ADX: TSX
TORONTO, Nov. 11 /CNW/ - Advantex Marketing International Inc. (TSX:ADX)
today reported first quarter results for the three months ended September 30,
2005.
Sales and Fees for the three-month period ended September 30, 2005 were
$17.9 million, compared with $17.7 million in the same period in the previous
year. Gross Contribution (defined as Sales and Fees less Direct Costs) was
$1.5 million for the quarter, compared to $1.6 million last year. Operating
expenses, consisting of selling, general and administrative costs were
$2.2 million, compared to $2.4 million last year. The Net Loss from Continuing
Operations for the three-month periods ended September 30, 2005 and 2004 was
$1.0 million. The Net Loss was $0.9 million, compared to $0.8 million last
year. As at September 30, 2005, the Company had Cash and Cash Equivalents of
$2.3 million compared to $3.0 million at June 30, 2005. Working capital as at
September 30, 2005 was $2.3 million versus $3.0 million at June 30, 2005.
"The year-over-year results do not reflect the recent positive changes
that have taken place, and are continuing to be made, in the business," said
G. Randall Munger, Chairman and Chief Executive Officer of Advantex. "A major
restructuring of the business began in October, beginning with the appointment
of Kelly Ambrose to the position of President and Chief Operating Officer.
Kelly has had extensive experience in managing companies for growth and
profitability. In November, Advantex announced that annual operating costs
would be cut by more than $1.5 million through selective staff reductions,
lower occupancy costs and reductions in other overhead expenses. The positive
impact of these changes will begin to be seen in the third and fourth quarters
of this reporting year ending June 30, 2006."
"In addition to the restructuring and cost reductions, revenue
enhancement initiatives are also underway, including an expanded merchant
working capital program offered in connection with the Company's merchant
loyalty programs. The merchant working capital program enables us to expand
our merchant partner base and increase profit margins."
About Advantex Marketing International Inc.
Advantex Marketing International Inc. is a leading marketing services
company, specializing in integrated marketing solutions for its Merchant and
Channel Partner clients. Advantex offers a range of products and services
including coalition loyalty rewards programs, online shopping malls, direct
marketing, online and email promotion, and data capture and award processing
systems. Advantex loyalty partners include CIBC, United Airlines, Delta Air
Lines, The New York Times, Alaska Airlines, US Airways, and other major North
American corporations, as well as a growing list of restaurants, online
retailers, golf courses, small inns and resorts. Advantex is traded on the
Toronto Stock Exchange under the symbol "ADX". For additional information on
Advantex, please visit www.advantex.com.
This press release may include statements about expected future events
and/or financial results that are forward-looking in nature and subject to
risks and uncertainties. Advantex cautions that actual performance will be
affected by a number of factors, many of which are beyond its control. Future
events and results may vary substantially from what Advantex currently
foresees. Discussion of the various factors that may affect future results is
contained in Advantex's recent filings with Canadian securities regulatory
authorities.
ADVANTEX MARKETING INTERNATIONAL INC.
CONSOLIDATED FINANCIAL STATEMENTS
For the period ended September 30, 2005
The accompanying consolidated financial statements have been prepared by
management and approved by the Board of Directors of the Company. Management
is responsible for the information and representations contained in these
consolidated financial statements and other sections of this report.
An auditor has not performed a review of these financial statements.
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ADVANTEX MARKETING INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(unaudited - Note 1)
September 30, June 30,
AS AT 2005 2005
(in thousands) ($) ($)
ASSETS
Current:
Cash and cash equivalents 2,282 2,971
Accounts receivable 1,076 1,239
Purchased receivables 2,019 2,363
Prepaid expenses and sundry assets 179 225
------------ ------------
5,556 6,798
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Long Term:
Capital and other assets 817 874
Deferred financing charges 267 293
------------ ------------
1,084 1,167
------------ ------------
TOTAL ASSETS 6,640 7,965
------------ ------------
------------ ------------
LIABILITIES
Current:
Accounts payable and accrued liabilities 3,297 3,844
Long Term:
Convertible debenture payable 3,505 3,460
------------ ------------
TOTAL LIABILITIES 6,802 7,304
------------ ------------
SHAREHOLDERS' EQUITY
Capital Stock
Class A preference shares 4 4
Common shares 21,498 21,463
------------ ------------
21,502 21,467
Contributed surplus 60 60
Equity portion of convertible debenture 880 880
Deficit (22,604) (21,746)
------------ ------------
(162) 661
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 6,640 7,965
------------ ------------
------------ ------------
(see accompanying notes)
ADVANTEX MARKETING INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF NET LOSS
(unaudited - Note 1)
THREE MONTHS
(in thousands, except net loss per common share) ENDED SEPTEMBER 30
2005 2004
($) ($)
REVENUE
Sales and fees 17,898 17,674
Direct costs 16,438 16,079
------------ ------------
1,460 1,595
OPERATING EXPENSES
Selling 971 1,130
General and administrative 1,206 1,236
------------ ------------
2,177 2,366
LOSS BEFORE AMORTIZATION, INTEREST
AND INCOME TAXES (717) (771)
------------ ------------
Amortization 66 88
Interest 175 160
------------ ------------
241 248
------------ ------------
NET LOSS - CONTINUING OPERATIONS (958) (1,019)
NET INCOME - DISCONTINUED OPERATIONS 100 222
------------ ------------
NET LOSS (858) (797)
------------ ------------
------------ ------------
EARNINGS (LOSS) PER COMMON SHARE
- Continuing Operations (0.02) (0.02)
- Discontinued Operations 0.00 0.00
------------ ------------
NET LOSS PER COMMON SHARE (0.02) (0.02)
------------ ------------
------------ ------------
(see accompanying notes)
ADVANTEX MARKETING INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF DEFICIT
(unaudited - Note 1)
THREE MONTHS
(in thousands) ENDED SEPTEMBER 30
2005 2004
($) ($)
BALANCE AT THE BEGINNING OF THE PERIOD (21,746) (20,742)
Net Loss (858) (797)
------------ ------------
BALANCE AT THE END OF THE PERIOD (22,604) (21,539)
------------ ------------
------------ ------------
(see accompanying notes)
ADVANTEX MARKETING INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited - Note 1)
THREE MONTHS
(in thousands) ENDED SEPTEMBER 30
2005 2004
($) ($)
OPERATING ACTIVITIES
Net loss - continuing operations (958) (1,019)
Items not affecting cash
Amortization of capital assets 66 88
Accretion charge 45 42
Amortization of deferred financing charges 26 17
Issue of common shares 35 -
------------ ------------
(786) (872)
Changes in non-cash working capital items 7 340
------------ ------------
Cash used in operating activities (779) (532)
INVESTING ACTIVITIES
Purchase of capital assets (9) (20)
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CONTINUING OPERATIONS (788) (552)
DISCONTINUED OPERATIONS 100 (118)
Cash and cash equivalents at the beginning of
the period 2,970 2,337
------------ ------------
CASH AND CASH EQUIVALENTS AT THE END OF THE
PERIOD 2,282 1,667
------------ ------------
------------ ------------
ADDITIONAL INFORMATION
Interest paid 206 200
------------ ------------
------------ ------------
(see accompanying notes)
ADVANTEX MARKETING INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS
For the three months ended September 30, 2005 (unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The interim unaudited financial statements for the three months ended
September 30, 2005 have been prepared on a consistent basis with the
Company's annual consolidated financial statements for the year ended
June 30, 2005 and should be read in conjunction with the accounting
policies and other disclosures in those consolidated financial
statements. The enclosed consolidated financial statements do not
include all the disclosures required by generally accepted accounting
principles applicable to annual financial statements.
2. CAPITAL STOCK AND INCENTIVE WARRANTS
On July 12, 2005, the Company issued 500,000 common shares to CIBC,
by way of a private placement, in consideration of: i) the signing of
a long-term agreement to continue Advantex's merchant-based loyalty
programs and ii) the agreement to cancel CIBC's rights under a
previous agreement to receive additional Incentive Warrants to
purchase Advantex common shares. Under the terms of the private
placement, the 500,000 common shares are subject to a resale
restriction of four months. Prior to July 12, 2005, the additional
Incentive Warrants which may be awarded collectively to CIBC and Air
Canada totalled 54,824,026. As a result of the new long-term
agreement with CIBC, this was reduced to 27,412,013, all in respect
of Air Canada.
Issued Common Shares
Number Amount
Balance as at June 30, 2005 58,493,831 $ 21,462,938
Issue of common shares 500,000 35,000
Balance as at September 30, 2005 58,993,831 $ 21,497,938
3. SUBSEQUENT EVENT
2,857,500 stock options were outstanding at September 30, 2005.
Subsequent to September 30, 2005, the Company granted 2,000,000 stock
options to the new President and Chief Operating Officer. These stock
options have an exercise price of $0.07 per common share and expire
October 27, 2010, vesting equally over a three-year period. The
Company calculated the fair value of the stock options issued during
the period using the Black-Scholes option pricing model and
determined their value to be immaterial. Accordingly, no expense has
been recorded in these financial statements upon the issue of these
options. The assumptions used in the model were a risk free interest
rate of 4.4%, an expected life of five years, an expected volatility
of 10% and no expected dividends on the common shares.
4. COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to conform
to the presentation adopted in the current year.
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%SEDAR: 00004122E
