Netcapital Announces Third Quarter Fiscal 2024 Financial Results

In This Article:

  • Management to Host Earnings Call on March 19, 2024 at 10:00 a.m. ET

BOSTON, March 18, 2024--(BUSINESS WIRE)--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