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Vascular, if that is to be believed, you must be the only person on LSE who does not contribute to the boards of companies while they actually own their shares. If so, fair play to you.
Curious still though, what brand of nicotine free vapes are on offer in the Indian fishing village?
I'd say fairly obvious he's been pushed. His payout is settlement/severance that the company won't have wanted to give but the alternative was very likely to fight it out in court at an increased cost to potentially pay the same amount anyway. Poor form on the raise but they may not have had other readily available options in this market.
Vascular, what brand of nicotine free vapes is on offer in the Indian fishing village?
As far as I am aware, there is no dominating force in the nicotine vape market either in the UK or the US. The same view was reflected to me by a friend who runs a logistics and distribution company that deals primarily in alcohol but obviously sees great category overlap of the products and the stores they visit.
It is all about brand. Elf Bar being the UK leader in nicotine vapes that has very recently lost a big chunk of its market share due to legal and compliance issues which have tarnished their brand. Despite the past Chill's brand is still extremely good and is arguably miles better than when it was focused on rodeo. Price will of course be an element but there is much more to it than that.
Being fair to them the product only came into being in December and we know that Eric Schrader has already been out on the road with retail buyers introducing the vapes. I take that as it has 'launched'. They have them and are taking steps to get them sold.
Yes, it’s very important for there to be balance. We’ve got to live in the real world - it’s a company not a fairytale. But also, I’m not sure slow and steady is the right term. They’ve developed a totally new product and we’re now on a completely different path, in less than a YEAR. Again I say if the progress of the last 10 months or so had been made as a new company, without encumbrance from the trouble before, we’d be ecstatic.
Let's not forget why this renewed optimism isn't misplaced. In April 2022 a switched on 26 year old took the burning embers of a company in an industry that was failing (look at all CBD companies, see what's happened to them. It isn't and has never been "just Chill").
With less money and less excitement/sentiment he's cut their costs and believed in the guys who were there before enough to build bridges. They've cleaned up all sorts of messes by the look of the reports. But to boot he's also rebranded the whole thing, taken a hard look at their sales strategies, developed a whole new line of vapes, put the site on course to make money as a marketplace and started negotiating with other brands etc.
Look it's not perfect. It's rough around the edges but companies at this stage of growth are. BUT if this had started from nothing in April 2022 we'd be shouting from the rooftops about what's been achieved during stagflation/bear market/winter misery.
Say what you like but colour me impressed.
As the old saying goes, every trade you see is the result of someone buying and someone else selling. They both think that they are prudent to do so. The market is a game of opinions.
I think what we're seeing here with Chill is months of hard work and anticipated changes that hadn't been priced in when they were announced. This time a year ago we were a niche CBD company that was running out of ideas, now we're releasing a line of vapes into a huge growing market, and we're developing a marketplace online sales hub for other brands.
I'm not saying it'll always be plain sailing but Chill looks a lot more sensible and scaleable than it has done for a long time.
St.Ives I share your concern for the sector. I am skeptical of the RTO/merger concept that will double down on CBD without much differentiation. From what I can see, there's really not much that separates Cannaray products from any other CBD products on the market, notwithstanding a visible ad campaign.
I still have a small holding here, but a larger holder in Chill (CHLL) who are also in the CBD space. They've also had a very dramatic decline during late 2021 and through 2022 that led to them changing their CEO who by all accounts has been doing some heavy lifting to sort things out. He's been pretty clear in explaining that brands shouldn't be built only around one ingredient. They're still in CBD, but not JUST CBD. It has made me much more confident in a long-term stake there.
Put it this way, Nivea and L'Oréal don't build their whole business around a single ingredient. Neither should these guys.
I was most interested in their cash position and burn rate.
They spent £1,249,219 during the six months. They tell us a few times in the report about this including that. “While this loss is reflective of cash costs including those attributable to substantial legacy legal fees” and that they’ve taken “steps to substantially reduce costs… from the discontinuation of certain prior activities and the cancellation of numerous consultancy agreements, the benefit of which will largely occur during the second half of the year.”
There are also some things they don’t refer to that I guess would have increased their spending. The application process for synthetic nicotine TFN products, the legal and admin costs of the fundraises, the redevelopment of Chill.com. Not recurring monthly costs to keep forking out on.
Finally they tell us that they are “seeking to recover slotting fees for stores that were not effectively activated during previous reporting periods” and expect to receive a balancing payment from Ox Distributing in 2023.
So all in all I think we can expect the spending to now be more under control and for them to have cash flow from Ox and reclaiming slotting fees if not yet from sales.
Vas that is not a true representation of the situation. Read the wording of the report. “Actual sales of Chill branded products to retailers and consumers significantly exceeded this level, however the Company's entire inventory of CBD chew pouches and combustible smokes had already been sold to Ox, its former Master Distributor. This meant that sales of CBD pouches and combustible smoke products made during the Period could not be recognised as additional revenue”.
Ox repaid the company $250k during the 6 months so reading between the lines I’d guess real sales of the product were closer to that figure - they pay Chill back as they sell it.
Seems the space itself has struggled. CBX put out their full year last week with total revenue of 28k for 12 months, and it’s not like they had something like the Ox arrangement going on the background! I’m just glad we’re diversifying a bit with the nicotine free vapes and Chill.com marketplace as CBD is obviously a very tough market.
We can now see what a mess Callum and co have been cleaning up. Employment legal cases, an FRC review of last year’s interims, the Ox agreement. They’ve even had to build a sales team which you would have hoped they had before.
?Anyway, it is what it is. I’m interested to see where the vapes and selling other branded products can take us. The business is probably stronger now than when we all thought it was a beast in 2021.
Hi St.Ives, the threshold for a TR1 (notifiable holding) is 3% so I don't think there's anything untoward to worry about with that at least.
In fairness, yes there was a time when it wasn't slowly, slowly. When the stock shot up over £1 it was far from "slowly" as there were massive announcements coming out about progress on store count and big deals. Well, it turned out that none of that materialised. Rampy hot air.
I would hardly call those latest announcements bubble wrap. They're not going to announce 60 stores and a bog standard order to ramp up a frenzy. It shows methodical progress on a realistic strategy, the kind that all businesses need.
Thanks St.Ives. Let's hope that they get this figured out quickly as relisting/readmission is a very time consuming and costly process.
Averaging down here too, hopefully not just chasing losses!
Good article yesterday: https://www.swlondoner.co.uk/life/13122022-podcasts-are-more-popular-than-ever-heres-why
AM this is a useful update thank you.
One question I still have is as St.Ives commented a while back:
"Will the new listing be treated as a new applicant to the LSE? If so, would the new rules around MMC (£30m) for main market listings come into play? I read this.. “the requirement (£30m)only applies when the company is first listed, or on re-listing after a reverse takeover”"
So from point 3 and 5 of your post, do you see us getting to that magic 30m? If we don't get it could that mean suspension? And since the merger (which for the record I think is a good thing) is already very dilutive, do you think we can expect to be watered down further with a bumper placing to reach the required level?
Not ramping or deramping just trying to see where we stand. Hopefully we can all do well here.
That's not quite what he said. CS referred to both CBD and the "botanical" nicotine free vapes that you mention.
The nicotine versus nicotine free point was not missed in the interview. As he said, the fact of the matter is that a lot of the people who use vapes do not do so because they're trying to quit cigarettes or nicotine but instead because they enjoy the taste and sensation of vaping. That seems especially true with millennials and the younger demographic.
The alcohol free beverage market is a very interesting parallel here. Look at Seedlip and other 0% alcohol adult drinks that have really blown up over the past several years. You'll even find most if not all of the major breweries and alcohol companies making their own alcohol free / low alcohol beverages.
It looks like some of the big tobacco players are already eying up the nicotine free space. BAT sells VUSE e-cigarettes for example. Their website allows customers to "Choose 0mg for a nicotine-free option". They wouldn't offer that if they thought it wouldn't be popular or profitable. Elf Bar are also offering lots of nicotine free options and I think we can all agree that they've become huge with a presence in corner shops, post offices etc. etc.
This looks to be a good decision by Chill. Yes, I'm excited to see the CBD vapes and think that offers an edge, but I wouldn't be so quick to write off a nicotine-free vape especially sold under their new branding.
Thanks for your response. Important to remember/account for the fact that Chill won't be selling packs of its products at the list price you see whatever that is e.g. $10 as you say. That's the price for customers and there will be an adjustment for other steps in the chain. The retailer wants to take a cut and so on.
I'm not suggesting that revenues have been all that great but just another factor to consider. FWIW it seems the online consensus is that vapes are high margin products. I hope and believe they'll be able to sell them in greater quantities.
Maybe you should pay more attention Vas.
As you say BettermentRS operates the 'feel good shop' programme in convenience stores. That includes Yesway and Allsups. If you read the AGM Statement of 29 September 2022 you'll see it refers to "363 branches of Yesway/Allsup's". That's 20 more than the announcement your dragging up. Clearly it must still be doing OK to still be in the stores and have been added to more.
As for the cowboy and the soccer tournament, it's pretty obvious it wasn't working. The new CEO has said as much and clearly stopped spending on that and not a moment too soon.
Oh and PS. I'm told by a source worth listening to that TAAT products are definitely NOT legal in the UK whatever you may believe. So enjoy that tat while you still can.
It seems to me that you're here to have an argument regardless of what they do. You rightly complain and criticise that they've not sold enough of their CBD products, but then you still complain when they take steps to sell more of them. You even complain when they expand into other products - so what is it that you'd have them do then?
Everyone agrees that the last two years were a missed opportunity but what's the point in saying that. There's still a lot of opportunity to come and I think Chill will work out in the end.