Netcapital Inc., a fintech company operating an online platform for private companies to raise capital, has released its annual 10-K report. The report provides a comprehensive overview of the company’s financial performance, business operations, strategic initiatives, and the challenges it faces in the competitive and regulated fintech indusattempt.
Financial Highlights
Revenues: Netcapital Inc. reported revenues of $0.869 million for the fiscal year, a significant decrease of 82.4% compared to the previous year. This decline was primarily due to a reduction in consulting services for equity securities.
Gross Profit: The company’s gross profit stood at $0.829 million, down from $4.843 million in the previous fiscal year, reflecting the substantial decrease in revenues.
Business Highlights
Business Model: Netcapital Inc. operates a fintech platform that enables private companies to raise capital online from both accredited and non-accredited investors. The platform is based on Title III, Regulation Crowdfunding of the JOBS Act, and has expanded to include Regulation A offerings through its broker-dealer subsidiary, Netcapital Securities Inc.
Revenue Segments: The company generates revenue through listing fees, portal fees, and a 1% success fee paid in equity. Listing fees decreased by 53% due to a drop in new offerings, while portal fees decreased by 33% due to a reduction in total dollars invested through the portal.
Sales Units: In fiscal 2025, the average amount raised per offering on the Netcapital funding portal was $215,745, with a total of 70 offerings closed, of which 21 did not meet the minimum capital requirement.
Consulting Business: Netcapital Advisors, a subsidiary, provides strategic advice and technology consulting but did not seek consulting engagements in fiscal 2025 and does not plan to in fiscal 2026.
Broker-Dealer Business: Netcapital Securities Inc. became a FINRA-member broker-dealer in November 2024, allowing the company to host and generate additional fees from Reg A and Reg D offerings.
Technology Platform: The Netcapital platform is a scalable, real-time transaction-processing engine that operates 24/7 without human intervention, providing automated onboarding and regulatory filings for companies raising capital.
Proposed ATS Relationship: The company is exploring a secondary trading feature through a partnership with Templum Markets LLC to address liquidity issues for investors in private companies, although development has been pautilized to reevaluate market conditions.
Competitive Landscape: Netcapital competes with companies like StartEngine, Wefunder, and Republic Core in the online capital formation space, emphasizing its low-cost solution and strong customer support.
Future Outsee: The company plans to expand internationally, increase its marketing budreceive to grow portal clients, and invest in technology to enhance its platform. It is also exploring new verticals such as Regulation A and D offerings.
Strategic Initiatives
Strategic Initiatives: Netcapital Inc. has focutilized on expanding its revenue base by leveraging its registered broker-dealer subsidiary, Netcapital Securities Inc., to host and generate additional fees from Reg A and Reg D offerings. The company also entered into a software license and services agreement with Templum Markets LLC to potentially enhance distribution and liquidity for issuers and investors on its platform. Additionally, the company formed two strategic advisory boards, the Crypto Advisory Board and the Game Advisory Board, to provide sector-specific strategic guidance and marketing insight.
Capital Management: The company engaged in several capital management activities, including multiple securities purchase agreements in July 2025, raising approximately $8 million through the sale of common stock and warrants. It also completed a private placement in June 2025, raising $475,000, and entered into various promissory note agreements to secure short-term financing. The company has not paid dividconcludes on its common stock and does not expect to do so in the foreseeable future. Additionally, no repurchase of equity securities was built during the 2025 fiscal year.
Future Outsee: Netcapital Inc. plans to continue focutilizing on online revenue products and expanding its broker-dealer capabilities to maximize market penetration and optimize capital raising efforts. The company acknowledges the challenges of its limited operating history and the uncertain nature of its future operations, which may impact its ability to generate significant revenues or achieve profitable operations consistently. The company also intconcludes to address liquidity issues for investors in private companies by exploring alternative trading systems, although further development has been pautilized to reevaluate market conditions.
Challenges and Risks
Challenges and Risks: Netcapital Inc. operates in a highly competitive and regulated fintech indusattempt, providing a platform for private companies to raise capital. The company faces significant competition from both established and new entrants in the market, which could impact its ability to attract and retain customers. Additionally, the company’s reliance on a single escrow agent for its funding portal services presents operational risks if the relationship is disrupted.
The company faces several financial risks, including substantial doubt about its ability to continue as a going concern due to negative working capital and operating losses. Raising additional capital may cautilize dilution to stockholders and impose restrictive covenants. The company’s obligations to the U.S. Small Business Administration are secured by its assets, posing a risk of asset foreclosure in case of default. Impairments in portfolio company investments have materially reduced total assets and shareholders’ equity, affecting the company’s ability to raise capital and investor confidence.
Operational risks include a limited operating history with recent losses, substantial customer concentration, and a high level of debt that could impact financial condition and business prospects. The company operates in a highly regulated indusattempt, with its funding portal and broker-dealer subsidiaries subject to extensive regulation by the SEC and FINRA. The evolving regulatory environment for online capital formation presents uncertainties that could impact operations.
The company’s business model is evolving, with a focus on expanding product lines and services, but there is no assurance of success. The reliance on third-party software and technology for its platform poses risks of errors or failures. The company’s strategy of acquiring equity in early-stage companies may result in illiquid investments with no guaranteed liquidity or market.
Management has identified the required to address financial challenges by potentially raising additional capital through equity offerings, debt financings, or strategic collaborations. The company is also focutilized on expanding its broker-dealer activities to generate additional revenue streams. However, the success of these strategies is uncertain, and the company may face difficulties in managing growth effectively.
The company is exposed to market risks, including fluctuations in the value of its equity securities holdings, which could materially affect financial condition and results of operations. The potential for increased competition and regulatory alters also poses significant market risks that could impact the company’s business and financial performance.
SEC Filing: Netcapital Inc. [ NCPL ] – 10-K – Aug. 12, 2025
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