Netcapital Inc.

Good day, everyone, and welcome to the NetCapital, Inc. Second Quarter Fiscal 2025 Conference Call. At this time, all participants have been placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star 1 on your phone to enter the question queue at any time, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Corrine Krasler, CFO of NetCapital, Inc. Ma'am, the floor is yours.

Thank you, Matthew. Good morning, everyone, and thank you for joining NEC Capital's second quarter fiscal 2025 financial results conference call. I'm Corrine Kreisler, CFO of NEC Capital, Inc. I will begin by reviewing our financial results, and then our Chief Executive Officer, Martin Kaye, will share his prepared remarks before we open up the Q&A portion of our call. Before we begin, I'd like to remind everyone of the safe harbor disclosure regarding forward-looking information. Management's discussion may include forward-looking statements. These statements relate to future events or 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. With that said, I'd like to now turn to our financial results for the second quarter fiscal 2025. Revenues for Q2 fiscal 2025 for the period ended October 31, 2024, decreased by approximately $1.9 million or approximately 92% to $170,528 as compared to approximately $2.04 million in Q2 fiscal 2024. The decline in revenues was attributed to the lack of consulting service revenue in Q2 2025 as compared to revenue of approximately $1.5 million for consulting services for equity securities and $62,000 for consulting revenue in Q2 2024. I'm pleased to report that as of November 22, 2024, we received approval from FINRA for our broker-dealer subsidiary, which will be a focus for the company moving forward. We reported an operating loss of $2.2 million approximately for the second quarter fiscal 2025 as compared to an operating profit of $52,220 for the second quarter fiscal 2024. Our net loss for the second quarter fiscal 2025 was approximately $2,220,501 as compared to a net profit of approximately $339,616 for the same period in the prior year. We reported a loss per share of $2.34 for the second quarter ended October 31, 2024, compared to earnings per share of $2.52 for the same period in the prior year. As of October 31, 2024, The company had cash and cash equivalents of $1,346,739. I'll now turn the call over to our CEO, Martin Kay.

Thank you, Corrine. I'd like to also thank everyone for being on this call today and for your interest and support of NetCapital. As Corrine mentioned, during the quarter, we saw a decrease in revenue primarily due to the shift away from what is primarily non-cash consulting service revenue. So with our focus on the broker-dealer subsidiary, we believe that we will see greater potential and value added in that area. And as such, we've not been pursuing equity-based revenue contracts. Recently, as Corinne mentioned, we were pleased to announce that our wholly owned subsidiary, Net Capital Securities, Inc., had received approval from the Financial Industry Regulatory Authority, or FINRA, to become a FINRA member broker-dealer. This marks a significant achievement for the company and it begins to open new opportunities for more revenue streams. We believe that by having NetCapital Securities, Inc. as registered broker-dealer, it could create new opportunities to expand the company's revenue base by hosting and generating additional fees from Reg A and Reg D offerings on the NetCapital platform. This positions the company to support larger fundraisers and potentially expand the range of investment opportunities available to its investor base. A broker-dealer license allows us to conduct private placements of securities and referral business, support companies raising equity capital, as I mentioned under Regulation A and Regulation D, partner with other broker-dealers to syndicate deals, charge fees on capital raised under Reg A and Reg D, as well as enter into fee-sharing agreements with other broker-dealers. Thank you for your continued interest and support of NetCapital, and we look forward to keeping you informed of our progress. Operator, we're ready for questions.