Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-267921
PROSPECTUS
SUPPLEMENT
(To Prospectus Dated October 26, 2022)
Up
to $2,100,000
Common Stock
Netcapital
Inc.
We
have entered into an At The Market Offering Agreement (the “Offering Agreement”) with H.C. Wainwright & Co., LLC (the
“Sales Agent” or “Wainwright”), relating to the sale of our common stock, par value $0.001 per share, offered
by this prospectus supplement and the accompanying prospectus. In accordance with the terms of the Offering Agreement, we may offer and
sell shares of our common stock having an aggregate offering price of up to $2,100,000 from time to time through Wainwright acting
as our sales agent.
Sales
of common stock, if any, under this prospectus supplement and the accompanying prospectus may be made in transactions that are deemed
to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities
Act”), including sales made directly on or through The Nasdaq Capital Market LLC (the “Nasdaq”), the existing trading
market for our common stock, or any other existing trading market in the Unites States for our common stock, sales made to or through
a market maker other than on an exchange or otherwise, directly to the Sales Agent as principal, in negotiated transactions at market
prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or in any other method permitted by
law. Wainwright is not required to sell any specific number or dollar amount of shares, but will act as sales agent on a commercially
reasonable efforts basis consistent with its normal trading and sales practices. There is no arrangement for funds to be received in
any escrow, trust or similar arrangement.
We
will pay Wainwright a commission of 3.0% of the gross sales price per share of common stock issued by us and sold through it as our sales
agent under the Offering Agreement. In connection with the sale of common stock on our behalf, Wainwright will be deemed to be an “underwriter”
within the meaning of the Securities Act and the compensation of Wainwright will be deemed to be underwriting commissions or discounts.
We provide more information about how the shares of common stock will be sold in the section entitled “Plan of Distribution.”
Our
common stock is traded on Nasdaq under the symbol “NCPL.” On August 19, 2024, the last reported sale price of our
common stock was $3.65 per share.
As
of the date of this prospectus supplement, the aggregate market value of our common stock held by non-affiliates, or our public float,
was approximately $6,410,641 based on a total number of 718,934 shares of common stock outstanding, of which 688,783 shares
of common stock were held by non-affiliates, at a price of $9.3072 per share, the closing sales price of our common stock on June
25, 2024, which is the highest closing price of our common stock on the Nasdaq within the prior 60 days. We have not sold
any securities pursuant to General Instruction I.B.6 of Form S-3 during the prior 12-calendar month period that ends on and includes
the date of this prospectus supplement (excluding this offering). Accordingly, based on the foregoing, we are currently eligible under
General Instruction I.B.6 of Form S-3 to offer and sell shares of our Common Stock having an aggregate offering price of up to approximately
$2,136,880. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell securities in a public primary offering
with a value exceeding one-third of our public float in any 12-month period so long as our public float remains below $75.0 million.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning on page S-11 of this prospectus supplement,
page 11 of the accompanying base prospectus and under similar headings in the documents incorporated by reference into this prospectus
supplement and the accompanying base prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus supplement or the accompanying base prospectus is truthful or complete. Any representation to the contrary is a criminal
offense.
H.C.
Wainwright & Co.
The
date of this prospectus supplement is August 23, 2024
TABLE
OF CONTENTS
Prospectus
Supplement
Prospectus
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying base prospectus form a part of a registration statement on Form S-3 (File No. 333-267921),
which was declared effective on October 26, 2022, that we filed with the Securities Exchange Commission (“SEC”) utilizing
a “shelf’ registration process. This document is in two parts. The first part is the prospectus supplement, which describes
the specific terms of this offering. The second part, the accompanying base prospectus, provides more general information about the securities
we may offer from time to time, some of which may not apply to the securities offered by this prospectus supplement. Generally, when
we refer to this prospectus, we are referring to both parts of this document combined. Before you invest, you should carefully read this
prospectus supplement, the accompanying base prospectus, all information incorporated by reference herein and therein, and the additional
information described under “Where You Can Find More Information” in this prospectus supplement. These documents contain
information you should consider when making your investment decision. This prospectus supplement may add, update or change information
contained in the accompanying base prospectus. To the extent that any statement that we make in this prospectus supplement is inconsistent
with statements made in the accompanying base prospectus or any documents incorporated by reference therein, the statements made in this
prospectus supplement will be deemed to modify or supersede those made in the accompanying base prospectus and such documents incorporated
by reference therein.
You
should rely only on the information contained or incorporated herein by reference in this prospectus supplement and contained or incorporated
therein by reference in the accompanying base prospectus. We have not authorized any other person to provide you with any information
that is different. If anyone provides you with different, additional or inconsistent information, you should not rely on it.
We
are offering to sell our securities only in jurisdictions where offers and sales are permitted. The distribution of this prospectus supplement
and the accompanying base prospectus and the offering of the securities in certain jurisdictions may be restricted by law. This prospectus
supplement and the accompanying base prospectus do not constitute, and may not be used in connection with, an offer to sell, or a solicitation
of an offer to buy, any securities offered by this prospectus supplement and the accompanying base prospectus by any person in any jurisdiction
in which it is unlawful for such person to make such an offer or solicitation.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document
that is incorporated by reference in the prospectus supplement and the accompanying base prospectus were made solely for the benefit
of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements,
and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants
were accurate only as of the date when made.
Accordingly,
such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.
Unless
the context otherwise requires, references in this prospectus supplement to the “Company,” “we,” “us”
and “our” refer to Netcapital Inc. and its subsidiaries.
We
have authorized only the information contained or incorporated by reference in this prospectus supplement, the accompanying base prospectus,
and any free writing prospectus prepared by or on behalf of us or to which we have referred you. We have not, and Wainwright has not, authorized anyone to provide you with information that is different. We and Wainwright take no responsibility
for, and can provide no assurance as to the reliability of, any information that others may give you. We are offering to sell, and seeking
offers to buy, our common stock only in jurisdictions where offers and sales are permitted. The information contained in or incorporated
by reference in this document is accurate only as of the date such information was issued, regardless of the time of delivery of this
prospectus supplement or the date of any sale of our common stock.
CAUTIONARY
NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This
prospectus supplement, the accompanying base prospectus and the documents that we incorporate by reference, contains forward-looking
statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this
prospectus supplement and the accompanying base prospectus, including the documents that we incorporate by reference, may not occur.
Generally, these statements relate to our business plans or strategies, projected or anticipated benefits or other consequences of our
plans or strategies, financing plans, projected or anticipated benefits from acquisitions that we may make, or projections involving
anticipated revenues, earnings or other aspects of our operating results or financial position, and the outcome of any contingencies.
Any such forward-looking statements are based on current expectations, estimates and projections of management. We intend for these forward-looking
statements to be covered by the safe-harbor provisions for forward-looking statements. Words such as “may,” “expect,”
“believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,”
and “continue,” and their opposites and similar expressions are intended to identify forward-looking statements. We caution
you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and
other influences, many of which are beyond our control that may influence the accuracy of the statements and the projections upon which
the statements are based. Factors that may affect our results include, but are not limited to, the risks and uncertainties discussed
in the “Risk Factors” section on page S-11 of this prospectus supplement, in our Annual Report on Form 10-K for the fiscal
year ended April 30, 2023 or in other reports we file
with the SEC.
Any
one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking
statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from
those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking
statements, whether from new information, future events or otherwise.
You
should rely only on the information in this prospectus supplement, the accompanying prospectus and the documents that we incorporate
by reference herein and therein. We have not authorized any other person to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely upon it.
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary highlights selected information contained elsewhere in this prospectus supplement, the accompanying base prospectus and in the
documents we incorporate by reference. This summary does not contain all of the information you should consider before investing in our
common stock. You should read this entire prospectus supplement and the accompanying base prospectus carefully, especially the risks
of investing in our common stock discussed under “Risk Factors” beginning on page S-11 of this prospectus supplement and
under similar sections of the accompanying base prospectus and other periodic reports incorporated herein and therein by reference, along
with our consolidated financial statements and notes to those consolidated financial statements, before making an investment decision.
On August 1,
2024, we effectuated a 1-for-70 reverse split of our outstanding shares of common stock. No fractional shares were issued in connection
with the reverse stock split and all such fractional interests were rounded up to the nearest whole number of shares of common stock.
The exercise prices of our issued and outstanding convertible securities, including shares issuable upon exercise of outstanding stock
options and warrants, have been adjusted accordingly. All information presented in this prospectus supplement has been retroactively
restated to give effect to our 1-for-70 reverse split of our outstanding shares of common stock and unless otherwise indicated, all such
amounts and corresponding exercise price data set forth in this prospectus supplement have been adjusted to give effect to the reverse
stock split.
Company
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
We
provide private companies with access to investments from accredited and non-accredited investors through our online portal located at
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 and a 4.9% success fee for capital raised at closing. 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 fiscal 2024 and 2023 that closed was 70 and 63, respectively, of which 17 and 13 offerings hosted
on the Netcapital funding platform in fiscal 2024 and 2023, respectively, terminated their listings without raising the required minimum
dollar amount of capital. As of the date of this report, we own minority equity positions in 20 Portfolio Companies that have utilized
the funding portal to facilitate their offerings, for which equity was received as payment for services.
Funding
Portal
Netcapital
Funding Portal, Inc. is an SEC-registered funding portal that enables private companies to raise capital online, while investors are
able to invest from anywhere in the world, at any time, with just a few clicks. Securities offerings on the Netcapital funding 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 anyone, including friends, family, customers, and employees. Customer accounts
on our platform will not be permitted to hold digital securities.
In
addition to access to the funding portal, the Netcapital funding portal provides the following services:
●
a fully automated onboarding process;
●
automated filing of required regulatory documents;
●
compliance review;
●
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 final close date of offering;
●
assistance with annual filings; and
●
direct access to our team for ongoing support.
Consulting
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. In the instances where we take equity stakes in a company,
such interests are of the same class of securities that are offered on the Netcapital platform.
Netcapital
Advisors’ services include:
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● |
incubation
of technology start-ups; |
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● |
investor
introductions; |
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online
marketing; |
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● |
website
design, software and software development; |
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● |
message
crafting, including pitch decks, offering pages, and ad creation; |
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strategic
advice; and |
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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
Regulatory
Overview
In
an effort to enhance economic growth and to democratize access to private investment opportunities, Congress finalized the JOBS Act in
2016. Title III of the JOBS Act enabled early-stage companies to offer and sell securities to the general public for the first time.
The SEC then adopted Reg CF, in order to implement the JOBS Act’s crowdfunding provisions.
Reg
CF has several important features that changed the landscape for private capital raising and investment. For the first time, this regulation:
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● |
Allowed
the general public to invest in private companies, no longer limiting early-stage investment opportunities to less than 10% of the
population; |
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Enabled
private companies to advertise their securities offerings to the public (general solicitation); and |
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Conditionally
exempted securities sold under Section 4(a)(6) from the registration requirements of the Securities and Exchange Act of 1934, as
amended (the “Exchange Act”). |
The
SEC had also adopted rules to implement Section 401 of the Jumpstart Our Business Startups (JOBS) Act by expanding Reg A into two tiers
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● |
Tier
1, for securities offerings of up to $20 million in a 12-month period; and |
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|
|
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Tier
2, for securities offerings of up to $75 million in a 12-month period. |
In
addition, Reg A allows companies that are subject to the ongoing reporting requirements of Section 13 or 15(d) of the Exchange Act to
use Reg A. Further, Reg A also enables issuers to raise funds from non-accredited investors and accredited investors.
We
are subject, both directly and indirectly, to various laws and regulations relating to our business. If any of the laws are amended,
compliance could become more expensive and directly affect our income. We intend to comply with such laws, but new restrictions may arise
that could materially adversely affect our Company. Specifically, the SEC regulates our funding portal business, and our funding portal
is also a member of FINRA and is regulated by FINRA. We are also subject to the USA Patriot Act of 2001, which contains anti-money laundering
and financial transparency laws and mandates various regulations applicable to financial services companies, including standards for
verifying client identification at account opening, and obligations to monitor client transactions and report suspicious activities.
Anti-money laundering laws outside of the United States contain some similar provisions. In the event that our wholly-owned subsidiary
receives a broker-dealer license, we will become subject to additional regulation and supervision of the SEC and FINRA, including without
limitation Rule 15c3-1 under the Securities Exchange Act of 1934 (the Uniform Net Capital Rule). The Uniform Net Capital Rule specifies
minimum capital requirements intended to ensure the general financial soundness and liquidity of broker-dealers. The Uniform Net Capital
Rule prohibits broker-dealers from paying cash dividends, making unsecured advances or loans or repaying subordinated loans if such payment
would result in a net capital amount of less than 5% of aggregate debit balances or less than 120% of its minimum dollar requirement.
Our failure to comply with these requirements as applicable to us could have a material adverse effect on us.
Our
Market
The
traditional funding model restricts access to capital, investments and liquidity. According to Harvard Business Review, venture capital
firms (“VCs”) invest in fewer than 1% of the companies they consider and only 10% of VC meetings are obtained through cold
outreach. In addition, only 2% of VC funding went to women-owned firms in 2022, according to PitchBook, while only 1% went to black-owned
firms, according to TechCrunch.
Furthermore,
under the traditional model, the average investor lacked access to early-stage investments. Prior to the JOBS Act, almost 90% of U.S.
households were precluded from investing in private deals, per dqydj.com. Liquidity has also been an issue, as private investments are
generally locked up until IPO or takeout.
The
JOBS Act helped provide a solution to these issues by establishing the funding portal industry, which is currently in its infancy. Title
III of the JOBS Act outlines Reg CF, which traditionally allowed private companies to raise up to $1.07 million. In March 2021, regulatory
enhancements by the SEC went into effect and increased the limit to $5 million. These amendments increased the offering limits for Reg
CF, Reg A and Regulation D, Rule 504 offerings as follows: Reg CF increased to $5 million; Regulation D, Rule 504 increased to $10 million
from $5 million; and Reg A Tier 2 increased to $75 million from $50 million.
There
was $494 million raised via Reg CF in 2022, according to Crowdwise. We believe a significant opportunity exists to disrupt private capital
markets via the Netcapital funding portal.
Private
capital markets reached $12 trillion by the first half of 2022, per McKinsey. Within this market, private equity represents the largest
share, with assets in excess of $3 trillion and a 10-year compound annual growth rate (CAGR) of 10%. Since 2000, global private equity
(“PE”), net asset value has increased almost tenfold, nearly three times faster than the size of the public equity market.
Both McKinsey and Boston Consulting Group predict that this strong growth will continue, as investors allocate increasing amounts to
private equity, due to historically higher returns and lower volatility than public markets. In addition, Boston Consulting Group estimates
that there are $42 trillion held in retail investment accounts, which we believe represents a large pool of potential account holders
for us.
Our
Technology
The
Netcapital platform is a scalable, real-time, transaction-processing engine that runs 24 hours a day, seven days a week.
For
companies raising capital, the technology provides fully automated onboarding with integrated regulatory filings. Funds are collected
from investors and held in escrow until the offering closes. For entrepreneurs, the technology facilitates access to capital at low cost.
For investors, the platform provides access to investments in private, early-stage companies that were previously unavailable to the
general public. Both entrepreneurs and investors can track and view their investments through their dashboard on netcapital.com. As of
the date of this prospectus, the platform currently has approximately 116,000 users.
Scalability
was demonstrated in November 2021, when the platform processed more than 2,000 investments in less than two hours, totaling more than
$2 million.
Our
infrastructure is designed in a way that can horizontally scale to meet our capacity needs. Using Docker containers and Amazon Elastic
Container Service (“Amazon ECS”), we are able to automate the creation and launch of our production web and application programming
interface (“API”), endpoints in order to replicate them as needed behind Elastic Load Balancers (ELBs).
Additionally,
all of our public facing endpoints live behind CloudFlare to ensure protection from large scale traffic fluctuations (including distributed
denial of service (“DdoS”) attacks).
Our
main database layer is built on Amazon RDS and features a Multi-AZ deployment that can also be easily scaled up or down as needed. General
queries are cached in our API layer, and we monitor to optimize very complex database queries that are generated by the API. Additionally,
we cache the most complex queries (such as analytics data) in our NoSQL (Mongo) data store for improved performance.
Most
of our central processing unit (“CPU”), intensive data processing happens asynchronously through a worker/jobs system managed
by AWS ElastiCache’s Redis endpoint. This component can be easily fine-tuned for any scale necessary.
The
technology necessary to operate our funding portal is licensed from Netcapital Systems LLC, a Delaware limited liability company (“Netcapital
DE LLC”), of which Jason Frishman, Founder and former CEO of Netcapital Funding Portal Inc., owns a 29% interest, under a license
agreement with Netcapital Funding Portal, Inc., for an annual license fee of $380,000, paid in quarterly installments.
Proposed
Alternative Trading (“ATS”) Relationship
We
believe that lack of liquidity is a key issue for investors in private companies in our targeted market. We also recognize that secondary
trading of securities in private companies is subject to extensive regulation and oversight. Such regulation and oversight includes,
but is not limited to, the need to be a registered broker-dealer that is licensed to operate an ATS, or to partner with an entity that
is licensed to do so. In order to try to address what we believe is a large, unmet need, our wholly-owned subsidiary, Netcapital Systems
LLC, a Utah limited liability company (“Netcapital UT LLC”), entered into a software license and services agreement on January
2, 2023 (the “Templum License Agreement”) with Templum Markets LLC (“Templum”), to provide issuers and investors
on the Netcapital platform with the potential for greater distribution and liquidity. Templum is a company that provides capital markets
infrastructure for trading private equity securities, and operates an ATS with approval in 53 U.S. states and territories for the trading
of unregistered or private securities. We are currently working with Templum to design the software required to allow issuers and investors
on the Netcapital platform to access the Templum ATS in order to engage in secondary trading of securities in a regulatorily compliant
manner. The operation of the Templum ATS, however, remains subject to extensive regulation and oversight. Accordingly, any regulatory
delays or objections will result in delays in our ability to launch the proposed platform. While we are currently working with Templum
on the design of the required software to enable the access to secondary trading on the Templum ATS, no assurance can be given as to
when, or if, we will be able to successfully complete this project in order to enable access to a secondary trading feature beta (testing)
version to a closed group of users for testing before any final launch is made to the public, and Templum’s approval. Milestones
required to launch the platform include, but are not limited to, plug-in of Templum’s KYC and AML requirements to enable interested
users to directly send to the Templum ATS any KYC/AML information required by Templum for review and approval, as well as the launch
of a beta version to a closed group of users. In July 2024, we announced the launch of our beta version for this secondary trading
platform and our goal is to offer such secondary trading platform through the Templum ATS to all issuers and investors on the
Netcapital funding portal before the end of 2024 subject to compliance with all regulatory requirements, however, we do not
know when, or if, this feature will be fully completed and launched, as there are many details that remain to be completed.
The
operation of the Templum ATS is subject to extensive regulation and oversight. Accordingly, any regulatory delays or objections will
result in delays in our ability to launch the proposed platform. In addition, because we cannot easily switch between operators of secondary
trading platforms of this nature, any disruption of or interference, whether due to regulatory issues or natural disasters, cyber-attacks,
terrorist attacks, power losses, telecommunications failures, or other similar events, would impact our operations and may adversely
affect the ability of issuers and investors to utilize this platform. There is no obligation for Templum to renew its agreements with
us on commercially reasonable terms or at all.
Institutions
and individual investors may face significant risk when buying securities on our proposed secondary trading platform. These risks include
the following:
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● |
private
companies are not required to make periodic public filings, and therefore certain capitalization, operational and financial information
may not be available for evaluation; |
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|
|
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● |
an
investment may only be appropriate for investors with a long-term investment horizon and a capacity to absorb a loss of some or all
of their investment; |
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|
|
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● |
the
securities, when purchased, are generally highly illiquid, are often subject to further transfer restrictions, and no public market
exists for such securities; and |
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|
|
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transactions
may fail to settle, which could harm our reputation. |
Further,
we may become involved in disputes and litigation matters between customers with respect to transactions on our proposed secondary trading
platform. There is a risk that clients may increasingly look to us to make them whole for delayed and/or broken trades. Customers may
litigate over a failure of sellers to deliver securities or over the untimely deliveries of securities. Any litigation to which we are
a party could be expensive and time consuming, regardless of the ultimate outcome, and the potential costs and risks of such litigation
may incentivize us to settle, which could harm our reputation or have a material adverse effect on our business or results or operations.
We
estimate that the cost for developing this platform will not exceed $1.0 million, most of which has already been incurred and consists
of salaries or fees paid to engineers and consultants. We have and continue to pay these expenses from our working capital. We do not
currently have a revenue model associated with the sales of securities on the proposed ATS. However, we may seek incorporate this revenue
model in the future, provided that we determine any such revenue model is in strict compliance with all regulatory guidelines.
We
currently anticipate that we will also be able to sell our interests in any portfolio company using the Templum ATS provided such sales
are made in a regulatorily compliant matter. We expect to place a restriction on any sales during any period in which an issuer is offering
its securities for sale on the Netcapital funding platform. In addition, securities issued in a Reg CF transaction generally cannot be
resold for a period of one year, unless the securities are transferred: (1) to the issuer of the securities; (2) to an “accredited
investor”; (3) as part of an offering registered with the SEC; or (4) to a member of the family of the purchaser or the equivalent,
to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family of the purchaser or the equivalent,
or in connection with the death or divorce of the purchaser or other similar circumstance.. Accordingly, any shares owned by us would
also be subject to these restrictions. Additional restrictions may be implemented, and there can be no assurance that we will ever sell
any of our interests in any portfolio company using the Templum ATS. Further, our insider trading policy prohibits all of our employees,
officers, consultants and directors from buying or selling securities while in possession of material non-public information and all
such parties are also required to maintain strict confidentiality of all such information. In addition, in order to maintain compliance
with our insider trading policies, any affiliate or employee seeking to trade securities in any issuer listed on the funding portal must
receive prior approval and clearance from our Chief Financial Officer and all such requests for clearance will be documented and maintained
with our compliance department.
Our
Netcapital funding portal is currently registered with the SEC and is a member of FINRA. For so long as we continue to operate our Netcapital
platform solely for primary offerings by issuers under Reg CF, we believe that we are not required to register under Regulation ATS.
Competitive
Advantages
Based
upon publicly available information either published on the websites of our peer group (StartEngine Crowdfunding, Inc., Wefunder Inc.
and Republic Core LLC) or included in offering statements of issuers hosted on such offering platforms, we believe that we provide the
lowest cost solution for online capital raising. We also believe, based upon our facilitated technology platforms, our strong emphasis
on customer support, and feedback received from clients that have onboarded to our platform, that our access and onboarding of new clients
are superior due to our facilitated technology platforms. Our network continues to rapidly expand as a result of our enhanced marketing
and broad distribution to reach new investors.
Our
competitors include StartEngine Crowdfunding, Inc., Wefunder Inc. and Republic Core LLC . Given the rapid growth in the industry and
its potential to disrupt the multi-billion dollar private capital market, we believe there is sufficient room for multiple players.
Our
Strategy
Two
major tailwinds are driving accelerated growth in the shift to the use of online funding portals: (i) the COVID-19 pandemic and (ii)
the increase in funding limits under Reg CF. The pandemic drove a rapid need to bring as many processes as possible online. With travel
restrictions in place and most people in lockdown, entrepreneurs were no longer able to fundraise in person and have increasingly turned
to online capital raising through funding portals.
There
are numerous industry drivers and tailwinds that complement investor demand for access to investments in private companies. To capitalize
on these, our strategy is to:
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Generate
New Investor Accounts. Growing the number of investor accounts on our platform is a top priority. Investment dollars that continue
to flow through our platform are the key revenue driver. When issuers advertise their offerings, they are generating new investor
accounts for the Netcapital funding platform at no cost to us. We plan to supplement our issuers’ spend on advertising by increasing
our online marketing spend as well, which may include virtual conferences going forward. |
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|
|
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Hire
Additional Business Development Staff. We seek to hire additional business development staff that is technology advanced and financially
passionate about capital markets to handle our growing backlog of potential customers. |
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|
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Increase
the Number of Companies on Our Platform via Marketing. When a new company lists on our platform, they bring their customers, supporters,
and brand ambassadors as new investors to Netcapital. We plan to increase our marketing budget to help grow our portal and advisory
clients. |
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Invest
in Technology. Technology is critical to everything that we do. We plan to invest in developing innovative technologies that enhance
our platform and allow us to pursue additional service offerings.. |
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Incubate
and accelerate our advisory clients. The advisory clients and our equity interests in select advisory clients represent potential
upside for our shareholders. We seek to grow this model of advisory clients. |
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Expand
Internationally. We believe there is a significant opportunity to expand the marketing of Netcapital funding platform and the services
we offer into Europe and Asia as an appetite abroad grows for U.S. stocks. |
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|
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Provide
a secondary trading feature. We believe that lack of liquidity is a key issue for investors in private companies in our targeted
market. Accordingly, we are exploring ways in which we can provide our clients with the ability to access a secondary trading feature.
In January 2023, we entered into the Templum License Agreement to provide issuers and investors on the Netcapital platform with the
potential for greater distribution and liquidity. Templum is an operator of an ATS with approval in 53 U.S. states and territories
for the trading of unregistered or private securities to provide issuers and investors on the Netcapital platform with the potential
for greater distribution and liquidity. We are currently working with Templum on the design of the required software to enable issuers
and investors on the Netcapital platform the ability to access the Templum ATS in order to engage in secondary trading of securities.
In July 2024, we announced the launch of our beta version for this secondary trading platform and our goal is to offer such secondary
trading platform through the Templum ATS to all issuers and investors on the Netcapital funding portal before the end of 2024 subject
to compliance with all regulatory requirements, however, we do not know when, or if, this feature will be fully completed and launched,
as there are many details that remain to be completed. |
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|
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New
Verticals Represent a Significant Opportunity. We operate in a regulated market supported by the JOBS Act. We are pursuing expanding
our model to include Reg A and Regulation D offerings. |
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Secure
Broker-Dealer License. In May 2024, we announced that our wholly-owned subsidiary, Netcapital Securities Inc. 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. |
Our
Management
Our
management team is experienced in finance, technology, entrepreneurship, and marketing.
Martin
Kay is our Chief Executive Officer (“CEO”) and a director. He previously served as Managing Director at Accenture Strategy,
from October 2015 to December 2022 and holds a BA in physics from Oxford University and an MBA from Stanford University Graduate School
of Business. Mr. Kay is an experienced C-suite advisor and digital media entrepreneur, working at the intersection of business and technology.
His experience includes oversight of our funding portal when he served on the board of managers of Netcapital DE LLC from 2017 to 2021.
Coreen
Kraysler, CFA, is our Chief Financial Officer (“CFO”). With over 30 years of investment experience, she was formerly a Senior
Vice President and Principal at Independence Investments, where she managed several 5-star rated mutual funds and served on the Investment
Committee. She also worked at Eaton Vance as a Vice President, Equity Analyst on the Large and Midcap Value teams. She received a B.A.
in Economics and French, cum laude from Wellesley College and a Master of Science in Management from MIT Sloan.
Jason
Frishman is our Founder and former chief executive officer of our funding portal subsidiary, Netcapital Funding Portal Inc. Mr. Frishman
founded Netcapital Funding Portal Inc. to help reduce the systemic inefficiencies that early-stage companies face in securing capital.
He currently holds advisory positions at leading organizations in the financial technology ecosystem and has spoken as an external expert
at Morgan Stanley, University of Michigan, Young Presidents’ Organization (YPO), and others. Mr. Frishman has a background in the
life sciences and previously conducted research in medical oncology at the Dana Farber Cancer Institute and cognitive neuroscience at
the University of Miami, where he graduated summa cum laude with a B.S. in Neuroscience.
Corporate
Information
The
Company was incorporated in Utah in 1984 as DBS Investments, Inc. (“DBS”). DBS merged with Valuesetters L.L.C. in December
2003 and changed its name to Valuesetters, Inc. In November 2020, the Company purchased Netcapital Funding Portal Inc. from Netcapital
DE LLC and changed the name of the Company from Valuesetters, Inc. to Netcapital Inc. In November 2021, the Company purchased MSG Development
Corp.
Attached
below is an organization chart for the Company as of the date of this prospectus:
Implications
of Being a Smaller Reporting Company
We
have elected to take advantage of certain of the reduced disclosure obligations in this prospectus and may elect to take advantage of
other reduced reporting requirements in future filings. As a result, the information that we provide to our stockholders may be different
than you might receive from other public reporting companies in which you hold equity interests.
We
are a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate
amount of gross proceeds to us as a result of this offering is less than $700 million and our annual revenue was less than $100 million
during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the
market value of our common stock held by non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million
during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. As
a smaller reporting company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller
reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited
financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced
disclosure obligations regarding executive compensation.
Recent
Developments
Regained Compliance with Nasdaq
Continued Listing Requirements
On August 19, 2024, we received a
notice from The Nasdaq Stock Market, LLC (“Nasdaq”), dated August 19, 2024, informing us that we had regained compliance
with Nasdaq’s Listing Rule 5550(a)(2) (the “Bid Price Rule”) for continued listing on The Nasdaq Capital Market, as
the bid price of our common stock closed at or above $1.00 per share for a minimum of 10 consecutive business days since August 2, 2024.
As previously disclosed on a
Current Report on Form 8-K filed by us, Nasdaq had previously notified us on September 1, 2023 that we were not in compliance with
the Bid Price Rule because our common stock failed to maintain a minimum bid price of $1.00 per share for 30 consecutive business
days. Further as of July 22, 2024, Nasdaq determined that that our securities had a closing bid price of $0.10 or less for ten
consecutive trading days and as a result, Nasdaq delivered written notice to the Company on July 23, 2024 under which it advised us
that Nasdaq has determined to delist our securities from The Nasdaq Capital Market. We requested a hearing to appeal Nasdaq’s
delisting determination, but since the Company has regained compliance with Nasdaq’s continued listing requirements as
described above, the hearing was cancelled.
Reverse Stock Split
On July 29, 2024, following
shareholder approval we filed articles of amendment (the “Articles of Amendment”) to our Articles of Incorporation, as
amended, with the Utah Department of Commerce, Division of Corporations and Commercial Code to effectuate a 1-for-70 reverse stock
split (the “Reverse Stock Split”) of our issued and outstanding shares of common stock, which Articles of Amendment
became effective on August 1, 2024. The Reverse Stock Split became effective at 4:01pm Eastern Time on August 1, 2024, and our
common stock began trading on a split-adjusted basis at the open of trading on The Nasdaq Capital Market on August 2, 2024. Upon
effectiveness of the Reverse Stock Split, every seventy (70) shares of our common stock issued and outstanding were automatically
reclassified and combined into one share of our common stock, without any change in the par value per share. Following the Reverse
Stock Split, we had 718,934 shares of our common stock outstanding, which includes 139,781 shares of our common stock that were
issued for rounding up fractional shares resulting from the Reverse Stock Split.
Launch of Beta Version for Secondary
Trading Platform
In July 2024, we announced the launch
of our beta version of a secondary trading platform through the Templum ATS to a closed group of users. This secondary trading platform
has been designed to provide investors who purchase stock through the Netcapital funding portal with the potential for secondary trading
through access to the Templum ATS.
May
2024 Warrant Inducement
On
May 24, 2024, we entered into inducement offer letter agreements with certain investors that held certain outstanding Series A-2
warrants to purchase up to an aggregate of 204,572 shares of our common stock with an exercise price of $17.50 per share,
originally issued in December 2023 at a reduced exercise price of $10.75 per share in partial consideration for the Company’s
agreement to issue in a private placement (i) new Series A-3 common stock purchase warrants to purchase up to 253,947 shares of
our common stock at an exercise price of $8.74 per share and (ii) new Series A-4 common stock purchase warrants to purchase up
to 253,947 shares of our common stock at an exercise price of $8.74 per share for aggregate gross proceeds of approximately
$2.2 million from the exercise of the existing warrants, before deducting placement agent fees and other expenses payable by the Company.
The Series A-3 Warrants and Series A-4 Warrants are exercisable beginning on the effective dates of stockholder approval of the issuance
with such warrants expiring on (i) the five year anniversary of the initial exercise date for the Series A-3 Warrants and (ii) the eighteen
month anniversary of the initial exercise date for the Series A-4 Warrants. This transaction closed on May 29, 2024. H.C. Wainwright
was the exclusive agent for transaction for which we paid them a cash fee equal to 7.5% from the exercise of the Series A-2 warrant at
the reduced exercise price and a management fee equal to 1.0% of such aggregate gross proceeds. We also issued warrants to designees
of H.C. Wainwright to purchase up to 19,048 shares of our common stock at an exercise price of $10.93 per share.
OFFERING
SUMMARY
| Common
Stock to be offered by us |
|
Shares
of our common stock having an aggregate offering price of up to $2,100,000. |
| |
|
|
| Common
Stock outstanding after this offering (1) |
|
Up
to 1,294,276 shares of common stock, assuming sales of 575,342 shares of common stock at a price of $3.65 per
share, which was the closing price of our common stock on the Nasdaq Capital Market on August 19, 2024. The actual number
of shares of our common stock issued will vary depending on the sales price under this offering. |
| |
|
|
| Market
for Common Stock |
|
Our
common stock is listed on the Nasdaq Capital Market under the symbol “NCPL.” |
| |
|
|
| Form
of offering |
|
The
Sales Agent may, according to the terms of the Offering Agreement, sell the shares of our common stock offered under this prospectus
supplement in an “at-the-market” offering. See “Plan of Distribution” on page S-15 of this prospectus supplement. |
| |
|
|
| Use
of Proceeds |
|
We
plan to use the net proceeds from this offering, if any, for general working capital and general corporate purposes. See “Use
of Proceeds.” |
| |
|
|
| Risk
factors |
|
See
“Risk Factors” beginning on page S-11 of this prospectus supplement, as well as the other information included in
or incorporated by reference in this prospectus supplement and the accompanying base prospectus, for a discussion of risks you
should carefully consider before investing in our securities. |
(1)
The number of shares of Common Stock to be outstanding after this offering is based on 718,934 shares of our Common Stock outstanding
as of August 23, 2024, and excludes:
| ● |
48,222
shares of common stock reserved for future issuance
under our 2021 Equity Incentive Plan and our 2023 Omnibus Equity Incentive Plan; |
| |
|
| ● |
29,714
shares of common stock issuable upon exercise
of outstanding options with a weighted average exercise price of $157.11 per share; |
| |
|
| |
|
| ● |
885,727
shares of common stock issuable upon the exercise
of stock warrants outstanding at a weighted average exercise price of $22.27 per share; and |
| |
|
| ● |
180
shares of common stock to be issued in connection
with our acquisition of MSG Development Corp., of which 90 shares will be issued on each of October 31, 2024 and October
31, 2025. |
Unless
otherwise indicated, all information in this prospectus supplement assumes no exercise of the outstanding options or warrants, described
above.
RISK
FACTORS
Before
you make a decision to invest in our securities, you should consider carefully the risks described below, together with other information
in this prospectus supplement, the accompanying base prospectus and the information incorporated by reference herein and therein, including
any risk factors contained in our annual and other reports filed with the SEC. if any of the following events actually occur, our business,
operating results, prospects or financial condition could be materially and adversely affected. This could cause the trading price of
our common stock to decline and you may lose all or part of your investment. The risks described below are not the only ones that we
face. Additional risks not presently known to us or that we currently deem immaterial may also significantly impair our business operations
and could result in a complete loss of your investment.
Risks
Related to Our Need for Additional Capital
Our
financial situation creates doubt whether we will continue as a going concern.
As of April
30, 2024, the Company had negative working capital of $2,074,163 and for the year ended April 30 2024, the Company had an operating loss
of $3,442,388 and net cash used in operating activities amounted to $4,879,838.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 recently reduced its operating
expenses and we have turned our focus to our funding portal business, which generates cash revenues and has seen a growth in revenues
on a year-to-year basis. We plan to continue operating with lower fixed overhead amounts and 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 its 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.
Risks
Related to our Business
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 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
Risks
Related to Receipt of Securities for Services
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 is often made through equity stakes from such customers.
As of April 30, 2024, approximately $25.2 million 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. During the year ended April 30, 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.
Risks
Related to this Offering and our Common Stock
Our
ability to have our securities traded on the Nasdaq Capital Market is subject to us meeting applicable listing criteria.
We
are currently listed on the Nasdaq Stock Market, LLC (“Nasdaq”), a national securities exchange. The Nasdaq requires companies
desiring to list their common stock to meet certain listing criteria including total number of shareholders: minimum stock price, total
value of public float, and in some cases total shareholders’ equity and market capitalization. Our failure to meet such applicable
listing criteria could prevent us from continuing to list our common stock on the Nasdaq. In the event we are unable to have our shares
listed on Nasdaq, our common stock could potentially quote on the OTCQX or the OTCQB, each of which is generally considered less liquid
and more volatile than the Nasdaq. Our failure to have our shares listed on the Nasdaq could make it more difficult for you to trade
our shares, could prevent our common stock trading on a frequent and liquid basis and could result in the value of our common stock being
less than it would be if we were able to list our shares on the Nasdaq.
As previously
disclosed on a Current Report on Form 8-K filed by us, Nasdaq had previously notified us on September 1, 2023 that we were not in compliance
with the Nasdaq’s Listing Rule 5550(a)(2) the “Bid Price Rule”) because it failed to maintain a minimum bid price of
$1.00 per share for 30 consecutive business days. Further as of July 22, 2024, Nasdaq determined that that our securities had a closing
bid price of $0.10 or less for ten consecutive trading days and as a result, Nasdaq delivered written notice to the Company on July 23,
2024 under which it advised us that Nasdaq has determined to delist our securities from The Nasdaq Capital Market. We
requested a hearing to appeal Nasdaq’s delisting determination. On August 19, 2024, we received a notice from The Nasdaq Stock
Market, LLC (“Nasdaq”), dated August 19, 2024, informing us that we had regained compliance with the “Bid Price Rule
for continued listing on The Nasdaq Capital Market, as the bid price of our common stock closed at or above $1.00 per share for a minimum
of 10 consecutive business days since August 2, 2024. As a result of our demonstrated compliance with Nasdaq’s continued listing
requirements, such aforementioned hearing was cancelled
Although our common stock is currently listed on Nasdaq, we may not be able to continue to meet the exchange’s
minimum listing requirements or those of any other national exchange. The Listing Rules of Nasdaq require listing issuers to comply with
certain standards in order to remain listed on its exchange. If, for any reason, we should fail to maintain compliance with these listing
standards and Nasdaq should delist our securities from trading on its exchange and we are unable to obtain listing on another national
securities exchange, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our
shareholders:
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● |
the
liquidity of our common stock; |
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the
market price of our common stock; |
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|
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● |
our
ability to obtain financing for the continuation of our operations; |
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|
|
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● |
the
number of institutional and general investors that will consider investing in our common stock; |
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|
|
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● |
the
number of investors in general that will consider investing in our common stock; |
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|
|
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● |
the
number of market makers in our common stock; |
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|
|
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● |
the
availability of information concerning the trading prices and volume of our common stock; and |
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|
|
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● |
the
number of broker-dealers willing to execute trades in shares of our common stock. |
The
actual number of shares we will issue under the Offering Agreement, at any one time or in total, is uncertain.
Subject
to certain limitations in the Offering Agreement and compliance with applicable law, we have the discretion to deliver instruction to
the Sales Agent to sell shares of our common stock at any time throughout the term of the Offering Agreement. The number of shares that
are sold through the Sales Agent after our instruction will fluctuate based on a number of factors, including the market price of our
common stock during the sales period, the limits we set with the Sales Agent in any instruction to sell shares, and the demand for our
common stock during the sales period. Because the price per share of each share sold will fluctuate during this offering, it is not currently
possible to predict the number of shares that will be sold or the gross proceeds to be raised in connection with those sales.
The
common stock offered hereby will be sold in “at the market offerings,” and investors who buy shares at different times will
likely pay different prices.
Investors
who purchase shares in this offering at different times will likely pay different prices, and so may experience different levels of dilution,
and different outcomes in their investment results. We will have discretion, subject to market demand, to vary the timing, prices, and
numbers of shares sold in this offering. Investors may experience a decline in the value of the shares they purchase in this offering
as a result of sales made at prices lower than the prices they paid.
Our
management will have broad discretion over the use of the net proceeds from this offering, you may not agree with how we use the proceeds,
and the proceeds may not be invested successfully.
Our
management will have broad discretion in the application of the net proceeds from this offering, and our stockholders will not have the
opportunity as part of their investment decision to assess whether the net proceeds are being used appropriately. Because of the number
and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially
from their currently intended use. The failure by our management to apply these funds effectively could harm our business. See “Use
of Proceeds” on page S-14 of this prospectus supplement for a description of our proposed use of proceeds from this offering.
Our
common stock price may be volatile and could decline substantially.
The
trading price of our common stock may experience wide fluctuations. The price of the common stock that will prevail in the market may
be higher or lower than that of this offering depending on numerous factors, some of which are beyond our control and may not be directly
related to our operating performance. These factors include, but are not limited to, the following:
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● |
actual
or anticipated fluctuations in our operating results; |
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|
|
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● |
the
absence of securities analysts covering us and distributing research and recommendations about us; |
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|
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● |
we
may have a low trading volume for a number of reasons, including that a large portion of our stock is closely held; overall stock
market fluctuations; |
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|
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● |
announcements
concerning our business or those of our competitors; |
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|
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● |
actual
or perceived limitations on our ability to raise capital when we require it, and to raise such capital on favorable terms; conditions
or trends in the industry; |
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|
|
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● |
litigation; |
| |
● |
changes
in market valuations of other similar companies; future sales of common stock; |
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|
|
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● |
departure
of key personnel or failure to hire key personnel; and general market conditions. |
Any
of these factors could have a significant and adverse impact on the market price of our common stock. In addition, the stock market in
general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating
performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock and/or
warrants, regardless of our actual operating performance.
We
cannot assure you that the market price of our common stock will not decline. Accordingly, we cannot assure you that you will be able
to sell your common stock at a price equal to or greater than the purchase price.
We
do not anticipate paying any dividends on our common stock for the foreseeable future.
We
have not paid any dividends on our common stock to date, and we do not anticipate paying any such dividends in the foreseeable future.
We anticipate that any earnings experienced by us will be retained to finance the implementation of our operational business plan and
expected future growth.
USE
OF PROCEEDS
We
may offer and sell shares of our common stock having aggregate sales proceeds of up to $2,100,000 from time to time. The amount
of proceeds we receive, if any, will depend on the actual number of shares of our common stock sold and the market price at which such
shares are sold. There can be no assurance that we will be able to sell any shares or fully utilize the Offering Agreement with Wainwright
as a source of financing. Because there is no minimum offering amount required as a condition of this offering, the net proceeds to us,
if any, are not determinable at this time.
We
currently intend to use the net proceeds from this offering, if any, for general corporate purposes, capital expenditures, working capital
and general and administrative expenses. We do not currently have more specific plans or commitments with respect to the net proceeds
from this offering and, accordingly, are unable to quantify the allocation of such proceeds among the various potential issues..
We
have broad discretion in determining how the proceeds of this offering will be used, and our discretion is not limited by the aforementioned
possible uses. Our board of directors believes the flexibility in application of the net proceeds is prudent. See the section entitled
“Risk Factors-Risks Relating to this Offering and our Common Stock- Our management will have broad discretion over the use of
the net proceeds from this offering, you may not agree with how we use the proceeds, and the proceeds may not be invested successfully.”
PLAN
OF DISTRIBUTION
We
have entered into the Offering Agreement, dated as of August 23, 2024, with Wainwright as sales agent, under which we may issue
and sell shares of our common stock having an aggregate offering price of up to $2,100,000 from time to time through Wainwright
acting as our sales agent.
The
Offering Agreement provides that sales of our common stock, if any, under this prospectus supplement and the accompanying prospectus
may be made in in transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities
Act of 1933, as amended (the “Securities Act”), including sales made directly on or through Nasdaq, the existing trading
market for our common stock, or any other existing trading market in the Unites States for our common stock, sales made to or through
a market maker other than on an exchange or otherwise, directly to the Sales Agent as principal, in negotiated transactions at market
prices prevailing at the time of sale or at prices related to such prevailing market prices, and/or in any other method permitted by
law.
Wainwright
will offer shares of our common stock subject to the terms and conditions of the Offering Agreement as agreed upon by us and Wainwright.
We will designate the number of shares which we desire to sell, the time period during which sales are requested to be made, any limitation
on the number of shares that may be sold in one day and any minimum price below which sales may not be made. Subject to the terms and
conditions of the Offering Agreement, Wainwright will use its commercially reasonable efforts consistent with its normal trading and
sales practices and applicable laws and regulations to sell on our behalf all of the shares requested to be sold by us. We or Wainwright
may suspend the offering of the shares of common stock being made through Wainwright under the Offering Agreement at any time upon proper
notice to the other party.
Settlement
for sales of common stock will occur on the first trading day (or any such other shorter settlement cycle as may be in effect pursuant
to Rule 15c6-1 under the Exchange Act from time to time) following the date on which any sales are made in return for payment of the
net proceeds to us. Sales of shares of our common stock as contemplated in this prospectus supplement and the accompanying base prospectus
will be settled through the facilities of The Depository Trust Company or by such other means as we and Wainwright may agree upon. There
is no arrangement for funds to be received in an escrow, trust or similar arrangement.
We
will pay Wainwright a cash commission of 3.0% of the gross sales price of the shares of our common stock that Wainwright sells pursuant
to the Offering Agreement. Because there is no minimum offering amount required as a condition to this offering, the actual total offering
amount, commissions and proceeds to us, if any, are not determinable at this time. Pursuant to the terms of the Offering Agreement, we
agreed to reimburse Wainwright for the documented fees and costs of its legal counsel reasonably incurred in connection with entering
into the transactions contemplated by the Offering Agreement in an amount not to exceed $50,000 in the aggregate, in addition to (for
Wainwright’s counsel’s fees) up to a maximum of $2,500 per due diligence update session conducted in connection with each
such date the Company files its Quarterly Reports on Form 10-Q, its Annual Report on Form 10-K and amendments or supplements to the Registration
Statement, the accompanying prospectus, or any prospectus supplement. We will report at least quarterly the number of shares of our common
stock sold through Wainwright under the Offering Agreement, the net proceeds to us and the compensation paid by us to Wainwright in connection
with the sales of shares of our common stock.
In
connection with the sales of shares of our common stock on our behalf, Wainwright will be deemed to be an “underwriter” within
the meaning of the Securities Act, and the compensation paid to Wainwright will be deemed to be underwriting commissions or discounts.
We have agreed in the Offering Agreement to provide indemnification and contribution to Wainwright against certain liabilities, including
liabilities under the Securities Act.
The
offering of shares of our common stock pursuant to this prospectus supplement will terminate upon the earlier of the sale of all of the
shares of our common stock provided for in this prospectus supplement or termination of the Offering Agreement as permitted therein.
To
the extent required by Regulation M, Wainwright will not engage in any market making activities involving our common stock while the
offering is ongoing under this prospectus supplement.
Wainwright
and its affiliates have and may in the future provide in investment banking, advisory and other commercial dealings in
the ordinary course of business with us or our affiliates and have received and may receive customary fees and expenses for these
transactions. Wainwright acted as placement agent for the warrant inducement transaction in May 2024 and was paid compensation. In addition, in the ordinary course
of its various business activities, Wainwright and its affiliates may make or hold a broad array of investments and actively trade debt
and equity securities (or related derivative securities) and financial instruments (which may include bank loans) for their own account
and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours
or our affiliates. Wainwright or its affiliates may also make investment recommendations and/or publish or express independent research
views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short
positions in such securities and instruments.
This
prospectus supplement and the accompanying base prospectus may be made available in electronic format on a website maintained by Wainwright,
and Wainwright may distribute this prospectus supplement and the accompanying base prospectus electronically.
The
foregoing does not purport to be a complete statement of the terms and conditions of the Offering Agreement. A copy of the Offering Agreement
is included as an exhibit to the Current Report on Form 8-K was filed with the SEC
on August 23, 2024. See “Where You Can Find More Information” below.
The
Transfer Agent and Registrar for our common stock is Equity Stock Transfer LLC with its business address at 237 W 37th Street,
Suite 602, New York, NY 10018. Its telephone number is (212) 575-5757 and its email address is info@equitystock.com.
Our
common stock is listed on Nasdaq Capital Market under the symbol “NCPL.”
LEGAL
MATTERS
The
validity of the securities offered by this prospectus and certain legal matters as to Utah law will be passed upon by CodeLaw LLC. We
have been advised on U.S. securities matters by Sheppard Mullin Richter & Hampton, LLP, New York, New York. Ellenoff Grossman &
Schole LLP, New York, New York, is counsel for Wainwright in connection with this offering.
EXPERTS
The
audited financial statements incorporated by reference in this prospectus supplement and elsewhere in the registration statement have
been so incorporated by reference in reliance upon the report of Fruci & Associates II, PLLC, independent registered public accountants,
upon the authority of said firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-3 under the Securities
Act, with respect to the securities covered by this prospectus. This prospectus supplement, which is a part of the registration statement,
does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith. For further
information with respect to us and the securities covered by this prospectus supplement, please see the registration statement and the
exhibits filed with the registration statement. The SEC maintains an internet website that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the SEC. The address of the website is http://www.sec.gov.
We
are subject to the information and periodic reporting requirements of the Exchange Act and, in accordance therewith, we file periodic
reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements and other information are available
for inspection and copying at the website of the SEC referred to above. We maintain a website at http://www.netcapitalinc.com.
You may access our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports
filed pursuant to Sections 13(a) or 15(d) of the Exchange Act with the SEC free of charge at our website as soon as reasonably practicable
after such material is electronically filed with, or furnished to, the SEC. Our website and the information contained on that site, or
connected to that site, are not incorporated into and are not a part of this prospectus supplement or the accompanying prospectus.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” the information we file with them, which means that we can disclose important
information by referring you to those documents. The information incorporated by reference is considered to be part of the accompanying
base prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below:
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Our
Annual Report on Form 10-K for the year ended April 30, 2024, filed with the SEC on July 29, 2024; |
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|
|
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Our
Current Reports on Form 8-K filed with the SEC on May
28, 2024; May 29, 2024; July 24, 2024; August 2, 2024 and August 19, 2024 (other than any portions thereof deemed furnished
and not filed); |
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Our
Definitive Proxy Statement on Schedule 14A, filed with the SEC on August 12, 2024; and |
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|
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The
description of our common stock, par value $0.001 per share, contained in Exhibit 4.16 to our Annual Report on Form 10-K for
the year ended April 30, 2024 filed with the SEC on July 29, 2024, including any amendment or report filed for the
purpose of updating such description. |
ln
addition, all filed information contained in reports and documents filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this prospectus supplement and before the termination or completion of this offering, shall
be deemed to be incorporated by reference in this prospectus supplement. Any statement contained herein or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that
a statement contained herein or in any other subsequently filed document which is also incorporated or deemed to be incorporated herein
modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus supplement.
We
will provide, without charge, to each person to whom a copy of this prospectus supplement is delivered, including any beneficial owner,
upon the written or oral request of such person, a copy of any or all of the documents incorporated by reference herein, including exhibits.
Requests should be directed to:
Netcapital
Inc.
1
Lincoln Street
Boston,
MA 02111
Attn.:
Secretary
In
addition, you may obtain a copy of these filings from the SEC as described in the section entitled “Where You Can Find More Information.”
PROSPECTUS
Netcapital
Inc.
Common
Stock
Debt Securities
Warrants
Rights
Units
We
may offer and sell, from time to time in one or more offerings, any combination of common stock, debt securities, warrants to purchase
common stock or debt securities, or any combination of the foregoing, either individually or as units comprised of one or more of the
other securities, having an aggregate initial offering price not exceeding $25,000,000.
This
prospectus provides a general description of the securities we may offer. Each time we sell a particular class or series of securities,
we will provide specific terms of the securities offered in a supplement to this prospectus. The prospectus supplement and any related
free writing prospectus may also add, update or change information contained in this prospectus. We may also authorize one or more free
writing prospectuses to be provided to you in connection with these offerings. You should read carefully this prospectus, the applicable
prospectus supplement and any related free writing prospectus, as well as any documents incorporated by reference herein or therein before
you invest in any of our securities.
The
specific terms of any securities to be offered, and the specific manner in which they may be offered, will be described in one or more
supplements to this prospectus. This prospectus may not be used to consummate sales of any of these securities unless it is accompanied
by a prospectus supplement. Before investing, you should carefully read this prospectus and any related prospectus supplement.
Our
common stock presently listed on The Nasdaq Capital Market under the symbol “NCPL”. On October 14, 2022, the last reported
sale price of our common stock was $1.655 per share. The applicable prospectus supplement will contain information, where applicable,
as to any other listing on The Nasdaq Capital Market or any securities market or other exchange of the securities, if any, covered by
the prospectus supplement. Prospective purchasers of our securities are urged to obtain current information as to the market prices of
our securities, where applicable.
These
securities may be sold directly by us, through dealers or agents designated from time to time, to or through underwriters, dealers, or
through a combination of these methods on a continuous or delayed basis. See “Plan of Distribution” in this prospectus.
We may also describe the plan of distribution for any particular offering of our securities in a prospectus supplement. If any agents,
underwriters or dealers are involved in the sale of any securities in respect of which this prospectus is being delivered, we will disclose
their names and the nature of our arrangements with them in a prospectus supplement. The price to the public of such securities and the
net proceeds we expect to receive from any such sale will also be included in a prospectus supplement.
Investing
in our securities involves various risks. See “Risk Factors” contained herein for more information on these risks. Additional
risks will be described in the related prospectus supplements under the heading “Risk Factors.” You should review that section
of the related prospectus supplements for a discussion of matters that investors in our securities should consider.
Neither
the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or passed
upon the adequacy or accuracy of this prospectus or any accompanying prospectus supplement. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is October 26, 2022.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission, or SEC, using a “shelf”
registration process. Under this shelf registration statement, we may sell from time to time in one or more offerings of common stock,
various series of debt securities and/or warrants to purchase any of such securities, either individually or as units comprised of a
combination of one or more of the other securities in one or more offerings up to a total dollar amount of $25,000,000. This prospectus
provides you with a general description of the securities we may offer. Each time we sell any type or series of securities under this
prospectus, we will provide a prospectus supplement that will contain more specific information about the terms of that offering.
This
prospectus does not contain all of the information included in the registration statement. For a more complete understanding of the offering
of the securities, you should refer to the registration statement, including its exhibits. We may add, update or change in a prospectus
supplement or free writing prospectus any of the information contained in this prospectus or in the documents we have incorporated by
reference into this prospectus. We may also authorize one or more free writing prospectuses to be provided to you that may contain material
information relating to these offerings. This prospectus, together with the applicable prospectus supplement, any related free writing
prospectus and the documents incorporated by reference into this prospectus and the applicable prospectus supplement, will include all
material information relating to the applicable offering. You should carefully read both this prospectus and the applicable prospectus
supplement and any related free writing prospectus, together with the additional information described under “Where You Can Find
More Information,” before buying any of the securities being offered.
We
have not authorized any dealer, agent or other person to give any information or to make any representation other than those contained
or incorporated by reference in this prospectus, any accompanying prospectus supplement or any related free writing prospectus that we
may authorize to be provided to you. You must not rely upon any information or representation not contained or incorporated by reference
in this prospectus or an accompanying prospectus supplement, or any related free writing prospectus that we may authorize to be provided
to you. This prospectus, the accompanying prospectus supplement and any related free writing prospectus, if any, do not constitute an
offer to sell or the solicitation of an offer to buy any securities other than the registered securities to which they relate, nor do
this prospectus, the accompanying prospectus supplement or any related free writing prospectus, if any, constitute an offer to sell or
the solicitation of an offer to buy securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation
in such jurisdiction. You should not assume that the information contained in this prospectus, any applicable prospectus supplement or
any related free writing prospectus is accurate on any date subsequent to the date set forth on the front of the document or that any
information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated by reference
(as our business, financial condition, results of operations and prospects may have changed since that date), even though this prospectus,
any applicable prospectus supplement or any related free writing prospectus is delivered or securities are sold on a later date.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document
that is incorporated by reference in this prospectus were made solely for the benefit of the parties to such agreement, including, in
some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation,
warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly,
such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.
This
prospectus may not be used to consummate sales of our securities, unless it is accompanied by a prospectus supplement. To the extent
there are inconsistencies between any prospectus supplement, this prospectus and any documents incorporated by reference, the document
with the most recent date will control.
As
permitted by the rules and regulations of the SEC, the registration statement, of which this prospectus forms a part, includes additional
information not contained in this prospectus. You may read the registration statement and the other reports we file with the SEC at the
SEC’s web site or at the SEC’s offices described below under the heading “Where You Can Find More Information.”
Company
References
In
this prospectus “the Company,” “we,” “us,” and “our” refer to Netcapital Inc., a Utah
corporation and its subsidiaries, unless the context otherwise requires.
SUMMARY
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, Reg CF of the JOBS Act. We generate fees from listing private companies
on our portals. Our consulting group, Netcapital Advisors, provides marketing and strategic advice in exchange for cash and equity positions.
The Netcapital funding portal is registered with the SEC, is a member of the Financial Industry Regulatory Authority, or FINRA, a registered
national securities association, and provides investors with opportunities to invest in private companies.
Development
of Business
In
November 2020, the Company purchased Netcapital Funding Portal Inc. (the “Funding Portal”) and changed the name of the Company
from ValueSetters, Inc. to Netcapital Inc.
The
Company has three operating subsidiaries. The Funding Portal provides private companies with access to investments from accredited and
non-accredited retail investors through our online portal (www.netcapital.com). The Funding Portal charges an listing fee of $5,000
upfront, or $10,000 in arrears, and a 4.9% success fee for capital raised at closing. In addition, the Funding Portal generates fees
for other ancillary services, such as rolling closes. Netcapital Advisors Inc. generates fees and equity stakes from consulting in select
portfolio and non-portfolio clients. MSG Development Corp. provides corporate valuation services to businesses and individuals.
Funding
Portal
Netcapital.com
is an SEC-registered funding portal that enables private companies to raise capital online, while investors are able to invest from 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 anyone, including friends, family, customers, employees, etc. Customer accounts on our platform will not be permitted
to hold digital securities.
In
addition to access to the funding portal, the Netcapital funding portal provides the following services:
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a
fully automated onboarding process; |
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automated
filing of required regulatory documents; |
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compliance
review; |
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custom-built
offering page on our portal website; |
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third
party transfer agent and custodial services; |
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email
marketing to our proprietary list of investors; |
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rolling
closes, which provide potential access to liquidity before final close date of offering; |
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assistance
with annual filings; and |
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direct
access to our team for ongoing support. |
Consulting
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:
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incubation
of technology start-ups; |
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investor
introductions; |
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online
marketing; |
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website
design, software and software development; |
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message
crafting, including pitch decks, offering pages, and ad creation; |
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strategic
advice; and |
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technology
consulting. |
Valuation
Business
Our
valuation group, MSG Development Corp. prepares valuations that are always reviewed by an Accredited Senior Business Appraiser licensed
by the American Society of Appraisers.
The
valuation services include:
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business
valuations; |
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fairness
and solvency opinions; |
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ESOP
feasibility and valuation; |
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non-cash
charitable contributions; |
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economic
analysis of damages; |
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intellectual
property appraisals; and |
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compensation
studies. |
As
noted above, in 2014, we began our consulting business, and we now own a portion of several companies as a result of our consulting work.
Many of these businesses operate solely on the Internet and many use the Internet to raise capital. We believe the value of our ownership
interests in several of these companies may be significant. In 2016, we began consulting for companies seeking to raise capital via Reg
CF. In 2020, we purchased Netcapital Funding Portal Inc., a regulated funding portal operating under the provisions of Reg CF. On November
5, 2020, we changed our name to Netcapital Inc. to leverage the strength of Netcapital’s well-established brand and unique private
capital markets platform.
Competition
We
compete with a number of public and private companies that provide assistance with capital raising, strategy, technology consulting,
and digital marketing. Most of our competitors have significant financial resources and occupy entrenched positions in the market with
name-brand recognition. The majority of our capital raising and digital marketing business is on the Internet.
The
barriers to entry into most Internet markets are relatively low, making them accessible to a large number of entities and individuals.
We believe the principal competitive factors in our industry that create certain barriers to entry include but are not limited to reputation,
technology, financial stability and resources, proven track record of successful operations, critical mass, and independent oversight
and transparency of business practices. Obtaining approval from FINRA to operate as a funding portal is also a barrier to entry due to
the significant internal control and capital requirements. While these barriers will limit those able to enter or compete effectively
in the market, it is likely that new competitors as well as laws and regulations of governmental authority will be established in the
future, in addition to our known current competitors.
We
face significant competition in every aspect of our business, including from companies that facilitate online capital formation and the
sharing of content and information, companies that enable marketers to display advertising, companies that distribute video and other
forms of media content, and companies that provide development platforms for applications developers. We compete to attract, engage,
and retain customers, to attract and retain marketers, and to attract and retain developers to build compelling applications that integrate
with our products.
Increased
competition from current and future competitors may in the future materially adversely affect our business, revenues, operating results
and financial condition.
Industry
Regulation
In
an effort to enhance economic growth and to democratize access to private investment opportunities, Congress finalized the Jumpstart
Our Business Startups Act (JOBS Act) in 2016. Title III of the JOBS Act enabled early-stage companies to offer and sell securities to
the general public for the first time. The SEC then adopted Regulation Crowdfunding, or Reg CF, in order to implement the JOBS Act’s
crowdfunding provisions.
Reg
CF has several important features that changed the landscape for private capital raising and investment. For the first time, this regulation:
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Allowed
the general public to invest in private companies, no longer limiting early-stage investment opportunities to less than 10% of the
population; |
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Enabled
private companies to advertise their securities offerings to the public (general solicitation); and |
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Conditionally
exempted securities sold under Section 4(a)(6) from the registration requirements of the Securities and Exchange Act of 1934. |
We
are subject, both directly and indirectly, to various laws and regulations relating to our business. If any of the laws are amended,
compliance could become more expensive and directly affect our income. We intend to comply with such laws, but new restrictions may arise
that could materially adversely affect our Company. Specifically, the SEC regulates our funding portal business, and our funding portal
is also a member of FINRA and is regulated by FINRA. We are also subject to the USA Patriot Act of 2001, which contains anti-money laundering
and financial transparency laws and mandates various regulations applicable to financial services companies, including standards for
verifying client identification at account opening, and obligations to monitor client transactions and report suspicious activities.
Anti-money laundering laws outside of the United States contain some similar provisions. Our failure to comply with these requirements
as applicable to us could have a material adverse effect on us.
Our
Market
The
traditional funding model restricts access to capital, investments and liquidity. According to Harvard Business Review, VCs invest in
fewer than 1% of the companies they consider and only 10% of VC meetings are obtained through cold outreach. In addition, under 5% of
VC funding went to women and minority-owned firms in 2020, according to Forbes.
Furthermore,
under the traditional model, the average investor lacked access to early-stage investments. Prior to the JOBS Act, almost 90% of U.S.
households were precluded from investing in private deals, per dqydj.com. Liquidity has also been an issue, as private investments are
generally locked up until IPO or takeout.
The
JOBS Act helped provide a solution to these issues by establishing the funding portal industry which is currently in its infancy. Title
III of the JOBS Act outlines Reg CF, which traditionally allowed private companies to raise up to $1.07 million from all Americans. In
March 2021, regulatory enhancements by the SEC went into effect and increased the limit to $5 million. These amendments increased the
offering limits for Reg CF, Regulation A and Regulation D Rule 504 offerings as follows; Reg CF increased to $5 million, Regulation D,
Rule 504 increased to $10 million from $5 million; and Regulation A Tier 2 increased to $75 million from $50 million.
Reg
CF private company investments accounted for approximately $490 million in 2021, according to KingsCrowd, versus $205 million during
2020. We believe a significant opportunity exists to disrupt private capital markets via the Netcapital funding portal.
Private
capital markets reached $7.4 trillion at the end of 2020, per Morgan Stanley, and this number is expected to reach $13 trillion over
the next five years. Within this market, private equity represents the largest share, with assets in excess of $3 trillion and a 10-year
CAGR of 10%. Since 2000, global PE net asset value has increased almost tenfold, nearly three times faster than the size of the public
equity market. Both McKinsey and Boston Consulting Group predict that this strong growth will continue, as investors allocate increasing
amounts to private equity, due to historically higher returns and lower volatility than public markets. In addition, Boston Consulting
Group estimates that there are $42 trillion held in retail investment accounts, which we believe represents a large pool of potential
account holders for us.
Our
Technology
The
Netcapital platform is a scalable, real-time, transaction processing engine that runs without human intervention, 24 hours a day, seven
days a week. For companies raising capital, the technology provides fully automated onboarding with integrated regulatory filings. Funds
are collected from investors and held in escrow until the offering closes.
For
entrepreneurs, the technology facilitates access to capital at low cost. For investors, the platform provides access to investments in
private, early-stage companies that were previously unavailable to the general public. Both entrepreneurs and investors can track and
view their investments through their dashboard on netcapital.com. The platform currently has more than 100,000 users.
Scalability
was demonstrated in November 2021, when the platform processed more than 2,000 investments in less than two hours, totaling more than
$2 million.
Our
infrastructure is designed in a way that can horizontally scale to meet our capacity needs. Using Docker containers and Amazon ECS, we
are able to automate the creation and launch of our production web and API endpoints in order to replicate them as needed behind Elastic
Load Balancers (ELBs).
Additionally,
all of our public facing endpoints live behind CloudFlare to ensure protection from large scale traffic fluctuations (including DDoS
attacks).
Our
main database layer is built on Amazon RDS and features a Multi-AZ deployment that can also be easily scaled up or down as needed. General
queries are cached in our API layer, and we monitor to optimize very complex database queries that are generated by the API.
Additionally,
we cache the most complex queries (such as analytics data) in our NoSQL (Mongo) data store for improved performance.
Most
of our CPU intensive data processing happens asynchronously through a worker/jobs system managed by AWS ElastiCache’s Redis endpoint.
This component can be easily fine-tuned for any scale necessary.
The
technology necessary to operate our funding portal is licensed from our affiliate, Netcapital Systems LLC under a license agreement with
our wholly owned subsidiary Netcapital Funding Portal Inc., where we have the exclusive right to use the technology with respect to our
funding portal, for an annual license fee of $380,000 paid in quarterly installments.
Competitive
Advantages
We
believe we provide the lowest cost solution for online capital raising versus our peer group (StartEngine Crowdfunding, Inc., Wefunder
Inc.and Republic Core LLC). We also believe that our access and onboarding of new clients are superior due to our facilitated technology
platforms. Our network is rapidly expanding as a result of our enhanced marketing and broad distribution to reach new investors. Given
the rapid growth in the industry and its potential to disrupt the multi-billion dollar private capital market, we believe there is sufficient
room for multiple players.
Our
Strategy
Three
major tailwinds are driving accelerated growth in the shift to the use of online funding portals: (i) the COVID-19 pandemic; (ii) the
increase in funding limits under Reg CF; and (iii) the recent private equity outperformance of public markets. The pandemic drove a rapid
need to bring as many processes as possible online. With travel restrictions in place and most people in lockdown, entrepreneurs were
no longer able to fundraise in person and have increasingly turned to online capital raising through funding portals.
There
are numerous industry drivers and tailwinds that complement investor demand for access to investments in private companies. To capitalize
on these, our strategy is to:
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Generate
New Investor Accounts. Growing the number of investor accounts on our platform is a top priority. Investment dollars continuing to
flow through our platform is a key revenue driver. When issuers advertise their offerings, they are generating new investor accounts
for us at no cost to Netcapital. We plan to supplement our issuers’ spend on advertising by increasing our online marketing
spend as well, which may include virtual conferences going forward. |
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Hire
Additional Business Development Staff. We seek to hire additional business development staff that is technology and financially passionate
about capital markets to handle our growing backlog of potential customers. |
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Increase
the Number of Companies on Our Platform via Marketing. When a new company lists on our platform, they bring their customers, supporters,
and brand ambassadors as new investors to Netcapital. We plan to increase our marketing budget to help grow our portal and advisory
clients. |
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Invest
in Technology. Technology is critical to everything that we do. We plan to invest in developing innovative technologies that enhance
our platform and allow us to pursue additional service offerings. |
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Incubate
and Accelerate Our Advisory Portfolio Clients. The advisory portfolio and our equity interests in select advisory clients represent
potential upside for our shareholders. We seek to grow this model of advisory clients. |
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Expand
Internationally. We believe there is a significant opportunity to expand into Europe and Asia as an appetite abroad grows for U.S.
stocks. |
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Open
ATS/Secondary Transfer Feature. Lack of liquidity is a key issue for investors in private companies as private markets lack a liquidity
feature in our targeted market. We plan to open a Secondary Transfer Feature and are exploring various alternatives to provide potential
liquidity for secondary offerings to investors who participate in our primary offerings on the Netcapital platform. |
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New
Verticals Represent a Compelling Opportunity. We operate in a regulated market supported by the JOBS Act. We may pursue expansion
to our model to include Regulation A and Regulation D offerings. |
Investment
Portfolio
A
key part of our story involves the potential value creation driven by our portfolio companies. In our portfolio, we focus on companies
with emerging, disruptive technologies. A partial list of our investment portfolio is described below:
KingsCrowd
Industry:
Fintech
Trusted
by over 300,000 investors to vet startup investments, KingsCrowd, Inc. is a leader in ratings and analytics for online private markets.
The company aggregates, analyzes, and rates companies raising on platforms like Netcapital to help investors make more informed decisions.
ChipBrain
Industry:
AI
Effective
communicators close more deals. ChipBrain LLC’s emotionally intelligent AI assistant provides real-time emotion, tone, and facial
expression feedback in live conversations across text, voice, and video. Taking the guesswork out of identifying conversational cues,
the company’s technology enables sales professionals to see at a glance how they are coming across to customers.
Deuce
Drone
Industry:
Drone Delivery Technology
Deuce
Drone LLC solves the last mile delivery problem for “brick and mortar” retailers. The company designs, builds, and operates
drone delivery systems, transforming retail stores into customer fulfillment centers. Deuce Drone LLC provides a cost-effective, technology-driven
solution for same-day delivery that allows retailers to compete with major e-commerce players.
Zelgor
Industry:
Mobile Games
Backed
by famous venture capitalist Tim Draper, napster founder, Shawn Fanning, and co-creator of Guitar Hero, Kai Huang, Zelgor Inc. is an
interactive entertainment company featuring a new species of rambunctious alien characters called The Noobs. The Noobs are a unique and
original intellectual property introduced to the world through mobile games, multimedia content, and strategic partnerships.
MustWatch
Industry:
Technology
MustWatch
LLC brings your friends and favorite shows together all in one place. The Watch Party app makes it easy to find new shows, see what your
friends are watching, and recommend great shows to each other. The company’s platform delivers targeted show recommendations based
on the television viewing tastes of users’ friends and family. It’s not a single streaming platform’s media catalog,
but a cross-platform television guide, crowdsourced from your friends and family.
C-Reveal
Therapeutics
Industry:
Cancer Immunotherapy
C-Reveal
Therapeutics’s proprietary technology, developed at Massachusetts General Hospital and Harvard University, helps the body’s
immune system to identify and destroy cancer cells by inhibiting key enzymes that conceal the disease. This patent pending approach is
designed to improve the efficacy of treating a broad range of cancers.
Hiveskill
LLC
Industry:
AI
The
product is an AI-powered database and CRM hybrid that uses data and emotionally intelligent AI to boost direct one-to-one marketing efforts.
It also provides specialized experts who know how to leverage your company’s data.
Caesar
Media Group Inc.
Industry:
Marketing
Caesar
Media Group, Inc. is an advanced marketing and technology solutions provider. Caesar Media Group is designed to leverage its technology
and data to provide lead generation, search engine optimization (SEO) website development, project development, digital marketing, content
management, customer service, and sales management.
Corporate
Information
The
Company was incorporated in Utah in 1984 as DBS Investments, Inc., or DBS. DBS merged with Valuesetters L.L.C. in December 2003 and changed
its name to Valuesetters, Inc. In November 2020, the Company purchased Netcapital Funding Portal Inc. from Netcapital Systems LLC and
changed the name of the Company from Valuesetters, Inc. to Netcapital Inc.
Our
principal executive offices are located at State Street Financial Center, One Lincoln Street, Boston, Massachusetts and our telephone
number is 781-925-1700.We maintain a corporate website with the address http://www.netcapitalinc.com, our funding portal maintains a
website with the address http://www.netcapital.com, Netcapital Advisors maintains a website at http://www.netcapitaladvisors.com and
our valuation business maintains a website at https://valucorp.com/. The information contained on our websites are not incorporated by
reference into this prospectus, and you should not consider any of such information to be a part of this prospectus or in deciding whether
to purchase our securities.
SUMMARY
OF RISK FACTORS
Risks
Relating to Our Business and Growth Strategy
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We
have a limited operating history which makes evaluating the business and future prospects difficult, and may increase the risk of
your investment. |
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We
have substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues,
and 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. |
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We
are subject to extensive regulation and failure to comply with such regulation could have an adverse effect on our business. |
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Our
funding portal’s service offerings are relatively new in an industry that is still quickly evolving and if our ability to continue
to penetrate the market remains uncertain potential issuer companies may choose to use different platforms or providers. |
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We
may be liable for misstatements made by issuers on the Funding Portal and any lawsuits brought as a result will be time consuming
and expensive, and being a party to such actions may cause us reputational harm that would negatively impact our business. |
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Most
of our cash-flow generating services are variants on one type of service: providing a platform for online and any downturn in such
market could have a material adverse effect of our business and financial condition. |
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If
our wholly-owned subsidiary, Netcapital Funding Portal Inc., fails to comply with its obligations under the license agreement with
Netcapital Systems LLC under which the technology to operate our funding portal is licensed to Netcapital Funding Portal Inc., we
could lose rights necessary to operate our funding portal which are important to our business. |
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We
face significant market competition and increased competition from current and future competitors may in the future materially adversely
affect our business, revenues, operating results and financial condition. |
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We
may need additional capital in the future to continue to execute our business plan and if we are unable to raise additional capital
when required or on acceptable terms, we may have to significantly delay, scale back or discontinue our operations. |
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We
cannot assure you that third parties will not claim our current or future products or services infringe their intellectual property
rights, and any such claims, with or without merit, could cause costly litigation that could consume significant management time. |
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We
may be subject to stringent and changing laws, regulations, standards, and contractual obligations related to privacy, data protection,
and data security. Our actual or perceived failure to comply with such obligations could adversely affect our business. |
Risks
Related to Receipt of Securities for Services
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For
our consulting and advisory services, payment is often made through equity securities of customers instead of cash. The securities
issued are in private companies with no established trading market for their securities In the absence of a trading market, we may
be unable to liquidate our investment, which will result in the loss of our investment. |
Risks
Related to Our Common Stock
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We
are currently listed on The Nasdaq Capital Market. If we are unable to maintain listing of our securities on Nasdaq or any stock
exchange, our stock price could be adversely affected and the liquidity of our stock and our ability to obtain financing could be
impaired and it may be more difficult for our stockholders to sell their securities. |
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We
may issue additional equity securities, or engage in other transactions that could dilute our book value or relative rights of our
common stock, which may adversely affect the market price of our common stock. |
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Concentration
of ownership among our majority stockholders may prevent new investors from influencing significant corporate decisions which could
have the effect of delaying or preventing a change of control of our company or changes in management and will make the approval
of certain transactions difficult or impossible without the support of these stockholders. |
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We
do not intend to pay cash dividends on our shares of common stock so any returns will be limited to the value of our shares. |
The
Securities We May Offer
We
may offer shares of our common stock, various series of debt securities and warrants or rights to purchase any of such securities, either
individually or in units, from time to time under this prospectus, together with any applicable prospectus supplement and related free
writing prospectus, at prices and on terms to be determined by market conditions at the time of offering. If we issue any debt securities
at a discount from their original stated principal amount, then, for purposes of calculating the total dollar amount of all securities
issued under this prospectus, we will treat the initial offering price of the debt securities as the total original principal amount
of the debt securities. Each time we offer securities under this prospectus, we will provide offerees with a prospectus supplement that
will describe the specific amounts, prices and other important terms of the securities being offered, including, to the extent applicable:
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designation
or classification; |
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aggregate
principal amount or aggregate offering price; |
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maturity,
if applicable; |
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original
issue discount, if any; |
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rates
and times of payment of interest or dividends, if any; |
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redemption,
conversion, exchange or sinking fund terms, if any; |
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conversion
or exchange prices or rates, if any, and, if applicable, any provisions for changes to or adjustments in the conversion or exchange
prices or rates and in the securities or other property receivable upon conversion or exchange; |
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ranking; |
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voting
or other rights, if any; and |
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important
United States federal income tax considerations. |
A
prospectus supplement and any related free writing prospectus that we may authorize to be provided to you may also add, update, or change
information contained in this prospectus or in documents we have incorporated by reference. However, no prospectus supplement or free
writing prospectus will offer a security that is not registered and described in this prospectus at the time of the effectiveness of
the registration statement of which this prospectus is a part.
We
may sell the securities to or through underwriters, dealers or agents or directly to purchasers. We, as well as any agents acting on
our behalf, reserve the sole right to accept and to reject in whole or in part any proposed purchase of securities. Each prospectus supplement
will set forth the names of any underwriters, dealers or agents involved in the sale of securities described in that prospectus supplement
and any applicable fee, commission or discount arrangements with them, details regarding any over-allotment option granted to them, and
net proceeds to us. The following is a summary of the securities we may offer with this prospectus.
Common
Stock
We
currently have authorized 900,000,000 shares of common stock, par value $0.001 per share. As of July __, 2024, 40,540,680 shares of common
stock were issued and outstanding. We may offer shares of our common stock either alone or underlying other registered securities convertible
into or exercisable for our common stock. Holders of our common stock are entitled to such dividends as our board of directors (the “Board
of Directors” or “Board”) may declare from time to time out of legally available funds. Currently, we do not pay any
dividends on our common stock. Each holder of our common stock is entitled to one vote per share. In this prospectus, we provide a general
description of, among other things, the rights and restrictions that apply to holders of our common stock.
Debt
Securities
We
may offer general debt obligations, which may be secured or unsecured, senior or subordinated, and convertible into shares of our common
stock. In this prospectus, we refer to the senior debt securities and the subordinated debt securities together as the “debt securities.”
We may issue debt securities under a note purchase agreement or under an indenture to be entered between us and a trustee and forms of
the senior and subordinated indentures are included as an exhibit to the registration statement of which this prospectus is a part. The
indentures do not limit the amount of securities that may be issued under it and provides that debt securities may be issued in one or
more series. The senior debt securities will have the same rank as all of our other indebtedness that is not subordinated. The subordinated
debt securities will be subordinated to our senior debt on terms set forth in the applicable prospectus supplement. In addition, the
subordinated debt securities will be effectively subordinated to creditors of our subsidiaries. Our Board of Directors will determine
the terms of each series of debt securities being offered. This prospectus contains only general terms and provisions of the debt securities.
The applicable prospectus supplement will describe the particular terms of the debt securities offered thereby. You should read any prospectus
supplement and any free writing prospectus that we may authorize to be provided to you related to the series of debt securities being
offered, as well as the complete note agreements and/or indentures that contain the terms of the debt securities. Forms of indentures
have been filed as exhibits to the registration statement of which this prospectus is a part, and supplemental indentures and forms of
debt securities containing the terms of debt securities being offered will be incorporated by reference into the registration statement
of which this prospectus is a part from reports we file with the SEC.
Warrants
We
may offer warrants for the purchase of shares of our common stock or of debt securities. We may issue the warrants by themselves or together
with common stock or debt securities, and the warrants may be attached to or separate from any offered securities. Any warrants issued
under this prospectus may be evidenced by warrant certificates. Warrants may be issued under a separate warrant agreement to be entered
into between us and the investors or a warrant agent. Our Board of Directors will determine the terms of the warrants. This prospectus
contains only general terms and provisions of the warrants. The applicable prospectus supplement will describe the particular terms of
the warrants being offered thereby. You should read any prospectus supplement and any free writing prospectus that we may authorize to
be provided to you related to the series of warrants being offered, as well as the complete warrant agreements that contain the terms
of the warrants. Specific warrant agreements will contain additional important terms and provisions and will be incorporated by reference
into the registration statement of which this prospectus is a part from reports we file with the SEC.
Rights
We
may issue rights to our stockholders to purchase shares of our common stock or the other securities described in this prospectus. We
may offer rights separately or together with one or more additional rights, debt securities, common stock or warrants, or any combination
of those securities in the form of units, as described in the applicable prospectus supplement. Each series of rights will be issued
under a separate rights agreement to be entered into between us and a bank or trust company, as rights agent. The rights agent will act
solely as our agent in connection with the certificates relating to the rights of the series of certificates and will not assume any
obligation or relationship of agency or trust for or with any holders of rights certificates or beneficial owners of rights. The following
description sets forth certain general terms and provisions of the rights to which any prospectus supplement may relate. The particular
terms of the rights to which any prospectus supplement may relate and the extent, if any, to which the general provisions may apply to
the rights so offered will be described in the applicable prospectus supplement. To the extent that any particular terms of the rights,
rights agreement or rights certificates described in a prospectus supplement differ from any of the terms described below, then the terms
described below will be deemed to have been superseded by that prospectus supplement. Specific rights agreements will contain additional
important terms and provisions and will be incorporated by reference into the registration statement of which this prospectus is a part
from reports we file with the SEC.
Units
We
may offer units consisting of our common stock, debt securities and/or warrants to purchase any of these securities in one or more series.
We may evidence each series of units by unit certificates that we will issue under a separate agreement. We may enter into unit agreements
with a unit agent. Each unit agent will be a bank or trust company that we select. We will indicate the name and address of the unit
agent in the applicable prospectus supplement relating to a particular series of units. This prospectus contains only a summary of certain
general features of the units. The applicable prospectus supplement will describe the particular features of the units being offered
thereby. You should read any prospectus supplement and any free writing prospectus that we may authorize to be provided to you related
to the series of units being offered, as well as the complete unit agreements that contain the terms of the units. Specific unit agreements
will contain additional important terms and provisions and will be incorporated by reference into the registration statement of which
this prospectus is a part from reports we file with the SEC.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. This prospectus contains, and the prospectus supplement applicable to each
offering of our securities will contain, a discussion of the risks applicable to an investment in our securities. Prior to making a decision
about investing in our securities, you should carefully consider the specific factors discussed under the heading “Risk Factors”
in this prospectus and the applicable prospectus supplement, together with all of the other information contained or incorporated by
reference in the prospectus supplement or appearing or incorporated by reference in this prospectus. You should also consider the risks,
uncertainties and assumptions discussed under Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for
the fiscal year ended April 30, 2022, filed with the SEC on August 8, 2022, and any updates described in our Quarterly Reports on Form 10-Q,
all of which are incorporated herein by reference, and may be amended, supplemented or superseded from time to time by other reports
we file with the SEC in the future and any prospectus supplement related to a particular offering. The risks and uncertainties we have
described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial
may also affect our operations. The occurrence of any of these known or unknown risks might cause you to lose all or part of your investment
in the offered securities.
FORWARD-LOOKING
STATEMENTS
This
prospectus and any accompanying prospectus supplement, including the documents that we incorporate by reference, contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this prospectus and any accompanying
prospectus supplement about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical
facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as
“believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,”
“plan,” and “would.” For example, statements concerning financial condition, possible or assumed future results
of operations, growth opportunities, industry ranking, plans and objectives of management, markets for our common stock and future management
and organizational structure are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve
known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements
to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement.
Any
forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this prospectus and
any accompanying prospectus supplement. Some of the risks, uncertainties and assumptions that could cause actual results to differ materially
from estimates or projections contained in the forward-looking statements include, but are not limited to:
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our
business strategies ; |
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capital
requirements and the availability of capital to fund our growth and to service our existing debt; |
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difficulties
executing our growth strategy, including attracting new issuers and investors; |
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difficulties
in increasing the average number of investments made per investor; |
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shortages
or interruptions in the supply of quality issuers; |
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our
dependence on a small number of large issuers to generate revenue; |
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negative
publicity relating to any one of our issuers; |
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competition
from other online capital portals with significantly greater resources than we have; |
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changes
in investor tastes and purchasing trends; |
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our
inability to maintain an adequate level of cash flow, or access to capital, to meet growth expectations; |
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changes
in senior management, loss of one or more key personnel or an inability to attract, hire, integrate and retain skilled personnel;
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Labor
shortages, unionization activities, labor disputes or increased labor costs, including increased labor costs resulting from the demand
for qualified employees; |
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our
vulnerability to increased costs of running an online portal on Amazon Web Services; |
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our
vulnerability to increasing labor costs; |
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the
impact of governmental laws and regulation; |
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failure
to obtain or maintain required licenses; |
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changes
in economic or regulatory conditions and other unforeseen conditions that prevent or delay the development of a secondary trading
market for shares of equity that are sold on our online portal; |
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intellectual
property risks; |
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risks
associated with our reliance on third party organizations; |
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our
competitive position; |
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our
industry environment; |
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our
anticipated financial and operating results, including anticipated sources of revenues; |
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management’s
expectation with respect to future acquisitions; |
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our
cash needs and financing plans. |
The
foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any
forward-looking statements. You should read this prospectus and any accompanying prospectus supplement and the documents that we
reference herein and therein and have filed as exhibits to the registration statement, of which this prospectus is part, completely
and with the understanding that our actual future results may be materially different from what we expect. You should assume that
the information appearing in this prospectus and any accompanying prospectus supplement is accurate as of the date on the front
cover of this prospectus or such prospectus supplement only. Because the risk factors referred to on page 12 of this prospectus and
incorporated herein by reference, could cause actual results or outcomes to differ materially from those expressed in any
forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements.
Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors
will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We
qualify all of the information presented in this prospectus and any accompanying prospectus supplement, and particularly our
forward-looking statements, by these cautionary statements.
USE
OF PROCEEDS
Except
as described in any prospectus supplement and any free writing prospectus in connection with a specific offering, we currently intend
to use the net proceeds from the sale of the securities offered under this prospectus for general corporate purposes, including the development
and commercialization of our products, research and development, general and administrative expenses, license or technology acquisitions,
and working capital and capital expenditures. We may also use the net proceeds to invest in or acquire complementary businesses, products,
or technologies, although we have no current commitments or agreements with respect to any such investments or acquisitions as of the
date of this prospectus. We have not determined the amount of net proceeds to be used specifically for the foregoing purposes. As a result,
our management will have broad discretion in the allocation of the net proceeds and investors will be relying on the judgment of our
management regarding the application of the proceeds of any sale of the securities. Pending use of the net proceeds, we intend to invest
the proceeds in short-term, investment-grade, interest-bearing instruments.
Each
time we offer securities under this prospectus, we will describe the intended use of the net proceeds from that offering in the applicable
prospectus supplement. The actual amount of net proceeds we spend on a particular use will depend on many factors, including, our future
capital expenditures, the amount of cash required by our operations, and our future revenue growth, if any. Therefore, we will retain
broad discretion in the use of the net proceeds.
DESCRIPTION
OF CAPITAL STOCK
General
The
following description of our capital stock, together with any additional information we include in any applicable prospectus supplement
or any related free writing prospectus, summarizes the material terms and provisions of our common stock that we may offer under this
prospectus. While the terms we have summarized below will apply generally to any future common stock that we may offer, we will describe
the particular terms of any class or series of these securities in more detail in the applicable prospectus supplement. For the complete
terms of our common stock, please refer to our Articles of Incorporation, as amended (the “Articles of Incorporation”) and
our amended and restated bylaws (the “Bylaws”) that are incorporated by reference into the registration statement of which
this prospectus is a part or may be incorporated by reference in this prospectus or any applicable prospectus supplement. The terms of
these securities may also be affected by the Utah Business Corporation Act. The summary below and that contained in any applicable prospectus
supplement or any related free writing prospectus are qualified in their entirety by reference to our Articles of Incorporation and our
Bylaws.
Common
Stock
We
currently have authorized 900,000,000 shares of common stock, par value $0.001 per share. As of July __, 2024, 40,540,680 shares of common
stock were issued and outstanding. The holders of shares of our common stock are entitled to one vote per share. In addition, the holders
of our common stock will be entitled to receive ratably such dividends, if any, as may be declared by our Board out of legally available
funds; however, the current policy of our Board is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution
or winding-up, the holders of our common stock will be entitled to share ratably in all assets that are legally available for distribution.
The holders of our common stock will have no preemptive rights.
Warrants
As
of July __, 2024, warrants to purchase up to 20,562,932 shares of our common stock were issued and outstanding. The warrants are exercisable
for five years from the date of issuance at a weighted average exercise price of $2.24 per share, subject to adjustment for stock dividends,
stock splits, pro rata distributions and upon the occurrence of fundamental transactions. If at any time following the issuance date
of the warrants there is no registration statement registering for resale the shares of common stock issuable upon exercise of the warrants,
the warrants may be exercised on a cashless basis. The warrants contain an ownership limitation such that the holder may not exercise
the warrant to the extent that such exercise would result in the holder’s beneficial ownership being in excess of 4.99% of the
Company’s issued and outstanding common stock together with all shares owned by the holder and its affiliates, which beneficial
ownership limitation may be increased by the holder up to, but not exceeding, 9.99% of the Company’s issued and outstanding common
stock.
Other
Convertible Securities
As
of July __, 2024, in addition to the securities described above, there are options outstanding to purchase up to 2,078,500 shares of
common stock under our 2021 Equity Incentive Plan and our 2023 Omnibus Equity Incentive Plan, with 3,375,605 shares available for future
issuance.
Anti-Takeover
Effects of Utah Law and Our Articles of Incorporation and Bylaws
The
provisions of Utah law, our articles of incorporation and our bylaws may have the effect of delaying, deferring or discouraging another
person from acquiring control of our Company. These provisions, which are summarized below, may have the effect of discouraging takeover
bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our Board. We believe
that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the
disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their
terms.
Board
of Directors Vacancies
Our
articles of incorporation and bylaws provide that newly created directorships resulting from an increase in the number of directors and
vacancies occurring in the board for any reason except the removal of directors without cause may be filled by a vote of the majority
of directors then in office, although less than a quorum exists. Vacancies occurring by reason of the removal of directors without cause
shall be filled by vote of the stockholders. A director elected to fill a vacancy caused by resignation, death or removal shall be elected
to hold office for the unexpired term of his predecessor. In addition, the number of directors constituting our Board is permitted to
be set only by a resolution adopted by our Board. These provisions prevent a stockholder from increasing the size of our Board and then
gaining control of our Board by filling the resulting vacancies with its own nominees. This makes it more difficult to change the composition
of our Board but promotes continuity of management.
Special
Meeting of Shareholders
Our
bylaws provide that special meetings of our stockholders may be called only by our president or any two directors, thus prohibiting a
stockholder from calling a special meeting. These provisions might delay the ability of our stockholders to force consideration of a
proposal or for stockholders controlling a majority of our capital stock to take any action, including the removal of directors.
No
Cumulative Voting
The
Utah Business Corporation Act provides that stockholders are not entitled to the right to cumulate votes in the election of directors
unless a corporation’s articles of incorporation provide otherwise. Our articles of incorporation do not provide for cumulative
voting.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Equity Stock Transfer LLC with its business address at 237 W 37th Street, Suite
602, New York, NY 10018. Its telephone number is (212) 575-5757 and its email address is info@equitystock.com.
Listing
Our
common stock is listed on The Nasdaq Capital Market under the symbol “NCPL”.
DESCRIPTION
OF DEBT SECURITIES
The
following description, together with the additional information we include in any applicable prospectus supplements or free writing prospectuses,
summarizes the material terms and provisions of the debt securities that we may offer under this prospectus. We may issue debt securities,
in one or more series, as either senior or subordinated debt or as senior or subordinated convertible debt. While the terms we have summarized
below will apply generally to any future debt securities we may offer under this prospectus, we will describe the particular terms of
any debt securities that we may offer in more detail in the applicable prospectus supplement or free writing prospectus. The terms of
any debt securities we offer under a prospectus supplement may differ from the terms we describe below. However, no prospectus supplement
shall fundamentally change the terms that are set forth in this prospectus or offer a security that is not registered and described in
this prospectus at the time of its effectiveness. As of the date of this prospectus, we have no outstanding registered debt securities.
Unless the context requires otherwise, whenever we refer to the “indentures,” we also are referring to any supplemental indentures
that specify the terms of a particular series of debt securities.
We
will issue any senior debt securities under the senior indenture that we will enter into with the trustee named in the senior indenture.
We will issue any subordinated debt securities under the subordinated indenture and any supplemental indentures that we will enter into
with the trustee named in the subordinated indenture. We have filed forms of these documents as exhibits to the registration statement,
of which this prospectus is a part, and supplemental indentures and forms of debt securities containing the terms of the debt securities
being offered will be filed as exhibits to the registration statement of which this prospectus is a part or will be incorporated by reference
from reports that we file with the SEC.
The
indentures will be qualified under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). We use the term
“trustee” to refer to either the trustee under the senior indenture or the trustee under the subordinated indenture, as applicable.
The
following summaries of material provisions of the senior debt securities, the subordinated debt securities and the indentures are subject
to, and qualified in their entirety by reference to, all of the provisions of the indenture and any supplemental indentures applicable
to a particular series of debt securities. We urge you to read the applicable prospectus supplements and any related free writing prospectuses
related to the debt securities that we may offer under this prospectus, as well as the complete indentures that contains the terms of
the debt securities. Except as we may otherwise indicate, the terms of the senior indenture and the subordinated indenture are identical.
General
The
terms of each series of debt securities will be established by or pursuant to a resolution of our Board of Directors and set forth or
determined in the manner provided in an officers’ certificate or by a supplemental indenture. Debt securities may be issued in
separate series without limitation as to aggregate principal amount. We may specify a maximum aggregate principal amount for the debt
securities of any series. We will describe in the applicable prospectus supplement the terms of the series of debt securities being offered,
including:
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the
principal amount being offered, and if a series, the total amount authorized and the total amount outstanding; |
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any
limit on the amount that may be issued; |
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whether
or not we will issue the series of debt securities in global form, and, if so, the terms and who the depositary will be; |
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the
maturity date; |
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whether
and under what circumstances, if any, we will pay additional amounts on any debt securities held by a person who is not a United
States person for tax purposes, and whether we can redeem the debt securities if we have to pay such additional amounts; |
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the
annual interest rate, which may be fixed or variable, or the method for determining the rate and the date interest will begin to
accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for determining
such dates; |
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whether
or not the debt securities will be secured or unsecured, and the terms of any secured debt; |
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the
terms of the subordination of any series of subordinated debt; |
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the
place where payments will be made; |
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restrictions
on transfer, sale or other assignment, if any; |
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our
right, if any, to defer payment of interest and the maximum length of any such deferral period; |
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the
date, if any, after which, and the price at which, we may, at our option, redeem the series of debt securities pursuant to any optional
or provisional redemption provisions and the terms of those redemption provisions; |
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provisions
for a sinking fund purchase or other analogous fund, if any, including the date, if any, on which, and the price at which we are
obligated, pursuant thereto or otherwise, to redeem, or at the holder’s option, to purchase, the series of debt securities
and the currency or currency unit in which the debt securities are payable; |
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whether
the indenture will restrict our ability or the ability of our subsidiaries, if any, to: |
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incur
additional indebtedness; |
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issue
additional securities; |
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create
liens; |
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pay
dividends or make distributions in respect of our capital stock or the capital stock of our subsidiaries; |
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redeem
capital stock; |
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place
restrictions on our subsidiaries’ ability to pay dividends, make distributions or transfer assets; |
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make
investments or other restricted payments; |
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sell
or otherwise dispose of assets; |
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enter
into sale-leaseback transactions; |
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engage
in transactions with stockholders or affiliates; |
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issue
or sell stock of our subsidiaries; or |
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effect
a consolidation or merger; |
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whether
the indenture will require us to maintain any interest coverage, fixed charge, cash flow-based, asset-based or other financial ratios; |
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a
discussion of certain material or special United States federal income tax considerations applicable to the debt securities; |
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information
describing any book-entry features; |
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the
applicability of the provisions in the indenture on discharge; |
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whether
the debt securities are to be offered at a price such that they will be deemed to be offered at an “original issue discount”
as defined in paragraph (a) of Section 1273 of the Internal Revenue Code of 1986, as amended; |
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the
denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral multiple
thereof; |
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the
currency of payment of debt securities if other than U.S. dollars and the manner of determining the equivalent amount in U.S. dollars;
and |
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any
other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, including any additional events
of default or covenants provided with respect to the debt securities, and any terms that may be required by us or advisable under
applicable laws or regulations. |
Conversion
or Exchange Rights
We
will set forth in the applicable prospectus supplement the terms under which a series of debt securities may be convertible into or exchangeable
for our common stock or other securities (including securities of a third party). We will include provisions as to whether conversion
or exchange is mandatory, at the option of the holder or at our option. We may include provisions pursuant to which the number of shares
of our common stock or other securities (including securities of a third party) that the holders of the series of debt securities receive
would be subject to adjustment.
Consolidation,
Merger or Sale
Unless
we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the indentures will not contain
any covenant that restricts our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of all or substantially
all of our assets. However, any successor to or acquirer of such assets must assume all of our obligations under the indentures or the
debt securities, as appropriate. If the debt securities are convertible into or exchangeable for our other securities or securities of
other entities, the person with whom we consolidate or merge or to whom we sell all of our property must make provisions for the conversion
of the debt securities into securities that the holders of the debt securities would have received if they had converted the debt securities
before the consolidation, merger or sale.
Events
of Default under the Indenture
Unless
we provide otherwise in the prospectus supplement applicable to a particular series of debt securities, the following are events of default
under the indentures with respect to any series of debt securities that we may issue:
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if
we fail to pay interest when due and payable and our failure continues for 90 days and the time for payment has not been extended; |
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if
we fail to pay the principal, premium or sinking fund payment, if any, when due and payable at maturity, upon redemption or repurchase
or otherwise, and the time for payment has not been extended; |
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if
we fail to observe or perform any other covenant contained in the debt securities or the indentures, other than a covenant specifically
relating to another series of debt securities, and our failure continues for 90 days after we receive notice from the trustee
or we and the trustee receive notice from the holders of at least 25% in aggregate principal amount of the outstanding debt securities
of the applicable series; and |
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if
specified events of bankruptcy, insolvency or reorganization occur. |
We
will describe in each applicable prospectus supplement any additional events of default relating to the relevant series of debt securities.
If
an event of default with respect to debt securities of any series occurs and is continuing, other than an event of default specified
in the last bullet point above, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities
of that series, by notice to us in writing, and to the trustee if notice is given by such holders, may declare the unpaid principal,
premium, if any, and accrued interest, if any, due and payable immediately. If an event of default arises due to the occurrence of certain
specified bankruptcy, insolvency or reorganization events, the unpaid principal, premium, if any, and accrued interest, if any, of each
issue of debt securities then outstanding shall be due and payable without any notice or other action on the part of the trustee or any
holder.
The
holders of a majority in principal amount of the outstanding debt securities of an affected series may waive any default or event of
default with respect to the series and its consequences, except defaults or events of default regarding payment of principal, premium,
if any, or interest, unless we have cured the default or event of default in accordance with the indenture. Any waiver shall cure the
default or event of default.
Subject
to the terms of the indentures, if an event of default under an indenture shall occur and be continuing, the trustee will be under no
obligation to exercise any of its rights or powers under such indenture at the request or direction of any of the holders of the applicable
series of debt securities, unless such holders have offered the trustee reasonable indemnity or security satisfactory to it against any
loss, liability or expense. The holders of a majority in principal amount of the outstanding debt securities of any series will have
the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or exercising any
trust or power conferred on the trustee, with respect to the debt securities of that series, provided that:
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the
direction so given by the holder is not in conflict with any law or the applicable indenture; and |
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subject
to its duties under the Trust Indenture Act, the trustee need not take any action that might involve it in personal liability or
might be unduly prejudicial to the holders not involved in the proceeding. |
The
indentures will provide that if an event of default has occurred and is continuing, the trustee will be required in the exercise of its
powers to use the degree of care that a prudent person would use in the conduct of its own affairs. The trustee, however, may refuse
to follow any direction that conflicts with law or the indenture, or that the trustee determines is unduly prejudicial to the rights
of any other holder of the relevant series of debt securities, or that would involve the trustee in personal liability. Prior to taking
any action under the indentures, the trustee will be entitled to indemnification against all costs, expenses and liabilities that would
be incurred by taking or not taking such action.
A
holder of the debt securities of any series will have the right to institute a proceeding under the indentures or to appoint a receiver
or trustee, or to seek other remedies only if:
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the
holder has given written notice to the trustee of a continuing event of default with respect to that series; |
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the
holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made a written request
and such holders have offered reasonable indemnity to the trustee or security satisfactory to it against any loss, liability or expense
or to be incurred in compliance with instituting the proceeding as trustee; and |
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the
trustee does not institute the proceeding, and does not receive from the holders of a majority in aggregate principal amount of the
outstanding debt securities of that series other conflicting directions within 90 days after the notice, request and offer. |
These
limitations do not apply to a suit instituted by a holder of debt securities if we default in the payment of the principal, premium,
if any, or interest on, the debt securities, or other defaults that may be specified in the applicable prospectus supplement.
We
will periodically file statements with the trustee regarding our compliance with specified covenants in the indentures.
The
indentures will provide that if a default occurs and is continuing and is actually known to a responsible officer of the trustee, the
trustee must mail to each holder notice of the default within the earlier of 90 days after it occurs and 30 days after it is
known by a responsible officer of the trustee or written notice of it is received by the trustee, unless such default has been cured
or waived. Except in the case of a default in the payment of principal or premium of, or interest on, any debt security or certain other
defaults specified in an indenture, the trustee shall be protected in withholding such notice if and so long as the Board of Directors,
the executive committee or a trust committee of directors, or responsible officers of the trustee, in good faith determine that withholding
notice is in the best interests of holders of the relevant series of debt securities.
Modification
of Indenture; Waiver
Subject
to the terms of the indenture for any series of debt securities that we may issue, we and the trustee may change an indenture without
the consent of any holders with respect to the following specific matters:
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to
fix any ambiguity, defect or inconsistency in the indenture; |
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to
comply with the provisions described above under “Description of Debt Securities—Consolidation, Merger or Sale;” |
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to
comply with any requirements of the SEC in connection with the qualification of any indenture under the Trust Indenture Act; |
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to
add to, delete from or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue,
authentication and delivery of debt securities, as set forth in the indenture; |
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to
provide for the issuance of, and establish the form and terms and conditions of, the debt securities of any series as provided under
“Description of Debt Securities—General,” to establish the form of any certifications required to be furnished
pursuant to the terms of the indenture or any series of debt securities, or to add to the rights of the holders of any series of
debt securities; |
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to
evidence and provide for the acceptance of appointment hereunder by a successor trustee; |
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to
provide for uncertificated debt securities and to make all appropriate changes for such purpose; |
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to
add such new covenants, restrictions, conditions or provisions for the benefit of the holders, to make the occurrence, or the occurrence
and the continuance, of a default in any such additional covenants, restrictions, conditions or provisions an event of default or
to surrender any right or power conferred to us in the indenture; or |
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to
change anything that does not adversely affect the interests of any holder of debt securities of any series in any material respect. |
In
addition, under the indentures, the rights of holders of a series of debt securities may be changed by us and the trustee with the written
consent of the holders of at least a majority in aggregate principal amount of the outstanding debt securities of each series that is
affected. However, subject to the terms of the indenture for any series of debt securities that we may issue or otherwise provided in
the prospectus supplement applicable to a particular series of debt securities, we and the trustee may only make the following changes
with the consent of each holder of any outstanding debt securities affected:
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extending
the stated maturity of the series of debt securities; |
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reducing
the principal amount, reducing the rate of or extending the time of payment of interest, or reducing any premium payable upon the
redemption or repurchase of any debt securities; or |
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reducing
the percentage of debt securities, the holders of which are required to consent to any amendment, supplement, modification or waiver. |
Discharge
Each
indenture provides that, subject to the terms of the indenture and any limitation otherwise provided in the prospectus supplement applicable
to a particular series of debt securities, we may elect to be discharged from our obligations with respect to one or more series of debt
securities, except for specified obligations, including obligations to:
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register
the transfer or exchange of debt securities of the series; |
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replace
stolen, lost or mutilated debt securities of the series; |
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maintain
paying agencies; |
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hold
monies for payment in trust; |
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recover
excess money held by the trustee; |
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compensate
and indemnify the trustee; and |
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appoint
any successor trustee. |
In
order to exercise our rights to be discharged, we will deposit with the trustee money or government obligations sufficient to pay all
the principal of, and any premium and interest on, the debt securities of the series on the dates payments are due.
Form,
Exchange and Transfer
We
will issue the debt securities of each series only in fully registered form without coupons and, unless we otherwise specify in the applicable
prospectus supplement, in denominations of $1,000 and any integral multiple thereof. The indentures will provide that we may issue debt
securities of a series in temporary or permanent global form and as book-entry securities that will be deposited with, or on behalf of,
The Depository Trust Company or another depositary named by us and identified in a prospectus supplement with respect to that series.
See “Legal Ownership of Securities” below for a further description of the terms relating to any book-entry securities.
At
the option of the holder, subject to the terms of the indentures and the limitations applicable to global securities described in the
applicable prospectus supplement, the holder of the debt securities of any series can exchange the debt securities for other debt securities
of the same series, in any authorized denomination and of like tenor and aggregate principal amount.
Subject
to the terms of the indentures and the limitations applicable to global securities set forth in the applicable prospectus supplement,
holders of the debt securities may present the debt securities for exchange or for registration of transfer, duly endorsed or with the
form of transfer endorsed thereon duly executed if so required by us or the security registrar, at the office of the security registrar
or at the office of any transfer agent designated by us for this purpose. Unless otherwise provided in the debt securities that the holder
presents for transfer or exchange, we will make no service charge for any registration of transfer or exchange, but we may require payment
of any taxes or other governmental charges.
We
will name in the applicable prospectus supplement the security registrar, and any transfer agent in addition to the security registrar,
that we initially designate for any debt securities. We may at any time designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through which any transfer agent acts, except that we will be required to maintain
a transfer agent in each place of payment for the debt securities of each series.
If
we elect to redeem the debt securities of any series, we will not be required to:
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issue,
register the transfer of, or exchange any debt securities of that series during a period beginning at the opening of business 15 days
before the day of mailing of a notice of redemption of any debt securities that may be selected for redemption and ending at the
close of business on the day of the mailing; or |
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register
the transfer of or exchange any debt securities so selected for redemption, in whole or in part, except the unredeemed portion of
any debt securities we are redeeming in part. |
Information
Concerning the Trustee
The
trustee, other than during the occurrence and continuance of an event of default under an indenture, undertakes to perform only those
duties as are specifically set forth in the applicable indenture and is under no obligation to exercise any of the powers given it by
the indentures at the request of any holder of debt securities unless it is offered reasonable security and indemnity against the costs,
expenses and liabilities that it might incur. However, upon an event of default under an indenture, the trustee must use the same degree
of care as a prudent person would exercise or use in the conduct of his or her own affairs.
Payment
and Paying Agents
Unless
we otherwise indicate in the applicable prospectus supplement, we will make payment of the interest on any debt securities on any interest
payment date to the person in whose name the debt securities, or one or more predecessor securities, are registered at the close of business
on the regular record date for the interest payment.
We
will pay principal of and any premium and interest on the debt securities of a particular series at the office of the paying agents designated
by us, except that unless we otherwise indicate in the applicable prospectus supplement, we will make interest payments by check that
we will mail to the holder or by wire transfer to certain holders. Unless we otherwise indicate in the applicable prospectus supplement,
we will designate the corporate trust office of the trustee as our sole paying agent for payments with respect to debt securities of
each series. We will name in the applicable prospectus supplement any other paying agents that we initially designate for the debt securities
of a particular series. We will maintain a paying agent in each place of payment for the debt securities of a particular series.
All
money we pay to a paying agent or the trustee for the payment of the principal of or any premium or interest on any debt securities that
remains unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid to us,
and the holder of the debt security thereafter may look only to us for payment thereof.
Governing
Law
The
indentures and the debt securities will be governed by and construed in accordance with the laws of the State of New York, except to
the extent that the Trust Indenture Act is applicable.
Ranking
Debt Securities
The
subordinated debt securities will be unsecured and will be subordinate and junior in priority of payment to certain other indebtedness
to the extent described in a prospectus supplement. The subordinated indenture does not limit the amount of subordinated debt securities
that we may issue. It also does not limit us from issuing any other secured or unsecured debt.
The
senior debt securities will be unsecured and will rank equally in right of payment to all our other senior unsecured debt. The senior
indenture does not limit the amount of senior debt securities that we may issue. It also does not limit us from issuing any other secured
or unsecured debt.
DESCRIPTION
OF WARRANTS
The
following description, together with the additional information we may include in any applicable prospectus supplements and free writing
prospectuses, summarizes the material terms and provisions of the warrants that we may offer under this prospectus, which may consist
of warrants to purchase common stock or debt securities and may be issued in one or more series. Warrants may be offered independently
or together with common stock or debt securities offered by any prospectus supplement, and may be attached to or separate from those
securities. While the terms we have summarized below will apply generally to any warrants that we may offer under this prospectus, we
will describe the particular terms of any series of warrants that we may offer in more detail in the applicable prospectus supplement
and any applicable free writing prospectus. The terms of any warrants offered under a prospectus supplement may differ from the terms
described below. However, no prospectus supplement will fundamentally change the terms that are set forth in this prospectus or offer
a security that is not registered and described in this prospectus at the time of its effectiveness.
We
may issue the warrants under a warrant agreement that we will enter into with a warrant agent to be selected by us. If selected, the
warrant agent will act solely as an agent of ours in connection with the warrants and will not act as an agent for the holders or beneficial
owners of the warrants. If applicable, we will file as exhibits to the registration statement of which this prospectus is a part, or
will incorporate by reference from a Current Report on Form 8-K that we file with the SEC, the form of warrant agreement, including
a form of warrant certificate, that describes the terms of the particular series of warrants we are offering before the issuance of the
related series of warrants. The following summaries of material provisions of the warrants and the warrant agreements are subject to,
and qualified in their entirety by reference to, all the provisions of the warrant agreement and warrant certificate applicable to a
particular series of warrants. We urge you to read the applicable prospectus supplement and any applicable free writing prospectus related
to the particular series of warrants that we sell under this prospectus, as well as the complete warrant agreements and warrant certificates
that contain the terms of the warrants.
General
We
will describe in the applicable prospectus supplement the terms relating to a series of warrants, including:
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the
offering price and aggregate number of warrants offered; |
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the
currency for which the warrants may be purchased; |
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if
applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with
each such security or each principal amount of such security; |
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if
applicable, the date on and after which the warrants and the related securities will be separately transferable; |
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in
the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant
and the price at, and currency in which, this principal amount of debt securities may be purchased upon such exercise; |
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in
the case of warrants to purchase common stock, the number of shares of common stock purchasable upon the exercise of one warrant
and the price at which these shares may be purchased upon such exercise; |
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the
effect of any merger, consolidation, sale or other disposition of our business on the warrant agreements and the warrants; |
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the
terms of any rights to redeem or call the warrants; |
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any
provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants; |
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the
dates on which the right to exercise the warrants will commence and expire; |
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the
manner in which the warrant agreements and warrants may be modified; |
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United
States federal income tax consequences of holding or exercising the warrants; |
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the
terms of the securities issuable upon exercise of the warrants; and |
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any
other specific terms, preferences, rights or limitations of or restrictions on the warrants. |
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Before
exercising their warrants, holders of warrants will not have any of the rights of holders of the securities purchasable upon such
exercise, including: |
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in
the case of warrants to purchase debt securities, the right to receive payments of principal of, or premium, if any, or interest
on, the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture; or |
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|
|
| |
● |
in
the case of warrants to purchase common stock, the right to receive dividends, if any, or, payments upon our liquidation, dissolution
or winding up or to exercise voting rights, if any. |
Exercise
of Warrants
Each
warrant will entitle the holder to purchase the securities that we specify in the applicable prospectus supplement at the exercise price
that we describe in the applicable prospectus supplement. Unless we otherwise specify in the applicable prospectus supplement, holders
of the warrants may exercise the warrants at any time up to the specified time on the expiration date that we set forth in the applicable
prospectus supplement. After the close of business on the expiration date, unexercised warrants will become void.
Holders
of the warrants may exercise the warrants by delivering the warrant certificate representing the warrants to be exercised together with
specified information, and paying the required amount to the warrant agent in immediately available funds, as provided in the applicable
prospectus supplement. We will set forth on the reverse side of the warrant certificate and in the applicable prospectus supplement the
information that the holder of the warrant will be required to deliver to us or the warrant agent as applicable.
Upon
receipt of the required payment and the warrant certificate properly completed and duly executed at the corporate trust office of the
warrant agent or any other office indicated in the applicable prospectus supplement, we will issue and deliver the securities purchasable
upon such exercise. If fewer than all of the warrants represented by the warrant certificate are exercised, then we will issue a new
warrant certificate for the remaining amount of warrants. If we so indicate in the applicable prospectus supplement, holders of the warrants
may surrender securities as all or part of the exercise price for warrants.
Enforceability
of Rights by Holders of Warrants
If
selected, each warrant agent will act solely as our agent under the applicable warrant agreement and will not assume any obligation or
relationship of agency or trust with any holder of any warrant. A single bank or trust company may act as warrant agent for more than
one issue of warrants. A warrant agent will have no duty or responsibility in case of any default by us under the applicable warrant
agreement or warrant, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon
us. Any holder of a warrant may, without the consent of the related warrant agent or the holder of any other warrant, enforce by appropriate
legal action its right to exercise, and receive the securities purchasable upon exercise of, its warrants.
DESCRIPTION
OF RIGHTS
General
We
may issue rights to our stockholders to purchase shares of our common stock or the other securities described in this prospectus. We
may offer rights separately or together with one or more additional rights, debt securities, common stock or warrants, or any combination
of those securities in the form of units, as described in the applicable prospectus supplement. Each series of rights will be issued
under a separate rights agreement to be entered into between us and a bank or trust company, as rights agent. The rights agent will act
solely as our agent in connection with the certificates relating to the rights of the series of certificates and will not assume any
obligation or relationship of agency or trust for or with any holders of rights certificates or beneficial owners of rights. The following
description sets forth certain general terms and provisions of the rights to which any prospectus supplement may relate. The particular
terms of the rights to which any prospectus supplement may relate and the extent, if any, to which the general provisions may apply to
the rights so offered will be described in the applicable prospectus supplement. To the extent that any particular terms of the rights,
rights agreement or rights certificates described in a prospectus supplement differ from any of the terms described below, then the terms
described below will be deemed to have been superseded by that prospectus supplement. We encourage you to read the applicable rights
agreement and rights certificate for additional information before you decide whether to purchase any of our rights. We will provide
in a prospectus supplement the following terms of the rights being issued:
| ● |
the
date of determining the stockholders entitled to the rights distribution; |
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|
| ● |
the
aggregate number of shares of common stock or other securities purchasable upon exercise of the rights; |
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|
| ● |
the
exercise price; |
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|
| ● |
the
aggregate number of rights issued; |
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whether
the rights are transferrable and the date, if any, on and after which the rights may be separately transferred; |
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|
| ● |
the
date on which the right to exercise the rights will commence, and the date on which the right to exercise the rights will expire; |
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|
| ● |
the
method by which holders of rights will be entitled to exercise; |
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|
| ● |
the
conditions to the completion of the offering, if any; |
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|
| ● |
the
withdrawal, termination and cancellation rights, if any; |
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|
| ● |
whether
there are any backstop or standby purchaser or purchasers and the terms of their commitment, if any; |
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|
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whether
stockholders are entitled to oversubscription rights, if any; |
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|
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any
applicable material U.S. federal income tax considerations; and |
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|
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any
other terms of the rights, including terms, procedures and limitations relating to the distribution, exchange and exercise of the
rights, as applicable. |
Each
right will entitle the holder of rights to purchase for cash the principal amount of shares of common stock or other securities at the
exercise price provided in the applicable prospectus supplement. Rights may be exercised at any time up to the close of business on the
expiration date for the rights provided in the applicable prospectus supplement.
Holders
may exercise rights as described in the applicable prospectus supplement. Upon receipt of payment and the rights certificate properly
completed and duly executed at the corporate trust office of the rights agent or any other office indicated in the prospectus supplement,
we will, as soon as practicable, forward the shares of common stock or other securities, as applicable, purchasable upon exercise of
the rights. If less than all of the rights issued in any rights offering are exercised, we may offer any unsubscribed securities directly
to persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, including
pursuant to standby arrangements, as described in the applicable prospectus supplement.
Rights
Agent
The
rights agent for any rights we offer will be set forth in the applicable prospectus supplement.
DESCRIPTION
OF UNITS
The
following description, together with the additional information we may include in any applicable prospectus supplements and free writing
prospectuses, summarizes the material terms and provisions of the units that we may offer under this prospectus.
While
the terms we have summarized below will apply generally to any units that we may offer under this prospectus, we will describe the particular
terms of any series of units in more detail in the applicable prospectus supplement. The terms of any units offered under a prospectus
supplement may differ from the terms described below. However, no prospectus supplement will fundamentally change the terms that are
set forth in this prospectus or offer a security that is not registered and described in this prospectus at the time of its effectiveness.
We
will file as exhibits to the registration statement of which this prospectus is a part, or will incorporate by reference from a Current
Report on Form 8-K that we file with the SEC, the form of unit agreement that describes the terms of the series of units we are
offering, and any supplemental agreements, before the issuance of the related series of units. The following summaries of material terms
and provisions of the units are subject to, and qualified in their entirety by reference to, all the provisions of the unit agreement
and any supplemental agreements applicable to a particular series of units. We urge you to read the applicable prospectus supplements
related to the particular series of units that we sell under this prospectus, as well as the complete unit agreement and any supplemental
agreements that contain the terms of the units.
General
We
may issue units comprised of one or more debt securities, shares of common stock and warrants in any combination. Each unit will be issued
so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights
and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that the securities
included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
We
will describe in the applicable prospectus supplement the terms of the series of units, including:
| ● |
the
designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those
securities may be held or transferred separately; |
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|
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any
provisions of the governing unit agreement that differ from those described below; and |
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|
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any
provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units. |
The
provisions described in this section, as well as those described under “Description of Capital Stock,” “Description
of Debt Securities” and “Description of Warrants” will apply to each unit and to any common stock, debt security or
warrant included in each unit, respectively.
Unit
Agent
The
name and address of the unit agent, if any, for any units we offer will be set forth in the applicable prospectus supplement.
Issuance
in Series
We
may issue units in such amounts and in numerous distinct series as we determine.
Enforceability
of Rights by Holders of Units
Each
unit agent will act solely as our agent under the applicable unit agreement and will not assume any obligation or relationship of agency
or trust with any holder of any unit. A single bank or trust company may act as unit agent for more than one series of units. A unit
agent will have no duty or responsibility in case of any default by us under the applicable unit agreement or unit, including any duty
or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any holder of a unit may, without the
consent of the related unit agent or the holder of any other unit, enforce by appropriate legal action its rights as holder under any
security included in the unit.
We,
the unit agents and any of their agents may treat the registered holder of any unit certificate as an absolute owner of the units evidenced
by that certificate for any purpose and as the person entitled to exercise the rights attaching to the units so requested, despite any
notice to the contrary. See “Legal Ownership of Securities.”
LEGAL
OWNERSHIP OF SECURITIES
We
can issue securities in registered form or in the form of one or more global securities. We describe global securities in greater detail
below. We refer to those persons who have securities registered in their own names on the books that we or any applicable trustee or
depositary or warrant agent maintain for this purpose as the “holders” of those securities. These persons are the legal holders
of the securities. We refer to those persons who, indirectly through others, own beneficial interests in securities that are not registered
in their own names, as “indirect holders” of those securities. As we discuss below, indirect holders are not legal holders,
and investors in securities issued in book-entry form or in street name will be indirect holders.
Book-Entry
Holders
We
may issue securities in book-entry form only, as we will specify in the applicable prospectus supplement. This means securities may be
represented by one or more global securities registered in the name of a financial institution that holds them as depositary on behalf
of other financial institutions that participate in the depositary’s book-entry system. These participating institutions, which
are referred to as participants, in turn, hold beneficial interests in the securities on behalf of themselves or their customers.
Only
the person in whose name a security is registered is recognized as the holder of that security. Global securities will be registered
in the name of the depositary or its participants. Consequently, for global securities, we will recognize only the depositary as the
holder of the securities, and we will make all payments on the securities to the depositary. The depositary passes along the payments
it receives to its participants, which in turn pass the payments along to their customers who are the beneficial owners. The depositary
and its participants do so under agreements they have made with one another or with their customers; they are not obligated to do so
under the terms of the securities.
As
a result, investors in a global security will not own securities directly. Instead, they will own beneficial interests in a global security,
through a bank, broker or other financial institution that participates in the depositary’s book-entry system or holds an interest
through a participant. As long as the securities are issued in global form, investors will be indirect holders, and not legal holders,
of the securities.
Street
Name Holders
We
may terminate a global security or issue securities that are not issued in global form. In these cases, investors may choose to hold
their securities in their own names or in “street name.” Securities held by an investor in street name would be registered
in the name of a bank, broker or other financial institution that the investor chooses, and the investor would hold only a beneficial
interest in those securities through an account he or she maintains at that institution.
For
securities held in street name, we or any applicable trustee or depositary will recognize only the intermediary banks, brokers and other
financial institutions in whose names the securities are registered as the holders of those securities, and we or any such trustee or
depositary will make all payments on those securities to them. These institutions pass along the payments they receive to their customers
who are the beneficial owners, but only because they agree to do so in their customer agreements or because they are legally required
to do so. Investors who hold securities in street name will be indirect holders, not legal holders, of those securities.
Legal
Holders
Our
obligations, as well as the obligations of any applicable trustee or third party employed by us or a trustee, run only to the legal holders
of the securities. We do not have obligations to investors who hold beneficial interests in global securities, in street name or by any
other indirect means. This will be the case whether an investor chooses to be an indirect holder of a security or has no choice because
we are issuing the securities only in global form.
For
example, once we make a payment or give a notice to the holder, we have no further responsibility for the payment or notice even if that
holder is required, under agreements with its participants or customers or by law, to pass it along to the indirect holders but does
not do so. Similarly, we may want to obtain the approval of the holders to amend an indenture, to relieve us of the consequences of a
default or of our obligation to comply with a particular provision of an indenture, or for other purposes. In such an event, we would
seek approval only from the legal holders, and not the indirect holders, of the securities. Whether and how the legal holders contact
the indirect holders is up to the legal holders.
Special
Considerations for Indirect Holders
If
you hold securities through a bank, broker or other financial institution, either in book-entry form because the securities are represented
by one or more global securities or in street name, you should check with your own institution to find out:
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how
it handles securities payments and notices; |
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whether
it imposes fees or charges; |
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|
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how
it would handle a request for the holders’ consent, if ever required; |
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|
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whether
and how you can instruct it to send you securities registered in your own name so you can be a legal holder, if that is permitted
in the future; |
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|
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how
it would exercise rights under the securities if there were a default or other event triggering the need for holders to act to protect
their interests; and |
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|
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if
the securities are in book-entry form, how the depositary’s rules and procedures will affect these matters. |
Global
Securities
A
global security is a security that represents one or any other number of individual securities held by a depositary. Generally, all securities
represented by the same global securities will have the same terms.
Each
security issued in book-entry form will be represented by a global security that we issue to, deposit with and register in the name of
a financial institution or its nominee that we select. The financial institution that we select for this purpose is called the depositary.
Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, NY, known as DTC, will be
the depositary for all securities issued in book-entry form.
A
global security may not be transferred to or registered in the name of anyone other than the depositary, its nominee or a successor depositary,
unless special termination situations arise. We describe those situations below under “—Special Situations When A
Global Security Will Be Terminated.” As a result of these arrangements, the depositary, or its nominee, will be the sole registered
owner and legal holder of all securities represented by a global security, and investors will be permitted to own only beneficial interests
in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that
in turn has an account with the depositary or with another institution that does. Thus, an investor whose security is represented by
a global security will not be a legal holder of the security, but only an indirect holder of a beneficial interest in the global security.
If
the prospectus supplement for a particular security indicates that the security will be issued as a global security, then the security
will be represented by a global security at all times unless and until the global security is terminated. If termination occurs, we may
issue the securities through another book-entry clearing system or decide that the securities may no longer be held through any book-entry
clearing system.
Special
Considerations For Global Securities
As
an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s
financial institution and of the depositary, as well as general laws relating to securities transfers. We do not recognize an indirect
holder as a holder of securities and instead deal only with the depositary that holds the global security.
If
securities are issued only as global securities, an investor should be aware of the following:
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an
investor cannot cause the securities to be registered in his or her name, and cannot obtain non-global certificates for his or her
interest in the securities, except in the special situations we describe below; |
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|
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an
investor will be an indirect holder and must look to his or her own bank or broker for payments on the securities and protection
of his or her legal rights relating to the securities, as we describe above; |
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|
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an
investor may not be able to sell interests in the securities to some insurance companies and to other institutions that are required
by law to own their securities in non-book-entry form; |
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an
investor may not be able to pledge his or her interest in the global security in circumstances where certificates representing the
securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective; |
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the
depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating
to an investor’s interest in the global security. We and any applicable trustee have no responsibility for any aspect of the
depositary’s actions or for its records of ownership interests in the global security. We and the trustee also do not supervise
the depositary in any way; |
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the
depositary may, and we understand that DTC will, require that those who purchase and sell interests in the global security within
its book-entry system use immediately available funds, and your broker or bank may require you to do so as well; and |
| ● |
financial
institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in the
global security, may also have their own policies affecting payments, notices and other matters relating to the securities. There
may be more than one financial intermediary in the chain of ownership for an investor. We do not monitor and are not responsible
for the actions of any of those intermediaries |
Special
Situations When A Global Security Will Be Terminated
In
a few special situations described below, a global security will terminate and interests in it will be exchanged for physical certificates
representing those interests. After that exchange, the choice of whether to hold securities directly or in street name will be up to
the investor. Investors must consult their own banks or brokers to find out how to have their interests in securities transferred to
their own names, so that they will be direct holders. We have described the rights of holders and street name investors above.
A
global security will terminate when the following special situations occur:
| ● |
if
the depositary notifies us that it is unwilling, unable or no longer qualified to continue as depositary for that global security
and we do not appoint another institution to act as depositary within 90 days; |
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|
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if
we notify any applicable trustee that we wish to terminate that global security; or |
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|
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if
an event of default has occurred with regard to securities represented by that global security and has not been cured or waived. |
The
applicable prospectus supplement may also list additional situations for terminating a global security that would apply only to the particular
series of securities covered by the prospectus supplement. When a global security terminates, the depositary, and neither we, nor any
applicable trustee, is responsible for deciding the names of the institutions that will be the initial direct holders.
PLAN
OF DISTRIBUTION
We
may sell the securities being offered hereby in one or more of the following ways from time to time:
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through
agents to the public or to investors; |
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● |
to
underwriters for resale to the public or to investors; |
| ● |
negotiated
transactions; |
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|
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block
trades; |
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|
| ● |
directly
to investors; or |
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|
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through
a combination of any of these methods of sale. |
As
set forth in more detail below, the securities may be distributed from time to time in one or more transactions:
| ● |
at
a fixed price or prices, which may be changed; |
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|
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at
market prices prevailing at the time of sale; |
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at
prices related to such prevailing market prices; or |
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|
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at
negotiated prices. |
We
will set forth in a prospectus supplement the terms of that particular offering of securities, including:
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● |
the
name or names of any agents or underwriters; |
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the
purchase price of the securities being offered and the proceeds we will receive from the sale; |
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any
over-allotment options under which underwriters may purchase additional securities from us; |
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any
agency fees or underwriting discounts and other items constituting agents’ or underwriters’ compensation; |
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any
initial public offering price; |
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any
discounts or concessions allowed or re-allowed or paid to dealers; and |
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any
securities exchanges or markets on which such securities may be listed. |
Only
underwriters named in an applicable prospectus supplement are underwriters of the securities offered by that prospectus supplement.
If
underwriters are used in an offering, we will execute an underwriting agreement with such underwriters and will specify the name of each
underwriter and the terms of the transaction (including any underwriting discounts and other terms constituting compensation of the underwriters
and any dealers) in a prospectus supplement. The securities may be offered to the public either through underwriting syndicates represented
by managing underwriters or directly by one or more investment banking firms or others, as designated. If an underwriting syndicate is
used, the managing underwriter(s) will be specified on the cover of the prospectus supplement. If underwriters are used in the sale,
the offered securities will be acquired by the underwriters for their own accounts and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale.
Any public offering price and any discounts or concessions allowed or re-allowed or paid to dealers may be changed from time to time.
Unless otherwise set forth in the prospectus supplement, the obligations of the underwriters to purchase the offered securities will
be subject to conditions precedent and the underwriters will be obligated to purchase all of the offered securities if any are purchased.
We
may grant to the underwriters options to purchase additional securities to cover over-allotments, if any, at the public offering price,
with additional underwriting commissions or discounts, as may be set forth in a related prospectus supplement. The terms of any over-allotment
option will be set forth in the prospectus supplement for those securities.
If
we use a dealer in the sale of the securities being offered pursuant to this prospectus or any prospectus supplement, we will sell the
securities to the dealer, as principal. The dealer may then resell the securities to the public at varying prices to be determined by
the dealer at the time of resale. The names of the dealers and the terms of the transaction will be specified in a prospectus supplement.
We
may sell the securities directly or through agents we designate from time to time. We will name any agent involved in the offering and
sale of securities and we will describe any commissions we will pay the agent in the prospectus supplement. Unless the prospectus supplement
states otherwise, any agent will act on a best-efforts basis for the period of its appointment.
We
may authorize agents or underwriters to solicit offers by institutional investors to purchase securities from us at the public offering
price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified
date in the future. We will describe the conditions to these contracts and the commissions we must pay for solicitation of these contracts
in the prospectus supplement.
In
connection with the sale of the securities, underwriters, dealers or agents may receive compensation from us or from purchasers of the
common stock for whom they act as agents in the form of discounts, concessions or commissions. Underwriters may sell the securities to
or through dealers, and those dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters
or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution
of the securities, and any institutional investors or others that purchase common stock directly and then resell the securities, may
be deemed to be underwriters, and any discounts or commissions received by them from us and any profit on the resale of the common stock
by them may be deemed to be underwriting discounts and commissions under the Securities Act.
We
may provide agents and underwriters with indemnification against particular civil liabilities, including liabilities under the Securities
Act, or contribution with respect to payments that the agents or underwriters may make with respect to such liabilities. Agents and underwriters
may engage in transactions with, or perform services for, us in the ordinary course of business.
We
may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act.
In addition, we may enter into derivative transactions with third parties (including the writing of options), or sell securities not
covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates,
in connection with such a transaction, the third parties may, pursuant to this prospectus and the applicable prospectus supplement, sell
securities covered by this prospectus and the applicable prospectus supplement. If so, the third party may use securities borrowed from
us or others to settle such sales and may use securities received from us to close out any related short positions. We may also loan
or pledge securities covered by this prospectus and the applicable prospectus supplement to third parties, who may sell the loaned securities
or, in an event of default in the case of a pledge, sell the pledged securities pursuant to this prospectus and the applicable prospectus
supplement. The third party in such sale transactions will be an underwriter and will be identified in the applicable prospectus supplement
or in a post-effective amendment.
To
facilitate an offering of a series of securities, persons participating in the offering may engage in transactions that stabilize, maintain,
or otherwise affect the market price of the securities. This may include over-allotments or short sales of the securities, which involves
the sale by persons participating in the offering of more securities than have been sold to them by us. In those circumstances, such
persons would cover such over-allotments or short positions by purchasing in the open market or by exercising the over-allotment option
granted to those persons. In addition, those persons may stabilize or maintain the price of the securities by bidding for or purchasing
securities in the open market or by imposing penalty bids, whereby selling concessions allowed to underwriters or dealers participating
in any such offering may be reclaimed if securities sold by them are repurchased in connection with stabilization transactions. The effect
of these transactions may be to stabilize or maintain the market price of the securities at a level above that which might otherwise
prevail in the open market. Such transactions, if commenced, may be discontinued at any time. We make no representation or prediction
as to the direction or magnitude of any effect that the transactions described above, if implemented, may have on the price of our securities.
Unless
otherwise specified in the applicable prospectus supplement, each class or series of securities will be a new issue with no established
trading market, other than our common stock, which is listed on The Nasdaq Capital Market. We may elect to list any other class or series
of securities on any exchange or market, but we are not obligated to do so. It is possible that one or more underwriters may make a market
in a class or series of securities, but the underwriters will not be obligated to do so and may discontinue any market making at any
time without notice. We cannot give any assurance as to the liquidity of the trading market for any of the securities.
In
order to comply with the securities laws of some U.S. states or territories, if applicable, the securities offered pursuant to this prospectus
will be sold in those states only through registered or licensed brokers or dealers. In addition, in some states securities may not be
sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification
requirement is available and complied with.
Any
underwriter may engage in overallotment, stabilizing transactions, short covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Overallotment involves sales in excess of the
offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Short covering transactions involve purchases of the securities in the open market
after the distribution is completed to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from
a dealer when the securities originally sold by the dealer are purchased in a covering transaction to cover short positions. Those activities
may cause the price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of
these activities at any time.
Any
underwriters who are qualified market makers on The Nasdaq Capital Market may engage in passive market making transactions in the securities
on The Nasdaq Capital Market in accordance with Rule 103 of Regulation M, during the business day prior to the pricing of the
offering, before the commencement of offers or sales of the securities. Passive market makers must comply with applicable volume and
price limitations and must be identified as passive market makers. In general, a passive market maker must display its bid at a price
not in excess of the highest independent bid for such security. If all independent bids are lowered below the passive market maker’s
bid, however, the passive market maker’s bid must then be lowered when certain purchase limits are exceeded.
LEGAL
MATTERS
The
validity of the issuance of the securities offered hereby will be passed upon for us by Codelaw LLC. Additional legal matters may be
passed upon for us or any underwriters, dealers or agents, by counsel that we will name in the applicable prospectus supplement.
EXPERTS
The
financial statements as of and for the years ended April 30, 2023 and 2022, included in our Annual Report on Form 10-K for the year ended
April 30, 2023, have been audited by Fruci & Associates II, PLLC, independent registered public accounting firm, as set forth in
their report, and have been incorporated herein by reference in reliance on the report of Fruci & Associates II, PLLC, given on the
authority of such firm as experts in auditing and accounting in giving said reports.
WHERE
YOU CAN FIND MORE INFORMATION
This
prospectus constitutes a part of a registration statement on Form S-3 filed under the Securities Act. As permitted by the SEC’s
rules, this prospectus and any prospectus supplement, which form a part of the registration statement, do not contain all the information
that is included in the registration statement. You will find additional information about us in the registration statement. Any statements
made in this prospectus or any prospectus supplement concerning legal documents are not necessarily complete and you should read the
documents that are filed as exhibits to the registration statement or otherwise filed with the SEC for a more complete understanding
of the document or matter.
You
may read and copy the registration statement, as well as our reports, proxy statements, and other information, at the SEC’s Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the
operation of the Public Reference Room. The SEC maintains an Internet site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the SEC. The SEC’s Internet site can be found at http://www.sec.gov.
You can also obtain copies of materials we file with the SEC from our website found at http://www.netcapitalinc.com/. Information on
our website does not constitute a part of, nor is it incorporated in any way, into this prospectus and should not be relied upon in connection
with making an investment decision.
INCORPORATION
OF DOCUMENTS BY REFERENCE
The
Securities and Exchange Commission (the “SEC”) allows us to “incorporate by reference” information that we file
with them. Incorporation by reference allows us to disclose important information to you by referring you to those other documents. The
information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically
update and supersede this information. We filed a registration statement on Form S-3 under the Securities Act with the SEC with
respect to the securities being offered pursuant to this prospectus. This prospectus omits certain information contained in the registration
statement, as permitted by the SEC. You should refer to the registration statement, including the exhibits, for further information about
us and the securities being offered pursuant to this prospectus. Statements in this prospectus regarding the provisions of certain documents
filed with, or incorporated by reference in, the registration statement are not necessarily complete and each statement is qualified
in all respects by that reference. Copies of all or any part of the registration statement, including the documents incorporated by reference
or the exhibits, may be obtained upon payment of the prescribed rates at the offices of the SEC listed above in “Where You Can
Find More Information.” We are incorporating by reference the documents listed below, which we have already filed with the SEC,
and all documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, except as to any
portion of any future report or document that is not deemed filed under such provisions:
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● |
Our
Annual Report on Form
10-K as of and for the year ended April 30, 2022, filed with the SEC on August 8, 2022; and |
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|
|
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● |
Our
Quarterly Reports on Form 10-Q for the quarters ended January 31, 2022 and July 31, 2022, filed with the SEC on March 17, 2022 and September 12, 2022,
respectively; |
| |
|
|
| |
● |
Our
Current Reports on Form 8-K (other than Current Reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on
such form that are related to such items) filed with the SEC on January 13, 2022, February 3, 2022, February 15, 2022, May 10, 2022,
May 18, 2022, June 28, 2022, and July 15, 2022; and |
| |
|
|
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● |
The
description of the our common stock contained in our registration statement on Form 8-A filed with the SEC on July 7, 2022, including
any amendments or reports filed with the SEC for the purposes of updating such description. |
We
also incorporate by reference all documents (other than Current Reports furnished under Item 2.02 or Item 7.01 of Form 8-K
and exhibits filed on such form that are related to such items) that are subsequently filed by us with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering of the securities made by this prospectus (including
documents filed after the date of the initial Registration Statement of which this prospectus is a part and prior to the effectiveness
of the Registration Statement). These documents include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
Any
statement contained in this prospectus or in a document incorporated or deemed to be incorporated by reference into this prospectus will
be deemed to be modified or superseded to the extent that a statement contained in this prospectus or any subsequently filed document
that is deemed to be incorporated by reference into this prospectus modifies or supersedes the statement.
You
may request, and we will provide you with, a copy of these filings, at no cost, by calling us at (781) 925-1700 or by writing to us at
the following address:
Netcapital Inc.
1
Lincoln Street
Boston,
MA 02111
Attn.:
Secretary
Netcapital
Inc.
Common
Stock
Debt
Securities
Warrants
Rights
Units
PROSPECTUS
October
26, 2022
Up to $2,100,000
Common Stock
Netcapital Inc.
H.C.
Wainwright & Co.
August 23, 2024
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