Netcapital's auditor resigns; company says financials can't be relied on

What happened

Netcapital Inc., a Boston-based financial services company, disclosed on August 18, 2026, that its independent auditor, Fruci & Associates II, PLLC, resigned effective August 12, 2026. The company also said that previously issued financial statements should no longer be relied upon.

The auditor's resignation and the non-reliance disclosure were prompted by an SEC civil complaint filed on August 10, 2026, which alleges that Netcapital improperly recognized approximately $13.9 million of consulting revenue from certain portfolio companies between October 2021 and January 2024. The company noted that the allegations have not been adjudicated.

Netcapital stated that it is still evaluating the accounting effects and has not completed its assessment of what corrections or restatement adjustments may be required.

Background

Netcapital provides financial services, including a platform for private company capital raising. The company's common stock trades on Nasdaq under the ticker NCPL.

The company's most recent annual revenue reported was approximately $869,000 for the fiscal year ended April 30, 2025. The stock closed at $0.239 on the filing date, up about 2.1% from the prior close.

What this means

This filing is an 8-K, a form companies use to disclose major events that shareholders should know about. Items 4.01 and 4.02 are specific sections that require companies to report changes in their auditor and to disclose when previously issued financial statements can no longer be relied upon.

The resignation of an auditor is a serious event, and the non-reliance statement means investors should not trust the accuracy of the financial reports listed. The affected periods include audited financial statements for fiscal years 2022 through 2025 and several quarterly reports.

The SEC complaint alleges that Netcapital recognized revenue that it should not have, which overstated its financial results. The company has not yet restated any numbers, and it says it is still evaluating what adjustments may be needed. The company also noted that the complaint's allegations are unproven.

Typically, when a company announces non-reliance on financials, it will later restate those financials. The company said it will make additional disclosures when its evaluation is complete. The auditor's resignation letter is attached to the filing as Exhibit 16.1.