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December 2021 Quarterly Activities Report Strong Double Digit Growth Maintained While Preparing For North America And Asia Pacific Expansions

February 1, 2022 Business News No Comments

Nutritional Growth Solutions Ltd. (ASX: NGS), a global nutrition company that creates scientifically formulated and clinically tested supplements to support growth development in children, is pleased to provide a business update for the quarter ending 31 December 2021 (Q4 FY21), along with its Appendix 4C quarterly cash flow report.Continued strong growth in sales drives 36% increase in cash receipts Nutritional Growth Solutions has delivered a record December quarter for revenue and cash receipts, driven by continued strength and positive feedback on new products recently launched in the US and a 300% increase in sales on NGS’ Tmall flagship store in China. Quarterly cash receipts were US$604k, up 36% on the prior corresponding period (pcp) with revenue of US$570k up 38% on pcp. The Company is continuing to progress with manufacturing of products in New Zealand for the Asia Pacific
market, with product coming on line by the end of Q1 2022.

Commenting on the Company’s progress during the quarter, Nutritional Growth Solutions CEO Liron Fendell said, “This quarter has been focused on the manufacturing of our Healthy Heights® products in New Zealand and ensuring the first production run is on time and available to fulfill our new distribution arrangements in Asia Pacific. “The Ultrahealth and Australia Sunshine agreements signed this quarter symbolise a milestone in our growth strategy as we enter South East Asia and expand our footprint in China. We are in a strong position to reach our growth objectives with additional markets planned to launch Healthy Heights® in 2022.

“Our US operations have been concentrating on preparing for the launch of our retail expansion strategy, which is due to commence in Q1 2022 and lead by our newly appointed president of North America, Stephen Turner. To support this, we commenced a high-level brand awareness campaign specifically targeting parents of young children, we held numerous ranging meetings with retailers across the US, and also placed purchase orders for Healthy Heights® canister shake mixes which are retail shelf friendly”.

“Since Nutritional Growth Solutions was founded, we have been working to grow the Healthy Heights® brand into a leading household name to support healthy growth development in children.

Our activities and performance this quarter have been paramount to achieve this and has us well placed to reach our short-term objectives outlined in our three-pillar growth strategy around new territories, new products and new sales channels.”

OPERATIONAL UPDATE IN DETAIL
Preparation of retail expansion launch in the US
Nutritional Growth Solutions is preparing to commence its retail expansion strategy in the US in early 2022. Throughout the quarter, the Company completed design requirements and placed purchase orders for the canister range of it’s Healthy Heights® shake mixes, conducted a high-level brand awareness campaign, specifically targeting parents of children aged 0 – 12 years old, and met with key retailers to introduce the brand and discuss ranging.

Approval to sell on Walmart.com and RangeMe.com as part of US retail expansion After the reporting period, NGS received approval from Walmart Inc and RangeMe America LLC to begin selling Healthy Heights® through Walmart.com and RangeMe.com respectively. These two platforms will play a key role in the Nutritional Growth Solutions US retail expansion strategy.

Nutritional Growth Solutions’ flagship product, Healthy Heights® Grow Daily 3+ single serve shake mixes will be sold on Walmart’s ecommerce platform, which receives approximately 100 million unique visitors each month, as soon as the products are ready for shipping, which is expected March 2022. Further ranging expansion is expected in Q2 2022. In addition, the complete Healthy Heights® product portfolio, including upcoming product launches, will list on leading product discovery and sourcing platform, RangeMe.com. The platform, used by over 10,000 retailers including Wholefoods, CVS Pharmacy, Target and 7-Eleven.

Preparation for e-commerce expansion in Asia Pacific
Nutritional Growth Solutions will enter Southeast Asia and expand its presence in China through a multi-region distribution agreement signed during the quarter with leading Australian-based distributor, Australia Sunshine International Group Pty LTD (Australia Sunshine). The distribution agreement will see the Healthy Heights® Grow Daily shake stocked through leading e-commerce platforms in China and Southeast Asia, including Fortune 500 company and one of China’s largest online retailers by transaction volume and revenue, JD.com (NASDAQ: JD), as well as multinational ecommerce platforms Lazada and Shopee, and TikTok’s emerging e-commerce channel.
During the quarter, the Company also signed a distribution agreement with Australian-based distributor, Ultrahealth Group Pty Ltd (Ultrahealth). The distribution agreement will see the Healthy Heights® shake mix stocked through leading e-commerce platforms including the second largest crossborder e-commerce platform, Kaola, and one of the world’s largest community e-commerce platforms, Little Red Book.

Product development update
Throughout the quarter Nutritional Growth Solutions continued working on new product development to cater for Consumer needs. In addition to the Healthy Heights® range canister range, the Company progressed new product formulations including Kidz Protein dairy-based shake range, Kidz Protein vegan shake range, new Grow Daily 3+ nutrition bars and Ready-to-Drink Grow Daily 3+.

These products are being presented to retailers currently and we expect additional ranging in Q2.

LOOKING AHEAD
“Growing a brand into a global household name is our company’s goal. Our imminent launch into Southeast Asia combined with our growing range of products and increasing distribution channels has us well placed to achieve this mission. In early 2022 we will have doubled our SKU offering as we prepare for our mass retail rollout in the US and we will be expanding our international footprint, entering new markets and territories. Ensuring children around the world have access to healthy products that support their development is at the forefront of our business and we look forward to executing on the strategies in place to ensure even more children around the world can access our
products and reach their full potential.”

WEBINAR DETAILS
An investor webcast will take place on Tuesday 1 February 2022 at 4:00pm AEDT. Following the briefing, participants will have an opportunity to ask questions via an online facility. Please pre-register for webcast via:
https://us02web.zoom.us/webinar/register/WN_GThMhzX8QvC3CmO8JkAXOg

FINANCIAL OVERVIEW
The Company achieved quarterly customer collection of US$604k, up 36% on Q4 FY20.
Operating cash outflows of US$0.9 million for the quarter included:
● US$748k in advertising and marketing;
● US$87k in research and development; and
● US$396k in product manufacturing and operating costs
● US$269k in other, general and administrative expenses.
The Company’s cash balance as at 31 December 2021 is US$4.1 million, providing flexibility for it to execute its growth plans.

Payments made to related parties and their associates shown in the Appendix 4C are as follows:

● Item 6.1 includes US$22k directors’ fees and US$141k payroll expenses

ASX Additional Information
Pursuant to ASX Listing Rule 4.7C.2, the Company provides the following comparison of its actual expenditure since admission to ASX (being 30 October 2020) against the total “use of funds” statement in its Prospectus dated 14 September 2020.

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