Nutrition 21 Records Net Loss

14/08/07 Nutrition 21, Inc., a leading developer and marketer of chromium-based and omega-3 fish oil-based nutritional supplements, has said that it anticipates revenues of approximately $42.2 million for fiscal year 2007, an increase of almost 300% when compared to fiscal year 2006 revenues of $10.6 million. Revenues in the fourth quarter were negatively impacted by a $1.8 million return of Selenomax by a national retailer, which had previously made a one-time $2.6 million purchase in the third quarter. Earlier this month, Nutrition 21 entered into an agreement to sell the returned inventory to a third party for $1.7 million in barter credits that the Company expects to use in fiscal 2008.

The Company currently anticipates a net loss for fiscal year 2007 of $18.2 million, or $0.32 per diluted share. The anticipated net loss for the year will include a one-time net charge of $1.4 million in the fourth quarter for the return of Selenomax.

In general, the net loss for the year reflects the investments made by the Company to transition from a research and development-focused company selling chromium picolinate as an ingredient, to a sales and marketing-driven company selling branded consumer product goods targeting significant and growing age- and weight- related health needs, including diabetes, cardiovascular health, obesity, joint health, cognitive function and mental health.

The activities and investments during the fiscal year included:
• Adding key members to our retail sales, marketing and distribution team;
• Conducting pre-market activities associated with launching Chromax, Iceland Health Omega-3, Iceland Health Joint Relief and Diachrome into the retail channel. Such activities include market research, focus groups, web site development, collateral development, as well as developing integrated marketing programs, such as PR, print and radio advertisements;
• Acquiring Iceland Health, Inc. on August 25, 2006 and integrating its established line of Omega-3 products that promote cardiovascular and joint health. The acquisition also provided us with direct-to-consumer marketing and sales capabilities, which allow us to effectively leverage television infomercials, print, radio, direct mail, and Internet e-commerce;
• Expanding the Company’s direct response operations by adding new call centers, developing new marketing and sales programs in Spanish, producing and launching a 30-minute infomercial for Chromax and developing line extensions for the Iceland Health franchise that will launch in Fall 2007;
• Testing and refining radio and print media campaigns for the four products that Nutrition 21 currently sells at retail, and financing national retail radio and print campaigns to advertise both Chromax in the third quarter of fiscal 2007 and Iceland Health products introduced at retail in the fourth quarter of fiscal 2007;
• Completing research and development for Advanced Memory Formula, a nutritional supplement for promoting cognitive function. The Company recently completed a randomized-double-blind, placebo-controlled, clinical trial evaluating recall performance and brain activity using MRI scans. Nutrition 21 filed a patent covering this product ; and
• Preparing for the Fall 2007 launches of Advanced Memory Formula and Diabetes Essentials, a line of nutritional supplements for people with type-2 diabetes. Major retailers and key regional retailers have already placed purchase orders for both products.