Progress Update

RNS Number : 0266P

Zoetic International PLC

15 February 2021

 

For immediate release

15 February 2021

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310

Zoetic International plc

('Zoetic', the 'Company' or the 'Group')

Progress Update

Zoetic, the international CBD group, is pleased to provide an update on its operations, its activities, and sets out its current strategic roadmap.

Overview

· Pivotal distribution agreements in place

o  AATAC rollout has commenced with initial 10,000 stores committed during next phase

o  Executed previously announced agreement with prominent UK distributor

o  Ox Distribution beta-store programme complete

· Legal and regulatory work underway for new market entry

o  UK FSA Novel Foods dossier submitted

o  EU compliance work underway

· Executive management team appointment and corporate governance progress

· Financial commitment from the Schrader Family has now been fully executed

Distribution Agreements

The Group is pleased to provide an update on its distribution contracts and refined marketing strategy.  After consultation with its leading distribution partners, the Group has committed to ramping-up its market entrance through a calibrated and phased entry into stores.  This careful approach has been engineered to maximise sell-through rates and revenues with demographically targeted products, following from the Group's long-term commitment to ensuring that all processes are properly implemented to yield the best possible results.

The Group will now enter what has been dubbed its 'Prepare for Lift Off' plan, as it works in close partnership with distributors to orchestrate a successful rollout and to implement best practices across appropriate marketing, trade spend, advertising, in-store display, education, and speed to market.  The Group and its distributors anticipate this ramp-up cycle to be completed over the course of 12 to 15 months, and the information gathered during this phase will allow Zoetic to guide its strategy as the Group accelerates towards total network penetration.

United States

Asian American Trading Associations Council ('AATAC')

The rollout of Zoetic's Chill brand of tobacco alternative products has now commenced across the AATAC's national convenience store distribution network.  Leveraging dedicated shelf space, our products will take prime position within an initial 10,000 stores committed during the 'Prepare for Lift Off' phase.  In conjunction with the sage advice of the AATAC's distribution experts, the Group's focus during this time will be on determining favourable geographic targets whilst gathering the data needed to optimise continued rollout operations.  Initial product shipments are anticipated in the coming weeks, with the programme's early requirements set to be satisfied with existing inventory and available funds.  With initial test markets set to span from New York to California, these key strategic geographies will inform our wider strategy, enhance brand recognition, and allow us to execute a mass market rollout that is repeatable and scalable.

Ox Distributing LLC (Ox) / The Schrader Family

The Group's beta-store programme with Ox Distributing is now complete, having enabled the Group to establish a market fit and genuine appetite for its products.  As previously announced, this pilot saw the Group's products enter the market via convenience stores that were owned by the Schrader Family. Despite negligible marketing and no in store promotional spend, the results of the beta-store programme were extremely encouraging as Chill became the chain's number one selling CBD line and continued to see sales increase despite decreased footfall caused by the Covid-19 pandemic.

The Schrader Family has subsequently divested their interest in the convenience store chain and have fully executed their previous financial commitment.  The Group is very thankful for their continual support and guidance, and now looks to a promising future as the Chill brand continues to penetrate the wider American market with the benefit of valuable guidance from the Ox Distributing team.

Europe

UK distribution and regulatory application

Further to the Group's interim results issued on 28 January 2021, the Group is pleased to announce that it has now executed an agreement with a prominent retail partner in the UK.  This milestone agreement has the potential to facilitate a large-scale rollout across some of the UK's most recognised high street brands, granting the Group further exposure to this rapidly growing market. This contract is conditional on Zoetic achieving Food Standards Agency ('FSA') Novel Foods authorisation for its CBD product range.  The Group is pleased to announce that progress has been made on this front, and the application for authorisation has now been submitted in accordance with FSA guidance.  Zoetic looks forward to updating the market in due course on this matter.

EU   Distribution

As previously announced, the Group has signed a number of distribution agreements with the potential to facilitate the distribution of the Group's Chill products across 17 distinct European markets.  The Group is committed to ensuring proper compliance across each of these jurisdictions, and is working closely with its legal advisers to drive a compliant and driven rollout into the wider European market.  The Group will provide a further update as these matters progress.

Executive Appointment and Governance

The Group is pleased to announce that Mr. Paul Ferguson has been promoted to Chief Financial Officer and is expected to join the Board shortly.  Mr. Ferguson joined Zoetic in November 2020 as Vice President - Corporate Finance, and has been focused on financial budgeting, forecasting, and identifying capital requirements.  Mr. Ferguson brings a combined five years' experience in previous CFO positions, including a private cannabis equipment manufacturer as well as TSX-listed Surge Energy.  Additionally, Mr. Ferguson spent approximately 15 years in the asset management industry as portfolio manager and research analyst with firms such as Fidelity Investments and Citadel.  In addition to an undergraduate engineering degree, Mr. Ferguson obtained an MBA in finance from the Cox School of Business at Southern Methodist University.

An executive search programme has also commenced, as the Group targets talented independent board directors.  Interviews for Zoetic board positions have begun, and the Group looks forward to providing an update on this front in the coming months.

The CBD space is one of the most dynamic current business sectors, both in terms of activities and regulations.  As evidenced by our FSA Novel Foods application, Zoetic seeks to be at the forefront of current best-practice.  This requires frequent input from our legal advisers and regular changes to our website and marketing material.

Antonio Russo, Co-CEO of Zoetic, said: "This an exciting time for the Group, and we are confident that our careful approach to distribution will ultimately yield better sell-through rates and higher revenues, all whilst significantly boosting brand awareness.  Rather than making a consolidated market entrance as an outlier, our incremental phased approach is designed to ensure that our products are the market favourite across every geography in which we operate.  We are enthusiastic about the growing popularity of our lines and look forward to seeing this trajectory continue in the coming months."

Eric Schrader, formerly of Shrader Oil, commented: "With four generations of experience in the convenience store sector, we have seldom had a brand that, with no in store promotional spend, outsells famous brands with million-dollar marketing budgets.  This kind of performance is why so many retail groups are keen to carry the Chill brand, and it's easy to come to the conclusion that we have something special here."

- Ends -

Publication on website

A copy of this announcement is also available on the Group's website at www.zoeticinternational.com

Media enquiries:

Zoetic International plc	c/o Buchanan
Trevor Taylor, Co-CEO Antonio Russo, C0-CEO
Allenby Capital Limited (Financial Adviser and Broker)	[phone]
Nick Harriss / Nick Naylor (Corporate Finance)
Guy McDougall (Equity Sales)
Buchanan
Henry Harrison-Topham / Jamie Hooper / Ariadna Peretz	Tel: [phone]
[e-mail]	www.buchanan.uk.com

 

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