NAI(NAII) - 2026 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended September 30, 2025, increased by 14% to $37.73 million compared to $33.15 million for the same period in 2024[106] - Private-label contract manufacturing sales rose by 18% to $36.07 million, driven by increased orders from existing customers and new customer shipments[97] - Patent and trademark licensing revenue decreased by 34% to $1.67 million, down from $2.52 million in the prior year, primarily due to lower raw material sales[98] - Gross profit for the three months ended September 30, 2025, increased by 95% to $4.40 million, with a gross profit margin of 11.7%, up from 6.8% in the prior year[106] - The company recorded a net loss of $0.29 million for the three months ended September 30, 2025, an improvement of 85% compared to a net loss of $1.98 million in the same period in 2024[102] Cash Flow and Investments - Cash used in operating activities was $4.0 million for the three months ended September 30, 2025, compared to $3.4 million in the same period last year[114] - Cash used in investing activities increased to $1.0 million, primarily due to capital expenditures for solar energy generation equipment installation[117] - As of September 30, 2025, the company had $7.7 million in cash and cash equivalents, with $7.5 million held by NAIE[120] - On October 15, 2025, NAIE paid a dividend of $3.1 million to NAI, subject to a 5% Swiss withholding tax[120] - The company anticipates sufficient cash flows and credit lines to meet working capital needs for at least the next 12 months[120] Credit and Compliance - An amended credit facility with Wells Fargo extended the maturity date to December 31, 2026, and decreased the maximum borrowing amount from $12.5 million to $10.0 million[120] - The company was not in compliance with the maximum net loss and fixed charge coverage ratio covenants for the first quarter of fiscal 2026[121] - The company is negotiating a potential revision to its credit agreement due to anticipated covenant non-compliance[121] Operational Efficiency - Days sales outstanding improved to 41 days in Q1 2026 from 48 days in Q1 2025, indicating better collection efficiency[115] Future Outlook - The company expects annualized revenue concentration for its largest customer to decrease in fiscal 2026 compared to fiscal 2025, where it accounted for 38% of total net sales[97] - The company continues to invest in R&D for its CarnoSyn® product offerings, including the new TriBsyn™ product aimed at the Wellness and Healthy Aging markets[99] Financial Position - As of September 30, 2025, there were no off-balance sheet debts or significant obligations that could materially affect the financial condition[122] - Recent accounting pronouncements have been discussed in the notes to the consolidated financial statements, with no material impact on financial position noted[123]