CBX.L Regulatory News (CBX)

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014, as retained as part of the law of England and Wales. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Press Release

3 December 2021

Cellular Goods PLC

('Cellular Goods' or 'the Company')

Annual results

Cellular Goods, a UK-based provider of premium consumer products based on lab-made cannabinoids (LSE: CBX), announces its audited results for the 12 months ended 31 August 2021, the Company's maiden full-year figures since its flotation on the main market of the London Stock Exchange (LSE) on 26 February 2021.

Highlights:

● Became the first UK brand for premium consumer products based on lab-made cannabinoids to join the LSE, raising £13m before expenses in a significantly oversubscribed IPO.

● Made excellent progress to create and develop the UK's first fully-validated and legally-compliant cannabigerol (CBG) based skincare product line, which culminated with their launch on 1 December 2021, less than a year after operations began. Secured long-term supply of ultra-pure biosynthetic CBG through a multi-year agreement with Willow Biosciences Inc. in June 2021.

● Launched a cannabidiol (CBD) ingestibles range on 1 December, following the signing of a multi-year agreement with Chanelle McCoy Health for the supply of three clinically-validated CBD ingestibles, which brought forward the introduction of a second revenue stream by more than a year.

● Loss before tax of £3.3m (2020: £0.33m) principally attributable to business set-up costs and a one-off non-cash charge primarily for share-based incentives for the management and operational team.

● Net cash amounted to £10.32m as at 31 August 2021. Net cash as at 1 December 2021 was £9.15m.

Outlook

● Skincare and ingestible product ranges were launched earlier this month, initially via the Company's new transactional website.

● A comprehensive omni-channel marketing campaign will commence in February 2022 to support Cellular's sales drive, in-line with industry best-practice whereby new beauty and wellness products typically go on sale early in the year to coincide with consumers' focus on self-care and forming positive habits. The timing will also avoid the hyper competitive pre-Christmas rush where return on advertising spend is poor for new entrants.

● Having recently launched its first wellness consumer products, Cellular Goods has entered its most important and exciting phase of growth and begun generating revenues in the current financial year.

● Good progress is also being made across the business and the Company is well-placed to benefit from strong industry fundamentals, which are being driven by growing public acceptance and scientific validation of the benefits of cannabinoids such as CBD and CBG. As a result, the Board looks to the future with great confidence.

Commenting on the results, Peter Wall, chairman of Cellular Goods, said: "In less than a year since listing, the Company has achieved its major operational milestones for developing Cellular Goods' inaugural range. Having launched our first range of wellness consumer products, Cellular Goods is now entering a significant chapter of its long-term business strategy.

"The environmental advantages of lab-made cannabinoid production are becoming more widely known and we are proud to be an early adopter and champion of this sustainable method. Notably, minor cannabinoids such as CBG will help to revolutionise the cannabinoid sector and we are thrilled to incorporate them in our fully-validated skincare line as we continue to deliver on our mission of becoming the most innovative listed wellness company."

For further information please contact:

About Cellular Goods PLC

Cellular Goods is a UK-based provider of premium consumer products based on lab-made cannabinoids. It was established in August 2018 to develop efficacy-led and research-backed cannabinoid products. The initial focus is on three product verticals: premium CBG skincare, CBD ingestibles and topical athletic recovery products. The first products were launched on 1 December 2021 through the Company's website.

www.cellulargoods.co 

CHAIRMAN'S STATEMENT

Introduction

I am delighted to report the first set of full-year results for Cellular Goods since its debut on the main market of the LSE on 26 February 2021. These results, covering only six months of activities as a listed plc, come at an exciting time with the launch of our inaugural range of consumer products earlier this week.

During the year under review, the management team focused on developing a business strategy and raising capital to fund the expansion of the Company. A major milestone was achieved with the flotation, which raised additional capital of £13m before expenses and sparked unprecedented public interest in an initial public offering of our size. The IPO was significantly oversubscribed and share allocations were scaled down to maximise the opportunity for small investors to become shareholders in Cellular Goods.

No revenue was generated during the year and a loss before tax of £3.3m was incurred (2020: £0.33m loss), reflecting start-up costs, expenses relating to our IPO as well as a £0.9m one-off non-cash cost relating to share-based incentives provided mainly to management and staff.

Since the IPO, the Company has made excellent progress to create a trusted new British consumer wellness brand incorporating lab-made cannabinoids, which are legally compliant, independently tested for quality, environmentally friendly, and not tested on animals. Our inaugural range comprising skincare and ingestibles was launched on 1 December 2021.

I would therefore like to congratulate the executive management team and the operational staff, our suppliers and partners for their hard work, which has laid a strong foundation for strong growth in the years ahead.

Beyond the immediate focus on the first skincare and ingestibles products, the Company is also making good progress with the development of its next vertical, a 'movement range' aimed at the after-sports market. We anticipate this will be ready for consumer launch in 2022.

With a clear product roadmap, Cellular Goods is entering its most important and exciting phase of growth and has started generating revenues from skincare and ingestibles in the current financial year, to be followed by the movement products.

Going forward, the Company's biggest challenge is to continue executing well on its long-term strategic goals that will require ongoing investment in the business and in people. Total staff numbers have increased considerably since the listing in February. We also have a strong balance sheet to fund this growth with net cash of £9.15m as at 1 December.

I would also like to thank our many shareholders for their support and patience while we scaled-up our activities in the run-up to the product launch on 1 December 2021.

Strategy and operational review

According to BDS Analytics and Arcview Market Research, the market for annual CBD sales in the USA will surpass $20 billion by 2024. Meanwhile, the Centre for Medicinal Cannabis estimated that 1.3 million British consumers were using CBD products, the market was growing at double digits annually, and could be worth almost £1bn a year by 2025.

The strong industry growth prospects, together with the wide disparity in the quality and consistency of products currently on the market, has opened an opportunity for a supplier of premium cannabinoid-based products with known and verifiable provenance to differentiate itself in the market.

Cellular Goods was established to address this market gap by developing premium quality, efficacy-led and research-backed cannabinoid products which leverage lab-made cannabinoids such as CBD and CBG. The manufacture of the Company's product is outsourced to partners and does not involve the cultivation or processing of the cannabis sativa plant. The Company believes that its strategic decision to source exclusively lab-made cannabinoids will become increasingly important as consumers become more discriminating about rival brands while enforcement of existing and new consumer regulations concerning the source of cannabinoids tightens.

Operational review

Solid progress was made in the second half of the year as the Company pivoted from business planning and fund-raising to the development and launch of its first products to tight timescales. The initial focus is on three product verticals: a premium CBG skincare range and CBD-based ingestibles this year followed by topical athletic recovery products in 2022.

The inaugural skincare range comprises a face oil, an after-shave moisturiser, and a serum. Their creation and development involved taking each product from concept and prototype to preparing proprietary formulations followed by extensive testing to validate their efficacy. These formulations incorporate biosynthetic CBG (cannabigerol) which has demonstrated anti-inflammatory, anti-oxidant and anti-microbial properties.

After several months of extensive development in-house and at our UK-based contract manufacturer, the formulations were finalised in July. This was followed by a rigorous testing process focusing on product quality, stability, and compatibility with packaging.

All three skincare products have been fully validated for marketing and labelling as:

● Suitable for sensitive skin

● Dermatologist approved

● Dermatologically tested

The completion of branding and packaging design led by creative director, Sara Hemming, for both the skincare and ingestible lines was a further significant milestone to be reached, with designs being approved for compliance in time for the launch.

Successful product launch

As a result of the excellent progress described above, the inaugural range of skincare products and ingestibles was launched on 1 December 2021, via the Company's online ecommerce platform.

Customer order intake for the face oil and after shave moisturiser have now commenced, and will be followed by the skincare serum in February 2022.

As announced on 16 August 2021, a multi-year manufacture and supply agreement was signed with Chanelle McCoy Health Ltd (CMH) for the launch of an ingestibles range of clinically-validated products. These were unveiled at the same time as the skincare range. The agreement enabled Cellular Goods to bring forward the introduction of a complementary wellness product range by more than a year. CMH is a research-led developer of high quality ultra-pure CBD products that are fully compliant with the new novel food regime which came into force in the UK and EU earlier this year.

In June 2021 a multi-year supply agreement was signed with Willow Biosciences (Willow), securing long-term supply of proprietary, ultra-pure, biosynthetic CBG for use in the Company's skincare products.

Marketing and product development

Both the skincare and ingestible products are on sale initially in the UK, direct to consumers through the Company's website. This enables the Company to prioritise its marketing on channels that generate the greatest customer engagement and return on investment. A comprehensive omni-channel marketing campaign will commence in February 2022 to support our sales drive, in-line with industry best-practice whereby new beauty and wellness products typically go on sale early in the year to coincide with consumers' focus on self-care and forming positive habits. The timing will also avoid the hyper competitive pre-Christmas rush where return on advertising spend is poor for new entrants.

As part of the ongoing product development for the skincare range, the Company has also begun the next phase of testing which will include the gold standard user trial/consumer panel testing, in addition to a combination of quantitative and qualitative efficacy-based studies for its skincare products. Separately, travel sizes and sampling sachets are also being finalised to expand the range of skincare offerings and gifting options for Cellular Goods customers for next year.

Development of the first three products in the movement range for sports recovery and daily body maintenance continues. The criteria for clinical trials have also been finalised and the trials will be initiated next year on completion of stability and compatibility testing.

The Company continues to evaluate potential partnership opportunities to sell its products via third party online retailers and traditional brick-and-mortar outlets who will contribute to broaden exposure, consumer recognition and acceptance.

Further to the multi-year supply agreement with Chanelle McCoy Health, the Company is currently working with two leading cannabinoid producers including Willow and has volume supply agreements in place to ensure security of supply of cannabinoids including CBD and CBG. The producers have experience and expertise in the manufacture of pharmaceutical grade cannabinoid compounds through lab-based processes, thereby securing a consistent supply of legally compliant raw materials that are not derived from plant material.

In April 2021, the Company strengthened its operational capability with the appointment of Istok Nahtigal as the head of process and applied sciences with responsibility for developing, monitoring and optimising the Company's relationships with its manufacturing partners. Further senior hires were made to strengthen the product development team and support quality assurance and project delivery including Jodie Sanders, commercial and partnerships director, and Sean O'Dwyer, marketing director, who joined the Company in August and September 2021 respectively.

In addition, the Company has also significantly increased investment in its marketing and brand management resources with a roster of consumer product agencies for digital advertising, content marketing and sales promotion including Cream, Rakuten, Climb Online and Numberly. Similarly, Good Culture has been appointed as the consumer public relations agency to drive brand and product awareness for the launch of the Company's skincare and ingestible product range.

Outlook

With the launch of its first products, Cellular Goods has entered its most important and exciting phase of growth and has started generating revenues in the current financial year.

Excellent progress is being made across the business, and the Company is well-placed to benefit from strong industry fundamentals which are being driven by growing public acceptance and scientific validation of the benefits of cannabinoids such as CBD and CBG.

The market for sustainable CBD and CBG-based consumer products is expected to grow massively over the long term and is in its early stages of mass adoption. Cellular Goods is well placed to ride this consumer mega-trend, which is being driven by changing attitudes to, and greater understanding of, the benefits of cannabinoids. As a result, the Board look forward to the future with great confidence and optimism.

Peter Wall

Chairman

3 December 2021 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  FOR THE YEAR ENDED 31 AUGUST 2021

The consolidated statement of comprehensive income has been prepared on the basis that all operations are continuing operations.

The Accounting Policies and notes below form part of these consolidated financial statements.

The Company has elected to take exemption under section 408 of the Companies Act 2006 not to present the parent company Statement of Comprehensive Income.

The loss of the parent company for the year was £3,334,439 (2020: loss of £329,886).

CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 AUGUST 2021

The Accounting Policies and Notes below form part of the financial statements

Consolidated and Company figures at 31 August 2020 are identical as the company's sole subsidiary was formed during the year ended 31 August 2021.

The consolidated and Company financial statements were approved and authorised for issue by the Board of Directors. Signed on behalf of the Board of Directors by:

Simon Walters Director

3 December 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 31 AUGUST 2021

COMPANY STATEMENT OF CHANGES IN EQUITY AS AT 31 AUGUST 2021

CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 AUGUST 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2021

1. General Information

The Company was incorporated in England and Wales on 25 August 2018 as Leaf Studios Limited, but subsequently re-registered as a public limited company and renamed as Leaf Studios PLC. On 29 September 2020, the Company's name was changed to Cellular Goods PLC.

The registered office is 9th Floor, 16 Great Queen Street, London, WC2B 5DG. The principal activity of the Company is establishing a biosynthetic CBD retail business. The Company gained admission to the Official List (by way of a Standard Listing under Chapter 14 of the Listings Rules) and trading on the London Stock Exchange on 26 February 2021.

2. Accounting Policies

The Directors consider that in the proper preparation of the financial statements there were no critical or significant areas which required the use of accounting estimates and exercise of judgement by management while applying the Company's accounting policies, with the exception of share-based payment calculations.

There is no material difference between the fair value of financial assets and liabilities and their carrying amount.

The functional and presentational currency is UK Sterling (GBP).

2.1 Basis of preparation

These financial statements have been prepared in accordance with international financial reporting standards adopted pursuant to Regulation EC No.1606/2002 as it applies in the European Union and the Companies Act 2006. The financial statements have been prepared under the historical cost convention. There is no material difference between the fair value of financial assets and liabilities and their carrying amount.

Amounts in the financial statements have been rounded to the nearest pound.

2.2 Basis of consolidation 

The Group financial statements consolidate those of the Company and its subsidiary as of 31 August 2021. The subsidiary has a reporting date of 31 August and is an entity over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the entity. The subsidiary has been fully consolidated from the date on which control was transferred to the Group.

Inter-company transactions, unrealised gains and losses on intra-group transactions and balances between Group companies are eliminated on consolidation.

New and Revised Standards

There were no new and amended standards adopted for the first time which had a material impact on the Group or Company.

IFRS in issue but not applied in the current financial statements

The following IFRS and IFRIC Interpretations have been issued but have not been applied by the Company in preparing these financial statements, as they are not yet effective. The Company intends to adopt these standards and interpretations when they become effective, rather than adopt them early.

• IAS 1 amendments - classification of liabilities as current or non-current (effective: 1 January 2022)

• IFRS 3 amendments - Business Combinations (effective: 1 January 2022)

• IAS 16 amendments - Property, Plant and Equipment (effective: 1 January 2022)

• IAS 37 amendments - Provisions, Contingent Liabilities and Contingent Assets (effective: 1 January 2022)

The above standards are not expected to have a material impact on the Group or Company in future reporting periods and on foreseeable future transactions.

2.3 Going concern

The Directors have assessed the current financial position of the Group, along with future cash flow requirements, to determine whether the Group has the financial resources to continue as a going concern for the foreseeable future.

The conclusion of this assessment is that it is appropriate that the Group be considered a going concern. For this reason, the Directors continue to adopt the going concern basis in preparing the financial statements. 

2.4 Capital risk management

The Company's objectives when managing capital is to safeguard the Company's ability to continue as a going concern, in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure. The Company has no borrowings. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The Company monitors capital on the basis of the total equity held by the Company.

2.5 Financial Instruments Initial recognition

A financial asset or financial liability is recognised in the Statement of Financial Position of the Group when it arises or when the Group becomes part of the contractual terms of the financial instrument.

Classification

The Group measures financial assets at amortised cost if both of the following conditions are met:

1. The asset is held within a business model whose objective is to collect contractual cash flows; and

2. The contractual terms of the financial asset generating cash flows at specified dates only pertain to capital and interest payments on the balance of the initial capital.

Financial assets which are measured at amortised cost, are measured using the Effective Interest Rate method (EIR) and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

Financial liabilities at amortised cost

Financial liabilities measured at amortised cost using the EIR method include current borrowings and trade and other payables that are short term in nature.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in profit or loss.

Derecognition

Financial liabilities are derecognised if the company's obligations specified in the contract expire or are discharged or cancelled.

A financial asset is derecognised when:

1. The rights to receive cash flows from the asset have expired, or

2. The company has transferred its rights to receive cash flows from the asset or has undertaken the commitment to fully pay the cash flows received without significant delay to a third party under an arrangement and has either (a) transferred substantially all the risks and the assets of the asset or (b) has neither transferred nor held substantially all the risks and estimates of the asset but has transferred the control of the asset.

2.6 Impairment

The Group recognises a provision for impairment for expected credit losses regarding all financial assets. Expected credit losses are based on the balance between all the payable contractual cash flows and all discounted cash flows that the Company expects to receive. Regarding trade receivables, the Company applies the IFRS 9 simplified approach in order to calculate expected credit losses. Therefore, at every reporting date, provision for losses regarding a financial instrument is measured at an amount equal to the expected credit losses, trade receivables and contract assets have been grouped based on shared risk characteristics.

At each balance sheet date, the Directors review the carrying amounts of the Company's investments, to determine whether there are any indications that those investments have suffered an impairment loss. 

2.7 Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which entities operate ('the functional currency'). The financial statements are presented in Sterling, which is the parent company's functional and presentation currency. There has been no change in the functional currency during the current or preceding period.

(ii) Transactions and balances 

Transactions in foreign currencies are translated into Sterling using monthly average exchange rates. This is permissible in this case as there are no significant fluctuations between the currencies with which the entity operates. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange rates ruling at the Statement of Financial Position date and any exchange differences arising are taken to profit or loss.

(iii) Foreign operations

In the Group's financial statements, all assets, liabilities and transactions of Group entities with a functional currency other than GBP are translated into GBP upon consolidation. The functional currency of the entities in the Group has remained unchanged during the reporting period. On consolidation, assets and liabilities have been translated into GBP at the closing rate at the reporting date. Income and expenses have been translated into GBP at the average rate over the reporting period. Exchange differences arising from significant foreign subsidiaries are charged or credited to other comprehensive income and recognised in the currency translation reserve in equity. On disposal of a foreign operation, the related cumulative translation differences recognised in equity are reclassified to profit or loss and are recognised as part of the gain or loss on disposal

2.8 Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Company keeping the scheme open or the employee maintaining any contributions required by the scheme).

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.

Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received. 

2.9 Taxation and deferred taxation

The income tax expense or income for the year is the tax payable on the current period's taxable income. This is based on the national income tax rate enacted or substantively enacted for each jurisdiction with any adjustment relating to tax payable in previous years and changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Current tax credits arise from the UK legislation regarding the treatment of certain qualifying research and development costs, allowing for the surrender of tax losses attributable to such costs in return for a tax rebate.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applicable when the asset or liability crystallises based on current tax rates and laws that have been enacted or substantively enacted by the reporting date. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability.

A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits against which to recover carried forward tax losses and from which the future reversal of temporary differences can be deducted. The carrying amount of deferred tax assets are reviewed at each reporting date. 

2.10 Trade and other payables

Short-term creditors are measured at the transaction price. Other financial liabilities are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest rate method. 

2.11 Trade and other receivables

Trade and other receivables are short-term financial assets due to the Company. Other receivables are recognised at the transaction's price when it is probable that economic benefit will flow to the Company.

2.12 Equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds.

The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

2.13 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and demand deposits with banks and other financial institutions, that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

2.14 Inventory

Inventory is valued at the lower of cost and net realisable value. Cost is based on the purchase price of the manufactured products, materials, direct labour and transport costs. Net realisable value is based on the estimated selling price less estimated selling costs.

3. Segment information

During the year ended 31 August 2021, the Group generated no revenue.

Under IFRS 8 there is a requirement to show the profit or loss for each reportable segment and the total assets and total liabilities for each reportable segment if such amounts are regularly provided to the chief operating decision-maker.

The Group has one operating segment, being the establishment and operation of a biosynthetic CBD retail business, therefore all IFRS 8 disclosures are incorporated within other notes to the financial statements. 

4. Critical accounting estimates and judgement

In the application of the Company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Estimating the fair value of share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant of share options and warrants. This estimate also requires determination of the most appropriate inputs into the valuation model including volatility and dividend yield, and making assumptions about them. The assumptions used for estimating the fair value of share-based payment transactions are disclosed in note 17. 

5. Expenses by nature

6. Auditor's remuneration

7. Directors' remuneration

Directors' remuneration amounted to £397,861 during the year (2020: £121,500), none of which (2020: £85,000) remained outstanding at the year end. Detailed disclosure of Directors' remuneration is disclosed in the Directors' Remuneration Report.

8. Employees

The average number of employees for the group during the year was two, apart from the Directors (2020: nil).

9. Taxation

The tax charge for the year was £Nil (2020 - £Nil). The company had tax losses at the year end of £2,595,503 (2020: £174,722).

10. Earnings per share

The investment in subsidiary companies comprises one wholly-owned subsidiary of the Company which is incorporated in Canada and has its registered office at 700-401 West Georgia Street, Vancouver, British Columbia V6B 5A1, Canada. The subsidiary undertaking is set out below.

17. Share-based payments

The Company has issued 52,960,000 warrants to subscribe for additional share capital of the Company. Each warrant entitles the holder to subscribe for one ordinary equity share in the Company. The right to convert each warrant is unconditional.

The right to subscribe for ordinary shares in the Company is subject to minimum vesting periods of up to three years. Relevant warrants are subject to a lock-in period of 12 months from 26 February 2021, the Company's date of admission to trading on the London Stock Exchange. This restriction applies to all warrants, exercised or otherwise.

Equity-settled share-based payments are measured at fair-value (excluding the effect of non-market- based vesting conditions) as determined through use of the Black-Scholes model at the date of issue. 

The total share-based payment charge for warrants in the year was £1,295,918, of which £907,343 has been charged to administrative expenses and £388,575 against share premium. The share-based payment charge was calculated using the Black-Scholes model. All warrants have an exercise period between one and three years from the date of issue.

Volatility for the calculation of the share-based payment charge in respect of the warrants issued was determined by reference to movements in the relative share prices of a selected peer group of companies listed on the London Stock Exchange.

The inputs into the Black-Scholes model for the warrants issued in the year are as follows:

The total of the share-based payment charge has been simultaneously credited to a share-based payment reserve within equity.

The total number of warrants issued to directors was 24,000,000.

18. Contingent liabilities

There were no contingent liabilities at 31 August 2021 or 31 August 2020.

19. Capital commitments

There were no capital commitments at 31 August 2021 or 31 August 2020.

20. Controlling party

There was no ultimate controlling party as at the year end.

21. Related-party transactions 

During the year, the Company incurred fees of £69,755 (2020: £Nil) for consulting services from Headline FD Limited, a company majority-owned by Simon Walters. Of this, £29,480 (2020: £Nil) was included in Directors' remuneration and £2,100 (2020: £Nil) was outstanding at the year end. The Company incurred fees of £45,042 (2020: £32,000) from Ampersand Ventures Limited, a Canadian company controlled by Eric Chang. Of this, £Nil (2020: £27,000) was outstanding at the year end.

During the year, the Company purchased £45,000 (2020: £90,000) of consultancy services from Toro Consulting Limited, a Canadian company owned by Jonathan Bixby, who is in joint control of Canadian-registered Durban Holdings Limited. Of this, £Nil (2020: £67,500) was outstanding at the year-end. In addition, the company incurred fees of £17,250 (2020: £22,000) during the year from Briarmount Limited, a company part-owned by Timothy Le Druillenec, while he was a director of Cellular Goods. Of this, £Nil (2020: £18,000) remained outstanding at the year-end.

22. Subsequent events

On 28 October 2021, the Company granted options over a total of 700,000 ordinary shares of

£0.001 each. Jodie Sanders, commercial and partnerships director, and Sean O'Dwyer, marketing director, who joined the Company in August and September 2021 respectively, were each granted options over 250,000 ordinary shares. Antony Buck, a skincare adviser, was granted options over 200,000 ordinary shares, this follows an announcement on 6 May 2021, that he would be granted warrants over 200,000 ordinary shares in July 2021; these warrants were never issued.

The exercise price of the two sets of 250,000 options is 7.06 pence per share, with a total exercise period of ten years, and the options can be exercised in stages starting from the fourth quarter of 2022 to the fourth quarter of 2023.

The options over 200,000 ordinary shares can be exercised at 7.812 pence per share, from 12 July 2022, and will lapse on 12 July 2024 if not exercised.