, 2023
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative			Total
Beginning Balance	$	(444	)	$	391		$	488		$	435
OCI/OCL before reclassifications		—			713			(90	)		623
Amounts reclassified from OCI to Sales		—			(1,181	)		—			(1,181	)
Tax effect of OCI activity		—			122			79			201
Net current period OCI/OCL		—			(346	)		(11	)		(357	)
Ending Balance	$	(444	)	$	45		$	477		$	78

	Nine Months Ended
	March 31, 2023
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative		Total
Beginning Balance	$	(444	)	$	1,795		$	348	$	1,699
OCI/OCL before reclassifications		—			1,328			88		1,416
Amounts reclassified from OCI to Sales		—			(3,604	)		41		(3,563	)
Tax effect of OCI activity		—			526			—		526
Net current period OCI/OCL		—			(1,750	)		129		(1,621	)
Ending Balance	$	(444	)	$	45		$	477	$	78

	Three Months Ended
	March 31, 2022
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative			Total
Beginning Balance	$	(538	)	$	1,200		$	62		$	724
OCI/OCL before reclassifications		—			1,064			299			1,363
Amounts reclassified from OCI to Sales		—			(685	)		—			(685	)
Tax effect of OCI activity		—			(120	)		(84	)		(204	)
Net current period OCI/OCL		—			259			215			474
Ending Balance	$	(538	)	$	1,459		$	277		$	1,198

	Nine Months Ended
	March 31, 2022
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative			Total
Beginning Balance	$	(538	)	$	(23	)	$	—		$	(561	)
OCI/OCL before reclassifications		—			3,308			361			3,669
Amounts reclassified from OCI to Sales		—			(1,335	)		—			(1,335	)
Tax effect of OCI activity		—			(491	)		(84	)		(575	)
Net current period OCI/OCL		—			1,482			277			1,759	)
Ending Balance	$	(538	)	$	1,459		$	277		$	1,198

XML

Note E - Leases

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

E. Leases

We currently lease our Vista, CA and Lugano, Switzerland product manufacturing and support facilities.

Leases are classified as operating leases. Substantially all our operating leases are comprised of payments for the use of manufacturing and office space. We have no leases classified as finance leases. As of March 31, 2023, the weighted average remaining lease term for our operating leases was 5.8 years and the weighted average discount rate for our operating leases was 4.15%. As of June 30, 2022, the weighted average remaining lease term for our operating leases was 6.3 years and the weighted average discount rate was 4.12%.

Other information related to leases as of March 31, 2023 and March 31, 2022 was as follows (in thousands):

Supplemental Cash Flows Information	Nine Months Ended March 31, 2023		Nine Months Ended March 31, 2022
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,433	$	2,495
Operating lease liabilities arising from obtaining Right of Use Assets for new leases		—	$	182

XML

Note F - Debt

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

F. Debt

On May 24, 2021, we entered into a new credit facility with Wells Fargo Bank, N.A (“Wells Fargo”) to extend the maturity for our working line of credit from November 1, 2022 to May 24, 2024. This new credit facility provides total lending capacity of up to $20.0 million and allows us to use the credit facility for working capital as well as potential acquisitions. On August 18, 2021, we entered into an amendment of our credit facility with Wells Fargo. The amended credit facility added a $10.0 million term loan to the existing $20.0 million credit facility, and permitted us to use the $10.0 million term loan as part of the $17.5 million purchase consideration for the acquisition of our new manufacturing and warehouse property in Carlsbad, California. The amended credit agreement also increased the allowed capital expenditures from $10.0 million to $15.0 million for fiscal 2022 (exclusive of the amount paid for the acquisition of the new Carlsbad property noted above). In addition, the new credit notes now reflect a change in the interest rate reference from LIBOR to Secured Overnight Financing Rate (SOFR). The Credit Agreement was amended and a new Revolving Line of Credit Note, and Security Agreement were entered into. A Term Note and real property security documents were added to secure the Term Note by the new Carlsbad property. Additionally, we entered into a second amendment to our credit facility with Wells Fargo on February 8, 2022 that was effective January 31, 2022 and modified the annual limit imposed upon our ability to repurchase stock and issue dividends. This amendment increased this limit from $5.0 million annually to $7.0 million annually. Effective September 19, 2022, we entered into a third amendment to our credit facility with Wells Fargo. The third amendment extends the maturity date from May 24, 2024 to May 23, 2025 and also increased the allowed capital expenditures from $7.5 million to $25.0 million for the fiscal year ending June 30, 2023.

Under the terms of the Credit Agreement, borrowings are subject to eligibility requirements including maintaining (i) a ratio of total liabilities to tangible net worth of not greater than 1.50 to 1.0 at any time; (ii) a ratio of total current assets to total current liabilities of not less than 1.75 to 1.0 at each fiscal quarter end (iii) net income after taxes not less than $1.00, determined on a trailing four quarter basis with no two consecutive quarterly losses, determined as of each quarter end and (iv) a rolling 4-quarter fixed charge coverage ratio not less than 1.25 to 1.0 as of each fiscal quarter end. The credit agreement also includes a limitation on the amount of capital expenditures that can be made in a given fiscal year, with such limitation set at $25.0 million for our fiscal year ending June 30, 2023 and $7.5 million for all fiscal years thereafter. Any amounts outstanding under the line of credit will bear interest at a fixed or fluctuating interest rate as elected by us from time to time; provided, however, that if the outstanding principal amount is less than $100,000 such amount shall bear interest at the then applicable fluctuating rate of interest. If elected, the fluctuating rate per annum would be equal to 1.29% above the daily simple SOFR rate as in effect from time to time. If a fixed rate is elected, it would equal a per annum rate of 1.29% above the SOFR rolling 30-day average rate in effect on the first day of the applicable fixed rate term. Any amounts outstanding under the line of credit must be paid in full on or before the maturity date. Amounts outstanding that are subject to a fluctuating interest rate may be prepaid at any time without penalty. Amounts outstanding that are subject to a fixed interest rate may be prepaid at any time in minimum amounts of $100,000, subject to a prepayment fee equal to the sum of the discounted monthly differences between payment under a fixed rate versus payment under the variable rate for each month from the month of prepayment through the month in which the then applicable fixed rate term matures. There is an unused commitment fee of 0.125% required as part of the line of credit.

The Term Note used as part of the purchase consideration of our new manufacturing and warehouse property in Carlsbad, California referenced above, is for the original principal amount of $10.0 million, and is a seven year term note with payments fully amortized based on a twenty five year assumed term. Installment payments under this loan commenced October 1, 2021 and continue through August 1, 2028 with a final installment consisting of all remaining amounts due to be paid in full on September 1, 2028. Amounts outstanding on this note during the term of the agreement will bear interest equal to 1.8% above the SOFR rolling 30-day average. In connection with our term loan, we entered into an interest rate swap with Wells Fargo that effectively fixes our interest rate on our term loan at 2.4% for the first three years of the term of the note.

Our obligations under the Credit Agreement are secured by our accounts receivable and other rights to payment, general intangibles, inventory, equipment and fixtures. We also have credit approval with Wells Fargo Bank, which allows us to hedge foreign currency exposures up to 30 months in the future. We also have credit approval with Bank of America which allows us to hedge foreign currency exposures up to 24 months in the future.

On March 31, 2023, we were in compliance with all of the financial and other covenants required under the Amended Credit Agreement.

As of March 31, 2023, we had $10.9 million available for borrowing under our credit facility with Wells Fargo Bank.

As of March 31, 2023, we had $9.6 million outstanding under the Term Note used in the purchase of the Carlsbad, California warehouse in August 2021.

XML

Note G - Economic Dependency

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

G. Economic Dependency

We had substantial net sales to certain customers during the periods shown in the following table. The loss of any of these customers, or a significant decline in (i) sales to these customers, (ii) the growth rate of sales to these customers, or (iii) these customers’ ability to make payments when due, each individually could have a material adverse impact on our net sales and net income. Net sales to any one customer representing 10% or more of the respective period's consolidated net sales were as follows (in thousands):

	Three Months Ended March 31,					Nine Months Ended March 31,
	2023			2022		2023			2022
Customer 1	$	15,962		$	10,673	$	46,948		$	19,795
Customer 2		9,558			13,846		38,823			40,110
Customer 3	(a		)		6,773	(a		)		22,761
	$	25,520		$	31,292	$	85,771		$	82,666

(a) Sales were less than 10% of the respective period’s total net sales.

Accounts receivable from these customers totaled $5.2 million at March 31, 2023 and $10.7 million at June 30, 2022.

We buy certain products, including beta-alanine, from a limited number of raw material suppliers who meet our quality standards. The loss of any of these suppliers could have a material adverse impact on our net sales and net income. Raw material purchases from any one supplier representing 10% or more of the respective period’s total raw material purchases were as follows (dollars in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Supplier 1	$	3,916		2,946	$	11,394		10,800
	$	3,916		2,946	$	11,394		10,800

XML

Note H - Segment Information

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

H. Segment Information

Our business consists of two segments for financial reporting purposes. The two segments are identified as (i) private-label contract manufacturing, which primarily relates to the provision of private-label contract manufacturing services to companies that market and distribute nutritional supplements and other health care products, and (ii) patent and trademark licensing, which primarily includes direct raw material sales and royalty income from our license and supply agreements associated with the sale and use of beta-alanine under our CarnoSyn® and SR CarnoSyn® trade names.

We evaluate performance of these segments based on a number of factors. The primary performance measures for each segment are net sales and income or loss from operations before the allocation of certain corporate level expenses. Operating income or loss for each segment does not include corporate general and administrative expenses, interest expense and other miscellaneous income and expense items. Corporate general and administrative expenses include, but are not limited to human resources, corporate legal, finance, information technology, and other corporate level related expenses, which are not allocated to any segment. Transfers of raw materials between segments are recorded at cost. The accounting policies of our segments are the same as those described in the summary of significant accounting policies in Note A above and in the consolidated financial statements included in our 2022 Annual Report.

Our operating results by business segment were as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Net Sales
Private label contract manufacturing	$	30,354	$	37,623	$	112,969	$	104,894
Patent and trademark licensing		2,345		4,750		5,152		13,546
Total Net Sales	$	32,699	$	42,373	$	118,121	$	118,440

	Three Months Ended March 31,						Nine Months Ended March 31,
	2023			2022			2023			2022
(Loss) Income from Operations
Private label contract manufacturing	$	(1,243	)	$	3,605		$	6,264		$	10,065
Patent and trademark licensing		790			1,813			1,485			6,206
(Loss) income from operations of reportable segments		(453	)		5,418			7,749			16,271
Corporate expenses not allocated to segments		(2,035	)		(2,144	)		(6,210	)		(6,368	)
Total (Loss) Income from Operations	$	(2,488	)	$	3,274		$	1,539		$	9,903

	March 31, 2023		June 30, 2022
Total Assets
Private-label contract manufacturing	$	113,098	$	115,649
Patent and trademark licensing		30,829		30,354
	$	143,927	$	146,003

Our private-label contract manufacturing products are sold both in the U.S. and in markets outside the U.S., including Europe, Canada, Australia, New Zealand, Mexico, and Asia. Our primary markets outside the U.S. are Europe and Asia. Our patent and trademark licensing activities are primarily based in the U.S.

Net sales by geographic region, based on the customers’ location, were as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
United States	$	24,254	$	29,382	$	82,995	$	78,279
Markets outside of the United States		8,445		12,991		35,126		40,161
Total	$	32,699	$	42,373	$	118,121	$	118,440

Products manufactured by our Swiss subsidiary ("NAIE") accounted for 81% of net sales in markets outside the U.S. for the three months ended March 31, 2023 and 76% for the nine months ended March 31, 2023. Products manufactured by our Swiss subsidiary ("NAIE") accounted for 85% of net sales in markets outside the U.S. for the three months ended March 31, 2022 and 84% for the nine months ended March 31, 2022.

Long-lived assets by geographic region, based on the location of the company or subsidiary at which they were located or made, were as follows (in thousands):

	March 31, 2023		June 30, 2022
United States	$	54,305	$	43,769
Europe		20,411		22,505
Total Long-Lived Assets	$	74,716	$	66,274

Total assets by geographic region, based on the location of the company or subsidiary at which they were located or made, were as follows (in thousands):

	March 31, 2023		June 30, 2022
United States	$	92,149	$	83,443
Europe		51,778		62,560
Total Assets	$	143,927	$	146,003

Capital expenditures by geographic region, based on the location of the company or subsidiary at which they were located or made, were as follows (in thousands):

	Nine Months Ended March 31,
	2023		2022
United States	$	12,983	$	20,766
Europe		256		702
Total Capital Expenditures	$	13,239	$	21,468

XML

Note I - Income Taxes

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

I. Income Taxes

To determine our quarterly provision for income taxes, we use an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions to which we are subject. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rate from quarter to quarter. We recognize interest and penalties related to uncertain tax positions, if any, as an income tax expense.

Our effective tax rate for the three months ended March 31, 2023 was 14.6% and our effective tax rate for the three months ended March 31, 2022 was 21.4%. Our effective tax rate for the nine months ended March 31, 2023 was 40.6% and our effective tax rate for the nine months ended March 31, 2022 was 22.2%. Our effective tax rates for the three and nine months ended March 31, 2023 differ from the fiscal 2023 U.S. federal statutory rate of 21% primarily due to due to foreign income tax rate differential, the recognition of a prior year bad debt reserve as a tax loss in the current year, the timing of other forecasted permanent tax items, and discrete tax items related to employee stock vesting and return-to-provision adjustments. Our effective tax rates for the three and nine months ended March 31, 2022 differ from the fiscal 2022 U.S. federal statutory rate of 21% primarily due to foreign income tax rate differential and other tax credits.

We record valuation allowances to reduce our deferred tax assets to an amount we believe is more likely than not to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. During the three and nine months ended March 31, 2023, there was no change to our valuation allowance for our deferred tax assets.

XML

Note J - Treasury Stock

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Equity [Text Block]

J. Treasury Stock

We purchase shares under a stock repurchase plan (“Repurchase Plan”) authorized by the Board of Directors. On December 2, 2022, the Board of Directors authorized a $1.0 million increase to the Repurchase Plan, thus bringing the total authorized repurchase to $19.0 million. Under the Repurchase Plan, we may, from time to time, purchase shares of our common stock, depending upon market conditions, in open market or privately negotiated transactions.

Stock repurchases for the three months ended March 31, 2023 were as follows:

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		25,447	$	9.23	$	235
Shares acquired from employees for restricted stock vesting		23,587		8.86		209
Total		49,034			$	444

Stock repurchases for the nine months ended March 31, 2023 were as follows:

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		140,812	$	9.19	$	1,294
Shares acquired from employees for restricted stock vesting		23,587		8.86		209
Total		164,399			$	1,503

Stock repurchases for the three months ended March 31, 2022 were as follows:

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		179,810	$	12.62	$	2,269
Shares acquired from employees for restricted stock vesting		27,161		11.00		299
Total		206,971			$	2,568

Stock repurchases for the nine months ended March 31, 2022 were as follows:

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		369,512	$	12.98	$	4,796
Shares acquired from employees for restricted stock vesting		27,853		11.08		309
Total		397,365			$	5,105

Stock repurchase costs include commissions and fees.

Shares acquired from employees for restricted stock vesting were returned to us by the related employees and in return we paid each employee’s required tax withholding resulting from the vesting of restricted shares. The valuation of the shares acquired and thereby the number of shares returned to us was calculated based on the closing share price on the date the shares vested.

XML

Note K - Derivatives and Hedging

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

K. Derivatives and Hedging

We are exposed to gains and losses resulting from fluctuations in foreign currency exchange rates relating to forecasted product sales denominated in foreign currencies and to other transactions of NAIE, our foreign subsidiary. As part of our overall strategy to manage the level of exposure to the risk of fluctuations in foreign currency exchange rates, we may use foreign exchange contracts in the form of forward contracts. To the extent we enter into such contracts, there can be no guarantee any such contracts will be effective hedges against our foreign currency exchange risk.

As of March 31, 2023, we had forward contracts designated as cash flow hedges primarily to protect against the foreign exchange risks inherent in our forecasted sales of products at prices denominated in currencies other than the U.S. Dollar. These contracts are expected to be settled through September 2024. For derivative instruments that are designated and qualify as cash flow hedges, we record the effective portion of the gain or loss on the derivative in accumulated other comprehensive income (“OCI”) as a separate component of stockholders’ equity and subsequently reclassify these amounts into earnings in the period during which the hedged transaction is recognized in earnings.

For foreign currency contracts designated as cash flow hedges, hedge effectiveness is measured using the spot rate. Changes in the spot-forward differential are excluded from the test of hedge effectiveness and are recorded currently in earnings as revenue. We measure effectiveness by comparing the cumulative change in the hedge contract with the cumulative change in the hedged item. No hedging relationships were terminated as a result of ineffective hedging for the three and nine months ended March 31, 2023 and March 31, 2022.

We monitor the probability of forecasted transactions as part of the hedge effectiveness testing on a quarterly basis. During the three and nine months ended March 31, 2023 and March 31, 2022, we did not have any losses or gains related to the ineffective portion of our hedging instruments.

As of March 31, 2023, the notional amounts of our foreign exchange contracts designated as cash flow hedges were approximately $24.0 million (EUR 21.4 million). As of March 31, 2023, a net gain of approximately $50,000, offset by $6,000 of deferred taxes, related to derivative instruments designated as cash flow hedges was recorded in OCI. It is expected that $50,000 will be reclassified into earnings in the next 12 months along with the earnings effects of the related forecasted transactions.

For foreign currency contracts not designated as cash flow hedges, changes in the fair value of the hedge are recorded directly to foreign exchange gain or loss in other income in an effort to offset the change in valuation of the underlying hedged item. During the three and nine months ended March 31, 2023, we entered into forward contracts in order to hedge foreign exchange risk associated with our lease liability at NAIE, which is denominated in Swiss Francs (CHF). As of March 31, 2023, the notional amounts of our foreign exchange contracts not designated as cash flow hedges were approximately $12.2 million (CHF 11.4 million).

We are exposed to interest rate fluctuations related to our $10.0 million Term Note with Wells Fargo, which carries a variable interest rate of 1.80% above the SOFR rolling 30-day average. To manage our exposure to this variable rate, on August 23, 2021, we entered into a floored interest rate swap that fixes our all-in rate on this loan to 2.4% for the first three years of the term loan. Fluctuations in the relation of our contractual swap rate to current market rates are recorded as an asset or liability with an offset to OCI at the end of each reporting period. Interest expense is adjusted for the difference between the actual SOFR spread and the swap contractual rate such that our effective interest expense for each period is equal to our hedged rate of 2.4%.

XML

Note L - Contingencies

9 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Legal Matters and Contingencies [Text Block]

L. Contingencies

From time to time, we become involved in various investigations, claims and legal proceedings that arise in the ordinary course of our business. These matters may relate to product liability, employment, intellectual property, regulatory, contract or other matters. The resolution of these matters as they arise may be subject to various uncertainties and, even if such claims are without merit, could result in the expenditure of significant financial and managerial resources. While unfavorable outcomes are possible, based on available information, we currently do not believe the resolution of these matters will result in a material adverse effect on our business, consolidated financial condition, or results of operations. However, a settlement payment or unfavorable outcome could be greater than we currently anticipate and if so, could adversely impact our results of operations. Our evaluation of the likely impact of these actions could change in the future and we could have unfavorable outcomes we do not expect.

COVID-19 Pandemic

We continue to monitor and evaluate the risks to public health and the impact on overall global business activity related to the COVID-19 pandemic, including its potential impacts on our employees, customers, suppliers and financial results. As the situation remains fluid, it is difficult to predict the duration and scope of the pandemic and its impact on our business. However, it may result in a material adverse impact to our financial position, operations and cash flows if conditions persist or worsen.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

We did not adopt any accounting pronouncements during the three and nine months ended March 31, 2023.

Recently Issued Accounting and Regulatory Pronouncements

Other recently issued accounting pronouncements are not discussed in this Report as such pronouncements did not have, and are not believed by management to have, a material impact on our present or future financial statements.

Earnings Per Share, Policy [Policy Text Block]

Net (Loss) Income per Common Share

We compute net income per common share using the weighted average number of common shares outstanding during the period, and diluted net income per common share using the additional dilutive effect of all dilutive securities. The dilutive impact of unvested restricted shares account for the additional weighted average shares of common stock outstanding for our diluted net income per common share computation. We calculated basic and diluted net (loss) income per common share as follows (in thousands, except per share data):

	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2023			2022		2023		2022
Numerator
Net (loss) income	$	(2,381	)	$	2,504	$	485	$	7,607
Denominator
Basic weighted average common shares outstanding		5,816			6,003		5,867		6,168
Dilutive effect of restricted stock		—			38		18		48
Diluted weighted average common shares outstanding		5,816			6,041		5,885		6,216
Basic net (loss) income per common share	$	(0.41	)	$	0.42	$	0.08	$	1.23
Diluted net (loss) income per common share	$	(0.41	)	$	0.41	$	0.08	$	1.22

We exclude the impact of restricted stock from the calculation of diluted net loss per common share in periods where we have a net loss or when their inclusion would be antidilutive. During the three months ended March 31, 2023, we excluded 227,082 shares of restricted stock. During the nine months ended March 31, 2023, we excluded 151,585 shares of restricted stock. During the three and nine months ended March 31, 2022, we excluded 126,850 shares of restricted stock.

Revenue [Policy Text Block]

Revenue Recognition

We record revenue based on a five-step model which includes: (1) identifying a contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price among the performance obligations; and (5) recognizing revenue as each of the various performance obligations are satisfied.

Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling one or more performance obligations. We identify purchase orders from customers as contracts. The amount of consideration expected to be received and revenue recognized includes estimates of variable consideration, including estimates for early payment discounts and volume rebates. Such estimates are calculated using historical averages adjusted for any expected changes due to current business conditions and experience. We review and update these estimates at the end of each reporting period and the impact of any adjustments is recognized in the period the adjustments are identified. In assessing whether collection of consideration from a customer is probable, we consider both the customer's ability and intent to pay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, which is typically 30 days from the invoice date. Invoices are generally issued on the date of transfer of control of the products ordered to the customer.

Revenue is recognized at the point in time that each of our performance obligations is fulfilled, and control of the ordered products is transferred to the customer. This transfer occurs when the product is shipped, or in some cases, when the product is delivered to the customer.

We recognize revenue in certain circumstances before delivery to the customer has occurred (commonly referred to as bill-and-hold transactions). Products sold under bill-and-hold arrangements are recorded as revenue when risk of ownership has been transferred to the customer, but the product has not shipped due to a substantive reason, typically at the customer’s request. The product must be separately identified as belonging to the customer, ready for physical transfer to the customer, and we cannot have the ability to redirect the product to another customer.

We provide early payment discounts to certain customers. Based on historical payment trends, we expect that these customers will take advantage of these early payment discounts. The cost of these discounts is reported as a reduction to the transaction price. If the actual discounts differ from those estimated, the difference is also reported as a change in the transaction price. We require prepayment from certain customers. We record any payments received in advance of contract fulfillment as a contract liability and they are classified as customer deposits on the consolidated balance sheet.

Contract liabilities and revenue recognized were as follows (in thousands):

	June 30, 2022		Additions		Revenue Recognized			Customer Refunds			March 31, 2023
Contract Liabilities (Customer Deposits)	$	140	$	326	$	(137	)	$	(3	)	$	326

	June 30, 2021		Additions		Revenue Recognized			Customer Refunds		March 31, 2022
Contract Liabilities (Customer Deposits)	$	1,721	$	372	$	(1,721	)	$	—	$	372

Except for product defects, no right of return exists on the sale of our products. We estimate returns based on historical experience and recognize a returns liability for any estimated returns. As of March 31, 2023, we have no estimated returns liability.

We currently own certain U.S. patents, and each patent’s corresponding foreign patent applications. All of these patents and patent rights relate to the ingredient known as beta-alanine marketed and sold under our CarnoSyn® and SR CarnoSyn® trade names. We recorded beta-alanine raw material sales and royalty and licensing income as a component of revenue in the amount of $2.3 million during the three months ended March 31, 2023, and $5.2 million during the nine months ended March 31, 2023. We similarly recorded $4.8 million during the three months ended March 31, 2022, and $13.5 million during the nine months ended March 31, 2022. These royalty income and raw material sale amounts resulted in royalty expense paid to the original patent holders from whom NAI acquired its patents and patent rights. We recognized royalty expense as a component of cost of goods sold in the amount of $107,000 during the three months ended March 31, 2023, and $213,000 during the nine months ended March 31, 2023. We recorded $200,000 of royalty expense during the three months ended March 31, 2022, and $600,000 during the nine months ended March 31, 2022.

Share-Based Payment Arrangement [Policy Text Block]

Stock-Based Compensation

The Board of Directors approved our current omnibus equity incentive plan that became effective January 1, 2021 (the “2020 Plan”), which was approved by our stockholders at the Annual Meeting of Stockholders on December 4, 2020. Under the 2020 Plan, we may grant nonqualified and incentive stock options, restricted stock grants, restricted stock units, stock appreciation rights, and other stock-based awards to employees, non-employee directors and consultants.

We did not have any option activity or options outstanding during the three and nine month periods ended March 31, 2023 or March 31, 2022.

During the three and nine months ended March 31, 2023, we granted a total of 118,000 restricted stock shares to members of our Board of Directors and certain key members of our management team. During the three months ended March 31, 2022, we granted a total of 126,850 restricted stock shares to members of our Board of Directors and certain key members of our management team. During the three and nine months ended March 31, 2023, 5,999 restricted stock shares were forfeited. During the three months ended March 31, 2022, 1,400 restricted stock shares were forfeited. During the nine months ended March 31, 2022, 19,832 restricted stock shares were forfeited. Our net income included stock-based compensation expense with the vesting of prior restricted stock grants of approximately $0.3 million for the three months ended March 31, 2023 and $0.7 million for the nine month ended March 31, 2023. Our net income included stock based compensation expense in connection with the vesting of prior restricted stock grants of approximately $0.3 million for the three months ended March 31, 2022 and $0.7 million for the nine months ended March 31, 2022.

Compensation Related Costs, Policy [Policy Text Block]

Deferred Compensation Plan

Effective July 16, 2020, the Board of Directors approved and adopted a Non-Qualified Incentive Plan (the “Incentive Plan”). Pursuant to the Incentive Plan, the Human Resources Committee and the Board of Directors may make deferred cash payments or other cash awards (“Awards”) to directors, officers, employees and eligible consultants of NAI (“Participants”). These Awards are made subject to conditions precedent that must be met before NAI is obligated to make the payment. The purpose of the Incentive Plan is to enhance the long-term stockholder value of NAI by providing the Human Resources Committee and the Board of Directors the ability to make deferred cash payments or other cash awards to encourage Participants to serve NAI or to remain in the service of NAI, or to assist NAI to achieve results determined by the Human Resources Committee or the Board of Directors to be in NAI's best interest.

The Incentive Plan authorizes the Human Resources Committee or the Board of Directors to grant to, and administer, unsecured and deferred cash Awards to Participants and to subject each Award to whatever conditions are determined appropriate by the Human Resources Committee or the Board of Directors. The terms of each Award, including the amount and any conditions that must be met to be entitled to payment of the Award are set forth in an Award Agreement between each Participant and NAI. The Incentive Plan provides the Board of Directors with the discretion to set aside assets to fund the Incentive Plan although that has not been done to date.

During the three and nine months ended March 31, 2023, we granted a total of $0.6 million in deferred cash awards to members of our Board of Directors and certain key members of our management team. During the three and nine months ended March 31, 2022, we granted a total of $0.3 million in deferred cash awards to members of our Board of Directors and certain key members of our management team. Each deferred cash award provides for three equal cash payments to the applicable Participant to be paid on the one year, two year, and three year anniversaries of the date of the grant of such Awards, (the “Award Date”); provided on the date of each payment (the “Payment Date”), the Participant has been since Award Date, and continues to be through the Payment Date, a member of our Board of Directors or an employee of NAI. In the event a Participant ceases to be an employee of NAI or a member of our Board of Directors prior to any Payment Date, no further payments are to be made in connection with the Award.

No deferred cash awards were forfeited during the three and nine month periods ended March 31, 2023. No deferred cash awards were forfeited during the three months ended March 31, 2022. Awards totaling $191,000 were forfeited during the nine months ended March 31, 2022.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value of Financial Instruments

Except for cash and cash equivalents, as of March 31, 2023, and June 30, 2022, we did not have any financial assets or liabilities classified as Level 1. We classify derivative forward exchange and interest rate swap contracts as Level 2 assets and liabilities. The fair values were determined by obtaining pricing from our bank and corroborating those values with a third party bank or pricing service.

Fair value of derivative instruments classified as Level 2 assets and liabilities consisted of the following (in thousands):

	March 31, 2023		June 30, 2022
Euro Forward Contract– Current Assets	$	593	$	3,144
Swiss Franc Forward Contract – Current Assets		318		109
Total Derivative Contracts – Current Assets		911		3,253
Interest Swap – Other noncurrent Assets		542		453
Euro Forward Contract– Other noncurrent Assets		—		561
Total Derivative Contracts – Other noncurrent Assets		542		1,014
Euro Forward Contract– Current Liabilities	$		$	—
Swiss Franc Forward Contract – Current Liabilities		—		—
Total Derivative Contracts – Current Liabilities				—
Fair Value Net Asset – all Derivative Contracts	$	1,453	$	4,267

We also classify any outstanding line of credit and term loan balance as a Level 2 liability. As of March 31, 2023, and June 30, 2022, we did not have any financial assets or liabilities classified as Level 3. We did not transfer any assets or liabilities between these levels during fiscal 2022 or the three and nine months ended March 31, 2023. 

XML

Note A - Basis of Presentation and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Mar. 31, 2023

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2023			2022		2023		2022
Numerator
Net (loss) income	$	(2,381	)	$	2,504	$	485	$	7,607
Denominator
Basic weighted average common shares outstanding		5,816			6,003		5,867		6,168
Dilutive effect of restricted stock		—			38		18		48
Diluted weighted average common shares outstanding		5,816			6,041		5,885		6,216
Basic net (loss) income per common share	$	(0.41	)	$	0.42	$	0.08	$	1.23
Diluted net (loss) income per common share	$	(0.41	)	$	0.41	$	0.08	$	1.22

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]

	June 30, 2022		Additions		Revenue Recognized			Customer Refunds			March 31, 2023
Contract Liabilities (Customer Deposits)	$	140	$	326	$	(137	)	$	(3	)	$	326

	June 30, 2021		Additions		Revenue Recognized			Customer Refunds		March 31, 2022
Contract Liabilities (Customer Deposits)	$	1,721	$	372	$	(1,721	)	$	—	$	372

Fair Value, by Balance Sheet Grouping [Table Text Block]

	March 31, 2023		June 30, 2022
Euro Forward Contract– Current Assets	$	593	$	3,144
Swiss Franc Forward Contract – Current Assets		318		109
Total Derivative Contracts – Current Assets		911		3,253
Interest Swap – Other noncurrent Assets		542		453
Euro Forward Contract– Other noncurrent Assets		—		561
Total Derivative Contracts – Other noncurrent Assets		542		1,014
Euro Forward Contract– Current Liabilities	$		$	—
Swiss Franc Forward Contract – Current Liabilities		—		—
Total Derivative Contracts – Current Liabilities				—
Fair Value Net Asset – all Derivative Contracts	$	1,453	$	4,267

XML

Note B - Inventories, Net (Tables)

9 Months Ended

Mar. 31, 2023

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	March 31, 2023			June 30, 2022
Raw materials	$	24,880		$	28,196
Work in progress		6,955			1,948
Finished goods		8,117			2,842
Reserve		(643	)		(511	)
	$	39,309		$	32,475

XML

Note C - Property and Equipment (Tables)

9 Months Ended

Mar. 31, 2023

Notes Tables

Property, Plant and Equipment [Table Text Block]

	Depreciable Life In Years			March 31, 2023			June 30, 2022
Land	NA			$	7,645		$	7,645
Building and building improvements	7	–	39		25,817			17,415
Machinery and equipment	3	–	12		41,715			40,131
Office equipment and furniture	3	–	5		6,288			5,970
Vehicles		3			265			211
Leasehold improvements	1	–	15		22,540			21,626
Total property and equipment					104,270			92,998
Less: accumulated depreciation and amortization					(49,513	)		(48,425	)
Property and equipment, net				$	54,757		$	44,573

XML

Note D - Other Comprehensive (Loss) Income (Tables)

9 Months Ended

Mar. 31, 2023

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Three Months Ended
	March 31, 2023
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative			Total
Beginning Balance	$	(444	)	$	391		$	488		$	435
OCI/OCL before reclassifications		—			713			(90	)		623
Amounts reclassified from OCI to Sales		—			(1,181	)		—			(1,181	)
Tax effect of OCI activity		—			122			79			201
Net current period OCI/OCL		—			(346	)		(11	)		(357	)
Ending Balance	$	(444	)	$	45		$	477		$	78

	Nine Months Ended
	March 31, 2023
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative		Total
Beginning Balance	$	(444	)	$	1,795		$	348	$	1,699
OCI/OCL before reclassifications		—			1,328			88		1,416
Amounts reclassified from OCI to Sales		—			(3,604	)		41		(3,563	)
Tax effect of OCI activity		—			526			—		526
Net current period OCI/OCL		—			(1,750	)		129		(1,621	)
Ending Balance	$	(444	)	$	45		$	477	$	78

	Three Months Ended
	March 31, 2022
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative			Total
Beginning Balance	$	(538	)	$	1,200		$	62		$	724
OCI/OCL before reclassifications		—			1,064			299			1,363
Amounts reclassified from OCI to Sales		—			(685	)		—			(685	)
Tax effect of OCI activity		—			(120	)		(84	)		(204	)
Net current period OCI/OCL		—			259			215			474
Ending Balance	$	(538	)	$	1,459		$	277		$	1,198

	Nine Months Ended
	March 31, 2022
	Defined			Unrealized Gains			Unrealized Gains
	Benefit			(Losses) on			(Losses) on
	Pension			Cash Flow			Swap
	Plan			Hedges			Derivative			Total
Beginning Balance	$	(538	)	$	(23	)	$	—		$	(561	)
OCI/OCL before reclassifications		—			3,308			361			3,669
Amounts reclassified from OCI to Sales		—			(1,335	)		—			(1,335	)
Tax effect of OCI activity		—			(491	)		(84	)		(575	)
Net current period OCI/OCL		—			1,482			277			1,759	)
Ending Balance	$	(538	)	$	1,459		$	277		$	1,198

XML

Note E - Leases (Tables)

9 Months Ended

Mar. 31, 2023

Notes Tables

Lease, Cost [Table Text Block]

Supplemental Cash Flows Information	Nine Months Ended March 31, 2023		Nine Months Ended March 31, 2022
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,433	$	2,495
Operating lease liabilities arising from obtaining Right of Use Assets for new leases		—	$	182

XML

Note G - Economic Dependency (Tables)

9 Months Ended

Mar. 31, 2023

Supplier Concentration Risk [Member]

Notes Tables

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Supplier 1	$	3,916		2,946	$	11,394		10,800
	$	3,916		2,946	$	11,394		10,800

Customer Concentration Risk [Member]

Notes Tables

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Three Months Ended March 31,					Nine Months Ended March 31,
	2023			2022		2023			2022
Customer 1	$	15,962		$	10,673	$	46,948		$	19,795
Customer 2		9,558			13,846		38,823			40,110
Customer 3	(a		)		6,773	(a		)		22,761
	$	25,520		$	31,292	$	85,771		$	82,666

XML

Note H - Segment Information (Tables)

9 Months Ended

Mar. 31, 2023

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Net Sales
Private label contract manufacturing	$	30,354	$	37,623	$	112,969	$	104,894
Patent and trademark licensing		2,345		4,750		5,152		13,546
Total Net Sales	$	32,699	$	42,373	$	118,121	$	118,440

	Three Months Ended March 31,						Nine Months Ended March 31,
	2023			2022			2023			2022
(Loss) Income from Operations
Private label contract manufacturing	$	(1,243	)	$	3,605		$	6,264		$	10,065
Patent and trademark licensing		790			1,813			1,485			6,206
(Loss) income from operations of reportable segments		(453	)		5,418			7,749			16,271
Corporate expenses not allocated to segments		(2,035	)		(2,144	)		(6,210	)		(6,368	)
Total (Loss) Income from Operations	$	(2,488	)	$	3,274		$	1,539		$	9,903

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	March 31, 2023		June 30, 2022
Total Assets
Private-label contract manufacturing	$	113,098	$	115,649
Patent and trademark licensing		30,829		30,354
	$	143,927	$	146,003

Revenue from External Customers by Geographic Areas [Table Text Block]

	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
United States	$	24,254	$	29,382	$	82,995	$	78,279
Markets outside of the United States		8,445		12,991		35,126		40,161
Total	$	32,699	$	42,373	$	118,121	$	118,440

Long-Lived Assets by Geographic Areas [Table Text Block]

	March 31, 2023		June 30, 2022
United States	$	54,305	$	43,769
Europe		20,411		22,505
Total Long-Lived Assets	$	74,716	$	66,274

Assets by Geographic Areas [Table Text Block]

	March 31, 2023		June 30, 2022
United States	$	92,149	$	83,443
Europe		51,778		62,560
Total Assets	$	143,927	$	146,003

Capital Expenditures by Geographic Areas [Table Text Block]

	Nine Months Ended March 31,
	2023		2022
United States	$	12,983	$	20,766
Europe		256		702
Total Capital Expenditures	$	13,239	$	21,468

XML

Note J - Treasury Stock (Tables)

9 Months Ended

Mar. 31, 2023

Notes Tables

Class of Treasury Stock [Table Text Block]

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		25,447	$	9.23	$	235
Shares acquired from employees for restricted stock vesting		23,587		8.86		209
Total		49,034			$	444

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		140,812	$	9.19	$	1,294
Shares acquired from employees for restricted stock vesting		23,587		8.86		209
Total		164,399			$	1,503

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		179,810	$	12.62	$	2,269
Shares acquired from employees for restricted stock vesting		27,161		11.00		299
Total		206,971			$	2,568

	Shares		Average Cost		Total Cost (in thousands)
Shares purchased under Repurchase Plan		369,512	$	12.98	$	4,796
Shares acquired from employees for restricted stock vesting		27,853		11.08		309
Total		397,365			$	5,105

XML

Note A - Basis of Presentation and Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022	Jun. 30, 2022
Contract with Customer, Refund Liability, Total	$ 0		$ 0
Sales, Royalty and Licensing Revenue	2,300,000	$ 4,800,000	5,200,000	$ 13,500,000
Royalty Expense	$ 107,000	$ 200,000	$ 213,000	$ 600,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross (in shares)	0	0	0	0
Deferred Compensation Arrangement with Individual, Cash Award Granted, Amount	$ 0.6	$ 0.3	$ 0.6	$ 0.3
Deferred Compensation Arrangement with Individual, Cash Award Forfeited, Amount	0	$ 0	0	$ 191,000
Fair Value, Inputs, Level 1 [Member]
Fair Value, Net Asset (Liability), Total	0		0		$ 0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Net Asset (Liability), Total	$ 0		$ 0		$ 0
Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	118,000	126,850	118,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Forfeited in Period (in shares)	5,999	1,400	5,999	19,832
Share-Based Payment Arrangement, Expense	$ 300,000	$ 300,000	$ 700,000	$ 700,000
Restricted Stock 1 [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	227,082	126,850	151,585	126,850

XML

Note A - Basis of Presentation and Summary of Significant Accounting Policies - Calculation of Basic and Diluted Net Income Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		105 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022	Sep. 25, 2031
Numerator
Net income	$ (2,381)	$ 2,504	$ 485	$ 7,607	$ (2,381)
Denominator
Basic weighted average common shares outstanding (in shares)	5,816,000	6,003,036	5,867,400	6,167,539	5,816,058
Dilutive effect of restricted stock (in shares)	0	38,000	18,000	48,000
Diluted weighted average common shares outstanding (in shares)	5,816,000	6,041,424	5,885,116	6,216,422	5,816,058
Basic net (loss) income per common share (in dollars per share)	$ (0.41)	$ 0.42	$ 0.08	$ 1.23	$ (0.41)
Diluted net (loss) income per common share (in dollars per share)	$ (0.41)	$ 0.41	$ 0.08	$ 1.22	$ (0.41)

XML

Note A - Basis of Presentation and Summary of Significant Accounting Policies - Contract Liabilities and Revenue Recognized (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Contract Liabilities (Customer Deposits), balance	$ 140	$ 1,721
Contract Liabilities (Customer Deposits), addition	326	372
Contract Liabilities (Customer Deposits), revenue recognized	(137)	(1,721)
Contract Liabilities (Customer Deposits)	(3)	0
Contract Liabilities (Customer Deposits), balance	$ 326	$ 372

XML

Note A - Basis of Presentation and Summary of Significant Accounting Policies - Fair Value of Derivative Instruments Classified As Level 2 Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Jun. 30, 2022
Derivative assets, current asset	$ 911	$ 3,144
Fair Value, Inputs, Level 2 [Member]
Derivative assets, current asset	911	3,253
Derivative assets, noncurrent asset	542	1,014
Derivative assets, current liability		0
Fair Value Net Asset – all Derivative Contracts	1,453	4,267
Fair Value, Inputs, Level 2 [Member] | Euro Forward Contract [Member]
Derivative assets, current asset	593	3,144
Derivative assets, noncurrent asset	0	561
Derivative assets, current liability		0
Fair Value, Inputs, Level 2 [Member] | Swiss Franc Forward Contract [Member]
Derivative assets, current asset	318	109
Derivative assets, current liability	0	0
Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member]
Derivative assets, noncurrent asset	$ 542	$ 453

XML

Note B - Inventories, Net - Summary of Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Jun. 30, 2022
Raw materials	$ 24,880	$ 28,196
Work in progress	6,955	1,948
Finished goods	8,117	2,842
Reserve	(643)	(511)
Inventories, net	$ 39,309	$ 32,475

XML

Note C - Property and Equipment (Details Textual) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Depreciation	$ 1.0	$ 1.2	$ 3.1	$ 3.3

XML

Note C - Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Jun. 30, 2022
Property and equipment, gross	$ 104,270	$ 92,998
Less: accumulated depreciation and amortization	(49,513)	(48,425)
Property and equipment, net	54,757	44,573
Land [Member]
Property and equipment, gross	7,645	7,645
Building and Building Improvements [Member]
Property and equipment, gross	$ 25,817	17,415
Building and Building Improvements [Member] | Minimum [Member]
Depreciable Life In Years (Year)	7 years
Building and Building Improvements [Member] | Maximum [Member]
Depreciable Life In Years (Year)	39 years
Machinery and Equipment [Member]
Property and equipment, gross	$ 41,715	40,131
Machinery and Equipment [Member] | Minimum [Member]
Depreciable Life In Years (Year)	3 years
Machinery and Equipment [Member] | Maximum [Member]
Depreciable Life In Years (Year)	12 years
Office Equipment [Member]
Property and equipment, gross	$ 6,288	5,970
Office Equipment [Member] | Minimum [Member]
Depreciable Life In Years (Year)	3 years
Office Equipment [Member] | Maximum [Member]
Depreciable Life In Years (Year)	5 years
Vehicles [Member]
Property and equipment, gross	$ 265	211
Depreciable Life In Years (Year)	3 years
Leasehold Improvements [Member]
Property and equipment, gross	$ 22,540	$ 21,626
Leasehold Improvements [Member] | Minimum [Member]
Depreciable Life In Years (Year)	1 year
Leasehold Improvements [Member] | Maximum [Member]
Depreciable Life In Years (Year)	15 years

XML

Note D - Other Comprehensive (Loss) Income - Other Comprehensive (Loss) Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Balance	$ 89,530	$ 84,401	$ 88,520	$ 80,083
Balance	86,606	85,077	86,606	85,077
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Balance	(444)	(538)	(444)	(538)
OCI/OCL before reclassifications	0	0	0	0
Amounts reclassified from OCI to Sales	0	0	0	0
Tax effect of OCI activity	0	0	0	0
Net current period OCI/OCL	0	0	0	0
Balance	(444)	(538)	(444)	(538)
Accumulated Gain (Loss), Net, Cash Flow Hedge, Parent [Member]
Balance	391	1,200	1,795	(23)
OCI/OCL before reclassifications	713	1,064	1,328	3,308
Amounts reclassified from OCI to Sales	(1,181)	(685)	(3,604)	(1,335)
Tax effect of OCI activity	122	(120)	526	(491)
Net current period OCI/OCL	(346)	259	(1,750)	1,482
Balance	45	1,459	45	1,459
Accumulated Gain (Loss), Net, Swap Derivative, Parent [Member]
Balance	488	62	348	0
OCI/OCL before reclassifications	(90)	299	88	361
Amounts reclassified from OCI to Sales	0	0	41	0
Tax effect of OCI activity	79	(84)	0	(84)
Net current period OCI/OCL	(11)	215	129	277
Balance	477	277	477	277
AOCI Attributable to Parent [Member]
Balance	435	724	1,699	(561)
OCI/OCL before reclassifications	623	1,363	1,416	3,669
Amounts reclassified from OCI to Sales	(1,181)	(685)	(3,563)	(1,335)
Tax effect of OCI activity	201	(204)	526	(575)
Net current period OCI/OCL	(357)	474	(1,621)	1,759
Balance	$ 78	$ 1,198	$ 78	$ 1,198

XML

Note E - Leases (Details Textual)	Mar. 31, 2023	Jun. 30, 2022
Operating Lease, Weighted Average Remaining Lease Term (Year)	5 years 9 months 18 days	6 years 3 months 18 days
Operating Lease, Weighted Average Discount Rate, Percent	4.15%	4.12%

XML

Note E - Leases - Lease Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash paid for amounts included in the measurement of operating lease liabilities	$ 2,433	$ 2,495
Operating lease liabilities arising from obtaining Right of Use Assets for new leases	$ 0	$ 182

XML

Note F - Debt (Details Textual)			3 Months Ended	9 Months Ended
	Aug. 20, 2021 USD ($)	Aug. 18, 2021 USD ($)	Mar. 31, 2023 USD ($)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)	Jun. 30, 2021 USD ($)	May 24, 2021 USD ($)	Jan. 31, 2021 USD ($)
Payments to Acquire Property, Plant, and Equipment, Total				$ 13,239,000	$ 21,468,000
Interest Rate Swap [Member]
Derivative, Fixed Interest Rate		2.40%
Manufacturing Facility and Warehouse [Member] | Carlsbad, California [Member]
Payments to Acquire Property, Plant, and Equipment, Total	$ 17,500,000
Wells Fargo Bank, N.A. [Member]
Debt Instrument, Covenant, Annual Limit To Repurchase Stock or Issue Dividends							$ 5,000,000.0			$ 7,000,000.0
Wells Fargo Bank, N.A. [Member] | Credit Agreement [Member]
Line of Credit Facility, Maximum Borrowing Capacity									$ 20,000,000.0
Debt Instrument Covenant Capital Expenditures Limitation, Amount, Next Twelve Years			$ 25,000,000.0	25,000,000.0		$ 15,000,000.0		$ 10,000,000.0
Debt Instrument Covenant Capital Expenditures Limitation, Amount, After Twelve Years			25,000,000.0	25,000,000.0		$ 7,500,000
Debt Instrument Covenant Minimum, Net Income Required		$ 1.00
Debt Instrument Covenant, Fixed Charge Coverage Ratio						1.25
Long-term Debt, Percentage Bearing Fluctuating Interest, Threshold Amount		100,000
Minimum Prepayment Amount Under Line of Credit		$ 100,000
Line of Credit Facility, Commitment Fee Percentage		0.125%
Line of Credit Facility, Remaining Borrowing Capacity			$ 10,900,000	$ 10,900,000
Wells Fargo Bank, N.A. [Member] | Credit Agreement [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument, Basis Spread on Variable Rate			1.29%
Debt Instrument Basis Spread on Elected Fixed Rate Borrowing			1.29%	1.29%
Wells Fargo Bank, N.A. [Member] | Credit Agreement [Member] | Maximum [Member]
Ratio of Indebtedness to Net Capital		1.50
Ratio of Total Current Assets to Total Current Liabilities		1.75
Wells Fargo Bank, N.A. [Member] | Credit Agreement [Member] | Term Loan [Member]
Debt Instrument, Face Amount		$ 10,000,000.0
Debt Instrument, Term (Year)		7 years
Debt Instrument, Amortization Period (Year)		25 years
Long-Term Debt			$ 9,600,000	$ 9,600,000
Wells Fargo Bank, N.A. [Member] | Credit Agreement [Member] | Term Loan [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		1.80%

XML

Note G - Economic Dependency (Details Textual) - USD ($) $ in Millions	Mar. 31, 2023	Jun. 30, 2022
Three Customers [Member]
Accounts Receivable, after Allowance for Credit Loss	$ 5.2	$ 10.7

XML

Note G - Economic Dependency - Substantial Net Sales to Certain Customers (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		105 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022	Sep. 25, 2031
Net sales	$ 32,699	$ 42,373	$ 118,121	$ 118,440	$ 32,699
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Net sales	25,520	31,292	85,771	82,666
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer 1 [Member]
Net sales	15,962	10,673	46,948	19,795
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer 2 [Member]
Net sales	$ 9,558	13,846	$ 38,823	40,110
Customer Concentration Risk [Member] | Revenue Benchmark [Member] | Customer 3 [Member]
Net sales		$ 6,773		$ 22,761

XML

Note G - Economic Dependency - Substantial Net Purchase From Certain Suppliers (Details) - Supplier Concentration Risk [Member] - Raw Material Purchases [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Raw Material Purchases by Supplier	$ 3,916	$ 2,946	$ 11,394	$ 10,800
Supplier 1 [Member]
Raw Material Purchases by Supplier	$ 3,916	$ 2,946	$ 11,394	$ 10,800

XML

Note H - Segment Information (Details Textual)	3 Months Ended		9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Number of Reportable Segments			2
Products Manufactured by NAIE [Member] | Product Concentration Risk [Member] | Revenue Benchmark [Member] | Non-US [Member]
Concentration Risk, Percentage	81.00%	85.00%	76.00%	84.00%

XML

Note H - Segment Information - Operating Results by Business Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		105 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022	Sep. 25, 2031
Net sales	$ 32,699	$ 42,373	$ 118,121	$ 118,440	$ 32,699
Income from operations	(2,488)	3,274	1,539	9,903	$ (2,488)
Operating Segments [Member]
Income from operations	(453)	5,418	7,749	16,271
Corporate, Non-Segment [Member]
Income from operations	(2,035)	(2,144)	(6,210)	(6,368)
Private Label Contract Manufacturing [Member]
Net sales	30,354	37,623	112,969	104,894
Private Label Contract Manufacturing [Member] | Operating Segments [Member]
Income from operations	(1,243)	3,605	6,264	10,065
Patent and Trademark Licensing [Member]
Net sales	2,345	4,750	5,152	13,546
Patent and Trademark Licensing [Member] | Operating Segments [Member]
Income from operations	$ 790	$ 1,813	$ 1,485	$ 6,206

XML

Note H - Segment Information - Assets by Business Segment (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Jun. 30, 2022
Assets	$ 143,927	$ 146,003
Private Label Contract Manufacturing [Member]
Assets	113,098	115,649
Patent and Trademark Licensing [Member]
Assets	$ 30,829	$ 30,354

XML

Note H - Segment Information - Net Sales by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		105 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022	Sep. 25, 2031
Net sales	$ 32,699	$ 42,373	$ 118,121	$ 118,440	$ 32,699
UNITED STATES
Net sales	24,254	29,382	82,995	78,279
Non-US [Member]
Net sales	$ 8,445	$ 12,991	$ 35,126	$ 40,161

XML

Note H - Segment Information - Long-lived Assets by Geographical Region (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Jun. 30, 2022
Long-Lived Assets	$ 74,716	$ 66,274
UNITED STATES
Long-Lived Assets	54,305	43,769
Europe [Member]
Long-Lived Assets	$ 20,411	$ 22,505

XML

Note H - Segment Information - Total Assets by Geographical Region (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Jun. 30, 2022
Total Assets	$ 143,927	$ 146,003
UNITED STATES
Total Assets	92,149	83,443
Europe [Member]
Total Assets	$ 51,778	$ 62,560

XML

Note H - Segment Information - Capital Expenditures by Geographical Region (Details) - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Payments to Acquire Property, Plant, and Equipment, Total	$ 13,239	$ 21,468
UNITED STATES
Payments to Acquire Property, Plant, and Equipment, Total	12,983	20,766
Europe [Member]
Payments to Acquire Property, Plant, and Equipment, Total	$ 256	$ 702

XML

Note I - Income Taxes (Details Textual)	3 Months Ended		9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Effective Income Tax Rate Reconciliation, Percent	14.60%	21.40%	40.60%	22.20%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			21.00%	21.00%

XML

Note J - Treasury Stock (Details Textual) $ in Millions	Dec. 02, 2022 USD ($)
Stock Repurchase Program, Additional Authorized Amount	$ 1
Stock Repurchase Program, Authorized Amount	$ 19

XML

Note J - Treasury Stock - Treasury Stock Repurchases (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2023	Mar. 31, 2022
Treasury Stock Acquired, Shares (in shares)	49,034	206,971	164,399	397,365
Treasury Stock Acquired, Average Cost (in dollars per share)
Treasury Stock Acquired, Total Cost	$ 444	$ 2,568	$ 1,503	$ 5,105
Stock Repurchase Plan [Member]
Treasury Stock Acquired, Shares (in shares)	25,447	179,810	140,812	369,512
Treasury Stock Acquired, Average Cost (in dollars per share)	$ 9.23	$ 12.62	$ 9.19	$ 12.98
Treasury Stock Acquired, Total Cost	$ 235	$ 2,269	$ 1,294	$ 4,796
Stock Repurchased from Employee for Restricted Stock Vesting [Member]
Treasury Stock Acquired, Shares (in shares)	23,587	27,161	23,587	27,853
Treasury Stock Acquired, Average Cost (in dollars per share)	$ 8.86	$ 11.00	$ 8.86	$ 11.08
Treasury Stock Acquired, Total Cost	$ 209	$ 299	$ 209	$ 309

XML

Note K - Derivatives and Hedging (Details Textual) € in Millions, SFr in Millions		3 Months Ended
	Aug. 18, 2021 USD ($)	Mar. 31, 2023 USD ($)	Mar. 31, 2023 EUR (€)	Mar. 31, 2023 CHF (SFr)
Wells Fargo Bank, N.A. [Member] | Credit Agreement [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument, Basis Spread on Variable Rate		1.29%
Wells Fargo Bank, N.A. [Member] | Credit Agreement [Member] | Term Loan [Member]
Debt Instrument, Face Amount	$ 10,000,000.0
Wells Fargo Bank, N.A. [Member] | Credit Agreement [Member] | Term Loan [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	1.80%
Foreign Exchange Contract [Member] | Not Designated as Hedging Instrument [Member]
Derivative, Notional Amount		$ 12,200,000		SFr 11.4
Foreign Exchange Contract [Member] | Cash Flow Hedging [Member]
Derivative, Notional Amount		24,000,000.0	€ 21.4
Accumulated Other Comprehensive Income (Loss) Cumulative Cash Flow Hedges, Gain (Loss)		50,000
Deferred Tax Assets, Derivative Instruments		6,000
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months		$ 50,000
Interest Rate Swap [Member]
Derivative, Fixed Interest Rate	2.40%