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iFabric Corp. — Management Reports 2026
Mar 31, 2026
46118_rns_2026-03-31_da5249e5-8ad3-4de3-815a-947d1697c543.pdf
Management Reports
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
The following Management's Discussion and Analysis ("MD&A") of iFabric Corp. and its subsidiaries ("iFabric" or the "Company") is based upon and should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2025 and the comparative year ended December 31, 2024. The audited consolidated financial statements and accompanying notes were prepared in accordance with International Financial Reporting Standards and International Accounting Standards as issued by the International Accounting Standards Board (IASB) and Interpretations (collectively IFRS Accounting Standards) using the accounting policies described therein. This MD&A is dated March 30, 2026.
All references to dollars or “$” are to Canadian dollars, the Company's presentation currency, unless otherwise noted. In the discussion that follows, “2025” refers to the annual fiscal period ended December 31, 2025, “2024” refers to the annual fiscal period ended December 31, 2024, “2023” refers to the fifteen month period ended December 31, 2023, “Q1” refers to the period of January 1 to March 31, “Q2” refers to the period of April 1 to June 30, “Q3” refers to the period of July 1 to September 30, “Q4” refers to the period of October 1 to December 31, and “Q5” refers to the additional quarterly period of October 1, 2023 to December 31, 2023, resultant from the change in the Company's fiscal year end from September 30 of each year to December 31 of each year, with effect from January 1, 2024.
FORWARD-LOOKING INFORMATION
Forward-looking statements provide an opinion as to the effect of certain events and trends on the business. Certain statements contained in this MD&A constitute forward looking statements. The use of any words such as "anticipate", "continue", "plans", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: the extent and impact of health pandemic outbreaks on our business; general business, economic, competitive, political and social uncertainties; general capital market conditions and market prices for securities; the actual results of the Company's future operations; competition; changes in legislation affecting the Company; the ability to obtain and maintain required permits and approvals, the timing and availability of external financing on acceptable terms; lack of qualified, skilled labour or loss of key individuals.
A description of additional risk factors that may cause actual results to differ materially from forward-looking information can be found in the section of this MD&A titled "Risks and Uncertainties", in the Company's annual information form dated March 30, 2026 and other filings with the Canadian securities regulators available under the Company's profile on SEDAR+ at www.sedarplus.ca. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended.
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. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated.
Any financial outlook or future oriented financial information in this MD&A, 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 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.
NON-GAAP FINANCIAL MEASURES
Certain measures in this MD&A do not have any standardized meaning as prescribed by IFRS and, therefore, are not considered generally accepted accounting principles ("GAAP") measures. Where non-GAAP measures or terms are used, definitions are provided. In this document and in the Company's consolidated financial statements, unless otherwise noted, all financial data is prepared in accordance with IFRS.
This MD&A and certain of the Company's press releases include references to the Company's adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"). Adjusted EBITDA per share is a non-GAAP measure. These measures should not be considered an alternative to net earnings (loss) attributable to the owners of the Company or other measures of financial performance calculated in accordance with IFRS. Rather, this measure is provided to complement IFRS measures in the analysis of iFabric's results since the Company believes that the presentation of this measure will enhance an investor's understanding of iFabric's operating performance. For reconciliations
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
of this non-GAAP measure to its nearest IFRS measure, refer to the Non-GAAP Performance Measure section below for a reconciliation of consolidated net earnings (loss) attributable to the owners of the Company reported under IFRS to reported adjusted EBITDA and adjusted EBITDA per share.
Adjusted EBITDA
The Company uses Adjusted EBITDA to assess its operating performance without the effects of (as applicable): current and deferred tax expense, finance costs, interest income, depreciation and amortization of plant assets, other gains and losses, impairment losses, share-based compensation and other non-recurring items. The Company adjusts for these factors as they may be non-cash or unusual in nature and may not optimally present its core operating performance. Adjusted EBITDA is not intended to be representative of net earnings from operations or an alternative measure to cash provided by operating activities determined in accordance with IFRS.
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
BUSINESS OVERVIEW
General
iFabric is a Canadian public company, incorporated under the Alberta Business Corporations Act and is domiciled in Canada. The Company is listed on the Toronto Stock Exchange ("TSX") under the trading symbol "IFA" and traded on the OTC Markets under the trading symbol "IFABF". The head office is located at 525 Denison Street, Unit 1, Markham, Ontario, Canada.
The Company's business activities are divided into three reportable operating segments, which offer different products and services, and are managed separately because they require different marketing strategies and resource allocations. The following summarizes the operations of each segment:
- Intimate Apparel: Includes the design and distribution of women's intimate apparel and accessories.
- Intelligent Fabrics: Includes the development and distribution of innovative products and treatments that are suitable for application to textiles, plastics, liquids, and hard surfaces as well as finished performance apparel, medical apparel, and swimwear, which integrate one or more such treatments. These products are designed to provide added benefits to the user.
- Other: Includes leasing of property to group companies, related parties and third parties.
NATURE OF OPERATIONS
Intimate Apparel
The Intimate Apparel division currently operates under the trade name Coconut Grove Intimates. Its business comprises the design, purchasing, and distribution of intimate apparel and, in particular, a range of specialty bras including the division's patented reversible bra, patented bandeaux bra and patented breast lift product. The division also distributes a range of apparel accessories. The Division is managed by Hylton Karon, President and CEO of iFabric.
The division utilizes contract warehouse facilities located in Houston, Texas which services its key United States ("US") market and, a Company-owned warehouse located in Markham, Ontario, serves as the distribution center for the Canadian and European markets. The Company's administrative workforce for both its operating divisions, comprising, management, designers, administrative, product sourcing and logistical staff, are housed in separate office premises close to its warehouse location. All product design for the Division is handled by the Markham, Ontario design team and, currently over 95% of the division's inventory production is outsourced to factories in China.
For a number of years, the Company had positioned the division's product strategy by way of leveraging a key license agreement in order to sell products under various Maidenform® brands. The license agreement with Maidenform® expired in December 2025 and, has not been renewed. Instead, products similar to those previously marketed under Maidenform® brands, will be marketed under a newly developed own brand of the Company. A major difference is that the company's own branded products will target a younger demographic, whereas Maidenform® products targeted an older demographic. This reprofiling is anticipated to result in a number of new opportunities to the grow the revenues of the division, with the added benefit of not having to incur costly royalties. In addition, the division develops and supplies products for sale under the private label brands of certain major retailers, as well as another of the Company's long-established own brands, which strives to be demographic neutral.
Products are sold internationally to the division's customer base, which includes major retailers, online distributors, as well as specialty boutiques
Intelligent Fabrics
The Intelligent Fabrics Division currently enjoys exclusive worldwide distribution rights in respect of a number of proprietary chemical formulations that can be applied to textiles and other surfaces in order to kill bacteria and viruses, repel insects, absorb odours, repel and wick moisture, block ultraviolet light and help encourage a healthy skin environment, amongst others. The Intelligent Fabrics Division operates under the name Intelligent Fabric Technologies (North America) Inc. ("IFTNA"). The Division is managed by Giancarlo Beevis, President and CEO of IFTNA.
The business of the Intelligent Fabrics Division includes the development, testing and distribution of chemicals suitable for application to textiles as well as finished performance apparel, medical apparel, protective products, and swimwear, which integrate one or more chemical enhancements, in order to achieve the performance characteristics demanded by the customer or consumer. The current focus is on technologies that improve the safety and well-being of the wearer. The division's current technology offerings include ProTX2® and bioFRESH™ (anti-microbial and anti-viral formulations), Enguard® (insect repellant technology), Dreamskin® (skin polymer), UVtx® (ultraviolet light blocker), FreshTx™ (odour-absorbing technology), ecoPEL® (durable water repellant), Omega+ (joint and muscle recovery), TempTx (thermal regulator), Apollo (body odour neutralizer), DryTx™ (moisture-wicking technology), BioTX™ (metal free anti-stink solution), IMPRINT (logo exposing moisture-wicker) and DriForce (fabric interior moisture-wicker), amongst others. The Company will continue with efforts geared towards developing new generations of existing formulations and adding new technologies to its pipeline in the future.
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
All chemical formulations and finished apparel for customers, is produced or manufactured by the Division's supply chain in Asia. In addition, the Division has two key chemical distribution centers in Asia (namely China and Taiwan), which service the Asian market. As Asia comprises the main region for the manufacture of textile products supplied to North America and internationally, this region represents the Division's main market for the supply of its textile treatments. For the distribution of finished products to customers, a third-party warehouse facility in Houston, Texas in the US, serves as the distribution center for the US, Central and South American markets and, the Company-owned warehouse located in Markham, Ontario serves as the distribution center for the Canadian market. Technical support specialists in Asia provide guidance and support to customers regarding the integration of the Company's chemical treatments in their products as well as the Division's own products, including the Division's own performance apparel brand, VERZUS ALL, which was developed to showcase the dynamic range of the Company's class-leading fabric technologies, applied to premium and luxury fabrics.
The following describes the functionality of the division's current chemical portfolio:
ProTX2® Anti-Microbial and Anti-Viral Technologies
ProTX2® represents IFTNA's flagship technology.
ProTX2® formulations impart anti-microbial and/or anti-viral powers to fibers, plastic, paint and paper treated with these formulations. Numerous laboratory tests have shown that treated products inhibit the growth of a wide variety of infectious agents associated with healthcare and community infections, and by their application may assist in preventing the spread of such infections.
The Company is currently targeting three key markets with regard to the distribution of ProTX2® chemicals or treated finished products:
1) Sports apparel, outerwear and footwear
There is an increasing trend amongst major sports apparel, outerwear and footwear manufacturers to offer technologically-enhanced products. With the ability of ProTX2® to combat odor causing bacteria, the Company is able to provide manufacturers with the ability to produce apparel and footwear that stays fresher longer without the need for repeated washing or cleaning. Innovative application methodology developed by the Company over a number of years allows for Protx2® to be integrated into almost any fabric as well as all the components of footwear including foam, rubber, and plastics. With its current Environmental Protection Agency ("EPA") and European regulatory registrations, the Company can distribute ProTX2® for use in all sportswear and footwear for distribution in the U.S., European and Canadian markets as well as most other international markets.
2) Healthcare
Protx2® is suitable for application to many areas of a hospital environment, including, scrubs, bedding, curtaining, carpeting, walls (paint), air filters, and plastic components, amongst others.
The ProTX2® range of products is dedicated to combating healthcare acquired bacterial infections ("HAI's"), including Methicillin-resistant Staphylococcus aureus ("MRSA"), Clostridium difficile, Vancomycin-resistant enterococci ("VRE") and Klebsiella pneumoniae amongst others and, by their application may greatly assist in reducing such infections. In addition, Protx2® is also laboratory proven to be a strong antiviral agent effective against the SARS-CoV-2 virus (which causes the COVID-19 disease), the Human Corona Virus (229E), Norovirus and Influenza A tested on H1N1.
On July 21, 2022, Company announced the commencement of a clinical trial in respect of medical garments (i.e. "scrubs") treated with the Company's ProTX2® antimicrobial technology and ecoPEL® (formerly RepelTX) water-repellent technology, had been completed. The trial was conducted at MemorialCare Medical Group – Irvine, in the United States and comprised scrubs supplied in three forms: One treated with ProTX2® antimicrobial technology, another with a combination of ProTX2® and ecoPEL® (durable water-repellant technology), and a third (control) group of untreated scrubs. The trial comprised 125 nurses recruited for 3 shifts per nurse, equating to a total of 375 regular staff-shifts. At the start of each shift, nurses were provided new and unmarked scrubs from one of the three groups, which were swabbed twice, once prior to the commencement of the shift and a second time at the end of the shift. The principal endpoint of the trial was to compare bacterial loads on the scrubs treated with the Company's technologies compared to the untreated scrubs and. A pathogen load reduction is key to enhancing the protection of the wearer and those with which they encounter during their workday. The spread of infection from surface contact is a major concern in the healthcare industry.
On July 5, 2023, the Company announced that it had achieved a successful outcome with regard to its clinical trial. The summary of the trial findings was that both the ProTX2® and the ProTX2® with DWR treated scrubs demonstrated statistically significant reductions in bacterial loads on the surfaces of scrubs, as compared to untreated scrubs. The term statistically significant is used to describe a result that is highly unlikely to occur by chance alone in a natural environment. The results achieved in the study demonstrate that the Company's proprietary technologies were uniquely responsible for the reduction in bacterial loads witnessed throughout the trial. On August 19, 2025 the Company announced that the final phase of its clinical trial, comprising a peer review and publishing of the trial results by recognized medical journal,
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
had been completed following publication of the trial results in the Journal of Hospital Infection, the editorially independent scientific publication of the Healthcare Infection Society. The published trial results can be found at:
https://www.journalofhospitalinfection.com/article/S0195-6701(25)00222-1/fulltext
The Company has also filed an application with the U.S. EPA in order to secure EPA approval to make public health claims on medical apparel (scrubs) and other textiles (bedding, etc.) treated with ProTX2®. The final submissions to the EPA have been made as at the date of this MD&A and approvals are currently pending, subject to the completion and submission of a leaching study, which remains in process.
In addition, IFTNA has been granted utility patents in both the United States and Canada in respect of the Company's antiviral treatment of textiles (Protx2® AV) and its stand-alone laundry additive (AVguard).
As at the date of the AIF the Company had commenced its entry into the healthcare market via scrubs programs at two major retailers. The receipt of EPA approved public health claims, as discussed above, is expected to accelerate healthcare market adoption of ProTX2® treated products.
3) Community protection
The recent COVID-19 pandemic has underscored the need for individuals to protect themselves from harmful bacteria and viruses when entering closed environments such as aircraft, shopping malls, hotels, and even ones residence, as well as close proximity environments such as sports arenas, movie houses etc. With future pandemics being predicted by experts, management believes that the supply of equipment, apparel, washes and sanitizers, that can deactivate infectious bacteria and viruses, is set to become one of the fastest growing market segments. With its ProTX2® technologies, iFabric is well positioned to capitalize on the opportunity to supply its chemical treatments, finished personal protection equipment and apparel, as well as a laundry additive that can be utilized during a normal household laundry cycle.
On, May 2, 2023, IFTNA received an EPA registration for ProTX2® as a “Continually Self-Sanitizing Textile”. This registration allows textiles treated with the ProTX2® technology, to make public health claims for use in non-apparel products, which includes, curtains, carpeting and home furnishing fabrics, amongst others.
The permitted public health claims pursuant to this registration are that PROTX treated textiles:
- Kills 99.99% of bacteria in 10 mins, with nonstop disinfection for 24 hours;
- Kills pathogenic bacteria;
- Kills 99.99% of bacteria non-stop for 24 hours; and
- Continuously disinfects bacteria after 24 hours of continuous use without washing.
The ability to make public health claims on non-apparel products are considered an important catalyst in attracting new customers representing significant market segments within home, office and healthcare settings.
DryTx®
DryTx™ moisture wicking technology provides treated apparel with the ability to quickly draw moisture away from the skin and disperse perspiration across the fabric surface for faster evaporation. The main attributes of DryTx™ are its abilities to:
- Wick moisture away from the skin;
- Provide for garments that will not feel heavy or damp even during periods of high exertion by the wearer;
- Provide for garments that create less skin chafe compared to wet fabrics;
- Provide for garments that dry quicker, thereby assisting the wearer in maintaining a more even body temperature;
- Allow for fabrics to retain their natural softness.
An additional significant attribute of DryTx™ is its ability to be integrated into apparel in combination with the division’s other product offerings, resulting in unique garments that provide superior performance characteristics for athletic apparel. DryTx™ does not require regulatory approvals and is commercially available for sale.
ecoPEL® (formerly RepelTX Eco Plus)
ecoPEL® is a cutting-edge, C zero, PFC-Free Durable Water Repellent (DWR) technology designed to meet the apparel industry’s demand for sustainability, without compromising on performance. As a class leading eco-friendly textile finish, ecoPEL® provides superior water repellency, is easy to apply, and preserves fabric breathability, all while reducing environmental impact.
Laboratory testing has shown that ecoPEL® maintains efficacy up to 30 washes, outperforming other non-fluorinated DWR finishes by up to
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
three times. This ensures garments remain protected against rain and stains for the life of the garment.
ecoPEL® offers superior performance across a variety of fabrics, whether applied to natural fibers like cotton or synthetic blends. Its compatibility with standard finishing processes ensures easy integration into existing production lines, which makes ecoPEL® ideal for outdoor apparel, active wear, and everyday clothing.
A substantial body of testing carried out by the Company has shown that ProTX™ and ecoPEL® work extremely well together. Particularly in health care environments, the combination of water repellency and antimicrobial properties allows for garments that repel liquids and at the same time are able to kill bacteria. These combined attributes are optimal for the healthcare industry. The enhanced commercial benefit is increased revenue from sales involving a multiple of chemicals.
ecoPEL® does not require regulatory approvals and is commercially available for sale.
Dreamskin®
Fabrics treated with the Dreamskin® polymer are designed to encourage a healthy skin environment because of its ability to control both moisture and friction. Dreamskin® is effective during both summer and winter months as both high and low moisture environments are known causes of discomfort and irritation. In particular, athletic apparel has two key areas that can cause skin irritation, namely friction and excessive moisture. Dreamskin® targets both of these to help prevent irritation during sporting activities. Dreamskin® does not require regulatory approvals and is commercially available for sale.
Enguard® Insect Repellent Fabric
Applying Enguard® to fabrics results in a highly effective and durable insect repellent. A major strength of Enguard® is that it is safe for children. Testing carried out by the London School of Hygiene and Tropical Medicine show Enguard® to have repelling power comparable to high-concentration DEET and significantly greater than any other natural insect repellents.
The Company requires regulatory approvals in order to distribute Enguard® treated products in the United States and Canada. The Company intends to pursue regulatory approvals for Enguard® with the EPA after the receipt of the Protx2® approvals referenced above.
UVtx®
Textiles infused with UVtx™ provides apparel with a built in ultraviolet (“UV”) light blocker. The UVtx™ formulation contains both UV reflecting and UV absorption elements, giving apparel treated with UVtx™ the ultraviolet protection factor (“UPF”) strength of up to UPF 60. This allows the wearer of UVtx™ treated apparel to enjoy permanent sun protection without the need to apply sprays or lotions to the area covered by the garment. Testing has shown that UVtx™ treated textiles never lose efficacy. UVtx™ does not require regulatory approvals and is commercially available for sale.
FreshTx™
FreshTx™ is a state of the art odour-absorbing technology, which is easily infused into textile products. FreshTx™ offers permanent protection against odours without the need to use sprays or perfumes. FreshTx™ uses naturally-occurring elements for effective results that are non-toxic and safe. Extremely durable, once applied, the properties of FreshTx™ are renewed with each wash, and FreshTx™ is effective even when wet. FreshTx™ does not require regulatory approvals and is commercially available for sale.
Apollo
Apollo is the ultimate treatment for combating odour. With the use of antimicrobial + neutralization combined it not only smells fresher but also combats odour causing bacteria in order to extend textile life. Apollo does not require regulatory approvals and is commercially available for sale.
TempTX
TempTX is offered in two variants:
Cool: TempTX COOL utilizes unique chemical composites in order to decrease skin surface temperature, allowing for maximum performance in the hottest conditions.
Thermo: TempTX THERMO uses an innovative thermo-conductive inner coating to absorb and retain body heat. TempTX does not require regulatory approvals and is commercially available for sale.
BioTX™
BioTX is a revolutionary durable anti-stink solution that does not use traditional heavy metals. BioTX uses a proprietary microencapsulation process that stores the active ingredient in a coated shell that is embedded into the fabric, allowing for sustained long term release, when needed. BioTx does not require regulatory approvals and is commercially available for sale.
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
OMEGA+
OMEGA+ is a natural, safe, and proprietary ingredient used to increase the level of Far Infrared ("FIR") emissions (soft heat) from a broad range of medical, textile, personal care and household products. It effectively emits a mild FIR energy directly to the area of discomfort and at the same time provides comfort, support and relief in minutes. OMEGA+ does not require regulatory approvals and is commercially available for sale.
IMPRINT
IMPRINT wicks moisture away from the skin utilizing gateways in the fabric exposing logos and patterns. This allows designers to create unique and interactive textiles by adding additional product features not found on ordinary garments. As soon as the fabric absorbs and wicks away moisture from the skin, it instantly reveals unique patterns, graphics and/or logos. IMPRINT does not require regulatory approvals and is commercially available for sale.
DriForce
DriForce works by absorbing and spreading moisture out across the fabric to enhance the evaporative drying rate on the inside whilst utilizing a revolutionary polymer on the outside that doesn't allow perspiration to pull moisture through the textile. DriForce is designed to transport moisture away from the skin on the inside of a garment, so that embarrassing perspiration stains are not shown on the outside of a garment. DriForce does not require regulatory approvals and is commercially available for sale.
bioFRESH™
bioFRESH is a revolutionary bio-based antimicrobial technology, which is registered with the EPA. Geared towards a growing trend for sustainable products, bioFRESH offers the opportunity to advance environmental stewardship, while still maintaining superior performance in antimicrobial protection. Accordingly, bioFRESH provides an effective and eco-friendly solution for a wide range of textile applications.
PROTX2 S
PROTX2 S, is a new hydrothermal mineral-based antimicrobial technology, which is EPA registered. This innovative addition expands the Company's product portfolio, offering customers a greater selection of antimicrobial solutions to meet their specific needs.
AVguard
AVguard is a standalone anti-microbial anti-viral laundry additive, which can be used in everyday household laundry cycles.
IMPORTANT DEVELOPMENTS DURING FISCAL 2025
US Tariffs
In February 2026, the Supreme Court of the United States issued a ruling, which held that tariffs imposed by the new administration in the US, under the International Emergency Powers Act ("IEEPA"), were unlawful. This ruling upheld the prior rulings of two lower courts in the US. In terms of the effect of the ruling on the operations of the Company, this means that the additional 20% tariff imposed on goods imported from China into the US under IEEPA, no longer applies. However, the administration immediately imposed a new 10% tariff on Chinese imports to replace the IEEPA tariffs. The new tariff remains in effect for a limited period of 150 days unless renewed by the US Congress. In conjunction with its US clearing agents, as at the date of this MD&A, the Company has commenced proceedings to file a refund claim of approximately US$600,000 (equivalent to approximately Canadian $828,000), in respect of the unlawful IEEPA tariffs paid by the Company to date. As the bulk of the products brought into the US under the old IEEPA tariff have since been sold, the Company will be repricing its new US imports to fully recover the new 10% tariff.
Acquisition of balance of Markham Property and New Banking Agreement
On April 7, 2025, the Company announced the execution of an agreement to acquire of the remaining 25% of the shares in its subsidiary company that owns its Markham, Ontario, warehouse property. The acquisition was funded through Cdn$3.7 million in mortgage financing provided by the Bank of Montreal ("BMO"), which was utilized for the share purchase, as well as to repay an existing secured loan and outstanding minority shareholder loans. This acquisition effectively removes the borrowing restrictions imposed by the prior minority shareholders and now allows the Company to utilize its Markham property to the full extent possible, in order to fund its growth objectives.
Concurrently with the acquisition, the Company also announced that it had signed a new banking agreement with BMO, which increased its revolving operating credit facility from $6.75 million to $12 million. This expanded line of credit, which is secured by company assets, including a mortgage on the Company's Markham property, will provide additional financial flexibility to support future growth and expansion initiatives.
The Markham warehouse property was valued by an independent valuator at $12 million at the time of acquisition.
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
Publication of Clinical Trial
On August 19, 2025 the Company announced that the results of its clinical trial, "Antimicrobial-treated fabric scrubs can prevent pathogen proliferation on scrubs", had been officially published in the Journal of Hospital Infection, the editorially independent scientific publication of the Healthcare Infection Society, following an independent peer review of the trial data. The aim of the Journal is to publish high quality research and information relating to infection prevention and control that is relevant to an international audience.
The study—conducted by subsidiary Intelligent Fabric Technologies (North America) Inc. "IFTNA" at Memorial Care Saddleback Medical Center in Southern California under the leadership of Cheryl Westlake, PhD, RN, ACNS-BC, FHFSA, FAHA, FAAN; Kathleen M. Young, MSN, RN, NPD-BC; Brandi Cassingham, MSN, RN; and Lisa Forsythe, MSN-Ed, RN, NPD-BC—marks the first successful antimicrobial textile trial of its kind to demonstrate statistically significant reductions in bacterial loads on scrubs worn in a real-world healthcare setting.
First Major Retail Scrubs Program
On October 15, 2025 the Company announced that IFTNA had begun the launch of Doctor's Choice® Next Generation scrubs with an initial rollout at a leading U.S. national big-box retailer. The first collections will integrate three of IFTNA's flagship textile technologies, combining ProTX2® (advanced antimicrobial) with ecoPEL® (C0 PFC-free durable water repellent), and PROTX2® (advanced antimicrobial) with DryTX™ (moisture-management); delivering two performance scrub platforms designed for everyday clinical demands. These fabric treatments are targeted to provide scrubs that are cleaner, safer, and more comfortable, with these benefits expected to last through the life of the scrubs. The first collections will initially launch online, with instore availability at the end of October 2025. The launch underscores IFTNA's strategy to broaden adoption of it's technologies across high-use uniform categories, pairing evidence-driven finishes with mass-market accessibility through the retailer's nationwide footprint.
On March 4, 2026, the Company announced that it had secured a 1,000-store expansion of the Doctor's Choice® scrubs program. This expansion significantly broadens in-store access to Doctor's Choice® scrubs following the program's initial rollout, which began online and progressed into stores during late 2025.
First Major Footwear Program
On January 7, 2026 the Company announced that its wholly-owned subsidiary, Intelligent Fabric Technologies (North America) Inc. ("IFTNA"), had launched a Roots® branded footwear program, with an initial rollout at a nationwide Canadian wholesale club retailer.
The new Roots® footwear assortment is designed, developed, and produced by IFTNA and integrates multiple proprietary performance technologies intended to enhance everyday use with respect to comfort, wearability, and freshness. The Company believes footwear represents a significant new finished-product category for IFTNA, with strong long-term potential as consumer demand continues to shift toward performance-driven, technology-enabled products across broader lifestyle segments.
Based on partner commitments, the Company expects the initial launch to contribute approximately $8 million in incremental revenue within its first calendar year of distribution, with the opportunity to expand into additional styles, seasonal offerings, and channels over time.
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
SELECTED ANNUAL INFORMATION
The following table sets forth selected annual consolidated statement of earnings (loss) information and balance sheet data for each of the last five fiscal periods.
| For the period ending | Twelve months | Twelve months | Fifteen months | Twelve months | Twelve months |
|---|---|---|---|---|---|
| December 31, 2025 | December 31, 2024 | December 31, 2023 | September 30, 2022 | September 30, 2021 | |
| Income Statement Data | |||||
| Revenue | 32,874,918 | 27,327,390 | 28,398,742 | 19,743,008 | 19,763,672 |
| Net earnings (loss) attributable to common shareholders | (99,195) | 1,632,614 | (2,107,522) | (454,998) | 2,369,698 |
| Net earnings (loss) per common share | |||||
| Basic | (0.003) | 0.054 | (0.070) | (0.015) | 0.084 |
| Diluted | (0.003) | 0.054 | (0.070) | (0.015) | 0.081 |
| Balance Sheet Data | |||||
| Total assets | 42,987,262 | 29,489,145 | 25,913,934 | 27,369,496 | 27,629,685 |
| Total non-current financial liabilities | 243,228 | 846,139 | 906,752 | 614,660 | 551,277 |
| Cash dividends declared | - | - | - | - | - |
Note
With effect from October 1, 2022 the Company changed its financial year end to December 31 of each year, from the prior September 30 of each year. As a result, the results for the 2023 financial period comprise a period of fifteen months compared to twelve months for the prior fiscal period and all subsequent fiscal periods.
Three Year Overview
A discussion of the significant factors which have caused variations in the results of operations over the three most recently completed fiscal years is set out below. The selected financial information set out in this MD&A is not exhaustive and should be read in conjunction with the Company's 2025 audited consolidated financial statements and notes thereto. With effect from October 1, 2022, the Company changed its financial year end to December 31 from September 30. Accordingly, the 2025 financial statements are presented for the twelve months ended December 31, 2025 compared to the twelve months ended December 31, 2024 and the fifteen months ended December 31, 2023.
Revenue
Total revenue amounted to $32,874,918 for the twelve months ended December 31, 2025 compared to $27,327,390 for the twelve months ended December 31, 2024 and $28,398,742 for the fifteen months ended December 31, 2023.
The amount of revenue reported in 2025 increased by 20%, compared to an increase of 20% on a proportionate basis in 2024, compared to 15% on a proportionate basis in 2023, as compared to each of the immediately preceding fiscal periods.
Overall revenues increased by 20% in 2025 compared to 2024. With respect to reportable operating segments of the Company, revenue increased 33% in its Intelligent Fabrics segment, to $26,221,629 in 2025 from $19,778,082 in 2024 and, revenue its Intimate Apparel segment amounted to $6,641,039 in 2025 from $7,537,058 in 2024, representing a 12% decrease. In the Company's Intelligent Fabrics operating segment, the increase in revenue was attributable to new apparel programs in the Canada and US. In the Intimate Apparel operating segment, the decrease was primarily attributable to the cessation of shipments of Maidenform® branded products in the fourth quarter due to the non-renewal of the Maidenform® license under which such products were sold. Maidenform® branded products are being replaced by similar own branded products, with initial shipments planned for Q1 2026. In addition, the segment incurred a one-time provision of approximately $400,000 in respect of markdown support to major retail customers in connection with the final sell through of Maidenform® branded products by them. This provision was deducted from revenues as required by IFRS. Geographically, the Company increased its revenues in the US and Canada by 156% and 101% respectively and, in Southeast Asia and other regions by 12% in fiscal 2025 compared to fiscal 2024. UK sales were not significant in both fiscal periods.
Overall revenues increased by 20% on a proportionate basis in 2024 compared to 2023. With respect to reportable operating segments of the Company, revenue increased 25% on a proportionate basis in its Intelligent Fabrics segment, to $19,778,082 for the twelve months
Page 9 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
in 2024 from $19,852,953 for the fifteen months in 2023 and, revenue its Intimate Apparel segment amounted to $7,537,058 for the twelve months in 2024 from $8,504,393 for the fifteen months in 2023, representing a 11% increase on a proportionate basis. In the Company's Intelligent Fabrics operating segment, the increase in revenue was attributable to new apparel programs in the Canada and US. In the Intimate Apparel operating segment, the proportionate increase was mainly as a result of new intimate apparel programs in the US with a major retailer. Geographically, on a proportionate basis, the Company increased its revenues in the US by 122%, and revenues decreased in Canada, the UK and Southeast Asia and other regions by 9%, 73% and 3% respectively, in fiscal 2024 compared to fiscal 2023
Overall revenues increased by 15% on a proportionate basis for the fifteen months ended December 31, 2023 compared to the twelve months ended September 30, 2022. With respect to reportable operating segments of the Company, revenue increased by 25% on a proportionate basis in its Intelligent Fabrics segment and amounted to $19,852,953 for the fifteen months ended December 31, 2023 from $12,658,907 for the twelve months ended September 30, 2022. The increase in revenue is attributable to new apparel programs and timing differences in the commencement dates of programs for a major customer. In the Intimate Apparel segment revenue decreased by 2% on a proportionate basis and amounted to $8,504,393 for the fifteen months in 2023 from $6,976,621 for the twelve months in 2022, mainly as a result of general retail weakness in the Division's main market regions. Geographically, on a proportionate basis, the Company increased its revenues in Canada, and the UK by 81% and 52% respectively, and revenues decreased in the US and Southeast Asia and other regions by 17% and 24% respectively, in 2023 compared to 2022.
Net Earnings (Loss)
The net loss after tax attributable to the common shareholders of the Company was $99,195 for the twelve months ended December 31, 2025, compared to net earnings of $1,632,614 for the twelve months ended December 31, 2024, and net loss of $2,107,522 for the fifteen months ended December 31, 2023.
The primary reasons for the decrease in net earnings in 2025 compared to 2024 were lower gross margins resultant from increased U.S. tariffs, one-time license exit costs of approximately $400,000 as discussed above and, one-time implementation costs of approximately $200,000 related to a new Enterprise Resource Planning ("ERP") system. The primary reasons for the increase in net earnings in 2024 compared to 2023 is increased revenues from new apparel programs. The primary reasons for the increase in net loss in 2023 compared to 2022 was the recording of an impairment provision of $2,823,982 net of tax in respect of an ongoing legal claim in China.
Key factors which have caused variations in the Company's financial position over the three most recently completed fiscal years include:
- Changes in working capital
As at December 31, 2025, the Company's real working capital (excluding a term loan classified as current under IFRS) increased by $298,792 to $19,127,409, compared to working capital of $18,828,617 as at December 31, 2024. During the year ended December 31, 2024, working capital increased by $3,257,757, primarily as a result of the earnings for the year. During the fifteen months in 2023, working capital decreased by $3,134,051, mainly attributable to an impairment provision of $3,842,153 in respect of an ongoing legal claim of the Company. Changes in working capital are more fully discussed in the section dealing with liquidity and cash flow below.
- Changes in property, plant, and equipment
During 2025, the Company capitalized amount of $337,058 in respect of an investment in a new Enterprise Resource Planning (ERP) system, as well as upgrades to its Markham warehouse property. During 2024, the Company capitalized amount of $92,859 in respect to a company vehicle and received proceeds of $40,000 on sale of a company vehicle. During 2023, the Company capitalized an amount of $235,973 in respect of warehouse renovations for the purpose of increasing available warehouse space at its Markham property, and received proceeds of $63,000 on sale of company vehicle.
- Changes in non-current financial liabilities
During 2025, non-current financial liabilities decreased by $602,911 as a result of the repayment of minority shareholder loans in the Company's real estate owning subsidiary, as a condition of acquiring the remaining minority interest in this company. During 2024, there was no material change in the amount of non-current financial liabilities. During 2023, non-current financial liabilities increased by $292,092 and, was mainly attributable to a lease liability recognized in respect of a new office lease.
Page 10 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
The following table sets forth the Company's consolidated statements of earnings and comprehensive earnings (loss):
RESULTS OF OPERATIONS
| For the period ending | December 31, 2025 | December 31, 2024 |
|---|---|---|
| REVENUE | 32,874,918 | 27,327,390 |
| COST OF SALES | 22,377,716 | 16,025,306 |
| GROSS PROFIT | 10,497,202 | 11,302,084 |
| EXPENSES | ||
| General and administrative costs | 6,660,493 | 6,084,190 |
| Selling costs | 2,930,682 | 2,527,044 |
| Impairment provision - legal claim | - | (361,980) |
| Interest expense | 280,183 | 97,050 |
| Depreciation of property, plant and equipment and right-of-use assets | 190,150 | 196,480 |
| Amortization of deferred development costs | 35,604 | 35,604 |
| Share-based compensation | 159,341 | 548,040 |
| 10,256,453 | 9,126,428 | |
| EARNINGS (LOSS) FROM OPERATIONS | 240,749 | 2,175,656 |
| OTHER EXPENSES (INCOME) | ||
| Gain (loss) on foreign exchange | (4,826) | (53,037) |
| Loss (gain) on disposal of property, plant and equipment | - | 217 |
| (4,826) | (52,820) | |
| EARNINGS (LOSS) BEFORE INCOME TAXES | 245,575 | 2,228,476 |
| PROVISION (RECOVERY) OF INCOME TAXES | ||
| Current | 518,370 | 99,256 |
| Deferred | (173,600) | 501,500 |
| 344,770 | 600,756 | |
| NET EARNINGS (LOSS) | (99,195) | 1,627,720 |
| NET EARNINGS (LOSS) ATTRIBUTABLE TO: | ||
| iFabric Corp. shareholders | (99,195) | 1,632,614 |
| Non-controlling interest | - | (4,894) |
| (99,195) | 1,627,720 | |
| OTHER COMPREHENSIVE EARNINGS (LOSS) | ||
| Items that will or may be reclassified to profit or loss | ||
| Unrealized gain (loss) on translation of foreign operations | (252,148) | 332,431 |
| TOTAL COMPREHENSIVE EARNINGS (LOSS) | (351,343) | 1,960,151 |
| EARNINGS (LOSS) PER SHARE | ||
| Basic | (0.003) | 0.054 |
| Diluted | (0.003) | 0.054 |
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
SELECTED OPERATING SEGMENT DATA
| Twelve months ended December 31, 2025 | Intimate Apparel | Intelligent Fabrics | Other Segments | Corporate Items and Eliminations | Consolidated |
|---|---|---|---|---|---|
| External Revenue | 6,641,039 | 26,221,629 | 12,250 | - | 32,874,918 |
| Earnings (loss) before income taxes | (255,310) | 1,155,950 | (18,575) | (636,490) | 245,575 |
| Twelve months ended December 31, 2024 | Intimate Apparel | Intelligent Fabrics | Other Segments | Corporate Items and | Consolidated |
| External Revenue | 7,537,058 | 19,778,082 | 12,250 | - | 27,327,390 |
| Earnings (loss) before income taxes | 100,831 | 3,115,802 | (26,598) | (961,559) | 2,228,476 |
FISCAL 2025 RESULTS COMPARED WITH FISCAL 2024
Revenue
Revenue amounted to $32,874,918 for the twelve months ended 2025 compared to $27,327,390 for the twelve months ended December 31, 2024. With respect to reportable operating segments of the Company, revenue increased 33% in its Intelligent Fabrics segment, to $26,221,629 for the twelve months in 2025 from $19,778,082 for the twelve months in 2024, and revenue its Intimate Apparel segment decreased to $6,641,039 for the twelve months in 2025 from $7,537,058 for the twelve months in 2024, representing a 12% decrease.
Overall revenues increased by 20% in 2025 compared to 2024. In the Company's Intelligent Fabrics operating segment, the increase in revenue was attributable to new apparel programs in the Canada and US. In the Intimate Apparel operating segment, the decrease was primarily attributable to the cessation of shipments of Maidenform® branded products in the fourth quarter due to the non-renewal of the Maidenform® license under which such products were sold. Maidenform® branded products are being replaced by similar own branded products, with initial shipments planned for Q1 2026. In addition, the segment incurred a one-time provision of $364,320 in respect of markdown support to major retail customers in connection with the final sell through of Maidenform® branded products by them. This provision was deducted from revenues as required by IFRS. Geographically, the Company increased its revenues in the US and Canada by 156% and 101% respectively and, decreased in Southeast Asia and other regions by 12% in fiscal 2025 compared to fiscal 2024. UK sales were not significant in both fiscal periods.
Gross profit
Gross profit as a percentage of revenue decreased to 32% in 2025 from 41% in 2024. The decrease in gross profit percentage is primarily attributable to increased U.S. tariffs, as well as a one-time provision of $364,320 recorded in connection with the exit of the Maidenform® license as discussed above. Gross profit dollars decreased by 7% to $10,497,202 for the twelve months in 2025 from $11,302,084 for the twelve months in 2024 for the same reasons.
Selling, general and administrative costs
Selling, general and administrative costs increased by 11% to $9,591,175 for the twelve months in 2025 compared to $8,611,234 for the twelve months in 2024, due to increased personnel costs, insurance, rent, freight, commissions and royalties primarily incurred to support future revenue growth.
Impairment provision – legal claim
The Company received a partial recovery of $361,980 in 2024 in respect of a legal claim in China against which, an impairment provision of $3,842,153 had been made in the prior period. The collection process for recovery of the balance of the Company's claim is ongoing, with no further recoveries in fiscal 2025.
Interest Expense
Interest expense during the twelve months in 2025 totaled $280,183 compared to $97,050 during the twelve months in 2024 representing an increase of $183,133. The increase in interest expense is attributable to interest on a new mortgage loan of $3,700,000, used to acquire the outstanding minority interest in the Company's Markham warehouse, as well as the utilization of the Company's operating line to fund business growth.
Amortization and Depreciation
Amortization and depreciation of the Company's property, plant and equipment, right-of-use assets and deferred development costs totaled $225,754 during 2025 compared to $232,084 during 2024.
Page 12 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
Share-based compensation
Share-based compensation costs in 2025 amounted to $159,341 compared to $548,040 in 2024, with the decrease attributable to fewer options being granted in 2025 compared to 2024.
Loss (gain) on foreign exchange
In 2025, the Company's gain on foreign exchange was $4,826 versus a gain of $53,037 in 2024. This decrease is the result of a stronger Canadian dollar in 2025 compared to 2024.
Provision (recovery) of income taxes
The Company's provision of income taxes in 2025 was $344,770, compared to a provision for income taxes of $600,756 in 2024, with the increase in tax rate mainly attributable to increased taxes in China, pursuant to reassessments of approximately $300,000, resultant from certain disallowed expenses. The Company is filing objections to these reassessments, as management believes that the disallowance of certain expenses to be unfounded, but has nevertheless provided for the additional taxes in full. Differences in tax rates in China compared to Canada and permanent differences between tax and accounting income represent the primary reasons for balance of the change in the Company's effective income tax rate in 2025 compared to 2024.
Net earnings (loss) and EBITDA
The net loss after tax attributable to iFabric's shareholders in 2025 was $99,195 ($0.003 per share, basic and diluted respectively) compared to net earnings of $1,627,720 in 2024 ($0.054 per share, basic and diluted respectively), with the decrease attributable to the factors discussed above. Adjusted EBITDA for fiscal 2025 amounted to $1,931,094 compared to adjusted EBITDA of $2,743,670 in 2024, representing a decrease of 30% for the same reasons. Refer to Non-GAAP performance measures below for reconciliation to IFRS earnings.
Other comprehensive earnings (loss)
The Company's subsidiaries Coconut Grove Pads Inc., Intelligent Fabric Technologies (North America) Inc., and Protx (Shanghai) Trading Co., Ltd., currently utilize the United States dollar as their functional currency due to the prevalence of United States dollar denominated transactions in their operations. Accordingly, all unrealized exchange differences resultant from the translation of balances from the functional currency (US dollars) to the presentation currency (Canadian dollars) are recognized in other comprehensive income. In 2025, a loss of $252,148 was included in other comprehensive earnings, in respect of the accumulated unrealized loss arising on the currency translation of foreign operations, compared to a gain of $332,431 included in 2024. Total comprehensive loss amounted to $351,343 in 2025 compared to total comprehensive earnings of $1,960,151 in 2024.
SEASONALITY AND QUARTERLY FLUCTUATIONS
The Company's business is seasonal and results of operations for any interim period are not necessarily indicative of results of operations for the full fiscal year. All quarterly results and figures, and their related discussion topics, are unaudited.
Page 13 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
SUMMARY OF QUARTERLY RESULTS
| Fiscal 2025 | Q1 | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|---|
| Revenue | 7,080,440 | 5,796,761 | 9,021,607 | 10,976,110 | |
| Net earnings (loss) attributable to common shareholders | 88,458 | (190,103) | 543,802 | (541,352) | |
| Net earnings (loss) per common share | |||||
| Basic | 0.003 | (0.006) | 0.018 | (0.018) | |
| Diluted | 0.003 | (0.006) | 0.018 | (0.018) | |
| Fiscal 2024 | Q1 | Q1 | Q2 | Q3 | Q4 |
| Revenue | 6,754,624 | 5,796,220 | 4,280,564 | 10,495,982 | |
| Net earnings (loss) attributable to common shareholders | 550,596 | 56,103 | (105,616) | 1,131,531 | |
| Net earnings (loss) per common share | |||||
| Basic | 0.018 | 0.002 | (0.003) | 0.037 | |
| Diluted | 0.018 | 0.002 | (0.003) | 0.037 | |
| Fiscal 2023 | Q1 | Q2 | Q3 | Q4 | Q5 |
| Revenue | 4,916,365 | 6,642,563 | 5,278,331 | 4,805,502 | 6,755,981 |
| Net earnings (loss) attributable to common shareholders | 134,566 | 469,419 | 132,546 | (139,545) | (2,704,508) |
| Net earnings (loss) per common share | |||||
| Basic | 0.005 | 0.015 | 0.005 | (0.005) | (0.090) |
| Diluted | 0.005 | 0.015 | 0.005 | (0.005) | (0.090) |
Q4 2025 FINANCIAL HIGHLIGHTS
| Three months ended December 31, | 2025 | 2024 |
|---|---|---|
| Revenue | 10,976,110 | 10,495,982 |
| Earnings (loss) from operations | (137,066) | 1,567,061 |
| Share based compensation | 7,507 | 131,220 |
| Impairment provision - legal claim | - | - |
| Adjusted EBITDA *(Note) | 1,030,710 | 1,895,396 |
| Net earnings before tax | (172,615) | 1,678,362 |
| Net earnings after tax attributable to shareholders | (541,352) | 1,131,531 |
| Other comprehensive earnings (loss) | (65,214) | 258,423 |
| Total comprehensive earnings | (606,566) | 1,383,424 |
| Net earnings per share | ||
| Basic | (0.018) | 0.037 |
| Diluted | (0.018) | 0.037 |
*Note: Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization, share based compensation and other non-operational items.
Page 14 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
2025 FOURTH QUARTER RESULTS COMPARED WITH 2024 FOURTH QUARTER RESULTS
Revenue
Revenue during Q4 2025 increased by 5% or $480,128 to $10,976,110 from $10,495,982 during the comparable quarter in 2024. With regard to its two main operating segments, revenue in its Intelligent Fabrics segment increased by 13% or $1,160,693 to $10,203,845 in Q4 2025 from $9,043,152 in Q4 2024 whereas, revenue in its Intimate Apparel segment decreased by 47% or $675,315 to $772,265 in Q4 2025 from $1,447,580 in Q4 2024. In the Intimate Apparel operating segment, the decrease was primarily attributable to the cessation of shipments of Maidenform® branded products in the fourth quarter due to the non-renewal of the Maidenform® license under which such products were sold. Maidenform® branded products are being replaced by similar own branded products, with initial shipments planned for Q1 2026. In addition, the segment incurred a one-time provision of approximately $364,320 in respect of markdown support to major retail customers in connection with the final sell through of Maidenform® branded products by them. This provision was deducted from revenues as required by IFRS. The increase in the Intelligent Fabrics segment is attributable to new apparel programs in both Canada and US. Geographically, the Company increased its revenues in the US by 22%, and revenues decreased in Canada, the U.K and Southeast Asia and other regions by 8%, 100% and 3% respectively in Q4 2025 compared to Q5 2024.
Gross profit
Gross profit as a percentage of revenue during Q4 2025 was 26% compared to 40% in Q4 2024, with the difference attributable to the product mix for the quarter, transitional Maidenform® license exit costs and illegal U.S. tariffs. The Company is filing a claim for approximately US$600,000 (Can$828,000) for the refund of illegal IEEPA tariff charges in the U.S. to the date of this MD&A. Gross profit dollars during Q4 2025 decreased by 31% or $1,280,326 to $2,887,788, from $4,168,114 in Q4 2024. The decrease in gross profit in dollars is attributable to lower margins as discussed above.
Selling, general and administrative costs
Selling, general and administrative costs during Q4 2025 increased by $457,751 or 19%, to $2,841,770 from $2,384,019 in Q4 2024, mainly attributable to increased selling costs, which are variable in nature.
Interest expense
Interest expense during Q4 2025 was $117,639 compared to $21,513 during Q4 2024. The increase in interest expense is attributable to interest on a new mortgage loan of $3,700,000.
Amortization and depreciation
Amortization and depreciation of the Company's property, plant and equipment, right of use assets and deferred development costs totaled $57,938 during Q4 2025 compared to $64,301 during Q4 2024.
Provision (recovery) of income taxes
The Company's provision of income taxes in Q4 2025 was $368,737, compared to a provision of income taxes of $553,361 in Q4 2024. The decrease is due to the loss in certain subsidiaries for the year which was partially offset by increased taxes in China, pursuant to reassessments of approximately $300,000, resultant from certain disallowed expenses. The Company is filing objections to these reassessments, as management believes that the disallowance of certain expenses to be unfounded, but has nevertheless provided for the additional taxes in full. Included in earnings before income taxes are certain non-deductible items for tax purposes, for example share based compensation. Differences in the amounts of non-deductible expenses is the primary reason for the change in the Company's effective income tax rate in Q4 2025 compared to Q4 2024.
Net earnings (loss) and EBITDA
Net loss after tax attributable to iFabric's shareholders during Q4 2025 was $541,352 ($0.018 per share, basic and diluted) compared to net earnings of $1,131,531 ($0.037 per share, basic and diluted) during Q4 2024. Adjusted EBITDA for Q4 2025 amounted to $1,030,710 compared to adjusted EBITDA of $1,895,396 in Q4 2024 (refer to Non-GAAP performance measures below for reconciliation to IFRS earnings).
Other comprehensive earnings (loss)
The Company's subsidiaries Coconut Grove Pads Inc. and, Intelligent Fabric Technologies (North America) Inc., and Protx (Shanghai) Trading Co. Ltd., utilize the United States dollar as their functional currency due to the prevalence of United States dollar denominated transactions in their operations. Accordingly, all unrealized exchange differences resultant from the translation of balances from the functional currency (US dollars) to the presentation currency (Canadian dollars) are recognized in other comprehensive income. For Q4 2025, there was a loss of $65,214 in other comprehensive earnings compared to a gain of $258,423 in Q4 2024, in respect of unrealized gains (losses) arising on currency translation of foreign operations. The main reason for this decrease was the strengthening of the Canadian dollar towards the end of 2025 relative to the end of 2024.
Page 15 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
The following table sets forth the Company's consolidated statements of financial position as at December 31, 2025 and December 31, 2024:
| As at | December 31, 2025 | December 31, 2024 |
|---|---|---|
| ASSETS | ||
| Current assets | ||
| Cash | 3,783,334 | 2,058,156 |
| Accounts receivable | 9,838,190 | 10,811,834 |
| Inventories | 21,025,662 | 10,163,536 |
| Income taxes recoverable | 10,108 | 20,439 |
| Foreign exchange forward contracts | - | 219,285 |
| Prepaid expenses and deposits ) | 2,870,616 | 1,058,147 |
| Total current assets | 37,527,910 | 24,331,397 |
| Non-current assets | ||
| Property, plant and equipment | 3,370,038 | 3,122,705 |
| Right-of-use assets | 293,954 | 394,379 |
| Deferred development costs | 106,810 | 142,414 |
| Deferred income taxes | 1,633,500 | 1,443,200 |
| Goodwill | 55,050 | 55,050 |
| Total non-current assets | 5,459,352 | 5,157,748 |
| Total assets | 42,987,262 | 29,489,145 |
| LIABILITIES | ||
| Current liabilities | ||
| Operating credit line | 6,661,109 | - |
| Accounts payable and accrued liabilities | 10,826,557 | 4,374,022 |
| Customer deposits | 24,435 | 66,450 |
| Income taxes payable | 543,533 | 24,847 |
| Current portion of lease liability | 107,470 | 101,929 |
| Current portion due to related parties | 231,469 | 143,535 |
| Current portion of car loan payable | 5,928 | 12,358 |
| Bank loan payable | 3,646,044 | 779,639 |
| Total current liabilities | 22,046,545 | 5,502,780 |
| Non-current liabilities | ||
| Non-current portion of lease liability | 243,228 | 350,698 |
| Non-current portion of car loan payable | - | 8,069 |
| Due to related parties | - | 487,372 |
| Total non-current liabilities | 243,228 | 846,139 |
| Total liabilities | 22,289,773 | 6,348,919 |
| Commitments | ||
| EQUITY | ||
| Equity attributable to iFabric Corp. shareholders | ||
| Capital stock | 8,818,844 | 8,898,580 |
| Reserves | 7,179,614 | 9,185,631 |
| Retained earnings | 4,583,824 | 4,683,019 |
| Accumulated other comprehensive earnings | 115,207 | 367,355 |
| Total equity attributable to iFabric Corp. shareholders | 20,697,489 | 23,134,585 |
| Non-controlling interest | - | 5,641 |
| Total equity | 20,697,489 | 23,140,226 |
| Total liabilities and equity | 42,987,262 | 29,489,145 |
Page 16 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
OVERVIEW OF CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
The Company's cash balance increased to $3,783,334 as at December 31, 2025 from $2,058,156 as at December 31, 2024, as the company continued to hold its US dollars as opposed to converting to Canadian Dollars.
Total accounts receivable at the end of 2025 was $9,838,190 compared to $10,811,834 at December 31, 2024, representing a decrease of $973,644. This decrease is attributable to collections net of revenue in the fourth quarter of 2025.
Total inventories increased by $10,862,126 to $21,025,662 at the end of 2025 from $10,163,536 at December 31, 2024, mainly attributable to inventory received near the year end for a number of new and expanded programs shipping in the following quarter.
Prepaid expenses and deposits increased by $1,812,469 to $2,870,616 at December 31, 2025, from $1,058,147 at December 31, 2024, as a result of increased inventory orders for future delivery.
Property, plant and equipment as at December 31, 2025 totaled $3,370,038 compared to $3,122,705 as at December 31, 2024, representing an increase of $247,333, with the increase attributable to the investment in a new Enterprise Resource Planning (ERP) system.
Right-of-use assets decreased to $293,954 at the end of 2025 compared to $394,379 as December 31, 2024, with the difference attributable to amortization.
Deferred development costs decreased to $106,810 at the end of 2025 from $142,414 at December 31, 2024, with the difference attributable to the amortization.
Deferred income taxes increased to $1,633,500 at the end of 2025 from $1,443,200 at December 31, 2024, with the difference attributable to tax losses for the period.
Total liabilities at the end of 2025 were $15,940,854 higher than at December 31, 2024 and amounted to $22,289,773 compared to $6,348,919, with the increase attributable to an increase in accounts payable as a result of inventory receipts in the fourth quarter of 2025, utilization of the Company's bank operating credit line and, a new mortgage of $3,700,000 utilized to acquire the remaining 25% interest in the Company's Markham, Ontario property owning subsidiary.
The Company is subject to risks including, but not limited to, the potential inability to raise additional funds through debt and/or equity financing to support the Company's development and continued operations, and to meet the Company's liabilities and commitments as they come due.
The Company's capital resources include a bank operating line, bank loan, and equity attributable to the Company's shareholders.
NON-GAAP PERFORMANCE MEASURES
The following tables reconcile Non-GAAP Performance Measures used by the Company in analyzing the operational performance of the Company to their nearest IFRS measure, and should be read in conjunction with the Consolidated statement of operations and comprehensive earnings (loss) and Consolidated statement of cash flows included in the Consolidated financial statements as of December 31, 2025 and December 31, 2024.
EBITDA and Adjusted EBITDA
The following table reconciles net earnings and comprehensive earnings (loss) attributable to owners of the Company to the Company's Non-GAAP Performance Measure, Adjusted EBITDA:
Page 17 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
| For the period ending | Three months
December 31, 2025 | Three months
December 31, 2024 | Twelve months
December 31, 2025 | Twelve months
December 31, 2024 |
| --- | --- | --- | --- | --- |
| | | | | |
| Net earnings (loss) after tax attributable to shareholders | (541,352) | 1,131,531 | (99,195) | 1,632,614 |
| Add (deduct): | | | | |
| Net earnings attributable to non-controlling interest | - | (6,530) | - | (4,894) |
| Provision for income taxes | 368,737 | 553,361 | 344,770 | 600,756 |
| Share-based compensation | 7,507 | 131,220 | 159,341 | 548,040 |
| Impairment provision - legal claim | - | - | - | (361,980) |
| Maidenform license transition costs | 364,320 | - | 364,320 | - |
| ERP system - implementation costs | 200,690 | - | 200,690 | - |
| Illegal US IEEPA tariffs (refundable) | 455,231 | - | 455,231 | - |
| Amortization of deferred development costs | 8,901 | 8,901 | 35,604 | 35,604 |
| Depreciation of plant, property and equipment and right-of-use assets | 49,037 | 55,400 | 190,150 | 196,480 |
| Interest expense | 117,639 | 21,513 | 280,183 | 97,050 |
| Adjusted EBITDA | 1,030,710 | 1,895,396 | 1,931,094 | 2,743,670 |
| Add (deduct): | | | | |
| Impairment provision - legal claim | - | - | - | 361,980 |
| Share-based compensation | (7,507) | (131,220) | (159,341) | (548,040) |
| Maidenform license transition costs | (364,320) | - | (364,320) | - |
| ERP system - implementation costs | (200,690) | - | (200,690) | - |
| Illegal US IEEPA tariffs (refundable) | (455,231) | - | (455,231) | - |
| EBITDA | 2,962 | 1,764,176 | 751,512 | 2,557,610 |
The Company provides adjusted EBITDA for the purpose of providing investors, prospective investors and other users of the financial statements, the means to optimally assess the Company's operational performance, by excluding items such as share-based compensation and other expense items, which are not are not considered operational in nature.
LIQUIDITY, CASH FLOWS AND CAPITAL RESOURCES
The Company is subject to risks including, but not limited to, the potential inability to raise additional funds through debt and/or equity financing to support the Company's development and continued operations, and to meet the Company's liabilities and commitments as they come due.
The Company's capital resources include a bank operating line, a secured bank loan, and equity attributable to the Company's shareholders.
Bank operating line
Two of the Company's subsidiaries share a demand operating loan with a tier one Canadian bank available to a maximum of $12,000,000 (2024 - $6,750,000), against which $6,661,109 was outstanding as at December 31, 2025 (2024 - $0). The loan facility bears interest at either the bank's prime lending rate or USD base rate, as applicable, plus 0.75%. The purpose of the credit facility is to provide for ongoing operating requirements including the financing of accounts receivable and inventories. The facility is secured by a first-ranking all-indebtedness collateral mortgage in the amount of $11,850,000 (2024 - $3,000,000) on land and buildings, a general security agreement, an assignment of rents, as well as guarantees from the Company and two of its subsidiary companies.
Fixed Rate Term Loan
One of the Company's subsidiaries has a fixed rate demand term loan, against which $3,646,044 was outstanding at December 31, 2025 (December 31, 2024 - $779,639). The loan is repayable in monthly instalments of $22,172 comprising principal and interest at a fixed interest rate of 5.25% per annum. The loan is amortized over a twenty-five-year period ending March 21, 2055, matures on March 21, 2029 and, is
Page 18 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
secured by a first-ranking all-indebtedness collateral mortgage in the amount of $11,850,000 on land and buildings, a general security agreement, an assignment of rents, as well as guarantees from the Company and three of its subsidiary companies. Management expects to pay the minimum monthly payments over the next 12 months.
Working capital
Working capital represents current assets less current liabilities. As at December 31, 2025, the Company's real working capital (excluding a term loan classified as current under IFRS) increased by $298,792 to $19,127,409, compared to working capital of $18,828,617 as at December 31, 2024.
Operating activities
Cash used in operating activities during the twelve months ended December 31, 2025 totaled $4,403,123 in 2025, compared to an amount of $301,782 provided by operating activities during the twelve months ended December 31, 2024. The decrease in operational cash inflow can largely be attributed to an increase in the amount of inventory on hand, as previously discussed.
Financing activities
Cash provided by financing activities during 2025 amounted to $6,784,307, compared to $214,742 used in financing activities during 2024, representing an increased inflow of $6,999,049, attributed to the utilization of the Company's operating credit line and a new mortgage loan, as discussed above.
Investing activities
Cash used in investing activities totaled $337,058 in 2025 compared to an amount of $52,859 used in investing activities during 2024, mainly attributable to the investment in a new ERP system.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements as of December 31, 2025.
COMMITMENTS & CONTRACTUAL OBLIGATIONS
The following details the Company's contractual obligations, under various operating lease agreements as at December 31, 2025:
| Contractual obligations | Payments due by fiscal year end | Subsequent years | Total | |||
|---|---|---|---|---|---|---|
| 2026 | 2027 | 2028 | 2029 | |||
| Minimum guaranteed royalties & leases | 463,669 | 253,490 | 248,712 | 113,707 | 47,971 | 1,127,549 |
(a) In terms of a worldwide license agreement, the Company has the right to use trademarks in connection with the manufacture, marketing, sale and distribution of certain licensed products. During the license term, the Company is required to pay a quarterly royalty on its net sales as defined in the agreement, on all products sold under the licensed marks. The effective royalty rates vary depending on the distribution channel and range from 0%-10%. Minimum annual royalties have been established for the balance of the contract period ending August 31, 2026 in U.S. dollar amounts of $240,000. In addition, the Company is required to pay an advertising fee of 1%-2%, depending on the distribution channel, payable quarterly, on its net sales as defined in the agreement, for promotion of the licensed products. The license term is in effect until August 31, 2026.
(b) In terms of a Canadian license agreement pursuant to which the Company has the right to use trademarks in connection with the manufacture, marketing, sale and distribution of certain licensed products. During the license term, the Company is required to pay a quarterly royalty on its net sales as defined in the agreement, on all products sold under the licensed marks. The effective royalty rates vary depending on the distribution channel and range from 10-12%. Minimum annual royalties have been established for the contract periods ending December 31, 2026, in amount of $200,000. The license term is in effect until December 31, 2026.
(c) On October 16, 2023, the Company executed a lease agreement for the rental of 5,202 square feet of office space in Markham, Ontario, at a location in close proximity to its current warehouse location. After the move of management and all administrative staff to the new location, the Company's Markham owned building was fully repurposed as warehouse space, in order to accommodate the warehousing of products for new Canadian apparel programs. The lease agreement is for a period of 5 years with rental payments commencing on April 1, 2024 and expiring March 31, 2029, with the option of renewal for a further period of 5 years at market rates. Basic rent payable is $17.95
Page 19 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
per square foot for years 1-3 of the lease amounting to $93,376 per annum and $18.95 per square foot for years 4-5, amounting to $98,578 per annum. Additional rent will be calculated each year and, is estimated at $17.96 per square foot for the first year of the lease, or $93,428 per annum. A right of use asset and a lease liability have been recognized in the financial statements in respect of this lease.
(d) In terms of a worldwide license agreement, the Company has the right to use trademarks in connection with the manufacture, marketing, sale and distribution of certain licensed products. During the license term, the Company is required to pay a quarterly royalty on its net sales as defined in the agreement, on all products sold under the licensed marks. The effective royalty rate is 3.5%. Minimum annual royalties have been established for the 36 month period after the effective date (January 6, 2025) of $60,000 and each annual period after the initial period of $35,000. The license term is in effect for a period of 10 years.
RELATED PARTY TRANSACTIONS
(a) Key management personnel of the Company are those individuals having authority and responsibility for planning, directing, and controlling the activities of the Company, including members of the Company's Board of Directors. The Company considers key management to be the Company's Board of Directors, which includes three executive officers of the Company.
Remuneration of key management personnel of the Company was as follows:
| For the period ending | December 31, 2025 | December 31, 2024 |
|---|---|---|
| Salaries, management and professional fees, directors' fees, and short-term benefits | 1,533,798 | 1,378,670 |
| Share-based compensation | 131,220 | 548,040 |
| 1,665,018 | 1,926,710 |
Further information about the remuneration of certain individual executive officers and members of the Board of Directors will be provided in the Company's Management Information Circular, to be filed in respect of its fiscal 2025 shareholders' meeting.
(c) Included in accounts payable and accrued liabilities is an amount of $90,000 (2024 - $100,000) due to directors and key management personnel of the Company in respect of unpaid fees.
(d) Included in selling, general and administrative costs is an amount of $106,000 (2024 - $92,785) paid to the spouse of an executive officer of the Company for marketing and administrative services rendered.
(e) There is an amount of $0 due to a previous director of one of the Company's subsidiaries (2024 - $487,372).
OUTSTANDING SHARE DATA
As of the date of this MD&A, the Company had 30,299,467 common shares outstanding. Furthermore, as of the date of this MD&A, the Company had 1,884,000 options issued and outstanding, of which 1,805,500 were exercisable.
RISKS
A number of risk factors known and unknown may affect the operations of iFabric. One should consider the following and all of the other information included in this document and in other documents filed under the Company's profile on SEDAR when considering investing in the securities of the Company.
The following specific factors categorized by the primary nature of the associated risk, could materially adversely affect the Company and should be considered when deciding whether to make an investment in the Company. The risks and uncertainties described in this Management Discussion & Analysis and the information incorporated by reference herein are those the Company currently believes to be material, but they are not the only ones it faces. If any of the following risks, or any other risks and uncertainties that the Company has not yet identified or that it currently considers not to be material, actually occur or become material risks, the Company's business, prospects, financial condition, results of operations and cash flows and consequently the price of the common shares could be materially and adversely affected. In all these cases, the trading price of the common shares could decline, and prospective investors could lose all or part of their investment.
Financial Risks
Credit risk
Credit risk arises from the potential that a counter party will fail to perform its obligations. The Company routinely assesses the financial strength of its customers to mitigate its exposure to credit risk.
Page 20 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
The Company's maximum exposure to credit risk is $9,471,120 (2024 - $10,441,297). Included in selling, general and administrative costs are bad debts of $425 expensed (2024 - $367,142 recovered) during the year.
The aging of trade accounts receivable is as follows:
| December 31, 2025 | December 31, 2024 | |
|---|---|---|
| Trade receivables not past due | 9,195,762 | 9,701,470 |
| Trade receivables past due and not impaired | ||
| Under 31 days | 171,270 | 534,383 |
| 31 - 60 days | 18,890 | 62,906 |
| 61 - 90 days | 10,101 | 50,676 |
| Over 90 days | 75,097 | 91,862 |
| Trade receivables, net of expected credit loss allowance | 9,471,120 | 10,441,297 |
Economic dependence
Approximately 75% of the Company's total sales were to four customers (2024 - 59% of sales were to four customers). At December 31, 2025, four customers accounted for 84% (2024 - four customers accounted for 78%) of the Company's accounts receivable. Approximately 82% of the Company's total purchases were from four vendors (2024 - 65% of purchases were from four vendors), one of which is related to a distributor of the Company.
The loss of any one of these key customers or suppliers can have a material impact on revenues, earnings, cash flows, and the financial position of the Company.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulties in meeting its obligations associated with its financial liabilities. The Company is exposed to this risk mainly with respect to its bank indebtedness, accounts payable and accrued liabilities, income taxes payable, related party loans, bank loan payable, and commitments. The Company reduces its exposure to liquidity risk by ensuring that it documents when authorized payments become due, maintains an adequate line of credit to pay trade creditors and repays long term debt interest and principal as it becomes due using cash generated from operations.
| December 31, 2025 | Carrying amount | Contractual cash flow | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | |
|---|---|---|---|---|---|---|---|---|---|
| Minimum guaranteed royalties | - | 378,178 | 227,412 | 27,412 | 27,412 | 47,971 | 47,971 | - | |
| Lease obligations | 749,371 | 749,371 | 236,257 | 226,078 | 221,300 | 65,736 | - | - | |
| Car loan | 5,928 | 5,928 | 5,928 | - | - | - | - | - | |
| Bank loan payable | 3,646,044 | 3,646,044 | 3,646,044 | - | - | - | - | - | |
| Trade and other payables | 11,689,007 | 11,689,007 | 11,689,007 | - | - | - | - | - | |
| Operating credit line | 6,661,109 | 6,661,109 | 6,661,109 | - | - | - | - | - | |
| 22,751,459 | 23,129,637 | 22,465,757 | 253,490 | 248,712 | 113,707 | 47,971 | - |
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. The Company is exposed to currency and interest rate risk.
Currency risk
The Company conducts certain of its operations in U.S. Dollars ("USD"), New Taiwanese Dollars ("TWD") and Chinese Yuan ("RMB"). The following balances were included in the 2025 financial statements:
Page 21 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
| USD | December 31, 2025 | December 31, 2024 |
|---|---|---|
| Cash | 2,073,181 | 699,958 |
| Accounts receivable | 4,818,337 | 5,409,305 |
| Accounts payable and accrued liabilities | (2,591,584) | (1,021,433) |
| Prepaids and deposits | 608,121 | 69,056 |
| 4,908,055 | 5,156,886 | |
| TWD | December 31, 2025 | December 31, 2024 |
| --- | --- | --- |
| Cash | 1,971,778 | 2,923,774 |
| Accounts receivable | 4,404,973 | 12,676,954 |
| Accounts payable and accrued liabilities | (142,343) | (179,011) |
| 6,234,408 | 15,421,717 | |
| RMB | December 31, 2025 | December 31, 2024 |
| --- | --- | --- |
| Cash | 4,173,536 | 2,396,928 |
| Accounts receivable | 5,268,791 | 3,948,455 |
| Accounts payable and accrued liabilities | (2,359,217) | (2,108,145) |
| 7,083,110 | 4,237,238 |
The Company has performed a sensitivity analysis on its foreign currency denominated financial instruments. The effect of a 5% strengthening (weakening) of the USD against the Canadian Dollar as at December 31, 2025, in relation to the net amount of USD-denominated currency balances, would have resulted in an increase (decrease) of approximately $260,000 in net earnings (loss) for 2025 all other variables held constant. The effect of a 5% strengthening (weakening) of the TWD against the Canadian Dollar as at December 31, 2025, in relation to the net amount of TWD-denominated currency balances, would have resulted in an increase (decrease) of approximately $10,000 in net earnings (loss) for 2025, all other variables held constant. The effect of a 5% strengthening (weakening) of the RMB against the Canadian Dollar as at December 31, 2025, in relation to the net amount of RMB-denominated currency balances, would have resulted in an increase (decrease) of approximately $50,000 to the net earnings (loss) for 2025, all other variables held constant.
The RMB located in China is not freely convertible into other currencies. However, under China's Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Company is permitted to exchange RMB for other currencies through banks authorized to conduct foreign exchange business.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company is exposed to interest rate risk on its secured bank loan and its bank operating line, which bear interest at floating rates, since changes in market rates can cause fluctuations in cash flows.
The Company has performed a sensitivity analysis on its interest rate risk. The effect of a 1% decrease (increase) in the average interest rate paid during the year would have resulted in an increase (decrease) of approximately $52,000 in net earnings (loss) for 2025, all other variables held constant.
SUBSEQUENT EVENTS
On January 8, 2026, the Company secured a new CAD 2,500,000 trade finance facility. This facility is fully unsecured and has been put in to place to provide additional financial flexibility to support future growth and expansion initiatives. Each draw under the line is required to be repaid within 150 days from the day of advance and the facility currently bears interest at a fixed rate of 6% per annum.
Page 22 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
Business Operation Risks
Competition
The Company faces significant competition in both the Intimate Apparel and Intelligent Fabrics Divisions. In the Intimate Apparel Division, the Company is in direct competition with companies that design, manufacture, or distribute intimate apparel and accessories.
In the Intelligent Fabrics Division, the Company competes with other companies that manufacture or distribute sprays, topical liquids, creams, medications, or chemicals that:
- repel insects when applied to skin or textiles;
- kill bacteria or viruses when applied to textiles;
- assist with the healing of skin and the control of skin irritations when applied to textiles;
- repel or wick moisture on textiles;
- provide ultraviolet light protection on textiles; and
- provide temperature control on textiles.
The markets in which the Company operates are highly competitive. Competition may result in pricing pressures, reduced profit margins or lost market share or a failure to grow the Company's market share, any of which could substantially harm its business and results of operations. The Company competes directly against wholesalers and direct retailers of apparel, including large, diversified apparel companies with substantial market share and established companies expanding their production and marketing of apparel, as well as against large retailers. The Company also faces competition from wholesalers and direct retailers of traditional commodity apparel. Many of the Company's competitors are large companies with strong worldwide brand recognition. Because of the fragmented nature of the industry, the Company also competes with other apparel sellers. Many of the Company's competitors have significant competitive advantages, including longer operating histories, larger and broader customer bases, more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and development, store development, marketing, distribution and other resources than the Company does.
The Company's competitors may be able to achieve and maintain brand awareness and market share more quickly and effectively than the Company can. The Company's competitors may also be able to increase sales in their new and existing markets faster than it does by emphasizing different distribution channels than it does.
Economic Conditions and Consumer Spending
In the Intimate Apparel Division, the Company's customer base consists of national and international retailers, independent stores, and boutiques. The success of this Division is dependent on customers perpetually replenishing their distribution channels with the Company's year-round merchandise, as well as ongoing commitments and purchase orders for seasonal fashion goods. The Company's ability to achieve the expected volume and price points of sales indirectly depends on the retailer's continuous ability to sell the Company's merchandise to their end use consumers. The retail apparel industry is highly sensitive to adverse economic factors, such as consumer debt levels, interest rates, and unemployment rates. Any adverse effects of economic conditions on the retail industry can have a negative impact on the level of sales and gross margins that the Company expects to achieve.
Within its Intelligent Fabrics Division, the Company's primary customer base are mills and manufacturing centers that produce textiles which integrate the Company's chemical technologies. The demand for such technologies can be negatively impacted if retailers and distributors of textiles experience adverse consumer spending patterns due to weak economic conditions. This indirectly affects the Company's ability to execute sales volumes and price levels that are anticipated by management.
Licensing Arrangements
The Company is reliant on a number of key licensing and distribution agreements and its future performance could be materially affected by a termination of one or more of such agreements. Termination could arise as a result of any of the following, among others:
- Failure to pay royalties or advertising contributions;
- Failure to meet minimum purchase obligations;
- Failure to achieve minimum sales targets;
- The breach of a material covenant;
- Failure to ship licensed products to authorized customers;
Page 23 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
- Failure to give notice of intention to renew within the stipulated time period
Key Personnel
The senior officers of the Company are critical to its success. In the event of the departure of a senior officer, the Company believes that it will be successful in attracting and retaining qualified successors but there can be no assurance of such success. Recruiting qualified personnel as the Company grows is critical to its success. As the Company's business activities grow, it will require additional key financial, administrative and technical personnel as well as additional operations staff. If the Company is not successful in attracting and training qualified personnel, the efficiency of its operations could be affected, which could have an adverse impact on the Company's future cash flows, earnings, results of operations and financial condition.
Technological Advancements
With regard to the Company's Intelligent Fabrics Division, the chemical industry is subject to significant technological advancements, changing industry standards, market trends, customer preferences and competitive pressures which can, among other things, necessitate revisions in pricing strategies, price reductions and reduced profit margins. The success of the Company will depend on its ability to secure technological superiority in its products and maintain such superiority in the face of new technologies. No assurance can be given that further modification of product offerings of the Company will not be required in order to meet demands or to remain competitive.
Intellectual Property
The success of the Company will depend, in part, on its ability to maintain proprietary protection over its intellectual property and operate without infringing the proprietary rights of third parties. Despite precautions, it may be possible for a third party to copy or otherwise obtain and use the Company's technologies without authorization. There can be no assurance that any steps taken by the Company will prevent misappropriation of its intellectual property. In addition, intellectual property protection may be unavailable or limited in some foreign countries where laws or law enforcement practices may not protect the Company's intellectual property rights as fully as in the United States or Canada, and it may be more difficult for the Company to successfully register its intellectual property rights or challenge the use of those rights by other parties in these countries. If the Company fails to protect and maintain its intellectual property rights, the value of its brands could be diminished and the Company's competitive position may suffer.
In the event that any of the Company's intellectual property is successfully challenged, the Company could be forced to rebrand or re-engineer its products, which could result in loss of brand recognition and could require the Company to devote resources to advertising and marketing new brands and or product development and the Company's competitive position may suffer, which could have a material adverse effect on its financial condition.
Litigation may be necessary to protect and enforce the Company's intellectual property rights, or to defend against claims brought by third parties. Although the Company is not aware of any current claims, the Company's products may, or may be in the future, be claimed to violate intellectual property rights of third parties.
Although the Company cannot currently estimate the likely outcome of any intellectual property-related claims or lawsuits, any such litigation or claims brought by or against the Company could result in substantial costs and diversion of resources, which could have an adverse effect on the Company's business, financial condition and results of operations. If disputes arise in the future, the Company may not be able to successfully resolve these types of conflicts to its satisfaction.
Government Regulation, Regulatory Approvals and Compliance with Laws
Future changes in government regulation could adversely affect the industries in jurisdictions in which the Company operates or intends to operate.
With regard to its Intelligent Fabrics Division's technologies, the Company is dependent on regulatory approvals or registrations and the legal systems in the markets in which it operates, such as the U.S. Environmental Protection Agency ("EPA") and Health Canada. The Company currently has a number of EPA registrations and is in process of securing additional approvals from both the EPA and Health Canada. There is no certainty that such approvals will be granted and regulators could, even after granting such approvals, be stringent on non-compliance with regulatory requirements or change such requirements, which could have a material adverse effect on the Company's business and result in adverse publicity.
The Company is subject to customs, tax, labour and employment, human rights, health and safety, cyber and data security, privacy, environmental, advertising, competition, product safety and other laws. Although the Company has taken measures designed to ensure compliance with governing statutes, laws, regulations and regulatory policies in the jurisdictions in which it conducts business, there is no assurance that it will be in compliance at all times. If management, employees, contractors, suppliers, manufacturers or others fail to comply with any of these laws or regulations for any reason, the Company could become subject to enforcement actions or the imposition of significant penalties or claims, or suffer reputational harm, any of which could adversely affect the Company's business. Additionally, although the Company undertakes to monitor applicable laws, it is possible changes may be implemented or new laws or regulations may be introduced without
Page 24 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
management's knowledge, creating a greater risk of non-compliance. The adoption of new laws or regulations or requirements for public companies or changes in the interpretation of existing laws or regulations may result in increased compliance costs and could make the ordinary conduct of the Company's business more expensive or require it to change the way it does business. It is difficult for the Company to plan and prepare for potential changes to applicable laws, and future actions or expenses related to any such changes could be material to it.
Litigation Risk
The Company faces the risk of litigation and other claims against it. Litigation and other claims may arise in the ordinary course of business and include employee and client claims, commercial disputes, landlord-tenant disputes, intellectual property issues, product-oriented allegations and personal injury claims. These claims can raise complex factual and legal issues that are subject to risks and uncertainties and could require significant management time. As the Company sells products that are produced by third-party manufacturers, these products may expose the Company to various claims, including class action claims relating to merchandise that is subject to a product recall or liability claim. Litigation and other claims against the Company could result in unexpected expenses and liabilities, which could materially adversely affect the Company's operations and reputation.
Insurance Related Risks
The Company believes that it maintains insurance customary for businesses of its size and type, including liability insurance, property and business interruption insurance and directors' and officers' insurance, with deductibles, limits of liability and similar provisions. However, there is no guarantee that such insurance coverage will be sufficient, or that insurance proceeds will be paid to the Company on a timely basis. In addition, there are types of losses the Company may incur but against which it cannot be insured or which it believes are not economically reasonable to insure. If the Company incurs these losses and they are material, its business, financial condition and results of operations may be adversely affected. Also, certain material events may result in sizable losses for the insurance industry and materially adversely impact the availability of adequate insurance coverage or result in significant premium increases. Accordingly, the Company may elect to self-insure, accept higher deductibles or reduce the amount of coverage in response to such market changes.
Customer Adoption
The Company's revenues in its Intelligent Fabrics Division are highly dependent on the willingness of consumers to purchase products based upon their awareness of the benefits that such products provide. Different markets will require differing marketing strategies and the adoption of the Company's products may be slower than anticipated.
Anticipating Consumer Preferences and Developing New, Innovative and Updated Products
The Company's success depends on its ability to identify and originate product trends as well as to anticipate and react to changing consumer demands in a timely manner. Many of the Company's products are subject to changing consumer preferences that cannot be predicted with certainty. If the Company is unable to introduce new products or novel technologies in a timely manner or its new products or technologies are not accepted by its customers, the Company's competitors may introduce similar products in a more timely fashion, which could have an adverse effect on the Company's performance. Failure to anticipate and respond in a timely manner to changing consumer preferences could lead to, among other things, lower sales, excess inventory levels, and deterioration of operating results. Even if the Company is successful in anticipating consumer preferences, its ability to adequately react to and address those preferences will in part depend upon the Company's continued ability to develop and introduce innovative, high-quality products. The Company's failure to effectively introduce new products that are accepted by consumers could result in a decrease in net revenue and excess inventory levels, which could have a material adverse effect on the Company's financial condition.
Reliance on Third Parties
The Company does not manufacture its products or the raw materials for them and relies instead on third-party suppliers. The Company has no long-term contracts with its suppliers or manufacturing sources, and it competes with other companies for fabrics, raw materials, production and import quota capacity.
The Company has occasionally received, and may in the future continue to receive, shipments of products that fail to comply with its technical specifications or that fail to conform to its quality control standards. The Company has also received, and may in the future continue to receive, products that meet its technical specifications but that are nonetheless unacceptable to the Company. Under these circumstances, unless the Company is able to obtain replacement products in a timely manner, it risks the loss of net revenue resulting from the inability to sell those products and related increased administrative and shipping costs. Additionally, if defects in the manufacture of the Company's products are not discovered until after such products are purchased by its customers, the Company's customers could lose confidence in the technical attributes of its products and its results of operations could suffer and its business could be harmed.
The Company may in the future experience a significant disruption in the supply of fabrics or raw materials from current sources and it may be unable to locate alternative materials suppliers of comparable quality at an acceptable price, or at all. In addition, if the Company experiences significant increased demand, or if the Company needs to replace an existing supplier or manufacturer, it may be unable to locate additional
Page 25 of 29
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
supplies of fabrics or raw materials or additional manufacturing capacity on terms that are acceptable to the Company, or at all, or the Company may be unable to locate any supplier or manufacturer with sufficient capacity to meet its requirements or to fill its orders in a timely manner. Identifying a suitable supplier is an involved process that requires the Company to become satisfied with its quality control, responsiveness and service, financial stability and labor and other ethical practices. Even if the Company is able to expand existing or find new manufacturing or raw material sources, it may encounter delays in production and added costs as a result of the time it takes to train its suppliers and manufacturers in its methods, products and quality control standards. Delays related to supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from the Company's markets or from other participants in its supply chain. Any delays, interruption or increased costs in the supply of fabric or manufacture of the Company's products could have an adverse effect on its ability to meet customer demand for its products and could result in lower net revenue and income from operations both in the short and long term.
The Company has entered into an agreement to outsource some of its warehouse and fulfillment functions to third party providers where its inventory is held at sites managed by an independent contractor who will then perform most of its warehousing, packaging and fulfillment services. The Company depends on independent contractor fulfillers to properly fulfill customer orders in a timely manner and to properly protect its inventories. The contractor's failure to ship products to customers in a timely manner, to meet the required quality standards, to correctly fulfill orders, to maintain appropriate levels of inventory, or to provide adequate security measures and protections against excess shrinkage could cause the Company to miss delivery date requirements of its customers or incur increased expense to replace or replenish lost or damaged inventory or inventory shortfall. The failure to make timely and proper deliveries may cause the Company's customers to cancel orders, refuse to accept deliveries, impose non-compliance charges through invoice deductions or other charge-backs, demand reduced prices or reduce future orders, any of which could harm its sales, reputation and overall profitability. The Company's excess inventory held at these facilities may be damaged due to the length of time that they are at the facility, which may not be covered by the contractor or its insurance.
Imposition of Trade Restrictions or Duties
The Company's ability to source its merchandise profitably or at all could be hurt if new trade restrictions are imposed or existing trade restrictions become more burdensome. Canada and the countries in which the Company's products are produced or sold internationally have imposed and may impose additional quotas, duties, tariffs, or other restrictions or regulations, or may adversely adjust prevailing quota, duty or tariff levels. Countries impose, modify and remove tariffs and other trade restrictions in response to a diverse array of factors, including global and national economic and political conditions, which make it impossible for the Company to predict future developments regarding tariffs and other trade restrictions. Trade restrictions, including tariffs, quotas, embargoes, safeguards and customs restrictions, could increase the cost or reduce the supply of products available to the Company or may require the Company to modify its supply chain organization or other current business practices, any of which could harm its business, financial condition and results of operations.
Information Technology Systems
The Company's business is dependent on the successful and uninterrupted functioning of its information technology systems setup by third-party providers, as it outsources many of its major systems. The Company relies on the controls of these providers in lieu of controls setup by the Company. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt the Company's operations. Because the Company's information technology and telecommunications systems interface with and depend on third-party systems, the Company could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions.
Dividend Policy
The Company does not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on common shares will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. The Company's current intention is to apply net earnings, if any, in the foreseeable future to increasing its capital base and development and marketing efforts. There can be no assurance that the Company will ever have sufficient earnings to declare and pay dividends to the holders of common shares, and in any event, a decision to declare and pay dividends is at the sole discretion of the Company's board of directors. If the Company does not pay dividends, its common shares may be less valuable because a return on an investor's investment will only occur if its stock price appreciates.
Centralized Management
Many of the Company's business functions are centralized at its head office location. Disruptions to the operations at that location could have an adverse effect on the Company's business. The Company's head office is located in Markham, Ontario. The Company has centralized a large number of business functions at this location, including product design, client support, marketing and research and development. Most of the Company's senior management and critical resources dedicated to product development, merchandizing, financial and administrative functions, are located at the head office. If the Company were required to shut down the support office location for any reason, including fire, natural disasters, global hostilities, global health crises, disease outbreaks (including COVID-19) or civil disruptions, its management and its operations staff would need to find an alternative location, causing significant disruption and expense to the Company's business and operations.
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
Current and future global economic and political volatility and uncertainty may negatively impact our financial performance, results of operations and our ability to predict future spending requirements and growth, if any.
Current and future global economic, political and social conditions remain volatile in certain parts of the world. Further, acts of terrorism, labor activism or unrest, and other geopolitical unrest, including global events such as the Russian invasion of Ukraine, could cause disruptions in our business or the businesses of our partners or the economy as a whole. If any of the following international business risks were to materialize or become worse, they could have a material adverse effect on our business, financial condition and results of operations:
- social and political instability and, potential terrorist attacks, in a number of countries around the world, including continued hostilities and civil unrest in the Middle East and Ukraine. This instability may have a negative effect on our business, financial condition and operations via our customers and global supply chain;
- epidemics and pandemics, such as the coronavirus outbreak, which may adversely affect our workforce, as well as our suppliers and customers;
- adverse changes in trade restrictions or duties/tariffs, impacting merchandise profitability and supply chain organization;
- adverse changes in government policies, especially those affecting trade and investment; and
- volatility in foreign currency exchange rates, in particular with respect to the U.S. dollar, and transfer restrictions, particularly in China.
As a result, it is difficult to estimate the level of growth or contraction for the global economy as a whole. It is even more difficult to estimate economic growth or contraction in various sectors and regions, including the markets in which we operate. Because all components of our budgeting and forecasting are dependent upon estimates of growth or contraction in the markets we serve and the demand for our products and services, the prevailing economic uncertainties render estimates of future income and expenditures very difficult to make. Adverse changes in events such as the war in Ukraine or the continued prevalence of public health crises, wavering consumer confidence, unemployment, declines in stock markets, contraction of credit availability, declines in real estate values, stagnant economic conditions, increasing nationalism and protectionism, trade tensions and tariff uncertainty, political deadlock, war, financial and trade sanctions, social unrest or other factors affecting economic conditions generally, may negatively impact our ability to meet our targets for revenue, adjusted EBITDA and cash from operating activities.
Natural Disasters, Extreme Weather etc.
The Company's offices, warehouses, distribution centers and digital operations, as well as the operations of the Company's vendors and manufacturers, are vulnerable to disruption from natural disasters, extreme and/or unusual weather, wildfires, global health crises, disease outbreaks, and other unexpected events. These events could cause, and in the case of COVID-19, have already caused and are expected to continue to cause for the foreseeable future, disruptions in the operations of the Company's corporate offices and supply chain and those of the Company's vendors and manufacturers.
These events could reduce the availability and quality of raw materials used to manufacture the Company's products which could result in delays in responding to consumer demand resulting in the potential loss of customers and revenues or the Company may incur increased costs to meet demand and may not be able to pass all or a portion of higher costs on to customers, which could adversely affect gross margin and results of operations.
Counterparty Risk
The Company is party to contracts, transactions and business relationships with various third parties, pursuant to which such third parties have performance, payment and other obligations to the Company. If any of these third parties were to become subject to bankruptcy, receivership or similar proceedings, the Company's rights and benefits in relation to the contracts, transactions and business relationships with such third parties could be terminated, modified in a manner adverse to the Company, or otherwise impaired. The Company cannot make any assurances that it would be able to arrange for alternate or replacement contracts, transactions or business relationships on terms as favorable as its existing contracts, transactions or business relationships, if at all. Any inability on the Company's part to do so could have a material adverse effect on its business and results of operations.
Trading Price Volatility
The market price of the common shares could be subject to significant fluctuations which could materially reduce the market price of the common shares regardless of the Company's operating performance. In addition to the other risk factors described in this section of this Annual Information Form, such factors include actual or anticipated changes or fluctuations in operating results, adverse market reaction to any indebtedness the Company may incur or securities it may issue in the future, litigation or regulatory action, significant acquisitions, business combinations or other strategic actions or capital commitments by or involving the Company or its competitors, recruitment or departure of key
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
personnel and investors' general perception and reactions to the Company's public disclosure and filings.
In addition, broad market and industry factors may harm the market price of the common shares. As a result, the market price of the common shares may fluctuate based upon factors external to the Company and that may have little or nothing to do with the Company, including expectations of market analysts, positive or negative recommendations or withdrawal of research coverage by analysts, publication of research reports or news stories about the Company, competitors or the industry and changes in general political, economic, industry and market conditions and trends.
Concentrated Share Ownership
The President and Chief Executive Officer of the Company owns approximately 63% of the outstanding common shares. This concentrated ownership results in various impediments on the ability or desire of a third party to acquire control of the Company. This may discourage, delay or prevent a change of control of the Company or an acquisition of the Company at a price that shareholders may find attractive. The existence of the concentrated ownership may also discourage proxy contests and make it difficult or impossible for the Company's holders of common shares to elect directors and take other corporate actions without the approval of the President and Chief Executive Officer. Such concentration of ownership may also have a negative impact on the trading price of the common shares.
Cybercrime
Cybercrime poses a significant risk due to the potential for direct financial losses through fraud, ransom payments, or fines due to regulatory non-compliance.
The Company attempts to mitigate cybercrime by the adoption of a structured cybersecurity framework in order to assess and manage cyber risks systematically.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of these financial statements requires management to select appropriate accounting policies and to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities at the end of the reporting period. The estimates and related assumptions are based on previous experience and other factors considered reasonable under the circumstances, the results of which form the basis of making assumptions about carrying values of assets and liabilities that are not readily apparent from other sources.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of revision and future periods if the revision affects both current and future periods.
Significant assumptions about the future that management has made and that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:
Benefits of deferred income tax assets
The recognition of deferred income tax assets is based on the Company's judgment. The assessment of the probability of future taxable income in which the deferred income tax assets can be utilized is based on management's best estimate of future taxable income that the Company expects to achieve based on its internal projections. The estimate is adjusted for significant non-taxable income and expenses and for specific limits to the use of any unused tax loss or credit. Deferred income tax assets are recognized to the extent it is probable that estimated taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax losses can be utilized.
Revenue recognition
Revenue recognized from contracts with variable consideration is based on estimates and judgments on achieving future milestones and unit sales. Projections of future sales is based on historical data and projections from customers.
Recoverability of deposit
The Company has an outstanding deposit from a foreign supplier in respect of a contract for the purchase of merchandise, which was partially fulfilled. An arbitrator ruled in favour of the Company in respect of its claim and the Company is currently following a court mandated process to recover its deposit. Given the uncertain recovery timeline and its inability to fully assess the degree of recoverability, the Company has made provision for the full impairment of its claim of $3,842,153 in its prior financial period. As of December 31, 2025, the Company had recovered an amount of Chinese RMB 1,921,335.41 to date. Accordingly, the previously recorded impairment provision has been reduced by an amount of $361,980, being the Canadian $ equivalent. The collection process is ongoing.
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iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
Valuation of inventories
Provisions for non-saleable inventories are prepared by management based on estimates and judgments that include current market prices, current economic trends and past experience in the measurement of net realizable value.
Actual results could differ from these estimates and may require a material adjustment to the carrying amount of affected assets and liabilities, or on the reported results of revenues, expenses, gains or losses.
ACCOUNTING POLICY DEVELOPMENTS
Adoption of new or amended accounting standards
During the period ended December 31, 2025 the Company did not amend any of its accounting policies as the result of new or revised accounting standards which became effective for the annual reporting period commencing on January 1, 2025
i) New standards, interpretations and amendments adopted from January 1, 2024
IAS 21 The Effects of Changes in Foreign Exchange Rates (Amendment - Currency Translation - Lack of Exchangeability)
Under the revised guidance, when exchangeability between two currencies is lacking at the measurement date, the Company estimates the spot exchange rate that would have applied in an orderly transaction between market participants. The adoption of these amendments did not have a material impact on the Company's financial statements.
ii) New standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January 2027 and 1 January 2026:
- IFRS 18 Presentation and Disclosure in Financial Statements
- Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7)
DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to provide reasonable assurance that material information relating to the Company is made known to the Chief Executive Officer and the Chief Financial Officer (the "Certifying Officers") by others on a timely basis so that appropriate decisions can be made regarding public disclosure within the time periods required by applicable securities laws. The Certifying Officers are responsible for establishing and maintaining the Company's disclosure controls and procedures. Based on an evaluation of the Company's disclosure controls and procedures, the Company's Certifying Officers have concluded that these controls are appropriately designed and were operating effectively as of December 31, 2025. Although the Company's disclosure controls and procedures were operating effectively as of December 31, 2025, there can be no assurance that the Company's disclosure controls and procedures will detect or uncover all failures of persons within the Company to disclose material information otherwise required to be set forth in the annual regulatory filings.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Internal control over financial reporting ("ICFR") is designed to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of financial statements in accordance with IFRS. The Certifying Officers are responsible for establishing and maintaining adequate ICFR for the Company. The Certifying Officers have evaluated the effectiveness of the Company's ICFR as at December 31, 2025 and whether any material weaknesses relating to the design of the Company's ICFR were existing as at December 31, 2025. Based on that evaluation, the Certifying Officers concluded that the ICFR, as defined by National Instrument 52-109 – Certification of Disclosure on Issuers' Annual and Interim Filings, are appropriately designed and were operating effectively and that no material weaknesses were identified through their evaluation. The Certifying Officers have evaluated whether there were any changes in the Company's ICFR that occurred during the period ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, its ICFR. No such changes were identified through their evaluation.
ADDITIONAL INFORMATION
Additional information relating to the Company, including the Company's Annual Information Form, is available on SEDAR+ at www.sedarplus.ca. Additional information can also be found on the Company's website at www.ifabriccorp.com.
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