Netcapital Seeks Up to $50M in Mixed Shelf Offering

Netcapital has filed a $50M mixed shelf offering, allowing the company to issue various securities, including common stock, preferred stock, debt securities, warrants, and units. The offering aims to raise up to $50M, giving Netcapital flexibility to meet its financial needs.

Netcapital Inc. (NASDAQ: NCPL), a company specializing in providing a funding portal for startups and small businesses, has filed a $50M mixed shelf offering. This offering allows the company to issue various securities, including common stock, preferred stock, debt securities, warrants, and units. The primary goal of this offering is to raise up to $50M, providing Netcapital with the flexibility to meet its financial needs.

The company's Form 10-Q report for the third quarter of fiscal year 2025 provides insights into its financial performance. Netcapital reported revenues of $0.19 million, a 34% increase from the same period last year, primarily due to an increase in portal fees and services provided in exchange for equity securities. However, the company also reported an operating loss of $(3.29) million, an increase from $(2.51) million in the prior year, primarily due to higher payroll and general administrative expenses. This resulted in a net loss of $(3.64) million, compared to $(2.53) million in the previous year.

Despite the challenges, Netcapital has shown growth in certain revenue segments. The company reported an increase in portal fees, which consist of a 4.9% fee of the total capital raised by an issuer plus fixed miscellaneous charges. This increase was primarily attributed to one major customer who successfully raised approximately $5 million. Additionally, the 1% equity fee charged to issuers also saw a significant increase, attributed to the same major customer.

Netcapital has expanded its model to include Regulation A offerings, conducted by its wholly owned subsidiary Netcapital Securities Inc., which is a licensed broker-dealer with FINRA. The company plans to continue operating with lower fixed overhead amounts and seeks to raise money from private placements, public offerings, and/or bank financing to support its working capital requirements.

However, management has determined that it is unlikely that its current plan will sufficiently alleviate or mitigate the relevant conditions or events noted, raising substantial doubt about the company's ability to continue as a going concern. This filing of the $50M mixed shelf offering is a strategic move to address these financial challenges.