Advantex Announces Fiscal 2024 Second Quarter Results

Continuing significant improvements in operational financial metrics

• Core activity – Merchant Cash Advance program – Revenues increased 105.1% to $581,756 in second quarter and 69.9% to $1,107,445 in YTD second quarter.
• Total Revenues increased 97.5% to $863,982 in second quarter and 57.7% to $1,612,160 in YTD second quarter.
• Gross Profit increased 96.1% to $671,301 in second quarter and 66.5% to $1,259,088 in YTD second quarter.
• Flat SG&A. $455,029 vs. $441,920 in second quarter and $866,311 vs. $861,052 in YTD second quarter.
• Earnings from operations before depreciation, amortization and interest $216,272 in second quarter and $392,777 in YTD second quarter. Significant turnaround of $315,848 in second quarter and $497,824 in YTD second quarter from loss positions in the corresponding periods in the previous year.
• Decrease in Loss from operations before non-cash expenses. Reduction of $151,043 to $258,564 in second quarter and $183,442 to $545,713 in YTD second quarter.

TORONTO, Feb. 28, 2024 /CNW/ - Advantex Marketing International Inc. (CSE: ADX) ("Advantex"), a leader in the merchant cash advance and loyalty marketing products for merchants, announced its results for three and six months ended December 31, 2023.

Post pandemic improvements in operational financial metrics which were gradual until fiscal year ended June 30, 2023, are accelerating and reflect execution of strategies to re-build Advantex business levels, initially to pre-pandemic levels and then to capitalize on a strengthening economy to achieve growth.

Advantex carries a higher debt load to support re-build of its business and for general corporate purposes, and this is a reason for increase in interest costs in the second quarter and YTD second quarter vs. corresponding periods in the previous year. This debt consists of fixed coupon non-convertible debentures which provide general working capital and a line of credit which carries a floating interest rate - a base rate plus prime rate - and which is used exclusively for growth of the core activity. The increase in prime rates during 2023 was the factor that hurt the financial performance for July-August 2023 period, but this was offset by reduction in the base rate from September 2023. Despite increase in interest costs Loss from operations before non-cash expenses was a reduction vs. corresponding periods in the previous year of $151,043 to $258,564 in second quarter and $183,442 to $545,713 in YTD second quarter.

The above improvement in Loss from operations before non-cash expenses is masked by increase in non-cash expenses. Increase in non-cash expenses is primarily on account of accretion charges which reflect outcome of prescribed accounting connected to the non-convertible debentures.

Highlights are provided in the tabulation in this news release comparing three and six months ended December 31, 2023, with three and six months ended December 31, 2022.

	3 months ended December 31 (second quarter)			6 ended  December 31 (YTD second quarter)
	23	22	Inc./(Dec)	23	22	Inc./(Dec)
`	$	$	$	$	$	$
Revenues
Merchant Cash Advance ("MCA") program	$             581,756	$             283,655	$             298,101	$          1,107,445	$             651,915	$             455,530
Reseller-Aeroplan program-Loyalty marketing	$             282,226	$             153,896	$             128,330	$             504,715	$             370,473	$             134,242
	$             863,982	$             437,551	$             426,431	$          1,612,160	$          1,022,388	$             589,772
Gross profit	$             671,301	$             342,344	$             328,957	$          1,259,088	$             756,005	$             503,083
Selling and General & administrative expenses	$             455,029	$             441,920	$               13,109	$             866,311	$             861,052	$                 5,259
Earnings/(Loss) from operations before depreciation, amortization and interest	$             216,272	$             (99,576)	$             315,848	$             392,777	$           (105,047)	$             497,824
Stated interest expense - loan payable (utilized exclusively to support 90% of funds deployed in MCA, balance 10% is from working capital available to Advantex)	$             237,570	$             107,889	$             129,681	$             463,958	$             219,823	$             244,135
Stated interest expense - 9% non-convertible debentures payable, and 12% non-convertible debentures payable (general working capital, including to support 10% of funds deployed in MCA)	$             237,266	$             202,142	$               35,124	$             474,532	$             404,285	$               70,247
(Loss) from operations before non-cash expenses	$           (258,564)	$           (409,607)	$           (151,043)	$           (545,713)	$           (729,155)	$           (183,442)
Non-cash interest expense - 1) accretion charges and restructuring bonus respecting 9% non-convertible debentures payable, 2) amortization of transaction costs respecting 9% non-convertible debentures payable and 12% non- convertible debentures payable, and 3) interest on lease	$             270,212	$             217,924	$               52,288	$             533,020	$             429,780	$             103,240
Net (loss) and comprehensive (loss)	$            (528,776)	$           (627,531)	$             (98,755)	$        (1,078,733)	$        (1,158,935)	$             (80,202)

The above tabulation is a non-GAAP presentation and is provided to assist readers in understanding Advantex's financial performance. The information is extracted from interim consolidated financial statements for three and six months ended December 31, 2023.

About Advantex

Advantex provides working capital to merchants. Advantex also provides specialized marketing programs that enable members of Aeroplan to earn Aeroplan points at participating merchants.

Advantex shares trade on the Canadian Securities Exchange under the symbol ADX. For more information go to Advantex's profile on www.sedarplus.com

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

	Note	December 31, 2023		June 30, 2023
		$		$
Assets
Current assets
Cash		$              155,598		$              340,427
Accounts receivable		66,631		84,917
Transaction credits	5	5,645,935		5,641,940
Prepaid expenses and sundry assets		1,416		1,416
		$           5,869,580		$           6,068,700
Total assets		$           5,869,580		$           6,068,700
Liabilities
Current liabilities
Loan payable	6	$           5,869,038		$           5,992,287
Loan	16	60,000		60,000
Accounts payable and accrued liabilities		3,605,951		3,590,699
		$           9,534,989		$           9,642,986
Non-current liabilities
9% non-convertible debentures payable	7	$           9,749,158		$           8,765,806
12% non-convertible debentures payable	8	300,696		278,136
Deferred fair value adjustment on 12% non-convertible debentures payable		73,691		91,993
		$         10,123,545		$           9,135,935
Total liabilities		$         19,658,534		$         18,778,921
Shareholders' deficiency
Share capital	9	$         24,530,555		$         24,530,555
Contributed surplus		7,901,617		7,901,617
Accumulated other comprehensive loss		(47,383)		(47,383)
Deficit		(46,173,744)		(45,095,010)
Total deficiency		$        (13,788,955)		$        (12,710,221)
Total liabilities and deficiency		$           5,869,580		$           6,068,700
Going concern (note 2)  and Commitments and contingencies (note 12)
The accompanying notes are an integral part of these consolidated financial statements
Approved by the Board
Director: Signed "Marc Lavine"		Director: Signed "Kelly Ambrose"
Marc Lavine		Kelly Ambrose

Advantex Marketing International Inc.
Consolidated Statements of Loss and Comprehensive Loss (unaudited)
For the three and six months ended December 31, 2023 and 2022
(expressed in Canadian dollars)

		3 months ended December 31				6 months ended December 31
	Note	2023		2022		2023		2022
		$		$		$		$
Revenues	15
Marketing activities		$              282,226		$              153,896		$              504,715		$              370,473
Interest income		581,756		283,655		1,107,445		651,915
		$              863,982		$              437,551		$           1,612,160		$           1,022,388
Direct expenses	14/15	192,681		95,207		353,072		266,383
		671,301		342,344		1,259,088		756,005
Operating expenses
Selling and marketing	14/15	151,731		140,389		289,907		275,136
General and administrative	14/15	303,298		301,531		576,404		585,916
Earnings/(Loss) from operations before depreciation, amortization and interest		216,272		(99,576)		392,777		(105,047)
Stated interest expense
Loan payable	6	237,570		107,889		463,958		219,823
9% non-convertible debentures payable	7	225,266		202,142		450,532		404,285
12% non-convertible debentures payable	8	12,000		-		24,000		-
Interest - Lease		-		-		-		180
Non-cash interest expense - accretion charges, restructuring bonus and amortization of transaction costs related to 9% non-convertible debentures payable	7	268,084		217,924		528,763		429,600
Non-cash interest expense - amortization of transaction costs related to 12% non-convertible debentures	8	2,128		-		4,257		-
Non-cash interest expense - accretion charges related to 12% non-convertible debentures payable	8	9,283		-		18,302		-
Non-cash interest expense - accretion of deferred gain related to 12% non-convertible debentures payable	8	(9,283)		-		(18,302)		-
Net (loss) and comprehensive (loss)		$             (528,776)		$             (627,531)		$          (1,078,733)		$          (1,158,935)
(Loss) per share
Basic and Diluted		$                   (0.00)		$                   (0.00)		$                   (0.00)		$                   (0.00)
The accompanying notes are an integral part of these consolidated financial statements

Advantex Marketing International Inc.
Consolidated Statements of Changes in Shareholders' Deficiency (unaudited)
For the three and six months ended December 31, 2023 and 2022
(expressed in Canadian dollars)

	Class A preference shares		Common shares		Contributed surplus		Accumulated other comprehen - sive loss		Deficit		Total
	$		$		$		$		$		$
Balance at July 1, 2022	$            3,815		$   24,526,740		$     7,742,802		$         (47,383)		$  (42,567,857)		$  (10,341,883)
Net (loss) and comprehensive (loss)	-		-		-		-		(1,158,935)		(1,158,935)
Balance at December 31, 2022	$            3,815		$   24,526,740		$     7,742,802		$         (47,383)		$  (43,726,792)		$  (11,500,818)
Balance at July 1, 2023	$            3,815		$   24,526,740		$     7,901,617		$         (47,383)		$  (45,095,010)		$  (12,710,221)
Net (loss) and comprehensive (loss)	-		-		-		-		(1,078,733)		(1,078,733)
Balance at December 31, 2023	$            3,815		$   24,526,740		$     7,901,617		$         (47,383)		$  (46,173,744)		$  (13,788,955)
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, 2023 and 2022
(expressed in Canadian dollars)

	Note	2023		2022
		$		$
Operational activities
Net (loss) for the period		$          (1,078,733)		$          (1,158,935)
Adjustments for:
Accrued and unpaid 9% non-convertible debentures payable interest - current and non-current payable	7	450,532		404,285
Accrued and unpaid 12% non-convertible debentures payable interest - current payable	8	24,000		-
Interest - Lease		-		180
Accretion charge - 9% non-convertible debentures payable	7	458,678		380,968
Restructuring bonus - 9% non-convertible debentures payable	7	56,608		38,608
Amortization of transaction costs - 9% non-convertible debentures payable	7	13,477		10,024
Amortization of transaction costs - 12% non-convertible debentures payable	8	4,257		-
Non-cash interest expense - accretion charges related to 12% non-convertible debentures payable	8	18,302		-
Non-cash interest expense - accretion of deferred gain related to 12% non-convertible debentures payable	8	(18,302)		-
		(71,181)		(324,870)
Changes in items of working capital
Accounts receivable		18,286		(12,576)
Transaction credits		(3,995)		1,532,891
Prepaid expenses and sundry assets		-		40,172
Accounts payable and accrued liabilities excluding current portion of accrued and unpaid interest on 9% non-convertible debentures payable and 12% non-convertible debentures payable		18,192		244,386
		32,483		1,804,873
Net cash generated/(used) - operating activities		$               (38,698)		$           1,480,003
Financing activities
Payment for lease		-		(12,948)
Payment of  interest - 12% non-convertible debentures payable		(22,882)		-
Proceeds of loan payable	6	6,322,140		2,320,821
(Repayment) of loan payable	6	(6,445,389)		(3,845,998)
Net cash generated/(used) - financing activities		$             (146,131)		$          (1,538,125)
Increase/(Decrease) in cash during the period		$             (184,829)		$               (58,122)
Cash at beginning of the period		340,427		93,185
Cash at end of the period		$              155,598		$                35,063
Additional information
Interest paid		$              486,840		219,823
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], Email: [email protected]