Netcapital Inc (NCPL) 2022 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Netcapital fiscal 2022 fourth-quarter earnings conference call. At this time, all participants have been placed on a listen-only mode and the floor will be open for questions and comments after the presentation. It is my pleasure to turn the floor over to your host, Coreen Kraysler, CFO at Netcapital. Ma'am, the floor is yours.

Thank you very much. Good afternoon, everyone, and thank you for joining Netcapital financial results conference call for the fiscal-year 2022 ended April 30, 2022. This is Coreen Kraysler, CFO of Netcapital Inc.; and joining me on the call today are Dr. Cecilia Lenk, CEO of Netcapital Inc.; and Jason Frishman, CEO of Netcapital Funding Portal.

Before we begin, I'd like to call your attention for the customary safe harbor disclosure regarding forward-looking information. Management's 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 view 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.

Fiscal-year 2022 was a strong year for Netcapital, as demonstrated in our solid financial results. We've spent the last few years building a private capital market ecosystem, with a mission to democratize access to capital and private investment opportunities. Our efforts have generated significant company growth and momentum, with strong reviews and accolades from our clients, investors, and stakeholders.

One year ago, we announced our intent to list on a major national exchange; an important milestone in the evolution of our company and our achievements in building an unparalleled platform for the new finance economy. Over that 12-month [slot] time frame, we delivered on the financial and liquidity requirements, and satisfied the corporate governance and disclosure requirements required for initial and continued listing on the NASDAQ Capital Markets Exchange.

Last month, we closed on a common stock offering, raising gross proceeds of $5 million. At that time, we were approved for listing and began trading on the exchange on July 13, a huge milestone achievement for Netcapital.

We believe our NASDAQ listing provides new opportunities for better visibility and accessibility in the market, engagement with institutional investors, and improve liquidity for our stock. Out of all the doors that we expect to open for Netcapital through our uplisting, a significant one will be the potential to accelerate long-term value creation for our shareholders, as we continue to build for the future.

Now I'll discuss Netcapital's fiscal-year 2022 financial result. For fiscal-year 2022 ended April 30, 2022, revenues increased 16% year over year to $5.5 million, compared to $4.7 million in fiscal-year 2021. Net income was $3.5 million for the year, compared to $1.5 million for the prior year. Earnings per share growth was 43% year over year to $1.27 per diluted share. Net income was favorably impacted by loan forgiveness of $1.9 million.

As of April 30, 2022, equity securities at fair value totaled $12.9 million compared to $6.3 million one year ago, an increase of 104%.

I'll now turn the call over to Jason Frishman, CEO of the Netcapital Funding Portal. Jason, the floor is yours.

Thank you, Coreen. During fiscal-year 2022, Netcapital funding portal achieved double-digit year-over-year growth across several key performance indicators: one, dollars invested through the platform was up more than 14% year over year to just under $20 million; two, the funding portal traffic increased almost 30% to 1.3 million visitors; and third, we added more than 34,000 new users during the fiscal year, and they now have nearly 100,000 users.

Client impact has been strong, and the number of clients with impressive success stories have indicated their interest in returning in Netcapital to raise additional capital on our public portal. One of the success stories was MAGFAST, designer and manufacturer of premium wireless magnetic chargers. And their first offering with us in November of 2020, their goal for the raise was $1.07 million and that offering was sold out entirely in approximately one day, from nearly 1,000 investors.

And their second offering with us was this last November, MAGFAST raised approximately $2 million in their first two hours during a launch event. And their total raise was more than $4.9 million.

Seymour Segnit, Founder and CEO of MAGFAST, stated quote: "We chose to work with Netcapital because of its high-touch, personalized approach, which is unique in the marketplace. And we're so glad we did. If you are growing something that you believe is extraordinary, call Jason's team at Netcapital. They're exceptional." Thank you to Seymour and MAGFAST for their tremendous success on the funding portal.

We're proud of the that we have received in recent months. A highlight of the year was being named Best Crowdfunding Platform at the 6th Annual FinTech Breakthrough Awards. Netcapital funding portal was selected among nearly 4,000 nominations across range of FinTech categories. In addition, this month, Netcapital was named one of FinTech Energy's Massachusetts's fastest-growing FinTech start-ups.

You can read more about these awards and their criteria at the website of the FinTech Breakthrough Awards or in Massachusetts's Energy fastest-growing FinTech start-ups website.

I also would like to note that although our funding portal is thriving, we note that investments in private markets security that work on our platform are highly speculative, and investors and private companies are subject to risk of loss of the entire amount invested.

Going forward, we'll continue to innovate in ways that all [funding] services for both start-ups and investors. [Stepping] acquisitions and partnership opportunities are part of our long-term business strategy, and commitment to customers and investors on our portal, and all company's stakeholders.

I will now turn the call over to Dr. Cecilia Lenk, CEO of Netcapital Inc., for closing remarks. Cecilia?

Thank you, Jason and Coreen, and welcome. We are very pleased with our company's performance to date, and strong fiscal-year 2022. We are delighted to now be trading on NASDAQ, and look forward to the benefits of our listing would bring. We thank you so much for your interest and investment in Netcapital. I look forward to delivering continued growth for the future.

Operator, we are now ready to take questions from the audience.

Thank you. Ladies and gentlemen, the floor is now ready for questions. (Operator Instructions) Andrew Scott, ThinkEquity LLC.

Hey guys. Hey, congratulations for final results. I don't know how many people are in the call, but we know how far you've come, you had a great year, your model's demonstrating a lot of success. We know you got some financing behind you, there's a lot of great opportunities. We're very excited to see where 2023 take you. But again, I just want to call and say congratulations. Great job team, you did a fantastic job.

Thank you so much for all your help. We really, really appreciate that, thank you.

[Les Memper], Private Investor

So I'm wondering if you could talk about the timing decision for the financing you did in a terrible market, particularly for companies that are marginally profitable or not profitable. The price decision in -- whatever in different disaster, and I'm just wondering why you thought it was appropriate to do a financing at that time.

Thanks so much for your question. I can certainly hear where you're coming from. We felt that it was really important to keep our promise to investors that we made almost a year ago, in order to uplist to NASDAQ. So given the market environment, while we raised the minimum amount that we would have needed in order to do the uplist, and to keep that promise to our shareholders.

So this is a follow-up, is there any wills to [renew] SEC listing because of how well stock prices right now?

No. We think we're doing great and we're well within where we need to be in order to stay listed.

Okay. Thanks.

Thank you.

Thank you. (Operator Instructions) [Tim Festers], Fresco Global Ltd.

Okay hi. My main question -- my question is what regulatory agencies do you have to abide by in conjunction with your primary business in raising capital?

Jason, I'm going to let you follow-up in this question, please?

Sure, I'm happy to. Thanks for the question, yes. It's a new classification for the regulatory firm called a [funding] portal. So the job's that to jumpstart our business artifact with the new piece of registration that [could place a new] security exemption that private companies can rely on to raise capital from non-accredited investors using the Internet to [generate deficit].

So we're classified as a funding portal. We can facilitate those security transactions, we're not -- it's part of our business model. We're collecting 4.9% success fee. So the name of the specific part of the JOBS Act that we primarily rely on, it's called Section 4(a)(6) of the JOBS Act, also referred to as Reg CF.

So you can certainly look that up as well for additional information. But that's the security exemption that we rely on, and there are various regulations that we abide by as part of being a registered funding portal.

Now do you a (multiple speakers)

So let me follow-up on that, we are members of FINRA. And then we are also regulated by SEC.

Right. Do you see that your firm gets audited in the normal course of business on a specific basis, like every six months, every year; not particularly as it pertains to violation, but does it pertains to the course of your business?

Yes, I can answer the question. And just to clarify, when you say audited, you're not referring to a financial audit, you're referring to our status as a regulated business, correct?

I would have to say, being in the securities industry for a number of years, you would just get in a course of time, you'll get audited by whatever the regulatory agency was [to oversize you]. And I was just questioning, is that something that you see happening to you guys? Getting not audited by a specific violation, but just to see that you are abiding by the regulations?

Yes, we have routine examinations with FINRA, and with the SEC. We're always been [in contact] dialogue with them as they are the regulators. We take that extremely, extremely seriously. They are very vigilant with respect to our own protocols and processes, [with respect to] listing companies. Doing our [diligence], make sure -- making sure we record all of our decisions.

So that is something that is in our ordinary course of business enhancing for years. Since we've been a registered funding portal, we are members of FINRA and registered with the SEC, and we are in routine contact with each of those firms.

Okay, thank you very much.

You're welcome.

Thank you.

Thank you. There are no other questions in queue at this time.

Alright, great. Thank you, everyone, for joining and participating in the call. We're very pleased with our company's performance to date. We're delighted to be trading on NASDAQ, and we look forward to benefits that listing will bring.

We look forward to your interest and investment in Netcapital, and we look forward to delivering continued growth for the future. Thank you so much. Bye everyone.

Thank you, ladies and gentlemen. This does conclude today's conference. You may disconnect your lines at this time and have a wonderful day. Thank you for your participation.