# Dear Shareholder

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-defensive-packaged-foods/NASDAQ_NAII_2017/NASDAQ_NAII_2017.mmd` · pages 2-8_

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Dear Shareholder,

Our fiscal year ended June 30, 2017 was an excellent year based on a variety of metrics. We have successfully undertaken facility and capacity expansion in order to take advantage of what we believe will be an influx of new business by companies desiring to upgrade their supply chain performance in terms of quality and the ability to meet scheduled or unanticipated demand. By expanding our Swiss facility to just under 100,000 square feet with additional capacity for powder processing and bagging, and by upgrading our blending, compression, encapsulation, and coating capabilities in our 160,000 square foot California plants to handle more throughput, we are poised to grow even more in the years ahead.

We accomplished these multi-million dollar investments utilizing operating cash flow and still ended the year with the highest cash balances ever, while remaining debt-free. As our industry wrestles with the various challenges associated with quality standards, we have established a significant competitive advantage by being nimble both in our capacity, and by refraining to date from incurring any debt. I believe our balance sheet is one of the most robust in our industry and we are proud of that achievement.

With a clean balance sheet, significant assets in cash and high quality processing, packaging, production and testing equipment, we are able to seize opportunities when they present themselves to secure long term relationships with companies who are interested in aligning with a best-in-class manufacturing partner, while they focus their attention on marketing and sales expansion, allowing NAI to do what it does best – namely produce excellent products meeting consumers' needs and expectations. We believe this is evident with the recent new business award from The Juice Plus+® Company allowing NAI to produce the majority of their nutraceutical products and effectively adding an estimated $25 million in annual new business beginning this month.

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Our management team now has the experience and well-earned reputation for performance, and my role has further expanded over the past year having been elected to a three year term as the Chairman of the venerable Natural Products Association (NPA), located not far from Capitol Hill in Washington, D.C. This appointment allows me to be in a position to help shape the dialogue with the regulatory and legislative communities, both within the United States as well as abroad. The demographics of population aging and the emergence of supportive clinical science on a variety of essential nutrients has given rise to a better understanding of the role of dietary supplements in the potential mitigation of burgeoning health care costs in the US and abroad. Coupling the development and enforcement of regulatory standards with consumer expectations and those of the regulators in various states is a key component of NPA's activities, and I am proud to lead a board of seasoned veterans in the retail and producer communities in that effort.

With a 37 year history, NAI is really in a leadership role, and takes great pride in efforts to help craft legislation and regulations that foster continued expansion of standards for excellence in manufacturing with a keen eye on providing consumers access to the best products that have been researched and tested for their value propositions. Major retailers have joined the effort to develop the Supplement Safety Compliance Initiative, which is patterned after the Global Food Safety Initiative. NPA leadership is taking an active role in helping this essential effort along with marquis brands and suppliers, including NAI.

The years ahead hold great promise for your company, and I want to thank you for your continued support of our global efforts as we endeavor to fulfill our promise to enrich the world with the best of nutrition.

Sincerely,

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Mark A. LeDoux

Chairman and Chief Executive Officer

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