Advantex Marketing International Inc. ("Advantex" or the "Company") (CNSX:ADX),
a leading specialist in merchant funding and loyalty marketing programs, today
announced its results for the three months ended September 30, 2011 ("Q1 F
2012"). All amounts are in Canadian dollars unless otherwise noted.
"We are pleased to report a return to net profit. The strong results from Retail
programs for Q1 F 2012 are a vindication of our belief that during fiscal year
ended June 30, 2011 the Company had set up a solid platform to grow its merchant
base, and ensure growth in its future revenues and profitability," said Kelly
Ambrose, Advantex President and Chief Executive Officer.
"In the coming quarters we expect to introduce new product offerings to the
small merchant marketplace, that will enable merchants to market their goods and
services in new mediums, and save money in their inputs. We expect these new
product offerings to generate incremental revenues for the Company," said Mr.
Ambrose.
Financial Highlights (ii)
----------------------------------------------------------------------------
3 months ended 3 months ended
September 30, September 30,
2011 2010
("Q1 F 2012") ("Q1 F 2011")
----------------------------------------------------------------------------
Revenues: Retail programs (merchant
based programs) $ 3,835,000 $ 3,392,000
----------------------------------------------------------------------------
: Online Shopping Mall
(discontinued Q3 of fiscal year
ended June 30, 2011) $ - $ 566,000
----------------------------------------------------------------------------
: Total $ 3,835,000 $ 3,958,000
----------------------------------------------------------------------------
Gross Margin 72.8% 68.4%
----------------------------------------------------------------------------
Contribution from Operations before
amortization and interest (EBITDA(i)) $ 976,000 $ 875,000
----------------------------------------------------------------------------
Amortization $ 92,000 $ 153,000
----------------------------------------------------------------------------
Stated Interest on loan payable and
debentures $ 491,000 $ 398,000
----------------------------------------------------------------------------
Non-cash Interest $ 132,000 $ 173,000
----------------------------------------------------------------------------
Net Profit $ 261,000 $ 150,000
----------------------------------------------------------------------------
(i) EBITDA is a non-GAAP financial measure which does not have any
standardized meaning prescribed by the issuer's GAAP and is therefore
unlikely to be comparable to similar measures presented by other issuers.
For the Company, the most directly comparable measure to EBITDA is
Contribution from operations before amortization and interest.
(ii) Some numbers in the presentation under Financial Highlights may not add
due to rounding.
The Company's revenues from Retail programs increased 13 % during Q1 F 2012
compared with Q1 F 2011, a reflection of increased merchant participation in the
programs. The Company's premier product, Advance Purchase Marketing ("APM"),
generated revenues of $2.6 million in Q1 F 2012 compared with $2.3 million
during Q1 F 2011, and represents 68 % and 67 % of the Company's revenues for Q1
F 2012 and Q1 F 2011 respectively.
Stated interest cost (cash interest paid or payable) for Q1 F 2012 was $0.5
million compared with $0.4 million for Q1 F 2011. The higher dollar cost
reflects both an increase in the utilization of the line of credit facility
(Loan payable on the balance sheet) which the Company utilized to expand its APM
program business, and increase in the coupon of the convertible debenture
re-financed in May, 2011 ($6.0 million Convertible debenture with coupon of 10%
re-financed as $6.462 million Non-convertible debenture at a coupon of 12%). The
re-financing was done to stabilize the Company's access to capital.
About Advantex Marketing International Inc.
Advantex is a specialist in the marketing services industry, managing
white-labeled rewards accelerator programs for major affinity groups through
which their members earn bonus frequent flyer miles and/or other rewards on
purchases at participating merchants. Under the umbrella of each program,
Advantex provides merchants with marketing, customer incentives, and
additionally pre-purchase of merchants' future sales through its Advance
Purchase Marketing (APM) model. Advantex partners include more than 1,150
merchants; CIBC; and Aeroplan. Advantex is traded on the Canadian National Stock
Exchange under the symbol "ADX". For additional information on Advantex, please
visit www.advantex.com.
Forward-Looking Information
This Press Release contains certain "forward-looking information". All
information, other than information comprised of historical fact, that addresses
activities, events or developments that the Company believes, expects or
anticipates will or may occur in the future constitutes forward-looking
information. Forward-looking information is typically identified by words such
as: anticipate, believe, expect, goal, intend, plan, will, may, should, could
and other similar expressions. Such forward-looking information relates to,
without limitation, information regarding: the Company's belief that the strong
results from Retail programs for Q1 F 2012 are a vindication of its belief that
during fiscal year ended June 30, 2011 the Company had set up a solid platform
to grow its merchant base, and ensure growth in its future revenues and
profitability; the Company's expectation to the timing of the launch of its new
product offerings; the Company's expectation to the acceptance of its new
product offerings by the small merchants; the Company's expectation of
incremental revenue from the new product offerings; the Company's belief that
the re-financing of debenture was done to stabilize its access to capital; the
Company's ability to increase merchant participation in its Retail programs; and
other information regarding financial and business prospects and financial
outlook is forward-looking information.
Forward-looking information reflects the current expectations or beliefs of the
Company based on information currently available to the Company, including
certain assumptions and expectations of Management. With respect to the
forward-looking information contained in this Press Release, the Company has
made assumptions regarding, among other things, the size of the market for the
Company's programs; its ability to increase merchant participation in its
programs; its ability to access future financing; continued affinity partner
participation with the Company; continued support from its providers of Loan
payable and holders of Debentures payable; current and future economic and
market conditions and the impact of same on the Company's business; ongoing and
future revenue sources; future business levels; interest and currency rates; the
appropriateness of the Company's tax filing position; ongoing consumer interest
in accumulating frequent flyer miles; and the Company's ability to manage risks
connected to collection of transaction credits.
Forward-looking information is subject to a number of risks, uncertainties and
assumptions that may cause the actual results of the Company to differ
materially from those discussed in the forward-looking information, and even if
such actual results are realized or substantially realized, there can be no
assurance that they will have the expected consequences to, or effects on the
Company. Factors that could cause actual results or events to differ materially
from current expectations include, among other things, changes in general
economic and market conditions; changes to regulations affecting the Company's
activities; level of merchant participation in the Company's programs;
uncertainties relating to the availability and costs of financing needed in the
future; termination of the CIBC agreement; termination of the Aeroplan
agreement; currency risks; the financial impact from failure to meet its
obligations noted under Contractual Obligations section of the Management
Discussion and Analysis ("MD&A") for the three months ended September 30, 2011;
the inability of the Company to collect under its APM program; the Company's
financial status, and other factors, including without limitation, those listed
under "General Risks and Uncertainties" and "Economic Dependence" in MD&A for
the three months ended September 30, 2011.
All forward-looking information speaks only as of the date on which it is made
and, except as may be required by applicable securities laws, the Company
disclaims any intent or obligation to update any forward-looking information,
whether as a result of new information, future events or results or otherwise.
Although the Company believes that the assumptions inherent in the
forward-looking information are reasonable, forward-looking information is not a
guarantee of future performance and accordingly undue reliance should not be put
on such information due to the inherent uncertainty therein.
Advantex Marketing International Inc.
Consolidated Statement of Financial Position
As at September 30, 2011, June 30, 2011 and July 1, 2010 - (Unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
September 30, June 30, July 1,
2011 2011 2011
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Assets
----------------------------------------------------------------------------
Current assets
----------------------------------------------------------------------------
Cash and cash equivalents 393,667 5,000 505,941
----------------------------------------------------------------------------
Accounts receivable 856,444 842,249 700,927
----------------------------------------------------------------------------
Transaction credits (note 3) 13,316,325 12,408,060 9,538,364
----------------------------------------------------------------------------
Aeronotes (note 6) - 66,451 381,309
----------------------------------------------------------------------------
Prepaid expenses and sundry
assets 320,821 248,541 249,510
----------------------------------------------------------------------------
$ 14,887,257 $ 13,570,301 $ 11,376,051
----------------------------------------------------------------------------
Non-current assets
----------------------------------------------------------------------------
Other asset (note 6) 100,000 100,000 -
----------------------------------------------------------------------------
Property, plant and equipment
(note 7) 736,430 761,177 807,315
----------------------------------------------------------------------------
836,430 861,177 807,315
----------------------------------------------------------------------------
Total assets $ 15,723,687 $ 14,431,478 $ 12,183,366
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
----------------------------------------------------------------------------
Current liabilities
----------------------------------------------------------------------------
Bank Indebtedness - 83,262 -
----------------------------------------------------------------------------
Loan payable (note 8) 6,022,774 4,917,446 3,030,549
----------------------------------------------------------------------------
Accounts payable and accrued
liabilities 3,243,899 3,319,363 3,093,652
----------------------------------------------------------------------------
Liabilities of discontinued
operations (note 17) 407,363 432,440 -
----------------------------------------------------------------------------
14% non-convertible debentures
payable (note 9) - - 2,620,705
----------------------------------------------------------------------------
Convertible debentures payable
(note 10) - - 5,217,578
----------------------------------------------------------------------------
$ 9,674,036 $ 8,752,511 $ 13,962,484
----------------------------------------------------------------------------
Non-current liabilities
----------------------------------------------------------------------------
14% Non-convertible debentures
payable (note 9) 1,748,599 1,747,497 -
----------------------------------------------------------------------------
12% Non-convertible debentures
payable (note 10) 5,402,821 5,300,492 -
----------------------------------------------------------------------------
$ 7,151,420 $ 7,047,989 $ -
----------------------------------------------------------------------------
Total Liabilities $ 16,825,456 $ 15,800,500 $ 13,962,484
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Shareholders' equity
----------------------------------------------------------------------------
Share capital (note 11) 24,110,096 24,110,096 24,110,096
----------------------------------------------------------------------------
Contributed surplus (note 12) 732,795 726,795 645,879
----------------------------------------------------------------------------
Equity portion of debentures
(note 10) 2,114,341 2,114,341 2,114,341
----------------------------------------------------------------------------
Warrants (note 9/10) 1,196,013 1,196,013 374,554
----------------------------------------------------------------------------
Deficit (29,255,014) (29,516,267) (29,023,988)
----------------------------------------------------------------------------
Total equity $ (1,101,769) $ (1,369,022) $ (1,779,118)
----------------------------------------------------------------------------
Total liabilities and equity $ 15,723,687 $ 14,431,478 $ 12,183,366
Commitments (note 18)
Approved by the Board:
Director: "William Polley" Director: "Kelly E. Ambrose"
---------------------- ------------------
William Polley Kelly E. Ambrose
Advantex Marketing International Inc.
Consolidated Statement of Profit/ (Loss)
For the three months ended September 30, 2011 and 2010 - (Unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2011 2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Revenues 3,835,107 3,957,698
----------------------------------------------------------------------------
Direct expenses 1,044,193 1,252,409
----------------------------------------------------------------------------
Gross profit 2,790,914 2,705,289
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Expenses
----------------------------------------------------------------------------
Selling and marketing 776,330 831,033
----------------------------------------------------------------------------
General and administrative 1,038,091 999,719
----------------------------------------------------------------------------
Contribution from operations before amortization
and interest 976,493 874,537
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Depreciation of property, plant and equipment 92,402 153,152
----------------------------------------------------------------------------
Interest expense:
----------------------------------------------------------------------------
Stated interest expense - loan payable,
debentures 490,834 397,968
----------------------------------------------------------------------------
Non-cash interest expense on loan payable, and
debentures 132,004 173,084
----------------------------------------------------------------------------
Net income (loss) 261,253 150,333
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Comprehensive income (loss) 261,253 150,333
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per share:
----------------------------------------------------------------------------
Basic 0.00 0.00
----------------------------------------------------------------------------
Diluted 0.00 0.00
Advantex Marketing International Inc.
Consolidated Statements of Changes in Equity
(Unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Class A Equity
preference Common Contributed portion of
shares shares surplus debentures
$ $ $ $
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance - July 1, 2010 3,815 24,106,281 645,879 2,114,341
----------------------------------------------------------------------------
Net income (loss) for the
period
----------------------------------------------------------------------------
Other comprehensive income
(net of tax):
----------------------------------------------------------------------------
Comprehensive income (loss)
for the period
----------------------------------------------------------------------------
Employee share options:
----------------------------------------------------------------------------
Value of services
recognized 6,000
----------------------------------------------------------------------------
Balance - September 30, 2010 3,815 24,106,281 651,879 2,114,341
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Balance - July 1, 2011 3,815 24,106,281 726,795 2,114,341
----------------------------------------------------------------------------
Net income (loss) for the
period
----------------------------------------------------------------------------
Other comprehensive income
(net of tax):
----------------------------------------------------------------------------
Comprehensive income (loss)
for the period
----------------------------------------------------------------------------
Employee share options:
----------------------------------------------------------------------------
Value of services
recognized 6,000
----------------------------------------------------------------------------
Balance - September 30, 2011 3,815 24,106,281 732,795 2,114,341
------------------------------------------------------------------
------------------------------------------------------------------
Warrants Deficit Total
$ $ $
------------------------------------------------------------------
------------------------------------------------------------------
Balance - July 1, 2010 374,554 (29,023,988) (1,779,118)
------------------------------------------------------------------
Net income (loss) for the
period 150,333 150,333
------------------------------------------------------------------
Other comprehensive income
(net of tax): - -
------------------------------------------------------------------
Comprehensive income (loss)
for the period 150,333 150,333
------------------------------------------------------------------
Employee share options:
------------------------------------------------------------------
Value of services
recognized 6,000
------------------------------------------------------------------
Balance - September 30, 2010 374,554 (28,873,655) (1,622,785)
------------------------------------------------------------------
------------------------------------------------------------------
Balance - July 1, 2011 1,196,013 (29,516,267) (1,369,022)
------------------------------------------------------------------
Net income (loss) for the
period 261,253 261,253
------------------------------------------------------------------
Other comprehensive income
(net of tax): - -
------------------------------------------------------------------
Comprehensive income (loss)
for the period 261,253 261,253
------------------------------------------------------------------
Employee share options:
------------------------------------------------------------------
Value of services
recognized 6,000
------------------------------------------------------------------
Balance - September 30, 2011 1,196,013 (29,255,014) (1,101,769)
Advantex Marketing International Inc.
Consolidated Statement of Cash Flow
For the three months ended September 30, 2011 and 2010 - (Unaudited)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2011 2010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------
Cash flow provided by (used in)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating activities
----------------------------------------------------------------------------
Net income (loss) for the period 261,253 150,333
----------------------------------------------------------------------------
Adjustments for:
----------------------------------------------------------------------------
Depreciation of property, plant and equipment,
and intangibles 92,402 153,152
----------------------------------------------------------------------------
Stock-based compensation 6,000 6,000
----------------------------------------------------------------------------
Accretion charge for debentures 132,004 173,084
----------------------------------------------------------------------------
491,659 482,569
----------------------------------------------------------------------------
Changes in items of working capital
----------------------------------------------------------------------------
Accounts receivable (14,195) (100,493)
----------------------------------------------------------------------------
Transaction credits (908,265) (694,249)
----------------------------------------------------------------------------
Aeronotes 66,451 30,058
----------------------------------------------------------------------------
Prepaid expenses and sundry assets (72,280) (22,239)
----------------------------------------------------------------------------
Accounts payable and accrued liabilities (100,541) 88,097
----------------------------------------------------------------------------
(1,028,830) (698,826)
----------------------------------------------------------------------------
Net cash generated from operating activities (537,171) (216,257)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Investing activities
----------------------------------------------------------------------------
Purchase of property, plant and equipment (67,655) (83,189)
----------------------------------------------------------------------------
Net cash generated from investing activities (67,655) (83,189)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financing activities
----------------------------------------------------------------------------
Loan Payable 1,105,328 765,020
----------------------------------------------------------------------------
Debenture renewal Costs (28,573) -
----------------------------------------------------------------------------
Net cash generated in financing activities 1,076,755 765,020
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Movement in cash and cash equivalents during the
period
----------------------------------------------------------------------------
- From continuing operations 497,006 465,574
----------------------------------------------------------------------------
- From discontinued operations (note 17) (25,077) -
----------------------------------------------------------------------------
471,929 465,574
----------------------------------------------------------------------------
Increase (decrease)in cash and cash equivalents 471,929 465,574
----------------------------------------------------------------------------
Cash and cash equivalents - Beginning of period (78,262) 505,941
----------------------------------------------------------------------------
Cash and cash equivalents - End of period 393,667 971,515
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