THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.

23 May 2025

Chill Brands Group plc

("Chill Brands" or the "Company")

£1 million raised from issuance of convertible loan notes

Extension of existing convertible loan notes

Update on lawsuit

Chill Brands, the consumer packaged-goods distribution company, is pleased to announce that it has raised £1 million through the issue of convertible loan notes (the "Fundraising") and has secured agreement from its largest shareholder, Jonathan Swann, to extend the terms of convertible loan notes entered into during 2023 (the "2023 CLNs"). The Company also provides an update on the conclusion of legal proceedings commenced during 2024, and on the expected timing of completion of the Company's audited accounts for the year to 31 March 2024 (the "FY24 Accounts") and its unaudited interim accounts for the six-month period ended 30 September 2024 (the "H1 FY25 Interim Accounts").

Completion of £1 million Fundraising

On 11 March 2025, the company announced its intention to raise funds through the issue of 66,666,666 new Convertible Loan Notes of 1.5 pence each (the "CLNs"). The Company has now raised £1 million from its largest shareholder, Jonathan Swann, and a number of other investors. The terms of the Fundraising are as follows:

·    the CLNs have a conversion price of 1.5 pence per new ordinary share (the "New Ordinary Shares"), being a 30.2% discount to the closing price of the Company's shares on the day prior to the suspension of trading in the Company's shares on 3 June 2024;

·    the CLNs shall attract interest at a rate of 10% per annum and shall have a maturity date three years from the date of their issue;

·    under the CLNs, the principal, along with the fixed interest, may be converted into new ordinary shares solely at the election of the subscriber and following the suspension of trading in the Company's shares being lifted;

·    the minimum investment amount under the Fundraising was set at £10,000. Investors subscribing for up to £50,000 of CLNs (the "Initial Subscribers") were required to remit funds to the Company at the time of subscription. For subscriptions in excess of £50,000, drawdown of funds will be at the discretion of the Company and may occur at any time within 12 months from the date of issue of the CLNs, the first drawdown having been made; and

·    the Company shall also issue to subscribers a warrant to subscribe for one New Ordinary Share per CLN. The exercise price of each warrant shall be equal to 1.25 times the volume-weighted average (the "VWAP") of the Company's Ordinary Shares over the ten (10) trading days immediately preceding the date of the relevant Drawdown Notice. As at the date of this announcement, the Company's Ordinary Shares are suspended from trading. Accordingly, in respect of any Drawdown made prior to the resumption of trading in the Company's Ordinary Shares, the VWAP for the purposes of calculating the exercise price of the associated warrants shall be deemed to be 1.5 pence per New Ordinary Share. Warrants awarded to the Initial Subscribers, as opposed to those resulting from future drawdowns at such time as trading in the Company's shares has resumed, shall be deemed to be issued during the suspension. The exercise price of warrants awarded to the Initial Subscribers shall therefore be calculated in line with a VWAP of 1.5 pence per Ordinary Share. An initial 15,733,333 warrants shall be issued.

Jonathan Swann has participated in the Fundraising through his wholly owned company, Denstone Investments Ltd.

As set out previously, the proceeds of the Fundraising will primarily be used for the following: the ongoing development, launch and distribution of new, compliant rechargeable, reuseable pod-based vaping products; the expansion of marketing campaigns for the chill.com marketplace website to drive brand awareness and customer acquisition; the expansion of the Company's sales and distribution infrastructure to enable it to attract and serve additional brands through enhanced field sales operations; and to support the Company's general working capital requirements, including potentially examining and pursuing synergistic and value generative bolt-on acquisitions.

The Company intends to provide a more comprehensive update on its current strategy and business model following the publication of its audited accounts for the financial year ended 31 March 2024 and its unaudited interim accounts for the six-month period ending 30 September 2024. This update will reflect the Company's progress to date and outline its plans for future growth and development.

Extension of existing convertible loan notes

In addition to the Fundraising, the Company has also reached agreement with Jonathan Swann to vary the terms of 20,000,000 convertible loan notes issued in 2023 with an aggregate principal value of £1.6 million, originally announced on 3 April 2023 (the "2023 CLN"). Under the original terms, the 2023 CLN carried annual interest of 12%, were convertible into new ordinary shares at a conversion price of 8 pence per share, and had a maturity date of 1 April 2026.

The Company has now entered into a deed of variation with Mr Swann to amend the terms of the 2023 CLN as follows:

·    The maturity date has been extended from 1 April 2026 to 15 May 2028;

·    The conversion price has been reduced from 8 pence per share to 2.15 pence per share, being the price at which the Company's shares were suspended on 3 June 2024;

·    Outstanding accrued interest of £215,134 will be settled by the issue of new ordinary shares in the Company, priced at the volume-weighted average price ("VWAP") over the ten trading days following the lifting of the current suspension in the Company's shares;

·    The 2023 CLN have been assigned by Mr Swann to his wholly owned company, Denstone Investments Ltd.

The Board considers these revised terms to be favourable to the Company, particularly as they reduce near-term cash outflows at a time when available capital is required to support trading and operational activities. The extension of the maturity date and conversion of accrued interest into equity further strengthen the Company's balance sheet without immediate cost.

Related Party Transactions

Mr Swann is regarded as a related party by virtue of his existing shareholding in the Company, being 68,075,000 Ordinary Shares, representing approximately 13.45% of the Company's issued share capital. The Board of Directors, having consulted with the Company's advisers, consider the revised terms of the 2023 CLN and the new issue of CLN to Denstone Investments Ltd to be fair and reasonable and in the best interests of the Company and all shareholders.

Update on the publication of financial results

Further to the Company's announcement on 24 April 2025, the Company has continued to progress towards the completion of its audit and the publication of the FY24 Accounts, along with the H1 FY25 Interim Accounts (together, the "Financial Results"). Based on discussions with its statutory auditors, the Company expects to receive sign-off on its FY24 Accounts imminently.

Preparation of the Company's H1 FY25 Interim Accounts is at an advanced stage, and the Company expects to publish these interim accounts shortly following the publication of the FY24 Accounts. The Company will then lodge a request with the Financial Conduct Authority (FCA) seeking the lifting of the suspension of trading in its shares.

Update on lawsuit

As announced on 25 July 2024, the Company initiated legal proceedings in the United States against certain former directors in connection with assets belonging to the Company, including the Chill.com domain, various intellectual property assets, and a sum of cash. On 19 December 2024, the Company announced that it had reached an out-of-court settlement with those individuals. As a result of the settlement, the Chill.com domain and associated trademarks have been under the Company's ownership and control since the time of that settlement.

As stated in the December announcement, the former directors retained the funds that had been received by them prior to the general meeting held on 4 June 2024. The settlement avoided the need to expend further time and financial resources on prolonged litigation in the US, enabling the Company to redirect its resources towards operational execution and strategic growth.

Following a federal court settlement conference, all remaining matters in the case have now been resolved. The Company has made the necessary filings and the claim has been formally dismissed with prejudice. This brings the legal proceedings to a definitive conclusion. The Board is pleased to put this chapter behind the Company and is focused on moving forward with the execution of its strategy.

-ENDS-

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About Chill Brands Group

Chill Brands Group plc (LSE: CHLL, OTCQB: CHBRF) is an international consumer packaged goods company focused on the development, marketing and distribution of wellness and recreational products. The Company's proprietary nicotine-free vapour products cater to the rapidly growing market for tobacco alternatives and are distributed by some of leading retail stores in the US and UK. Chill Brands also operates the chill.com e-commerce website, on which it is building a marketplace of products from third-party brands.

Publication on website

A copy of this announcement is also available on the Group's website at http://www.chillbrandsgroup.com