NATURAL ALTERNATIVES INTERNATIONAL INC
For the period ended Jun 30, 2026. Filed Sep 28, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Sep 28, 2026
NAII$1.11-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-06-30; filed 2025-09-23.
0001437749-25-029731
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2026-06-30; filed 2026-09-28.
0001437749-26-031343
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 36 previous paragraphs and 48 current paragraphs.
13 unchanged; 20 reworded; 15 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
Impairment Loss — 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.
Current report
(NM) Not meaningful as base is zero.
Current report
Selling, general and administrative expenses, excluding impairment loss and litigation settlement expenses, increased $0.7 million, or 5% to $17.3 million in fiscal 2026 as compared to $16.5 million in fiscal 2025. This increase is primarily due to a $0.4 million net expense to establish a reserve allowance on the remaining Employee Retention Tax Credit receivable balance offset by the reversal of associated fees and taxes. Other increases include advertising expense to promote our CarnoSyn® 4X and TriBsyn® product offerings and an increase in compensation expense related to increased headcount required to support the growth in sales.
Current report
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.
Current report
Cash provided by financing activities in fiscal 2026 was $7.8 million, compared to $2.0 million used in fiscal 2025. The change in financing activities includes borrowings of $66.7 million on our short-term line of credit in fiscal 2026 compared to borrowings of $31.0 million in fiscal 2025. The change in financing activities also includes borrowings of $11.0 million on our long-term debt in fiscal 2026 compared to no additional borrowings in fiscal 2025. Offsetting these borrowings are repayments of $60.9 million on our short-term line of credit in fiscal 2026 compared to repayments of $32.5 million in fiscal 2025. The change in financing activities also includes repayments of $9.0 million as part of refinancing our real estate loan in fiscal 2026 compared to repayments of $0.3 million in fiscal 2025.
Current report
On May 18, 2026, we entered into a new credit facility with Legacy Corporate Lending, LLC (“Legacy”). This new credit facility includes a new term loan for $11.0 million and a working capital line of credit with a maximum borrowing capacity of $20.0 million subject to a borrowing-base calculation. On June 17, 2026, our subsidiary NAIE entered into a new credit line with UBS Switzerland AG (“UBS”) with maximum borrowing capacity of CHF 2.0 million. Please see Note F in Item 8 of this report for terms of our two new credit facilities.
Current report
As of June 30, 2026, NAIE had no outstanding borrowings and was in compliance with the debt covenants of its UBS credit facility.
Current report
Going Concern
Current report
Management evaluated whether conditions and events, considered in aggregate, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date our financial statements are issued.
Current report
As of June 30, 2026, we had $7.5 million in cash, cash equivalents and restricted cash of which $6.3 million was held by NAIE. On October 15, 2025, NAIE paid a dividend of $3.1 million to NAI which was subject to a 5% Swiss withholding tax.
Current report
On May 18, 2026, we entered into a new domestic credit facility with Legacy. The new credit facility includes a fixed charge coverage ratio covenant requirement as defined in the Loan and Security Agreement that is based on only domestic operations and will first be measured for the nine months ending September 30, 2026. We anticipate we will not be able to comply with the covenant required under the Loan and Security Agreement as of September 30, 2026 due to one of our largest private-label contract manufacturing customer's material downward revisions to their forecast of projected orders and purchases from us during our fiscal year 2027. We have informed Legacy of our pending non-compliance with the fixed charge coverage ratio, and there is no assurance that a waiver, amendment, or remedy will be available or what the difference in amount, cost or other factors may be.
Current report
Management identified the following conditions that raised substantial doubt about the Company’s ability to continue as a going concern:
Current report
To address these conditions, management has implemented the following actions:
Current report
Management has prepared cash flow projections incorporating these plans, as well as projected sales growth reflecting our best estimates of future operating performance and liquidity needs. Management believes these plans will allow the Company to mitigate the current conditions that have raised substantial doubt about the Company’s ability to continue as a going concern. While management plans to take the actions noted above, there can be no assurance we will be successful in our efforts to obtain a waiver, amendment, or obtain alternative financing or avoid future issues maintaining compliance with financial covenants.
Current report
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
Removed paragraphs (3)
Previous report
Cash used in financing activities in fiscal 2025 was $2.0 million, compared to $2.9 million provided in fiscal 2024. The change in financing activities includes net payments of $1.5 million on outstanding short-term borrowings on our line of credit in fiscal 2025 compared to a $3.4 million increase in short-term net borrowings on our line of credit in fiscal 2024.
Previous report
For the quarter ended June 30,2025, we were not in compliance with the minimum net income and fixed charge coverage ratio covenants of our credit agreement, but these defaults were prospectively waived by the Sixth Amendment to our credit facility, as discussed below.
Previous report
As of June 30, 2025, we had $12.3 million in cash and cash equivalents of which $11.9 million was held by NAIE. Overall, we believe our available cash, cash equivalents, potential cash flows from operations, and our line of credit will be sufficient to fund our current working capital needs and capital expenditures through at least the next 12 months. On June 20, 2025, we entered into an amended credit facility with Wells Fargo Bank, National Association ("Wells Fargo"). The amended credit facility extended the maturity date of our credit facility to December 31, 2026, decreased the maximum principal amount that can be borrowed from $12.5 million to $10.0 million, waived all prior events of default, prospectively waived the anticipated covenant violations for the quarter ending June 30, 2025, and modified the financial covenants for the first quarter of fiscal 2026 and beyond. We anticipate we will not be able to comply with all of the covenants required under the modified Credit Agreement in the first half of fiscal 2026, primarily related to the impact on the fixed charge coverage ratio calculation due to the unexpected recognition of the litigation expense and valuation allowance on our net deferred tax assets during the fourth quarter of fiscal 2025. We have advised our lender and are currently negotiating a potential revision to our credit agreement. There can be no assurance we will be able to successfully complete the negotiation of a revised credit facility, or what the differences in amount, cost and other factors may be. Please see Note F in Item 8 of this report for terms of our current modified line of credit.
Reworded paragraphs (20)
Previous wording
The following discussion and analysis is intended to help you understand our financial condition and results of operations as of June 30, 2025 and 2024 and for each of the last two fiscal years then ended. You should read the following discussion and analysis together with our audited consolidated financial statements and the notes to the consolidated financial statements included under Item 8 in this report. Our future financial condition and results of operations will vary from our historical financial condition and results of operations described below based on a variety of factors. You should carefully review the risks described under Item 1A and elsewhere in this report, which identify certain important factors that could cause our future financial condition and results of operations to vary.
Current wording
The following discussion and analysis is intended to help you understand our financial condition and results of operations as of our fiscal years ending June 30, 2026 and 2025. You should read the following discussion and analysis together with our audited consolidated financial statements and the notes to the consolidated financial statements included under Item 8 in this report. Our future financial condition and results of operations will vary from our historical financial condition and results of operations described below based on a variety of factors. You should carefully review the risks described under Item 1A and elsewhere in this report, which identify certain important factors that could cause our future financial condition and results of operations to vary.
Previous wording
Our primary business activity is providing private-label contract manufacturing services to companies that market and distribute vitamins, minerals, herbal and other nutritional supplements, as well as other health care products, to consumers both within and outside the U.S. Historically, our revenue has been largely dependent on sales to two or three private-label contract manufacturing customers and subject to variations in the timing of such customers’ orders, which in turn is impacted by such customers’ internal marketing programs, supply chain management, entry into new markets, new product introductions, the demand for such customers’ products, and general industry and economic conditions. Our revenue also includes raw material sales, royalty and licensing revenue generated from our patent estate pursuant to license and supply agreements with third parties for the distribution and use of the ingredient known as beta-alanine sold under our CarnoSyn®, SR CarnoSyn® and TriBsyn™ trademarks.
Current wording
Our primary business activity is providing private-label contract manufacturing services to companies that market and distribute vitamins, minerals, herbal and other nutritional supplements, as well as other health care products, to consumers both within and outside the U.S. Historically, our revenue has been largely dependent on sales to two or three private-label contract manufacturing customers and subject to variations in the timing of such customers’ orders, which in turn is impacted by such customers’ internal marketing programs, supply chain management, entry into new markets, new product introductions, the demand for such customers’ products, and general industry and economic conditions. Our revenue also includes raw material sales, royalty and licensing revenue generated from our patent estate pursuant to license and supply agreements with third parties for the distribution and use of the ingredient known as beta-alanine sold under our CarnoSyn®, SR CarnoSyn®, CarnoSyn® 4X and TriBsyn® trademarks.
Previous wording
A cornerstone of our business strategy is to achieve long-term growth and profitability and to diversify our sales base. We have sought and expect to continue to seek to diversify our sales by developing relationships with additional, quality-oriented, private-label contract manufacturing customers, and commercializing our patent estate through sales of beta-alanine under our CarnoSyn®, SR CarnoSyn® and TriBsyn™ trademarks, royalties from license agreements, and potentially additional contract manufacturing opportunities with licensees.
Current wording
A cornerstone of our business strategy is to achieve long-term growth and profitability and to diversify our sales base. We have sought and expect to continue to seek to diversify our sales by developing relationships with additional, quality-oriented, private-label contract manufacturing customers, and commercializing our patent estate through sales of beta-alanine under our CarnoSyn®, SR CarnoSyn®, CarnoSyn® 4X and TriBsyn® trademarks, royalties from license agreements, and potentially additional contract manufacturing opportunities with licensees.
Previous wording
During fiscal 2025, our consolidated net sales were 14% higher than in fiscal 2024. Private-label contract manufacturing net sales increased 16% primarily due to increased orders from two of our larger customers and shipments to new customers partially offset by lower sales from our largest customer. Revenue concentration from our largest private-label contract manufacturing customer as a percentage of our total net sales was 33% in fiscal 2025, and revenue concentration from our largest private-label contract manufacturing customer as a percentage of total net sales in fiscal 2024 was 42%.
Current wording
During fiscal 2026, our consolidated net sales were 10% higher than in fiscal 2025. Private-label contract manufacturing net sales increased 11% primarily due to increased orders from one of our largest customers and several of our other existing customers, partially offset by reduced orders from other existing customers. Revenue concentration from our largest private-label contract manufacturing customer as a percentage of our total net sales was 28% in fiscal 2026, and revenue concentration from our largest private-label contract manufacturing customer as a percentage of total net sales in fiscal 2025 was 33%.
Previous wording
During fiscal 2025, patent and trademark licensing revenue decreased 4% to $8.1 million as compared to $8.4 million for fiscal 2024. The decrease in patent and trademark licensing revenue was primarily due to decreased material sales from existing customers partially offset by decreased volume rebates and increased royalty income.
Current wording
During fiscal 2026, patent and trademark licensing revenue decreased 2% to $7.9 million as compared to $8.1 million for fiscal 2025. The decrease in patent and trademark licensing revenue was primarily due to a decrease in beta-alanine-based material sales from existing customers, partially offset by increased orders of other raw material sales.
Previous wording
We continue to invest in research and development for the expansion of our CarnoSyn® product offerings. We believe SR CarnoSyn® may provide a unique opportunity within the growing Wellness and Healthy Aging markets but acceptance of this product offering has been limited as we only offer this product in tablet form. In August 2024, we announced our new product called TriBsyn™. We believe TriBsyn™ and its patent-pending formulation will allow us to better penetrate the Wellness and Healthy Aging channel. This groundbreaking product is a carnosine booster that utilizes CarnoSyn® beta-alanine and other proprietary technology to increase beta-alanine bioavailability and absorption while effectively eliminating beta-alanine related paresthesia. This product is available as a raw material powder, which allows formulation flexibility for our customers. The elimination of paresthesia while maintaining efficacy of dosage creates a new opportunity to reach segments of the market that to date have been untapped, including older adults, vegetarians, and vegans. We believe our efforts to refine our formulations and product offerings will be positively received and result in significant opportunity for increased sales of our patented products. We are also working on several additional innovations we believe could lead to new patentable products for CarnoSyn® Brands in the future.
Current wording
We continue to invest in research and development to expand our CarnoSyn® Brands product portfolio. In August 2024, we announced a new product called TriBsyn®, a clinically supported carnosine booster designed for daily wellness that delivers more than four times the bioavailability of standard beta-alanine without the paresthesia commonly associated with traditional formulations. We believe TriBsyn® and its patent-pending formulation will enable us to better penetrate the Wellness and Healthy Aging market. On April 20, 2026, we launched CarnoSyn® 4X, which utilizes the same microencapsulation technology as TriBsyn® and is specifically positioned for the Sports Nutrition market. On May 4, 2026, we announced expanded market applications for TriBsyn®, unlocking new opportunities across the beverage, dairy, and medical nutrition categories. With these expanded capabilities, TriBsyn® is well suited for ready-to-drink beverages, protein drinks, dairy-based products, gummies, and medical nutrition applications. Both CarnoSyn® 4X and TriBsyn® combine CarnoSyn® beta-alanine with proprietary technology to enhance beta-alanine bioavailability and absorption while effectively eliminating beta-alanine-related paresthesia. Available as raw material powders, they provide formulation flexibility for our customers. By eliminating paresthesia while maintaining an efficacious dosage, these products create new opportunities to reach previously untapped market segments, including older adults, vegetarians, and vegans. We believe our continued efforts to refine our formulations and expand our product portfolio will be well received and create significant opportunities to increase sales of our patented and patent-pending products.
Previous wording
To protect and grow our CarnoSyn® product offerings, we incurred litigation and patent compliance expenses of approximately $0.4 million during fiscal 2025 and $0.2 million during fiscal 2024. Our legal expense associated with our CarnoSyn® business has remained relatively low as we have no active litigation, and the current run-rate of expenses is primarily related to maintenance and expansion of our patent and trademark estate. Our ability to maintain or further increase our beta-alanine royalty and licensing revenue will depend in large part on our ability to develop a market for our sustained release form of beta-alanine marketed under our SR CarnoSyn® trademark and our new beta-alanine product marketed under our TriBsyn™ trademark, maintain our patent rights, the availability and the cost of the raw material when and in the amounts needed, the ability to expand distribution of beta-alanine to new and existing customers, and continued compliance by third parties with our license agreements and our patent, trademark and other intellectual property rights. During fiscal 2026, we will continue our sales and marketing activities to consumers, customers, potential customers, and brand owners on multiple platforms to promote and reinforce the features and benefits of utilizing CarnoSyn®, SR CarnoSyn® and TriBsyn™ beta-alanine products.
Current wording
To protect and grow our CarnoSyn® product offerings, we incurred patent compliance expenses of approximately $0.4 million during fiscal 2026 and fiscal 2025. Our legal expense associated with our CarnoSyn® business has remained relatively low as we have no related active litigation, and the current run-rate of expenses is primarily related to maintenance and expansion of our patent and trademark estate. Our ability to maintain or further increase our beta-alanine royalty and licensing revenue will depend in large part on our ability to expand the market for our sustained release form of beta-alanine marketed under our SR CarnoSyn® trademark and our new beta-alanine product marketed under our TriBsyn® and CarnoSyn® 4X trademarks, maintain our patent rights, the availability and the cost of the raw material when and in the amounts needed, the ability to expand distribution of beta-alanine to new and existing customers, and continued compliance by third parties with our license agreements and our patent, trademark and other intellectual property rights. During fiscal 2027, we will continue our sales and marketing activities to consumers, customers, potential customers, and brand owners on multiple platforms to promote and reinforce the features and benefits of utilizing CarnoSyn®, SR CarnoSyn®, CarnoSyn® 4X and TriBsyn® beta-alanine products.
Previous wording
We experienced a loss during fiscal 2025 that was primarily due to underutilization of our available factory capacities, a valuation allowance against our domestic net deferred income tax assets and the accrual of a litigation settlement associated with a PAGA claim. Although our overall sales forecast for fiscal 2026 includes a significant increase in sales as compared to fiscal 2025, we currently anticipate we will experience a net loss in the first half of fiscal 2026, net income in the second half of fiscal 2026, and net income for the full fiscal 2026 year.
Current wording
While we grew our net sales during fiscal 2026, we experienced a loss during fiscal 2026 that was primarily due to underutilization of our available factory capacities which also led to an impairment charge of one of our facilities and related assets. The growth in net sales is primarily related to increased existing private label contract manufacturing customer sales that also drove improved factory utilization, partially offset by a decrease in patent and trademark licensing net sales. Selling, general and administrative expenses during fiscal 2026 increased as compared to fiscal 2025 primarily due to a reserve allowance recorded on the final Employee Retention Tax Credit claim as we no longer believe we will be able to collect this remaining amount without substantial legal fees, an increase in advertising expense to promote our CarnoSyn® 4X and TriBsyn® product offerings, and an increase in compensation expense related to increased headcount required to support the growth in sales, partially offset by a settlement associated with a class action claim recorded during fiscal 2025. Consolidated net loss during fiscal 2026 increased primarily due to the recognition of a non-cash impairment charge of $10.4 million to write down property and equipment to reflect the lower of their estimated fair values or carrying amount as of June 30, 2026. Although our overall sales forecast for fiscal 2027 includes an expected increase in sales as compared to fiscal 2026, we currently anticipate we will experience a net loss for fiscal 2027.
Previous wording
We have identified the following as our most critical accounting estimates, which are those that are most important to the portrayal of our financial condition and results, and that require management’s most subjective and complex judgments. Information regarding our other significant accounting estimates and policies is disclosed in Note A, Organization and Summary of Significant Accounting Policies, of the notes to the consolidated financial statements.
Current wording
We have identified the following as our most critical accounting estimates, which are those that are most important to the portrayal of our financial condition and results, and that require management’s most subjective and complex judgments. Information regarding our other significant accounting estimates and policies is disclosed in Note A of Item 8, Organization and Summary of Significant Accounting Policies, of the notes to the consolidated financial statements.
Previous wording
Private-label contract manufacturing sales increased 16% primarily due to increased orders from two of our larger customers and shipments to new customers partially offset by lower sales from our largest customer. Revenue concentration from our largest private-label contract manufacturing customer as a percentage of our total net sales was 33% in fiscal 2025, and revenue concentration from our largest private-label contract manufacturing customer as a percentage of total net sales in fiscal 2024 was 42%.
Current wording
Private-label contract manufacturing sales increased 11% primarily due to increased orders from one of our largest customers and shipments to existing customers, partially offset by lower sales from other existing customers. Revenue concentration from our largest private-label contract manufacturing customer as a percentage of our total net sales was 28% in fiscal 2026, and revenue concentration from our largest private-label contract manufacturing customer as a percentage of total net sales in fiscal 2025 was 33%.
Previous wording
Net sales from our patent and trademark licensing segment decreased 4% during fiscal 2025. The decrease in patent and trademark licensing revenue was primarily due to decreased orders from existing customers partially offset by decreased volume rebates and increased royalty income.
Current wording
Net sales from our patent and trademark licensing segment decreased 2% during fiscal 2026. The decrease in patent and trademark licensing revenue was primarily due to a decrease in beta-alanine-based material sales from existing customers, partially offset by increased orders of other raw material sales.
Previous wording
Selling, general and administrative expenses, excluding litigation settlement expenses, increased $1.2 million, or 7% to $16.5 million in fiscal 2025 as compared to $15.4 million in fiscal 2024. This increase is primarily due to increased compensation and benefits costs, legal expenses associated with new patent and tradename registrations, rent, and outside sales commissions. Fiscal 2025 results of operations also included a $1.4 million expense associated with an accrued litigation settlement and related legal costs associated with a PAGA claim.
Current wording
Fiscal 2025 results of operations also included a $1.4 million expense associated with an accrued litigation settlement and related legal costs associated with a PAGA claim of which an additional $44,000 of related legal fees was incurred during fiscal 2026.
Previous wording
Other expense, net, increased $1.2 million during fiscal 2025 as compared to fiscal 2024. The increase is primarily due to unfavorable foreign currency exchange volatility and increased interest expense due to increased interest rates and usage of our credit facility.
Current wording
Other expense, net, decreased $0.6 million during fiscal 2026 as compared to fiscal 2025. The decrease is primarily due to favorable foreign currency exchange rates, partially offset by an increase in interest expense related to increased interest rates and usage of our credit facility under the terms of our domestic credit agreement.
Previous wording
We recorded an income tax provision of $2.8 million during fiscal 2025 as compared to a tax benefit of $2.2 million in fiscal 2024. The change in our income tax provision in fiscal 2025 compared to the benefit recorded in fiscal 2024 is primarily driven by a $4.8 million valuation allowance that was recognized in fiscal 2025 against our net domestic deferred income tax asset.
Current wording
We recorded an income tax provision of $0.4 million during fiscal 2026 as compared to $2.8 million in fiscal 2025. The decrease in our income tax provision is primarily driven by a $4.8 million valuation allowance that was recognized in fiscal 2025 against our net domestic deferred income tax asset, as well as continuation of a full valuation allowance on our domestic deferred income tax asset throughout fiscal 2026.
Previous wording
Our primary sources of liquidity and capital resources are cash flows provided by operating activities and the availability of borrowings under our credit facilities. Net cash provided by operating activities was $5.9 million in fiscal 2025 compared to net cash used in operating activities of $1.5 million in fiscal 2024.
Current wording
Our primary sources of liquidity and capital resources are cash flows provided by operating activities and the availability of borrowings under our credit facilities. Net cash used in operating activities was $8.9 million in fiscal 2026 compared to net cash provided by operating activities of $5.9 million in fiscal 2025.
Previous wording
For the year ended June 30, 2025, changes in accounts receivable provided $2.2 million in cash compared to using $9.9 million in fiscal 2024. The increase in cash provided by accounts receivable during fiscal 2025 primarily resulted from timing of sales and the related collections. Days sales outstanding increased to 44 days during fiscal 2025 compared to 38 days during fiscal 2024, primarily due to customer sales mix and timing of sales and the related collections.
Current wording
For the year ended June 30, 2026, changes in accounts receivable used $6.0 million in cash compared to providing $2.2 million in fiscal 2025. The change in cash used in accounts receivable during fiscal 2026 primarily resulted from the timing of sales and the related collections. Days sales outstanding increased to 45 days during fiscal 2026 compared to 44 days during fiscal 2025.
Previous wording
Inventory used $0.6 million in cash during fiscal 2025 compared to providing $5.4 million in fiscal 2024. The change in cash activity from inventory was primarily related to the difference in the amount and timing of orders and anticipated sales in fiscal year 2025 as compared to fiscal year 2024. Changes in accounts payable and accrued liabilities provided $2.9 million in cash during fiscal 2025 compared to providing $5.4 million during fiscal 2024. The change in cash flow activity related to accounts payable and accrued liabilities is primarily due to the timing of inventory receipts and payments.
Current wording
Inventory used $5.9 million in cash during fiscal 2026 compared to $0.6 million in fiscal 2025. The change in cash activity from inventory was primarily related to the difference in the amount and timing of orders and anticipated sales in fiscal year 2026 as compared to fiscal year 2025. Changes in accounts payable and accrued liabilities provided $4.1 million in cash during fiscal 2026 compared to providing $2.9 million during fiscal 2025. The change in cash flow activity related to accounts payable and accrued liabilities is primarily due to the timing of inventory receipts and payments.
Previous wording
Cash used in investing activities in fiscal 2025 was $3.6 million compared to $3.0 million in fiscal 2024. The primary reason for this change is due to increased capital expenditures. Capital expenditures in fiscal 2025 included costs incurred to install solar energy generation equipment on our manufacturing facilities. Capital expenditures in fiscal 2024 included normal expenditures to support equipment and activities in our facilities in California and Switzerland.
Current wording
Cash used in investing activities in fiscal 2026 was $3.7 million compared to $3.6 million in fiscal 2025. The primary reason for this change is due to increased capital expenditures. Capital expenditures in fiscal 2026 and in fiscal 2025 included costs incurred to install solar energy generation equipment on our manufacturing facilities as well as normal expenditures to support equipment and activities in our facilities in California and Switzerland.
Previous wording
At June 30, 2025, we had $9.9 million of borrowing capacity available on our credit facility of which we had outstanding borrowings of $1.9 million. We also owed $8.9 million on a term loan that was borrowed as part of the purchase of our Carlsbad, California manufacturing facility in August 2021. At June 30, 2024, we had $12.0 million of borrowing capacity available on our credit facility of which we had outstanding borrowings of $3.4 million. We also owed $9.2 million on the term loan.
Current wording
As of June 30, 2026, we had $17.7 million available of the maximum borrowing capacity under the terms of our Legacy credit line of which we had outstanding borrowings of $7.7 million. We also owed $10.9 million on the new term loan secured by our Carlsbad, California powder processing and storage facility. As of June 30, 2025, we had $9.9 million available of the maximum borrowing capacity on our previous credit facility of which we had outstanding borrowings of $1.9 million. We also owed $8.9 million on the previous term loan.
Previous wording
During fiscal 2025, we experienced continued price increases for product raw material, and other increased operational costs related to inflationary pressure though to a lesser degree than in fiscal 2024. We currently believe increasing raw material and product cost pricing pressures will continue throughout fiscal 2026 as a result of limited supplies of various ingredients, the effects of higher labor and transportation costs, interest rates, tariffs, and global fuel and energy costs. We anticipate current inflation rates will have a negative impact on our fiscal 2026 operations, and we are monitoring the drivers and working with suppliers and customers to mitigate the impact on our results.
Current wording
During fiscal 2026, we experienced continued price increases for product raw material, and other increased operational costs related to inflationary pressure to a higher degree than in fiscal 2025. We currently believe increasing raw material and product cost pricing pressures will continue throughout fiscal 2027 as a result of limited supplies of various ingredients, the effects of higher labor and transportation costs, interest rates, tariffs, and global fuel and energy costs. We anticipate current inflation rates will have a negative impact on our fiscal 2027 operations, and we are monitoring the drivers and working with suppliers and customers to mitigate the impact on our results.