LOS ANGELES, CA, (NAMC) - Health Sciences Group, Inc. (OTCBB:HESG), provider of innovative nutraceutical products and functional food ingredients derived from natural sources, announced today that it is entering into a non-exclusive sales and distribution agreement that establishes a minimum sales requirement of $2 million for Shugr Natural Sweetener(TM) and Shugr Sweet(TM) over the coming twelve months with distributor DNP International, Inc. DNP International is a leading importer and distributor of raw materials to manufacturers in the food, beverage and nutritional supplement industries, among others.
"After having the opportunity to work with DNP during the past six months, we have built an excellent alliance moving us toward a more expanded agreement for the sale and distribution of Shugr," commented Fred E. Tannous, Co-Chairman and CEO of Health Sciences Group. "This new agreement sets the foundation for commercial distribution of Shugr, both domestically in North America and around the world. We believe our continuing relationship with DNP will make a strong and growing contribution to our sales and bottom line in 2006 and beyond."
Under the terms of the agreement, DNP will distribute Shugr as a raw ingredient to established manufacturers in the flavor, nutritional, nutraceutical, food, confection and pharmaceutical industries. In addition, DNP will maintain a sales volume in accordance with established annual sales targets totaling $2.0 million in 2006, $4.3 million in 2007 and $5.6 million in 2008. The agreement is expected to be signed this week.
Loren Miles, Director of Marketing, stated, "We are very excited to be working with DNP International, who represents some of the best products in the industry. They have a well-organized and experienced sales force with a proven track record, having been instrumental in creating exposure for our Shugr products with food and beverage manufacturers. DNP has established strong relationships with their customers and are very particular about the products they represent. They only represent products that they believe in and, because of that, when they recommend new items -- their customers buy. We believe that the market will continue to react favorably to our products that are truly changing the alternative sweetener category."
Shugr Natural Sweetener(TM), a zero-calorie, low glycemic sweetener that tastes and measures like table sugar, is made from sugars that occur naturally in such good-tasting, healthy foods as fruits, vegetables, corn and dairy products. Erythritol is a naturally-occurring sugar commonly found in melon, grapes, mushrooms and soy. Tagatose comes from dairy products, but does not affect people who are lactose intolerant. Tagatose also provides an added health benefit -- prebiotic fiber that promotes intestinal health, much the way yogurt does. Maltodextrin is derived from corn sugar, which is non-GMO and gluten-free. A trace amount of sucralose is added to give Shugr its "high note." All of these ingredients carry a GRAS (Generally Recognized As Safe) designation for food safety from the US Food & Drug Administration.
Shugr Sweet(TM) is a high-efficiency sweetener designed for commercial applications which is based on the Shugr Natural Sweetener formula. Offered in 5X and 10X versions, Shugr Sweet includes an increased amount of sucralose to achieve heightened sweetness level that is equivalent to five and ten times the sweetness of cane sugar, respectively.
"Most food and beverage manufactures require an exhaustive evaluation of any new product before it can be used as an ingredient in their products -- oftentimes taking as long as six months or more," states Bill Glaser, Co-Chairman of Health Sciences Group. "Over the past six months DNP has been working with numerous companies who have tested Shugr in their products. The overwhelming favorable feedback from these companies has led to this new agreement with DNP. We believe DNP could generate sales in excess of the minimum requirement of $2 million in 2006."
Shugr Progress Report
Since making its debut in February of this year, Shugr Natural Sweetener(TM) has been steadily gaining traction in the specialty retail channel. To date, Shugr can be found at several retail outlets including GNC, Vitamin Shoppe, Meijer, ValueDrug and online at drugstore.com.
"While revenues have been insignificant to date, we are starting to see an increasing trend in Shugr sales as we add new retailers and existing retailers start placing repeat orders," commented Mr. Tannous. "In fact, we have already received over six purchase orders from GNC and Vitamin Shoppe. We believe many of our current retailers will start increasing their order size as they transition from testing Shugr in a limited number of stores to fully stocking Shugr in all of their retail locations."
In addition, the company is negotiating several distribution agreements for Shugr with companies in North America and abroad. One such agreement is an exclusive arrangement with an established Japanese distributor who has access to over 50,000 retail doors in Japan. This agreement calls for a minimum annual sales requirement of $1.1 million in 2006, $3.5 million in 2007 and $7.5 million in 2008.
About DNP International, Inc.
DNP International Co., Inc. imports and distributes raw material ingredients to manufacturers in the food, beverage, dietary supplement, cosmetic and pharmaceutical industries. Founded in 1994, DNP is one of the largest suppliers of raw materials in the United States sourcing over two thousand different ingredients. Headquartered in Irvine, Calif., DNP has locations in Los Angeles, Chicago and New Jersey. For more information, visit
www.dnpint.com.
About Health Sciences Group, Inc.
Health Sciences Group identifies, develops and commercializes innovative nutraceutical products derived from natural sources to provide consumers and medical professionals with preventative healthcare alternatives. The company markets its own line of proprietary products based on novel technologies with clinically-supported, GRAS-certified ingredients under its Swiss Research(TM) and Swiss Diet(TM) brand names. For more information, visit
www.HSciences.com and
www.Shugr.com.
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 that are based upon current expectations or beliefs, as well as a number of assumptions about future events. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties, including without limitation, the independent authority of the special committee to act on the matters discussed, the successful negotiation of the potential acquisition and disposal of transactions described above, successful implementation of the company's business strategy and competition, any of which may cause actual results to differ materially from those described in the statements. In addition, other factors that could cause actual results to differ materially are discussed in the Company's most recent Form 10-QSB and Form 10-KSB filings with the Securities and Exchange Commission.