Mr. Hylton Karon reports

IFABRIC CORP. ANNOUNCES BEST QUARTER IN ITS HISTORY

iFabric Corp. has released its financial results for the third quarter ended June 30, 2014. iFabric has a Sept. 30 year-end.

Third-quarter highlights:

• Record revenue of $3,881,993, an increase of 42 per cent over corresponding quarter in 2013;
• Record income from operations of $566,224 an increase of 53 per cent over corresponding quarter of 2013.

Nine-month highlights:

• Record revenue of $9,799,051, an increase of 57 per cent over corresponding nine months of 2013;
• Record income from operations of $1,222,555, an increase of 76 per cent over corresponding nine months of 2013.

"The revenue and income from operations for the quarter ended June 30, 2014, are the largest in the company's history to date. We have a great base of blue chip customers from which to build future revenues and profitability," stated Hylton Karon, chief executive officer and president.

Operating results

In the third quarter ended June 30, 2014, revenues increased to $3,881,993 compared with $2,741,232 in the corresponding quarter in 2013, an increase of $1,140,761 or 42 per cent. For the nine months ended June 30, 2014, revenue amounted to $9,799,051 compared with $6,229,569 in respect of the nine months ended June 30, 2013, representing an increase of $3,569,482 or 57 per cent. Gross profit in the quarter was $1,931,281 or 50 per cent of sales, compared with $1,536,327 or 56 per cent of sales in the corresponding quarter in 2013. The decrease in gross margin percentage is attributable to increases in discounts and margin guaranty rebates provided to major customers as well as the clearance of end-of-season fashion goods at lower margins. For the nine months ended June 30, 2014, gross profit amounted to $5,132,181 or 52 per cent of sales, compared with $3,542,981 or 57 per cent in the corresponding nine months in 2013. The decrease in gross margin percentage was attributable to the factors as explained above.

Income from operations for the third quarter ended June 30, 2014, amounted to $566,224 compared with $369,612, representing an increase of 53 per cent. For the nine months ended June 30, 2014, income from operations amounted to $1,222,555 compared with $693,688 in the corresponding nine-month period in 2013, representing an increase of 76 per cent.

Net profit after tax for the third quarter ended June 30, 2014, was $245,088 or 0.9 cent per share compared with an after-tax profit of $199,715 or 0.8 cent per share for the quarter ended June 30, 2013. The net profit for the current quarter was reduced by an amount of $84,208 in foreign exchange losses resulting from the strengthening of the Canadian dollar during the quarter. For the nine months ended June 30, 2014, the company reported an after-tax profit of $33,645 or 0.1 cent per share compared with an after-tax profit of $231,439 or 0.9 cent per share for the nine months ended June 30, 2013. The reduction in net income for the current nine months is mainly attributable to an amount of $911,275 which was expensed in respect of share-based compensation regarding the issuance of warrants and options as required under international financial reporting standards.

The company's balance sheet remains strong. With a working capital ratio of 4:1, operating debt of $388,663 and cash of $494,613 as well as unutilized bank lines of approximately $1.6-million, the company is well capitalized to finance its continuing operations. Shareholders' equity increased to $7,549,379 from $5,164,171 as at Sept. 30, 2013.

                                     FINANCIAL HIGHLIGHTS
                                                                            
                       Quarter ended June 30,     Nine months ended June 30,
                          2014          2013             2014          2013 
                                                                            
Revenue           $  3,881,993  $  2,741,232     $  9,799,051  $  6,229,569 
Cost of sales       (1,950,712)   (1,204,905)      (4,666,870)   (2,686,588)
                  ------------- -------------    ------------- -------------
Gross margin         1,931,281     1,536,327        5,132,181     3,542,981 
Operating expenses  (1,365,057)   (1,166,715)      (3,909,626)   (2,849,293)
                  ------------- -------------    ------------- -------------
Income from                                                                 
operations             566,224       369,612        1,222,555       693,688 
Share-based                                                                 
compensation          (123,150)      (73,065)        (911,275)     (346,210)
Gain (loss) on                                                              
exchange               (84,208)       59,223          117,891        76,363 
Other income                                                                
(expenses)              22,309       (18,454)          (9,808)       25,189 
                  ------------- -------------    ------------- -------------
Earnings before                                                             
income taxes           381,175       337,316          419,363       449,030 
Income taxes          (136,087)     (137,601)        (385,718)     (217,591)
                  ------------- -------------    ------------- -------------
Earnings after 
tax               $    245,088  $    199,715     $     33,645  $    231,439 
                  ============= =============    ============= =============
EBITDA                 442,123       370,456          604,541       539,162 
Earnings per share       0.009         0.008            0.001         0.009 

Corporate update

Mr. Karon has provided the following update with regard to the operations and future prospects of the company's two key divisions.

Intimate apparel

"Headquartered in company-owned office and warehouse premises located in Markham, Ont., the intimate apparel division operates under the trade name of 'Coconut Grove Intimates.' The division leverages several key licence arrangements that it has to distribute a range of ladies intimate apparel and complementary accessories, to major retailers and independent stores, under some of the most recognized brands in the apparel industry. The division also distributes products through private label programs for major retailers as well as under the division's long established own brand, 'The Natural.'

"Product is delivered to retailers from warehouse facilities located in the division's key market regions, being the United States, the United Kingdom and Canada. International customers outside these regions are also serviced via these warehouses. The division also rents premises in New York, which serve both as a design studio and a showroom for U.S. customers.

"Our apparel division has delivered record sustained growth since our listing in June of 2012 and we a looking to maintain this. Our ongoing strategy is to further leverage our relationships with major retailers in order to build established programs to their full potential. In addition, our team of highly gifted designers constantly looks to design innovative products for the purpose of fuelling future expansion and growth within this division."

Intelligent textiles:

"Our intelligent textile division operates under the name Intelligent Fabric Technologies (North America) Inc. and is also headquartered in our company-owned premises located in Markham, Ont. In addition, IFTNA has recently established marketing and distribution facilities located in China and Taiwan.

"IFTNA holds exclusive rights for several class-leading textile compounds which, when applied, have the ability to kill bacteria and viruses, repel insects, and heal the skin, amongst others.

"Our current main marketing focus is with regard to anti-microbial and anti-viral formulations, which are marketed under the brand names Protx2 and Cliniweave. We received Environmental Protection Agency registrations for these formulations in the United Sates at both the federal and state levels in late 2013 and this allows us to sell these formulations, to major apparel, outerwear, sportswear, shoe and bedding manufacturers, as well as to the hospitality, and cruise line industries and military suppliers throughout USA. We are currently seeking a second level of registrations which will allow us entry into medical markets and health care sectors. We anticipate that our second level of registrations for advanced claims will be completed around the middle of 2015. The markets that we are currently able to service are all extremely large markets and our current strategy is to establish a strong foothold in as many of these markets as possible, before we tackle the medical and health care markets in the latter half of 2015. We believe that this strategy will result in the maximum momentum for this division.

"I would characterize the bulk of the current programs with our customers as verification programs. These represent limited initial programs which our customers use to test the ease of integration, efficacy and durability of Protx2 in limited product ranges. I am pleased to report that to date, we have not disappointed, with Protx2 showing class-leading abilities on all fronts. Based on forward projections that we have been receiving from our customers we see Protx2 being specified as the anti-microbial of choice in an ever increasing number of new programs for the forthcoming year and beyond. Initially these programs will be targeted at the U.S. and Canadian markets but we expect to see product offerings with Protx2 showing up in international markets in due course.

"Accordingly, I am expecting a spike in the level of anti-microbial sales commencing the first quarter of 2015 and I am confident that this will be the start of a period of strong sustained growth for this division which is what we projected when listed in 2012."

We seek Safe Harbor.