Netcapital Inc.

Good morning, ladies and gentlemen, and welcome to the NetCapital Fiscal 2023 First Quarter Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Corrine Krasler. The floor is yours.

Thank you. Good morning, and thank you for joining NetCapital Inc. Financial Results Conference Call. for the first quarter of fiscal year 2023, ended July 31st, 2022. This is Corrine Kreisler, CFO of NetCapital, Inc., and joining me on the call today are Dr. Cecilia Link, CEO of NetCapital, Inc., and Jason Frischmann, CEO of NetCapital Funding Portal. Before we begin, I'd like to call your attention to the customary safe harbor disclosure regarding forward-looking information. Management's discussion may include forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. Any forward-looking statements reflect management's current views with respect to operations, results of operations, growth strategy, liquidity, and future events. Net capital assumes 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. Since our fiscal year 2022 investor call was held just five weeks ago, Our comments today will be brief. I'll begin with a review of our financial results for the first quarter of fiscal 2023. The momentum in our business feels strong revenue growth in the first quarter. Revenues increased 114% year over year to $1.3 million compared to $625,000 in the year ago quarter. And we generated positive operating income for the first quarter compared to an operating loss of $1.1 million in the year-ago quarter. Net income for the quarter was $64,000, compared to $1.5 million in the first quarter of fiscal year 2022. In the year-ago period, net income included an unrealized gain on equity securities of $3.3 million. We own minority equity positions in 13 early-stage companies. Two of these companies are preparing to list on an exchange, and we currently receive cash payments from three of these companies for consulting, marketing, and professional services. Our investments in equity securities totaled $13.4 million as of July 31, 2022, as compared to $12.8 million as of April 30, 2022. Diluted earnings per share for the first quarter was $0.02 compared to $0.65 in the year-ago quarter. At July 31, 2022, we had cash and cash equivalents of $2.6 million as compared to $474,000 at April 30, 2022. On July 15, 2022, we completed an underwritten public offering of 1.2 million shares of our common stock and warrants, generating gross proceeds of $5 million. During July, we also paid down $1 million in debt. We finished the first quarter with working capital of $737,000 compared to a working capital deficit of $3.1 million at April 30, 2022. I'll now turn the call over to Jason Frischman, CEO of the NetCapital Funding Portal.

Thank you, Corian. We are off to a strong start in fiscal year 2023 with continued strong momentum on our platforms. We have now surpassed 100,000 users and have provided services to hundreds of issuers. We believe the activity on our portal illustrates the key competitive advantages we offer over other online capital-raising platforms. A comprehensive suite of services, scalable technology platform, and high-value management consulting for issuers, plus the ability of investors to invest virtually anywhere at almost any time with just a few clicks. We also closed large raises on the platform in the month of August. Avidane raised $1.4 million on net capital, and KMX Technologies raised $1.07 million. We were also pleased to be nominated as a finalist for Platform of the Year in the 2020-22 Equity Crowdfunding Awards by Startup Starter. NetCapital was selected for Outstanding Innovation and Excellence in Moving the Equity Crowdfunding Industry Forward and Creating Opportunities for the Masses to Invest. In addition, I was selected as a finalist for Industry Leader of the Year by Startup Starter, and voting ends for that award September 30th. I will now turn the call over to Dr. Cecilia Lenk, Chairman of the Board and CEO of NetCapital, Inc., for closing remarks.

Thank you, Corrine and Jason. Our uplisting to NASDAQ in July was a fantastic way to kick off our new fiscal year, and we welcome all of our new shareholders and appreciate the investor interest we are receiving. We're pleased to discuss our successful first quarter results and look forward to a productive year ahead. Operator, we are now ready for questions.

Certainly. The floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold just a moment while we poll for questions. Your first question is coming from Richard Newberg. Please pose your question. Your line is live.

Okay, now that you're making all the money, now that you're paying down your debt, now that you're really getting on top of the game, where are you going from here?

Jason, I'm going to let you answer that question and talk about the strategy for the Net Capital Funding Portal.

Sure. Hi, Richard. Thanks for your question. We do have some growth strategies in place that we're looking to execute on. Marketing is a big focus of ours. Through our NetCapital Advisor Services, we're looking to enhance the digital marketing of not only NetCapital, but also the issuers that are coming on our platform, providing services to them through NetCapital Advisors, if they so choose. We're also looking to grow our business development grow our pipeline with respect to issuers coming on the platform, and provide better services all around to both issuers and investors who are looking to access net capital and have a good experience in connecting in the digital private markets.

There are no additional questions in queue at this time.

Okay. Thank you very much. Thank you, everyone, for joining, and we look forward to speaking with you soon.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.