Advantex Announces Fiscal 2019 Second Quarter Results and Business Update

TORONTO, Feb. 27, 2019 /CNW/ - Advantex Marketing International Inc. (CSE: ADX), a specialist in working capital and loyalty marketing products for merchants, announced its results for the three and six months ended December 31, 2018 and measures it is taking in response to recent developments.

Results are in-line with year ago, reflecting a stabilized merchant base. Details are available in Advantex's filings which are available under its profile on www.sedar.com.

Effective fourth quarter of Fiscal 2019 Advantex will no longer operate a bonus rewards program for CIBC and TD. Advantex is shifting its business focus, but will continue to focus on marketing services and working capital for retail merchants. Advantex has a strong base of existing merchants participating in its current program and believes it can grow this merchant base.  Advantex has the support of its financial partners in this endeavour.

About Advantex:

Advantex provides working capital to merchants. Advantex also provides specialized marketing programs that enable members of affinity groups to earn frequent-flyer miles and other loyalty rewards through purchases at participating merchants.

Advantex has partnerships with Aeroplan, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce. Advantex also has partnerships with about 875 merchants in Canada. Advantex shares trade on the Canadian Securities Exchange under the symbol ADX. For more information, go to www.advantex.com

Forward-Looking Information

This news release contains "forward-looking statements" within the meaning of applicable securities laws relating to the future business and operations of Advantex, including expectations of growth in merchant base; and expectation of support of its financial partners. Actual results and developments may differ materially from those contemplated by these statements. The business and operations of Advantex described herein is dependent on a number of factors and is subject to a number of risks and uncertainties. Factors that could cause actual results to differ materially include those listed under "Working Capital and Liquidity Management", "General Risks and Uncertainties" and "Economic Dependence" in Advantex's Management's Discussion and Analysis for the three and six months ended December 31, 2018.

The statements in this news release are made as of the date of this release. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and Advantex undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.

Advantex Marketing International Inc.
Consolidated Statements of Financial Position (unaudited)
(expressed in Canadian dollars)

	Note	At December  30, 2018			At June  30, 2018
		$			$
Assets
Current assets
Cash and cash equivalents		$	136,411		$	635,836
Accounts receivable		176,375			112,322
Transaction credits	5	6,656,069			5,592,426
Prepaid expenses and sundry assets		83,036			79,349
		$	7,051,891		$	6,419,933
Non-current assets
Property, plant and equipment		$	33,813		$	43,969
		$	33,813		$	43,969
Total assets		$	7,085,704		$	6,463,902
Liabilities
Current liabilities
Loan payable	6	$	5,482,636		$	4,427,390
Accounts payable and accrued liabilities		2,167,288			2,843,718
		$	7,649,924		$	7,271,108
Non-current liabilities
9% Non-convertibles debentures payable	7	4,820,512			4,547,951
		$	4,820,512		$	4,547,951
Shareholders' deficiency
Share capital	8	$	24,530,555		$	24,530,555
Contributed surplus		4,090,382			4,090,382
Accumulated other comprehensive loss		(47,383)			(47,383)
Deficit		(33,958,286)			(33,928,711)
Total deficiency		$	(5,384,732)		$	(5,355,157)
Total liabilities and deficiency		$	7,085,704		$	6,463,902

Economic/Financial dependence and Going Concern (note 2), Commitments and contingencies (note 11)
The accompanying notes are an integral part of these consolidated financial statements
Approved by the Board
Director: Signed	"William Polley"	Director: Signed	"Kelly Ambrose"
	William Polley		Kelly Ambrose

Advantex Marketing International Inc.
Consolidated Statements of Profit/(Loss) and Comprehensive Profit/(Loss) (unaudited)
For the three and six months ended December 31, 2018 and 2017
(expressed in Canadian dollars)

	Note	Three months ended December 31						Six months ended December 31
		2018			2017			2018			2017
		$			$			$			$
Revenues	14	$	1,812,853		$	1,978,166		$	3,658,987		$	3,984,335
Direct expenses	13/14	376,062			593,425			820,573			1,206,904
		1,436,791			1,384,741			2,838,414			2,777,431
Operating expenses
Selling and marketing	13/14	388,045			442,664			855,464			922,862
General and administrative	13/14	613,509			578,371			1,151,626			1,327,455
Earnings from operations before depreciation, amortization and interest		435,237			363,706			831,324			527,114
Interest expense:
Stated interest expense - loan payable, and debentures	6/7	296,161			316,588			575,372			642,410
Non-cash interest expense (accretion charges) and restructuring bonus related to debentures	7	136,886			6,802			272,561			6,802
		2,190			40,316			(16,609)			(122,098)
Depreciation of property, plant and equipment, and amortization of intangible assets		7,018			8,246			12,966			17,137
Profit/(loss) and comprehensive profit/(loss) before non-recurring item		$	(4,828)		$	32,070		$	(29,575)		$	(139,235)
Gain on debt restructuring	7	$	-		$	1,795,103		$	-		$	1,795,103
Net profit/(loss) and comprehensive profit/(loss)		$	(4,828)		$	1,827,173		$	(29,575)		$	1,655,868
Profit/(Loss) per share
Basic and Diluted	12	$	-		$	0.01		$	-		$	0.01
The accompanying notes are an integral part of these consolidated financial statements

Advantex Marketing International Inc.
Consolidated Statements of Changes in Shareholders' Deficiency (unaudited)
For the three and six months ended December 31, 2018 and 2017
(expressed in Canadian dollars)

		Class A preference shares		Common shares			Contributed surplus			Accumulated other comprehensive loss			Deficit			Total
		$		$			$			$			$			$
Balance - July 1, 2017	$	3,815		$	24,526,740		$	4,090,382		$	(47,383)		$	(35,153,009)		$	(6,579,455)
Net profit and comprehensive profit		-		-			-			-			1,655,868			1,655,868
Balance - December 31, 2017	$	3,815		$	24,526,740		$	4,090,382		$	(47,383)		$	(33,497,141)		$	(4,923,587)
Balance - July 1, 2018	$	3,815		$	24,526,740		$	4,090,382		$	(47,383)		$	(33,928,711)		$	(5,355,157)
Net loss and comprehensive loss		-		-			-			-			(29,575)			(29,575)
Balance - December 31, 2018	$	3,815		$	24,526,740		$	4,090,382		$	(47,383)		$	(33,958,286)		$	(5,384,732)
The accompanying notes are an integral part of these consolidated financial statements

Advantex Marketing International Inc.
Consolidated Statements of Cash Flow (unaudited)
For the three and six months ended December 31, 2018 and 2017
(expressed in Canadian dollars)

	Note	At December 31, 2018			December 31, 2017
		$			$
Operational activities
Net profit/(loss) for the period		$	(29,575)		$	1,655,868
Adjustments for:
Depreciation of property, plant and equipment, and amortization of intangible assets		12,966			17,137
Accretion charge for debentures	7	147,398			-
Restructuring bonus for debentures	7	125,163			6,802
Non-cash portion of gain on debt restructuring		-			(1,283,611)
		255,952			396,196
Changes in items of working capital
Accounts receivable		(64,053)			(167,498)
Transaction credits		(1,063,643)			863,355
Inventory		-			10,481
Prepaid expenses and sundry assets		(3,687)			1,137
Accounts payable and accrued liabilities		(676,430)			(297,153)
		(1,807,813)			410,322
Net cash provided by / (used in) operating activities		$	(1,551,861)		$	806,518
Investing activities
Purchase of property, plant and equipment, and intangible assets		$	(2,810)		$	-
Net cash (used in) investing activities		$	(2,810)		$	-
Financing activities
Proceeds - 9% Non-convertible debentures payable	7	$	-		$	400,000
Proceeds -  Loan payable	6	1,055,246			(664,571)
Net cash generated from / (used in) financing activities		$	1,055,246		$	(264,571)
Increase / (decrease) in cash and cash equivalents during the period		$	(499,425)		$	541,947
Cash and cash equivalents at beginning of period		635,836			367,357
Cash and cash equivalents at end of period		$	136,411		$	909,304
Additional information
Interest paid		$	573,190		$	333,580
For purposes of the cash flow statement, cash comprises
Cash		$	136,411		$	909,304
The accompanying notes are an integral part of these consolidated financial statements

SOURCE Advantex Marketing International Inc.

Mukesh Sabharwal, Vice-President and Chief Financial Officer, Tel: [phone] ext. 249, Email: [email protected]

Related Links

http://www.advantex.com