Netcapital Inc.

Good day and welcome to the NetCapital Inc. earnings call. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Corrine Kreisler. Ma'am, the floor is yours.

Thank you, Holly. Good morning, everyone, and thank you for joining NetCapital's second quarter fiscal 2026 financial results conference call. I'm Corrine Kreisler, CFO of NetCapital, Inc. I will begin by reviewing our financial results, and then our Chief Executive Officer, Rich Wheelis, will share his prepared remarks before we open 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 strategies, 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. With that said, I'd like to now turn to our financial results for the second quarter fiscal 2026. We reported revenues of approximately $51,000 for the three months ended October 31, 2025, as compared to approximately 170,000 during the three months ended October 31, 2024. The decrease in revenues was primarily attributed to a decrease in portal fees during the quarter. I'll add that our revenues can be lumpy quarter over quarter as the timing of large client funding events can have an outsized impact on results. We reported an operating loss of approximately $2.1 million compared to an operating loss of approximately $2.2 million for the second quarter of fiscal year 2025. We reported a loss per share of 44 cents compared to a loss per share of $2.34 for the second quarter of fiscal year 2025. As of October 31, 2025, the company had cash and cash equivalents of approximately $1.7 million. I'll now turn the call over to our CEO, Rich Wheelis.

Thank you very much, Karine, and thank you, everybody, for joining the call today. This marks my first call with investors, and I want to start by emphasizing how excited I am to join NetCapital at this pivotal moment in our evolution. Throughout my career, I've been drawn to businesses that use technology to open doors that were previously closed. And NetCapital's mission to democratize access to private investments fits up perfectly. I've been involved in the blockchain crypto industry for numerous years and have had success with going back to one of my prior companies, Tal, which we made the ASIC chips for crypto miners. For example, in 2018, we were able to raise $33 million and execute on our strategy, which led to a 1260% increase in our share price in a four-month timeframe. So given the market size anticipated growth in the tokenized asset market, as well as experience of our team, I do believe that we're very well positioned to be able to be successful with our new strategy and drive value for all shareholders. Quite simply, NetCapital has significant opportunity for revenue enhancement by helping overall small businesses integrate crypto and blockchain into their financing and capital market strategy. The company already has a proven regulated platform that connects entrepreneurs with investors in a simple, transparent way. And I see this as a tremendous opportunity for us to build upon that foundation as we expand into new asset classes and blockchain-enabled solutions. I'm really looking forward to working alongside the team and with our issuer and investor communities to make NetCapital a leading digital ecosystem for founders seeking growth capital and investors looking to participate in the next generation of innovative companies. So I want to spend a few minutes putting our recent results into context. walking through how our strategy is involved and then talking about where we're focused going forward in emerging market drivers that may be the wind at our backs. We are in a transition period and our second quarter fiscal 2026 revenues continue to be impacted by the fact that we've exited a consulting for equity model that while it's generated revenue, this was not scalable in cash terms and made it harder for investors to see the underlying economics of our business. Against that backdrop, we made a strategic decision to resettle the company around our core FinTech platform and our recently licensed broker dealer. Our funding portal is fundamentally a technology business. We have a generally fixed cost platform and a relatively small employee base. So when we add more offerings and more volume, those incremental values, I'm sorry, incremental revenues will follow with attractive incremental margins. That is the kind of operating leverage that we want to see in a FinTech model. In parallel, our wholly owned subsidiary, Net Capital Securities, allows us to participate in Reg A capital raises, which are typically larger than Reg CF offerings, and it potentially expands the base of issuers and investors we can serve. So as we look ahead, the strategy is straightforward. Grow volume on a platform that is now structurally more scalable, fully leverage our broker-dealer to unlock larger transactions and a broader product set, and position the company for emerging opportunities from digital assets and tokenization, which we view as a logical extension of our existing business. We plan to focus on where blockchain generally adds value, which can encompass how security is recorded, how they're traded, or how liquidity mechanisms are structured. And we always evaluate each opportunity with a long-term lens. How does it create durable value for the company and for shareholders? And can it be executed in a way that is consistent within the requisite regulatory framework? Lastly, I'll touch on the macro environment and why I'm very excited about the timeliness of our push in our position for success. There's the emerging new category for U.S. compliant utility token sales that we believe is decentralizing token ownership. and seeding long-term network growth. For example, Coinbase's Monad token sale last month in November demonstrated strong pent-up demand for U.S. recapitulation patient and utility token offerings. $269 million was raised from 86,000 buyers and less than 24 hours. This was not just speculation, but it was rather, it was a clear market signal. With our position as a broker-dealer and deep regulatory expertise, we have a compliant bridge between global token ecosystems and U.S. retail investors. This new category has the potential for high-margin revenue streams on top of our current business. And a single successful token sale may generate revenue that's equivalent to dozens of our regular traditional red CF offerings, with a similar compliance list but higher margins. In addition, with 100,000 US Investors Network, and over 300 companies that we've successfully funded. We have the foundation and a track record to succeed in this market. With all that being said, we'll open the call up for Q&A.