NCPLW Netcapital Inc.

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Executive Summary

Netcapital acquired the NetNudge AI Agent Platform from Codesharp Corporation for 600,000 shares of newly created Series A Convertible Preferred Stock (stated value $900,000), with up to 600,000 additional earnout shares contingent on $3M cumulative GAAP revenue over 36 months. The preferred stock carries 2.5 votes per share for initial shares (non-voting for earnout shares), is convertible only at Netcapital's option on a 1-for-1 basis, and is calibrated to stay under Nasdaq's 20% voting-power threshold. The filing also discloses a pending SEC Wells Notice received March 4, 2026, which the seller explicitly acknowledged and agreed does not constitute a closing condition or material adverse effect.

Key Financial Metrics

Actionable Insight

Key Facts

• Netcapital acquired substantially all assets of the NetNudge AI Agent Platform from Codesharp Corporation (Canadian corp) via Asset Purchase Agreement dated May 21/22, 2026.
• Initial consideration: 600,000 shares of Series A Convertible Preferred Stock at $1.50 stated value = $900,000.
• Earnout: up to 600,000 additional Series A shares if cumulative GAAP revenue of acquired business unit alone reaches $3M during June 1, 2026 – May 31, 2029 (36-month period).
• Series A Preferred: initial shares carry 2.5 votes/share; earnout shares are non-voting while preferred; all convert to common at 1 vote/share only at Netcapital's election (holders have no conversion right).
• Conversion ratio is fixed 1:1, no anti-dilution, no cumulative dividends, liquidation preference of $1.50/share senior to common.
• Maximum aggregate voting power of all Series A shares calibrated to 19.11% of pre-issuance voting power — under Nasdaq 5635(a) 20% threshold.
• NetNudge is described as an early-stage platform; no existing customer/supplier contracts or established relationships were acquired.
• Netcapital received a SEC Wells Notice on March 4, 2026; seller acknowledged it and agreed it does not block closing or constitute a material adverse effect.
• John Fanning Sr. (husband of Netcapital's CFO) served as an advisor on the platform development; no formal agreement or separate consideration.
• Shares issued under Section 4(a)(2) exemption from registration.

Financial Impact

Initial consideration of $900,000 in preferred stock (stated value) for an early-stage AI platform with no acquired revenue; earnout could add up to $900,000 more if $3M cumulative revenue achieved over 3 years.

Risk Factors

• SEC enforcement action from the disclosed Wells Notice could result in fines, injunctions, or operational restrictions.
• Earnout milestone ($3M cumulative revenue over 36 months) is aggressive for an early-stage platform with no existing customer contracts.
• Dilution risk: up to 1.2M shares of preferred (convertible to common) could be issued, representing significant dilution relative to current common outstanding.
• The brand/domain (NetNudge, www.netnudge.com) is owned by third-party Dotcom Capital LLC and only licensed to the seller — sublicense/assignment to Netcapital requires third-party consent.
• No existing customer or supplier contracts were acquired — platform must be commercialized from scratch.

Market Snapshot

Documents Analyzed

This report is based on 6 SEC documents filed with EDGAR.

US Market Status

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