Netcapital Inc.: Form 10-Q for the period ended Oct 31, 2025

This quarterly report on Form 10-Q and other reports filed by Netcapital Inc. (the “Company”) from time to time with the U.S. Securities and Exchange Commission (collectively, the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned. Unless the context otherwise requires, references in this Quarterly Report to the “Company,” “we,” “us,” and “our” refer to Netcapital Inc. and its subsidiaries.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

Overview

Netcapital Inc. is a fintech company with a scalable technology platform that allows private companies to raise capital online from accredited and non-accredited investors. We give virtually all investors the opportunity to access investments in private companies. We believe our model is disruptive to traditional private equity investing and is based on Title III, Regulation Crowdfunding (“Reg CF”) of the Jumpstart Our Business Startups Act (“JOBS Act”). We generate fees from listing private companies on our funding portal located at www.netcapital.com (http://www.netcapital.com). The Netcapital funding portal is registered with the SEC, is a member of the Financial Industry Regulatory Authority (“FINRA”), a registered national securities association, and provides investors with opportunities to invest in private companies. In addition, we recently expanded our model to include Regulation A (“Reg A”) offerings, which are conducted by our wholly owned subsidiary Netcapital Securities Inc. “(“Netcapital Securities”), which is a licensed broker-dealer with FINRA. Both Reg A and Reg CF offerings are made available to investors via the Company’s website, www.netcapital.com (http://www.netcapital.com).

We provide private company investment access to accredited and non-accredited investors through (i) our online portal (www.netcapital.com (http://www.netcapital.com)), which is operated by our wholly owned subsidiaries Netcapital Funding Portal, Inc and (ii) our broker-deal subsidiary, Netcapital Securities. The Netcapital funding portal charges a $5,000 listing fee, a 4.9% portal fee for capital raised at closing, and beginning in fiscal year 2024, a 1% success fee paid for with equity of the funding portal customer. In addition, the portal generates fees for other ancillary services, such as rolling closes. Netcapital Advisors previously generated fees and equity stakes from consulting in select portfolio companies (“Portfolio Companies”) and non-portfolio clients. With respect to services for Reg A offerings, Netcapital Securities charges a listing fee of $25,000 and a success fee of 4.9% of the capital raised by an issuer under Reg A.

We generated revenues of $241,134, with costs of service of $9,286, in the six months ended October 31, 2025, for a gross profit of $231,848 as compared to revenues of $312,755, with costs of service of $30,001, in the six months ended October 31, 2024, for a gross profit of $282,754.

The total number of offerings on the Netcapital funding portal in fiscal 2025 and 2024 that closed was 70 in each fiscal year, of which 21 and 17 offerings hosted on the Netcapital funding platform in fiscal 2025 and 2024, respectively, terminated their listings without raising the required minimum dollar amount of capital. For the three- and six-months periods ended October 31, 2025, 5 and 10 issuers have launched an offering on the portal, respectively, as compared to 16 and 37 issuers that launched an offering in the three- and six-month periods ended October 31, 2024, respectively. As of the date of this report, we have minority equity positions in 19 Portfolio Companies that have utilized the funding portal to facilitate their offerings, which equity was received as payment for services.

For the three months ended October 31, 2025, the Company had one customer that constituted 23% of revenues, a second customer that constituted 13% of revenues and a third customer that accounted for 10% of revenues. For the six months ended October 31, 2025, the Company had one customer that constituted 58% of revenues. For the three and six months ended October 31, 2024, the Company had one customer that constituted 44% and 24% of revenues, respectively.

Netcapital funding portal is an SEC-registered funding portal that enables private companies to raise capital online, while investors are able to invest from almost anywhere in the world, at any time, with just a few clicks. Securities offerings on the portal are accessible through individual offering pages, where companies include product or service details, market size, competitive advantages, and financial documents. Companies can accept investment from virtually anyone, including friends, family, customers, employees, etc.

In addition to access to the funding portal, Netcapital provides the following services:

• a fully automated onboarding process;
• automated filing of required regulatory documents;
• compliance review;
• a custom-built offering page on our portal website;
• third party transfer agent and custodial services;
• email marketing to our proprietary list of investors;
• rolling closes, which provide potential access to liquidity before the final close date of an offering;
• assistance with annual filings; and
• direct access to our team for ongoing support.
• 24-

Broker-Dealer Business

In November 2024, our wholly owned subsidiary, Netcapital Securities Inc. received approval from FINRA to become a FINRA-member broker dealer. We believe that by having a registered broker-dealer, it may create opportunities to expand the Company’s revenue base by hosting and generating additional fees from Reg A and Reg D offerings on the Netcapital platform, earning additional fees in connection with offerings that may result from the introduction of clients to other FINRA broker-dealers and expanding our distribution capabilities by leveraging strategic partnerships with other broker-dealers to distribute offerings of issuers that utilize the Netcapital platform to a wider range of investors in order to maximize market penetration and optimize capital raising efforts. As of the date of this prospectus, Netcapital Securities has been engaged by one issuer seeking to raise capital via a Regulation A offering.

Our limited operating history and the uncertain nature of our future operations and the markets we address or intend to address make predictions of our future results of operations difficult. Our operations may never generate significant revenues, and we may not consistently achieve profitable operations.

Recent Developments

Plans to Expand Platform

On November 19, 2025, the Company announced plans to expand its platform to include support for compliant blockchain-based digital assets, amid accelerating interest in tokenized securities and tokenized real-world assets (RWAs) like real estate. As of the date of this report, the expansion has not yet occurred.

Rivetz Asset Purchase

On December 3, 2025, the Company purchased substantially all of Rivetz Corp.’s (“Rivetz”) assets related to its “Rivetz Network” which develops technology combining hardware-based cybersecurity with blockchain services for mobile and other computing devices (the “Purchased Assets”) pursuant to an asset purchase agreement for 950,000 shares of the Company’s common stock, par value $0.001 per share. In addition, the Company assumed only specified liabilities of Rivetz relating to the Purchased Assets and certain contracts, subject to an aggregate cap of $100,000 for liabilities other than those arising under assumed contracts. All other liabilities of Rivetz, including liabilities relating to Rivetz tokens, employee-related obligations, and indebtedness for borrowed money, remain with Rivetz.

Kay Resignation and Separation Agreement

On December 3, 2025, Martin Kay resigned as Chief Executive Officer, director and all other officer, director, board and committee positions with the Company pursuant to a CEO Separation, Severance and Consulting Agreement (the “Separation Agreement”) with the Company. In consideration of Mr. Kay’s service and execution of the Separation Agreement, the Company agreed to pay Mr. Kay a one-time severance payment equal to 3-months’ salary ($98,750). All options previously granted to Mr. Kay shall be fully vested and Mr. Kay shall have 4 years from the date of the Separation Agreement to exercise his options. Mutual releases and non-disparagement clauses were also agreed to by the parties in the Separation Agreement. The Company also agreed to engage Mr. Kay as a consultant for a period of 12 months following the date of the Separation Agreement under which Mr. Kay will be paid $10,000 per month.

Appointment of Chief Executive Officer and Employment Agreement

On December 7, 2025, the Company appointed Rich Wheeless as its Chief Executive Officer and entered into an employment agreement with Rich Wheeless (the “Employment Agreement”), pursuant to which Mr. Wheeless will serve as the Company’s Chief Executive Officer for a twelve-month term commencing on December 7, 2025, unless earlier terminated in accordance with its terms. Under the Employment Agreement, Mr. Wheeless is entitled to an annual base salary of $180,000, payable in accordance with the Company’s regular payroll practices. He is eligible to receive periodic bonuses throughout the year, or additional salary in excess of the base salary, in each case as may be approved by the Company’s Board of Directors or its Compensation Committee. Mr. Wheeless will also be eligible to receive one or more grants of stock options under the Company’s stock option plan, subject to approval by the Company’s Board of Directors or its Compensation Committee and a majority of the Company’s shareholders, with the amount, timing and terms of any such grants to be determined in the sole discretion of the Board or such committee. For the period of his employment and for two years thereafter, Mr. Wheeless is subject to certain non-competition and non-solicitation covenants, including restrictions on engaging in or assisting competitive businesses and on soliciting certain customers, clients, suppliers and employees of the Company and its affiliates, subject to customary limited exceptions. The Agreement also contains customary provisions relating to non-disparagement, remedies, severability, waiver, governing law and other matters.

Appointment of General Counsel

On December 7, 2025, the Board appointed Kevin Kilduff, as its General Counsel. In addition, on December 7, 2025 the Company granted Mr. Kilduff 1,000,000 shares of its common stock (“Restricted Stock”) as a Restricted Stock Award under the Company’s 2023 Omnibus Equity Incentive Plan (the “Plan”) in accordance with NASDAQ Listing Rule 5635(c)(4) to Kevin Kilduff to induce him to accept employment with the Company as its General Counsel. The shares of Restricted Stock will have voting rights upon issuance and will vest in whole or in part on March 15, 2027 with the number of shares of Restricted Stock that will vest on the vesting date will be determined based on the Company’s revenue during the period beginning on February 1, 2026 and ending on January 31, 2027. Specifically, in the event that the revenue during the measuring period is below $900,000, none of the shares of Restricted Stock shall vest and in the event that the revenue during the measuring period is at least equal to $1,500,000, one hundred percent (100%) of the shares of Restricted Stock shall vest as of the vesting date, with pro-rata vesting for results between the minimum and maximum revenue targets. The Restricted Stock Award will be an Exempt Award (as defined in the Plan) under the Plan by reason of being an award granted as an inducement grant pursuant to NASDAQ Listing Rule 5635(c), as this award is specifically made to induce Mr. Kilduff to become an employee of the Company.

Results of Operations

Comparison of the Three Months Ended October 31, 2025 and 2024

Our revenues for the three months ended October 31, 2025, decreased by $119,452, or approximately 70%, to $51,076, as compared to $170,528 during the three months ended October 31, 2024. The decrease in revenues was attributed to the lack of new issuers signing up for funding portal services. Only five new issuers launched a crowdfunding campaign in the three months ended October 31, 2025, as compared to 16 offerings launched in the three months ended October 31, 2024.

In the three months ended October 31, 2025, we recorded $51,076 in funding portal revenues, consisting of portal fees of $14,461, listing fees of $35,000, and equity fees of $1,510, as compared to funding portal revenues of $170,528 in the three months ended October 31, 2024, consisting of portal fees of $108,124, listing fees of $47,500 and equity fees of $14,748. Two issuers successfully closed offerings in the three months ended October 31, 2025, as compared to 13 issuers in the three months ended October 31, 2024. The components of revenue were as follows:

Cost of revenues decreased by $17,904 to $1,877, or approximately 91% for the three months ended October 31, 2025, from $19,781 during the three months ended October 31, 2024. The decrease was attributed to lower revenues.

Payroll and payroll related expenses increased by $106,732, or approximately 14%, to $856,433 for the three months ended October 31, 2025, as compared to $749,701 during the three months ended October 31, 2024. The increase was attributed to the salary increases for certain key positions, to assist with employee retention.

Rent expense increased by $1,858, or approximately 10%, to $21,300 for the three months ended October 31, 2025, as compared to $19,442 during the three months ended October 31, 2024. The increase was primarily attributed to a new office-space agreement.

General and administrative expenses decreased by $302,102, or approximately 20%, to $1,202,288 for the three months ended October 31, 2025, from $1,504,390 during the three months ended October 31, 2024. The decrease was primarily attributable to lower legal costs in fiscal 2026.

Consulting expense increased by $8,990, or approximately 11%, to $88,635 for the three months ended October 31, 2025, from $79,645 during the three months ended October 31, 2024. The increase was primarily attributed to corporate needs due to lack of hiring full-time employees.

Interest expense increased by $2,603 to $12,204, or approximately 27%, for the three months ended October 31, 2025, as compared to $9,601 during the three months ended October 31, 2024, due to short-term borrowings in April and May 2025.

Comparison of the Six Months Ended October 31, 2025 and 2024

Our revenues for the six months ended October 31, 2025, decreased by $71,621, or approximately 23%, to $241,134, as compared to $312,755 during the six months ended October 31, 2024.

In the six months ended October 31, 2025, we recorded $241,134 in funding portal revenues, consisting of portal fees of $137,189, listing fees of $40,000, and equity fees of $63,705, as compared to funding portal revenues of $312,755 in the six months ended October 31, 2024, consisting of portal fees of $197,553, listing fees of $90,000 and equity fees of $24,875. The decrease in revenues was primarily attributed to a decrease in the number of issuers raising capital on the funding portal’s platform. New offerings launched amounted to 10 issuers in the six months ended October 31, 2025, as compared to 37 issuers in the six months ended October 31, 2024. Five issuers successfully closed offerings in the six months ended October 31, 2025, as compared to 17 issuers in the six months ended October 31, 2024.The components of revenue were as follows:

The components of revenue were as follows:

Cost of revenues decreased by $20,715 to $9,286, or approximately 69%, for the six months ended October 31, 2025 from $30,001 during the six months ended October 31, 2024. The decrease was primarily attributed to lower revenues.

Payroll and payroll related expenses increased by $763,589, or approximately 41%, to $2,649,883 for the six months ended October 31, 2025, as compared to $1,886,294 during the six months ended October 31, 2024. The increase was attributed to the salary increases and bonuses for certain key positions, to assist with employee retention.

Rent expense increased by $5,594, or approximately 15%, to $44,152 for the six months ended October 31, 2025, as compared to $38,558 during the six months ended October 31, 2024. The increase was primarily attributed to a new office-space agreement.

General and administrative expenses decreased by $109,312, or approximately 4%, to $2,782,232 for the six months ended October 31, 2025, from $2,891,544 during the six months ended October 31, 2024. The decrease was primarily attributable to lower legal costs in fiscal 2026.

Consulting expense decreased by $16,340, or approximately 9%, to $160,686 for the six months ended October 31, 2025 from $177,026 during the six months ended October 31, 2024. The decrease was primarily attributed to our efforts to control expenses associated with overseas programmers.

Interest expense increased by $28,206 to $48,271, or approximately 141%, for the six months ended October 31, 2025, as compared to $20,065 during the six months ended October 31, 2024. The increase resulted from short-term borrowings in April and May 2025 that were paid off in September 2025.

The Company owned 8,989 shares of a funding portal issuer at a cost of $5.00 per share. On May 30, 2025, the issuer closed an offering at a price of $10.00 per share. As a result, the Company marked its investment to market and recorded an unrealized gain of $44,945 in the six-month period ended October 31, 2025. No unrealized gains or losses were recorded in the first two quarters of fiscal 2025.

Accretion on short-term notes increased to $356,413 for the six months ended October 31, 2025. There was no accretion on short-term notes recorded during the six months ended October 31, 2024. During 2025, the Company sold 4 notes, and each note contained an original issuance discount that was accreted during the six months ended October 31, 2025.

Liquidity and Capital Resources

As of October 31, 2025, we had cash and cash equivalents of $1,684,188 and negative working capital of $1,500,153 as compared to cash and cash equivalents of $289,428 and negative working capital of $5,096,155 as of April 30, 2025.

We have been successful in raising capital by completing offerings of our common stock.

On July 16, 2025, we entered into a securities purchase agreement with certain institutional investors, pursuant to which we agreed to sell 641,712 shares of our common stock, at a purchase price of $4.675 per share for gross proceeds of approximately $3 million, prior to deducting placement agent’s fees and other offering expenses payable by us. Each share of commons stock was also sold with a warrant to purchase one share of common stock with an exercise price of $4.55 per share. The shares were offered pursuant to our shelf registration statement on Form S-3 (File No. 333-267921), which was declared effective by the Securities Exchange Commission on October 26, 2022. This offering closed on July 17, 2025.

On July 2, 2025, we entered into a securities purchase agreement with certain institutional investors, pursuant to which we agreed to sell 714,286 shares of our common stock, at a purchase price of $7.00 per share for gross proceeds of approximately $5 million, prior to deducting placement agent’s fees and other offering expenses payable by us. Each share of commons stock was also sold with a warrant to purchase one share of common stock with an exercise price of $6.88 per share. We used approximately $320,000 of the net proceeds for repayment of outstanding promissory notes and intend to use the remainder for working capital and other general corporate purposes. The shares were offered pursuant to our shelf registration statement on Form S-3 (File No. 333-267921), which was declared effective by the Securities Exchange Commission on October 26, 2022. The offering closed on July 7, 2025.

On June 23, 2025, the Company filed a prospectus supplement with respect to our At-The-Market-Offering Agreement with Wainwright for an aggregate of $975,000 of additional shares of our common stock. From June 23, 2025 to June 25, 2025, we sold 229,404 shares of our common stock through Wainwright at an average price of approximately $4.25 per share, resulting in aggregate gross proceeds of approximately $974,747, for which it paid Wainwright approximately $29,242 in commissions and other issuance costs of $1,438, resulting in net proceeds to the Company of approximately $944,067. No additional shares will be sold under this ATM Agreement unless an additional prospectus supplement is filed.

On June 10, 2025, we entered into subscription agreements with ten accredited investors to issue an aggregate of 118,750 shares of common stock at a purchase price of $4.00 per share (the “Purchase Price”) in a private placement, for gross proceeds of $475,000. The Company agreed to file a registration statement providing for the resale of the Shares within 60 calendar days of the initial closing of the private placement (the “Filing Date”) and to use reasonable best efforts to cause the resale registration statement to be declared effective by the SEC within 90 calendar days following the final closing of the private placement date of the Filing Date. The resale registration statement is not yet effective. The subscription agreements include a price adjustment provision whereby if the Company issues additional shares at a price lower than the Purchase Price during the period beginning on the date of the subscription agreements and prior to April 19, 2026, investors will receive additional shares to reflect the lower price, subject to the minimum price as defined under Nasdaq Rule 5635(d) on the date the subscription agreements were signed, which was $2.56. On September 16, 2025, the Company issued a total of 59,147 shares of common stock to the investors in the June 10, 2025 private placement in consideration of the adjustment provision contained in their subscription agreements The Company used the net proceeds from the offering for general corporate purposes.

We believe that our existing cash investment balances, our anticipated cash flows from operations and liquidity sources including offering of equity and/or debt securities and/or the sale of equity positions in certain portfolio companies for which we provide marketing and strategic advice may not be sufficient to meet our working capital and expenditure requirements for the next 12 months. Our management has determined, based on its recent history and the negative cash flow from operations, that it is unlikely that its plan will sufficiently alleviate or mitigate, to a sufficient level, the relevant conditions or events noted above. To the extent that funds generated from any private placements, public offerings and/or bank financing, if available, are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms. Accordingly, the Company’s management has concluded that these conditions raise substantial doubt about our ability to continue as a going concern. There can be no assurance that we will be able to achieve our business plan objectives or be able to achieve or maintain cash-flow-positive operating results. If we are unable to generate adequate funds from operations or raise sufficient additional funds, we may not be able to repay our existing debt, continue to operate our business network, respond to competitive pressures or fund our operations. As a result, we may be required to significantly reduce, reorganize, discontinue or shut down our operations.

Year over Year Changes

Net cash used in operating activities amounted to $6,792,561 and $3,451,087 for the six months ended October 31, 2025 and 2024, respectively. The principal source of cash used in operating activities in the six months ended October 31, 2025 was a decrease in accounts payable and accrued expenses of $1,734,036 . The principal sources of cash from operating activities in the six months ended October 31, 2025 was a non-cash item, stock-based compensation of $655,444 and an increase in accretion of short-term notes of $356,413. These amounts were offset by a loss of $5,771,541. The principal source of cash from operating activities in the six months ended October 31, 2024 was a non-cash item, stock-based compensation of $278,742 and an increase in accounts payable and accrued expenses of $911,387. These amounts were offset by a loss of $4,747,671.

For the six months ended October 31, 2025, net cash provided by financing activities amounted to $8,187,321, which consisted of proceeds from the sale of common stock of $8,507,171 and proceeds from short-term notes of $300,000. However, this was off-set by payment of short-term notes of $619,850. For the six months ended October 31, 2024, net cash provided by financing activities amounted to $3,934,644, which consisted of proceeds from the sale of common stock of $1,979,000 and proceeds from the exercise of warrants of $1,955,644.

In the six months ended October 31, 2025 and 2024, there were no expenditures for capital assets. We do not anticipate any capital expenditures in fiscal 2026.

Critical Accounting Policies and Significant Judgments and Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements. We believe that the estimates, judgments and assumptions are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. For a discussion of our critical accounting estimates, please read Part II, Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended April 30, 2025 filed with the SEC on August 12, 2025. There have been no material changes to the critical accounting estimates previously disclosed in such report.

Recently Issued Accounting Standards Not Yet Effective or Adopted

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying unaudited condensed consolidated financial statements.

The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.

Evaluation of Disclosure Controls and Procedures

As of October 31, 2025, our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on that evaluation, they concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

As previously disclosed in our Annual Report on Form 10-K for the year ended April 30, 2025 and in our Quarterly Report on Form 10-Q for the quarter ended July 31, 2025, management had identified (i) a material weakness in internal control over financial reporting related to the over-accrual of legal expenses and (ii) a significant deficiency related to the process for identifying and evaluating evidence of orderly transactions and impairment indicators for investments in equity securities without readily determinable fair values.

During the quarter ended October 31, 2025, we completed the implementation and testing of additional controls designed to remediate these issues. As a result of these actions and based on the testing performed, management has concluded that the previously identified material weakness and significant deficiency have been remediated as of October 31, 2025.

Changes in Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). During the quarter ended October 31, 2025, we implemented the following changes to our internal control over financial reporting, which were designed to remediate the previously identified material weakness and significant deficiency and which management believes have materially improved, and are reasonably likely to materially affect our internal control over financial reporting:

• We instituted enhanced period-end procedures over accrued expenses and accounts payable, including direct communication with key vendors at the end of each quarter to obtain statements or confirmations and reconcile our accounts payable and accrued legal expense balances to vendor records, as well as expanded review of subsequent disbursements and vendor correspondence.
• We implemented strict procedures for examining qualitative factors related to potential impairment of investments in equity securities without readily determinable fair values. These procedures include a formal quarterly review process that requires the collection and evaluation of current information from investees, consideration of any known or potential orderly transactions in the securities, identification of qualitative impairment indicators, and contemporaneous documentation of management’s conclusions.

Other than the changes described above, there were no changes in our internal control over financial reporting during the quarter ended October 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended April 30, 2025 as filed with the SEC on August 12, 2025 (“Annual Report”). There have been no material changes in our risk factors from those previously disclosed in our Annual Report, except as discussed below. You should carefully consider the risks described in our Annual Report, which could materially affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

Our financial situation creates doubt whether we will continue as a going concern.

At October 31, 2025, we had negative working capital of $1,500,153 and for the six months ended October 31, 2025, we had an operating loss of $5,405,105 and net cash used in operating activities amounted to $6,792,561. There can be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or additional financing through private placements, public offerings and/or bank financing necessary to support our working capital requirements. Our management has turned our focus to our funding portal business, and we plan to use our funding portal experience to build a broker-dealer business, initially for Regulation A and Regulation D offerings. We plan to continue to seek to raise money from private placements, public offerings and/or bank financing. Our management has determined, based on its recent history and the negative cash flow from operations, that it is unlikely that its plan will sufficiently alleviate or mitigate, to a sufficient level, the relevant conditions or events noted above. To the extent that funds generated from any private placements, public offerings and/or bank financing, if available, are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms. Accordingly, our management has concluded that these conditions raise substantial doubt about our ability to continue as a going concern. There can be no assurance that we will be able to achieve our business plan objectives or be able to achieve or maintain cash-flow-positive operating results. If we unable to generate adequate funds from operations or raise sufficient additional funds, we may not be able to repay our existing debt, continue to operate our business network, respond to competitive pressures or fund our operations. As a result, we may be required to significantly reduce, reorganize, discontinue or shut down our operations.

Our business and operations could be negatively affected if we become subject to any securities litigation or shareholder activism, which could cause us to incur significant expense, hinder execution of business and growth strategy and impact our stock price.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. Shareholder activism, which could take many forms or arise in a variety of situations, has been increasing recently. Volatility in the stock price of our Common Stock or other reasons may in the future cause us to become the target of securities litigation or shareholder activism. Securities litigation and shareholder activism, including potential proxy contests, could result in substantial costs and divert management’s attention and the attention and resources of our board of directors (our “Board”) from our business. Additionally, such securities litigation and shareholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with service providers and make it more difficult to attract and retain qualified personnel. Also, we may be required to incur significant legal fees and other expenses related to any securities litigation and activist shareholder matters. Further, our stock price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and shareholder activism.

Regulatory and legal uncertainties could harm our business.

From time to time, we may become involved in litigation or regulatory proceedings in the ordinary course of our business, including litigation or regulatory proceedings that could be material to our business.

In addition, the securities industry is highly regulated and many aspects of our business involve substantial risk of liability. In past years, there has been an increasing incidence of litigation involving the securities industry, including class action suits that generally seek substantial damages, including in some cases punitive damages. Compliance problems that are reported to federal, state and provincial regulators, exchanges or other self-regulatory organizations by dissatisfied customers are investigated by such regulatory bodies, and, if pursued by such regulatory body or such customers, may rise to the level of arbitration or disciplinary action. We are also subject to periodic regulatory audits and inspections for various federal, self-regulatory and state regulators. Any such audits and inspections could require significant amounts of management time, result in the diversion of significant operational resources, require us to change our business practices or products, result in sanctions being levied against us, including fines and censures, suspension or expulsion from a certain jurisdiction or market or the revocation or limitation of licenses, result in negative publicity, or otherwise harm our business and financial results.

Pending Regulatory Inquiries

Our businesses are heavily regulated by state and federal regulatory agencies as well as the Securities & Exchange Commission, the Nasdaq Stock Market and FINRA. In the current era of heightened regulatory scrutiny of financial institutions, we have incurred increased legal and compliance costs, along with the industry as a whole. Increased regulation also creates increased barriers to entry.

We receive many regulatory inquiries each year in addition to being subject to frequent regulatory examinations. The great majority of these inquiries do not lead to fines or any further action against us. We are routinely the subject of regulatory inquiries regarding subjects including, but not limited to: anti-money laundering, compliance, registration, record-keeping, disclosure and other topics of recent regulatory interest. We have procedures for evaluating whether potential regulatory fines are probable, estimable and material and for updating its contingency reserves and disclosures accordingly. In the current climate, we expect that we may, from time to time, be subject to regulatory fines on various topics on an ongoing basis, as other regulated financial services businesses do. The amount of any fines, and when and if they will be incurred, typically is impossible to predict given the nature of the regulatory process, and the cost of responding to such inquiries and matters can be significant.

We have substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues.

We currently derive a significant portion of our revenues from a limited number of customers. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. For the three months ended July 31, 2025, we had one customer that constituted 73% of our revenues. For the three months ended October 31, 2025, the we had one customer that constituted 23% of revenues, a second customer that constituted 13% of revenues and a third customer that accounted for 10% of revenues. For the six months ended October 31, 2025, we had one customer that constituted 58% of revenues. For the three and six months ended October 31, 2024, we had one customer that constituted 44% and 24% of revenues, respectively.

It is not possible for us to predict the future level of demand for our services that will be generated by these customers or new customers, or the future demand for the products and services of these customers or new customers. If any of these customers experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we charge for our products which could have an adverse effect on our margins and financial position and could negatively affect our revenues and results of operations and/or trading price of our common stock.

A significant portion of our total assets are held in equity securities of early-stage companies, which securities are illiquid and subject to volatility, which factors could have a material adverse effect on our financial condition and results of operations.

Payment related to the consulting and advisory services provided by Netcapital Advisors was often made through equity stakes from such customers. As of October 31, 2025 and April 30, 2025, approximately $5,856,700 and $5,748,050, respectively, of our holdings are issued by companies whose securities do not trade on public markets. The securities issued are typically in private companies with no established trading market for their securities, that often have limited operating histories, limited operating cash, and negative cash flows. Additionally, these securities are primarily restricted and are subject to legal holding periods pursuant to Rule 144 or other applicable exemptions. The stock price of such issuers is often volatile, unpredictable, and with limited liquidity, and the value of such securities on the date of receipt compared to the date when we are able to legally sell the securities may decrease significantly. The value ascribed to our assets in our financial statements as of a particular date may be materially greater than or less than the value that would be realized if our assets were to be liquidated as of such date. Accordingly, the value of such holdings may change over time due to factors that we do not control, such as issuance of securities by such companies at lower prices or other market factors. One such example of a change in value occurred in the period ended January 31, 2024, we recognized an unrealized loss of approximately $2.7 million on the value of our equity securities due to the decline in value of a single issuer, which represented an impairment of more than 80% of the previous value of our holdings in such issuer, which resulted in a reduction of our retained earnings. Changes to the value of our holdings could have a material adverse effect on our financial condition and results of operations.