Netcapital Announces Revenue Growth of 71% for First Half of Fiscal 2023

Conference call to be held tomorrow, December 13, 2022, at 10:00 a.m. ET

BOSTON–(BUSINESS WIRE)–$NCPL #EarningsNetcapital Inc. (Nasdaq: NCPL, NCPLW) (the “Company”), a digital private capital markets ecosystem, today announced financial results for the second quarter and first six months of fiscal year 2023 ended October 31, 2022.

“Continuing strong business trends fueled our growth across multiple financial and operating measures in the second quarter,” commented Cecilia Lenk, CEO of Netcapital Inc. “Our portfolio companies continued to perform well, and portal activity both from private companies seeking capital and private investors funding innovation remains solid. We look forward to similar trends in the second half of our fiscal year 2023.”

Jason Frishman, CEO of Netcapital Funding Portal Inc., commented, “We have hosted many exciting and lucrative offerings over the past six months and will continue to feature inspiring success stories by our clients in our communications to Netcapital stakeholders. The key purpose of our business is to mentor and support entrepreneurs in their journeys. It’s rewarding to see the benefits of our services as these startups build, expand, and prosper.”

Second Quarter Fiscal 2023 Financial Highlights

Revenue growth of 48% year-over-year to $1.8 million

Positive operating income compared to operating loss in the year-ago quarter

Diluted earnings per share of $0.04 compared to loss per share of ($0.10) in the year-ago quarter

Equity securities at fair value of $15.1 million at October 31, 2022

Cash and cash equivalents of $1.6 million at October 31, 2022

First Half Fiscal 2023 Highlights

Revenue growth of 71% year-over-year to $3.1 million

Positive operating income compared to operating loss of $1.4 million in the first six months of fiscal year 2022

Equity securities at fair value increased 18% compared to $12.9 million at April 30, 2022

Paid down $1 million in debt, closed a $5 million underwritten public offering, and uplisted to Nasdaq in July 2022

For additional disclosure regarding Netcapital’s operating results, please refer to the Quarterly Report on Form 10-Q for the period ended October 31, 2022, which has been filed with the Securities and Exchange Commission.

Conference Call Information

The Company will host an investor conference call tomorrow, December 13, 2022, at 10:00 a.m. ET.

Participant access: 844-985-2012 or 973-528-0138

Conference entry code: 914548

For those unable to participate in the live call, a replay will be made available in the Investors section of the company’s website.

About Netcapital Inc.

Netcapital Inc. is a fintech company with a scalable technology platform that allows private companies to raise capital online and provides private equity investment opportunities to investors. The company’s consulting group, Netcapital Advisors, provides marketing and strategic advice and takes equity positions in select companies with disruptive technologies. The Netcapital funding portal is registered with the U.S. Securities & Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA), a registered national securities association.

 

NETCAPITAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

Assets:

 

October 31, 2022

(Unaudited)

 

April 30, 2022

(Audited)

Cash and cash equivalents

 

$

1,565,242

 

$

473,925

Related party receivable

 

 

668

 

 

668

Accounts receivable net

 

 

2,269,800

 

 

2,433,900

Other receivables

 

 

16,604

 

 

Prepaid expenses

 

 

39,236

 

 

5,694

Total current assets

 

 

3,891,550

 

 

2,914,187

 

 

 

 

 

Deposits

 

 

6,300

 

 

6,300

Notes receivable – related parties

 

 

202,000

 

 

202,000

Purchased technology, net

 

 

15,494,542

 

 

15,536,704

Investment in affiliate

 

 

240,080

 

 

240,080

Equity securities at fair value

 

 

15,112,601

 

 

12,861,253

Total assets

 

$

34,947,073

 

$

31,760,524

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

 

 

 

Trade

 

$

451,903

 

$

536,508

Related party

 

 

75,204

 

 

378,077

Accrued expenses

 

 

250,179

 

 

229,867

Stock subscription payable

 

 

10,000

 

 

33,400

Deferred revenue

 

 

660

 

 

2,532

Interest payable

 

 

270,083

 

 

222,295

Deferred tax liability, net

 

 

779,000

 

 

977,000

Related party debt

 

 

19,660

 

 

22,860

Secured note payable

 

 

400,000

 

 

1,400,000

Current portion of SBA loans

 

 

1,896,737

 

 

1,890,727

Loan payable – bank

 

 

34,324

 

 

34,324

Convertible notes payable

 

 

 

 

300,000

Total current liabilities

 

 

4,187,750

 

 

6,027,590

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Long-term SBA loans, less current portion

 

 

489,063

 

 

495,073

Total liabilities

 

 

4,676,813

 

 

6,522,663

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

Common stock, $.001 par value; 900,000,000 shares authorized, 4,312,777 and 2,934,344 shares issued and outstanding

 

 

4,313

 

 

2,934

Shares to be issued

 

 

244,250

 

 

244,250

Capital in excess of par value

 

 

27,263,174

 

 

22,479,769

Retained earnings

 

 

2,758,523

 

 

2,510,908

Total stockholders’ equity

 

 

30,270,260

 

 

25,237,861

Total liabilities and stockholders’ equity

 

$

34,947,073

 

$

31,760,524

 

NETCAPITAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

Three Months Ended

 

Three Months Ended

 

Six Months Ended

 

Six Months Ended

 

 

October 31, 2022

 

October 31, 2021

 

October 31, 2022

 

October 31, 2021

 

 

 

 

 

 

 

Revenues

 

$

1,778,973

 

 

$

1,199,822

 

$

3,119,546

 

$

1,825,009

 

Costs of services

 

 

36,235

 

 

 

17,775

 

 

57,298

 

 

46,080

 

Gross profit

 

 

1,742,738

 

 

 

1,182,047

 

 

3,062,248

 

 

1,778,929

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

Consulting expense

 

 

199,781

 

 

 

183,030

 

 

325,392

 

 

365,635

 

Marketing

 

 

32,882

 

 

 

22,000

 

 

40,662

 

 

43,826

 

Rent

 

 

17,187

 

 

 

10,481

 

 

34,399

 

 

22,611

 

Payroll and payroll related expenses

 

 

876,908

 

 

 

730,296

 

 

1,646,848

 

 

1,791,655

 

General and administrative costs

 

 

280,815

 

 

 

561,370

 

 

673,112

 

 

956,422

 

Total costs and expenses

 

 

1,407,573

 

 

 

1,507,177

 

 

2,720,413

 

 

3,180,149

 

Operating income (loss)

 

 

335,165

 

 

 

(325,130

)

 

341,835

 

 

(1,401,220

)

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

Interest expense

 

 

(22,978

)

 

 

(35,026

)

 

(59,290

)

 

(70,271

)

Gain on debt conversion

 

 

 

 

 

 

 

224,260

 

 

 

Amortization of intangible assets

 

 

(21,081

)

 

 

 

 

(42,162

)

 

 

Realized loss on sale of investment

 

 

 

 

 

 

 

(406,060

)

 

 

Unrealized gain (loss) on equity securities

 

 

(8,968

)

 

 

 

 

(8,968

)

 

3,275,745

 

Total other income (expense)

 

 

(53,027

)

 

 

(35,026

)

 

(292,220

)

 

3,205,474

 

Net income (loss) before taxes

 

 

282,138

 

 

 

(360,156

)

 

49,615

 

 

1,804,254

 

Income tax expense (benefit)

 

 

99,000

 

 

 

(86,000

)

 

(198,000

)

 

621,000

 

Net income

 

$

183,138

 

 

$

(274,156

)

$

247,615

 

$

1,183,254

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

$

0.04

 

 

$

(0.10

)

$

0.07

 

$

0.48

 

Diluted earnings (loss) per share

 

$

0.04

 

 

$

(0.10

)

$

0.07

 

$

0.47

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

Basic

 

 

4,289,802

 

 

 

2,718,383

 

 

3,729,174

 

 

2,462,251

 

Diluted

 

 

4,290,052

 

 

 

2,718,383

 

 

3,729,424

 

 

2,497,808

 

 

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Contacts

Investor Contact

800-460-0815

ir@netcapital.com

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