Mr. Hylton Karon reports

IFABRIC CORP REPORTS FINANCIAL RESULTS FOR FIRST FINANCIAL QUARTER 2017 AND OUTLOOK FOR 2017

iFabric Corp. has released its financial results for its first quarter ended Dec. 31, 2016, and its outlook for 2017.

Highlights for first quarter

• Intelligent fabric revenues increased to $1,290,581 compared with $106,029 in the corresponding quarter of the prior year, representing an increase of $1,184,552 and 42 per cent of total revenues compared with 3 per cent of total revenues in the corresponding quarter of 2016.
• Apparel revenues were $1,785,939 compared with $3,183,307, representing a decrease of $1,397,368. The decrease in apparel sales was attributable to transitioning out of the Splendid and Ella Moss programs, as well as the receipt of subquality product supplied by two long-standing suppliers which the company did not ship to its customers. The company has taken measures to prevent these issues from reoccurring.
• Total revenues were $3,102,120 compared with $3,329,010 in the corresponding quarter of 2016, a decrease of 7 per cent.
• Operating loss for the quarter was $139,885 compared with an operating profit of $70,076 in 2016, representing a decrease of $209,961.
• Gross profit decreased to $1,147,086 from $1,784,215 in 2016, representing a decrease of $637,129, or 36 per cent.
• Gross profit margins decreased to 37 per cent compared with 54 per cent in the corresponding quarter in 2016.
• The decrease in gross profit was mainly attributable to the higher ratio of intelligent fabric revenues, which carry lower margins compared with apparel revenues.
• Selling and administrative costs decreased by 27 per cent to $1,210,046 from $1,651,592, representing a decrease of $441,546. This decrease was mainly attributable to the elimination of expenses related to the Splendid and Ella Moss programs and substantially offset the reduction in gross profit during the quarter.
• After-tax loss attributable to common shareholders was $125,375 (0.5 cent basic and fully diluted per share), compared with a profit in the corresponding quarter of 2016 of $39,588 (0.2 cent basic and 0.1 cent fully diluted per share).
• Working capital amounted to $5,176,837 at Dec. 31, 2016, compared with $5,300,067 as at the end of the previous financial quarter ended Sept. 30, 2016.
• Net cash improved by $362,465 to $732,775, compared with $370,310 at the end of the previous quarter ended Sept. 30, 2016.
• Shareholder equity attributable to common shareholders was $7,529,094, compared with $7,638,010 at the end of the previous financial quarter ended Sept. 30, 2016, representing a decrease of $108,916.

Outlook

Hylton Karon, president and chief executive officer of iFabric, provided the following outlook.

Intelligent fabrics division

• The intelligent fabrics division continues to build momentum and is now expected to exceed the previously announced 100 million yards of treatments in calendar 2017.
• The company is now able to combine a variety of its technologies in unique combinations to enhance the value proposition of its customers' products. This will result in increased sales revenue per yard of treated fabrics. Furthermore, margins in this division will improve as the company's increased volumes have allowed it to negotiate improved pricing from its suppliers.

Apparel division

• The transition out of the Splendid and Ella Moss programs will now allow the company to fully focus on Maidenform-branded sleepwear programs and further reduce overheads.
• The official launch of Maidenform sleepwear commenced in January, 2017. The initial sell-through results have exceeded expectations. This has resulted in record initial bookings for the key 2017 holiday season and further bookings are anticipated.
• In order to prevent the product quality issues experienced in the quarter from reoccurring, the company has taken measures to further diversify its supply chain and improve quality controls at source.

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

                         FINANCIAL HIGHLIGHTS                                                              
                                                    Quarter ended Dec. 31, 
                                                      2016           2015 
                                                              
Revenue                                         $3,102,120     $3,329,010 
Income (loss) from operations                     (139,885)        70,076 
Share-based compensation                           (16,459)       (45,405)
EBITDA                                             (75,014)       137,001 
Net income (loss) after tax                       (123,287)        41,396 
Net income (loss) after tax 
attributable to shareholders                      (125,375)        39,588 
Net income (loss) per share -- basic                (0.005)         0.002 
Net income (loss) per share -- diluted              (0.005)         0.001 

About iFabric Corp.

iFabric is a manufacturer, distributor, licensor and licensee of ladies intimate apparel products, sleepwear and accessories. It is also a developer and distributor of proprietary innovative products and treatments that are suitable for application to textiles, plastics, liquids and hard surfaces. These products are designed to provide added benefits to the user.

We seek Safe Harbor.