Core Viewpoint - Netcapital Inc. reported a significant increase in revenues for the first quarter of fiscal year 2026, indicating strong financial performance and growth potential. Financial Results - The company reported revenues of $190,058 for the three months ended July 31, 2025, which represents an increase of approximately 34% compared to $142,227 in the same period of the previous year [4].

Financial Data and Key Metrics Changes - The company reported revenues of $190,058 for the first quarter of fiscal 2026, representing an increase of approximately 34% compared to $142,227 for the same period in fiscal 2025 [3] - Operating loss was approximately $3.3 million, compared to an operating loss of approximately $2.5 million for the first quarter of fiscal 2025 [4] - Loss per share improved to $1.27 from $5.10 in the first quarter of fiscal 2025 [4] - As of July 31, 2025, cash and cash equivalents stood at approximately $4.6 million [4] Business Line Data and Key Metrics Changes - The increase in revenues was primarily attributed to higher portal fees and increased revenues from services provided in exchange for equity securities [3] - One issuer accounted for 73% of the revenues during the quarter, successfully raising approximately $5 million from March 24, 2025, to May 30, 2025 [4] Market Data and Key Metrics Changes - The company is focusing on integrating blockchain, digital assets, and crypto with traditional finance, positioning itself to explore opportunities in decentralized finance (DeFi) [6][7] Company Strategy and Development Direction - The company is shifting its business model away from equity-based consulting revenue to build a stronger, more scalable business [5] - The establishment of a crypto advisory board aims to guide efforts in integrating blockchain and digital assets into the company's operations [6] - A game advisory board has been launched to advance strategic growth initiatives and deepen engagement with the online gaming community [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the solid performance of the core business, with revenue and portal fee growth exceeding 30% [5] - The company remains committed to driving long-term growth through innovation and execution, aiming to build the best fintech ecosystem [5] Other Important Information - The company serves a broad base of issuers and investors through its Netcapital Funding Portal and broker-dealer Netcapital Securities Inc. [7] Q&A Session Summary - The Q&A session was conducted but no specific questions or answers were documented in the provided content [9][10]

Financial Data and Key Metrics Changes - The company reported revenues of $190,058 for Q1 fiscal 2026, an increase of approximately 34% compared to $142,227 in Q1 fiscal 2025, primarily driven by increased portal fees and service revenues related to equity securities [3] - Operating loss was approximately $3.3 million in Q1 fiscal 2026, compared to a loss of approximately $2.5 million in Q1 fiscal 2025 [4] - Loss per share improved to $1.27 from $5.10 in the same period last year [4] - As of July 31, 2025, the company had cash and cash equivalents of approximately $4.6 million [4] Business Line Data and Key Metrics Changes - The increase in revenues was significantly attributed to one issuer, which accounted for 73% of total revenues during the quarter [3] Market Data and Key Metrics Changes - The company is focusing on integrating blockchain, digital assets, and crypto with traditional finance, indicating a strategic shift towards decentralized finance (DeFi) [6][7] Company Strategy and Development Direction - The company is committed to driving long-term growth through innovation and execution, aiming to build a stronger and more scalable fintech ecosystem [5] - Establishment of a crypto advisory board to guide efforts in integrating blockchain and digital assets [6] - Launch of a game advisory board to enhance strategic growth initiatives and engagement with the online gaming community [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the encouraging results at the start of the fiscal year, highlighting solid performance in core business areas [5] - The strategic shift from equity-based consulting revenue to a focus on scalable business models is seen as a positive development [5] Other Important Information - The company aims to enhance its services through blockchain and digital asset innovation to lead future private market opportunities [7] Q&A Session Summary - The Q&A session was conducted but no specific questions or answers were documented in the provided content [9][11]

Financial Data and Key Metrics Changes - The company reported revenues of $190,058 for the first quarter of fiscal 2026, representing an increase of approximately 34% compared to $142,227 for the same period in fiscal 2025 [3] - The operating loss was approximately $3.3 million, compared to an operating loss of approximately $2.5 million for the first quarter of fiscal 2025 [4] - The loss per share improved to $1.27 from $5.10 in the first quarter of fiscal 2025 [4] - As of July 31, 2025, the company had cash and cash equivalents of approximately $4.6 million [4] Business Line Data and Key Metrics Changes - The increase in revenues was primarily attributed to an increase in portal fees and services provided in exchange for equity securities [3] - One issuer accounted for 73% of the revenues during the quarter, successfully raising approximately $5 million from March 24, 2025, to May 30, 2025 [4] Company Strategy and Development Direction - The company emphasized a strategic shift from equity-based consulting revenue to building a stronger, scalable business model [5] - The focus is on driving long-term growth through innovation and execution to build a robust fintech ecosystem [5] - The establishment of a crypto advisory board aims to integrate blockchain and digital assets with traditional finance, positioning the company for a larger role in fintech and decentralized finance (DeFi) [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the encouraging results at the start of the fiscal year, highlighting revenue and portal fee growth of over 30% [5] - The company aims to enhance its services through blockchain, crypto, and digital asset innovation to lead future private market opportunities [7] Other Important Information - A game advisory board was launched to advance strategic growth initiatives and deepen engagement with the online gaming community [6] Q&A Session Summary - The Q&A session was conducted but no specific questions or answers were documented in the provided content [9][10]

Financial Data and Key Metrics Changes - The company reported revenues of $190,058 for Q1 2026, representing a 34% increase compared to $142,227 in Q1 2025, primarily driven by increased portal fees and services related to equity securities [3][4] - Operating loss was approximately $3.3 million in Q1 2026, compared to an operating loss of approximately $2.5 million in Q1 2025 [4] - Loss per share improved to $1.27 from $5.10 in the same period last year [4] Business Line Data and Key Metrics Changes - The significant revenue increase was attributed to one issuer, which accounted for 73% of total revenues, successfully raising approximately $5 million during the quarter [3][4] Market Data and Key Metrics Changes - The company is focusing on integrating blockchain, digital assets, and crypto with traditional finance, indicating a strategic shift towards decentralized finance (DeFi) [6] Company Strategy and Development Direction - The company is committed to building a stronger, scalable business model, moving away from equity-based consulting revenue [5] - Establishment of a crypto advisory board and a game advisory board to enhance engagement and drive long-term growth [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the first quarter results, highlighting solid performance in core business and a strategic vision taking shape [5] - The company aims to lead in private market opportunities and direct investment opportunities for investors through innovation in blockchain and digital assets [6] Other Important Information - As of July 31, 2025, the company had cash and cash equivalents of approximately $4.6 million [4] Q&A Session Summary - The Q&A session was conducted but no specific questions or answers were documented in the provided content [8]

[Announcement and Business Context](index=1&type=section&id=Announcement%20and%20Business%20Context) [Fiscal Year 2025 Financial Results Announcement](index=1&type=section&id=Fiscal%20Year%202025%20Financial%20Results%20Announcement) Netcapital Inc. announced full fiscal year 2025 financial results for the period ended April 30, 2025, on August 12, 2025 - Netcapital Inc. announced full fiscal year 2025 financial results on August 12, 2025[1](index=1&type=chunk) - The fiscal year ended April 30, 2025[1](index=1&type=chunk) [Management Commentary and Strategic Direction](index=1&type=section&id=Management%20Commentary%20and%20Strategic%20Direction) CEO Martin Kay highlighted a strategic shift in 2025 to build a stronger, scalable foundation, emphasizing the secured broker-dealer license to broaden service and a commitment to disciplined execution and long-term value creation - In 2025, Netcapital Inc. made an important shift in strategy to focus on building a stronger, more scalable foundation for the future[2](index=2&type=chunk) - The secured broker-dealer license positions the company to serve a broader base of issuers and investors and deepen its impact on democratizing access to private markets[2](index=2&type=chunk) - Management remains committed to disciplined execution, product innovation, and long-term value creation[2](index=2&type=chunk) [Conference Call Information](index=1&type=section&id=Conference%20Call%20Information) The company will host an investor conference call on August 13, 2025, at 9 a.m. ET, providing participant access details and a conference entry code - An investor conference call is scheduled for August 13, 2025, at 9 a.m. ET[3](index=3&type=chunk) - Participant access: **844-985-2012** or **973-528-0138**, Conference entry code: **310637**[3](index=3&type=chunk) [About Netcapital Inc.](index=1&type=section&id=About%20Netcapital%20Inc.) Netcapital Inc. is a fintech company providing a scalable platform for private capital raising and investment, operating Netcapital Advisors and two SEC/FINRA registered entities - Netcapital Inc. is a fintech company providing a scalable technology platform for private capital raising and private equity investment opportunities[4](index=4&type=chunk) - The company's consulting group, Netcapital Advisors, offers marketing and strategic advice and takes equity positions[4](index=4&type=chunk) - Netcapital Funding Portal Inc. and Netcapital Securities Inc. (broker-dealer) are registered with the U.S. SEC and are members of FINRA[4](index=4&type=chunk) [Forward Looking Statements](index=1&type=section&id=Forward%20Looking%20Statements) The report contains forward-looking statements subject to known and unknown risks and uncertainties, with no obligation for public updates or revisions - The information includes forward-looking statements related to future events or financial performance[5](index=5&type=chunk) - These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different[5](index=5&type=chunk) - The company assumes no obligation to publicly update or revise these forward-looking statements[5](index=5&type=chunk) [Fiscal Year 2025 Financial Performance](index=1&type=section&id=Fiscal%20Year%202025%20Financial%20Performance) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) For fiscal year 2025, Netcapital Inc. reported significantly decreased revenues, a larger operating loss, substantial impairment, and a reduced net loss per share Key Financial Highlights Table | Metric | FY2025 | FY2024 | Change (YoY) (%) | | :----------------------- | :------------- | :------------- | :---------------- | | Revenues ($) | $869,460 | $4,951,435 | -82.4 | | Operating loss ($) | ($8,321,317) | ($3,442,388) | -141.7 | | Impairment loss ($) | $19,900,000 | N/A | N/A | | Net loss per share ($) | ($20.39) | ($28.83) | +29.3 (less negative) | - Revenues decreased primarily due to a reduction in consulting services[6](index=6&type=chunk) [Consolidated Balance Sheets](index=2&type=section&id=Consolidated%20Balance%20Sheets) As of April 30, 2025, total assets significantly decreased to **$20.9 million** from **$41.6 million**, driven by reduced equity securities, while liabilities increased and equity decreased Consolidated Balance Sheets Table | Balance Sheet Item | April 30, 2025 ($) | April 30, 2024 ($) | Change (YoY) (%) | | :-------------------------- | :------------- | :------------- | :---------------- | | Cash and cash equivalents | $289,428 | $863,182 | -66.5 | | Total current assets | $399,612 | $1,042,535 | -61.7 | | Equity securities | $5,748,050 | $25,333,386 | -77.3 | | Total assets | $20,901,491 | $41,557,306 | -49.7 | | Total current liabilities | $5,495,767 | $3,116,698 | +76.3 | | Total liabilities | $5,995,767 | $3,616,698 | +65.8 | | Total stockholders' equity | $14,905,724 | $37,940,608 | -60.7 | - The significant decrease in total assets was largely due to a reduction in equity securities from **$25.3 million** to **$5.7 million**[8](index=8&type=chunk) - Retained earnings shifted from positive **$479,563** in FY2024 to a deficit of **($27,821,762)** in FY2025[8](index=8&type=chunk) [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) For FY2025, Netcapital Inc. experienced substantial declines in revenues and gross profit, leading to increased operating and net losses, exacerbated by impairment expense and negative unrealized gain/loss Consolidated Statements of Operations Table | Income Statement Item | FY2025 ($) | FY2024 ($) | Change (YoY) (%) | | :-------------------------------- | :------------- | :------------- | :---------------- | | Revenues | $869,460 | $4,951,435 | -82.4 | | Gross profit | $829,116 | $4,843,375 | -82.8 | | Total costs and expenses | $9,150,433 | $8,285,763 | +10.4 | | Operating loss | ($8,321,317) | ($3,442,388) | -141.7 | | Impairment expense | ($19,915,556) | ($1,048,430) | -1799.5 | | Unrealized gain (loss) on equity securities | $18,050 | ($2,696,135) | +100.7 (less negative) | | Net loss | ($28,301,325) | ($4,986,317) | -467.6 | | Basic loss per share | ($20.39) | ($28.83) | +29.3 (less negative) | - The significant increase in net loss was primarily driven by a substantial impairment expense of **$19.9 million** in FY2025, compared to **$1.0 million** in FY2024[10](index=10&type=chunk) - General and administrative costs increased from **$3.4 million** in FY2024 to **$5.2 million** in FY2025[10](index=10&type=chunk) - Despite a higher net loss, basic loss per share decreased due to a significant increase in the weighted average number of common shares outstanding (from **172,937** to **1,387,666**)[10](index=10&type=chunk)

Core Viewpoint - Netcapital Inc. reported a revenue growth of over 30% in the first quarter of fiscal year 2026, indicating a successful shift in strategy towards building a scalable business model [2][3]. Financial Performance - Revenue increased approximately 34% year-over-year to $190,058 compared to $142,227 in the first quarter of fiscal year 2025 [7]. - The company posted an operating loss of ($3,285,648), which is an increase from the operating loss of ($2,508,237) for the same period last year [7]. - Loss per share improved to ($1.27) from ($5.10) in the first quarter of fiscal year 2025 [7]. - As of July 31, 2025, the company had cash and cash equivalents of $4,562,491, a significant increase from $289,428 as of April 30, 2025 [9]. Strategic Initiatives - The establishment of a Crypto Advisory Board aims to integrate blockchain and digital assets with traditional finance, positioning the company to explore opportunities in decentralized finance (DeFi) [3][5]. - The company’s consulting group, Netcapital Advisors, provides marketing and strategic advice while taking equity positions in select companies, enhancing its role in the fintech ecosystem [5]. Balance Sheet Overview - Total assets as of July 31, 2025, were $28,432,302, up from $20,901,491 as of April 30, 2025 [9]. - Total liabilities decreased to $5,305,386 from $5,995,767, indicating improved financial health [9]. - Stockholders' equity increased to $23,126,916 from $14,905,724, reflecting a stronger capital position [9].

```markdown [PART I—FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section presents Netcapital Inc.'s unaudited condensed consolidated financial statements and related disclosures for the period ended July 31, 2025 [Item 1. Financial Statements.](index=6&type=section&id=Item%201.%20Financial%20Statements.) This section presents Netcapital Inc.'s unaudited condensed consolidated financial statements for the period ended July 31, 2025, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, financing arrangements, related party transactions, and other financial disclosures [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of Netcapital Inc.'s financial position, detailing assets, liabilities, and equity as of July 31, 2025, and April 30, 2025 | | July 31, 2025 | April 30, 2025 | | :--- | :--- | :--- | | **Assets:** | | | | Cash and cash equivalents | $4,562,491 | $289,428 | | Total current assets | $4,992,152 | $399,612 | | Intangible assets | $17,528,660 | $14,697,529 | | Equity securities | $5,855,190 | $5,748,050 | | Total assets | $28,432,302 | $20,901,491 | | **Liabilities and Stockholders' Equity:** | | | | Total current liabilities | $4,805,386 | $5,495,767 | | Total liabilities | $5,305,386 | $5,995,767 | | Total stockholders' equity | $23,126,916 | $14,905,724 | | Total liabilities and stockholders' equity | $28,432,302 | $20,901,491 | - Cash and cash equivalents significantly increased from **$289,428** on April 30, 2025, to **$4,562,491** on July 31, 2025, reflecting improved liquidity[16](index=16&type=chunk) - Total assets grew by approximately **36%** from **$20.9 million** to **$28.4 million**, driven by increases in cash and intangible assets[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details Netcapital Inc.'s revenues, expenses, and net loss for the three months ended July 31, 2025, and 2024 | | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Revenues | $190,058 | $142,227 | | Costs of services | $7,409 | $10,220 | | Gross profit | $182,649 | $132,007 | | Total costs and expenses | $3,468,297 | $2,640,244 | | Operating loss | $(3,285,648) | $(2,508,237) | | Net loss | $(3,642,052) | $(2,527,170) | | Basic loss per share | $(1.27) | $(5.10) | | Diluted loss per share | $(1.27) | $(5.10) | - Revenues increased by **33.6%** year-over-year, from **$142,227** in Q1 2024 to **$190,058** in Q1 2025[18](index=18&type=chunk) - Net loss widened to **$(3,642,052)** in Q1 2025 from **$(2,527,170)** in Q1 2024, primarily due to increased operating expenses[18](index=18&type=chunk) - Basic and diluted loss per share improved from **$(5.10)** to **$(1.27)** despite a larger net loss, due to a significant increase in weighted average common shares outstanding[18](index=18&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This statement outlines changes in Netcapital Inc.'s stockholders' equity, including common stock issuances and net loss, for the three months ended July 31, 2025 | | Balance April 30, 2025 | Sale of common stock | Purchase of software license | Net loss quarter ended July 31, 2025 | Balance July 31, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Common Stock (Shares) | 2,192,226 | 1,704,152 | 500,000 | - | 4,720,066 | | Common Stock (Amount) | $2,192 | $1,704 | $500 | - | $4,720 | | Capital in Excess of Par Value | $42,525,294 | $8,505,467 | $2,839,500 | - | $54,586,010 | | Retained Earnings (Deficit) | $(27,821,762) | - | - | $(3,642,052) | $(31,463,814) | | Total Equity | $14,905,724 | $8,507,171 | $2,840,000 | $(3,642,052) | $23,126,916 | - Total stockholders' equity increased from **$14.9 million** to **$23.1 million**, primarily driven by the sale of common stock (**$8.5 million**) and the issuance of common stock for a software license (**$2.84 million**)[19](index=19&type=chunk) - The number of common shares issued and outstanding nearly doubled from 2,192,226 to 4,720,066 during the quarter[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes Netcapital Inc.'s cash inflows and outflows from operating, investing, and financing activities for the three months ended July 31, 2025, and 2024 | | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,214,258) | $(1,963,645) | | Net cash provided by financing activities | $8,487,321 | $1,955,644 | | Net increase (decrease) in cash | $4,273,063 | $(8,001) | | Cash and cash equivalents, end of the period | $4,562,491 | $855,181 | - Net cash used in operating activities increased significantly from **$(1,963,645)** in Q1 2024 to **$(4,214,258)** in Q1 2025[23](index=23&type=chunk) - Net cash provided by financing activities surged to **$8,487,321** in Q1 2025, primarily from the sale of common stock, leading to a substantial net increase in cash[23](index=23&type=chunk) - Cash and cash equivalents at the end of the period rose to **$4,562,491**, a significant increase from **$855,181** in the prior year period[23](index=23&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section presents Netcapital Inc.'s unaudited condensed consolidated financial statements for the period ended July 31, 2025, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue recognition, financing arrangements, related party transactions, and other financial disclosures [Note 1– Summary of Significant Accounting Policies](index=10&type=section&id=Note%201%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the fundamental accounting principles and methods used in preparing Netcapital Inc.'s financial statements - The financial statements are prepared in accordance with GAAP for interim information and SEC rules for Form 10-Q, with all adjustments considered necessary for fair presentation[24](index=24&type=chunk) - A 1-for-70 reverse stock split was effective August 1, 2024, retroactively adjusted in all financial statements[25](index=25&type=chunk) - The Company operates as a single operating segment providing fintech services, based on centralized decision-making, an integrated operational ecosystem, and a uniform review process by the CODM[31](index=31&type=chunk)[33](index=33&type=chunk) [Note 2 – Concentrations](index=12&type=section&id=Note%202%20%E2%80%93%20Concentrations) This note discloses significant concentrations of risk, particularly regarding customer revenue dependency - Customer concentration increased significantly, with one customer accounting for **73%** of revenues for the three months ended July 31, 2025, up from **15%** in the prior year period[34](index=34&type=chunk) [Note 3 – Revenue Recognition](index=12&type=section&id=Note%203%20%E2%80%93%20Revenue%20Recognition) This note details Netcapital Inc.'s policies and methods for recognizing revenue from various sources - Revenue is recognized using the five-step model under ASC 606, primarily from professional services, funding portal listing fees, and a **4.9%** portal fee on capital raised, plus a **1%** equity fee[35](index=35&type=chunk)[36](index=36&type=chunk) Revenues Disaggregated by Source | Revenue Source | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Portal fees | $122,728 | $89,429 | | Listing fees | $5,000 | $42,500 | | Portal 1% equity fee | $62,195 | $10,127 | | Game website revenue | $135 | $171 | | Total revenues | $190,058 | $142,227 | - Deferred revenue as of July 31, 2025, and April 30, 2025, was **$315** and **$330**, respectively, with all remaining performance obligations expected to be recognized within 12 months[44](index=44&type=chunk) [Note 4 – Earnings Per Common Share](index=15&type=section&id=Note%204%20%E2%80%93%20Earnings%20Per%20Common%20Share) This note provides the calculation of basic and diluted earnings per common share for Netcapital Inc. Earnings Per Common Share | | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net loss attributable to common stockholders | $(3,642,052) | $(2,527,170) | | Weighted average common shares outstanding - basic | 2,873,379 | 495,319 | | Loss per common share - basic | $(1.27) | $(5.10) | | Loss per common share - diluted | $(1.27) | $(5.10) | - Outstanding warrants and options were anti-dilutive and thus excluded from EPS calculations for both periods[46](index=46&type=chunk)[47](index=47&type=chunk) [Note 5 – Principal Financing Arrangements](index=16&type=section&id=Note%205%20%E2%80%93%20Principal%20Financing%20Arrangements) This note describes Netcapital Inc.'s debt instruments, including promissory notes and loans, and their terms Debt Summary | Debt Type | July 31, 2025 | April 30, 2025 | Interest Rate | | :--- | :--- | :--- | :--- | | Convertible promissory notes | $— | $161,787 | 12.0% | | Notes payable | $600,000 | $101,650 | 8.0% | | U.S. SBA loan | $500,000 | $500,000 | 3.75% | | U.S. SBA loan | $1,885,800 | $1,885,800 | 1.0% | | Loan payable – bank | $34,324 | $34,324 | 9.75% | | Total Debt | $3,020,124 | $2,683,561 | | - Total debt increased to **$3,020,124** as of July 31, 2025, from **$2,683,561** as of April 30, 2025, primarily due to new notes payable[49](index=49&type=chunk) - The Company prepaid several convertible promissory notes in July 2025, including a **$181,540** note and two convertible bridge notes totaling **$126,320**[55](index=55&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - Two unsecured, non-convertible promissory notes totaling **$600,000** (principal) were issued in April and May 2025, both with **50%** OID and **8%** interest, increasing to **20%** upon default[56](index=56&type=chunk)[59](index=59&type=chunk) [Note 6 – Income Taxes](index=18&type=section&id=Note%206%20%E2%80%93%20Income%20Taxes) This note explains Netcapital Inc.'s income tax position, including deferred taxes and tax expense - No income tax expense was recorded for the three months ended July 31, 2025, and 2024, due to operating losses in both periods[60](index=60&type=chunk) [Note 7 – Related Party Transactions](index=18&type=section&id=Note%207%20%E2%80%93%20Related%20Party%20Transactions) This note discloses transactions between Netcapital Inc. and its related parties, including officers and affiliated entities - The Company paid Netcapital Systems LLC (**29%** owned by Founder Jason Frishman) **$285,000** for software use in Q1 2025, up from **$95,000** in Q1 2024[61](index=61&type=chunk) - Compensation to officers in Q1 2025 included **$508,269** in stock-based compensation and **$697,742** in cash salaries, significantly higher than Q1 2024[62](index=62&type=chunk) - The CFO, Coreen Kraysler, personally guaranteed a **$500,000** SBA loan[65](index=65&type=chunk) [Note 8 – Stockholders' Equity](index=19&type=section&id=Note%208%20%E2%80%93%20Stockholders'%20Equity) This note details changes in Netcapital Inc.'s stockholders' equity, including stock issuances, warrants, and capital raises - The Company authorized 10,000,000 shares of 'blank check' preferred stock on March 25, 2025, increasing total authorized capital stock to 910,000,000 shares[68](index=68&type=chunk) - Various warrant inducement offers and private placements occurred, including a May 2024 transaction generating **$2.2 million** gross proceeds and a January 2025 transaction generating **$487,000** gross proceeds[69](index=69&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - In June and July 2025, the Company conducted multiple equity offerings, including an ATM program increase (**$975,000** gross proceeds) and two registered direct offerings (**$5 million** and **$3 million** gross proceeds respectively), often coupled with warrants[78](index=78&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - On June 26, 2025, the Company issued 500,000 shares of common stock for a perpetual, royalty-free license to Horizon's software for capital-raising and secondary trading services[80](index=80&type=chunk) [Note 9 – Fair Value](index=21&type=section&id=Note%209%20%E2%80%93%20Fair%20Value) This note describes Netcapital Inc.'s fair value measurements for financial instruments, particularly equity securities Equity Securities at Fair Value (Level 2) | | July 31, 2025 | April 30, 2025 | | :--- | :--- | :--- | | Equity securities at fair value | $5,855,190 | $5,748,050 | - All equity securities measured at fair value are classified as Level 2, indicating observable inputs other than quoted prices in active markets[85](index=85&type=chunk)[87](index=87&type=chunk) [Note 10 – Stock-Based Compensation Plans](index=21&type=section&id=Note%2010%20%E2%80%93%20Stock-Based%20Compensation%20Plans) This note outlines Netcapital Inc.'s stock-based compensation arrangements and related expenses - Stock-based compensation expense increased significantly to **$516,073** for the three months ended July 31, 2025, from **$139,371** in the prior year period[88](index=88&type=chunk) Stock-Based Compensation Expense by Recipient | Recipient | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Chief Executive Officer | $250,844 | $62,493 | | Chief Financial Officer | $203,265 | $14,914 | | Founder | $14,914 | $14,914 | | Total stock-based compensation expense | $516,073 | $139,371 | [Note 11 – Deposits and Commitments](index=23&type=section&id=Note%2011%20%E2%80%93%20Deposits%20and%20Commitments) This note discloses Netcapital Inc.'s significant deposits and contractual commitments - The Company maintains an office space with a monthly membership fee of approximately **$7,600** and a refundable security deposit of **$6,300**[91](index=91&type=chunk) [Note 12 – Intangible Assets](index=23&type=section&id=Note%2012%20%E2%80%93%20Intangible%20Assets) This note provides details on Netcapital Inc.'s intangible assets, including their acquisition and valuation - Intangible assets increased significantly due to the acquisition of a perpetual software license from Horizon Globex GmbH, valued at **$2,840,000**, in exchange for 500,000 shares of common stock[93](index=93&type=chunk) Intangible Assets Categories | Category | July 31, 2025 | April 30, 2025 | | :--- | :--- | :--- | | Acquired users | $14,271,836 | $14,271,836 | | License agreement | $2,840,000 | $— | | Acquired brand | $532,118 | $532,118 | | Total intangible assets | $17,643,954 | $14,803,954 | | Net intangible assets | $17,528,660 | $14,697,529 | [Note 13 – Investments](index=23&type=section&id=Note%2013%20%E2%80%93%20Investments) This note describes Netcapital Inc.'s equity investments and the recognition of related gains or losses - The Company received equity securities from 3 issuers in Q1 2025 as part of its **1%** equity fee compensation, totaling **$62,195** in revenue, compared to **$10,127** in Q1 2024[95](index=95&type=chunk) - An unrealized gain of **$44,945** was recognized in Q1 2025 from changes in observable prices of investment securities, specifically from a funding portal issuer whose shares increased from **$5.00** to **$10.00**[95](index=95&type=chunk)[162](index=162&type=chunk) Summary of Investments in Equity Securities | Investment | July 31, 2025 | April 30, 2025 | | :--- | :--- | :--- | | Systems DE | $1,985 | $1,985 | | Zelgor Inc. | $1,400,000 | $1,400,000 | | Vymedic Inc. | $11,032 | $11,032 | | C-Reveal Therapeutics LLC | $50,000 | $50,000 | | Cust Corp. | $1,200,000 | $1,200,000 | | Hiveskill LLC | $712,500 | $712,500 | | ScanHash LLC | $425,000 | $425,000 | | Kingscrowd Inc. | $577,743 | $577,743 | | Reper LLC | $1,200,000 | $1,200,000 | | Issuers that paid a 1% equity fee to the funding portal | $276,930 | $169,790 | | Total | $5,855,190 | $5,748,050 | [Note 14 – Going Concern Matters and Realization of Assets](index=26&type=section&id=Note%2014%20%E2%80%93%20Going%20Concern%20Matters%20and%20Realization%20of%20Assets) This note addresses Netcapital Inc.'s ability to continue as a going concern and management's plans to mitigate associated risks - The Company's operating loss of **$3,285,648** and net cash used in operating activities of **$4,214,258** for the three months ended July 31, 2025, raise substantial doubt about its ability to continue as a going concern[108](index=108&type=chunk)[109](index=109&type=chunk) - Management plans to focus on its growing funding portal business, expand broker-dealer operations, and seek additional financing, but acknowledges these plans may not sufficiently mitigate the going concern risk[109](index=109&type=chunk) [Note 15 – Subsequent Events](index=26&type=section&id=Note%2015%20%E2%80%93%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On September 16, 2025, the Company settled two defaulted promissory notes (Seidenberg Note for **$209,272** and Hesse Note for **$418,148**) by paying half in cash and issuing common stock for the other half at **$2.262** per share[110](index=110&type=chunk)[111](index=111&type=chunk) - On September 16, 2025, 59,147 shares of common stock were issued to June 2025 private placement investors due to a price adjustment provision, as the Company issued shares below **$4.00** per share[112](index=112&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on Netcapital Inc.'s financial condition and operational results for the three months ended July 31, 2025, compared to the prior year. It covers the Company's business overview, recent developments, detailed analysis of revenue and expense changes, liquidity, and capital resources, highlighting the Company's fintech platform, broker-dealer expansion, and ongoing efforts to address its going concern status [Overview](index=27&type=section&id=Overview) This section provides an overview of Netcapital Inc.'s fintech platform, revenue streams, and recent operational performance - Netcapital Inc. operates a fintech platform enabling private companies to raise capital online from accredited and non-accredited investors via Regulation Crowdfunding (Reg CF) and Regulation A (Reg A) offerings[118](index=118&type=chunk) - Revenue streams include a **$5,000** listing fee, a **4.9%** portal fee on capital raised, and a **1%** success fee paid in equity for Reg CF offerings, with Reg A offerings charging a **$25,000** listing fee and a **4.9%** success fee[119](index=119&type=chunk) Revenue and Gross Profit Comparison | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Revenues | $190,058 | $142,227 | | Costs of service | $7,409 | $10,220 | | Gross profit | $182,649 | $132,007 | - The average amount raised per offering on the Netcapital funding portal decreased from **$280,978** in fiscal 2024 to **$215,745** in fiscal 2025[121](index=121&type=chunk) [Broker-Dealer Business](index=29&type=section&id=Broker-Dealer%20Business) This section describes the expansion of Netcapital Securities Inc.'s broker-dealer operations and its strategic objectives - Netcapital Securities Inc., a wholly-owned subsidiary, received FINRA approval in November 2024 to operate as a broker-dealer, aiming to expand revenue through Reg A and Reg D offerings[125](index=125&type=chunk) - The broker-dealer business is expected to leverage strategic partnerships and introduce clients to other FINRA broker-dealers to broaden distribution capabilities[125](index=125&type=chunk) [Recent Developments](index=29&type=section&id=Recent%20Developments) This section highlights key corporate events and financial transactions that occurred recently, impacting the company's financial position - On September 16, 2025, the Company settled two outstanding promissory notes (Seidenberg and Hesse Notes) totaling **$627,420** by paying half in cash and issuing common stock for the remainder[127](index=127&type=chunk)[128](index=128&type=chunk) - In July 2025, the Company issued 269,257 shares of common stock to warrant holders who exercised warrants on a net exercise basis[129](index=129&type=chunk) - The Company completed two registered direct offerings in July 2025, raising approximately **$3 million** and **$5 million** gross proceeds, respectively, with concurrent private placements of warrants[130](index=130&type=chunk)[134](index=134&type=chunk) - On June 26, 2025, the Company acquired a perpetual, royalty-free license to Horizon Globex GmbH's software for capital-raising and secondary trading services in exchange for 500,000 shares of common stock[138](index=138&type=chunk) - The Board of Directors approved the formation of Crypto and Game Advisory Boards on June 6, 2025, issuing 783,722 non-qualified stock options to advisors, subject to stockholder approval[144](index=144&type=chunk)[145](index=145&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes Netcapital Inc.'s revenue and expense trends, explaining the drivers behind changes in financial performance - Revenues increased by **$47,831** (**34%**) to **$190,058** for the three months ended July 31, 2025, primarily due to higher portal fees and equity-based service revenues, largely driven by one major customer[148](index=148&type=chunk) Revenue Components (YoY Change) | Revenue Component | July 31, 2025 | July 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Portal fees | $122,728 | $89,429 | $33,299 | 37% | | Listing fees | $5,000 | $42,500 | $(37,500) | -88% | | Portal 1% equity fee | $62,195 | $10,127 | $52,068 | 514% | | Total | $190,058 | $142,227 | $47,831 | 34% | - Payroll and payroll-related expenses increased by **$656,857** (**58%**) to **$1,793,450**, attributed to salary increases and bonuses for employee retention[155](index=155&type=chunk) - General and administrative expenses rose by **$188,250** (**14%**) to **$1,568,506**, mainly due to increased legal costs, with approximately **60%** related to regulatory matters[158](index=158&type=chunk) - Interest expense increased by **$25,603** (**245%**) to **$36,067** due to increased debt from notes sold in March, April, and May 2025[160](index=160&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses Netcapital Inc.'s ability to meet its short-term and long-term obligations, detailing cash position and financing activities - As of July 31, 2025, cash and cash equivalents were **$4,562,491**, and working capital was **$186,766**, a significant improvement from negative working capital of **$5,096,155** as of April 30, 2025[163](index=163&type=chunk) - The Company successfully raised capital through public offerings of common stock, including two July 2025 registered direct offerings totaling approximately **$8 million** gross proceeds and an ATM program increase of **$975,000**[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - Despite recent capital raises, management believes existing cash and anticipated cash flows may not be sufficient for the next 12 months, raising substantial doubt about the Company's ability to continue as a going concern[170](index=170&type=chunk) Cash Flow Summary (YoY Change) | Activity | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,214,258) | $(1,963,645) | | Net cash provided by financing activities | $8,487,321 | $1,955,644 | | Net increase (decrease) in cash | $4,273,063 | $(8,001) | [Critical Accounting Policies and Significant Judgments and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section discusses the key accounting policies and estimates that significantly impact Netcapital Inc.'s financial reporting - The Company's financial statements rely on estimates and judgments in areas like revenue recognition, accounts receivable, equity securities valuation, income taxes, and long-lived assets[176](index=176&type=chunk) - No material changes to critical accounting estimates were disclosed from the Annual Report on Form 10-K for the year ended April 30, 2025[176](index=176&type=chunk) [Recently Issued Accounting Standards Not Yet Effective or Adopted](index=36&type=section&id=Recently%20Issued%20Accounting%20Standards%20Not%20Yet%20Effective%20or%20Adopted) This section addresses the potential impact of new accounting pronouncements on Netcapital Inc.'s financial statements - Management does not anticipate any recently issued, but not yet effective, accounting pronouncements to have a material impact on the unaudited condensed consolidated financial statements[177](index=177&type=chunk) [Item 3. Quantitative and Qualitative disclosures about Market Risk.](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20disclosures%20about%20Market%20Risk.) As a 'smaller reporting company,' Netcapital Inc. is not required to provide quantitative and qualitative disclosures about market risk in this quarterly report - The Company is exempt from providing market risk disclosures as it qualifies as a 'smaller reporting company' under Exchange Act Rule 12b-2[178](index=178&type=chunk) [Item 4. Controls and Procedures.](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures.) This section details the evaluation of Netcapital Inc.'s disclosure controls and procedures, concluding they were not effective as of July 31, 2025, due to identified material weaknesses and significant deficiencies. Management is actively implementing remediation efforts, but these are not yet complete [Evaluation of Disclosure Controls and Procedures](index=37&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section provides an overview of Evaluation of Disclosure Controls and Procedures for the reporting period - The principal executive and financial officers concluded that disclosure controls and procedures were not effective as of July 31, 2025[180](index=180&type=chunk) - Identified weaknesses include a material weakness related to over-accrual of legal expenses and a significant deficiency in evaluating orderly transactions and impairment indicators for equity investments[184](index=184&type=chunk) [Changes in Internal Control Over Financial Reporting](index=37&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section provides an overview of Changes in Internal Control Over Financial Reporting for the reporting period - There were no changes in internal control over financial reporting during the quarter ended July 31, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[181](index=181&type=chunk) [Remediation Efforts](index=37&type=section&id=Remediation%20Efforts) This section provides an overview of Remediation Efforts for the reporting period - Remediation efforts include enhanced period-end closing procedures for accrued expenses and updated investment valuation policies[185](index=185&type=chunk) - Remediation efforts are ongoing, and management cannot yet conclude on the effectiveness of the updated controls[182](index=182&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=37&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) This section provides an overview of Limitations on Effectiveness of Controls and Procedures for the reporting period - Management acknowledges that controls and procedures, regardless of design, cannot provide absolute assurance and involve judgment in balancing benefits against costs[183](index=183&type=chunk) [PART II—OTHER INFORMATION](index=38&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section provides additional information, including legal proceedings, risk factors, equity sales, and other disclosures [Item 1. Legal Proceedings.](index=38&type=section&id=Item%201.%20Legal%20Proceedings.) Netcapital Inc. is not currently a party to any material legal proceedings but is subject to extensive regulatory oversight from bodies like the SEC, FINRA, and Nasdaq. The Company routinely faces regulatory inquiries and examinations, which can incur significant legal and compliance costs and divert management resources, with uncertain outcomes - The Company is not currently involved in any material legal proceedings[186](index=186&type=chunk) - The Company is subject to extensive regulation by the SEC, FINRA, and Nasdaq, leading to frequent regulatory inquiries and examinations[186](index=186&type=chunk) - Responding to regulatory matters can incur significant legal fees and divert management resources, with outcomes inherently uncertain and potentially adverse to the business[186](index=186&type=chunk) [Item 1A. Risk Factors.](index=38&type=section&id=Item%201A.%20Risk%20Factors.) This section updates the risk factors from the Annual Report on Form 10-K, emphasizing the substantial doubt about Netcapital Inc.'s ability to continue as a going concern due to operating losses and negative cash flows. It also highlights risks related to securities litigation, shareholder activism, regulatory uncertainties, and significant customer concentration - The Company's financial situation, including an operating loss of **$3,285,648** and net cash used in operating activities of **$4,214,258** for the three months ended July 31, 2025, raises substantial doubt about its ability to continue as a going concern[188](index=188&type=chunk) - The Company faces risks from potential securities litigation or shareholder activism, which could lead to significant expenses, divert management attention, and negatively impact stock price[189](index=189&type=chunk) - Regulatory and legal uncertainties, including increased scrutiny of financial institutions and potential fines, pose ongoing risks to the business[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - A significant customer concentration exists, with one customer accounting for **73%** of revenues for the three months ended July 31, 2025, posing a risk if demand from this customer declines[193](index=193&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) This section details several unregistered sales and issuances of equity securities by Netcapital Inc. in July and September 2025, including shares issued for consulting services, settlement of promissory notes, and price adjustments for private placement investors, all relying on Section 4(a)(2) and/or Rule 506 exemptions - On July 21, 2025, 54,421 shares of common stock were issued to an investor relations consulting firm for services rendered, with no proceeds received[194](index=194&type=chunk) - On September 16, 2025, shares were issued as part of settlement agreements for the Seidenberg and Hesse Notes[195](index=195&type=chunk)[196](index=196&type=chunk) - On September 16, 2025, 59,147 Adjustment Shares were issued to June 2025 private placement investors due to a price adjustment provision, as the Company issued common stock below **$4.00** per share[197](index=197&type=chunk) - All these issuances relied on exemptions from registration under Section 4(a)(2) and/or Rule 506 of the Securities Act[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) [Item 3. Defaults Upon Senior Securities.](index=40&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) Netcapital Inc. reported no defaults upon senior securities during the period - There were no defaults upon senior securities reported[199](index=199&type=chunk) [Item 4. Mine Safety Disclosures.](index=40&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to Netcapital Inc.'s operations - Mine safety disclosures are not applicable to the Company[200](index=200&type=chunk) [Item 5. Other Information.](index=40&type=section&id=Item%205.%20Other%20Information.) This section provides additional information, including details on the settlement of two defaulted promissory notes and confirmation that no Rule 10b5-1 trading plans were adopted or terminated by directors or executive officers during the quarter - On September 16, 2025, the Company settled a **$200,000** promissory note (Seidenberg Note) that had defaulted, by paying **$104,636** in cash and issuing 46,258 shares of common stock[201](index=201&type=chunk) - On September 16, 2025, the Company settled a **$400,000** promissory note (Hesse Note) that had defaulted, by paying **$209,074** in cash and issuing 92,428 shares of common stock[202](index=202&type=chunk) - No Rule 10b5-1 trading plans were adopted or terminated by the Company's directors or executive officers during the fiscal quarter ended July 31, 2025[203](index=203&type=chunk) [Item 6. Exhibits.](index=41&type=section&id=Item%206.%20Exhibits.) This section lists all exhibits filed with the Form 10-Q, including various convertible and non-convertible promissory notes, warrant forms, securities purchase agreements, advisory agreements, the Horizon Software Agreement, and certifications - The exhibits include various financing agreements such as convertible promissory notes, forms of warrants, and securities purchase agreements[203](index=203&type=chunk) - Key operational agreements like the Horizon Software Agreement and Form of Advisory Agreement are also listed[203](index=203&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer, as required by the Sarbanes-Oxley Act, are included[203](index=203&type=chunk) [SIGNATURES](index=43&type=section&id=SIGNATURES) The report is duly signed on behalf of Netcapital Inc. by Martin Kay, Chairman of the Board and Chief Executive Officer, and Coreen Kraysler, Chief Financial Officer, on September 22, 2025 - The report was signed by Martin Kay, Chairman and CEO, and Coreen Kraysler, CFO, on September 22, 2025[207](index=207&type=chunk)[208](index=208&type=chunk) ```

Financial Data and Key Metrics Changes - The company reported revenues of approximately $869,460 for fiscal year 2025, a significant decline from approximately $4,900,000 in fiscal year 2024, primarily due to the discontinuation of consulting services [4] - The gross profit for fiscal year 2025 was $8.29 compared to $4,800,000 in fiscal year 2024, indicating a substantial decrease in profitability [4] - The net loss for fiscal year 2025 was approximately $28,300,000, compared to a net loss of approximately $4,900,000 in fiscal year 2024, reflecting a worsening financial position [6] Business Line Data and Key Metrics Changes - The company discontinued its consulting services, which accounted for the largest portion of revenue decline year over year [4] - The funding portal charged a 1% fee payable in securities to issuers, generating $72,000 in fees for fiscal year 2025, down from $97,700 in fiscal year 2024 [4] Market Data and Key Metrics Changes - The company evaluated its equity investments for impairment, resulting in an impairment expense of approximately $19,900,000 due to several investments declining below their carrying amounts [5] Company Strategy and Development Direction - The company is transitioning away from equity-based consulting revenue to focus on building a scalable foundation for future growth [7] - The wholly owned subsidiary, Net Capital Securities, received its broker-dealer license, allowing the company to serve a broader base of issuers and investors [8] - The company aims to integrate blockchain and digital assets with traditional finance, exploring opportunities in the evolving regulatory environment [15][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by macroeconomic headwinds and uncertainty in financial markets but remains committed to strengthening the core business for long-term growth [7] - The company is focused on democratizing access to private capital markets and is exploring ways to enhance liquidity in secondary markets [34] Other Important Information - The company faces high general and administrative expenses, totaling $5,300,000, attributed to the complexities of operating in the fintech space and regulatory challenges [37] - Management expressed frustration over the high legal expenses, which are necessary for educating regulators about their unique business model [38] Q&A Session Summary Question: Can you shed light on your transition and future plans? - Management discussed broadening the platform to help companies raise capital and mentioned securing a broker-dealer license to participate in larger capital raisings [13][14] Question: Is the consulting business the major cost driver leading to losses? - Management clarified that the funding portal is a scalable technology operation, while the consulting business was less scalable and typically compensated in equity, which is hard to value [19][20] Question: What are the plans regarding crypto and blockchain integration? - Management stated they are evaluating long-term value creation opportunities in blockchain and digital assets, focusing on sustainable deals rather than short-term gains [21][23] Question: Why are G&A expenses so high for a small company? - Management acknowledged that high legal expenses are a cost of doing business in the fintech space, particularly due to regulatory complexities [37][38] Question: Are you considering going private due to unsustainable costs? - Management confirmed they are not exploring going private, emphasizing the benefits of being a public company despite the associated costs [41][42]

Core Viewpoint - Netcapital Inc. has shifted its strategy to build a scalable foundation for future growth, focusing on democratizing access to private markets and enhancing its service offerings with a secured broker-dealer license [2]. Financial Performance - Reported revenues for fiscal year 2025 were $869,460, a significant decrease from $4,951,435 in fiscal year 2024, primarily due to a decline in consulting services [6]. - The company experienced an operating loss of $8,321,317 compared to a loss of $3,442,388 in fiscal year 2024 [6]. - An impairment loss of $19.9 million was recorded in fiscal year 2025 [6]. - The net loss per share was $20.39, an improvement from $28.83 in fiscal year 2024 [6]. Balance Sheet Overview - As of April 30, 2025, total assets were $20,901,491, down from $41,557,306 in the previous year [8]. - Cash and cash equivalents decreased to $289,428 from $863,182 [8]. - Total current liabilities increased to $5,495,767 from $3,116,698 [8]. - Total stockholders' equity fell to $14,905,724 from $37,940,608 [8]. Operational Insights - The company’s consulting group, Netcapital Advisors, provides marketing and strategic advice while taking equity positions in select companies [4]. - The funding portal, Netcapital Funding Portal Inc., is registered with the SEC and a member of FINRA, enhancing its credibility in the market [4].