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Netcapital Announces Third Quarter Fiscal 2023 Financial Results Including Year-to-Date Revenue Growth of 48%

NCPL, NCPLW | March 16, 2023

Conference call to be held on March 17th at 10:00 a.m. ET

Netcapital Inc. (Nasdaq: NCPL, NCPLW) (the “Company”), a digital private capital markets ecosystem, today announced financial results for the third quarter and first nine months of fiscal year 2023 ended January 31, 2023.

“Over the past nine months, Netcapital has generated substantial revenue growth while generating positive operating and net income,” said Martin Kay, CEO of Netcapital Inc. “We have established a number of important strategic partnerships designed to create opportunities for clients and investors, while scaling and advancing our operating platform for continuing growth. Netcapital is executing on the vision for our brand - to break down traditional barriers and offer opportunities for anyone to invest in private companies. Along the way, we are turning customers and communities into owners and brand ambassadors for the businesses they love. We believe this is a powerful symbiotic relationship.”

Third Quarter Fiscal 2023 Financial Highlights

Revenue growth of 25% year-over-year to $2.3 million
Positive operating income of $571,000 compared to an operating loss of $135,000 in the year-ago quarter
Diluted earnings per share of $0.33

First Nine Months of Fiscal 2023 Highlights

Revenue growth of 48% year-over-year to $5.4 million
Positive operating income of $912,000 compared to an operating loss of $1.5 million in the first nine months of fiscal year 2022
Diluted earnings per share of $0.46
Paid down $1 million in debt, closed a $5 million underwritten public offering, and uplisted to Nasdaq in July 2022

For additional disclosure regarding Netcapital’s operating results, please refer to the Quarterly Report on Form 10-Q for the period ended January 31, 2023, which has been filed with the Securities and Exchange Commission.

Conference Call Information

The Company will host an investor conference call at 10:00 a.m. ET tomorrow, March 17, 2023.

Participant access:			844-985-2012 or 973-528-0138

Conference entry code:			399662

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 with disruptive technologies. The Netcapital funding portal 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.

NETCAPITAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS

		January 31, 2023		April 30, 2022
		(Unaudited)		(Audited)
Assets:
Cash and cash equivalents		$	1,771,927	$	473,925
Accounts receivable net			2,163,931		2,433,900
Related party receivable			668		668
Prepaid expenses			36,844		5,694
	Total current assets		3,973,370		2,914,187

Deposits			6,300		6,300
Notes receivable - related parties			202,000		202,000
Purchased technology, net			15,903,628		15,536,704
Investment in affiliate			240,080		240,080
Equity securities at fair value			19,250,193		12,861,253
	Total assets	$	39,575,571	$	31,760,524

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Trade		$	634,970	$	536,508
Related party			75,204		378,077
Accrued expenses			246,665		229,867
Stock subscription payable			10,000		33,400
Deferred revenue			718		2,532
Interest payable			89,491		222,295
Deferred tax liability, net			1,476,000		977,000
Related party debt			15,000		22,860
Convertible notes payable			-		300,000
Secured note payable			350,000		1,400,000
Current portion of SBA loans			1,885,800		1,890,727
Loan payable - bank			34,324		34,324
	Total current liabilities		4,818,172		6,027,590

Long-term liabilities:
Long-term SBA loans, less current portion			500,000		495,073
	Total liabilities		5,318,172		6,522,663

Commitments and contingencies			-		-

Stockholders' equity:
Common stock, $.001 par value; 900,000,000 shares
authorized, 6,071,777 and 2,934,344 shares issued and outstanding			6,072		2,934
Shares to be issued			183,187		244,250
Capital in excess of par value			29,613,118		22,479,769
Retained earnings			4,455,022		2,510,908
	Total stockholders' equity		34,257,399		25,237,861
Total liabilities and stockholders' equity		$	39,575,571	$	31,760,524

NETCAPITAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	January 31, 2023		January 31, 2022		January 31, 2023		January 31, 2022

Revenues	$	2,260,414	$	1,811,041	$	5,379,960	$	3,636,050
Costs of services		4,305		39,349		61,603		85,429
Gross profit		2,256,109		1,771,692		5,318,357		3,550,621

Costs and expenses:
Consulting expense		130,500		309,545		455,892		675,180
Marketing		23,549		23,945		64,211		67,771
Rent		17,187		11,869		51,586		34,480
Payroll and payroll related expenses		946,043		1,241,332		2,592,891		3,032,987
General and administrative costs		568,253		320,724		1,241,365		1,277,146
Total costs and expenses		1,685,532		1,907,415		4,405,945		5,087,564
Operating income (loss)		570,577		(135,723)		912,412		(1,536,943)

Other income (expense):
Interest expense		(17,632)		(20,573)		(76,922)		(90,844)
Gain on debt conversion		-		-		224,260		-
Debt forgiveness		-		1,904,302		-		1,904,302
Amortization of intangible assets		(25,914)		-		(68,076)		-
Realized loss on sale of investment		-		-		(406,060)		-
Unrealized gain on equity securities		1,866,468		-		1,857,500		3,275,745
Total other income (expense)		1,822,922		1,883,729		1,530,702		5,089,203
Net income before taxes		2,393,499		1,748,006		2,443,114		3,552,260
Income tax expense (benefit)		697,000		(73,000)		499,000		548,000
Net income	$	1,696,499	$	1,821,006	$	1,944,114	$	3,004,260

Basic earnings per share	$	0.33	$	0.64	$	0.46	$	1.16
Diluted earnings per share	$	0.33	$	0.63	$	0.46	$	1.14

Weighted average number of common shares outstanding:
Basic		5,166,299		2,842,924		4,208,216		2,589,142
Diluted		5,166,549		2,882,825		4,208,466		2,629,043

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different 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 other factors 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 to these 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 actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.