Advantex Marketing International Inc.
CSE : ADX

Advantex Marketing International Inc.

February 27, 2017 18:04 ET

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

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