Netcapital Inc. Files 2024 10-K

TL;DR

Netcapital Inc. filed its 2024 10-K, detailing financials and operations for the year ending April 30.

AI Summary

Netcapital Inc. filed its 10-K for the fiscal year ending April 30, 2024, reporting on its financial performance and business operations. The company, formerly known as ValueSetters Inc., is incorporated in Utah and operates in the finance services sector. The filing details various financial instruments and equity components, including common stock and warrants, as of April 30, 2024, and comparative periods.

Why It Matters

This 10-K filing provides investors and stakeholders with a comprehensive overview of Netcapital Inc.'s financial health and strategic positioning for the fiscal year ending April 30, 2024.

Risk Assessment

Risk Level: medium — The filing is a standard annual report, but the company operates in the finance services sector which can carry inherent risks.

Key Numbers

• 0001414767 — Central Index Key (Unique identifier for Netcapital Inc. with the SEC.)
• 001-41443 — SEC File Number (SEC registration number for Netcapital Inc.)

Key Players & Entities

• Netcapital Inc. (company) — Filer of the 10-K
• ValueSetters Inc. (company) — Former name of Netcapital Inc.
• 2024-04-30 (date) — Fiscal year end
• 2023-04-30 (date) — Prior fiscal year end
• 2022-04-30 (date) — Prior fiscal year end
• 1 LINCOLN STREET, BOSTON, MA 02111 (address) — Business and mailing address

FAQ

Key Financial Figures

• $0.001 — ch registered Common Stock, par value $0.001 per share NCPL The Nasdaq Stock Mar
• $5.19 — of Common Stock at an exercise price of $5.19 NCPLW The Nasdaq Stock Market LLC
• $5,000 — The Netcapital funding portal charges a $5,000 listing fee, a 4.9% portal fee for capi
• $4,951,435 — ocket costs. We generated revenues of $4,951,435, with costs of service of $108,060, in
• $108,060 — of $4,951,435, with costs of service of $108,060, in the year ended April 30, 2024 for a
• $4,843,375 — ed April 30, 2024 for a gross profit of $4,843,375 (consisting of $3,537,700 in equity sec
• $3,537,700 — oss profit of $4,843,375 (consisting of $3,537,700 in equity securities for payment of ser
• $1,413,736 — securities for payment of services and $1,413,736 in cash-based revenues, offset by $108,
• $8,493,985 — of services) as compared to revenues of $8,493,985 with costs of service of $85,038 in the
• $85,038 — of $8,493,985 with costs of service of $85,038 in the year ended April 30, 2023 for a
• $8,408,947 — ed April 30, 2023 for a gross profit of $8,408,947 (consisting of $7,105,000 in equity sec
• $7,105,000 — oss profit of $8,408,947 (consisting of $7,105,000 in equity securities for the payment of
• $1,388,985 — urities for the payment of services and $1,388,985 in cash-based revenues, offset by $85,0
• $280,978 — ng on the Netcapital funding portal was $280,978 and $128,170, respectively. The total n
• $128,170 — capital funding portal was $280,978 and $128,170, respectively. The total number of offe

Filing Documents

• form10-k.htm (10-K) — 1794KB
• ex4-16.htm (EX-4.16) — 16KB
• ex21-1.htm (EX-21.1) — 3KB
• ex23-1.htm (EX-23.1) — 6KB
• ex31-1.htm (EX-31.1) — 18KB
• ex31-2.htm (EX-31.2) — 18KB
• ex32-1.htm (EX-32.1) — 8KB
• ex32-2.htm (EX-32.2) — 8KB
• ex97-1.htm (EX-97.1) — 73KB
• form10-k_001.jpg (GRAPHIC) — 10KB
• form10-k_002.jpg (GRAPHIC) — 4KB
• ex23-1_001.jpg (GRAPHIC) — 4KB
• ex23-1_002.jpg (GRAPHIC) — 10KB
• 0001493152-24-029454.txt ( ) — 8628KB
• ncpl-20240430.xsd (EX-101.SCH) — 56KB
• ncpl-20240430_cal.xml (EX-101.CAL) — 64KB
• ncpl-20240430_def.xml (EX-101.DEF) — 264KB
• ncpl-20240430_lab.xml (EX-101.LAB) — 446KB
• ncpl-20240430_pre.xml (EX-101.PRE) — 360KB
• form10-k_htm.xml (XML) — 1270KB

Selected Financial Data

Selected Financial Data. 35 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations. 35 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk. 45 Item 8.

Financial Statements

Financial Statements. 45 Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. 45 Item 9A.

Controls and Procedures

Controls and Procedures. 46 Item 9B. Other Information. 46 Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections. 46 PART III Certain information called for by Part III (Items 10 , 11 , 12 , 13 and 14 ) has been omitted as Registrant intends to file with the Securities and Exchange Commission not later than 120 days after the close of its fiscal year a definitive Proxy Statement pursuant to Regulation 14A. 47 PART IV Item 15. Exhibits, Financial Statements Schedules. 48 Item 16. Form 10-K Summary 49

SIGNATURES

SIGNATURES 50 i FORWARD-LOOKING We caution readers that this Form 10-K contains forward-looking statements as that term is defined in the Exchange Act. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other comparable terminology. We hereby qualify all our forward-looking statements by the following cautionary statements. Forward-looking statements are predictions and not guarantees of future performance or events. Forward-looking Such statements are based on currently available financial and competitive information and are subject to various risks and uncertainties that could cause actual results to differ materially from historical experience and present expectations. Our actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with our business. Undue reliance should not be placed on forward-looking statements as such statements speak only as of the date on which they are made. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Some of the factors that could affect our financial performance, cause actual results to differ from our estimates, or underlie such forward-looking statements, are set forth below and in various places in this Form 10-K, including under the headings Item 1. "Business" and Item 1A. "Risk Factors" in this Form 10-K.

BUSINESS

ITEM 1. BUSINESS. 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 all investors the opportunity to access investments in private companies. 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"). In addition, we have recently expanded our model to include Regulation A ("Reg A") offerings. We generate fees from listing private companies on our funding portal located at www.netcapital.com. We also generate fees from advising companies with respect to their Reg A offerings posted on www.netcapital.com. Our consulting group, Netcapital Advisors Inc. ("Netcapital Advisors"), which is a wholly owned subsidiary, provides marketing and strategic advice to companies in exchange for cash fees and/or equity positions. 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. Neither Netcapital Advisors, nor any Netcapital entity or subsidiary, is a broker- dealer, nor do any of such entities operate as a broker-dealer with respect to any Reg A offering listed on the www.netcapital.com website. Our

Business

Business We provide private company investment access to accredited and non-accredited investors through our online portal (www.netcapital.com), which is operated by our wholly owned subsidiary Netcapital Funding Portal, Inc. 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 generates fees and equity stakes from consulting in select portfolio ("portfolio Companies") and non-portfolio clients. With respect to its services for Reg A offerings, Netcapital Advisors charges a monthly flat fee for each month the offering is listed on the netcapital.com website as well as a nominal administrative flat fee for each investor that is processed to cover out-of-pocket costs. We generated revenues of $4,951,435, with costs of service of $108,060, in the year ended April 30, 2024 for a gross profit of $4,843,375 (consisting of $3,537,700 in equity securities for payment of services and $1,413,736 in cash-based revenues, offset by $108,060 for costs of services) as compared to revenues of $8,493,985 with costs of service of $85,038 in the year ended April 30, 2023 for a gross profit of $8,408,947 (consisting of $7,105,000 in equity securities for the payment of services and $1,388,985 in cash-based revenues, offset by $85,038 for costs of services). We provided additional services for two (2) and four (4) of our Portfolio Companies during the years ended April 30, 2024 and 2023, respectively, and our cash-based gross profits as a percentage of gross profits were approximately 1% in both fiscal years. In fiscal 2024 and 2023, the average amount raised in an offering on the Netcapital funding portal was $280,978 and $128,170, respectively. The total number of offerings on the Netcapital funding portal in

Business

Business Our consulting group, Netcapital Advisors helps companies at all stages to raise capital. Netcapital Advisors provides strategic advice, technology consulting and online marketing services to assist with fundraising campaigns on the Netcapital platform. We also act as an incubator and accelerator, taking equity stakes in select disruptive start-ups. Netcapital Advisors' services include: incubation of technology start-ups; investor introductions; online marketing; website design, software and software development; message crafting, including pitch decks, offering pages, and ad creation; strategic advice; and technology consulting. Proposed Broker-Dealer Business Our recently formed wholly owned subsidiary, Netcapital Securities Inc. has applied for broker-dealer registration with the Financial Industry Regulatory Authority ("FINRA"). We that by having a registered broker-dealer, it will create opportunities to expand 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. Netcapital Securities Inc.'s application to become a registered broker-dealer remains subject to regulatory approval and/or licensing from the Financial Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). No assurance can be given as to when or if such approvals may be granted or when, if at all, Netcapital will be able to expand the services it offers. As of the date of this Annual Report, Netcapital Securities Inc. has not conducted any business activities. -5- Comp

View Full Filing

View this 10-K filing on SEC EDGAR