Significant Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Issued Accounting Pronouncements

Other recently issued accounting pronouncements

not

discussed in this Report did

not

have, or are

not

believed by management to have, a material impact on our present or future financial statements. 

Earnings Per Share, Policy [Policy Text Block]

Net Income per Common Share

We compute net income per common share using the weighted average number of common shares outstanding during the period, and diluted net income per common share using the additional dilutive effect of all dilutive securities. The dilutive impact of stock options and unvested restricted stock 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				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Numerator
Net income	$	476	$	2,181	$	572	$	4,740
Denominator
Basic weighted average common shares outstanding		6,795		6,808		6,818		6,786
Dilutive effect of stock options and restricted stock		91		191		117		196
Diluted weighted average common shares outstanding		6,886		6,999		6,935		6,982
Basic net income per common share	$	0.07	$	0.32	$	0.08	$	0.70
Diluted net income per common share	$	0.07	$	0.31	$	0.08	$	0.68

We did

not

exclude any shares for the

three

or

six

months ended

December 31, 2019

and

December 31, 2018

that would have had an anti-dilutive impact.

Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition

We record revenue based on a

five

-step model which includes: (

1

) identifying a contract with a customer; (

2

) identifying the performance obligations in the contract; (

3

) determining the transaction price; (

4

) allocating the transaction price among the performance obligations; and (

5

) recognizing revenue as each of the various performance obligations are satisfied.

Revenue is measured as the net amount of consideration expected to be received in exchange for fulfilling

one

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

30

days from the invoice date. Invoices are generally issued on the date of transfer of control of the products ordered to the customer.

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

We provide early payment discounts to certain customers. Based on historical payment trends, we expect that these customers will take advantage of these early payment discounts. The cost of these discounts is reported as a reduction to the transaction price. If the actual discounts differ from those estimated, the difference is also reported as a change in the transaction price.

Except for product defects,

no

right of return exists on the sale of our products. We estimate returns based on historical experience and recognize a returns liability for any estimated returns. As of

December 31, 2019,

we have

no

liability recorded for estimated returns of products.

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 them with certain of their products within

24

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

500,000

shares of NAI common stock to Juice Plus+, (the “JP Shares”), and Juice Plus+ agreed the JP Shares are subject to certain restrictions and risk of forfeiture. Pursuant to the Irrevocable Proxy, Juice Plus+ also granted the NAI Board of Directors the right to vote the JP Shares that remain subject to risk of forfeiture. Each Agreement is for a term of

5

years, and each

may

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

On

March 31, 2019,

we amended our original Agreements with Juice Plus+ and extended the term of the Exclusive Manufacturing Agreement through

August 6, 2025.

In addition, pursuant to that Amended and Restated Exclusive Manufacturing Agreement, Juice Plus+ returned

400,000

shares of restricted common stock in exchange for an annual cash sales discount. The expense associated with the return of those shares and the related cash discount granted to Juice Plus+ are each recorded as a reduction to sales. As a result of the amendments contained in the Amended and Restated Exclusive Manufacturing Agreement, we made a

one

-time adjustment to reverse the expense associated with unvested shares that were returned as a result of such amendments. Amounts associated with the new cash discount began to be recorded in our

fourth

quarter of fiscal

2019

and will be amortized ratably over extended remaining life of the Amended and Restated Exclusive Manufacturing Agreement based on the full value of the cash discount expected to be given over the same period. We recorded

$395,000

of “Cash Sales Discount” during the

three

months ended

December 31, 2019

and

$790,000

for the

six

months ended

December 31, 2019.

We recognized

$245,000

of “Non-cash Sales Discount” during the

three

months ended

December 31, 2018

and

$490,000

during the

six

months ended

December 31, 2018.

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”, which is marketed and sold under our CarnoSyn® and SR CarnoSyn® trade names. We recorded beta-alanine raw material sales and royalty and licensing income as a component of revenue in the amount of

$4.3

million during the

three

months ended

December 31, 2019

and

$7.5

million during the

six

months ended

December 31, 2019.

We similarly recorded

$4.4

million during the

three

months ended

December 31, 2018

and

$9.8

million during the

six

months ended

December 31, 2018. 

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

$192,000

during the

three

months ended

December 31, 2019

and

$359,000

during the

six

months ended

December 31, 2019.

We similarly recognized

$178,000

of royalty expense during the

three

months ended

December 31, 2018

and

$441,000

during the

six

months ended

December 31, 2018.

Financing Receivable [Policy Text Block]

Notes Receivable

On

September 30, 2017,

we accepted a

12

-month note (the “KM Loan Agreement”) from Kaged Muscle, LLC (“Kaged Muscle”),

one

of our contract manufacturing customers, in exchange for

$1.5

million of trade receivables due to us from Kaged Muscle. On

September 30, 2018,

we entered into a First Amendment (the “First Amendment”) with Kaged Muscle in connection with the KM Loan Agreement. The First Amendment modified the KM Loan Agreement and related promissory note by extending the loan’s maturity date from

September 30, 2018

to

December 28, 2018

in exchange for an extension fee in the amount of

$25,000.

We executed this note receivable conversion, and subsequent amendment, to assist Kaged Muscle with their near term financing needs. The note carried an interest rate of

fifteen

percent (

15%

) per annum with payments of interest only. The note was paid in full before the amended maturity date.  In association with this note, we did

not

recognize any interest income during the

three

or

six

months ended

December 31, 2019.

During the

three

months ended

December 31, 2018

we recognized

$46,000

and during the

six

months ended

December 31, 2018

we recognized

$104,000

in interest income associated with this note.

Share-based Payment Arrangement [Policy Text Block]

Stock-Based Compensation

We had an omnibus equity incentive plan that was approved by our Board of Directors effective

October 

15,

2009

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

November 

30,

2009

(

"2009

Plan"). The

2009

Plan expired on

October 15, 2019.

The Board of Directors approved a new omnibus equity incentive plan effective

October 15, 2019 (

“2019

Plan”) and this plan was approved by our stockholders at the Annual Meeting of Stockholders held on

December 6, 2019.

Under the

2019

Plan, we

may

grant nonqualified and incentive stock options, restricted stock grants, restricted stock units, stock appreciation rights, and other stock-based awards to employees, non-employee directors and consultants.

We did

not

grant any options during each of the

three

and

six

month periods ending

December 31, 2019

and

December 31, 2018.

All remaining outstanding stock options are fully vested.

No

options were exercised during the

three

or

six

month period ended

December 31, 2019.

No

options were exercised during the

three

month period ended

December 31, 2018.

During the

six

months ended

December 31, 2018,

5,000

options were exercised. There were

no

option forfeitures during the

three

or

six

month periods ended

December 31, 2019

or

December 31, 2018.

During the

three

and

six

months ended

December 31, 2019,

we granted

5,000

shares of restricted stock shares to a new member of our management team. During the

six

months ended

December 31, 2018,

we granted

15,000

shares of restricted stock shares to a new member of our management team. We did

not

grant any shares to employees during the

three

months ended

December 31, 2018.

During the

three

months ended

December 31, 2019,

there were

no

restricted stock forfeitures. During the

six

months ended

December 31, 2019,

15,000

restricted stock shares were forfeited. During the

three

and

six

months ended

December 31, 2018,

5,000

restricted stock shares forfeited. Our net income included stock based compensation expense of approximately

$459,000

for the

three

months ended

December 31, 2019,

and

$892,000

for the

six

months ended

December 31, 2019.

Our net income included stock based compensation expense of approximately

$400,000

for the

three

months ended

December 31, 2018

and

$809,000

for the

six

months ended

December 31, 2018.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value of Financial Instruments

Except for cash and cash equivalents and assets and liabilities related to our pension plan, as of

December 31, 2019,

and

June 30, 2019,

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 value of our forward exchange contracts as of

December 31, 2019

was a net asset of

$1.6

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

June 30, 2019

included a net asset of

$2.3

million. The fair values were determined based on obtaining pricing from our bank and corroborating those values with a

third

party bank. As of

December 31, 2019,

and

June 30, 2019,

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

2019

or the

three

or

six

months ended

December 31, 2019.