NETCAPITAL INC

Company Overview

Netcapital Inc. is a fintech funding portal that helps private companies raise capital online primarily under Regulation Crowdfunding (Reg CF) and increasingly Regulation A through its newly formed broker‑dealer, Netcapital Securities. The business is fee‑based (listing fees, a 4.9% success fee on capital raised, ancillary administrative fees and — beginning FY2025 — a 1% equity success fee), and it operates a cloud‑native automated transaction engine with a small team (~20 employees). The company experienced a severe revenue decline in FY2025 after eliminating equity‑for‑services consulting revenues, recorded a large impairment and a net loss, and has since relied on multiple equity/debt financings (ATMs, registered direct offerings, warrant exercises) to shore up liquidity while pausing planned ATS rollout pending regulatory/market clarity.

Executive Compensation Practices

With a compact executive team (three senior officers) and constrained cash, compensation at Netcapital is likely skewed toward equity‑linked and event‑driven pay: equity grants, warrants, success‑fee equity (the new 1% equity success fee) and financing‑linked instruments are logical levers to conserve cash and align management with fundraising/listing outcomes. Management commentary and the Q1 disclosure show deliberate retention raises/bonuses (payroll rose 58%) and frequent use of equity financings, implying a mix of modest base salaries, retention bonuses and material equity dilution risk for shareholders. Performance metrics that plausibly drive variable pay are platform KPIs (capital raised, number of new listings/closings, average raise size), regulatory milestones (FINRA broker‑dealer approvals, ATS launch), and successful completion of financing events.

Insider Trading Considerations

Executives and officers operate under SEC reporting obligations and FINRA‑member restrictions (Netcapital Securities), so insider trades will typically be reported on Forms 3/4/5 and may be subject to pre‑clearance, blackout windows and stricter FINRA personal‑trading policies for access persons. Given the company’s repeated equity raises, ATM sales, registered directs and warrant issuances/exercises, insiders are more likely to transact via financing participation and warrant exercises than routine open‑market timing; watch Form 4s for exercises and immediate sales tied to financings. Because revenue is concentrated and quarter results are lumpy (large single issuer raises drive quarters), insider purchases or sales around announced issuer closings, financing closings, or regulatory milestones (e.g., broker‑dealer approvals, ATS activity) can carry meaningful informational content — purchases are relatively rare and thus potentially bullish, while insider sales closely tied to dilutive financings are common and may be liquidity‑driven rather than valuation‑based.