Netcapital Announces Third Quarter Fiscal 2024 Financial Results

Management to Host Earnings Call on March 19, 2024 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 select financial results for the third quarter of fiscal year 2024 ended January 31, 2024.


“Despite the challenges faced by businesses seeking capital in the current market climate, we remain optimistic about our future prospects and the strength of our funding portal,” said Martin Kay, CEO of Netcapital Inc. “While we experienced a decline in the number of issuers listing on our platform this quarter, funding portal revenues increased by more than 70% on a year-to-date basis, and we continue to focus on the opportunities ahead. Most notably, we closed a $4 million public offering in December which adds to working capital, strengthens our financial position, and which we believe positions us for future success. ”

Third Quarter Fiscal 2024 Financial Highlights

Revenues decreased by approximately 54% year-over-year to $1.0 million, compared to revenue of $2.3 million in the third quarter of fiscal year 2023.

Funding portal revenues decreased approximately 23% year-over-year to $179,588 compared to $231,833 in the third quarter of fiscal 2023.

Diluted earnings per share of ($0.19) in the three months ended January 31, 2024, were down compared to diluted earnings per share of $0.33 for the same period in the prior year.

As of January 31, 2024, the Company had cash and cash equivalents of $2,172,099.

First Nine Months of Fiscal 2024 Financial Highlights

Revenues decreased by approximately 14% year-over-year to $4.6 million, compared to revenue of $5.4 million in the first nine months of fiscal year 2023.

Funding portal revenues increased driven by higher portal fees of approximately 152% year-over-year to $375,683 and an increase in listing fees of $48,040, or 14% compared to the first nine months of fiscal 2023.

Diluted earnings per share of ($0.25) in the nine months ended January 31, 2024, were down compared to diluted earnings per share of $0.46 for the same period in the prior year.

In December 2023, the Company closed a $4 million underwritten public offering.

For additional disclosure regarding Netcapital’s operating results, please refer to the Quarterly Report on Form 10-Q for the period ended January 31, 2024, which has been filed with the Securities and Exchange Commission.

Netcapital Inc

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

Three Months Ended

Three Months Ended

Nine Months Ended

Nine Months Ended

January 31, 2024

January 31, 2023

January 31, 2024

January 31, 2023

 

Revenues

 $

        1,042,793

 

 $

            2,260,414

 

 $

            4,604,260

 

 $

           5,379,960

 

Costs of services

 

               58,875

 

 

                     4,305

 

 

                   97,062

 

 

                  61,603

 

Gross profit

 

             983,918

 

 

              2,256,109

 

 

               4,507,198

 

 

              5,318,357

 

 

Costs and expenses:

Consulting expense

 

             175,357

 

 

                 130,500

 

 

                  544,033

 

 

                455,892

 

Marketing

 

               32,198

 

 

                   23,549

 

 

                  320,817

 

 

                  64,211

 

Rent 

 

               19,544

 

 

                   17,187

 

 

                   57,533

 

 

                  51,586

 

Payroll and payroll related expenses

 

             869,517

 

 

                 946,043

 

 

               2,957,394

 

 

              2,592,891

 

General and administrative costs

 

           1,092,459

 

 

                 568,253

 

 

               2,529,378

 

 

              1,241,365

 

               Total costs and expenses

 

           2,189,075

 

 

              1,685,532

 

 

               6,409,155

 

 

              4,405,945

 

Operating income (loss)

 

         (1,205,157

)

 

                 570,577

 

 

             (1,901,957

)

 

                912,412

 

 

Other income (expense):

Interest expense

 

              (11,918

)

 

                  (17,632

)

 

                  (35,784

)

 

                 (76,922

)

Gain on debt conversion

 

                        –

 

 

                            –

 

 

                            –

 

 

                224,260

 

Amortization of intangible assets

 

              (28,331

)

 

                  (25,914

)

 

                  (84,993

)

 

                 (68,076

)

Unrealized gain (loss) on equity securities

 

         (2,696,135

)

 

              1,866,468

 

 

             (2,696,135

)

 

              1,857,500

 

Realized loss on sale of investment

 

                        –

 

 

                            –

 

 

                            –

 

 

               (406,060

)

Total other income (expense)

 

         (2,736,384

)

 

              1,822,922

 

 

             (2,816,912

)

 

              1,530,702

 

               Net income (loss) before taxes

 

         (3,941,541

)

 

              2,393,499

 

 

             (4,718,869

)

 

              2,443,114

 

  Income tax expense (benefit)

 

         (1,713,999

)

 

                 697,000

 

 

             (2,339,288

)

 

                499,000

 

Net income (loss)

 $

      (2,227,542

)

 $

            1,696,499

 

 $

           (2,379,581

)

 $

           1,944,114

 

 

Basic earnings per share

 $

               (0.19

)

 $

                    0.33

 

 $

                   (0.25

)

 $

                   0.46

 

Diluted earnings per share

 $

               (0.19

)

 $

                    0.33

 

 $

                   (0.25

)

 $

                   0.46

 

 

Weighted average number of common shares outstanding:

Basic

 

11,466,523

 

 

5,166,299

 

 

9,457,740

 

 

4,208,216

 

Diluted

 

11,466,523

 

 

5,166,549

 

 

9,457,740

 

 

4,208,466

 

Netcapital Inc.

Balance Sheets

 

 

Assets:

January 31, 2024

April 30, 2023

  Cash and cash equivalents

 $

         2,172,099

 $

           569,441

  Accounts receivable net

 

            3,701,501

 

           1,388,500

  Note receivable

 

                20,000

 

                      –  

  Prepaid expenses

 

              158,465

 

              583,030

Total current assets

 

            6,052,065

 

           2,540,971

 

   Deposits

 

                  6,300

 

                 6,300

   Notes receivable – related parties

 

              202,000

 

              202,000

   Purchased technology, net 

 

          15,790,304

 

         15,875,297

   Investment in affiliate

 

              240,080

 

              240,080

   Equity securities at fair value

 

          21,844,698

 

         22,955,445

Total assets

 $

       44,135,447

 $

      41,820,093

 

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

   Trade

 $

           828,836

 $

           578,331

   Related party

 

                75,204

 

                75,204

Accrued expenses

 

              394,911

 

              285,065

Stock subscription payable

 

                10,000

 

                10,000

Deferred revenue

 

                     487

 

                    661

Interest payable 

 

                88,084

 

                98,256

Current taxes payable

 

                       –  

 

              174,000

Deferred tax liability, net

 

                       –  

 

           1,657,000

Related party debt

 

                15,000

 

                15,000

Secured note payable

 

                       –  

 

              350,000

Current portion of SBA loans

 

            1,885,800

 

           1,885,800

Loan payable – bank

 

                34,324

 

                34,324

 
Total current liabilities

 

            3,332,646

 

           5,163,641

 

Long-term liabilities:

Long-term SBA loans, less current portion

 

              500,000

 

              500,000

Total Liabilities

 

            3,832,646

 

           5,663,641

 

Commitments and contingencies

 

                       –  

 

                      –  

 

Stockholders’ equity:

  Common stock, $.001 par value; 900,000,000 shares

  authorized, 17,231,132 and 6,440,527 shares issued and outstanding

 

                17,231

 

                 6,441

  Shares to be issued

 

              122,124

 

              183,187

  Capital in excess of par value

 

          37,077,147

 

         30,500,944

  Retained earnings 

 

            3,086,299

 

           5,465,880

  
Total stockholders’ equity 

 

          40,302,801

 

         36,156,452

Total liabilities and stockholders’ equity 

 $

       44,135,447

 $

      41,820,093

Conference Call Information

The Company will host an investor conference call on Tuesday, March 19, 2024 at 10:00 a.m. ET.

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

Conference entry code: 926076

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. The Company’s funding portal, Netcapital Funding Portal, Inc., 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.

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

Investors

800-460-0815

ir@netcapital.com