Advantex Marketing International Inc.
CNSX : ADX

Advantex Marketing International Inc.

March 03, 2014 07:29 ET

Advantex Announces Net Income for Three and Six Months ended December 31, 2013

TORONTO, ONTARIO--(Marketwired - March 3, 2014) - Advantex Marketing International Inc. (CSE:ADX) ("Advantex" or the "Company"), a leading specialist in the marketing services industry, today announced its results for three and six months ended December 31, 2013. All currency amounts are in Canadian dollars unless otherwise noted.

"The value proposition of our marketing services programs, the 2,000 merchants participating in our programs, and the diverse revenue streams enabled us to deliver a profit in a volatile business environment," said Kelly Ambrose, Advantex President and Chief Executive Officer.

The Company validated the attractiveness of its credit card partnership - loyalty point accelerator programs when it signed a new agreement with Canadian Imperial Bank of Commerce ("CIBC") for a three year term expiring September 30, 2016, and is expected to benefit from the growth in CIBC's Aventura program, even as the Company expects slippage as a significant part of CIBC's Aeroplan credit card portfolio migrates to The Toronto-Dominion Bank ("TD"), as publicly disclosed. Furthermore, in October 2013 the Company entered discussions with TD to operate a rewards accelerator program for their credit card portfolio. A successful outcome will fuel the future growth of Advantex, and counter the significant effect on revenues in the aftermath of the decision by CIBC respecting its credit card portfolio, and the intensifying competition amongst Canadian banks for credit card business.

The refinancing of December 30, 2013 significantly improved the capital structure by reducing the fully diluted common shares by 24.5% from 197.9 million to 149.5 million, a reduction of 48.4 million common shares.

"Advantex is in the final stages of discussions with Aimia for a multi-year renewal of their existing agreement. The revenue from this program helped to increase revenues and protect profitability, and I have great expectations of future growth of this program. I am pleased to inform of our entry into the USA. In November 2013 we launched a pilot rewards accelerator program in a test market for Caesars Entertainment Corporation and its Total Rewards loyalty program," said Mr. Ambrose.

Financial Highlights:
Three months ended December 31 Six months ended December 31
2013 2012 2013 2012
Revenues
Program in partnership with CIBC $ 3,843,000 $ 4,099,000 $ 7,868,000 $ 8,308,000
Program in partnership with Aimia 766,000 288,000 1,289,000 470,000
Misc. - 41,000 - 53,000
$ 4,609,000 $ 4,428,000 $ 9,157,000 $ 8,831,000
Net Income $ 75,000 $ 124,000 $ 131,000 $ 398,000

About Advantex Marketing International Inc.

Advantex is a specialist in the marketing services industry. Advantex partners with CIBC, and Aeroplan Canada Inc. (subsidiary of Aimia). On a combined basis, Advantex has contractual marketing access to about five million Canadian consumers with above-average personal and household income. Advantex's merchant partner base currently consists of about 2,000 merchants operating in several business segments: restaurants; golf courses; independent inns, resorts and selected hotels; spas; retailers of men's and ladies fashion, footwear and accessories; retailers of sporting goods; florists and garden centres; book and newspaper stores; health and beauty centres; dry cleaners; gift stores; home décor; automotive dealers, service centers; and tire dealerships many of which are leaders in their respective categories.

Advantex is traded on the Canadian Securities Excahnge 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: expectation on its business from changes in CIBC's credit card portfolio; expectation of a successful outcome, and it's timing, from the discussions with TD; expectation of future prospects on its business from a relationship with TD; expectation of a multi-year renewal of its existing agreement with Aimia, and the future prospects from this relationship on its business; 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.

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 those listed under "General Risks and Uncertainties" and "Economic Dependence" in Management's Discussion and Analysis for the three and six months ended December 31, 2013.

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 Statements of Financial Position - (unaudited)
(expressed in Canadian dollars)
December 31, 2013 June 30, 2013
Assets
Current assets
Cash and cash equivalents $ 848,604 $ 1,773,672
Accounts receivable 1,395,512 599,339
Transaction credits 12,096,949 13,632,654
Inventory (note 5) 112,224 139,985
Prepaid expenses and sundry assets 306,998 273,519
$ 14,760,287 $ 16,419,169
Non-current assets
Property, plant and equipment (note 6a) $ 275,085 $ 299,528
Intangible assets (note 6b) 454,476 539,545
$ 729,561 $ 839,073
Total assets $ 15,489,848 $ 17,258,242
Liabilities
Current liabilities
Loan payable (note 7) $ 7,153,617 $ 7,099,371
Accounts payable and accrued liabilities 4,249,260 3,420,130
14% Non-convertible debentures payable (note 8) - 1,736,298
12% Non-convertible debentures payable (note 9) - 6,055,336
$ 11,402,877 $ 18,311,135
Non-current Liabilities
12% Non-convertible debentures payable (note 9) $ 4,588,541 $ -
Total Liabilities $ 15,991,418 $ 18,311,135
Shareholders' deficiency
Share capital (note 10) $ 24,530,555 $ 24,110,096
Contributed surplus (note 11) 4,090,382 808,167
Equity portion of debentures (note 9/11) - 2,114,341
Warrants (note 8/9/11) - 1,167,874
Deficit (29,122,507 ) (29,253,371 )
Total deficiency $ (501,570 ) $ (1,052,893 )
Total liabilities and deficiency $ 15,489,848 $ 17,258,242
Economic and Financial dependence (note 2)
Commitments and Contingencies (note 13)

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 Income and Comprehensive Income
For the three and six months ended December 31, 2013 and December 31, 2012 - (unaudited)
(expressed in Canadian dollars)
Three months ended December 31 Six months ended December 31
2013 2012 2013 2012
$ $ $ $
Revenues 4,608,874 4,427,976 9,157,041 8,831,393
Direct expenses 1,735,907 1,415,995 3,340,003 2,792,024
2,872,967 3,011,981 5,817,038 6,039,369
Operating Expenses
Selling and marketing 920,469 977,914 1,897,447 1,887,751
General and administrative 1,218,605 1,007,794 2,362,008 2,085,642
Earnings from operations before depreciation, amortization and interest 733,893 1,026,273 1,557,583 2,065,976
Interest expense:
Stated interest expense - loan payable, and debentures 514,383 514,079 1,027,648 1,030,675
Non-cash interest expense on debentures - 149,991 104,333 291,280
219,510 362,203 425,602 744,021
Write-off of investment 100,000 100,000
Depreciation of property, plant and equipment, and amortization of intangible assets
144,527
138,206
294,738
246,120
Net income and Comprehensive income $74,983 $123,997 $130,864 $397,901
Earnings per share
Basic and Diluted (note 14) $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 Deficiency
For the six months ended December 31, 2013 and December 31, 2012 - (unaudited)
(expressed in Canadian dollars)
Class A preference shares
$
Common shares
$
Contributed surplus
$
Equity portion of debentures
$
Warrants
$
Deficit
$
Total
$
Balance - July 1, 2012 3,815 24,106,281 793,198 2,114,341 1,196,013 (29,289,624 ) (1,075,976 )
Net income and comprehensive income for the period 397,901 397,901
Partial early prepayment of debentures (notes 8 and 9) (28,139 ) (28,139 )
Balance - December 31, 2012 3,815 24,106,281 793,198 2,114,341 1,167,874 (28,891,723 ) (706,214 )
Balance - July 1, 2013 3,815 24,106,281 808,167 2,114,341 1,167,874 (29,253,371 ) (1,052,893 )
Net income and comprehensive income for the period 130,864 130,864
Transfer to Contributed surplus (notes 8,9, and 11) 3,282,215 (2,114,341 ) (1,167,874 ) -
Issue of common shares as part of refinancing of debentures (notes 9 and 10) 420,459 420,459
Balance - December 31, 2013 3,815 24,526,740 4,090,382 - - (29,122,507 ) (501,570 )

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

Advantex Marketing International Inc.
Consolidated Statements of Cash Flow
For the six months ended December 31, 2013 and December 31, 2012 - (unaudited)
(expressed in Canadian dollars)
31-12-2013 31-12-2012
$ $
Cash flow provided by (used in)
Operating activities
Net income for the period $ 130,864 $ 397,901
Adjustments for:
Write-off of investment - 100,000
Depreciation of property, plant & equipment, and amortization of intangible assets 294,738 246,120
Accretion charge for debentures 104,333 291,280
529,935 1,035,301
Changes in items of working capital
Accounts receivable (796,173 ) (197,817 )
Transaction credits 1,535,705 (611,176 )
Inventory 27,761 86,690
Prepaid expenses and sundry assets (33,479 ) (273,408 )
Accounts payable and accrued liabilities 829,130 (396,003 )
1,562,944 (1,391,714 )
Net cash provided by (used in) operating activities 2,092,879 (356,413 )
Investing activities
Purchase of property, plant and equipment, and intangible assets (185,226 ) (380,191 )
Net cash (used in) investing activities (185,226 ) (380,191 )
Financing activities
Proceeds from loan payable 54,246 (185,800 )
Partial early prepayment of debentures (notes 8 and 9) - (376,033 )
Payments on maturity / retirement of debentures (notes 8 and 9) (7,895,967 )
Proceeds from refinancing debentures (note 9) 5,159,000 -
Transaction costs to close debenture refinancing (note 9) (150,000 ) -
Debenture early prepayment / renewal - additional transaction costs - (8,700 )
Net cash (used in) generated from financing activities (2,832,721 ) (570,533 )
Increase (decrease) in cash and cash equivalents during the period $ (925,068 ) $ (1,307,137 )
From continuing operations (782,414 ) (1,235,168 )
From discontinued operations (note 16) (142,654 ) (71,969 )
Increase (decrease) in cash and cash equivalents during the period Movement in cash and cash equivalents during the period Continuing Operations Discontinued Operations (note 17) (25,077) Increase (decrease) in cash and cash equivalents $ (925,068 ) $ (1,307,137 )
Cash and cash equivalents - Beginning of period 1,773,672 1,084,773
Cash and cash equivalents - End of period 848,604 (222,364 )
Additional Information
Interest paid $ 699,401 $ 1,041,584
For purposes of the cash flow statement, cash comprises:
Cash / (Bank indebtedness) $ 843,604 $ (227,364 )
Term deposits $ 5,000 $ 5,000
$ 848,604 $ (222,364 )

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

Contact Information