TIDMCHLL
RNS Number : 9803X
Chill Brands Group PLC
28 December 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF REGULATION 11 OF THE MARKET ABUSE (AMMENT) (EU EXIT) REGULATIONS
2019/310. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
28 December 2023
Chill Brands Group plc
("Chill Brands" or the "Company")
Half Year Results for the Six Months Ended 30 September 2023
Chill Brands Group, the international consumer packaged goods
company, announces its interim results for the six months ending 30
September 2023 (the "Period"), which can be viewed below and also
on the Company's website at www.chillbrandsgroup.com .
Callum Sommerton, Chief Executive Officer of Chill Brands,
commented: "The groundwork laid during the first half of this
financial year prepared the Company for significant growth. In the
months since September 2023, we have sold Chill ZERO products into
hundreds of independent stores and secured listings with major
retail chains in both the US and UK.
We will see in the New Year with more than 2,365 committed
retail stores, sustained multi-channel growth and substantial
purchase orders that will result in material income for the Company
as they are fulfilled during Q1.
2024 will be an exciting time for Chill Brands as we further
extend our international distribution network and expand our
offering both in terms of our own products and those sold by
third-party brands on the Chill.com website."
-S-
About Chill Brands Group
Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is concerned
with the development, marketing and distribution of wellness and
recreational products containing natural, functional ingredients.
The Company's proprietary product range is distributed by some of
the most recognisable convenience retail outlets in the US and
includes nicotine-free disposable vapour products that cater to the
rapidly growing market for tobacco alternatives. Chill Brands also
operates the chill.com e-commerce website, on which it is building
a marketplace of products from third-party brands.
Publication on website
A copy of this announcement is also available on the Group's
website at http://www.chillbrandsgroup.com
Media enquiries:
Chill Brands Group plc contact@chillbrandsgroup.com
Allenby Capital Limited (Financial
Adviser and Broker) +44 (0) 20 3328 5656
Nick Harriss/Nick Naylor/Lauren Wright
(Corporate Finance)
Kelly Gardiner (Equity Sales)
CHILL BRANDS GROUP PLC
("Chill Brands" or the "Company" or the "Group")
Half Year Results for the Six Months Ended 30 September 2023
Chill Brands Group, the consumer packaged-goods distribution
company, announces its unaudited half year results for the six
months ending 30 September 2023 (the "Period").
Summary
During the Period the Company focused on the launch of its
'Chill ZERO' nicotine-free vape products and the expansion of its
e-commerce marketplace on the Chill.com website, however progress
in these areas only started to be reflected in sales post the
Period end. In particular, the Company announced sales of its Chill
ZERO products to significant retailers in both the UK and USA
during Q3, leading to a notable improvement in the Company's
trading performance.
The Company was sustained during the Period by funds raised in
March and April 2023 with a combined total of GBP3.1 million
(before expenses). The Company has deployed these funds for working
capital purposes and to grow the distribution and sales of its
products.
In addition, post the period end, over GBP3 million of
convertible loan notes raised during the previous financial year
were converted to equity. This follows the approval of the
Company's prospectus, published on 30 November 2023.
Revenues recorded during the Period represent a 325% increase on
the prior year interim period. This reflects initial sales of the
Company's vape products, commissions earned on products sold by
third-party brands on the Chill.com website, and continued sales of
certain legacy products including CBD oral chew pouches. Excluding
expenses related to the writing down of legacy product inventory,
sales of the Company's products during the period achieved a margin
of 31.9%.
Since the end of the Period the Company has experienced a
sustained improvement in trading conditions driven by rapid growth
in sales of its vape products. Due to this much improved sales
performance and successful expansion through new distribution
agreements, the Company expects to record substantially higher
revenues during the second half of the financial year, reflecting
the positive impact of the Company's new product focus on overall
business development.
Financial Overview
During the half year Period the Company recorded revenues of
GBP83,392 (prior interim period: GBP19,610), an increase on the
GBP82,840 recorded during the prior full financial year ending 30
March 2023.
Sales of the Company's products resulted in a gross profit of
GBP1,153 (prior interim period: loss of GBP30,128). The Company's
profit margin for the Period was impacted by the recording of costs
associated with writing-off legacy CBD inventory. Excluding
obsolete inventory expenses, the Company achieved a margin on sales
of 31.9%. The Company anticipates that its profit margins will
improve due to the high-margin nature of its core vape product. It
is further expected that unit costs will improve due to economies
of scale, driven by larger manufacturing runs made possible by
heightened demand for the Company's products.
The Company recorded a reduced operating loss of GBP1,518,355
(prior interim period: GBP2,196,195) for the period, down 30.86% on
the prior year. The loss reflects a marginal increase in
administrative expenses comprising additional costs incurred by the
Company related to professional fees for the preparation of the
Company's prospectus (published post-Period on 30 November 2023)
and the establishment of sales operations in the UK for the
Company's UK launch of its nicotine-free vape products starting in
August 2023.
The Company's asset position is broadly consistent with the
position at the end of the prior financial year. There is a reduced
cash position at 30 September 2023 as compared to 31 March 2023, in
line with continued expenditure related to growth of the business,
as set out above.
Since the end of the interim Period, the Company has made
additional sales and received purchase orders creating near-term
trade receivables. These are expected to be paid during the second
half of the financial year.
Fundraising during the Period
During the Period the Company's working capital needs were met
through funds raised in March and April 2023.
On 16 March 2023 the Company announced that it had raised
GBP560,000 (before expenses) from a financial institution. The
fundraise consisted of a subscription for 16,000,000 new ordinary
shares of 1 pence each at a price of 3.5 pence per share.
On 3 April 2023 the Company announced that it had raised GBP2.6
million (before expenses) from a high net worth investor. This
consisted of a subscription for 25,000,000 new ordinary shares of 1
pence each at a price of 4 pence per share for a total of
GBP1,000,000,000, and the issue of convertible unsecured loan notes
with a value of GBP1.6 million. The Convertible Loan Notes carry a
coupon of 12% per annum for a term of three years from the date of
issue on 31 March 2023, and are convertible into ordinary shares at
8 pence per share.
Conversion of Debt to Equity
On 30 November 2023 the Company published a prospectus following
approval by the UK Financial Conduct Authority (FCA). The
publication of this prospectus was necessary in order to facilitate
the conversion of convertible loan notes issued as part of
fundraising activities and an associated Open Offer to existing
shareholders in 2022.
As a result of the conversion, which took place on 5 December
2023, the Company has converted in excess of GBP3 million current
and non-current liabilities into equity.
Key Commercial Events During the Period
During the Period, the Company has focused its efforts on
establishing a route to market for its nicotine-free vape products.
The first inventory of Chill ZERO nicotine-free vapes was received
in the US at the end of March 2023. The Company went on to
establish a pilot programme, engaging with select independent
stores and retail partners to assess product market fit and gather
crucial sell-through data to inform future sales strategies.
In May 2023, the Company entered into a contract with
full-service industry specialists, The Vaping Group, to provide
sales, distribution and marketing services in relation to the
launch of Chill ZERO nicotine-free vape products in the UK. The
Company launched an extended range of large puff count devices in
the UK, receiving its first inventory in early August 2023. Initial
efforts focused on establishing distribution to sales to UK
independent stores, with 120 outlets recorded as stocking the
product within the first month of its retail debut on 7 August
2023.
The Company also directed its efforts towards the continued
development of the Chill.com website on which it is building an
e-commerce marketplace of wellness products containing natural,
functional ingredients. These include alcohol alternatives,
supplements, and products containing active ingredients such as
hemp-derivatives, adaptogens and nootropics. More than 40 external
brands now list their products for sale on the website, generating
commissions for the Company whenever sales are made.
Subsequent Events
Significant progress has been made in the months since the end
of the Period.
In the US, the Company's pilot strategy has produced sufficient
data to facilitate discussions with chain retailers. This has borne
fruit in the form of an initial purchase order from Smoker
Friendly, the largest dedicated operator of smoke shops in the
nation. All 13 existing Chill ZERO products will be stocked by
Smoker Friendly stores in nine US states, providing further
opportunities to develop the brand's position within the
market.
In the UK, Chill ZERO vape products have been sold into more
than 475 independent retail stores. The Company has also secured an
initial purchase order that will see its products stocked in 150
WHSmith's travel stores in major airports, train stations and
transit hubs around the UK. More recently, the Company has received
a seven figure purchase order for the sale of its products into a
one of the UK's top supermarket chains. This will provide further
exposure to consumers in all of the leading store operator's UK
stores. The Company has also received a significant purchase order
that will result in the sale of its vape products to a prominent
operator of UK petrol stations including those trading under major
brand names including Shell, Esso and BP.
The Company has also reached agreement for its products to be
sold by leading wholesalers and distributors. These include Vape
Local and Flawless, between them some of the UK's largest vape
category specialists with a combined reach of more than 9,000
business customers. These agreements are expected to enable Chill
ZERO to further penetrate the UK market over the coming year.
Outside of the retail channel, the Company also launched its
Chill ZERO products on Amazon.co.uk in late October 2023. The
products are now available for purchase and next-day delivery on
Amazon Prime, offering another convenient way for additional
customers to purchase Chill ZERO nicotine-free vapes. Since their
launch on Amazon, the products have outperformed expectations and
gained first page rankings for key search terms including 'nicotine
free vape'.
Sales and purchase orders received by the Company's for its
Chill ZERO products have a combined gross value of more than GBP2.1
million (including VAT). While the Company has incurred costs
related to the commencement of sales of its products by major
retailers, it has taken the opportunity to structure deals that
result in the recovery of slotting fees and other similar retail
costs upon fulfilment of initial purchase orders which
significantly exceed the costs of listing.
To support the growth of its sales channels, the Company has
secured a supply chain financing facility from an existing major
shareholder. The facility of GBP1,000,000 carries a monthly
interest rate of 2% and has a term of one year. The funds will
support the acquisition of inventory and the roll-out of products
to new stores, reducing the cashflow impact of the Company's rapid
expansion.
Outlook and Future Prospects
As outlined in this report, the Company has made significant
progress in developing a route to market for its vape products.
Since the end of the interim period, the Company has secured
product listings with major UK retail chains including a leading
supermarket and WHSmith in the UK, along with Smoker Friendly, the
largest dedicated smoke shop chain in the US. The Company has also
sold its products into more than 475 independent retail stores and
established relationships with key distributors and wholesalers
including Flawless and Phoenix 2 Retail.
Listings have now been secured for Chill ZERO products in more
than 2,365 locations with further progress to be made in 2024 as
the products reach the shelves of major retail stores. This has all
been achieved within a matter of months, demonstrating demand for
our products and setting the stage for a compounding effect as
sales continue. As the Chill brand gains recognition and a foothold
in the market, we anticipate a cascading effect that will foster
additional sales and create opportunities for further expansion
into new retail channels. This is already apparent in both key
territories as discussions with further distributors and retailers
are underway in the US and UK.
Following progress made during the first half of the financial
year, the Company now benefits from a diversified base of business
across four key sources of revenue:
1. US retail channel sales which are expected to expand as the
Company reaches agreement to sell its products into additional
stores and states. The US is the largest vaping market in the
world, accounting for an estimated US$8.3 billion in 2023.
2. UK retail channel sales, where the Company is making rapid
progress through sales into major supermarkets, convenience store
chains and other outlets. The UK has seen an immense rise in the
popularity of vaping with the domestic market generating estimated
revenues of more than GBPGBP3 billion in 2023.
3. Sales of Chill products online via our own website,
Amazon.co.uk and other e-commerce sites. The Company is confident
that these channels will also provide a cost-effective means of
entering additional European markets during the 2024 calendar
year.
4. Sales of third-party brands on the Chill.com website. As more
brands join the site and additional user traffic is attracted by
means of new marketing campaigns, the Company expects sustained
growth in the revenue generated by its e-commerce marketplace
model.
The establishment of these new revenue centres comes with its
own set of costs that will require careful financial management.
The expansion of retail sales channels, for instance, requires
expenditure on store listing fees, merchandising, compliance, and
product sampling. While these are the inevitable costs of building
a consumer products brand, the Company continues to take every
opportunity to carefully structure deals that provide upside from
the first order rather than relying on future reorders to create
financial value.
Based on sales made and purchase orders received to date, the
Company expects to record a material increase in revenues for the
full financial year.
The Company's Board is proud of the progress achieved this year.
Chill Brands is experiencing substantial growth with the
diversification of its product offerings, expansion into new
markets, and the development of a business model that is expected
to deliver recurring revenue with healthy profit margins. Efforts
made during the Period have propelled the Company into a much
stronger position than at the outset of 2023 and Chill Brands is
now positioned favourably for continued success.
This interim financial report was approved by the Board of
Directors on 11 December 2023 and signed on its behalf by:
Callum Sommerton
Chief Executive Officer, Chill Brands Group plc
Chill Brands Group PLC
Consolidated Statement of Comprehensive Income (Unaudited)
For the six months ended 30 September 2023
Unaudited six months Unaudited six months
ended 30 September 2023 ended 30 September 2022 Audited year ended 31
GBP GBP March 2023 GBP
------------------------- ------------------------- -------------------------
Revenue 83,392 19,610 82,840
Cost of sales (56,776) (49,738) (61,798)
Obsolete inventory expense (25,463) - (227,901)
------------------------- ------------------------- -------------------------
Gross (loss) profit 1,153 (30,128) (206,859)
Administrative expenses (1,519,508) (1,249,219) (2,636,115)
Share expenses for options
granted - (916,848) (1,126,846)
Operating Loss (1,518,355) (2,196,195) (3,969,820)
Finance income 60,553 8,282 24,159
Finance cost (111,036) - (323,556)
Other income - - 6,203
------------------------- ------------------------- -------------------------
Loss on ordinary
activities before
taxation (1,568,838) (2,187,913) (4,263,014)
Taxation on loss on
ordinary activities - - -
------------------------- ------------------------- -------------------------
Loss for the period from
continuing activities (1,568,838) (2,187,913) (4,263,014)
Loss for the period from
discontinued activities (13,698) (14,749) (24,877)
Loss for the period (1,582,536) (2,202,662) (4,287,891)
Other comprehensive
income
Items that may be
re-classified
subsequently to profit or
loss:
Foreign exchange
adjustment on
consolidation 23,143 324,591 (24,241)
Total comprehensive loss
for the
period attributable to
the equity holders (1,559,393) (1,878,071) (4,312,132)
------------------------- ------------------------- -------------------------
Earnings (loss) per
share attributed to
equity holders
Attributable to continuing
activities (0.56) (0.89) (1.75)
Attributable to
discontinued activities (0.01) (0.01) (0.01)
------------------------- ------------------------- -------------------------
Total (0.57) (0.90) (1.76)
------------------------- ------------------------- -------------------------
Chill Brands Group PLC
Consolidated Statement of Financial Position (Unaudited)
At 30 September 2023 and 2022
Unaudited six months Unaudited six months
ended 30 September 2023 ended 30 September 2022 Audited year ended 31
GBP GBP March 2023 GBP
------------------------- -------------------------- --------------------------
Non-Current Assets
Tangible assets 36,510 54,621 42,612
Right of use lease asset 244,879 269,855 210,216
Intangible assets 1,201,062 1,370,160 1,209,424
Total Noncurrent Assets 1,482,451 1,694,636 1,462,252
Current Assets
Inventories, net 622,197 765,644 464,028
Trade and other
receivables 391,879 414,055 447,367
Cash and cash equivalents 1,954,306 1,822,322 3,767,426
Other current assets - 53,720 -
Total Current Assets 2,968,382 3,055,741 4,678,821
Total Assets 4,450,833 4,750,377 6,141,073
========================= ========================== ==========================
Non-Current Liabilities
Loans, excluding current
maturities 1,426,168 3,147,151 4,034,726
Right of use lease
liability, net of current
portion 114,341 204,266 149,755
-------------------------- --------------------------
Total Noncurrent
Liabilities 1,540,509 3,351,417 4,184,481
Current Liabilities
Current maturities of
loans 3,179,164 10,000 468,893
Trade and other payables 294,937 354,556 540,641
Current portion of right
of use lease liability 135,949 74,602 68,386
Total Current
Liabilities 3,610,050 439,158 1,077,920
Total Liabilities 5,150,559 3,790,575 5,262,401
-------------------------- --------------------------
Net Assets (699,726) 959,802 878,672
------------------------- -------------------------- --------------------------
Equity
Share capital 2,876,153 2,451,153 2,611,153
Share premium account 11,718,000 10,421,550 10,923,000
Share based payments
reserve 4,516,608 4,751,130 4,516,608
Compound loan note equity
component reserve 419,168 - 419,168
Shares to be issued
reserve - 16,941 1,079,256
Foreign currency
translation reserve 259,930 585,368 236,536
Retained loss (20,489,585) (17,266,340) (18,907,049)
-------------------------- --------------------------
Total Equity (699,726) 959,802 878,672
========================= ========================== ==========================
Chill Brands Group PLC
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2023
Compound Loan Note Equity
Share Capital GBP Share Premium Account GBP Share Based Payment Reserve GBP Component Reserve GBP Shares To Be Issued Reserve GBP Foreign Currency Translation Reserve GBP Retained Loss GBP Total GBP
---------------------------------- --------------------------------------- ----------------------------------- ------------------------------ ----------------------------------- ------------------------------------------ -------------------------------- ---------------------------
At 31 March
2022 2,120,700 10,298,440 3,389,762 - 89,517 260,777 (14,619,158) 1,540,038
---------------- ---------------------------------- --------------------------------------- ----------------------------------- ------------------------------ ----------------------------------- ------------------------------------------ -------------------------------- ---------------------------
Comprehensive
income for the
period
Loss for the
period - - - - - - (4,287,891) (4,287,891)
Other
comprehensive
income
Translation
adjustment - - - - - (24,241) - (24,241)
------------------------------ ---------------------------
Total
comprehensive
loss for the
period
attributable
to the equity
holders - - - - - (24,241) (4,287,891) (4,312,132)
Issue of
warrant and
options - - 1,126,846 - - - - 1,126,846
Shares to be
issued - - - 1,072,743 - - 1,072,743
Shares issued
in the period 490,453 799,471 - - (83,004) - - 1,206,920
Equity
component of
compound
financial
instrument - - - 419,168 - - - 419,168
Cost relating
to share
issues - (174,911) - - - - - (174,911)
------------------------------
At 31 March
2023 2,611,153 10,923,000 4,516,608 419,168 1,079,256 236,536 (18,907,049) 878,672
---------------- ---------------------------------- --------------------------------------- ----------------------------------- ------------------------------ ----------------------------------- ------------------------------------------ -------------------------------- ---------------------------
Comprehensive
income for the
period
Loss for the
period - . - - - - (1,582,536) (1,582,536)
Other
comprehensive
income
Translation
adjustment - - - - 23,394 - 23,394
------------------------------ ---------------------------
Total
comprehensive
loss for the
period
attributable
to the equity
holders - - - - 23,394 (1,582,536) (1,559,142)
Shares issued
in the period 265,000 795,000 - (1,060,000) - - -
Termination of
shares to be
issued - - - (19,256) - - (19,256)
At 30
September 2023 2,876,153 11,718,000 4,516,608 419,168 - 259,930 (20,489,585) (699,726)
---------------- ---------------------------------- --------------------------------------- ----------------------------------- ------------------------------ ----------------------------------- ------------------------------------------ -------------------------------- ---------------------------
Chill Brands Group PLC
Consolidated Statement of Cash Flows
For the six months ended 30 September 2023
Unaudited six months ended 30 Unaudited six months ended 30 Audited year ended 31
September 2023 GBP September 2022 GBP March 2023 GBP
------------------------------ ------------------------------ --------------------------
Cash Flows From
Operating
Activities
Loss for the period (1,582,536) (2,202,662) (4,287,891)
Adjustments for:
Depreciation and
amortisation
charges 112,055 70,541 132,779
Impairment provision 25,463 - 227,901
Promotional product
in lieu of fees 5,538 - 41,818
Imputed interest on
convertible loan
notes 111,036 - 177,722
Share expenses for
options granted - 925,472 1,126,846
Termination of
options (19,256) - -
Shares issued as
compensation - - 40,739
Foreign exchange
translation
adjustment (19,795) 56,066 1,157
Operating cash flow
before working
capital movements (1,367,495) (1,150,583) (2,538,929)
------------------------------ ------------------------------ --------------------------
Decrease (increase)
in inventories (183,632) (129,350) (30,029)
Decrease (increase)
in trade and other
receivables 49,950 232,424 288,864
Increase(decrease)
in trade and other
payables (245,704) (436,057) (234,692)
Net Cash outflow
from Operating
Activities (1,746,881) (1,483,566) (2,514,786)
------------------------------ ------------------------------ --------------------------
Cash Flows From
Investing
Activities
Cash paid for
intangible assets - (593,912) (639,192)
Net Cash generated
from/(used in)
Investing
Activities - (593,912) (639,192)
------------------------------ ------------------------------ --------------------------
Cash Flows From
Financing
Activities
Net proceeds from
issue of shares - 372,363 2,004,013
Loans made by the
Company - 3,083,932 4,693,504
Payments of lease
liability (60,244) (38,838) (66,173)
Repayment of
long-term debt (9,323) (9,572) (18,859)
Net Cash
Generated from
Financing
Activities (69,567) 3,407,885 6,612,485
------------------------------ ------------------------------ --------------------------
Net increase in
cash and cash
equivalents
As above (1,816,448) 1,340,249 3,458,507
Cash and cash
equivalents at
beginning of period 3,767,426 420,045 420,405
Foreign exchange
adjustment on
opening balances 3,328 62,028 (111,486)
Cash and cash
equivalents at end
of period 1,954,306 1,822,322 3,767,426
============================== ============================== ==========================
CHILL BRANDS GROUP PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Six Months Ended 30 September 2023
NOTE 1 - GENERAL INFORMATION
Chill Brands Group PLC ("the Company") and its subsidiaries
(together "the Group") are involved in the development, production
and distribution of consumer packaged goods products including
nicotine-free vapour products. The Company, a public limited
company incorporated and domiciled in England and Wales, is the
Group's ultimate parent company. The Company was incorporated on 13
November 2014 with Company Registration Number 09309241 and its
registered office and principal place of business is 27/28
Eastcastle Street, London W1W 8DH. The Company's US offices are
located at 1601 Riverfront Drive, Grand Junction, Colorado
81501.
NOTE 2 - ACCOUNTING POLICIES
Basis of preparation
The interim condensed unaudited consolidated financial
statements for the period ended 30 September 2023 have been
prepared in accordance with IAS 34 Interim Financial Reporting. The
comparative figures for 31 March 2023 are extracted from the
Group's audited accounts to that date. The comparative figures for
the period ended 30 September 2022 are unaudited.
The condensed unaudited consolidated interim financial
statements of the Group have been prepared on the basis of the
accounting policies, presentation, methods of computation and
estimation techniques used in the preparation of the audited
accounts for the period ended 31 March 2023 and expected to be
adopted in the financial information by the Group in preparing its
annual report for the year ending 31 March 2023.
The financial information in this statement relating to the six
months ended 30 September 2023 and the six months ended 30
September 2022 has neither been audited nor reviewed by the
auditors pursuant to guidance issued by the Auditing Practices
Board. The financial information presented for the year ended 31
March 2023 does not constitute the full statutory accounts for that
period. The Annual Report and Financial Statements for the year
ended 31 March 2023 have been filed with the Registrar of
Companies.
The financial information of the Group is presented in British
Pounds Sterling ("GBP").
NOTE 3 - INCOME TAX EXPENSE
No tax is applicable to the Group for the period ended 30
September 2023. No deferred income tax asset has been recognised in
respect of the tax losses carried forward, due to the uncertainty
as to whether the Group will generate sufficient profits in the
foreseeable future to prudently justify this.
NOTE 4 - LOSS PER SHARE
Basic loss per ordinary share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue during the period.
Diluted earnings per share is calculated by adjusting the weighted
average number of ordinary shares outstanding to assume conversion
of all dilutive potential ordinary shares. There are currently no
dilutive potential ordinary shares.
Earnings Weighted average Loss per
GBP number of shares share (pence)
-------------- ------------------ -----------------
Loss per share attributed
to ordinary shareholders (1,559,393) 281,098,912 (0.57)
NOTE 5 - INVENTORIES
Inventories comprise finished products and raw materials either
developed by the Group or bought in from third parties. All
inventory items are stated at their cost of production or
acquisition, or at net realisable value if this is lower. There are
no biological assets being grown for the six month periods ended
September 30, 2023 and 2022. Recorded Inventories are inclusive of
the Group's hemp seed assets of GBP363,240. For the period ended
September 30, 2023, the Group had impairments of GBP25,463
inventory, relating predominantly to provisioning of legacy CBD
pouch and gummy products nearing their recommended sell by date
codes.
NOTE 6 - NOTE RECEIVABLE - RELATED PARTY
During the six month period ended 30 September 2021, the Group
entered into a note agreement with a related party. The note
receivable consisted of a note from an entity owned and operated by
a shareholder of the Group. The note carried interest on the unpaid
principal balance of nil interest from 30 September 2021 through 31
January 2022 and bear interest at the short term rate of 0.18
percent per annum from 1 February 2022. The note has now been paid
in full. The total balance due from the related parties note
receivable at 30 September was nil (2023) and GBP194,294 (2022).
The note was reduced in line with promotional offers and free fills
provided to retailers as part of the Group's rollout strategy.
NOTE 7 - INTANGIBLE ASSETS
The Group purchased the domain name Chill.com on 22 June 2021.
This domain name is the only intangible asset held by the
Group.
This domain name is stated in the accounts at its cost of
acquisition less a provision for amortisation. The domain name is
amortised over 25 years using the straight line method. The balance
as of 30 September was GBP1,201,062 (2023) and GBP1,370,160 (2022).
The amortisation expense for the period ended 30 September is
GBP26,201 (2023) and GBP28,845 (2022). The change in the balance of
the intangible asset from 30 September 2022 to 30 September 2023 is
reflective of amortisation expense and adjusted for foreign
currency translation.
NOTE 8 - LOANS
On 10 June 2020, the Group entered into a BBLS managed by the
British Business Bank on benefit of and with the financial backing
of the Secretary of State for Business, Energy and Industrial
Strategy. The BBLS loan of GBP50,000 carries an interest of 2.50%
rate per annum with repayment over 60 months beginning July 2021.
The loan balance as of 30 September was GBP27,500 (2023) and
GBP37,500 (2022).
On 22 April 2020, Highlands Natural Resources Corporation
entered into a Paycheck Protection Program (PPP) loan with the U.S.
Small Business Administration (SBA) for GBP154,078 with an interest
of 1.00% rate per annum with principal and accrued interest due and
payable on 22 April 2022. During the period ended 31
March 2021, the Group received partial forgiveness of the SBA
loan. The loan balance as of September 30 was GBP14,738 (2023) and
GBP26,147 (2022).
On 13 May 2022, the Group issued convertible loan notes with an
aggregate value of GBP2,916,670 with an interest rate of nil
through 31 May 2023 and 10% for the period after 31 May 2023.
Conversion of 145,833,495 shares at a conversion price of 2 pence
per share is compulsory upon approval of the prospectus or a change
in legislation where a prospectus is not needed between the date of
issuance and through 31 May 2024. To the extent not already
redeemed or converted, the notes then in issue shall be paid to the
lender on 31 May 2024.
On 21 June 2022, the Group issued convertible loan notes with an
aggregate value of GBP176,835 with an interest rate of nil through
31 May 2023 and 10% for the period after 31 May 2023. Conversion of
8,841,725 shares at a conversion price of 2 pence per share is
compulsory upon approval of the prospectus or a change in
legislation where a prospectus is not needed between the date of
issuance through 31 May 2024. To the extent not already redeemed or
converted, the notes then in issue shall be paid to the lender on
31 May 2024.
On 31 March 2023, the Group issued convertible loan notes with
an aggregate value of GBP1,600,000 with an interest rate of 12%.
The lender has the right between the date of issuance and through 1
April 2026 to serve a conversion notice on the Group to convert all
or some of the notes outstanding into the applicable number of
conversion shares up to 20,000,000 at the conversion price of 8
pence per share.
The loan notes constitute a compound financial instrument under
IAS 32. The liability component representing the net present value
of future contractual cash flows.
Subsequent to 30 September 2023, on 30 November 2023, the Group
received approval from the UK Financial Conduct Authority for
publication of a UK prospectus document (the "Prospectus"). The
Prospectus has been produced to enable the issue and admission of
154,675,220 ordinary shares of 1 pence each in the capital of the
Group to the standard segment of the FCA Official List and to
trading on the London Stock Exchange's Main Market for listed
securities, resulting from the conversion of the May 2022 loan
notes and the June 2022 loan notes.
NOTE 9 - LEASES
The Group determines if an arrangement is a lease at inception
if the contract conveys the right to control the use and obtain
substantially all the economic benefits from the use of an
identified asset for a period of time in exchange for
consideration.
The Group identifies a lease as a finance lease if the agreement
includes any of the following criteria: transfer of ownership by
the end of the lease term; an option to purchase the underlying
asset that the lessee is reasonably certain to exercise; a lease
term that represents 75 percent or more of the remaining economic
life of the underlying asset; a present value of lease payments and
any residual value guaranteed by the lessee that equals or exceeds
90 percent of the fair value of the underlying asset; or an
underlying asset that is so specialised in nature that there is no
expected alternative use to the lessor at the end of the lease
term. A lease that does not meet any of these criteria is
considered an operating lease.
Lease right-of-use assets represent the Group's right to use an
underlying asset for the lease term and lease liabilities represent
the Group's obligation to make lease payments arising from the
lease. Right-of-use assets and liabilities are recognised at the
commencement date of a lease based on the present value of lease
payments over the lease term. Lease terms may include options to
extend or terminate the lease. The Group includes these extension
or termination options in the determination of the lease term when
it is reasonably certain that we will exercise that option. The
Group does not recognise leases having a term of less than one year
in the consolidated statements of financial position.
For the purposes of determining the present value of the lease
payments, the Group use a lease's implicit interest rate when
readily determinable. As leases do not provide an implicit interest
rate, the Group used an incremental borrowing rate based on
available information at the commencement of the lease. Lease cost
for operating leases is recognised on a straight-line basis over
the lease term.
On 5 May 2021, the Group entered into an office lease agreement
between the Company and Bonsai Development LLC. The operating lease
is a five year lease with an option to extend up to five years. The
Group believes the option to extend up to five years is not
probable as of 30 September 2023. The Group recorded a right of use
lease asset and corresponding liability using an incremental
borrowing rate to determine the discount rate. As of 30 September,
the right of use lease asset had a balance of GBP179,481 (2023) and
GBP269,855 (2022).
On 9 June 2023, the Group entered into a warehouse lease
agreement between the Company and Raquette Hanger, LLC ( a related
party). The operating lease is a one year lease with an option to
extend up to five years. The Group recorded a right of use lease
asset and corresponding liability using an incremental borrowing
rate to determine the discount rate. As of 30 September 2023, the
right of use lease asset had a balance of GBP65,398. The Group
believes the option to extend up to five years is not probable as
of 30 September 2023.
NOTE 10 - SHARE CAPITAL & RESERVES
Allotted, called up and fully paid Ordinary shares of GBP0.01
each:
Number of Share Capital Share Premium
Shares GBP GBP
------------------ ------------------ ------------------
Balance at 31 March 2023 261,115,305 2,611,153 10,923,000
15 May 2023 - issuance
of shares 26,500,000 265,000 750,000
------------------ ------------------ ------------------
Balance at 30 September
2023 287,615,305 2,876,153 11,718,000
================== ================== ==================
The Group has only one class of share and all shares rank pari
passu in every respect.
NOTE 11 - EQUITY-SETTLED SHARE-BASED PAYMENTS RESERVE
30 September 31 March
2023 GBP 2023 GBP
--------------------- --------------------------
At beginning of period 4,516,608 3,389,762
On options and warrants granted
in the year - 1,126,846
Released on lapsing of warrants
during the year - -
--------------------- --------------------------
At end of period 4,516,608 4,516,608
NOTE 12 - SUBSEQUENT EVENTS
In October 2023 the Group announced the sale of its Chill ZERO
nicotine-free vapour products into WHSmith travel stores. The
products will be stocked in an initial 150 outlets including those
in key travel hubs such as Heathrow Airport and London Kings Cross
Station.
On October 12 2023, the Group announced the launch of its Chill
ZERO nicotine-free vapour products onto the Amazon.co.uk e-commerce
platform.
In November 2023 the Group announced the launch of its Chill
Zero nicotine-free vapour products on Vape Local, and the sale of
products to the leading UK vapour products distributor,
Flawless.
On 30 November 2023, the Group received approval from the UK
Financial Conduct Authority for publication of a UK prospectus
document (the "Prospectus"). The Prospectus has been produced to
enable the issue and admission of 154,675,220 ordinary shares with
a value of 1 pence each in the capital of the Group to the
standard segment of the FCA Official List and to trading on the
London Stock Exchange's Main Market for listed securities, which
will result from the conversion of the May 2022 loan notes and the
June 2022 loan notes.
On 20 December 2023, the Company announced the sale of its Chill
ZERO nicotine-free vapour products into stores operated by one of
the UK's top supermarket chains, alongside a new supply-chain
finance facility.
To support the growth of its sales channels, the Company secured
a supply chain financing facility from an existing major
shareholder in November 2023. The facility of GBP1,000,000 carries
a monthly interest rate of 2% and has a term of one year. The funds
will support the acquisition of inventory and the roll-out of
products to new stores, reducing the cashflow impact of the
Company's rapid expansion.
On 22 December 2023, the Company announced the sale of its Chill
ZERO nicotine-free vapour products into stores operated by a major
operator of UK fuel forecourts.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR BIBDDRBDDGXR
(END) Dow Jones Newswires
December 28, 2023 02:00 ET (07:00 GMT)
Chill Brands (LSE:CHLL)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Chill Brands (LSE:CHLL)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
