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Letter to Mark Steward at the FCA - Chill Brands again caught misleading on revenues, time to act (at last)

By Tom Winnifrith | Friday 4 March 2022


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


I last wrote to the FCA as regulator, no sniggering at the back, of the Standard List, about the almost insolvent fraud that is Chill Brands (CHLL) on 31 January, just five weeks ago when for a second time I flagged up how it was deceiving investors with sales announcements that are bogus. Npw it is a 3rd strike on this count and the FCA needs to suspend trading in Chill shares pending an enquiry and sanctions against its management team and advisers Allenby. I have gone to the head of enforcement Mark Steward with the letter below.


Re Chill Brands, Standard List – a 3rd case of deceiving investors re sales & trading, suspend shares now


To: Mark Steward, The FCA.


Mark.


For the third time I find myself writing to you about Standard listed Chill Brands. The most recent occasion was on January 31 when I asked you to take action over a wilful deception of investors with regards to sales. You did nothing.


May I remind you that when publishing it interims to 30 September in late January, Chill reported sales of £1,073,872. Yet in RNS releases dated May 17, July 1 and November 3 2021, sales for that period from just one distributor were claimed to be £1.91 million and there were other distribution channels supposedly shifting product. 


As such, either the interims were made up or those RNS statements, which Allenby Capital was so happy to put its name to, were fiction designed to deceive investors.


Today it gets worse as we are told:


“As announced in the Company’s interim report published 28 January 2022, Chill Brands’ recognised revenues of over US$1,200,000 for the first half of this financial year. As a result of supply chain delays, previously announced additional orders valued at approximately US$1,000,000 may not all become recognisable revenue by the end of the current financial year. The Chill Brands’ Board is confident that any remaining orders will be placed with distribution and retail partners during the first half of the next financial year.”


So what were previously announced as sales/orders will not now be recognized. Why is that? The company has inventory on its balance sheet (over £1.06 million as at 30 September) so what excuse can it have for not shipping and delivering orders received and announced  in Q3 and early Q4?


The idea that logistical issues for this one company mean it cannot deliver product in the US for months and months is fantasy.  Clearly Chill, again, misled investors.


This is the thirds time that Chill has misled investors over sales. As worryingly, without any meaningful sales the cash of £2million at the end of September will now be almost all gone and so a  bailout refinancing is needed ASAP. I suggest to you that the FCA should suspend the shares with immediate effect pending an enquiry into false statements about sales and a clarification of the company’s financial position.


I remain, as ever,


Your obedient servant


Tom Winnifrith
Editor www.Shareprophets.com


PS. Might I remind you that on February 3 2021, I sent you a detailed 60 red flags dossier on Chill, then known as Zoetic, demonstrating clearly that it was lying to customers, regulators and investors. I urged you to suspend the shares then when the market cap was c£150 million at a 76p share price. You did not.  The shares are now 5p, the market cap £11million and insiders have been able to dump stock and the company place at 60p because of your inaction.  Might you consider why you and your colleagues failed so badly to protect investors in this matter?

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