Except as otherwise indicated, all amounts in the press release are expressed in Canadian dollars.
Q4 2022 and Fiscal 2022 Highlights
- Total revenue in Q4 2022 was approximately
$2.9 million , representing the largest single quarter revenue figure reported in the Company’s history and the fourth consecutive quarter of increasing revenue (compared with Q3 2022 revenue of approximately$1.5 million , Q2 2022 revenue of approximately$1.4 million , and Q1 2022 of approximately$1.1 million ). - Total revenue of approximately
$2.9 million in Q4 2022 compared with approximately$1.3 million in Q4 2021, representing an increase of approximately 121%. Total revenue of approximately$6.9 million in Fiscal 2022 compared with approximately$9.3 million in the twelve-month period endedMarch 31, 2021 (“Fiscal 2021”), representing a decrease of approximately 26%. The increase in total revenue for the three-month period was primarily a result of the launch of the moto watch 100 late in the third quarter. 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 inJanuary 2022 . The decrease in total revenue in Fiscal 2022 compared to Fiscal 2021 was primarily attributable to constrained working capital within Q1 2022, prior to the Qualifying Transaction, which resulted in the inability to procure inventory for sale, combined with the supply chain constraints which resulted in delays in the procurement of inventory for sale, as well as a reduction in Moto360 sales as the Company focused procurement efforts for the moto watch 100 launch. The decrease in total revenue year over year was offset by moto watch 100 sales and increased sales of air purifiers and security cameras. - Gross profit of approximately
$0.7 million in Q4 2022 from a gross loss of approximately$0.3 million in Q4 2021, representing an increase of approximately 305%. Gross profit of approximately$1.5 million in Fiscal 2022 from approximately$1.2 million in Fiscal 2021, representing an increase of approximately 19%. The increase in gross profit in the three-month period was due to an increase in total sales with the incremental sales primarily coming from the moto watch 100 product line and increased sales of air purifiers and security cameras. Further contributing to the period over period increase was a recognition of a provision within cost of products and services in Q4 2021 which decreased the comparative period gross profit. The increase in gross profit in Fiscal 2022 was due to a higher proportion of total sales coming from the moto watch 100 and Kodak smart home products than the previous period where the majority of sales were from the Moto360 product line which had lower gross margins. The shift in sales to higher margin products as well as the recognition of a provision within cost of products and services in Fiscal 2021, more than offset the reduction in gross profit attributable to decreased total revenue. - Net loss of approximately
$2.9 million in Q4 2022 from approximately$3.5 million in Q4 2021, representing a decrease of approximately 15%. Net loss of approximately$10.3 million in Fiscal 2022 from approximately$14 million in Fiscal 2021, representing a decrease of approximately 26%. The decrease in net loss in the three-month period was primarily due to the aforementioned increase in gross profit and a decrease in finance costs associated with lower corporate debt levels, offset primarily by increased marketing, selling and distribution and wages and contractor expenses in Q4 2022 associated with the launch of the moto watch 100 and the KODAK Infinio F882 Outdoor Security Camera. The decrease in net loss in Fiscal 2022 was primarily due to the aforementioned increase in gross profit, reduced marketing, selling and distribution, professional fees and finance costs and a fair value gain on financial instruments, offset in part by increased wages and contractor expenses, royalties, technology and related expenses and the listing expense on the reverse acquisition.
“Our fiscal 2022 have been impacted by global macro events and sourcing of product material causing delays in manufacturing and significantly reduced sales figures. Despite these challenges, we are pleased that we have been able to bring three new products to market over the year and deliver four consecutive quarters of revenue growth including a record quarterly revenue amount of approximately
Post-Q4 2022 Updates / Highlights.
- On
May 24, 2022 , the Company entered into an agreement with Choco-Up (“Choco”) for the sale ofUS$2,475,000 ($3,174,435 ) of future receivables for net proceeds of up toUS$2,250,000 ($2,885,850 ) (the “Choco Facility”). The funds committed under the Choco Facility may be drawn—subject to further due diligence and certain conditions and repayment terms being met—in three tranches with an initial tranche ofUS$1,250,000 of proceeds having already been drawn in respect of future receivables ofUS$1,375,000 . This first tranche is to be repaid over eight months with a retrieval percentage of 15.6%, subject to maximum payments ofUS$154,688 per month for the first four months andUS$252,083 per month for the remaining four months. The second tranche in the amount ofUS$500,00 is expected to be available on or beforeAugust 31, 2022 , subject to further due diligence and the Company meeting certain conditions. The second tranche is to be repaid over eight months with a retrieval percentage of 6.3% and maximum payments ofUS$61,875 per month for the first four months andUS$100,833 per month for the remaining four months. The third tranche in the amount ofUS$500,000 is expected to be available on or beforeOctober 31, 2022 , subject to further due diligence and the Company meeting certain conditions. The third tranche is to be repaid over eight months with a retrieval percentage of 6.3% and maximum payments ofUS$61,875 per month for the first four months andUS$100,833 per month for the remaining four months. The foregoing description of the Choco Facility is qualified in its entirety by the full text of the Choco Facility, which is available under the Company’s corporate profile on SEDAR at www.sedar.com. There can be no assurance that the Company will be able to access funding under the Choco Facility on the terms contemplated, in a timely manner or at all. See “Forward-Looking Information” below. See also the “Forward-Looking Information”, “Going Concern” and “Other Risk Factors” sections of the MD&A. - On
May 26, 2022 , the Company closed a private placement of convertible notes (the “May 2022 Convertible Notes”) in the aggregate principal amount of$1,000,000 (the “May 2022 Debt Financing”). TheMay 2022 Convertible Notes bear interest at a rate of 15.0% per annum on outstanding principal amounts, payable on the first and second anniversary of the issue date, unless earlier redeemed or converted. TheMay 2022 Convertible Notes are senior secured obligations of the Company and mature on the second anniversary of the issue date. Prior to maturity, theMay 2022 Convertible Notes are convertible into common shares of the Company, at the option of the holders, at a conversion price per share of$1.50 . TheMay 2022 Convertible Notes are not redeemable by the Company prior to the first anniversary of the issue date. Refer to the “Subsequent Events” section in the MD&A for additional details on theMay 2022 Debt Financing. In addition, 500,000 common share purchase warrants (“May 2022 Warrants”) were issued to the holders of theMay 2022 Convertible Notes, with eachMay 2022 Warrant having an exercise price of$1.00 per share and being exercisable on or before the second anniversary of the issue date. - On
June 20, 2022 , the Company entered into a binding financing agreement withVesta Fund for a facility for up to a maximum ofUS$2,000,000 . See “Vesta Facility” and “Forward-Looking Information” below and the “Subsequent Events”, “Forward-Looking Information”, “Going Concern” and “Other Risk Factors” sections of the MD&A. - On
June 20, 2022 , the Company entered into a letter of intent with Kang-Shuo regarding the proposed Definitive Kang-Shuo Agreement between EBN and Kang-Shuo with respect to smartwatch and wearables engineering, design and manufacturing. There can be no assurance that the Definitive Kang-Shuo Agreement (as defined herein) will be entered into on the terms contemplated, in a timely manner or at all. See “Kang-Shuo Partnership” and “Forward-Looking Information” below and the “Subsequent Events” and “Forward-Looking Information” section in the MD&A for additional details on the Definitive Kang-Shuo Agreement.
Outlook
Following the launch of moto watch 100, which was announced in
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, reductions in SG&A and strategically prioritizing 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 fulfill 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.
Due to the working capital and liquidity constraints that the Company has faced and a slower than anticipated return to full operations in our partner factories, the Company has determined to withdraw all previously disclosed financial guidance due to the uncertainty in forecasting operating results, including the previously stated revenue guidance of
The Company anticipates that it will require additional financing to address the Company’s working capital and other financing needs and 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
Three months ended | Year ended | ||||||||||
2022 | 2021 | 2022 | 2021 | 2020 | |||||||
Total revenue | 2,892,645 | 1,309,586 | 6,898,924 | 9,270,470 | 7,299,077 | ||||||
Gross profit | 658,890 | (320,996 | ) | 1,486,003 | 1,247,803 | 1,843,501 | |||||
Operating loss | (2,502,220 | ) | (2,358,689 | ) | (9,089,030 | ) | (9,727,317 | ) | (9,262,735 | ) | |
Net loss | (2,930,663 | ) | (3,119,339 | ) | (10,335,863 | ) | (14,048,843 | ) | (10,458,337 | ) | |
Total comprehensive loss | (2,938,435 | ) | (3,136,502 | ) | (10,317,419 | ) | (14,922,534 | ) | (9,849,127 | ) | |
Total assets | 13,901,561 | 13,139,765 | 13,901,561 | 13,139,765 | 18,915,238 | ||||||
Total liabilities | 9,168,228 | 17,072,413 | 9,168,228 | 17,072,413 | 14,672,718 | ||||||
Basic and Diluted Loss per share | (0.12 | ) | (0.18 | ) | (0.46 | ) | (0.85 | ) | (0.72 | ) |
References in this press release to the “Company” refer to EBN and its direct or indirect subsidiaries for information provided in respect of any period prior to
For more information, please see CE Brands’ corporate presentation, which is available on CE Brands’ website at www.cebrands.ca/investors.
Shareholder Call Information
The Company will answer pre-submitted questions at the conclusion of prepared remarks. Investors are invited to submit their questions in advance to ir@cebrands.ca.
You may attend the Meeting and the shareholder update call at www.agmconnect.com/ceb2022. Please note that only registered shareholders and duly appointed proxyholders who have registered with AGM Connect prior to the voting cut-off date will be able to submit questions and vote at the Meeting. Any shareholder or appointed proxyholder who has not registered with AGM Connect prior to the voting cut-off date will be able to attend the Meeting as guests, but guests will not be able to vote or ask questions.
A recording of the shareholder update call will be made available on the Company’s website at www.cebrands.ca/investors.
Vesta Facility
The Company has entered into a binding financing arrangement with
Subject to the satisfaction of certain conditions, the Company will be permitted under the Vesta Facility to periodically draw funds up to the aggregate total amount of
The Vesta Facility will have a maturity date of 12 months following the commencement of the Funding Period (the “Maturity Date”). The Vesta Facility is callable at any time by
The Vesta Facility will have an effective annual interest rate of 18% (the “Interest Rate”). The principal amount outstanding will accrue interest at the Interest Rate, which interest will be paid on the last day of each month in arrears based on the total drawn amount of the Vesta Facility and shall be calculated on a daily basis on the principal amount outstanding in such period based on the actual number of days elapsed in the period for which such interest is payable. There will be no standby fee or interest due on undrawn amounts.
The Vesta Facility includes customary events of default, including with respect to the bankruptcy or insolvency of
There can be no assurance that the Company will be able to access funding under the Vesta Facility on the terms contemplated, in a timely manner or at all. The foregoing description of the Vesta Facility is qualified in its entirety by the full text of the Vesta Facility, which is available under the Company’s corporate profile on SEDAR at www.sedar.com. See “Forward-Looking Information” below. See also the “Forward-Looking Information”, “Going Concern” and “Other Risk Factors” sections of the MD&A.
Required Disclosure under MI 61-101
The board of directors of
The Company has entered into the letter of intent with Kang-Shuo regarding a proposed
There can be no assurance that the Definitive Kang-Shuo Agreement will be entered into on the terms contemplated, in a timely manner or at all. See “Forward-Looking Information” below.
About
Neither the
Numerical Amounts
The reporting and the functional currency of the Company is the Canadian dollar.
Forward-Looking Information
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 the Company’s intention to pursue additional financing opportunities, including the expected timing and successful completion thereof, the Company’s ability to access funding under the Choco Facility and/or the Vesta Facility, the Company’s expectations with respect to the entering into of a Definitive Kang-Shuo Agreement, the Company’s production targets and related expectations around product launches, the Company’s ability to meet its revenue forecasts and anticipated product sales and the Company’s ability to manage manufacturing, supply chain and inventory constraints and continue to operate its business in the ordinary course.
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
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 and/or the Vesta Facility 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
Further Information
For further information about
Kalvie Legat | |
Chief Financial Officer | Manager, Investor Relations |
778-771-0901 | 1-855-770-2324 |
ir@cebrands.ca |
Source:
2022 GlobeNewswire, Inc., source