2025Q2Ended June 30, 2025

Condensed Consolidated Interim Statements of Financial Position 1

Condensed Consolidated Interim Statements of Earnings (Loss) and Comprehensive Earnings (Loss) 2

Condensed Consolidated Interim Statements of Changes in Equity 3

Condensed Consolidated Interim Statements of Cash Flows 4

Notes to Condensed Consolidated Interim Financial Statements 5-10

Approved on behalf of the Board of Directors on August 13, 2025

"Hylton Karon" "Hilton Price"

Director Director

Three months Six months

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements

The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements

1. NATURE OF OPERATIONS

   iFabric Corp. ("iFabric or the Company") is a Canadian public company, incorporated under the Alberta Business Corporations Act and is domiciled in Canada. iFabric is listed on the Toronto Stock Exchange ("TSX") under the trading symbol "IFA" and is traded in the United States on the OTCQX Market under the trading symbol "IFABF". The head office is located at 525 Denison Street, Unit 1, Markham, Ontario, Canada.

   The Company's principle activities relate to the business of designing and distributing women's intimate apparel and a range of complimenting accessories. The Company is also in the business of developing and distributing a range of innovative products and treatments that are suitable for application to textiles, plastics, liquids, hard surfaces and finished performance apparel which integrate one or more such treatments. These products are designed to provide added user benefits.

2. BASIS OF PREPARATION
   1. Statement of compliance

      These unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting ("IAS 34"), as issued by the International Accounting Standards Board ("IASB"). Certain information, in particular the accompanying notes, normally included in the audited annual consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") has been omitted or condensed. Accordingly, these unaudited condensed consolidated interim financial statements do not include all the information required for full annual financial statements, and, therefore, should be read in conjunction with the audited annual consolidated financial statements and the notes thereto for the year ended December 31, 2024.

   2. Seasonal fluctuations

      The interim period results of operations do not necessarily reflect results for the full fiscal year because of seasonal fluctuations that characterize the apparel and textiles industries.

   3. Basis of measurement

      These unaudited condensed consolidated interim financial statements were prepared on a historical cost basis except for certain items which may be accounted for at fair value, as further discussed in the significant accounting policies of the most recent audited annual financial statements for the year ended December 31, 2024. All intercompany transactions and balances have been eliminated.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   The significant accounting policies disclosed in the Company's audited annual consolidated financial statements for the year ended December 31, 2024 have been applied consistently in the preparation of these unaudited condensed consolidated interim financial statements.

4. ACCOUNTS RECEIVABLE

   	June 30, 2025	December 31, 2024
   Trade receivables	5,132,822	10,466,947
   Deposit recoverable (i)	3,474,343	3,474,343
   Expected credit loss	(3,517,212)	(3,499,993)
   Contract asset	359,475	359,475
   Other	8,257	11,062
   	5,457,685	10,811,834

   i) On May 4, 2020, the Company entered into an agreement to purchase 1,000,000 N95 masks from a foreign supplier. The contract required full delivery by June 2020 but was partially fulfilled, with the supplier defaulting on the timing of the remaining delivery. The Company sourced these products from a different supplier to fulfill the order to its customer in 2021. The Company pursued recovery of the deposit through an arbitration process in the foreign jurisdiction, which was delayed due to COVID-19 restrictions and lockdowns. On December 21, 2021, the arbitration court ruled in the Company's favor and confirmed that the Company was entitled to recover its remaining deposit of USD $2,905,000, plus liquidated damages of USD

   $146,942, interest at the rate of 12% per annum calculated from the date of payment of the deposit, and reimbursement of the arbitration cost of RMB 445,902. In December 2023, the Company's claim was registered with the competent court in China and the Company is currently following a court supervised process in order to recover all amounts owing to it. Given the uncertain recovery timeline and its inability to fully assess the degree of recoverability the Company has made provision for the full impairment of its claim on December 31, 2023. As of June 30, 2025, the Company has recovered an amount of RMB 1,921,335.41 to date. Accordingly, the previously recorded impairment provision has been reduced by an amount of $361,980, being the Canadian $ equivalent. The collection process is ongoing.

5. INVENTORIES

   Inventories represent the carrying amount of merchandise for resale. During the six months ended June 30, 2025, the amount of inventories charged to net earnings was $7,658,238 (2024 - $6,556,941) and the amount of inventory write-downs were $0 (2024 - $120,097). There were no reversals of prior period write-downs of inventory.

6. PREPAID EXPENSES AND DEPOSITS

   	June 30, 2025	December 31, 2024
   Prepaid expenses and other assets	586,656	478,505
   Deposits paid to suppliers	4,102,930	579,642
   	4,689,586	1,058,147

7. FOREIGN EXCHANGE FORWARD CONTRACTS

   The Company enters into foreign exchange forward contracts to manage the risks associated with exchange rate fluctuations. The balance is comprised of the following:

   	June 30, 2025	December 31, 2024
   Margin balance - cash deposit Mark to market variance - gain (loss) on foreign exchange	126,000 (108,600)	116,935 102,350
   	17,400	219,285

   As at June 30, 2025, the Company had contracted to buy 2,000,000 U.S. Dollars.

   For the six months ended June 30, 2025, there is an unrealized loss on foreign exchange of $210,950 (June 30, 2024 - gain

   $68,98) recognized in net earnings, in respect to changes in fair value of the Company's foreign exchange forward contracts.

8. 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, 2024 - $6,750,000), against which $0 was outstanding as at June 30, 2025 (December 31, 2024 -

   $0). The loan facility bears interest at either the bank's prime lending rate or USD base rate, as applicable, plus 0.75%. The purpose of the credit facility is to provide for ongoing operating requirements including the financing of accounts receivable and inventories. The facility is secured by a first-ranking all-indebtedness collateral mortgage in the amount of $11,850,000 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.

9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

   	June 30, 2025	December 31, 2024
   Trade payables	2,967,622	3,850,798
   Government remittances	(3,911)	215,321
   Accrued liabilities	373,600	307,903
   	3,337,311	4,374,022

10. BANK LOAN

    One of the Company's subsidiaries has a new fixed rate demand term loan, 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 the minimum monthly payments over the next 12 months.

11. SEGMENTED INFORMATION

    The Company has three reportable operating segments, as described below. The reportable segments offer different products and services, and are managed separately because they require different marketing strategies, technologies, and resource allocations. For each of the operating segments, the CEO and CFO (the chief operating decision makers) review internal management reports on at least a quarterly basis. The following describes the operations in each of the reportable segments:

    • 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 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. Inter-segment transactions are made at prices that approximate market rates.

    Intimate

    Intelligent

    Corporate Items

    Six months ended June 30, 2025

    Apparel

    Fabrics Other Segments and Eliminations Consolidated

    Revenue
    Third party	3,779,365	9,087,336	-	10,500	12,877,201
    Inter-segment	-	854,631	136,111	(990,742)	-
    Total Revenue	3,779,365	9,941,967	136,111	(980,242)	12,877,201
    Earnings (loss) before income taxes	281,197	(96,488)	(81,667)	(407,943)	(304,901)

    Six months ended June 30, 2024	Intimate Apparel	Intelligent Fabrics	Other Segments	Corporate Items and Eliminations	Consolidated
    Revenue
    Third party	4,383,301	8,165,793	1,750	-	12,550,844
    Inter-segment	-	1,280,285	135,028	(1,415,313)	-
    Total Revenue	4,383,301	9,446,078	136,778	(1,415,313)	12,550,844
    Earnings before income taxes	280,924	1,212,124	11,121	(740,931)	763,238

    Six months ended June 30,	2025	2024
    External sales revenue
    Canada	5,641,930	4,726,188
    United States	4,730,286	4,711,956
    United Kingdom	-	5,304
    Southeast Asia and other	2,504,985	3,107,396
    Total	12,877,201	12,550,844

    All of the Company's non-current assets are located in Canada.

    Approximately 59% of the Company's total sales were to four customers (2024 - 52%). Approximately 80% of the Company's

    total purchases were to four vendors (2024 - 72% ), one of which is related to a distributor of the Company.

12. EARNINGS PER SHARE

    Basic earnings per share is calculated using the weighted average number of shares outstanding during the period. Diluted earnings per share is calculated to reflect the dilutive effect of warrants and stock options outstanding. The calculation of basic and diluted earnings per share is based on net loss attributable to iFabric Corp.'s shareholders for the six months ended June 30, 2025 of $101,645 ($190,103 for the three months ended June 30, 2025). The number of shares used in the earnings per share calculation is as follows:

    Three months Six months

    Period ended June 30,	2025	2024	2025	2024
    Weighted average number of shares outstanding - basic Dilutive effect of options	30,299,467 446	30,299,467 -	30,299,467 744	30,299,467 -
    Weighted average number of shares outstanding - diluted	30,299,913	30,299,467	30,300,211	30,299,467

    For the six months ended June 30, 2025, 1,760,000 options were excluded from the calculation of diluted earnings per share as these instruments were deemed to be anti-dilutive. (2024 - 1,870,000). For the six months ended June 30, 2025, all warrants had expired, and for the six months ended June 30, 2024, 2,943,717 warrants were excluded from the calculation of diluted earnings per share as these instruments were deemed to be anti-dilutive.

13. CAPITAL STOCK
    1. Authorized, issued and outstanding

       Authorized: Unlimited number of common shares

       Number of

       common shares

       Common share

       capital

       Balance at December 31, 2024 Deferred tax on share issue costs Warrants expiry	30,299,467 8,898,580 - (33,800) - (29,636)
       Balance at June 30, 2025	30,299,467 8,835,144

       Number of common shares

       Common share

       capital

       Balance at December 31, 2023 30,299,467 8,989,049

       Deferred tax on share issue costs - (33,800)

       Warrants extension - (22,869)

       Balance at June 30, 2024 30,299,467 8,932,380
    2. Stock option plan

       The Company has reserved 10% of the issued and outstanding common shares for issuance under its stock option plan. The status of the Company's stock option plan is summarized as follows:

       Number of stock

       options

       Weighted average exercise price

       Balance at Decmeber 31, 2024 Granted, during the period (i) Expired, during the period	1,870,000 2.03 124,000 1.03 (110,000) 3.00
       Balance at June 30, 2025	1,884,000 1.91

       	Number of stock options	Weighted average exercise price
       Balance at Decmeber 31, 2023	1,345,000	2.52
       Granted, during the period (ii)	600,000	1.20
       Expired, during the period	(75,000)	4.15
       Balance at June 30, 2024	1,870,000	2.03

       1. On May 21, 2025 the Company issued 25,000 stock options to an investor relations consultant. Each options entitles the holder to acquire one common share of the Company at a price of $0.97, and is exercisable for a period of 5 years from the grant date. 12,500 options will vest on November 21, 2025 and May 21, 2026 respectively. Share-based compensation expense, based on the fair value of the options, had been estimated by management at $15,015 as of the date of the grant using the Black-Scholes pricing model with the following assumptions:

          Dividend yield	0.00%
          Expected volatility	73.54%
          Risk-free interest rate	2.97%
          Expected maturity	5 years

          On June 9, 2025 the Company issued 99,000 stock options to employees of the Company. Each option entitles the holder to acquire one common share of the Company at a price of $1.04, and is exercisable for a period of 5 years from the grant date. 33,000 options vested immediately and, 33,000 options will vest on June 9, 2026 and June 9, 2027 respectively. Share-based compensation expense, based on the fair value of the options, had been estimated by management at $61,841 as of the date of the grant using the Black-Scholes pricing model with the following assumptions:

          Dividend yield	0.00%
          Expected volatility	70.45%
          Risk-free interest rate	2.96%
          Expected maturity	5 years

       2. On May 13, 2024 the Company issued 600,000 stock options to members of the Board of Directors. Each options entitles the holder to acquire one common share of the Company at a price of $1.20, and is exercisable for a period of 5 years from the grant date. 150,000 options vested immediately and 150,000 options vested on August 13, 2024, November 13, 2024 and February 13, 2025 respectively. Share-based compensation expense, based on the fair value of the options, had been estimated by management at $524,894 as of the date of the grant using the Black-Scholes pricing model with the following assumptions:

          Dividend yield	0.00%
          Expected volatility	90.01%
          Risk-free interest rate	3.76%
          Expected maturity	5 years

          As of June 30, 2025, the following options were outstanding and exercisable:

          Options Outsanding Options Exercisable Weighted

          average

          remaining

          Weighted

          Weighted

          Expiry date	Number of stock options	contractual life (years)	average exercise price	Number of stock options	average exercise price
          June 5, 2027	450,000	1.93	2.40	450,000	2.40
          February 9, 2027	150,000	2.61	3.50	150,000	3.50
          March 1, 2027	50,000	1.67	3.10	50,000	3.10
          May 15, 2028	5,000	2.88	1.29	5,000	1.29
          August 15, 2028	5,000	3.12	1.29	5,000	1.29
          July 25, 2028	75,000	3.07	1.44	75,000	1.44
          October 25, 2028	75,000	3.32	1.44	75,000	1.44
          January 25, 2029	75,000	3.57	1.44	75,000	1.44
          April 25, 2029	75,000	3.82	1.44	75,000	1.44
          April 7, 2030	200,000	4.77	2.70	200,000	2.70
          May 13, 2029	150,000	3.87	1.20	150,000	1.20
          August 13, 2029	150,000	4.12	1.20	150,000	1.20
          November 13, 2029	150,000	4.37	1.20	150,000	1.20
          February 13, 2030	150,000	4.62	1.20	150,000	1.20
          November 21, 2030	12,500	5.39	0.97	-	0.97
          May 21, 2031	12,500	5.89	0.97	-	0.97
          June 9, 2030	33,000	4.94	1.04	33,000	1.04
          June 9, 2031	33,000	5.94	1.04	-	1.04
          June 9, 2032	33,000	6.94	1.04	-	1.04
          	1,884,000	3.52	1.91	1,793,000	1.95

    3. Warrants

       The following table summarizes warrants that have been issued, exercised, or expired during the years presented:

       Number of warrants

       Weighted average exercise

       price

       Balance, December 31, 2024 Expired, during the period	2,943,717 4.60 (2,943,717) 4.60
       Balance, June 30, 2025	- 4.60

       Number of warrants

       Weighted average exercise

       price

       Balance, December 31, 2023 and June 30, 2024 2,943,717 4.60

14. INVESTMENT IN SUSBSIDARY

    On March 21, 2025, the Company acquired the remaining 25% of the common shares in 2074160 Ontario Inc. from the non-controlling shareholders for cash consideration of $2,200,635, resulting in the Company's shareholding in 2074160 Ontario Inc. increasing to 100% from the prior 75% at the end of fiscal 2024. This resulted in a charge of $2,194,994 to contributed surplus. The acquisition was financed by a newly secured mortgage loan. See note 10 for details. As a condition of the acquisition, the Company repaid the non-controlling shareholders' loans amounting to $487,272. 2074160 Ontario Inc. owns the Markham, Ontario land and buildings utilized by the Company as a warehouse.

15. COMMITMENTS

    1. The Company enters into foreign exchange forward contracts to manage the risks associated with exchange rate fluctuations. See note 7 for more information.

    2. In terms of a worldwide license agreement, the Company has the right to use trademarks in connection with the manufacture, marketing, sale and distribution of certain licensed products. During the license term, the Company is required to pay a quarterly royalty on its net sales as defined in the agreement, on all products sold under the licensed marks. The effective royalty rates vary depending on the distribution channel and range from 0%-10%. Minimum annual royalties have been established for the balance of the contract period ending December 31, 2025 in U.S. dollar amount of $240,000. In addition, the Company is required to pay an advertising fee of 1%-2%, depending on the distribution channel, payable quarterly, on its net sales as defined in the agreement, for promotion of the licensed products. The license term is in effect until December 31, 2025.

    3. 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, 2025 and 2026, in amounts of $185,000 and

       $200,000 respectively. The license term is in effect until December 31, 2026.

    4. 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.

16. 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 six months ended June 30, 2025 from those described in the Company's audited annual consolidated financial statements for the year ended December 31, 2024.