Netcapital Inc. Reports 23% Revenue Decline and Leadership Changes

Netcapital Inc. reported a significant decline in financial performance for the six months ending October 31, 2025, with revenues totaling $241,134, down 23% from $312,755 in the same period the previous year. The company experienced a similar trend in the third quarter, where revenues fell by approximately 70% to $51,076 compared to $170,528 in the prior year. The decrease in revenue was primarily attributed to a reduction in the number of issuers launching crowdfunding campaigns on its platform, with only 10 new issuers in the first half of fiscal 2025 compared to 37 in the same period of fiscal 2024.

Despite the drop in revenue, Netcapital's gross profit for the six months ended October 31, 2025, was $231,848, down from $282,754 in the previous year. The cost of revenues also decreased significantly, from $30,001 to $9,286, reflecting the lower revenue levels. However, total operating expenses increased to $5,636,953 from $4,993,422, driven by higher payroll and related expenses, which rose by 41% to $2,649,883 due to salary increases aimed at employee retention.

In terms of operational metrics, the company reported a total of 70 offerings closed on its funding portal in both fiscal years 2025 and 2024, although the number of successful offerings decreased. Notably, one customer accounted for 58% of revenues in the first half of fiscal 2025, highlighting a reliance on a limited number of clients. The company also reported a cash position of $1,684,188 as of October 31, 2025, a significant increase from $289,428 at the end of the previous fiscal year, primarily due to successful capital raises.

Strategically, Netcapital has made moves to expand its service offerings, including plans to support blockchain-based digital assets. Additionally, the company recently acquired assets from Rivetz Corp., which focuses on cybersecurity technology, in a transaction valued at 950,000 shares of common stock. This acquisition is expected to enhance Netcapital's technological capabilities. Furthermore, the company has undergone leadership changes, with Rich Wheeless appointed as the new CEO following the resignation of Martin Kay.

Looking ahead, Netcapital's management expressed concerns regarding its ability to generate sufficient cash flow to meet operational needs, raising substantial doubt about its ability to continue as a going concern. The company plans to focus on its funding portal business while seeking additional financing through private placements and public offerings. However, management cautioned that there are no guarantees regarding the availability of such financing or its terms, which could impact the company's future operations.