~Company reports consolidated net income and higher revenue on a year over year basis along with lower expenses~
VANCOUVER, BC, July 30, 2020 – TIMIA Capital Corporation (“TIMIA” or the “Company”) (TSX-V:TCA / OTC: TIMCF) today announced financial results for the second quarter ended May 31, 2020.
Second Quarter 2020 Highlights include:
- Reported consolidated net income of $478,611, compared with a consolidated net loss of $490,358 for the same period last year.
- Revenue of $891,186, up 7% over the same period last year.
- Posted interest income from investments of $869,793, included in total revenue, an increase of 28% year over year.
- Total assets increased 18% to $31.9 million as at May 31, 2020 compared to the same time period last year. Cash balance, as part of assets, was $5.2 million compared to $4.7 million as at November 30, 2019.
- TIMIA’s loan investment portfolio (loans receivable) increased by 56% to $25,541,689 in comparison to the same period last year.
“The Company posted a solid quarter during a time of unprecedented uncertainty with the emergence of the COVID-19 pandemic,” said Mike Walkinshaw, CEO of TIMIA Capital Corporation. “While much of the economy of North America was shut down during our second quarter, our experience was SaaS companies continued to operate near full capacity. Based on our experience, we believe that SaaS companies are a more secure asset class than most consider and offer a superior risk adjusted return. We will remain vigilant with our operations and continue to leverage our fintech platform to locate and engage leading recurring revenue software companies.”
Detailed Financial Review
During the quarter ended May 31, 2020, the Company continued to grow its revenue-financing (“RF”) business by completing two new investments, distributing growth capital of US$750,000 to US-based Measured and $1,250,000 to a Canadian-based Cova.
The Company’s revenue is primarily interest income generated under the Company’s RF model. As the Company makes new investments, the amount of monthly payments derived from the portfolio grows. Interest income in the three months ended May 31, 2020 was $869,793 compared to $680,260 in the same period last year, a 28% increase. Income from transaction and other fees was $21,393 in the three months ended May 31, 2020 compared to $154,778 in the same period last year. The change in transaction and other fees reflects the reduction in total number of new transactions as the Company paused its pace of investment during the initial phases of COVID-19. Reflecting the reduction in transaction fee revenue, total revenue for the three months ended May 31, 2020 increased 7% to $891,186 compared to $835,038 for the three months ended May 31, 2019.
TIMIA continues to build the value and size of its portfolio by making new investments and follow-on investments in existing portfolio companies, and actively assisting portfolio companies with their growth plans. At the same time, 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 May 31, 2020 were $813,794 compared with $1,076,785 for the same period last year. The change reflects a decrease in interest expense, administrative, management, and director fees, and investor relations and communications costs, offset by small increases in the expected credit loss provision, share-based payments, and office, travel, systems, and miscellaneous expenses, year over year.
During the quarter ended May 31, 2020, the Company posted net income of $478,611 compared with a net loss of $490,358 in the same period last year. The year-over-year improvement of $968,969 is primarily due to the continued growth in size of the portfolio and the resulting interest income increase, lower operating expenses and $292,717 fund restructuring and financing costs recognized in 2019.
As at May 31, 2020, the Company’s cash balance was approximately $5.2 million and working capital was approximately negative $2.3 million, compared with approximately $4.7 million and $4.6 million, respectively, as of November 30, 2019. The working capital deficit at quarter end is attributed to the nearing maturity of certain of the debentures and convertible debentures. Management is currently considering alternatives to address these maturities through a combination of refinancing or extension of the debentures, and conversion of a portion of the convertible debentures to equity.
This news release is qualified in its entirety by the Company’s condensed interim financial statements for the three months ended May 31, 2020 and May 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.
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
Fortunately, TIMIA employees are able to work from home and maintain close contact and relationships with current portfolio companies and new and exciting SaaS investment opportunities.
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 $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 SaaS companies being a more secure asset class than most consider and offer a superior risk adjusted return, expectations as to re-financing, extending or converting the debentures to equity, expectations as to the Company having enough funds to operate and grow the business into 2021 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.