VANCOUVER, BC – May 5, 2020 – TIMIA Capital Corporation (“TIMIA” or the “Company”) (TSX-V:TCA/OTC: TIMCF) today announced a letter to shareholders from Chief Executive Officer, Mr. Mike Walkinshaw.
Dear Fellow Shareholders,
Today, we find ourselves facing an unprecedented global crisis and our first priority is to ensure we are all taking the necessary precautions to keep ourselves and our families safe and contribute to overall effort to reduce the impact of COVID-19. Our thoughts go out to those touched by the pandemic and the workers on the front lines, we genuinely appreciate the important work that they do. While TIMIA has been fortunate to keep our operations running smoothly with all our team working from home, we appreciate that not everyone is in this same position.
The purpose of this letter is to provide an update on your Company’s progress and future plans. 2019 was a transformative year as we implemented several important changes to strengthen our business model and establish a leadership position in our sector. We have added to the management team and continue to focus on growth and shareholder value over the long term.
The Company continues to outperform based on most metrics.
Our 2019 Highlights include:
- Revenue increased by 90% to $3,046,608
- Assets grew by 90% to $27,107,384
- TIMIA’s loan investment portfolio increased 123% to $21,596,037 compared to $9,680,390 in the prior year period
- Raised $18,500,000 for the first limited partnership
- Closed a lender finance arrangement totalling up to $7.5M to help fund growth in a warehouse format for future limited partnerships
- Gross portfolio return on loans deployed in 2019 was an impressive 19.9%
The Company achieved record growth in revenue and assets under management for the third year in a row by leveraging our fintech platform and expanding our successful business model. Our reputation within the SaaS industry grows stronger with each successful loan facility of non-dilutive growth capital deployed, and we are experiencing an increase in referred business from our existing network of clients. Our fintech platform continues to aid with improved risk management and lower transaction costs, and as a result, we believe our portfolio of SaaS companies is well positioned.
The primary reason for our transformation and our continued success was the strategic decision to move from exclusively investing capital from our own balance sheet to including investment capital from managed limited partnerships. Extensive analysis by the board and management team indicated that raising capital through limited partnerships is the most likely pathway to maximize earnings per share for common shareholders.
Our strong performance over the past 4 years enabled the Company to attract $18.5M in limited partnership investments in 2019. Using investments from managed limited partnerships allows us to leverage our expertise and earn interest and other fees from investing in entrepreneurial growth companies, without significantly impacting the Company’s capital structure and causing material dilution to the common shareholders.
TIMIA intends to capitalize on the successful performance in 2019 by growing its assets under management through the creation of more limited partnerships.
More recently, we reported our first quarter of 2020 and again, achieved record results in the growth of the business. A few highlights as disclosed in the news release include:
First Quarter 2020 Highlights include:
- Record revenue of $1,024,188, up 80% over the same period last year.
- Total assets increased 105% to $30.0 million as at February 29, 2020 compared to the same time period last year. Cash balance, as part of assets, was $6.8 million.
- Reported net income of $444,144, compared with a net loss of $255,480 for the same period last year. Included in the net income is a gain on sale
- TIMIA’s loan investment portfolio (loans receivable) increased by 71% to $21,644,460 in comparison to the same period last year.
The outlook for the company continues to be positive. We are growing, investing and vigilantly watching the performance of our portfolio of exciting SaaS companies. As you can see from the revenue chart below, we have built a strong track record of growing the business.
As well, the recent creation of a preferred share class will provide an option, assuming satisfactory financing terms can be arranged, to facilitate the payout of the Company’s debentures as they mature, thus avoiding the conversion into common shares, reducing the interest burden, and potentially shortening the path to profitability.
2020 Team Changes
2019 was about positive financial growth but it also brought some unexpected and impactful sadness. Mr. Greg Smith, a co-founder of TIMIA, was diagnosed with ALS in early 2019. Greg has continued to work with TIMIA right through to Q2 2020. Greg’s primary role at TIMIA has been to build the “fintech machine” that delivers the loans that TIMIA funds. We are thankful that this machine is up and running and continuous improvement is ongoing. Greg is an exceptional person and we are fully supportive of his desire to spend more time with his family. Our best wishes are with him and his family at this time.
Rob Foxall, our VP of Origination, has been promoted into Greg’s place. Rob brings 8 years of experience in technology lending to TIMIA previously working at Espresso Capital. Rob has done an excellent job managing the pipeline since taking over in early December. We also hired Tyson Bracken, Sales Development Representative, to augment the team’s capability to push deals through our platform.
Outlook for 2020 and Covid Related Economic Downturn
As at February 29, 2020, the Company’s cash balance was approximately $6.8 million and working capital was approximately $3.9 million, compared with approximately $4.7 million and $4.6 million, respectively, as of November 30, 2019. The funds raised by the private placement of debentures, the limited partnership, co-investment agreements, access to the Company’s lender financing facility, and cash generated from the underlying portfolio are expected to provide the Company with enough funds to operate the business into 2021.
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.
In closing, I would like to express my deep gratitude and appreciation for our employees and shareholders of TIMIA. We are grateful for our team’s dedication and tremendous effort to continue to perform during these challenging times. We are also grateful for the continuing trust and support of our shareholders in our strategy and its potential for creation of value. We will do our utmost to build on the success of 2019 and realize our potential in 2020 and beyond.
Chief Executive Officer
TIMIA Capital Corporation
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 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 $1 Million to $10 Million in Annual Recurring Revenue. For more information about TIMIA Capital Corporation, please visit www.timiacapital.com.
For more information, please contact:
Vice President, Capital Markets & Communications
Mike Walkinshaw, CEO
TIMIA Capital Corporation
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.
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 beliefs as to the Company’s portfolio of SaaS companies being well positioned, TIMIA’s intention to capitalize on the successful performance in 2019 by growing its assets under management through the creation of more limited partnerships, the recent creation of a preferred share class providing an option, assuming satisfactory financing terms can be arranged, to facilitate the payout of the Company’s debentures as they mature, thus avoiding the conversion into common shares, reducing the interest burden, and potentially shortening the path to profitability, expectations that the funds raised by the private placement of debentures, the limited partnership, co-investment agreements, access to the Company’s lender financing facility, and cash generated from the underlying portfolio will provide the Company with enough funds to operate the business into 2021 and management’s belief that recurring revenue software companies offer security and stability.. 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.