TIDMZOE
RNS Number : 0552F
Zoetic International PLC
05 March 2020
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO
CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE
MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF
THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.
5 March 2020
Zoetic International plc
("Zoetic" or the "Company")
Operational update
Zoetic, the London listed vertically integrated CBD company, is
pleased to provide the following update on its operations.
Highlights
-- First US distribution contract in final form
-- Contract manufacturing of smokables secured
-- New UK rules on CBD to the Company's advantage
-- Website launched for the sale of feminised seeds
-- Selected to appear on "Behind the Scenes with Laurence Fishburne"
Retail products
Chill in the US
Further to the announcement on 5 February 2020, the Company is
pleased to report that its contract to distribute smokable products
and chew pouches with the first of the US national distributors is
in final form. It is Zoetic's intention to sign this contract once
it has concluded successful trials with its contract manufacturing
partners. To date, the Company has finalised work on production of
its smokable products and so will be in a position to proceed with
the contract once equivalent work has been concluded on its chew
pouches. Operations have been going well and therefore the Company
anticipates concluding the contract and commencing supply during
March and April 2020.
As anticipated, retail prices for both products will be in the
sub-US$10 range and Zoetic will sell to the distributors at around
half of that price, earning around a 50% gross margin. It is the
parties' intention that the Chill chew pouches and smokables will
be presented in display cases in all stores to enhance their
visibility to customers. Based on the display cases Zoetic already
has in stock, the Company's objective is initially to supply around
500 new stores and build the network from there, subject to
customer demand, fabrication of display cases and manufacturing
constraints.
Zoetic / Chill in the UK
During February the UK Food Standards Agency (the "FSA")
announced that only CBD food products where a "valid novel food
authorisation application" has been submitted by 31 March 2021 will
be allowed to remain for sale in the UK-all other CBD food products
will need to be removed from sale by this date.
Whilst this ruling came as no surprise, Zoetic welcomes the
clarity that now exists in the CBD industry and the Board considers
that this greater level of regulation will be to the advantage of
companies such as Zoetic that are determined to supply only the
highest quality products and to ensure that all products meet the
required standards. Furthermore, in anticipation of these new
regulations, and in conjunction with its manufacturing partners,
the management team had already commenced work to ensure compliance
with the new regulations. Barring any unexpected events, Zoetic's
board is confident that its products will be fully compliant ahead
of the deadline of 31 March 2021.
The new rules will have a number of consequences for the
industry and these were well summarised in an article published by
New Frontier Data on 23 February. The author concluded that "Most
current CBD companies are unlikely to survive past March of next
year with their current offerings" and Zoetic in particular noted
the observation that:
"Broad and full-spectrum extracts may have difficulty getting
approved, as most producers are unlikely to have adequate
toxicology data for every compound found present in such products.
It will be easier to produce safety data for CBD isolate, which
could usher in CBD isolate as the standard for oils, capsules, and
additives in foods and beverages."
All of Zoetic's existing range of ingestible CBD products are
manufactured using CBD isolate. If the implications of the new
rules are in line with many commentators' expectations, then the
Company's existing portfolio of products is far better placed to
obtain novel food authorisation than those of many of the Company's
competitors.
The full text of the New Frontier Data article is available on
the Company's LinkedIn page at
www.linkedin.com/company/zoeticinternational. Further details on
the application process are set out at the end of this
announcement.
Zoetic has also become a member of the Association of
Cannabinoid Industries (www.theaci.co.uk). It has been the
Company's intention for some time to join a reputable trade
association and the Board believes that the alignment with the ACI
will provide Zoetic's customers with further assurance of the high
standards of quality and accuracy in which Zoetic judges
itself.
Feminised seeds
Zoetic has also launched a new website, www.zoeticorganics.com,
from which it will advertise and sell its feminised hemp seeds.
This does not alter the Company's strategy of dealing directly with
brokers and large growers, but it provides a "shop window" from
which to advertise the Company's range. Discussions are now
underway with potential buyers and seed brokers in both the US and
Europe. The market for hemp seeds is relatively undeveloped and
there is considerable price differentiation not only between
countries but, to an extent, between US states. The management team
are focusing on ensuring that sales can be directed to locations
where the price is highest.
Developing Zoetic's profile in the US
In its announcement on 5 February 2020, Zoetic stated that is
was examining different options to boost the Company's profile in
the US. As part of that initiative, Zoetic is pleased to announce
that it has been selected to appear on "Behind the Scenes with
Laurence Fishburne". This is an award-winning programme that
highlights new stories and innovative concepts through short-form
documentary presentation. It is an educational show that, in the
case of the episode featuring Zoetic, will seek to address some of
the stigma surrounding the CBD industry and explain more about the
hemp plant.
The programme is shown on US public television channels
throughout the country in five-minute slots over a 12 month period
and the producers estimate that total reach in that period may be
in the range of 40 to 60 million homes. In addition to the
documentary, Behind the Scenes will produce a one-minute
educational commercial segment which will air around 400 times on
networks such as CNBC, CNN, CNN Headline News and Fox Business
Network and is estimated to reach around 84 million homes.
Filming is scheduled to take place at Zoetic's Debeque facility
in May and the programme should commence showing in the summer of
this year.
Further details on "Behind the Scenes with Laurence Fishburne",
including examples of previous programmes, can be found at
www.behindthesceneslf.com.
Commenting, Nick Tulloch, Chief Executive of Zoetic, said:
"During the past month, we have made good progress on finalising
our first major contract to distribute Chill products in the US.
The majority of the necessary agreements and logistics are in place
and, once we complete testing of the outsourced manufacturing of
our chew pouches, we are in a position to proceed.
"Over in the UK, with the announcement by the FSA of new rules
for ingestible CBD products, our decision to manufacture our
products with CBD isolate, rather than full or broad-spectrum CBD,
may place us at an advantage to many of our competitors in the UK
as retailers and customers increasingly focus on the deadline for a
novel food authorisation application.
"We have also made the first steps towards selling our feminised
hemp seeds, marking the culmination of several months of planning
and development.
"Overall this has been another month of excellent progress as we
build Zoetic into a company capable of generating revenue on a
number of fronts. Securing our appearance on "Behind the Scenes"
represents a publicity opportunity in the US that we could not have
conceived of previously and the timing, coming on the back of our
opportunities with our retail products and feminised seeds, is
ideal."
**S**
Enquiries
Zoetic International plc +44 (0) 1738 472 029
Nick Tulloch
Allenby Capital Limited (Financial Adviser and Broker) +44 (0)
20 3328 5656
Nick Harriss
Nicholas Malins Smith
Nick Naylor
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe
Graham Herring
Florence Chandler
Further re FSA application process
A novel food authorisation application for a CBD food made
before 31 December 2020 will need to be submitted to the European
Commission (although it is recommended that applications are also
sent to the FSA). From 1 January 2021, any application for a novel
food authorisation for the UK will need to be submitted to the
FSA.
The application must include:
-- details of the ingredients and production process;
-- the composition of the food and stability data;
-- history of use, proposed uses, use levels and anticipated intake;
-- details of absorption, distribution, metabolism and excretion;
-- nutritional information;
-- toxicological and clinical data; and
-- allergenicity.
Once received, the appropriate authority will either validate
the application or reject it on the basis that the application does
not contain all the necessary elements. Once validated, the
application is assessed for risk.
Prior to April 2021, existing CBD food products may be sold
given that they are safe, correctly labelled, and do not contain
any substances classified as drugs.
In addition to the new rules in respect of making a novel food
authorisation application, the FSA also issued further safety
advice including recommending that vulnerable groups (such as
pregnant or breast feeding mothers and people on medication) should
not consume CBD products and healthy adults should consume no more
than 70mg/day.
This information is provided by RNS, the news service of the
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Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
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END
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