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February 12, 2019

Flow Capital Announces 2018 Year End and Fourth Quarter Results

Flow Capital Announces 2018 Year End and Fourth Quarter Results

– Records Recurring Revenues from Royalties, Interest and Fees of $2.0 million and Free Cash Flow(1) of $0.7 million in Q4 2018 –

TORONTO, Ontario, February 11, 2019 – Flow Capital Corp. (TSXV: FW) (“Flow Capital”) today announced its financial and operating results for the three-month and twelve-month periods ended December 31, 2018. Financial references are in Canadian dollars unless otherwise specified.

2018 Fourth Quarter Highlights

  • Recurring revenue from royalties and interest of $1,209,000
  • Recurring revenue from Global Partners fee income of $855,000
  • Adjusted EBITDA(1) of $411,000
  • Free Cash Flow(1) of $703,000
  • Alex Baluta has been appointed Chief Executive Officer and Robb McLarty will continue in the role of Chief Investment Officer

“The refocused investment strategy in place since the end of 2016 continues to generate positive returns for shareholders” said Alex Baluta, Chief Executive Officer of Flow. “Three of the twelve new investments since 2016 have been bought-out, returning 1.74X cash-on-cash. We expect our portfolio to continue generating net positive cash flows from growing, recurring royalty and interest payments, royalty buyouts, and realizations of equity positions.”

Financial Highlights

Canadian dollars

Three months ended December 31, 2018

Three months ended December 31, 2017 Year ended December 31, 2018

Year ended December 31, 2017

Revenues

$           (991,440)

$       (2,870,932)

$          4,594,086

$       (9,603,221)

Recurring revenues from royalties and interest

        1,209,263

        1,133,230

        4,597,550

  4,692,908

Recurring revenue from Global Partners fee income

        855,109

        –

        1,851,417

  –

Adjusted EBITDA(1)

                411,364

                  65,313

            1,873,021

            4,150,069

Free Cash Flow(1)

                703,434

                701,050

                676,620

            4,438,293

Profit/(Loss) for the period

          (2,458,672)

(3,339,863)

            3,030,163

       (11,351,423)

Book Value per outstanding share(2)

0.3593

0.2084

0.3593

0.2084

Basic Earnings/(Loss) per share

               (0.0282)

               (0.0288)

             0.0578

               (0.1068)

Diluted Earnings/(Loss) per share

               (0.0282)

               (0.0288)

              0.0578

               (0.1068)

Weighted diluted average number of shares outstanding

109,186,393

133,746,009

66,944,650

133,741,120

(1) Adjusted EBITDA, Free Cash Flow and Net Asset Value per outstanding share are non-IFRS measures. Refer to section Definition of Non-IFRS Measures for further explanation and definitions.
(2) Calculated by taking Total Shareholders’ Equity as reported on the Statements of Financial Position over the number of outstanding common shares.

Recurring revenues from royalties and interest

Recurring royalties and interest earned were $1,209,000 and $4,598,000 for the three-month (Q4 2018) and twelve-month (YTD 2018) periods, respectively, compared to $1,133,000 and $4,693,000 for the corresponding periods in 2017. Royalties and interest for Q4 2018 was 7% higher than the same period in 2017.

Recurring revenues from Global Partners fee income

Global Partners fee income was $855,000 in Q4 2018 including the $50,000 amortization of deferred income. There has been solid growth in the income earned from this business since being acquired in Q2 2018.

Non-recurring revenues from buyouts, equity returns and fees

Cash of $76,000 and $1,413,00 was generated during Q4 2018 from the sale of shares in Lattice, and the Frequentz royalty buyout, respectively.

Revenues

Revenues as reported under IFRS were $(991,000) and $4,594,000 for Q4 2018 and YTD 2018 respectively, compared to $(2,871,000) and $(9,603,000) for the corresponding periods in 2017. With the adoption of IFRS 9, certain non-cash items are recognized in revenue.

Revenues in the quarterly period were impacted by IFRS 9 net non-cash items of $(2,525,000) compared to $(4,024,000) for the same period in 2017. The non-cash amount of $(2,525,000) was made up of $6,653,000 for adjustments to fair value, $(9,827,000) realized loss on investments written-off that were previously written-down to zero, and $650,000 for foreign exchange gains. Included in the adjustments to fair value were: 1) $(1,459,000) for the decrease in the market value of shares held in investee companies, 2) $9,944,000 for a reversal of the fair value adjustment of three legacy investments written-off where Flow Capital is now pursing legal measures in order to recover shareholder value and 3) $(2,040,000) for the write-down charge on the Solar Brokers investment.

Revenues in the annual period were negatively impacted by net non-cash items of $3,126,000 compared to $17,390,000 in 2017. This non-cash amount relates to $14,017,000 adjustments to fair value, $(17,932,000) for investments written-off and $788,000 for unrealized foreign exchange gain.

Operating Expense

Total operating expenses were $1,634,000 and $5,760,000 for Q4 2018 and YTD 2018, respectively, compared to $1,196,000 and $3,963,000 for the corresponding periods in 2017. The change in the quarterly period was due to $567,000 in operating costs incurred by the LOGiQ business during Q4 2018, as well as $409,000 in amortization cost of the Global Partners intangible asset. These increases were partially offset by $106,000 in lower salary costs and $394,000 in lower withholding tax expense.

The increase in operating expenses in the annual period is due to $706,000 restructuring costs and $1,114,000 in operating costs incurred by the LOGiQ business since the acquisition in Q2 2018.

Adjusted EBITDA(1)

Adjusted EBITDA(1) was $411,000 and $1,873,000 for Q4 2018 and YTD 2018, respectively, compared to $65,000 and $4,150,000 for the corresponding periods in 2017. The increase in the quarterly period was due to $192,000 Adjusted EBITDA(1) generated by the LOGiQ business and the $283,000 realized gain on the Frequentz royalty buyout. The change in the annual period was due to the $3,000,000 realized gain earned in 2017 on the buyout of the Aquam investment that was partially offset by the $474,000 Adjusted EBITDA(1) earned by the LOGiQ business since its acquisition in June 2018.

Free Cash Flow(1)

Free Cash Flow(1) was $703,000 and $677,000 for Q4 2018 and YTD 2018, respectively, compared to $701,000 and $4,438,000 for the corresponding periods in 2017. The change in the annual period was primarily due to the buyout of the Aquam investment in 2017 that generated $3,533,000 in Free Cash Flow(1).

Profit (Loss) After Taxes

Profit (Loss) after taxes was $(2,459,000) and $3,030,000 for Q4 2018 and YTD 2018, respectively, compared to $(3,340,000) and $(11,351,000) for the corresponding periods in 2017. The improvement in the quarterly and annual period was primarily due to a combination of non-cash items, the most significant of which was the bargain purchase gain of $5,459,000 recorded in Q2 2018 and the change over the reporting periods in the realized loss from investments written-off and adjustments of fair value totaling $944,000 and $12,588,000 respectively.

Assets

 

 As at December 31, 2018

 As at December 31, 2017

Cash and cash equivalents

$8,607,686

$7,534,383

Investments at fair value

24,075,839

22,289,157

Intangible asset

12,115,869

Total assets

56,665,349

39,392,563

As of today, Flow Capital has $8.3 million held in cash and cash equivalents.  

Conference Call Details

Flow Capital will host a conference call to discuss these results at 8:00 a.m. Eastern Time, Tuesday, February 12, 2019. Participants should call (647) 427-2311 or (866) 521-4909 and ask an operator for the Flow Capital earnings call. Please dial in 10 minutes prior to the call to secure a line. A replay will be available shortly after the call. To access the replay, please dial (416) 621-4642 or (800) 585-8367 and enter access code 5283308. The replay recording will be available until 11:59 p.m. Eastern Time, February 19, 2018.

An audio recording of the conference call will be also available on the investors’ page of Flow Capital’s website at www.flowcap.com/financials.

About Flow Capital

Based in Toronto, Flow Capital Corp. is a diversified alternative asset investor and advisor, operating two divisions: an investment operation providing revenue-linked capital to emerging growth businesses, and an institutional advisory sales platform providing pension funds, charities and endowment clients with access to leading institutional money managers from around the world. Learn more at www.flowcap.com.

Forward-Looking Information and Statements

This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information contained herein may include, but is not limited to, information with respect to: prospective financial performance; including the Company’s opinion regarding the current and future performance of its portfolio, expenses and operations; anticipated cash needs and need for additional financing; anticipated funding sources; future growth plans; royalty acquisition targets and proposed or completed royalty transactions; estimated operating costs; estimated market drivers and demand; business prospects and strategy; anticipated trends and challenges in the Company’s business and the markets in which it operates; the amount and timing of the payment of dividends by the Company; and the Company’s financial position. By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.

An investment in securities of the Company is speculative and subject to a number of risks including, without limitation, risks relating to: the need for additional financing; the relative speculative and illiquid nature of an investment in the Company; the volatility of the Company’s share price; the Company’s limited operating history; the Company’s ability to generate sufficient revenues; the Company’s ability to manage future growth; the limited diversification in the Company’s existing investments; the Company’s ability to negotiate additional royalty purchases from new investee companies; the Company’s dependence on the operations, assets and financial health of its investee companies; the Company’s limited ability to exercise control or direction over investee companies; potential defaults by investee companies and the unsecured nature of the Company’s investments; the Company’s ability to enforce on any default by an investee company; competition with other investment entities; tax matters, including the potential impact of the Foreign Account Tax Compliance Act on the Company; the potential impact of the Company being classified as a Passive Foreign Investment Company (“PFIC”); the Company’s ability to pay dividends in the future and the timing and amount of those dividends; reliance on key personnel, particularly the Company’s founders; dilution of shareholders’ interest through future financings; and general economic and political conditions; as well as the risks discussed in the joint management information circular of the Company dated May 2, 2018 and the risks discussed herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

In connection with the forward-looking information and forward-looking statements contained in this press release, the Company has made certain assumptions. Assumptions about the performance of the Canadian and U.S. economies over the next 24 months and how that will affect the Company’s business and its ability to identify and close new opportunities with new investees are material factors that the Company considered when setting its strategic priorities and objectives, and its outlook for its business.

Key assumptions include, but are not limited to: assumptions that the Canadian and U.S. economies relevant to the Company’s investment focus will remain relatively stable over the next 12 to 24 months; that interest rates will not increase dramatically over the next 12 to 24 months; that the Company’s existing investees will continue to make royalty payments to the Company as and when required; that the businesses of the Company’s investees will not experience material negative results; that the Company will continue to grow its portfolio in a manner similar to what has already been established; that tax rates and tax laws will not change significantly in Canada and the U.S.; that more small to medium private and public companies will continue to require access to alternative sources of capital; that the Company will have the ability to raise required equity and/or debt financing on acceptable terms; and that the Company will have sufficient free cash flow to pay dividends. The Company has also assumed that access to the capital markets will remain relatively stable, that the capital markets will perform with normal levels of volatility and that the Canadian dollar will not have a high amount of volatility relative to the U.S. dollar. In determining expectations for economic growth, the Company primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies. Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements.

The forward-looking information and forward-looking statements contained in this PRESS RELEASE are made as of the date of this PRESS RELEASE, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward- looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For further information, please contact:

 

Flow Capital Corp.:

Alex Baluta

Chief Executive Officer

Tel: (416) 777-0383

 

February 5, 2019

Notice of Flow Capital’s Year End 2018 Financial Results Conference Call

Notice of Flow Capital’s Year End 2018 Financial Results Conference Call

– Financial results to be released after markets on Monday, February 11, 2019 –

TORONTO, Ontario, February 4, 2019 – Flow Capital Corp. (TSXV: FW) (“Flow Capital” and “Flow”) today announced it will release its year end 2018 financial results after the markets close on Monday, February 11, 2019. Mr. Alex Baluta, Chief Executive Officer, and Mr. Donnacha Rahill, Chief Financial Officer, will host a conference call at 8:00 a.m. ET the next day, Tuesday, February 12, 2019, to review the results. A question and answer session will follow the corporate update.

CONFERENCE CALL DETAILS

DATE:                                           Tuesday, February 12, 2019

TIME:                                            8:00 AM Eastern Time

DIAL IN NUMBER:                        866 521-4909 or 647 427-2311

TAPED REPLAY:                            800 585-8367 or 416 621-4642

REFERENCE NUMBER:                5283308

A recording of the call will be archived on the Company’s website at www.flowcap.com/financials/ .

About Flow Capital

Based in Toronto, Flow Capital Corp. is a diversified alternative asset investor and advisor, operating two divisions: an investment operation providing revenue-linked capital to emerging growth businesses, and an institutional advisory sales platform providing pension funds, charities and endowment clients with access to leading institutional money managers from around the world. Learn more at www.flowcap.com.

For further information, please contact:

 

Flow Capital Corp.:

Donnacha Rahill

Chief Financial Officer

Tel: (416) 477-2601

January 29, 2019

Flow Capital Announces Sale of Agnity Royalty to Universal mCloud

Flow Capital Announces Sale of Agnity Royalty to Universal mCloud

TORONTO, January 29, 2019 – Flow Capital Corp. (“Flow Capital” and “Flow”) today announced that it has closed the sale of its Royalty Agreement with Agnity Global (“Agnity”) to Universal mCloud Corp. (TSX-V: MCLD) (OTCQB: MCLDF) (“mCloud”).

The purchase price is USD $153,227 paid at close, USD $2,000,000 in the form of a senior secured note, plus CAD $525,000 or 1.5 million mCloud shares, chosen at Flow’s election, and another 3.5 million shares if certain milestones are met within the next six years. The senior secured note is for a term of up-to twelve months, paying monthly interest of $41,667. Flow will receive the CAD $525,000 or 1.5 million mCloud shares when the note is repaid.

“We are pleased to become investors in mCloud with its proven team, fast growing network of connected assets, and the global market opportunity for AI-assisted infrastructure management that mCloud is attacking,” said Robb McLarty, Chief Investment Officer of Flow Capital. “This transaction provides Flow Capital upside potential through mCloud’s equity returns while continuing to generate a monthly cash flow equivalent to 25 percent per annum.”

About Flow Capital Corp.

Based in Toronto, Flow Capital Corp. is a diversified alternative asset investor and advisor, operating two divisions: an investment operation providing revenue-linked capital to emerging growth businesses, and an institutional advisory sales platform providing pension funds, charities and endowment clients with access to leading institutional money managers from around the world. Learn more at www.flowcap.com.

For further information, please contact:

Flow Capital Corp.

Alex Baluta
Chief Executive Officer
alex@flowcap.com

Phone: (416) 777-0383

1 Adelaide Street East, Suite 3002,

Toronto, Ontario M5C 2V9

January 22, 2019

Flow Capital Announces Write Down of Solar Brokers Investment

Flow Capital Announces Write Down of Solar Brokers Investment

TORONTO, January 22, 2019 – Flow Capital Corp. (“Flow Capital” and “Flow”) today announced that it will record a $2,000,000 write-down charge on the company’s investment in Solar Brokers Canada Corp. and its affiliate Green Lion Eco Group Corp. (collectively “Solar Brokers”) during the three-month period ending December 31, 2018.

The Company decided to record the charge due to the recent difficulties experienced by the residential solar industry in Canada and management’s view that Solar Brokers does not have the ability to meet its payment obligations. After this charge, the book value of Flow’s investment of $2,500,000 in Solar Brokers made up of a royalty, a secured line of credit and shares, is zero. The investment represents less than 4.5 percent of Flow’s total assets. While the company conducts extensive due diligence on prospective investee companies, it expects to incur losses from time to time given the inherent risk of high return potential emerging growth companies.

“Management is confident in the outlook for Flow despite the recent setback on its Solar Broker investment. We have been encouraged by the business’s ability to generate net positive cash flows through recurring royalties, management fees, buyouts, and increasingly, from equity positions in our investee companies.  Flow’s strategy to manage the risk of investing in emerging growth companies by broadly diversifying our portfolio cushions the effect of any one company on our returns,” said Alex Baluta, Chief Executive Officer of Flow.

About Flow Capital Corp.

Based in Toronto, Flow Capital Corp. is a diversified alternative asset investor and advisor, operating two divisions: an investment operation providing revenue-linked capital to emerging growth businesses, and an institutional advisory sales platform providing pension funds, charities and endowment clients with access to leading institutional money managers from around the world. Learn more at www.flowcap.com.

For further information, please contact:

Flow Capital Corp.

Alex Baluta
Chief Executive Officer
alex@flowcap.com

Phone: (416) 777-0383

1 Adelaide Street East, Suite 3002,

Toronto, Ontario M5C 2V9

December 5, 2018

Flow Capital Announces USD $1.06 Million Buyout of Frequentz Investment

Flow Capital Announces USD $1.06 Million Buyout of Frequentz Investment

TORONTO, December 5, 2018 – Flow Capital Corp. (“Flow Capital” and “Flow”) today announced that its investment in Frequentz, Inc. (“Frequentz”) has been bought-out for a price of USD $1,062,500, generating a 1.54X return on the USD $850,000 investment made in June 2017.  It is the third profitable exit from Flow Capital’s portfolio in 2018.  The other 2018 exits were Fixt (2.2X) and Boardwalktech (2.2X).

“The value proposition of Flow’s growth capital was demonstrated in our Frequentz investment. Our flexible capital structure provided a bridge to the acquisition of Frequentz’s assets by rfXcel,” stated Robb McLarty, Chief Investment Officer of Flow Capital. “With approximately CDN $9 million in capital available to deploy, we are very well positioned for growth in 2019.”

About Flow Capital Corp.

Based in Toronto, Flow Capital Corp. is a diversified alternative asset investor and advisor, operating two divisions: an investment operation providing revenue-linked capital to emerging growth businesses, and an institutional advisory sales platform providing pension funds, charities and endowment clients with access to leading institutional money managers from around the world. Learn more at www.flowcap.com.

For further information, please contact:

Flow Capital Corp.

Robb McLarty
Chief Investment Officer
robb@flowcap.com

Phone: (416) 777-0383

December 4, 2018

Flow Capital Announces Appointment of Alex Baluta as CEO

Flow Capital Announces Appointment of Alex Baluta as CEO

TORONTO, December 4, 2018 – Flow Capital Corp. (TSXV: FW) (“Flow Capital”,“Flow” or the “Company”) is pleased to announce that Alex Baluta has been appointed Chief Executive Officer of the Company.

Mr. Baluta brings a wealth of relevant experience to the role, most recently as Founder and CEO of Temperance Capital, a royalty investor in small and medium sized enterprises across North America.  Previously, Mr. Baluta held roles in business development in a software company, and was an investment banker and #1 rated software research analyst with experience with firms in both Canada and the United States.

“We are very pleased to have a person of Alex’s integrity, energy and experience join the Flow Capital team”, said Vernon Lobo, Chairman of Flow.  “In particular, Alex has strong capital markets experience with both retail and institutional investors and is very familiar with markets on both sides of the border.  His skills are complementary to the existing Flow management team.  We look forward to the contributions that Alex will be making.”

“I am thrilled to be joining the team at Flow,” said Alex Baluta.  “I strongly believe that emerging growth businesses continue to be underserved by traditional funding sources, including restrictive bank debt and dilutive equity capital.  Flow’s unique revenue-linked growth capital is perfectly suited to meeting the needs of emerging growth companies.  I look forward to working in partnership with Robb McLarty and the rest of the Flow team to help grow our business and expand our market share in this dynamic market.”

Robb McLarty will continue in the role of Chief Investment Officer and will focus on building shareholder value through deal sourcing and execution, in particular in the United States.

About Flow Capital

Based in Toronto, Flow Capital Corp. is a diversified alternative asset investor and advisor, operating two divisions: an investment operation providing revenue-linked capital to emerging growth businesses, and an institutional advisory sales platform providing pension funds, charities and endowment clients with access to leading institutional money managers from around the world. Learn more at www.flowcap.com.

For further information, please contact:

Flow Capital Corp.

Alex Baluta
Chief Executive Officer
alex@flowcap.com

Phone: (416) 777-0383

December 3, 2018

Flow Capital Congratulates Dionymed on its CSE Listing

Flow Capital Congratulates Dionymed on its CSE Listing

TORONTO, December 3, 2018 – Flow Capital Corp. (“Flow Capital” and “Flow”) wishes to congratulate DionyMed Brands Inc. (“DionyMed”) on its approximately CAD $35,000,000 equity financing and successful listing on the Canadian Securities Exchange (“CSE”).  DionyMed, in which Flow Capital invested in March 2018, commenced trading on the CSE on November 29, 2018 under the ticker symbol DYME.

In addition to continuing to hold a revenue royalty of CAD $1,000,000 with DionyMed, Flow Capital holds 190,000 common share purchase warrants of DionyMed, at a strike price of CAD $1.50.

Currently based in California and Oregon, DionyMed is a rapidly-growing, multi-state cannabis brands and distribution platform, supporting cultivators, manufacturers and award-winning brands in the medical and adult-use cannabis markets. DionyMed sells branded products in every category from flower to vape cartridges, concentrates and edibles. DionyMed serves more than 700 dispensaries and completes over 40,000 Direct-To-Consumer deliveries each month with its growing portfolio of products and brands.

“Dionymed is the prototypical Flow Capital portfolio company: rapidly accreting the value of its equity, led by seasoned and invested management, with a clear value proposition, and operating in a large and high growth market,” stated Robb McLarty, Chief Investment Officer and Acting Chief Executive Officer of Flow.  “We will continue to execute on opportunities like Dionymed, in exciting markets like cannabis, in both the United States and in Canada, in order to continue to fulfill our mission of building shareholder value by contracting for recurring, high-yield revenue royalties, 2X buyouts and further upside from warrants.”

About Flow Capital

Based in Toronto, Flow Capital Corp. is a diversified alternative asset investor and advisor, operating two divisions: an investment operation providing revenue-linked capital to emerging growth businesses, and an institutional advisory sales platform providing pension funds, charities and endowment clients with access to leading institutional money managers from around the world. Learn more at www.flowcap.com.

For further information, please contact:

Flow Capital Corp.

Robb McLarty
Chief Executive Officer (Acting)
robb@flowcap.com

Phone: (416) 777-0383

November 15, 2018

Flow Capital Announces Follow-on Investment in Stability Healthcare

Flow Capital Announces Follow-on Investment in Stability Healthcare

TORONTO, Ontario, November 13, 2018 Flow Capital Corp. (TSXV: FW) (“Flow” or the “Company”) announces that it has completed a follow-on investment in Stability Healthcare Inc. (“Stability”), providing USD $425,000 in growth capital. Similar to Flow’s other royalty agreements, the financial terms include an indefinite term, monthly payments, and a buyout provision. In addition, Stability has issued to Flow Capital five-year warrants to purchase approximately 1% of the company.

Based in Los Angeles, California, Stability uses an online platform to match the supply of travel nurses with healthcare facilities that are in need of temporary nurses, significantly reducing placement times. The company has changed the way that the industry has historically operated by creating transparency in selecting travel assignments, and by releasing as much information upfront to nurses including compensation, travel expenses and placement facility details.  For the past four years, Stability has been ranked on the Inc. 5000 fastest growing private companies list, making the top 500 list in 2015, 2016 and 2017.

“We are pleased to continue our support of Stability’s growth as the healthcare industry digitizes and as the nursing workforce shifts from Boomers to Millennials,” said Robb McLarty, Acting CEO of Flow Capital. “Our flexible, revenue-linked growth capital is helping Stability to achieve its goals, while offering a unique blend of cash flow yield and upside to Flow Capital and its shareholders.”

About Flow Capital

Based in Toronto, Flow Capital Corp. is a diversified alternative asset investor and advisor, operating two divisions: an investment operation providing revenue-linked capital to emerging growth businesses, and an institutional advisory sales platform providing pension funds, charities and endowment clients with access to leading institutional money managers from around the world. Learn more at www.flowcap.com.

For further information, please contact:

Flow Capital Corp.

Robb McLarty
Chief Executive Officer (Acting)
robb@flowcap.com

Phone: (416) 777-0383

1 Adelaide Street East, Suite 3002,
PO Box 171,
Toronto, Ontario M5C 2V9

 

November 1, 2018

Flow Capital Announces 2018 Third Quarter Results

Flow Capital Announces 2018 Third Quarter Results

– Records Recurring Revenues from Royalties, Interest and Fees of $2.0 million in Q3 2018 –

TORONTO, Ontario, November 1, 2018 – Flow Capital Corp. (TSXV: FW) (“Flow Capital”) today announced its financial and operating results for the three-month and nine-month periods ended September 30, 2018. Financial references are in Canadian dollars unless otherwise specified.

2018 Third Quarter Financial Highlights

  • Recurring revenue from royalties of $1,219,000
  • Recurring revenue from Global Partners fee income of $800,000
  • Adjusted EBITDA(1) of $844,000
  • Free Cash Flow(1) of $24,000

Operational Highlights

  • Investee company, Inner Spirit Holdings Ltd. (“Inner Spirit”), completed a successful public listing on the Canadian Securities Exchange, increasing the value of Flow’s equity position to $4.1 million as of September 30, 2018. At that date, the total value of shares and warrants held in publicly listed companies amounted to $4.9 million
  • Implemented a normal course issuer bid permitting the Company to repurchase for cancellation, up to 4.66 million common shares, up to $1,720,000 principal amount of the 8% convertible unsecured subordinated debentures of the Company and up to $521,000 principal amount of the 7% convertible unsecured subordinated debentures of the Company
  • Announced the acquisition of the joint venture portfolio from Darwin Strategic Royalty Corp, comprised of eight investments for a price equal to approximately $1.3 million
  • Concluded the joint venture with Foregrowth Holdco Inc. and bought five investments from the joint venture for a price equal to approximately $600,000

“We are building a business with a stable and sustainable stream of recurring cash flows. With the completion of the LOGiQ acquisition, we have scaled our platform to include a diverse set of recurring revenues focused on royalties from emerging growth companies and royalties from third-party asset management fees.  We also benefit from non-recurring but material cash inflows from buyouts of royalties and loans, and realizations from a growing portfolio of equity and warrant positions,” said Robb McLarty, Acting Chief Executive Officer of Flow Capital. “The performance of our royalty portfolio has improved significantly in the last year. We continue to grow the portfolio, most recently through the acquisition of our joint venture partners portfolios which was an efficient and effective use of capital in a group of eight investments that we know extremely well. Our results reflect the first full quarter contribution of the royalties from third-party asset management fees – a revenue stream that continues to grow. Our prospect pipeline remains strong, and we are proactively building new dealflow channels. Our model continues to attract high-quality emerging growth companies that are seeking a superior alternative to traditional debt and equity.”

Financial Highlights

Canadian dollars

Three months ended September 30, 2018

Three months ended September 30, 2017

Recurring revenues from royalties and interest

       1,219,227

1,193,359

Recurring revenues from Global Partners fee income

800,476

Non-recurring revenues from buyouts, equity returns and fees

(225,557)

Adjusted EBITDA(1)

844,423

        55,774

Free Cash Flow(1)

  23,922

 166,068

Profit/(Loss) for the period

 (499,406)

(1,763,068)

EBITDA/EBITDA (Loss)(1)

151,939

(1,926,154)

Basic Earnings/(Loss) per share

(0.0057)

         (0.0166)
Diluted Earnings/(Loss) per share         (0.0057)          (0.0166)
Weighted basic average number of shares outstanding

87,466,856

106,317,656

New investments in period

2,722,706

425,000

(1)EBITDA, Adjusted EBITDA and Free Cash Flow are non-IFRS measures. Refer to section Definition of Non-IFRS Measures for further explanation and definitions.

Recurring revenues from royalties and interest

Recurring royalties, interest and fee income earned were $1,219,000 and $3,419,000 for the three-month (Q3 2018) and nine-month (YTD 2018), respectively, compared to $1,193,000 and $3,574,000 for the corresponding periods in 2017. Royalties and interest for Q3 2018 was up 2% from the same period in 2017.

Management believes that the core companies from its portfolio will continue to contribute Free Cash Flow(1) on a regular basis as the portfolio matures.

Recurring revenues from Global Partners fee income

Global Partners fee income was $800,000 in Q3 2018. Excluding the $50,000 amortization of deferred income, this was an increase of 8%, compared to the same period in 2017.

Non-recurring revenues from buyouts, equity returns and fees

Cash of $114,000 was generated from the sale of shares held in publicly listed companies during Q3 2018.

Revenues

Revenues as reported under IFRS were $1,170,000 and $5,586,000 for Q3 2018 and YTD 2018 respectively, compared to $(1,223,000) and $(6,732,000) for the corresponding periods in 2017. With the adoption of IFRS 9, certain non-cash items are recognized in revenue.

Revenues in the quarterly period were impacted by IFRS 9 net non-cash items of $(650,000) compared to $2,438,000 for the same period in 2017. The non-cash amount of $(650,000) was made up of $2,272,000 for adjustments to fair value, $(2,676,000) realized loss on investments written-off that were previously written-down to zero and $(246,000) for foreign exchange differences. Included in the adjustments to fair value was: 1) $837,000 for the increase in the fair value of the shares held in Inner Spirit Holdings Inc. (“Inner Spirit”) and net of decreases in the fair value of shares held in Lattice and Boardwalktech, 2) $2,589,000 for a reversal of the fair value adjustment following the restructuring of the Medical Imaging investment during the quarter and 3) $(1,154,000) for fair value adjustments on various investments in the portfolio.

Operating Expense

Total operating expenses were $1,449,000 and $4,126,000 for Q3 2018 and YTD 2018, respectively, compared to $713,000 and $2,767,000 for the corresponding periods in 2017. The change in the quarterly period was due to $50,000 restructuring costs, $408,000 in operating costs incurred by the LOGiQ business during Q3 2018 as well as, $422,000 in amortization cost of the Global Partners intangible asset. These increases were partially offset by $123,000 lower salary costs and $20,000 lower office rent cost.

Adjusted EBITDA(1)

Adjusted EBITDA(1) was $844,000 and $1,462,000 for Q3 2018 and YTD 2018, respectively, compared to $556,000 and $4,085,000 for the corresponding periods in 2017. The change in the quarterly period was primarily due to $386,000 Adjusted EBITDA(1) earned by the LOGiQ business.

Free Cash Flow(1)

Free Cash Flow(1) was $24,000 and negative $268,000 for Q3 2018 and YTD 2018, respectively, compared to $166,000 and $3,737,000 for the corresponding periods in 2017. The $142,000 change in the quarterly period was primarily due to reducing accounts payable balance from prior periods.

Profit (Loss) After Taxes

Profit (Loss) after taxes was $(499,000) and $5,740,000 for Q3 2018 and YTD 2018, respectively, compared to $(1,763,000) and $(8,012,000) for the corresponding periods in 2017. The improvement in the quarterly period was primarily due to a combination of non-cash items, the most significant of which was the change over the reporting periods in the realized loss from investments written-off and adjustments of fair value totaling $1,344,000.

Assets

 

 As at September 30, 2018

 As at December 31, 2017

Cash and cash equivalents

$8,215,958

$7,534,383

Investments at fair value

27,262,067

22,289,157

Intangible asset

12,524,917

Total assets

59,746,435

39,392,563

Update on Agnity Global transaction with Universal mCloud

On June 21, 2018, Flow Capital announced that it had signed a binding agreement to sell its Royalty Agreement with Agnity Global (“Agnity”) to Universal mCloud Corp. The Binding Agreement was subject to certain conditions of closing, including receipt of the approval of the TSX Venture Exchange. The parties continue to work toward the satisfaction of all closing conditions.

Conference Call Details

Flow Capital will host a conference call to discuss these results at 5:00 p.m. Eastern Time, Thursday, November 1, 2018. Participants should call (647) 427-2311 or (866) 521-4909 and ask an operator for the Flow Capital earnings call. Please dial in 10 minutes prior to the call to secure a line. A replay will be available shortly after the call. To access the replay, please dial (416) 621-4642 or (800) 585-8367 and enter access code 4895774. The replay recording will be available until 11:59 p.m. Eastern Time, November 14, 2018.

An audio recording of the conference call will be also available on the investors’ page of Flow Capital’s website at www.flowcap.com/financials.

About Flow Capital

Based in Toronto, Flow Capital Corp. is a diversified alternative asset investor and advisor, operating two divisions: an investment operation providing revenue-linked capital to emerging growth businesses, and an institutional advisory sales platform providing pension funds, charities and endowment clients with access to leading institutional money managers from around the world. Learn more at www.flowcap.com.

Forward-Looking Information and Statements

This press release contains certain “forward-looking information” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved”. The forward-looking information contained herein may include, but is not limited to, information with respect to: prospective financial performance; including the Company’s opinion regarding the current and future performance of its portfolio, expenses and operations; anticipated cash needs and need for additional financing; anticipated funding sources; future growth plans; royalty acquisition targets and proposed or completed royalty transactions; estimated operating costs; estimated market drivers and demand; business prospects and strategy; anticipated trends and challenges in the Company’s business and the markets in which it operates; the amount and timing of the payment of dividends by the Company; and the Company’s financial position. By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements.

An investment in securities of the Company is speculative and subject to a number of risks including, without limitation, risks relating to: the need for additional financing; the relative speculative and illiquid nature of an investment in the Company; the volatility of the Company’s share price; the Company’s limited operating history; the Company’s ability to generate sufficient revenues; the Company’s ability to manage future growth; the limited diversification in the Company’s existing investments; the Company’s ability to negotiate additional royalty purchases from new investee companies; the Company’s dependence on the operations, assets and financial health of its investee companies; the Company’s limited ability to exercise control or direction over investee companies; potential defaults by investee companies and the unsecured nature of the Company’s investments; the Company’s ability to enforce on any default by an investee company; competition with other investment entities; tax matters, including the potential impact of the Foreign Account Tax Compliance Act on the Company; the potential impact of the Company being classified as a Passive Foreign Investment Company (“PFIC”); the Company’s ability to pay dividends in the future and the timing and amount of those dividends; reliance on key personnel, particularly the Company’s founders; dilution of shareholders’ interest through future financings; and general economic and political conditions; as well as the risks discussed in the joint management information circular of the Company dated May 2, 2018 and the risks discussed herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information and forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended.

In connection with the forward-looking information and forward-looking statements contained in this press release, the Company has made certain assumptions. Assumptions about the performance of the Canadian and U.S. economies over the next 24 months and how that will affect the Company’s business and its ability to identify and close new opportunities with new investees are material factors that the Company considered when setting its strategic priorities and objectives, and its outlook for its business.

Key assumptions include, but are not limited to: assumptions that the Canadian and U.S. economies relevant to the Company’s investment focus will remain relatively stable over the next 12 to 24 months; that interest rates will not increase dramatically over the next 12 to 24 months; that the Company’s existing investees will continue to make royalty payments to the Company as and when required; that the businesses of the Company’s investees will not experience material negative results; that the Company will continue to grow its portfolio in a manner similar to what has already been established; that tax rates and tax laws will not change significantly in Canada and the U.S.; that more small to medium private and public companies will continue to require access to alternative sources of capital; that the Company will have the ability to raise required equity and/or debt financing on acceptable terms; and that the Company will have sufficient free cash flow to pay dividends. The Company has also assumed that access to the capital markets will remain relatively stable, that the capital markets will perform with normal levels of volatility and that the Canadian dollar will not have a high amount of volatility relative to the U.S. dollar. In determining expectations for economic growth, the Company primarily considers historical economic data provided by the Canadian and U.S. governments and their agencies. Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements.

The forward-looking information and forward-looking statements contained in this PRESS RELEASE are made as of the date of this PRESS RELEASE, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward- looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For further information, please contact:

Flow Capital Corp.:

Robb McLarty

Chief Executive Officer (Acting)

Tel: (416) 777-0383

October 26, 2018

Third Quarter 2018 Financial results conference call

Third Quarter 2018 Financial results conference call

Financial results to be released before market on Thursday, November 1, 2018 –

TORONTO, Ontario, October 25, 2018 – Flow Capital Corp. (TSXV: FW) (“Flow Capital” and “Flow”) today announced it will release its third quarter 2018 financial results before the markets open on Thursday, November 1, 2018. Mr. Robb McLarty, Acting Chief Executive Officer, and Mr. Donnacha Rahill, Chief Financial Officer, will host a conference call at 5:00 p.m. ET that same day, Thursday, November 1, 2018, to review the results. A question and answer session will follow the corporate update.

 CONFERENCE CALL DETAILS

DATE:                                           Thursday, November 1, 2018

TIME:                                            5:00 PM Eastern Time

DIAL IN NUMBER:                        866 521-4909 or 647 427-2311

TAPED REPLAY:                            800 585-8367 or 416 621-4642

REFERENCE NUMBER:                4895774

A recording of the call will be archived on the Company’s website at www.flowcap.com/financials/ .

About Flow Capital

Based in Toronto, Flow Capital Corp. is a diversified alternative asset investor and advisor, operating two divisions: an investment operation providing revenue-linked capital to emerging growth businesses, and an institutional advisory sales platform providing pension funds, charities and endowment clients with access to leading institutional money managers from around the world. Learn more at www.flowcap.com.

For further information, please contact:

Flow Capital Corp.:

Donnacha Rahill

Chief Financial Officer

Tel: (416) 477-2601