Mr. James Bell reports

FOUNDERS ADVANTAGE RELEASES 2018 Q4 AND ANNUAL RESULTS; ANNOUNCES BOARD CHANGE

Founders Advantage Capital Corp. has released its financial results for the three months and year ended Dec. 31, 2018. For complete information, readers should refer to the audited consolidated financial statements and management discussion and analysis which are available on SEDAR at www.sedar.com and on the Corporation's website at www.advantagecapital.ca. All amounts are presented in Canadian dollars unless otherwise stated.

Our subsidiaries are referred to herein as Dominion Lending Centres Limited Partnership ("DLC"), Club16 Limited Partnership operating as Club16 Trevor Linden Fitness ("Club16"), Cape Communications International Inc. operating as Impact Radio Accessories ("Impact"), and Astley Gilbert Limited ("AG"). DLC's subsidiary Newton Connectivity Systems Inc. is referred to herein as "NCS".

Highlights

• Revenues of $34.7 million for Q4-2018 and $133.5 million for the year ended December 31, 2018, representing a 24% and 61% increase compared to 2017, respectively;
• Adjusted EBITDA of $8.0 million for Q4-2018 and $34.5 million for the year ended December 31, 2018, representing a 85% and 70% increase compared to 2017, respectively;
• DLC's Adjusted EBITDA of $4.6 million for Q4-2018 and $19.8 million for the year ended December 31, 2018, representing a 16% and 22% increase compared to 2017, respectively
• Proportionate share of adjusted EBITDA of $5.0 million for Q4-2018 and $21.4 million for the year ended December 31, 2018, increasing by 54% and 40% compared to 2017, respectively;
• Income from operations of $4.0 million for Q4-2018 and $13.8 million for the year ended December 31, 2018, increasing from $0.1 million and $5.4 million in 2017, respectively;
• The Corporation recognized a $20.4 million loss for the year ended December 31, 2018, primarily driven by a $10.4 million non-cash write off of the Corporation's deferred tax asset (previously disclosed in Q3 2018), a $6.2 million non-cash impairment of AG goodwill and a $4.6 million foreign exchange loss related to our USD debt and cash balances;
• Adjusted net losses attributable to shareholders of $1.5 million for Q4-2018 and $1.0 million for the year ended December 31, 2018, compared to losses of $0.8 million and $2.1 million in 2017, respectively;
• The Corporation recognized $2.7 million of restructuring costs for the year ended December 31, 2018, with respect to severance, legal costs, special committee fees and other related costs in connection with the strategic alternative review process commenced in August 2018, and continuing to year end;
• The Corporation was successful in reducing run-rate corporate overhead from over $4.0 million to less than $1.75 million, annually;
• Subsequent to year end, the Corporation announced executive management changes, appointing James Bell as President and CEO and Ron Gratton as Interim CFO; and
• On March 12, 2019, the Corporation suspended its dividend and amended its credit facility to permit debt repayment from excess cash flow.

James Bell, President and CEO, commented, "We are proud of the financial and operating successes our portfolio companies achieved in 2018 while the Corporation navigated through various corporate strategies to maximize long-term shareholder value. In particular, we note that DLC grew annual funded volumes in 2018 and contributed $19.8 million to 2018 Adjusted EBITDA as compared to $16.3 million in 2017. The 2019 fiscal year will be dedicated to unlocking the deep value within the existing portfolio through both organic and add-on acquisition opportunities. The Corporation's free cash flow will be directed towards either reinvestment within the portfolio or repaying corporate debt. We remain committed to making good business decisions with a clear focus on long-term shareholder value."

                                     Selected Consolidated Financial Highlights:
  
 
                                                          Three months ended                       Year ended
(in thousands except per share amounts)          Dec. 31, 2018 Dec. 31, 2017 Dec. 31, 2018          Dec. 31, 2017
    
Revenues                                         $      34,657 $      27,952       133,541             82,905 
Income from operations                                   3,993            51        13,774              5,438 
Adjusted EBITDA   (1)                                    8,019         4,340        34,536             20,346 
Adjusted EBITDA attributable to:   (1)                                                                        
Shareholders                                             4,331         1,878        18,190              9,678 
Non-controlling interests                                3,688         2,462        16,346             10,668 
Adjusted EBITDA margin   (1)                                23%           16%           26%                25%
Proportionate share of adjusted    EBITDA    (1)         4,968         3,227        21,398             15,301 
Free cash flow   (1)                                       967          (681)        4,411              1,952 
Net loss for the period                                 (8,792)       (5,699)      (20,377)              (657)
Net income (loss) attributable to:                                                                            
Shareholders                                            (6,715)       (6,697)      (21,062)            (6,212)
Non-controlling interests                               (2,077)          998           685              5,555 
Adjusted net income (loss)  (1)                           (524)          208         5,021              2,514 
Adjusted net income (loss) attributable to:   (1)                                                             
Shareholders                                            (1,536)         (836)       (1,026)            (2,087)
Non-controlling interests                                1,012         1,044         6,047              4,601 
Diluted (loss) income per share                          (0.18)        (0.18)        (0.55)             (0.17)
Adjusted income (loss) per share   (1)                   (0.04)        (0.02)        (0.03)             (0.05)
Dividend declared per share                             0.0125        0.0125          0.05               0.05 

(1)  Please see the Non-IFRS Financial Performance Measures section of the MD&A for additional information.

2018 Annual Highlights

Adjusted EBITDA increased $14.2 million compared to the year ended December 31, 2017. This variance is primarily due to a $8.4 million increase in Business Products and Services segment's adjusted EBITDA due to the timing of the Impact and AG acquisitions in this segment. The Franchise segment's adjusted EBITDA increased $3.5 million compared to the year ended December 31, 2017 largely due to higher funded mortgage volumes and lower general and administrative expenses. In addition, there was an increase in Corporate EBITDA of $2.4 million due to lower acquisition and general and administrative costs. Consumer Products and Services segment was relatively flat compared to the year ended December 31, 2017.

Adjusted net income for the year ended December 31, 2018 increased $2.5 million from the same period in the previous year. The increase in adjusted net income was a result of an increase in income from operations partially offset by higher income tax expense and an increase in financing costs related to an increase in the corporate head office's total loans and borrowings from $26.6 million to $42.0 million USD (CAD{A —}$57.3 million). The additional loans and borrowings were used to fund the acquisition of the 50% interest in AG in Q4-2017.

Q4-2018 Highlights

Adjusted EBITDA increased $3.7 million compared to the three months ended December 31, 2017. These gains were primarily due to a $1.7 million increase in the Business Products and Services segment's adjusted EBITDA primarily due to the timing of the AG acquisition on October 31, 2017 and an increase in Impact's adjusted EBITDA from higher revenue. Franchise segment adjusted EBITDA increased $0.6 million compared to the three months ended December 31, 2017 primarily due to higher revenue. The adjusted EBITDA of Consumer Products and Services segment increased $0.6 million primarily due to recent club openings and expansions.

Adjusted net income for the three months ended December 31, 2018 decreased $0.7 million compared to the same period in the previous year with increased income from operations offset by higher finance expense and deferred tax expense.

2018 Outlook Review

Previously, FAC issued revised 2018 guidance for our expected proportionate share of annual adjusted EBITDA from our four investees of approximately $19.0 million to $20.0 million for the year ended December 31, 2018. We are pleased to report that the proportionate share of annual adjusted EBITDA of $21.4 million for 2018 was ahead of management's expectations. Further, the 2018 proportionate share of annual adjusted EBITDA was near the low end of the range of management's original 2018 guidance of $21.5 million to $22.5 million. For fiscal 2019, the Corporation does not intend on issuing guidance for its expected proportionate share of annual adjusted EBITDA. Given current market conditions, the Corporation believes it is better served to simply publish its financial results once available.

Board Change

The Corporation announces that Stephen Reid has resigned as a director of FAC. Kingsley Ward, Chairman of the Corporation commented: "We would like to thank Stephen for his tireless effort and many contributions to Founders Advantage and we wish him all the best in his future endevours." Upon Mr. Reid's resignation, the FAC Board is comprised of eight individuals, being Messrs. Ward, Bell, Gratton, Kayat, Lacavera, Mauris, McRae and Sykora.

About Founders Advantage Capital Corp.

The Corporation is listed on the TSX Venture Exchange as an Investment Issuer (Tier 1) and employs a permanent investment approach.

We seek Safe Harbor.