TIDMCHLL
RNS Number : 3155B
Chill Brands Group PLC
30 September 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF
DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT
2018), AS AMED BY REGULATION 11 OF THE MARKET ABUSE (AMMENT) (EU
EXIT) REGULATIONS 2019/310.
30 September 2022
Chill Brands Group plc
("Chill Brands" or the "Company")
Final Results for the year to 31 March 2022
Chill Brands Group, the international consumer packaged goods
company, is pleased to announce its final results and the
publication of its audited annual report and accounts for the year
to 31 March 2022 (the "Annual Report"). A copy of the Annual Report
has been published on the Company's website,
https://chillbrandsgroup.com , in accordance with its articles of
association, and can also be viewed through the link below.
http://www.rns-pdf.londonstockexchange.com/rns/3155B_1-2022-9-30.pdf
Key extracts from the Annual Report can be viewed below.
-S-
About Chill Brands Group
Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is an
international company concerned with the development, production,
and distribution of best-in-class hemp-derived CBD products,
tobacco alternatives and other consumer packaged goods (CPG)
products. The Company operates primarily in the US, where its
products are distributed online and via some of the nation's most
recognisable convenience retail outlets. The Group's strategy is
anchored around lifestyle marketing that is designed to enhance the
popularity of its products, channelling visitors to its landmark
chill.com website.
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 (Corporate
Finance)
Kelly Gardiner (Equity Sales)
Chief Executive's Review and Strategic Report
Introduction
I am pleased to present the Group's results for the financial
year ended 31 March 2022 ("FY22"). After what has been an
undeniably difficult period for Chill Brands, now is a time for
reflection and change with a view to positioning the Group as an
agile business with many factors to set us apart from our
competitors.
Both as a result of shifting strategies and changing market
conditions, this period has been transformational. The Group has
emerged into the new financial year as an ambitious contender
within the pharmaceuticals sector of the Standard List with
aspirations to establish itself as a leading supplier of natural,
functional consumer products.
The difficulties encountered by the Group during the financial
year were laid bare by the fundraising activity announced in late
April 2022. 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. In particular,
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.
Since the end of the period in review, the Group has 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. Our
continuing base of activity can now be broadly categorised as brand
building on a budget, where it is understood that each penny spent
must push us closer to self-sufficiency.
Before providing more specific commentary on the Group's
financial performance and operations, I would like to take this
opportunity to outline some of the key events that characterised
the Group's financial year.
A Digital Home for Chill
In June 2021, the Group entered into an agreement to acquire the
Chill.com domain name for $1,600,000. As of 31 March 2022, $800,000
had been paid with the remaining balance of $800,000 (GBP594,199)
being paid on 9 June 2022. In purchasing this domain, the Group
started the journey to becoming a digitally native business with
the opportunity to establish a world-class online destination for
the functional products and relaxed, 'Chill' lifestyle that we
promote.
As an intangible asset, it is understandable that many question
the value of this web domain despite its commonality with other
domains that have previously been bought and sold for significantly
more. In the case of Chill.com, it is our belief that we have
acquired a highly advantageous anchor for the Chill brand that
provides the Group with a platform from which to grow.
An iconic and memorable name is the cornerstone of effective
branding. In Chill.com we have a monosyllabic, easy to spell, and
near-unforgettable online home that has already started to attract
thousands of monthly visitors with traffic, conversions, and repeat
purchases trending continuously upwards since acquisition. Given
these attributes, the Group's management has designated Chill.com
as an asset of exceptional commercial value with a long lifespan of
25 years. In making this decision, the Group has considered the
value ascribed to other comparable domains, the perceived value of
the Chill.com domain to its eponymous brand, and the potential to
release additional financial value upon any future sale of this
digital asset.
Many of our future commercial efforts and investments will be
focused on developing Chill.com as the centerpiece of our digital
strategy. Where in the past the Group has pursued a wide range of
sponsorship deals and other big-ticket campaigns, it is important
not to allow basic marketing principles to go unserviced. Greater
attention will therefore be paid to search engine optimisation
(SEO), brand consistency, and the targeting of relevant customers
going forward.
Marketing Activities
In concert with the acquisition and development of Chill.com,
FY22 saw more investment in the expansion of Chill's brand than
during any prior period. Through strategic partnerships and
relationship building, the Group activated sporting properties to
advertise our products and engaged with affiliate marketers to
develop a wider social media presence.
Despite surprising some members of the UK investment community,
the Group's sponsorship of ambassadors in the Western Heritage and
rodeo space provided a connection to one of the most prolific
demographics for tobacco chew pouch use in the United States.
Access to users of tobacco chew pouches provided the Group with the
opportunity to market our tobacco-alternative products to relevant
consumers while introducing our brand to the Western Heritage
community at the grassroots level. These efforts were aided
significantly by the performance of our athletic ambassadors, most
notably Creek Young who finished the season fifth in the World
Rankings and as PRCA Bull Riding Rookie of the Year.
The period also saw the Group sponsor the US Major Arena Soccer
League (MASL) which provided an additional opportunity to improve
brand recognition and market our CBD products as a natural way to
unwind after rigorous sporting activity. This partnership saw Chill
brand assets applied to hoardings, kits, and stadium fixtures not
only in the MASL, but also to other sporting properties including
the Connecticut Whale - a popular team within the US Premier Hockey
Federation. Once again, our strategy of supporting sports
communities in their infancy prevailed as the MASL season closed
with the establishment of a franchise team by all-time great
Ronaldinho which attracted significant attention to the league and,
by extension, to Chill.
While the aforementioned sporting sponsorships aided brand
recognition within certain subsets of US consumers, they did not
ultimately yield any significant measurable return by way of
product sales. Going forward, the Company will seek to pursue less
costly strategies that are targeted at those consumers who are
statistically most likely to engage with our brands and purchase
our products.
During the period, the Group expanded its online marketing
activities whilst operating within the strict rules set by the
major social media platforms in respect of products containing CBD
and other such compounds. In order to extend its online reach, the
Group has partnered with over 200 sites and online groups as part
of an extensive affiliate marketing program. Adopting the same
'grassroots' strategy as seen in its sporting properties, the Group
has sought to create an organic following through relationships
with micro-influencers who create authentic content that is
relevant to, and well received by, key target demographics.
Having spoken so much about the potential of the Chill brand
during the past few years, it is only right that we exhaust every
opportunity to deliver it to the widest possible group of consumers
through effective marketing. These efforts will continue and indeed
multiply as the months go on.
Steady Growth of Retail Distribution
Until a recent pivot in focus to digital sales channels, most of
the Group's commercial activities related to bricks and mortar
retail stores.
During the year in review, sales into the convenience store
channel via the Group's master distributor remained the primary
revenue generator for the business. Despite the Group having now
climbed back from an initially planned rollout to around 10,000
stores, FY22 saw Chill products reach the doors and counters of
more than 2,000 individual retail outlets in various regions
throughout the United States.
While our physical footprint is now substantially higher with
product making an initial entrance to more than 1,500 stores during
the financial period (2021: 500), it is important to note that the
performance of Chill products has not been consistent across all
stores. At the time of publication, our time and resources in this
channel are allocated to a core group of around 500 locations.
These are representative of our best stores, and we will seek to
replicate their performance across any and all future retail
activations.
Following the end of the financial year, the Group terminated
its distribution agreement with Ox Distributing. By ending their
master distributor status the Group intends to simplify its
distribution operations and its approach to revenue generation and
recognition. Going forward, sales into the physical retail channel
will be made to distribution agents closer to the final customer or
to retail stores themselves. It is expected that this will provide
the Group with better oversight of its retail operations and the
performance of its products within retail locations.
Fulfilment Innovation
In line with these changes to our operating model and commercial
strategy, the Group engaged with Fabric - an innovative product
fulfilment company providing state-of-the-art pick and pack
services from centres across the United States.
As part of this agreement, Chill products entered Fabric's
Dallas facility from which they are dispatched to all consumers
ordering via Chill.com. Going forward, the Group's products will
enter other fulfilment centres across the United States as the
Chill.com platform furnishes us with sales data. This approach
facilitates the rapid delivery of Chill products to consumers
across the country, ensuring that we are able to provide an
exemplary customer experience that is befitting of a premier
e-commerce brand.
Regulatory Challenges
In September 2021, the Group announced the planned launch of a
range of synthetic nicotine chew pouches. These products were
intended to position the Group as a direct competitor to major
tobacco companies, providing an attractive alternative to more
traditional tobacco-derived oral tobacco. Despite international
logistical issues causing a delay to the intended launch date,
Chill tobacco-free nicotine pouches made a market debut in December
2021.
At the time of their launch, Chill tobacco-free nicotine pouches
were not subject to the same regulations or restrictions as regular
tobacco products. In March 2022, however, a federal funding bill
that amended the definition of "tobacco product" was passed by the
US Congress. This statutory change gave the US Food and Drug
Administration (FDA) authority over synthetic nicotine and brought
the Company's new product line within the scope of tobacco
regulations.
As a result of these changes, manufacturers and marketers of
synthetic nicotine products must now submit Premarket Tobacco
Applications (a "PMTA") for their products to legally remain on
sale. Following an extensive consultation process, it was
determined that the Group would need to incur significant costs in
excess of US $1.5 million in order to obtain the necessary
regulatory approvals for the continued sale of its synthetic
nicotine range. Such an expense was not deemed to be commercially
viable and so the decision was made that the Group would not
continue with the development of tobacco-free nicotine products.
The Group continues to work with its network of brokers to sell the
remaining inventory of synthetic nicotine products, however
provisions have been made for a decline in the value of the
remaining tobacco-free nicotine products within this report of
accounts.
The discontinuation of Chill's range of synthetic nicotine
products so soon after its launch underscores the challenges of
operating in an uncertain regulatory environment. Now more than
ever, it is important for the Group to take a well-considered and
deliberate approach to all the activities it engages in to ensure
full compliance and the best possible understanding of the market
landscape.
Following the decision to bring an end to the Chill line of
synthetic nicotine products, the Group's efforts have been firmly
refocused around CBD and the commercialization of holistic wellness
products and more recreational tobacco alternatives.
Building a Brand for the Future
Looking to the months ahead, I firmly believe that the Group is
now in strong position to move forward as an agile consumer
packaged goods competitor with many unique advantages. Chief among
these is the brand and community that we are building, both with
our customers and investors.
Since the end of FY22, we have been working to eliminate costs
and sharpen our operating model to ensure we are able to maximise
the impact of available funds while seeking new revenue generation
opportunities through both our digital and physical retail
channels.
It is important that we recognise past mistakes and failures
while looking to the future with enthusiasm. We have the
opportunity to create lasting brands and products that resonate
with consumers and produce recurring revenues. Nobody should be in
any doubt as to the challenges ahead and it takes a substantial
amount of time, investment, and effort to elevate consumer brands
into the consciousness of consumers and ultimately profitability.
With that being said, we are confident that our brands have what it
takes to excel and we are determined to demonstrate their potential
no matter how challenging the route to success may be.
Against the backdrop of trying market conditions and a changing
consumer landscape, it is our aim to diversify and differentiate
Chill Brands Group for the benefit of all stakeholders. I am
grateful to the Group's shareholders for their ongoing support and
look forward to an exciting and fruitful year ahead.
Callum Sommerton
Chief Executive Officer - Chill Brands Group PLC
Chief Executive's Financial Review
During the period the Group increased its physical retail
footprint and enjoyed a gradual increase in online sales made
predominantly via the Chill.com website. The Group recorded
revenues, net of promotional discounts of GBP624,187, up 95% from
the prior year (2021: GBP320,875). It is important to note that
GBP447,814 of this revenue is due to an agreement with Ox
Distributing, LLC, a related party. See further discussion of this
in the revenue section below on page 8.
The Group's financial performance was adversely affected by the
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. Combined with the lower margins achieved
on sales to distributors amongst other factors, this ultimately led
to the Group incurring a gross loss.
In addition to the above, the Group incurred significant
non-cash costs relating to the issue of shares such as those issued
to the Major Arena Soccer League (MASL) for marketing services and
the share options issued to Viridian Capital Advisors LLC for
strategic advisory services. The Group also incurred cash costs in
respect of acquiring rights to the Chill.com domain, in launching
new product categories, and in expanding its retail distribution
network.
Key Developments
On 4 May 2021, the Group announced that it had raised
GBP6,000,000 through an oversubscribed subscription round for
10,000,000 new shares of 1 pence each at a price of 60 pence per
Ordinary Share. The net proceeds of that subscription round were
used in part to settle an outstanding termination fee for a prior
finance agreement with LDA Capital. The termination fee for the LDA
Capital finance agreement totaled GBP1,200,000, a liability that
was settled shortly after the 4 May 2021 and recognised in the
prior year accounts.
In July, the Group announced that it had signed a contract to
acquire the Chill.com domain name. The total purchase price was
GBP1,226,119 ($1,600,000 cash paid) of which the Group had paid
half by the close of the Financial Year. Alongside this
acquisition, the Group invested heavily in the development of the
Chill.com website while further efforts were made to redesign and
redevelop the Zoetic website.
Following efforts during prior reporting periods, the vast
majority of the Group's legacy natural resources assets were closed
or divested during the financial year or shortly thereafter.
Through a cautious and well-considered approach to the winding down
of its activities in the natural resources space, the Group is now
solely focused on its consumer packaged goods business and has not
incurred any significant financial liabilities in respect of its
previous operations.
In December 2021, the Group announced its sponsorship of the
Major Arena Soccer League (MASL). This marketing deal saw Chill
products and logos advertised to thousands of fans and many more
online followers, both of MASL and of the Connecticut Whale women's
hockey team. The cost of the sponsorship package included
equity-based remuneration totalling 500,000 ordinary shares of 1
pence in addition to further cash costs.
In its Half-Year Report for the period ending 30 September 2021,
the Group announced that it had entered into a related party
agreement with Ox Distributing LLC - its master distributor and a
major shareholder. The agreement provided extended payment terms to
Ox Distributing to provide them with additional time to sell Chill
products and release funds for payment following logistical delays
and challenges within the retail distribution environment. More
specifically, Ox placed a large order for Chill products during the
financial year for the forecasted activation of new convenience
store locations in line with the Group's existing agreements with
large distribution partners. In ordinary circumstances, the Group
would have received numerous smaller payments in respect of
retailer orders, however logistical issues delayed delivery of
products to Ox and the Group could not therefore meet its
contractual performance obligations until a later date. As a result
of this, a significant balance fell due to the Group on the
eventual delivery of products to Ox. The Group entered into the
extended credit terms agreement with Ox to provide them with an
adequate opportunity to sell the delayed products downstream to
distributors and generate funds with which to settle the
outstanding liability to Chill. This resulted in a large one-off
revenue generation event as the full value of the credit provided
to Ox was recognised and recorded. Given that the majority of
revenue generated during the financial period can be attributed to
this sale and transfer of products to Ox, it cannot be said that
the year in review was one of extensive financial growth as the
Group did not make significant sales to downstream distributors or
retailers on its own behalf.
Following the end of the financial period, work has continued to
establish a more effective revenue model. The agreement appointing
Ox as the Group's master distributor was terminated during May
2022, however they continue to pay all outstanding balances as they
fall due under the aforementioned extended credit terms. The Group
is now focused on establishing and extending direct relationships
with retail and distribution partners that will enable it to take a
more conventional path to generating revenues from product
sales.
During the period, the Group launched a new range of synthetic
nicotine products under the commercial name 'Tobacco Free Nicotine'
or 'TFN'. As discussed elsewhere in this report, the US Congress
legislated during March 2022 to regulate all forms of nicotine in
the same way as tobacco. As a result of this regulatory change,
manufacturers and markets of synthetic nicotine products must now
submit a premarket tobacco application (PMTA) in order for their
products to remain on sale in the US. While the Group has submitted
a PMTA in respect of its TFN products, the cost of pursuing the
application through to completion may be prohibitively expensive
and so there is no guarantee that the Group's synthetic nicotine
products will be able to remain on sale. In light of this, the
Group's financial reports include an obsolete inventory expense
that effectively reduces the retail value of the remaining
synthetic nicotine inventory by 80%. It is hoped that the remaining
20% can be sold either at a discount or to alternative distributors
in jurisdictions where comparable regulations do not apply.
Following the end of the period, on 26 April 2022 the Group
announced that it had conditionally raised GBP3,500,000 (before
costs) from new and existing investors through fundraising
consisting of two parts. The first part was by means of
Subscription for 29,166,699 new ordinary shares of 1 pence each at
a price of 2 pence each. The second part comprised convertible loan
notes of 2 pence each with an aggregate value of GBP2,916,670 which
will convert automatically on the publication of a prospectus or
the passing of legislation that means a prospectus is no longer
required. Shareholder approval was sought and gained at a General
Meeting held on 12 May 2022, where all resolutions were duly
passed.
Further to the aforementioned fundraising, the Group announced
its intention to issue an Open Offer to enable long-term
shareholders to participate on equivalent terms. As announced on 17
June 2022, the Open Offer raised a total of GBP212,201 (before
expenses).
Although the Group recorded a loss after taxation of
GBP5,572,324, this figure is comparable with the previous reporting
period net of non-cash share expenses for options granted totaling
GBP3,437,163 (2021: GBP1,410,268). This included the granting of
options for 10,391,432 shares to Viridian Capital Advisors LLC.
Going forward, the Group's Board of Directors intends to reduce
operational costs while seeking to scale both retail and digital
channels with the expectation of improved sales.
In preparing these financial statements, it has been determined
that a significant balance of loans to the Group's subsidiaries
(totaling GBP GBP9,299,301) should be written off. Since its
inception, the Group has raised funds in the UK but incurred the
majority of its costs in the US where its operational subsidiaries
are incorporated. Transfers of funds from the UK bank accounts of
Chill Brands Group PLC to the US accounts of its subsidiaries are
recorded as intra-group loans. The total balance written off is
reflective of funds transferred to these operational entities over
a period of several years. While the Group's management anticipates
that its financial performance will improve over time, it is
expected that revenues will be reinvested back into the company to
facilitate further growth for the foreseeable future. It is not
considered appropriate to plan for repayment of sums invested into
the Group's subsidiaries to the parent company at this time. As a
result of this, the balance of funds paid from Chill Brands Group
PLC to its subsidiaries has been written off.
Revenue
The Group recorded revenues, net of promotional discounts of
GBP624,187. These were largely derived from sales of products into
the retail channel to Ox Distributing, a related party which made
onward sales to distribution partners and retailers. While this
represents an increase of 95% as compared to revenues generated
during the previous reporting period, it is not reflective of
sustained repeat sales to retailers as explained in the 'Key
Developments' section of this Financial Review. The Group did not
generate revenue from any of its remaining natural resources assets
during the year.
Going forward, the Group's revenues will continue to center
around consumer sales into the digital and physical retail
channels. It is expected that sales will increase gradually over
time as the Group refines its retail sales model and scales its
online marketing activities.
In its Mid-Year Financial Report for the six-month period to 30
September 2021, the Group reported revenues of GBP1,073,872. This
value largely comprised the value of the related party agreement
promissory note entered into by the Group with Ox Distributing
LLC.
The sales made to Ox Distributing (in respect of which the Group
extended its credit terms) were based on product requirements for
projected store counts in line with the Group's major distribution
relationships with AATAC and other organisations. As a result of
supply chain and logistics issues, shipments to these stores were
delayed and the Group subsequently determined that it was not
financially equipped for the widespread activation of additional
convenience stores.
While Ox Distributing continues to pay all sums owed under the
related party agreement, the value of the note has been reduced in
line with promotional offers and free fills provided to retailers
as part of the Group's rollout strategy. These promotional offers
and free product fill initiatives are an established feature of the
consumer packaged goods landscape and in many cases are a condition
of entering new stores to enable operators to trial products. The
Group's decision to modify its operating model and pivot towards
the digital retail channel was partly based on the major expense
incurred as a result of these standard practices.
As a result of the above, the Group was only able to recognize
GBP624,187 of revenue for the full financial period, a reduction of
GBP447,814 from the figure recorded in the Group's Half-Year
report.
Expenditure
During the period, the Group's expenditure increased as compared
to the last full financial year. Additional cash costs related to
advisory agreements, securing intellectual property rights
including those over the Chill.com domain, and launching the
synthetic nicotine product category.
The Group also incurred very substantial legal costs in relation
to ongoing regulatory matters in relation to the legality and
marketing of CBD products, restrictions relating to synthetic
nicotine products, and the Group's corporate rebrand exercise from
Zoetic International to Chill Brands Group PLC. These, along with
costs relating to the Group's London Stock Exchange listing,
represent a significant portion of its ongoing costs base.
In addition to cash costs and those relating to share-based
awards, the Company also incurred additional costs in respect of
providing free sample products to retail stores upon entry into new
locations, and in respect of increased shipping and logistics
costs.
Liquidity, Cash and Cash Equivalents
At the year end, the Group held GBP420,045 at the bank (2021:
GBP333,176).
Funding and Going Concern
During the year the Group was financially sustained by funding
obtained through an oversubscribed subscription round for
10,000,000 new ordinary shares of 1 pence each at a price of 60
pence per share.
In May 2022, the Group received shareholder approval for
fundraising activity that raised a total of GBP3,500,000 before
costs through a combination of subscription shares at 2 pence per
share and through convertible loan notes of 2 pence each with an
aggregate value of GBP2,916,670 which will convert automatically on
the publication of a prospectus or the passing of legislation that
means a prospectus is no longer required. The loan note aspect of
the fundraising activity was made necessary by the Group's listing
rules which limited the Board's ability to issue subscription
shares to that value. Further funds were raised from an Open Offer
to the Group's long-term shareholders totaling GBP212,201before
costs.
It is the intention of the Directors to substantially reduce the
Group's expenditure by limiting monthly retainer fees and
implementing strict standard operating procedures to ensure that
funds spent are directed towards revenue-generating activities.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Further details are given in Note 2.2 to the
Financial Statements and in the Directors' Report. For this reason,
the Directors continue to adopt the going concern basis in
preparing the financial statements.
The Directors have also considered the recoverability of loans
made from Chill Brands Group PLC to its subsidiaries. Given the
that the Group's subsidiaries have a continuing need for capital
investment and support, the Directors do not believe it is
appropriate to plan for a repayment of these intra-company loans at
this time. As a result of this, the balance of loans made by Chill
Brands Group PLC to its subsidiary companies has been written off
as discussed elsewhere in the 'Key Developments' section of this
Financial Review.
Based on the considerations above, the Directors consider the
Group to be a going concern.
Chief Executive's Review and Strategic Report- Our Operating
Model
The Group's primary focus is the sale of consumer packaged goods
that contain functional, natural compounds like cannabidiol (CBD).
Sales are made both online and via bricks and mortar retail
locations.
Those who have followed the Group for some time will be aware
that its strategy has changed on a number of occasions. This has
been due in part to the nature of the retail landscape, which is
rapidly evolving, particularly for products containing cannabinoids
which are highly regulated and subject to intense scrutiny. It was
only in 2018 that the Agriculture Improvement Act legalized the
farming of industrial hemp in the United States, making way for
businesses to commence the legal marketing of CBD products. The
Group was an early entrant to this emerging industry and continues
to seek opportunities for diversification and differentiation that
will set it apart from its competitors.
During the year in review, the Group embarked on an ambitious
retail rollout schedule but encountered both logistical and other
challenges that prompted the Board to pivot towards a digital-led
sales model. It is expected that this new approach will prove to be
effective during the current financial year as the Group seeks to
build out the revenue generating capabilities of its landmark
Chill.com domain.
Product Focus
The Group's existing range of products can be categorised into
two categories, namely tobacco alternatives and wellness products.
While the products are within two categories, the products are
considered to be one segment as they are both analysed in total as
the products are both marketed and sold to the same end user.
CBD Tobacco Alternative Products
In the United States the Group sells its Chill brand CBD chew
pouches. While they cannot legally be pitched as a licensed smoking
or tobacco cessation product, the pouches are marketed as an
alternative to the 'dip' or 'chew' pouches that are popular among
many users of traditional tobacco products.
The Group also sells a unique line of herbal cigarettes that are
infused with CBD using a proprietary method. As with the pouch
products, the cigarettes cannot be marketed directly as a smoking
cessation product however they are used by many smokers while also
supporting a recreational use case. The mint variety of the smokes
have proven to be particularly popular in regions where traditional
menthol tobacco cigarettes are no longer available.
Synthetic Nicotine Tobacco Alternative Products
In December 2021 the Group launched a new range of synthetic
nicotine pouches that have since been marketed as 'tobacco-free
nicotine' or 'TFN'. Sales of the pouches increased incrementally
following their launch, however in March 2022 the US Congress
unexpectedly voted to amend the definition of tobacco products to
include "nicotine from any source that is intended for human
consumption". This legislative change effectively brought synthetic
nicotine products like Chill's TFN under the regulatory scope of
the FDA.
Following this change, the FDA applied a timeline for
manufacturers and brands to gain authorization to continue
marketing synthetic nicotine products to the US public. The
deadline for submission of a completed Pre-Market Tobacco
Application (PMTA) was 14 May 2022. Products that are part of an
accepted PMTA remained on sale until 22 September 2022. Eligibility
after that time will be at the discretion of the regulators. As of
22 September 2022, the Group has not received communication from
the regulators. As such, they are able to continue marketing and
selling synthetic nicotine products to the US public.
While the Group lodged a PMTA application in respect of its TFN
products, it was subsequently determined that the costs of
progressing that application through to regulatory approval could
total in excess of US $1.5 million. In addition to this, it was
also found that the application of tobacco regulations to these
products would significantly elevate the Group's costs while
complicating distribution and logistical arrangements. In light of
these considerations, the Group has now ceased development of its
range of synthetic nicotine pouches and its remaining inventory of
TFN has been withdrawn from sale to US consumers.
As referenced elsewhere in this report, the Group's management
have made a provision within the accounts to write off 80% of the
value of the remaining TFN inventory while at least a portion of
the product may be saleable either at a discounted rate or to
retailers in jurisdictions where synthetic nicotine products are
not subject to such licensing requirements.
CBD Wellness Products
The Group also sells CBD wellness products branded under its
Chill and Zoetic ranges. In the UK, the Zoetic range comprises a
variety of CBD-infused topical creams and beauty products,
alongside ingestible CBD tinctures (oils) in a number of flavors
and strengths.
A range of CBD gummies are also marketed in the UK and the
United States under the Chill brand. The Group's gummies are
supplied by an exclusive partner who manufacture the products using
a time-tested recipe using CBD isolate to ensure every gummy passes
strict quality controls.
Digital Channel Strategy
In January 2022, the Group announced that it had shifted its
focus towards sales made digitally via Chill.com. Having first
taken carriage of the domain and its associated rights in July
2021, the Group has refrained from making any major financial
investment into the development and growth of this platform.
Despite this, the site ranks highly in search engine results for
certain relevant terms and now attracts in excess of 10,000
visitors each month.
Going forward, the Group has radical plans to broaden its base
of activities within the digital channel with a view to improving
consumer recognition of the Chill brand and therefore the revenue
that it can generate. In the immediate future this will result in
the launch of digital marketing campaigns, redevelopment of the
Chill.com domain, and a renewed focus on search engine optimization
(SEO).
Over the longer the term, it is the Group's intention to onboard
selected partners to the Chill.com platform. Analogous and
complementary products will be carried via an online marketplace
model with the intention of creating a single destination for
quality, trusted, and highly differentiated products containing
functional ingredients like CBD.
While there is no present intention to sell the Chill.com
domain, the Board also believes that it has inherent value as a
digital asset. Many comparable domains are sold as stand-alone
intellectual property assets despite there being no underlying
business to support their value. It is therefore the Board's
opinion that the Chill.com domain could arguably attract a premium
to the price paid.
Retail Channel Strategy
To date the Group's largest base of sales activity has occurred
within the physical retail channel, where its products are sold
into convenience stores, gas stations, and specialist outlets
across multiple US States. During 2020 and 2021, the Group signed a
number of distribution agreements with the intention of pursuing an
ambitious rollout plan that would see its products enter thousands
of outlets. As a result of various factors, however, the Group has
since modified its strategy to focus on targeted sales within
select high-performing outlets, prioritising volume of unit sales
over store count.
The impact of the COVID-19 pandemic on the retail environment
cannot be understated and it has undoubtedly had a significant
effect on the Group's progress. Consumer behaviors changed as a
result of public health measures, with the majority of people
prioritising the purchase of essential items over novel
recreational products such as those sold by the Group. These
behaviors were also reflected by retail distribution businesses and
store operators who, as part of their own pandemic continuity
plans, sought to stock tried and tested brands with a strong track
record and demonstrable sales performance spanning years if not
decades. As a result of this, it was very difficult for a
comparatively new brand to gain traction within this rapidly
changing ecosystem.
In addition to the above, logistical issues delaying the import
of the Group's products to the United States prevented additional
sales from being made during the year. This meant that the Group
was unable to fulfil orders in a timely fashion, which frustrated
certain sales opportunities throughout the period. Even once the
products had entered the United States, it was not possible to
backfill retail locations with a surplus of inventory that might
otherwise have been sold during the period when Chill products were
absent from those locations.
In certain cases, the Group's distribution relationships did not
prove to be fit for purpose. In one specific case, it was found
that a distribution partner had effectively ceased all operations
involving CBD products without informing the Group of this change.
As a result of this, stores within a specific region that had been
assigned to the distributor were not adequately served and
opportunities to maintain sales relationships and enter new
transactions were missed.
Despite these challenges, the physical retail sales channel
remains the Group's primary source of revenue. During the year in
review, the majority of the Group's recognized revenue was derived
from sales to the Group's former master distributor, Ox
Distributing LLC, which continues to sell products on to downstream
distributors and retailers.
Given continuing sales and encouraging anecdotal feedback from
retail partners and distributors, the Group will continue to expand
its physical retail channel albeit with a modified strategy that is
more appropriate for its size and level of resources. Although the
Group remains in contract for an ambitious multi-thousand store
rollout, the costs of pursuing such a high store count footprint
represent a major barrier to entry. For every store entered, the
Group is typically subject to slotting fees, an obligation to
provide an initial fill of sample products free of charge, and the
need to provide educational materials and marketing collateral.
These start-up costs often reach or exceed $1,000 per location
while ongoing investment is required to ensure that stores continue
to stock and sell Chill products. To make a success of such a large
retail footprint, the Group would also need to develop the internal
infrastructure necessary to effectively manage relationships with
thousands of stores.
In light of these observations, the Group's forward-facing
strategy will involve focusing more closely on a smaller number of
retail outlets before scaling in a sustainable way over a longer
period of time. This will enable the Group to generate commercial
insights and verifiable sales data that can be used when
establishing new distribution relationships, all whilst building
goodwill and brand recognition among consumers in a more
concentrated way.
UK Operations
While the vast majority of the Group's revenue is generated in
the United States, its Chill and Zoetic brands are also sold in the
UK.
During the year in review, the Group launched its Chill-branded
CBD-infused herbal cigarettes to the UK market with sales made
exclusively via thechillwayuk.com. To date the Group's investment
in the growth of the Chill brand within the UK has been negligible,
however it now intends to extend its operations within the UK
market in concert with the onboarding of the UK sales portal to the
master Chill.com domain.
The Group's Zoetic brand of luxury CBD cosmetics and tinctures
has also continued to generate interest, with appearances in a
variety of publications and media reviews including The Telegraph,
The Daily Mail, and Metro. Having launched a new range of
anti-aging balms and creams during the period, the Zoetic brand now
offers an extensive selection of luxury CBD products that are
pitched at wellness enthusiasts. Given the continued growth of the
UK's CBD sector, however, it has become increasingly important for
brands to differentiate themselves from competitors. With this in
mind, the Board intends to consolidate the Zoetic product range in
order to prioritise the best-selling products while making room for
novel product category entrants that may be better able to seize
market share.
Without any significant level of investment from the Group, the
Zoetic and Chill brands have continued to slowly expand in the UK.
Going forward the Board intends to assign greater attention to the
opportunities at hand in the UK with the hope of generating
additional revenues and further expanding its consumer brands.
UK Novel Foods Authorisation
In order to sell ingestible CBD products in the UK, the Group
has progressed through the novel foods application process by
submitting relevant applications to the Food Standards Agency
(FSA).
In April 2022, the Group's Zoetic tinctures and Chill gummies
were added to an updated FSA list of CBD food products that are
linked to a credible application for authorization. This means that
the Group's products can remain on sale and that they have reached
the penultimate stage to full validation.
The Group hopes that its products will receive full novel foods
validation in the near future and will provide further updates as
the situation progresses.
Feminised Seed
In addition to sales of its consumer products, the Group also
carries a significant inventory of feminised hemp seeds that are
currently undergoing extensive testing following a successful first
trial season.
While there is no guarantee that the Group's inventory of seeds
will grow and progress as expected, the Board hopes that these
unique feminised assets will make good on their strong cultivation
potential. Should the growing season prove to be a success, the
Group may be able to rely on an additional stream of revenue from
sales of its seeds which boast exclusive genetics and have
previously been used to produce premium quality CBD isolate.
Chief Executive's Review and Strategic Report- Other Matters
Board Changes and Operational Composition
During FY22, the Group was led by Antonio Russo and Trevor
Taylor as joint Chief Executive Officers. Following the end of the
period, I was appointed to the Board of Directors on 15 April 2022
and now serves as the Group's Chief Executive Officer. Mr Taylor
now serves as the Group's Chief Operating Officer, while Mr Russo
is now the Group's Chief Commercial Officer with responsibility for
sales and marketing.
On 1 August 2021, Eric Schrader was appointed to the Board as a
Non-Executive Director and representative of his family company -
Ox Distributing LLC - the Group's single largest shareholder. He is
also joined on the Board by Mr Scott E Thompson who was appointed
as an Independent Non-Executive Director on 27 January 2022.
Mr Thompson is an intellectual property attorney with almost
forty years of experience having previously worked to protect and
extend some of the world's largest brands. He is currently
recognized by the World Trademark Reporter as one of the top 300
trademark attorneys in the world and most recently acted as General
Counsel, Intellectual Property/Marketing Properties for Mars Inc.
He has also worked for Philip Morris Companies, Colgate-Palmolive,
and GlaxoSmithKline. The Group welcomes Mr Thompson, whose
extensive experience of the consumer packaged goods industry and
brand protection will no doubt serve us well.
While the Board is now more populated than during previous
financial periods, it is the Group's intention to continue
searching for reputable and experienced candidates who may be able
to provide value in particular as a Chairman or UK-based
independent non-executive director. More specifically, the Group is
keen to attract individuals with financial management experience
both to assist with operational efficiency and to guide and improve
its approach to forecasting and reporting.
More information regarding the Board of Directors can be found
in the key personnel section of this report on page 20.
Changes to Listings of the Group's Shares
In August 2021, the Group completed a corporate rebranding
exercise during which it changes its trading name from Zoetic
International PLC to Chill Brands Group PLC. In line with this
change, the Group's ticker (TIDM) for the London Stock Exchange
changed from 'ZOE' to 'CHLL' on 17 August 2021.
In November 2021, the Group's shares commenced trading on the US
OTCQB Venture Market. Having previously traded on the OTCQX Best
Market, this relisting relates to the Group's share price and
market capitalisation which did not meet the standards required for
a listing on the OTCQX market. On 14 December 2021, the Group's
OTCQB listing was updated to reflect its corporate rebrand, with
shares now trading on the US market under the updated ticker symbol
'CHBRF'.
In April 2022 the Group was re-categorised as a cannabis
producer within the HealthCare, Pharmaceuticals and Biotechnology
category of the London Stock Exchange. This change followed an
extensive review period by the exchange, which could only commence
this assessment following the publication of the prior year
financial results. Following this adjustment, the Group is now
trading within a more appropriate sector category that is
representative of its commercial activities.
Risks and Uncertainties Facing the Group
The Group's continued evolution has seen its risk profile change
significantly. Having pivoted away from the natural resources
sector during previous financial years, the Group now faces risks
that relate predominantly to its operations within the consumer
packaged goods space. As with other companies of its size, the
Group also faces an overriding financial risk.
The Board continues to monitor and mitigate a detailed list of
risks that face the Group, but those listed below are considered to
be of the highest importance given the likelihood of their
occurrence or the materiality of their potential impact.
General Risks Relating to the Group's Financial Position
While revenues from the Group's consumer-facing activities
continue to grow, the risk remains that sales will be insufficient
to maintain the Group's current level of expenditure on an ongoing
basis. In light of this, the Board has engaged in a cost-cutting
exercise to ensure that the Group's business model remains lean
while ensuring all commercial infrastructure is properly resourced.
The Board has considered a variety of scenarios including a
scenario of limited online sales without growth and a linked
reduced cost base, and is prepared to execute further cost-cutting
contingency plans to mitigate such risks should they arise.
Supply and Logistics Challenges
Various geopolitical events pose a risk to the Group's supply
chain and logistics activities in its core areas of operation
across North America and the UK. Industry-wide issues relating to
driver shortages, warehousing, international logistics, and
transport may affect the availability and timely movement of the
Group's products. Furthermore, some of the finished products sold
by the Group are sourced from multiple component parts that are
manufactured internationally. As a result of this, there remains a
risk that local regulations could prevent the timely export of CBD
and other products, resulting in delays and disruption to the
Group's operations.
The Board has 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.
Risks Associated with Laws and Regulations Relating to CBD
The production, labelling and distribution of the products that
the Group distributes are regulated by various federal, state and
local agencies. As the Group expands its CBD operations, it must
keep up with the evolving compliance environments of the
territories in which it operates. This entails the building and
maintaining of robust systems which ensure that our products and
operations comply with the regulatory regimes of multiple
jurisdictions.
Should the Group's operations be found to violate any such laws
or other governmental regulation, the Group may be subject to
penalties, including, without limitation, civil and criminal
penalties, damages, fines, the curtailment or restructuring of the
Group's operations, any of which could adversely affect the Group's
business and financial results.
The Group may be required to obtain and maintain certain
permits, licenses, and approvals in the jurisdictions where its
products are licensed and into which its operations expand. There
can be no assurance that the Group will be able to obtain or
maintain any necessary licenses, permits or approvals.
Product Viability
If the products the Group sells are not perceived to have the
effects intended by the end-user, its business may suffer. Many of
the Group's products contain innovative ingredients or combinations
of ingredients. There is little long-term data with respect to
efficacy, unknown side effects and/or interaction with individual
human biochemistry. Whilst the Group conducts extensive testing of
its product stocks, there remains a risk that its products may not
have the desired effect.
Product Liability
The Group's products are produced for sale directly to end
consumers, and therefore there is an inherent risk of exposure to
product liability claims, regulatory action and litigation if the
products are alleged to have caused loss or injury. Accordingly,
the Group maintains product liability insurance policies to
safeguard against the implications of any claims that may
arise.
Success of Quality Control Systems
The quality and safety of the Group's products are critical to
the success of its business and operations. As such, it is
imperative that the Group's (and its service providers) quality
control systems operate effectively and successfully. Although the
Group strives to ensure that all of its service providers have
implemented and adhere to high calibre quality control systems, any
significant failure or deterioration of such quality control
systems could have a materially adverse effect on the Group's
business and operating results.
Product Recalls
Manufacturers and distributors of products are sometimes subject
to the recall or return of their products for a variety of reasons,
including product defects, such as contamination, unintended
harmful side effects or interactions with other substances,
packaging safety and inadequate or inaccurate labelling
disclosure.
If any of the Group's products are recalled for any reason, the
Group could incur adverse publicity, decreased demand for the
Group's products and significant reputational and brand damage.
Although the Group has detailed procedures in place for testing its
products, there can be no assurance that any quality, potency or
contamination problems will be detected in time to avoid unforeseen
product recalls.
Industry Competition
The CBD industry is competitive and evolving. The Group faces
strong competition from both existing and emerging companies that
offer similar products. Some of its current and potential
competitors may have longer operating histories, greater financial,
marketing and other resources and larger customer bases than the
Group has. Given the rapid changes affecting the global, national,
and regional economies generally and the CBD industry, in
particular, the Group may not be able to create and maintain a
competitive advantage in the marketplace.
Risks Relating to Legacy Oil and Gas Assets
Despite having now discontinued the operation of its legacy
natural resource assets, the Group continues to monitor for risks
relating to any liabilities arising from its former activities.
While the Group no longer owns or operates any of its former
legacy assets or sites, there remains a risk that the Group may be
subject to costs and liabilities arising from any lawsuit, civil or
regulatory action that may commence in respect of historical
mining, drilling, extraction or other activities that the Group may
have previously engaged in.
Risks Associated with Laws and Regulations Relating to Synthetic
Nicotine
Following new legislation enacted by the US government on 15
March 2022, synthetic nicotine now falls under the regulatory
jurisdiction of the US Food and Drug Administration (FDA). As of 14
April 2022, manufacturers, distributors, and retailers of products
that contain non-tobacco derived nicotine must comply with all
relevant regulatory provisions relating to the supply, marketing,
and sale of such products.
As a result of this legislative change, the FDA now requires
those marketing synthetic nicotine products to submit a premarket
tobacco application (PMTA) and obtain authorization to market their
product. While the Group has submitted a regulatory dossier in line
with initial FDA requirements, there is an overriding risk that
this application will not be approved or will otherwise require
very substantial financial investment in order to maintain the
saleability of Chill's synthetic nicotine products. As discussed in
the Group's financial review contained within this report, the
Group has made a provision for the value of its existing synthetic
nicotine inventory to be written down by 80% as a direct
consequence of the commercial challenges resulting from this change
to US regulations.
As with its other products in other categories, the Group may
also be subject to penalties, including, without limitation, civil
and criminal penalties, damages, fines, or the curtailment or
restructuring of the curtailment of its operations if its
operations are found to violate any such laws or other governmental
regulations in respect of synthetic nicotine products.
IT Security and Brand Protection Risks
As the Group's activities and profile expand, its digital assets
and intellectual property rights may be challenged both legally by
competitors and illegally by bad actors. With these risks in mind,
the Group has engaged with numerous initiatives, protections, and
countermeasures to ensure that its interests and those of its
shareholders and customers are insulated against these risks. Our
intellectual property rights are well protected through a series of
international trade marks and patent applications, while our core
systems and flagship Chill.com web domain are guarded by IT
security professionals and robust protective frameworks.
Statement of the Directors in Performance of Their Statutory
Duties in Accordance with s172(1) Companies Act 2006
Section 172 Statement (Companies Act 2006) Under Section 172 of
the Companies Act 2006, a director has a duty to promote the
success of the company. The directors confirm that the
deliberations of the Board, which underpin its decisions,
incorporate appropriate consideration with due regard to the
matters detailed in Section 172 of the Companies Act 2006.
As a result of its policies and procedures, the Board of Chill
Brands Group PLC considers that they have acted in a way they
consider, in good faith, would be most likely to promote the
success of the Company for the benefit of its members as a whole
(having regard to the stakeholders and matters set out in
s172(1)(a-f) of the Companies Act 2006) in decisions taken during
the year ended 31 March 2022.
The Board and each director acknowledge that the success of the
Company's strategy is dependent on the support and commitment of
all the Company's stakeholders including employees, suppliers,
advisers, vendors, distributors, shareholders, and other parties.
The Group engages directly with stakeholders when it is necessary
and appropriate to do so both through the medium of formal
shareholder assemblies and through direct dialogue with advisers
and other stakeholders.
During the year in review, the Board considered information from
across its business when making decisions. Information,
presentations, and reports were provided by the Group's management
and Board Advisers. In addition to this, the Board reviewed papers
and reports from key stakeholders and expert industry groups to
understand the impact of its operations. These activities, in
concert with direct engagement by the Board and individual
directors with certain key stakeholders and shareholders, assisted
the Board in the decision-making process.
The Board acknowledges the importance of balancing the needs and
expectations of stakeholders but is often required to make
difficult decisions based on competing priorities where the outcome
may not be positive for all stakeholders. Decisions are always
taken with the utmost regard and respect for all stakeholders, and
the decision-making process has been formulated to ensure directors
evaluate the merits and demerits of proposed activities and their
likely consequences over the short, medium and long-term. It is the
aim of the Board to safeguard the Company so that it can continue
in existence while fulfilling its operational purpose and creating
value for stakeholders.
During 2021, the Company engaged with certain key stakeholders
regarding certain key strategic matters, including the need to
refine its model. As a result of this, the Company developed a new
direct to its retail strategy that removed additional layers of
distributor contracts from this sales channel. These changes were
announced in early 2022 and continue to be acted upon with the
intention of generating reliable revenues.
Key Performance Indicators
The Group's current focus is on the continued development of its
core business and the Board has yet to set key performance
indicators as applicable to overall operations. The Board will seek
to identify and measure such indicators as the Group's activities
become more settled.
In the future, it is likely that specific indicators will be
assigned to reflect progress within the Group's sales channels. For
digital sales, major indicators are likely to include website
traffic, conversion and retention rates, and average spend per
consumer. In respect of physical retail sales, major indicators may
include unit sell-through rates. More generally, the Group will
report on revenue generated from across its full base of commercial
activities.
Once established, the Group's financial, operational, health and
safety and environmental key performance indicators will be
measured and reported as appropriate.
Chill Brands Group PLC (Formerly Zoetic International PLC)
Consolidated Statement of Comprehensive Income
For the years ended 31 March 2022 and 2021
Year ended Year ended
31 March 31 March
Notes 2022 GBP 2021 GBP
------ ------------------------- ------------------------
Revenue 3 624,187 320,875
Cost of sales (738,555) (361,517)
Obsolete inventory expense 15 (664,442) -
------------------------- ------------------------
Gross loss (778,810) (40,642)
Administrative expenses (2,837,400) (2,151,391)
Share expenses for options granted 21 (1,958,076) (1,410,268)
Other Expense 24 - (1,200,000)
------------------------- ------------------------
Operating Loss 5 (5,574,286) (4,802,301)
Finance income 1,962 1,762
------------------------- ------------------------
Loss on ordinary activities before
taxation (5,572,324) (4,800,539)
Taxation on loss on ordinary activities 8 - -
------------------------- ------------------------
Loss for the period from continuing
activities (5,572,324) (4,800,539)
Loss for the period from discontinued
activities 9 (139,179) (49,762)
Loss for the period (5,711,503) (4,850,301)
Other comprehensive income
Items that may be re-classified
subsequently
to profit or loss:
Foreign exchange adjustment on
consolidation (271,869) 231,644
Total comprehensive income for the
period attributable to the equity
holders (5,983,372) (4,618,657)
------------------------- ------------------------
Earnings per share attributed to
the equity holders:
Attributable to continuing activities (2.65) p (2.48) p
Attributable to discontinued activities (0.06) p (0.03) p
------------------------- ------------------------
Total 10 (2.71) p (2.51) p
------------------------- ------------------------
The financial Statements were approved by the Board of Directors on
and signed on their behalf by:
Chill Brands Group PLC
Registered Number: 09309241
Consolidated Statement of Financial Position
At 31 March 2022 and 2021
At 31 March At 31 March
Notes 2022 GBP 2021 GBP
------- ----------------------------------- -----------------------------------
Non-Current Assets
Property, plant, and
equipment 11 54,173 54,597
Right of use lease asset 12 260,376 -
Intangible assets 13 1,190,225 -
Total Noncurrent Assets 1,504,774 54,597
Current Assets
Inventories, net 15 636,294 1,238,779
Trade and other receivables 16 700,199 136,093
Cash and cash equivalents 17 420,045 333,176
Total Current Assets 1,756,538 1,708,048
Total Assets 3,261,312 1,762,645
=================================== ===================================
Non-Current Liabilities
Loans, excluding current
maturities 23 50,463 72,042
Right of use lease
liability, net
of current portion 12 205,672 -
-----------------------------------
Total Noncurrent Liabilities 256,135 72,042
Current Liabilities
Current maturities of loans 23 18,494 8,382
Trade and other payables 18 730,184 661,653
Right of use lease
liability, non-current
portion 12 62,390 -
Accrued liabilities 18 654,071 1,244,750
Total Current Liabilities 1,465,139 1,914,785
Total Liabilities 1,721,274 1,986,827
-----------------------------------
Net Assets 1,540,038 (224,182)
----------------------------------- -----------------------------------
Equity
Share capital 19 2,120,700 2,020,700
Share premium account 19 10,298,440 4,698,441
Share based payments reserve 20 3,389,762 1,431,686
Shares to be issued reserve 21 89,517 -
Foreign currency translation
reserve 260,777 532,646
Retained loss (14,619,158) (8,907,655)
-----------------------------------
Total Equity 1,540,038 (224,182)
=================================== ===================================
The financial Statements were approved by the Board of Directors
on and signed on their behalf by:
Chill Brands Group PLC
Consolidated Statement of Cash Flows
For the years ended 31 March 2022 and 2021
2022 GBP 2021 GBP
----------------------------------- -------------------------------------
Cash Flows From Operating Activities
Loss for the period (5,711,503) (4,850,301)
Adjustments for:
Depreciation and amortization
charges 113,090 20,677
Impairment provision 664,441 206,685
Loss on disposal of property, plant,
and equipment and intangible assets 226 -
Share expenses for options
granted 1,958,076 1,410,268
Shares issued as compensation 89,517 -
Foreign exchange translation
adjustment (319,545) 193,717
Operating cash flow before working
capital
movements (3,205,698) (3,018,954)
----------------------------------- -------------------------------------
Increase in inventories (61,957) (275,743)
(Increase)/decrease in trade
and other
receivables (564,106) 1,301,039
Increase/(decrease) in trade
and other
payables 68,531 (235,732)
(Decrease)/increase in accrued
liabilities (1,199,600) 1,244,750
Net Cash outflow from Operating
Activities (4,962,830) (984,640)
----------------------------------- -------------------------------------
Cash Flows From Investing Activities
Proceeds from sale of assets held for
sale - 301,891
Purchase of property, plant, and
equipment (27,443) (1,352)
Purchase of intangible assets (617,198) -
Net Cash generated from/(used in)
Investing
Activities (644,641) 300,539
----------------------------------- -------------------------------------
Cash Flows From Financing Activities
Net proceeds from issue of shares 5,699,999 542,825
Loans made by the Company (11,467) 80,424
Payments of lease liability (52,801) -
Net Cash Generated from Financing
Activities 5,635,731 623,249
----------------------------------- -------------------------------------
Net increase (decrease) in cash and
cash equivalents
As above 28,260 (60,852)
Cash and cash equivalents at
beginning
of period 333,176 349,006
Foreign exchange adjustment on
opening
balances 58,609 45,022
Cash and cash equivalents at end of
period 420,045 333,176
=================================== =====================================
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