QuiaPEG Pharmaceuticals

The Transaction provides the Company with a large number of existing health food products, know-how and related IP rights (the "New Business"). The health food products have in common that they are based in various parts on polyunsaturated fatty acids, such as Omega 3, and have been assessed by the Company to have a large growth potential in a rapidly growing market with multi-billion dollar sales.
 
About polyunsaturated fatty acids
 
Omega 3 is a well-known dietary supplement. Omega 3 is a family of polyunsaturated fatty acids that are important for several functions of the human body. Most of the fats the body needs can be formed from carbohydrates and protein. The exception is certain omega-3 and omega-6 fats, which we must get from food. Omega 3 and Omega 6 have many different roles in the body, including building and repairing cells. They also affect the regulation of blood pressure, the functioning of the kidneys and our immune system. Omega 3 reduces the blood's ability to clot, thus reducing the risk of blood clots. For foetuses and young children, Omega 3 and Omega 6 are essential for normal growth and development. Polyunsaturated fats can also help reduce the risk of cardiovascular disease.
 
Additional information on acquired business activities
 
The products that QuiaPEG will acquire through the Transaction are approved and tested by the Norwegian Food Safety Authority, which is considered to be an important quality mark in this context. Many players in the global market are able to manufacture products containing Omega 3. However, an important distinguishing feature between the various products on the market is the quality of the raw materials in the products and the design of the product recipes. Through the Transaction, QuiaPEG receives, among other things, a product range consisting of a large number of health food products with associated recipes. The Transaction also includes rights to, inter alia, trademarks (which the Company intends to register after completion of the Transaction) and business-critical know-how. It is further announced that QuiaPEG, after the Transaction, intends to be able to utilise a pre-negotiated logistics chain presented by Rosemonkey at short notice. The health food products are mainly based on Omega 3 and are adapted for different customer groups such as women, men, children, people over 55 years old, Sports/Active etc.
 
Market
 
The global market for Omega 3 is in strong growth and in 2022 the market was estimated to have a turnover of about USD 8.5 billion and the market is expected to grow strongly. Since health supplements are not regulated in the same way as pharmaceuticals, it is particularly important to be able to prove the quality and effects of the products during continuous use and thus build strong brands. It is in this strong market growth that the Company wants to take a position based on proven quality products produced in Norway.
 
Production
 
The products are manufactured in Norway by an experienced contract manufacturer who is able to scale up production without major investment by QuiaPEG. Production takes place in predefined volumes, which means that a certain investment must be made to build up an initial inventory. There are economies of scale and at higher volumes the production cost goes down significantly. A gross margin of over 70 per cent is sought right from the start. A large part of the expected gross profit in the initial phase will be reinvested in marketing to build the brand and place the products on the market.
 
Sales plan for the products
 
QuiaPEG sees significant potential in the increased retail trade and sales of health food products on platforms such as Amazon. If the Transaction is completed, the focus will be on sales in the markets in Sweden, Germany, Austria, the UK and the US. The vision is to become one of the leading suppliers of Omega 3 to the retail market in Europe. The growth of the business is intended to be created through the Company's future sales network in the above-mentioned markets and via platforms such as Amazon, thereby quickly generating sales without significant investments in its own sales organisation.