Netcapital Inc.

Good morning, ladies and gentlemen, and welcome to the NetCapital Fiscal 2023 Second 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 Krasner, CFO of NetCapital. Corrine, the floor is yours. Thank you, Jenny. Thank you, Jenny. Good morning, everybody, and thank you for joining NetCapital's financial results conference call for the second quarter of fiscal 2023, ended October 31, 2022. This is Corrine Kreisler, CFO of NetCapital, Inc. I will begin with a review of our financial results. Jason Frischman, CEO of NetCapital Funding Portal, will follow with an update on our platform. and Cecilia Link, CEO of NetCapital, Inc., will discuss the recent addition to our board of directors. Before we begin, I'd like to call your attention to the customary safe harbor disclosure regarding forward-looking information. Management 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. NetCapital 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. I'll begin now with a review of our financial results for the second quarter of fiscal 2023. We had a particularly strong quarter for our consulting services for equity securities. Led by this revenue expansion, total revenues increased 48% year-over-year to $1.8 million, compared to $1.2 million in the year-ago quarter, and we generated positive operating income for the second quarter compared to an operating loss of $325,000 in the year-ago quarter. Net income for the second quarter was $183,000 compared to a net loss of $274,000 in the second quarter of fiscal 2022. Diluted earnings per share for the second quarter were $0.04 per share, compared to a loss per share of 10 cents in the year-ago quarter. For the six months of fiscal year 2023, revenue increased 71% year-over-year to $3.1 million. Net capital generated positive operating income compared to an operating loss of $1.4 million in the first six months of fiscal year 2022. Diluted earnings per share of 7 cents compared to a loss per share of 47 cents in the first six months of fiscal year 2022. At October 31, 2022, we had cash and cash equivalents of $1.6 million, as compared to $474,000 at April 30, 2022. As of October 31, 2022, equity securities at fair value totaled $15.1 million, compared to $12.9 million at April 30, 2022. I'll now turn the call over to Jason Fritchman, CEO of the NetCapital Funding Portal. Jason?

Thank you, Colleen. We have hosted many exciting offerings this year, and we've featured a number of them in press releases over the past six months. Some examples include Lithium startup EnergyX, which completed two rounds of financing with us and recently received a $450 million investment commitment from private equity firm Global Emerging Markets Group, or GEM. Phantom Global, a startup that was among the first clients of NetCapital Advisors, completed a round of financing through NetCapital Funding Portal. Phantom Global is now backed by Bill Gates' energy fund, Breakthrough Energy Ventures. Multiple offerings raised more than $1 million in the past six months, including KMX Technologies and Avidane. And we previously discussed MagFast, a developer of premium wireless magnetic chargers. MagFast has previously sold out two offerings on the NetCapital platform and has relaunched a new offering in the last few months. These are some of the success stories we are privileged to support through our digital private market ecosystem. One of our missions as a business is to mentor and support entrepreneurs in their journeys, and it's truly rewarding to see the startups on our platform that succeed in attracting subsequent funding as they build, expand, and prosper. We continue to see our business grow stronger during even tough economic climates. I will now turn the call over to Dr. Cecilia Link, Chairman of the Board and CEO of NetCapital, Inc.

Thank you, Corrine and Jason. It is with great pleasure that we recently welcomed Arne Scott to our board of directors. Arne has been involved in NetCapital as an investor and advisor since our inception. He is an accomplished business leader and corporate governance expert with 15 years of experience as a director and chair on various corporate and advisory boards. He is deeply skilled in startup businesses, venture capital, business strategy, executive management, and entrepreneurship, all of which are fundamental to the services we provide in private capital markets and strategic advisory. As an active participant in the angel investing community of Greater Boston for more than 10 years, Mr. Scott currently serves as a founding member of the Private Directors Association. Previously, he has served as a member of the Board of Trustees for Alderson Broaddus University and is Vice Chairman of First Commons Bank, Chairman of AssetLink International, and Director for Civo Nutraceuticals, Neuron Corp., and Hub Management Company. He has also served on a number of advisory boards, including Bestmark, Success Emo, AI Resources, and the Capital Network. Mr. Scott served for over 30 years at MFF Investment Management and retiring as Senior Executive Vice President in 2001. Arnie, we are so delighted to have you join us. We are very pleased with our company's performance to date and strong first half of fiscal year 2023. We thank you for your interest in investment in net capital. and look forward to delivering continuing growth in the future. Operator, we are now ready to take questions.