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What changed in NATURAL ALTERNATIVES INTERNATIONAL INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of NATURAL ALTERNATIVES INTERNATIONAL INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+266 added−261 removedSource: 10-K (2025-09-23) vs 10-K (2024-09-27)

Top changes in NATURAL ALTERNATIVES INTERNATIONAL INC's 2025 10-K

266 paragraphs added · 261 removed · 208 edited across 4 sections

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

16 edited+5 added−1 removed9 unchanged
Biggest changeThis facility became operational in April 2023; however, it was temporarily closed in October 2023 due to a significant reduction in customer orders and subsequently reopened in May 2024 to meet current capacity needs. ITEM 3.
Biggest changeThis facility became operational in April 2023; was temporarily closed in October 2023 due to a significant reduction in customer orders and subsequently reopened in May 2024. ITEM 3. 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.
Our Information Systems risk management process evaluates and mitigates cybersecurity risks in alignment with our business objectives and operational needs. We periodically engage third-party consultants and service providers to obtain an independent assessment regarding internal efforts to prevent threats on our Information Systems.
Our Information Systems risk management process evaluates and mitigates cybersecurity risks in alignment with our business objectives and operational needs. We periodically engage third -party consultants and service providers to obtain an independent assessment regarding internal efforts to prevent threats to our Information Systems.
Because certain of our vendors have experienced cyberattacks in the past and the threat and development of cyberattacks is continuous, it is impossible to say with certainty whether the Company’s efforts will prevail in a coordinated attack on its Information Systems.
Certain of our vendors have experienced cyberattacks in the past and the threat and development of cyberattacks is continuous. It is impossible to say with certainty whether the Company’s efforts will prevail in a coordinated attack on its Information Systems.
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.
Our evaluation of the likely impact of these actions could change in the future, routinely do change, 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.
Therefore, all users must use an online IT ticketing system, which is monitored around the clock, to report any incidences. Qualified individuals in IT determine what resources to allocate to each case and escalation of an incident, if deemed necessary.
Therefore, all users must use an online IT ticketing system, which is monitored around the clock, to report any incidents. Qualified individuals in IT determine what resources to allocate to each case and escalation of an incident, if deemed necessary.
PROPERTIES This table summarizes our facilities as of June 30, 2024. We believe our facilities are adequate to meet our operating requirements for the foreseeable future.
PROPERTIES This table summarizes our facilities as of June 30, 2025. We believe our facilities are adequate to meet our operating requirements for the foreseeable future.
Continuous vigilance over safeguarding the Company’s Information Systems have resulted in our current approach and these assessments are shared with our Audit Committee.
Continuous vigilance over safeguarding the Company’s Information Systems has resulted in our current approach and these assessments are shared with our Audit Committee.
Lease Square Expiration Location Nature of Use Feet How Held Date Vista, CA USA(1),(2) Manufacturing, warehousing, packaging and distribution 162,000 Leased August 2034 Manno, Switzerland(3) Manufacturing, warehousing, packaging and distribution 95,990 Leased December 2032 Manno, Switzerland(4) Warehousing 30,892 Leased December 2025 Carlsbad, CA USA(5) Corporate headquarters 20,981 Owned N/A Carlsbad, CA USA(6) Powder filling, packaging, distribution and storage 67,453 Owned N/A (1) This facility is used by NAI for its private-label contract manufacturing segment.
Lease Square Expiration Location Nature of Use Feet How Held Date Vista, CA USA(1),(2) Manufacturing, warehousing, packaging and distribution 162,000 Leased August 2034 Manno, Switzerland(3) Manufacturing, warehousing, packaging and distribution 85,070 Leased December 2032 Manno, Switzerland(4) Warehousing 30,892 Leased December 2026 Carlsbad, CA USA(5) Corporate headquarters 20,981 Owned N/A Carlsbad, CA USA(6) Powder filling, packaging, distribution and storage 67,453 Owned N/A (1) This facility is used by NAI for its private-label contract manufacturing segment.
(2) At this facility we use approximately 93,000 square feet for production, 60,000 square feet for warehousing and 9,000 square feet for administrative functions. In July 2023, NAI executed an extension to the lease covering this facility effective April 1, 2024 and extends the lease through August 31, 2034.
(2) At this facility we use approximately 93,000 square feet for production, 60,000 square feet for warehousing and 9,000 square feet for administrative functions. In July 2023, NAI executed an Amendment to the Lease covering this facility. The Amendment, effective April 1, 2024, extended the Lease through August 31, 2034.
The Systems Administrators and IT Director, who has more than 17 years of experience with the Company, communicates on a day-to-day basis with the Chief Financial Officer and President/Chief Operating Officer who would bring any material cybersecurity issues to the attention of the Company’s Chief Executive Officer and the Board. 17 Table of Contents ITEM 2.
The Systems Administrators and IT Director, who has more than 18 years of experience with the Company, communicates on a day-to-day basis with the Chief Financial Officer, and President/Chief Operating Officer who would bring any material cybersecurity issues to the attention of the Company’s Chief Executive Officer, the Audit Committee, and the Board. 14 Table of Contents ITEM 2.
(3) This facility is used by NAIE in connection with our private-label contract manufacturing segment. In May 2022, NAIE executed an extension to the lease covering this facility that is effective January 1, 2023 and extends the lease through December 31, 2032. (4) This facility is used by NAIE for additional warehouse storage.
(3) This facility is used by NAIE in connection with our private-label contract manufacturing segment. In May 2022, NAIE executed an Amendment to the Lease covering this facility that became effective January 1, 2023 and extended the Lease through December 31, 2032. (4) This facility is used by NAIE for additional warehouse storage.
Our senior management attends meetings of our Board and its committees on a quarterly basis, and as otherwise needed, and are available to address any questions or concerns raised by our Board on risk management and any other matters.
Our senior management attends meetings of our Board and its committees on a quarterly basis, and management communicates with the Board and its members regularly between Board meetings as otherwise needed and are available to address any questions or concerns raised by our Board on risk management and any other matters.
While unfavorable outcomes are possible, based on available information, we generally 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.
While unfavorable outcomes are possible, and sometimes a matter is subsequently determined to be of greater risk. Based on available information, we generally 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.
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.
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.
As of September 27, 2024, 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 currently involved in several matters in the ordinary course of our business.
As of September 23, 2025 with exception of these two matters, 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. At any given time, we may be involved in one or more matters in the ordinary course of our business.
We currently do not expect the risks from cybersecurity threats are reasonably likely to materially affect us, including our business, strategy, results of operations or financial condition. For additional information about cybersecurity risks, see Item 1A.
Currently we expect the risks from cybersecurity threats will continue, but are not reasonably likely to materially affect us mostly due to our profile and not because our defenses are impenetrable or the efforts of criminals will not become more sophisticated.
Removed
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.
Added
A cybersecurity attack on our systems could have a material negative impact upon our business, results of operations or financial condition. For additional information about cybersecurity risks, see Item 1A.
Added
In December 2023 we were sued by three former employees in two separate but substantially identical matters brought by the same law firm. The lawsuits were filed as a putative class action and a Private Attorney General Act ("PAGA") action seeking awards for all similarly situated employees going back ten years or more.
Added
We responded to these actions and agreed to submit the matters for mediation. On July 3, 2025, the mediation took place, and a tentative settlement agreement was reached whereby we agreed to contribute a maximum of $1.25 million. We have joined with the plaintiffs in moving the court to consolidate the two actions.
Added
The potential settlement has been brought before the court and all similarly situated employees need to be contacted, and they may elect to participate or not. The process of obtaining court approval of the settlement is estimated to take approximately one year.
Added
We accrued the maximum settlement amount in our results of operation as of June 30, 2025 along with estimated related legal fees of approximately $0.15 million.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeAdditionally, under the terms of our credit facility, we are precluded from paying a dividend while such facility is in place without a waiver from our lender. Recent Sales of Unregistered Securities During the fiscal year ended June 30, 2024, we did not sell any unregistered securities.
Biggest changeOur current policy is to retain all earnings to provide funds for operations and future growth. Additionally, under the terms of our credit facility, we are precluded from paying a dividend while such facility is in place without a waiver from our lender.
Equity Compensation Plan Information The following table sets forth information regarding outstanding options and shares reserved for future issuance under our existing equity compensation plans as of June 30, 2024: Number of Shares Remaining Available Weighted- for Future Number of Average Issuance Shares Exercise Under Equity to be Issued Price Compensation Upon of Plans Exercise of Outstanding (Excluding Outstanding Options, Shares Options, Warrants, Reflected in Warrants, and Column Plan Category and Rights Rights (a)) (a) (b) (c) Equity compensation plans approved by stockholders — $ — 182,877 Equity compensation plans not approved by stockholders N/A N/A N/A Total — $ — 182,877
Equity Compensation Plan Information The following table sets forth information regarding outstanding options and shares reserved for future issuance under our existing equity compensation plans as of June 30, 2025: Number of Shares Remaining Available Weighted- for Future Number of Average Issuance Shares Exercise Under Equity to be Issued Price Compensation Upon of Plans Exercise of Outstanding (Excluding Outstanding Options, Shares Options, Warrants, Reflected in Warrants, and Column Plan Category and Rights Rights (a)) (a) (b) (c) Equity compensation plans approved by stockholders — $ — 158,877 Equity compensation plans not approved by stockholders N/A N/A N/A Total — $ — 158,877
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 18 Table of Contents PART II ITEM 5.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 15 Table of Contents PART II ITEM 5.
Repurchases During the fiscal year ended June 30, 2024, we did not repurchase any shares of our common stock other than shares acquired from employees in exchange for our paying their withholding requirements upon vesting of restricted stock.
Recent Sales of Unregistered Securities During the fiscal year ended June 30, 2025, we did not sell any unregistered securities. Repurchases During the fiscal year ended June 30, 2025, we did not repurchase any shares of our common stock other than shares acquired from employees in exchange for our paying their withholding requirements upon vesting of restricted stock.
MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Global Market under the symbol “NAII.” Below are the high and low sales prices of our common stock as reported on the Nasdaq Global Market for each quarter of the fiscal years ended June 30, 2024 and 2023: Fiscal 2024 Fiscal 2023 High Low High Low First Quarter $ 7.62 $ 5.06 $ 12.60 $ 8.38 Second Quarter $ 7.37 $ 5.78 $ 9.84 $ 7.04 Third Quarter $ 6.98 $ 5.65 $ 10.12 $ 7.95 Fourth Quarter $ 7.26 $ 6.00 $ 9.44 $ 6.97 Holders As of September 25, 2024, there were 177 stockholders of record of our common stock.
MARKET FOR OUR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Global Market under the symbol “NAII.” Below are the high and low sales prices of our common stock as reported on the Nasdaq Global Market for each quarter of the fiscal years ended June 30, 2025 and 2024: Fiscal 2025 Fiscal 2024 High Low High Low First Quarter $ 6.88 $ 5.10 $ 7.62 $ 5.06 Second Quarter $ 5.60 $ 4.02 $ 7.37 $ 5.78 Third Quarter $ 4.40 $ 3.27 $ 6.98 $ 5.65 Fourth Quarter $ 3.62 $ 2.57 $ 7.26 $ 6.00 Holders As of September 19, 2025 , there were 169 stockholders of record of our common stock.
On that same date, the last sales price of our common stock as reported on NASDAQ was $6.54 per share. Dividends We have never paid a dividend on our common stock, and we do not intend to pay a dividend in the foreseeable future. Our current policy is to retain all earnings to provide funds for operations and future growth.
On that same date, the last sales price of our common stock as reported on NASDAQ was $3.12 per s hare. Dividends We have never paid a dividend on our common stock, and we do not intend to pay a dividend in the foreseeable future.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

42 edited+9 added−10 removed8 unchanged
Biggest changeFiscal Year Ended June 30, 2024 June 30, 2023 Increase (Decrease) Private-label contract manufacturing $ 105,358 93 % $ 145,294 94 % $ (39,936 ) (27 )% Patent and trademark licensing 8,438 7 % 8,721 6 % (283 ) (3 )% Total net sales 113,796 100 % 154,015 100 % (40,219 ) (26 )% Cost of goods sold 106,931 94 % 135,857 88 % (28,926 ) (21 )% Gross profit 6,865 6 % 18,158 12 % (11,293 ) (62 )% Selling, general & administrative expenses 15,399 14 % 13,445 9 % 1,954 15 % (Loss) income from operations (8,534 ) (7 )% 4,713 3 % (13,247 ) (281 )% Other loss, net (930 ) (1 )% (1,158 ) (1 )% 228 (20 )% (Loss) income before income taxes (9,464 ) (8 )% 3,555 2 % (13,019 ) (366 )% Provision for income taxes (2,247 ) (2 )% 1,033 1 % (3,280 ) (318 )% Net (loss) income $ (7,217 ) (6 )% $ 2,522 2 % $ (9,739 ) (386 )% Private-label contract manufacturing sales decreased 27% primarily due to reduced orders from several of our larger customers associated with their continued efforts to reduce excess on-hand inventory, partially offset by increased shipments to other existing customers and shipments to new customers.
Biggest changeFiscal Year Ended June 30, 2025 June 30, 2024 Increase (Decrease) Private-label contract manufacturing $ 121,779 94 % $ 105,358 93 % $ 16,421 16 % Patent and trademark licensing 8,081 6 % 8,438 7 % (357 ) (4 )% Total net sales 129,860 100 % 113,796 100 % 16,064 14 % Cost of goods sold 120,571 93 % 106,931 94 % 13,640 13 % Gross profit 9,289 7 % 6,865 6 % 2,424 35 % Other selling, general & administrative expenses 16,549 13 % 15,399 14 % 1,150 7 % Settlement of legal proceeding and associated expense 1,400 1 % — 0 % 1,400 100 % Loss from operations (8,660 ) (7 )% (8,534 ) (7 )% (126 ) 1 % Other loss, net (2,080 ) (2 )% (930 ) (1 )% (1,150 ) 124 % Loss before income taxes (10,740 ) (8 )% (9,464 ) (8 )% (1,276 ) 13 % Provision (benefit) for income taxes 2,835 2 % (2,247 ) (2 )% 5,082 (226 )% Net loss $ (13,575 ) (10 )% $ (7,217 ) (6 )% $ (6,358 ) 88 % Private-label contract manufacturing sales increased 16% primarily due to increased orders from two of our larger customers and shipments to new customers partially offset by lower sales from our largest customer.
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 and our new TriBsyn™ product, maintain our patent rights, the availability and the cost of the raw material when and in the amounts needed, the ability to 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.
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 and our new beta-alanine product marketed under our TriBsyn™ trademark, maintain our patent rights, the availability and the cost of the raw material when and in the amounts needed, the ability to 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.
Information regarding our other significant accounting estimates and policies are disclosed in Note A, Organization and Summary of Significant Accounting Policies, of the notes to the consolidated financial statements. Revenue Recognition — Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling one or more performance obligations.
Information regarding our other significant accounting estimates and policies is disclosed in Note A, Organization and Summary of Significant Accounting Policies, of the notes to the consolidated financial statements. Revenue Recognition — Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling one or more performance obligations.
Our revenue also includes raw material sales, royalty and licensing revenue generated from our patent estate pursuant to license and supply agreements with third parties for the distribution and use of the ingredient known as beta-alanine sold under our CarnoSyn® and SR CarnoSyn® trademarks.
Our revenue also includes raw material sales, royalty and licensing revenue generated from our patent estate pursuant to license and supply agreements with third parties for the distribution and use of the ingredient known as beta-alanine sold under our CarnoSyn®, SR CarnoSyn® and TriBsyn™ trademarks.
Off-Balance Sheet Arrangements As of June 30, 2024, we did not have any significant 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, in each case 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.
Off-Balance Sheet Arrangements As of June 30, 2025, we did not have any significant 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, in each case 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.
Our primary business activity is providing private-label contract manufacturing services to companies that market and distribute vitamins, minerals, herbs and other nutritional supplements, as well as other health care products, to consumers both within and outside the U.S.
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.
MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion and analysis is intended to help you understand our financial condition and results of operations as of June 30, 2024 and 2023 and for each of the last two fiscal years then ended.
MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION The following discussion and analysis is intended to help you understand our financial condition and results of operations as of June 30, 2025 and 2024 and for each of the last two fiscal years then ended.
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 legal expense associated with our CarnoSyn® business has remained relatively low as we have no active litigation, and the current run-rate of expenses is primarily related to maintenance and expansion of our patent and trademark estate.
Inflation During fiscal 2024, we experienced continued price increases for product raw material, and other increased operational costs related to inflationary pressure though to a lesser degree than in fiscal 2023.
Inflation During fiscal 2025, we experienced continued price increases for product raw material, and other increased operational costs related to inflationary pressure though to a lesser degree than in fiscal 2024.
We anticipate current inflation rates will have a negative impact on our fiscal 2025 operations, and we are monitoring the drivers and working with suppliers and customers to mitigate the impact on our results.
We anticipate current inflation rates will have a negative impact on our fiscal 2026 operations, and we are monitoring the drivers and working with suppliers and customers to mitigate the impact on our results.
ITEM 6. SELECTED FINANCIAL DATA As a smaller reporting company, we are not required to provide Item 6 disclosure in this Annual Report. 19 Table of Contents ITEM 7.
ITEM 6. SELECTED FINANCIAL DATA As a smaller reporting company, we are not required to provide Item 6 disclosure in this Annual Report. 16 Table of Contents ITEM 7.
We currently believe increasing raw material and product cost pricing pressures will continue throughout fiscal 2025 as a result of limited supplies of various ingredients, the effects of higher labor and transportation costs, interest rates, and global fuel and energy costs.
We currently believe increasing raw material and product cost pricing pressures will continue throughout fiscal 2026 as a result of limited supplies of various ingredients, the effects of higher labor and transportation costs, interest rates, tariffs, and global fuel and energy costs.
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.
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®, SR CarnoSyn® and TriBsyn™ trademarks, royalties from license agreements, and potentially additional contract manufacturing opportunities with licensees.
The increase in margin contribution during the year ended June 30, 2024 was primarily due to increased patent and trademark licensing net sales in total 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 decrease in margin contribution during the year ended June 30, 2025 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.
Revenue concentration from our largest private-label contract manufacturing customer as a percentage of our total net sales was 42% in fiscal 2024, and revenue concentration from our largest private-label contract manufacturing customer as a percentage of total net sales in fiscal 2023 was 40%.
Revenue concentration from our largest private-label contract manufacturing customer as a percentage of our total net sales was 33% in fiscal 2025, and revenue concentration from our largest private-label contract manufacturing customer as a percentage of total net sales in fiscal 2024 was 42%.
Revenue concentration from our largest private-label contract manufacturing customer as a percentage of our total net sales was 42% in fiscal 2024, and revenue concentration from our largest private-label contract manufacturing customer as a percentage of total net sales in fiscal 2023 was 40%. Net sales from our patent and trademark licensing segment decreased 3% during fiscal 2024.
Revenue concentration from our largest private-label contract manufacturing customer as a percentage of our total net sales was 33% in fiscal 2025, and revenue concentration from our largest private-label contract manufacturing customer as a percentage of total net sales in fiscal 2024 was 42%. Net sales from our patent and trademark licensing segment decreased 4% during fiscal 2025.
The decrease in patent and trademark licensing revenue was primarily due to increased volume rebates partially offset by increased royalty income.
The decrease in patent and trademark licensing revenue was primarily due to decreased orders from existing customers partially offset by decreased volume rebates and increased royalty income.
Inventory provided $5.4 million in cash during fiscal 2024 compared to providing $2.8 million in fiscal 2023. The change in cash activity from inventory was primarily related to the difference in the amount and timing of orders and anticipated sales in fiscal year 2024 as compared to fiscal year 2023.
The change in cash activity from inventory was primarily related to the difference in the amount and timing of orders and anticipated sales in fiscal year 2025 as compared to fiscal year 2024. Changes in accounts payable and accrued liabilities provided $2.9 million in cash during fiscal 2025 compared to providing $5.4 million during fiscal 2024.
The change in gross profit margin for the year ended June 30, 2024, was as follows: Percentage Change Contract manufacturing(1) (6.9 ) Patent and trademark licensing(2) 1.1 Total change in gross profit margin (5.8 ) 1 Private-label contract manufacturing gross profit margin contribution decreased 6.9 percentage points in fiscal 2024 as compared to fiscal 2023.
The change in gross profit margin for the year ended June 30, 2025, was as follows: Percentage Change Contract manufacturing (1) 1.4 Patent and trademark licensing (2) (0.2 ) Total change in gross profit margin 1.2 1 Private-label contract manufacturing gross profit margin contribution increased 1.4 percentage points in fiscal 2025 as compared to fiscal 2024.
At June 30, 2024, we had $12.0 million of borrowing capacity on our credit facility of which we had outstanding borrowings of $3.4 million. We also owed $9.2 million on a term loan that was borrowed as part of the purchase of our new Carlsbad, California manufacturing facility in August 2021.
At June 30, 2025, we had $9.9 million of borrowing capacity available on our credit facility of which we had outstanding borrowings of $1.9 million. We also owed $8.9 million on a term loan that was borrowed as part of the purchase of our Carlsbad, California manufacturing facility in August 2021.
Overall, we believe our available cash, cash equivalents, potential cash flows from operations, and our line of credit will be sufficient to fund our current working capital needs and capital expenditures through at least the next 12 months.
As of June 30, 2025, we had $12.3 million in cash and cash equivalents of which $11.9 million was held by NAIE. Overall, we believe our available cash, cash equivalents, potential cash flows from operations, and our line of credit will be sufficient to fund our current working capital needs and capital expenditures through at least the next 12 months.
During fiscal 2025, we 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 assist us in developing relationships with additional quality-oriented customers; • 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, developing a market for our new TriBsyn™ beta-alanine product, 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.
Although our overall sales forecast for fiscal 2026 includes a significant increase in sales as compared to fiscal 2025, we currently anticipate we will experience a net loss in the first half of fiscal 2026, net income in the second half of fiscal 2026, and net income for the full fiscal 2026 year. 17 Table of Contents During fiscal 2026, we 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 assist us in developing relationships with additional quality-oriented customers; • Expanding the commercialization of our beta-alanine patent estate through raw material sales, developing sales distribution channels in Sports Nutrition, Wellness and Healthy Aging and Medical foods for our SR CarnoSyn® and TriBsyn™ beta-alanine product lines, 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.
Capital expenditures in fiscal 2024 included normal expenditures to support equipment and activities in our facilities in California and Switzerland. Cash provided in financing activities in fiscal 2024 was $2.9 million, compared to $1.8 million used in fiscal 2023.
Capital expenditures in fiscal 2025 included costs incurred to install solar energy generation equipment on our manufacturing facilities. Capital expenditures in fiscal 2024 included normal expenditures to support equipment and activities in our facilities in California and Switzerland. Cash used in financing activities in fiscal 2025 was $2.0 million, compared to $2.9 million provided in fiscal 2024.
We believe SR CarnoSyn® may provide a unique opportunity within the growing Wellness and Healthy Aging markets but acceptance of this product offering has been limited as we only offer this product in tablet form. In August 2024, we announced our new product called TriBsyn™. We believe TriBsyn™ may allow us to better penetrate the Wellness and Healthy Aging channel.
We continue to invest in research and development for the expansion of our CarnoSyn® product offerings. We believe SR CarnoSyn® may provide a unique opportunity within the growing Wellness and Healthy Aging markets but acceptance of this product offering has been limited as we only offer this product in tablet form.
For certain contracts with volume rebates, our estimates of future sales used to assess the volume rebate 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. 21 Table of Contents Results of Operations The following table sets forth selected consolidated operating results for each of the last two fiscal years, presented as a percentage of net sales (dollars in thousands).
For certain contracts with volume rebates, our estimates of future sales used to assess the volume rebate 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.
During fiscal 2025, 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®, SR CarnoSyn® and TriBsyn™ beta-alanine products. 20 Table of Contents We experienced a loss during fiscal 2024 that was primarily due to a slowdown across our private-label contract manufacturing segment.
During fiscal 2026, 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®, SR CarnoSyn® and TriBsyn™ beta-alanine products.
During fiscal 2024, patent and trademark licensing revenue decreased 3% to $8.4 million as compared to $8.7 million for fiscal 2023. The decrease in patent and trademark licensing revenue was primarily due to increased volume rebates partially offset by increased royalty income. We continue to invest in research and development for the expansion of our CarnoSyn® product offerings.
During fiscal 2025, patent and trademark licensing revenue decreased 4% to $8.1 million as compared to $8.4 million for fiscal 2024. The decrease in patent and trademark licensing revenue was primarily due to decreased material sales from existing customers partially offset by decreased volume rebates and increased royalty income.
The increase in cash used by accounts receivable during fiscal 2024 primarily resulted from timing of sales and the related collections. Days sales outstanding increased to 38 days during fiscal 2024 compared to 29 days during fiscal 2023, primarily due to customer sales mix and timing of sales and the related collections.
Days sales outstanding increased to 44 days during fiscal 2025 compared to 38 days during fiscal 2024, primarily due to customer sales mix and timing of sales and the related collections. Inventory used $0.6 million in cash during fiscal 2025 compared to providing $5.4 million in fiscal 2024.
The decrease is primarily associated to an increase in interest income and a decrease in interest expense related to reduced usage of our line of credit in fiscal 2024. We recorded an income tax benefit of $2.2 million during fiscal 2024 as compared to tax expense of $1.0 million in fiscal 2023.
The increase is primarily due to unfavorable foreign currency exchange volatility and increased interest expense due to increased interest rates and usage of our credit facility. We recorded an income tax provision of $2.8 million during fiscal 2025 as compared to a tax benefit of $2.2 million in fiscal 2024.
The change in financing activities includes $3.4 million of outstanding short-term borrowing on our line of credit in fiscal 2024 offset by a reduction of stock repurchase activity which totaled $0.2 million in 2024 as compared to $1.5 million in fiscal 2023.
The change in financing activities includes net payments of $1.5 million on outstanding short-term borrowings on our line of credit in fiscal 2025 compared to a $3.4 million increase in short-term net borrowings on our line of credit in fiscal 2024.
There can be no assurance we will be able to successfully complete the negotiation of a revised credit facility, or what the differences in amount, cost and other factors may be. Please see Note F in Item 8 of this report for terms of our current modified line of credit.
We have advised our lender and are currently negotiating a potential revision to our credit agreement. There can be no assurance we will be able to successfully complete the negotiation of a revised credit facility, or what the differences in amount, cost and other factors may be.
During fiscal 2024, our consolidated net sales were 26% lower than in fiscal 2023. Private-label contract manufacturing sales decreased 27% primarily due to reduced orders from several of our larger customers associated with their efforts to reduce excess on-hand inventory, partially offset by increased shipments from other existing customers and shipments to new customers.
During fiscal 2025, our consolidated net sales were 14% higher than in fiscal 2024. Private-label contract manufacturing net sales increased 16% primarily due to increased orders from two of our larger customers and shipments to new customers partially offset by lower sales from our largest customer.
Changes in accounts payable and accrued liabilities provided $5.4 million in cash during fiscal 2024 compared to using $8.6 million during fiscal 2023. The change in cash flow activity related to accounts payable and accrued liabilities is primarily due to the timing of inventory receipts and payments.
The change in cash flow activity related to accounts payable and accrued liabilities is primarily due to the timing of inventory receipts and payments. Cash used in investing activities in fiscal 2025 was $3.6 million compared to $3.0 million in fiscal 2024. The primary reason for this change is due to increased capital expenditures.
We are also working on several additional innovations that could lead to new patentable products for CarnoSyn® Brands in the future. To protect and grow our CarnoSyn® product offerings, we incurred litigation and patent compliance expenses of approximately $0.2 million during fiscal 2024 and $0.2 million during fiscal 2023.
To protect and grow our CarnoSyn® product offerings, we incurred litigation and patent compliance expenses of approximately $0.4 million during fiscal 2025 and $0.2 million during fiscal 2024.
The elimination of paresthesia while maintaining efficacy of dosage creates a new opportunity to reach segments of the market that to date have been untapped, including older adults, vegetarians, and vegans. We believe our efforts to refine our formulations and product offerings will be positively received and result in significant opportunity for increased sales of our patented products.
This product is available as a raw material powder, which allows formulation flexibility for our customers. The elimination of paresthesia while maintaining efficacy of dosage creates a new opportunity to reach segments of the market that to date have been untapped, including older adults, vegetarians, and vegans.
This groundbreaking new product is a carnosine booster that utilizes CarnoSyn® beta-alanine and other patent-pending technology to increase beta-alanine bioavailability and absorption while effectively eliminating beta-alanine related paresthesia. This product is available as a raw material powder, which allows formulation flexibility for our customers.
In August 2024, we announced our new product called TriBsyn™. We believe TriBsyn™ and its patent-pending formulation will allow us to better penetrate the Wellness and Healthy Aging channel. This groundbreaking product is a carnosine booster that utilizes CarnoSyn® beta-alanine and other proprietary technology to increase beta-alanine bioavailability and absorption while effectively eliminating beta-alanine related paresthesia.
We anticipate we will not be able to comply with all of the covenants required under the modified Credit Agreement in the first half of fiscal 2025. We have advised our lender and are currently negotiating a potential revised line of credit.
We anticipate we will not be able to comply with all of the covenants required under the modified Credit Agreement in the first half of fiscal 2026, primarily related to the impact on the fixed charge coverage ratio calculation due to the unexpected recognition of the litigation expense and valuation allowance on our net deferred tax assets during the fourth quarter of fiscal 2025.
The decrease in gross profit as a percentage of sales for private-label contract manufacturing is primarily due to unfavorable sales mix, lower sales, and increased per unit manufacturing costs.
The increase in gross profit as a percentage of sales for private-label contract manufacturing is primarily due to a favorable change in product sales mix, partially offset by a marginal increase in manufacturing overhead costs. 2 During fiscal 2025, patent and trademark licensing gross profit margin contribution decreased 0.2 percentage points as compared to fiscal 2024.
Net cash used in operating activities was $1.5 million in fiscal 2024 compared to net cash provided by operating activities of $7.0 million in fiscal 2023. At June 30, 2024, changes in accounts receivable used $9.8 million in cash compared to providing $11.8 million in fiscal 2023.
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 provided by operating activities was $5.9 million in fiscal 2025 compared to net cash used in operating activities of $1.5 million in fiscal 2024.
Selling, general and administrative expenses increased $2.0 million, or 15% to $15.4 million in fiscal 2024 as compared to $13.5 million in fiscal 2023.
Selling, general and administrative expenses, excluding litigation settlement expenses, increased $1.2 million, or 7% to $16.5 million in fiscal 2025 as compared to $15.4 million in fiscal 2024. This increase is primarily due to increased compensation and benefits costs, legal expenses associated with new patent and tradename registrations, rent, and outside sales commissions.
At June 30, 2023 we had no outstanding balances due and $20.0 million available in connection with our line of credit. We also owed $9.5 million on a term loan that was borrowed as part of the purchase of our new Carlsbad, California manufacturing facility in August 2021.
At June 30, 2024, we had $12.0 million of borrowing capacity available on our credit facility of which we had outstanding borrowings of $3.4 million. We also owed $9.2 million on the term loan.
The change in our income tax provision between fiscal 2024 and 2023 is primarily driven by our pre-tax income changing from income in fiscal 2023 to a loss in fiscal 2024, which was partially offset by a lower effective tax rate.
The change in our income tax provision in fiscal 2025 compared to the benefit recorded in fiscal 2024 is primarily driven by a $4.8 million valuation allowance that was recognized in fiscal 2025 against our net domestic deferred income tax asset.
Removed
Sales were also negatively impacted by Euro to USD exchange rates. Our foreign currency exchange rates as applied to sales denominated in Euro decreased to a weighted average of 1.09 EUR/USD in fiscal 2024 compared to a weighted average of 1.13 EUR/USD in fiscal 2023.
Added
We believe our efforts to refine our formulations and product offerings will be positively received and result in significant opportunity for increased sales of our patented products. We are also working on several additional innovations we believe could lead to new patentable products for CarnoSyn® Brands in the future.
Removed
On August 16, 2023, we announced the temporary closure of our high-speed powder processing facility in Carlsbad, California due to excess inventory on hand at one of our largest customers and their efforts to rebalance supply and demand. We reopened this facility in May 2024.
Added
We experienced a loss during fiscal 2025 that was primarily due to underutilization of our available factory capacities, a valuation allowance against our domestic net deferred income tax assets and the accrual of a litigation settlement associated with a PAGA claim.
Removed
Although our overall sales forecast for fiscal 2025 includes a significant increase in sales as compared to fiscal 2024, we currently anticipate we will experience a net loss in the first half of fiscal 2025, net income in the second half of fiscal 2025, and we will break-even or have a slight profit for the full fiscal 2025 year.
Added
Results of Operations The following table sets forth selected consolidated operating results for each of the last two fiscal years, presented as a percentage of net sales (dollars in thousands).
Removed
Sales were also negatively impacted by Euro to USD exchange rates. Our foreign currency exchange rates as applied to sales denominated in Euro decreased to a weighted average of 1.09 EUR/USD in fiscal 2024 compared to a weighted average of 1.13 EUR/USD in fiscal 2023.
Added
Fiscal 2025 results of operations also included a $1.4 million expense associated with an accrued litigation settlement and related legal costs associated with a PAGA claim. 18 Table of Contents Other expense, net, increased $1.2 million during fiscal 2025 as compared to fiscal 2024.
Removed
Per unit manufacturing costs were negatively impacted by reduced sales resulting in our fixed costs being allocated over fewer production units and carrying costs of our Carlsbad, California manufacturing plant that was closed beginning in October of fiscal 2024 and not re-opened until May of fiscal 2024, increased costs associated with higher labor rates, and increased rent and utility costs. 2 During fiscal 2024, patent and trademark licensing gross profit margin contribution increased 1.1 percentage points as compared to fiscal 2023.
Added
For the year ended June 30, 2025, changes in accounts receivable provided $2.2 million in cash compared to using $9.9 million in fiscal 2024. The increase in cash provided by accounts receivable during fiscal 2025 primarily resulted from timing of sales and the related collections.
Removed
Our fiscal 2023 expense included a $1.3 million benefit recorded related to our Employee Retention Tax Credit filing and a $1.4 million bad debt recovery associated with a settlement we agreed to with a former customer whose balance was written-off in a prior year while fiscal 2024 did not include any such items.
Added
For the quarter ended June 30, 2025 , we were not in compliance with the minimum net income and fixed charge coverage ratio covenants of our credit agreement, but these defaults were prospectively waived by the Sixth Amendment to our credit facility, as discussed below.
Removed
Excluding the non-recurring items, the remainder of selling, general and administrative expenses decreased in fiscal 2024 as compared to fiscal 2023 primarily due to a decrease in advertising, promotion, and sales commission expenses. Other loss, net, decreased $0.2 million during fiscal 2024 as compared to fiscal 2023.
Added
On June 20, 2025, we entered into an amended credit facility with Wells Fargo Bank, National Association ("Wells Fargo").
Removed
The decrease in the effective tax rate was primarily driven by decreases in Global Low-Taxed Intangible Income associated with our Swiss operations and changes in apportionment allocation of income to state jurisdictions offset by an increase in available business credits in the U.S. 22 Table of Contents 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.
Added
The amended credit facility extended the maturity date of our credit facility to December 31, 2026, decreased the maximum principal amount that can be borrowed from $12.5 million to $10.0 million, waived all prior events of default, prospectively waived the anticipated covenant violations for the quarter ending June 30, 2025, and modified the financial covenants for the first quarter of fiscal 2026 and beyond.
Removed
Cash used in investing activities in fiscal 2024 was $3.0 million compared to $13.5 million in fiscal 2023. The primary reason for this change is due to reduced capital expenditures. Fiscal 2023 included residual capital improvement expenditures associated with our new manufacturing and warehouse facility in Carlsbad, California that was completed in fiscal 2023.
Added
Please see Note F in Item 8 of this report for terms of our current modified line of credit.
Removed
At June 30, 2024, we were in compliance with the financial and other covenants as modified by the Fourth Amendment to our credit facility. As of June 30, 2024, we had $12.0 million in cash and cash equivalents which was held by NAIE.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

144 edited+44 added−42 removed127 unchanged
Biggest changeExhibit 10.36 of NAI's Current Report on Form 8-K dated October 12, 2022, file with the commission on October 13, 2022 10.35 Fourth Amendment to Lease of NAI manufacturing facilities in Vista, California between NAI, the tenant, and Park Center Industrial ILP, LLC, a Delaware limited liability company, the landlord Exhibit 10.17 of NAI's Current Report on Form 8-K dated July 21, 2023, file with the commission on July 24, 2023. 10.36 Clawback Policy Exhibit 10.36 of NAI's Annual Report on Form 10-K for the fiscal year ended June 30, 2023, filed with the commission on September 19, 2023. 10.37 First modification to Promissory Note by and between NAI and Wells Fargo, effective as of February 13, 2024 Exhibit 10.37 of NAI’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2023, filed with the commission on February 13, 2024 50 Table of Contents 10.38 Fourth Amendment and Waiver of Events of Default to Credit Agreement by and between NAI and Wells Fargo effective as of February 13, 2024 Exhibit 10.38 of NAI’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2023, filed with the commission on February 13, 2024 21 Subsidiaries of the Company Filed herewith 23.1 Consent of Independent Registered Public Accounting Firm Filed herewith 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 (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) Furnished herewith 101.SCH Inline XBRL Taxonomy Extension Schema Document Furnished herewith 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Furnished herewith 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Furnished herewith 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Furnished herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Furnished herewith 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) Furnished herewith * Indicates management contract or compensatory plan or arrangement. 51 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, thereunto duly authorized.
Biggest changeFortin effective July 1, 2025 * Exhibit 10.68 of NAI's Current Report on Form 8-K dated July 1, 2025, filed with the commission on July 1, 2025 10.44 Manufacturing Agreement by and between Natural Alternatives International, Inc., and The Juice Plus+ Company, dated effective July 16, 2025 Exhibit 10.49 of NAI's Current Report on Form 8-K dated June 21, 2025, filed with the commission on June 21, 2025 21 Subsidiaries of the Company Filed herewith 23.1 Consent of Independent Registered Public Accounting Firm Filed herewith 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 44 Table of Contents 101.INS Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) Furnished herewith 101.SCH Inline XBRL Taxonomy Extension Schema Document Furnished herewith 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Furnished herewith 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Furnished herewith 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Furnished herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Furnished herewith 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) Furnished herewith * Indicates management contract or compensatory plan or arrangement. 45 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, thereunto duly authorized.
These amounts are part of the undistributed earnings that we recorded a one -time deemed repatriation transition tax on in fiscal 2018 and therefore we did not recognize any additional tax on these dividends.
These amounts are part of the undistributed earnings that we recorded a one -time deemed repatriation transition tax in fiscal 2018, and therefore, we did not recognize any additional tax on these dividends.
The early termination reduced the lease term by 9 years and 8 months thus ending on April 30, 2024. Our lease liability and Right of Use asset were both decreased by approximately $0.3 million as a result of the early termination of the lease agreement.
The early termination reduced the lease term by 9 years and 8 months thus ending on April 30, 2024. Our lease liability and Right of Use asset were both decreased by approximately $0.3 million as a result of the early termination of the lease agreement.
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.
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 and TriBsyn™ trademark.
Foreign exchange derivative instruments that do not meet the criteria for cash flow hedge accounting are marked-to-market through the Consolidated Statements of Operations and Comprehensive (Loss) Income. Historically, our cash flow derivative instruments related to our Euro sales have met the criteria for hedge accounting, while our derivative instruments related to our long-term lease liability have not.
Foreign exchange derivative instruments that do not meet the criteria for cash flow hedge accounting are marked-to-market through the Consolidated Statements of Operations and Comprehensive Loss. Historically, our cash flow derivative instruments related to our Euro sales have met the criteria for hedge accounting, while our derivative instruments related to our long-term lease liability have not.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, we are not required to provide Item 7A disclosure in this Annual Report. 23 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Natural Alternatives International, Inc.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, we are not required to provide Item 7A disclosure in this Annual Report. 19 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Natural Alternatives International, Inc.
The fourth amendment extends the term of the lease by an additional ten years and five months commencing April 1, 2024 and includes an option to extend the lease through August 31, 2039. NAIE leases facility space in Manno, Switzerland from two unaffiliated third parties. The leased spaces total approximately 125,000 square feet .
The fourth amendment extends the term of the lease by an additional ten years and five months commencing April 1, 2024 and includes an option to extend the lease through August 31, 2039. NAIE leases facility space in Manno, Switzerland from two unaffiliated third parties. The leased spaces total approximately 116,000 square feet .
Silvio Tarchini dated October 19, 2018 Exhibit 10.5 of NAI’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, filed with the commission on November 13, 2018 10.19 Lease of Facilities in Manno, Switzerland between NAIE and Sofinol SA dated November 5, 2018 Exhibit 10.6 of NAI’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, filed with the commission on November 13, 2018 10.20 Amended and Restated Exclusive Manufacturing Agreement with Juice Plus+ dated March 31, 2019 Exhibit 10.48 of NAI’s Current Report on Form 8-K Form 8-K dated March 31, 2019, filed with the commission on April 5, 2019 10.21 Third amendment to the Amended and Restated Employment Agreement, by and between NAI and Michael E.
Silvio Tarchini dated October 19, 2018 Exhibit 10.5 of NAI’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, filed with the commission on November 13, 2018 43 Table of Contents 10.19 Lease of Facilities in Manno, Switzerland between NAIE and Sofinol SA dated November 5, 2018 Exhibit 10.6 of NAI’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, filed with the commission on November 13, 2018 10.20 Amended and Restated Exclusive Manufacturing Agreement with Juice Plus+ dated March 31, 2019 Exhibit 10.48 of NAI’s Current Report on Form 8-K Form 8-K dated March 31, 2019, filed with the commission on April 5, 2019 10.21 Third amendment to the Amended and Restated Employment Agreement, by and between NAI and Michael E.
Employees are not required to contribute to the plan to receive the discretionary profit-sharing contribution. We did not make any discretionary profit-sharing contributions in fiscal 2024 or in fiscal 2023 . We have a “Cafeteria Plan” pursuant to Section 125 of the Code, whereby health care benefits are provided for active employees through insurance companies.
Employees are not required to contribute to the plan to receive the discretionary profit-sharing contribution. We did not make any discretionary profit-sharing contributions in fiscal 2025 or in fiscal 2024 . We have a “Cafeteria Plan” pursuant to Section 125 of the Code, whereby health care benefits are provided for active employees through insurance companies.
We measure effectiveness by comparing the cumulative change in the hedge contract with the cumulative change in the hedged item as well as ensuring the assumptions we made at hedge inception have not materially changed. No hedging relationships were terminated as a result of ineffective hedging for the years ended June 30, 2024 and June 30, 2023 .
We measure effectiveness by comparing the cumulative change in the hedge contract with the cumulative change in the hedged item as well as ensuring the assumptions we made at hedge inception have not materially changed. No hedging relationships were terminated as a result of ineffective hedging for the years ended June 30, 2025 and June 30, 2024 .
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2024 and 2023, and the consolidated results of its operations and its cash flows for each of the two years in the period ended June 30, 2024, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2025 and 2024, and the consolidated results of its operations and its cash flows for each of the two years in the period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
Except for cash and cash equivalents, as of June 30, 2024 and June 30, 2023 , we did not have any financial assets or liabilities classified as Level 1. We classify derivative forward exchange contracts as Level 2 assets and liabilities. The fair values were determined by obtaining pricing from our bank.
Except for cash and cash equivalents, as of June 30, 2025 and June 30, 2024 , we did not have any financial assets or liabilities classified as Level 1. We classify derivative forward exchange contracts as Level 2 assets and liabilities. The fair values were determined by obtaining pricing from our bank.
Exhibit 10.35 of NAI's Current Report on Form 8-K dated October 12, 2022, file with the commission on October 13, 2022 10.34 Revolving Line of Credit Note made by NAI for the benefit of Wells Fargo dated September 19, 2022 in the amount of $20,000,000.
Exhibit 10.35 of NAI's Current Report on Form 8-K dated October 12, 2022, filed with the commission on October 13, 2022 10.34 Revolving Line of Credit Note made by NAI for the benefit of Wells Fargo dated September 19, 2022 in the amount of $20,000,000.
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 are recognized in the period the adjustments are identified.
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 adjustment is recognized in the period the adjustments are identified.
Based on this assessment, management believes our internal control over financial reporting was effective as of June 30, 2024 based on the criteria issued by COSO. This assessment does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.
Based on this assessment, management believes our internal control over financial reporting was effective as of June 30, 2025 based on the criteria issued by COSO. This assessment does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.
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. Stock Incentive Plans For the years ended June 30, 2024 and June 30, 2023 , the Company had no stock options outstanding.
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. Stock Incentive Plans For the years ended June 30, 2025 and June 30, 2024 , the Company had no stock options outstanding.
As of June 30, 2024 , the notional amounts of our foreign exchange contracts not designated as cash flow hedges were approximately $11.9 million (CHF 10.5 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.
As of June 30, 2025 , the notional amounts of our foreign exchange contracts not designated as cash flow hedges were approximately $11.8 million (CHF 9.5 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.
During the year ended June 30, 2024 and prior, we entered into 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 2025.
During the year ended June 30, 2025 and prior, we entered into 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 June 2026.
During the year ended June 30, 2024 , 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).
During the year ended June 30, 2025 , 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).
Management performed an assessment of the effectiveness of our internal control over financial reporting as of June 30, 2024 based upon criteria in an Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework).
Management performed an assessment of the effectiveness of our internal control over financial reporting as of June 30, 2025 based upon criteria in an Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework).
The lease is for an initial five -year term commencing on January 1, 2019 and NAIE can terminate the lease with 12 months advance notice given on June 30th or December 31st each year of the initial term.
The lease was for an initial five -year term commencing on January 1, 2019 and NAIE can terminate the lease with 12 months advance notice given on June 30th or December 31st each year of the initial term.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2024.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2025. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2025.
(b) Management ’ s Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, and for performing an assessment of the effectiveness of internal control over financial reporting as of June 30, 2024.
(b) Management ’ s Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, and for performing an assessment of the effectiveness of internal control over financial reporting as of June 30, 2025.
Instead, taxpayers are mandated to capitalize these expenses and amortize them over five years for research conducted within the United States and 15 years for research conducted abroad, as stipulated in IRC Section 174.
Instead, taxpayers were mandated to capitalize these expenses and amortize them over five years for research conducted within the United States and 15 years for research conducted abroad, as stipulated in IRC Section 174.
LeDoux, effective July 1, 2018* Exhibit 10.1 of NAI’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, filed with the commission on November 13, 2018 49 Table of Contents 10.15 First amendment to the Amended and Restated Employment Agreement, by and between NAI and Kenneth E.
LeDoux, effective July 1, 2018* Exhibit 10.1 of NAI’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, filed with the commission on November 13, 2018 10.15 First amendment to the Amended and Restated Employment Agreement, by and between NAI and Kenneth E.
For tax years commencing on or after January 1, 2022, the Tax Cuts and Jobs Act of 2017, also eliminates the ability to immediately deduct research and development costs.
For tax years commencing on or after January 1, 2022, the Tax Cuts and Jobs Act of 2017, also eliminated the ability to immediately deduct research and development costs.
Our tax years for the fiscal years ended June 30, 2018 and forward are subject to examination by the state tax authorities. Our tax years for the fiscal year ended June 30, 2023 and forward are subject to assessment by the Swiss tax authorities.
Our tax years for the fiscal years ended June 30, 2019 and forward are subject to examination by the state tax authorities. Our tax years for the fiscal year ended June 30, 2023 and forward are subject to assessment by the Swiss tax authorities.
The financial statements listed below are included under Item 8 of this report: • Consolidated Balance Sheets as of June 30, 2024 and 2023; • Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended June 30, 2024 and 2023; • Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2024 and 2023; • Consolidated Statements of Cash Flows for the years ended June 30, 2024 and 2023; and • Notes to Consolidated Financial Statements.
The financial statements listed below are included under Item 8 of this report: • Consolidated Balance Sheets as of June 30, 2025 and 2024; • Consolidated Statements of Operations and Comprehensive Loss for the years ended June 30, 2025 and 2024; • Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2025 and 2024; • Consolidated Statements of Cash Flows for the years ended June 30, 2025 and 2024; and • Notes to Consolidated Financial Statements.
(the “Company”) as of June 30, 2024 and 2023, and the related consolidated statements of operations and comprehensive (loss) income, stockholders’ equity and cash flows for each of the two years in the period ended June 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).
(the “Company”) as of June 30, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the two years in the period ended June 30, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).
Our research and development expenses for the last two fiscal years ended June 30 were $1.9 million for fiscal 2024 and $2.1 million for fiscal 2023 . These costs are included in selling, general and administrative expenses and cost of goods sold. Advertising Costs We expense the production costs of advertising the first time the advertising takes place.
Our research and development expenses for the last two fiscal years ended June 30 were $1.8 million for fiscal 2025 and $1.9 million for fiscal 2024 . These costs are included in selling, general and administrative expenses and cost of goods sold. Advertising Costs We expense the production costs of advertising the first time the advertising takes place.
Actual results could differ from those estimates and our assumptions may prove to be inaccurate. 34 Table of Contents Net (Loss) Income per Common Share We compute basic net (loss) income per common share using the weighted average number of common shares outstanding during the year, and diluted net income per common share using the additional dilutive effect of all dilutive securities.
Actual results could differ from those estimates and our assumptions may prove to be inaccurate. Net Loss per Common Share We compute basic net loss per common share using the weighted average number of common shares outstanding during the year, and diluted net loss per common share using the additional dilutive effect of all dilutive securities.
We did not have any ownership changes that met this criterion during the fiscal years ended June 30, 2024 and June 30, 2023 . We are subject to taxation in the U.S., Switzerland and various state jurisdictions. Our tax years for the fiscal year ended June 30, 2019 and forward are subject to examination by the U.S. tax authorities.
We did not have any ownership changes that met this criterion during the fiscal years ended June 30, 2025 and June 30, 2024 . We are subject to taxation in the U.S., Switzerland and various state jurisdictions. Our tax years for the fiscal year ended June 30, 2020 and forward are subject to examination by the U.S. tax authorities.
The premiums expensed to results from operations for these benefits totaled $1.4 million for the fiscal year ended June 30, 2024 and $1.7 million for the fiscal year ended June 30, 2023 . Deferred Compensation Plan Effective July 16, 2020, the Board of Directors approved and adopted a Non-Qualified Incentive Plan (the “Incentive Plan”).
The premiums expensed to results from operations for these benefits totaled $1.6 million for the fiscal year ended June 30, 2025 and $1.4 million for the fiscal year ended June 30, 2024 . Deferred Compensation Plan Effective July 16, 2020, the Board of Directors approved and adopted a Non-Qualified Incentive Plan (the “Incentive Plan”).
The total contributions under the plan charged to income from operations totaled $0.6 million for fiscal 2024 and $0.7 million for fiscal 2023 . Additionally, we have a discretionary profit-sharing plan pursuant to Section 401 (k) of the Code, whereby we may contribute an additional percentage of compensation.
The total contributions under the plan charged to income from operations totaled $0.5 million for fiscal 2025 and $0.6 million for fiscal 2024 . Additionally, we have a discretionary profit-sharing plan pursuant to Section 401 (k) of the Code, whereby we may contribute an additional percentage of compensation.
Date: September 27, 2024 NATURAL ALTERNATIVES INTERNATIONAL, INC. By: /s/ Mark A. LeDoux Mark A. LeDoux, Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Natural Alternatives International, Inc. and in the capacities and on the dates indicated.
Date: September 23, 2025 NATURAL ALTERNATIVES INTERNATIONAL, INC. By: /s/ Mark A. LeDoux Mark A. LeDoux, Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Natural Alternatives International, Inc. and in the capacities and on the dates indicated.
Stockholders ’ Equity Treasury Stock On September 18, 2020, the Board of Directors authorized a $2.0 million increase to our stock repurchase plan (“Repurchase Plan”), thus bringing the total authorized repurchase amount to $12.0 million.
Stockholders' Equity Treasury Stock On September 18, 2020, the Board of Directors authorized a $2.0 million increase to our stock repurchase plan (“Repurchase Plan”), thus bringing the total authorized repurchase amount to $12.0 million.
As of June 30, 2024 , the notional amounts of our foreign currency contracts not designated as cash flow hedges were $11.9 million (CHF 10.5 million). These contracts will mature in the first quarter of fiscal year 2025.
As of June 30, 2025 , the notional amounts of our foreign currency contracts not designated as cash flow hedges were $11.8 million (CHF 9.5 million). These contracts will mature in the first quarter of fiscal year 2026.
Additionally, amounts due related to our beta-alanine raw material sales were 4.4% of gross accounts receivable at June 30, 2024 and 21.4% of gross accounts receivable at June 30, 2023 . Concentrations of credit risk related to the remaining accounts receivable balances are limited due to the number of customers comprising our remaining customer base. B.
Additionally, amounts due related to our beta-alanine raw material sales were 6.8% of gross accounts receivable at June 30, 2025 and 4.4% of gross accounts receivable at June 30, 2024 . Concentrations of credit risk related to the remaining accounts receivable balances are limited due to the number of customers comprising our remaining customer base. B.
During the year ended June 30, 2024 , we excluded 232,574 shares of unvested restricted stock. For the year ended June 30, 2023 we excluded restricted stock totaling 60,497, as their impact would have been anti-dilutive. Concentrations of Credit Risk Financial instruments that subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.
During the year ended June 30, 2025 , we excluded 222,551 shares of unvested restricted stock. For the year ended June 30, 2024 we excluded restricted stock totaling 232,574, as their impact would have been anti-dilutive. Concentrations of Credit Risk Financial instruments that subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.
Signature Title Date /s/ Mark A. LeDoux Chief Executive Officer and Chairman of the Board of Directors September 27, 2024 (Mark A. LeDoux) (principal executive officer) /s/ Michael E. Fortin Chief Financial Officer September 27, 2024 (Michael E. Fortin) (principal financial officer and principal accounting officer) /s/ Alan G. Dunn Director September 27, 2024 (Alan G. Dunn) /s/ L.
Signature Title Date /s/ Mark A. LeDoux Chief Executive Officer and Chairman of the Board of Directors September 23, 2025 (Mark A. LeDoux) (principal executive officer) /s/ Michael E. Fortin Chief Financial Officer September 23, 2025 (Michael E. Fortin) (principal financial officer and principal accounting officer) /s/ Alan G. Dunn Director September 23, 2025 (Alan G. Dunn) /s/ L.
We estimate returns based on historical experience and recognize a returns liability for any estimated returns. As of June 30, 2024 , we have $0 in our returns reserve. We currently own certain U.S. patents, and each patent’s corresponding foreign patent applications.
We estimate returns based on historical experience and recognize a returns liability for any estimated returns. As of June 30, 2025 , we have $11,000 in our returns reserve. We currently own certain U.S. patents, and each patent’s corresponding foreign patent applications.
We incurred and expensed advertising costs in the amount of $0.3 million during the fiscal year ended June 30, 2024 and $0.7 million during fiscal 2023 . These costs are included in selling, general and administrative expenses.
We incurred and expensed advertising costs in the amount of $0.4 million during the fiscal year ended June 30, 2025 and $0.3 million during fiscal 2024 . These costs are included in selling, general and administrative expenses.
PART III The information called for under Items 10- 14 of this Part III will be incorporated by reference from our definitive proxy statement for our Annual Meeting of Stockholders to be held on December 6, 2024, to be filed on or before October 28, 2024. 48 Table of Contents PART IV ITEM 15.
PART III The information called for under Items 10 - 14 of this Part III will be incorporated by reference from our definitive proxy statement to be filed on or before October 28, 2025 for our Annual Meeting of Stockholders to be held on December 5, 2025 . 42 Table of Contents PART IV ITEM 15.
Our defined benefit pension plan’s weighted average asset allocation at June 30 and weighted average target allocation were as follows: Target 2024 2023 Allocation Equity securities 72 % 64 % 53 % Debt securities 14 % 14 % 41 % Commodities 0 % 12 % 4 % Cash alternatives 14 % 10 % 2 % 100 % 100 % 100 % The underlying basis of the investment strategy of our defined benefit pension plan is to ensure that pension funds are available to meet the plan’s benefit obligations when due.
Our defined benefit pension plan’s weighted average asset allocation at June 30 and weighted average target allocation were as follows: Target 2025 2024 Allocation Equity securities 60 % 72 % 53 % Debt securities 35 % 14 % 41 % Cash alternatives 4 % 14 % 2 % Commodities 1 % 0 % 4 % 100 % 100 % 100 % The underlying basis of the investment strategy of our defined benefit pension plan is to ensure that pension funds are available to meet the plan’s benefit obligations when due.
(c) Changes in Internal Control Over Financial Reporting There were no changes to our internal control over financial reporting during the fourth quarter ended June 30, 2024 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None .
(c) Changes in Internal Control Over Financial Reporting There were no changes to our internal control over financial reporting during the fourth quarter ended June 30, 2025 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B.
We place our cash and cash equivalents with highly rated financial institutions. Credit risk with respect to receivables is primarily concentrated with our three largest customers, whose receivable balances collectively represented 72.6% of gross accounts receivable at June 30, 2024 and 47.4% at June 30, 2023 .
We place our cash and cash equivalents with highly rated financial institutions. Credit risk with respect to receivables is primarily concentrated with our three largest customers, whose receivable balances collectively represented 67.8% of gross accounts receivable at June 30, 2025 and 72.6% at June 30, 2024 .
Additional payments based on the change in an index or rate, or payments based on a change in our portion of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability.
Additional payments based on the change in an index or rate, or payments based on a change in our portion of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred.
This initial term of this lease ends on December 31, 2024 and as of June 30, 2024, we have not provided notification of terminating this lease, so the term automatically extended to December 31, 2025. On January 26, 2024, we exercised the early termination of an apartment lease in Lugano, Switzerland.
This initial term of this lease ended on December 31, 2024 and as of June 30, 2025 , we have not provided notification of terminating this lease, so the term automatically extended to December 31, 2026. 37 Table of Contents On January 26, 2024, we exercised the early termination of an apartment lease in Lugano, Switzerland.
As of June 30, 2023 , a net loss of approximately $0.2 million, offset by approximately $0.1 million of deferred taxes, related to derivative instruments designated as cash flow hedges was recorded in OCI.
As of June 30, 2025 , a net loss of approximately $1.6 million offset by approximately $0.4 million of deferred taxes, related to derivative instruments designated as cash flow hedges was recorded in OCI.
As of June 30, 2024 , we held derivative 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, which is primarily the Euro.
As of June 30, 2025 , we held derivative 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, which are the Euro and Swiss Franc.
We also seek to commercialize our patent and trademark estate related to the ingredient known as beta-alanine sold under our CarnoSyn®, SR CarnoSyn® trademarks, and recently announced TriBsyn™ tradename through direct raw material sales and various license and similar arrangements.
We also seek to commercialize our patent and trademark estate related to the ingredient known as beta-alanine sold under our CarnoSyn®, SR CarnoSyn® and TriBsyn™ trademarks through raw material and finished product sales and various license and similar arrangements.
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.
Amounts outstanding that are subject to a fluctuating interest rate may be prepaid at any time without penalty. 31 Table of Contents Amounts outstanding under our credit line 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.
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 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. We evaluate the likelihood of customers taking advantage of these discounts based on historical payment trends.
We calculated basic and diluted net (loss) income per common share as follows (in thousands, except per share data): For the Years Ended June 30, 2024 2023 Numerator Net (loss) income $ (7,217 ) $ 2,522 Denominator Basic weighted average common shares outstanding 5,871 5,863 Dilutive effect of stock options and restricted stock shares — 14 Diluted weighted average common shares outstanding 5,871 5,878 Basic net (loss) income per common share $ (1.23 ) $ 0.43 Diluted net (loss) income per common share $ (1.23 ) $ 0.43 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.
We calculated basic and diluted net (loss) income per common share as follows (in thousands, except per share data): For the Years Ended June 30, 2025 2024 Numerator Net loss $ (13,575 ) $ (7,217 ) Denominator Basic weighted average common shares outstanding 5,947 5,871 Dilutive effect of stock options and restricted stock shares — — Diluted weighted average common shares outstanding 5,947 5,871 Basic net loss per common share $ (2.28 ) $ (1.23 ) Diluted net loss per common share $ (2.28 ) $ (1.23 ) 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.
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. 32 Table of Contents Defined Benefit Pension Plan We formerly sponsored a defined benefit pension plan.
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 which expired on September 3, 2024. Defined Benefit Pension Plan We formerly sponsored a defined benefit pension plan.
NAIE’s effective tax rate for the fiscal year ended June 30, 2024 for Swiss federal, cantonal and communal taxes is approximately 1%.
NAIE’s effective tax rate for the fiscal year ended June 30, 2025 for Swiss federal, cantonal and communal taxes is approximately 21% .
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
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): Year ended June 30, 2024 2023 % of Total % of Total Raw Material Raw Raw Material Raw Purchases by Material Purchases by Material Supplier Purchases Supplier Purchases Supplier 1 $ 11,624 23 % $ 11,487 13 % $ 11,624 23 % $ 11,487 13 % L.
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): Year ended June 30, 2025 2024 % of Total % of Total Raw Material Raw Raw Material Raw Purchases by Material Purchases by Material Supplier Purchases Supplier Purchases Supplier 1 $ 12,004 18 % $ 11,624 23 % $ 12,004 18 % $ 11,624 23 % L.
During fiscal 2024 and 2023 , we recognized no impairment losses. Derivative Financial Instruments We may use derivative financial instruments in the management of our foreign currency exchange risk inherent in our forecasted sales denominated in Euros, our long-term lease liability denominated in Swiss Francs and our exposure to interest rate fluctuations related to our term-note with Wells Fargo.
Derivative Financial Instruments We may use derivative financial instruments in the management of our foreign currency exchange risk inherent in our forecasted sales denominated in Euros and Swiss Francs, our long-term lease liability denominated in Swiss Francs and our exposure to interest rate fluctuations related to our term-note with Wells Fargo.
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. The Fourth Amendment to the Credit Agreement with Wells Fargo effective February 13, 2024, currently prohibits most stock repurchases (see Note F).
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. Our Credit Agreement with Wells Fargo as amended, currently prohibits most stock repurchases (see Note F).
Fair value of derivative instruments classified as Level 2 assets and liabilities consisted of the following (in thousands): June 30, June 30, 2024 2023 Interest Swap – Other Current Assets $ 111 $ — Euro Forward Contract– Current Assets 492 250 Swiss Franc Forward Contract – Current Assets — 140 Total Derivative Contracts – Current Assets 603 390 Interest Swap – Other Noncurrent Assets — 532 Euro Forward Contract– Other Noncurrent Assets 78 15 Total Derivative Contracts – Other Noncurrent Assets 78 547 Swiss Franc Forward Contract – Current Liabilities (91 ) — Total Derivative Contracts – Current Liabilities (91 ) — Fair Value Net Asset – all Derivative Contracts $ 590 $ 937 We also classify any outstanding line of credit and term loan balance as a Level 2 liability, as the fair value is based on inputs that can be derived from information available in publicly quoted markets.
Fair value of derivative instruments classified as Level 2 assets and liabilities consisted of the following (in thousands): June 30, June 30, 2025 2024 Interest Swap – Other Current Assets $ — $ 111 Euro Forward Contract– Current Assets — 492 Swiss Franc Forward Contract – Current Assets 368 — Total Derivative Contracts – Current Assets 368 603 Euro Forward Contract– Other Noncurrent Assets — 78 Total Derivative Contracts – Other Noncurrent Assets — 78 Euro Forward Contract–Current Liabilities (1,704 ) — Swiss Franc Forward Contract – Current Liabilities (263 ) (91 ) Total Derivative Contracts – Current Liabilities (1,967 ) (91 ) Fair Value Net Asset – all Derivative Contracts $ (1,599 ) $ 590 We also classify any outstanding line of credit and term loan balance as a Level 2 liability, as the fair value is based on inputs that can be derived from information available in publicly quoted markets.
Other information related to leases was as follows (in thousands) for the year ended June 30, Supplemental Cash Flows Information 2024 2023 Cash paid for amounts included in the measurement of operating lease liabilities $ 2,966 $ 3,291 Net increase in operating lease liabilities and right-of-use assets due to lease remeasurement 25,692 906 36 Table of Contents E.
Other information related to leases was as follows (in thousands) for the year ended June 30, Supplemental Cash Flows Information 2025 2024 Cash paid for amounts included in the measurement of operating lease liabilities $ 4,302 $ 2,966 Net increase in operating lease liabilities and right-of-use assets due to lease remeasurement - 25,692 E.
The following benefit payments are expected to be paid (in thousands): 2025 $ 1,009 2026 13 2027 101 2028 29 2029 32 2030-2034 199 Total benefit payments expected to be paid $ 1,383 The weighted-average rates used for the years ended June 30 in determining the defined benefit pension plan’s net pension costs, were as follows: 2024 2023 Discount rate 5.28 % 4.89 % Expected long-term rate of return 6.70 % 6.24 % Compensation increase rate N/A N/A Our expected rate of return is determined based on a methodology that considers historical returns of multiple classes analyzed to develop a risk-free real rate of return and risk premiums for each asset class.
The following benefit payments are expected to be paid (in thousands): 2026 $ 781 2027 101 2028 29 2029 33 2030 — 2031-2035 244 Total benefit payments expected to be paid $ 1,188 35 Table of Contents The weighted-average rates used for the years ended June 30 in determining the defined benefit pension plan’s net pension costs, were as follows: 2025 2024 Discount rate 5.29 % 5.28 % Expected long-term rate of return 6.70 % 6.70 % Compensation increase rate N/A N/A Our expected rate of return is determined based on a methodology that considers historical returns of multiple classes analyzed to develop a risk-free real rate of return and risk premiums for each asset class.
The total remaining unrecognized compensation cost related to unvested restricted stock shares amounted to $1.7 million at June 30, 2024 and the weighted average remaining requisite service period of unvested restricted stock shares was 2.1 years. J.
The total remaining unrecognized compensation cost related to unvested restricted stock shares amounted to $0.9 million at June 30, 2025 and the weighted average remaining requisite service period of unvested restricted stock shares was 1.6 years. J.
However, as part of these dividends, we were required to pay a 5% Swiss withholding tax totaling $0.3 million in fiscal 2024 and $0.7 million in fiscal 2023 which were also accrued for as part of the implementation of the Tax Act in fiscal 2018. 39 Table of Contents A reconciliation of our income tax (benefit) provision computed by applying the statutory federal income tax rate of 21% for fiscal 2024 and for fiscal 2023 to net (loss) income before income taxes for the year ended June 30 is as follows (dollars in thousands): 2024 2023 Income taxes computed at statutory federal income tax rate $ (2,033 ) $ 749 State income taxes, net of federal income tax expense (215 ) 90 Permanent differences (20 ) 8 Foreign tax rate differential 131 18 Tax credits (170 ) (347 ) Stock based compensation 93 61 Global intangible low-taxed income (GILTI) — 355 Return to provision - differences (33 ) 99 Income tax (benefit) provision as reported $ (2,247 ) $ 1,033 Effective tax rate (23.7 )% 29.1 % We expect our U.S. federal statutory rate to be 21% for fiscal years going forward.
However, as part of these dividends, we were required to pay a 5% Swiss withholding tax totaling $0.3 million in fiscal 2024 which was also accrued for as part of the implementation of the Tax Act in fiscal 2018. 33 Table of Contents A reconciliation of our income tax provision (benefit) computed by applying the statutory federal income tax rate of 21% for fiscal 2025 and for fiscal 2024 to net loss before income taxes for the year ended June 30 is as follows (dollars in thousands): 2025 2024 Income taxes computed at statutory federal income tax rate $ (2,256 ) $ (2,033 ) State income taxes, net of federal income tax expense (177 ) (215 ) Permanent differences 10 (20 ) Foreign tax rate differential (2 ) 131 Tax credits (61 ) (170 ) Stock based compensation 123 93 Global intangible low-taxed income (GILTI) 233 — Return to provision - differences 150 (33 ) Change in valuation allowance, net 4,815 — Income tax provision (benefit) as reported $ 2,835 $ (2,247 ) Effective tax rate (26.4 )% (23.7 )% We expect our U.S. federal statutory rate to be 21% for fiscal years going forward.
Commitments We lease a total of approximately 162,000 square feet at our manufacturing facility in Vista, California from an unaffiliated third party under a non-cancelable operating lease. On July 31, 2013, we executed a third amendment to the lease for our manufacturing facility in Vista, California.
Commitments We lease a total of approximately 162,000 square feet at our manufacturing facility in Vista, California from an unaffiliated third party under a non-cancelable operating lease. On July 18, 2023, we entered into a fourth amendment to the lease of our Vista, California manufacturing facility.
The Company has federal and state tax credits of $0.8 million, which, if unutilized, will begin to expire in fiscal year 2041.
The Company has state net operating loss carryforwards of $6.8 million, which, if unutilized, will begin to expire beginning in fiscal year 2032. The Company has federal and state tax credits of $0.8 million, which, if unutilized, will begin to expire in fiscal year 2041.
The following is a summary of changes in plan assets and benefit obligations recognized in other comprehensive income (loss) (in thousands): 2024 2023 Net loss $ (88 ) $ (8 ) Settlement loss — (28 ) Amortization of net loss (39 ) (50 ) Total recognized in other comprehensive loss $ (127 ) $ (86 ) Total recognized in net periodic benefit cost and other comprehensive loss $ (81 ) $ (5 ) 41 Table of Contents The estimated net loss for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is approximately $24,000.
The following is a summary of changes in plan assets and benefit obligations recognized in other comprehensive income (loss) (in thousands): 2025 2024 Net income (loss) $ 21 $ (88 ) Settlement loss (62 ) — Amortization of net loss (24 ) (39 ) Total recognized in other comprehensive loss $ (65 ) $ (127 ) Total recognized in net periodic benefit cost and other comprehensive loss $ 16 $ (81 ) The estimated net loss for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is approximately $17,000.
Net sales by geographic region, based on the customers’ location, for the two years ended June 30 were as follows (in thousands): 2024 2023 United States $ 73,512 $ 109,277 Markets outside the United States 40,284 44,738 Total net sales $ 113,796 $ 154,015 Products manufactured by NAIE accounted for 79% of consolidated net sales in markets outside the U.S. in fiscal 2024 and in fiscal 2023 .
Net sales by geographic region, based on the customers’ location, for the two years ended June 30 were as follows (in thousands): 2025 2024 United States $ 79,128 $ 73,512 Markets outside the United States 50,732 40,284 Total net sales $ 129,860 $ 113,796 Products manufactured by NAIE accounted for 85% of consolidated net sales in markets outside the U.S. in fiscal 2025 and 79% of consolidated net sales in markets outside the U.S. in fiscal 2024 .
Economic Dependency We had substantial net sales to certain customers during the fiscal years ended June 30 shown in the following table.
K. Economic Dependency We had substantial net sales to certain customers in our private-label contract manufacturing segment during the fiscal years ended June 30 shown in the following table.
As of June 30, 2024 , the weighted average remaining lease term for our operating leases was 9.5 years. The weighted average discount rate for our operating leases was 5.92%. As of June 30, 2023 , the weighted average remaining lease term for our operating leases was 5.3 years and the weighted average discount rate was 4.12%.
As of June 30, 2025 , the weighted average remaining lease term for our operating leases was 8.6 years. The weighted average discount rate for our operating leases was 5.94%. As of June 30, 2024 , the weighted average remaining lease term for our operating leases was 9.5 years and the weighted average discount rate was 5.92%.
As of June 30, 2024, we had $3.4 million outstanding on our line of credit and $9.2 million outstanding on our term loan. As of June 30, 2023, we had no balance outstanding on our line of credit and $9.5 million outstanding on our term loan.
As of June 30, 2025 , we had $1.9 million outstanding on our line of credit and of $8.9 million outstanding on our term loan. As of June 30, 2024 , we had $3.4 million outstanding on our line of credit and $9.2 million outstanding on our term loan.
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%. 45 Table of Contents M.
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%. This interest rate swap contract expired on September 3, 2024. M.
As we are currently subject to these SEC requirements, this ASU is not expected to have a material impact on our Consolidated Financial Statements or related disclosures. In November 2023, the FASB issued ASU 2023 - 07, "Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures".
As we are currently subject to these SEC requirements, this ASU is not expected to have a material impact on our Consolidated Financial Statements or related disclosures. In December 2023, the FASB issued ASU 2023 - 09, "Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures".
Net Periodic Benefit Cost The components included in the defined benefit pension plan’s net periodic benefit expense for the fiscal years ended June 30 were as follows (in thousands): 2024 2023 Interest cost $ 49 $ 46 Expected return on plan assets (42 ) (42 ) Recognized actuarial loss 39 50 Settlement loss - 27 Net periodic benefit expense $ 46 $ 81 In the fiscal year ended June 30, 2024 , we contributed $0.1 million to our defined benefit pension plan, and in the fiscal year ended June 30, 2023 , we did not contribute to the plan.
Net Periodic Benefit Cost The components included in the defined benefit pension plan’s net periodic benefit expense for the fiscal years ended June 30 were as follows (in thousands): 2025 2024 Interest cost $ 46 $ 49 Expected return on plan assets (51 ) (42 ) Recognized actuarial loss 24 39 Settlement loss 62 — Net periodic benefit expense $ 81 $ 46 In the fiscal year ended June 30, 2025 , we contributed $48,000 to our defined benefit pension plan, and in the fiscal year ended June 30, 2024 , we contributed $116,000 to our defined benefit pension plan.
Effective January 1, 2022, all employees are eligible to participate in the plan the first of the month following 30 days of employment. Also effective, January 1, 2022, we match 100% of the first 5% of a participant’s compensation contributed to the plan under the 401 (k) plan.
Effective January 1, 2022, all employees became eligible to participate in the plan the first of the month following 30 days of employment. Also effective, January 1, 2025, we match 50% of the first 6% of a participant’s compensation contributed to the plan.
Restricted stock activity for the year ended June 30, 2024 was as follows: Weighted Number of Average Grant Shares – Date Fair 2020 Plan Value Nonvested at June 30, 2023 223,682 $ 10.39 Granted 166,500 $ 6.09 Vested (104,075 ) $ 11.39 Forfeited (3,000 ) $ 9.59 Nonvested at June 30, 2024 283,107 $ 7.50 Available for grant at June 30, 2024 182,877 43 Table of Contents Restricted stock activity for the year ended June 30, 2023 was as follows: Weighted Number of Average Grant Shares – Date Fair 2009 Plan Value Nonvested at June 30, 2022 1,666 $ 8.50 Granted — $ — Vested (1,666 ) $ 8.50 Forfeited — $ — Nonvested at June 30, 2023 — $ — Available for grant at June 30, 2023 — Weighted Number of Average Grant Shares – Date Fair 2020 Plan Value Nonvested at June 30, 2022 186,227 $ 12.56 Granted 123,000 $ 8.79 Vested (71,146 ) $ 13.04 Forfeited (14,399 ) $ 11.69 Nonvested at June 30, 2023 223,682 $ 10.39 Available for grant at June 30, 2023 349,377 Restricted stock grants, granted to members of our Board of Directors and certain key members of our management team, vest over a period of years from the date of grant and the unvested shares cannot be sold or otherwise transferred and the right to receive dividends, if declared by our Board of Directors, is forfeitable until the shares become vested.
Restricted stock activity for the year ended June 30, 2025 was as follows: Weighted Number of Average Grant Shares – Date Fair 2020 Plan Value Nonvested at June 30, 2024 283,107 $ 7.50 Granted 24,000 $ 3.84 Vested (133,122 ) $ 8.31 Forfeited — $ — Nonvested at June 30, 2025 173,985 $ 6.38 Available for grant at June 30, 2025 158,877 Restricted stock activity for the year ended June 30, 2024 was as follows: Weighted Number of Average Grant Shares – Date Fair 2020 Plan Value Nonvested at June 30, 2023 223,682 $ 10.39 Granted 166,500 $ 6.09 Vested (104,075 ) $ 11.39 Forfeited (3,000 ) $ 9.59 Nonvested at June 30, 2024 283,107 $ 7.50 Available for grant at June 30, 2024 182,877 Restricted stock grants, granted to members of our Board of Directors and certain key members of our management team, vest over a period of up to three years from the date of grant and the unvested shares cannot be sold or otherwise transferred and the right to receive dividends, if declared by our Board of Directors, is forfeitable until the shares become vested.
Consolidated Statements of Stockholders ’ Equity For the Years Ended June 30 (Dollars in thousands) Accumulated Additional Other Common Stock Paid-in Retained Treasury Stock 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 Issuance of common stock for restricted stock grants 123,000 2 (2 ) — — — — — Compensation expense related to stock compensation plans — — 1,015 — — — — 1,015 Repurchase of common stock — — — — 164,399 (1,503 ) — (1,503 ) Forfeiture of restricted stock — — — — 14,399 — — — Change in minimum pension liability, net of tax — — — — — — 64 64 Unrealized loss resulting from change in fair value of derivative instruments, net of tax — — — — — — (1,846 ) (1,846 ) Net income — — — 2,522 — — — 2,522 Balance, June 30, 2023 9,314,406 $ 91 $ 31,436 $ 80,183 3,240,593 $ (22,855 ) $ (83 ) $ 88,772 Issuance of common stock for restricted stock grants 166,500 2 (2 ) — — — — — Compensation expense related to stock compensation plans — — 1,200 — — — — 1,200 Repurchase of common stock — — — — 37,128 (221 ) — (221 ) Forfeiture of restricted stock — — — — 3,000 — — — Change in minimum pension liability, net of tax — — — — — — 102 102 Unrealized loss resulting from change in fair value of derivative instruments, net of tax — — — — — — (41 ) (41 ) Net loss — — — (7,217 ) — — — (7,217 ) Balance, June 30, 2024 9,480,906 $ 93 $ 32,634 $ 72,966 3,280,721 $ (23,076 ) $ (22 ) $ 82,595 See accompanying notes to consolidated financial statements. 28 Table of Contents Natural Alternatives International, Inc.
Consolidated Statements of Stockholders ’ Equity For the Years Ended June 30 (Dollars in thousands) Accumulated Additional Other Common Stock Paid-in Retained Treasury Stock Comprehensive Shares Amount Capital Earnings Shares Amount Income (Loss) Total Balance, June 30, 2023 9,314,406 $ 91 $ 31,436 $ 80,183 3,240,593 $ (22,855 ) $ (83 ) $ 88,772 Issuance of common stock for restricted stock grants 166,500 2 (2 ) — — — — — Compensation expense related to stock compensation plans — — 1,200 — — — — 1,200 Repurchase of common stock — — — — 37,128 (221 ) — (221 ) Forfeiture of restricted stock — — — — 3,000 — — — Change in minimum pension liability, net of tax — — — — — — 102 102 Unrealized loss resulting from change in fair value of derivative instruments, net of tax — — — — — — (41 ) (41 ) Net loss — — — (7,217 ) — — — (7,217 ) Balance, June 30, 2024 9,480,906 $ 93 $ 32,634 $ 72,966 3,280,721 $ (23,076 ) $ (22 ) $ 82,595 Issuance of common stock for restricted stock grants 24,000 — — — — — — — Compensation expense related to stock compensation plans — — 977 — — — — 977 Repurchase of common stock — — — — 45,972 (178 ) — (178 ) Change in minimum pension liability, net of tax — — — — — — 50 50 Unrealized loss resulting from change in fair value of derivative instruments, net of tax — — — — — — (1,443 ) (1,443 ) Net loss — — — (13,575 ) — — — (13,575 ) Balance, June 30, 2025 9,504,906 $ 93 $ 33,611 $ 59,391 3,326,693 $ (23,254 ) $ (1,415 ) $ 68,426 See accompanying notes to consolidated financial statements. 23 Table of Contents Natural Alternatives International, Inc.
ASU 2023 - 06 clarifies or improves disclosure and presentation requirements on various disclosure areas, including the statement of cash flows, earnings per share, debt, equity, and derivatives. The amendments will align the requirements in the FASB Accounting Standards Codification (ASC) with the SEC’s regulations.
In October 2023, the FASB issued Accounting Standards Update ("ASU") 2023 - 06, "Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative". ASU 2023 - 06 clarifies or improves disclosure and presentation requirements on various disclosure areas, including the statement of cash flows, earnings per share, debt, equity, and derivatives.
The accounting policies of our segments are the same as those described in the summary of significant accounting policies in Note A.
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.

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