Significant Accounting Policies (Policies)

3 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

March 2016,

the F

inancial Accounting Standards Board issued Accounting Standards Update

No.

2016

-

09,

Compensation-Stock Compensation (Topic

718

) (ASU

2016

-

09

), which provides guidance improvements to employee share-based payment accounting. The standard amends several aspects of current employee share-based payment accounting including income taxes, forfeitures, earnings per share, and statutory tax withholding requirements, as well as classification in the statement of cash flows. We adopted ASU

2016

-

09

effective

July 1, 2017.

ASU

2016

-

09

also requires all excess tax benefits and tax deficiencies associated with employee stock compensation awards to be recognized as income tax expense or benefit as part of the Statement of Operations. Adopting this standard did

not

result in any significant impact to our results of operation or financial position. During the quarter ended

September 30, 2017,

there was

no

impact to the Statement of Cash Flows.

In

March 2016,

the FASB issued Accounting Standards Update

No.

2016

-

02,

Leases (Topic

842

) (ASU

2016

-

02

), which amends existing standards for leases to increase transparency and comparability among organizations by requiring recognition of lease assets an

d liabilities on the balance sheet and requiring disclosure of key information about such arrangements.  ASU

2016

-

02

will be effective for us beginning in our

first

quarter of fiscal

2020.

 Early adoption is permitted. We are currently evaluating the impact of adopting the new standard on our consolidated financial statements and the timing and presentation of our adoption.

In

April 2016,

the FASB issued Accounting Standards Update

No.

2016

-

10,

Revenue from Contracts with Customers (Topic

606

)(ASU

2016

-

10

),

which amends and adds clarity to certain aspects of the guidance set forth in the upcoming revenue standard (ASU

2014

-

09

) related to identifying performance obligations and licensing. In

May 2016,

the FASB issued Accounting Standards Update

No.

2016

-

11,

Revenue Recognition (Topic

605

) and Derivatives and Hedging (Topic

815

) (ASU

2016

-

11

), which amends and rescinds certain revenue recognition guidance previously released within ASU

2014

-

09.

In

May 2016

the FASB issued Accounting Standards Update

No.

2016

-

12,

Revenue from Contracts with Customers (Topic

606

) (ASU

2016

-

12

), which provides narrow scope improvements and practical expedients related to ASU

2014

-

09.

ASU

2014

-

09

defines a

five

step process to achieve this core principle and, in doing so, it is possible that more judgment and estimates

may

be required within the revenue recognition process than is required under present U.S. GAAP. These

may

include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price, and allocating the transaction price to each separate performance obligation. The new standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. 

All of these new standards will be effective for us concurrently with ASU

2014

-

09,

beginning in our

first

quarter of fiscal

2019.

Early adoption is

not

permitted.  Currently, w

e do

not

expect our annual revenue to be materially

different under Topic

606.

The most significant change will be to our quarterly and annual financial statement disclosures.  We are continuing to evaluate the impact of adopting the new standard.

In

August 2

017,

the FASB issued ASU

2017

-

12,

Derivatives and Hedging (Topic

815

): Targeted Improvements to Accounting for Hedging Activities. The ASU is intended to improve and simplify accounting rules around hedge accounting and improve the disclosures of hedging arrangements. 

We are currently evaluating the impact of adopting the new standard on our consolidated financial statements.   ASU

2017

-

12

will be effective for us beginning in our

first

quarter of fiscal

2020.

 

Earnings Per Share, Policy [Policy Text Block]

Net Income per Common Share

We compute net income per common share using the weighted average number of common shares outstanding during the period, and dilute

d net income per common share using the additional dilutive effect of all dilutive securities. The dilutive impact of stock options accounts for the additional weighted average shares of common stock outstanding for our diluted net income per common share computation. We calculated basic and diluted net income per common share as follows

(in thousands, except per share data):

	Three Months Ended September 30,
	201 7		201 6
Numerator
Net income	$	1,434	$	2,490
Denominator
Basic weighted average common shares outstanding		6,607		6,558
Dilutive effect of stock options		224		89
Diluted weighted average common shares outstanding		6,831		6,647
Basic net income per common share	$	0.22	$	0.38
Diluted net income per common share	$	0.21	$	0.37

No

shares related to stock options or restricted stock were excluded for the

three

months ended

September 30, 2017

or

September 30, 2016.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

To recognize revenue,

four

basic cr

iteria must be met:

1

) there is evidence that an arrangement with a buyer exists;

2

) delivery has occurred;

3

) the fee is fixed or determinable; and

4

) collectability is reasonably assured. Revenue from sales transactions where the buyer has the right to return the product is recognized at the time of sale only if (a) the seller’s price to the buyer is substantially fixed or determinable at the date of sale; (b) the buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is

not

contingent on resale of the product; (c) the buyer’s obligation to the seller would

not

be changed in the event of theft or physical destruction or damage of the product; (d) the buyer acquiring the product for resale has economic substance apart from that provided by the seller; (e) the seller does

not

have significant obligations for future performance to directly bring about resale of the product by the buyer; and (f) the amount of future returns can be reasonably estimated. We recognize revenue upon determination that all criteria for revenue recognition have been met. The criteria are usually met at the time title passes to the customer, which usually occurs upon shipment. Revenue from shipments where title passes upon completion of delivery is deferred until the shipment has been delivered.

We record reductions to gross revenue for estimated returns of private-label contract manufacturing products and

beta-alanine raw material sales. The estimated returns are based on the trailing

six

months of private-label contract manufacturing gross sales and our historical experience for both private-label contract manufacturing and beta-alanine raw material sales returns. However, the estimate for product returns does

not

reflect the impact of a potential large product recall resulting from product nonconformance or other factors as such events are

not

predictable nor is the related economic impact estimable.

On

August 7, 2017,

we entered into

three

agreements (“

Agreements”), with The Juice Plus+ Company LLC (“Juice Plus+”). The Agreements are an Exclusive Manufacturing Agreement, a Restricted Stock Award Agreement, and an Irrevocable Proxy. Pursuant to the Exclusive Manufacturing Agreement, Juice Plus+ has granted us exclusive rights to manufacture and supply Juice Plus+ with certain Juice Plus+ products within

24

countries where Juice Plus+ currently sells those products. Pursuant to the Restricted Stock Award Agreement, NAI has agreed to grant

500,000

shares of NAI common stock to Juice Plus+, (the “Shares”), and Juice Plus+ agreed the Shares are subject to certain restrictions and risk of forfeiture. Pursuant to the Irrevocable Proxy, Juice Plus+ has granted to the NAI Board of Directors Juice Plus+’s right to vote the Shares as long as the Shares are subject to the associated risk of forfeiture. The Agreements each are for a term of

5

years, and each

may

be terminated by either party only upon on the occurrence of specified events. For the

three

months ended

September 30, 2017,

$163,000

of expense associated with the shares granted to Juice Plus+ was recorded as a reduction to revenue

.   

We currently own certain U.S. patents, and each patent

’s corresponding foreign patent applications. All of these patents and patent rights relate to the ingredient known as beta-alanine and marketed and sold under the CarnoSyn® and SR CarnoSyn® trade names. We recorded beta-alanine raw material sales and royalty and licensing income as a component of revenue in the amount of

$5.9

 million during the

three

months ended

September 30, 2017

and

$6.7

million during the

three

months ended

September 30, 2016.

These royalty income and raw material sale amounts resulted in royalty expense paid to the original patent holders from whom NAI acquired its patents and patent rights. We recognized royalty expense as a component of cost of goods sold in the amount of

$284,000

during the

three

months ended

September 30, 2017

,

and

$316,000

during the

three

months ended

September 30, 2016

.

Finance, Loans and Leases Receivable, Policy [Policy Text Block]

Notes Receivable

On

September 30, 2017,

we entered into a note receivable with Kaged Muscle, LLC (“Kaged Muscle”),

one

of our contract manufacturing customers, converting

$1.5

million of trade receivables to a

12

month note. Kaged Muscle is

one

of our fastest growing sports nutrition customers and we executed this note receivable conversion to assist them with their near term financing needs. The note carries an interest rate of

fifteen

percent (

15%

) per annum and is an interest only note secured by the assets of Kaged Muscle and a personal guarantee by the co-founder and President of Kaged Muscle. Interest is due quarterly and the note can be paid down at any time without penalty. 

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

We have an omnibus incentive plan that was approved by our Board of Directors effective as of

October

 

15,

2009

and approved by our stockholders at the Annual Meeting of Stockholders held on

November 

30,

2009.

Under the plan, we

may

grant nonqualified and incentive stock options and other stock-based awards to employees, non-employee directors and consultants.

We estimate the fair value of stock option awards at the date of grant using the Bl

ack-Scholes option valuation model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have

no

vesting restrictions and are fully transferable. Option valuation models require the input of highly subjective assumptions. Black-Scholes uses assumptions related to volatility, the risk-free interest rate, the dividend yield (which we assume to be zero, as to date we have

not

paid any cash dividends) and employee exercise behavior. Expected volatilities used in the model are based on the historical volatility of our stock price. The risk-free interest rate is derived from the U.S. Treasury yield curve in effect on the date of grant. The expected life of stock option grants is derived from historical experience. The fair value of restricted stock shares granted is based on the market price of our common stock on the date of grant. We amortize the estimated fair value of our stock awards to expense over the related vesting periods.

The Company did

not

grant

any options during the

three

months ended

September 30, 2017

or the

three

months ended

September 30, 2016.

All remaining outstanding stock options are fully vested

.

No

options were exercised during the

three

months ended

September 30, 2017

or

three

months ended

September 30, 2016.

During the

three

months ended

September 30, 2017,

5,000

options were forfeited. There were

no

forfeitures during the

three

months ended

September 30, 2016.

We did

not

grant any shares to employees during the

three

months ended

September 30, 2017.

We granted

10,000

restricted shares to a new member of management during the

three

months ended

September 30, 2016.

Our net income included stock based compensation expense of approximately

$301,000

for the

three

months ended

September 30, 2017,

and

$250,000

for the

three

months ended

September 30, 2016.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liabili

ty (i.e., the “exit price”) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We use a

three

-level hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent

sources. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability and are

developed based on the best information available under the circumstances.

The fair value hierarchy is broken down into

three

levels based on the source of inputs. In general, fair values determined by Level

1

inputs use quoted prices

(unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. We classify cash, cash equivalents, and marketable securities balances as Level

1

assets. Fair values determined by Level

2

inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are

not

active and models for which all significant inputs are observable or can be corroborated, either directly or indirectly by observable market data. Level

3

inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. These include certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of

September 30, 2017

and

June 30, 2017,

we did

not

have any financial assets or liabilities classified as Level

1,

except for assets and liabilities related to our pension plan. We classify derivative forward exchange contracts as Level

2

assets. The fair value of our forward exchange contracts as of

September 30, 2017

was a net liability of

$2.3

million. The fair value of our forward exchange contracts as of

June 30, 2017

was a net liability of

$521

,000.

As of

September 30, 2017

and

June 30, 2017

we did

not

have any financial assets or liabilities classified as Level

3.

We did

not

transfer any assets or liabilities between Levels during fiscal

2017

 or the

three

months ended

September 30, 2017

.