8-K
Netcapital Inc. (NCPL)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 18, 2024
NETCAPITAL
INC.
(Exact name of registrant as specified in charter)
| Utah | 001-41443 | 87-0409951 |
|---|---|---|
| (State<br> or other jurisdiction of incorporation) | (Commission<br><br> <br>File<br> Number) | (IRS<br> Employer<br><br> <br>Identification<br> No.) |
| 1 Lincoln Street, Boston, Massachusetts | 02111 | |
| --- | --- | |
| (Address<br> of principal executive offices) | (Zip<br> Code) |
Registrant’s telephone number, including area code: (781) 925-1700
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Trading<br> symbol(s) | Name<br> of each exchange on which registered |
|---|---|---|
| Common Stock, $0.001 par value per share | NCPL | The Nasdaq Stock Market LLC |
| Redeemable warrants exercisable for one share of Common Stock at an exercise price of $5.19 | NCPLW | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1934 (§240.12b-2 of this chapter)
Emerging growth company ☐.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item2.02. Results of Operations and Financial Condition.
On March 18, 2024, Netcapital Inc. (the “Company”) issued a press release announcing financial results for the period ended January 31, 2024. The text of the press release is furnished as Exhibit 99.1 to this current report.
The information in this Item 2.02 and Exhibit 99.1 hereto shall not be deemed “filed” for the purposes of or otherwise subject to the liabilities under Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Unless expressly incorporated into a filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, the information contained in this Item 2.02 and Exhibit 99.1 hereto shall not be incorporated by reference into any Company filing, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item9.01 Financial Statements and Exhibits
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated March 18, 2024. |
| 104 | Cover<br> Page Interactive Data File (embedded within the Inline XBRL document). |
| -2- |
| --- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Netcapital Inc. | ||
|---|---|---|
| (Registrant) | ||
| By: | /s/ Coreen Kraysler | |
| Name: | Coreen<br> Kraysler | |
| Title: | Chief<br> Financial Officer | |
| Dated<br> March 18, 2024 |
| -3- |
| --- |
Exhibit99.1
Netcapital Announces Third Quarter Fiscal 2024 Financial Results
| ● | Management to Host Earnings Call on March 19, 2024 at 10:00 a.m. ET |
|---|
BOSTON, MA – March 18, 2024 – Netcapital Inc. (Nasdaq: NCPL, NCPLW) (the “Company”), a digital private capital markets ecosystem, today announced select financial results for the third quarter of fiscal year 2024 ended January 31, 2024.
“Despite the challenges faced by businesses seeking capital in the current market climate, we remain optimistic about our future prospects and the strength of our funding portal,” said Martin Kay, CEO of Netcapital Inc. “While we experienced a decline in the number of issuers listing on our platform this quarter, funding portal revenues increased by more than 70% on a year-to-date basis, and we continue to focus on the opportunities ahead. Most notably, we closed a $4 million public offering in December which adds to working capital, strengthens our financial position, and which we believe positions us for future success.”
Third Quarter Fiscal 2024 Financial Highlights
| ● | Revenues<br> decreased by approximately 54% year-over-year to $1.0 million, compared to revenue of $2.3<br> million in the third quarter of fiscal year 2023. |
|---|---|
| ● | Funding<br> portal revenues decreased approximately 23% year-over-year to $179,588 compared to $231,833<br> in the third quarter of fiscal 2023. |
| ● | Diluted<br> earnings per share of ($0.19) in the three months ended January 31, 2024, were down compared<br> to diluted earnings per share of $0.33 for the same period in the prior year. |
| ● | As<br> of January 31, 2024, the Company had cash and cash equivalents of $2,172,099 |
First Nine Months of Fiscal 2024 Financial Highlights
| ● | Revenues<br> decreased by approximately 14% year-over-year to $4.6 million, compared to revenue of $5.4<br> million in the first nine months of fiscal year 2023. |
|---|---|
| ● | Funding<br> portal revenues increased driven by higher portal fees of approximately 152% year-over-year<br> to $375,683 and an increase in listing fees of $48,040, or 14% compared to the first nine<br> months of fiscal 2023. |
| ● | Diluted<br> earnings per share of ($0.25) in the nine months ended January 31, 2024, were down compared<br> to diluted earnings per share of $0.46 for the same period in the prior year. |
| ● | In<br> December 2023, the Company closed a $4 million underwritten public offering. |
For additional disclosure regarding Netcapital’s operating results, please refer to the Quarterly Report on Form 10-Q for the period ended January 31, 2024, which has been filed with the Securities and Exchange Commission.
Conference Call Information
The Company will host an investor conference call on Tuesday, March 19, 2024 at 10:00 a.m. ET.
Participant access: 844-985-2012 or 973-528-0138
Conference entry code: 926076
For those unable to participate in the live call, a replay will be made available in the Investors section of the Company’s website.
About Netcapital Inc.
Netcapital Inc. is a fintech company with a scalable technology platform that allows private companies to raise capital online and provides private equity investment opportunities to investors. The Company’s consulting group, Netcapital Advisors, provides marketing and strategic advice and takes equity positions in select companies. The Company’s funding portal, Netcapital Funding Portal, Inc., is registered with the U.S. Securities & Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA), a registered national securities association.
Theinformation contained herein includes forward-looking statements. These statements relate to future events or to our future financialperformance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materiallydifferent from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and otherfactors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity,performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject tothese and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity.We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actualresults could differ materially from those anticipated in these forward-looking statements, even if new information becomes availablein the future.
Investor Contact
800-460-0815
ir@netcapital.com
Netcapital Inc.
Balance Sheets
| April 30, 2023 | |||
|---|---|---|---|
| Assets: | |||
| Cash and cash equivalents | 2,172,099 | $ | 569,441 |
| Accounts receivable net | 3,701,501 | 1,388,500 | |
| Note receivable | 20,000 | - | |
| Prepaid expenses | 158,465 | 583,030 | |
| Total current assets | 6,052,065 | 2,540,971 | |
| Deposits | 6,300 | 6,300 | |
| Notes receivable - related parties | 202,000 | 202,000 | |
| Purchased technology, net | 15,790,304 | 15,875,297 | |
| Investment in affiliate | 240,080 | 240,080 | |
| Equity securities at fair value | 21,844,698 | 22,955,445 | |
| Total assets | 44,135,447 | $ | 41,820,093 |
| Liabilities and Stockholders’ Equity | |||
| Current liabilities: | |||
| Accounts payable | |||
| Trade | 828,836 | $ | 578,331 |
| Related party | 75,204 | 75,204 | |
| Accrued expenses | 394,911 | 285,065 | |
| Stock subscription payable | 10,000 | 10,000 | |
| Deferred revenue | 487 | 661 | |
| Interest payable | 88,084 | 98,256 | |
| Current taxes payable | - | 174,000 | |
| Deferred tax liability, net | - | 1,657,000 | |
| Related party debt | 15,000 | 15,000 | |
| Secured note payable | - | 350,000 | |
| Current portion of SBA loans | 1,885,800 | 1,885,800 | |
| Loan payable - bank | 34,324 | 34,324 | |
| Total current liabilities | 3,332,646 | 5,163,641 | |
| Long-term liabilities: | |||
| Long-term SBA loans, less current portion | 500,000 | 500,000 | |
| Total Liabilities | 3,832,646 | 5,663,641 | |
| Commitments and contingencies | - | - | |
| Stockholders’ equity: | |||
| Common stock, .001 par value; 900,000,000 shares authorized, 17,231,132 and<br> 6,440,527 shares issued and outstanding | 17,231 | 6,441 | |
| Shares to be issued | 122,124 | 183,187 | |
| Capital in excess of par value | 37,077,147 | 30,500,944 | |
| Retained earnings | 3,086,299 | 5,465,880 | |
| Total stockholders’ equity | 40,302,801 | 36,156,452 | |
| Total liabilities and stockholders’ equity | 44,135,447 | $ | 41,820,093 |
All values are in US Dollars.
Netcapital Inc
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | Three Months Ended | Nine Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| January 31, 2024 | January 31, 2023 | January 31, 2024 | January 31, 2023 | |||||||||
| Revenues | $ | 1,042,793 | $ | 2,260,414 | $ | 4,604,260 | $ | 5,379,960 | ||||
| Costs of services | 58,875 | 4,305 | 97,062 | 61,603 | ||||||||
| Gross profit | 983,918 | 2,256,109 | 4,507,198 | 5,318,357 | ||||||||
| Costs and expenses: | ||||||||||||
| Consulting expense | 175,357 | 130,500 | 544,033 | 455,892 | ||||||||
| Marketing | 32,198 | 23,549 | 320,817 | 64,211 | ||||||||
| Rent | 19,544 | 17,187 | 57,533 | 51,586 | ||||||||
| Payroll and payroll related expenses | 869,517 | 946,043 | 2,957,394 | 2,592,891 | ||||||||
| General and administrative costs | 1,092,459 | 568,253 | 2,529,378 | 1,241,365 | ||||||||
| Total costs and expenses | 2,189,075 | 1,685,532 | 6,409,155 | 4,405,945 | ||||||||
| Operating income (loss) | (1,205,157 | ) | 570,577 | (1,901,957 | ) | 912,412 | ||||||
| Other income (expense): | ||||||||||||
| Interest expense | (11,918 | ) | (17,632 | ) | (35,784 | ) | (76,922 | ) | ||||
| Gain on debt conversion | - | - | - | 224,260 | ||||||||
| Amortization of intangible assets | (28,331 | ) | (25,914 | ) | (84,993 | ) | (68,076 | ) | ||||
| Unrealized gain (loss) on equity securities | (2,696,135 | ) | 1,866,468 | (2,696,135 | ) | 1,857,500 | ||||||
| Realized loss on sale of investment | - | - | - | (406,060 | ) | |||||||
| Total other income (expense) | (2,736,384 | ) | 1,822,922 | (2,816,912 | ) | 1,530,702 | ||||||
| Net income (loss) before taxes | (3,941,541 | ) | 2,393,499 | (4,718,869 | ) | 2,443,114 | ||||||
| Income tax expense (benefit) | (1,713,999 | ) | 697,000 | (2,339,288 | ) | 499,000 | ||||||
| Net income (loss) | $ | (2,227,542 | ) | $ | 1,696,499 | $ | (2,379,581 | ) | $ | 1,944,114 | ||
| Basic earnings per share | $ | (0.19 | ) | $ | 0.33 | $ | (0.25 | ) | $ | 0.46 | ||
| Diluted earnings per share | $ | (0.19 | ) | $ | 0.33 | $ | (0.25 | ) | $ | 0.46 | ||
| Weighted average number of common shares outstanding: | ||||||||||||
| Basic | 11,466,523 | 5,166,299 | 9,457,740 | 4,208,216 | ||||||||
| Diluted | 11,466,523 | 5,166,549 | 9,457,740 | 4,208,466 |