Core Viewpoint - Netcapital Inc. has shifted its strategy to focus on building a scalable foundation for future growth, emphasizing its broker-dealer license to enhance access to private markets for issuers and investors [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 a loss of $28.83 in fiscal year 2024 [6] Balance Sheet Overview - Total assets decreased to $20,901,491 as of April 30, 2025, down from $41,557,306 in the previous year [8] - Cash and cash equivalents fell to $289,428 from $863,182 [8] - Total current liabilities increased to $5,495,767 from $3,116,698 [8] - Total stockholders' equity decreased to $14,905,724 from $37,940,608 [8] Operational Insights - The company is positioned as a fintech entity that facilitates capital raising for private companies and offers private equity investment opportunities [4] - Netcapital Advisors, the consulting group, provides strategic advice and takes equity positions in select companies [4]

[Forward-Looking Statements](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section clarifies that the Form 10-K contains predictions, not guarantees, subject to various risks - The Form 10-K contains forward-looking statements, which are predictions and not guarantees of future performance, based on current expectations and subject to various risks and uncertainties[13](index=13&type=chunk) - Key factors that could cause actual results to differ materially include capital requirements, difficulties in executing growth strategy, economic uncertainties (e.g., COVID-19), challenges in acquisitions, increasing revenue per issuer, hiring fintech employees, increasing investments per investor, supply shortages, dependence on large issuers, negative publicity, competition, inability to manage growth, and maintaining adequate cash flow[13](index=13&type=chunk) [Risk Factor Summary](index=5&type=section&id=RISK%20FACTOR%20SUMMARY) The company's business faces significant risks, making investment speculative, as detailed in the 'Risk Factors' section - The Company's business is subject to significant risks and uncertainties, making an investment speculative. Principal risk factors are summarized, but investors should review the full 'Risk Factors' section[16](index=16&type=chunk) - Key risks include financial position concerns (going concern doubt, SBA loan security, significant impairment losses on investments, limited operating history with recent losses), business and growth strategy challenges (management changes, labor issues, increased cloud costs, regulatory impact, license failures, IP protection, secondary trading market delays), and specific risks related to receiving securities for services, proposed secondary trading platform, broker-dealer activities, and common stock volatility[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) PART I [Item 1. Business.](index=4&type=section&id=Item%201.%20Business.) Netcapital Inc. is a fintech company enabling private companies to raise capital online from diverse investors - Netcapital Inc. operates a fintech platform for private companies to raise capital online from accredited and non-accredited investors, leveraging Regulation Crowdfunding (Reg CF) and Regulation A (Reg A) offerings[24](index=24&type=chunk) Revenue Breakdown and Changes (Fiscal Year Ended April 30) | Revenue Source | FY2025 Revenue ($) | FY2024 Revenue ($) | Change (YoY) ($) | % Change (YoY) | | :----------------------------- | :------------- | :------------- | :----------- | :------------- | | Total Revenues | $869,460 | $4,951,435 | $(4,081,975) | -82.4% | | Consulting services for equity securities | $0 | $3,440,000 | $(3,440,000) | -100% | | Consulting revenue | $0 | $96,200 | $(96,200) | -100% | | Portal fees | $589,074 | $874,368 | $(285,294) | -33% | | Listing fees | $207,500 | $442,040 | $(234,540) | -53% | | Portal 1% equity fee | $72,090 | $97,700 | $(25,610) | -26.2% | | Game website revenue | $796 | $1,127 | $(331) | -29.4% | - The significant revenue decline in fiscal 2025 is primarily due to the cessation of consulting services in exchange for equity, which accounted for approximately **$3.5 million** in fiscal 2024[26](index=26&type=chunk) - Portal fees decreased by **33%** due to a **29% decrease** in total capital invested through the portal, from **$14.8 million** in fiscal 2024 to **$10.6 million** in fiscal 2025. Listing fees decreased by **53%** due to a **54% decrease** in new offerings launched[27](index=27&type=chunk)[28](index=28&type=chunk) [Overview](index=7&type=section&id=Overview) Netcapital Inc. is a fintech company offering a scalable platform for private companies to raise capital online - Netcapital Inc. is a fintech company providing a scalable technology platform for private companies to raise capital online from accredited and non-accredited investors, based on Reg CF of the JOBS Act[24](index=24&type=chunk) - The company generates fees from its funding portal (www.netcapital.com) and has expanded to include Regulation A (Reg A) offerings through its licensed broker-dealer subsidiary, Netcapital Securities Inc[24](index=24&type=chunk) [Our Business](index=7&type=section&id=Our%20Business) Netcapital generates revenue through listing and portal fees from its funding portal and broker-dealer subsidiary - Netcapital provides private company investment access via its online portal (Netcapital Funding Portal, Inc.) and broker-dealer subsidiary (Netcapital Securities)[25](index=25&type=chunk) - The funding portal charges a **$5,000** listing fee, a **4.9%** portal fee for capital raised, and a **1%** success fee paid in equity (starting FY2025). Netcapital Securities charges a **$25,000** listing fee and a **4.9%** success fee for Reg A offerings[25](index=25&type=chunk) Revenue Comparison (FY2025 vs. FY2024) | Metric | FY2025 ($) | FY2024 ($) | | :-------------------------------- | :------- | :------- | | Total Revenues | $869,460 | $4,951,435 | | Costs of Service | $40,344 | $108,060 | | Gross Profit | $829,116 | $4,843,375 | | Equity Securities for Services | $0 | $3,537,700 | | Cash-based Revenues | N/A | $1,413,736 | | Portal Fees | $589,074 | $874,368 | | Listing Fees | $207,500 | $442,040 | | Portal 1% Equity Fee | $72,090 | $97,700 | - Revenue from portal fees decreased by **33%** in fiscal 2025 due to a **29% decrease** in total dollars invested through the portal (**$10.6 million** in FY2025 vs. **$14.8 million** in FY2024)[27](index=27&type=chunk) - Listing fees decreased by **53%** in fiscal 2025, directly linked to a **54% drop** in new offerings launched (38 in FY2025 vs. 82 in FY2024)[28](index=28&type=chunk) [Funding Portal](index=8&type=section&id=Funding%20Portal) Netcapital.com is an SEC-registered funding portal enabling private companies to raise capital online - Netcapital.com is an SEC-registered funding portal allowing private companies to raise capital online from global investors. It provides individual offering pages with company details and financial documents[30](index=30&type=chunk) - Services include automated onboarding, regulatory document filing, compliance review, custom offering pages, third-party transfer agent/custodial services, email marketing, rolling closes, annual filing assistance, and direct team support[33](index=33&type=chunk) [Consulting Business](index=8&type=section&id=Consulting%20Business) Netcapital Advisors historically offered strategic advice and took equity stakes, now significantly decreased - Netcapital Advisors, a wholly-owned subsidiary, offers strategic advice, technology consulting, and online marketing for fundraising campaigns. Historically, it also acted as an incubator/accelerator, taking equity stakes in select startups, holding positions in ten portfolio companies valued at approximately **$6 million**[31](index=31&type=chunk) - The company has written off investments in twelve Portfolio Companies, resulting in a non-cash loss of over **$19.9 million** from failed entities[31](index=31&type=chunk) - Netcapital Advisors' services include investor introductions, online marketing, website design/software development, message crafting (pitch decks, offering pages, ads), strategic advice, and technology consulting[34](index=34&type=chunk) [Broker-Dealer Business](index=8&type=section&id=Broker-Dealer%20Business) Netcapital Securities Inc. received FINRA approval to expand revenue via Reg A and Reg D offerings - In November 2024, Netcapital Securities Inc., a wholly-owned subsidiary, received FINRA approval to operate as a broker-dealer[32](index=32&type=chunk) - This approval is expected to expand revenue opportunities by hosting Reg A and Reg D offerings, earning fees from client introductions to other FINRA broker-dealers, and leveraging strategic partnerships for wider distribution[32](index=32&type=chunk) - As of the report date, Netcapital Securities has engaged with one issuer for a Regulation A offering[32](index=32&type=chunk) [Competition](index=9&type=section&id=Competition) Netcapital competes with numerous companies in capital raising, facing well-resourced market players - Netcapital competes with numerous public and private companies in capital raising, strategy, technology consulting, and digital marketing, many of which have significant financial resources and established market positions[35](index=35&type=chunk) - Key competitive factors and barriers to entry include reputation, technology, financial stability, track record, critical mass, independent oversight, transparency, and FINRA approval for funding portals[36](index=36&type=chunk) - Increased competition could materially adversely affect the company's business, revenues, operating results, and financial condition[38](index=38&type=chunk) [Industry Regulation](index=9&type=section&id=Industry%20Regulation) The company operates in a highly regulated industry under the JOBS Act, subject to SEC and FINRA - The company operates in a highly regulated industry, primarily under Title III, Regulation Crowdfunding (Reg CF) of the JOBS Act, which democratized access to private investment opportunities[39](index=39&type=chunk) - Reg CF allows the general public to invest in private companies, permits public advertising of securities offerings, and conditionally exempts Section 4(a)(6) securities from registration[40](index=40&type=chunk)[41](index=41&type=chunk) - The SEC also expanded Reg A into Tier 1 (up to **$20 million**) and Tier 2 (up to **$75 million**) offerings[41](index=41&type=chunk) - The company is subject to SEC and FINRA regulation, including the USA Patriot Act (anti-money laundering) and Rule 15c3-1 (Uniform Net Capital Rule) for broker-dealers, with non-compliance potentially leading to material adverse effects[40](index=40&type=chunk) [Our Market](index=10&type=section&id=Our%20Market) The JOBS Act established the funding portal industry, with regulatory enhancements increasing offering limits - The traditional funding model restricts capital access, investments, and liquidity, with venture capital firms investing in less than **1%** of considered companies and limited funding for women- and black-owned firms[42](index=42&type=chunk) - The JOBS Act addressed these issues by establishing the funding portal industry, with regulatory enhancements in March 2021 increasing offering limits for Reg CF to **$5 million**, Regulation D Rule 504 to **$10 million**, and Reg A Tier 2 to **$75 million**[44](index=44&type=chunk) Reg CF and Reg A+ Funding Trends | Metric | 2024 ($M) | 2021 Peak ($M) | 2018 ($M) | | :-------------------------------- | :----- | :-------- | :----- | | Reg CF Funding | $343.6 | $496.1 | $74.8 | | Reg CF Funding Growth (2018-2024) | N/A | N/A | 360% | | Reg CF Raises (Number) | 569 | N/A | N/A | | Average Reg CF Investment Size ($) | $1,500 | N/A | N/A | | Reg A+ Offerings Closed (Number) | 61 | N/A | N/A | | Reg A+ New Offerings Launched (Number) | 34 | N/A | N/A | | Median Reg A+ Raise ($M) | $2 | N/A | N/A | | Average Reg A+ Raise ($M) | $7.7 | N/A | N/A | [Our Technology](index=10&type=section&id=Our%20Technology) The Netcapital platform is a scalable, real-time transaction-processing engine built on AWS - The Netcapital platform is a scalable, real-time, 24/7 transaction-processing engine, offering automated onboarding and integrated regulatory filings for companies, and access to private investments for over **100,000 users**[48](index=48&type=chunk)[49](index=49&type=chunk) - Its infrastructure uses Docker containers, Amazon Elastic Container Service (ECS), Elastic Load Balancers (ELBs), CloudFlare for DDoS protection, Amazon RDS for the main database (Multi-AZ deployment), and AWS ElastiCache's Redis for asynchronous CPU-intensive data processing[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) - The technology for the funding portal is licensed from Netcapital Systems LLC, with payments of **$95,000** in FY2025 and **$195,000** in FY2024[55](index=55&type=chunk) [Proposed Alternative Trading ("ATS") Relationship](index=11&type=section&id=Proposed%20Alternative%20Trading%20%28%22ATS%22%29%20Relationship) Netcapital is exploring a secondary trading feature with Templum Markets LLC, though development is paused - Netcapital aims to address the lack of liquidity for private company investors by exploring a secondary trading feature, having entered into a software license and services agreement with Templum Markets LLC in January 2023[56](index=56&type=chunk) - Templum operates an ATS approved in 53 U.S. states and territories for trading unregistered or private securities. However, further development and roll-out of this platform have been paused to reevaluate market conditions and customer expectations[56](index=56&type=chunk)[65](index=65&type=chunk) - Risks associated with the proposed ATS include lack of public filings for private companies, illiquidity of securities, transfer restrictions, and potential transaction settlement failures[58](index=58&type=chunk) - The estimated development cost for this platform is under **$1.0 million**, mostly incurred, with no current revenue model associated with securities sales on the proposed ATS[60](index=60&type=chunk) [Competitive Advantages](index=12&type=section&id=Competitive%20Advantages) Netcapital offers a low-cost online capital raising solution, emphasizing technology, support, and onboarding - Netcapital believes it offers the lowest cost solution for online capital raising compared to peers like StartEngine, Wefunder, and Republic Core LLC[63](index=63&type=chunk) - The company highlights its facilitated technology platforms, strong customer support, and efficient client onboarding as superior advantages[63](index=63&type=chunk) - Its network is rapidly expanding due to enhanced marketing and broad distribution to new investors[63](index=63&type=chunk) [Our Strategy](index=13&type=section&id=Our%20Strategy) Netcapital's strategy focuses on investor acquisition, platform expansion, technology, and new offerings - Netcapital's strategy focuses on generating new investor accounts, hiring business development staff, increasing companies on the platform via marketing, investing in technology, accelerating advisory portfolio clients, expanding internationally, providing a secondary trading feature (currently paused), and exploring new verticals like Regulation A and Regulation D offerings[65](index=65&type=chunk) - The company received FINRA approval in November 2024 for its broker-dealer subsidiary, Netcapital Securities Inc., to expand revenue opportunities through Reg A and Reg D offerings and strategic partnerships[65](index=65&type=chunk) [Investment Portfolio](index=14&type=section&id=Investment%20Portfolio) Netcapital's investment portfolio targets disruptive technology companies in Fintech, Mobile Games, and AI - Netcapital's investment portfolio focuses on companies with emerging, disruptive technologies, including KingsCrowd (Fintech), Zelgor (Mobile Games), and Hiveskill LLC (AI)[66](index=66&type=chunk)[67](index=67&type=chunk)[71](index=71&type=chunk) Investment Portfolio Summary (April 30, 2025 vs. 2024) | Investment | April 30, 2025 ($) | April 30, 2024 ($) | | :------------------------------------------ | :------------- | :------------- | | Netcapital DE LLC | $1,985 | $48,128 | | MustWatch LLC | - | $440,000 | | Zelgor Inc. | $1,400,000 | $1,400,000 | | ChipBrain LLC | - | $3,366,348 | | Vymedic Inc. | $11,032 | $11,032 | | C-Reveal Therapeutics LLC | $50,000 | $50,000 | | Deuce Drone LLC | - | $2,350,000 | | Hiveskill LLC | $712,500 | $712,500 | | ScanHash LLC | $425,000 | $425,000 | | Caesar Media Group Inc. | - | $1,999,128 | | Cust Corp. | $1,200,000 | $1,200,000 | | Reper LLC | $1,200,000 | $1,200,000 | | Dark LLC | - | $2,100,000 | | Netwire LLC | - | $1,300,000 | | CountSharp LLC | - | $1,170,000 | | CupCrew LLC | - | $1,170,000 | | HeadFarm LLC | - | $1,170,000 | | AceHedge LLC | - | $1,110,000 | | Fantize LLC | - | $1,110,000 | | StockText LLC | - | $1,220,000 | | 1% equity fee received - 61 issuers (2025), 30 issuers (2024) | $169,790 | $97,700 | | KingsCrowd Inc. | $577,743 | $513,550 | | **Total Investments at fair value** | **$5,748,050** | **$25,333,386**| [Major Customers](index=16&type=section&id=Major%20Customers) The company exhibits customer concentration, with a few major customers contributing significant revenues Major Customer Revenue Concentration | Fiscal Year | Customer 1 (%) | Customer 2 (%) | Customer 3 (%) | | :------------ | :--------- | :--------- | :--------- | | April 30, 2025 | 20% | 11% | N/A | | April 30, 2024 | 25% | 22% | 22% | [Recent Developments](index=16&type=section&id=Recent%20Developments) Recent activities include equity offerings, debt financings, a software license, and equity plan amendments - In July 2025, the company issued **269,257** common shares from warrant exercises and completed two registered direct offerings, raising approximately **$3 million** and **$5 million** respectively, with concurrent private placements of warrants[74](index=74&type=chunk)[75](index=75&type=chunk)[79](index=79&type=chunk) - Net proceeds from these offerings were primarily allocated to repaying outstanding promissory notes and for working capital and general corporate purposes[75](index=75&type=chunk)[79](index=79&type=chunk) - In June 2025, the company entered a Horizon Software Agreement for a royalty-free, perpetual license to use capital-raising and secondary trading software in the US, in exchange for **500,000 shares** of common stock[83](index=83&type=chunk) - An At-The-Market (ATM) offering in June 2025 sold **229,404 shares** for gross proceeds of approximately **$974,747**, yielding net proceeds of **$944,067** after commissions and costs[84](index=84&type=chunk) - A June 2025 private placement raised **$475,000** by issuing **118,750** common shares to accredited investors, with a price adjustment provision tied to future share issuances[85](index=85&type=chunk) - The board approved amendments to the 2023 Omnibus Equity Incentive Plan to increase authorized shares to **1,547,556** and the evergreen limit from **5% to 10%** of outstanding shares, subject to stockholder approval[86](index=86&type=chunk) - Two strategic advisory boards (Crypto and Game) were formed in June 2025, with advisors receiving **783,722** non-qualified stock options under the amended Plan, exercisable upon stockholder approval[87](index=87&type=chunk)[88](index=88&type=chunk) - In May 2025, the company completed several debt financings, including a **$400,000** unsecured non-convertible promissory note (**50% OID**, **8% interest**) and two convertible promissory notes totaling **$126,320** principal (**$108,000** net proceeds), both of which were prepaid in July 2025[89](index=89&type=chunk)[90](index=90&type=chunk) [Employees](index=19&type=section&id=Employees) As of April 30, 2025, Netcapital Inc. had three senior personnel and approximately 20 full-time employees - As of April 30, 2025, Netcapital Inc. had three senior corporate personnel and approximately **20** full-time employees, none of whom are unionized. Employee relations are considered good[91](index=91&type=chunk) [Corporate History and Information](index=19&type=section&id=Corporate%20History%20and%20Information) The company, incorporated in 1984, has undergone name changes and acquisitions, with offices in Boston - The company was incorporated in Utah in 1984 as DBS Investments, Inc., underwent several name changes and acquisitions, including ValueSetters, Inc. (2003), NetGames.com (2010), Netcapital Funding Portal Inc. (2020), and MSG Development Corp. (2021). The parent company was renamed Netcapital Inc. in November 2020, and Netcapital Securities Inc. was formed in 2024[92](index=92&type=chunk) - Its principal executive offices are in Boston, Massachusetts, and it maintains corporate and funding portal websites[93](index=93&type=chunk) [Item 1A. Risk Factors.](index=19&type=section&id=Item%201A.%20Risk%20Factors.) Netcapital Inc. faces substantial risks across its financial position, operations, growth, and common stock - The company's financial situation raises substantial doubt about its ability to continue as a going concern, with negative working capital of **$5,096,163**, an operating loss of **$8,321,317**, and net cash used in operating activities of **$5,339,211** for the year ended April 30, 2025[96](index=96&type=chunk) - Netcapital recognized impairment losses totaling **$17.9 million** on portfolio company investments in FY2025, which materially reduced total assets and shareholders' equity, and further impairments are possible[100](index=100&type=chunk)[102](index=102&type=chunk) - The company has a limited operating history and has suffered losses in recent years, with no guarantee of future profitability, as past profits were primarily from unrealized gains on illiquid equity securities[104](index=104&type=chunk)[105](index=105&type=chunk) - Netcapital is highly dependent on a limited number of customers, with one customer accounting for **20%** and another for **11%** of FY2025 revenues, posing risks if these customers experience declining demand[106](index=106&type=chunk) - The company's proposed secondary trading platform, dependent on a third-party (Templum), has paused development and roll-out, and its failure to launch could perpetuate a lack of liquidity for investors, adversely affecting business[156](index=156&type=chunk)[158](index=158&type=chunk)[160](index=160&type=chunk) - The market price of Netcapital's common stock is highly volatile and subject to fluctuations from various factors, including financial results, analyst expectations, economic conditions, and future equity issuances, which could dilute ownership and depress stock price[171](index=171&type=chunk)[172](index=172&type=chunk) [Risks Related to our Financial Position](index=19&type=section&id=Risks%20Related%20to%20our%20Financial%20Position) The company's negative working capital and operating losses raise substantial doubt about its going concern - The company's financial situation, including negative working capital, operating losses, and negative cash flow from operations, creates substantial doubt about its ability to continue as a going concern[96](index=96&type=chunk) - Obligations to the U.S. Small Business Administration (SBA) are secured by company assets; a default could lead to foreclosure and cessation of operations[98](index=98&type=chunk) - The company recognized **$17.9 million** in impairment losses on portfolio company investments in FY2025, which reduced total assets and shareholders' equity and may impact future capital raising and stock value[100](index=100&type=chunk)[102](index=102&type=chunk) - Despite prior profitability from unrealized gains, the company has suffered losses in recent years, including a **$28,301,325** net loss in FY2025, with no guarantee of returning to profitability[105](index=105&type=chunk) [Risks Related to Our Business and Growth Strategy](index=21&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Growth%20Strategy) Operational risks include customer concentration, regulatory non-compliance, cyber-attacks, and illiquid investments - The company has substantial customer concentration, with two customers accounting for **31%** of FY2025 revenues, posing a risk if their demand declines[106](index=106&type=chunk) - Operating in a highly regulated and evolving industry, non-compliance with SEC, FINRA, and other regulations could lead to fines, sanctions, or business limitations[109](index=109&type=chunk) - The funding portal's service offerings are relatively new, and market penetration remains uncertain as issuers and investors may choose alternative platforms or financing methods[110](index=110&type=chunk) - The company is vulnerable to hackers and cyber-attacks, which could disrupt services, lead to data loss, litigation, and reputational damage, especially given its reliance on third-party technology providers and escrow agents[118](index=118&type=chunk)[119](index=119&type=chunk) - Failure to comply with the license agreement for its funding portal technology with Netcapital Systems LLC could result in termination of rights, severely impacting operations[120](index=120&type=chunk) - The company's strategy of acquiring equity in early-stage companies may result in illiquid investments with uncertain future value, as evidenced by **$19.9 million** in write-downs in FY2025[125](index=125&type=chunk) [Risks Related to Receipt of Securities for Services](index=30&type=section&id=Risks%20Related%20to%20Receipt%20of%20Securities%20for%20Services) A significant portion of assets are illiquid equity securities, subject to volatility and holding periods - A significant portion of total assets (**$5.7 million** as of April 30, 2025) are illiquid equity securities of early-stage companies, subject to volatility and legal holding periods, with no established trading market[149](index=149&type=chunk) - The company is not regulated as an investment company under the 1940 Act and intends to avoid this designation, as applicable restrictions would make its current operations impractical[150](index=150&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) - The company's investment securities did not exceed the **40%** threshold for investment company status as of April 30, 2025, following **$19.9 million** in impairment losses[152](index=152&type=chunk) [Risks Related to Operation of our Proposed Secondary Trading Platform](index=31&type=section&id=Risks%20Related%20to%20Operation%20of%20our%20Proposed%20Secondary%20Trading%20Platform) The proposed secondary trading platform's dependence on a third-party and paused development poses liquidity risks - The proposed secondary trading platform is dependent on a third-party provider (Templum), and any disruption in services or failure to officially launch could materially adversely affect the business[156](index=156&type=chunk)[158](index=158&type=chunk) - Investors on the proposed platform face significant risks, including limited information on private companies, illiquid securities, transfer restrictions, and potential transaction settlement failures[159](index=159&type=chunk)[162](index=162&type=chunk) - Failure to launch the secondary trading platform could perpetuate a lack of liquidity for investors in the target market, potentially reducing investor interest and client engagement with Netcapital's platform[160](index=160&type=chunk) [Risks Related to our Proposed Broker-Dealer Activities](index=32&type=section&id=Risks%20Related%20to%20our%20Proposed%20Broker-Dealer%20Activities) The broker-dealer business is heavily regulated, requiring specific net capital, with non-compliance risking sanctions - The securities business is heavily regulated by bodies like the SEC, FINRA, and Nasdaq, with non-compliance potentially leading to sanctions, fines, and reputational harm[161](index=161&type=chunk) - Netcapital Securities Inc., as a licensed broker-dealer, must maintain specific net capital levels; failure to do so could result in suspension, revocation of registration, or liquidation[164](index=164&type=chunk) [Risk Factors Related to Our Common Stock](index=33&type=section&id=Risk%20Factors%20Related%20to%20Our%20Common%20Stock) Common stock faces volatility, potential Nasdaq delisting, and dilution from future equity issuances - The company's ability to maintain its Nasdaq Capital Market listing is subject to meeting criteria like minimum stock price and public float; failure could lead to delisting and reduced liquidity[165](index=165&type=chunk)[166](index=166&type=chunk) - The market price of common stock is highly volatile, influenced by operational fluctuations, analyst opinions, economic conditions, and future equity issuances, which could dilute ownership[171](index=171&type=chunk)[172](index=172&type=chunk) - The company does not intend to pay cash dividends, meaning investor returns will be limited to stock value appreciation, and a lack of dividends could hinder future fundraising[169](index=169&type=chunk) - Issuance of common stock upon exercise of options under equity incentive plans may dilute existing stockholders' ownership interests[178](index=178&type=chunk) [Item 1B. Unresolved Staff Comments.](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) As a smaller reporting company, Netcapital Inc. is not required to provide information under this item - Netcapital Inc. is a smaller reporting company and is not required to provide information regarding unresolved staff comments[185](index=185&type=chunk) [Item 1C. Cybersecurity](index=35&type=section&id=Item%201C.%20Cybersecurity) The Board oversees cybersecurity risk management, internal frameworks, and third-party evaluations - Cybersecurity is critical for Netcapital as a fintech company, facing threats like ransomware and denial-of-service attacks, which could materially adversely affect operations[186](index=186&type=chunk) - The Board of Directors oversees cybersecurity risk management, receiving regular briefings from a cybersecurity consultant and being apprised of incidents with moderate or higher business impact[187](index=187&type=chunk) - The company has implemented governance structures, internal frameworks, and engages third-party services for security control evaluations (penetration testing, independent audits, consulting)[188](index=188&type=chunk) - Subcontractors are required to report cybersecurity incidents, and while cybersecurity insurance is maintained, it may not fully cover all related costs or disruptions[189](index=189&type=chunk) [Item 2. Properties.](index=38&type=section&id=Item%202.%20Properties.) Netcapital Inc. leases an office space in Boston, Massachusetts, deemed suitable for its near-term needs - Netcapital Inc. leases an office at 1 Lincoln Street, Boston, MA, paying approximately **$6,600** monthly for **400 square feet**[190](index=190&type=chunk) - The office membership agreement is cancellable with **60-day notice**, and most employees work remotely[190](index=190&type=chunk) - The current office space is considered suitable and adequate for its intended purposes and near-term expansion plans[190](index=190&type=chunk) [Item 3. Legal Proceedings.](index=38&type=section&id=Item%203.%20Legal%20Proceedings.) The company may face litigation and regulatory proceedings in its highly regulated industry, increasing compliance costs - The company may face litigation or regulatory proceedings in the ordinary course of business, especially in the highly regulated securities industry, which has seen an increasing incidence of class action suits[191](index=191&type=chunk) - Increased regulatory scrutiny of financial institutions has led to higher compliance costs for Netcapital[192](index=192&type=chunk) - The company receives many regulatory inquiries annually, primarily concerning anti-money laundering, compliance, registration, and record-keeping, though most do not result in fines[193](index=193&type=chunk) - Procedures are in place to evaluate the probability and estimability of potential regulatory fines and to update contingency reserves accordingly[193](index=193&type=chunk) [Item 4. Mine Safety Disclosures.](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to Netcapital Inc - Item 4. Mine Safety Disclosures is not applicable to Netcapital Inc[194](index=194&type=chunk) PART II [Item 5. Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.](index=40&type=section&id=Item%205.%20Market%20For%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities.) Netcapital's common stock and warrants trade on Nasdaq, with no dividends paid, and amended equity plans - Netcapital's common stock and warrants trade on the Nasdaq Capital Market under symbols 'NCPL' and 'NCPLW' since July 13, 2022[197](index=197&type=chunk) - As of August 12, 2025, there were **281** shareholders of record and **4,720,056** shares of common equity outstanding[6](index=6&type=chunk)[198](index=198&type=chunk) - The company has never paid dividends on its common stock and does not expect to do so in the foreseeable future[200](index=200&type=chunk) - The 2023 Omnibus Equity Incentive Plan was amended in June 2025 to increase authorized shares to **1,547,556** and the evergreen limit from **5% to 10%** of outstanding shares, and further amended in July 2025 to increase authorized shares to **3,500,000**[207](index=207&type=chunk)[208](index=208&type=chunk) - No repurchase of equity securities were made during the 2025 fiscal year[209](index=209&type=chunk) [Market Information](index=40&type=section&id=Market%20Information) Netcapital's common stock and warrants have traded on the Nasdaq Capital Market since July 2022 - Netcapital's common stock was quoted on the OTCQX marketplace under 'NCPL' before listing on Nasdaq in July 2022[196](index=196&type=chunk) - Common stock and warrants currently trade on the Nasdaq Capital Market under symbols 'NCPL' and 'NCPLW' respectively, since July 13, 2022[197](index=197&type=chunk) [Recent Issuances of Unregistered Securities](index=40&type=section&id=Recent%20Issuances%20of%20Unregistered%20Securities) There were no recent issuances of unregistered securities - There were no recent issuances of unregistered securities[198](index=198&type=chunk) [Holders](index=40&type=section&id=Holders) As of August 12, 2025, the company had 281 shareholders of record for its common stock - As of August 12, 2025, there were **281** shareholders of record of the company's common stock[198](index=198&type=chunk) [Transfer Agent and Registrar](index=40&type=section&id=Transfer%20Agent%20and%20Registrar) Equity Stock Transfer LLC serves as the transfer agent and registrar for Netcapital's common stock - Equity Stock Transfer LLC serves as the transfer agent and registrar for Netcapital's common stock[199](index=199&type=chunk) [Dividends](index=40&type=section&id=Dividends) The company has never paid dividends on its common stock and does not anticipate doing so - The company has never paid dividends on its common stock and does not anticipate doing so in the foreseeable future[200](index=200&type=chunk) [Securities Authorized for Issuance under Equity Compensation Plans](index=40&type=section&id=Securities%20Authorized%20for%20Issuance%20under%20Equity%20Compensation%20Plans) Equity incentive plans have been amended to increase authorized shares and evergreen limits - The 2021 Equity Incentive Plan reserved **4,286 shares** for awards, with **2,459 options** outstanding and **1,827 shares** remaining for grant as of August 12, 2025[201](index=201&type=chunk) - The 2023 Omnibus Equity Incentive Plan initially authorized **28,571 shares**, with an annual increase provision. As of April 30, 2025, **25,951** option grants were outstanding[204](index=204&type=chunk) - Amendments in June and July 2025 increased authorized shares under the 2023 Plan to **1,547,556** and then to **3,500,000**, respectively, and increased the evergreen limit from **5% to 10%** of outstanding shares[207](index=207&type=chunk)[208](index=208&type=chunk) [Purchase of Equity Securities](index=41&type=section&id=Purchase%20of%20Equity%20Securities) No equity securities were repurchased during the 2025 fiscal year - No equity securities were repurchased during the 2025 fiscal year[209](index=209&type=chunk) [Item 6. Selected Financial Data.](index=37&type=section&id=Item%206.%20Selected%20Financial%20Data.) This item is reserved, as Netcapital Inc. is a smaller reporting company and not required to provide this data - Item 6. Selected Financial Data is reserved, as the registrant is a smaller reporting company and not required to provide this information[210](index=210&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=38&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Netcapital experienced significant revenue decline and losses in fiscal 2025, raising going concern doubts Revenue and Gross Profit Comparison (FY2025 vs. FY2024) | Metric | FY2025 ($) | FY2024 ($) | Change (YoY) ($) | % Change (YoY) | | :---------------- | :------- | :------- | :----------- | :------------- | | Revenues | $869,460 | $4,951,435 | $(4,081,975) | -82.4% | | Costs of services | $40,344 | $108,060 | $(67,716) | -62.7% | | Gross profit | $829,116 | $4,843,375 | $(4,014,259) | -82.9% | - The decrease in revenues is primarily attributable to a **$3.44 million** reduction in consulting services for equity securities, which ceased in fiscal 2025[214](index=214&type=chunk)[243](index=243&type=chunk) Key Financial Performance Indicators (FY2025 vs. FY2024) | Metric | FY2025 ($) | FY2024 ($) | Change (YoY) ($) | | :-------------------------------- | :----------- | :----------- | :----------- | | Operating Loss | $(8,321,317) | $(3,442,388) | $(4,878,929) | | Net Loss | $(28,301,325)| $(4,986,317) | $(23,315,008)| | Net Cash Used in Operating Activities | $(5,339,211) | $(4,879,838) | $(459,373) | | Impairment Expense | $(19,915,556)| $(1,048,430) | $(18,867,126)| | Unrealized Gain (Loss) on Equity Securities | $18,050 | $(2,696,135) | $2,714,185 | - As of April 30, 2025, the company had negative working capital of **$5,204,109** and cash and cash equivalents of **$289,428**, down from **$863,182** in FY2024, raising substantial doubt about its ability to continue as a going concern[254](index=254&type=chunk)[267](index=267&type=chunk) - Subsequent to year-end, the company raised significant capital through public offerings and private placements, including **$8 million** from two registered direct offerings in July 2025 and **$944,067** net proceeds from an ATM offering in June 2025[255](index=255&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) [Overview](index=42&type=section&id=Overview) Netcapital is a fintech company providing an online platform for private companies to raise capital - Netcapital Inc. is a fintech company that provides a scalable technology platform for private companies to raise capital online from accredited and non-accredited investors, primarily through Reg CF and Reg A offerings[212](index=212&type=chunk) - The company's revenue model includes listing fees (**$5,000**), a **4.9%** portal fee for capital raised, and a **1%** equity success fee (starting FY2025) for its funding portal, and **$25,000** listing fee plus **4.9%** success fee for Reg A offerings via its broker-dealer subsidiary[213](index=213&type=chunk) Revenue and Gross Profit (FY2025 vs. FY2024) | Metric | FY2025 ($) | FY2024 ($) | | :---------------- | :------- | :------- | | Revenues | $869,460 | $4,951,435 | | Costs of services | $40,344 | $108,060 | | Gross profit | $829,116 | $4,843,375 | - The significant revenue decline in FY2025 is largely due to not providing consulting services for equity, which contributed approximately **$3.5 million** in FY2024[214](index=214&type=chunk) - Portal fees decreased by **33%** to **$589,074** in FY2025 from **$874,368** in FY2024, driven by a **29% decrease** in total capital invested through the portal (**$10.6 million** in FY2025 vs. **$14.8 million** in FY2024)[215](index=215&type=chunk) - Listing fees decreased by **53%** to **$207,500** in FY2025 from **$442,040** in FY2024, due to a **54% decrease** in offerings launched (38 in FY2025 vs. 82 in FY2024)[217](index=217&type=chunk) - The average amount raised per offering on the funding portal decreased from **$280,978** in FY2024 to **$215,745** in FY2025[218](index=218&type=chunk) - Netcapital Securities Inc. received FINRA approval in November 2024 to operate as a broker-dealer, aiming to expand revenue through Reg A and Reg D offerings[222](index=222&type=chunk) - Development and roll-out of the proposed secondary trading platform with Templum Markets LLC have been paused to reevaluate market conditions[224](index=224&type=chunk) [Recent Developments](index=44&type=section&id=Recent%20Developments) Recent activities include equity offerings, debt financings, a software license, and equity plan amendments - In July 2025, the company issued **269,257** common shares from warrant exercises and completed two registered direct offerings, raising approximately **$3 million** and **$5 million** respectively, with concurrent private placements of warrants[226](index=226&type=chunk)[227](index=227&type=chunk)[231](index=231&type=chunk) - Net proceeds from these offerings were primarily allocated to repaying outstanding promissory notes and for working capital and general corporate purposes[227](index=227&type=chunk)[231](index=231&type=chunk) - In June 2025, the company entered a Horizon Software Agreement for a royalty-free, perpetual license to use capital-raising and secondary trading software in the US, in exchange for **500,000 shares** of common stock[235](index=235&type=chunk) - An At-The-Market (ATM) offering in June 2025 sold **229,404 shares** for gross proceeds of approximately **$974,747**, yielding net proceeds of **$944,067** after commissions and costs[236](index=236&type=chunk) - A June 2025 private placement raised **$475,000** by issuing **118,750** common shares to accredited investors, with a price adjustment provision tied to future share issuances[237](index=237&type=chunk) - The board approved amendments to the 2023 Omnibus Equity Incentive Plan to increase authorized shares to **1,547,556** and the evergreen limit from **5% to 10%** of outstanding shares, subject to stockholder approval[238](index=238&type=chunk) - Two strategic advisory boards (Crypto and Game) were formed in June 2025, with advisors receiving **783,722** non-qualified stock options under the amended Plan, exercisable upon stockholder approval[239](index=239&type=chunk) - In May 2025, the company completed several debt financings, including a **$400,000** unsecured non-convertible promissory note (**50% OID**, **8% interest**) and two convertible promissory notes totaling **$126,320** principal (**$108,000** net proceeds), both of which were prepaid in July 2025[240](index=240&type=chunk)[242](index=242&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) Total revenues decreased significantly in fiscal 2025 due to the absence of consulting services for equity Revenue Components (FY2025 vs. FY2024) | Revenue Source | April 30, 2025 ($) | April 30, 2024 ($) | | :----------------------------- | :------------- | :------------- | | Consulting services for equity securities | $0 | $3,440,000 | | Consulting revenue | $0 | $96,200 | | Portal fees | $589,074 | $874,368 | | Listing fees | $207,500 | $442,040 | | Portal 1% equity fee | $72,090 | $97,700 | | Game website revenue | $796 | $1,127 | | **Total** | **$869,460** | **$4,951,435** | - Total revenues decreased by **$4,081,975** (**82.4%**) in fiscal 2025, primarily due to the absence of consulting services for equity securities[243](index=243&type=chunk) - Costs of revenues decreased by **$67,716** (**63%**) to **$40,344** in fiscal 2025, aligning with the overall revenue decline[247](index=247&type=chunk) Operating Expenses (FY2025 vs. FY2024) | Expense Category | FY2025 ($) | FY2024 ($) | Change (YoY) ($) | % Change (YoY) | | :----------------------- | :------- | :------- | :----------- | :------------- | | Consulting expense | $314,947 | $610,209 | $(295,262) | -48% | | Marketing | $37,699 | $333,771 | $(296,072) | -89% | | Rent | $79,568 | $76,117 | $3,451 | +5% | | Payroll & related expenses | $3,502,166 | $3,838,640 | $(336,474) | -9% | | General & administrative | $5,224,007 | $3,427,026 | $1,796,981 | +52% | - General and administrative expenses increased significantly by **52%** due to higher professional fees (attorneys, proxy solicitation, investor relations)[249](index=249&type=chunk) - The company recorded an impairment expense of **$19,915,556** in fiscal 2025, a substantial increase from **$1,048,430** in fiscal 2024, due to write-offs of thirteen equity investments[252](index=252&type=chunk) - An unrealized gain of **$18,050** on equity securities was recognized in fiscal 2025, contrasting with an unrealized loss of **$2,696,135** in fiscal 2024[251](index=251&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The company's negative working capital and cash flow raise going concern doubts, despite recent capital raises Liquidity Position (April 30, 2025 vs. 2024) | Metric | April 30, 2025 ($) | April 30, 2024 ($) | | :-------------------- | :------------- | :------------- | | Cash and cash equivalents | $289,428 | $863,182 | | Negative working capital | $5,204,109 | $2,074,163 | - The company's negative working capital and cash flow from operations raise substantial doubt about its ability to continue as a going concern[267](index=267&type=chunk) - Subsequent to April 30, 2025, the company raised significant capital through public offerings and private placements, including **$8 million** from two registered direct offerings in July 2025, **$944,067** net from an ATM offering in June 2025, and **$475,000** from a June 2025 private placement[255](index=255&type=chunk)[256](index=256&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk)[260](index=260&type=chunk) - Net cash used in operating activities increased to **$5,339,211** in fiscal 2025 from **$4,879,838** in fiscal 2024[268](index=268&type=chunk) - Net cash provided by financing activities amounted to **$4,765,457** in fiscal 2025, primarily from common stock sales (**$1,979,000**) and warrant exercises (**$2,529,957**)[271](index=271&type=chunk) [New Accounting Standards](index=52&type=section&id=New%20Accounting%20Standards) The company is evaluating the impact of new FASB ASUs on income statement disclosures and stock compensation - The FASB issued ASU 2024-03 (Income Statement—Reporting Comprehensive Income) in March 2024, requiring public companies to provide additional disclosures on expense line items, effective for fiscal years beginning after December 15, 2026[388](index=388&type=chunk) - ASU 2024-01 (Compensation—Stock Compensation) was issued in January 2024, clarifying scope application for profits interest awards, effective for public companies for fiscal years beginning after December 15, 2024[389](index=389&type=chunk) - The company is currently evaluating the impact of these new standards on its future financial statement disclosures and equity-based compensation arrangements[388](index=388&type=chunk)[389](index=389&type=chunk) [Critical Accounting Policies and Estimates](index=52&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant management judgment in revenue recognition and asset valuation - Critical accounting policies involve significant management judgment, estimates, and assumptions, particularly in revenue recognition, valuation of long-lived assets, and valuation of intangible assets[274](index=274&type=chunk)[275](index=275&type=chunk) - Revenue recognition follows a five-step model (ASC 606), identifying performance obligations, determining transaction price, allocating price, and recognizing revenue as obligations are satisfied[275](index=275&type=chunk)[277](index=277&type=chunk) - The company uses the measurement alternative for equity securities without readily determinable fair values, initially at cost, and remeasuring to fair value upon observable price changes or impairment[289](index=289&type=chunk)[290](index=290&type=chunk) - Impairment losses of **$19,915,556** and **$1,048,430** were recorded in fiscal 2025 and 2024, respectively, for long-lived assets and equity investments[288](index=288&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk.](index=51&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a smaller reporting company, Netcapital Inc. is not required to provide market risk disclosures - Netcapital Inc. is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[294](index=294&type=chunk) - The company is not subject to fluctuations in interest rates, currency exchange rates, or other financial market risks, and has no foreign sales, purchases, or commitments that would expose it to currency risks[293](index=293&type=chunk) [Item 8. Financial Statements.](index=51&type=section&id=Item%208.%20Financial%20Statements.) The Consolidated Financial Statements for Netcapital Inc. are included in this report, commencing on page F-1 - The Consolidated Financial Statements are included in this report, starting on page F-1 (page 64 of the document)[295](index=295&type=chunk) [Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.](index=51&type=section&id=Item%209.%20Changes%20In%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) This item is not applicable to Netcapital Inc - Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure is not applicable to Netcapital Inc[296](index=296&type=chunk) [Item 9A. Controls and Procedures.](index=51&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and internal control over financial reporting were ineffective - As of April 30, 2025, the company's disclosure controls and procedures were not effective[297](index=297&type=chunk) - Management concluded that internal control over financial reporting was not effective as of April 30, 2025, identifying a material weakness related to the over-accrual of legal expenses[299](index=299&type=chunk) - A significant deficiency was identified in the process for identifying and evaluating impairment indicators for equity investments without readily determinable fair values, particularly for related party investees[300](index=300&type=chunk) - Remediation efforts include enhanced period-end closing procedures for accrued expenses and updating investment valuation policies to require recent financial information from investees[301](index=301&type=chunk)[302](index=302&type=chunk) - As a smaller reporting company, the report does not include an attestation report from the registered public accounting firm regarding internal control over financial reporting[304](index=304&type=chunk) [Item 9B. Other Information.](index=51&type=section&id=Item%209B.%20Other%20Information.) There is no other information to report under this item - There is no other information to report under this item[306](index=306&type=chunk) [Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections.](index=51&type=section&id=Item%209C.%20Disclosures%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) This item is not applicable to Netcapital Inc - Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections is not applicable to Netcapital Inc[307](index=307&type=chunk) PART III [Items 10-14. Directors, Executive Officers and Corporate Governance, Executive Compensation, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Certain Relationships, Related Person Transactions and Director Independence, Principal Accountant Fees and Services.](index=57&type=section&id=Items%2010-14.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance%2C%20Executive%20Compensation%2C%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters%2C%20Certain%20Relationships%2C%20Related%20Person%20Transactions%20and%20Director%20Independence%2C%20Principal%20Accountant%20Fees%20and%20Services.) Information for these items is omitted from this Form 10-K and will be incorporated by reference from the Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is omitted from this Form 10-K and will be incorporated by reference from the company's definitive Proxy Statement, to be filed within **120 days** after the fiscal year-end[11](index=11&type=chunk)[308](index=308&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk) - The company has adopted a code of business conduct and ethics and an insider trading policy, available on its corporate website[309](index=309&type=chunk)[310](index=310&type=chunk) PART IV [Item 15. Exhibits, Financial Statements Schedules.](index=58&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statements%20Schedules.) Item 15 lists all exhibits and financial statement schedules filed as part of this Annual Report on Form 10-K - Item 15 provides a comprehensive list of exhibits and financial statement schedules included in the Form 10-K[11](index=11&type=chunk)[316](index=316&type=chunk) - Exhibits cover a wide range of corporate and financial documents, including underwriting agreements, articles of incorporation, bylaws, various warrant forms, equity incentive plans, employment agreements, and the Templum Software License and Services Agreement[316](index=316&type=chunk)[317](index=317&type=chunk)[319](index=319&type=chunk)[322](index=322&type=chunk) [Item 16. Form 10-K Summary](index=56&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to Netcapital Inc - Item 16. Form 10-K Summary is not applicable to Netcapital Inc[321](index=321&type=chunk) [SIGNATURES](index=57&type=section&id=SIGNATURES) The Annual Report on Form 10-K is duly signed by Netcapital Inc.'s CEO, CFO, and Directors - The report is signed by Martin Kay, Chief Executive Officer and Director (Principal Executive Officer), and other directors and the Chief Financial Officer, Coreen Kraysler, as of August 12, 2025[324](index=324&type=chunk)[326](index=326&type=chunk) [Consolidated Financial Statements](index=64&type=section&id=Consolidated%20Financial%20Statements) This section presents Netcapital Inc.'s audited financial statements, including balance sheets, operations, cash flows, and notes [Report of Independent Registered Public Accounting Firm](index=65&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditors issued an unqualified opinion but highlighted a 'Going Concern' matter and investment valuation as a critical audit matter - Fruci & Associates II, PLLC issued an unqualified opinion on the consolidated financial statements for the years ended April 30, 2025 and 2024[330](index=330&type=chunk) - The auditors noted a 'Going Concern' issue due to negative working capital, operating losses, and negative cash flows, which raises substantial doubt about the company's ability to continue[331](index=331&type=chunk) - Valuation of investments was identified as a critical audit matter due to the complex and highly judgmental estimation required for fair value, which is sensitive to assumptions about market conditions, revenue growth, and strategic plans[336](index=336&type=chunk)[337](index=337&type=chunk) [Consolidated Balance Sheets](index=67&type=section&id=Consolidated%20Balance%20Sheets) The balance sheet shows a significant decrease in total assets and stockholders' equity due to net losses Consolidated Balance Sheet Summary (April 30, 2025 vs. 2024) | Metric | April 30, 2025 ($) | April 30, 2024 ($) | | :-------------------------- | :------------- | :------------- | | **Assets:** | | | | Cash and cash equivalents | $289,428 | $863,182 | | Total current assets | $399,612 | $1,042,535 | | Purchased technology, net | $14,697,529 | $14,733,005 | | Equity securities | $5,748,050 | $25,333,386 | | **Total assets** | **$20,901,491**| **$41,557,306**| | **Liabilities:** | | | | Total current liabilities | $5,495,767 | $3,116,698 | | Total liabilities | $5,995,767 | $3,616,698 | | **Stockholders' Equity:** | | | | Retained earnings | $(27,821,762) | $479,563 | | **Total stockholders' equity**| **$14,905,724**| **$37,940,608**| - Total assets decreased by approximately **49.8%** year-over-year, primarily due to a significant reduction in the value of equity securities[341](index=341&type=chunk) - Total liabilities increased by **65.8%** year-over-year, driven by higher accounts payable and short-term promissory notes[341](index=341&type=chunk) - Retained earnings shifted from a positive balance of **$479,563** in April 2024 to a deficit of **$(27,821,762)** in April 2025, reflecting substantial net losses[341](index=341&type=chunk) [Consolidated Statements of Operations](index=68&type=section&id=Consolidated%20Statements%20of%20Operations) Netcapital reported a substantial net loss in fiscal 2025, driven by decreased revenues and massive impairment expense Consolidated Statements of Operations Summary (FY2025 vs. FY2024) | Metric | Year Ended April 30, 2025 ($) | Year Ended April 30, 2024 ($) | | :-------------------------------- | :------------------------ | :------------------------ | | Revenues | $869,460 | $4,951,435 | | Gross profit | $829,116 | $4,843,375 | | Total costs and expenses | $9,150,433 | $8,285,763 | | Operating loss | $(8,321,317) | $(3,442,388) | | Impairment expense | $(19,915,556) | $(1,048,430) | | Unrealized gain (loss) on equity securities | $18,050 | $(2,696,135) | | Net loss | $(28,301,325) | $(4,986,317) | | Basic loss per share | $(20.39) | $(28.83) | | Diluted loss per share | $(20.39) | $(28.83) | | Weighted average common shares outstanding (Basic) (Number) | 1,387,666 | 172,937 | - Revenues decreased by **82.4%** year-over-year, leading to a significant drop in gross profit[343](index=343&type=chunk) - Total costs and expenses increased by **10.4%** in FY2025, contributing to a wider operating loss[343](index=343&type=chunk) - Impairment expense surged from **$(1,048,430)** in FY2024 to **$(19,915,556)** in FY2025, representing a major factor in the increased net loss[343](index=343&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=69&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total stockholders' equity significantly decreased in fiscal 2025 due to net losses, partially offset by capital raises Consolidated Statements of Changes in Stockholders' Equity Summary (April 30, 2025 vs. 2024) | Metric | April 30, 2025 (Number) | April 30, 2024 (Number) | | :-------------------------------- | :------------- | :------------- | | Common Stock Shares Outstanding | 2,192,226 | 326,867 | | Common Stock Amount ($) | $2,192 | $327 | | Capital in Excess of Par Value ($)| $42,525,294 | $37,338,594 | | Retained Earnings ($) | $(27,821,762) | $479,563 | | **Total Stockholders' Equity ($)**| **$14,905,724**| **$37,940,608**| - The net loss of **$(28,301,325)** in FY2025 was the primary driver for the substantial decrease in total stockholders' equity[344](index=344&type=chunk) - Sales of common stock contributed **$1,979,000** and warrant exercises contributed **$2,529,957** to capital in excess of par value in FY2025[344](index=344&type=chunk) - The number of common shares outstanding increased significantly from **326,867** in FY2024 to **2,192,226** in FY2025[344](index=344&type=chunk) [Consolidated Statements of Cash Flows](index=70&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased, while cash provided by financing activities decreased, reducing overall cash Consolidated Statements of Cash Flows Summary (FY2025 vs. FY2024) | Activity | Year Ended April 30, 2025 ($) | Year Ended April 30, 2024 ($) | | :-------------------------------- | :------------------------ | :------------------------ | | Net cash used in operating activities | $(5,339,211) | $(4,879,838) | | Net cash used in investing activities | $0 | $(20,000) | | Net cash provided by financing activities | $4,765,457 | $5,193,579 | | Net increase (decrease) in cash | $(573,754) | $293,741 | | Cash and cash equivalents, end of period | $289,428 | $863,182 | - The primary sources of cash from operating activities in FY2025 included an impairment loss of **$19,915,556** and an increase in accounts payable of **$2,107,454**, offset by a net loss of **$(38,301,317)**[268](index=268&type=chunk) - Financing activities in FY2025 included proceeds from common stock sales (**$1,979,000**), warrant exercises (**$2,529,957**), and short-term notes (**$256,500**)[271](index=271&type=chunk) - There were no investing activities in fiscal 2025, compared to **$20,000** used in fiscal 2024 for a note receivable[270](index=270&type=chunk) [Notes to Consolidated Financial Statements](index=71&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on business, accounting policies, financial performance, and significant events - Netcapital Inc. is a fintech company providing online capital raising and private equity investment opportunities through its funding portal and broker-dealer subsidiary[348](index=348&type=chunk) - A **1-for-70** reverse stock split became effec

Group 1 - The company, Netcapital Inc., closed a registered direct offering, selling 641,712 shares of common stock at a price of $4.675 per share, generating approximately $3 million in gross proceeds [1][3] - In a concurrent private placement, the company issued unregistered short-term warrants to purchase an additional 641,712 shares at an exercise price of $4.55 per share, potentially adding up to $2.9 million in gross proceeds if fully exercised [1][3] - The net proceeds from the offering will be used for repaying certain outstanding promissory notes and for general working capital purposes [3] Group 2 - H.C. Wainwright & Co. acted as the exclusive placement agent for the offering [2] - The common stock was offered under a "shelf" registration statement declared effective by the SEC on October 26, 2022, and the offering was made only by means of a prospectus [4] - The unregistered short-term warrants were offered in a private placement under Section 4(a)(2) of the Securities Act and have not been registered under the Securities Act or applicable state securities laws [5] Group 3 - Netcapital Inc. is a fintech company that provides a scalable technology platform for private companies to raise capital online and offers private equity investment opportunities to investors [7] - The company's consulting group, Netcapital Advisors, provides marketing and strategic advice and takes equity positions in select companies [7] - The company's funding portal and broker-dealer are both registered with the SEC and are members of FINRA [7]

Group 1 - Netcapital Inc. has entered into agreements for the purchase and sale of 641,712 shares of common stock at a price of $4.675 per share in a registered direct offering [1][3] - The offering is expected to generate approximately $3 million in gross proceeds, with an additional potential of $2.9 million from unregistered short-term warrants if fully exercised [3][4] - The company intends to use the net proceeds for the repayment of certain outstanding promissory notes and for general working capital purposes [3] Group 2 - H.C. Wainwright & Co. is acting as the exclusive placement agent for the offering [2] - The common stock is being offered under a "shelf" registration statement that was declared effective by the SEC on October 26, 2022 [4] - The unregistered short-term warrants are being offered in a private placement under Section 4(a)(2) of the Securities Act and have not been registered under the Securities Act or applicable state securities laws [5] Group 3 - Netcapital Inc. is a fintech company that provides a platform for private companies to raise capital online and offers private equity investment opportunities to investors [7] - The company's consulting group, Netcapital Advisors, provides marketing and strategic advice and takes equity positions in select companies [7] - The company's funding portal and broker-dealer are both registered with the SEC and are members of FINRA [7]

Group 1 - The company, Netcapital Inc., closed a registered direct offering for the purchase and sale of 714,286 shares of common stock at a price of $7.00 per share, generating approximately $5 million in gross proceeds [1][3] - In a concurrent private placement, the company issued unregistered short-term warrants to purchase up to 714,286 shares at an exercise price of $6.88 per share, potentially adding up to $4.9 million in gross proceeds if fully exercised [1][3] - The net proceeds from the offering will be used for the repayment of certain outstanding promissory notes and for general working capital purposes [3] Group 2 - H.C. Wainwright & Co. acted as the exclusive placement agent for the offering [2] - The common stock was offered under a "shelf" registration statement that was declared effective by the SEC on October 26, 2022 [4] - The unregistered short-term warrants were offered in a private placement under Section 4(a)(2) of the Securities Act and have not been registered under the Securities Act or applicable state securities laws [5] Group 3 - Netcapital Inc. is a fintech company that provides a scalable technology platform for private companies to raise capital online and offers private equity investment opportunities to investors [7] - The company's consulting group, Netcapital Advisors, provides marketing and strategic advice and takes equity positions in select companies [7] - The company's funding portal is registered with the SEC and is a member of FINRA, and its broker-dealer is also registered with the SEC and a member of FINRA [7]

Core Points - Netcapital Inc. has announced a registered direct offering of 714,286 shares of common stock at a price of $7.00 per share, with expected gross proceeds of approximately $5 million [1][3] - The company will also issue unregistered short-term warrants to purchase up to 714,286 shares at an exercise price of $6.88, potentially generating an additional $4.9 million if fully exercised [1][3] - The offering is expected to close around July 7, 2025, subject to customary closing conditions [1] Financial Details - The gross proceeds from the offering are anticipated to be about $5 million before deducting fees and expenses [3] - If the unregistered short-term warrants are fully exercised, the potential additional gross proceeds will be approximately $4.9 million [3] - The net proceeds from the offering will be used for repaying certain outstanding promissory notes and for general working capital purposes [3] Regulatory Information - The common stock is being offered under a "shelf" registration statement that was declared effective by the SEC on October 26, 2022 [4] - The unregistered short-term warrants are being offered in a private placement and have not been registered under the Securities Act [5] Company Overview - Netcapital Inc. is a fintech company that provides a platform for private companies to raise capital online and offers private equity investment opportunities [7] - The company operates a registered funding portal and has a broker-dealer that is a member of FINRA [7]

Core Insights - Netcapital Inc. has established a Crypto Advisory Board, welcoming Matt Morgan as a member, who brings extensive expertise in digital asset strategy and decentralized systems [1][2][3] - The company has announced a PIPE financing round, issuing 118,750 shares at $4.00 per share, raising gross proceeds of $475,000 [4][5] - The net proceeds from the offering will be used for general corporate purposes [5] Company Developments - The Crypto Advisory Board aims to integrate blockchain and digital assets with traditional finance, positioning Netcapital to lead in capital formation innovation [3] - The company has granted stock options to each member of the Crypto Advisory Board under its 2023 Equity Incentive Plan [3] - The shares issued in the PIPE financing are subject to a price reset provision, with a minimum price set at $2.56 [4] Industry Context - The appointment of industry leaders to the Crypto Advisory Board reflects the growing importance of decentralized finance (DeFi) and digital assets in the financial landscape [2][3] - Netcapital's funding portal is registered with the SEC and is a member of FINRA, indicating compliance with regulatory standards in the fintech sector [8]

Group 1 - Netcapital Inc. has formed a Game Advisory Board to enhance strategic growth and engagement with the online gaming community [1][2] - The Game Advisory Board consists of industry leaders with expertise in marketing, technology, partnerships, and operations, including members such as Trey Smith and Nik Redenko [2] - The CEO of Netcapital Inc. expressed confidence that the platform aligns well with the online gaming community's focus on innovation and engagement [3] Group 2 - Netcapital Inc. operates a fintech platform that enables private companies to raise capital online and offers private equity investment opportunities [4] - The company’s consulting group, Netcapital Advisors, provides marketing and strategic advice while taking equity positions in select companies [4] - Netcapital's funding portal is registered with the SEC and is a member of FINRA, ensuring compliance with regulatory standards [4]

Group 1 - Netcapital Inc. announced the acquisition of Mixie by its portfolio company Zelgor, which focuses on Web3 gaming and decentralized community engagement [1] - Mixie offers an AI-powered no-code game engine, a media network with over 100 million monthly impressions, and an accelerator model for early-stage crypto projects [2] - Zelgor aims to leverage Mixie's technology and media reach to enhance its capabilities in both Web2 and Web3 environments [3] Group 2 - Zelgor is an interactive entertainment company known for its media franchise "Noobs," featuring a unique universe of aliens [3] - Notable investors in Zelgor include Tim Draper and Kai Huang, with team members having experience in successful games like The Sims and Bioshock Infinite [3] - Netcapital Inc. operates a scalable technology platform for private companies to raise capital online and offers private equity investment opportunities [4]

Alpharetta, GA, May 14, 2025 (GLOBE NEWSWIRE) -- Industrial automation is at a turning point, and Macrovey is inviting forward-thinking investors to be part of what comes next. Now live on Netcapital, Macrovey is offering a unique opportunity to invest in a company that's reshaping how industries approach automation through its patented, hardware-agnostic solutions. Recent Recognition and Industry Momentum As global tariffs and supply chain disruptions continue to challenge operations, Macrovey offers compa ...