Mr. Hylton Karon reports

IFABRIC CORP REPORTS RECORD 3RD QUARTER REVENUE & OPERATING PROFIT

iFabric Corp. has released its financial results for its third quarter and nine months ended June 30, 2017.

"The third quarter results represent a milestone in the company's history, with record revenue, record operating profit and record adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)," stated Hylton Karon, president and chief executive officer. "We look forward to continued growth in the future."

Q3 2017 highlights:

• Revenues of $4,888,400 compared with $2,999,317 in Q3 2016, an increase of $1,899,083 or 63 per cent. Revenues in the apparel division increased by 31 per cent or $833,072 to $3,495,976 from $2,662,904 in Q3 2016, primarily due to new Maidenform sleepwear lines, which launched earlier in 2017. Revenues in the intelligent fabrics division increased by 343 per cent or $1,067,261 to $1,378,074 from $310,813 in 2016, primarily due to increased sales of antimicrobial products to major customers;
• Operating profit of $1,000,267 compared with an operating loss of $87,247 during Q3 2016, an increase of $1,087,514. The substantial increase operating profit was mainly as a result of increased revenues, increased gross profit and a reduction in operating costs;
• Adjusted EBITDA was $955,335 compared with negative adjusted EBITDA of $63,859 for the same quarter last year. This represents an increase of $1,019,194;
• Gross profit of $2,449,749 or 50 per cent of sales compared with $1,418,332 or 47 per cent in Q3 2016, an increase of $1,031,417 or 39 per cent. The increase in gross profit percentage was mainly due to lower clearances of end-of-season merchandise and the product mix for the quarter;
• Net profit after tax attributable to shareholders was $264,213 (or one cent per share basic and diluted) compared with a net loss attributable to shareholders of $121,653 in Q3 2016 (or 0.5 cent per share basic and diluted). The increase in net earnings was mainly attributable to higher revenues and higher gross profit as discussed above;
• The net earnings for the quarter were impacted by an increase in share-based compensation costs to $369,359 from $16,280 in Q3 2016, as a result of 600,000 options awarded to directors and key management in the quarter, 50 per cent of which vested immediately;
• Working capital amounted to $6,786,980 compared with $6,170,802 at March 31, 2017, an increase of $616,178;
• Shareholders' equity attributable to shareholders was $8,735,588, up $699,572 from $8,036,016 as at March 31, 2017;
• Cash on hand amounted to $1,876,983, while the company had utilized $436,155 from its total credit line of $3.5-million as at June 30, 2017, leaving an unused balance of $3,063,845. This compares with cash on hand of $1,202,172 and credit line usage of $600,441 as at the end of the previous quarter ended March 31, 2017, representing a net cash increase of $839,097;
• Long-term debt decreased by $38,991 from $2,229,804 as at March 31, 2017, to $2,190,813 as at June 30, 2017.

Nine-month highlights:

• Revenues increased by $2,845,357 to $12,245,711 compared with $9,400,354 for the corresponding nine months in 2016, representing an increase of 30 per cent. With respect to its two operating divisions, apparel revenues decreased by 1 per cent or $80,709 to $8,304,410, while intelligent fabric revenues increased by 319 per cent or $2,951,390 to $3,875,751.
• Gross profit for the nine months ended June 30, 2017, increased by 21 per cent or $974,757 to $5,679,750 (46 per cent of sales), compared with $4,704,993 (50 per cent of sales) for the same period in 2016. The lower gross profit percentage was mainly attributable to a higher proportion of intelligent fabric sales which carry lower margins compared with apparel sales.
• The net profit after tax attributable to shareholders for the nine months ended June 30, 2016, was $627,159 (or 2.4 cents per share basic and 2.3 cents per share diluted) compared with a loss of $406,723 in the corresponding nine months of 2016 (or 1.6 cents per share basic and diluted), representing an increase of $1,033,882. The increased earnings were attributable to increased revenue, increased gross profit and lower administrative costs for the current nine months of 2017 compared with 2016.
• Adjusted EBITDA was $1,652,049 compared with negative adjusted EBITDA of $216,279 for the nine months ended June 30, 2016. This represents an increase of $1,868,328.

Complete financial statements are available on SEDAR.

                                               FINANCIAL HIGHLIGHTS                                               
  
                                                                 Quarter ended June 30    Nine months ended June 30 
                                                                     2017         2016           2017          2016 
                                                                                                                  
Revenue                                                       $ 4,888,400  $ 2,999,317   $ 12,245,711   $ 9,400,354
Income (loss) from operations                                   1,000,267      (87,247)     1,515,337      (243,584) 
Share-based compensation                                          369,359       16,280        401,919       101,943
Adjusted EBITDA                                                   955,335      (63,859)     1,652,049      (216,279)
Net income (loss) after tax                                       269,154     (121,962)       629,826      (404,433) 
Net income (loss) after tax attributable to shareholders          264,213     (121,653)       627,159      (406,723)
Net income (loss) per share -- basic                                0.010       (0.005)         0.024        (0.016)
Net income (loss) per share -- dliuted                              0.010       (0.005)         0.023        (0.016)

We seek Safe Harbor.