Subject: EARNINGS
CE Brands Reports Second Quarter 2023 Financial Results and Restates First Quarter 2023 Financial Information
CALGARY, Alberta, Nov. 28, 2022 (GLOBE NEWSWIRE) -- CE Brands Inc. (TSXV: CEBI; CEBI.WT) ("CE Brands", "we", "our", or the "Company"), a data-driven consumer-electronics company, today announced its financial results for the three and six-month period ended September 30, 2022 ("Q2 2023") ?¹?. The related condensed interim consolidated financial statements and Management's Discussion and Analysis ("MD&A") for Q2 2023 are available on SEDAR at www.sedar.com and on CE Brands' website at www.cebrands.ca/investors.
Q2 2023 Highlights (Compared to Q2 2022)
- Revenue in the quarter increased 56% to $2.1 million driven by the launch of the moto watch 100.
- Gross profit improved 13% to $0.5 million.
- Increased investment, primarily in the marketing, selling and other costs to support revenue growth, netted a loss of $2.1 million, similar to the same quarter of the prior year.
- Additional financing completed to support current operations.
Review of Operations
Total revenue of approximately $2.1 million in the three-month period ending Sep 30, 2022 from approximately $1.4 million in the prior year, representing an increase of approximately 56%. The increase in total revenue was primarily a result of the launch of the moto watch 100 late in fiscal 2022. Further contributing to the increase in total revenue was increased sales in smart home products, driven primarily by increased sales of air purifiers as well as sales of the KODAK Infinio F882 Outdoor Security Camera which was launched in January 2022. Gross profit was approximately $0.5 million in the three-month period ending Sep 30, 2022 from a gross profit of approximately $0.4 million in the prior year, representing an increase of approximately 13%. The increase in gross profit was due primarily to an increase in total sales from the launch of the new moto watch 100 product line and increased sales volumes from the air purifiers and security cameras product lines. Net loss of approximately $2.12 million for the three-month period ending Sep 30, 2022 was up 2% when compared with $2.07 million in the same period during the prior year. The increase in net loss was due to increased spend across marketing, selling and distribution, royalties and licence fees, technology and related, legal, accounting and professional fees and finance costs associated with supporting the Company's notable revenue growth.
Outlook
Following the launch of Moto watch 100, which was announced in mid-November 2021, and the KODAK Infinio F882 Outdoor Security Camera (announced on January 20, 2022), the Company is on track with its plan to launch two new smart watch products in the late Q3 2023 and one new smart watch in the early Q4 2023. In view of these launches, the Company expects significant improvements in gross revenue starting quarter four of the fiscal year ending on March 31, 2023 and continuing to the subsequent periods.
The Company continues to take steps to mitigate the impacts of the ongoing supply constraints on semiconductor chip manufacturing and global supply chain disruptions through supply-chain improvements and strategically prioritising the Company's product portfolio to conserve cash and improve near-term profitability. The Company continues to believe it is in the early stages of improved sales momentum through increased product deliveries and sales. In order to continue to meet customer demand and fulfil growing order backlog, the Company anticipates pursuing additional financing for working capital and general corporate purposes, principally to ensure the Company has sufficient financing on hand for the purchase of inventory, other financing needs and to support the Company's product launches and sales. See the "Forward-Looking Information", "Going Concern" and "Other Risk Factors" sections of the MD&A.
Selected Financial Information
| As at Sep 30, 2022 | As at March 31, 2022 | |||
| Total assets | 14,756,575 | 13,901,560 | ||
| Total liabilities | 14,113,526 | 9,050,148 |
| Three months ended Sep 30, 2022 | Three months ended Sep 30, 2021 | |||
| Total revenue | 2,183,127 | 1,395,170 | ||
| Cost of products and services | 1,668,498 | 941,499 | ||
| Gross Profit | 514,629 | 453,671 | ||
| Net loss | (2,128,816 | ) | (2,072,350 | ) |
?¹? References in this press release to the "Company" refer to eBuyNow eCommerce Ltd. ("EBN") and its direct or indirect subsidiaries for information provided in respect of any period prior to June 18, 2021, which is the date on which the Company's Qualifying Transaction (as defined in the policies of the TSX Venture Exchange) was completed pursuant to which the business of EBN became the business of CE Brands. Subsequent to June 18, 2021, the "Company" refers to the consolidated operations of CE Brands Inc. and its direct or indirect subsidiaries and the historical operations of EBN and its direct or indirect subsidiaries.
For more information, please see CE Brands' corporate presentation, which is available on CE Brands' website at www.cebrands.ca/investors.
Restatement of First Quarter 2023 Financial Information
The Company has restated certain financial information for the First Quarter 2023 (the "Restatement") which has been disclosed in Note 2 of the condensed interim consolidated financial statements for Q2 2023 and the MD&A for Q2 2023.
The material changes included in the Restatement affect the Company's Net Loss, Prepaid Expenses and Deposits, Current Liabilities, Non-Current Liabilities and Accumulated Deficit as at and for the three months ended June 30, 2022. The impact is a decrease to the Company's previously reported Net Loss in Q1 2023 of $253,180 from $2,790,504 to $2,537,324.? The Restatement affects cash flow to the extent of reclassification between cash used in operating activities and cash provided by financing activities.
The impact of the Restatement is as follows:
| For the three months ended June 30, 2022 | |||
| Condensed Interim Consolidated Statement of Loss | Previously reported | Adjustments | Restated |
| Expenses | |||
| Professional fees | $372,788 | ($100,000) | $272,788 |
| Finance costs | $598,830 | ($153,180) | $445,650 |
| Net loss | $2,790,504 | ($253,180) | $2,537,324 |
| Basic and diluted- Loss Per Share | (0.11) | 0.01 | (0.10) |
| As at June 30, 2022 | ||||||
| Condensed Interim Consolidated Statement of Financial Position | Previously reported | Adjustments | Restated | |||
| Assets | ||||||
| Prepaid expenses and deposits | $926,733 | $477,418 | $1,404,151 | |||
| Liabilities | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | $2,633,256 | $1,137,901 | $3,771,157 | |||
| Current portion of long-term debt | $4,065,884 | ($936,286) | $3,129,598 | |||
| Non-current liabilities | ||||||
| Long-term debt | $4,388,830 | ($89,324) | $4,299,506 | |||
| Shareholders' Equity (Deficit) | ||||||
| Equity component of convertible debt | $1,160,386 | ($6,134) | $1,154,252 | |||
| Accumulated Deficit | ($41,461,786) | $366,718 | ($41,095,068) | |||
| For the three months ended June 30, 2022 | ||||||
| Condensed Interim Consolidated Statement of Cash Flows | Previously reported | Adjustments | Restated | |||
| Net cash used in operating activities | $2,527,232 | ($925,428) | $1,601,804 | |||
| Net cash provided by financing activities | $2,643,062 | ($925,428) | $1,717,634 | |||
All amounts are subject to change when future audited financial statements of the Company are filed on SEDAR.
About CE Brands
CE Brands Inc. develops products with leading manufacturers and iconic brand licensors by utilising proprietary data that identifies key market opportunities?. With sales today ?in? over 70 countries, our innovative, ?highly ?repeatable process, which we call the "CE Method?",? has created ?an ?optimal growth ?path for CE Brands to be the premier global licensed brand manufacturer.
Neither the TSX Venture Exchange nor its regulation services provider (as defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
Numerical Amounts
The reporting and the functional currency of the Company is the Canadian dollar.
Forward-Looking Information
This press release contains forward-looking information within the meaning of applicable securities laws. In general, forward-looking information refers to disclosure about future conditions, courses of action, and events. The use of any of the words "anticipates", "believes", "expects", "intends", "plans", "will", "would", and similar expressions are intended to identify forward-looking information. More particularly and without limitation, this press release includes forward-looking information with respect to: new product launches and the timing for such launches; the Company's expectations of significant improvements in gross revenue and the timing for the same; the steps the Company is taking to mitigate the impacts of the ongoing supply constraints and to conserve cash and improve near-term profitability?; the Company's belief that it is in the early stages of improved sales momentum through increased product deliveries and ?sales?; the Company's intention to pursue additional financing opportunities; and the Restatement, including the impact of the Restatement on the Company and its financial information, further potential revisions to future financial statements and management discussion and analysis of the Company and the impact of the Restatement on cash flows of the ?Company.
The forward-looking information is based on certain key expectations and assumptions, including the continuance of manufacturing operations at the Company's partner factories in Asia, the timing of product launches, shipments and deliveries, forecast sales price and sales volume of the Company's products, the ability of the Company to secure additional sources of financing in 2022, the Company's current understanding of the reasons required for the Restatement and the nature and ?magnitude of the Restatement.?
There can be no assurance that the Company will be able to secure additional financing in the future and/or access funding under the Choco Facility (as defined in the MD&A) and/or the Vesta Facility (as defined in the MD&A) on the terms contemplated, in a timely manner or at all. If the Company fails to secure additional financing and/or access funding under the Choco Facility and/or the Vesta Facility, then the Company may have insufficient liquidity and capital resources to operate its business resulting in material uncertainty regarding the Company's ability to meet its financial obligations as they become due and continue as a going concern.
Although CE Brands believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because CE Brands cannot give any assurance that it will prove to be accurate. By its nature, forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed in this press release. Such risks and uncertainties include, among others: general business, economic, competitive, political ?and social uncertainties; general capital market conditions and market prices for securities; delay or failure to ?receive board of directors, third party or regulatory approvals; the actual results of CE Brands' future operations; ?competition; changes in legislation affecting CE Brands; the timing and availability of external financing on ?acceptable terms; lack of qualified, skilled labour or loss of key individuals; the impact of the evolving Covid-19 ?pandemic on the Company's business, operations and sales; reliance on third party manufacturers and suppliers; ?the Company's ability to stabilize its business and secure sufficient capital, including the funding under various credit facilities and other financing arrangements, which may not be available in a timely manner or at all; the Company's ?available liquidity being insufficient to operate its business and meet its financial commitments, which could result ?in the Company having to refinance or restructure its debt, sell assets or seek to raise additional capital, which ?may be on unfavorable terms, if available at all; the inability to implement the Company's objectives and ?priorities for 2022 and beyond, which could result in financial strain on the Company and continued pressure on ?the Company's business; delay in anticipated product launches and commercial partnerships; risks associated ?with developing and launching new products; increased indebtedness and leverage; the fact that historical and ?projected financial information may not be representative of the Company's future results; the inability to ?position the Company for long-term growth; risks associated with issuing new equity including the possible dilution ?of the Company's outstanding common shares; the value of existing equity following the completion of any ?financing transaction; the Company defaulting on its obligations, which could result in the Company having to ?file for bankruptcy or undertake a restructuring proceeding; and the Company being put into a bankruptcy or ?restructuring proceeding. A description of additional risk factors that may cause actual results to differ materially ?from forward-looking information can be found in CE Brands' disclosure documents on the SEDAR website at ?www.sedar.com. Although CE Brands 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. Readers are cautioned that the foregoing list of factors is not ?exhaustive. Readers are further cautioned not to place undue reliance on forward-looking information as there can ?be no assurance that the plans, intentions or expectations upon which they are placed will occur. Forward-looking ?information contained in this press release is expressly qualified by this cautionary statement. The forward-looking ?information contained in this press release represents the expectations of CE Brands as of the date of this press ?release and, accordingly, is subject to change after such date. However, CE Brands expressly disclaims any intention ?or obligation to update or revise any forward-looking information, whether as a result of new information, future ?events or otherwise, except as expressly required by applicable securities law.?
Further Information
For further information about CE Brands or its principal operating subsidiary, eBuyNow eCommerce Ltd., please contact:
Kalvie Legat
EVP Corporate Development
778-771-0901
[email protected]
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