Mr. Hylton Karon reports

IFABRIC CORP. REPORTS RECORD FOURTH QUARTER REVENUE AND FINANCIAL RESULTS FOR ITS 2016 FINANCIAL YEAR ENDED SEPTEMBER 30TH, 2016

iFabric Corp. today released its results for the fourth quarter and its fiscal year ended Sept. 30, 2016.

Fourth quarter ended Sept. 30, 2016, highlights:

• Revenues were $4,170,011, compared with $3,080,464 in the fourth quarter of 2015, representing an increase of $1,089,547, or 35 per cent. This represents a record revenue quarter for iFabric.
• Revenues for the intelligent fabrics division were $1,257,166, compared with $89,555 in the fourth quarter of 2015, representing an increase of $1,167,611. Apparel division revenues were $2,887,215, compared with $2,966,280 in the fourth quarter of 2015, representing a decrease of $79,065, or 3 per cent.
• Gross profit increased by 30 per cent, or $372,740, to $1,600,681 from $1,227,941 in the fourth quarter of 2015.
• Net earnings attributable to shareholders were $32,745 (or 0.1 cent per share basic and diluted), compared with a net loss of $282,071 in the same quarter of 2015 (or 1.1 cents per share basic and diluted), representing an increase in net earnings of $314,816, or 112 per cent.

"I am extremely pleased with our revenue performance in Q4 of fiscal 2016 as two important milestones were achieved. Firstly, total revenue of $4.17-million represents a record for iFabric, and, secondly, and more importantly, our intelligent fabrics division recorded its first quarter of sales of more than $1-million. I am confident that sales in this division will continue to grow as our industry-leading proprietary technologies, like PROTX2, are adopted across broader ranges of products by the global brands and industry leaders that purchase these technologies from us," stated Hylton Karon, president and chief executive officer.

Year ended Sept. 30, 2016, highlights:

• Total 2016 revenues were $13,570,365, compared with $13,074,848 in 2015, representing an increase of $495,517, or 4 per cent.
• Apparel division revenue decreased from $12,298,361 in 2015 to $11,272,334 in 2016, representing a decrease of $1,026,027, or 8 per cent. By contrast, intelligent fabric division revenue increased to $2,181,527 from $679,298 in 2015, representing an increase of $1,502,229, or 221 per cent.
• The loss from operations in 2016 amounted to $80,891, compared with income from operations of $168,351 in 2015. The main reasons for this decrease are a decrease in gross margin contribution of approximately $165,000, resulting from the clearance of end-of-season apparel division merchandise at lower margins and the product mix for the year, as well as increased expenses of $84,000 in 2016 compared with 2015.
• Gross profit of $6,305,673 for the year ended Sept. 30, 2016 (or 46 per cent), compared with $6,470,580 (or 49 per cent) in 2015, representing a decrease of $165,157, or 3 per cent. The lower gross profit for the year was mainly attributable to a higher proportion of intelligent fabric sales, which carry lower margins than apparel sales.
• Net loss attributable to shareholders was $373,977 (or 1.4 cents per share basic and diluted), compared with a net loss attributable to shareholders of $109,837 (or 0.4 cent per share basic and diluted) for the year ended Sept. 30, 2015. The increase in net loss is mainly attributable to a decrease in gross profit of $165,157, increased foreign exchange losses of $519,777 and an impairment loss of $126,710 in 2016. The impact of these changes was partially offset by lower share-based compensation costs of $374,949 in 2016 versus 2015.
• Working capital amounted to $5,300,067, compared with $5,419,934 at Sept. 30, 2015, a decrease of $119,867.
• Shareholder equity attributable to shareholders decreased by $219,575 from $7,857,585 in 2015 to $7,638,010 at Sept. 30, 2016. This was mainly attributable to the loss for the year.
• Long-term debt relating to the building owned by the company increased by $484,916, attributable to capital improvements and infrastructure expansion, from $1,408,893 at Sept. 30, 2015, to $1,893,809 as at Sept. 30, 2016. At the same time, property, plant and equipment increased by an amount of $450,771 from $2,487,880 in 2015 to $2,938,651 in 2016, mainly in respect of expenditures on building renovations that were made to house the additional staff that will be required to service the projected growth in both of iFabric's divisions in 2017 and beyond.
• The company's land and buildings have been appraised by independent appraiser in an amount of $4.4-million, representing an increase of $1,621,411 over the carrying value of this asset.
• Cash at year-end was $1,260,213.
• Bank operating debt line at year-end was $889,903, leaving $1,110,097 of unutilized bank operating line available to the company.

Complete financial statements are available on SEDAR and on the company's website.

Business outlook

Mr. Karon, president and CEO of iFabric, provided the following comments regarding the business outlook for iFabric, and financial performance for the fourth quarter of fiscal 2016 and the 2016 fiscal year:

"Our intelligent fabrics division has secured a strong customer base across all segments of our target markets, including medical scrubs, hospital curtains, bedding, sportswear, yoga wear, outerwear, travel luggage and accessories, plastics and footwear, amongst others. Our product offerings have been adopted by some of the world's leading brands. We will be working with these customers to integrate our technologies in more and more of their future product offerings. In addition, we anticipate adding several additional key customers during fiscal 2017.

"Whilst we have seen some slippage in apparel sales because of currency challenges and the phaseout of Splendid-branded products, the official market launch of Maidenform-branded sleepwear has been set for the spring 2017 season with initial shipments to commence in January, 2017. We completed a small test of Maidenform sleepwear in the first quarter of 2017 (October to December, 2016), and the sell through at retail has been beyond our expectations. For this reason, we have high expectations for the potential for growth in this program. In addition, we have developed several new products to be added to our core bra and accessory ranges, and will also be launching these during fiscal 2017. Accordingly, I am confident that we will see reasonable sales growth in our apparel division in 2017, and significant growth in 2018 and beyond."

About PROTX2

PROTX2 provides long-term, effective control of micro-organisms. Its efficacy and safety have been documented in numerous peer-reviewed publications, trade articles and certified tests. It is durable to deterioration through repeated washing and is clinically proven to kill bacteria associated with hospital-acquired infections. Medical facility uses for PROTX2 include bedding, curtaining, air filters, scrubs, masks, plastic components and most other surfaces.

About iFabric

Through its wholly owned subsidiaries, Intelligent Fabric Technologies (North America) Inc. and Coconut Grove Pads Inc., the company offers a variety of products and services in both of its strategic divisions.

IFTNA is focused on proprietary chemical formulations that render fabrics, foams, plastics and numerous other surfaces intelligent, thereby improving the safety and well-being of the consumer.

Coconut Grove, operating as Coconut Grove Intimates, is a designer, manufacturer, distributor, licensor and licensee of ladies' intimate apparel products, accessories and sleepwear.

 
                                                   FINANCIAL HIGHLIGHTS                                                                               
                                                                                                   
                                                             Year ended Sept. 30,       Quarter ended Sept. 30,
                                                             2016           2015           2016           2015

Revenue                                               $13,570,365    $13,074,848     $4,170,011     $3,080,464
Income (loss) from operations                             (80,891)       168,351        162,693       (483,693)
Earnings before interest, taxes, depreciation
and amortization                                         (159,908)       341,915        158,315       (312,079)
Net earning (loss) before tax                            (448,537)        81,789         73,609       (372,522)
Net earnings (loss) after tax                            (370,162)      (107,207)        34,271       (283,461)
Net earnings (loss) attributable to shareholders         (373,977)      (109,837)        32,745       (282,071)
Net earnings (loss) per share
Basic                                                      (0.014)        (0.004)         0.001         (0.011)
Diluted                                                    (0.014)        (0.004)         0.001         (0.011)

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