On you. Okay.

Thank you. Good morning, everyone, and welcome.

As I normally do, I'll start the webinar by saying that we put out a very comprehensive press release on the Q2 and six-month numbers and results. The releases, as well as the financial statements, management discussion and analysis, can be viewed on our website at www.ifabriccorp.com.

I'm going to deal with what I consider the main or salient features of the results. I'll start with revenues.

Q2 revenues came in at $9.6 million, compared to $5.8 million in 2025, which is an increase of $3.8 million, or 65%. There's one item I'd like to discuss here, and that is we provided $650,000 in advertising support to customers, and as required by IFRS, this is deducted from revenues.

In fact, our true amount invoiced to customers was around $10.3 million. Look, I don't agree with this requirement.

I think it's stupid, but it is what it is. Revenues were reduced by $650,000.

The rule is that if the customer gets to determine how the dollars are spent, it's a deduction from revenue. With regard to the six months revenues, those came in at a record $37.1 million, compared to $12.9 million in 2025, which is an increase of $24.2 million, or 188%, an absolute record.

I'd like to take a few moments to discuss the seasonal nature of our business. In this regard, we have two kinds of programs: seasonal programs, and this would include products like swimwear, footwear.

These are set programs, and currently range in size from around $3 million to $8 million. They sell through fairly quickly, around two to three months, and these programs normally ship in Q1 and Q4.

That's the reason why those are our biggest quarters historically. That may change in time as we get programs through the middle part of the year, but at this point, those programs generally go out in Q1 and Q4.

The second category of revenue is from replenishment. These are programs that run throughout the year.

Those kind of products would be scrubs, leak-proof underwear, and the bulk of our intimate apparel. In the current quarter, we mainly focused on replenishment.

I don't believe we did any set programs. If you look at the 65% increase, growth year-on-year, that's a good indication of strong momentum in my mind.

Gross margins, on the face of it, margins dropped from 37% last year to 30 30% in the current quarter. Here again, the $650,000 that we provided in advertising is deducted from margins, because it's deducted from revenue, it flows down to margins.

The four 7% drop in margins is attributable to that $650,000 deduction for advertising. Going forward, we've taken the decision, actually, to provide less direct support to customers in favor of doing the advertising campaigns or the marketing ourselves in-house.

We've hired specialists to do that. In our experience, retailers don't always spend the marketing dollars efficiently, and I think actually we could do a better job.

It'll also make for far more consistent margins, which I think tends to confuse investors. Selling and administration expenses increased by $800,000 in the quarter compared to 2025.

Most of the increase is variable costs, such as royalties and commissions, as a result of the increased revenues. Although we did do a lot more travelling in the quarter, and we have increased our staff compliment year-over-year.

That is part of the increase, but the bulk of the increase is variable costs. EBITDA, that came in at $715,000.

Oh, let me just discuss one other thing before EBITDA. In the quarter, I'm pleased to report that we've recognized $925,000 as sundry income in respect of the recovery of tariffs, Trump tariffs.

This is net of our processing costs. The amounts been fully processed by US Customs, and to date, we've already received $710,000 in cash.

We've got $215,000 still to be received, which I believe will be received in the next quarter. EBITDA came in at $715,000, a turnaround of about $1 million from 2025.

I was projecting breakeven, the tariff recovery obviously did provide us with some earnings. Hey, I'll take it.

All gifts graciously received. EBITDA for the six months is $5.8 million, compared to $0 in 2025, and that's an absolute record for the company.

Anything else here? No, it's cool.

I think that's it for the profit and loss account or the income statement. In terms of our balance sheet, our balance sheet's been beefed up by a very successful capital raise that we closed in June.

We received, or we banked, net proceeds of around $21 million. We finished the quarter with $25 million in cash after paying off our credit line, and our working capital stood at around $45.1 million.

Together with available credit lines of about $14 or $15 million between our trade credits and our regular bank line, I've calculated that we can push revenues well north of $100 million without the need for additional capital. Oh, yeah.

I think that's all I really have to say, and happy to answer any questions.

Today the deposits have grown to $5 million. That's indicative of the fact that all the programs that we're expecting for the latter part of the year are starting to materialize and crystallize.

I think the deposits figure will grow a bit more. Normally we put down 25%, if you time that number by four, that shows what's already in the books, with more

to come. Also just to add to that is we've negotiated some better terms with our suppliers, our deposit numbers are a little bit lower on the front end.

That's why you're seeing a little bit of a lower number on deposits.

I did mention that $650,000 is all IFTNA, so that did impact IFTNA's margins. Our target for blended is 35%.

Intimate apparel tends to be a bit higher, round about 49, 50%. IFTNA generally around 30% because of we dealing with major retailers.

We do work of higher volume, lower margin. Depends on the product mix what the ultimate margins for the quarter will be.

We do a high proportion of intimates, you should see better margins. We do a high proportion of intelligent fabrics, the margins will drop.

Yes, it will be recurring, but I think we're going to try and cut back on it and push back against retailers, because they just ask for a number and quite frankly we no longer just accept those kind of numbers from retailers. We'll fight back.

I think we can do a better job. Yes, we still will provide some advertising directly to retailers, but our long-term strategy is to do the campaigns ourselves.

In fact, we've kind of already proved that strategy out with Target on the scrub program that we did. There was a big ask for some advertising dollars there that we pushed back and took on ourselves.

Has really been doing well for us and for the program, and they're quite happy with it. I think we'll be successful doing that with further programs with them, as well as the other retailers.

Yes, we're going to foot all the development costs. We're going to pay for all testing, development.

They will not charge us any fees. Obviously all the work they do is their end of the contract.

We'll pay for all the direct costs.

Just depends how successful we are. The more we have to trial and error, the more expensive it'll be.

Obviously if we get it right straight away or in the short term, we'll obviously have a much lower cost.

As we've done some preliminary work, we do have a decent base to start working off of, we're hopeful it won't be too much trial and error.

It's staying kind of the same as where we were. As soon as there's space available for us, we'll add into additional stores.

They have a glut of inventory from the incumbent that they're trying to move through. All signs are still, as we've mentioned previously, that we would look to be a good part of their business in the scrubs by fall of '27.

Giancarlo,

can I jump in here, Giancarlo? Giancarlo, am I correct in saying that our bigger goal is to get more shelf space?

Our bigger goal is to get more shelf space, potentially introduce new brands that are owned by us as well, and to increase SKU count, as well as add doors. It's a combination of all of it.

Cool. Then

I think we're obviously looking to continue our international growth. We've seen now we've gone into Marks & Spencer with our PROTX that we announced last year.

We just announced this week the expansion of our swimwear program from North America into five European countries. Yes, it is on the radar, but I think what we'll do is we'll do it through our current retail partners.

Costco sells globally, Walmart sells almost globally, we'll continue to work through those partners as we grow international.

Potentially. All that's on the table, but right now the strategy we took to be at the more available price point seems to be working.

If 60% of people in the US buy their scrubs at Walmart, that's where we want to be.

The scrubs is a 52-week-a-year replenishment program, we ship scrubs every single week. Yes, we hold for Walmart any time anywhere between 12 and 16 weeks of stock in our warehouses.

Just trying to get rid of it. The previous supplier had a huge amount of inventory in there that they are clearing out at their pace given their markdown strategy and what they have available to do what they need to do to get through it, but outside of that, I don't.

I can hope for that. I don't know.

Love to be.

Unlikely.

I'm just going to jump in. Even if we're not the only, there's a high likelihood that we're going to supply more than one brand in the future.

There are plans to expand our opportunity there, it might appear to look like two different suppliers, but it could very well both be us.

We'll be the only one with the clinically proven antibacterial, I think that's where the benefit is for us.

Right.

We're still working with the Memorial Care group, which is where we did the clinical trial. It's a cyclical thing.

They have contracts that we have to wait until they expire, we are going through the process, but we're still beginning stages of that. Once we get in there, I think it'll open up quite a few opportunities elsewhere, but in the last six months, we've been focused on executing the retail strategy that we've decided was the lower-hanging fruit.

I think kind of the same way. Our focus is North America because we're so entrenched in it and we have the opportunity on our doorstep within the United States.

Those specific retailers in the US are actually coming to us with programs, we'll deal with that first because it's on our table currently. Internationally we'd like to grow.

Obviously there's Asda in the UK, which is the Walmart of the UK. We've had some discussions with Walmart Mexico.

It's there, it's ready to go. I think scrubs are a universal item.

Everywhere needs them. That'll obviously be one that's a key for us, but same with a lot of our other product categories that we'll get into going forward, probably into the later half of 2027.

Wasn't our peer review done by a UK medical journal?

Yes, correct.

That may resonate there as well.

Yeah.

The answer is yes, it will correlate, and no, we don't pay commissions on all our sales. I don't believe we pay any commissions on intimate apparel.

It's very specific intelligent fabric programs, like for Walmart, where a representative or a consultant opened the door, and they get continual revenue stream from us. There might be others like that in the future, but it's not every product that we sell that generates commissions.

Not every product generates royalties. Obviously our own brands are royalty-free.

Yes, I think we've done both. We've done both in the past.

We do have some fiber technologies that we're looking at as a long-term R&D project, but we've found topical a much more integrable way of using our technologies in the market. Yes, there are some developments on the horizon for us in that realm as well.

Our scrub programs have been doing well, all of our new intimate apparel launches have been doing incredibly well, Leakproof continues to thrive. Giving exact sell-throughs, I don't think would be appreciated by our retailers.

We don't have anything that's not selling through, let's put it that way.

It's taken off quite well. It's doing well at Target, it's doing well at Kohl's, and in fact, we're expanding that brand out to not only being the solution bra and bra accessory products, we'll be looking to launch more performance-type underwear and bras coming in the future, as well as some sleepwear and some loungewear that will also bear the Nudesh brand.

Then we have some other opportunities that we're looking at to use that brand as well.

The first one's gone through, and we're busy finalizing one for the following year, so that's where we're at right now.

Continuing into next year, yeah.

We generally don't give breakdowns on what our product mix is, and how that leads to revenue, but they're both substantial programs, and both doing very well and look to be in for the foreseeable future.

That's something we're working on now. We expect it to be somewhere in the market in 2027.

The acceptance has been obviously very good. The physical properties of the bedding itself are incredible, as well as the technology that we're going to add to it.

The initial feedback has been great. We're fitting into retailer calendars to make sure we get a launch in the not-too-distant future.

Baseline?

Our goal remains to make 15% net after G&A, I'd rather look at it that way. We're not a big company, G&A is actually very, very manageable.

I don't see massive growth in our core G&A. If there's any growth, it's going to be in variable costs directly related to revenue.

We will be adding people, but we're also using AI, maybe we'll get some kind of benefit there.

Exactly.

be replaced by AI. You won't see us.

I don't believe so.

larger revenues, the increase will be fairly nominal, yeah. Yeah.

The investment in new product launches, specifically I'll go into the Target scrubs, as Hilton had mentioned, we took on the advertising there. Wasn't a massive investment, but we used it wisely and I think probably better than what would have been handled in-house.

For example, if we would have done it through Target, they would have put it in their marketing machine and would have been marketing to the person looking for bananas at Target who's not necessarily looking for scrubs. By handling it ourselves, we were able to focus it and really dive into the customer, trying to let them know that now Target carries scrubs and how great those scrubs are.

While I can't really give you the dollar figure of what we invested, it's substantially less than what they wanted and substantially more effective than what we believe theirs would have been. When we started the scrubs at Walmart, we paid for some signage in every store where all of our scrubs went.

In intimate apparels, we paid for some sidekicks that go in about 1,100 Walmart stores. Again, that's real estate now we own, it's ours for the next however long, it's not going anywhere because we paid for it.

I can't put a number on it, but there is small investments on major programs that we launch. I believe for hard surface chemicals, it was a nominal fee that we started with, and as Hilton mentioned, we'll pay for all the direct costs, testing, things of that nature.

That's pretty much it. I think that's as best we can answer that.

Then

No, Target didn't sell scrubs before this launch. We're the only ones.

They put it out to all the major scrub companies in North America to be the supply. They chose us predicated primarily on the clinically validated study and technology that are on the scrubs.

They saw the value. Those 400 stores would have launched almost all at the same time.

They should have been at the same time, but over about a four- to five-week span, most of the stores kept them set, and that just happened a couple months ago. Those stores should be fully set by now.

We know it's doing well, we know it's continuing through next year, now it's really just to expand, again, same as Walmart, expand SKU count, expand store count, and continue to grow it.

Typically you get told by a retailer. With this particular program, they asked for some of our guidance as to where we would see the best value.

We put them near major medical systems, major medical schools, things of that nature. Not all of them went there because it depends on store space planning for Target.

Yes, we were able to help them strategically pick some certain locations out of those 400 that we thought would benefit from having the scrubs and would possibly have more people walking into a Target looking for scrubs.

Currently, no, but we'll see in the future.

Hilton, do you want to take that or you want me to?

Go for

it. Sorry, I got distracted on that one.

The long-term growth strategy, again, there's a lot of organic growth. We want to continue to grow in the retailers we are.

We have so much ample of opportunity. Scrubs at Walmart were eight SKUs in 1,400 stores.

It could be 12 SKUs in 4,800 stores. That's our focus in the near term, and it might take more than near term to fully execute all that and get into all those stores and fully penetrate.

Obviously the same thing at Target. Scrubs is a major focus with us in all aspects.

Internationally growing, having the versus brand, regardless of what category it is, expanded to five new countries is very important for us. We want to make that a prevalent brand that other retailers want to bring in and put in store.

We think that the launch in Europe in store will lead to North American in-store placement, hopefully as soon as spring of next year. That's kind of where we are through '26 and at least through '27.

Also the new product categories that we haven't announced as of yet that are not necessarily apparel, still textile-based, but more hard, I don't want to call them hard surface, but hard product. That's a big focus on us to diversify the different categories that we're in through '26 and '27.

Some cool new things launching that once we can say, we will say. I think that's pretty much it for '26, '27.

We're already, believe it or not, starting to look at '28, so that's where we are.

It's almost looking good for this year, we'll see how it plays out. Right.

As soon as we need more money. No, I think we're cognizant of that.

One of the problems was when we're using credit lines, that becomes difficult. If we maintain a cash situation, that could be sooner than you think, possibly within the next two years.

We would like to get a dividend on the table. It might start small, but we do would like to start with something.

I think we better off spending our money to develop IP, because IP will create the best long-term value. Certainly it'll create a lot more interest in our company.

I'm not saying we'll get bought out, but we'll have a lot more big company eyes on us. For those big billion-dollar companies, $500 million, a billion is just a rounding difference.

I don't know how it relates to scrubs, but we're working on it. We signed a new license with a brand, as we noted I think it was about a month ago, that we've gotten strategically for entree into Costco US and Sam's Club in the US.

Could shake my crystal ball, see what it says, but a high probability is my guess, but we're working on that currently.

just jump in here and say, Deborah, we've got a whole lot of other technologies, some of which we haven't actually brought to the forefront to create businesses out of. There's plenty within our current portfolio that when we start devoting some time and attention to them, they will represent growth points within the company.

It seems to be that the product pipeline seems to be a recurring theme here, just a quick futuristic item we've been talking about, we're working on a combination of PROTX with one of our other technologies called Dreamskin in a wound care environment, where Dreamskin is specifically developed to help your skin heal faster. When we combine the two products together, obviously PROTX keeps the infection away, while Dreamskin will help your wound heal in a faster state.

That is something we're working on a wound care type of product, and just to give a little bit of carrot going forward, but those are some of the markets that we're working on, and some of the products we're working on for probably late '27, early '28.

Wouldn't require a clinical trial. Would require some regulatory work, but last year we announced, I believe it was last year, it could have been 2 years ago, that we registered as a medical device for some of our products.

These types of products would fall under that registration and was part of why we started the medical device registration early.

We don't require, but I saw the question there, are we going to do any more? We may.

I think that we will look to do something on other soft surfaces within a hospital, potentially ward curtains, potentially bedsheets, things of that nature. We do have hospital groups that are in the US that are interested, Memorial Care being one.

Another one that's probably the three largest healthcare system in the US who has expressed interest in doing some kind of study with us. The end of the question there is to prove that the scrubs reduce infection rates, as opposed to load on the scrubs.

It's all part and parcel. If you reduce the amount of bacteria living in an environment, it can directly link, and there's theoretical proof that we can show that it does reduce infection rates, I don't know that doing another scrub study would really help, but we would like to show it across multiple different soft-surface items.

We'll see. We'll take on where we think we can do it well, and we can do it better.

If there are other items, specifically maybe the wound care is an opportunity where we license it to a Medline or Cardinal Health or something like that, that is an opportunity. Where we think we can do the best job, we'll keep it in-house.

I would anticipate Q3 being mainly replenishment-oriented. We may get some of the set programs start late in the quarter.

Giancarlo can speak to that. Sometimes the timing doesn't always line up year year-on-year, just depends at the end of the day.

As a rule, as a rule, Q1 and Q4 will be our biggest quarters.

I think that Q3 will be an improvement over last year. I think we could squeeze maybe one program in.

Again, really depends on timing and when we actually ship the goods, but if it doesn't go in Q3, it'll just add to the bigger number in Q4. We like to look at the business as an annual business, not a quarter-to-quarter.

That's what our goals are, is to make sure that the year-over-year numbers are where we expect them to be.

Can I jump in? I think it's important for the investors, when they're looking at our quarters, to compare quarter this year to quarter last year.

Don't look at Q2 and Q1 and say, 'Well, you did so much in Q1. How does it relate to Q2?'

It's more important for us, because of the seasonality, to look at quarter this year to quarter last year. That's a better way of looking at the performance of the company.

We've exceeded every number from year to year. To Giancarlo's point, I really think that when you put the 12 months together, that's where you're really going to see quite impressive growth.

Yep, sure.

Look at the annual, and then let's look at the percentage growth. It'll be impressive.

Get out of this quarter-to-quarter thing. It's an annual business.

I think obviously scrubs is an easy one. I think that's one of them for sure.

We're very excited about the opportunity with the hard surface. We're super excited about bedding.

The question about the LYD Collective was pertinent. There's a lot of interest around it.

They've done a heck of a job on their end advertising and getting it out in their markets, and we think we can really capitalize on that here. Then I think the new categories that we haven't announced yet, once we announce, the market will be really excited about.

Probably things they never thought we'd be in, but we've found a niche and we believe it'll resonate. At least for me, that's the exciting part.

Thank you very much.

Our aim is not to disappoint anyone.

Definitely. We're going to try our best to disappoint no one.