NAI(NAII) - 2025 Q2 - Quarterly Report

Financial Performance - Net sales for the six months ended December 31, 2024, increased by 14% to $67.2 million compared to$59.2 million for the same period in 2023[97] - The company experienced a net loss of $4.2 million for the six months ended December 31, 2024, an 11$3.8 million in the same period of 2023[102] - Patent and trademark licensing revenue increased by 9% to $4.3 million for the six months ended December 31, 2024, compared to$3.9 million in the prior year[98] Expenses - Selling, general, and administrative expenses increased by 14% to $8.5 million during the six months ended December 31, 2024, primarily due to higher compensation and legal expenses[110] - The company incurred litigation and patent compliance expenses of approximately$0.3 million during the six months ended December 31, 2024, compared to $0.1 million in the prior year[100] Profit Margins - The gross profit margin for the six months ended December 31, 2024, was 5.8$1.4 million for the six months ended December 31, 2024, down from $1.7 million in the prior year[117] - Cash provided by financing activities was$1.4 million for the six months ended December 31, 2024, compared to using $0.1 million in the prior year[118] - As of December 31, 2024, the company had$10.8 million of borrowing capacity available on its credit facility, with outstanding borrowings of $5.0 million[119] - The company had$8.7 million in cash and cash equivalents as of December 31, 2024, with $8.2 million held by NAIE[120] Future Outlook - The company anticipates a net loss in the second half of fiscal 2025, despite an overall increase in sales forecasted for the year[102] - The company plans to continue focusing on expanding its beta-alanine patent estate and developing new sales channels in the Wellness and Healthy Aging category[107] - The company anticipates non-compliance with financial covenants related to net income requirements and fixed charge coverage ratio in the next two quarters of fiscal 2025[120] Inventory and Sales - Days sales outstanding increased to 46 days during the six months ended December 31, 2024, compared to 27 days in the prior year[114] - Changes in inventory provided$1.2 million in cash during the six months ended December 31, 2024, compared to $10.1 million in the prior year period[115] Compliance and Accounting - There were no off-balance sheet arrangements or debt as of December 31, 2024, that would materially affect the company's financial condition[122] - Recent accounting pronouncements do not materially affect the company's financial position or results of operations[123]