Advantex Marketing International Inc. (CNSX:ADX) ("Advantex" or the "Company"),
a leading specialist in merchant funding and loyalty marketing programs, today
announced its results for the three and six months ended December 31, 2011.
"We are pleased to report a second successive quarter of net profit. Net profit
from operations of the Company, for the three and six months, is the highest in
over a decade. The strong results are driven by our Retail programs and confirm
our belief that the Company has set up a solid platform from which to continue
to grow its merchant base and ensure growth in its future revenues and
profitability," said Kelly Ambrose, Advantex President and Chief Executive
Officer.
Financial Highlights (ii):
(CAD)
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Three months ended December 31
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2011 2010 Change
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Retail programs - average # of
participating merchants 1,114 765 45.6%
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Retail program Revenues $4,234,000 $3,588,000 $ 646,000
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Retail program Gross Profit $3,066,000 $2,419,000 $ 647,000
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Contribution from operations before
Amortization and Interest (EBITDA (i)) $1,000,000 $ 730,000 $ 270,000
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Cash Interest $ 518,000 $ 387,000 $ (131,000)
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Contribution after Cash Interest (i) $ 482,000 $ 343,000 $ 139,000
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Amortization $ 102,000 $ 119,000 $ 17,000
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Non cash interest - Accretion $ 133,000 $ 168,000 $ 35,000
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Net Profit $ 247,000 $ 56,000 $ 191,000
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Six months ended December 31
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2011 2010 Change
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Retail programs - average # of
participating merchants 1,059 749 41.4%
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Retail program Revenues $8,069,000 $6,980,000 $1,089,000
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Retail program Gross Profit $5,857,000 $4,924,000 $ 933,000
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Contribution from operations before
Amortization and Interest (EBITDA (i)) $1,977,000 $1,605,000 $ 372,000
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Cash Interest $1,009,000 $ 785,000 $ (224,000)
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Contribution after Cash Interest (i) $ 968,000 $ 820,000 $ 148,000
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Amortization $ 194,000 $ 272,000 $ 78,000
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Non cash interest - Accretion $ 266,000 $ 341,000 $ 75,000
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Net Profit $ 508,000 $ 207,000 $ 301,000
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(i) EBITDA, and Contribution after cash interest, are non-GAAP financial
measures which do not have any standardized meaning prescribed by the issuer's
GAAP and are therefore unlikely to be comparable to similar measures presented
by other issuers. For the Company, the most directly comparable measure to
EBITDA is Contribution from operations before amortization and interest, and
Contribution after cash interest is provided to illustrate the Company's
assessment of cash generated from its operating activities.
(ii) Some numbers in the presentation under Financial Highlights may not add due
to rounding.
"We are in the process of introducing a product with digital marketing
capabilities that will enable merchants to market their products and services
through new channels including social media. Additionally, the Company recently
announced its agreement with Canadian Tire, its third affinity partner, for a
pilot program. In the coming quarters we expect to introduce new product
offerings to the small merchant marketplace, that will enable merchants to save
money as well as generate incremental revenues for the Company," said Mr.
Ambrose.
The increase in the Company's revenues and profitability is a reflection of
increase in the number of merchants participating in its programs.
The higher dollar cash interest cost is mainly a reflection of an increase in
the utilization of the line of credit facility (Loan payable on the balance
sheet) which the Company utilized to expand its Advance Purchase Marketing (APM)
program business. The APM program is the Company's premier product and source of
revenue.
About Advantex Marketing International Inc.
Advantex is a specialist in the marketing services industry, managing
white-labeled rewards accelerator programs for major affinity groups through
which their members earn bonus frequent flyer miles and/or other rewards on
purchases at participating merchants. Under the umbrella of each program,
Advantex provides merchants with marketing, customer incentives, and
additionally pre-purchase of merchants' future sales through its Advance
Purchase Marketing (APM) program. Advantex partners include over 1,150
merchants; CIBC; Aeroplan; and Canadian Tire. Advantex is traded on the Canadian
National Stock 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 belief that it has set
up a solid platform from which to continue to grow its merchant base and ensure
growth in its future revenues and profitability; the Company's expectation that
it will launch new products in the coming quarters; and other information
regarding 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, including
certain assumptions and expectations of Management. With respect to the
forward-looking information contained in this Press Release, the Company has
made assumptions regarding, among other things, the size of the market for the
Company's programs; its ability to increase merchant participation in its
programs; its ability to access future financing; continued affinity partner
participation with the Company; continued support from its providers of Loan
payable and holders of Debentures payable; current and future economic and
market conditions and the impact of same on the Company's business; ongoing and
future revenue sources; future business levels; interest and currency rates; the
appropriateness of the Company's tax filing position; ongoing consumer interest
in accumulating frequent flyer miles; and the Company's ability to manage risks
connected to collection of transaction credits.
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, among other things, changes in general
economic and market conditions; changes to regulations affecting the Company's
activities; level of merchant participation in the Company's programs;
uncertainties relating to the availability and costs of financing needed in the
future; termination of the CIBC agreement; termination of the Aeroplan
agreement; currency risks; the financial impact from failure to meet its
obligations noted under Contractual Obligations section of the Management
Discussion and Analysis ("MD&A") for the three and six month periods ended
December 31, 2011; the inability of the Company to collect under its APM
program; the Company's financial status, and other factors, including without
limitation, those listed under "General Risks and Uncertainties" and "Economic
Dependence" in MD&A for the three and six month periods ended December 31, 2011.
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 Statement of Financial Position
As at December 31, 2011 and June 30, 2011 - (Unaudited)
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December 31, 2011 June 30, 2011
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Assets
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Current assets
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Cash and cash equivalents 1,311,807 5,000
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Accounts receivable 1,063,966 842,249
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Transaction credits 13,100,514 12,408,060
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Aeronotes (note 4) - 66,451
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Prepaid expenses and sundry assets 276,265 248,541
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$ 15,752,552 $ 13,570,301
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Non-current assets
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Other asset (note 4) 100,000 100,000
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Property, plant and equipment, and
intangibles 702,943 761,177
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802,943 861,177
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Total assets $ 16,555,495 $ 14,431,478
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Liabilities
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Current liabilities
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Bank Indebtedness - 83,262
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Loan payable (note 5) 5,912,234 4,917,446
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Accounts payable and accrued liabilities 3,829,866 3,319,363
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Liabilities of discontinued operations
(note 11) 395,186 432,440
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$ 10,137,286 $ 8,752,511
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Non-current liabilities
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14% Non-convertible debentures payable
(note 6) 1,754,891 1,747,497
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12% Non-convertible debentures payable
(note 7) 5,521,672 5,300,492
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$ 7,276,563 $ 7,047,989
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Total Liabilities $ 17,413,849 $ 15,800,500
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Shareholders' equity
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Share capital (note 8) 24,110,096 24,110,096
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Contributed surplus (note 9) 729,350 726,795
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Equity portion of debentures (note 7) 2,114,341 2,114,341
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Warrants (note 6/7) 1,196,013 1,196,013
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Deficit (29,008,154) (29,516,267)
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Total equity $ (858,354) $ (1,369,022)
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Total liabilities and equity $ 16,555,495 $ 14,431,478
Commitments (note 12)
Approved by the Board:
Director: "William Polley" Director: "Kelly Ambrose"
---------------- ----------------
William Polley Kelly E. Ambrose
Advantex Marketing International Inc.
Consolidated Statement of Profit/ (Loss)
For the three and six months ended December 31, 2011 and 2010 - (Unaudited)
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For the three months For the six months
ended ended
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December 31 December 31
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2011 2010 2011 2010
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$ $ $ $
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Revenues 4,234,322 3,682,261 8,069,429 7,639,959
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Direct expenses 1,168,283 1,228,630 2,212,476 2,481,039
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Gross profit 3,066,039 2,453,631 5,856,953 5,158,920
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Operating Expenses
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Selling and marketing 925,084 746,699 1,701,413 1,577,732
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General and administrative 1,140,546 976,533 2,178,638 1,976,252
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Contribution from operations
before amortization and
interest 1,000,409 730,399 1,976,902 1,604,936
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Depreciation of property,
plant and equipment, and
intangibles 102,001 118,611 194,403 271,764
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Interest expense:
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Stated interest expense -
loan payable, debentures 517,890 386,905 1,008,724 784,872
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Non-cash interest expense
on loan payable, and
debentures 133,658 168,624 265,662 341,708
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Net income 246,860 56,259 508,113 206,592
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Comprehensive income 246,860 56,259 508,113 206,592
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Earnings per share:
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Basic 0.00 0.00 0.01 0.00
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Diluted 0.00 0.00 0.00 0.00
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Advantex Marketing International Inc.
Consolidated Statements of Changes in Equity
(Unaudited)
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Class A Equity
preference Common Contributed portion of
shares shares surplus debentures
$ $ $ $
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Balance - July 1, 2010 3,815 24,106,281 645,879 2,114,341
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Net income for the period
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Other comprehensive income
(net of tax):
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Comprehensive income for
the period
----------------------------------------------------------------------------
Employee share options:
----------------------------------------------------------------------------
Value of services
recognized 12,000
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Balance - December 31, 2010 3,815 24,106,281 657,879 2,114,341
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Balance - July 1, 2011 3,815 24,106,281 726,795 2,114,341
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Net income for the period
----------------------------------------------------------------------------
Other comprehensive income
(net of tax):
----------------------------------------------------------------------------
Comprehensive income for
the period
----------------------------------------------------------------------------
Employee share options:
----------------------------------------------------------------------------
Value of services
recognized 2,555
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Balance - December 31, 2011 3,815 24,106,281 729,350 2,114,341
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Warrants Deficit Total
$ $ $
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Balance - July 1, 2010 374,554 (29,023,988) (1,779,118)
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Net income for the period 206,592 206,592
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Other comprehensive income
(net of tax): - -
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Comprehensive income for
the period 206,592 206,592
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Employee share options:
-------------------------------------------------------------------
Value of services
recognized 12,000
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Balance - December 31, 2010 374,554 (28,817,396) (1,560,526)
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Balance - July 1, 2011 1,196,013 (29,516,267) (1,369,022)
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Net income for the period 508,113 508,113
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Other comprehensive income
(net of tax): - -
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Comprehensive income for
the period 508,113 508,113
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Employee share options:
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Value of services
recognized 2,555
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Balance - December 31, 2011 1,196,013 (29,008,154) (858,354)
Advantex Marketing International Inc.
Consolidated Statement of Cash Flow
For the six months ended December 31, 2011 and 2010 - (Unaudited)
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2011 2010
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$ $
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Cash flow provided by (used in)
----------------------------------------------------------------------------
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Operating activities
----------------------------------------------------------------------------
Net income for the period 508,113 206,592
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Adjustments for:
----------------------------------------------------------------------------
Depreciation of property, plant and
equipment, and intangibles 194,403 271,764
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Stock-based compensation 2,555 12,000
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Accretion charge for debentures 265,662 341,708
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970,733 832,064
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Changes in items of working capital
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Accounts receivable (221,717) (18,407)
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Transaction credits (692,454) (153,075)
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Aeronotes 66,451 115,671
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Prepaid expenses and sundry assets (27,724) (116,060)
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Accounts payable and accrued liabilities 510,503 437,356
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(364,941) 265,485
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Net cash generated from operating activities 605,792 1,097,549
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Investing activities
----------------------------------------------------------------------------
Purchase of property, plant and equipment, and
intangibles (136,169) (132,831)
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Net cash generated from investing activities (136,169) (132,831)
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Financing activities
----------------------------------------------------------------------------
Loan Payable 994,788 18,407
----------------------------------------------------------------------------
Debenture renewal - additional transaction
costs (37,088) -
----------------------------------------------------------------------------
Net cash generated in financing activities 957,700 18,407
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Movement in cash and cash equivalents during
the period
----------------------------------------------------------------------------
- From continuing operations 1,427,323 983,125
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- From discontinued operations (note 11) (37,254) -
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1,390,069 983,125
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Increase (decrease) in cash and cash
equivalents 1,390,069 983,125
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Cash and cash equivalents - Beginning of
period (78,262) 505,941
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Cash and cash equivalents - End of period 1,311,807 1,489,066
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