iFabric Corp.
TSX : IFA

May 12, 2016 08:30 ET

iFabric Corp Reports Second Quarter 2016 Results and Provides Operations Update and Outlook

MARKHAM, ONTARIO--(Marketwired - May 12, 2016) - iFabric Corp. (TSX:IFA), hereinafter referred to as "iFabric" or the "Company", today announced its financial results for its second quarter and six months ended March 31, 2016.

Q2 2016 HIGHLIGHTS:

  • Revenues of $3,072,027 compared to $3,251,478 in Q2 2015, a decrease of $179,451 or 6%. Revenues in the apparel division decreased by 15% or $431,603 to $2,538,908, whilst revenues in the intelligent fabrics division, increased by 98% or $251,181 to $517,519.
  • Operating loss of $226,413 compared to an operating profit of $159,087 during Q2 2015. The lower operating profit was mainly as a result of decreased margin contribution of $173,143 resulting from seasonal softness in the apparel market as well as increased selling and administrative costs of $214,296 incurred to support a new line of sleepwear products in the ladies' apparel division as well as to facilitate growth of existing products and the launch of new products in the intelligent fabrics division.
  • Gross profit of $1,502,446 or 49% of sales compared to $1,675,589 or 52% in Q2 2015. The decrease in gross profit percentage was mainly due to wider fluctuations in the Canadian dollar exchange rate vis-à-vis the US dollar and British pound in Q2 2016 compared to Q2 2015.
  • Net loss attributable to shareholders was $324,657 (or $0.013 per share basic and diluted) compared to net earnings attributable to shareholders of $126,333 in Q2 2015 (or $0.005 per share basic and diluted). The decrease in net earnings was mainly attributable to a loss on foreign exchange of $173,125 compared to a gain on foreign exchange of $186,158 in Q2 2015 representing a net change of $359,283. Also contributing to lower net earnings in Q2 2016 compared to Q2 2015 were lower revenues, lower gross profit contribution and higher selling, general and administrative costs as outlined above.
  • Share based compensation amounting to $41,258 compared to $100,747 in Q2 2015, in connection with the issuance of stock options to directors, officers and employees of the Company.
  • Working capital amounted to $5,207,274 compared to $5,419,934 at December 31, 2015, a decrease of $212,660.
  • Shareholder equity attributable to shareholders decreased by $253,961 from $7,687,617 compared to $7,941,578 at December 31, 2015.
  • Net bank debt of $219,062 compared to net cash on hand of $112,104 as at December 31, 2015.

SIX MONTH HIGHLIGHTS:

  • Revenues increased by $107,155 to $6,401,037 compared to $6,293,882 for the corresponding six months in 2015, representing an increase of 2%. With respect to its two operating divisions, apparel revenues decreased by 2% or $140,367 while intelligent fabrics division revenues increased by 60% or $230,179.
  • Gross profit for the six months ended March 31, 2106 increased by $211,500 to $3,286,661 (or 51% of revenues) from $3,075,161 (or 49% of sales) in Q4 2014.
  • The net loss attributable to shareholders for the six months ended March 31st 2016 was $285,069 (or $0.011 per share basic and diluted) compared to a loss of $34,572 in the corresponding six months of 2015 (or $0.001 per share basic and diluted). The loss was mainly attributable to losses on foreign exchange of $124,342 compared to a gain of $251,552 in the corresponding six months of 2015 as well as increased selling, general and administrative expenses of $401,936 incurred to support a new line of sleepwear products in the ladies' apparel division as well as to facilitate the growth of existing products and the launch of new products in the intelligent fabrics division.

"Whilst we saw some softness in Q2 2016 in the retail apparel market as well as challenges with regard to the fluctuating Canadian dollar, historically Q2 has always been the weakest quarter for this division. However, I am pleased to note that we were slightly up on our six month revenues and our peak shipping period for apparel lies ahead. On a very positive note, I advise that the initial sales of textile chemical treatments to the supply chain of our major brand customers for full production programs commenced shipping as planned in the quarter, with a resultant increase of 98% in revenue in the quarter compared to the same quarter in 2015, when we were still only engaged in bulk trials," stated Hylton Karon, President and CEO of iFabric.

Hylton Karon further provided the following operations update in respect of both divisions of iFabric:

OPERATIONS UPDATE:

Intelligent Fabrics

  • "With the initial deliveries of textile treatments for major brand customer approved programs in the sportswear, outerwear, footwear, yoga wear and apparel markets, I anticipate a scale up of deliveries during the course of calendar 2016 and beyond, with the result that we expect to meet or exceed our earlier projections of delivering treatments for 30 million yards of textiles in calendar 2016 and 100 million yards for calendar 2017. These segments represent some of the largest global retail markets and, with our current portfolio of major brand customers, I believe that all represent major market opportunities for iFabric.
    In addition, we expect increasingly greater visibility for our brands in these markets especially amongst those customers who have committed to exclusively use our technologies.
  • Intelligent Fabric Technologies (North America) Inc. ("IFTNA"), the subsidiary company which operates our intelligent fabrics division, has successfully added a number of new technologies to its suite of offerings. These can be applied as standalone solutions for textile enhancement or can be used in conjunction with Protx2, our class leading antimicrobial technology, in order to provide for a wide variety of solutions that are currently being demanded by our customers.
  • Notwithstanding the excellent traction that the IFTNA is seeing with retail market customers, IFTNA remains focused on its entry into the medical market as we continue with our regulatory efforts to obtain approval of higher level public health claims from the Environmental Protection Agency ("EPA") in the US. We are currently working with some major medical market customers to develop products ahead of entry and it would not surprise me if we saw certain of these products in the market even before final approvals are received from the EPA.
  • Our technology partners are currently developing a number of new innovative and groundbreaking formulations and we anticipate adding some of these to our portfolio during the course of calendar 2017."

Intimate Apparel

  • "We recently exhibited at the second Fashion Market Week of 2016 in New York where we rolled out our second range of sleepwear under the Maidenform brand. Our products were very well received by our major retail customers and I have great confidence that this program will experience solid revenue growth after the initial launch of these products in Q4 2016.
  • We are also currently developing the first range of products using some of our class leading textile treatments. I believe that these products will represent a fundamental change in respect of offerings in this market segment and will present us with a further opportunity with great growth potential for our apparel division."

ABOUT PROTX2:

It provides long-term, effective control of microorganisms. Its efficacy and safety has 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.

Complete Financial Statements are available on www.sedar.com

FINANCIAL HIGHLIGHTS
Quarter Ended March 31 Six Months Ended March 31
2016 2015 2016 2015
$ $ $ $
Revenue 3,072,027 3,251,478 6,401,037 6,293,882
Income (loss) from operations (226,413 ) 159,087 (156,337 ) 27,362
Share based compensation 41,258 100,747 85,663 209,376
EBITDA (375,084 ) 312,149 (238,083 ) 204,534
Net income (loss) after tax (323,867 ) 127,713 (282,471 ) (32,507 )
Net income (loss) after tax attributable to shareholder (324,657 ) 126,333 (285,069 ) (34,572 )
Net income (loss) per share - basic (0.013 ) 0.005 (0.011 ) (0.001 )
Net income (loss) per share - dliuted (0.013 ) 0.005 (0.011 ) (0.001 )

ABOUT iFABRIC CORP:

Headquartered in Markham, Ontario, iFabric Corp www.ifabriccorp.com currently has 25.9 million shares issued and outstanding.

Through its wholly-owned subsidiaries, Intelligent Fabric Technologies (North America) Inc. ("IFTNA") and Coconut Grove Pads Inc. ("Coconut Grove"), 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.

FORWARD-LOOKING STATEMENTS:

Forward-looking statements provide an opinion as to the effect of certain events and trends on the business. Certain statements contained in this news release constitute forward looking statements. The use of any words such as "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on current expectations and various estimates, factors and assumptions and involve known and unknown risks, uncertainties and other factors. Forward-looking information includes, but is not limited to, statements with respect to the development potential of the Company's products.

Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Readers are cautioned not to place undue reliance on these statements as the Company's actual results, performance, or achievements may differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements if known or unknown risks, uncertainties or other factors affect the Company's business, or if the Company's estimates or assumptions prove inaccurate. Therefore, the Company cannot provide any assurance that forward-looking statements will materialize. The Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or any other reason except as required by applicable securities laws.

Any financial outlook or future oriented financial information in this news release, as defined by applicable securities legislation, has been approved by management of iFabric. Such financial outlook or future oriented financial information is provided for the purpose of providing information about management's reasonable expectations as to the anticipated results of its proposed business activities. Readers are cautioned that reliance on such information may not be appropriate for other purposes. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward -looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither the TSX nor its Regulations Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this press release.

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