Flow Capital Corp.

Good morning, ladies and gentlemen, and welcome to the full capital earnings call for Q2 2024. At this time, all participants are in the listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. If anyone has difficulties hearing the conference, you may press star zero for operator assistance at any time. I would like to remind everyone that today's discussion may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on full capital's risks and uncertainties related to these forward-looking statements, please refer to the Q2 2024 Companies Management Discussion Analyst, which is available on CDER. Today's call is being recorded on Tuesday, August 20, 2024. I would now like to turn the meeting over to Alex Baluda, Chief Executive Officer of Flow Capital.

Thank you, Joelle. Good morning, and thank you all for participating in today's call. I'm joined by Michael Denny, our Chief Financial Officer, and Vernon Lobo, our Executive Chairman. After the close of market today, we released our financial results for the quarter. Q2 ended June 30, 2024. Details can be found on our website or as filed on CDER. I will, as usual, try to keep my comments brief. During Q2, we reported another record quarter in terms of recurring revenue going as far back as at least 2018. We transitioned our strategy away from royalties and into growth debt, and we continue to see strong progress. This is the fourth sequential quarter in a row of growth. I will not be going through our full financial statements on this call, but rather I'll focus on a few of the relevant highlights. If you'd like more detail, I encourage you to read our full financial statements. As a quick aside, as I've repeated on almost every call, it's worth noting that our definition of recurring revenue is a non-IFRS metric. For us, recurring revenue means cash revenue generated from our investments. Our total reported revenue under IFRS this quarter was actually $2.1 million in the quarter and $4.11 million for the year. However, IFRS can be slightly distorting and hard to follow as under IFRS changes in the balance sheet need to flow through the income statement, which can lead to things like negative revenue in a quarter making it hard to track our real performance. That's why we talk about recurring revenue and recurring free cash flow, which we believe are better metrics to track. Turning to our results for the quarter, we reported $1.9 million in recurring loan interest income. That's up .7% from Q1 and up .5% from Q2 last year. Book value is at $1.255 per share. That's up .4% over the prior quarter and up 37% over the last two years. We generated just under $300,000 in recurring free cash flow in the quarter and $1.4 million in free cash flow over the last four quarters. I will note that we've now been profitable for 17 quarters in a row. Our total assets were $65.8 million, up 12% over the prior year, and we deployed $29 million in new capital over the last 12 months, which is a 12-month record for us. In fact, we achieved several milestones in the quarter, including record recurring revenue, $1.9 million, record book value per share, $1.255 million, record total assets at $65.8 million, and as I just mentioned, a trailing 12-month deployment record of $29 million. So needless to say, we've had an excellent quarter. Some additional highlights in the quarter included repayment of our pure investment of $4.5 million. That investment had generated a 20% – slightly higher than 20% IRR to date, and we continue to own warrants in that company. We also closed a $5.4 million investment into an excellent SaaS B2B company called GetTable, which is focused on global customer experience improvement. We announced a follow-on investment into Minilux, which is an existing portfolio company, and then after the end of the quarter, we closed a $6.8 million investment in a tech-enabled marketplace for co-living spaces and a $5.4 million investment in a media measurement company – media measurement provider. It's worth noting that for the year, we had targeted to get ourselves to a $10 million revenue run rate in recurring revenue, and currently, including the recent investments, we are over $9 million approaching our target for the year. And given the strength of our pipeline, we feel comfortable that we will be able to hit our target before the end of the year. It's worth noting as well that we have published our IRR performance for the portfolio at a portfolio level for several years now. Our trailing sixth-year IRR, which we press released on June 11th of this year, is over 26%. So we continue to see good performance in our portfolio, and we continue to see good growth in our deal opportunities

in

terms of our

pipeline. Looking forward,

our internal target – the space that we participate in is a very large space. The venture debt space has over $30 billion in originations, give or take, in any given year in North America. With $60 million in assets, we're a very small player in this space. However, over the last five years, we've been building the infrastructure to grow our business. We have a fantastic team. We've developed some excellent internal processes, and we're targeting to get our assets up to $100 million, then $250 million, and then $500 million over the next several years. And while I'm not making any forecasts, we feel strongly that that is an achievable target. So all in all, another excellent quarter. Our portfolio continues to perform well. Our team is really gelling, and we feel that we have an excellent future ahead of us. And with that, I'll pause my formal statements, and I'll hand it back to the operator to see if there's any questions.

Thank you, ladies and gentlemen. We will now begin the -and-answer session. Should you have a question, please press star, followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star, followed by the two. If you are using a speakerphone, please lift the hands up before pressing any keys. One moment, please for your first question. There are no questions at this time. I'd like to hand it all over to Alex for closing remarks.

Thank you, Joel. Thank you, everybody, for joining and continuing to track our progress. As I said, we feel confident that we're in the right space and that we have the right processes and team in place. And I look forward to chatting with you in three months with our Q3 results. Thank you very much.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and ask that you please disconnect your lines.