Netcapital Sued in Securities Fraud Class Action Covering Five Fiscal Years as Filings Fall Delinquent

Investors who acquired Netcapital Inc. securities during the period starting December 15, 2021, and concluding September 3, 2026, are eligible to join newly initiated class action litigation.¹ Rosen Law Firm started the formal legal challenge in court to hold the enterprise accountable for representations made during those dates.¹ Under statutory requirements governing collective investor suits, participants have until December 7, 2026, to file motions requesting appointment as lead plaintiff.¹ The core complaint asserts that the company booked illegitimate, substantial revenue derived from fraudulent advisory contracts linked to entities John Fanning directed.¹ By adding those disputed sums into reported totals, the organization allegedly distorted financial health throughout the multi-year class period.¹

The filed allegations outline a series of deceptive documentation practices designed to generate artificial revenue entries across corporate ledgers.¹ According to legal claims, advisory contracts were given retroactive dates and occasionally forged outright.¹ While significant consulting fees were accounted for on the books, the Netcapital Advisors unit provided almost no meaningful consulting support to the contracting entities.¹ In addition, business dealings connected with Portfolio Companies represented undisclosed related-party operations involving John Fanning.¹ The legal filing stresses that concealing these insider ties prevented public investors from evaluating the genuine nature of transactions credited to corporate accounts.¹

Alongside disputed contracts and concealed connections, the complaint targets the executive oversight mechanisms maintained at the organization.¹ It alleges that the organization released fraudulent certifications governed by the Sarbanes-Oxley Act of 2002.¹ The legal filing further states that defendants distributed misleading and untrue statements concerning Netcapital's operational state and prospective business.¹ Relying on these recurring periodic representations, investors bought equity believing that corporate reporting reflected authentic commercial expansion.¹ Shareholders ultimately sustained severe financial losses when disclosure of the underlying business realities prompted an equity decline.¹

The operational framework of the corporation assigns designated responsibilities to Netcapital Advisors inside the organizational family.² Operating as the corporate advisory arm, Netcapital Advisors offers strategic and promotional advice while taking equity positions in designated client firms.² These equity interests in partner ventures serve as standard compensation alongside strategic guidance.² Supported findings indicate that Netcapital Advisors, presented by the company as a provider of marketing and strategic guidance, is the specific business unit tied to the purported sham advisory arrangements.¹ Supported evidence shows that an arm created to build equity assets and provide strategic guidance operated as the conduit for nominal services and altered contracts.¹²

The surfacing of these accounting controversies coincided with structural disruption among the external professionals reviewing the company's financial records.² Effective August 12, 2026, Fruci & Associates II, PLLC stepped down from its position as Netcapital's independent auditor.² This auditor resignation occurred following previous corporate admissions regarding the fundamental reliability of its historical filings.² Netcapital earlier revealed that previous financial filings cannot be depended upon and will require comprehensive restatement.² Management acknowledged that past reported figures were flawed, leaving previous balances invalid until corrected submissions can be assembled.²

To address the vacant auditor position following Fruci & Associates II, PLLC's departure, internal leadership selected a replacement firm.² The Audit Committee of the Board of Directors chose Adeptus Partners, LLC to serve as Netcapital's independent registered public accounting firm.² Adeptus was charged with auditing consolidated statements across the fiscal years ending April 30, 2022, through April 30, 2026, alongside reviewing fiscal year 2026 interim numbers.² This broad undertaking assigns the replacement accounting firm to examine half a decade of finalized annual records.² The review of fiscal 2026 interim numbers will accompany the multi-year audits to ensure all quarterly data points undergo formal scrutiny.²

The comprehensive multi-year review handed to Adeptus Partners mirrors the timeline highlighted by aggrieved shareholders.¹² Supported accounts show that the auditing review and restatements directed to Adeptus Partners overlap precisely with the timeframe wherein Netcapital allegedly carried out securities fraud.¹ The civil fraud litigation identifies transactions starting on December 15, 2021, and extending through September 3, 2026.¹ Supported details show that the five fiscal periods undergoing full audit from 2022 through 2026 match the period when sham revenues were allegedly booked.¹² This alignment leaves the accounting firm reconstructing the exact multi-year reporting cycle that formed the predicate for the class action.¹²

Alongside litigation and auditor transitions, the company encountered heightened regulatory enforcement regarding overdue periodic filings.² The company remains in violation of Nasdaq Listing Rule 5250(c)(1) due to unfiled documentation, including the annual Form 10-K for the fiscal year that ended April 30, 2026, and the Form 10-Q quarterly report for the period ending July 31, 2026.² Because both annual and quarterly reports were withheld from the market, regulatory noncompliance has persisted.² Management established an objective of delivering a remediation blueprint to Nasdaq by October 23, 2026, while promising to submit delayed filings as quickly as feasible.² Submitting this blueprint forms the primary step toward curing the current delinquency under exchange standards.²

Even as disclosure delays persisted, the business succeeded in clearing an independent compliance matter regarding its market price.² This determination enabled Nasdaq to conclude the bid price deficiency proceeding first presented to Netcapital on February 4, 2026.² The company's common stock finished at $1.00 or higher for 10 consecutive trading sessions spanning September 23, 2026, to October 6, 2026.² Nasdaq's Listing Qualifications Department informed Netcapital on October 7, 2026, that it had regained standing under minimum bid price Listing Rule 5550(a)(2).² The formal notification confirmed that the specific pricing inquiry opened eight months earlier had been fully resolved.²

Outside of corporate headquarters, subsidiaries within the group maintain direct connections to primary financial regulators.² Corporate affiliates Netcapital Funding Portal, Inc. and Netcapital Securities Inc. maintain SEC registration alongside active FINRA memberships.² On the plaintiff side, the legal team guiding the securities complaint possesses a substantial history in collective investor litigation.¹ Back in 2017, ISS Securities Class Action Services placed Rosen Law Firm in the top position for total volume of class action settlements in the securities field.¹ During calendar year 2019, Rosen Law Firm secured over $438 million on behalf of participating investors.¹