Netcapital Inc.

Good day, and welcome to the NetCapital second quarter earnings call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your 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 so much. Good morning, everyone, and thank you for joining NetCapital's fiscal second quarter 2024 financial results conference call. This is Corrine Kreisler, CFO of NetCapital Inc. I will begin with a review of our financial results. Following that, NetCapital's CEO, Martin Kaye, will follow with his prepared remarks before we open the call up for questions. 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. turning to our financial results for the second quarter. During the quarter, we experienced a significant increase in revenue from our funding portal, reflecting a 151% year-over-year growth, helped by the success of several large issuers during the period. Total company revenues grew 15% year-over-year to $2 million, as compared to revenue of $1.8 million in the second quarter of fiscal year 2023. Net income increased 85% to $339,616 as compared to $183,138 for the second quarter fiscal year 2023 with the increase driven primarily by an income tax benefit of approximately $326,000. Operating income for the second quarter decreased to $52,220 compared to $336.165 in the second quarter of fiscal 2023. The decrease was driven primarily by higher stock-based compensation expense. I'll now turn the call over to our CEO, Martin Kay.

Thank you, Corrine, and welcome, everyone. We followed up the first quarter of fiscal 2024 with another solid quarter with both overall revenues and revenue from our funding portal showing growth. As Corrine mentioned, there was sizable activity in the funding portal of our business with a significant increase in our revenue and the amount of dollars closed on offerings, which we're pleased to have seen. There were two significant deals that were closed by issuers during the quarter. The first, Avidane, a graphene technology company, successfully sold out their $4.5 million offering after upsizing the offering several times due to strong demand. And the second deal, EarthGrid PBC, a plasma boring technology company, closed a $3.3 million offering. These deals are a testament to the confidence both our client companies and our investor community have in our funding portal. NetCapital is a unique platform that is a scalable real-time transaction processing engine that runs 24 hours a day, seven days a week. We have over 100,000 users and over 50 companies that are currently raising capital on the platform. By offering a cost-effective online capital raising solution and delivering exceptional issuer experience with easy access and onboarding process, Backed by solid technology and boasting an extensive network of investors and companies, we're confident that we continue to offer a strong value proposition. As always, thank you for your interest in support of NetCapital. And operator, we're ready for questions.

Certainly. The floor is now open for questions. If you would like to join the queue to ask a question at this time, please press star 1 on your telephone keypad. We do ask, if listening on speakerphone this morning, that you pick up your handset while asking your question to provide optimal sound quality. Once again, that will be star one at this time to join the queue to ask a question. Please hold a moment while we poll for questions. And the first question this morning is coming from Michael Matheson from Singular Research. Michael, your line is live. Please go ahead.

Good morning, you guys, and congratulations on the quarter.

Hi, Michael. Thanks for joining.

Yeah, great. Particularly in light of current macro conditions, very, very impressive to have sold-out offerings like that. Let me move forward to questions. The crucial one, Corinne, you know me, I always focus on cash flow. And I noticed that while you often accept equity in lieu of cash for your fees, this quarter, if I'm reading your statement right, all the revenue was in the form of cash. Am I correct on that, and how should we model going forward?

So during the quarter, approximately 26% of the revenues were cash. Cash revenues totaled $524,991. You can see that in the management discussion analysis of the quarter. OK, great. Thank you for the correction.

Second question, we've talked about an exciting thing you've been trying to get off the ground, secondary trading on your platform, and I'm wondering how that's going.

Yeah, so I would say that we've made very significant progress on that. Right now we're just dotting our I's and crossing our T's. Given how close we are to the holidays, I wouldn't expect us to launch pre-holiday, but certainly once the holidays are over, you should expect a launch, you know, reasonably soon after that.

Great. Thank you for taking my questions.

Absolutely.

Thank you. Once again, if you'd like to join the queue at this time to ask a question, you may press star 1 on your telephone keypad. Please hold a moment while we check the questions one last time. And there are no further questions in queue at this time.

Great. Thank you so much, everyone, for joining. We really appreciate your time and attention, especially during this very busy holiday season. We're very excited about how well our funding portal has been performing. I think it's a testament to the product that we've built and the confidence that both investors and issuers have in our product. And thank you very much.

Thank you. This does conclude today's Thank you. 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.