Encouraging improvement in operational metrics compared to previous periods:
- Revenues from core activity – Merchant Cash Advance program – up $35,265 (10.5%) for three months and $235,754 (29.9%) for nine months.
- Advantex Revenues up $78,106 (17.3%) for three months and $360,001 (30.2%) for nine months.
- Gross Profit improves by $41,653 (11.3%) for three months and $276,204 (31.0%) for nine months.
- Flat SG&A. Prior to Federal pandemic subsidies, increase of $19,033 (4.5%) for three months and decrease of $26,092 (2.0 %) for nine months.
- Decrease in Loss from operations before depreciation, amortization and interest, and prior to Federal pandemic subsidies. Reduction of $22,620 to $28,768 for 3 months and reduction of $305,002 to $135,703 for 9 months.
TORONTO, May 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 three and nine months ended March 31, 2023.
The operational improvement of Fiscal 2023 third quarter is not reflected at the level of loss before non-cash expenses due to end of Federal pandemic subsidies and increase in interest costs. Corresponding periods in the previous Fiscal year reflect significant Federal pandemic subsidies. The stated interest costs during Fiscal 2023 on 1) loan payable is higher primarily due to the increase of 300 bps in prime rate during Fiscal 2023, and 2) 9% non-convertible debentures payable reflects higher outstanding principal, and interest on accrued and unpaid interest.
Non-cash expenses which are to do with 9% non-convertible debentures saw an increase primarily in accretion charges which also reflect outcome of prescribed accounting connected to the January 2023 capital raise by way of 9% non-convertible debentures.
Advantex utilized a portion of the funds from the January 2023$600,000 capital raise, by way of 9% non-convertible debentures payable, to bolster its merchant cash advance ("MCA") portfolio and this is reflected in improvement in revenues and in higher Transaction credits (MCA receivables) on the balance sheet ($4,575,496 as at March 31, 2023 compared to $1,779,377 as at December 31, 2022). Advantex closed a debenture placement of $400,000 in April 2023. Using the additional capital Advantex expects to continue its operational improvement and reflect it at the results before non-cash expenses level.
Additional financial information is provided in the tabulation in this news release.
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| Three months ended March 31 |
| Nine months ended March 31 |
| March 2023 |
| March 2022 |
| Inc./(Dec) |
| March 2023 |
| March 2022 |
| Inc./(Dec) |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
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Revenues |
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Merchant Cash Advance ("MCA") program | $ 372,415 |
| $ 337,150 |
| $ 35,265 |
| $ 1,024,330 |
| $ 788,576 |
| $ 235,754 |
Reseller of Aeroplan program - Loyalty Marketing | 157,794 |
| 114,953 |
| 42,841 |
| 528,267 |
| 404,020 |
| 124,247 |
| $ 530,209 |
| $ 452,103 |
| $ 78,106 |
| $ 1,552,597 |
| $ 1,192,596 |
| $ 360,001 |
Direct expenses |
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Costs of loyalty rewards, and marketing in connection as Reseller of Aeroplan program | $ 117,077 |
| $ 83,286 |
| $ 33,791 |
| $ 376,185 |
| $ 296,402 |
| $ 79,783 |
Expense for provision against delinquent accounts, credit/collection expense - MCA program | 3,314 |
| 652 |
| 2,662 |
| 10,589 |
| 6,575 |
| 4,014 |
Gross profit | $ 409,818 |
| $ 368,165 |
| $ 41,653 |
| $ 1,165,823 |
| $ 889,619 |
| $ 276,204 |
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Selling and General & administrative expenses, prior to Federal pandemic subsidies | $ 438,586 |
| $ 419,553 |
| $ 19,033 |
| $ 1,301,526 |
| $ 1,330,324 |
| $ (28,798) |
(Loss) from operations before depreciation, amortization and interest, and prior to
Federal pandemic subsidies | $ (28,768) |
| $ (51,388) |
| $ (22,620) |
| $ (135,703) |
| $ (440,705) |
| $ (305,002) |
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Federal pandemic wage and rent subsidies | - |
| (29,632) |
| (29,632) |
| (1,888) |
| (139,753) |
| (137,865) |
(Loss) from operations before depreciation, amortization and interest | $ (28,768) |
| $ (21,756) |
| $ 7,012 |
| $ (133,815) |
| $ (300,952) |
| $ (167,137) |
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Stated interest expense - Loan payable used exclusively for MCA program | $ 185,330 |
| $ 139,600 |
| $ 45,730 |
| $ 405,153 |
| $ 334,687 |
| $ 70,466 |
| $ (214,098) |
| $ (161,356) |
| $ 52,742 |
| $ (538,968) |
| $ (635,639) |
| $ (96,671) |
Stated Interest expense - 9% non-convertible debentures payable - general working capital | $ 243,138 |
| $ 199,029 |
| $ 44,109 |
| $ 647,423 |
| $ 571,590 |
| $ 75,833 |
(Loss) from operations before depreciation, amortization, non cash interest and non cash items | $ (457,236) |
| $ (360,385) |
| $ 96,851 |
| $ (1,186,391) |
| $ (1,207,229) |
| $ (20,838) |
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Non-cash interest expense related to 9% non-convertible debentures payable |
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Accretion charges | $ 211,501 |
| $ 177,944 |
| $ 33,557 |
| $ 592,469 |
| $ 524,215 |
| $ 68,254 |
Performance bonus and amortization of transaction costs | 35,043 |
| 21,976 |
| 13,067 |
| 83,675 |
| 64,190 |
| 19,485 |
Non-cash Interest - Lease | - |
| 1,201 |
| (1,201) |
| 180 |
| 5,065 |
| (4,885) |
Net (loss) and comprehensive (loss) | $ (703,780) |
| $ (561,506) |
| $ 142,274 |
| $ (1,862,715) |
| $ (1,800,699) |
| $ 62,016 |
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 three and nine months ended March 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.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 (unaudited)
(expressed in Canadian dollars)
| Note | March 31,
2023 |
| June 30,
2022 |
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| $ |
| $ |
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Assets |
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Current assets |
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Cash |
| $ 35,507 |
| $ 93,185 |
Accounts receivable |
| 39,214 |
| 83,320 |
Transaction credits | 5 | 4,575,496 |
| 3,312,268 |
Prepaid expenses and sundry assets |
| 1,417 |
| 41,589 |
|
| $ 4,651,634 |
| $ 3,530,362 |
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Total assets |
| $ 4,651,634 |
| $ 3,530,362 |
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Liabilities |
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Current liabilities |
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Loan payable | 6 | $ 4,977,375 |
| $ 4,019,685 |
Lease liability | 15 | - |
| 12,768 |
Loan | 16 | 60,000 |
| 60,000 |
Accounts payable and accrued liabilities |
| 2,962,125 |
| 2,825,914 |
|
| $ 7,999,500 |
| $ 6,918,367 |
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Non-current liabilities |
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9% non-convertible debentures payable | 7 | $ 8,697,917 |
| $ 6,953,878 |
|
| $ 8,697,917 |
| $ 6,953,878 |
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Total liabilities |
| $ 16,697,417 |
| $ 13,872,245 |
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Shareholders' deficiency |
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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 |
| (44,430,572) |
| (42,567,857) |
Total deficiency |
| $ (12,045,783) |
| $ (10,341,883) |
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Total liabilities and deficiency |
| $ 4,651,634 |
| $ 3,530,362 |
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Going concern (note 2) and Commitments and contingencies (note 11) |
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The accompanying notes are an integral part of these consolidated financial statements |
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Approved by the Board |
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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, 2023 and 2022
(expressed in Canadian dollars)
|
| 3 months ended March 31 |
| 9 months ended March 31 |
| Note | 2023 |
| 2022 |
| 2023 |
| 2022 |
|
| $ |
| $ |
| $ |
| $ |
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Revenues | 14 |
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Marketing activities |
| $ 157,794 |
| $ 114,953 |
| $ 528,267 |
| $ 404,020 |
Interest income |
| 372,415 |
| 337,150 |
| 1,024,330 |
| 788,576 |
|
| 530,209 |
| 452,103 |
| 1,552,597 |
| 1,192,596 |
Direct expenses | 13/14 | 120,391 |
| 83,938 |
| 386,774 |
| 302,977 |
|
| 409,818 |
| 368,165 |
| 1,165,823 |
| 889,619 |
Operating expenses |
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Selling and marketing | 13/14 | 149,943 |
| 148,113 |
| 425,079 |
| 483,470 |
General and administrative | 13/14 | 288,643 |
| 241,808 |
| 874,559 |
| 707,101 |
(Loss) from operations before depreciation, amortization and interest |
| (28,768) |
| (21,756) |
| (133,815) |
| (300,952) |
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Stated interest expense - loan payable, and 9% non-convertible debentures payable | 6/7 | 428,468 |
| 338,629 |
| 1,052,576 |
| 906,277 |
Interest - Lease | 15 | - |
| 1,201 |
| 180 |
| 5,065 |
Non-cash interest expense - accretion charges, restructuring
bonus and amortization of transaction costs related to 9% non-
convertible debentures payable | 7 | 246,544 |
| 199,920 |
| 676,144 |
| 588,405 |
Net (loss) and comprehensive (loss) |
| $ (703,780) |
| $ (561,506) |
| $ (1,862,715) |
| $ (1,800,699) |
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(Loss) per share |
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Basic and Diluted | 12 | $ (0.00) |
| $ (0.00) |
| $ (0.01) |
| $ (0.01) |
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The accompanying notes are an integral part of these consolidated financial statements |
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Advantex Marketing International Inc.
Consolidated Statements of Changes in Shareholders' Deficiency (unaudited)
For the three and nine months ended March 31, 2023 and 2022
(expressed in Canadian dollars)
| Class A
preference
shares |
| Common
shares |
| Contributed
surplus |
| Accumulated
other comprehen -
sive loss |
| Deficit |
| Total |
| $ |
| $ |
| $ |
| $ |
| $ |
| $ |
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Balance at 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 7) | - |
| - |
| 378,082 |
| - |
| - |
| 378,082 |
Net (loss) and comprehensive (loss) | - |
| - |
| - |
| - |
| (1,800,699) |
| (1,800,699) |
Balance at March 31, 2022 | $ 3,815 |
| $ 24,526,740 |
| $ 7,742,802 |
| $ (47,383) |
| $ (41,660,718) |
| $ (9,434,744) |
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Balance at 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 7) | - |
| - |
| 158,815 |
| - |
| - |
| 158,815 |
Net (loss) and comprehensive (loss) | - |
| - |
| - |
| - |
| (1,862,715) |
| (1,862,715) |
Balance at March 31, 2023 | $ 3,815 |
| $ 24,526,740 |
| $ 7,901,617 |
| $ (47,383) |
| $ (44,430,572) |
| $ (12,045,783) |
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The accompanying notes are an integral part of these consolidated financial statements |
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Advantex Marketing International Inc.
Consolidated Statements of Cash Flow (unaudited)
For the three and nine months ended March 31, 2023 and 2022
(expressed in Canadian dollars)
| Note | 2023 |
| 2022 |
|
| $ |
| $ |
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|
Operational activities |
|
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Net (loss) for the period |
| $ (1,862,715) |
| $ (1,800,699) |
Adjustments for: |
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Accrued and unpaid 9% non-convertible debentures payable interest | 7 | 647,423 |
| 571,590 |
Interest - Lease | 15 | 180 |
| 5,065 |
Accretion charge - 9% non-convertible debentures payable | 7 | 592,469 |
| 524,215 |
Restructuring bonus - 9% non-convertible debentures payable | 7 | 66,912 |
| 53,759 |
Amortization of transaction costs - 9% non-convertible debentures payable | 7 | 16,763 |
| 10,431 |
|
| (538,968) |
| (635,639) |
Changes in items of working capital |
|
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|
Accounts receivable |
| $ 44,106 |
| $ 43,135 |
Transaction credits |
| (1,263,228) |
| (2,765,779) |
Prepaid expenses and sundry assets |
| 40,172 |
| 2,085 |
Accounts payable and accrued liabilities |
| 136,211 |
| (85,398) |
|
| (1,042,739) |
| (2,805,957) |
Net cash (used) - operating activities |
| $ (1,581,707) |
| $ (3,441,596) |
|
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|
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Financing activities |
|
|
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|
Gross proceeds - 9% non-convertible debentures payable | 7 | $ 600,000 |
| $ 1,150,000 |
Transaction costs - 9% non-convertible debentures payable | 7 | (20,713) |
| (85,616) |
Payment for lease | 15 | (12,948) |
| (58,255) |
Proceeds of loan payable | 6 | 6,877,589 |
| 7,394,861 |
(Repayment) of loan payable | (5,919,899) |
| (4,948,407) |
Net cash generated - financing activities |
| $ 1,524,029 |
| $ 3,452,583 |
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Increase/(Decrease) in cash during the period |
| $ (57,678) |
| $ 10,987 |
Cash at beginning of the period |
| 93,185 |
| 82,606 |
Cash at end of the period |
| $ 35,507 |
| $ 93,593 |
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Additional information |
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Interest paid |
| $ 405,153 |
| $ 334,687 |
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The accompanying notes are an integral part of these consolidated financial statements |
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SOURCE Advantex Marketing International Inc.
View original content: http://www.newswire.ca/en/releases/archive/May2023/30/c8104.html
Mukesh Sabharwal, Vice-President and Chief Financial Officer, Tel: 416-560-5173, Email: Mukesh.Sabharwal@advantex.com