Mr. Hylton Karon reports

IFABRIC CORP REPORTS INCREASED REVENUES FOR ITS FINANCIAL PERIOD ENDED DECEMBER 31, 2023

iFabric Corp. has released its results for its fifth quarter and fiscal period ended Dec. 31, 2023. With effect from Oct. 1, 2022, the company changed its financial year-end to Dec. 31. Accordingly, the financial statements for 2023 are presented for a period of 15 months compared with 12 months in 2022.

"Two thousand twenty-three has been very satisfying in terms of growth in revenue and operational earnings, as well as in acquiring new major customers in the United States. With new programs commencing in 2024 and with our order book at record levels, we now have the opportunity to showcase our class-leading technologies across a broad range of apparel categories in North America," said Hylton Karon, president and chief executive officer of iFabric.

"At the same time, we continue to devote significant resources and effort towards acquiring new regulatory registrations as well as the completing our pending initiatives, and I remain confident that we will prevail," concluded Mr. Karon.

15 months ended Dec. 31, 2023, highlights:

• Total revenues amounted to $28,398,742 for the 15 months ended Dec. 31, 2023, compared with $19,743,008 for the 12 months ended Sept. 30, 2022, representing a 15-per-cent increase on a proportionate basis, and was mainly attributable to new apparel programs with existing customers and increased sales of fabric treatment chemicals.
• Intelligent fabric division revenue increased by 25 per cent on a proportionate basis to $19,852,953 for the 15 months in 2023 from $12,658,907 for the 12 months in 2022, as a result of new programs and increases in existing programs, as well as increased chemical sales. For the intimate apparel division, revenue decreased by 2 per cent on a proportionate basis and amounted to $8,504,393 for the 15 months in 2023 compared with $6,976,621 for the prior 12 months in 2022.
• Gross profit of $11,073,008 (39-per-cent margin) for the 15 months ended Dec. 31, 2023, compared with $7,026,276 (36-per-cent margin) for the 12 months in 2022, with the gross margin improvement mainly attributable to a reduction in shipping costs and the repricing of certain products.
• Selling, general and administrative costs amounted to $9,868,085 in 2023 compared with $6,440,518 in 2022, representing a 23-per-cent increase on a proportionate basis, mainly attributable to increases in the amount of royalties and commissions, which are variable in nature.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $1,239,522 in 2023 compared with $445,861 in 2022, mainly as a result increased revenues and gross margin dollars.
• The company has a continuing legal claim with a Chinese supplier relating to an unfulfilled order. On Dec. 21, 2021, the arbitration court ruled in the iFabric's favour and confirmed that it is entitled to recover its remaining deposit of $2,905,000 (U.S.), plus liquidated damages of $146,942 (U.S.), interest at the rate of 12 per cent per annum calculated from the date of payment of the deposit, and reimbursement of the arbitration cost of 445,902 renminbi. However, the company was unable pursue collection due to lockdowns during the COVID pandemic and the related closure of the courts in China. In December, 2023, the company's claim was finally registered with the competent court in China and the company is currently following a court supervised process in order to recover all amounts owing to it. However, given the uncertainties relating to the recovery timeline and degree of recoverability at the date of the financial statements, the company has fully written down its claim amount of $3,842,153 gross and $2,823,982 after tax in the quarter ended Dec. 31, 2023. Accordingly, any subsequent recoveries will be treated as income in the period they are recovered.
• The net loss attributable to shareholders for the 15 months in 2023 amounted to $2,107,522 (or seven per share basic and diluted), compared with a net loss attributable to shareholders of $454,998 (or 1.5 cents per share basic and diluted) for the prior 12 months. The net loss in 2023 was mainly attributable to the impairment provision discussed above.
• Working capital (excluding a demand term loan classified as current under international financial reporting standards, but not requiring repayment in 2024) amounted to $16,460,565 at Dec. 31, 2023, compared with $19,843,615 at Sept. 30, 2022, with the decrease attributable to the above discussed impairment provision.
• Long-term debt was $906,752 in 2023 compared with $614,660 in 2022, with the increase attributable to the recognition of a new right-of-use asset and liability, relating to a premises lease entered into during the period.
• Cash amounted to $1,571,744 in 2023 compared with $944,725 in 2022.
• The company's bank operating line amounting to $6.75-million was unutilized at both Dec. 31, 2023, and Sept. 30, 2022.

Q5 ended Dec. 31, 2023, highlights:

• Revenues of $6,755,981 for the quarter ended Dec. 31, 2023, compared with $4,916,365 for the same period in 2022, representing an increase of $1,839,616 or 37 per cent. New apparel programs, increased chemical sales and timing differences in shipments were the main contributors to this increase.
• Revenues for the intelligent fabrics division were $5,839,504 in 2023 compared with $3,087,556 in 2022, representing an increase of $2,751,948 or 89 per cent, as a result new apparel programs, increased chemical sales and timing differences in shipments.
• Revenues for the intimate apparel division decreased to $912,977 in 2023 compared with $1,806,663 in 2022, representing a decrease of $893,686 or 49 per cent, as a result of depressed retail conditions in the division's market segment during the quarter.
• Gross profit dollars in the current quarter increased by 31 per cent or $596,577 to $2,552,545 from $1,955,988 in 2022, attributable to higher revenues.
• Gross profit margins decreased to 38 per cent in 2023 from 40 per cent in 2022, as a result of the product mix for the current quarter.
• Selling, general and administrative costs during 2023 increased by $488,504 or 27 per cent, to $2,279,699 from $1,791,195 in 2022, mainly attributable to increased variable selling costs.
• Adjusted EBITDA amounted to $257,458 in 2023 compared with $189,777 in 2022.

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

About iFabric Corp.

Headquartered in Markham, Ont., iFabric is listed on the Toronto Stock Exchange and currently has 30.3 million shares issued and outstanding. Its two strategic divisions offer a variety of products and services through wholly owned subsidiaries, namely, Intelligent Fabric Technologies (North America) Inc. (IFTNA) and Coconut Grove Pads Inc.

IFTNA is focused on development and sale of high-performance sports apparel, medical protective apparel, consumer protective apparel and proprietary treatments that provide intelligent properties to fabrics, foams, plastics and numerous other surfaces, thereby improving the safety and well-being of the user. Such intelligent properties include anti-viral and anti-bacterial characteristics, water repellence, and UV (ultraviolet) protection, among others.

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

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