NUTRITIONAL GROWTH SOLUTIONS LTD — Interim / Quarterly Report 2021

Jan 28, 2021

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ASX Announcement 29 January 2021

Quarterly Activities Report for the period ended 31 December 2020

Key Highlights

• Successful ASX listing on 30 October 2020 after raising A$7 million via IPO with strong support from Australian and international investors.

• Cash receipts for the three-month period ended 31 December 2020 (Q2 FY21) were US$417,000.

• Total sales for the quarter up 35% on the previous corresponding period (pcp).

• Total sales for 2020 up 58% pcp.

• Total number of customers in Q2 FY21 increased 37% pcp, with 3.5K new customers setting the foundation for increased sales in Q3 FY21.

• Vendor Agreement signed with Independent Medical Co-op, Inc. (“ IMCO, INC ”), a leading US Independent Medical Distributor Cooperative, to distribute Healthy Height® to the medical market in the US. The Agreement gives NGS access to IMCO, INC’s 134 distributors in 166 locations across the US with over 1,000 sales reps in the field.

• Launch of a flagship store on Alibaba group's Tmall Global online platform to sell NGS’ Healthy Height products to Chinese consumers.

• Strong balance sheet with US$4.6M in cash reserves.

29 January 2021, Nutritional Growth Solutions Limited ( ASX: NGS, “NGS” or the “Company” ), a global foodtech company focused on nutritional health and the wellbeing of children, presents its Quarterly Activities Report and Appendix 4C for the quarter ended 31 December 2020 (the “ Quarter ”).

Commenting on the Quarterly Activities Report, NGS Managing Director and Chief Executive Officer, Liron Fendell said, “ During this quarter, NGS has used funds from our recent IPO to create the partnerships that will enable the company to grow our market share of the huge global pediatric consumer healthcare market ”.

Brian Leedman, Company Chairman said, “ We enter the new calendar year in a strong cash position with sales growth initiatives in place that we hope will deliver strong returns for our shareholders ”.

ASX Code: NGS

Nutritional Growth Solutions Ltd. ARBN 642 861 774 Israel: 4 Berkovich Street, Tel Aviv 6423806 Australia: Level 11, 216 St George’s Terrace, Perth WA 6000

www.ngsolutions.co

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Business Activities

• NGS successfully completed an Initial Public Offering (“IPO”) which raised A$7 million (before costs) and commenced trading as a listed company on the ASX on 30 October 2020. The offer was comprised exclusively of primary capital with the issue of 35 million shares at A$0.20.

• The Company is using proceeds of the IPO to accelerate its sales, marketing and brand development activities in the US and China. As a global foodtech company, NGS continues to invest in securing its IP through the filing of patents, as well as pursuing R&D to develop more clinically proven supplements for children. In addition, NGS is investing in growing its business through:

• Expanding its direct-to-consumer sales in the US – the newly raised funds are put into use with the company acquiring more customers in the US and expanding market share. Total number of customers in Q2 increased 37% pcp, with 3.5K new customers setting the foundation for increased sales in Q3.

• Tapping into offline sales in the US, initially with the new partnership with IMCO, Inc. The Agreement gives NGS access to IMCO, INC’s 134 distributors in 166 locations across the US with over 1,000 sales reps in the field with the focus on independent retail pharmacy stores.

• Expanding product diversity in the US – through the purchase of the KidzShake brand, as well as continued clinical studies and product development.

• Growing Chinese sales – firstly, with the new Alibaba store (January 2021). Nutritional supplements were among the fastest growing categories on Tmall Global during 2020 with monthly sales exceeding 1B RMB (approx. A$200m) with protein powders/amino acids among the largest categories. In addition, the company entered discussions during the quarter with multiple potential distribution partners, in order to grow its distribution into China.

• Strengthening its global distribution, mainly in Asia Pacific – company received a registered trademark in Korea, and is in discussions with potential partners for that region, which have progressed through the quarter.

Financial Overview

• Cash receipts from customers for the three-month period ended 31 December 2020 (Q2 FY21) were US$417,000.

• Net operating cash outflows in Q2 FY21 of US$509,000.

• US$4.63 million in cash reserves as of 31 December 2020.

Nutritional Growth Solutions Ltd. – ASX Announcement 29 January 2021

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ASX Additional Information

Pursuant to ASX Listing Rule 4.7C.2, NGS 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.

Item	Prospectus Use of Funds Amount	Actual Expenditures for the 3 months ending on 31/12/2020
Sales & MarketingExpenses	A$3,700,000	AUD 534,190
IntellectualpropertyProtection	A$100,000	AUD 45,328
International Expansion and Global Business Development	A$700,000	AUD 79,907
Research and Development Expenses	A$500,000	AUD 64,372
WorkingCapital	A$1,000,000	AUD 532,538
Costs of the Offer	A$1,000,000	AUD 908,456
Total	A$7,000,000	AUD 2,164,792

Item	Prospectus Use of Funds Amount	Actual Expenditures for the 3 months ending on 31/12/2020
Salaries and Wages	A$1,900,000	AUD 235,796
Social Media campaigns, adverting and brand awareness	A$1,600,000	AUD 160,185
Other Sales and Marketingexpenses	A$200,000	AUD 138,208
Total	A$3,700,000	AUD 534,190

This announcement has been authorised for release by the Board of Directors of Nutritional Growth Solutions Ltd.

For more information, please contact:

Ms Liron Fendell, CEO & MD liron@ngsolutions.co +972 (0)3 693 5266

Mr Brian Leedman, Chairman bleedman@ngsolutions.co +61 (0) 412 281 780

Nutritional Growth Solutions Ltd. – ASX Announcement 29 January 2021

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About Nutritional Growth Solutions

Nutritional Growth Solutions is a global nutritional health company focused on the well-being of children. NGS develops, produces and sells clinically tested nutritional supplement formulae for children following 20 years of medical research into pediatric nutrition at Schneider Children’s Medical Centre, Israel’s largest pediatric hospital. The nutritional supplements market has experienced tremendous growth in recent years, but most attention has been focused on adult users and children under three years of age. The three to twelve year old consumers represent a larger market opportunity and NGS is highly differentiated from its competitors with clinically tested products and an expanding product portfolio to capture this market opportunity.

Nutritional Growth Solutions Ltd. – ASX Announcement 29 January 2021

Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

Nutritional Growth Solutions Ltd.

ABN 642 861 774

Quarter ended (“current quarter”) On 31/12/2020

Consolidated statement of cash flows	Current quarter $US’000	Year to date (6 months) $US’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	417 (70) (231) (394) - (231) - - - - - -	843 (99) (554) (927) - (380) - - - - - -
	(509)	(1,117)
2. Cash flows from investing activities 2.1 Payments to acquire or for: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets	- (75) (2) - - -	- (75) (5) - - -

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $US’000	Year to date (6 months) $US’000
2.2 Proceeds from disposal of: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities		- - - - - - - - -	- - - - - - - - -
		(77)	(80)
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities		5,005 - - (370) - - - - -	5,005 - - (491) - - - - -
		4,635	4,514
4. 4.1 4.2 4.3	Net increase / (decrease) in cash and cash equivalents for the period Cash and cash equivalents at beginning of period Net cash from / (used in) operating activities (item 1.9 above) Net cash from / (used in) investing activities (item 2.6 above)	581 (509) (77)	1,313 (1,117) (80)

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $US’000	Year to date (6 months) $US’000
4.4 4.5 4.6	Net cash from / (used in) financing activities (item 3.10 above) Effect of movement in exchange rates on cash held Cash and cash equivalents at end of period	4,635	4,514
		4,630	4,630
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts		Current quarter $US’000	Previous quarter $US’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)		4,630	4,630
		4,630	4,630
6. Payments to related parties of the entity and their associates			Current quarter $US'000
6.1 Aggregate amount of payments to related parties and their associates included in item 1 128 6.2 Aggregate amount of payments to related parties and their associates included in item 2 - Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments.			128
			-

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

7. 7.1 7.2 7.3 7.4 7.5 7.6	Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $US’000 Amount drawn at quarter end $US’000 Loan facilities - - Credit standby arrangements - - Other (please specify) 138 138 Total financing facilities 138 138 Unused financing facilities available at quarter end - Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $US’000	Amount drawn at quarter end $US’000
		-	-
		-	-
		138	138
		138	138
	The US$138K refers to Payroll Protection Plan loan, granted under the US federal Covid-19 aid program.

8.	Estimated cash available for future operating activities	$US’000
8.1 8.2 8.3 8.4 8.5 8.6	Net cash from / (used in) operating activities (item 1.9) (475) Cash and cash equivalents at quarter end (item 4.6) 4,635 Unused finance facilities available at quarter end (item 7.5) Total available funding (item 8.2 + item 8.3) 4,630 Estimated quarters of funding available (item 8.4 divided by item 8.1) 9.85 Note: if the entity has reported positive net operating cash flows in item 1.9, answer item 8.5 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.5. If item 8.5 is less than 2 quarters, please provide answers to the following questions: 8.6.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?	(475) 4,635
		4,630
	Answer:
	8.6.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?
	Answer:
	8.6.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?
	Answer:
	Note: where item 8.5 is less than 2 quarters, all of questions 8.6.1, 8.6.2 and 8.6.3 above must be answered.

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

• Date: 29 January 2021

Authorised by: The Board of Nutritional Growth Solutions Ltd

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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