Full Year 2024 Netcapital Inc Earnings Call

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Good morning, everyone and welcome to the net capital incorporated quarterly earnings call. At this time, all participants have been placed on a listen only mode and the floor will be opened for questions. Following the presentation. It is now my pleasure to turn the floor over to your house Corrine Chrysler of net capital Inc.

Corrine.

Yeah.

Coreen S. Kraysler: Thank you so much Jenny and good morning, everyone and thank you for joining that capital full year fiscal 'twenty 'twenty four financial results Conference call. This is Korean Chrysler CFO of net capital thing I.

I will begin with a review of our financial results.

Knowing that that capital's CEO Martin K will follow with his prepared remarks before we open up the call for questions.

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.

Statements relate to future events or future financial performance and involve known and unknown risks.

Certainties 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.

Corrine Chrysler: Any forward looking statements reflect management's current views with respect to operation results of operations growth strategy liquidity in future events.

Corrine Chrysler: Net capital assumes no obligation to publicly update or revise 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 full year fiscal 2024.

Revenues for fiscal 2024 decreased by $3 million $542550 or 42% to $4 million at $951004 35, compared to $8 million for 93 985 in fiscal 2023.

This decline in revenues was mainly due to a decrease in consulting services for equity securities, which dropped by $3 million 660, 500000, or 52% to 3.44 million in fiscal 2024 as compared to $7 1 million in the previous year.

The aggregate decrease of approximately $3 7 million in consulting services for equity Securities in fiscal 2024 occurred because we provided consulting services to only three companies in fiscal 2024 as compared to six companies in fiscal 2023, we strive to provide more.

$1 million worth of consulting services to this type of client and the average fee that we earn FERC Wyatt in fiscal 2024, and 2023 amounted to 1 million $1 46, 667, and 1 million 184 167, respectively.

These services are provided by our consulting subsidiary net capital Advisors and advisors did not earn any equity securities from consulting work in the fourth quarter of fiscal 2024.

Our subsidiary net capital funding portal, Inc. Introduced a 1% fee on the equity raised by issuers using the funding portal in fiscal 2020 for the funding portal are equity securities from 30 clients with a total value of 97700 as compared to $0 in the previous fiscal year.

Corrine Chrysler: Our cost of revenues increased by $23000 or 27% to 108 approximately 108000 in fiscal 2024 from approximately 85000 in fiscal 2023. The increase is attributable to the funding portal, which saw a rise in revenue.

From portal fees, two 874368 in fiscal 2024.

Corrine Chrysler: We recognized an unrealized loss in the value of our equity securities.

Corrine Chrysler: Proximately $2 7 million in fiscal 2024, as compared to unrealized gains of approximately $1 9 million in the value of our equity securities and fiscal 2023 lots in fiscal 2024 was attributable to a decrease in value of our $3 2 million shares of King's crowd common stock.

From one dollar per share to 16 cents per share.

Corrine Chrysler: We recorded an impairment loss of 1 million and 48 $4 30 in fiscal 2020 for the loss in fiscal 2024 consists of a reduction in value from 647. She was 60 $420 for the intangible assets, we acquired in the purchase of M. S. G.

And a reduction in value from 401167 $0 for the intangible assets, we own that are associated with the website one on one's down.

The person who operated M. S. G retired due to health reasons during fiscal 2024, and we were unsuccessful in transitioning the valuation consulting work performed by MSG to another person.

Corrine Chrysler: We may continue providing business valuation services in the future, but at this point in time, we cannot attribute any value to the assets we purchased.

Similarly, the person who was designated to operate our one on one fans website left the company in May 2024, and without his expertise and connections with professional hockey players, we determined the value to be $0.

Revenues from portal fees increased by 455, 855, or 109% year over year to 874 368 from 418 513 in fiscal 2023.

The increase in portal fees is attributable to the increase in the amount of capital raised on the net capital funding portal and the increase in a number of issuers that completed an offering in fiscal 2024.

Corrine Chrysler: 2023.

The average amount raised in an offering on the net capital funding portal was 280978 and 128170, respectively.

We had an operating loss of 3 million or 42 388 for the full fiscal 2024 as compared to operating income of $2 million 271, 876 for fiscal 2023, and the net loss for fiscal 2020 for a $4 million 986 370.

<unk> as compared to 2 million $9 54, 972 for fiscal 2023.

Corrine Chrysler: We reported a loss per share of <unk> 41, and the full year ended April 32, 24, which was 202024, which was down compared to earnings per share of 63000 for the same period in the prior year.

As of April 30th 224 <unk>.

20024, the company had cash and cash equivalents of 863182, I'll now turn the call over to our CEO Martin K.

Thank you Corrine and thank you to all shareholders, who were taking the time to be on this call today.

Martin Kay: We saw a challenging economic environment over the year as reflected in the press release filing and and the numbers the Korean recapped showing decreases in both our top and bottom line.

There are several important metrics.

Martin Kay: This will give metrics to highlight.

Corrine mentioned these but just to emphasize.

The average amount raised.

<unk> on our platform went up from $1 28 to 280000 year over year. The total number of successful offerings increased.

From 50% to 53 and in addition, we saw total revenue for portal fees increased by 109% so more than double and so these numbers tell the story that despite the tough environment. We completed more deals on our platform are issuers on average raised more capital and as a result, we saw strong growth in op.

Total fee revenue compared to 2023.

Martin Kay: Along those lines I'd like to highlight two significant deals that were closed by issuers during the year.

Aberdeen Graphene technology company successfully sold out the $4 $5 million offering after upsizing the offering several times due to strong demand.

Martin Kay: And the second deal Earth grid, PBC, a plasma boring technology company closed at $3 3 million offering.

These two deals alone totaled almost $8 million demonstrating the opportunity for both companies and investors that use funding portal.

Martin Kay: Yeah.

As of today, we own minority positions in 22 portfolio companies that have utilized the funding quarter to facilitate their offerings for which equity was received as payment for services.

Martin Kay: And as Corey mentioned, we added a 1% fee on equity raised by issuers this year.

And the funding portal and securities from 30 clients.

As a result of that that move.

Looking forward and highlighting some of the strategic priorities for us as a company, we recently announced the launch of the beta version.

Martin Kay: Secondary trading platform to a cruise a close group of users in collaboration with Tampa markets.

In September we began internal testing of this secondary trading platform, which provides access to a registered alternative trading system or an ats.

Martin Kay: The <unk> is approved in 53 U S States and territories and we will have the ability to facilitate the trading of unregistered or private equity securities.

Martin Kay: So this partnership will provide investors who purchased stock through the net capital funding portal with the potential for a secondary trading and allow for improved liquidity.

It will provide issuers with a potential path to a broader pool of retail investors a way to engage their communities and share in the value they're creating.

And also a potential steppingstone on journey to a more traditional public market.

Second we also announced that net capital has applied for a broker dealer license sports wholly owned subsidiary net capital Securities.

Martin Kay: We believe that by having a registered broker dealer, we may create opportunities to expand our revenue base by hosting and generating additional fees.

From what are called Reg, a plus and Reg D offerings on the net capital platform.

Under Reg a plus companies can raise up to $75 million from our credit and non accredited investors every 12 months.

This is $5 million the permitted under our current rig CF environment.

Additionally, under Reg D. <unk> companies can raise unlimited amounts of capital from accredited investors using general solicitation.

So net capital remains a competitive scalable platform offering a cost effective online capital raising solution for a growing network of companies and investors. We continue to strive as innovative leaders in producing what we believe and our customers frequently tell us is the best platform.

More than 100000 users and growing over 50 companies currently in the fundraising process.

Healthy, but very competitive for 9% portal fee for capital raised at closing.

Martin Kay: And higher outcomes in money raised per offering all speak to the value we provide in the marketplace.

Finally, I would say that we are focused on the long term and not optimizing for short term results. Our success depends on our client success and that usually takes time and patience.

As always thank you for your interest and support of net capital operator, we are ready for questions.

Thank you very much we are now opening the floor for questions. If you have any questions. Please press star one on your phone keypad now we also while you're posing your question you. Please pickup your handset if you're listening on a speaker phone to provide optimal sound quality.

Wait a moment, whilst we pulse any questions.

Speaker Change: Thank you. Your first question is coming from Chris Sakai of singular research Chris Your line is life.

Hi, good morning.

Just a question on on portal fees and the growth there.

What sort of initiatives that you're doing to maintain or increase that growth.

Well, it's as we mentioned, it's a function of the number of issuers on the platform and the success of those issuers. So we're continuing to do the things, we always do which is.

Speaker Change: Innovate in the ways in which we connect with new companies that would be would be a good fit for our platform.

And in terms of individual raises were learning from.

History at this point as to what it takes to be successful on our platform and ways in which you can engage in digital marketing activities.

Speaker Change: And and engage your community too.

To become investors and owners and ambassadors for those companies.

So.

We expect to continue focusing on those assets, so targeting new and potentially bigger issuers, particularly as we move into the Reg a plus business.

And leveraging the learnings to date as to how to make any given issue are as successful as possible on the platform.

Speaker Change: Okay. Thanks, and then you mentioned the Ats.

Speaker Change: Four months.

Do you have any sort of timeline as far as the progression there.

Speaker Change: Yeah, well as I mentioned, we we announced.

Announced.

Speaker Change: The launch of the production in a production environment to a closed group of users. We expect to as we I think we said in that press release to open that up.

Speaker Change: To a broader group of users before the end of this year.

But we obviously were doing something that no one else has done.

We're doing it in partnership with with a great company.

And we just want to be careful and make sure that.

When we do.

Open to everyone that we are that we provide the experience that folks will expect.

Okay, great. Thanks for the answers.

Thank you very much.

Speaker Change: Just as a reminder, that if anyone has any further questions. You can press star one on your phone keypad now to join the key star one.

Speaker Change: I'm not seeing anyone else come into queue.

No we don't have anyone else in the queue.

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Great.

Kurt: Back over to Kurt.

Alright. Thank you everyone for joining our call. We really appreciate your support and we look forward to speaking with you all soon.

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Thank you well. Thank you very much. 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.