Perk Labs Inc. — Management Reports 2023

Oct 31, 2023

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Letter to Shareholders for the fiscal year ended June 30, 2023

Dear Shareholders,

I am pleased to report that Advantex had a very productive year.

Improvements in financial performance reflected execution of strategies identified and implemented during the previous fiscal year. 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, enabling funds to be put towards accelerating the re-build of its merchant cash advance portfolio, which is Advantex’s core activity. Our Loyalty marketing program benefited from an increase in spending on marketing by businesses and a rebound in travel, post the pandemic. The outcome was evident in a double digit increase in revenues of 21.3% and gross profit, prior to one-off write back of direct costs, of 50.8%. Impressively, save for one off Selling, General & Administrative expenses (“SG&A”), SG&A 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 by 79.0%. Furthermore, despite increase in interest costs reflecting higher debt levels to support the business and higher interest rate on loan payable because of sharp increases in the prime rate, there was a commendable decrease of 20.1% in Loss from operations before one-off direct costs & SG&A, and non-cash expenses. This improvement of 20.1.% was partially offset by increases in non-cash expenses and one-off direct costs & SG&A. Increase in non-cash expenses was primarily on account of accretion charges which reflect outcome of prescribed accounting connected to the non-convertible debentures.

Support from our business partners was critical to our success this past year. As a follow up to investment in the previous fiscal year the principal holders of 9% non-convertible debentures invested additional capital. Improving our financial performance enabled us to secure incremental capital by issuing 12% non-convertible debentures to a non-related party. Together, these funds enabled Advantex to continue to grow its merchant cash advance program. Additional support came from the provider of the loan payable, who reduced the interest rate it charges on the loan payable facility beginning September 2023. Finally, and significantly, we renewed our agreement with Aeroplan, in September 2023, for an additional five year term expiring in August 2028. All this progress would not have been possible without the support of our staff and the Board of Directors.

There is reason to be cautiously optimistic about Advantex’s future. My optimism comes from working with the most talented, dedicated and experienced people in our industry, as well as, knowing that the market size for our products is large and accessible. Caution comes from the current inflationary and high interest environment and uncertainty in Advantex’s ability to raise the capital which is required to maintain and expand our merchant cash advance program. Growth of our merchant cash advance program is the path first to financial stability and then to prosperity.

Thank you for your support. I wish you the best for coming twelve months.

“Kelly E. Ambrose” Kelly E. Ambrose President and CEO October 30, 2023

This letter to shareholders 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 letter to shareholders are made as 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.