Rhinomed Ltd (ASX:RNO) App 4C Quarterly cashflow and commentary

MARCH QUARTERLY ACTIVITIES AND BUSINESS UPDATE

TOPLINE

• ● Record Quarterly revenues $3.04m, up 203% year on year:

  • ○ Strong Consumer health revenues via online and via retail store count increases

  • ○ Q3 FY22 Cash receipts up 295% year on year - $2.8m

• ● Rhinoswab Supply agreement with BTNX Inc:

  • ○ Minimum Rhinoswab orders of 22.5 million over 24 months, orders to commence July 2022

  • ○ Significant material impact on revenues in FY23 and FY24

  • ○ Exclusivity in the Canadian market and non-exclusivity in other markets

• ● Rhinoswab pipeline continues to grow

• ● Rights issue raising up to $5.0 million

28 April 2022: Melbourne, Australia.

Rhinomed Limited (ASX:RNO OTCQB:RHNMF), a leader in wearable nasal and respiratory technology, has continued to deliver on key milestones with strong momentum across the business.

Financial snapshot

Revenue for Q3 FY22 was $3.04m, up 50% on the previous quarter's record revenue of $2.03m and up 203% for the same period last year. The full FY22 revenue guidance remains $8.9m, an increase of 130% over last year's revenue of $3.9m.

Consumer health business:

• ● Our Consumer health business continues to experience robust growth across our three key markets - the USA, UK and Australia:

  • o Units shipped jumped to 134,000 over the quarter - representing a significant increase of over 54% versus Q2 FY22

  • o FY22 YTD units shipped is already 104% of the FY21 full year figure

  • o Consumer health business revenue contribution - 64%

  • o Gross margins remain strong - c.70%

  • o Retail presence continues to grow with Walgreens extending the presence of Mute on shelf to over 6,000 stores across the USA.

  • o Amazon UK set up has been completed with revenues expected in Q4 FY22

  • o Mute is #1 internal nasal dilator in the US market

  • o Mute is #32 sleep product on Amazon US

  • o In line with World Sleep Day the company released the 2022 Global Annual Sleep and

    Snoring Report.https://mutesnoring.com/wp-content/uploads/2022/04/SleepSnoring_AnnualReport.pdf

Diagnostics & Rhinoswab:

• ● BTNX Inc. Supply agreement:

  • o Supply agreement with Canadian based BTNX Inc. to supply both Rhinoswab and Rhinoswab Junior.

  • o BTNX Inc. is Canada's leading point of care diagnostic company - having supplied over 315 million rapid antigen tests over the last 4 months.

  • o 22.5 minimum swabs to be ordered over the 2 year term with 500,000 swabs per month (commencing in July) in the first 3 months scaling up to a minimum of 1 million swabs per month for the remainder of the agreement.

  • o Rhinoswab Junior to feature in the world's first rapid antigen test kit designed specifically for children - Rapid Response Covid-19 Antigen Rapid Test Cassette - Junior Home Test featuring Rhinoswab Junior

  • o 2-year term with exclusivity in the Canadian Rapid antigen test market and non-exclusivity in other judications.

• ● Rhinoswab sales/opportunity pipeline:

  • o In dialogue with four additional rapid antigen test companies to include the Rhinoswab into their test kits.

  • o A UK Rapid antigen test company has now submitted an application to the Australian TGA for approval of their rapid antigen test kit with Rhinoswab and Rhinoswab Junior for sale in the Australian market.

  • o Rhinoswab sales pipeline now exceeds USD$120 million.

Production capacity

• ● In response to significant increases in demand for its consumer health and diagnostics technology Rhinomed is expanding its manufacturing program. The company is now implementing a new manufacturing strategy to:

  • o Significantly expand its Rhinoswab production capacity to more than 100 million Rhinoswabs/Rhinoswab Juniors per annum

  • o Diversify its production sources in response to global supply chain and geopolitical changes.

  • o Over the quarter the company:

    • ▪ Brought online its Chinese based manufacturing facility to produce c. 2.5m Rhinoswabs /month

    • ▪ Scoped out and is now close to commencing fitting out an Australian based manufacturing facility capable of responding to local and international demand.

    • ▪ Identified new production sites in both the US and the UK

    • ▪ Continued to engage with Government to develop an Australian based manufacturing center capable of scaling to meet global demand. Additionally, this manufacturing center could act as a hub for future development programs in diagnostics and nasal drug delivery

  • o The company expects to provide material updates on the program over the course of Q4 FY22.

Drug delivery program - Cannabis

• ● Rhinomed has an ongoing focus on drug delivery using its proprietary nasal technology. The company believes that its unique nasal drug delivery capability enables the predictable, reliable and repeatable delivery of a range of medications including medical cannabis formulations.

  • o In the 2020 annual report the company reported that its medical cannabis delivery program was placed on hold as a result of the Covid pandemic and the company's desire to accelerate the commercialisation of its nasal swab technology.

  • o Rhinomed noted the recent announcement by Columbia Care that they have accepted a circa US$2Bn offer from US based Cresco Labs and as a result is reviewing the impact of this on its US program.

  • o The company is continuing to develop its drug delivery proposition and anticipates this program will recommence over the course of the financial year 2023.

Current revenue treatment status

At the end of Q3 FY22 the company recorded $3.036m in recognised revenues and an additional $296k as 'unrecognised revenue'. This figure represents those goods that have been invoiced to customers and that will be recorded as recognised revenues in coming quarters.

Stock Shipped	Recognised revenues	Unrecognised Revenues	A/C receivables
FY22 Q3	134,093	$3.036m	$296k	$1.391m

Operational Update

The company remains focused on delivering on its strategy of optimising its wearable technology platform across both the growing sleep and respiratory consumer health markets and strategic entry in the high value diagnostics market. Over the course of the quarter the company continued investment in the following areas:

• ● Research and Development: decreased 25% to $287k (Q2 FY22 - $381k) reflecting the more advanced stages of the company's new technology development.

• ● Production costs: increased 11% to $955k (Q2 FY22 - $858k) reflecting the investment in manufacturing Rhinoswab, ordering stock, partially for increased demand, and also to allow for increased delivery times globally due to the global pressures on logistics.

• ● Marketing and Promotion: increased 33% to $1,149k (Q2 FY22 - $865k). The company continued its marketing investment in our key market, the US, the UK and Australia during Q3.

• ● Staff Costs: increased 31% to $1,090k (Q2 FY22 - $829k). Included in staff costs at item 1.2 (e) of the Appendix 4C, and detailed at Item 6.1, are the amounts paid for Directors fees and salaries, excluding GST where applicable; Executive Board remuneration of $81k and Non-Executive Board Remuneration of $90k. Also included at item 6.1 is the amount of $44k for salaries and wages paid to another related party, on an arm's length basis.

• ● Administrative expenses: increased 98% to $624k (Q2 FY22 - $315k).

Over the quarter cash receipts from customers increased by 11% to $2.8m (Q2 FY22 - $2.5m) largely due to increased revenue in Q2 FY22 relating to Rhinoswab.

Solid financial position

The company continues to execute a prudent capital conservation strategy to support its operational momentum and allow us to deliver on short term revenue opportunities. Whilst the closing quarterly cash balance was $427k, post quarter end we have successfully raised $3.6m, to date, via the Institutional component of the rights issue.

On 7 April 2022, Rhinomed announced a strategic rights issue to raise up to $5.0m priced at $0.19. This is to allow Rhinomed to fund the expansion of the manufacturing capacity and to provide working capital. The institutional component, representing $3.37m, closed fully subscribed on 8 April 2022. The remaining $1.6m for the retail component closes on Friday 29 April 2022.

In July 2021 Rhinomed entered into an unsecured working capital facility to the value of $2.5m. This was provided equally from entities related to the company by way of our Chairman, Ron Dewhurst and Non-Executive Director John McBain. The facility is on commercial terms and is repayable by 31 July 2023. This facility has not been drawn on.

Future focus

The key focus remains reaching a sustainable operational cash flow position. Additionally, the company continues to assess all strategic options that will enable investors to realise the value in the technology platform.

This report has been authorised for release to the market by the Board.

Company	Investor and Media Relations
Michael Johnson, CEO & Director [phone] Follow us on Twitter @rhinomedceo	Rudi Michelson Monsoon Communications [phone]

About Rhinomed Limited (ASX: RNO, OTCQB:RHNMF)

Rhinomed Limited is a Melbourne, Australia based ASX listed nasal and airway technology company that has developed an innovative nasal technology platform that can improve air flow and provide both drug delivery and diagnostic capabilities.

*All financial figures contained in this Announcement are provided on an unaudited basis and are in $AUD