Advantex Announces Fiscal 2023 Results

Significant improvements in operational metrics reflect acceleration of business re-build versus same period year ago

• Revenues from core activity – Merchant Cash Advance program – increased $272,460 (23.3%) to $1,440,458.
• Advantex Revenues increased $371,022 (21.3%) to $2,110,719.
• Gross Profit, prior to one-time write-back of direct costs, increased $506,688 (50.8%) to $1,504,576.
• Reduction in SG&A. Prior to one-off SG&A comprising expenses and federal pandemic subsidies, a decrease of $156,539 (8.5%) to $1,680,872.
• Decrease in Loss from operations before depreciation, amortization and interest, and one-off direct costs & SG&A. Reduction of $663,227 (79.0%) to $176,296.
• Decrease in Loss from operations before one-off direct costs & SG&A, and non-cash expenses. Reduction of $420,888 (20.1%) to $1,669,329

TORONTO, Oct. 30, 2023 /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 fiscal year ended June 30, 2023 ("Fiscal 2023").

Improvements in financial performance reflected execution of strategies identified and implemented   during year ended June 30, 2022 ("Fiscal 2022"). The goal was to re-build Advantex business levels, initially to pre-pandemic levels and then to capitalize on a strengthening economy to achieve double digit growth. Advantex raised $1.0 million capital during Fiscal 2023. This enabled funds to be put towards accelerating the re-build of the MCA portfolio. Loyalty marketing program benefited from increase in spending on marketing activities by businesses and rebound in travel post pandemic. The outcome was evident in double digit increase in revenues of 21.3% and gross profit, prior to one-time write-back of direct costs, of 50.8% in Fiscal 2023.

Impressively, save for one off Selling, General & Administrative expense ("SG&A"), SG&A in Fiscal 2023 was reduced because of key initiatives, including closure of the corporate office. As a result, Loss from operations before depreciation, amortization and interest, and one-off direct costs & SG&A was sharply down (79.0%).

In Fiscal 2023 Advantex carried higher debt to support re-build of its business level and for general corporate purposes. Furthermore, there was increase in the interest rate on loan payable consequent to increase in prime rate. The impact of the foregoing two factors was reflected in higher cash interest cost. Despite increase in cash interest costs there was a commendable decrease in Loss from operations before one-off direct costs & SG&A, and non-cash expenses of 20.1%.

The above improvement in Loss from operations before one-off direct costs & SG&A, and non-cash expenses (20.1%) was masked by increase during Fiscal 2023 in non-cash expenses and one-off SG&A. Increase in non-cash expenses is primarily on account of accretion charges which reflect outcome of prescribed accounting connected to the non-convertible debentures. Impact of one-off direct costs & SG&A on Fiscal 2023 compared to Fiscal 2022 is set out in below tabulation.

Additional financial information is provided in the tabulation in this news release.

		Fiscal 2023		Fiscal 2022		Inc./(Dec)	Inc./(Dec)
		$		$		$	%
Revenues
Merchant Cash Advance ("MCA") program		1,440,458		1,167,998		272,460	23.3 %
Reseller - Aeroplan program - Loyalty marketing		670,261		571,699		98,562	17.2 %
		2,110,719		$    1,739,697		$        371,022	21.3 %
Gross Profit prior to one-off write-back of direct costs		$    1,504,576		$        997,888		$        506,688	50.8 %
Selling, General & Administrative ("SG&A") - Regular		1,680,872		1,837,411		(156,539)	-8.5 %
(Loss) from operations before depreciation, amortization and interest, and one- off direct costs & SG&A		$      (176,296)		$      (839,523)		$      (663,227)	-79.0 %
Interest - Loan payable		611,010		476,961		134,049
Interest - 9% non-convertible debentures payable ("9% 2025 debentures")		872,689		773,733		98,956
Interest - 12% non-convertible debentures payable ("12% debentures")		9,334		-		9,334
(Loss) from operations before one-off direct costs, SG&A and non-cash expenses		$  (1,669,329)		$  (2,090,217)		$      (420,888)	-20.1 %
One-off write-back of direct costs		(149,450)		-		149,450
One-off SG&A
Expenses		77,400		(35,063)		112,463
Federal pandemic subsidies		(1,888)		(152,034)		(150,146)
(Loss) non-cash expenses		$  (1,595,391)		$  (1,903,120)		$      (307,729)	-16.2 %
Non-cash interest expense - 1) accretion charges and restructuring bonus respecting 9% 2025 debentures, 2) amortization of transaction costs related to 9% 2025 debentures and 12% debentures, and 3) interest on lease		$        931,762		$        804,718		$        127,044	15.8 %
Net (loss) and comprehensive (loss)		$  (2,527,153)		$  (2,707,838)		$      (180,685)	-6.7 %

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 consolidated financial statements for years ended June 30, 2023, and June 30, 2022.

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.sedar.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. 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 material include, but are not limited to, changes in Advantex's economic and competitive conditions including but not limited to the industry sectors in which Advantex operates.

The statements in this news release are made 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
(expressed in Canadian dollars)

	Note	June 30, 2023		June 30, 2022
		$		$
Assets
Current assets
Cash		$                 340,427		$                   93,185
Accounts receivable	11 a	84,917		83,320
Transaction credits	11 a	5,641,940		3,312,268
Prepaid expenses and sundry assets		1,416		41,589
		$             6,068,700		$             3,530,362
Total assets		$             6,068,700		$             3,530,362
Liabilities
Current liabilities
Loan payable	5	$             5,992,287		$             4,019,685
Lease liability	18	-		12,768
Loan	19	60,000		60,000
Accounts payable and accrued liabilities		3,590,699		2,825,914
		$             9,642,986		$             6,918,367
Non-current liabilities
9% non-convertible debentures payable	6	$             8,765,806		$             6,953,878
12% non-convertible debentures payable	7	278,136		-
Deferred fair value adjustment on 12% non-convertible debentures payable	7	91,993		-
		$             9,135,935		$             6,953,878
Total liabilities		$           18,778,921		$           13,872,245
Shareholders' deficiency
Share capital	8	$           24,530,555		$           24,530,555
Contributed surplus		7,901,617		7,742,802
Accumulated other comprehensive loss		(47,383)		(47,383)
Deficit		(45,095,010)		(42,567,857)
Total deficiency		$         (12,710,221)		$         (10,341,883)
Total liabilities and deficiency		$             6,068,700		$             3,530,362
Going concern (note 2a) and Commitments and contingencies (note 13)
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)
For the years ended June 30, 2023 and 2022
(expressed in Canadian dollars)

	Note		2023		2022
			$		$
Revenues	17
Marketing activities			$                 670,261		$                 571,699
Interest income			1,440,458		1,167,998
			2,110,719		1,739,697
Direct expenses	16/17		456,693		741,809
			1,654,026		997,888
Operating expenses
Selling and marketing	16/17		551,182		636,480
General and administrative	16/17		1,205,202		1,013,834
(Loss) from operations before depreciation, amortization and interest			(102,358)		(652,426)
Stated interest expense
Loan payable	5		611,010		476,961
9% non-convertible debentures payable	6		872,689		773,733
12% non-convertible debentures payable	7		9,334		-
Interest - Lease	18		177		5,760
Non-cash interest expense - accretion charges, restructuring bonus and amortization of transaction costs related to 9% non-convertible debentures payable	6		929,641		798,958
Non-cash interest expense - amortization of transaction costs related to 12% non-convertible debentures	7		1,944		-
Non-cash interest expense - accretion charges related to 12% non-convertible debentures payable	7		6,788		-
Non-cash interest expense - accretion of deferred gain related to 12% non-convertible debentures payable	7		(6,788)		-
Net (loss) and comprehensive (loss)			$           (2,527,153)		$           (2,707,838)
(Loss) per share
Basic and Diluted	15		$                     (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
For the years ended June 30, 2023 and June 30, 2022
(expressed in Canadian dollars)

	Class A preference shares		Common shares		Contributed surplus		Accumulated other comprehen - sive loss		Deficit		Total
	$		$		$		$		$		$
Balance - July 1, 2021	$              3,815		$    24,526,740		$      7,364,720		$          (47,383)		$  (39,860,019)		$     (8,012,127)
Issuance of 9% non- convertible debentures payable (note 6)	-		-		378,082		-		-		378,082
Net (loss) and comprehensive (loss)	-		-		-		-		(2,707,838)		(2,707,838)
Balance - June 30, 2022	$              3,815		$    24,526,740		$      7,742,802		$          (47,383)		$  (42,567,857)		$  (10,341,883)
Balance - July 1, 2022	$              3,815		$    24,526,740		$      7,742,802		$          (47,383)		$  (42,567,857)		$  (10,341,883)
Issuance of 9% non- convertible debentures payable (note 6)	-		-		158,815		-		-		158,815
Net (loss) and comprehensive (loss)	-		-		-		-		(2,527,153)		(2,527,153)
Balance - June 30, 2023	$              3,815		$    24,526,740		$      7,901,617		$          (47,383)		$  (45,095,010)		$  (12,710,221)
The accompanying notes are an integral part of these consolidated financial statements

Advantex Marketing International Inc.
Consolidated Statements of Cash Flow
For the years ended June 30, 2023 and 2022
(expressed in Canadian dollars)

	Note	June 30, 2023		June 30, 2022
		$		$
Operational activities
Net (loss) for the year		$            (2,527,153)		$            (2,707,838)
Adjustments for:
Accrued and unpaid 9% non-convertible debentures payable interest - current and non-current payable	6	872,689		773,733
Accrued and unpaid 12% non-convertible debentures payable interest - current payable	7	9,334		-
Interest - Lease	18	177		5,760
Accretion charge - 9% non-convertible debentures payable	6	810,924		710,452
Restructuring bonus - 9% non-convertible debentures payable	6	95,216		73,063
Amortization of transaction costs - 9% non-convertible debentures payable	6	23,501		15,443
Amortization of transaction costs - 12% non-convertible debentures payable	7	1,944		-
Non-cash interest expense - accretion charges related to 12% non-convertible debentures payable	7	6,788		-
Non-cash interest expense - accretion of deferred gain related to 12% non-convertible debentures payable	7	(6,788)		-
		(713,368)		(1,129,387)
Changes in items of working capital
Accounts receivable		(1,597)		9,770
Transaction credits		(2,329,672)		(1,585,605)
Prepaid expenses and sundry assets		40,173		2,086
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		344,576		94,756
		(1,946,520)		(1,478,993)
Net cash (used) - operating activities		$           (2,659,888)		$           (2,608,380)
Financing activities
Gross proceeds - 9% non-convertibles debentures payable	6	$                 600,000		$             1,150,000
Transaction costs - 9%  non-convertible debentures payable	6	(20,710)		(85,616)
Gross proceeds - 12% non-convertibles debentures payable	7	400,000		-
Transaction costs - 12%  non-convertible debentures payable	7	(31,815)		-
Payment for lease		(12,945)		(77,671)
Proceeds of loan payable	5	10,235,989		8,868,861
(Repayment) of loan payable		(8,263,388)		(7,236,615)
Net cash generated - financing activities		$             2,907,131		$             2,618,959
Increase in cash during the year		$                247,242		$                   10,579
Cash at beginning of the year		93,185		82,606
Cash at end of the year		$                340,427		$                   93,185
Additional information
Interest paid		$                 611,010		$                 476,961
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]