CALGARY, Alberta - CE Brands Inc. (TSXV: CEBI; CEBI.WT) ('CE Brands', 'we', 'our', or the 'Company'), a data-driven consumer-electronics company, announced its financial results for the three-month ('Q4 2022') and twelve-month periods ('Fiscal 2022') ended March 31, 2022. The related audited financial statements and accompanying notes and Management's Discussion and Analysis ('MD&A') for Q4 and Fiscal 2022 are available on SEDAR at www.sedar.com and on CE Brands' website at www.cebrands.ca. In addition, the Company is announcing that it has entered into a binding financing agreement with Vesta Global Stability Fund ('Vesta Fund'), pursuant to which Vesta Fund has agreed to advance a senior secured loan facility (the 'Vesta Facility') in the maximum amount of US$2,000,000 to the Company to fund working capital and for other general corporate purposes, including the purchase of inventory and shipping and duty expenses. The Company is also announcing that the Company has entered into a letter of intent with Beijing KangShuo Information Technology Co., Ltd. ('Kang-Shuo') regarding a proposed Wearables Development and Sales Agreement (the 'Definitive Kang-Shuo Agreement') between eBuyNow eCommerce Ltd. ('EBN'), a wholly-owned subsidiary of CE Brands, and Kang-Shuo with respect to smartwatch and wearables engineering, design and manufacturing.
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 ended March 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 in January 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 $3 million in Q4 2022,' said Craig Smith, Chief Executive Officer of CE Brands. 'We are looking forward to this next year as we have several new products to be launched, highlighted by three new smartwatches scheduled for launch. We are seeing the supply chain constraints and logistical issues related to COVID 19, that were experienced throughout the past year, begin to lessen,' continued Mr. Smith.
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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 Asia, the timing of product launches, 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.
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 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, without limitation: the risks described in the 'Other Risk Factors' section of the MD&A; 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 the Choco Facility and/or the Vesta Facility, which may not be available in a timely manner or at all; the inability of the Company to enter into a Definitive Kang-Shuo Agreement; 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; the Company's expectations with respect to anticipated revenue growth in fiscal 2023; 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; the Company being put into a bankruptcy or restructuring proceeding; and the risk factors included in CE Brand's other continuous disclosure documents available on SEDAR at 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 law.
Contact:
Kalvie Legat
Chief Financial Officer
T: 778-771-0901
Rob Knowles
Manager
Investor Relations
T: 1-855-770-2324
E: ir@cebrands.ca
CE BRANDS INC. 
