Vape firm Chill Brands has on Wednesday announced that an internal investigation into allegations of insider trading against its chief executive Callum Sommerton has been discontinued.
The investigation, which scrutinised Sommerton's investment in the company’s equity fundraising in January 2024, concluded that the claims were baseless. Professional advisors confirmed that the relevant information was properly disclosed to the market, and therefore, Sommerton has been fully exonerated.
The company, which sells nicotine-free vape products in the UK and the US, has suspended Sommerton in April after allegations were raised, but reinstated him as chief executive last month, after law firm Fieldfisher gave a preliminary view that the allegations will not be evidenced to a sufficient degree.
Additionally, an examination of certain commercial arrangements related to the company’s UK vape business has also been completed. Industry advisors, including Allenby Capital, determined no further investigation was required, and the company will continue to refine its operations for better scalability and commercial viability.
The company has also released a trading update for the year ending 31 March 2024, reporting purchase orders valued at over $66,000 from US customers and nearly £1.81 million from UK customers.
Chill vapour products were launched in the UK during August 2023, and the company continues to expand its UK distribution, with products now in over 900 independent retail locations. Approximately 40 per cent of these stores receive ongoing account management, contributing to a positive reorder rate of nearly 50 per cent. The company said it is exploring ways to increase active management of independent retail accounts to enhance these rates further.
In the US, Chill Brands is making progress, particularly with distributors servicing Smoker Friendly Stores, and recent orders from these accounts have reached approximately $63,000.
Chill Brands said it remains committed to releasing new products, including reusable, rechargeable devices. Prototypes of a multi-pod vapour device received positive feedback at the World Vape Show in Dubai, and initial indications of interest have been recorded from customers in numerous markets including the UK, North America, Africa, Southern Asia, and the Middle East.
Efforts to recover the company’s assets, including the chill.com domain and certain trademarks transferred by former directors, are ongoing. Legal advisers are negotiating with the former directors for their return, aiming for a resolution without court proceedings.
The company, which has removed chief operating officer Trevor Taylor and chief commercial officer Antonio Russo from the board last month, later accused both of unauthorised activities and financial discrepancies.
The company said Russo and Taylor, who assumed executive control after the suspension of Sommerton in April, transferred the Chill.com domain to an account controlled by Russo without board authorisation. Further compounding the situation, nearly $400,000 in unauthorised payments were discovered, made from the company’s US subsidiary’s bank account to Russo’s and Taylor’s personal accounts on 3 June.
“Over the past month we have been working hard to restore confidence in our business. We thank our customers and suppliers for continuing to work with us through this period. We recognise that there is much work to do to ensure that the company can progress from a position of strength, but I am pleased that Chill Brands has maintained its trading activities,” Sommerton said.
“I am particularly excited about the prospects of our new multi-pod vapour device. The initial feedback from its debut at the Dubai World Vape Show has been incredibly encouraging, with significant interest from potential distributors and customers globally. This enthusiasm reinforces our confidence in the product's potential and our commitment to innovation and growth in the vaping industry.”
Cotswold Fayre
Cotswold Fayre
