v3.26.3
Note N - Segment Information
 12 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Segment Reporting [Text Block]

N. Segment Information

 

Our business consists of two segments for financial reporting purposes. The two segments are identified as (i) private-label contract manufacturing, which primarily relates to the provision of private-label contract manufacturing services to companies that market and distribute nutritional supplements and other health care products, and (ii) patent and trademark licensing, which primarily includes direct raw material sales and royalty income from our license and supply agreements associated with the sale and use of beta-alanine under our CarnoSyn®, SR CarnoSyn®, CarnoSyn® 4X, and TriBsyn® trademarks.

 

The chief operating decision maker is the Company's Chief Executive Officer, who, in conjunction with senior management, evaluates segment performance based on a number of factors. The primary performance measures for each segment are net sales and income or loss from operations before corporate allocations. Operating income or loss for each segment does not include corporate general and administrative expenses, interest expense and other miscellaneous income and expense items. Corporate general and administrative expenses include, but are not limited to human resources, corporate legal, finance, information technology, and other corporate level related expenses, which are not allocated to any segment. Transfers of raw materials between segments are recorded at cost. The accounting policies of our segments are the same as those described in the summary of significant accounting policies in Note A.

 

During fiscal 2026 in our Private-label contract manufacturing segment, we observed a decline in the fair value of our manufacturing facility we own in Carlsbad, California compared to its carrying value, negative cash flow results from operating activities in fiscal years 2026 and 2024, an adverse change in the business climate as a result of one of our largest customer's downward revisions of forecasted orders, and expected negative cash flow results for fiscal year 2027. These factors indicated the carrying value of certain long-lived assets might not be fully recoverable. Consequently, we performed an evaluation of the recoverability of this asset group. Based on this evaluation, we determined the carrying amount of our manufacturing facility in Carlsbad, California exceeded the projected undiscounted future cash flows from that facility. Accordingly, we determined an impairment loss due to the carrying value of this asset group as of  June 30, 2026 being in excess of the sum of expected cash flows over the forecasted useful life of the facility subject to fair value limitations. As a result, we recognized a non-cash impairment charge of $10.4 million presented as a separate line item, Impairment loss, on the consolidated statements of operations and comprehensive loss to write down property and equipment, to reflect the lower of their estimated fair values or carrying amounts as of June 30, 2026. This charge significantly increased our operating loss for fiscal year 2026 but had no immediate impact on our cash position or liquidity. For estimates of fair values, we relied on significant unobservable inputs categorized as Level 3 within the fair value hierarchy such as third-party real estate experts for building and land fair values as of June 5, 2026, and a third-party appraiser's report for Machinery and Equipment as of January 28, 2026, which we received as part of our debt refinancing in May 2026 and do not represent fair values as of June 30, 2026. It is possible the assumptions and underlying estimates used to determine the fair value of this asset group will change in the future, and such changes could result in a material difference from the impairment loss recognized in these financial statements.

 

Our operating results by business segment for the year ended June 30, 2026 were as follows (in thousands):

               

Natural

 
          

Corporate

   

Alternatives

 
  

Private-label

  

Patent and

  

expenses

   

International

 
  

contract

  

trademark

  

not allocated

   

Inc.

 
  

manufacturing

  

licensing

  

to segments

   

Consolidated

 
                  

Net sales

 $134,615  $7,900  $-   $142,515 

Cost of goods sold

  130,700   2,818   -    133,518 

Gross profit

  3,915   5,082   -    8,997 

Other selling, general and administrative expenses

  5,958   2,390   8,948    17,296 

Impairment loss

  10,409   -   -    10,409 

Settlement of legal proceeding and associated expense

  -   -   44 

(a)

  44 
                  

(Loss) income from operations

  (12,452)  2,692   (8,992)   (18,752)
                  

Other income (expense):

                 

Interest income

  50   -   -    50 

Interest expense

  (1,186)  -   -    (1,186)

Foreign exchange loss

  (316)  -   -    (316)

Other, net

  (61)  -   -    (61)

Total other expense

  (1,513)  -   -    (1,513)
                  

(Loss) income before income taxes

  (13,965)  2,692   (8,992)   (20,265)

Provision for income taxes

            430 

Net loss

           $(20,695)
                  
                  

Other supplemental information:

                 

Stock-based compensation

 $552  $51  $-   $603 

Depreciation and amortization

  4,702   7   -    4,709 

Total assets

  85,632   40,814   -    126,446 

Capital expenditures

  3,816   -   -    3,816 

 

(a)

Additional estimated legal fees related to services associated with settlement of two legal proceedings were allocated to Corporate expenses.

 

Our operating results by business segment for the year ended June 30, 2025 were as follows (in thousands):

               

Natural

 
          

Corporate

   

Alternatives

 
  

Private-label

  

Patent and

  

expenses

   

International

 
  

contract

  

trademark

  

not allocated

   

Inc.

 
  

manufacturing

  

licensing

  

to segments

   

Consolidated

 
                  

Net sales

 $121,779  $8,081  $-   $129,860 

Cost of goods sold

  118,111   2,460   -    120,571 

Gross profit

  3,668   5,621   -    9,289 

Other selling, general and administrative expenses

  5,395   2,215   8,939    16,549 

Settlement of legal proceeding and associated expense

  -   -   1,400 

(a)

  1,400 
                  

(Loss) income from operations

  (1,727)  3,406   (10,339)   (8,660)
                  

Other income (expense):

                 

Interest income

  168   -   -    168 

Interest expense

  (915)  -   -    (915)

Foreign exchange loss

  (1,340)  -   -    (1,340)

Other, net

  7   -   -    7 

Total other expense

  (2,080)  -   -    (2,080)
                  

(Loss) income before income taxes

  (3,807)  3,406   (10,339)   (10,740)

Provision for income taxes

            2,835 

Net loss

           $(13,575)
                  
                  

Other supplemental information:

                 

Stock-based compensation

 $887  $90  $-   $977 

Depreciation and amortization

  4,553   7   -    4,560 

Total assets

  113,843   38,096   -    151,939 

Capital expenditures

  3,614   -   -    3,614 

 

(a)

Expenses accrued for gross settlement of two legal actions and related legal fees for services associated with the settlement were allocated to Corporate expenses.

 

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

 

Net sales by geographic region, based on the customers’ location, for the two years ended June 30 were as follows (in thousands):

 

  

2026

  

2025

 

United States

 $93,324  $79,128 

Markets outside the United States

  49,191   50,732 

Total net sales

 $142,515  $129,860 

 

Products manufactured by NAIE accounted for 86% of consolidated net sales in markets outside the U.S. in fiscal 2026 and 85% of consolidated net sales in markets outside the U.S. in fiscal 2025. Products manufactured by NAIE and sold in the U.S. during the fiscal year ended June 30, 2026 accounted for $36,000 of NAIE net sales. No products manufactured by NAIE were sold in the U.S. during the fiscal year ended  June 30, 2025

 

Long-lived assets by geographic region, based on the location of the company or subsidiary at which they were located or made, for the two years ended June 30 were as follows (in thousands):

 

  

2026

  

2025

 

United States

 $45,777  $76,212 

Europe

  13,890   15,732 

Total Long-lived assets

 $59,667  $91,944 

 

Total assets by geographic region, based on the location of the company or subsidiary at which they were located or made, for the two years ended June 30 were as follows (in thousands):

 

  

2026

  

2025

 

United States

 $91,455  $105,860 

Europe

  34,991   46,079 

Total assets

 $126,446  $151,939 

 

Capital expenditures by geographic region, based on the location of the company or subsidiary at which they were located or made, for the two years ended June 30 were as follows (in thousands):

 

  

2026

  

2025

 

United States

 $2,469  $2,862 

Europe

  1,347   752 

Total capital expenditures

 $3,816  $3,614