Mr. Alex Baluta reports

FLOW CAPITAL ANNOUNCES Q3 2023 FINANCIAL RESULTS

Flow Capital Corp. has released its financial and operating results for the quarter ending Sept. 30, 2023 (Q3 2023). Financial references are in Canadian dollars unless otherwise specified.

Q3 2023 highlights:

• Book value of $1.20 per share, up 26 per cent over the past four quarters;
• Recurring royalty and loan interest income (1) of $1.50-million in Q3, up 3.9 per cent from the prior quarter;
• Recurring free cash flow (2) of approximately $237,000 in Q3 and $710,000 over the past four quarters;
• Total assets of approximately $62.5-million, compared with $53.0-million at Q3 2022;
• Cash of over $9.3-million, compared with $9.5-million at Q3 2022;
• $12.5-million in new investments made since May of 2023.

"Q3 was in line with our expectations and reflects recent loan maturities and modest capital deployments in the past year," said Alex Baluta, chief executive officer of Flow Capital. "Our balance sheet remains very strong and we continue to generate positive cash flow from recurring operations.

"Since May of this year, we have deployed over $12-million into four new investments and our pipeline remains very strong with currently five potential investments currently in due diligence. 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 number of deals we have in due diligence at the current time, we expect we will be deploying 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, Flow Capital launched its redeemable/retractable floating rate debenture. "We are excited about the introduction of the new debenture structure. By providing investors with a floating rate of interest (currently at 10.5 per cent), redeemability and seniority to almost $40-million in equity, we expect we can use it to raise additional capital over time," 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 the company's website and on SEDAR+.

Revenues

Total revenue for the three-month period ended Sept. 30, 2023, was $1,003,477, compared with $670,337 in the three-month period ended Sept. 30, 2022. Loan interest and royalty payment income for the three-month period ended Sept. 30, 2023, was $1,697,147, representing a 1.23-per-cent increase from the $1,676,567 earned in the three-month period ended Sept. 30, 2022.

Of the $1,697,147 loan interest and royalty payment income earned during the three-month period ended Sept. 30, 2023, $321,276 was contributed by interest earned from new investments acquired in the last 12 months, $1,197,583 from loan interest and royalty payment income from the existing portfolio, and $178,289 on account of loan amortization adjustments.

Income from changes in value of financial assets for the three-month period ended Sept. 30, 2023, was negative $722,558, compared with negative $1,006,139 for the three-month period ended Sept. 30, 2022.

Operating expense

Total operating expenses for the three- and nine-month periods ended Sept. 30, 2023, were $872,554 (2022 -- $881,638) and $2,615,664 (2022 -- $2,363,882), respectively. The increase is primarily due to higher salaries and professional fees compared with the previous corresponding periods.

The decline in operating expenses for three months ended Sept. 30, 2023, compared with the three months ended Sept. 30, 2022, was primarily driven by lower professional fees, offset by higher salaries and share-based compensation. The increase in operating expenses for nine months ended Sept. 30, 2023, compared with the nine months ended Sept. 30, 2022, was primarily driven by higher salaries, professional fees and share-based compensation.

Profit after taxes

Profit (loss) after taxes for the three- and nine-month periods ended Sept. 30, 2023, were $20,229 (2022 -- $502,663) and $453,789 (2022 -- $5,421,388), respectively. The decline in profit after taxes for three months ended Sept. 30, 2023, compared with the three months ended Sept. 30, 2022, was primarily driven by lower foreign exchange gains, offset by higher revenues and lower operating expenses. The decline in profit after taxes for nine months ended Sept. 30, 2023, compared with the nine months ended Sept. 30, 2022, was primarily driven by lower income from changes in values of financial assets, higher total operating expenses and lower foreign exchange gains.

Non-IFRS (international financial reporting standards) financial measures

This news release includes references to certain non-IFRS financial measures such as recurring royalty and loan interest income and recurring free cash flow. These financial measures are employed by the company to measure its operating and economic performance, and to assist in business decision-making as well as providing key performance information to senior management. The company believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors and analysts use this information to evaluate the company's operating and financial performance. These financial measures are not defined under IFRS nor do they replace or supersede any standardized measure under IFRS. Other companies in the industry may calculate these measures differently than the company does, limiting their usefulness as comparative measures. Reconciliations of non-IFRS measures to the nearest IFRS measure can be found in this news release.

Reconciliation of non-IFRS measures

Attached tables reconcile royalty and loan interest income to recurring royalty and loan interest income and recurring free cash flow for the periods indicated.

Recurring royalty and loan interest income is an internally defined, non-IFRS measure calculated as royalty and loan interest income less loan amortization income and one-time payments (for example, prepayment fees).

Recurring free cash flow is an internally defined, non-IFRS measure calculated as recurring royalty and loan interest income less salaries, professional fees, office and general administrative expenses, and financing expense.

Conference call details

Flow Capital will host a conference call to discuss these results at 9 a.m. Eastern Time on Wednesday, Nov. 22, 2023. Participants should call 1-888-886-7786 or 1-416-764-8658 and ask an operator for the Flow Capital earnings call, conference ID No. 47648691. 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 1-416-764-8692 or 1-877-674-7070 and enter passcode 648691 followed by the pound key. The replay recording will be available until 11:59 p.m. Eastern Time, Dec. 22, 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 advisor, specializing in providing minimally dilutive capital to emerging growth businesses.

We seek Safe Harbor.