Climate Change Data

Environmental Metrics

ESG Focus Areas

• Corporate social responsibility
• Corporate environmental responsibility

Environmental Achievements

• Established a new subsidiary, Highlands Water Resources, to distribute water recycling technology, processing up to 500 barrels of water per day.

Social Achievements

• Aims to conduct business with honesty, integrity, and openness, respecting human rights and the interests of shareholders and employees.
• Strives to create a safe and healthy working environment for staff and a trusting and respectful environment.

Governance Achievements

• Appointed a new Finance Director and Company Secretary.
• Passed a Special Resolution regarding the reduction of capital to create distributable profits.

Climate Goals & Targets

Environmental Challenges

• Water supply disruptions in Colorado due to drought conditions impacting operations.
• Higher than initially forecast operating costs in the second quarter of the calendar year, largely related to one-off costs of workovers and establishing a gas pipeline.
• Concerns from local communities regarding development plans at the West Denver project.
• Financing risk due to insufficient internally generated revenues to fully finance investments and development.

Mitigation Strategies

• Moved two E10X modular water-recycling units to the East Denver location to treat production and flow-back water.
• Operator confirmed that future monthly costs will be considerably reduced.
• Withdrew permits for the West Denver project and continue to consider the most appropriate way to manage this project.
• Secured a $500,000 loan facility (undrawn).

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Adverse weather conditions affecting quality and quantity of production and levels of farm inputs.

Environmental Metrics

ESG Focus Areas

• Environmental Responsibility
• Corporate Social Responsibility

Environmental Achievements

• Material reduction in greenhouse gas emissions due to divestment from oil and gas.

Social Achievements

• Zoetic products received multiple awards from various beauty and wellness organizations.
• Commitment to establishing a diverse Board of Directors.

Governance Achievements

• Continued to assess the situation and is prepared to take steps to establish an Audit Committee.
• The Board is committed to adopting a formal Code of Corporate Governance when it is appropriate to do so.

Climate Goals & Targets

Environmental Challenges

• Risks relating to legacy oil and gas assets.
• Risks associated with laws and regulations relating to CBD.
• Product viability.
• Success of quality control systems.
• Product recalls.
• Product liability.
• Industry competition.
• General risks relating to the Group’s financial position.
• Risks arising from the COVID-19 pandemic.
• Supply and logistics challenges.
• IT security and brand protection risks.

Mitigation Strategies

• Ongoing divestment of legacy natural resources assets.
• Commitment to legal compliance and scientific merit.
• Extensive product testing.
• Detailed procedures in place for testing products.
• Product liability insurance policies.
• Sustained cost-cutting exercise.
• Engagement with suppliers and partners to secure continuity of operations.
• Numerous initiatives, protections, and countermeasures to ensure that its interests and those of its shareholders and customers are insulated against IT security and brand protection risks.
• International trade marks and patent applications.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Chill and Zoetic product lines

Awards & Recognition

• Editor’s Choice, The Beauty Shortlist Wellbeing Awards - Zoetic 1,000mg CBD Oil
• Best New Wellness Product, Pure Beauty London Awards - Zoetic Calming Natural CBD Oil
• Best Natural Skincare Product, Global Green Beauty Awards - Zoetic Jasmine and Lavender CBD Night Cream
• CBD Hero, Glamour Wellness Power List - Zoetic Calming Natural CBD Oil
• Best New Hand Cream, The Global Makeup Awards - Zoetic Lemongrass and Ylang Ylang CBD Hand Cream
• Best UK Beauty Brand Bronze Award, The Global Makeup Awards - Zoetic
• Best CBD Product, The Global Makeup Awards - Zoetic CBD Facial Drops
• Best Body Product Silver Award, The Global Makeup Awards - Zoetic Regenerate CBD Massage Oil
• Best for Sleep, GQ Grooming Awards - Zoetic Blood Orange CBD Oil
• Editor’s Choice, The Beauty Shortlist - Zoetic CBD Oils
• Best Hand Cream, Top Sante Body Care Awards - Zoetic Lemongrass and Ylang Ylang CBD Hand Cream

Environmental Metrics

ESG Focus Areas

• Environmental Responsibility
• Corporate Social Responsibility

Social Achievements

• Strive to create a safe and healthy working environment for the wellbeing of our staff and to create a trusting and respectful environment, where all members of staff are encouraged to feel responsible for the reputation and performance of the Group.
• Aim to establish a diverse and dynamic workforce with team players who have the experience and knowledge of the business operations and markets in which we operate.

Governance Achievements

• The Board is committed to maintaining appropriate standards of corporate governance.

Climate Goals & Targets

Environmental Challenges

• Complex distribution arrangements and a flawed operating model made it difficult for the Group to deliver on the levels of growth that management had hoped for.
• Financial and logistical constraints meant that it was not possible to continue pursuing a swift and aggressive rollout of products to US retail stores.
• Many of those stores that were activated failed to generate consistent product sales as a result of challenging market conditions in combination with a deficient sales support program.
• High cost of slotting fees, promotional activities, and logistics which elevated the cost of goods sold.
• Significant promotional discounts were also offered in combination with free sample products in order to facilitate the entry of Chill products into select retail locations.
• Lower margins achieved on sales to distributors.
• Supply chain and logistics issues delayed delivery of products.
• Logistical issues delaying the import of the Group’s products to the United States prevented additional sales from being made.
• In certain cases, the Group’s distribution relationships did not prove to be fit for purpose.
• The impact of the COVID-19 pandemic on the retail environment.
• Industry-wide issues relating to driver shortages, warehousing, international logistics, and transport may affect the availability and timely movement of the Group’s products.
• Some of the finished products sold by the Group are sourced from multiple component parts that are manufactured internationally.
• Local regulations could prevent the timely export of CBD and other products, resulting in delays and disruption to the Group’s operations.
• Risks associated with laws and regulations relating to CBD and synthetic nicotine.
• Product liability claims.
• Success of quality control systems.
• Product recalls.
• Industry competition.
• Risks relating to any liabilities arising from its former activities in the natural resources sector.

Mitigation Strategies

• Taken strides to reduce spending and address issues with its distribution model.
• Marketing schemes that did not yield consistent results have been replaced with strategies that are intended to provide a firm foundation for growth, with an emphasis on reaffirming the position of the Group’s products within the retail environment.
• Focus on brand building on a budget.
• Greater attention will be paid to search engine optimisation (SEO), brand consistency, and the targeting of relevant customers.
• Pivoted towards a digital-led sales model.
• Focus on targeted sales within select high-performing outlets, prioritising volume of unit sales over store count.
• Engaged with Fabric – an innovative product fulfilment company providing state-of-the-art pick and pack services from centres across the United States.
• Developed direct relationships with retail and distribution partners.
• Cost-cutting exercise to ensure that the Group’s business model remains lean.
• Engaged with all suppliers and partners to secure the continuity of its operations and continues to develop controls and procedures to limit the impact of any such risks.
• Building and maintaining of robust systems which ensure that our products and operations comply with the regulatory regimes of multiple jurisdictions.
• Maintains product liability insurance policies.
• Detailed procedures in place for testing its products.
• Modified strategy that is more appropriate for its size and level of resources.
• Focusing more closely on a smaller number of retail outlets before scaling in a sustainable way over a longer period of time.
• Consolidating the Zoetic product range in order to prioritise the best-selling products while making room for novel product category entrants.

Supply Chain Management

Supplier Audits: Not disclosed

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental Responsibility
• Corporate Social Responsibility

Environmental Achievements

• Implemented measures to minimize ecological footprint, including encouraging recycling programs for vape product components and working with suppliers prioritizing sustainable sourcing and manufacturing processes.

Social Achievements

• Prioritizes safety and well-being of customers by adhering to strict product quality control measures and promoting responsible vaping practices, including age verification procedures and clear communication on potential risks.
• Strive to create a safe and healthy working environment for the wellbeing of our staff and to create a trusting and respectful environment, where all members of staff are encouraged to feel responsible for the reputation and performance of the Group.

Governance Achievements

• The Board is committed to maintaining appropriate standards of corporate governance. The Company strives to maintain a balance between conservation of limited resources and maintaining robust corporate governance practices.

Climate Goals & Targets

Environmental Challenges

• Challenging market for CBD consumer products due to regulatory uncertainty, limited market access, hindered distribution channels, inconsistent sales performance, and fluctuating prices.
• High costs of operation relative to sales results.
• Regulatory risks associated with vapour products, including age restrictions, packaging requirements, advertising restrictions, and product safety standards.
• Risks related to public health concerns surrounding vaping.
• Risks associated with laws and regulations relating to CBD production, labelling, and distribution.
• Potential product liability claims.
• Industry competition.

Mitigation Strategies

• Redirected efforts and resources towards diversified business activities, including the sale of nicotine-free vapour products and the development of an e-commerce marketplace.
• Comprehensive cost optimisation program focusing on enhancing operational efficiency and reducing reliance on external providers.
• Careful monitoring of regulatory developments and close collaboration with manufacturing partners to ensure product safety and quality.
• Proactive steps to ensure responsible vaping practices, including age verification and clear communication of risks.
• Building and maintaining robust systems to ensure compliance with regulatory regimes in multiple jurisdictions.
• Maintaining product liability insurance policies.
• Cost cutting measures to ensure that the Group’s business model remains lean while ensuring all commercial infrastructure is properly resourced.

Supply Chain Management

Responsible Procurement

• Work with suppliers who prioritize sustainable sourcing and manufacturing processes.

Climate-Related Risks & Opportunities