Aumake Limited (ASX: AUK) has announced a significant four-year exclusive global distribution agreement with EZZ Life Sciences (ASX: EZZ), a deal valued at a minimum of A$10 million.
Aumake becomes the exclusive global distributor for EZZ Life Sciences products across all channels, significantly expanding Aumake's reach.
The agreement has a four-year term, with minimum purchase commitments of A$10 million over the term.
EZZ retains intellectual property and brand control for its products.
Meanwhile, Aumake will manage the global sales and distribution responsibilities.
A key condition of the agreement states that failure to meet minimum purchase requirements, either annually or in aggregate, can lead to the termination of the exclusive distribution rights.
Aumake's Nutraceuticals and China Focus
The deal initially includes several key EZZ products: EZZ Glutathione Health Support, EZZ Vitality Boost, and EZZ Sleep.
There is also potential for expansion to include additional EZZ products in the future.
A cooperative manufacturing model has been designed to help preserve healthy margins for Aumake, an approach that aims to optimise profitability from these new product lines.
This agreement aligns with Aumake's broader nutraceutical growth strategy while supporting its upcoming Xenitra rebrand, potentially serving as a proof point for future collaborations in the sector.
The partnership is crucial for Aumake's strategic expansion into the lucrative China market, leveraging existing networks.
Financial Context and Going Concern
For the year ended 30 June 2025, Aumake reported a net loss of A$3.4 million with operating cash outflows of A$4.26 million.
Auditors noted a material uncertainty related to going concern in the annual report, highlighting potential future funding needs for the company.
This is a common disclosure when a company faces financial headwinds.
Despite these historical challenges, a more recent quarterly report showed positive operating cash flow of A$316,000.
Furthermore, Aumake successfully raised A$1.5 million in a recapitalisation, extending its funding runway to approximately 10 quarters.
China OTC Market Entry
Aumake has already obtained a Hong Kong pharmaceutical wholesale licence that facilitates cross-border over-the-counter (OTC) sales into China, with initial plans for up to five online stores.
This strategic move aims to leverage the large and rapidly growing China OTC market, which is estimated at USD 230 billion annually, with online sales experiencing significant acceleration.
The company brings established cross-border commerce experience to this venture.
This includes direct sourcing capabilities with international OTC brands and robust Hong Kong-based logistics.
Strategic Partnership With Financial Considerations
The exclusive global distribution deal with EZZ Life Sciences represents a significant revenue opportunity for Aumake, providing a minimum A$10 million floor and aligning with its strategic expansion into nutraceuticals and the China market.
However, investors will closely watch Aumake's execution, especially given its historical financial challenges and the ongoing need to demonstrate sustainable profitability and address going concern risks.
