UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

ý[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:JanuaryJuly 31, 20172020

OR

¨[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:000-55036

Indicate by check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý[X] No ¨[ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Emerging growth company  [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨Yes[ ] No [X]

As of March 19, 2018,September 21, 2020 the Company had 708,049,380831,581,712 shares of its common stock, par value $0.001 per share, issued and outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

VALUESETTERS, INC.

Condensed Consolidated Balance Sheets

See Accompanying Notes to the Condensed Consolidated Financial Statements

See Accompanying Notes to the Condensed Consolidated Financial Statements

See Accompanying Notes to the Consolidated Financial Statements

(Unaudited)

See Accompanying Notes to the Condensed Consolidated Financial Statements 

VALUESETTERS, INC.

Notes To Condensed Consolidated Financial Statements (Unaudited)

Note 1– Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine- and three-month periodsperiod ended JanuaryJuly 31, 2018,2020, are not necessarily indicative of the results that may be expected for the fiscal year ended April 30, 2018.2021. For further information, refer to the audited financial statements and footnotes thereto in our Annual Report on Form 10-K for the year ended April 30, 2017.2020.

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses.  The new guidance provides better representation about expected credit losses on financial instruments. This update requires the use of a methodology that reflects expected losses and requires consideration of a broader range of reasonable and supportive information to inform credit loss estimates.  This ASU is effective for reporting periods beginning after December 15, 2022, with early adoption permitted.  The company is studying the impact of adopting the ASU in fiscal year 2023, and what effect it could have. The Company believes the accounting change would not have a material effect on the financial statements.

In June 2018, the FASB issued ASU 2018-07, Improvement to Nonemployee Share-based Payment Accounting, which simplifies the accounting for share-based payments. The company elected early adoption of this ASU, using the modified retrospective approach, so that all stock compensation to employees and nonemployees is treated under the same guidance as in ASC 718.

In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes(Topic 740):Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance had no impact on our consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

Note 2 – Going Concern Matters and Realization of Assets

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the ordinary course of business. However, the Company has sustained recurring losses from its continuing operations and as of January 31, 2018, had negative working capital of $737,942$1,219,028 and a stockholders’an accumulated deficit of $1,671,959.$2,431,411. In addition, the Company ismay be unable to meet all of its obligations as they become due and sustain its operations.due. The Company believes that its existing cash resources are not sufficient to fund its continuing operating losses, capital expenditures, lease and debt payments and working capital requirements.

The Company may not be able to raise sufficient additional debt, equity or other cash on acceptable terms, if at all. Failure to generate sufficient revenues, achieve certain other business plan objectives or raise additional funds could have a material adverse effect on the Company’s results of operations, cash flows and financial position, including its ability to continue as a going concern, and may require it to significantly reduce, reorganize, discontinue or shut down its operations.

In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company which, in turn, is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in its existence.

Management’s plans include:

Management has determined, based on its recent history and its liquidity issues, that it is not probable that management’s plan will sufficiently alleviate or mitigate, to a sufficient level, the relevant conditions or events noted above. Accordingly, the management of the Company has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance date of these financial statements.

There can be no assurance that the Company will be able to achieve its business plan objectives or be able to achieve or maintain cash-flow-positive operating results.objectives. If the Company is unable to generate adequate funds from operations or raise sufficient additional funds, the Company may not be able to repay its existing debt, continue to operate its business network, respond to competitive pressures or fund its operations. As a result, the Company may be required to significantly reduce, reorganize, discontinue or shut down its operations. The financial statements do not include any adjustments that might result from this uncertainty.

Note 3 – Revenue Recognition

Revenue Recognition under ASC 606

The Company recognizes service revenue from its consulting contracts and its game website using the five-step model as prescribed by ASC 606:

• Identification of the contract, or contracts, with a customer;

• Identification of the performance obligations in the contract;

• Determination of the transaction price;

• Allocation of the transaction price to the performance obligations in the contract; and

• Recognition of revenue when or as, the Company satisfies a performance obligation.

The Company identifies performance obligations in contracts with customers, which primarily are professional services and subscription services. The transaction price is determined based on the amount the Company expects to be entitled to receive in exchange for transferring the promised services to the customer. The transaction price in the contract is allocated to each distinct performance obligation in an amount that represents the relative amount of consideration expected to be received in exchange for satisfying each performance obligation. Revenue is recognized when performance obligations are satisfied. The Company usually bills its customers before it provides any services and begins performing services after the first payment is received. Contracts are typically one year or less. For larger contracts, in addition to the initial payment, the Company may allow for progress payments throughout the term of the contract.

Judgments and Estimates

The estimation of variable consideration for each performance obligation requires the Company to make subjective judgments. The Company enters contracts with customers that regularly include promises to transfer multiple services, such as digital marketing, web-based videos, offering statements, and professional services. For arrangements with multiple services, the Company evaluates whether the individual services qualify as distinct performance obligations. In its assessment of whether a service is a distinct performance obligation, the Company determines whether the customer can benefit from the service on its own or with other readily available resources, and whether the service is separately identifiable from other services in the contract. This evaluation requires the Company to assess the nature of each individual service offering and how the services are provided in the context of the contract, including whether the services are significantly integrated, highly interrelated, or significantly modify each other, which may require judgment based on the facts and circumstances of the contract.

When agreements involve multiple distinct performance obligations, the Company allocates arrangement consideration to all performance obligations at the inception of an arrangement based on the relative standalone selling prices (“SSP”) of each performance obligation. Where the Company has standalone sales data for its performance obligations which are indicative of the price at which the Company sells a promised service separately to a customer, such data is used to establish SSP. In instances where standalone sales data is not available for a particular performance obligation, the Company estimates SSP by the use of observable market and cost-based inputs. The Company continues to review the factors used to establish list price and will adjust standalone selling price methodologies as necessary on a prospective basis.

Service Revenue

Service revenue from subscriptions to the Company's game website is recognized over time on a ratable basis over the contractual subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription services being rendered are recorded as a deferred revenue. Professional services revenue is recognized over time as the services are rendered.

When a contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable. The Company estimates the amount to reserve for uncollectible amounts based on the aging of the contract balance, current and historical customer trends, and communications with its customers. These reserves are recorded as operating expenses against the contract asset (Accounts Receivable).

Contract Assets

Contract assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when the customer receives services. Contract assets are included in other current or non-current assets in the consolidated balance sheets, depending on if their reduction will be recognized during the succeeding twelve-month period or beyond.

Deferred Revenue

Deferred revenues represent billings or payments received in advance of revenue recognition and are recognized upon transfer of control. Balances consist primarily of annual plan subscription services and professional and training services not yet provided as of the balance sheet date. Deferred revenues that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues in the consolidated balance sheets, with the remainder recorded as other non-current liabilities in the consolidated balance sheets.

Costs to Obtain a Customer Contract

Sales commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts. These costs are capitalized as other current or non-current assets and amortized on a straight-line basis over the life of the contract, which approximates the benefit period. The benefit period was estimated by taking into consideration the length of customer contracts, technology lifecycle, and other factors. All sales commissions are recorded as consulting fees within the Company's consolidated statement of operations.

Remaining Performance Obligations

The Company's subscription terms are typically less than one year. All of the Company’s revenues in the three-month periods ended July 31, 2020 and 2019, which amounted to $1,762,322 and $118,732, respectively, are considered contract revenues. Contract revenue as of July 31, 2020 and April 30, 2020, which has not yet been recognized, amounted to $35,572 and $656, respectively, and is recorded on the balance sheet as deferred revenue. The Company expects to recognize revenue on all of its remaining performance obligations over the next 12 months.  

Note 34 – Income (Loss)Earnings Per Common Share

Income (Loss) per common share data was computed as follows:

For the nine and three-month periods ended JanuaryJuly 31, 20182020 and 2017,2019, the Company excluded 38,000,000 and 38,733,333 shares, respectively, of common stock issuable upon the exercise of outstanding stock options and fixed-ratehad no convertible debt from the calculation of net loss per share because the effect would be anti-dilutive.or dilutive securities.

Note 45 – Principal Financing Arrangements

The following table summarizes components of debt as of JanuaryJuly 31, 20182020 and April 30, 2017:2020:

As of JanuaryJuly 31, 20182020 and April 30, 2017,2020, the Company owed its principal lender (“Lender”) $1,000,000 and $1,199,327, respectively, under a loan and security agreement (“Loan”) dated April 28, 2011, that was amended on July 26, 2014 and again on October 31, 2017. The Lender is also the largest shareholder of the Company, owning 271,371,454 shares of common stock, or 32.6% of the 831,581,712 shares issued and outstanding, as of July 31, 2020.

The Loan was amended on October 31, 2017 to change the maturity date to October 31, 2020, reduce the interest rate from 8% to 1.25% per annum, and reduce the default interest rate from 15% to 8% per annum (the “Amendments”). In conjunction with the Amendments, the Lender also agreed to reduce the total debt and accrued interest payable by $453,031 to $1,000,000, in exchange for the Company issuing to the Lender 44,198,246 shares of its common stock.  The Lender is also the largest shareholder of the Company, owning 271,371,454 shares of common stock, or 38.3% of the 708,049,380 shares issued and outstanding.

The Amendment decreased the Loan balance by $453,031. Consequently, upon issuance of the 44,198,246 shares, to the Lender, who is a related party, the Company recorded the debt decrease as a capital transaction, resulting in an increase of $44,198 in common stock and $408,833 in capital in excess of par value.

UnderIn connection with the provisions of the Loan,financing, the Company has agreed to certain restrictive covenants, including, among others, that the Company may not convey, sell, lease, transfer or otherwise dispose of any part of its business or property, except as permitted in the agreement, dissolve, liquidate or merge with any other party unless, in the case of a merger, the Company is the surviving entity, incur any indebtedness except as defined in the agreement, create or allow a lien on any of its assets or collateral that has been pledged to the Lender, make any loans to any person, except for prepaid items or deposits incurred in the ordinary course of business, or make any material capital expenditures

expenditures. To secure the payment of all obligations to the Lender, the Company granted to the lenderLender a continuing security interest and first lien on all of the assets of the Company.

As of JanuaryJuly 31, 20182020 and April 30, 2017,2020, the Company’s related-party unsecured notes payable totaled $75,800 and $35,100, respectively. At January 31, 2018, $15,000 is payable to a board member at a zero percent interest rate and $60,800 is payable to an entity that owns the majority of our largest shareholder. One related-party note totals $20,000 and accrues interest at a rate of 8% per annum and was due in January 2018. The remaining related-party debt payable of $40,800 is payable immediately and accrues interest at a rate of 8% per annum.

$15,000. The Company also owes JP Morgan Chase Bank $38,127 and $40,107 and$34,324 as of JanuaryJuly 31, 20182020 and April 30, 2017, respectively.2020 to Chase Bank. The Company pays approximately $220 a month in principal payments on the outstanding balance, plus the monthly interest expense to Chase Bank, which is calculated at a rate of 5.5% per annum.

OtherOn May 6, 2020 the Company borrowed $1,885,800 (the “May Loan”) and on June 17, 2020 the Company borrowed $500,000 (the “June Loan”) from a U.S. Small Business Administration (the "SBA") loan program. The May Loan has an initial term of two years and an interest rate of 1% per annum. Principal payments are delayed until the Company negotiates with the lender as to the amount of principal that is subject to repayment. If repayment of the May Loan is required, payments begin after a six-month deferral period, in which interest accrues, and payments are to be made in equal installments of approximately $106,125 over an 18-month period. Of the $1,885,800 balance, $955,125 is considered a short-term liability. Accrued interest payable on the May Loan amounted to $4,443 as of July 31, 2020.

The June Loan requires installment payments of $2,437 monthly, beginning on June 17, 2021 over a term of thirty years. Interest accrues at a rate of 3.75% per annum. The Company agreed to grant a continuing security interest in its assets to secure payment and performance of all debts, liabilities, and obligations to the SBA. The June Loan was personally guaranteed by the Company’s Chief Financial Officer. $1,666 of the June Loan is recorded as a current liability and the remaining $498,334 is classified as a long-term liability. Accrued interest payable on the June Loan amounted to $2,209 as of July 31, 2020.

Demand notes payable totaled $23,300 and $50,190 at January$7,860 as of July 31, 20182020 and April 30, 2017, respectively. The2020. These notes are payable on demand.have an interest rate of 0%.

The Company owes $200,000 and $533,066 at January 31, 2018 and April 30, 2017, respectively, to two individual note holders. A $200,000 note was due in September 2017 and accrues interest at an annual rate of 2%. The holder can convert the note into shares of common stock at a price of $0.01 per share. A second note for $333,066 (the “Second Note”), accrued interest at 3% per annum was due in June 2017. This note plus accrued interest was converted into shares of common stock on October 5, 2017. See Note 7.

The Second Note was settled by issuing a total number of shares of 52,301,100, which were valued at $130,753, for the settlement of obligations of $443,011, resulting in a gain on debt settlement of $312,259 in the three-month period ended October 31, 2017.

Note 56 – Income Taxes

At JanuaryAs of July 31, 2018,2020 and April 30, 2020, the Company had net operating loss carryforwards for federalFederal income tax purposes of approximately $2,100,000 that expire$700,000 expiring in the years 2018of 2021 through 2033. 2035.

The Company has provided an allowance forTax Cuts and Jobs Act ("Tax Act") was enacted on December 22, 2017. Among numerous provisions, the full valueTax Act reduces the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. As a result of the relatedTax Act, the Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. 

As of April 30, 2020, the Company had net deferred tax assets calculated at an expected rate of 21%, or approximately $180,000. As of April 30, 2020, the Company recognized the net deferred asset since it isto the extent of the impact on current book earnings, as the Company’s management believed that historical, current and expected earnings are sufficient to meet the more likely than not that none of such benefit will be realized. Utilization ofstandard to enable the Company to recognize the net operating losses may be subjectdeferred tax asset. As allowable under accounting standards, the Company elected to annual limitations provided by Section 382fully remove the valuation allowance as of the Internal Revenue Code and similar state provisions.April 30, 2020.

As of July 31, 2020, the deferred tax asset has been reduced to $168,659 by the tax provision of $11,341 for the three months ended July 31, 2020. Due to the lossnominal income for the nine-three-month period ended July 31, 2019, and three-month periods ended January 31, 2018 and 2017,the availability of a tax loss carryforward to offset any potential tax, the Company has recorded no income tax expense in any of these nine- and three-month periods.for the three months ended July 31, 2019.

Note 67 – Related Party Transactions

The Company’s largest shareholder is also its principal lender. As of JanuaryJuly 31, 20182020 and April 30, 2017,2020, the Company owed its largest shareholder, under a secured lending agreement, $1,000,000 and $1,199,327 respectively. The. Under the existing loan agreement, as amended, the maximum amount of the loan is $1,250,000, and the loan is duematures on October 31, 2020. The largest shareholder of the Company owns 271,371,454 shares of common stock, or 38.3%32.6% of the 708,049,380831,581,712 shares issued and outstanding.outstanding as of July 31, 2020. Accrued interest payable on this secured loan as of July 31, 2020 and April 30, 2020 amounted to $34,386 and $31,235, respectively.

Compensation to officers in the three-month periods ended July 31, 2020 and 2019 consisted of common stock valued at $82,622 and $19,688 respectively, and cash payments of $66,462 and $30,000, respectively.

Compensation to a related party consultant in the three-month periods ended July 31, 2020 and 2019 consisted of common stock valued at $19,378 and $0 respectively, and cash payments of $22,154 and $7,200, respectively. This consultant is also the controlling shareholder of Zelgor Inc. and $1,050,000 of the Company’s revenues in the quarter ended July 31, 2020 were from Zelgor Inc.

The Company owes a director $31,680$16,680 as of JanuaryJuly 31, 20182020 and April 30, 2017,2020, which is recorded as accounts payable, plus $15,000 in a non-interest-bearing note payable.

The Company owes $15,000 to a former director, who resigned on August 7, 2017. At April 30, 2017, the obligation was recorded as a related-party payable, and as a payable to a non-related party at January 31, 2018.

The Company owes a related party $20,000 as of January 31, 2018 and April 30, 2017 under a note payable with interest at 8% per annum, with a maturity date of November 18, 2017, and as of January 31, 2018, an additional $40,800 payable on demand.

Our Chief Executive Officer and our Chief Financial Officer each received stock grants of 20,000,000 shares. For each officer, 10,000,000 shares were vested immediately and 10,000,000 shares vest on a quarterly basis over a two-year period. See Note 7.

The Company owes its former Chief Executive Officer $0 and $100 as of January 31, 2018 and April 30, 2017, respectively.

Note 78 – Stockholders’ Deficit

The Company is authorized to issue 900,000,000 shares of its common stock, par value $0.001. 708,049,380831,581,712 and 530,000,000831,269,212 shares were outstanding as of JanuaryJuly 31, 20182020 and April 30, 2017,2020, respectively.

In the first quarter of fiscal 2018,2021, the Company issued 10,000,000an aggregate of 312,500 shares of restricted commonstock to its Chief Marketing Officer as compensation. The shares were valued at $1,406.

In the first quarter of fiscal 2020, the Company issued an aggregate of 2,812,500 shares of restricted stock to its Chief Executive Officer, and 24,590,000 to a creditor to settle $24,590 in debt.

In the second quarter of fiscal 2018, the Company issued an aggregate of 12,875,000 shares of restricted common stock as compensation expense. 11,125,000 shares were issued to our Chief Financial Officer and 1,125,000 to our Chief Executive Officer.Marketing Officer as compensation. The Company also issued 10,000,000 shares of restricted common stock to AthenaSoft Corp., to purchase a 20% ownership. The Company can exert no influence on AthenaSoft Corp., considers its ownership a passive investment and has no access to the financial records of AthenaSoft Corp. Consequently, the investment is recorded using the cost method. In conjunction with the acquisition, the Company incorporated a new wholly-owned subsidiary, AthenaSoft Inc., a Delaware corporation, for the purpose of being a U.S. marketing arm for programming projects that AthenaSoft Corp. completes with its labor force in India.

Additionally, the Company issued 96,499,346 shares of restricted common stock to settle debt obligations, including accrued interest payable, of $896,042

In the third quarter of fiscal 2018, the Company received conversion notices to convert debt and accrued interest payable totaling $26,973 into 8,755,867 shares of common stock. At the time of the conversion, the stock waswere valued at $33,273, and the Company recorded a loss on debt conversion of $6,300.$19,688.

In the third quarter of fiscal 2018, the Company issued an aggregate of 2,979,167 shares of restricted common stock as compensation expense, 2,250,000 of which were issued as compensation to the Company’s Chief Executive and Chief Financial Officers. The Company also issued 2,000,000 shares of restricted common stock for funds previously received in a private placement agreement of $2,000, which were formerly recorded in accrued expenses, 10,000,000 shares of restricted common stock for a two-year marketing agreement, and 350,000 shares of restricted common stock to acquire a digital marketing database.

Note 89 – Fair Value

The Fair Value Measurements Topic of the FASB Accounting Standards Codification establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

• Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company has the ability to access at the measurement date.

• Level 2: inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3: inputs are unobservable inputs for the asset or liability.

Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, we base fair value on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy. Fair value measurements for assets and liabilities where there exists limited or no observable market data and, therefore, are based primarily upon management’s own estimates, are often calculated based on current pricing policy, the economic and competitive environment, the characteristics of the asset or liability and other such factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows that could significantly affect the results of current or future value.used.

Note 910 – Stock-Based Compensation Plans

The Company issued common stock and optionsentered consulting agreements to purchaseissue common stock and recorded the applicable non-cash expense in accordance with the authoritative guidance of the Financial Accounting Standards Board.  For the nine- and three-month periods ended JanuaryJuly 31, 2018,2020 and 2019, the Company recorded $112,699$121,378 and $26,387, respectively, in stock-based compensation expense. For the nine- and three-month periods ended January 31, 2017, the Company recorded $114,744 and $38,248,$28,510, respectively, in stock-based compensation expense.

On January 23, 2018, the company issued 10,000,000As of July 31, 2020, there was $489,038 of prepaid stock-based compensation expense for services that end on August 31, 2021.

As of July 31, 2020, an aggregate of 2,187,500 shares of common stock valued at $0.007 per share, or $70,000 incan be earned by the aggregate, for a two-year consulting agreement. In conjunction with this agreement, $767 was included inCompany’s Chief Marketing Officer from unvested stock grants. 312,500 shares vested on July 31, 2020 and were recorded as stock-based compensation of $1,406. These shares vest at a rate of 312,500 shares per quarter, over the next seven quarters.

The table below presents the components of stock-based compensation expense for the nine- and three-month periods ended JanuaryJuly 31, 2018. 2020 and 2019.

The remaining balancetable below presents the prepaid compensation expense as of $69,233 is recorded as a prepaid expense at JanuaryJuly 31, 2018, $35,000 of which is recorded as a current asset2020 and $34,233 as a non-current asset. The $69,233 will be recognized on a straight-line basis as non-cash stock-compensation expense over the remainder of the two years.April 30, 2020:

Note 1011 – Deposits and Commitments

The companyCompany utilizes office space in Boston, Massachusetts, under a month-to-month lease agreement that allows to company to end its lease by providing 30-day written notice. The lease agreement includes a deposit of $6,300.

Note 12 – Concentrations

For the three-month period ended July 31, 2020, the Company had one customer that constituted 60% of its revenues, a second customer that constituted 26% of its revenues and a third customer that constituted 12% of its revenues. For the three-month period ended July 31, 2019, the Company had one customer that constituted 81% of its revenues.

Note 13 – Investments

In May 2020, the Company entered a consulting contract with Watch Party LLC (“WP”), which allowed the Company to receive up to 110,000 membership interest units of WP in return for consulting services. The Company earned 97,500 membership interest units in the quarter ended July 31, 2020. The WP units are valued at $2.14 per unit based on a sales price of $2.14 per unit on an online funding portal, resulting in revenues of $208,650 for the three-months ended July 31, 2020 and deferred revenue of $26,750 as of July 31, 2020.

In May 2020, the Company entered a consulting contract with ChipBrain LLC (“Chip”), which allowed the Company to receive up to 710,200 membership interest units of Chip in return for consulting services. The Company earned 500,000 membership interest units in the quarter ended July 31, 2020 and anticipates earning the remaining units in the quarter ending October 31, 2020. The Chip units are valued at $0.93 per unit based on a sales price of $0.93 per unit on an online funding portal, resulting in revenues of $465,000 for the three-months ended July 31, 2020.

In May 2020, the Company entered a consulting contract with Zelgor Inc. (“Zelgor”), which allowed the Company to receive up to 1,400,000 shares of common stock of Zelgor in return for consulting services. The Company earned 1,050,000 shares in the quarter ended July 31, 2020 and anticipates earning the remaining shares in the quarter ending October 31, 2020. The Zelgor shares are valued at $1.00 per share based on a sales price of $1.00 per share on an online funding portal, resulting in revenues of $1,050,000 for the three-months ended July 31, 2020. The $1.00 per share valuation was derived based on a combination of multiple transactions on a secondary trading platform in which shares were purchased at $1.00 per share, and two private offerings of shares, one at a selling price of $0.50 per share and the other at $2.00 per share.

On January 2, 2020, the Company entered a consulting contract with Deuce Drone LLC (“Drone”), which allowed the Company to receive up to 2,350,000 membership interest units of Drone in return for consulting services. The Company earned all 2,350,000 membership interest units in fiscal 2020. The Drone units are valued at $0.35 per unit based on a sales price of $0.35 per unit when the units were earned, or $822,500. Drone is currently selling Drone units for $1.00 per unit on an online funding portal.

In August 2019, the Company entered a consulting contract with Kingscrowd LLC (“Kingscrowd”), which allowed the Company to receive 300,000 membership interest units of Kingscrowd in return for consulting services. The Kingscrowd units are valued at $1.80 per unit based on a sales price of $1.80 per unit when the units were earned, or $540,000. Kingscrowd units currently trade at a price of $1.80 per unit on a secondary trading platform.

During fiscal 2019, the Company entered a consulting contract with NetCapital Systems LLC (“NetCapital”), which allowed the Company to receive up to 1,000 membership interest units of NetCapital in return for consulting services. The Company earned 40 units in the quarter ended July 31, 2020, at a value of $91.15 per unit, or $3,646. The Company earned all 1,000 Netcapital units but sold a portion of the units in fiscal 2020 at a sales price of $91.15 per unit. As of July 31, 2020 the Company owns 528 Netcapital units, at a value of $48,128.

The following table summarizes the components of investments as of July 31, 2020 and April 30, 2020:

The above investments do not have a readily determinable fair value, as identified in ASC 321-10-35-2, and all investments are measured at cost less impairment. The Company monitors the investments for any changes in observable prices from orderly transactions.

Note 1114 – Subsequent Events

On August 23, 2020, the Company entered into an Agreement and Plan of Merger whereby NetCapital Systems LLC would become an 80% owner of the Company. In conjunction with this agreement, the Company filed a preliminary information statement on September 8, 2020 to change the Company’s corporate name from ValueSetters, Inc. to NetCapital Inc and to amend the Company’s Articles of Incorporation to effect a stock combination, or reverse stock split, pursuant to which up to 2,000 shares of the Company’s common stock would be exchanged for one new share of common stock.

The merger agreement is contingent upon certain closing conditions and is not yet finalized. The reverse split is currently pending and FINRA has not been notified of an effective date for the reverse split to occur. Consequently, the financial statements of the merger candidate are not retrospectively presented, given that the effective date of the proposed merger has not been determined.

The Company evaluated subsequent events through March 19, 2018 the date these financial statements were available to be issued. There were no other material subsequent events that required recognition or additional disclosure in these financial statements.

Item 2. Management���sManagement’s Discussion and Analysis of Financial Condition and Results of Operations.

This quarterly report on Form 10-Q and other reports filed by the Company from time to time with the U.S. Securities and Exchange Commission (collectively, the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

Overview

ValueSetters is

We are a publicly traded, boutique advisory firm, based in Boston, MA.Massachusetts. Our team of experts, including entrepreneurs, angel investors, and industry specialists and digital marketing professionals work with companies at all stages to provide assistance with capital raising, strategy, technology consulting, digital marketing, economic development and technology consulting. Beginninglogistics technology.

We specialize in Regulation Crowdfunding (“Reg CF”), under the first quarterprovisions of fiscal 2015, we began consulting for small companies and taking an equity stake in these companies in exchange for our services.Title III of the JOBS Act of 2012. We have successfully increased our quarter-over-quarter revenue in the quarter ended January 31, 2018, duebelieve that new capital raising techniques, such as Reg CF, democratize capital raising, similar to the additionway that social networks democratize broadcast mechanisms that once belonged only to traditional media. Reg CF is one of three securities exemptions that enable online capital formation. Reg D 506(c) allows an unlimited amount of money to be raised from accredited investors. Reg A+ enables an issuer to raise up to $50 million online from anyone. Reg CF, the smallest of the crowdfunding exemptions, allows issuers to raise up to $1.07 million from non-accredited investors every 12 months.

In March 2020, the Securities and Exchange Commission (the "SEC") proposed meaningful changes to multiple securities exemptions in an effort to provide critical capital needed for emerging companies, from early-stage start-ups seeking seed capital, to companies that are pursuing a course to become a public reporting company. The new personnel, includingproposal intends to create a Chief Executive Officer and a Chief Financial Officer. With the additional staff available to us, we began growing the advisory services component of our business. We plan to continue to take equity stakes in some companies and it remains our strategy to purchase part or all of early-stage companies and cross pollinate the ideas, technology and expertise within these companiesmore rational framework to enhance the operations, profits and market share of all the entities, at an affordable price.entrepreneur's access to capital while preserving important investor protections.

DuringThe new regulations, which we anticipate will be implemented before the end of the year, are designed to:

The SEC proposed revisions to the offering and investment limits, which we believe will have a positive impact on our second quarterbusiness. For Reg CF, the new rules include:

Reg CF will also benefit from “Testing the Waters” a rule currently utilized under Reg A+, that enables issuers to measure investor demand before spending tens of fiscal 2018,thousands of dollars on an actual offering. Special Purpose Vehicles (or SPVs) may now be included in Reg CF offers and this inclusion is designed to improve the viability of the exemption while providing greater investor protection.

We believe these actions by the SEC will enhance the value of funding portals and strengthen the online capital raising process in private equity. Consequently, we formedhave negotiated a wholly-owned subsidiarytransaction that will consolidate the operations of a Reg CF funding portal, Netcapital.com (“Netcapital”), with the name of AthenaSoft Inc., a marketing arm of an Indian-based company with a website at http://athenasoftsolutions.com/. (“Athena Solutions”). We utilize Athena Solutions to provide software development services to some of our customers, including the development of websites, mobile applications and blockchain technology. For services provided to our customers by Athena Solutions, we recorded in our third quarter revenues of $21,300 and cost of revenues of $14,910.

A company that we own equity in, as a result of our consulting services, isfinancial results. Netcapital Systems LLC. This company ownsoperates a Title III JOBS Act funding portal, and as of today is one of fewer than 50only a few dozen FINRA approved crowdfunding portalsReg CF portals. Although we have a written agreement that we filed as an exhibit to a Current Report on Form 8-K on August 26, 2020, the agreement is subject to certain events and it is possible that the transaction will not be finalized.  Increasing our ownership in online businesses with private equity platforms is a significant component of our business strategy.

For the past three years we have provided consulting services to Netcapital. In addition to the services we provided to Netcapital, we provide consulting services to some of our clients that utilize the Netcapital website to raise money from non-accredited and accredited investors. We believe we have been successful in providing advice and digital marketing services to our clients, who are allowed to sell securitiesadvertise their fundraising, in startupconjunction with advertising provisions contained in the JOBS Act. During the past three years, many high-tech firms have become our clients, including Kingscrowd LLC, Deuce Drone LLC and ChipBrain LLC. These companies have contributed to non-accredited investors via the Internet. We continue to consult for Netcapital (see https://Netcapital.com)our growth and have investedwe own minority positions in additional early-stage companies that we met through Netcapital by providing our consulting services. We believe our investment and future revenue potential from our relationship with Netcapital is significant.

We also consulted for Zelgor, a mobile phone game company, which builds massive multiplayer online social games on top of the real-world map. It combines elements of classic arcade games and GPS technology, and ValueSetters currently owns 5% of Zelgor, which recently raised additional capital through the Netcapital platform. See http://www.zelgor.com.

them.

Our limited operating history and the uncertain nature of our future operations and the markets we address or intend to address make prediction of our future results of operations difficult. Our operations may never generate significant revenues, and we may never achieve profitable operations.   

Results of Operations

For the Nine Months Ended January 31, 2018 Compared to the Nine Months Ended January 31, 2017

Our revenues for the nine months ended January 31, 2018 increased by $59,711, or 574%, to $70,120 as compared to $10,409 reported for the nine months ended January 31, 2017. The increase in revenues is attributable to an increase in consulting services. With the hiring in July of a new CEO, and a CFO in September, we had the staffing needed to begin to generate new revenues for the Company. We also formed a new subsidiary for software development services that generated revenues of $21,300 in the nine-months ended January 31, 2018, as compared to no revenues in the prior fiscal year.

Selling, general and administrative expenses increased by $92,217, or 673%, to $105,921 for the nine months ended January 31, 2018 from $13,704 reported in the nine months ended January 31, 2017. The increase is primarily attributable to an increase in rent, accounting, sales commissions and consulting expenses in fiscal 2018.

Stock-based compensation expense decreased by $2,045 to $112,699, or 2%, for the nine months ended January 31, 2018, from $114,744 reported in the nine months ended January 31, 2017. For the nine months ended January 31, 2018, the expense primarily consisted of the value of common stock issued to four employees, whereas for the nine months ended January 31, 2017, the expense primarily consisted of stock-option compensation to members of our advisory board.

Depreciation expense amounted to $285,795 in the nine-month period ended January 31, 2017, as compared to no depreciation expense in the nine-month period ended January 31, 2018. The carrying value of our fixed assets is zero dollars as of April 30, 2017, and we have no depreciation expense in fiscal 2018.

Interest expense decreased by $24,525 to $62,209, for the nine-month period ended January 31, 2018, as compared to $86,734 for the nine months ended January 31, 2017. The decrease in interest expense is attributable to a decrease in our debt at January 31, 2018, as compared to January 31, 2017 and the reduction in the interest rate on October 31, 2017 for our secured loan, from 8% to 1.25%.

In the nine-month period ended January 31, 2018, we recorded a gain of $293,664 for the issuance of our common stock to settle debt obligations, as compared to no gain in the nine-month period ended January 31, 2017. Each instance of a debt settlement gain or loss is contingent upon the price of our stock and the amount of debt retired.

For the Three Months Ended JanuaryJuly 31, 20182020 Compared to the Three Months Ended JanuaryJuly 31, 20172019

Our revenues for the three monthsthree-months ended JanuaryJuly 31, 20182020 increased by $43,332,$1,643,590, or 5,888%1,384%, to $44,068$1,762,322 as compared to $736$118,732 reported for the three months ended JanuaryJuly 31, 2017.2019.  The increase in revenues is attributable to new consulting servicesservices. Part of our strategy this year is to provide cash resources to accelerate the growth of companies that we take an equity position in so that the investments we make are able to quickly bring their product to market. For example, the consulting and cash resources that we provided by our CEO, CFO, and our new software consulting subsidiary.to Watch Party LLC in the quarter ended July 31, 2020, allowed them to complete their iPhone app, which can now be downloaded from the App Store.

Selling, general and administrative expensesCosts of revenues increased by $19,800,$428,653 to $24,820$431,019 for the three-months ended JanuaryJuly 31, 20182020 from $5,020$2,366 reported in the three-months ended JanuaryJuly 31, 2017.2019.  The increase is primarily attributable to an increaseour increased revenues and the change in rent, accounting, sales commissions, and consulting expenses in fiscal 2018.our strategy of how we accelerate the product development for the companies we invest in.

Stock-based compensation expenseConsulting fees decreased by $11,861$37,209, or 95%, to $26,387, or 31%,$1,991 for the three months ended JanuaryJuly 31, 2018, from $38,2482020, as compared to $39,200 reported for the three months ended July 31, 2019. The decrease is attributable to our efforts to hire people as employees, not consultants, and consequently, wages and payroll related expenses in the three months ended JanuaryJuly 31, 2017. For2020 amounted to $1,096,120 as compared to $0 in the three months ended JanuaryJuly 31, 2018, the2019.

Marketing expense primarily consisted of the value of common stock issuedincreased by $562, or 16%, to our four employees, whereas$4,101 for the three months ended JanuaryJuly 31, 2017,2020, as compared to $3,539 reported for the three months ended July 31, 2019. The increase in expense primarily consisted of stock-option compensationis due to members of our advisory board.additional marketing outlets that we utilized in the three months ended July 31, 2020.

DepreciationRent expense amountedincreased by $1,550, or 12%, to $95,265$14,079 for the three months ended July 31, 2020, as compared to $12,529 reported for the three months ended July 31, 2019. The increase in expense is a result of fewer discounts available to us in the three-month period ended JanuaryJuly 31, 2017, as compared to no depreciation expense in the three-month period ended January 31, 2018. The carrying value of our fixed assets is zero dollars as of April 30, 2017, and we have no depreciation expense in fiscal 2018.2020.

Interest expense decreasedGeneral and administrative expenses increased by $22,378$37,759, or 1,117%, to $6,163, for the three-month period ended January 31, 2018, as compared to $28,541$41,139 for the three months ended JanuaryJuly 31, 2017.2020, from $3,380 for the three months ended July 31, 2019.  The increase is primarily attributed to $30,000 in legal fees for work to help us secure two loans from the U.S. Small Business Administration.

Stock-based compensation increased by $92,868, to 121,378 for the three-months ended July 31, 2020 from $28,510 reported in the three-months ended July 31, 2019.  The increase in expense is primarily due to the higher price per share of our common stock when shares were issued.

Interest expense increased by $5,550 to $10,283 for the three-months ended July 31, 2020, as compared to $4,733 for the three months ended July 31, 2019.  The decrease in interest expense is attributable to a decrease in ourreduced debt at January 31, 2018, as compared to January 31, 2017.amounts.  

In the three-month period ended January 31, 2018, we recorded a loss of $6,300 for the issuance of our common stock to settle debt obligations, as compared to no loss in the three-month period ended January 31, 2017. Each instance of a debt settlement gain or loss is contingent upon the price of our stock and the amount of debt retired.

Liquidity and Capital Resources

At JanuaryJuly 31, 2018,2020, we had cash and cash equivalents of $20,869$874,016 and negative working capital of $737,942$1,219,028 as compared to cash and cash equivalents of $3,324$11,206 and negative working capital of $2,590,703$877,581 at April 30, 2017. We successfully negotiated three debt settlement agreements in October 2017 that resulted in a significant improvement in our working capital deficit.2020.

Net cash used in operating activities amounted to $31,782$1,522,990 and $17,620 in the nine monthsthree-months ended JanuaryJuly 31, 2018.2020 and 2019, respectively.  The principal source of cash from operating activities in the nine-month periodthree-months ended JanuaryJuly 31, 2018 came from2020 was net income of $71,845, plus$30,781 and a non-cash item, stock-based compensation of $112,699 and an increase in accrued expenses of $97,747, which was$121,738. However, these items were offset by a gain on debt settlementchanges in non-cash revenue from the receipt of $293,664. Netequity of $1,754,046. The principal source of cash used infrom operating activities amounted to $3,545 in the nine monthsthree-months ended JanuaryJuly 31, 2017. The2019 was net lossincome of $490,568 for the nine months ended January 31, 2017 was offset by two$24,475 and a non-cash items, depreciation of $285,795 anditem, stock-based compensation of $114,744. In addition, there was an increase$28,510. However, changes in accrued expenses of $87,306.non-cash working capital balances used cash totaling $70,605

There was no investing activity in the ninethree-months ended July 31, 2020 and 2019.

For the three months ended JanuaryJuly 31, 2018 and 2017.

Net2020, net cash provided by financing activities aggregated $49,327 and $3,020amounted to $2,385,800, which consisted of two loans from the U.S. Small Business Administration. For the three months ended July 31, 2019, net cash used in the nine-month periods ended January 31, 2018 and 2017, respectively. The principal source of cash from financing activities amounted to $1,300, which consisted of a payment to a related-party lender.

In the three-months ended July 31, 2020 and 2019, there were no expenditures for capital assets.  We do not anticipate any capital expenditures in the nine-month period ended January 31, 2018 came from loan proceeds of $14,107 from our secured lender, $15,600 from a related party, and $21,700 from a single investor. The principal source of cash in the nine months ended January 31, 2017 was loan proceeds of $5,000 from our secured lender, offset by payments of bank debt of $1,980.fiscal 2021.

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of our company as a going concern. However, we have sustained net losses from operations during the last several years, and we have very limited liquidity. Management anticipates that we will be dependent, for the near future, on additional capital to fund our operating expenses and anticipated growth, which we intend to achieve through consulting services and the further development of Internet applications. Althougha private equity platform for raising capital and trading securities. In the quarter ended July 31, 2020, we are choosing methodsborrowed $2,385,800 to accelerate our growth and the growth of growth that potentially minimize the use of cash, we cannot be assuredearly-stage companies that we will be ableinvested in. However, we now have to obtainplan for new future payments to service our debt. Furthermore, the cash to market the digital products we sell or that we will be successful in increasing our sales. Furthermore, themost recent report of our independent registered public accounting firm expresses doubt about our ability to continue as a going concern. Our operating losses have been primarily funded through borrowings under a line of credit from our largest shareholder. We successfully negotiated a modification to this agreement that included an extension of the maturity date to October 31, 2020 and a reduction in the per annum interest rate from 8% to 1.25%.

We owe our Lender, who is also our largest shareholder, $1,000,000 at January 31, 2018. We also have balances due to directors, in both accounts payable and notes payable. We have not paid interest on anya related party debt; the interest accrues each month.$1,000,000 under a secured term loan that matures on October 31, 2020. We believe our related party creditors will not demandwe can renegotiate the payment terms of our current liabilities to them, in the near future, although any of our lenders may have a change in circumstances and demand payment.loan. Any demand for payment from a related party will have an adverse impact on our ability to achieve our longer-term business objectives and will adversely affect our ability to continue operating as a going concern.

Although we are not yet profitable on an operating basis and we are not generating cash from operations, we believe we have short-term financing available from our largest shareholder to fund our monthly cash-flow deficit. While we continually look for other financing sources, in the current economic environment, the procurement of outside funding is extremely difficult and there can be no assurance that such financing will be available, or, if available, that such financing will be at a price that will be acceptable to us. Failure to generate sufficient revenues or raise additional capital will have an adverse impact on our ability to achieve our longer-term business objectives and will adversely affect our ability to continue operating as a going concern.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide information under this item.

Item 4. Controls and Procedures.

(a) Disclosure Controls and Procedures.

The Company’s management, with the participation of the Company’s principal executive officer (“PEO”) and principal financial officer (“PFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the PEO and PFO concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective to ensure that information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the PEO and PFO, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses in our disclosure controls and procedures consisted of:

(b) Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide information under this item.

Item2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the three-month period ended JanuaryJuly 31, 2018,2020, we issued 10,755,867 shares of common stock in exchange for a reduction of debt and accrued interest payable totaling $28,973. We also issued 12,979,167312,500 shares of common stock to our corporate officers and consultantsChief Marketing Officer as compensation, and 350,000 shares to purchase a digital marketing database.stock-based compensation.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

31       Rule 13a-14(a) Certification

32       Rule 13a-14(b) Certification

101.CAL XBRL Calculation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.