AI assistant
iFabric Corp. — Management Reports 2026
May 20, 2026
46118_rns_2026-05-20_34ecdfd4-6fb1-4ef6-ac99-5896e0a0e91f.pdf
Management Reports
Open in viewerOpens in your device viewer
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 unaudited condensed consolidated interim statements as at and for the period ended March 31, 2026 and the audited consolidated financial statements and notes thereto for the twelve months ended December 31, 2025 and the comparative year ended December 31, 2024. All financial information in this MD&A and the unaudited condensed consolidated interim financial statements and accompanying notes thereto were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). This MD&A is dated May 11, 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, and "Q4" refers to the period of September 1 to December 31.
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 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.
Page 1 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
Adjusted EBITDA
The Company uses Adjusted EBITDA to assess its operating performance and earnings, 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 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. Refer page 15 for reconciliation of Adjusted EBITDA and EBITDA.
Page 2 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
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, swimwear and footwear, 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 it 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 called Nudish™. 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, The Natural®, 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, swimwear and footwear, 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.
Page 3 of 18
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, a 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, and medical apparel brand Frontline, which were 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,
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 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 COVID-19 pandemic 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®
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
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.
Page 6 of 18
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.
RECENT DEVELOPMENTS
Exceptional Revenue and Earnings Growth
The first quarter of 2026 saw the Company deliver record revenues of $27,502,695 and record Adjusted EBITDA of $5,733,393. The exceptional results were driven by a combination of expanding market opportunities and sustained organic growth across the company's core product lines. Retail partners have continued to encourage iFabric to broaden its presence into new categories and channels with them, opening the door to incremental revenue streams while reinforcing long-standing relationships. Standout drivers of revenue growth in Q1 were new medical apparel (scrubs) and footwear programs announced over recent months, followed by the results of the rebranding of intimate apparel product lines.
At the same time, the company's core product portfolio delivered robust performance, benefiting from increased store count penetration and stronger consumer demand. This dual engine of growth—new market entry alongside deeper retail integration—has positioned iFabric for continued momentum.
First Major Retail Scrubs Programs
On March 4, 2026, the Company announced that IFTNA had secured a 1,000-store expansion of the Doctor's Choice® scrubs program at a major US retailer. 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
Page 7 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
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.
New Intimate Apparel Brand
On December 31, 2025, the Maidenform® agreement under which most products of the Intimate Apparel Division had been sold, expired and, was not renewed. Instead, products similar to those previously marketed under Maidenform® brands, are now marketed under a newly developed own brand of the Company called Nudish™. A major difference is that the company's own branded products will target a younger demographic, whereas Maidenform® products targeted an older demographic. In addition, the new brand is free from the product restrictions imposed by the prior license. This 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 will continue to develop and supply intimate apparel products for sale under the private label brands of certain major retailers, as well as another of the Company's long-established own brands, The Natural®, which strives to be demographic neutral. The new Nudish™ brand was launched at major retailers in the current quarter.
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. 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. As at the date hereof the US Administration has commenced refunding IEEPA tariffs paid by importers of record. Accordingly, the Company has initiated a process to recover approximately $850,000 in IEEPA tariffs, paid by it on goods imported into the US from China to the date that these tariffs no longer applied. The recovery of the amount claimed is contingent on the US Administration continuing to honor its commitment to refund such tariffs. The company will recognize in income, any amounts subsequently recovered, as and when funds are received.
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 years.
| 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 |
| Pre-tax earnings (loss) before non-recurring provisions | 32,874,918 | 2,228,476 | 779,376 | (207,481) | 3,042,093 |
| Non-recurring provision | - | - | (3,842,153) | - | - |
| Pre-tax earnings (loss) after non-recurring provisions | 32,874,918 | 2,228,476 | (3,062,777) | (207,481) | 3,042,093 |
| 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 | - | - | - | - | - |
Page 8 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
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 four fiscal periods.
RESULTS OF OPERATIONS – THREE MONTHS ENDED MARCH 31, 2026 AND 2025
The following table sets forth the Company's unaudited condensed consolidated statements of earnings (loss) and comprehensive earnings (loss) for the three months ended March 31, 2026 and 2025:
| For the three months ended March 31, | 2026 | 2025 |
|---|---|---|
| REVENUE | 27,502,695 | 7,080,440 |
| COST OF SALES | 18,550,478 | 4,340,986 |
| GROSS PROFIT | 8,952,217 | 2,739,454 |
| EXPENSES | ||
| General and administrative costs | 1,862,691 | 1,550,750 |
| Selling costs | 2,000,060 | 850,168 |
| Interest expense | 117,200 | 35,997 |
| Depreciation of property, plant and equipment and right-of-use assets | 44,953 | 47,038 |
| Amortization of deferred development costs | 8,901 | 8,901 |
| Share-based compensation | - | 131,220 |
| 4,033,805 | 2,624,074 | |
| EARNINGS FROM OPERATIONS | 4,918,412 | 115,380 |
| OTHER EXPENSES (INCOME) | ||
| Loss (gain) on foreign exchange | 28,945 | 20,058 |
| 28,945 | 20,058 | |
| EARNINGS BEFORE INCOME TAXES | 4,889,467 | 95,322 |
| PROVISION FOR (RECOVERY OF) INCOME TAXES | ||
| Current | 451,553 | (31,736) |
| Deferred | 727,700 | 38,600 |
| 1,179,253 | 6,864 | |
| NET EARNINGS | 3,710,214 | 88,458 |
| OTHER COMPREHENSIVE EARNINGS (LOSS) | ||
| Unrealized gain (loss) on translation of foreign operations | 184,935 | (4,657) |
| TOTAL COMPREHENSIVE EARNINGS | 3,895,149 | 83,801 |
| EARNINGS PER SHARE | ||
| Basic | 0.122 | 0.003 |
| Diluted | 0.122 | 0.003 |
Page 9 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
SELECTED OPERATING SEGMENT DATA
| Three months ended March 31, 2026 | Intimate Apparel | Intelligent Fabrics | Other Segments | Corporate Items and Eliminations | Consolidated |
|---|---|---|---|---|---|
| External Revenue | 3,902,448 | 23,600,247 | - | - | 27,502,695 |
| Earnings (loss) before income taxes | 634,649 | 4,180,478 | 16,797 | 57,543 | 4,889,467 |
| Three months ended March 31, 2025 | Intimate Apparel | Intelligent Fabrics | Other Segments | Items and Eliminations | Consolidated |
| External Revenue | 1,250,739 | 5,824,451 | 5,250 | - | 7,080,440 |
| Earnings (loss) before income taxes | (119,154) | 564,893 | (49,580) | (300,837) | 95,322 |
| Three months ended March 31, | 2026 | 2025 | |||
| External sales revenue | |||||
| Canada | 10,510,731 | 4,366,988 | |||
| United States | 15,954,208 | 1,664,218 | |||
| Southeast Asia and other | 1,037,756 | 1,049,234 | |||
| Total | 27,502,695 | 7,080,440 |
Q1 2026 FINANCIAL HIGHLIGHTS
| Three months ended March 31, | 2026 | 2025 |
|---|---|---|
| Revenue | 27,502,695 | 7,080,440 |
| Earnings from operations | 4,918,412 | 115,380 |
| Share based compensation | - | (131,220) |
| Adjusted EBITDA *(Note) | 5,733,393 | 318,478 |
| Net earnings before tax | 4,889,467 | 95,322 |
| Net earnings after tax attributable to shareholders | 3,710,214 | 88,458 |
| Other comprehensive earnings (loss) | 184,935 | (4,657) |
| Total comprehensive earnings | 3,895,149 | 83,801 |
| Net earnings per share | ||
| Basic | 0.122 | 0.003 |
| Diluted | 0.122 | 0.003 |
*Note: Adjusted EBITDA represents earnings before interest, taxes, depreciation, amortization and share based compensation
Page 10 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
DISCUSSION OF THE RESULTS OF OPERATIONS – THREE MONTHS ENDED MARCH 31, 2026 AND 2025
Revenue
Revenue of $27,502,695 in Q1 2026 compared to $7,080,440 in 2025, representing an increase of $20,422,255. With respect to the reportable operating segments of the Company, revenue in its Intimate Apparel segment increased to $3,902,448 in Q1 2026 from $1,250,739 in 2025, representing an increase of $2,651,709 or 212% and, revenue increased in its Intelligent Fabrics segment to $23,600,247 in Q1 2026 from $5,824,451 in 2025, representing an increase of $17,775,796 or 305%. Geographically, revenues increased in Canada and the US, while revenues Southeast Asia decreased during Q1 2026 versus the comparative period in 2025.
Overall, revenue increased 288% during Q1 2026 in comparison to 2025. The increase in Intimate Apparel operating segment revenue in 2026 versus 2025 was primarily attributable to increased intimate apparel sales in the US, resulting from the launch of the segment's own brand Nudish™, at major retailers, following the expiry of the prior Maidenform® license arrangement on December 31, 2025. The new brand targets a younger demographic, whereas products marketed under the prior Maidenform® brand targeted an older demographic. In addition, the new brand is free from the product restrictions imposed by the prior license. This 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. The increase in revenues in the Intelligent Fabrics segment is mainly resultant from increased apparel sales in Canada and the US, as a result of new and expanded existing programs in this segment. In particular, new product launches included the segment's first major scrubs and footwear programs, as earlier discussed in this MD&A.
Gross profit
Gross profit as a percentage of revenue was 33% in Q1 2026 compared 39% in 2025. The decrease in gross percentage is primarily due to product mix, with a higher proportion of lower margin products being shipped in the current quarter, particularly with regard to the Intelligent Fabrics segment, as well as increased tariffs in the US on goods imported from China.
Gross profit in dollars increased by 227% or $6,212,763 to $8,952,217 in Q1 2026 compared to $2,739,454 in 2025, attributable to increased revenues.
Selling, general and administrative costs
Selling, general and administrative costs increased by $1,461,833 (61%) to $3,862,751 in Q1 2026 compared to $2,400,918 in 2025, mainly as a result of increased variable selling costs comprising royalties and commissions relating to the increased sales, as well as increased personnel, advertising and travel costs incurred to support future business initiatives.
Interest Expense
Interest expense during Q1 2026 was $117,200 compared to $35,997 in 2025, with the increase attributable to increased utilization of the Company's bank operating credit line and a new trade finance facility.
Depreciation and Amortization
Depreciation of the Company's property, plant and equipment and amortization of deferred development costs totaled $53,854 during Q1 2026 compared to $55,939 during 2025.
Share-based compensation
Share-based compensation costs in Q1 2026 amounted to $0, compared to $131,220 in the comparable quarter of 2025. The decrease is due to no vesting of options during the quarter.
Loss (gain) on foreign exchange
In Q1 2026, the Company's loss on foreign exchange was $28,945 versus a loss of $20,058 in 2025.
Provision (recovery) of income taxes
The Company's provision of income taxes in Q1 2026 was $1,179,253, compared to a provision of income taxes of $6,864 in 2025. Included in earnings before income taxes are certain non-taxable items for tax purposes, for example unrealized exchange gains, as well as non-deductible items for tax purposes, such as share based compensation. Differences in the amounts of non-taxable and non-deductible expenses is the primary reason for the change in the Company's effective tax rate in Q1 2026 compared to Q1 2025.
Net earnings and EBITDA
The net earnings during Q1 2026 was $3,710,214 ($0.122 per share, basic and diluted) compared to net earnings of $88,458 in 2025 ($0.003 per share, basic and diluted). The increase in the net earnings is primarily attributable to increased revenues and gross profit dollars as
Page 11 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
discussed above. Adjusted EBITDA for Q1 2026 amounted to $5,733,393 compared to adjusted EBITDA of $318,478 in 2025, representing an increase of $5,414,915.
Other comprehensive earnings (loss)
In Q1 2026, there was a gain of $184,935 included in other comprehensive earnings compared to a loss of $4,657 in 2025, in respect of unrealized gains and losses arising on currency translation of foreign operations. Total comprehensive earnings amounted to $3,895,149 in Q1 2026 compared to total comprehensive earnings of $83,801 in Q1 2025.
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.
SUMMARY OF QUARTERLY RESULTS
| Fiscal 2026 | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| Revenue | 27,502,695 | |||
| Net earnings (loss) attributable to common shareholders | 3,710,214 | |||
| Net earnings (loss) per common share | ||||
| Basic | 0.122 | |||
| Diluted | 0.122 | |||
| Fiscal 2025 | 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 | 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 |
Page 12 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
The following table sets forth the Company's unaudited condensed consolidated statements of financial position as at March 31, 2026 and December 31, 2025:
| As at | March 31, 2026 | December 31, 2025 |
|---|---|---|
| ASSETS | ||
| Current assets | ||
| Cash | 1,760,999 | 3,783,334 |
| Accounts receivable | 25,456,268 | 9,838,190 |
| Inventories | 16,839,810 | 21,025,662 |
| Income taxes recoverable | 500 | 10,108 |
| Foreign exchange forward contracts | 4,424 | - |
| Prepaid expenses and deposits | 1,332,166 | 2,870,616 |
| Total current assets | 45,394,167 | 37,527,910 |
| Non-current assets | ||
| Property, plant and equipment | 3,350,190 | 3,370,038 |
| Right-of-use assets | 268,848 | 293,954 |
| Deferred development costs | 97,910 | 106,810 |
| Deferred income taxes | 905,800 | 1,633,500 |
| Goodwill | 55,050 | 55,050 |
| Total non-current assets | 4,677,798 | 5,459,352 |
| Total assets | 50,071,965 | 42,987,262 |
| LIABILITIES | ||
| Current liabilities | ||
| Operating credit line | 6,998,802 | 6,661,109 |
| Trade finance facility | 2,279,961 | - |
| Accounts payable and accrued liabilities | 11,411,982 | 10,826,557 |
| Customer deposits | 24,435 | 24,435 |
| Income taxes payable | 646,737 | 543,533 |
| Current portion of lease liability | 107,470 | 107,470 |
| Current portion due to related parties | 164,031 | 231,469 |
| Current portion of car loan payable | 2,425 | 5,928 |
| Bank loan payable | 3,626,653 | 3,646,044 |
| Total current liabilities | 25,262,496 | 22,046,545 |
| Non-current liabilities | ||
| Non-current portion of lease liability | 216,831 | 243,228 |
| Total non-current liabilities | 216,831 | 243,228 |
| Total liabilities | 25,479,327 | 22,289,773 |
| Commitments | ||
| EQUITY | ||
| Capital stock | 8,818,844 | 8,818,844 |
| Reserves | 7,179,614 | 7,179,614 |
| Retained earnings | 8,294,038 | 4,583,824 |
| Accumulated other comprehensive earnings | 300,142 | 115,207 |
| Total equity | 24,592,638 | 20,697,489 |
| Total liabilities and equity | 50,071,965 | 42,987,262 |
Page 13 of 18
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 decreased by $2,022,335 to $1,760,999 as at March 31, 2026 from $3,783,334 as at December 31, 2025, mainly attributable to payments for inventory.
Total accounts receivable at the end of Q1 2026 was $25,456,268 compared to $9,838,190 as at December 31, 2025, representing an increase of $15,618,078, as a result of the significant increase in revenues in Q1 2026 compared to 2025.
Total inventory decreased by $4,185,852 to $16,839,810 at the end of Q1 2026 from $21,025,662 at the end of fiscal 2025 due to shipments during the current quarter.
Prepaid expenses and deposits decreased by $1,538,450 to $1,332,166 as at March 31, 2026 from $2,870,616 as at December 31, 2025 as a result of inventory received during Q1 2026.
Property, plant and equipment at the end of Q1 2026 totaled $3,350,190 compared to $3,370,038 at the end of fiscal 2025, with the decrease attributable to amortization.
Right-of-use assets decreased to $268,848 in Q1 2026 compared to $293,954 at the end of fiscal 2025, with the difference attributable to amortization.
Deferred development costs decreased to $97,910 at the end of Q1 2026 from $106,810 at the end of fiscal 2025, with the difference attributable to amortization.
Deferred income taxes decreased to $905,800 at the end of Q1 2026 from $1,633,500 at the end of fiscal 2025 with the decrease attributed to the utilization of accumulated tax losses in the current quarter.
Current liabilities amounted to $25,262,496 at March 31, 2026 compared to $22,046,545 as at December 31, 2025 representing an increase of $3,215,951, mainly attributable to the utilization of the Company's bank operating credit line and trade finance facility, as well as an increase in accounts payable in respect of inventory received during the quarter.
Non-current liabilities at the end of Q1 2026 were $216,831 compared to $243,228, as a result of the repayments during the quarter against a lease liability.
NON-GAAP PERFORMANCE MEASURES
The following tables reconcile Non-GAAP Performance Measures used by the Company in analyzing the operational performance and earnings 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 March 31, 2026 and 2025.
EBITDA and Adjusted EBITDA
The following table reconciles net earnings and comprehensive earnings (loss) attributable to owners of the Company to our Non-GAAP Performance Measure, Adjusted EBITDA:
Page 14 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
| Three months ended March 31, | 2026 | 2025 |
|---|---|---|
| Net earnings after tax attributable to shareholders | 3,710,214 | 88,458 |
| Add (deduct): | ||
| Net earnings attributable to non-controlling interest | - | - |
| Provision for income taxes | 1,179,253 | 6,864 |
| Share-based compensation | - | 131,220 |
| Maidenform license transition costs | 187,650 | - |
| ERP system - Implementation costs | 93,506 | - |
| Illegal US IEEPA Tariffs (refundable) | 391,716 | - |
| Amortization of deferred development costs | 8,901 | 8,901 |
| Depreciation of plant, property and equipment and right-of-use assets | 44,953 | 47,038 |
| Interest expense | 117,200 | 35,997 |
| Adjusted EBITDA | 5,733,393 | 318,478 |
| Add (deduct): | ||
| Share-based compensation | - | (131,220) |
| Maidenform license transition costs | (187,650) | - |
| ERP system - Implementation costs | (93,506) | - |
| Illegal US IEEPA Tariffs (refundable) | (391,716) | - |
| EBITDA | 5,060,521 | 187,258 |
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 and earnings performance, by excluding items such as share-based compensation and other expense items which, are unusual, non-recurring or 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.
Credit Facilities
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, (December 31, 2025 - $12,000,000) against which $6,998,802 was outstanding as at March 31, 2026 (December 31, 2025 - $6,661,109). 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 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.
The Company has a trade finance facility available to a maximum of $2,500,000, against which $2,279,961 was outstanding as at March 31, 2026 (December 31, 2025 - $0). The facility bears interest at a fixed rate of 6% per annum and each draw against the facility is required to be repaid within 150 days from the date of advance
Fixed Rate Term Loan
One of the Company's subsidiaries has a fixed rate demand term loan, against which $3,626,653 was outstanding at March 31, 2026 (March 31, 2025 - $3,646,044). The loan is payable 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 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 only the minimum monthly payments during the next twelve months.
Page 15 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
Working capital
Working capital represents current assets less current liabilities. As at March 31, 2026, The Company's adjusted working capital (working capital adjusted to exclude a term loan of $3,626,653, classified as current under IFRS) was $23,758,324 compared to working capital of $19,883,462 as at March 31, 2025, representing an increase of $3,874,862, mainly attributable to the net earnings for the current quarter.
Operating activities
Cash used in operating activities during the three months ended March 31, 2026, amounted to $4,701,107 compared to an amount of $3,671,771 provided by operating activities during the three months ended March 31, 2025, representing an increase in net cash outflow of $8,372,878. The increase in operational cash outflow can mainly be attributed to the increase in accounts receivable.
Financing activities
Cash provided by financing activities during the three months ended March 31, 2026, amounted to $2,493,837, compared to $152,543 provided by financing activities during the three months ended March 31, 2025, representing an increase of $2,341,294 in financing cashflow, attributable to utilization of the bank operating credit line and trade finance facility.
Investing activities
No cash was used in investing activities during the three months ended March 31, 2026, compared to $237,058 used in investing activities during the three months ended March 31, 2025, representing a decrease in cash outflow of $237,058. The decrease is mainly attributable to the amount capitalized in respect of the Company's new Enterprise Resource Planning (ERP) system in 2025, which was essentially the software component.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements as of March 31, 2026.
COMMITMENTS & CONTRACTUAL OBLIGATIONS
During Q1 2026, there have been no significant changes in the contractual obligations from those disclosed in the Company's 2025 Annual Financial Statements and MD&A. These are:
(a) The Company enters into foreign exchange forward contracts to manage the risks associated with exchange rate fluctuations. For additional information refer to note 7 to the Q1 2026 financial statements.
(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 commencing on April 1, 2024 and expiring March 31, 2029, with the option of renewal for a further period of 5 years. Basic rent payable is $17.95 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 lease liability have been recognized 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.
Page 16 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
RELATED PARTY TRANSACTIONS
During the three-month period ended March 31, 2026, there have been no significant changes in related party transactions from those disclosed in the Company’s 2025 audited consolidated financial statements.
FINANCIAL RISK MANAGEMENT
The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. There have been no significant changes in the Company’s risk exposures during the three months ended March 31, 2026, from those described in the Company’s audited annual consolidated financial statements for the fiscal year ended December 31, 2025.
OUTSTANDING SHARE DATA
As of the date of this MD&A, the Company had 30,299,467 common shares outstanding. Furthermore, the Company had 1,884,000 options issued and outstanding, of which 1,805,500 were exercisable.
RISKS & UNCERTAINTIES
The Company is exposed to various operational risks and uncertainties which are described in the Company’s 2025 annual MD&A and Annual Information Form. The risks and uncertainties disclosed in the 2025 annual MD&A and Annual Information Form are not exhaustive. New risk factors may emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the Company’s business, performance, condition, results, operations or strategies and plans.
No new risk factors were identified during the quarter ended March 31, 2026.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
This MD&A is based upon the Q1 2026 unaudited condensed consolidated interim financial statements, which have been prepared in accordance with IFRS and IAS 34, “Interim Financial Reporting”. The preparation of the Q1 2026 unaudited condensed consolidated interim 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 could result in a material adjustment to the carrying amounts of assets and liabilities, or on the reported results of revenues, expenses, gains, or losses, in the event that actual results differ from assumptions made. The methods used to calculate critical accounting estimates are consistent with prior periods.
During Q1 2026, there were no significant changes to methods used to:
- Cost inventory or determine provisions for obsolete or slow-moving inventory
- Determine impairment of deferred development costs
- Determine impairment of deferred income tax assets
- Determine impairment or estimated useful lives of property, plant and equipment
- Determine the fair value of share-based payment transactions
For further details concerning the use of estimates, judgments and assumptions in the preparation of the Company’s Q1 2026 unaudited condensed consolidated interim financial statements, along with details of the significant accounting policies used in the preparation of such interim financial statements, specific reference should be made to note 3 of the Company’s audited annual consolidated financial statements for the fiscal year ended December 31, 2025.
ACCOUNTING POLICY DEVELOPMENTS
The significant accounting policies as disclosed in the Company’s audited annual consolidated financial statements for the period ended
Page 17 of 18
iFABRIC CORP.
MANAGEMENT'S DISCUSSION & ANALYSIS
(In Canadian dollars, except as otherwise noted)
December 31, 2025 have been applied consistently in the preparation of the Q1 2026 unaudited condensed consolidated interim financial statements. There were no new developments in accounting standards requiring implementation in the current quarter.
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 March 31, 2026. Although the Company's disclosure controls and procedures were operating effectively as of March 31, 2026 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 March 31, 2026 and whether any material weaknesses relating to the design of the Company's ICFR were existing as at March 31, 2026. 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 fiscal period ended March 31, 2026 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, consolidated audited annual financial statements, and unaudited condensed consolidated interim financial statements, is available on SEDAR+ at www.sedarplus.ca. Additional information can also be found on the Company's website at www.ifabricorp.com.
Page 18 of 18