Netcapital Inc.

What they do

Netcapital operates www.netcapital.com, an online funding portal, and Netcapital Securities Inc., a licensed broker-dealer, to facilitate private-company capital raises under Reg CF and Reg A. It charges listing fees, a 4.9% portal fee on capital raised, and a 1% success fee paid in equity. Netcapital Advisors, a consulting subsidiary, previously provided marketing and strategic advice for cash fees and equity stakes, but management did not seek new consulting engagements in fiscal 2025 or plan to in fiscal 2026.

Revenue drivers

• Portal fees — 4.9% of capital raised on the funding portal plus miscellaneous administrative fees; fiscal 2025 revenue was $589,074, down 33% from $874,368 in fiscal 2024 due to a 29% decline in dollars invested.
• Listing fees — $5,000 per issuer; fiscal 2025 revenue was $207,500, down 53% from $442,040, reflecting a 54% decrease in new listings (38 vs. 82).
• Success fees (equity) — 1% of capital raised paid in securities of the issuer; fiscal 2025 value was $72,090 versus $97,700 in fiscal 2024.
• Reg A services (Netcapital Securities) — Charges a $25,000 listing fee and a 4.9% success fee on Reg A offerings; no specific revenue figures were provided for this segment.

Recent performance

Fiscal 2025 (year ended April 30, 2025) revenue was $869,460, down from $4.95 million in fiscal 2024, with a gross profit of $829,116 versus $4.84 million. Net loss for fiscal 2025 was $28.3 million, compared to a $5.0 million loss in fiscal 2024. Quarterly revenue has continued to decline, from $404,023 in the quarter ended April 30, 2025 to $94,347 in the quarter ended January 31, 2026. Cash and equivalents as of January 31, 2026 were $715,443, with total assets of $26.1 million and shareholder equity of $21.6 million. Operating cash flow was negative $5.3 million in fiscal 2025, following negative cash flow in each of the prior four fiscal years.

Strategy

The company is focusing on its core funding portal and Reg A capabilities, having discontinued consulting engagements in fiscal 2025. It implemented a 1% equity success fee on all closed offerings starting in fiscal 2025. Management is emphasizing cost discipline and remediation of internal control deficiencies, which were completed and tested as of January 31, 2026. The company has also engaged in multiple unregistered sales of equity and entered material agreements, as disclosed in 8-K filings through mid-2026.

Risks

• Going concern risk — Management concluded there is substantial doubt about the company's ability to continue as a going concern due to negative working capital of $5.1 million, recurring operating losses, and negative operating cash flow.
• Declining platform activity — Portal dollars invested fell 29% in fiscal 2025, new listings dropped 54%, and quarterly revenue has declined sharply, indicating reduced issuer and investor engagement.
• Dependence on equity-based fees — A significant portion of historical revenue came from consulting fees paid in equity, which ceased in fiscal 2025, and the new 1% success fee in securities adds volatility and illiquidity to revenue.
• Regulatory and legal exposure — The company and its regulated subsidiaries are subject to extensive SEC and FINRA oversight, and the cost of responding to regulatory inquiries can be significant, though no material legal proceedings are currently pending.

Outlook

Management has not provided specific forward-looking revenue guidance. They do not plan to resume consulting engagements in fiscal 2026, and they expect continued focus on portal and Reg A fee generation. The company may need to raise additional capital, given the going concern doubt and limited cash. No material changes to critical accounting estimates were noted in the latest 10-Q.