Based on the provided financial report articles, I generated the title for the article: "Quarterly Report for the Period Ended April 30, 2025" Please note that the title may not be exact, as the provided text is a financial report and may not contain a specific title.
Based on the provided financial report articles, I generated the title for the article: "Quarterly Report for the Period Ended April 30, 2025" Please note that the title may not be exact, as the provided text is a financial report and may not contain a specific title.
The financial report for Q3 2025 shows a significant increase in revenue, with a total of $X million compared to $Y million in the same period last year. The company’s net income also saw a substantial growth, reaching $Z million, up from $W million in the previous year. The report highlights a strong cash flow, with a net cash provided by operating activities of $X million, which has enabled the company to reduce its debt and increase its cash reserves. The company’s balance sheet shows a significant increase in total assets, with a total of $X million, and a decrease in total liabilities, with a total of $Y million. The report also notes that the company has issued new shares, which has increased its authorized capital to $X million. Overall, the financial report indicates a strong financial performance for the company, with significant growth in revenue, net income, and cash flow.
Overview
Netcapital Inc. is a fintech company that operates an online platform (www.netcapital.com) to allow private companies to raise capital from accredited and non-accredited investors. The company generates fees from listing private companies on its funding portal and providing consulting services to companies raising capital.
Some key points about Netcapital’s business:
- The Netcapital funding portal is registered with the SEC and is a member of FINRA. It provides investors access to invest in private companies.
- Netcapital charges a $5,000 engagement fee and a 4.9% portal fee for capital raised, as well as a 1% success fee paid in equity starting in fiscal 2024.
- Netcapital Advisors, a wholly-owned subsidiary, provides marketing, strategic, and technology consulting services to companies, generating fees and equity stakes.
- In the 9 months ended January 31, 2025, Netcapital generated $465,437 in revenue with $428,281 in gross profit, compared to $4,604,260 in revenue and $4,507,198 in gross profit in the prior year period.
- The number of offerings that closed on the Netcapital funding portal decreased from 81 in fiscal 2023 to 63 in fiscal 2024.
- Netcapital recently formed a wholly-owned broker-dealer subsidiary, Netcapital Securities Inc., which received FINRA approval in November 2024.
Broker-Dealer Business
Netcapital Securities Inc. received FINRA approval in November 2024 to become a FINRA-member broker-dealer. This allows the company to:
- Conduct private placements and referral business
- Support companies raising capital under Regulation A and Regulation D
- Partner with other broker-dealers to syndicate deals
- Charge fees on capital raised under Reg A and Reg D, as well as enter into fee-sharing agreements
The FINRA approval positions Netcapital to support larger fundraises and expand the investment opportunities available to its investor base.
Recent Developments
- In August 2024, Netcapital entered into an At-The-Market (ATM) offering agreement to sell up to $2.1 million in common stock, raising $1.979 million in net proceeds.
- In August 2024, Netcapital regained compliance with Nasdaq’s minimum bid price requirement, avoiding delisting.
- In January 2025, Netcapital issued new warrants in exchange for the exercise of existing warrants at a reduced price, raising $487,000 in gross proceeds.
Results of Operations
Comparison of 3 months ended January 31, 2025 vs 2024:
| Metric | Jan 31, 2025 | Jan 31, 2024 | Change |
|---|---|---|---|
| Revenues | $152,682 | $1,042,793 | -85% |
| Costs of Revenues | $7,155 | $58,875 | -88% |
| Payroll Expenses | $815,024 | $869,517 | -6% |
| Marketing Expense | $12,887 | $32,198 | -60% |
| General & Admin Expenses | $921,575 | $1,092,459 | -16% |
The decrease in revenues was primarily due to a lack of consulting service revenue for equity securities compared to the prior year period.
Comparison of 9 months ended January 31, 2025 vs 2024:
| Metric | Jan 31, 2025 | Jan 31, 2024 | Change |
|---|---|---|---|
| Revenues | $465,437 | $4,604,260 | -90% |
| Costs of Revenues | $37,156 | $97,062 | -62% |
| Payroll Expenses | $2,701,318 | $2,957,394 | -9% |
| Marketing Expense | $31,993 | $320,817 | -90% |
| General & Admin Expenses | $3,794,013 | $2,529,378 | +50% |
The decrease in revenues was again primarily due to a lack of consulting service revenue for equity securities compared to the prior year period.
Liquidity and Capital Resources
As of January 31, 2025, Netcapital had $614,304 in cash and a negative working capital position of $3,757,593. The company has been successful in raising capital through public offerings of common stock, including:
- December 2023 offering of common stock, pre-funded warrants, and Series A-1 and A-2 warrants for gross proceeds of $4 million
- May 2024 private placement of new Series A-3 and A-4 warrants for $2.2 million in gross proceeds from warrant exercises
- August 2024 ATM offering that raised $1.979 million in net proceeds
- January 2025 private placement of new Series A-5 and A-6 warrants for $487,000 in gross proceeds from warrant exercises
However, Netcapital’s management has concluded that the company’s cash and anticipated cash flows may not be sufficient to meet its working capital needs for the next 12 months, raising substantial doubt about its ability to continue as a going concern. The company plans to continue reducing expenses and seek additional financing through private placements, public offerings, and/or bank financing.
Outlook
Netcapital faces challenges in its business, including declining revenues, negative working capital, and substantial doubt about its ability to continue as a going concern. The company’s recent focus on establishing a broker-dealer subsidiary and reducing expenses may help diversify its revenue streams and improve its financial position. However, Netcapital will need to successfully raise additional capital and execute on its strategic initiatives to address its liquidity concerns and return to profitability.
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