Advantex Announces Fiscal 2024 Third Quarter Results

News provided by

Advantex Marketing International Inc.

May 29, 2024, 17:05 ET

Continuing year to date improvements in revenues but flat results reflecting difficult operating environment

  • Core activity – Merchant Cash Advance program – Revenues increased 48.8% to $554,225 in third quarter and 62.2% to $1,661,670 in YTD third quarter.
  • Total Revenues increased 43.5% to $760,761 in third quarter and 52.8% to $2,372,921 in YTD third quarter.
  • Gross Profit decreased 46.4% to $219,550 in third quarter but was ahead at 26.8% to $1,478,638 in YTD third quarter.
  • Flat SG&A. $412,833 vs. $438,586 in third quarter and $1,279,144 vs. $1,299,638 in YTD third quarter.
  • Earnings/(Loss) from operations before depreciation, amortization and interest was $(193,283) in third quarter and $199,494 in YTD third quarter. Healthy turnaround of $333,309 in YTD third quarter but deterioration of $164,515 in third quarter compared to the corresponding periods in the previous year.
  • Loss from operations before non-cash expenses. Flat YTD third quarter, current year $1,227,274 compared to $1,186,391 in the corresponding period in the previous year. Higher third quarter loss, current year $681,561 compared to $457,236 in the corresponding period in the previous year.

TORONTO, May 29, 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 nine months ended March 31, 2024.

Advantex successfully pushed double digit increase in three and nine month revenues with flat selling, general & administrative costs.  

The gross profit from the secondary activity – reseller of aeroplan points as a partner of Aeroplan Inc. – continued its sustained growth. However, Advantex faced headwinds in its core activity in the shape of increase in delinquencies on its Merchant Cash Advance receivables during the third quarter. This hurt the third quarter operational performance although on YTD third basis Advantex performed better compared to corresponding period in the previous year. While Advantex believes its credit processes are robust, the current difficult economic environment driven by high interest rates and inflation is creating financial difficulties in the small independent business world and this is Advantex's market. Advantex is continuously updating, as required, its credit policies.

Advantex raised gross proceeds of $300,000 in February 2024 to support the growth of its core activity. The higher than expected delinquencies was a setback to the expected positive outcome from use of the portion of additional capital earmarked to expand MCA program.

Compared to corresponding periods in the previous year 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 third quarter and YTD third quarter compared to 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. Prime rate during current periods was 7.20% compared to 4.20% (July 2022) which increased to 6.70% by January 2023 and 7.20% by July 2023. The adverse effect of increase in prime rate was offset by reduction in the base rate from September 2023 (to 8.00% from 8.80%).

Despite the difficult circumstances Advantex managed a healthy turnaround of $333,309 in YTD third quarter in its Earnings from operations before depreciation, amortization and interest. $199,494 earnings current year compared to loss of $133,815 for the corresponding period in the previous year. As well a flat loss from operations prior to non cash expenses. YTD third quarter current loss of $1,227,274 compared to loss of $1,186,391 for the corresponding period in the previous year. 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 below tabulation:

3 months ended March 31 (Third quarter)

9 months ended  March 31 (YTD Third quarter)

24

23

Inc./(Dec)

24

23

Inc./(Dec)

$

$

$

$

$

$







Revenues





Merchant Cash Advance ("MCA") program

$             554,225

$             372,415

$             181,810

$          1,661,670

$          1,024,330

$             637,340

Reseller-Aeroplan program-Loyalty marketing

$             206,536

$             157,794

$               48,742

$             711,251

$             528,267

$             182,984

$             760,761

$             530,209

$             230,552

$          2,372,921

$          1,552,597

$             820,324

Direct Expenses





MCA program: Expense for provision against receivables, credit & collection expense

$             414,043

$                 3,314

$             410,729

$             423,572

$               10,589

$             412,983

Reseller - Aeroplan program - Loyalty marketing: Costs of loyalty rewards and marketing

$             127,168

$             117,077

$               10,091

$             470,711

$             376,185

$               94,526

$             541,211

$             120,391

$             420,820

$             894,283

$             386,774

$             507,509







Gross profit

$             219,550

$             409,818

$           (190,268)

$          1,478,638

$          1,165,823

$             312,815







Selling and General & administrative expenses

$             412,833

$             438,586

$             (25,753)

$          1,279,144

$          1,299,638

$             (20,494)







Earnings/(Loss) from operations before depreciation, amortization and interest

$           (193,283)

$             (28,768)

$             164,515

$             199,494

$           (133,815)

$             333,309







Stated interest expense - loan payable (utilized exclusively to support 90% of
funds deployed in MCA program, balance 10% is from working capital available to Advantex)

$             227,260

$             185,330

$               41,930

$             691,218

$             405,153

$             286,065

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)

$             260,268

$             243,138

$               17,130

$             734,800

$             647,423

$               87,377

Stated interest on loan

$                    750

$                      -

$                    750

$                    750

$                      -

$                    750







(Loss) from operations before non-cash expenses

$           (681,561)

$           (457,236)

$             224,325

$        (1,227,274)

$        (1,186,391)

$               40,883







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 loan (2024) - lease (2023)

$             278,973

$             246,544

$               32,429

$             811,993

$             676,324

$             135,669







Net (loss) and comprehensive (loss)

$           (960,534)

$           (703,780)

$             256,754

$        (2,039,267)

$        (1,862,715)

$             176,552

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 nine months ended March 31, 2024.

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

March 31,
2024

June 30,
2023


$

$

Assets


Current assets


Cash 

$              113,497

$              340,427

Accounts receivable

77,104

84,917

Transaction credits 

5

5,265,114

5,641,940

Prepaid expenses and sundry assets

1,416

1,416


$           5,457,131

$           6,068,700




Total assets

$           5,457,131

$           6,068,700




Liabilities


Current liabilities


Loan payable 

6

$           5,685,959

$           5,992,287

Loan

16

60,750

60,000

9% & 12% non-convertible debentures payable-Current portion of interest payable

7 & 8

1,012,641

420,211

Accounts payable and accrued liabilities

3,102,037

3,170,488


$           9,861,387

$           9,642,986




Non-current liabilities


9% non-convertible debentures payable

7

$           9,689,791

$           8,765,806

12% non-convertible debentures payable

8

545,309

278,136

Deferred fair value adjustment on 12% non-convertible debentures payable

8

110,132

91,993


$         10,345,232

$           9,135,935




Total liabilities

$         20,206,619

$         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

(47,134,277)

(45,095,010)

Total deficiency

$        (14,749,488)

$        (12,710,221)




Total liabilities and deficiency

$           5,457,131

$           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 nine months ended March 31, 2024 and 2023
(expressed in Canadian dollars)

3 months ended March 31

9 months ended March 31

Note

2024

2023

2024

2023


$

$

$

$






Revenues

15



Marketing activities

$              206,536

$              157,794

$              711,251

$              528,267

Interest income 

554,225

372,415

1,661,670

1,024,330


$              760,761

$              530,209

$           2,372,921

$           1,552,597

Direct expenses

14/15

541,211

120,391

894,283

386,774


219,550

409,818

1,478,638

1,165,823

Operating expenses




Selling and marketing

14/15

138,455

149,943

428,362

425,079

General and administrative

14/15

274,378

288,643

850,782

874,559

Earnings/(Loss) from operations before depreciation, amortization and interest

(193,283)

(28,768)

199,494

(133,815)






Stated interest expense 




Loan payable

6

227,260

185,330

691,218

405,153

9% non-convertible debentures payable

7

245,268

243,138

695,800

647,423

12% non-convertible debentures payable

8

15,000

-

39,000

-

Loan 

16

750

-

750

-

Interest - Lease

-

-

-

180

Non-cash interest expense - accretion charges, restructuring
bonus and amortization of transaction costs related to 9% non-
convertible debentures payable

7

275,734

246,544

804,497

676,144

Non-cash interest expense - amortization of transaction costs
related to 12% non-convertible debentures

8

3,239

-

7,496

-

Non-cash interest expense - accretion charges related to 12%
non-convertible debentures payable

8

11,909

-

30,211

-

Non-cash interest expense - accretion of deferred gain related
to 12% non-convertible debentures payable

8

(11,909)

-

(30,211)

-

Net (loss) and comprehensive (loss)

$             (960,534)

$             (703,780)

$          (2,039,267)

$          (1,862,715)






(Loss) per share




Basic and Diluted

$                   (0.00)

$                   (0.00)

$                   (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 nine months ended March 31, 2024 and 2023
(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)

-

-

-

-

(1,862,715)

(1,862,715)

Issuance of 9% non-convertible debentures payable (note 7)

-

-

158,815

-

-

158,815

Balance at March 31, 2023

$            3,815

$   24,526,740

$     7,901,617

$         (47,383)

$  (44,430,572)

$  (12,045,783)







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)

-

-

-

-

(2,039,267)

(2,039,267)

Balance at March 31, 2024

$            3,815

$   24,526,740

$     7,901,617

$         (47,383)

$  (47,134,277)

$  (14,749,488)







 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 nine months ended March 31, 2024 and 2023
(expressed in Canadian dollars)

Note

2024

2023


$

$

Operational activities


Net (loss) for the period

$          (2,039,267)

$          (1,862,715)

Adjustments for:


Accrued and unpaid 9% non-convertible debentures payable interest - current and non-current payable

7

695,800

647,423

Accrued and unpaid 12% non-convertible debentures payable interest - current payable

8

39,000

-

Accrued and unpaid loan interest

16

750

-

Interest - Lease

-

180

Accretion charge - 9% non-convertible debentures payable

7

699,370

592,469

Restructuring bonus - 9% non-convertible debentures payable

7

84,912

66,912

Amortization of transaction costs - 9% non-convertible debentures payable

7

20,215

16,763

Amortization of transaction costs - 12% non-convertible debentures payable

8

7,496

-

Non-cash interest expense - accretion charges related to 12% non-convertible debentures payable

8

30,211

-

Non-cash interest expense - accretion of deferred gain related to 12% non-convertible debentures payable

8

(30,211)

-


(491,724)

(538,968)




Changes in items of working capital


Accounts receivable

7,813

44,106

Transaction credits 

376,826

(1,263,228)

Prepaid expenses and sundry assets

-

40,172

Accounts payable and accrued liabilities

(68,451)

136,211


316,188

(1,042,739)

Net cash (used) - operating activities

$             (175,536)

$          (1,581,707)




Financing activities


Gross proceeds - 9% non-convertible debentures payable

-

600,000

Transaction costs - 9% non-convertible debentures payable

-

(20,713)

Gross proceeds - 12% non-convertible debentures payable

300,000

-

Transaction costs - 12% non-convertible debentures payable

(22,184)

-

Payment for lease

-

(12,948)

Payment of  interest - 12% non-convertible debentures payable 

(22,882)

-

Proceeds of loan payable

6

9,417,086

6,877,589

(Repayment) of loan payable

6

(9,723,414)

(5,919,899)

Net cash generated/(used) - financing activities

$               (51,394)

$           1,524,029




(Decrease) in cash during the period

$             (226,930)

$               (57,678)

Cash at beginning of the period

340,427

93,185

Cash at end of the period

$              113,497

$                35,507




Additional information


Interest paid 

$              635,860

$              405,153




 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: 416-560-5173, Email: [email protected]

Organization Profile

Advantex Marketing International Inc.