Response to Government Proposals

Chill Brands Group, the consumer packaged-goods distribution company, responds to proposals published by the UK Government relating to the regulation of disposable vape products.

The Company notes that the Government proposes to introduce legislation that, amongst other things, would prohibit the sale of disposable vape products. The Government has not yet announced when its proposed measures may be introduced, however it has been reported that retailers will be given a six month implementation period once the relevant legislative process is complete. There can be no guarantee that these proposals will therefore be enacted in their current form, but current indications are for changes coming into force during Q4 2024 or 2025.

Chill Brands is committed to strict compliance with all relevant laws and the Company's existing nicotine-free vape products are differentiated through the inclusion of USB-C recharging ports. This feature sets Chill Brands' vape product apart from more commonplace disposable options, providing for a longer period of use by consumers.

Chill Brands is already preparing to launch a fully compliant reusable pod system vapour device and will accelerate its efforts to bring this product to market. The Company will work with its existing contracted retailers to prepare them to stock this range extension while they continue to sell through the existing range of Chill ZERO products.

As part of this range extension, the Company intends to introduce products that will provide users with a means to gradually reduce their nicotine intake. Chill Brands' expansion into the nicotine category is expected to dramatically increase the size of the total addressable market served by the Company's products.

A recent study conducted by University College London (UCL) and funded by Cancer Research UK showed that a ban on disposable vapes would adversely affect millions of UK adults. This study adds to a growing body of evidence that clearly demonstrates the important role played by disposable vapes as a smoking cessation tool. It is expected that organisations including Action on Smoking and Health (ASH), the UK Vape Industry Association (UKVIA) and other bodies will continue to make strong representations to the Government advocating for the continued availability of disposable products while engaging on alternative policy proposals that focus on the protection of public health.

Callum Sommerton, Chief Executive Officer of Chill Brands, said:

"The vaping landscape is constantly evolving, creating opportunities for businesses that are able to navigate the regulatory environment. The Chill brand has gained rapid traction with the support of major retailers, and I am confident that it will continue to do so as we move forward with our plans to launch reusable pod system vapes.

Chill Brands Group is an agile company, and we are prepared to adjust to any legislation that may be enacted. In the meantime, our existing high-puff count and rechargeable devices will continue to be sold by US and UK retailers who have demonstrated a strong appetite for products brought to market under the Chill brand."