Advantex Marketing International Inc. (CSE:ADX) ("Advantex" or the "Company"), a
leading specialist in the marketing services industry, today announced its
results for the three and nine months ended March 31, 2014. All currency amounts
are in Canadian dollars unless otherwise noted.
"Our results for the current quarter are an improvement over the corresponding
period in the previous year, and we closed the gap between current year-to-date
results to the corresponding period in the previous year. This was an
achievement in a difficult operating environment reflecting primarily the
decision by our affinity partner Canadian Imperial Bank of Commerce ("CIBC") to
sell a significant part of its credit card portfolio to The Toronto-Dominion
Bank ("TD"). We have a solid relationship with CIBC, and they support our
efforts to develop a parallel program for TD. We are in an advanced stage of
discussion with TD to operate a rewards accelerator program for TD's credit card
portfolio. A successful outcome will generate future growth for Advantex, and
counter the significant effect on our revenues in the aftermath of the decision
by CIBC," said Kelly Ambrose, Advantex President and Chief Executive Officer.
"The strategy of developing new affinity partnerships helped us financially. We
opened our relationship with Aimia Canada Inc. ("Aimia"), the owner of Aeroplan
loyalty program, in 2010, and current year-to-date this relationship gave about
12% of our gross profit, a 100% increase over corresponding period in the
previous year, which significantly offset the decline in the gross profit from
the program we operate in partnership with CIBC. The Company's refinancing in
December 2013 significantly improved the capital structure by reducing the fully
diluted common shares, and reduced the interest cost which in turn helped our
financial performance," said Mr. Ambrose.
"An additional positive development is the successful completion of our pilot in
partnership with Caesars Entertainment Corporation ('Caesars") and its Total
Rewards loyalty program, clearing the way for a full program roll out, in the
next twelve months, across certain cities in the United States. A multi-year
agreement with Caesars is under discussion. It will take time to develop and
launch this program, but it has a transformational possibility for Advantex,"
said Mr. Ambrose.
The financial results and their discussion are provided in the interim
consolidated financial statements, and management's discussion and analysis for
the three and nine months ended March 31, 2014. They are available under
Advantex's profile on www.SEDAR.com.
About Advantex Marketing International Inc.
Advantex is a specialist in the marketing services industry. Advantex partners
with CIBC, and Aimia. On a combined basis, Advantex has contractual marketing
access to about five million Canadian consumers with above-average personal and
household income. Advantex's merchant partner base currently consists of over
1,700 merchants operating in several business segments: restaurants; golf
courses; independent inns, resorts and selected hotels; spas; retailers of men's
and ladies fashion, footwear and accessories; retailers of sporting goods;
florists and garden centres; book and newspaper stores; health and beauty
centres; dry cleaners; gift stores; home decor; automotive dealers, service
centers; and tire dealerships many of which are leaders in their respective
business segment.
Advantex is traded on the Canadian Securities Exchange under the symbol "ADX".
For additional information on Advantex, please visit www.advantex.com.
Forward-Looking Information
This Press Release contains certain "forward-looking information". All
information, other than information comprised of historical fact, that addresses
activities, events or developments that the Company believes, expects or
anticipates will or may occur in the future constitutes forward-looking
information. Forward-looking information is typically identified by words such
as: anticipate, believe, expect, goal, intend, plan, will, may, should, could
and other similar expressions. Such forward-looking information relates to,
without limitation, information regarding the Company's: expectation of a
successful outcome from the discussions with TD; expectation of future prospects
on its business from a relationship with TD; expectation of a successful outcome
from the discussions with Caesars; expectation of future prospects on its
business from a relationship with Caesars; and other information regarding the
Company's financial and business prospects and financial outlook is
forward-looking information.
Forward-looking information reflects the current expectations or beliefs of the
Company based on information currently available to the Company.
Forward-looking information is subject to a number of risks, uncertainties and
assumptions that may cause the actual results of the Company to differ
materially from those discussed in the forward-looking information, and even if
such actual results are realized or substantially realized, there can be no
assurance that they will have the expected consequences to, or effects on the
Company. Factors that could cause actual results or events to differ materially
from current expectations include those listed under "General Risks and
Uncertainties" and "Economic Dependence" in the Company's Management's
Discussion and Analysis for the three and nine months ended March 31, 2014.
All forward-looking information speaks only as of the date on which it is made
and, except as may be required by applicable securities laws, the Company
disclaims any intent or obligation to update any forward-looking information,
whether as a result of new information, future events or results or otherwise.
Although the Company believes that the assumptions inherent in the
forward-looking information are reasonable, forward-looking information is not a
guarantee of future performance and accordingly undue reliance should not be put
on such information due to the inherent uncertainty therein.
Advantex Marketing International Inc.
Consolidated Statements of Financial Position - (unaudited)
(expressed in Canadian dollars)
March 31, 2014 June 30, 2013
Assets
Current assets
Cash and cash equivalents $ 949,229 $ 1,773,672
Accounts receivable 949,420 599,339
Transaction credits (note 5) 12,598,027 13,632,654
Inventory (note 6) 101,930 139,985
Prepaid expenses and sundry assets 269,829 273,519
$ 14,868,435 $ 16,419,169
Non-current assets
Property, plant and equipment (note 7a) $ 260,693 $ 299,528
Intangible assets (note 7b) 443,017 539,545
$ 703,710 $ 839,073
Total assets $ 15,572,145 $ 17,258,242
Liabilities
Current liabilities
Loan payable (note 8) $ 7,763,271 $ 7,099,371
Accounts payable and accrued liabilities 4,096,871 3,420,130
14% Non-convertible debentures payable
(note 9) - 1,736,298
12% Non-convertible debentures payable
(note 10) - 6,055,336
$ 11,860,142 $ 18,311,135
Non-current Liabilities
12% Non-convertible debentures payable
(note10) $ 4,609,639 $ -
Total Liabilities $ 16,469,781 $ 18,311,135
Shareholders' deficiency
Share capital (note 11) $ 24,530,555 $ 24,110,096
Contributed surplus (note 12) 4,090,382 808,167
Equity portion of debentures (note 10/12) - 2,114,341
Warrants (note 9/10/12) - 1,167,874
Deficit (29,518,573) (29,253,371)
Total deficiency $ (897,636) $ (1,052,893)
Total liabilities and deficiency $ 15,572,145 $ 17,258,242
Economic and Financial dependence (note 2)
Commitments and Contingencies (note 14)
The accompanying notes are an integral part of these consolidated financial
statements.
Approved by the
Board:
Director: Signed "William Polley" Director: Signed "Kelly Ambrose"
----------------------- -----------------------
William Polley Kelly E. Ambrose
Advantex Marketing International Inc.
Consolidated Statements of Income / (Loss) and Comprehensive Income / (Loss)
For the three and nine months ended March 31, 2014 and March 31, 2013 - (unaudited)
(expressed in Canadian dollars)
Three months ended Nine months ended
March 31 March 31
2014 2013 2014 2013
$ $ $ $
Revenues 3,625,013 3,593,094 12,782,054 12,424,487
Direct expenses 1,436,273 1,310,059 4,776,276 4,102,083
------------ ------------ ------------ ------------
2,188,740 2,283,035 8,005,778 8,322,404
Operating Expenses
Selling and marketing 840,528 895,397 2,737,975 2,783,148
General and
administrative 1,147,159 1,156,597 3,509,167 3,242,239
------------ ------------ ------------ ------------
Earnings from operations
before depreciation,
amortization and
interest 201,053 231,041 1,758,636 2,297,017
Interest expense:
Stated interest expense
- loan payable, and
debentures 435,165 503,712 1,462,813 1,534,387
Non-cash interest
expense on debentures 51,611 152,112 155,944 443,392
------------ ------------ ------------ ------------
(285,723) (424,783) 139,879 319,238
Write-off of investment - - - 100,000
Depreciation of
property, plant and
equipment, and
amortization of
intangible assets 110,343 141,892 405,081 388,012
------------ ------------ ------------ ------------
Net loss and
Comprehensive loss $(396,066) $(566,675) $(265,202) $(168,774)
Earnings per share
Basic and Diluted
(note 15) $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 Deficiency
For the nine months ended March 31, 2014 and March 31, 2013 - (unaudited)
(expressed in Canadian dollars)
Class A Equity
preference Common Contributed portion of
shares shares surplus debentures
$ $ $ $
Balance - July 1, 2012 3,815 24,106,281 793,198 2,114,341
Net loss and
comprehensive loss for
the period
Employee stock option:
value of services
recognized 14,969
Partial early prepayment
of debentures (notes 9
and 10)
Balance - March 31, 2013 3,815 24,106,281 808,167 2,114,341
Balance - July 1, 2013 3,815 24,106,281 808,167 2,114,341
Net loss and
comprehensive loss for
the period
Transfer to Contributed
surplus (notes 9,10,
and 12) 3,282,215 (2,114,341)
Issue of common shares
as part of refinancing
of debentures (notes 10
and 11) 420,459
Balance - March 31, 2014 3,815 24,526,740 4,090,382 -
Warrants Deficit Total
$ $ $
Balance - July 1, 2012 1,196,013 (29,289,624) (1,075,976)
Net loss and
comprehensive loss for
the period (168,774) (168,774)
Employee stock option:
value of services
recognized 14,969
Partial early prepayment
of debentures (notes 9
and 10) (28,139) (28,139)
Balance - March 31, 2013 1,167,874 (29,458,398) (1,257,920)
Balance - July 1, 2013 1,167,874 (29,253,371) (1,052,893)
Net loss and
comprehensive loss for
the period (265,202) (265,202)
Transfer to Contributed
surplus (notes 9,10,
and 12) (1,167,874) -
Issue of common shares
as part of refinancing
of debentures (notes 10
and 11) 420,459
Balance - March 31, 2014 - (29,518,573) (897,636)
The accompanying notes are an integral part of these consolidated financial
statements.
Advantex Marketing International Inc.
Consolidated Statements of Cash Flow
For the nine months ended March 31, 2014 and March 31, 2013 - (unaudited)
(expressed in Canadian dollars)
31-03-2014 31-03-2013
$ $
Cash flow provided by (used in)
Operating activities
Net loss for the period $ (265,202) $ (168,774)
Adjustments for:
Write-off of investment - 100,000
Depreciation of property, plant &
equipment, and amortization of
intangible assets 405,081 388,012
Stock based compensation - 14,969
Accretion charge for debentures 155,944 443,392
------------------------------------
295,823 777,599
Changes in items of working capital
Accounts receivable (350,081) 602,245
Transaction credits 1,034,627 260,084
Inventory 38,055 105,995
Prepaid expenses and sundry assets 3,690 (157,764)
Accounts payable and accrued
liabilities 676,741 (754,122)
------------------------------------
1,403,032 56,438
Net cash provided by (used in) operating
activities 1,698,855 834,037
Investing activities
Purchase of property, plant and
equipment, and intangible assets (269,718) (511,323)
------------------------------------
Net cash (used in) investing activities (269,718) (511,323)
Financing activities
Proceeds from loan payable 663,900 431,131
Partial early prepayment of debentures
(notes 9 and 10) - (376,033)
Payments on maturity / retirement of
debentures (notes 9 and 10) (7,895,967) -
Proceeds from refinancing debentures
(note 10) 5,159,000 -
Transaction costs, debenture:
refinancing (note 10), partial early
repayment (180,513) (8,700)
------------------------------------
Net cash (used in) generated from
financing activities (2,253,580) 46,398
Increase (decrease) in cash and cash
equivalents during the period $ (824,443) $ 369,112
------------------------------------
- From continuing operations (681,789) 460,982
- From discontinued operations (note
17) (142,654) (91,870)
------------------------------------
Increase (decrease) in cash and cash
equivalents during the period $ (824,443) $ 369,112
Cash and cash equivalents - Beginning of
period 1,773,672 1,084,773
Cash and cash equivalents - End of
period $ 949,229 $ 1,453,885
Additional Information
Interest paid $ 1,521,082 $ 1,729,349
For purposes of the cash flow statement,
cash comprises:
Cash $ 944,229 $ 1,448,885
Term deposits $ 5,000 $ 5,000
----------------------------------
$ 949,229 $ 1,453,885
----------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Advantex Marketing International Inc.
Mukesh Sabharwal
Vice-President and Chief Financial Officer
Tel: 905-470-9558 ext. 249
E-mail: Mukesh.sabharwal@advantex.com
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