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

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

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.

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.

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 ~~December 14, 2021~~March 17, 2022 the Company had ~~2,865,610~~2,896,844 Shares of its common stock, par value $0.001 per share, issued and outstanding.

This Form 10-Q/A amends the Company’s Quarterly Report on Form 10-Q for the quarterly period ended January 31, 2022, as filed with the Securities and Exchange Commission (“SEC”) on March 17, 2022 (the “Original Filing”). This Form 10-Q/A is being filed to include the iXBRL. There are no other changes to this document.

~~For the Six Months Ended October 31, 2021 and the Years Ended April 30, 2021 and 2020~~

The accompanying unaudited condensed financial statements of Netcapital Inc. (the “Company”) 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 ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2021,~~2022, are not necessarily indicative of the results that may be expected for the fiscal year ended April 30, 2022. 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, 2021.

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 consolidated financial statements.

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.

For the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2021,~~2022, the Company had one customer that constituted 2830% and 4233% of revenues and a second customer that constituted 2228% and 33% of revenues, respectively. For the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2020,~~2021, the Company had one related party customer that constituted 5637% and 480% of its revenues, ~~respectively, and~~ a second customer that constituted 2618% and 270% of its revenues, a third customer that constituted 13% and 37% of its revenues, and a fourth customer that constituted 9% and 28% of its revenues, respectively.

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

●• 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, listing fees on our funding portal, and a success fee of 4.9% of the money raised on the funding portal. 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.

The estimation of variable consideration for each performance obligation requires the Company to make subjective judgments. The Company enters into 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 from subscriptions to the ~~Company’s~~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 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 assets in the consolidated balance sheets and will be recognized during the succeeding twelve-month period.

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 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.

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~~Company's consolidated statement of operations.

The ~~Company’s~~Company's subscription terms are typically less than one year. All of the Company’s revenues in the ~~six-~~nine- and three-month periods ended ~~October~~January 31, 2022, which amounted to $3,636,050 and $1,811,041, respectively, and for the nine- and three-month periods ended January 31, 2021, which amounted to $~~1,825,009~~3,770,813 and $~~1,199,822, respectively, and for the six- and three-month periods ended October 31, 2020, which amounted to $2,493,486~~ ~~and $731,164~~1,277,327, respectively are considered contract revenues. Contract revenue as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, which has not yet been recognized, amounted to $~~670~~25,613 and $622, 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.

Our revenue is from U.S.-based companies with no notable geographical concentrations in any area. A distinction exists in revenue source; our revenues are either generated online or from consulting services.

Net income ~~(loss)~~ per common and diluted share share were calculated as follows for the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020:~~2021:

39,901 shares that are issuable to satisfy a supplemental consideration liability were included for the calculation of earnings per share for the ~~six months~~nine- and three-month periods ended ~~October~~January 31, ~~2021~~2022 because their effect is dilutive. 35,557 shares that are issuable to satisfy a supplemental consideration liability were excluded for the calculation of loss per share for the three months ended October 31, 2021 because their effect is antidilutive. No dilutive securities existed for the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2020.~~2021.

The following table summarizes components debt as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021:

As of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, the Company owed its principal lender (“Lender”) $1,000,000 under aan amended loan and security agreement (“Loan”) dated ~~April 28, 2011, that was amended on~~ July 26, 2014 and ~~again~~amended on October 31, 2017, October 31, 2020, January 31, 2021, ~~and~~ April 30, ~~2021.~~2021, January 28, 2022 and February 3, 2022. The Lender was the largest shareholder of the Company owning 32.6% of the shares issued and outstanding until the Company purchased Netcapital Funding Portal Inc. on November 5, 2020. With the purchase of Netcapital Funding Portal Inc., the Lender owns less than 10% of the Company and is no longer considered a related party.

The ~~Loan was amended on October 31, 2020 to change~~interest rate is 8% per annum and the maturity date ~~to January 31, 2021, and increase the interest rate from 1.25% to 8% per annum. The Loan has been further amended to change the maturity date to~~is April 30, ~~2022.~~2023.

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

As of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, the Company’s related-party unsecured notes payable totaled $22,860.

The Company also owes $34,324 as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021 to Chase Bank. The Company pays interest expense to Chase Bank, which is calculated at a rate of 5.5% per annum.

On May 6, 2020, the Company borrowed $1,885,800 (the “May Loan”), on June 17, 2020 the Company borrowed $500,000 (the “June Loan”), and on February 2, 2021, the Company borrowed $1,885,800 (the “February Loan”) from an a U.S. Small Business Administration (“SBA”) loan program.

The May loan ~~bears~~bore interest at a rate of 1% per annum and the SBA postponed any installment payments until September 6, 2021. In ~~September and October of 2021, the SBA debited the Company’s bank account for a total of $212,252 even though the Company had applied for forgiveness of the May Loan. In~~ November 2021 the May Loan was forgiven in its entirety, including accrued interest of $18,502. As a result, the Company recognized debt forgiveness of $1,904,302 in the nine- and ~~the payments of $212,252, which are reflected on the balance sheet as a receivable from the bank, were returned to the Company.~~ three-month periods ended January 31, 2022.

The June Loan required installment payments of $2,594 monthly, beginning on June 17, 2021, over a term of thirty years. However, the SBA has postponed the first installment payment for 12 months. 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.

The February loan bears interest at a rate of 1% per annum and the due date of the first payment is May 22, 2022. The Company ~~has applied~~intends to apply for forgiveness of the February Loan and believes it will be forgiven in its entirety.

As of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, the Company had net operating loss carryforwards for Federal income tax purposes of approximately $~~2,010,000~~1,675,000 and $890,000, respectively, expiring in the years of 2022 through 2041.

For the ~~six-~~nine- and three-month periods ended ~~October~~January 31, 2022, the Company recorded income tax expense of $548,000 and a tax benefit of $73,000, respectively. For the nine- and three- month periods ended January 31, 2021, the Company recorded income tax expense of ~~$621,000~~$42,288 and ~~a tax benefit of $86,000,~~$19,890, respectively. ~~For the six- and three- month periods ended October 31, 2020, the Company recorded income tax expense of $22,398 and $11,057, respectively.~~

As of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, the Company had net deferred tax assets calculated at an expected federal rate of 21%, and a state rate of 8%, when applicable, or approximately ~~$642,000~~$715,000 and $313,000, respectively. As a result of unrealized book gains on equity securities, the Company also has a deferred tax liability of $1,696,000 and $746,000 as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, respectively. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021 were as follows:

The Company’s majority shareholder, Netcapital Systems LLC, owns 1,671,360 shares of common stock, or ~~61.5%~~57.7% of the ~~Company~~Company’s 2,896,844 outstanding shares as of ~~October~~January 31, ~~2021.~~2022. The Company has a demand note payable to Netcapital Systems LLC of $4,660 and a demand note payable to one of its former managers of $3,200. In addition, as of April 30, 2021, the Company accrued a payable of $3,817,516 for supplemental consideration owed in conjunction with its purchase of Netcapital Funding Portal Inc., which was reduced to $294,054 as of ~~October~~January 31, ~~2021,~~2022, because of the issuance to 361,736 shares of common stock, valued at $3,523,462. Of the 361,736 shares that were issued, a total of 32,458 shares, representing a reduction in the payable amount of $346,821, were issued to managers of Netcapital Systems LLC, and 3,151 shares, representing a reduction in the payable amount of $30,691, were issued to our Chief Executive Officer.

In total, the Company owed its largest shareholder $298,714 and $3,822,116 as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, respectively. The company paid its majority shareholder ~~$157,429~~$257,429 and ~~$107,429~~$100,000 in the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2021,~~2022, respectively, for use of the software that runs the website www.netcapital.com. The Company also had a sale of $15,000 for consulting services to its largest shareholder during the nine- and three-month periods ended January 31, 2022.

Compensation to officers in the ~~six-~~nine- and three-month periods ended ~~October~~January 31, 2022 consisted of common stock valued at $190,763 and $89,436, respectively, and cash salary of $217,688 and $73,688, respectively. Compensation to officers in the nine- and three-month periods ended January 31, 2021 consisted of common stock valued at ~~$101,327~~$301,783 and $8,396, respectively, and cash salary of $144,000 and $72,000, respectively. Compensation to officers in the six- and three-month periods ended October 31, 2020 consisted of common stock valued at $164,885 and $82,263$86,417 respectively, and cash wages of ~~$138,462~~$210,462 and $72,000, respectively.

Compensation to a related party consultant in the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2021~~2022 consisted of common stock valued at $25,908 and ~~$6,530~~$0 respectively, and cash wages of ~~$30,000~~$45,000 and $15,000, respectively. Compensation to a related party consultant in the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2020~~2021 consisted of common stock valued at $38,757 and ~~$19,379~~$19,378 respectively, and cash wages of $46,154 and $24,000, respectively. This consultant is also the controlling shareholder of Zelgor Inc. and $1,400,000 and ~~$350,000~~$0 of the Company’s revenues in the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2020~~2021 were from Zelgor Inc.

Compensation to employees who are also managers of Netcapital Systems LLC in the ~~six~~nine and three-month periods ended ~~October~~January 31, ~~2021~~2022 consisted of common stock valued at $19,378 and $0, respectively, and cash wages of ~~$72,000~~$96,000 and $24,000, respectively. Compensation to managers of Netcapital Systems LLC in the ~~six~~nine and three-month periods ended ~~October~~January 31, ~~2020~~2021 consisted of common stock valued at ~~$38,757~~$58,135 and ~~$19,379,~~$19,378, respectively, and cash wages of ~~$93,308~~$141,308 and $48,000, respectively.

As of January 31, 2022 and April 30, 2021, the Company has invested $240,080 and $122,914 in an affiliate, 6A Aviation Alaska Consortium, Inc., in conjunction with a land lease in an airport in Alaska. Our Chief Executive Officer is also the Chief Executive Officer of 6A Aviation Alaska Consortium, Inc.

In November 2021 we issued a member of our board of directors 10,000 shares of common stock, for board and audit committee services, valued at $100,000.

The Company owes a director $16,680 as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, which is recorded as accounts payable, plus $15,000 in a non-interest-bearing note payable.

The Company is authorized to issue 900,000,000 shares of its common stock, par value $0.001. ~~2,719,310~~2,896,844 and 2,178,766 shares were outstanding as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, respectively. In August 2020, the board of directors authorized a reverse split of the common stock on a 1-for-2,000 basis, whereby the Company issued to each of its stockholders one share of Common Stock for every 2,000 shares of common stock held by such stockholder. The reverse split was effective on November 5, 2020. The financial statements for the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2020~~2021 have been adjusted to give effect to the reverse split.

On January 27, 2022, the Company filed a Form S-8 registration statement for securities to be offered in employee benefit plans, to register 300,000 shares of common stock from the Company’s 2021 Equity Incentive Plan. Stock options were granted under this plan in February 2022, see Note 14.

On July 26, 2021, the Company issued 361,736 shares of its common stock as payment of $3,523,462 of supplemental consideration that was owed to its affiliate, Netcapital Systems LLC. The 361,736 shares of common stock include an aggregate of 35,609 shares of common stock, that paid off liabilities totaling $346,821, that were made to our Chief Executive Officer, a company controlled by a member of the board of managers of Netcapital Systems LLC and to an individual manager.

On July 27, 2021, the Company completed ~~an offering~~a private placement for gross proceeds of $1,592,395 in conjunction with the sale of restricted shares of common stock at a price of $9.00 per share. A total of 176,934 shares of common stock were issued.

Effective October 31, 2021 and July 31, 2021, the Company issued an aggregate of 937 shares of restricted stock to two employees. The shares were valued at $10,073 and $14,056, respectively.

During the quarter ended January 31, 2022, the Company issued a total of 55,312 shares of common stock to personnel, valued at $554,022, for services rendered. The Company also issued 22,222 shares in conjunction with a private placement at $9.00 for a $200,000 stock subscription; 50,000 shares in conjunction with the purchase of a business, MSG Development Corp.; and 50,000 shares to purchase a 10% interest in a marketing firm, Caesar Media Group Inc.

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:

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.

~~The~~In addition to cash payments, the Company ~~entered consulting~~enters agreements to issue common stock and ~~recorded~~records the applicable non-cash expense in accordance with the authoritative guidance of the Financial Accounting Standards Board. For the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2021,~~2022, the Company recorded ~~$483,067~~$1,137,042 and ~~$186,087,~~$653,975, respectively, in stock-based compensation expense and for the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2020,~~2021, the Company recorded ~~$259,909~~$386,121 and ~~$138,531,~~$126,212, respectively, in stock-based compensation expense.

As of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, there was ~~$172,939~~$9,987 and $631,878, respectively of prepaid stock-based compensation expense for services. As of ~~October~~January 31, ~~2021,~~2022, two consulting agreements are effective, which expire in February 2022.

As of ~~October~~January 31, ~~2021,~~2022, an aggregate of ~~7,607~~157 shares of common stock can be earned by ~~the Company’s employees~~one Company employee from an unvested stock ~~grants.~~grant. The 157 shares vest ~~quarterly over the next two quarters and 781 shares vest quarterly over the next 9.3 quarters.~~ on April 30, 2022.

The table below presents the components of stock-based compensation expense for the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020.~~2021.

The components of the stock-based compensation expense are presented in the following table:

The table below presents the prepaid compensation expense as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021:

For the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2021, $325,907~~2022, $488,860 and ~~162,954~~$162,953 of stock-based compensation was recorded as consulting expense, respectively, and ~~$157,160~~$648,182 and ~~23,133~~$491,022 was recorded as payroll and payroll related expenses. For the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2020,~~2021, all of the stock-based compensation was recorded as a component of payroll and payroll related expenses.

The Company 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.

On November 2, 2021, the owners of ValuCorp Inc. (“ValuCorp”), a business valuation firm, formed a new company MSG Development Corp. (“MSG”) and transferred most of the assets of ValuCorp to MSG. The Company entered into an exchange agreement (“Agreement”) whereby the Company received 100% of the outstanding shares of MSG in exchange for 75,000 shares of common stock of the Company. 50,000 shares of the Company’s common stock were issued in December 2021 and four annual installments of 6,250 shares are due over the next four years. As a result, the Company has recorded $244,250 in stock subscriptions payable as of January 31, 2022.

MSG’s assets were less than 20% of the value of the Company’s assets and the Company’s investment in MSG is less than 20% of the Company’s market value. Furthermore, the revenue and operating income of MSG’s predecessor, ValuCorp, for the prior two years, is less than 20% of the revenue and operating income of the Company. Upon evaluation of the components of the business combination, including the relative voting rights in the combined entity, the composition of the governing body and senior management of the combined entity, the relative size of each entity and the terms of the exchange of equity interests, the Company recorded the transaction in the third quarter of fiscal 2022 as a purchase.

The following table summarizes the value of the consideration for MSG and the amounts of the assets acquired in conjunction with the Agreement. MSG had no liabilities.

The fair value of the common shares issued as the consideration for MSG was determined by the most recent closing price of the Company’s common shares at the time the shares were issued. Seven identifiable intangible assets were valued, as noted in the above table (the “Intangible Assets”). The estimated market value of the Intangible Assets on the date of purchase was $1,000,000, and the value of the 75,000 shares of common stock of the Company, payable as consideration was $9.77 per share, or $732,750. The value of the Intangible Assets has been recorded at an aggregate value of $732,750. The Company has not finished its evaluation of the Intangible Assets. The fair value of the acquired Intangible Assets is provisional pending receipt of the final valuation of those assets.

On August 23, 2020, the Company entered into an Agreement and Plan of Merger (“Agreement”) whereby Netcapital Systems LLC (“Systems”) would become an 80% owner of the Company. Pursuant to the requirements of this agreement, the Company filed a definitive information statement on Form 14C on September 21, 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 2,000 shares of the Company’s common stock would be exchanged for one new share of common stock. In conjunction with the merger agreement, the Company issued 1,666,360 shares of common stock to Systems on November 5, 2020.

The Agreement iswas a tax-free merger of Netcapital Funding Portal Inc. (“FP”), a wholly owned subsidiary of Systems, with Netcapital Acquisition Vehicle Inc., an indirect wholly owned subsidiary of the Company, wherein FP was the surviving corporation. This transaction iswas designed to enhance the Company’s revenues and ability to provide services to democratize the private capital markets while helping companies at all stages to build, grow and fund their businesses with a full range of services from strategic advice to raising capital. As a result of the transaction, the ~~company~~Company is expected to be a leading provider of private capital transactions for entrepreneurs seeking to raise money under the exemption provided by section 4(a)(6) of the Securities Act of 1933, which allows private companies to raise up to $5 million every 12 months.

ASC 805-10-25-4 requires the identification of one of the combining entities in each business combination as the acquirer. Upon evaluation of the components of the business combination, including the relative voting rights in the combined entity, the composition of the governing body and senior management of the combined entity, the relative size of each entity and the terms of the exchange of equity interests, the Company recorded the transaction in the third quarter of fiscal 2021 as a purchase. In conjunction with the purchase, Systems agreed to vote all of its shares of common stock to support the resolutions of the existing board of directors of the Company.

The following table summarizes the value of the consideration for FP and the amounts of the assets acquired and liabilities assumed in conjunction with the Agreement.

The fair value of the common shares issued as the consideration for FP was determined by the most recent (the prior day’s) closing price of the Company’s common shares at the time the shares were issued. The fair value of the assets and the liabilities of FP equaled their book value. Four identifiable intangible assets were valued; platform users, platform investors, platform issuers and unpatented technology (collectively the “Intangible Assets”). The estimated market value of the Intangible Assets is approximately $27,800,000. This amount is derived from valuing the IP functionality, brand, and license of FP at $1,000,000; valuing current issuers and pipeline issuers at approximately $14,000 each; valuing platform users at $382 each; and valuing investors at $1,025 each. These values are derived from comparing the FP Intangible Assets to the values recorded by funding portal offerings of FP’s competitors in public filings via Regulations CF and Regulation A.

The excess of purchase price over the total identifiable tangible net assets of $344,810, leaves an aggregate value of $14,803,954 to be assigned to the Intangible Assets. The estimated value of the $27,800,000 of Intangible Assets is allocated on a percentage basis in the above table to equal $14,803,954.

None of FP’s revenues and earnings are included in the Company’s consolidated income statements through the day of closing of November 5, 2020. The consolidated income statements for the year ended April 30, 2021 include $834,981 in revenues from FP. If the entities had been combined for the two reporting periods, the supplemental pro forma revenues and earnings are as follows:

Included in the supplemental pro forma information above is revenue earned by the Company from Netcapital Systems LLC of $18,646 and $152,864 in the periods ended November 4, 2020 and 2019, respectively.

In January 2022, the Company received 1,700,000 units of ScanHash LLC as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at $0.25 per unit based on a sales price of $0.25 per unit on an online funding portal. The receipt of the units satisfied $425,000 of an accounts receivable balance. As of January 31, 2022, the Company owns 1,700,000 units which are valued at $425,000.

In January 2022, the Company received 2,850,000 units of Hiveskill LLC as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at $0.25 per unit based on a sales price of $0.25 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of $712,500. As of January 31, 2022, the Company owns 2,850,000 units which are valued at $712,500.

In November 2021, the Company purchased a 10% interest, or 400 shares of common stock, in Caesar Media Group Inc. (“Caesar”) for an initial purchase price of 50,000 shares of the Company’s common stock, valued at $500,000. Caesar is a marketing and technology solutions provider. The purchase agreement includes additional contractual requirements for the Company and Caesar, including the issuance of an additional 150,000 shares of common stock of the Company over a two-year period. As of January 31, 2022, there have been no observable price changes in the value of the Caesar’s common stock and the Company has valued its ownership in Caesar at cost, which is $500,000.

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 $235,400 and ~~$208,650~~$0 for the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2020.~~2021. As of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, the Company owns 110,000 WP units, which are valued at $235,400.

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 earned the remaining units in the quarter ending October 31, 2020. The Chip units were initially 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~~$660,486 and $0 for the ~~six~~nine and three-month periods ended ~~October~~January 31, ~~2020.~~2021. Subsequently, ~~ChipBrain~~Chip sold identical units for $2.40 per unit, and as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, the units owned by the Company are valued at $1,704,480. In fiscal 2022 the Company received additional revenues from Chip, amounting to $39,360 and $20,000 for the nine- and three-month periods ended January 31, 2022.

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 earned 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 $1,400,000 and ~~$350,000~~$0 for the ~~six-~~nine- and three-month periods ended ~~October~~January 31, ~~2020.~~2021. The $1.00 per share valuation continues to be the observable price at which the shares trade and the Zelgor shares are valued at $1,400,000 as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021.

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 were initially 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 subsequently sold identical Drone units for $1.00 per unit on an online funding portal and as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, the units owned by the Company are valued at $2,350,000.

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 were initially valued at $1.80 per unit based on a sales price of $1.80 per unit when the units were earned, or $540,000. In December 2020, KingsCrowd converted from a limited liability company to a corporation to facilitate raising capital under Regulation A. KingsCrowd filed a Form 1-A Offering Statement under the Securities Act of 1933. In connection with the conversion to a corporation, each membership interest unit converted into 12.71915 shares of common stock. As of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, the Company owns 3,815,745 shares of KingsCrowd Inc. In July 2021, KingsCrowd subsequently sold identical shares of common stock for $1.00 per share, and as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021, the ~~units~~shares owned by the Company are valued at $3,815,745 and $540,000, respectively.

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 ~~October~~January 31, ~~2021~~2022 and April 30, 2021, the Company owns 528 Netcapital units, at a value of $48,128.

In July 2020 the Company entered a consulting agreement with Vymedic, Inc. for a $40,000 fee over a 5-month period. Half the fee iswas payable in stock and half iswas payable in cash. As of April 30, 2021, the Company earned $20,000 worth of stock. As of ~~October~~ January31, ~~2021~~2022 and April 30, 2021, the Company owns 4,000 units, at a value of $20,000.

In August 2020 the Company entered a consulting agreement with C-Reveal Therapeutics LLC (“CRT”). for a $120,000 fee over a 12-month period. $50,000 of the fee is payable in CRT units. The Company earned the units in fiscal 2021 and received them in the first quarter of fiscal 2022. As of ~~October~~January 31, ~~2021~~2022 the Company owns 5,000 units, at a value of $50,000.

The following table summarizes the components of investments as of ~~October~~January 31, ~~2021~~2022 and April 30, 2021:

The above investments in equity securities are within the scope of ASC 321. The Company monitors the investments for any changes in observable prices from orderly transactions. All investments are initially measured at cost and evaluated for changes in estimated fair value. During the ~~six~~nine months ended ~~October~~January 31, ~~2021,~~2022, the Company identified that one security, ~~Kingscrowd~~KingsCrowd Inc., had an observable price change. The result of the price change was an increase in the fair value of the equity securities totaling $3,275,745 in the ~~six~~nine months ended ~~October~~January 31, ~~2021,~~2022, which ~~was~~is recorded in the ~~income statement~~Consolidated Statements of Operations as an unrealized gain on equity securities.

On ~~November~~February 2, 2021, the owners of ValuCorp Inc. (“ValuCorp”), a business valuation firm, formed a new company MSG Development Corp. (“MSG”) and transferred most of the assets of ValuCorp to MSG. The Company entered into an exchange agreement (“Agreement”) whereby2022, the Company ~~received 100%~~granted an aggregate of ~~the outstanding shares of MSG in exchange for 75,000~~272,000 options to purchase shares of common stock of the ~~Company. 50,000~~company at a price of $10.50 per share. The options were granted to employees, consultants, and members of the board of directors under the Company’s 2021 Equity Incentive Plan. The options vest monthly on a straight-line basis over a 4-year period and expire in 10 years.

On February 9, 2022, the Company sold two convertible promissory notes to accredited investors for total proceeds of $300,000. The notes accrue interest at a rate of 8% per annum and have a maturity date of February 9, 2023. The notes automatically convert into shares of ~~the Company’s~~ common stock ~~were issued in December 2021 and four annual installments~~at a price per share that is the lesser of ~~6,250 shares are due over~~$10.00 or the ~~next four years.~~

~~MSG’s assets were less than 20%~~80% of the ~~value~~price paid per share for a subsequent round of the Company’s assets and the Company’s investment in MSG is less than 20% of the Company’s market value. Furthermore, the revenue and operating income of MSG’s predecessor, ValuCorp, for the prior two years, is less than 20% of the revenue and operating income of the Company. Upon evaluation of the components of the business combination, including the relative voting rightssecurities sold, as defined in the combined entity, the composition of the governing body and senior management of the combined entity, the relative size of each entity and the terms of the exchange of equity interests, the Company recorded the transactionpromissory note. The promissory notes also convert automatically with a change in ~~the third quarter of fiscal 2022 as a purchase.~~control.

~~The following table summarizes the value of the consideration for MSG and the amounts of the assets acquired in conjunction with the Agreement. MSG had no liabilities.~~

The fair value of the common shares issued as the consideration for MSG was determined by the most recent (the prior day’s) closing price of the Company’s common shares at the time the shares were issued.

~~In November 2021, the Company received notice that an SBA loan (see Note 5 the “May Loan”) was forgiven in its entirety.~~

~~In November 2021, the Company issued 46,300 shares of its common stock as stock-based compensation.~~

In December 2021, the company issued 50,000 shares of its common stock in conjunction with the purchase of a ten percent interest in Caesar Media Group, Inc., a marketing and technology solutions provider.

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

Item 2. Management’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.

~~We are~~Netcapital Inc. is a fintech company with a scalable technology platform that allows private companies to raise capital online from accredited and ~~provides~~non-accredited investors. We give all investors the opportunity to access investments in private companies. Our model is disruptive to traditional private equity ~~investment opportunities to investors. The company’s~~investing and is based on Title III, Reg CF of the JOBS Act. We generate fees from listing private companies on our portal. Our consulting group, Netcapital Advisors, ~~delivers~~provides marketing and strategic advice ~~and takes~~in exchange for equity positions ~~in select companies with disruptive technologies.~~and cash fees. The Netcapital funding portal is registered with the ~~U.S. Securities & Exchange Commission (SEC) and~~SEC, is a member of the Financial Industry Regulatory Authority, ~~(FINRA),~~or FINRA, a registered national securities ~~association.~~association, and provides investors with opportunities to invest in private companies.

We ~~specialize in Regulation Crowdfunding (“Reg CF”), under~~provide private company investment access to accredited retail and non-accredited retail investors through our online portal (www.netcapital.com). The Netcapital funding portal charges a $5,000 engagement fee and a 4.9% success fee for capital raised at closing. In addition, the ~~provisions of Title III of the JOBS Act of 2012. We believe that new capital raising techniques,~~portal generates fees for other ancillary services, such as ~~Reg CF, democratize~~rolling closes. Netcapital Advisors generates fees and equity stakes from consulting in select portfolio and non-portfolio clients.

Netcapital.com is an SEC-registered funding portal that enables private companies to raise capital ~~raising, similar~~online, while investors are able to invest from anywhere in the world, at any time, with just a few clicks. Securities offerings on the portal are accessible through individual offering pages, where companies include product or service details, market size, competitive advantages, and financial documents. Companies can accept investment from anyone, including friends, family, customers, employees, etc.

In addition to access to the ~~way that social networks democratize broadcast mechanisms that once belonged only~~funding portal, Netcapital provides the following services:

● email marketing to ~~traditional media. Reg CF is one~~our proprietary list of ~~three securities exemptions that enable online capital formation. Reg D 506(c) allows an unlimited amount~~investors;

● rolling closes, which provide potential access to liquidity before final close date of ~~money~~offering;

● direct access to ~~be raised from accredited investors. Reg A+ enables an issuer~~our team for ongoing support.

The company's consulting group, Netcapital Advisors helps companies at all stages to raise upcapital. Netcapital Advisors provides strategic advice, technology consulting and digital marketing services to ~~$75 million online from anyone. Reg CF,~~assist with fundraising campaigns on the ~~smallest~~Netcapital platform. The company also acts as an incubator and accelerator, taking equity stakes in select disruptive start-ups.

● incubation of ~~the crowdfunding exemptions, allows issuers to raise up to $5 million from non-accredited investors every 12 months.~~technology start-ups;

The $5 million limit was increased on March 15, 2021 by the Securities and Exchange Commission (the "SEC") from the previous level of $1.07 million. We believe this change has already impacted the number of issuers and users on our website and consequently increased our sales. Our website posted a record number of users and dollars invested in June, as investors made investment commitments of more than $2.9 million. Monthly investment commitments decreased in our second quarter but reached an all-time high in November 2021 when investment commitments exceeded $4.3 million.

We are encouraged by our growth over the past year. The investments made on our funding portal for the first seven months of fiscal 2022, are 156% higher than the first seven months of fiscal 2021, an increase of more than $8.5 million. We believe our increase in revenues and our gain in market share over the past year is a trend we can continue. However, our limited operating history and the uncertain nature of our future operations and the markets we address or intend to address make predictions of our future results of operations difficult.

Results of Operations

For the ~~Six~~Nine Months Ended ~~October~~January 31, ~~2021~~2022 Compared to the ~~Six~~Nine Months Ended ~~October~~January 31, ~~2020~~2021

Our revenues for the ~~six~~nine months ended ~~October~~January 31, ~~2021~~2022 decreased by ~~$668,476,~~$134,763, or ~~27%~~4%, to ~~$1,825,009,~~$3,636,050, as compared to ~~$2,493,486~~$3,770,813 reported for the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021. The decrease in revenues is attributable to a decrease of ~~$1,412,358~~$1,044,025 in non-cash revenue from the receipt of equity, which amounted to ~~$902,174~~$2,102,174 in the ~~six~~nine months ended ~~October~~January 31, ~~2021,~~2022, as compared to ~~$2,314,532~~$3,146,199 in the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021. This decrease was offset by revenues from our funding portal. Funding portal ~~which we did not have~~revenues began for us in ~~the six-month period ended October 31,~~November 2020. Funding portal revenues consisted of a listing fee that we charge when an issuer signs an engagement letter to raise capital on our funding portal, and portal fees that are equal to 4.9% of the capital that was raised by the issuers. The components of revenue for the ~~six-month~~nine-month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020~~2021 are as follows:

Oct. 31, 2021

Oct. 31, 2020

Receipt of equity from customers for consulting services

$
902,174

$
2,314,532

Consulting revenue

104,021

178,522

Portal fees

606,428

—

Listing fees

212,000

—

Other revenue

386

432

Total

$
1,825,009

$
2,493,486

	Jan. 31, 2022		Jan 31, 2021
Consulting services for equity securities	$	2,102,174	$	3,146,198
Consulting revenue		293,221		270,604
Portal fees		951,760		250,541
Listing fees		288,000		102,500
Other revenue		895		970
Total	$	3,636,050	$	3,770,813

Costs of revenues decreased by ~~$668,144~~$644,914 to ~~$46,080~~$85,429 for the ~~six-months~~nine-months ended ~~October~~January 31, ~~2021~~2022 from ~~$714,224~~$730,343 reported in the ~~six-months~~nine-months ended ~~October~~January 31, ~~2020.~~2021. The decrease is attributable to a decrease in non-cash revenues from the receipt of equity.

Payroll and payroll related expenses increased by ~~$235,413,~~$879,426, or ~~15%~~41%, to ~~$1,791,655~~$3,032,987 for the ~~six~~nine months ended ~~October~~January 31, ~~2021,~~2022, as compared to ~~$1,556,242~~$2,153,561 reported for the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021. The increase is attributable to an increase in staff.

Marketing expense increased by ~~$35,044,~~$46,151, or ~~399%~~213%, to ~~$43,826~~$67,771 for the ~~six~~nine months ended ~~October~~January 31, ~~2021,~~2022, as compared to ~~$8,782~~$21,620 reported for the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021. The increase in expense is due to additional marketing outlets that we utilized in the ~~six~~nine months ended ~~October~~January 31, ~~2021.~~2022.

Rent expense decreased by ~~$4,187,~~$5,036, or ~~16%~~13%, to ~~$22,611~~$34,480 for the ~~six~~nine months ended ~~October~~January 31, ~~2021,~~2022, as compared to ~~$26,798~~$39,516 reported for the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021. The decrease in expense is a result of discounts available to us in fiscal 2022 and our ability to have personnel work from home.

General and administrative expenses increased by ~~$880,992,~~$1,042,092, or ~~1,167%~~443%, to ~~$956,422~~$1,277,146 for the ~~six months~~nine months ended ~~October~~January 31, ~~2021,~~2022, from ~~$75,500~~$235,054 for the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021. The increase is primarily attributed to additional expenses we incurred in the current fiscal year for our newly acquired funding portal business.

Consulting expense increased by ~~$360,550,~~$283,974, to ~~$365,635,~~$675,180, or ~~7,090%~~73%, for the ~~six~~nine months ended ~~October~~January 31, ~~2021~~2022 from ~~$5,085~~$391,206 reported in the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021. The increase in expense is due to issuance of stock-based compensation to two outside consulting firms. ~~Stock-based consulting compensation amounted to $325,907 in the six-month period ended October 31, 2021, as compared to $0 in the six-month period ended October 31, 2020.~~

Interest expense increased by ~~$46,707~~$37,154 to ~~$70,271~~$90,844 for the ~~six~~nine months ended ~~October~~January 31, ~~2021,~~2022, as compared to ~~$23,564~~$53,690 for the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021. The increase in interest expense is attributable to higher debt amounts and a higher interest rate on our secured debt.

Our net income increased by $2,900,725 to $3,004,260, or 2,802% for the nine months ended January 31, 2022, as compared to $103,535 for the nine months ended January 31, 2021. The increase in net income is primarily attributable to debt forgiveness of $1,904,302 during the period related to our loan with the SBA.

For the Three Months Ended ~~October~~January 31, ~~2021~~2022 Compared to the Three Months Ended ~~October~~January 31, ~~2020~~2021

Our revenues for the three months ended ~~October~~January 31, ~~2021~~2022 increased by ~~$468,658,~~$533,714, or ~~64%~~42%, to ~~$1,199,821,~~$1,811,041, as compared to ~~$731,164~~$1,277,327 reported for the ~~six~~three months ended ~~October~~January 31, ~~2020.~~2021. The increase in revenues is attributable to an increase of ~~$315,938~~$368,333, or 44%, in non-cash revenue from the receipt of equity ~~offset by a decrease~~and an increase of ~~$113,384~~$94,791, or 38%, in ~~consulting fees.~~portal fee revenues from our funding portal. Funding portal revenues ~~also contributed to the increase in revenues in the six months ended October 31, 2021. Funding portal revenues consisted~~consist of a listing fee that we charge when an issuer signs an engagement letter to raise capital on our funding portal, and portal fees that are equal to 4.9% of the capital that was raised by the issuers. The components of revenue for the three-month periods ended ~~October~~January 31, ~~2021~~2022 and ~~2020~~2021 are as follows:

	Oct. 31, 2021		Oct. 31, 2020		Jan. 31, 2022		Jan 31, 2021
Receipt of equity from customers for consulting services	$	902,174	$	587,236
Consulting services for equity securities					$	1,200,000	$	831,667
Consulting revenue		12,334		143,718		189,200		92,082
Portal fees		169,111		—		345,332		250,541
Listing fees		116,000		—		76,000		102,500
Other revenue		203		210		509		537
Total	$	1,199,821	$	731,164	$	1,811,041	$	1,277,327

Costs of revenues ~~decreased~~increased by ~~$265,430,~~$23,230, or ~~94%~~144%, to ~~$17,775~~$39,349 for the three-months ended ~~October~~January 31, ~~2021~~2022, from ~~$283,205~~$16,119 reported in the three-months ended ~~October~~January 31, ~~2020.~~2021. The ~~decrease~~increase is attributable to ~~one consulting customer~~the increase in ~~the quarter ended October 31, 2020 that required large expenditures for us to earn~~revenues from our ~~revenues.~~ funding portal.

Payroll and payroll related expenses increased by ~~$391,552,~~$384,104, or ~~116%~~45%, to ~~$730,296~~$1,241,332 for the three months ended ~~October~~January 31, ~~2021,~~2022, as compared to ~~$338,744~~$857,228 reported for the three months ended ~~October~~January 31, ~~2020.~~2021. The increase is attributable to ~~an increase~~stock-based compensation of $400,000 that did not occur in ~~staff.~~the prior year.

Marketing expense increased by ~~$17,319,~~$11,107, or ~~370%~~87%, to ~~$22,000~~$23,945 for the three months ended ~~October~~January 31, ~~2021,~~2022, as compared to ~~$4,681~~$12,838 reported for the three months ended ~~October~~January 31, ~~2020.~~2021. The increase in expense is due to additional marketing outlets that we utilized in the three months ended ~~October~~January 31, ~~2021.~~2022.

Rent expense decreased by ~~$2,238,~~$849, or ~~18%~~7%, to ~~$10,481~~$11,869 for the three months ended ~~October~~January 31, ~~2021,~~2022, as compared to ~~$12,719~~$12,718 reported for the three months ended ~~October~~January 31, ~~2020.~~2021. The decrease in expense is a result of discounts available to us in the three-month period ended ~~October~~January 31, ~~2021~~2022, and our ability to have personnel work from home.

General and administrative expenses increased by ~~$527,009,~~$161,170, or ~~1,534%~~101%, to ~~$561,370~~$320,724 for the three months ended ~~October~~January 31, ~~2021,~~2022, from ~~$34,361~~$159,554 for the three months ended ~~October~~January 31, ~~2020.~~2021. The increase is primarily attributed to additional expenses we incurred in the current fiscal year for our newly acquired funding portal business.

Consulting expense increased by ~~$179,936,~~$183,333 to ~~$183,030,~~$309,545, or ~~5,816%~~145%, for the three months ended ~~October~~January 31, ~~2021~~2022 from ~~$3,094~~$126,212 reported in the three months ended ~~October~~January 31, ~~2020.~~2021. The increase in expense is due to issuance of stock-based compensation to two outside consulting firms. Stock-based consulting compensation amount to $162,954 in the three-month period ended ~~October~~January 31, ~~2021,~~2022, as compared to $0 in the ~~six-month~~three-month period ended ~~October~~January 31, ~~2020.~~2021.

Interest expense ~~increased~~decreased by ~~$21,745~~$9,553 to ~~$35,026~~$20,573 for the three-months ended ~~October~~January 31, ~~2021,~~2022, as compared to ~~$13,281~~$30,126 for the three months ended ~~October~~January 31, ~~2020.~~2021. The ~~increase~~decrease in interest expense is attributable to ~~higher~~lower debt amounts ~~and a higher interest rate on~~due to debt forgiveness.

Our net income increased by $1,778,364 to $1,821,006, or 4,170% for the three months ended January 31, 2022, as compared to $42,642 for the three months ended January 31, 2021. The increase in net income is primarily attributable to debt forgiveness of $1,904,302 during the period related to our ~~secured debt.~~loan with the SBA.

Liquidity and Capital Resources

At ~~October~~January 31, ~~2021,~~2022, we had cash and cash equivalents of ~~$940,966~~$477,134 and negative working capital of ~~$2,549,669~~$502,393 as compared to cash and cash equivalents of $2,473,959 and negative working capital of $4,666,833 at April 30, 2021.

Our net income increased by $1,778,364 to $1,821,006, or 4,170% for the three months ended January 31, 2022 as compared to $42,642 for the three months ended January 31, 2021. The increase in net income is primarily attributable to debt forgiveness of $1,904,302 during the period related to our loan with the SBA.

We have been successful in raising capital by selling restricted common stock in private placements and by borrowing funds from the U.S. Small Business Administration. ~~The~~In addition, we sold $300,000 worth of convertible promissory notes in February 2022. We believe our negative working capital balance as of ~~October~~January 31, ~~2021 has been significantly reduced~~2022 will eliminated by the forgiveness of $1,885,800 in borrowings from the ~~SBA in November 2021, and we believe an additional loan from the SBA, also totaling $1,885,800 will be forgiven.~~SBA.

We believe that our existing cash investment balances, financial resources and our anticipated cash flows from operations will be sufficient to meet our working capital and expenditure requirements for the next 12 months. Although we believe we have adequate sources of liquidity over the next 12 months, the success of our operations, the global economic outlook, and the pace of sustainable growth in our markets, in each case, in light of the market volatility and uncertainty as a result of the COVID-19 pandemic, among other factors, could impact our business and liquidity. Up to this point in time, we believe the pandemic has helped drive people to online investing, as we see regular monthly increases in users and dollars invested, and an increase in issuers seeking to use online fund-raising services in lieu of face-to-face meetings.

Net cash used in operating activities amounted to ~~$1,898,126~~$2,303,458 and ~~$1,941,012~~$2,475,484 in the ~~six~~nine months ended ~~October~~January 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The principal source of cash from operating activities in the ~~six~~nine months ended ~~October~~January 31, ~~2021~~2022 was net income of ~~$1,183,254~~$3,004,260 and a non-cash item, stock-based compensation of ~~$483,067.~~$1,137,042. However, these sources of cash were offset by an unrealized gain on equity securities of $3,275,745, an increase in accounts receivable of ~~$792,742~~$900,242, debt forgiveness of $1,904,302 and ~~a bank receivable~~non-cash revenue from the receipt of ~~$212,252.~~equity of $1,187,500. The principal source of cash from operating activities in the ~~six~~nine months ended ~~October~~January 31, ~~2020~~2021 was net income of ~~$60,893~~$103,535 and a non-cash item, stock-based compensation of ~~$259,909.~~$386,121. However, these items were offset by changes in non-cash revenue from the receipt of equity of ~~$2,314,532.~~$2,319,532 and an increase in accounts receivable of $1,001,586.

Net cash used in investing activities amounted to ~~$247,166~~$319,166 in the ~~six~~nine months ended ~~October~~January 31, ~~2021.~~2022. The use of cash consisted of loans to affiliates of ~~$130,000~~$202,000 and an investment in an affiliate of $117,166. ~~There was no~~Cash provided by investing ~~activity~~activities in the ~~six~~nine months ended ~~October~~January 31, ~~2020.~~2021 amounted to $364,939, from the purchase of Netcapital Funding Portal Inc.

For the ~~six~~nine months ended ~~October~~January 31, ~~2021,~~2022, cash provided financing activities amounted to ~~$612,299,~~$625,799, which consisted of proceeds from stock subscriptions for the sale of common stock. For the ~~six~~nine months ended ~~October~~January 31, ~~2020,~~2021, cash provided by financing activities amounted to $2,385,800, which consisted of two loans from the U.S. Small Business Administration.

In the ~~six~~nine months ended ~~October~~January 31, ~~2021~~2022 and ~~2020,~~2021, there were no expenditures for capital assets. We do not anticipate any capital expenditures in fiscal 2022.

ItemItem 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.

~~Ite~~mItem 4. Controls and Procedures.

(a) Disclosure Controls and Procedures.

The Company’s management, with the participation of the Principal Executive Officer (the “PEO”) and Principal Financial Officer (the “PFO”), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in SEC Rule 13a-15(e)) as of ~~October~~January 31, ~~2021.~~2022. Based on that evaluation, the PEO and the PFO concluded that, as of ~~October~~January 31, ~~2021,~~2022, such controls and procedures were effective.

(b) Management’s Assessment of Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rules 13a-15(f). A system of internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Under the supervision and with the participation of management, including the PEO and the PFO, the Company’s management has evaluated the effectiveness of its internal control over financial reporting as of ~~October~~January 31, ~~2021,~~2022, based on the criteria established in a report entitled “2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission” and the interpretive guidance issued by the Commission in Release No. 34-55929. Based on this evaluation, the Company’s management has evaluated and concluded that the Company’s internal control over financial reporting was effective as of ~~October~~January 31, ~~2021.~~2022.

The Company’s annual report on Form 10-K for the year ended April 30, 2021 does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. The Company’s registered public accounting firm was not required to issue an attestation on its internal controls over financial reporting pursuant to the rules of the SEC. The Company will continue to evaluate the effectiveness of internal controls and procedures on an ongoing basis.

(c) Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act) during the quarter ended ~~October~~January 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

~~Ite~~mItem 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.

~~Ite~~mItem 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.

~~Ite~~Itemm2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~During the three-month period ended October 31,~~1. On November 18, 2021, we issued ~~937~~46,300 shares of unregistered common stock as stock-based compensation, for services rendered to the Company. We did not receive any proceeds for this issuance. The issuance was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.

It2. On December 10, 2021, we issued 50,000 shares of our common stock to purchase all of the outstanding stock of MSG Development Corp. We did not receive any proceeds from this issuance. The issuance was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.

3. On December 10, 2021, we issued 50,000 shares of our common stock to purchase a 10% interest in Caesar Media Group Inc. We did not receive any proceeds from this issuance. The issuance was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.

4. On January 31, 2021, we issued 22,222 shares of common stock to an accredited investor for gross proceeds of $200,000. We used the proceeds for working capital and general corporate purposes. The issuance was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.

5. On January 31, 2021, we issued 9,012 shares of unregistered common stock as stock-based compensation, for services rendered to the Company. We did not receive any proceeds for this issuance. The issuance was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.

6. See our Current Report dated February 9, 2022.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. MineMine Safety Disclosures.

Not applicable.

ItemItem 5. Other Information.

None.

ItemItem 6. Exhibits.

31 Rule 13a-14(a) Certification

32 Rule 13a-14(b) Certification

101.INS

XBRL Instance

101.SCH

XBRL Schema

101.CAL

XBRL Calculation

101.DEF

XBRL Definition

101.LAB

XBRL Label

101.PRE

XBRL Presentation

~~101.INSXBRL Instance~~

~~101.SCHXBRL Schema~~

~~101.CAL XBRL Calculation~~SIGNATURES

~~101.DEFXBRL Definition~~

~~101.LABXBRL Label~~

~~101.PREXBRL Presentation~~

~~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.


Date: ~~December 14, 2021~~ March 18, 2022	NETCAPITAL INC.

	By:	/s/ Cecilia Lenk
		Cecilia Lenk
	Chairman of the Board and Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Coreen Kraysler
		Coreen Kraysler
	(Principal Financial ~~Officer~~ and Accounting Officer)

2627

Large accelerated filer ☐ [ ]	Accelerated filer ☐ [ ]	Non-accelerated filer ☒ [X]	Smaller reporting company ☒[X]
			Emerging growth company ☐[ ]

	Page
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.	3 4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	19 20

Item 3. Quantitative and Qualitative disclosures about Market Risk.	22 24

Item 4. Controls and Procedures.	22 24

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.	25 26

Item1A. Risk Factors.	25 26

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	25 26

Item 3. Defaults Upon Senior Securities.	25 26

Item 4. Mine Safety Disclosures.	25 26

Item 5. Other Information.	25 26

Item 6. Exhibits.	25 27

Signatures.	26 28


	Unaudited		Audited
Assets:	January 31, 2022		April 30, 2021
Cash and cash equivalents	$	477,134	$	2,473,959
Accounts receivable net		2,257,174		1,356,932
Prepaid expenses		9,987		653,861
Total current assets		2,744,295		4,484,752

Deposits		6,300		6,300
Notes receivable - related parties		202,000		—
Purchased technology		15,536,704		14,803,954
Investment in affiliate		240,080		122,914
Equity securities at fair value		11,261,253		6,298,008
Total assets	$	29,990,632	$	25,715,928

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Trade	$	437,326	$	308,506
Related party		320,224		3,843,686
Accrued expenses		253,285		306,308
Stock subscription payable		277,650		1,199,996
Deferred revenue		25,613		622
Interest payable		187,239		116,483
Deferred tax liability, net		981,000		433,000
Related party debt		22,860		22,860
Secured note payable		—		1,000,000
Current portion of SBA loans		951,417		1,885,800
Loan payable - bank		34,324		34,324
Total current liabilities		3,490,938		9,151,585

Long-term liabilities:
Secured note payable		1,000,000		—
Long-term SBA loans, less current portion		1,434,383		2,385,800
Total Liabilities		5,925,321		11,537,385

Commitments and contingencies		—		—

Stockholders' equity:

Common stock, $.001 par value; 900,000,000 shares authorized, 2,896,844 and 2,178,766 shares issued and outstanding		2,896		2,178
Capital in excess of par value		22,050,777		15,168,987
Retained earnings (deficit)		2,011,638		(992,622	)
Total stockholders' equity		24,065,311		14,178,543
Total liabilities and stockholders' equity	$	29,990,632	$	25,715,928


Assets:	(Unaudited) October 31, 2021		(Audited) April 30, 2021
Cash and cash equivalents	$	940,966	$	2,473,959
Accounts receivable net		2,149,674		1,356,932
Receivable from bank		212,252		—
Prepaid expenses		177,940		653,861
Total current assets		3,480,832		4,484,752

Deposits		6,300		6,300
Notes receivable - related parties		130,000		—
Purchased technology		14,803,954		14,803,954
Investment in affiliate		240,080		122,914
Equity securities at fair value		9,623,753		6,298,008
Total assets	$	28,284,919	$	25,715,928

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Trade	$	357,623	$	308,506
Related party		320,224		3,843,686
Accrued expenses		316,285		306,308
Stock subscription payable		219,900		1,199,996
Deferred revenue		670		622
Interest payable		185,650		116,483
Deferred tax liability, net		1,054,000		433,000
Related party debt		22,860		22,860
Secured note payable		1,000,000		1,000,000
Current portion of SBA loans		2,518,965		1,885,800
Loan payable - bank		34,324		34,324
Demand notes payable		—		—
Total current liabilities		6,030,501		9,151,585

Long-term liabilities:
Long-term SBA loans, less current portion		1,752,635		2,385,800
Total Liabilities		7,783,136		11,537,385

Commitments and contingencies		—		—

Stockholders’ equity:
Common stock, $.001 par value; 900,000,000 shares authorized, 2,719,310 and 2,178,766 shares issued and outstanding		2,719		2,178
Capital in excess of par value		20,308,432		15,168,987
Retained earnings (deficit)		190,632		(992,622	)
Total stockholders’ equity		20,501,783		14,178,543
Total liabilities and stockholders’ equity	$	28,284,919	$	25,715,928


	Six Months Ended October 31, 2021			Six Months Ended October 31, 2020			Three Months Ended October 31, 2021			Three Months Ended October 31, 2020

Revenues	$	1,825,009		$	2,493,486		$	1,199,822		$	731,164
Costs of services		46,080			714,224			17,775			283,205
Gross profit		1,778,929			1,779,262			1,182,047			447,959

Costs and expenses:
Consulting expense		365,635			5,085			183,030			3,094
Marketing		43,826			8,782			22,000			4,681
Rent		22,611			26,798			10,481			12,719
Payroll and payroll related expenses		1,791,655			1,556,242			730,296			338,744
General and administrative costs		956,422			75,500			561,370			34,361
Total costs and expenses		3,180,149			1,672,407			1,507,177			393,599
Operating income (loss)		(1,401,220	)		106,855			(325,130	)		54,360

Other income (expense):
Interest expense		(70,271	)		(23,564	)		(35,026	)		(13,281	)
Unrealized gain on equity securities		3,275,745			—			—			—
Total other income (expense)		3,205,474			(23,564	)		(35,026	)		(13,281	)
Net income before taxes		1,804,254			83,291			(360,156	)		41,079
Income tax provision (benefit)		621,000			22,398			(86,000	)		11,057
Net income	$	1,183,254		$	60,893		$	(274,156	)	$	30,022

Basic earnings per share	$	0.48		$	0.15		$	(0.10	)	$	0.07
Diluted earnings per share	$	0.47		$	0.15		$	(0.10	)	$	0.07

Weighted average number of common shares outstanding:
Basic		2,462,251			415,726			2,718,383			415,815
Diluted		2,497,808			415,726			2,718,383			415,815


	Nine Months Ended			Nine Months Ended			Three Months Ended			Three Months Ended
	January 31, 2022			January 31, 2021			January 31, 2022			January 31, 2021

Revenues	$	3,636,050		$	3,770,813		$	1,811,041		$	1,277,327
Costs of services		85,429			730,343			39,349			16,119
Gross profit		3,550,621			3,040,470			1,771,692			1,261,208

Costs and expenses:
Consulting expense		675,180			391,206			309,545			126,212
Marketing		67,771			21,620			23,945			12,838
Rent		34,480			39,516			11,869			12,718
Payroll and payroll related expenses		3,032,987			2,153,561			1,241,332			857,228
General and administrative costs		1,277,146			235,054			320,724			159,554
Total costs and expenses		5,087,564			2,840,957			1,907,415			1,168,550
Operating income (loss)		(1,536,943	)		199,513			(135,723	)		92,658

Other income (expense):
Interest expense		(90,844	)		(53,690	)		(20,573	)		(30,126	)
Debt forgiveness		1,904,302			—			1,904,302			—
Unrealized gain on equity securities		3,275,745			—			—			—
Total other income (expense)		5,089,203			(53,690	)		1,883,729			(30,126	)
Net income before taxes		3,552,260			145,823			1,748,006			62,532
Income tax provision (benefit)		548,000			42,288			(73,000	)		19,890
Net income	$	3,004,260		$	103,535		$	1,821,006		$	42,642

Basic earnings per share	$	1.16		$	0.11		$	0.64		$	0.02
Diluted earnings per share	$	1.14		$	0.11		$	0.63		$	0.02

Weighted average number of common shares outstanding:
Basic		2,589,142			948,058			2,842,924			2,012,723
Diluted		2,629,043			948,058			2,882,825			2,012,729


	Common Stock						Capital in Excess of		Retained Earnings			Total
	Shares			Amount			Par Value		(Deficit)			Equity
Balance, April 30, 2019		377,685		$	378		$	2,201,497	$	(3,067,133	)	$	(865,258	)
Q1 stock-based compensation		1,406			1			19,687		—			19,688
Net income, July 31, 2019		—			—			—		24,475			24,475
Balance, July 31, 2019		379,091			379			2,221,184		(3,042,658	)		(821,095	)

Q2 stock-based compensation		37,656			38			917,305		—			917,343
Net income, October 31, 2019		—								542,451			542,451
Balance, October 31, 2019		416,747			417			3,138,489		(2,500,207	)		638,699

Q3 stock-based compensation		156			—			1,500		—			1,500
Net income, January 31, 2020		—			—			—		595,174			595,174
Balance, January 31, 2020		416,903			417			3,139,989		(1,905,033	)		1,235,373

Q4 stock-based compensation		156			—			1,032		—			1,032
Net loss, April 30, 2020		—			—			—		(557,249	)		(557,249	)
Balance, April 30, 2020		417,059			417			3,141,021		(2,462,282	)		679,156

Q1 stock-based compensation		156			—			1,406		—			1,406
Net income, July 31, 2020		—			—			—		30,871			30,871
Balance, July 31, 2020		417,215			417			3,142,427		(2,431,411	)		711,433

Q2 stock-based compensation		2,240			2			18,555		—			18,557
Net income, October 31, 2020		—			—			—		30,022			30,022
Balance, October 31, 2020		419,455			419			3,160,982		(2,401,389	)		760,012

Shares issued to acquire funding portal		1,666,360			1,666			11,329,582		—			11,331,248
Return of shares of common stock		(5,000	)		(5	)		5		—			—
Q3 stock-based compensation		937			1			6,239		—			6,240
Net income, January 31, 2021		—			—			—		42,642			42,642
Balance, January 31, 2021		2,081,752			2,081			14,496,808		(2,358,747	)		12,140,142

Q4 stock-based compensation		95,937			96			657,180		—			657,276
Shares issued for debt settlement		1,077			1			14,999		—			15,000
Net income, April 30, 2021										1,366,125			1,366,125
Balance, April 30, 2021		2,178,766			2,178			15,168,987		(992,622	)		14,178,543

Q1 stock-based compensation		937			2			14,054		—			14,056
Sale of common stock		176,934			176			1,592,219					1,592,395
Shares issued to settle related party accounts payable		361,736			362			3,523,100					3,523,462
Net income, July 31, 2021		—			—			—		1,457,410			1,457,410
Balance, July 31, 2021		2,718,373			2,718			20,298,360		464,788			20,765,866

Q2 stock-based compensation		937			1			10,072		—			10,073
Net loss, October 31, 2021										(274,156	)		(274,156	)
Balance, October 31, 2021		2,719,310			2,719			20,308,432		190,632			20,501,783

Q3 stock-based compensation		55,312			55			553,967		—			554,022
Purchase of equity interest		50,000			50			499,950		—			500,000
Purchase of MSG Development Corp.		50,000			50			488,450		—			488,500
Sale of common stock		22,222			22			199,978		—			200,000
Net income, January 31, 2022		—			—			—		1,821,006			1,821,006
Balance, January 31, 2022		2,896,844		$	2,896		$	22,050,777	$	2,011,638		$	24,065,311


		Common Stock						Capital in Excess of		Retained Earnings			Total
	Shares			Amount			Par Value		(Deficit)			Equity
Balance, April 30, 2019		377,685		$	378		$	2,201,497	$	(3,067,133	)	$	(865,258	)
Q1 stock-based compensation		1,406			1			19,687		—			19,688
Net income, July 31, 2019		—			—			—		24,475			24,475
Balance, July 31, 2019		379,091			379			2,221,184		(3,042,658	)		(821,095	)

Q2 stock-based compensation		37,656			38			917,305		—			917,343
Net income, October 31, 2019		—								542,451			542,451
Balance, October 31, 2019		416,747			417			3,138,489		(2,500,207	)		638,699

Q3 stock-based compensation		156			—			1,500		—			1,500
Net income, January 31, 2020		—			—			—		595,174			595,174
Balance, January 31, 2020		416,903			417			3,139,989		(1,905,033	)		1,235,373

Q4 stock-based compensation		156			—			1,032		—			1,032
Net loss, April 30, 2020		—			—			—		(557,249	)		(557,249	)
Balance, April 30, 2020		417,059			417			3,141,021		(2,462,282	)		679,156

Q1 stock-based compensation		156			—			1,406		—			1,406
Net income, July 31, 2020		—			—			—		30,871			30,871
Balance, July 31, 2020		417,215			417			3,142,427		(2,431,411	)		711,433

Q2 stock-based compensation		2,240			2			18,555		—			18,557
Net income, October 31, 2020		—			—			—		30,022			30,022
Balance, October 31, 2020		419,455			419			3,160,982		(2,401,389	)		760,012

Shares issued to acquire funding portal		1,666,360			1,666			11,329,582		—			11,331,248
Return of shares of common stock		(5,000	)		(5	)		5		—			—
Q3 stock-based compensation		937			1			6,239		—			6,240
Net income, January 31, 2021		—			—			—		42,642			42,642
Balance, January 31, 2021		2,081,752			2,081			14,496,808		(2,358,747	)		12,140,142

Q4 stock-based compensation		95,937			96			657,180		—			657,276
Shares issued for debt settlement		1,077			1			14,999		—			15,000
Net income, April 30, 2021										1,366,125			1,366,125
Balance, April 30, 2021		2,178,766			2,178			15,168,987		(992,622	)		14,178,543

Q1 stock-based compensation		937			2			14,054		—			14,056
Sale of common stock		176,934			176			1,592,219					1,592,395
Shares issued to acquire funding portal		361,736			362			3,523,100					3,523,462
Net income, July 31, 2021		—			—			—		1,457,410			1,457,410
Balance, July 31, 2021		2,718,373			2,718			20,298,360		464,788			20,765,866

Q2 stock-based compensation		937			1			10,072		—			10,073
Net loss, October 31, 2021										(274,156	)		(274,156	)
Balance, October 31, 2021		2,719,310		$	2,719		$	20,308,432	$	190,632		$	20,501,783


	January 31, 2022			January 31, 2021
OPERATING ACTIVITIES
Net income	$	3,004,260		$	103,535
Adjustment to reconcile net income to net cash used in operating activities:
Stock-based compensation		1,137,042			386,121
Non-cash revenue from the receipt of equity		(1,187,500	)		(2,319,532	)
Unrealized gain on equity securities		(3,275,745	)		—
Debt forgiveness		(1,904,302	)
Provision for bad debts		—			29,000
Changes in deferred taxes		548,000			42,288
Changes in non-cash working capital balances:
Accounts receivable		(900,242	)		(1,001,586	)
Prepaid expenses		21,983			(3,144	)
Accounts payable and accrued expenses		138,797			250,587
Accounts payable - related party		—			37,314
Deferred revenue		24,991			(67	)
Accrued interest payable		89,258			—
Net cash used in operating activities		(2,303,458	)		(2,475,484	)

INVESTING ACTIVITIES
Proceeds from purchase of funding portal		—			364,939
Loans to affiliates		(202,000	)		—
Investment in affiliate		(117,166	)		—
Net cash provided by (used in) investing activities		(319,166	)		364,939

FINANCING ACTIVITIES
Proceeds from SBA loans		—			2,385,800
Proceeds from stock subscriptions		625,799			—
Net cash provided by financing activities		625,799			2,385,800

Net increase (decrease) in cash		(1,996,825	)		275,255
Cash and cash equivalents, beginning of the period		2,473,959			11,206
Cash and cash equivalents, end of the period	$	477,134		$	286,461

Supplemental disclosure of cash flow information:
Cash paid for taxes	$	—		$	—
Cash paid for interest	$	1,592		$	1,595

Supplemental Non-Cash Financing Information:
Common stock issued to purchase subsidiary	$	488,500		$	—
Common stock issued to purchase 10% interest in Caesar Media Group Inc.	$	500,000		$	—
Common stock issued to reduce related party payable	$	3,523,462		$	—


	Six Months Ended October 31, 2021			Six Months Ended October 31, 2020
OPERATING ACTIVITIES
Net income	$	1,183,254		$	60,893
Adjustment to reconcile net income to net cash used in operating activities:
Stock-based compensation		483,067			259,909
Non-cash revenue from the receipt of equity		(50,000	)		(2,314,532	)
Unrealized gain on equity securities		(3,275,745	)		—
Changes in deferred taxes		621,000			22,398
Changes in non-cash working capital balances:
Accounts receivable		(792,742	)		(40,671	)
Receivable from bank		(212,252	)		—
Prepaid expenses		16,983			(5,166	)
Accounts payable and accrued expenses		59,094			30,515
Deferred revenue		48			4,851
Accrued interest payable		69,167			40,791
Net cash used in operating activities		(1,898,126	)		(1,941,012	)

INVESTING ACTIVITIES
Loans to affiliates		(130,000	)		—
Investment in affiliate		(117,166	)		—
Net cash used in investing activities		(247,166	)		—

FINANCING ACTIVITIES
Proceeds from SBA loans		—			2,385,800
Proceeds from stock subscriptions		612,299			—
Net cash provided by financing activities		612,299			2,385,800

Net increase (decrease) in cash		(1,532,993	)		444,788
Cash and cash equivalents, beginning of the period		2,473,959			11,206
Cash and cash equivalents, end of the period	$	940,966		$	455,994

Supplemental disclosure of cash flow information:
Cash paid for taxes	$	—		$	—
Cash paid for interest	$	1,110		$	1,113

Supplemental Non-Cash Financing Information:
Common stock issued to reduce related party payable	$	3,523,462		$	—


	Nine Months Ended Jan. 31, 2022		Nine Months Ended Jan. 31, 2021		Three Months Ended Jan. 31, 2022		Three Months Ended Jan. 31, 2021
Consulting services	$	2,395,395	$	3,416,802	$	1,389,200	$	924,286
Fees from online services		1,240,655		354,011		421,841		353,041
Total revenues	$	3,636,050	$	3,770,813	$	1,811,041	$	1,277,327


	Six Months Ended Oct. 31, 2021		Six Months Ended Oct 31, 2020		Three Months Ended Oct. 31, 2021			Three Months Ended Oct. 31, 2020
Net income (loss) attributable to common stockholders – basic	$	1,183,254	$	60,893	$	(274,156	)	$	30,022
Adjustments to net loss		—		—		—			—
Net income (loss) attributable to common stockholders – diluted	$	1,183,254	$	60,893	$	(274,156	)	$	30,022

Weighted average common shares outstanding - basic		2,462,251		415,726		2,718,383			415,815
Effect of dilutive securities		35,557		—		—			—
Weighted average common shares outstanding – diluted		2,497,808		415,726		2,718,383			415,815

Earnings (loss) per common share - basic	$	0.48	$	0.15	$	(0.10	)	$	0.07
Earnings (loss) per common share - diluted	$	0.47	$	0.15	$	(0.10	)	$	0.07


	Nine Months Ended January 31, 2022		Nine Months Ended January 31, 2021		Three Months Ended January 31, 2022		Three Months Ended January 31, 2021
Net income attributable to common stockholders – basic	$	3,004,260	$	103,535	$	1,821,006	$	42,642
Adjustments to net income		—		—		—		—
Net income attributable to common stockholders – diluted	$	3,004,260	$	103,535	$	1,821,006	$	42,642

Weighted average common shares outstanding - basic		2,589,142		948,058		2,842,924		2,012,723
Effect of dilutive securities		39,901		—		39,901		—
Weighted average common shares outstanding – diluted		2,629,043		948,058		2,882,825		2,012,723

Earnings per common share - basic	$	1.16	$	0.11	$	0.64	$	0.02
Earnings per common share - diluted	$	1.14	$	0.11	$	0.63	$	0.02


	October 31, 2021		April 30, 2021		Interest Rate			January 31, 2022		April 30, 2021		Interest Rate

Secured lender	$	1,000,000	$	1,000,000		8.0	%	$	1,000,000	$	1,000,000		8.0	%
Notes payable – related parties		22,860		22,860		0.0	%		22,860		22,860		0.0	%
U.S. SBA loan		1,885,800		1,885,800		1.0	%		—		1,885,800		1.0	%
U.S. SBA loan		500,000		500,000		3.75	%		500,000		500,000		3.75	%
U.S. SBA loan		1,885,800		1,885,800		1.0	%		1,885,800		1,885,800		1.0	%
Loan payable – bank		34,324		34,324		5.5	%		34,324		34,324		5.5	%
Total Debt		5,328,784		5,328,784					3,442,984		5,328,784
Less: current portion of long-term debt		3,576,149		2,942,984					1,008,601		2,942,984
Total long-term debt	$	1,752,635	$	2,385,800				$	2,434,383	$	2,385,800


	October 31, 2021			April 30, 2021			January 31, 2022			April 30, 2021

Deferred tax assets, net:
Net operating loss carryforwards	$	422,000		$	141,000		$	352,000		$	141,000
Bad debt allowance		27,000			17,000			27,000			17,000
Stock-based compensation		193,000			155,000			336,000			155,000
Deferred tax assets		642,000			313,000			715,000			313,000

Deferred tax liability
Unrealized gain		1,696,000			746,000			1,696,000			746,000

Net deferred tax liability	$	(1,054,000	)	$	(433,000	)	$	(981,000	)	$	(433,000	)


Total consideration: 75,000 shares of common stock of the Company	$	732,750

Recognized amounts of identifiable assets acquired:
Professional practice intangible	$	556,830
Technology-related intangibles		36,650
Marketing-related intangibles		14,660
Computer-related intangibles		49,111
Customer-related intangibles		16,859
Contract-related intangibles		36,650
Human capital and artistic-related intangibles		21,990
Total identifiable net assets	$	732,750


Total consideration: 75,000 shares of common stock of the Company	$	750,000

Recognized amounts of identifiable assets acquired:
Professional practice goodwill	$	570,000
Technology-related intangibles		37,500
Marketing-related intangibles		15,000
Computer-related intangibles		50,250
Customer-related intangibles		17,250
Contract-related intangibles		30,000
Human capital and artistic-related intangibles		30,000
Total identifiable net assets	$	750,000


Stock-based compensation expense	Six Months Ended Oct. 31, 2021		Six Months Ended Oct. 31, 2020		Three Months Ended Oct. 31, 2021		Three Months Ended Oct. 31, 2020		Nine Months Ended Jan. 31, 2022		Nine Months Ended Jan. 31, 2021		Three Months Ended Jan. 31, 2022		Three Months Ended Jan. 31, 2021
Chief Executive Officer	$	40,608	$	81,216	$	—	$	40,608	$	40,608	$	121,824	$	—	$	40,608
Chief Financial Officer		40,608		81,216		—		40,608		40,608		121,824		—		40,608
Chief Marketing Officer		20,111		2,453		8,396		1,047		109,547		3,492		89,436		5,201
Related party consultant		25,908		38,757		6,530		19,379		25,908		58,135		—		19,378
VP of Digital Strategy		4,017		17,510		1,677		17,510		5,603		22,711		1,586		1,039
Marketing consultant		74,104		—		37,052		—		111,156		—		37,052		—
Marketing consultant		251,803		—		125,902		—		377,704		—		125,901		—
Member of board of directors										100,000		—		100,000		—
Director of Business Development										300,000		—		300,000		—
Business consultant		25,908		38,757		6,530		19,379		25,908		58,135		—		19,378
Total stock-based compensation expense	$	483,067	$	259,909	$	186,087	$	138,531	$	1,137,042	$	386,121	$	653,975	$	126,212


Description		Oct. 31, 2021		April 30, 2021	Jan. 31, 2022		April 30, 2021
Chief Executive Officer	$	—	$	40,608	$	—	$	40,608
Chief Financial Officer		—		40,608		—		40,608
Related party consultant		—		25,908		—		25,908
Business consultant		—		25,908		—		25,908
Marketing consultant		128,638		380,441		7,249		380,441
Marketing consultant		44,301		118,405		2,738		118,405
Total	$	172,939	$	631,878	$	9,987	$	631,878


Consideration: 1,666,360 shares of common stock of the Company	$	11,331,248
Payment of promissory notes and interest		3,817,516
Total consideration	$	15,148,764

Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash	$	358,634
Current assets		8,894
Accounts payable		(22,718	)
Platform users		7,080,319
Platform investors		6,288,392
Platform issuers		903,125
Unpatented technology		532,118
Total identifiable net assets	$	15,148,764

	Revenues		Earnings
Supplemental pro forma for 4/1/20 – 11/04/20	$	2,866,063	$	282,264
Supplemental pro forma for 4/1/19 – 11/04/19	$	1,018,200	$	680,212