Netcapital 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.
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