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Advantex Announces Fiscal 2017 Second Quarter Results

TORONTO, ONTARIO--(Marketwired - Feb. 27, 2017) - Advantex Marketing International Inc. (CSE:ADX), a specialist in marketing loyalty-reward programs, announced its results for the three and six months ended December 31, 2016.

In December 2016 the Company reached agreement to extend maturity date of its 12% debentures to March 31, 2017 from December 31, 2016. The Company is working with its exclusive financial advisor to refinance the 12% debentures and seek growth funds to capitalize on expansion opportunities.

During the period the Company's focus was to stabilize operations in an environment where it has limited access to working capital.

Highlights of results for three and six months ended December 31, 2016 are set out in the table (1). Additional details are available in the Consolidated Financial Statements and the Management Discussion and Analysis available under the Company's profile on www.sedar.com.

    3 months ended December 31   6 months ended December 31
      2016     2015     2016     2015
      $     $     $     $
Revenues   $ 2,410,369   $ 3,096,423   $ 5,014,639   $ 6,091,677
  Direct expenses - Cost of cardholder rewards and marketing merchants to cardholders    
704,248
   
856,738
   
1,402,012
   
1,601,157
  Direct expenses - Expense for provision against delinquent accounts    
132,010
   
169,843
   
311,604
   
308,493
Gross profit   $ 1,574,111   $ 2,069,842   $ 3,301,023   $ 4,182,027
  Selling and General & Administrative     1,439,997     1,541,888     2,838,248     3,189,701
Earnings from operations before depreciation, amortization and interest   $ 134,114   $ 527,954   $ 462,775   $ 992,326
  Cash interest on loan payable and debentures     334,622     396,865     673,616     780,336
Earnings (loss) from operations before depreciation, amortization and non-cash interest on debentures (accretion charges)   $ (200,508)   $ 131,089   $ (210,841)   $ 211,990
  Depreciation and amortization     37,099     103,045     115,944     234,152
  Non cash interest expense on debentures     -     58,146     60,227     115,612
Net loss and Comprehensive loss   $ (237,607)   $ (30,102)   $ (387,012)   $ (137,774)

(1) The tabulation is a non-GAAP presentation and is provided to assist readers in understanding the Company's financial performance. The information is extracted from consolidated financial statements for the three and six months ended December 31, 2016.

About Advantex:

Advantex provides specialized marketing programs that enable members of affinity groups to earn frequent-flyer miles and other loyalty rewards through purchases at participating merchants.

Through our partnerships with Aeroplan, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and Caesars Entertainment, we have contractual access to millions of consumers with above-average personal and household income. We also have partnerships with over 1,200 merchants in Canada and the US.

Advantex shares trade on the Canadian Securities Exchange under the symbol ADX. For more information, go to www.advantex.com.

Advantex Marketing International Inc.
Consolidated Statements of Financial Position (unaudited)
(expressed in Canadian dollars)
 
    Note     At December     At June
          31, 2016     30, 2016
          $     $
Assets                
Current assets                
Cash and cash equivalents       $ 370,441   $ 658,678
Accounts receivable         248,995     425,402
Transaction credits   5     5,698,419     7,352,262
Inventory   6     39,475     39,914
Prepaid expenses and sundry assets         103,289     103,684
        $ 6,460,619   $ 8,579,940
 
Non-current assets                
Property, plant and equipment       $ 93,714   $ 116,049
Intangible assets         26,312     119,921
        $ 120,026   $ 235,970
 
Total assets       $ 6,580,645   $ 8,815,910
 
Liabilities                
Current liabilities                
Loan payable   7   $ 4,090,052   $ 5,533,267
Accounts payable and accrued liabilities         3,091,713     3,556,978
12% Non-convertible debentures payable   8     5,159,000     5,098,773
        $ 12,340,765   $ 14,189,018
 
Shareholders' deficiency                
Share capital   9   $ 24,530,555   $ 24,530,555
Contributed surplus         4,090,382     4,090,382
Accumulated other comprehensive loss         (47,383)     (47,383)
Deficit         (34,333,674)     (33,946,662)
Total deficiency       $ (5,760,120)   $ (5,373,108)
 
Total liabilities and deficiency       $ 6,580,645   $ 8,815,910

Economic and Financial dependence (note 2a), Going concern (note 2b), Commitments and contingencies (note 12)

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

Approved by the Board   

Director: William Polley

Director: Kelly Ambrose

 
Advantex Marketing International Inc.
Consolidated Statements of Loss and Comprehensive Loss (unaudited)
For the three and six months ended December 31, 2016 and 2015
(expressed in Canadian dollars)
 
    Note   Three months ended December 31     Six months ended December 31
          2016     2015     2016     2015
          $     $     $     $
 
Revenues   15   $ 2,410,369   $ 3,096,423   $ 5,014,639   $ 6,091,677
Direct expenses   14/15     836,258     1,026,581     1,713,616     1,909,650
          1,574,111     2,069,842     3,301,023     4,182,027
Operating expenses                            
Selling and marketing   14/15     492,153     692,320     997,860     1,431,748
General and administrative   14/15     947,844     849,568     1,840,388     1,757,953
Earnings from operations before depreciation, amortization and interest         134,114     527,954     462,775     992,326
 
Interest expense:                            
Stated interest expense - loan payable, and debentures   7/8     334,622     396,865     673,616     780,336
Non-cash interest expense on debentures   8     -     58,146     60,227     115,612
          (200,508)     72,943     (271,068)     96,378
Depreciation of property, plant and equipment, and amortization of intangible assets         37,099     103,045     115,944     234,152
Net loss and comprehensive loss       $ (237,607)   $ (30,102)   $ (387,012)   $ (137,774)
 
Loss per share                            
Basic and Diluted   13   $ (0.00)   $ (0.00)   $ (0.00)   $ (0.00)
 
The accompanying notes are an integral part of these consolidated financial statements
 
Advantex Marketing International Inc.
Consolidated Statements of Changes in Shareholders' Deficiency (unaudited)
For the three and six months ended December 31, 2016 and 2015
(expressed in Canadian dollars)
 
  Class A preference shares   Common
shares
  Contributed surplus   Accumulated other comprehensive loss Deficit   Total
    $   $   $   $ $   $
 
Balance - July 1, 2015 $ 3,815 $ 24,526,740 $ 4,090,382 $ (47,383) $ (33,039,219) $ (4,465,665)
Net loss and comprehensive loss   -   -   -   -   (137,774)   (137,774)
Balance - December 31, 2015 $ 3,815 $ 24,526,740 $ 4,090,382 $ (47,383) $ (33,176,993) $ (4,603,439)
                         
                         
Balance - July 1, 2016 $ 3,815 $ 24,526,740 $ 4,090,382 $ (47,383) $ (33,946,662) $ (5,373,108)
Net loss and comprehensive loss   -   -   -   -   (387,012)   (387,012)
Balance - December 31, 2016 $ 3,815 $ 24,526,740 $ 4,090,382 $ (47,383) $ (34,333,674) $ (5,760,120)
 
The accompanying notes are an integral part of these consolidated financial statements
 
Advantex Marketing International Inc.
Consolidated Statements of Cash Flow (unaudited)
For the three and six months ended December 31, 2016 and 2015
(expressed in Canadian dollars)
 
  Note   At December
31, 2016
    December
31, 2015
      $     $
 
Operational activities            
Net loss for the period   $ (387,012)   $ (137,774)
Adjustments for:            
Depreciation of property, plant and equipment, and amortization of intangible assets     115,944     234,152
Accretion charge for debentures 8   60,227     115,612
      (210,841)     211,990
Changes in items of working capital            
  Accounts receivable     176,407     (200,148)
  Transaction credits     1,653,843     (1,214,158)
  Inventory     439     101,276
  Prepaid expenses and sundry assets     395     (44,730)
  Accounts payable and accrued liabilities     (465,265)     (317,175)
      1,365,819     (1,674,935)
Net cash provided by (used in) operating activities   $ 1,154,978   $ (1,462,945)
 
Investing activities            
Purchase of property, plant and equipment, and intangible assets   $ -   $ (41,983)
Net cash (used in) investing activities   $ -   $ (41,983)
 
Financing activities            
Proceeds from loan payable 7 $ (1,443,215)   $ 842,532
Net cash generated from / (used in) financing activities   $ (1,443,215)   $ 842,532
 
Increase / (decrease) in cash and cash equivalents during the period   $ (288,237)   $ (662,396)
Cash and cash equivalents at beginning of period     658,678     1,162,609
Cash and cash equivalents at end of period   $ 370,441   $ 500,213
 
Additional information            
Interest paid   $ 698,988   $ 778,639
For purposes of the cash flow statement, cash comprises            
  Cash   $ 370,441   $ 495,213
  Term deposits     -     5,000
    $ 370,441   $ 500,213

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