Release Date: September 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Netcapital Inc (NCPL, Financial) launched the beta version of its secondary trading platform through Templum ATS, which is approved in over 50 US states and territories.
- The company is focusing on establishing a broker-dealer subsidiary to diversify revenue sources and offer Reg A+ and Reg D deals.
- Netcapital Inc (NCPL) regained compliance with Nasdaq's Listing Rule 5550(a)(2), ensuring continued trading on Nasdaq.
- The company remains committed to its vision of empowering entrepreneurs and investors through a streamlined platform for capital raising and investing.
- Netcapital Inc (NCPL) has put in place an ATM agreement to support its financial stability and operations.
Negative Points
- Revenues for the first quarter of fiscal 2025 decreased by approximately 91% to $142,227 compared to the same period in 2024.
- The company reported an operating loss of approximately $2.5 million for the first quarter of fiscal 2025, significantly higher than the $749,020 loss in the same period of 2024.
- Net loss for the first quarter of fiscal 2025 was $2,527,170, compared to $491,655 for the same period in the prior year.
- Revenue from portal fees decreased by approximately 60% to $89,429 in the first quarter of fiscal 2025.
- The company faces challenges with the cyclicality and unpredictability of its business, particularly in the fundraising climate.
Q & A Highlights
Q: Could you give us an idea of the launch date of the trading portal? Will this portal be available for retail investors?
A: We have not specifically stated a launch date to the market. We are still working through some usability issues and want to ensure maximum impact when we go live. We hope to launch before the end of this calendar year, but regulatory factors may affect this timeline. (Martin Kay, CEO)
Q: At the Wainwright Conference, you mentioned the launch would be soon. Can you provide a ballpark idea? Are we talking Q4 or calendar year 2025?
A: We are moving as quickly as possible with regulators and our customers. We hope to launch before the end of this calendar year, but regulatory factors may affect this timeline. (Martin Kay, CEO)
Q: Will all securities listed on your balance sheet be available to trade on the secondary trading platform when it opens?
A: Yes, that is the intention. (Martin Kay, CEO)
Q: On your ATM, will you announce partial completions or only when it's fully complete? Also, what is your monthly burn rate?
A: We do not announce ATM usage; it will be disclosed in our quarterly filings. Our burn rate is $300,000 plus per month. (Coreen Kraysler, CFO)
Q: Given the investment in the ATS system, will the burn rate decrease dramatically after a full launch? How much of the $300,000 monthly burn is dedicated to this?
A: A lot of our current spending is on educating regulators and ensuring compliance. The technology is largely built, but regulatory and usability factors are still being addressed. (Martin Kay, CEO)
Q: At the current stock price, why is management not stepping up to buy shares to support the company?
A: We are severely restricted in purchasing shares due to the nature of our fundraising activities. (Coreen Kraysler, CFO)
Q: With a $300,000 per month burn rate and $800,000 cash on hand, at what point does it make sense to consider moving from a public to a private platform?
A: We are committed to our vision and believe in the long-term value of our business. We are seeing growing market awareness and success stories from our issuers, which supports our long-term strategy. (Martin Kay, CEO)
Q: How much of the $300,000 monthly burn is related to regulatory compliance and technology development?
A: A significant portion is spent on regulatory compliance and educating regulators. The technology is largely built, but ongoing enhancements and regulatory factors are still being addressed. (Martin Kay, CEO)
Q: Can you provide more details on the broker-dealer application process and its impact on revenue?
A: The broker-dealer application process is aimed at moving upscale into bigger transactions, which we expect will generate incremental revenue streams. (Martin Kay, CEO)
Q: What are the key factors affecting the launch of the secondary trading platform?
A: The key factors include regulatory compliance and ensuring the platform's usability. We are working closely with regulators and our beta users to address these issues. (Martin Kay, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
