Advantex announces fiscal 2008 Q1 results

    ADX: TSX

    TORONTO, Nov. 14 /CNW/ - Advantex Marketing International Inc. (TSX:ADX),
a leading specialist in merchant funding and loyalty marketing programs, today
announced its results for the three months ended September 30, 2007.
    "Our achievements this quarter will establish a base for future
expansion." said Kelly E. Ambrose, Advantex's Chief Executive Officer and
    A conference call will be held for analysts and investors at 4.30 pm EST,
on Tuesday, November 27, 2007. Details are available at the end of this News

    Financial Performance - Highlights

                          Three months     Three months
                          ended            ended
                          September 30,    September 30,
                          2007             2006             Improvement
    Revenue               $ 2.8 million    $ 2.2 million    $ 0.6 million +
    Contribution from
     Operations           $ (45,000)       $ (127,000)      $ 82,000      +
    Loss before
     Amortization &
     Interest             $ (61,000)       $ (138,000)      $ 77,000      +

    The improvement of $0.1 million at the operating level was offset by
increase in interest cost of $0.1 million, which arose from the increased debt
levels and the associated carrying costs. Consequently the Net Loss for the
current quarter at $0.4 million was unchanged from the corresponding period
previous year.


    The Company is operating close to break even at the contribution from
operations level, and it continues to evolve into a stronger and more
competitive company, with a clear focus on profitable growth in the programs
and areas in which it enjoys a leadership position.
    The Company is experiencing strong demand for its Advance Purchase
Marketing Program and has a backlog of merchants wishing to join this program.

    About Advantex Marketing International Inc.

    Advantex is a specialist in the marketing services industry, managing
white-labelled 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, Delta
Air Lines, Alaska Airlines and Lufthansa Airlines. Advantex is a public
company, traded on the Toronto Stock Exchange under the symbol "ADX". For
additional information on Advantex, please visit

    This press release contains certain "forward-looking statements". All
statements, other than statements of historical fact, that address activities,
events or developments that the Company believes, expects or anticipates will
or may occur in the future (including, without limitation, statements
regarding financial and business prospects and financial outlook) are
forward-looking statements. These forward-looking statements reflect the
current expectations or beliefs of the Company based on information currently
available to the Company. Forward-looking statements are 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
statements, 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, and delays in
finalizing retail contract. Any forward-looking statement 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 statement, 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 statements are reasonable,
forward-looking statements are not guarantees of future performance and
accordingly undue reliance should not be put on such statements due to the
inherent uncertainty therein.

    Analyst/Investor Conference Call

    Analysts and investors are invited to participate in a conference call at
4.30 pm EST, on Tuesday, November 27, 2007 with Mr. Kelly E. Ambrose, Advantex
Chief Executive Officer and President.
    To participate in the conference call, please call 1-800-926-6198. A
recording of the call will be available until December 4, 2007 at 416-626-4100
or 1-800-558-5253, Reservation No. 21356590.

             For the three month period ended September 30, 2007

    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 report.
    An auditor has not performed a review of these financial statements.

                         CONSOLIDATED BALANCE SHEETS
                             (unaudited - note 1)

                                                Sept 30, 2007  June 30, 2007
                                                -------------  -------------


      Cash and cash equivalents                      $502,380       $910,995
      Accounts receivable                             795,836        737,485
      Transaction credits                           5,155,968      5,390,412
      Prepaid expenses and sundry assets              165,432        185,955
                                                      -------        -------
                                                    6,619,616      7,224,847
                                                    ---------      ---------
      Property, plant and equipment and
       other assets                                   881,309        775,733

    TOTAL ASSETS                                   $7,500,925     $8,000,580
                                                   ----------     ----------
                                                   ----------     ----------

      Accounts payable and accrued liabilities     $3,573,628     $3,707,243

      Other liabilities                               336,724        450,856
      Convertible debenture payable                 4,140,514      4,042,335
                                                    ---------      ---------
                                                    4,477,238      4,493,191

                                                    8,050,866      8,200,434
                                                    ---------      ---------

    Capital Stock
      Class A preference shares                         3,815          3,815
      Common shares                                24,106,281     24,106,281
                                                   ----------     ----------
                                                   24,110,096     24,110,096
    Contributed surplus                               428,423        412,223
    Equity portion of convertible debenture         2,114,341      2,114,341

    Deficit                                       (27,202,801)   (26,836,514)
                                                   ----------     ----------

                                                     (549,941)      (199,854)
                                                      -------        -------
     (DEFICIENCY) EQUITY                           $7,500,925     $8,000,580
                                                   ----------     ----------
                                                   ----------     ----------
    (see accompanying notes)

               THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
                             (unaudited - note 1)

                                                Sept 30, 2007  Sept 30, 2006
                                                -------------  -------------

    REVENUE                                        $2,844,687     $2,261,784
      Direct expenses                               1,153,234        725,645
                                                    ---------        -------

    GROSS PROFIT                                    1,691,453      1,536,139
                                                    ---------      ---------

      Selling and marketing                           791,408        804,912
      General and administrative                      945,048        857,805
                                                      -------        -------
                                                    1,736,456      1,662,717
                                                    ---------      ---------

    CONTRIBUTION FROM OPERATIONS                      (45,003)      (126,578)

      Stock-based compensation                         16,200         11,400
                                                       ------         ------

    LOSS BEFORE AMORTIZATION AND INTEREST             (61,203)      (137,978)
      Amortization of property, plant
       and equipment                                   47,433         55,971
      Interest expense
        Stated interest on convertible debenture      159,472         95,453
        Accretion charge on convertible debenture
         and amortization of deferred
         financing charges                             98,179         79,859
                                                       ------         ------

     FOR THE PERIOD                                 $(366,287)     $(369,261)
                                                    ----------     ----------
                                                    ----------     ----------

    NET LOSS PER COMMON SHARE                       $   (0.00)     $   (0.00)
                                                    ----------     ----------
                                                    ----------     ----------
    (see accompanying notes)

               THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
                             (unaudited - note 1)

                                                Sept 30, 2007  Sept 30, 2006
                                                -------------  -------------

    BALANCE AT THE START OF PERIOD               $(26,836,514)  $(24,242,213)

    Net loss for the period                          (366,287)      (369,261)
                                                     ---------      ---------

    BALANCE AT THE END OF PERIOD                 $(27,202,801)  $(24,611,474)
                                                 -------------  -------------
                                                 -------------  -------------
    (see accompanying notes)

               THREE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006
                             (unaudited - note 1)

                                                Sept 30, 2007  Sept 30, 2006
                                                -------------  -------------


      Net loss for the period                       $(366,287)     $(369,261)

    Items not affecting cash
      Amortization of property, plant
       and equipment                                   47,433         55,971
      Accretion charge on convertible debenture        76,813         53,727
      Amortization of deferred financing charges       21,366         26,132
      Stock-based compensation                         16,200         11,400
                                                       ------         ------
                                                     (204,475)      (222,031)
    Changes in non-cash working capital items
      Accounts receivable                             (58,351)      (103,537)
      Transaction credits                             234,444     (1,085,455)
      Prepaid expenses and sundry assets               20,523         22,454
      Accounts payable and accrued liabilities       (133,615)      (206,755)
                                                      -------        -------
                                                       63,001     (1,373,293)

    Decrease in long-term other liabilities          (114,132)             -
                                                      -------        -------

                                                     (255,606)    (1,595,324)
      Purchase of property, plant and equipment      (153,009)       (70,382)

     DURING THE PERIOD                               (408,615)    (1,665,706)

    Cash and cash equivalents at the start
     of period                                        910,995      1,807,042
                                                      -------      ---------

    CASH AND CASH EQUIVALENTS AT END OF PERIOD       $502,380       $141,336
                                                     --------       --------
                                                     --------       --------

      Interest paid                                     $ nil       $198,000
                                                        -----       --------
                                                        -----       --------
    (see accompanying notes)

                    Three Months Ended September 30, 2007
                             (Unaudited - note 1)


    The accompanying interim consolidated financial statements of Advantex
    Marketing International Inc. and its subsidiaries ("Advantex" or the
    "Company") have been prepared in accordance with Canadian generally
    accepted accounting principles ("Canadian GAAP") for interim financial
    information. Accordingly, they do not include all of the information and
    footnotes required by Canadian GAAP for annual consolidated financial

    The accompanying financial information reflects all adjustments,
    consisting primarily of normal recurring adjustments, which are, in the
    opinion of management, necessary for a fair presentation of results for
    interim periods. Operating results for the three months ended
    September 30, 2007 are not necessarily indicative of the results that may
    be expected for the fiscal year ending June 30, 2008. The accounting
    policies used in the preparation of these interim consolidated financial
    statements should be read in conjunction with the consolidated financial
    statements and notes thereto for fiscal 2007.

    These interim consolidated financial statements follow the same
    accounting policies and methods of application as the consolidated
    financial statements for the year ended June 30, 2007, except as
    described in Note 2 below. Certain prior period amounts have been
    reclassified to conform to the current period's presentation.


    As required by the Canadian Institute of Chartered Accountants ("CICA"),
    on July 1, 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 three months ended September 30,
        2007 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 September 30, 2007.

    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 net income 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 three months ended September 30,
        2007 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

        Accounts receivable and other receivables are classified as loans and

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

        Convertible debentures 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 added to 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 three
        months ended September 30, 2007.


    As at September 30, 2007 there were 8,500,000 employee stock options
    outstanding at exercise prices between $0.045 to $0.20, expiring
    between July 9, 2008 and December 21, 2011.

    On September 19, 2007 the Company issued 800,000 stock options to certain
    employees at exercise price of $0.045, vesting equally over three years,
    and expiring September 19, 2011. The Company calculated the fair value of
    the stock options issued using the Black-Scholes option-pricing model and
    determined their fair value to be $21,840. The assumptions used in the
    model were risk free rate of 5%, an expected life of 4 years, an expected
    volatility of 78% and no expected dividends on the common shares.

    During the period 280,000 stock options were forfeited or expired.

    The Company has recorded $16,200 of stock option expense in these
    financial statements as this quarter's expense with respect to fair value
    of stock options issued during current and prior years.


    During the period the Company continued development of new processing
    systems for its CIBC Advantex programs. The costs incurred to date on
    this project approximate $359,530, and are included in property, plant,
    equipment. Amortization will commence when systems are in use.

    %SEDAR: 00004122E

For further information:

For further information: Mukesh Sabharwal, Tel: (416) 481-5657, ext.
249, E-mail:

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