Advantex Announces Fiscal 2008 Year-End Results



    
    -   Company achieves positive Contribution from Operations and Profit
        before Amortization and Interest in fourth quarter and for the year,
        compared with losses in 2007 periods
    -   Progress in 2008 indicates continuing improvement in 2009 and future
        "looks increasingly bright"
    -   Continues to expand Advance Purchase Marketing benefit program under
        its established credit facility
    -   Conference call and webcast on Friday, September 26 at 8:30 a.m.
        (eastern)

    ADX: TSX
    

    TORONTO, Sept. 25 /CNW/ - Advantex Marketing International Inc.
(TSX:ADX), a leading specialist in merchant funding and loyalty marketing
programs, today announced its results for the fiscal fourth quarter and year
ended June 30, 2008. All references to quarters or years are for the fiscal
periods and all currency amounts are in Canadian dollars unless otherwise
noted.
    "Advantex is evolving into a stronger, more competitive company, with a
clear focus on profitable growth as a leader in the marketing services
industry," said Kelly E. Ambrose, President and Chief Executive Officer. "We
made great progress on this path in 2008 as the fourth-quarter results
confirmed. In the fourth quarter, the company achieved a positive Contribution
from Operations and Profit before Amortization and Interest, and the
turnaround from the same period in the prior year was significant. We were
able to achieve these improvements by building on the initiatives that we
successfully implemented in fiscal 2007."

    
    Financial Performance - Highlights
    (millions of $s, except per share amounts)
    -------------------------------------------------------------------------
                                         Three     Three
                                        months    months      Year      Year
                                         Ended     Ended     Ended     Ended
                                       June 30,  June 30,  June 30,  June 30,
                                          2008      2007      2008      2007
    -------------------------------------------------------------------------
    Revenue                                3.0       3.0      11.5      11.3
    -------------------------------------------------------------------------
    Gross profit                           2.0       1.5       7.2       7.1
    -------------------------------------------------------------------------
    Gross margin                          65.9%     50.5%     62.5%     62.5%
    -------------------------------------------------------------------------
    Contribution from Operations           0.4      (0.5)      0.5      (0.2)
    -------------------------------------------------------------------------
    Profit/(loss) before Amortization
     And Interest                          0.3      (0.6)      0.4      (1.5)
    -------------------------------------------------------------------------
    Amortization                           0.2       0.1       0.4       0.2
    -------------------------------------------------------------------------
    Interest                               0.4       0.2       1.4       0.9
    -------------------------------------------------------------------------
    Net earnings (loss)                   (0.3)     (0.9)     (1.4)     (2.6)
    -------------------------------------------------------------------------
    Net earnings (loss) per
     common share                       ($0.00)   ($0.01)   ($0.01)   ($0.03)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    "Our accomplishments during 2008 will each be reflected in further
improvement in Advantex's financial performance in 2009," Mr. Ambrose said.
These accomplishments included:

    -   closing financings in late December 2007 and January 2008. This gave
        the company access to $4.2 million of funds to grow its Advance
        Purchase Marketing (APM) program;
    -   focusing after closing the financings on activating the backlog of
        merchants that were waiting to enroll in the APM program. There was a
        lag between the access to funds and the enrolling/activation process.
        This meant that the full impact of funds deployed was only partially
        evident in the APM program revenues for fiscal 2008 and we will see
        more of the positive impact on fiscal 2009 revenue;
    -   identifying additional savings in manpower within the sales, general
        and administrative expense category, as well as reduction in rent
        through relocating the Company's head office. We only partially
        realized the benefits of the measures implemented from mid-March 2008
        onwards during the last quarter of fiscal 2008. These measures carry
        annualized cost savings of approximately $650,000; and
    -   continuing with investment in information technology, keeping pace
        with new security and privacy standards, completing development of
        several platforms connected to our CIBC Advantex program, and online
        shopping malls.
    

    Fourth Quarter

    Revenue was flat in the 2008 quarter compared with the period in the
prior year. CIBC Advantex program revenue (Advance Purchase Marketing and
Marketing Only models) was unchanged at approximately $2.2 million reflecting
the closure of the two financings at mid-year and the gradual process of
activating the backlog of merchants waiting to enroll in the APM program.
Online transaction fee revenue was up about eight percent in U.S. dollars (the
currency in which Advantex earns its revenue), but was down three percent when
translated to Canadian dollars.
    Direct expenses, which include cardholders awards costs, cost of
marketing and advertising on behalf of merchants, and other costs were down a
third in the 2008 quarter to $1.0 from $1.5 million a year earlier when the
company had to incur additional cardholders incentives in the form of
cardholder awards that were not fully recovered through higher revenue, as
well as higher award costs related to expansion in the hospitality segment of
the business, and the resolution of certain processing issues connected to
cardholder awards. Sales, general, and administrative (SG&A) expenses were
down 20 percent to $1.6 million from $2.0 million in the 2007 period mainly as
the result of driving better operating efficiencies.
    The contribution from operations improved to $0.4 million from a loss of
$0.5 million in the 2007 period, leading to a lower net loss of $0.3 million,
compared with a net loss $0.9 million in the prior-year period quarter.

    Fiscal Year

    The CIBC Advantex program generated 70 percent of 2008 revenue or
$8.1 million, compared with 74 percent or $8.4 million in 2007. During Fiscal
2008 the Company moved existing merchants either to a Marketing Only program
or into its APM program which provides merchants with larger advances. This
realignment resulted in two very distinct programs with more of the existing
merchants in the Marketing Only program. During the second half of Fiscal 2008
the Company enrolled and activated the backlog of merchants waiting to enroll
in its APM program, a gradual process and consequently the full impact of the
funds deployed in the APM program was not realized in the revenue of Fiscal
2008. The Company continued to drive its Marketing Only program and revenues
for this model for Fiscal 2008 were up $1.1 million (53% +) compared to Fiscal
2007. Online revenue grew 39 percent in 2008 in U.S. dollars and 25 percent
when translated to Canadian dollars.
    Direct expenses were up two percent in 2008 to $4.3 million from
$4.2 million the prior year and this was in line with revenue growth. SG&A
expenses were down 7.0 percent to $6.7 million in 2008 from $7.2 million in
2007, reflecting improving operating efficiencies and strengthening business
processes and information technology infrastructure.
    The contribution from operations improved to $0.5 million in 2008,
compared with a loss in 2007 of $0.2 million. The net loss for 2008 was
$1.4 million, down from a net loss of $2.6 million in 2007, which also
included restructuring costs of $1.1 million for severance payments to former
employees.
    The company has negotiated with the lenders' agent a change in its
convertible debentures covenants for their remaining term for the
consideration of the issuance of 9,990,000 warrants. Each warrant is
exercisable for one common share at $0.045 per share. The agreement is subject
to the approval of the Toronto Stock Exchange.

    Outlook Increasingly Bright

    "The future for Advantex looks increasingly bright," Mr. Ambrose said.
"In 2009, we will build further on the progress made during the past year.
Already, we can speak of three developments that will contribute to our
growth."
    "First, and most significantly in terms of its impact on our financial
results, we continue to experience strong demand for the Advance Purchase
Marketing program in the dining, golf, small inns and spa categories. As at
the 2008 year-end, we had deployed $6.2 million of funds as initial advances
to new merchants. We expect to continue expanding the APM program using funds
available under our established credit facility," Mr. Ambrose said.
    "We are implementing a significant complementary revenue opportunity
identified in 2008," Mr. Ambrose added. In partnership with CIBC, Advantex
launched an 'Infinite Hotel' program targeted towards CIBC Infinite VISA
credit cardholders. The program markets the participating hotels to CIBC
Infinite VISA cardholders and entitles cardholders to special privileges at
participating hotels. Advantex will earn a fee for the marketing services
provided to participating hotels. The response from hotels to the roll out of
this program was encouraging and the program went live September 1, 2008. The
revenues from this program will be incremental to the company's 2008 revenues.
    "Finally, we are strengthening our online mall shopping partnerships. The
company and United Airlines have signed a two-year extension to the existing
contract, which represents the Company's busiest online mall. We also have
signed our first agreement to provide a European Online Shopping Mall. The
agreement with Lufthansa WorldShop GmbH (Lufthansa), replaces a two-year-old
contract with Lufthansa under which Advantex developed and has been operating
an online shopping mall site, shopmilesandmore.com, for North American
customers. Over time, this new business should partially offset the effect of
losing in June, 2008 Delta Airlines as online partner.
    "An initiative that we continue to work on as a growth area is retail. We
are in discussions with CIBC to launch our Advance Purchase Marketing Program
in this market. We have access to $3.5 million of funds, under an established
credit facility that will be available once we reach an agreement with CIBC
which allows Advantex to expand the APM program to retail fashion
establishments."

    Conference Call and Webcast

    Advantex will hold a conference call for analysts and investors to
discuss its 2008 fourth-quarter and year-end results on September 26, 2008 at
8:30 a.m. (Eastern).
    Kelly Ambrose, President and Chief Executive Officer, and Mukesh
Sabharwal, Vice-President and Chief Financial Officer, will be available to
answer questions during the call.
    To participate in the call, please dial 416-644-3414 or 1-800-733-7571 at
least five minutes prior to the start of the call.
    A live audio webcast of the conference call will be available at
www.newswire.ca and www.advantex.com.
    An archived recording of the call will be available at 416-640-1917 or 1-
877-289-8525 (Passcode 21284112 followed by the number sign) from noon on
September 26 to 11:59 p.m. on October 3. An archived recording of the webcast
will also be available at Advantex's website.
    Advantex will file its fiscal 2008 fourth-quarter and year-end statements
and management's discussion and analysis with SEDAR and they will be posted on
the company's website.

    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 secured
future sales through its Advance Purchase Marketing model. Advantex partners
include more than 700 restaurants, online retailers, golf courses, small inns
and resorts, and major organizations, including CIBC, United Airlines, Alaska
Airlines, and Lufthansa Airlines. Advantex is traded on the Toronto Stock
Exchange under the symbol "ADX". For additional information on Advantex,
please visit www.advantex.com.

    This press release contains certain "forward-looking information". All
information, other than information comprised of historical fact, addresses
activities, events or developments that the Company believes, expects or
anticipates will or may occur in the future. Such forward looking information
includes, without limitation, information regarding the Company's belief that
Transaction Credits are likely indicators of future revenue; the Company's
expectation that its annualised SG&A cost saving measures will be realized
during Fiscal 2009; management's expectations with respect to reaching
agreement with CIBC to expanding the APM program including into retail fashion
establishments in Fiscal 2009, and its ability to extend financing under its
existing line of credit facility with respect to expanding APM program in the
current categories (dining, golf, small inns and spa) allowed under the
current CIBC agreement; the Company's anticipated increase in the number of
Merchant Partners with which it will do business; the Company's anticipated
revenues from the 'Infinite Hotel' program, the Company's continued investment
in information technology systems required to keep pace with partner and
marketplace standards; the number of retailers the Company expects to target
for its programs, including the regional markets in which the Company intends
to focus on; the impact on the Company's revenues that increased merchant
participation would have; the Company's intentions with respect to retaining
future earnings in the foreseeable future; 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 such 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, uncertainties relating to
the availability and costs of financing needed in the future, delays in
finalizing the retail contract, and other factors, including without
limitation, those listed under "Risks and Uncertainties". 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.

    
             MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
    

    To our Shareholders:

    The accompanying consolidated financial statements have been prepared by
management and approved by the Board of Directors of the Company. Management
is responsible for the information and representations contained in these
consolidated financial statements and other sections of this Annual Report.
    The Company maintains appropriate processes to ensure that relevant and
reliable financial information is produced. The consolidated financial
statements have been prepared in accordance with accounting principles
generally accepted in Canada. The significant accounting policies which
management believes are appropriate for the Company are described in notes 1
and 2 to the consolidated financial statements.
    The Board of Directors is responsible for reviewing and approving the
consolidated financial statements and overseeing management's performance of
its financial reporting responsibilities. An Audit Committee, the majority of
whose members are non-management Directors, is appointed by the Board. The
Audit Committee reviews the consolidated financial statements, adequacy and
internal controls, the audit process and financial reporting with management
and the external auditors. The Audit Committee reports to the Directors prior
to the approval of the audited consolidated financial statements for
publication.
    PricewaterhouseCoopers LLP, the Company's external auditors, audited the
consolidated financial statements in accordance with generally accepted
auditing standards to enable them to express to the shareholders their opinion
on the consolidated financial statements.

    
    (Signed) "Kelly E. Ambrose"          (Signed) "Mukesh Sabharwal"

    Kelly E. Ambrose                     Mukesh Sabharwal
    President and Chief Executive        V.P. and Chief Financial Officer
    Officer



                    ADVANTEX MARKETING INTERNATIONAL INC.
                         CONSOLIDATED BALANCE SHEETS
                        AS AT JUNE 30, 2008 AND 2007

                                                       2008          2007
                                                       ----          ----
    ASSETS                                NOTE

    Current:
      Cash and cash equivalents                       $144,794      $910,995
      Accounts receivable                              804,673       737,485
      Transaction credits                  1(e)      7,300,912     5,390,412
      Prepaid expenses and sundry assets               114,978       185,955
                                                       -------       -------
                                                     8,365,357     7,224,847
                                                     ---------     ---------
    Long-term:
      Property, plant and equipment        3           745,456       775,733
                                                       -------       -------

    TOTAL ASSETS                                    $9,110,813    $8,000,580
                                                    ----------    ----------
                                                    ----------    ----------
    LIABILITIES
    Current:
      Loan payable                         4          $663,448      $      -
      Accounts payable and accrued
       liabilities                                   2,664,079     3,707,243
                                                     ---------     ---------
                                                     3,327,527     3,707,243
                                                     ---------     ---------

    Long-term:
      Other liabilities                   14           205,955       450,856
      Non-Convertible debentures payable   6         2,422,097             -
       Convertible debentures payable      5         4,443,115     4,042,335
                                                     ---------     ---------
                                                     7,071,167     4,493,191
                                                     ---------     ---------

                                                    10,398,694     8,200,434
                                                    ----------     ---------
    SHAREHOLDERS' DEFICIENCY

    Capital Stock                          7
      Class A preference shares                          3,815         3,815
      Common shares                                 24,106,281    24,106,281
                                                    ----------    ----------
                                                    24,110,096    24,110,096
    Contributed surplus                                507,023       412,223
    Equity portion of debentures           5         2,114,341     2,114,341
    Warrants                               6           184,744             -
    Deficit                                        (28,204,085)  (26,836,514)
                                                   ------------  ------------

                                                    (1,287,881)     (199,854)
                                                    -----------     ---------
    TOTAL LIABILITIES AND SHAREHOLDERS'
     DEFICIENCY                                     $9,110,813    $8,000,580
                                                    ----------    ----------
                                                    ----------    ----------

                                                     (see accompanying notes)

    Approved by the Board:

    (Signed) "William Polley"            (Signed) "Kelly E. Ambrose"

    Director:                            Director:
             ---------------------                ---------------------
              William Polley                       Kelly E. Ambrose



                    ADVANTEX MARKETING INTERNATIONAL INC.
           CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
                     YEARS ENDED JUNE 30, 2008 AND 2007

                                                       2008          2007
                                                       ----          ----
                                          NOTE

    REVENUE                                        $11,536,746   $11,346,359
      Direct expenses                                4,335,461     4,259,543
                                                     ---------     ---------

    GROSS PROFIT                                     7,201,285     7,086,816
                                                     ---------     ---------

    OPERATING EXPENSES
      Selling and marketing                          2,933,025     3,531,333
      General and administrative                     3,817,399     3,748,138
                                                     ---------     ---------
                                                     6,750,424     7,279,471
                                                     ---------     ---------

    CONTRIBUTION FROM OPERATIONS                       450,861      (192,655)

      Restructuring costs                  14                -     1,088,657
      Stock-based compensation                          94,800       168,775
                                                        ------       -------

    PROFIT/(LOSS) BEFORE AMORTIZATION
     AND INTEREST                                      356,061    (1,450,087)

    Amortization of property, plant
     and equipment                                     361,725       240,848
                                                       -------       -------

    (LOSS) BEFORE INTEREST                              (5,664)   (1,690,935)

    Interest expense
      Stated interest expense - Loan
       payable, non-convertible
       debenture, and other                            283,207             -
      Stated interest expense -
       convertible debenture                           601,645       542,180
      Accretion charge on debentures,
       and amortization of deferred
       financing charges                               477,055       361,186
                                                       -------       -------
    NET (LOSS) AND COMPREHENSIVE LOSS
     FOR THE YEAR                                  $(1,367,571)  $(2,594,301)
                                                   ------------  ------------
                                                   ------------  ------------

    NET (LOSS) PER COMMON SHARE             9           $(0.01)       $(0.03)
                                                        -------       -------
                                                        -------       -------

                                                     (see accompanying notes)



                    ADVANTEX MARKETING INTERNATIONAL INC.
                      CONSOLIDATED STATEMENT OF DEFICIT
                     YEARS ENDED JUNE 30, 2008 AND 2007

                                                       2008          2007
                                                       ----          ----

    BALANCE AT THE BEGINNING OF THE YEAR          $(26,836,514) $(24,242,213)

    Net (loss) for the year                         (1,367,571)   (2,594,301)
                                                    -----------   -----------

    BALANCE AT THE END OF THE YEAR                $(28,204,085) $(26,836,514)
                                                  ------------- -------------
                                                  ------------- -------------

                                                     (see accompanying notes)



                    ADVANTEX MARKETING INTERNATIONAL INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED JUNE 30, 2008 AND 2007

                                                       2008          2007
                                                       ----          ----
                                          NOTE

    OPERATING ACTIVITIES

      Net (loss)                                   $(1,367,571)  $(2,594,301)

    Items not affecting cash
      Amortization of property, plant
       and equipment                                   361,725       240,848
      Accretion charge on debentures      5/6          346,266       271,045
      Amortization of deferred
       financing charges                               130,789        90,141
      Stock-based compensation                          94,800       168,775
                                                        ------       -------
                                                      (433,991)   (1,823,492)

    Changes in non-cash working
     capital items
      Accounts receivable                              (67,188)      171,673
      Transaction credits                           (1,910,500)   (1,474,110)
      Prepaid expenses and sundry assets                70,977       (31,118)
      Accounts payable and accrued
       liabilities                                  (1,043,164)      585,237
                                                    -----------      -------
                                                    (2,949,875)     (748,318)

    Movement in long-term liabilities                 (244,901)      450,856
                                                      ---------      -------

    Cash utilized in operations                     (3,628,767)   (2,120,954)
                                                    -----------   -----------

    FINANCING ACTIVITIES

      Proceeds from convertible
       debenture, net                                        -     1,617,657
      Proceeds from non-convertible
       debenture, gross                              2,665,000             -
      Proceeds from draw of credit
       facility                                        824,281             -
      Financing costs                                 (295,267)            -
                                                      ---------    ---------
                                                     3,194,014     1,617,657

    INVESTING ACTIVITIES

      Purchase of property, plant and
       equipment                                      (331,448)     (392,750)
                                                      ---------     ---------

    (DECREASE) IN CASH AND CASH
     EQUIVALENTS DURING THE YEAR                      (766,201)     (896,047)

    Cash and cash equivalents at the
     beginning of the year                             910,995     1,807,042
                                                       -------     ---------

    CASH AND CASH EQUIVALENTS AT
     END OF YEAR                                      $144,794      $910,995
                                                      --------      --------
                                                      --------      --------

    ADDITIONAL INFORMATION
      Interest paid                                   $759,192      $595,000
                                                      --------      --------
                                                      --------      --------

                                                     (see accompanying notes)



    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Year Ended June 30, 2008

    1.  SIGNIFICANT ACCOUNTING POLICIES

        a. Nature of business

           Advantex Marketing International Inc. (Advantex or the Company) is
           a public company with common shares listed on the Toronto Stock
           Exchange (trading symbol ADX.TO). Advantex operates in the
           marketing services industry. The Company develops and manages
           loyalty programs for financial institutions, airlines and other
           major organizations through which their customers earn frequent
           flyer miles or points on purchases at a wide selection of
           participating merchants. Under the umbrella of each program,
           Advantex provides merchants with marketing, customer incentives
           and secured future sales through its Advance Purchase Marketing
           model.

        b. Basis of consolidation

           The consolidated financial statements include the accounts of the
           Company and its wholly owned subsidiaries, Advantex Dining
           Corporation, Advantex Marketing Corporation, Advantex Marketing
           International Inc. (US), Advantex Marketing (Maryland) Inc.,
           1600011 Ontario Limited, Advantex Systems Limited Partnership and
           Advantex GP Inc.

        c. Revenue recognition

           Advantex provides marketing services to participating
           establishments and provides awards to customers who make purchases
           at participating establishments. There are two types of agreements
           with participating establishments:

           (i)  The Company acquires the rights to future designated credit
                card transactions at a discount from the face value from
                participating establishments. The Company records as revenue
                the spread between the future credit card transactions and
                its costs to acquire the rights (cost of transaction
                credits).

           (ii) The Company provides marketing and loyalty services to
                participating establishments and records as revenue the fee
                charged for services. The fee is a percentage of customer
                purchases made at participating establishments.

           Under each agreement, the revenue is recognized at the time that a
           consumer makes a designated credit card purchase from
           participating establishments enrolled in these programs.

        d. Cash and cash equivalents

           Cash and cash equivalents include highly liquid investments
           redeemable at any time and are stated at cost, which approximates
           market value.

        e. Transaction credits

           The Company purchases the rights to receive future cash flows
           associated with designated credit card purchases at a discount
           from participating establishments. The Company continuously
           reviews its transaction credits and records an estimated allowance
           for amounts deemed uncollectible.

        f. Property, plant and equipment

           Property, plant and equipment are stated at cost less accumulated
           amortization. Amortization is provided for at the following annual
           rates and methods:

              Computer equipment         - 30% using the declining balance
                                           method
              Furniture and equipment    - 20% using the declining balance
                                           method
              Leasehold improvements     - Straight-line over the term of
                                           the lease
              Computer software          - 3 to 5 years straight-line

           Property, plant and equipment are tested for impairment when
           evidence of a decline in value exists. If it is determined that
           the carrying value of the property, plant and equipment is not
           recoverable, a write-down to fair value is charged to earnings in
           the year that such a determination is made.

        g. Deferred financing charges

           Deferred financing charges are amortized over the term of the
           convertible, non-convertible debentures, and loans payable using
           the effective interest rate method.

        h. Income taxes

           The Company provides for income taxes using the liability method
           of income tax allocation. Under this method, future income tax
           assets and liabilities are determined based on deductible or
           taxable temporary differences between financial statement values
           and the corresponding income tax values of assets and liabilities
           using substantively enacted income tax rates to be in effect for
           the year in which the differences are expected to reverse. The
           Company establishes a valuation allowance against future income
           tax assets if, based on available information, it is more likely
           than not that some or all of the future income tax assets will not
           be realized.

        i. Stock option plan

           The Company has a stock option plan which is described in
           note 7(d). The Company uses the Black-Scholes option pricing model
           to determine the fair value of stock options.

        j. Foreign currency translation

           Monetary assets and liabilities denominated in foreign currencies
           are translated into Canadian dollars at exchange rates in effect
           at the consolidated balance sheet dates. Non-monetary assets and
           liabilities are translated at rates of exchange at each
           transaction date. Revenue and expenses are translated at the
           average rate of exchange for the year. Gains or losses on foreign
           currency translation are included in loss.

        k. Use of estimates

           The preparation of these consolidated financial statements, in
           accordance with Canadian generally accepted accounting principles,
           requires management to make estimates and assumptions that affect
           the reported amounts of assets and liabilities, the disclosure of
           contingent assets and liabilities at the date of the consolidated
           financial statements and the reported amounts of revenue and
           expenses during the reporting period. Actual results could differ
           from those estimates.

    2.  CHANGES IN ACCOUNTING POLICIES

        As required by the Canadian Institute of Chartered Accountants
        ("CICA"), on July 1, 2007 the Company adopted CICA Handbook Section
        1530, Comprehensive Income; Section 3251, Equity; Section 3855,
        Financial Instruments - Recognition and Measurement; Section 3861,
        Financial Instruments - Disclosure and Presentation and Section 3865,
        Hedges. The prospective adoption of these new standards resulted in
        changes in the accounting and presentation for financial instruments.
        The principal changes in the accounting for financial instruments due
        to the adoption of these accounting standards are described below.

        a. Section 1530, Comprehensive Income
           ----------------------------------
           Section 1530 requires a statement of comprehensive income, which
           consists of net income and other comprehensive income ("OCI"). The
           Company did not have OCI during the twelve months ended June 30,
           2008 and its comprehensive loss comprised its net loss.

        b. Section 3251, Equity
           --------------------
           Section 3251 describes the changes in how to report and disclose
           equity and changes in equity as a result of the new requirements
           of Section 1530, including the changes in equity for the period
           arising from OCI. Accumulated changes in OCI are included in
           accumulated other comprehensive income ("AOCI") and are presented
           as a separate component of shareholders' equity. The Company did
           not have a balance of AOCI at June 30, 2008.

        c. Section 3855, Financial Instruments - Recognition and Measurement
           -----------------------------------------------------------------
           Section 3861, Financial Instruments - Disclosure and Presentation
           -----------------------------------------------------------------
           Under the new standards, all financial instruments were classified
           into the following categories: held for trading, held to maturity
           investments, loans and receivables, available for sale financial
           assets or other liabilities. All financial instruments within the
           scope of the standard are included in the consolidated financial
           statements and are initially measured at fair value. Subsequently,
           all financial instruments are re-measured to fair value at each
           reporting period except for loans and receivables, held to
           maturity investments and other financial liabilities which are
           measured at amortized cost. Held for trading financial investments
           are subsequently measured at fair value and all gains and losses
           as a result of measurement are included in earnings in the period
           in which they arise. Available for sale financial instruments are
           subsequently measured at fair value with revaluation gains and
           losses included in other comprehensive income until the instrument
           is derecognized or impaired.

           As a result of the adoption of this standard, the Company has
           elected to classify each of its significant categories of
           financial instruments outstanding during the twelve months ended
           June 30, 2008 as follows:

           Cash and cash equivalents are classified as held-for-trading.
           Changes in fair value for the period are recorded in earnings as
           interest income.

           Accounts receivable and other receivables are classified as loans
           and receivables.

           Borrowings under accounts payable and accrued liabilities are
           classified as other financial liabilities.

           Convertible debentures, non-convertible debentures, and loan
           payable are classified as other financial liabilities and recorded
           at amortized cost using the effective interest method.

           Debt issuance and transaction costs related to other financial
           liabilities are netted against the carrying value of the debt and
           amortized over the term of the debt using the effective interest
           method.

        d. Section 3865, Hedges
           --------------------
           Section 3865 specifies the criteria that must be satisfied in
           order for hedge accounting to be applied and the accounting for
           each of the permitted hedging strategies: fair value hedges and
           cash flow hedges. Hedge accounting is discontinued prospectively
           when the derivative no longer qualifies as an effective hedge, or
           the derivative is terminated or sold, or upon the sale of early
           termination of the hedged item. The Company did not have any
           hedges during the twelve months ended June 30, 2008.

    3.  PROPERTY, PLANT AND EQUIPMENT

                                                   Accumulated        Net
                                         Cost     Amortization    Book Value
                                         ----     ------------    ----------
        June 30, 2008
        -------------
        Computer equipment            $2,223,012    $2,022,899      $200,113
        Furniture and equipment          195,316       125,553        69,763
        Computer software              2,209,325     1,733,745       475,580
                                      ----------    ----------      --------

                                      $4,627,653    $3,882,197      $745,456
                                      ----------    ----------      --------
                                      ----------    ----------      --------

        June 30, 2007
        -------------
        Computer equipment            $2,893,587    $2,589,076      $304,511
        Furniture and equipment        1,112,293       972,185       140,108
        Leasehold improvements           504,773       504,773             -
        Computer software              1,667,455     1,584,128        83,327
        Assets-in-progress               247,787             -       247,787
                                      ----------    ----------      --------

                                      $6,425,895    $5,650,162      $775,733
                                      ----------    ----------      --------
                                      ----------    ----------      --------

        In July 2006, the Company commenced development of new processing
        systems for its Canadian credit card loyalty programs. Total costs
        incurred on this project were $510,239. The processing systems
        connected primarily to awarding of loyalty rewards were completed and
        implemented during the current year, and the Company commenced
        amortization on the systems. The costs are included in Computer
        software (F 2007 - such modules were not in use and were included in
        Assets-in-progress).

    4.  LOAN PAYABLE

        In December, 2007 Advantex Dining Corporation, a 100% subsidiary of
        the Company concluded an agreement with Montcap Financial Corp
        (Montcap) for a $5.0 million credit facility.  Interest is
        calculated daily on the amount outstanding and charged monthly at the
        per annum rate of 10 per cent above a certain major Canadian bank's
        prime rate. First charge on all amounts due from participating
        establishments which are funded from this facility are provided as
        security. The agreement is for three years.

        Under the agreement, the facility is to be used exclusively to
        acquire transaction credits. Transaction credits can only be acquired
        from those establishments that are in industries available to the
        Company under its agreement with CIBC. The Company currently has
        immediate access to $1.5 million of the facility. The remaining
        balance of $3.5 million will be available once the Company reaches an
        agreement with CIBC that will allow the Company to expand its program
        to retail fashion establishments.

        The financing fees related to this credit facility were $191,376. The
        fees are being amortized over the term of the facility. The amount
        outstanding under this facility at June 30, 2008 was $824,281. The
        loan payable amount disclosed on the Balance Sheet is net of the
        unamortized financing fees of $160,833.

    5.  CONVERTIBLE DEBENTURES PAYABLE

        In 2003, the Company issued $4,000,000 of senior convertible
        debentures (the convertible debentures) for net proceeds of
        $3,542,498, after issuance costs of $457,502. The conversion price of
        the debentures was $0.17 per common share. In accordance with The
        Canadian Institute of Chartered Accountants Handbook Section 3855
        "Financial Instruments" (CICA 3855), the convertible debentures were
        bifurcated into debt and equity portions. The amount allocated to the
        equity portion of the convertible debentures, net of allocated
        financing costs of $70,457, was $546,315. The debt portion of the
        convertible debentures is being accreted to its face value at
        maturity over the term of the debt by way of a charge to interest
        expense.

        In December 2003, in exchange for an amendment to the convertible
        debenture agreement, the conversion price of the convertible
        debentures was reduced to $0.15 per common share. As a result of this
        amendment, an additional $333,993, net of $35,100 of financing costs,
        was allocated to the equity portion of the convertible debentures.

        In July 2004, the Company issued an additional $125,000 of
        convertible debentures with the same terms as the previously issued
        convertible debentures, except that the conversion price was $0.13
        per common share.

        In March 2006, $150,000 of the convertible debentures was converted
        at the exercise option price of $0.15 per share for 1,000,000 common
        shares of the Company. A proportionate amount, $32,011, was
        transferred from the equity portion of convertible debentures to
        capital stock related to this conversion.

        In November 2006, the Company issued an additional $2,025,000 of
        convertible debentures and revised the terms of the convertible
        debentures. The term of the convertible debentures was extended to
        December 2011 and the conversion price was reduced to $0.10 per
        common share. In addition, the Company is now allowed, under certain
        conditions, to obtain additional secured debt financing.

        Costs related to the revision of the convertible debentures terms and
        issuance of additional convertible debentures totalled $407,343 and
        included $10,000 for 500,000 compensation warrants issued to the
        financing agent of the transaction.

        In accordance with CICA 3855, the fair value of the new convertible
        debentures was bifurcated into debt and equity portions and a fair
        value adjustment was applied to the conversion option of the existing
        convertible debentures. Accordingly, $1,387,822 was allocated to the
        equity portion of the convertible options. In addition, financing
        costs of $121,778 were allocated to the equity portion of the
        convertible debentures.

        The Black-Scholes option pricing model was used to determine the fair
        value of the conversion feature in the convertible debentures. The
        following assumptions were used in the Black-Scholes option pricing
        model:

        Common share price:                       $0.05
        Exercise price of conversion option       $0.10
        Expected life of conversion option        5 years
        Expected volatility                       89%
        Risk-free interest rate                   3.75%

        A summary of the debt and equity portions of the convertible
        debentures and the related balance of unamortized financing charges
        is as follows. The debt portion is shown on the balance sheet net of
        financing costs.


                                                                    Deferred
                                         Debt          Equity      financing
                                       portion        portion        costs
                                       -------        -------        -----
        Balance June 30, 2006         3,518,706        848,297       189,170
        Issuance of additional debt     637,178      1,387,822             -
        Issuance costs                        -       (121,778)      285,565
        Accretion charge                271,045              -             -
        Amortization of issuance costs        -              -       (90,141)
                                      ---------      ---------       --------
        Balance June 30, 2007         4,426,929      2,114,341       384,594
        Accretion charge                315,316              -             -
        Amortization of issuance costs        -              -       (85,464)
                                      ---------      ---------       --------
        Balance June 30, 2008         4,742,245      2,114,341       299,130
                                      ---------      ---------       -------
                                      ---------      ---------       -------

        The convertible debentures bear interest at 10% per annum payable
        semi-annually in arrears in June and December each year, mature on
        December 9, 2011 and are secured by a general security interest over
        assets of the Company and its subsidiaries.

        The significant financial covenants of the convertible debentures
        require the Company to meet a defined level of current assets and
        interest coverage on a quarterly basis. As at June 30, 2008, the
        Company was in breach of its financial covenant related to current
        assets, and interest charge. In September 2008, the convertible
        debenture agreement was amended and the covenants from June 30, 2008
        through maturity were revised. The Company met the revised covenants
        at June 30, 2008 and expects to meet the covenants throughout the
        remaining term of the debt. If the Company were to breach any of the
        covenants over the remaining term of the convertible debt, management
        intends to work with the lenders to obtain a waiver or renegotiate
        the terms of the covenants.

        In consideration for the amendments to the convertible debenture
        agreement, the Company agreed to issue 9,990,000 warrants to the
        holders of the convertible debenture holders on a pro rata basis
        based on the outstanding principal amounts of the convertible
        debentures. Each warrant entitles the holder to purchase one common
        share of the Company at an exercise price of $0.045 at any time prior
        to December 9, 2011.

        $6,000,000 will be repayable on maturity of the convertible debenture
        on December 9, 2011.

    6.  NON-CONVERTIBLE DEBENTURES PAYABLE

        In December, 2007, the Company issued 2,000 units of non-convertible
        debentures for gross proceeds of $2,000,000. The Company issued an
        additional 665 units in January 2008, for gross proceeds of $665,000.
        Certain Directors and Officers of the Company participated in the
        second tranche, purchasing 110 units. Financing fees of $103,891
        related to these debentures will be amortized over the term of the
        debentures.

        Each unit consists of a $1,000 secured non-convertible debenture and
        1,975 share purchase warrants. The debentures bear interest at 14%
        per annum, payable quarterly, and mature on December 31, 2010. Each
        share purchase warrant allows the holder to acquire one share of the
        Company at $0.06 per share during the three year term of the
        debenture.

        Under the agreement, the proceeds of the non-convertible debentures
        are to be used to acquire transaction credits. In addition, the
        proceeds of the non-convertible debentures and subsequent receipts
        related to transaction credits are to be maintained in a separate
        bank account. As security, the debenture holders have first charge to
        the balance in this separate bank account as well as all amounts due
        from establishments funded by the proceeds of the non-convertible
        debentures. The balance in the separate bank account at June 30, 2008
        was $60,000.

        The non-convertible debentures include a financial covenant that
        requires the Company to meet a defined level of assets at each
        quarter end commencing the quarter ending on March 31, 2008. The
        Company met its financial covenant during the period ended June 30,
        2008.

        In accordance with CICA 3855, the fair value of the non-convertible
        debentures was bifurcated into debt and equity portions based on the
        estimated relative fair value of the debt and equity components.
        Accordingly, $184,744 was allocated to the equity portion of the
        share purchase warrants.

        The Black-Scholes option pricing model was used to determine the fair
        value of the share purchase warrants. The following assumptions were
        used in the Black-Scholes option pricing model:

        Common share price                        $0.06
        Exercise price of share purchase warrant  $0.06
        Expected life of the share warrant        3 years
        Expected volatility                       89%
        Risk-free interest rate                   3.9%

        The amount of non-convertible debentures is disclosed under long-term
        liabilities:

        Gross proceeds of debentures              $2,665,000
        Allocated to share purchase warrants        (184,744)
        Unamortized financing fees                   (89,109)
        Accretion charges to date                     30,950
                                                  -----------
        Non - convertible debenture payable       $2,422,097
                                                  -----------
    7.  CAPITAL STOCK

        (a) Authorized

            Class A preference - 500,000 shares non-voting,
            non-participating, redeemable (at stated capital amount), 8% (of
            stated capital amount) non-cumulative dividend rate

            Class B preference - Unlimited number of shares, issuable in
            series with rights, privileges, restrictions and conditions
            determined by the Board of Directors at time of issue

            Common - Unlimited number of shares

        (b) Issued Class A preference shares

                                                       2008          2007
                                                       ----          ----
              459,781 shares                            $3,815        $3,815
                                                        ------        ------
                                                        ------        ------

        (c) Issued common shares

                                                       2008          2007
                                                       ----          ----
              97,030,868 shares                    $24,106,281   $24,106,281
                                                   -----------   -----------
                                                   -----------   -----------

        (d) Stock options

            The Company has a stock option plan for directors, officers,
            employees and consultants. The stock options are non-assignable;
            the stock option price is to be fixed by the Board of Directors
            (but may not be less than the closing price on the day
            immediately preceding the date of the grant of the stock option);
            the term of the stock options may not exceed five years, and
            payment for the optioned shares is required to be made in full on
            the exercise of the stock options. The stock options are subject
            to various vesting provisions, determined by the Board of
            Directors, ranging from immediately to four years. On January 26,
            2006, the Company received approval from the shareholders to
            amend its stock option plan from a fixed maximum number of common
            shares issuable to a rolling maximum number of common shares
            issued and outstanding (calculated on a non-diluted basis). At
            the Annual and Special Meetings of the Shareholders held on
            December 6, 2007, the Company's stock option plan was amended to
            increase the maximum number of common shares issuable under the
            plan from 10% of the number of common shares outstanding at any
            particular time, to 12.5% of the number of common shares
            outstanding at any particular time.

            A summary of the status of the Company's stock option plan as at
            June 30, 2008 and 2007, and changes during the years then ended
            is presented below:

                                      2008                   2007
                               ---------------------- -----------------------
                                            Weighted                Weighted
                                             Average                 Average
                                  Share     Exercise      Share     Exercise
                                 options      Price      options      Price
                               ----------- ----------- ----------- ----------
        Outstanding at the
         beginning of the year  7,980,000     $0.08     5,267,500     $0.10
        Granted                 4,721,606      0.05     3,000,000      0.06
        Forfeited and expired    (805,000)     0.14      (287,500)     0.11
                                 ---------               ---------
        Outstanding at the
         end of the year       11,896,606     $0.06     7,980,000     $0.08
                               ----------               ---------
                               ----------               ---------

        Options exercisable at
         the end of the year    7,239,333               6,510,833

            During the year, 1,336,660 options were granted to directors at
            an exercise price of $0.045, with vesting periods ranging between
            immediate and one year. The Company also granted 3,384,946
            options to employees at exercise price ranging between $0.045 and
            $0.05, with vesting periods ranging between one and three years.

            The following table summarizes information about stock options
            outstanding as at June 30, 2008:

                              Options Outstanding        Options Exercisable
                        -------------------------------- --------------------
                                    Weighted
                                    Average
                                   Remaining   Weighted             Weighted
        Range of                 Contractual   Average              Average
        Exercise          Number     Life      Exercise    Number   Exercise
        Prices         Outstanding  (years)     Price   Exercisable   Price
        ------------   ----------- -------------------------------- ---------
        0.045 - .095    11,146,606    3.1       $0.06     6,758,333   $0.06

        0.10 - 0.15        750,000    2.3       $0.13       481,000   $0.14
                        ----------                        ---------
                        11,896,606    3.1       $0.06     7,239,333   $0.06
                        ----------                        ---------

            The number of stock options available for future issuance as at
            June 30 is as follows:

                                                       2008          2007
                                                       ----          ----
            Maximum number reserved for issuance    12,128,858     9,703,087
            Less: Outstanding at end of year       (11,896,606)   (7,980,000)
                                                   ------------   -----------
            Number of options available for
             future issuance                           232,252     1,723,087
                                                       -------     ---------
                                                       -------     ---------

            The Company calculated the fair value of the stock options issued
            during 2008 using the Black-Scholes option pricing model and
            determined their fair value to be $110,000 (2007 - $113,045);
            $94,800 of stock option expense for the year ended June 30, 2008
            was recorded in these consolidated financial statements (2007 -
            $168,775), and was recorded as an increase in contributed
            surplus. The assumptions used in the model were:

                                                  2008           2007
                                                  ----           ----
            Expected life of stock option         4 to 5 years   1 to 5 years
            Expected volatility of common
             share price                          85%            74 to 100%
            Risk-free rate of return              2.45%          5.0-5.5%


        (e) Shareholders' rights plan

            At the Annual and Special Meetings of the Shareholders held on
            December 6, 2007 the Company received approval to renew the
            Shareholders rights plan. The Plan expires the earliest of the
            (i) termination time as defined in the plan; and (ii) the
            termination of the Annual General Meeting of the Company in the
            year 2010. Under the shareholders' rights plan, certain rights
            become exercisable and permit shareholders to purchase common
            shares from the Company at 50% of the then current market price
            if any entity or person acquires or announces an intention to
            acquire 20% or more of the common shares, other than with the
            approval of the Board of Directors or pursuant to the "permitted
            bid" procedures, as defined by the shareholders' rights plan.

    8.  FINANCIAL INSTRUMENTS

        (a) Credit risk

            Credit risk arises from the possibility that counterparties will
            be unable to discharge their obligations. The Company routinely
            assesses the financial strength of its merchants and, as a
            consequence, believes that risk exposure is limited in its
            accounts receivable and transaction credits.

        (b) Currency risk

            The Company is exposed to foreign exchange risk as a portion of
            its revenue is earned in US dollars and it has assets and
            liabilities that will be settled in US dollars. Foreign exchange
            risk arises due to fluctuations in foreign currency rates, which
            could affect the Company's financial results.

            Included in the undernoted accounts are the following amounts
            (in USD)

                                                       2008          2007
                                                       ----          ----
            Cash and cash equivalents                 $112,253      $365,113
            Accounts receivable                        656,849       522,665
            Accounts payable and accrued liabilities   153,300       455,476

        (c) Fair value

            The carrying values of cash and cash equivalents, accounts
            receivable, transaction credits, accounts payable and accrued
            liabilities approximate their fair values due to the short-term
            maturity of these instruments.

            The stated value of the loans payable, convertible debentures
            payable and non-convertible debentures payable approximate their
            fair values, as the interest rates are representative of current
            market rates for loans with similar terms, conditions and
            maturities.

        (d) Interest rate risk

            The Company is exposed to price risk on both the convertible and
            non-convertible debentures payable, as these amounts are subject
            to fixed interest rates.

    9.  LOSS PER COMMON SHARE

        Loss per share is calculated on the basis of net loss divided by the
        weighted average number of common shares outstanding for the year.
        Diluted loss per share is calculated using the treasury stock method,
        giving effect to the exercise of all dilutive instruments. Diluted
        loss per share information has not been presented, as the effect of
        potential exercise of the convertible debenture, stock options and
        warrants would be anti-dilutive.

    10. INCOME TAXES

        The Company has $16,224,000 (2007 - $19,324,000) of non-capital
        losses available to be applied against future taxable income. The
        losses expire as follows:

           Year ending June 30, 2009                 -  $ 1,959,000
                                2010                 -    2,344,000
                                2011                 -    1,154,000
                                2014 and thereafter  -   10,767,000
                                                         ----------
                                                        $16,224,000
                                                        -----------
                                                        -----------

        The income tax effect of these losses and other temporary differences
        give rise to future income tax assets against which a valuation
        allowance has been applied as follows:

                                                       2008          2007
                                                       ----          ----
           Income tax effect of:
             Non-capital losses carried forward     $5,860,000    $6,980,000
             Property, plant and equipment             (14,000)     (103,000)
             Deferred financing charges                (36,000)       (9,000)
             Research and development                   65,000        65,000
             Other                                      27,000        27,000
                                                        ------        ------
                                                     5,902,000     6,960,000
             Valuation allowance                    (5,902,000)   (6,960,000)
                                                    -----------   -----------
             Future income taxes                    $        -    $        -
                                                    -----------   -----------
                                                    -----------   -----------

    11. LEASE COMMITMENTS

        The Company is committed to minimum rental payments under existing
        leases for equipment and premises for the next five years as follows.

           Year ending June 30, 2009               $215,450
                                2010                211,007
                                2011                155,231
                                2012                 34,146
                                2013 & beyond        37,651

    12. RELATED PARTY TRANSACTIONS

        The following transactions are in the normal course of business and
        are measured at the exchange amount of consideration established and
        agreed to by the related parties:

        (i)   On January 17, 2006, the Company entered into an agreement
              appointing Notre-Dame Capital Inc. (Notre-Dame) to act as its
              exclusive agent in connection with a series of financing
              transactions. In addition, Notre-Dame was appointed as the
              Company's exclusive financial advisor for a period of two years
              from January 17, 2006. The agreement was terminated by the
              Company effective February 5, 2007. The agreement allowed the
              agent to earn a commission on issuance of common shares and
              debentures plus, in case of common shares, stock options
              corresponding to 10% of the common shares sold. On March 14,
              2006, the Company issued 37,037,037 common shares by way of a
              private placement and in its capacity as agent for the private
              placement, Notre-Dame earned and was paid commission of
              $287,770 and received 3,552,716 stock options exercisable at
              the offering price of 8.1 cents per share for a period of 24
              months from the closing date of the private placement; the
              stock options were not exercised and expired March 15, 2008. In
              its capacity of financial adviser, Notre-Dame was paid a
              monthly fee of $3,000. The president and managing partner of
              Notre-Dame has been a director of the Company since January 26,
              2006.

        (ii)  As at June 30, 2008, the following related parties are holders
              of the debentures described in notes 5 and 6:

                                                                   Principal
                                                     Principal       Amount
                                                       Amount        (Non-
                                                  (Convertible    convertible
              Title                                  debenture)    debenture)
                                                  -------------   -----------
              Chief Executive Officer                $  50,000      $ 30,000
              Directors                              $ 200,000      $ 25,000
              CFO                                    $     nil      $ 15,000
              Officers of the Company                $  40,000      $ 20,000

              In addition, a director of the Company who resigned effective
              June 30, 2008 held $179,683 and $15,000 of the Convertible and
              Non-convertible debentures, respectively.

    13. ECONOMIC DEPENDENCE

        A significant portion of the Company's current revenue is dependent
        upon its offline value-added loyalty program agreement with CIBC
        under which Aeroplan Miles are awarded to holders of certain CIBC
        Visa credit cards. The Company purchases Aeroplan Miles from CIBC,
        which in turn purchases Aeroplan Miles from Aeroplan LP, a subsidiary
        of ACE Aviation Holdings Inc.

        The agreement with CIBC was renewed in July 2005, for an additional
        term ending on December 31, 2009. The agreement may be renewed for a
        further three years upon mutual agreement. If CIBC terminates its
        offline value-added loyalty program agreement with the Company, this
        could materially and adversely affect the Company. However, during
        the current term of the agreement CIBC can only terminate such
        agreement with the Company if the Company is in material breach
        thereof. In the event that the agreement expires or is terminated by
        the Company as a result of a breach by CIBC, CIBC is not entitled to
        offer a similar offline program to its Visa cardholders for a period
        of six months and the Company will be entitled to offer such
        cardholders a similar replacement program on the Company's behalf.

        As part of Air Canada's restructuring under the Companies' Creditor
        Arrangement Act in 2004, Air Canada and CIBC entered into a new
        contract under which CIBC is entitled to purchase Aeroplan Miles,
        which will be available to support the CIBC Aerogold ADVANTEX BENEFIT
        program respecting restaurants, golf courses, and small inns and
        resorts. If Aeroplan Miles cease to be available for award in respect
        of purchases by holders of CIBC Visa credit cards, the Company has
        agreed to offer to such cardholders the same rewards as CIBC offers
        to them as a replacement for Aeroplan Miles, so long as the per unit
        cost of such rewards to the Company is the same or less than the
        Company's per unit cost of Aeroplan Miles.

    14. RESTRUCTURING COSTS

        Fiscal 2007 restructuring costs of $1,088,657 are primarily severance
        payments due to former employees, of which $205,955 (2007 - $450,856)
        is payable one year after June 30, 2008 and is disclosed as long-term
        other liabilities on the balance sheets. The amount included in
        Fiscal 2008 current liabilities is $260,000 (Fiscal 2007 $244,396).

    15. COMPARATIVES

        Certain of the comparative figures have been reclassified to conform
        to consolidated financial statement presentation adopted in the
        current year.



    (R) ADVANTEX and ADVANCE PURCHASING MARKETING are Registered Trademarks
    of Advantex Marketing International Inc. (R) Aerogold and Aeroplan are
    Registered Trademarks of Aeroplan Limited Partnership; CIBC is an
    Authorized Licensee of the Marks. (R) Aventura, Vacationgold and Dividend
    Platinum are Registered Trademarks of CIBC. (*)Visa and Classic are
    registered trademarks of Visa Int./CIBC lic. user. CIBC is the owner and
    issuer of the CIBC Aerogold Visa Card, CIBC Aventura(R) Gold Visa card,
    CIBC Aventura(R) Visa Infinite Card, CIBC Aerogold(R) Visa Infinite Card,
    CIBC Gold Visa Card, CIBC Vacationgold Visa Card, CIBC Dividend Platinum
    card and CIBC Aero Classic Visa Card. (R)Mileage Plus Miles and (R)United
    are Registered Trademarks of United Airlines Inc. (R)Delta and (R)
    SkyMiles are Registered Trademarks of Delta Airlines Inc. (R)Alaska
    Airlines and (R)Mileage Plan are Registered Trademarks of Alaska Air
    Group. (R) Lufthansa and (R)Lufthansa Air Lines are Registered Trademarks
    of Deutsche Lufthansa AG. (R)Miles & More is a Registered Trademark of
    Lufthansa Air Lines Inc.



    Head Office:

    606-600 Alden Road
    Markham, Ontario, Canada L3R 0E7
    Telephone: (905) 470-9558
    Fax: (905) 946-2984
    www.advantex.com

    Board of Directors:

    Kelly E. Ambrose
    Stephen Burns
    Richard Groome
    William H. Polley

    Senior Management:

    Kelly E. Ambrose
    Chief Executive Officer and President
    Mukesh Sabharwal
    V.P. and Chief Financial Officer

    Listing:

    Toronto Stock Exchange
    ADX.TO

    Auditors:

    PricewaterhouseCoopers LLP

    Transfer Agent:

    The CIBC Mellon Trust Company
    Toronto, Ontario, Canada
    Telephone: (416) 643-5500
    

    %SEDAR: 00004122E




For further information:

For further information: Mukesh Sabharwal, Vice-President and Chief
Financial Officer, Tel: (905) 946-2958, E-mail: Mukesh.sabharwal@advantex.com

Organization Profile

ADVANTEX MARKETING INTERNATIONAL INC.

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