Advantex Marketing International Inc.

CNSX : ADX


Advantex Marketing International Inc.

November 26, 2012 16:31 ET

Advantex Announces Net Income for Three Months Ended September 30, 2012

- Revenues up $568,000, to $4,403,000, compared with corresponding period previous year

- Net Income up $13,000, to $274,000, compared with corresponding period previous year

TORONTO, ONTARIO--(Marketwire - Nov. 26, 2012) - Advantex Marketing International Inc. (CNSX:ADX) ("Advantex" or the "Company"), a leading specialist in merchant funding and loyalty marketing programs, today announced its results for the three months ended September 30, 2012. All references to quarters or years are for the fiscal periods and all currency amounts are in Canadian dollars unless otherwise noted.

"We are pleased to report continuing improvement in the Company's financial performance. The growth of the Company's small merchant centric business model is reflected in the better revenues, earnings from operations before amortization and interest, and net income," said Kelly Ambrose, Advantex President and Chief Executive Officer.

"The Company continues to seek new business partners where we can sell our proprietary programs, as well as work with existing affinity partners on new business opportunities. Recently, we received Canadian Imperial Bank of Commerce ("CIBC") approval to expand our existing programs into home décor, and from January, 2013 we expect to expand our new relationship with Canadian Tire Group ("CTG"). Finally, we are attempting to improve the retention of participating merchants in our programs by introducing new services that deliver additional value to merchants such as digital marketing platforms," said Mr. Ambrose.

Financial Highlights:

Three months ended September 30, 2012 Three months ended September 30, 2011
Revenues $ 4,403,000 $ 3,835,000
Earnings from operations before amortization and interest (EBITDA (i)) $ 1,040,000 $ 976,000
Net Income $ 274,000 $ 261,000
(i) EBITDA is a non-GAAP financial measure which does not have any standardized meaning prescribed by the issuer's GAAP and is unlikely to be comparable to similar measures presented by other issuers. It is provided as additional information to assist readers in understanding a component of the Company's financial performance. In case of the Company, for three months ended September 30, 2012 and 2011, per consolidated financial statements for three months ended September 30, 2012, earnings from operations before amortization and interest is the nearest equivalent to EBITDA.

"The Company's agreements with its affinity partners - CIBC, and Aeroplan Canada Inc. ("Aeroplan") - and its financial partners - 14% and 12% debenture holders, and provider of loan payable - come up for renewal between August and December, 2013. The Company expects to successfully negotiate renewal of the agreements," said Mr. Ambrose.

About Advantex Marketing International Inc.

Advantex is a specialist in the marketing services industry. Advantex partners with CIBC, and Aeroplan. On a combined basis, Advantex has contractual marketing access to more than five million Canadian consumers with above-average personal and household income. The Company's merchant partner base currently consists of more than 1,350 merchants operating 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; and home decor; many of which are leaders in their respective categories. 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: expectation respecting enrolling new merchants; belief in its ability to influence the retention of participating merchants; expectation with regards to the renewal, including the timing and the terms of such renewal, of its agreements with its affinity and financial partners; expectation with respect to expanding relationship with CTG; 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 months ended September 30, 2012.

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)
September 30, 2012 June 30, 2012
Assets
Current assets
Cash and cash equivalents 617,532 1,084,773
Accounts receivable 1,044,566 966,437
Transaction credits 14,014,562 14,095,373
Inventory (note 5) 165,317 204,355
Prepaid expenses and sundry assets 421,412 315,454
$ 16,263,389 $ 16,666,392
Non-current assets
Investment (note 6) 100,000 100,000
Property, plant and equipment (note 7a) 222,015 222,132
Intangibles (note 7b) 273,524 330,018
595,539 652,150
Total assets $ 16,858,928 $ 17,318,542
Liabilities
Current liabilities
Loan payable (note 8) 6,540,205 6,715,691
Accounts payable and accrued liabilities 3,813,676 4,128,264
$ 10,353,881 $ 10,843,955
Non-current liabilities
14% Non-convertible debentures payable (note 9) 1,711,428 1,770,606
12% Non-convertible debentures payable (note 10) 5,623,830 5,779,957
$ 7,335,258 $ 7,550,563
Total Liabilities $ 17,689,139 $ 18,394,518
Shareholders' deficiency
Share capital (note 11) 24,110,096 24,110,096
Contributed surplus (note 12) 793,198 793,198
Equity portion of debentures (note 10) 2,114,341 2,114,341
Warrants (note 9/10) 1,167,874 1,196,013
Deficit (29,015,720 ) (29,289,624 )
Total deficiency $ (830,211 ) $ (1,075,976 )
Total liabilities and deficiency $ 16,858,928 $ 17,318,542

Economic and Financial dependence (note 2)

Commitments and Contingencies (note 14)

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

Approved by the Board:
Director: Signed "William Polley" Director: Signed "Kelly Ambrose"
William Polley Kelly E. Ambrose
Advantex Marketing International Inc.
Consolidated Statements of Income and Comprehensive Income
For the three months ended September 30, 2012 and September 30, 2011 - (unaudited)
(expressed in Canadian dollars)
September 30, 2012 September 30, 2011
$ $
Revenues 4,403,417 3,835,107
Direct expenses 1,376,029 1,044,193
Operating Expenses
Selling and marketing 909,837 776,330
General and administrative 1,077,848 1,038,091
Earnings from operations before amortization and interest 1,039,703 976,493
Depreciation of property, plant and equipment, and intangibles 107,914 92,402
Interest expense:
Stated interest expense - loan payable, and debentures 516,596 490,834
Non-cash interest expense on loan payable, and debentures 141,289 132,004
Net income and Comprehensive income 273,904 261,253
Earnings per share
Basic and Diluted (note 15) 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 three months ended September 30, 2012 and September 30, 2011 - (unaudited)
(expressed in Canadian dollars)
Class A preference shares
$
Common shares
$
Contributed surplus
$
Equity portion of debentures
$
Warrants
$
Deficit
$
Total
$
Balance - July 1, 2011 3,815 24,106,281 726,795 2,114,341 1,196,013 (29,516,267 ) (1,369,022 )
Net income and comprehensive income for the period 261,253 261,253
Employee share options:
Value of services recognized 6,000 6,000
Balance - September 30, 2011 3,815 24,106,281 732,795 2,114,341 1,196,013 (29,255,014 ) (1,101,769 )
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 273,904 273,904
Employee share options:
Value of services recognized - -
Partial early prepayment of debentures (notes 9 and 10) (28,139 ) (28,139 )
Balance - September 30, 2012 3,815 24,106,281 793,198 2,114,341 1,167,874 (29,015,720 ) (830,211 )

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

Advantex Marketing International Inc.
Consolidated Statements of Cash Flow
For the three months ended September 30, 2012 and September 30, 2011 - (unaudited)
(expressed in Canadian dollars)
30-09-2012 30-09-2011
$ $
Cash flow provided by (used in)
Operating activities
Net income for the period $ 273,904 $ 261,253
Adjustments for:
Depreciation of property, plant and equipment, and intangibles 107,914 92,402
Stock-based compensation - 6,000
Accretion charge for debentures 141,289 132,004
523,107 491,659
Changes in items of working capital
Accounts receivable (78,129 ) (14,195 )
Transaction credits 80,811 (908,265 )
Inventory 39,038 66,451
Prepaid expenses and sundry assets (105,958 ) (72,280 )
Accounts payable and accrued liabilities (314,588 ) (100,541 )
(378,826 ) (1,028,830 )
Net cash provided by (used in) operating activities 144,281 (537,171 )
Investing activities
Purchase of property, plant and equipment, and intangibles (51,303 ) (67,655 )
Net cash used in investing activities (51,303 ) (67,655 )
Financing activities
Proceeds from loan payable (175,486 ) 1,105,328
Partial early prepayment of debentures (376,033 ) -
Debenture early prepayment / renewal - additional transaction costs (8,700 ) (28,573 )
Net cash (used in) generated from financing activities (560,219 ) 1,076,755
Increase (decrease) in cash and cash equivalents during the period $ (467,241 ) $ 471,929
From continuing operations (435,135 ) 497,006
From discontinued operations (note 17) (32,106 ) (25,077 )
Increase (decrease) in cash and cash equivalents during the period $ (467,241 ) $ 471,929
Cash and cash equivalents, including bank indebtedness - Beginning of period 1,084,773 (78,262 )
Cash and cash equivalents, including bank indebtedness - End of period 617,532 393,667
Additional Information
Interest paid $ 713,073 $ 569,666
For purposes of the cash flow statement, cash comprises:
Cash $ 612,532 $ 388,667
Term deposits $ 5,000 $ 5,000
$ 617,532 $ 393,667

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

Contact Information