CE Brands Reports Second Quarter 2022 Financial Results and Shareholder Update Call

CALGARY, Alberta, Nov. 24, 2021 (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-month and six-month periods ended September 30, 2021 (“Q2 2022”) ⁽¹⁾. The related condensed interim consolidated financial statements and Management’s Discussion and Analysis for Q2 2022 are available on SEDAR at www.sedar.com and on CE Brands’ website at www.cebrands.ca.

CE Brands will host a virtual-only shareholder update call on Monday, November 29, 2021, at 9-10am PST (12-1pm EST). The shareholder update call will be facilitated by Craig Smith, CEO and Kalvie Legat, CFO, who will review the company's second quarter financial results as well as discuss milestones, financial strength, and speak to financial and operational expectations for 2022.

The Company will answer pre-submitted questions at the conclusion of prepared remarks. Investors are asked to submit their questions in advance to ir@cebrands.ca

You can join the shareholder update call via this link: https://us02web.zoom.us/j/81197553338

Or by telephone in:

• Canada: +1 647 558 0588 or +1 778 907 2071
• US: +1 646 558 8656 or +1 669 900 9128
• International numbers available: https://us02web.zoom.us/u/kcQY9iSTOi
  

Webinar ID: 811 9755 3338

A recording of the shareholder update call will be posted on the Company website.

Q2 2022 Highlights

• Total Revenue decreased to $1.4 million in Q2 2022 from $2.4 million in the three month period ended September 30, 2020 (“Q2 2021”), representing a decrease of 42%. The decrease in revenue for the three month period was primarily attributable to the global supply chain issues affecting the Company and the consumer electronics industry generally, which resulted in delays in the Company procuring inventory for sale.
• Gross profit decreased to $0.5 million in Q2 2022 from $0.6 million in Q2 2021, representing a decrease of 18%. This was due primarily to lower sales within the quarter, offset in part by an increase in the proportion of total sales coming from the Kodak baby product line at a higher gross margin.
• Net loss decreased to $2.1 million in Q2 2022 from $4.4 million in Q2 2021, representing a decrease of 53%. The decrease in net loss was due to the focus on controlling expenses in response to the ongoing COVID-19 pandemic, a decrease in finance costs as the Company used the proceeds from the June 18, 2021 public offering, to repay outstanding debt which resulted in lower interest costs, as well as fair value gains on financial instruments in Q2 2022 as a result of the repayment of debt.
  

“The second quarter was challenging operationally for CE Brands with ongoing production, logistical and supply chain disruptions; however, I am confident that CE Brands will successfully weather these supply chain headwinds and deliver on our long-term growth strategy,” said Chief Executive Officer Craig Smith. “We are seeing improving momentum in our business with sales increasing on a quarter over quarter basis and believe we are well-positioned with the recent additions to our senior operations team in Hong Kong and China to increase operational excellence in global supply chain management and capitalize on improving conditions following the completion of our recent $5.4 million financing.”

Post Q2 Fiscal 2022 Updates/Highlights

• On November 16, 2021, the Company announced the launch of its latest smartwatch, the moto watch 100, which was developed with its strategic brand partner Motorola.
• On November 12, 2021, the Company closed a non-brokered private placement financing comprised of (i) a debt financing of senior secured convertible notes (the “Convertible Notes”) for aggregate committed capital of $4,000,000, with a potential upsize in the amount of $2,000,000, and (ii) an equity financing for aggregate gross proceeds of $1,400,000 at a price of $0.56 per common share.
• On October 21, 2021, the Company provided an operational and financial update, including the initiatives being taken to address global supply chain challenges.
  

Outlook

Consistent with the operational and financial update provided on October 21, 2021 and taking into account supply chain disruptions, labour shortages and the ongoing direct and indirect effects of COVID-19, the Company continues to expect to generate approximately $8-9 million in revenues for the three-month period ending March 31, 2022, primarily driven by the initial sales of the Motorola moto watch 100 and the Kodak Infinio F882 Outdoor Security Monitor.

With the additional products planned to launch in early 2022, the Company continues to expect to generate revenue for calendar year 2022 in the $50-60 million range. See “Forward-Looking Information”.

While the supply chain disruptions are meaningful, the Company is attempting to mitigate the impacts 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. The recent additions to the Company’s senior operations team in Hong Kong and China are resulting in improvements to supply chain management and positioning the Company to deliver on its upcoming product launches.

If global supply chain issues persist into the future, the Company anticipates that it will from time to time pursue additional financing opportunities to address the Company’s working capital and other financing needs and support the Company’s product launches and sales. See “Forward-Looking Information”.

Select Financial Information

⁽¹⁾ References in this MD&A 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 Qualifying Transaction (as defined below) 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.

About CE Brands

CE Brands Inc. develops products with leading manufacturers and iconic brand​ licensors by utilizing 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 the Company’s intention to pursue additional financing opportunities, including the expected timing and successful completion thereof, 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.

Additionally, this press release includes forward-looking statements within the meaning of applicable securities laws, including with respect to, among other things, the Company’s expectation that (i) revenues for the three-month period ending March 31, 2022 will be approximately $8-$9 million, and (ii) revenues for the 12 month period ending December 31, 2022 will be approximately $50 -$60 million.

The forward-looking information is based on certain key expectations and assumptions, including the timing of the resumption of manufacturing operations at the Company’s partner factories in Asia, the timing of product shipments and deliveries, forecast sales price and sales volume of the Company’s products and the ability of the Company to secure additional sources of financing in 2022.

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 they 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, 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; 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; the reasonable possibility that the Company's existing cash and cash equivalents, along with cash generated from its operations, may not be sufficient to fund its current and planned operations through the next 12 months, which raises substantial doubt about the Company's ability to continue as a going concern; the inability to implement the Company’s objectives and priorities for 2021 and beyond, which could result in financial strain on the Company and continued pressure on the Company’s business; 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; the Company being put into a bankruptcy or restructuring proceeding; and the risk factors included in CE Brands’ continuous disclosure documents available on www.sedar.com. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date of this press release, and to not use such forward-looking information other than for its intended purpose. CE Brands undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events, or otherwise, except as required by applicable securities legislation.

Further Information

For further information about CE Brands or its principal operating subsidiary, eBuyNow eCommerce Ltd., please contact: