TIMIA Capital Announces Third Quarter 2020 Financial Results

~Company's growth profile continues with record quarterly revenue~

VANCOUVER, BC, Oct. 30, 2020 /CNW/ - TIMIACapital Corporation ("TIMIA" or the "Company") (TSXV: TCA) (OTC: TIMCF) today announced consolidated financial results for the third quarter ended August 31, 2020. All figures are reported in Canadian dollars unless otherwise noted.

Third Quarter 2020 Highlights include:

• Record total revenue of $1.4 million, up 56% over the same period last year.
• Posted interest income from investments of $1.3 million, included in total revenue, an increase of 46% year over year.
• Total assets increased 37% to $37.0 million as at August 31, 2020 compared to November 30, 2019. Cash balance, as part of assets, was $8.2 million compared to $4.7 million as at November 30, 2019.
• TIMIA's loan investment portfolio (loans receivable) increased by 26% to $27.3 million in comparison to the same period last year.
• During the third quarter 2020 the Company received approximately $10 million (US$7.5 million) in subscription agreements towards a second Limited Partnership ("LP II").
• Reported consolidated net income of $333,243, which includes a significant unrealized foreign exchange loss of $747,259, compared to a consolidated net loss of $54,658 for the same period last year. Outside of foreign exchange impacts, the improvement in consolidated net income on a year-over-year basis is representative of the increase in total revenue plus gains on investments.
• The portion of consolidated net loss attributable to the shareholders of the company is $23,580 as compared to $189,781 for the same period last year.

On a comprehensive basis:

• Reported consolidated net comprehensive loss of $73,584 compared to a consolidated net comprehensive loss of $54,658 for the same period last year. The current year includes a new foreign currency translation adjustment for the consolidation of the Company's LP II, which held its first close in July, 2020 and is denominated in US$.

"We are reporting very strong third quarter 2020 results with record total revenue, a 56% growth over Q3 2019, along with a 66% increase in total assets versus the same period in 2019," said Mike Walkinshaw, CEO of TIMIA Capital Corporation. "These strong results in the midst of the COVID-19 pandemic demonstrate the resiliency of the Company's model.   Our proprietary fintech platform continues to perform beyond expectations with a single loan exit and resulting gain on investment during the third quarter, and with four additional exits during the subsequent two months of the fourth quarter.  For the year to date, the Company has seen seven exits from its portfolio and a combined gain of approximately $1.6 million. With these exits and the $10 million raised in our second Limited Partnership, we have the necessary capital to continue our growth initiatives."

Portfolio and Revenue Review

The Company's investment portfolio has continued to deliver returns in accordance with the underlying loan agreements during the quarter.  For the 9 month period ended August 31, 2020, TIMIA has completed 6 new investments and has had 3 companies exit their loan facilities bringing the loan portfolio to 21 companies and a loan book of $27.3 million.

Subsequent to the end of the 3rd quarter, the Company has completed 2 new investments and seen exits from a further 4 portfolio companies.  Year to date, the Company has seen total gains of approximately $1.6 million based upon the 7 exited portfolio companies and has completed 8 new investments.

Interest income earned from the portfolio in the three months ended August 31, 2020 was $1.3 million compared to $0.9 million in the same period last year, a 46% increase.  Income from transaction and other fees was $123,513 in the three months ended August 31, 2020 compared to $26,644 in the same period last year. The change in transaction and other fees reflects an increase in investing activity after having taken a pause on these activities during the initial phases of COVID-19 in Q2. Reflecting the increase in transaction fee revenue, total revenue for the three months ended August 31, 2020 increased 56% to $1.4 million compared to $0.9 million for the three months ended August 31, 2019.

Impact of Foreign Exchange

The Company generated significantly positive financial returns this past quarter but also experienced foreign exchange headwinds related to the Canadian US dollar exchange rate.  During the third quarter, the Canadian US dollar exchange rate declined by approximately six cents to its lowest point of approximately 1.30 at quarter end.   The Company has hedged a substantial portion of the foreign exchange risk related to common shareholders, however the limited partners of LP I and LP II have chosen to bear the risk of foreign exchange swings.  These foreign exchange losses are reflected in our consolidated net income of $333,243, our consolidated comprehensive net loss of $73,584 as well as the net income attributable to non-controlling interests of $356,823.  Consolidated net income, prior to unrealized foreign exchange losses and the offsetting gains from the forward contract, was $894,252*.

Subsequent to quarter end, the Canadian US $ exchange rate has reversed a portion of its decline, increasing by approximately 300 basis points to 1.33 as of today's date.

Operational and Interest Expenses.

The Company is investing to support its future growth and the continued development of its fintech platform.  Total expenses, including interest expense, for the quarter ended August 31, 2020 were $1.0 million compared with $0.9 million for the same period last year. The change reflects a decrease in expected credit loss, investor relations and communications, and share-based compensation, offset by increases in accounting and legal, administrative, management, and director fees, amortization,  interest expense, marketing services and promotion, and office, travel, systems, and miscellaneous expenses, year-over-year.

Balance Sheet

As at August 31, 2020, the Company's consolidated cash balance was approximately $8.2 million and consolidated working capital was approximately $3.6 million, compared with approximately $4.7 million and $4.6 million, respectively, as of November 30, 2019. The change in working capital at quarter end reflects the nearing maturity of certain of the debentures and convertible debentures.  Subsequent to quarter end, these convertible debentures matured on October 7th, 2020.  In settlement of these debentures and in accordance with the instructions of the individual debenture holders, the Company converted $530,000 of these debentures to common shares at $0.14 per share, repaid $887,500 in the form of cash, and extended the maturity of $663,500 of debentures to Nov 27th, 2020 in order to allow for the potential exchange into a proposed offering of preferred shares. There is no guarantee that the proposed offering of preferred shares will be completed.

Net Loss Attributable to Common Shareholders

The Company has generated strong returns for its non-dilutive investors benefiting common shareholders by earning a portion of those returns in the form of management fees, recovery of administrative costs, and performance fees.  As the size of the loan book increases, these fees should also increase. In the current quarter, the net loss attributable to common shareholders is $23,580 as compared to $189,781 in the same period prior year.  Management expects continued improvement in net income attributable to common shareholders in the coming quarters.   

This news release is qualified in its entirety by the Company's condensed interim financial statements for the three months ended August 31, 2020 and August 31, 2019 and the associated Management's Discussion & Analysis respecting the same periods, which can be downloaded from the Company's profile on SEDAR at http://www.sedar.com.

COVID-19 Update
TIMIA is providing an update with respect to the impact from the COVID-19 virus outbreak on its current operations. To date, there have been no known cases of COVID-19 at any of TIMIA's offices.

Management believes that recurring revenue software companies offer security and stability. The Company utilizes a proprietary credit scoring process that focuses on high customer retention rates as well as a well-diversified customer base. These two factors, along with other key attributes such as size and cash runway, are structured to provide downward protection in an uncertain economic environment. Many of our portfolio companies have been agile in this environment, including in many instances transitioning employees to work remotely. At this time, none of the Company's investments are in arrears. However, it may be several months before the full effect of the economic slowdown is felt in the portfolio. Management is in the process of reviewing revised and updated forecasts for each of the portfolio companies and are working with them to determine the best way to support them through the crisis. Management has decided to increase the size of our capital reserves thereby reducing our allocation to new deals

TIMIA has been a remote-friendly working environment since its formation.  Our employees have been able to transition seamlessly to working from home and have been able to maintain close contact and relationships with current portfolio companies and new and exciting SaaS investment opportunities.

* Defined as net income removing foreign exchange loss and the gain on forward contract.

About TIMIA Capital Corporation
TIMIA Capital Corporation is a specialty finance company that provides growth capital to technology companies in exchange for payments based on monthly revenue. This alternative financing option complements both debt and equity financing, while allowing entrepreneurs and existing stakeholders to retain ownership and control of their business. TIMIA's singular focus is the fast growing, global, business-to-business Software-as-a-Service (or SaaS) segment. We align ourselves with entrepreneurial management teams growing their sales from $2 Million to $20 Million in Annual Recurring Revenue. For more information about TIMIA Capital Corporation, please visit www.timiacapital.com

Neither the 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 news release.

Forward-Looking Information
Certain information and statements in this news release contain and constitute forward-looking information or forward-looking statements as defined under applicable securities laws (collectively, "forward-looking statements"). Forward-looking statements normally contain words like 'believe', 'expect', 'anticipate', 'plan', 'intend', 'continue', 'estimate', 'may', 'will', 'should', 'ongoing' and similar expressions, and within this news release include any statements (express or implied) respecting the belief that as the size of the loan book increases fees should also increase, expectations as to  continued improvement in net income attributable to common shareholders in the coming quarters, beliefs that recurring revenue software companies offer security and stability, ,  expectations as to re-financing, extending or converting the debentures to equity, and statements about growing the Company's business. Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable and appropriate in the circumstances, including, without limitation, the following assumptions: that the Company and its investee companies are able to meet their respective future objectives and priorities, assumptions concerning general economic growth, the Company being able to obtain financing on acceptable terms, the Company's ability to attract and retain skilled staff, the absence of unforeseen changes in the legislative and regulatory framework for the Company, the COVID-19 pandemic not having a material impact on the Company's operations, the products and technology offered by the Company's competitors and the Company's ability to protect intellectual proprietary rights . Although management believes that the forward-looking statements are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to TIMIA's business. Material risks and uncertainties applicable to the forward-looking statements set out herein include, but are not limited to, worldwide pandemics, such as the recent outbreak of the novel coronavirus COVID-19, may adversely impact multiple aspects of the Company's business; the Company having insufficient financial resources to achieve its objectives; uncertainty as to the Company's ability to raise additional funding; availability of further investments that are appropriate for the Company on terms that it finds acceptable or at all; successful completion of exits from investments on terms that constitute a gain when no such exits are currently anticipated; intense competition in all aspects of business; reliance on limited management resources; the Company's dependence upon certain key personnel and their loss could adversely affect the Company's ability to achieve its business objectives; general economic risks; new laws and regulations, risk of litigation, the Company may not achieve its publicly announced business objectives according to schedule, or at all; the Company's success depending upon its ability to protect its intellectual property and its proprietary technology; the price of the Company's shares may be subject to fluctuation in the future based on market conditions; the Company's success depends on its ability to effectively manage growth; and significant disruptions of information technology systems or security breaches could adversely affect the Company's business. Although Timia has attempted to identify factors that may cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, predicted, estimated or intended. Also, many of the factors are beyond the control of Timia. Accordingly, readers should not place undue reliance on forward-looking statements. Timia undertakes no obligation to reissue or update any forward-looking statements as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements contained in this news release are qualified by this cautionary statement.

SOURCE TIMIA Capital Corp.