Netcapital Inc.
For the period ended Jul 31, 2025. Filed Sep 22, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2025 · Filed Sep 22, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of July 31, 2025, our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on that evaluation, they concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Quarterly Report on Form 10-Q.
This conclusion is consistent with the assessment included in our Annual Report on Form 10-K for the year ended April 30, 2025, which identified:
| ● | A material weakness in internal control over financial reporting related to the over-accrual of legal expenses, and |
| ● | A significant deficiency related to the process for identifying and evaluating evidence of orderly transactions and impairment indicators for investments in equity securities without readily determinable fair values. |
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended July 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Remediation Efforts
Management is in the process of implementing its remediation plan, which includes:
| ● | Enhanced period-end closing procedures for accrued expenses, including review of subsequent disbursements, vendor statements, and improved communication between management and accounting personnel regarding transaction timing; and |
| ● | Updated investment valuation policies requiring the collection and review of recent financial information from investees, enhanced documentation of efforts to obtain such information, and treating the lack of availability as a potential impairment indicator. |
At this time, remediation efforts have not yet been completed, and management is continuing to evaluate the effectiveness of the updated controls and procedures. Until remediation is completed and the enhanced controls have operated for a sufficient period of time, management cannot conclude that our disclosure controls and procedures or internal control over financial reporting are effective.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
-30-
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.