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Fab-Form Industries Ltd. Management Reports 2023

Oct 28, 2023

44274_rns_2023-10-27_e576a977-b91b-440a-8da8-7cf4f6b7ef26.pdf

Management Reports

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FAB-FORM INDUSTRIES LTD. OTHER INFORMATION

FAB-FORM KEY MILESTONES

Fab-Form introduced the Zont bracing system for insulated concrete forms. Traditional ICF for insulated braces are heavy and cumbersome - the Zont brace weighs and costs - the Zont brace weighs and costs about 10% of conventional systems.

Developed the Developed the Introduced the fabricfabric based Fastfoot fabric-based Pad , which was Fast- 2002 basedworld's first column form Fast-Tube , the bracing system concrete forms. Traditional ICF for insulated 1986 footing form, which replaced used to seismically upgrade schools manufactured entirely of lightweight polyethylene braces are heavy and cumbersome - the Zont brace weighs and costs bulky 1999 and homes fabric. Placing 100' of about 10% of conventional dimensional damaged after the column form behind the 2010 systems. lumber with 1989 Loma Prieta contractor's seat was lightweight earthquake in revolutionary. polyethylene. California. Fab-Form is developing the Introduced new products: ZAT catwalk bracket ; an Fab-Form introduced the ICF Fab-Slab System for 2021 accessory to the Zont bracing system, which simplifies Monopour System . This made 2011 insulated structural slabs. the construction of the walkway for foundations. MP 2017 ICFs far more economic, as a Initial design work is 50% Components: the manufacturing of the ICF single concrete pour greatly completed. monopour system is being rationalized. Fab-Form reduces costs and time onsite. intends to franchise this to truss manufacturers. 2022 Introduction of new ICF Monopour Bracket, 2023 Fast Tube – Production of Fast-Tube using new fabric an upgrade to “Fast Yoke” that was developed and existing welding technology commenced in early in 1990s. Upgrade allows adjustment by electric October. Development continues using polymer to join drill and other features to improve useability. the uncoated scrim. Patent pending.

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Page 2 of 12

FAB-FORM INDUSTRIES LTD. OTHER INFORMATION

Fab-Form Industries Ltd ("Fab-Form") is a leading enviromentally conscious concrete formwork manufacturer located in Vancouver, BC Canada. Since its inception in 1986, the company has invented, developed, and commercialized foundation products that are more sustainable for the building industry.

The history of the company shows a continuous effort to develop new products that enable organic growth of the company. Fab-Form focuses on innovative solutions that have the lowest cost to the customer. Refer to key milestones shown on page 2 achieved by Fab-Form since its inception. As always, thank you, board members, shareholders, and progressive dealers and contractors for your continued support and commitment.

The Company changed its financial year end from December 31 to June 30. The change in financial year end was completed to better align FabForm’s reporting calendar.

This management discussion and analysis (“MDA”) covers the operations of Fab-Form Industries Ltd. (“Company”) for the transitional period ended June 30, 2023, and should be read in conjunction with the audited financial statements for the period of six months ended June 30, 2023. The financial statements together with this MDA are intended to provide investors with a reasonable basis for assessing the financial performance of the Company.

HIGHLIGHTS: PERIOD OF SIX MONTHS ENDED 30 JUNE 2023

Profitability Revenue: $2,591,065 – A decrease of 13.98% compared to the previous year’s first six months ended 30 June 2022. Gross Profit: $1,070,338 – a 9.73% reduction compared to 2022. Operating Income: $666,948 – a 25% decline compared to 2022. Net Profit: $482,594 – a reduction of 26% over the previous year’s period.

Operations Fast-Tube coated fabric from Hagihara was ordered in May 2023, and arrived in the facility in September 2023. Production of FT commenced in October using existing welding technology.

Gross margins improved to 41% due to cost-saving measures implemented throughout 2023. Fab-Form continues to reassess all the cost centers for further reduction opportunities, either through automation, or elimination.

Fab-Form continues to invest in improving the interface between the ground and the building structure.

Designing machinery for the new FT polymer technology has made good progress over the last six months, with initial testing starting in November. Until then the Company will produce Fast Tube with the coated HDPE from Hagihara.

No major constraints were noted in respect of procuring the resources in all the lines of production.

Page 3 of 12

FAB-FORM INDUSTRIES LTD.

OTHER INFORMATION

HIGHLIGHTS: PERIOD OF SIX MONTHS ENDED 30 JUNE 2023

Liquidity Cash generated from operations in the period
of the six months ended 30 June 2023 was
$345,804. Total liquid funds increased to
$3.05Mn from $2.85Mn at the end of 31
December 2022		 FAB-FORM and FAST-TUBE trademarks were registered in the USA during
the period ended 30 June 2023.

We look forward to working with all the stakeholders to reach our growth objectives. We continue to be thankful to all our shareholders for trust in our company and our products.

Sincerely

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Richard Fearn President and CEO 27 October 2023

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Don Russell Chief Financial Officer 27 October 2023

Page 4 of 12

FAB-FORM INDUSTRIES LTD. OTHER INFORMATION

This discussion and analysis of the financial results of Fab-Form Industries Ltd. (“Fab-Form” or the “Company”) should be read in conjunction with the audited financial statements for period of six months ended 30 June 2023 and accompanying notes. The results reported herein have been prepared in accordance with International Financial Reporting Standards (IFRS) and are presented in Canadian dollars unless otherwise stated. Additional information relating to the Company can be found on the SEDAR (System for Electronic Document Analysis and Retrieval) website at www.sedar.com.

FORWARD-LOOKING STATEMENTS

Some statements contained in this MD&A constitute “forward-looking statements” as is defined in applicable securities laws. These statements include, without limitation, the success of developing, manufacturing, and distributing new products and other similar statements concerning anticipated future events, conditions, or results that are not historical in nature, and reflect management’s current estimates, beliefs, intentions, and expectations. These statements are not guaranteeing of future performance. The Company cautions that all forward-looking information is inherently uncertain, and that actual performance may be affected by several material factors, many of which are beyond the Company’s control. Such factors include, among others, risks and uncertainties relating to product development; the ability of the Company to obtain additional financing; the Company’s limited operating history; the need to comply with environmental and governmental regulations; potential defects in product performance; fluctuations in currency exchange rates; fluctuating prices of commodities; operating hazards and risks; competition; the uncertainty of capturing market share and other risks and uncertainties. Accordingly, actual future events, conditions, and results may differ materially from the estimates, beliefs, intentions, and expectations expressed or implied in the forward-looking information. These statements are made as of the Report Date and, except as required by law, the Company is under no obligation to update or alter any forward-looking information.

COMPANY DESCRIPTION

Fab-Form is a company domiciled in Canada and incorporated under the Company Act of British Columbia. The address of the Company’s head office is Unit 19, 1610 Derwent Way, Delta BC V3M 6W1. The Company develops, manufactures, and distributes proprietary technology to form concrete footings, columns, foundations, and walls for building structures. The Company also exclusively distributes Helix® micro rebar into the BC market and Nudura® insulating concrete form into the Lower Mainland market. The Company has traded on the TSX Venture Exchange (“TSXV” under the symbol FBF) since 1999.

Page 5 of 12

FAB-FORM INDUSTRIES LTD. OTHER INFORMATION

OPERATING RESULTS

Revenue
Cost of sales
Gross profit
Other income
Expenses
General and administration
Selling and marketing
Total expenses
Earnings from operations
Finance cost
Earnings before taxation
Income tax expense
Earnings after taxation
Other comprehensive income
Total comprehensive income		 For the period of six months ended 30 June
2023
2022
Change
%
$
$
$
2,591,065
3,012,256
(421,191)
(13.98)
(1,520,727)
(1,826,592)
305,865
(16.75)
1,070,338
1,185,664
(115,326)
(9.73)
10,437
22,995
(12,558)
(54.61)
(303,274)
(221,030)
(82,244)
37.21
(110,553)
(101,359)
(9,194)
9.07
(413,827)
(322,389)
(91,438)
28.36
666,948
886,270
(219,322)
(24.75)
(5,480)
(6,437)
957
(14.87)
661,468
879,833
(218,365)
(24.82)
(178,874)
(225,601)
46,727
(20.71)
482,594
654,232
(171,638)
(26.24)
-
-
-
-
482,594
654,232
(171,638)
(26.23)		 For the Quarter ended 30 June
2023
2022
Change
%
$
$
$
1,883,990
1,874,547
9,443
0.50
(1,092,382)
(1,156,563)
64,181
(5.55)
791,608
717,984
73,624
10.25
(14,215)
32,362
(46,577)
(143.92)
(206,375)
(125,038)
(81,337)
65.05
(54,551)
(48,126)
(6,425)
13.35
(260,926)
(173,164)
(87,761)
50.68
516,467
577,182
(60,714)
(10.52)
(2,867)
(3,133)
266
(8.49)
513,600
574,049
(60,448)
(10.53)
(142,928)
(142,846)
(82)
0.06
370,672
431,203
(60,530)
(14.04)
-
-
-
-
370,672
431,203
(60,530)
(14.04)

In the last quarter, the Company posted a net profit of $370,672, a decrease from the previous year's $431,203, due to an increase in administration costs and unrealized exchange losses due to a depreciation of the Canadian Dollar against the US Dollar. Overall gross margins were increased by 3% to 4% as a result of decrease in cost of sales in the quarter ended 30 June 2023.

Sales in quarter ended on 30 June 2023 increased compared to quarter ended on 30 June 2022. Earnings before income taxes and interest (EBIT) for the period of six months ended 30 June 2023 declined by 25% compared with same period in 2022. Net earnings for the six months ended 30 June 2023 were $482,594, a 26% decrease from $654,232 in six months ended 30 June 2022.

Net assets attributable to shareholders at end of 30 June 2023 showed a growth of 11.7% from 31 December 2022.

Page 6 of 12

FAB-FORM INDUSTRIES LTD. OTHER INFORMATION

1. Product performance

Bracing
Fastfoot
Fast-Pad
Fast-Tube
Helix
ICF accessories
Monopour
Nudura **
Rentals
Used bracing & accessories		 For the period of six months ended 30 June
For the Quarter
2023
$
2022
$
Change
$
%
2023
$
2022
$
702,478
746,988
(44,510)
(5.96)
477,951
395,805
317,131
378,467
(61,336)
(16.21)
239,489
242,999
5,797
8,149
(2,352)
(28.86)
4,367
3,570
22,637
2,906
19,731
678.97
1,793
1,676
63,798
148,892
(85,094)
(57.15)
31,124
108,029
78,468
80,946
(2,478)
(3.06)
58,784
46,776
91,577
106,051
(14,474)
(13.65)
60,831
65,023
1,210,048
1,464,797
(254,749)
(17.39)
944,236
963,893
95,847
68,447
27,400
40.03
65,342
44,071
3,284
6,613
(3,329)
(50.34)
73
2,705
2,591,065
3,012,256
(421,191)
(13.98)
1,883,990
1,874,547		 For the period of six months ended 30 June
For the Quarter
2023
$
2022
$
Change
$
%
2023
$
2022
$
702,478
746,988
(44,510)
(5.96)
477,951
395,805
317,131
378,467
(61,336)
(16.21)
239,489
242,999
5,797
8,149
(2,352)
(28.86)
4,367
3,570
22,637
2,906
19,731
678.97
1,793
1,676
63,798
148,892
(85,094)
(57.15)
31,124
108,029
78,468
80,946
(2,478)
(3.06)
58,784
46,776
91,577
106,051
(14,474)
(13.65)
60,831
65,023
1,210,048
1,464,797
(254,749)
(17.39)
944,236
963,893
95,847
68,447
27,400
40.03
65,342
44,071
3,284
6,613
(3,329)
(50.34)
73
2,705
2,591,065
3,012,256
(421,191)
(13.98)
1,883,990
1,874,547		 ended 30 June
2023
$		 2022
$		 Change
$
%
702,478 746,988 82,146
20.75
(3,510)
(1.44)
797
22.32
117
6.98
(76,905)
(71.19)
12,008
25.67
(4,192)
(6.45)
(19,657)
(2.04)
21,271
48.27
(2,632)
(97.30)
317,131 378,467
5,797 8,149
22,637 2,906
63,798 148,892
78,468 80,946
91,577 106,051
1,210,048 1,464,797
95,847 68,447
3,284 6,613
2,591,065 3,012,256 9,443
0.50

Reduction of ICF sales primarily resulted from reduction in housing construction in the first quarter of 2023 due to higher interest rates and associated uncertainty. Demand picked up in the second quarter showing a 0.50% increase over 2022. Total sales in the six months ended 30 June 2023 dropped by 13.98% over 2022.

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** *
2023 ($) 2022 ($) 2021 ($) 2023 ($) 2022 ($) 2021 ($) 2023 ($) 2022 ($) 2021 ($)
Fastfoot sales Bracing Sales Nudura Sales
Q1 77,642 135,468 101,249 Q1 224,527 351,183 134,413 Q1 265,812 500,904 398,721
Q2 239,489 242,999 206,579 Q2 477,951 395,805 243,133 Q2 944,236 963,893 633,400
Total 317,131 378,467 307,828 Total 702,478 746,988 377,546 Total 1,210,048 1,464,797 1,032,121
*----- End of picture text -----

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Page 7 of 12

FAB-FORM INDUSTRIES LTD. OTHER INFORMATION

2. Analysis of cost of sales

Total direct product COGS
Indirect product COGS
Waste disposal
Packing materials
Depreciation production equipment and tools
Warehouse lease rental
Variable overhead
Total indirect product COGS
Total Cost of sales		 For the period of six months ended 30 June
2023
2022
Change
%
$
$
$		 For the period of six months ended 30 June
2023
2022
Change
%
$
$
$		 For the Quarter ended 30 June
2023
2022		 2023
2022		 Change
%
$
$		 $
$		 $
(61,428)
(5.42)
3
1.07
(128)
(3.80)
(78)
(11.56)
-
-
(2,550)
(32.66)
1,481,109
1,786,270		 (305,161)
(17.08)		 1,072,192
1,133,620
144
23.11
(597)
(14.33)
27
2.27
29
0.13
(307)
(2.41)
(704)
(1.75)
(305,865)
(16.75)
767
623		 284
281
3,569
4,166		 3237
3365
1,214
1,187		 597
675
21,631
21,602		 10,815
10,815
12,437
12,744		 5,257
7,807
39,618
40,322		 20,190
22,943		 (2,753)
(12.00)
1,520,727
1,826,592		 1,092,382
1,156,563		 (64,181)
(5.55)

Cost of sales for the period of six months decreased by 16.75% compared to same period in the previous year.

3. Analysis of Administration Expenses

Amortization & depreciation
Impairment
Office rental amortisation
Patent & TM maintenance fees
Professional Fees
Pubco expenses
General expenses
Wages and benefits
Telecommunications & computers
Credit Card Processing fees
Provision/(reversal) for expected credit losses
Total administrative expenses		 For the period of six months ended 30 June
2023
2022
Change
%
$
$
$
12,769
1,705
11,064
648.91
1,122
-
1,122
100.00
10,314
11,225
(911)
(8.12)
1,876
-
1,876
100.00
46,086
15,740
30,346
192.80
23,633
8,359
15,274
182.73
13,732
9,957
3,775
37.91
147,542
138,800
8,742
6.30
11,217
9,589
1,628
16.98
26,297
25,655
642
2.50
8,686
-
8,686
100.00
303,274
221,030
82,244
37.21		 For the Quarter ended 30 June For the Quarter ended 30 June
2023
2022		 2023
2022		 Change
%
$
$		 $
$		 $
6,699
972.28
-
100.00
(44)
(0.80)
896
(100.00)
29,277
314.43
13,557
272.61
3,260
65.47
17,361
21.83
784
15.36
892
5.97
8,655
100.00
12,769
1,705		 7,388
689
1,122
-		 -
-
10,314
11,225		 5,470
5,514
1,876
-		 896
-
46,086
15,740		 38,588
9,311
23,633
8,359		 18,530
4,973
13,732
9,957		 8,239
4,979
147,542
138,800		 96,891
79,530
11,217
9,589		 5,889
5,105
26,297
25,655		 15,829
14,937
8,686
-		 8,655
-
303,274
221,030		 206,375
125,038		 81,337
65.05

Administration expenses increase by 37.21% during the period of six months ended 30 June 2023 as compared to 2022, primarily due to increase in the professional fees, pubco expenses and amortization and depreciation expenses.

Page 8 of 12

FAB-FORM INDUSTRIES LTD. OTHER INFORMATION

4. Analysis of Selling and Marketing Expenses

Bracing
Fastfoot
Fast-Pad
Fast-Tube
Helix
Monopour
Nudura
Total selling & marketing		 For the period of six months ended 30 June
2023
2022
Change
%
$
$
$
24,429
27,118
(2,689)
(9.92)
22,239
19,347
2,892
14.95
948
1422
(474)
(33.33)
900
339
561
165.49
1,382
631
751
119.02
7,592
5,984
1,608
26.87
53,063
46,518
6,545
14.07
110,553
101,359
9,194
9.07		 For the Quarte r ended 30 June
2023
2022		 2023
2022		 Change
%
$
$		 $
$		 $
5,658
69.09
9,391
125.31
(474)
100.00
417
(100.00)
(281)
(89.49)
1,676
62.58
(9,962)
(34.66)
6,425
13.35
24,429
27,118		 13,847
8,189
22,239
19,347		 16,885
7,494
948
1422		 237
711
900
339		 417
-
1,382
631		 33
314
7,592
5,984		 4354
2,678
53,063
46,518		 18,778
28,740
110,553
101,359		 54,551
48,126

The selling and marketing expenses increased by 9% during the period of six months ended 30 June 2023 compared to 2022, primarily due to wage adjustments in May 2023

5. Liquidity, Cash Flow Position and Going Concern

The Company generated $345,804 from operating activities in the period of six months ended 30 June 2023 compared to $1,634,919 during the year ended 31 December 2022.

Cash and cash equivalents at the end of June 30,2023 increased by $180,132, with total cash and cash equivalents at the end of 30 June 2023 of $1,012,026, compared to $831,894 at the end of 31 December 2022.

Cash of $104,453 was used in other investing activities, consisting of cash used in acquisition of property plant and equipment of $34,392, investment in product development of $8,056 and intangible assets of $37,307.

Cash used in financing activities of $61,220 consisted of lease payments for the offices and warehouses located in Delta BC.

The Company is debt-free except for lease liability and has financial liquidity and flexibility.

The financial statements have been prepared based on accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realization of assets and settlement of liabilities, contingent obligations, and commitments will occur in the ordinary course of business of the Company.

Page 9 of 12

FAB-FORM INDUSTRIES LTD. OTHER INFORMATION

6. New Products Update

Leveler

In the 1990s the company developed and sold the product ‘Fast-Yoke’ which was used to hold the 2x4 screed boards in place to hold Fastfoot. This product is being upgraded to allow adjustment by electric drill and other features to improve useability. This product is expected to sell well for the following reasons:

  1. Integrates perfectly with our existing customer base.

  2. Can accommodate different lumber sizes up to 2 x 12.

  3. Can function with and without Fastfoot, thereby capturing a dramatically larger market potential.

  4. As jobsite labour costs are very high, Leveler will reduce footing forming costs significantly.

In 2022, initial prototypes were tested, and further improvements were added to reduce wear and tear. New prototypes will be available in October 2023. Upon successful testing the product will be released to the market.

A patent application was filed to the USPTO to secure the intellectual properties attached to the invention.

ICF Monopour Bracket

The ability to monopour the foundation wall and footing in residential construction saves the contractor significant cost, materials, and time. The Company developed the MPSS product for this purpose, as the current MPSS is sacrificed in the concrete footing. The ICF Monopour Bracket is not sacrificed to the concrete as it lies outside the ICF wall and footing. It will sell well for the following reasons:

  1. Integrates perfectly with our existing customer base.

  2. Can form many different footing sizes.

  3. Can be rented out by ICF dealers to their contractors.

Manufacturing of Prototypes is complete, and testing will be done during the month of October.

A patent application was filed with the USPTO to secure the intellectual properties attached to the invention.

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Page 10 of 12

FAB-FORM INDUSTRIES LTD.

OTHER INFORMATION

Fast Tube

The company is performing a major upgrade and optimization on the product with the following objectives:

  1. Eliminate distortions in the form due to misalignment of the weft tapes.

  2. Reduce elongation in the tube due to higher concrete pressure in the base rather than at the top of the column form.

  3. Improve the joining technology of forming the tube so that failures cannot occur on the jobsite.

  4. Reduce the cost base of the tube to improve margins.

To achieve these objectives, on 30[th] September 2021, the company signed a “Fabric Development Agreement” with Hagihara Industries Inc., Japan to develop a new fabric. It is expected that the production machine will be running 24/7 and full automation in production will be required in the unwind, joining and rewind zones. Machinery design is underway.

The Company expects to take out a joint patent with Hagihara on the new fabric. Product introduction is expected in 2024.

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Additional financial information on the Company can be found on SEDAR at www.sedar.com.

Approved: “Board of Directors”

27 October 2023

Page 11 of 12

FAB-FORM INDUSTRIES LTD. OTHER INFORMATION

FAB-FORM INDUSTRIES LTD., headquartered in Delta BC, is a manufacturer and distributor of green and cost-effective concrete forming products for the building industry. Its common shares trade on the Toronto Venture Exchange under the symbol “FBF”.

For additional information, please contact:

Joey Fearn Chief Operating Officer [email protected]

Rick Fearn President, CEO [email protected]

Don Russell Chief Financial Officer [email protected]

Vishwanath Kumar

Corporate Secretary [email protected]

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INDUSTRIES LTD.

Unit 19, 1610 Derwent Way Delta, BC V3W 6W1, Canada (604)596-3278 Shareholders and interested investors should visit:

www.fab-form.com/investor/overview.php www.vancouvericf.com www.steelfiberswest.com

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