Fortun Holdings, Corp. (FRTU) Earnings Call Transcript & Summary

Good day, and welcome to the iAccess Alpha Virtual Best Ideas Fall Investment Conference 2026. Our next presenting company is Fortun Holdings, Corporation. [Operator Instructions] I'd now like to turn the floor over to today's host, Yoel Damas, CEO at Fortun Holdings, Corporation. Please go ahead.

Thank you. Thank you for having us, and welcome to everyone attending our presentation. We are a small [ fintech, finance company ] that dedicates itself to finance small businesses, specifically the gig economy. My name is Yoel Damas. I am the company's CEO. A little bit about me. I am an attorney by trade. I've been in the entertainment business for roughly 20 years or so of my life or 20-plus years. And I've been around the revenue finance space or the merchant cash advance space for roughly about 13 years at this point. Now to begin with and to really kick off the presentation here, we'll start with the market opportunity. Small -- there's 33 million small businesses in the United States, of which research shows 6 in 10 will seek financing in the next 12 months. Now more important to that, what we like to call the underserved sweet spot, a lot of business or a lot of these businesses would actually seek financing under $10,000, but there's really a very limited amount of banks or funding companies out there that specialize in that space. Now the process itself, we make it easy for merchants. They either go to our website or they talk to our back-office call center. At that point, they fill out a simple one-page application where we analyze the revenue, the industry and the risk. At that point, we run it through our proprietary underwriting software. We scope the risk profile, we come up with a funding amount and we make an offer to buy future receivables. Very important to understand that revenue-based financing is not a loan, but it's a purchase of a future receivable at a discount today. And what that does is it allows the merchant to receive almost instant capital to be able to satisfy whatever need or whatever they're going through at that point. Basically, a fixed percentage of daily sales is remitted back to us based on the receivable amount that we purchased and the discount amount. Now you might say, I've heard of merchant cash advance companies. I've heard of alternative finance. I've heard about revenue-based finance companies. What's different here? Well, a few things. First, the segmentation in the space. The space itself is broken. It really functions around brokers and syndicators. And really what it does is it creates this huge conflict of interest where brokers are in it for one thing and one thing only, and that is a commission. They don't care that they're exploiting a merchant. They don't care to load these merchants up with 3, 4 positions. And again, when I say positions, if you want to compare that to the mortgage world, second, third, fourth mortgages. Syndicators by nature are in it for the fees. Since they're syndicators of capital, they're basically after the fees related to funding these deals, which drives me to the next point, and that is the deal size. Again, syndicators rather make the fees on a $100,000 deal than a $10,000 deal. So going back to the segmentation part, we cure that. We deal with no brokers or no ISOs. We self-originate 100% of every deal that comes through our platform, which means we eliminate a lot of the fraud, a lot of the conflict of interest. And since we're not a syndicator, but we fund ourselves, we're interested and we're invested in not only the merchant success, but that these advances actually come to fruition or end up being profitable for the company. Then moving over to that sweet spot again, the deal size. Deal size is under $10,000. Our average deal size is $7,000. What does that do? It spreads risk. It allows us -- the 4- to 6-month duration allows us to pivot almost immediately in case of a market turn or just anything happens in the market. And lastly, our proprietary platform. Our proprietary platform not only uses our internal data, but risk modeling now with AI that takes into account not only the 2 years' worth of data that we have done as a company, but the management team's experience over the last few years in the merchant cash advance space and in the revenue finance space. With that said, a question that always comes up, how come your model generates the returns that it generates? How are you so quick 2 years in cash flow positive, net income positive, 0 burn? It's simple. It's the economics of our product. Our average factor rate is 1.49. The average deal term is 4 to 6 months, really about 4.3 months. And our remittances, 90% of the time, come in daily. And that daily remittance allows us to turn that capital over to the next advance to the next merchant that needs it almost immediately, which really creates a velocity of capital anywhere around the range of 2.5x a year. Now we reversed into the OTC market into what is FRTU today, what was LRGR, the moment we reversed in. We reversed in end of May 2024. We funded our first business deal June 7, 2024. So 2024, between always being a quarter behind showing what we're doing here and proving the model, was really a start year. I want to say 2025 was a year that we really started showing what this platform could do. What were the results? The results were $12.3 million in gross funding, of which $11.5 million returned back in cash, cash deposits in the bank. And we funded 1,851 businesses in 2025. As you could see, we went from $3.2 million in 2024 to $12 million in funding in 2025. Receivables went from $1.5 million to $11.5 million at the end of 2025. And the total deals were 424 in 2024 and 1,851 in 2025. Now before I -- the next slides are related to GAAP, and I want to come back to that. But I want to fast forward to this slide. And that is all those numbers I just quoted were done with $4 million total deployed into the funding accounts. That's $22 million worth of funding as of Q2 2026, $20 million of payments were calculated or put into the bank. At the end of Q2 2026, we still had almost $11 million in receivables. And again, that thesis of 2.5x on our capital velocity, the actual number ended up being over 24 months, 5.23 capital multiplier on that $4 million we put out. Total investment in this company, $6 million. Now with that said, again, the slide has GAAP numbers and so on for you guys to review at your leisure. But let's get into 2026, and let's talk about the first half and the second quarter. First half of 2026, total financing or funded deals $6.8 million, GAAP revenue of $3.2 million and net income positive of $900,000. Our net income margin was around 28%. And at the end of the half, we still had about $10.5 million in receivables. Now if you look at our Q2 numbers, which are obviously in the first half, you will see that that growth is steady. It wasn't an anomaly. It wasn't a onetime thing. We are actually growing quarter-over-quarter almost every quarter. In fact, talking about Q3 and what's public right now that we could discuss is the momentum we've had going into Q3. Everything we've discussed so far has been done with 0 marketing dollars. In May of 2026, we decided to launch fortunfunding.com, license the 800 toll-free number 833-FUNDING, rebrand our ticker into our current brand FRTU, which has always been our operating brand. We've enabled an underwriting platform that now includes AI. We've always had an underwriting platform, but now underwriting time has been cut from 3.5 hours to just 0.5 hour. The AI underwrites the deals in 55 seconds, a human still looks at it for about 30 minutes, but it's cut our underwriting time by about 3 hours. With all those changes implemented, we decided to finally do that test run on marketing, small run on net ads. The result, July, 120% increase in applications. A result of that was record monthly funding in August. Not only that already public, not on this presentation -- I'm sorry, in July, record funding. And in August, we had another record month back-to-back on July, all because of this light touch of marketing that we've experienced. So one of the things I would be very clear about, this company has a lot of ability to scale. The need for our product, the demand for our product is out there. In fact, I'll just show one simple example here, rideshare community. We'd love to fund rideshare community. We'd love to fund Uber drivers, Lyft drivers. There's 2.5 million rideshare drivers in the United States. If we were to just capture 3% of the rideshare community, just 3%, not even taking into account the renewals from that capture, which 30% of our funding volume today is renewals every single month, that would drive at an average funding amount of $2,500, $187 million funding opportunity if we were to just focus on that segment of the economy alone. On top of that, there's opportunity. We're operators. We control the vertical. We control everything from the lead generation, the underwriting, the closing and the collections. Therefore, being able to control that whole platform and control that vertical puts us in a unique situation for companies that want to enter the space but need an operator. GoDaddy Capital recently did such a move where they entered the space, but they're not the operator behind their finance business. So I think there's very -- quite a few interesting avenues for this company and a lot of ability to scale in different ways. Now what's the thesis of what we're here to talk about today? And that is $4 million over 24 months has got $22 million of funding. It has driven all the revenue, just those $4 million, if you go through our filings, that has driven every dollar in revenue, every dollar in net income that you see. So the question is, what would $4 million, $8 million, $20 million do for this company? And that is what we're seeking. We're seeking a lending partner, possibly an uplist situation or a situation that allows us to raise responsible capital so we could continue to grow this platform. Now on top of that, I think we're an interesting trade as a stock, personal opinion, of course, as the CEO of the company. But more importantly, I want to drive this message home that is the niche we're in, I do not know anybody else that's in, that sweet spot of $3,000 to $10,000, especially controlling the vertical, the way we do. And we're just in a perfect position that the only thing that we see in our way right now is the ability to raise significant capital because the demand is there. The infrastructure is there. Very important to note that our current infrastructure could fund 3x the amount of funding we're doing today. That means we don't need to purchase many more computers or spend a bunch of money on expensive real estate to house more staff. Basically, what we have today would allow us, if we have the capital, to fund 3x the amount that we fund today. So with that, I conclude my presentation. If there's any questions and answers, I'll gladly answer them now. If not, I'll wait around. I don't see questions and answers coming in, in the Q&A section -- I'm sorry, any questions coming in the Q&A section. At this juncture, if no one has any questions, I want to turn it over to the operator. Let's just stand by here for another 30 seconds or so to see if any questions come in.

Okay. It does look like we have a question. The first question is, when will you start advertising?

Well, we started advertising. We started advertising. We started testing the market in May. We really launched the first campaign in June. And that's why you see the increase of 120% in applications. We basically went -- and again, talking macro numbers here, we basically went from about 250 or so applications a month to almost 500 applications a month, and we've done that now for 2 months steady. And I believe September is on track to do the same. So we have started advertising. Really, I want to say we're in a test phase at this point. Second question, what is the spread on [indiscernible] the loans? Well, again, these are not loans. These are cash advances. So there is no spread on a loan. But our factor rate, and that might answer your question, is 1.49. So that's a 49% yield on our cash advances. Next question. You didn't talk about credit quality of your portfolio. Great question. This deck that I uploaded did not have that part, and I'm going to quote it because I don't have it in front of me. But basically, the question comes up a lot, what is your default rate? And the answer is there is no default rate. This is not a loan. This is the purchase of a future receivable. So you need -- the way we measure this internally and the way the industry as a whole measures it, you can't really look at it as a whole default rate. You got to ask yourself, at a certain point, usually most funders look at 6x term, we like to look anywhere between 3 and 5x term, really about 3x term, how much of the money or how much of the receivables have we recovered? And we group those into 3 different parts. New deals, too early to tell. And again, we do have some stuff we measure there. We measure on a daily basis how much of the receivables we should have collected did not come in. That's usually around 12%. Then we have another bucket, which we call it the maturing bucket. And that bucket, what it does is it gives us an idea of where that portfolio is heading. Is it going south? Is it going north? Is it performing well? Is there a certain industry type or deal size or deal term that we should be more careful of? But really, you focus on the seasoned portfolio. This is the portfolio or the bucket that you look at and say, okay, the average term was 3 to 4 months. We're going to have 3x that because, again, this is a receivable product, not a loan product. How much of that is still outstanding in that seasoned portfolio? The answer is our current seasoned portfolio, about 19% of every dollar has not come back. But more important to note, we've already made on that seasoned portfolio $1.38 for every dollar that we put out. So to answer your question, I wish I could just give you one simple answer, but unfortunately, with this product, you have to get into the detail of how you measure it because, again, it's not a loan, it's a receivable product. Let me move on to the next question. What are the biggest drivers of growth for Fortun over the next 12 months? Well, the drivers of -- really, the drivers are here. We have the demand, like I mentioned earlier, we just touched on a little bit of marketing, and we basically need additional funding. We need additional capital. That's really -- I know the answer that the question is not what's standing in your way. But really the only -- the biggest driver of growth is advertising. It's marketing. The demand is there. But we have a need and the needed capital. Now what -- your next question is what allows you -- the company to grow while quickly maintaining underwriting discipline goes back to that AI change that we did starting in January. We started implementing AI into our platform. So now the AI feeds and the LLM model that's learning our product sees every single default every time we don't get paid, every time people go into slow pay. Again, our underwriting time with more accuracy than ever has gone down from 3 hours to 55 seconds and then 30 minutes of human review. Now how much additional -- next question, how much additional funding capacity can the current operating platform support without meaningful new investment? So with $4 million, we've done the numbers that I've already discussed in the presentation. We believe we could easily hold another $8 million to $10 million where we would be able to effectively triple our funding volume, that will triple our revenue, triple our net along those lines because we really should not have to spend much more or any major capital -- much capital needed towards the operating platform or even the business in general. In other words, just to make it simple, I think I've gotten a little bit around the -- in circles in this answer. And that is today, we could fund 3x the amount, $8 million to $10 million we could put it out over the next 2 quarters, almost immediately, that capital would not sit in our bank account. Next question. What are the most important milestones investors should watch as Fortun goes towards stronger financial reporting and potential exchange uplisting? Well, we have been in the audit process. We audited 2023 and 2024. We are in the middle of auditing 2025. Again, we've purposely been slow with the audit. We want to get this right. This isn't a product that is common in the market. So we want to make sure that the trees here, the plants are on firm ground. But really it's the completion of the audit, which we should be at near end here. That's what I'm getting from the auditors. That's what I've been getting from the auditors. And second, milestone capital. If you see us announce capital, that's a big one. That really shows because, again, the demand is there, that Fortun is ready to take off regardless of anything else. The next question, which is really around capital and what we announced this morning. We announced a $10 million facility that's framed as nondilutive. What's the all-in cost of capital? Well, great question. So again, I could only talk about what's publicly available. It is a nondilutive, non-warrant, nonequity issued warehouse facility. That if closed -- again, and that's why we're still here on the ask, if closed, if the transaction closes, would that, in any way, have a dilution feature? It is a simple interest only with an eventual, of course, principal and interest payback. Again, I cannot get into the details of that because it has not been publicly announced. Next question. If the cash churn is so rapid and presumably there's a healthy factor rate earned as well, why do you need additional capital? Well, great question. So if you notice the $4 million we've brought in staggered over the first, I want to say, 1.5 years really of this business, a year and a few months, is the same capital that's in, and we've increased our funding amount. It's clearly showing our revenue has grown, our net income has grown. Now we could stay exactly where we are today and probably grow at a 20% to 30% clip every year on its own. But if we receive capital, if we get capital and the platform today that output 3x what it could and the demand is there, it's really what's best for this company and what's best for the shareholders. Now it is mentioned also in the same question, also what is your share count, including all warrants, options, et cetera? When your receivable does not come in, why is that case? I mean it's -- this is -- and who are the larger counterparties there? I have about 2 minutes before I got to get off. It's not a question that necessarily I don't want to answer. But on top of that, we've had another few questions come in. Unfortunately, at this time, I won't be able to get to them on time, but I welcome one-on-one meetings tomorrow as part of this conference. I welcome an e-mail and setting up Zoom meetings one-on-one as well so I could get into the deep -- any of these questions, again, as long as it's public information, more than willing to answer for you. Just the rest of these questions that have come in, I believe I'm up against the time right now. So at this point, operator, I will turn it over back to you.

That concludes Fortun Holdings Corporation's presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.