Mr. Alex Baluta reports

FLOW CAPITAL ANNOUNCES Q2 2023 FINANCIAL RESULTS AND CFO TRANSITION

Flow Capital Corp. has released its unaudited financial and operating results for the quarter ended June 30, 2023.

Second quarter 2023 highlights:

• Royalty and loan interest income of $1.84-million, up 9.0 per cent quarter over quarter;
• Recurring royalty and loan interest income of $1.45-million in Q2, down 4.2 per cent quarter over quarter;
• Recurring free cash flow of approximately $127,000 in Q2 and $726,000 over the past four quarters;
• Total assets of approximately $58.9-million compared with $51-million at Q2 2022;
• Cash of over $7.7-million compared with $8.8-million at Q2 2022;
• Book value of $1.18 per share, up 29 per cent over the past four quarters.

"While our revenues were down slightly year over year, they were in line with our expectations. Slower-than-expected capital deployment, combined with several early repayments, has led to flat revenue growth in the quarter," said Alex Baluta, chief executive officer of Flow Capital. "Our balance sheet remains very strong with almost $8-million in cash, and we continue to generate positive cash flow from recurring operations.

"In spite of the flat revenue from slow capital deployment, we are starting to make significant new investments driven by a very strong pipeline in terms of quality of opportunities. We closed an investment right at the end of the quarter, into Wrisk Ltd., a [business-to-business-to-consumer software-as-a-service] insurtech provider with a current focus on the automobile insurance space. In addition, in mid-August, we closed an investment in a woman-led B2C company in the sleep wellness space. We are starting to see the results of both the positive market opportunity for growth debt solutions, as well as our ongoing effort to increase deal flow quantity and quality.

"Given the record number of deals we have in due diligence at the current time, we expect we will be deploying significant amounts of new capital in the coming weeks and months," said Mr. Baluta.

To raise additional capital to support the company's continuing deployment growth, in July, it launched its redeemable floating-rate debenture. The debenture pays a floating rate of interest, currently set at 10.5 per cent to 11 per cent for Canadian-denominated units (depending on investment size), and is redeemable by the investor on 90 days notice. Full details on the debenture can be found on the SEDAR+ website.

"The redeemable debenture marks the third evolution of what was called our priority return fund. It is an investor-friendly structure that pays an excellent yield and is senior to the almost $40-million of equity we have on our balance sheet," said Mr. Baluta. "We expect this structure will help us grow our asset base for the foreseeable future."

Flow Capital continues to focus its efforts on originating and investing in high-growth companies looking to fuel expansion without the excessive and expensive dilution of equity or restrictive covenants of conventional debt. With over 30 million small- and medium-sized business in the United States and Canada, and tens of millions of others in Flow Capital's addressable geographies and sectors, there is a large market of potential investment opportunities.

Detailed financial results are available on its website or on SEDAR+.

Chief financial officer transition

The company is also pleased to announce the appointment of Michael Denney as chief financial officer of the company, effective Sept. 22, 2023. Mr. Denney succeeds Gaurav Singh, who has held the role since April, 2020, and will be leaving the company at the end of September to pursue other opportunities.

Mr. Denny has over 25 years of experience as a senior investment banker to growth companies, advising them on equity and debt placements and strategic acquisitions and divestitures. Prior to joining Flow Capital, he was a managing director with private equity manager Lynx Equity Ltd., where he managed the Lynx Equity Income Trust.

"We are excited to have Michael joining our team. He brings a mix of investment, financial and capital-raising skills that will help continue to scale our business," said Mr. Baluta. "Gaurav has made significant contributions to our business as evidenced by our book value growth of over 150 per cent during his tenure. I would like to thank him for his hard work and dedication and wish him every success in the future."

Conference call details

Flow Capital will host a conference call to discuss these results at 9 a.m. Eastern Time on Tuesday, Aug. 29, 2023. Participants should call 1-888-396-8049 or 1-416-764-8646 and ask an operator for the Flow Capital earnings call, conference ID: 62734095. Please dial in 10 minutes prior to the call to secure a line. A replay will be available shortly after the call. To listen to the replay, please dial 1-416-764-8692 or 1-877-674-7070 and enter passcode 734095 followed by the number sign. The replay recording will be available until 11:59 p.m. Eastern Time on Sept. 12, 2023.

An audio recording of the conference call will be also available on the investors page of Flow Capital's website.

About Flow Capital Corp.

Flow Capital is a diversified alternative asset investor and adviser, specializing in providing minimally dilutive capital to emerging growth businesses.

We seek Safe Harbor.