CE Brands Reports First Quarter 2024 Financial and Operational Results

CALGARY, Alberta, Aug. 25, 2023 (GLOBE NEWSWIRE) — CE Brands Inc. (TSXV: CEBI) (the “Corporation“), a data-driven consumer-electronics company, today announced its financial results for the three-month period ended June 30, 2023 (“Q1 2024“). The related unaudited condensed consolidated interim financial statements and accompanying notes and management’s discussion and analysis (“MD&A“) for Q1 2024 are available on SEDAR at www.sedar.com and on the Corporation’s website at www.cebrands.ca.

Except as otherwise indicated, all amounts in the press release are expressed in Canadian dollars.

Q1 2024 Highlights

  • Total revenue of approximately $1.22 million in Q1 2024 compared to total revenue of approximately $2.44 million in the three-month period ended June 30, 2023 (“Q1 2023“), representing a decrease of approximately 50%. The decrease in total revenue was due to the termination of the Corporation’s relationship with Eastman Kodak and lower business-to-consumer sales of moto watches on e-commerce platforms.
  • Gross profit of approximately $0.54 million in Q1 2024 compared to gross profit of approximately $0.55 million in Q1 2023, representing a decrease of approximately 2%. The increase in gross profit as a percentage of revenue was driven by an increased proportion of total sales coming from higher margin products such as the moto watch 100, versus the prior year which had a product mix including moto watch 360 with a comparatively lower gross margin.
  • Net Income of approximately $8.66 million in Q1 2024 compared to approximately $2.54 million of net loss in Q1 2023, an increase of approximately 441%. The increase in net income was due to a gain on deconsolidation of $10.45 million and lower operating expenditures, set off by increased finance cost. 
  • On June 26, 2023, eBuyNow eCommerce Ltd., a wholly-owned operating subsidiary of the Corporation, made a voluntary assignment into bankruptcy under the Bankruptcy and Insolvency Act (Canada). Pursuant to the voluntary bankruptcy, Harris & Partners Inc. (the “Trustee“) was appointed trustee of eBuyNow’s property.

“Q1 2024 was challenging for the Corporation. Global macro events continued to contribute to higher material costs for our product lines, which despite stable sales volumes, put significant pressure on the bottom line,” said Kalvie Legat, Interim Chief Executive Officer of the Corporation. “After Q1 2024, the Corporation commenced an internal reorganisation involving the eBuyNow bankruptcy. Moving forward, this will enable us to both reduce our corporate costs and focus on growing our key business lines and move the Corporation back to profitability.”


The Corporation 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 prioritizing the Corporation’s product portfolio to conserve cash and improve near-term as well as long-term profitability. In order to continue to meet customer demand, the Corporation is actively seeking financing to ensure the Corporation has sufficient fundson hand for the purchase of inventory, working capital, and for general corporate purposes.

Due to the working capital and liquidity constraints that the Corporation has faced and a slower than anticipated return to full operations in our partner factories, the Corporation withdraws all previously disclosed financial guidance due to the uncertainty in forecasting operating results.

The Corporation anticipates that it will require additional financing to address the Corporation’s working capital and other financing needs and support the Corporation’s Vitalist product launches and sales. See “Forward-Looking Information“, “Going Concern” and “Other Risk Factors” in the MD&A for more information. The Corporation is actively seeking financing to address such needs and support such product launches and sales.

Vitalist Products

On June 6, 2023, the Corporation announced the launch of Vitalist, an in-house smartwatch health brand. With a focus on affordability and market availability, Vitalist will specialize in cost-effective smartwatches that integrate with a dedicated application experience. By combining user-friendly design, at-home biomarker testing, and wellness improvement planning, Vitalist aims to empower users to gain deeper insight into, and track how their daily activities and interventions impact their long-term health.
In addition to providing comprehensive smartwatch features, Vitalist will offer bundled biomarker testing services. This means that users will be able to conveniently test their biomarkers, gaining valuable insights into their health. By leveraging the power of smartwatch data and biomarker analysis, the Corporation anticipates that Vitalist will create an ecosystem that enables users to make informed decisions about their well-being.

Beyond biomarker testing, Vitalist will take a holistic approach to health. The brand will offer personalized health supplement interventions that are tailored to the specific needs of users based on their biomarker and biometric data. By analyzing the collected information, Vitalist will be able to generate custom training and dietary supplement plans, enabling users to manage their biomarkers and achieve their health goals.

With Vitalist, the Corporation plans to foster an ecosystem that promotes proactive health management through the integration of smartwatches, biomarker testing services, and health supplement interventions that allow users to track their progress, identify areas for improvement, and make informed decisions to enhance their overall health and well-being.

Based on internal market research, the Corporation plans to bring multiple smartwatch and smart ring products to market in the upcoming fiscal year under the Vitalist brand, to reach market segments where current  products may not be appropriate (for example, to reach iPhone users with a keen interest in hormone levels) and also to be able to launch a portfolio of off-the-shelf hardware products already being manufactured under non-exclusive brand names in other countries, of which the research and development requires limited resources in order to introduce to the market.

The Corporation anticipates that it will require additional financing to address the Corporation’s working capital and other financing needs and support the Corporation’s product launches and sales. See “Forward-Looking Information“, “Going Concern” and “Other Risk Factors” in the MD&A for more information.

Selected Financial Information

The following table discloses certain financial information about the Corporation for Q1 2024 and Q1 2023:

  Three months ended
  June 30, 2023   June 30, 2022  
Total revenue 1,218,798   2,441,672  
Cost of products and services 680,373   1,894,152  
Gross Profit 538,425   547,520  
Net Income (loss) 8,667,973   (2,537,324)  
Total comprehensive Income (loss) 8,685,641   (2,376,667)  
Basic and Diluted Loss per share 0.34   (0.10)  

The following table discloses certain financial information about the Corporation as at June 30, 2023, and March 31, 2023:

  As at
  June 30, 2023   March 31, 2023  
Total Assets 90,353   1,995,279  
Total current liabilities 13,968,552   19,464,076  
Total Non-Current Financial Liabilities   5,097,002  

For more information, please see the Corporation’s corporate presentation, which is available on the Corporation’s website at www.cebrands.ca/investors.

About the Corporation

The Corporation develops products with leading manufacturers and iconic brand​ licensors by utilizing proprietary data that identifies key market opportunities​.

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.

Forward-Looking Information

In general, forward-looking information is disclosure about future conditions, courses of action, and events, including information about prospective financial performance or financial position. The use of any of the words “anticipates”, “believes”, “expects”, “intends”, “plans”, “will”, “would”, and similar expressions are intended to identify forward-looking information. Forward-looking statements included or incorporated by reference in the MD&A include, without limitation, with respect to:

  • the impact on the Corporation of the voluntary bankruptcy of eBuyNow, particularly as it relates to the Motorola License Agreement;
  • the effects of COVID-19 on the Corporation;
  • the effects of global supply constraints on the Corporation;
  • the plans of the Corporation for the Vitalist product category, the status of the Vitalist product segment relative to those plans, and the anticipated timing and costs to advance the Vitalist product category;
  • the requirement for additional financing;
  • the strategies of the Corporation for customer retention and growth;
  • anticipated demand for the products and services of the Corporation, and its ability to meet that demand;
  • the ability of the Corporation to generate sufficient cash to maintain its capacity and fund its growth and development;
  • the ability of the Corporation to meet its obligations as they become due;
  • the plans of the Corporation for remedying its working capital deficiency;
  • capital expenditures not yet committed, but required, to maintain the capacity of the Corporation and fund its growth and development;
  • the sources of financing that the Corporation has arranged, but not yet used; and

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

By its nature, forward-looking information is subject to various risks, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed in this news release. Some of these risks include the following:

  • due to the eBuyNow bankruptcy, contracts between eBuyNow and its subsidiaries and certain licensors, distributors, and manufacturers (including the Motorola License Agreement) may be terminated as part of the bankruptcy;
  • the eBuyNow bankruptcy constitutes an event of default under the terms of the debt instruments issued by the lenders of the Corporation;
  • the loss of control or relinquishment of substantially all of the assets of the Corporation as part of the eBuyNow bankruptcy could ultimately result in the Corporation being unable to continue operations;
  • there is the potential for litigation to arise from creditors in connection with the eBuyNow bankruptcy resulting in contingent liabilities and additional legal costs;
  • certain liabilities of eBuyNow and its wholly-owned subsidiaries may not be extinguished in connection with the eBuyNow bankruptcy;
  • upon completion of the eBuyNow bankruptcy, the Corporation will require additional funds by way of debt or equity financings to continue to fund its operating, investing, and financing activities in the foreseeable future;
  • the Corporation may continue to experience negative impacts of the COVID-19 pandemic;
  • the Corporation may continue to experience negative impacts of global supply constraints;
  • the Corporation has limited financial resources and will require additional funds to continue operations;
  • the Corporation is at risk of not being able to settle its debt obligations and the Corporation may not be able to extend, replace, or refinance its existing debt obligations on terms reasonably acceptable to the Corporation, or at all;
  • the Corporation has global operations and sales and, as such, has exposure to global credit and financial factors on consumers in its areas of operations;
  • the Corporation has a working capital deficiency;
  • the Corporation has a history of negative cash flow, including negative cash flow from operating activities;
  • the Corporation relies on third party manufacturing and from time to time there may be product defects caused by the manufacturing process, assembly, or engineering;
  • the Corporation relies heavily on manufacturing in China but at times may use factories in, Vietnam, Taiwan, or Malaysia, as such products may be subject to changing tariffs applied by selling countries to the countries of origin with little or no warning;
  • the Corporation believes its transaction-based revenues will begin to represent an increasing proportion of its overall revenue mix over time and expects the seasonality of its quarterly results to vary;
  • The company faces a risk of having “no to very low revenue” in the current fiscal quarter considering the company is in the negotiation stage with the business-to-business customer contracts;
  • the Corporation relies on major components to be manufactured on an original equipment manufacturer basis;
  • Demand for international sales may not grow as expected or at all, and there is no assurance that the Corporation will succeed in expanding into new markets;
  • the ability of the Corporation to successfully enter new markets is subject to uncertainties;
  • there can be no assurance that the business and growth strategy of the Corporation will enable the Corporation to be profitable;
  • the Corporation relies on licenses from third parties;
  • the future growth and profitability of the Corporation will be dependent in part on the effectiveness and efficiency of its sales and marketing expenditures;
  • the Corporation may be exposed to product liability claims in the use of its products;
  • the market for the products of the Corporation is characterized by rapidly changing technology, evolving industry standards, and customer requirements;
  • the precise segment of the market that is targeted by the Corporation is characterized by rapid technological change, evolving industry standards, frequent new product introductions, and short product life cycles;
  • the ability of the Corporation to generate revenue will largely depend upon the effectiveness of its sales and marketing efforts, both domestically and internationally;
  • the success of the Corporation is largely dependent on the performance of its key directors, officers, and employees;
  • the commercial success of the Corporation is reliant on the ability to develop new or improved technologies, manufacture products, and to successfully obtain patents or other proprietary or statutory protection for these technologies and products in Canada and other jurisdictions;
  • the Corporation could become subject to a wide variety of cyberattacks on its networks and systems;
  • the Corporation is engaged in an industry that is highly competitive and rapidly evolving;
  • the new products provided by the competitors of the Corporation may render the existing products of the Corporation less competitive;
  • the Corporation uses contract manufacturers to manufacture its products and products under development;
  • the management of the Corporation has limited experience operating public companies;
  • the Corporation may become party to litigation, mediation, or arbitration from time to time in the ordinary course of business;
  • any future acquisitions may result in significant transaction expenses and may present additional risks associated with entering new markets, offering new products, and integrating the acquired companies;
  • the business plan of the Corporation anticipates rapid growth, and the Corporation will need to continue to attract, hire, and retain highly skilled and motivated officers and employees;
  • the computer infrastructure of the Corporation may potentially be vulnerable to physical or electronic computer break-ins, viruses, and similar disruptive problems and security breaches;
  • the Corporation may not be able to enhance its current products or develop new products at competitive prices or in a timely manner;
  • the Corporation is subject to taxes in Canada and numerous foreign jurisdictions;
  • a customer of the Corporation or counterparty to a financial instrument of the Corporation may fail to meet its contractual obligations to the Corporation;
  • there are a number of risks inherent in the international activities of the Corporation, including unexpected changes in governmental policies or project locations concerning the import and export of goods, services, and technology;
  • the ability of the Corporation to manage growth effectively will require it to continue to implement and improve its operational and financial systems;
  • the forecasts and models of the Corporation could be inaccurate;
  • the accounting estimates and judgments of the Corporation could be incorrect;
  • the Corporation may fail to develop or maintain effective controls on financial reporting; and
  • there is no assurance that insurance will be consistently available to the Corporation on economically feasible basis or at all

Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date of this news release, and to not use such forward-looking information other than for its intended purpose. The Corporation 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.

Further Information

For further information about the Corporation, please contact:

Kalvie Legat 
Interim Chief Executive Officer
[email protected]

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