Zoetic International plc (LON:ZOE), the London-listed vertically integrated CBD and natural resources company, has today provided the following update on its operations.
· Outline agreement reached on a further US multi-State distribution contract for Chill
· Significant further cost reductions achieved within the Oil & Gas Division and progress towards exit from the industry
· Testing commenced with another US University on high quality seeds
· International seed distribution agreement discussions are underway
· Zoetic brand short-listed for Top Sante Skincare awards
Current Trading and Prospects
The period since the end of the last financial year, on 31 March 2020, has seen pivotal changes for the Company in its progress away from its origins in the oil & gas sector and towards its future as a vertically-integrated CBD and hemp business. The new board of directors (the “Board”) announced on 29 April 2020 has continued and accelerated the progress already made on this path.
The strategic partnership with the Schrader Family continues to develop successfully, combining their position as both the Company’s largest shareholder (13.32%) and through its US-wide convenience store network of distribution businesses, Ox Distributing LLC, the Company’s key marketing channel for the Chill brand within the USA. This has resulted in outline terms being agreed on a new multi-State distribution agreement to place Chill brand products in US convenience stores, which is expected to be signed this quarter.
The Board can also confirm that the Schrader Family has made the payment due on 30 April 2020 for the loan note announced on 26 March 2020 and the Board is confident the Schrader family will continue to be supportive and instrumental in the growth of the Company.
While the current Covid-19 pandemic is significantly limiting footfall in convenience stores in many US States, the Board believes the distribution agreements already agreed and those close to signing will lead to a substantial increase in sales of Chill brand products within the USA. The brand’s focus on the tobacco-replacement market is expected by the Board to be especially attractive as health concerns are exacerbated by the current pandemic. The Board has commenced negotiations for distribution of the Chill brand in two overseas markets, in addition to others within the USA, and hopes to conclude further significant distribution contracts during the first quarter of the current financial year.
The Zoetic brand, which is currently focussed on the UK market, has recently received recognition for its innovative use of CBD in beauty products by being shortlisted for the “Top Sante Skincare Awards” in the UK. The brand continues to generate excitement in its corresponding product categories.
The prospective wholesale hemp seed business has made significant progress towards commercialisation. Firstly, the Company is engaged with a major US University, one of the country’s leading centres of agri-science, to identify particularly attractive seed strains within its product offerings. Concurrently with this programme, negotiations have commenced on distribution agreements for seeds both in the USA and overseas. During the Covid-19 pandemic, Zoetic will continue to strengthen the credibility of its high-quality feminised seeds through various partnerships and third-party testing.
The Board has continued a substantial cost-reduction exercise within the Oil & Gas business, with further savings expected by the end of the first quarter of the current financial year. There are no revenues currently being produced by this business due the current low levels of domestic oil prices in the USA. The Board continues to seek an exit from this business and several negotiations are currently in progress. In addition, the Board is progressing additional cost-savings within the UK.
The Board is pleased to announce the appointment of MSP Secretaries Ltd as company secretary.
Antonio Russo, Co-CEO of Zoetic, commented, “We cannot be more pleased with the amount of demand we are receiving from large distributors for the Chill brand. When this pandemic is over, we will be well positioned to expand the brand’s distribution footprint both in the US and internationally.”
Trevor Taylor, Co-CEO of Zoetic, commented, “The recent restructuring is providing an immediate positive impact on the Company. Under the new structure decisive strategic decisions are being made at a pace much more aligned with shareholder expectations.”