UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: January 31, ~~2023~~2024

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

Commission file number: 001-41443

~~NETCAPITAL INC.~~

~~(Exact name of registrant as specified in its charter)~~

NETCAPITAL INC.

(Exact name of registrant as specified in its charter)

Utah		87-0409951
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1 Lincoln Street

Boston MA 02111

~~(Address~~(Address of principal executive offices)

(781) 925-1700

(Registrant’s telephone number, including area code)

Not Applicable

~~(Former~~(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, par value $0.001 per share	NCPL	The Nasdaq Stock Market LLC
Redeemable warrants exercisable for one share of Common Stock at an exercise price of $5.19	NCPLW	The Nasdaq Stock Market LLC

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

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ 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.

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

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

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

As of March ~~16, 2023~~18, 2024 the ~~Company~~registrant had ~~6,071,777~~20,011,132 shares of its common stock, par value $0.001 per share, issued and outstanding.

TABLE OF CONTENTS

	Page
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.	5
Condensed Consolidated Balance Sheets as of January 31, ~~2023~~2024 (unaudited) and April 30, ~~2022 (audited)~~2023	5
Condensed Consolidated Statements of Operations for the three and nine months ended January 31, 2024 and 2023 ~~and 2022~~ (unaudited)	6
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended January 31, ~~2023 (unaudited)~~2024 and the year ended April 30, ~~2022 (audited)~~2023 (unaudited)	7
Condensed Consolidated Statements of Cash Flows for the nine months ended January 31, 2024 and 2023 ~~and 2022~~ (unaudited)	8
Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	23

Item 3. Quantitative and Qualitative disclosures about Market Risk.	2829

Item 4. Controls and Procedures.	2829

PART II—OTHER INFORMATION

~~Item 1. Legal Proceedings.~~	29

~~Item1A. Risk Factors.~~Item 1. Legal Proceedings.	2930

Item1A. Risk Factors.	30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	29

~~Item 3. Defaults Upon Senior Securities.~~	30

~~Item 4. Mine Safety Disclosures.~~	31

Item ~~5. Other Information.~~3. Defaults Upon Senior Securities.	31

Item ~~6. Exhibits.~~4. Mine Safety Disclosures.	3132

~~Signatures.~~Item 5. Other Information.	32

Item 6. Exhibits.	32

Signatures.	33

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by such forward-looking terminology as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:

●	capital requirements and the availability of capital to fund our growth and to service our existing debt;

●	difficulties executing our growth strategy, including attracting new issuers and investors;

●	our anticipated use of the net proceeds from our recent public offering;

●	economic uncertainties and business interruptions resulting from the coronavirus COVID-19 global pandemic and its aftermath;

●	as restrictions related to the coronavirus COVID-19 global pandemic are removed and face-to-face economic activities normalize, it may be difficult for us to maintain the recent sales gains that we have experienced;

●	all the risks of acquiring one or more complementary businesses, including identifying a suitable target, completing comprehensive due diligence uncovering all information relating to the target, the financial stability of the target, the impact on our financial condition of the debt we may incur in acquiring the target, the ability to integrate the target’s operations with our existing operations, our ability to retain management and key employees of the target, among other factors attendant to acquisitions of small, non-public operating companies;

●	difficulties in increasing revenue per issuer;

●	challenges related to hiring and training fintech employees at competitive wage rates;

●	difficulties in increasing the average number of investments made per investor;

●	shortages or interruptions in the supply of quality issuers;

●	our dependence on a small number of large issuers to generate revenue;

●	negative publicity relating to any one of our issuers;

●	competition from other online capital portals with significantly greater resources than we have;

●	changes in investor tastes and purchasing trends;

●	our inability to manage our growth;


●	our inability to maintain an adequate level of cash flow, or access to capital, to meet growth expectations;

●	changes in senior management, loss of one or more key personnel or an inability to attract, hire, integrate and retain skilled personnel;

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●	labor shortages, unionization activities, labor disputes or increased labor costs, including increased labor costs resulting from the demand for qualified employees;

●	our vulnerability to increased costs of running an online portal with any cloud partner;

●	our vulnerability to increasing labor costs;

●	the impact of governmental laws and regulation;

●	failure to obtain or maintain required licenses;

●	changes in economic or regulatory conditions and other unforeseen conditions that prevent or delay the development of a secondary trading market for shares of equity that are sold on our online portal; and

●	inadequately protecting our intellectual property or breaches of security of confidential user information.

You are cautioned that all forward-looking statements involve risks and uncertainties. We undertake no obligation to amend this Form 10-Q or our annual report on Form 10-K or revise publicly these forward-looking statements (other than pursuant to reporting obligations imposed on registrants pursuant to applicable federal securities laws) to reflect subsequent events or circumstances.

All of our forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q may include market data and certain industry data and forecasts, which we may obtain from internal company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications, articles and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. While we believe that such studies and publications are reliable, we have not independently verified market and industry data from third-party sources.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NETCAPITAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Assets: January 31,
2023
(Unaudited) April 30,
2022
(Audited)
Cash and cash equivalents $ 1,771,927 $ 473,925
Related party receivable 668 668
Accounts receivable net 2,163,931 2,433,900
Prepaid expenses 36,844 5,694
Total current assets 3,973,370 2,914,187

Deposits 6,300 6,300
Notes receivable – related parties 202,000 202,000
Purchased technology, net 15,903,628 15,536,704
Investment in affiliate 240,080 240,080
Equity securities 19,250,193 12,861,253
Total assets $ 39,575,571 $ 31,760,524

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
  Trade $ 634,970 $ 536,508
  Related party 75,204 378,077
Accrued expenses 246,665 229,867
Stock subscription payable 10,000 33,400
Deferred revenue 718 2,532
Interest payable 89,491 222,295
Deferred tax liability, net 1,476,000 977,000
Related party debt 15,000 22,860
Secured note payable 350,000 1,400,000
Current portion of SBA loans 1,885,800 1,890,727
Loan payable - bank 34,324 34,324
Convertible notes payable —   300,000
Total current liabilities 4,818,172 6,027,590

Long-term liabilities:
Long-term SBA loans, less current portion 500,000 495,073
Total liabilities 5,318,172 6,522,663

Commitments and contingencies —   —

Stockholders’ equity:
Common stock, $.001 par value; 900,000,000 shares authorized, 6,071,777 and 2,934,344 shares issued and outstanding 6,072 2,934
Shares to be issued 183,187 244,250
Capital in excess of par value 29,613,118 22,479,769
Retained earnings 4,455,022 2,510,908
Total stockholders’ equity 34,257,399 25,237,861
Total liabilities and stockholders’ equity $ 39,575,571 $ 31,760,524
~~See Accompanying Notes to the Condensed Consolidated Financial Statements~~
5
~~NETCAPITAL INC.~~
~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS~~
~~(UNAUDITED)~~

Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
January 31, 2023 January 31, 2022 January 31, 2023 January 31, 2022

Revenues $ 2,260,414 $ 1,811,041 $ 5,379,960 $ 3,636,050
Costs of services 4,305 39,349 61,603 85,429
Gross profit 2,256,109 1,771,692 5,318,357 3,550,621

Costs and expenses:
Consulting expense 130,500 309,345 455,892 675,180
Marketing 23,549 23,945 64,211 67,771
Rent 17,187 11,869 51,586 34,480
Payroll and payroll related expenses 946,043 1,241,332 2,592,891 3,032,987
General and administrative costs 568,253 320,724 1,241,365 1,277,146
Total costs and expenses 1,685,532 1,907,415 4,405,945 5,087,564
Operating income (loss) 570,577 (135,723 ) 912,412 (1,536,973 )

Other income (expense):
Interest expense (17,632 ) (20,573 ) (76,922 ) (90,844 )
Gain on debt conversion —   —   224,260 —
Debt forgiveness —   1,904,302 —   1,904,302
Amortization of intangible assets (25,914 ) —   (68,076 ) —
Realized loss on sale of investment —   —   (406,060 ) —
Unrealized gain on equity securities 1,866,468 —   1,857,500 3,275,745
Total other income (expense) 1,822,922 1,883,729 1,530,702 5,089,203
Net income before taxes 2,393,499 1,748,006 2,443,114 3,552,260
Income tax expense (benefit) 697,000 (73,000 ) 499,000 548,000
Net income $ 1,696,499 $ 1,821,006 $ 1,944,114 $ 3,004,260

Basic earnings per share $ 0.33 $ 0.64 $ 0.46 $ 1.16
Diluted earnings per share $ 0.33 $ 0.63 $ 0.46 $ 1.14

Weighted average number of common shares outstanding:
Basic 5,166,299 2,842,924 4,208,216 2,589,142
Diluted 5,166,549 2,882,825 4,208,466 2,629,043

January 31, 2024
(Unaudited) April 30, 2023
(Audited)
Assets:
Cash and cash equivalents $ 2,172,099 $ 569,441
Accounts receivable net 3,701,501 1,388,500
Note receivable 20,000 -
Prepaid expenses 158,465 583,030
Total current assets 6,052,065 2,540,971

Deposits 6,300 6,300
Notes receivable - related parties 202,000 202,000
Purchased technology, net 15,790,304 15,875,297
Investment in affiliate 240,080 240,080
Equity securities 21,844,698 22,955,445
Total assets $ 44,135,447 $ 41,820,093

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Trade $ 828,836 $ 578,331
Related party 75,204 75,204
Accrued expenses 394,911 285,065
Stock subscription payable 10,000 10,000
Deferred revenue 487 661
Interest payable 88,084 98,256
Current taxes payable - 174,000
Deferred tax liability, net - 1,657,000
Related party debt 15,000 15,000
Secured note payable - 350,000
Current portion of SBA loans 1,885,800 1,885,800
Loan payable - bank 34,324 34,324
Total current liabilities 3,332,646 5,163,641

Long-term liabilities:
Long-term SBA loans, less current portion 500,000 500,000
Total liabilities 3,832,646 5,663,641

Commitments and contingencies - -

Stockholders’ equity:
Common stock, $.001 par value; 900,000,000 shares authorized, 17,231,132 and 6,440,527 shares issued and outstanding 17,231 6,441
Shares to be issued 122,124 183,187
Capital in excess of par value 37,077,147 30,500,944
Retained earnings 3,086,299 5,465,880
Total stockholders’ equity 40,302,801 36,156,452
Total liabilities and stockholders’ equity $ 44,135,447 $ 41,820,093

See Accompanying Notes to the Condensed Consolidated Financial Statements

6
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NETCAPITAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF ~~CHANGES IN STOCKHOLDERS’ EQUITY~~OPERATIONS
~~For the Nine Months Ended January 31, 2023 (unaudited) and the Year Ended April 30, 2022 (audited)~~(UNAUDITED)

Common Stock
Shares Amount Shares
To Be Issued Capital in Excess of Par Value Retained Earnings (Deficit) Total
Equity
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

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 50 244,250 488,450 —   732,750
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 2,896 244,250 22,050,777 2,011,638 24,309,561

Q4 stock-based compensation —   —   —   29,030 —   29,030
Purchase of equity interest 37,500 38 —   399,962 —   400,000
Net income, April 30, 2022 —   —   —   —   499,270 499,270
Balance, April 30, 2022 2,934,344 2,934 244,250 22,479,769 2,510,908 25,237,861

Shares issued for debt conversion 133,333 134 —   379,852 —   379,986
Sale of common stock 1,205,000 1,205 —   3,947,912 —   3,949,117
Vesting of stock options —   —   —   32,953 —   32,953
Net income for July 31, 2022 quarter —   —   —   —   64,477 64,477
Balance, July 31, 2022 4,272,677 4,273 244,250 26,840,486 2,575,385 29,664,394

Sale of common stock 2,600 3 —   23,397 23,400
Purchase of equity interest 37,500 37 366,338 366,375
Vesting of stock options 32,953 32,953
Net income for Oct. 31, 2022 quarter —   —   —   —   183,138 183,138
Balance October 31, 2022 4,312,777 4,313 244,250 27,263,174 2,758,523 30,270,260

Sale of common stock 1,434,000 1,434 —   1,620,025 —   1,621,459
Purchase of equity interest 18,750 19 —   171,105 —   171,124
Purchase of intellectual property 300,000 300 —   434,700 —   435,000
Reduction in shares to be issued 6,250 6 (61,063 ) 61,057 —   —
Vesting of stock options —   —   —   63,057 —   63,057
Net income for January 31, 2023 quarter —   —   —   —   1,696,499 1,696,499
Balance January 31, 2023 6,071,777 $ 6,072 $ 183,187 $ 29,613,118 $ 4,455,022 $ 34,257,399

Three Months
Ended Three Months
Ended Nine Months
Ended Nine Months
Ended
January 31, 2024 January 31, 2023 January 31, 2024 January 31, 2023

Revenues $ 1,042,793 $ 2,260,414 $ 4,604,260 $ 5,379,960
Costs of services 58,875 4,305 97,062 61,603
Gross profit 983,918 2,256,109 4,507,198 5,318,357

Costs and expenses:
Consulting expense 175,357 130,500 544,033 455,892
Marketing 32,198 23,549 320,817 64,211
Rent 19,544 17,187 57,533 51,586
Payroll and payroll related expenses 869,517 946,043 2,957,394 2,592,891
General and administrative costs 1,092,459 568,253 2,529,378 1,241,365
Total costs and expenses 2,189,075 1,685,532 6,409,155 4,405,945
Operating income (loss) (1,205,157 ) 570,577 (1,901,957 ) 912,412

Other income (expense):
Interest expense (11,918 ) (17,632 ) (35,784 ) (76,922 )
Gain on debt conversion - - - 224,260
Amortization of intangible assets (28,331 ) (25,914 ) (84,993 ) (68,076 )
Unrealized gain (loss) on equity securities (2,696,135 ) 1,866,468 (2,696,135 ) 1,857,500
Realized loss on sale of investment - - - (406,060 )
Total other income (expense) (2,736,384 ) 1,822,922 (2,816,912 ) 1,530,702
Net income (loss) before taxes (3,941,541 ) 2,393,499 (4,718,869 ) 2,443,114
Income tax expense (benefit) (1,713,999 ) 697,000 (2,339,288 ) 499,000
Net income (loss) $ (2,227,542 ) $ 1,696,499 $ (2,379,581 ) $ 1,944,114

Basic earnings (loss) per share $ (0.19 ) $ 0.33 $ (0.25 ) $ 0.46
Diluted earnings (loss) per share $ (0.19 ) $ 0.33 $ (0.25 ) $ 0.46

Weighted average number of common shares outstanding:
Basic 11,466,523 5,166,299 9,457,740 4,208,216
Diluted 11,466,523 5,166,549 9,457,740 4,208,466

See Accompanying Notes to the Condensed Consolidated Financial Statements

7
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NETCAPITAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
For the Nine Months Ended January 31, 2024 and the Year Ended April 30, 2023

Common Stock Shares to Capital in
Excess of Retained Total
Shares Amount Be Issued Par Value Earnings Equity
Balance, April 30, 2022 2,934,344 $ 2,934 $ 244,250 $ 22,479,769 $ 2,510,908 $ 25,237,861

Shares issued for debt conversion 133,333 134 - 379,852 - 379,986
Sale of common stock 1,205,000 1,205 - 3,947,912 - 3,949,117
Vesting of stock options - - - 32,953 - 32,953
Net income for July 31, 2022 quarter - - - - 64,477 64,477
Balance, July 31, 2022 4,272,677 4,273 244,250 26,840,486 2,575,385 29,664,394

Sale of common stock 2,600 3 - 23,397 - 23,400
Purchase of equity interest 37,500 37 - 366,338 - 366,375
Vesting of stock options - - - 32,953 - 32,953
Net income for Oct. 31, 2022 quarter - - - 183,138 183,138
Balance October 31, 2022 4,312,777 4,313 244,250 27,263,174 2,758,523 30,270,260

Sale of common stock 1,434,000 1,434 - 1,620,025 - 1,621,459
Purchase of equity interest 18,750 19 - 171,105 - 171,124
Purchase of intellectual property 300,000 300 - 434,700 - 435,000
Reduction in shares to be issued 6,250 6 (61,063 ) 61,057 - -
Vesting of stock options - - - 63,057 - 63,057
Net income for Jan. 31, 2023 quarter - - - - 1,696,499 1,696,499
Balance January 31, 2023 6,071,777 6,072 183,187 29,613,118 4,455,022 34,257,399

Purchase of equity interest 18,750 19 - 195,233 - 195,252
Vesting of stock options - - - 132,943 - 132,943
Stock-based compensation 350,000 350 - 559,650 - 560,000
Net income Q4 - - - 1,010,858 1,010,858
Balance April 30, 2023 6,440,527 6,441 183,187 30,500,944 5,465,880 36,156,452

Vesting of stock options - - - 139,371 - 139,371
Stock-based compensation 100,000 100 - 143,900 - 144,000
Sale of common stock 2,825,000 2,825 - 2,272,375 - 2,275,200
Purchase of equity interest 18,750 18 - 183,170 - 183,188
Stock-based settlement 49,855 50 - 58,779 - 58,829
Net loss July 31, 2023 quarter - - - - (491,655 ) (491,655 )
Balance July 31, 2023 9,434,132 9,434 183,187 33,298,539 4,974,225 38,465,385

Vesting of stock options - - - 139,371 - 139,371
Reduction in shares to be issued 6,250 6 (61,063 ) 61,057 - -
Purchase of equity interest 18,750 19 - 183,170 - 183,189
Net income October 31, 2023 quarter - - - - 339,616 339,616
Balance October 31, 2023 9,459,132 9,459 122,124 33,682,137 5,313,841 39,127,561
Balance 9,459,132 9,459 122,124 33,682,137 5,313,841 39,127,561

Vesting of stock options - - - 139,371 - 139,371
Sale of common stock 4,800,000 4,800 - 3,255,639 - 3,260,439
Warrant exercise 2,972,000 2,972 - - - 2,972
Net loss January 31, 2024 quarter - - - - (2,227,542 ) (2,227,542 )
Net income (loss) - - - - (2,227,542 ) (2,227,542 )
Balance January 31, 2024 17,231,132 $ 17,231 $ 122,124 $ 37,077,147 $ 3,086,299 $ 40,302,801
Balance 17,231,132 $ 17,231 $ 122,124 $ 37,077,147 $ 3,086,299 $ 40,302,801
See Accompanying Notes to the Condensed Consolidated Financial Statements
-7-
NETCAPITAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

Nine Months Ended
January 31, 2023

Nine Months Ended
January
31, 2022
OPERATING ACTIVITIES
Net income $ 1,944,114 $ 3,004,260
Adjustments to reconcile net income to net cash used in operating activities:
Stock-based compensation 128,963 1,137,042
Receipt of equity in lieu of cash (4,600,000 ) (1,187,500 )
Unrealized gain on equity securities (1,857,500 ) (3,275,745 )
Debt forgiveness —   (1,904,302 )
Gain on debt conversion (224,260 ) —
Provision for bad debts 2,600 —
Realized loss on investment 406,060 —
Changes in deferred taxes 499,000 548,000
Amortization of intangible assets 68,076 —
Changes in non-cash working capital balances:
Accounts receivable 267,369 (900,242 )
Prepaid expenses (31,150 ) 21,983
Accounts payable and accrued expenses 115,259 138,797
Deferred revenue (1,814 ) 24,991
Accrued interest payable (122,612 ) 89,258
Accounts payable – related party (8,819 ) —
Net cash used in operating activities (3,414,714 ) (2,303,458 )

INVESTING ACTIVITIES
Proceeds from sale of investment 200,000 —
Loans to affiliates —   (202,000 )
Investment in affiliate —   (117,166 )
Net cash provided by (used in) investing activities 200,000 (319,166 )

FINANCING ACTIVITIES
Payment to secured lender (1,050,000 ) —
Payment of related party note (7,860 ) —
Proceeds from stock subscriptions 5,570,576 625,799
Net cash provided by financing activities 4,512,716 625,799

Net increase (decrease) in cash 1,298,002 (1,996,825 )
Cash and cash equivalents, beginning of the period 473,925 2,473,959
Cash and cash equivalents, end of the period $ 1,771,927 $ 477,134

Supplemental disclosure of cash flow information:
Cash paid for taxes $ —   $ —
Cash paid for interest $ 2,077 $ 1,592

Supplemental Non-Cash Investing and Financing Information:
Common stock issued to pay promissory notes $ 266,272 $ —
Common stock issued to pay related party payable $ 113,714 $ 3,523,462
Common stock issued to purchase subsidiary $ 61,063 $ 488,500
Common stock issued to purchase 10% interest in Caesar Media Group Inc. $ 537,499 $ 500,000
Common stock issued to purchase intellectual property $ 435,000 $ —

Nine Months Ended Nine Months Ended
January 31, 2024 January 31, 2023
OPERATING ACTIVITIES
Net income (loss) $ (2,379,581 ) $ 1,944,114
Adjustment to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation 1,044,395 128,963
Receipt of equity in lieu of cash (1,219,012 ) (4,600,000 )
Unrealized (gain) loss on equity securities 2,696,135 (1,857,500 )
Gain on debt conversion - (224,260 )
Provision for bad debts 6,000 2,600
Realized loss on investment - 406,060
Changes in deferred taxes (1,657,000 ) 499,000
Amortization of intangible assets 84,993 68,076
Changes in non-cash working capital balances:
Accounts receivable (2,319,001 ) 267,369
Prepaid expenses 1,113 (31,150 )
Accounts payable and accrued expenses 360,351 115,259
Accounts payable - related party - (8,819 )
Income taxes payable (174,000 ) -
Deferred revenue (174 ) (1,814 )
Accrued interest payable (10,172 ) (122,612 )
Net cash used in operating activities (3,565,953 ) (3,414,714 )

INVESTING ACTIVITIES
Note receivable (20,000 ) -
Proceeds from sale of investment - 200,000
Net cash provided by (used in) investing activities (20,000 ) 200,000

FINANCING ACTIVITIES
Payment to secured lender (350,000 ) (1,050,000 )
Payment of related party note - (7,860 )
Proceeds from sale of common stock 5,538,611 5,570,576
Net cash provided by financing activities 5,188,611 4,512,716

Net increase in cash 1,602,658 1,298,002
Cash and cash equivalents, beginning of the period 569,441 473,925
Cash and cash equivalents, end of the period $ 2,172,099 $ 1,771,927

Supplemental disclosure of cash flow information:
Cash paid for taxes $ - $ -
Cash paid for interest $ 34,710 $ 2,077

Supplemental Non-Cash Financing Information:
Common stock issued to pay promissory notes $ - $ 266,272
Common stock issued to purchase 10% interest in Caesar Media Group Inc. $ 366,377 $ 537,499
Common stock issued to pay related party payable $ - $ 113,714
Common stock issued to purchase subsidiary $ - $ 61,063
Common stock issued to purchase intellectual property $ - $ 435,000

See Accompanying Notes to the Condensed Consolidated Financial Statements

8
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NETCAPITAL INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1– Summary of Significant Accounting Policies
Basis of Presentation

The accompanying unaudited condensed financial statements of Netcapital Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles (“GAAP”) 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~~notes 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 three- and nine-month periods ended January 31, ~~2023,~~2024, are not necessarily indicative of the results that may be expected for the fiscal year ended April 30, ~~2023.~~2024. For further information, refer to the audited financial statements and ~~footnotes thereto~~accompanying notes included in our Annual Report on Form 10-K for the year ended April 30, ~~2022.~~2023.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805). This ASU requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts. The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. AdoptionUse of the ASU should be applied prospectively. Early adoption is also permitted, including adoption in an interim period. If adopted early, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of adoption. This ASU is currently not expected to have a material impact on our consolidated financial statements.Estimates

~~In November 2021, the Financial Accounting Standards Board (FASB) issued ASU No. 2021-10,~~ ~~Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance~~ ~~(ASU 2021-10), which~~Preparation of condensed consolidated financial statements in conformity with GAAP requires the ~~disclosure~~use of ~~government assistance received by most business entities relating to: (1)~~estimates and judgments that affect the ~~types of government assistance received; (2)~~reported amounts in the accounting for such assistance; and (3) the effect of the assistance on a business entity’s financial statements. The additional annual disclosures required are not expected to have a material impact on ourcondensed consolidated financial ~~statements.~~statements and accompanying notes. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, accounts receivable, valuation of equity securities, income taxes, and valuation of long-lived assets including intellectual property and purchased technology. These estimates are based on management’s knowledge of current events, interpretation of regulations, and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.

~~In June 2022, the FASB issued ASU No. 2022-03,~~ ~~Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions~~ Significant Accounting Policies(ASU 2022-03), which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. The adoption of this new standard is not expected to have a material impact on our consolidated financial statements.

~~In December 2022,~~There have been no material changes to our significant accounting policies from our Annual Report on Form 10-K for the fiscal year ended April 30, 2023.
The Company accounts for allowance for credit losses under the current expected credit loss (“CECL”) impairment model for its financial assets, including accounts receivable, and presents the net amount of the financial instrument expected to be collected. The CECL impairment model requires an estimate of expected credit losses, measured over the contractual life of an instrument, which considers forecasts of future economic conditions in addition to information about past events and current conditions. Based on this model, the Company ~~purchased~~estimates the ~~website, intellectual property, source code and domain names~~amount of ~~1ON1.FANS and ONEONONE.FANS (the “Assets”). Pursuant to~~uncollectible accounts receivable at the ~~guidance~~end of ~~Topic 805, it was determined that~~each reporting period based on the ~~purchase~~aging of the ~~Assets did not meet the definition of a business~~receivable balance, current and historical customer trends, communications with its customers, and macro-economic conditions. Amounts are written off after considerable collection efforts have been made and the ~~asset purchase was accounted for as an asset acquisition. The fair value of the consideration, consisting of 300,000 shares of the Company’s common stock, valued at $435,000, was attributed~~amounts are determined to ~~a single asset consisting of a website and intellectual property.~~be uncollectible.

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.

9
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Note 2 – Concentrations

For the three and nine months ended January 31, 2024, the Company had one customer that constituted 78% and 27% of revenues, and a second customer that constituted 0% and 24% of revenues, and a third customer that constituted 0% and 24% of revenues, respectively. For the three and nine months ended January 31, 2023, the Company had one customer that constituted 0% and 39% of revenues, a second customer that constituted 35% and 15% of revenues, a third customer that constituted 35% and 15% of revenues, and a fourth customer that constituted ~~17% and 7% of revenues, respectively. For the three and nine months ended January 31, 2022, the Company had one customer that constituted 33% and 30% of revenues and a second customer that constituted~~ 3317% and 287% of revenues, respectively.

Note 3 – Revenue Recognition

Revenue Recognition under ASC 606

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

● Identification of the contract, or contracts, with a customer.

● Identification of the performance obligations in the contract.

● Determination of the transaction price.

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

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

The Company identifies performance obligations in contracts with customers, which primarily are professional services, listing fees on our funding portal, and a portal fee of ~~4.9%~~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.

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Judgments and Estimates

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

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

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

Contract Assets

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

Deferred Revenue

Deferred revenues represent billings or payments received in advance of revenue recognition and are recognized upon transfer of control. Balances consist primarily of annual plan subscription services and professional 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.

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Costs to Obtain a Customer Contract

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

Remaining Performance Obligations

The Company’s subscription terms are typically less than one year. All of the Company’s revenues in the three and nine months ended January 31, ~~2023,~~2024, which amounted to $~~2,260,414~~1,042,793 and $~~5,379,960~~4,604,260, respectively, are considered contract revenues. Contract revenue as of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, which has not yet been recognized, amounted to $~~718~~487 and $~~2,532~~661, 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.

Disaggregation of Revenue

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

Revenues disaggregated by revenue source consist of the following:

Schedule of revenue
Three Months Ended Jan. 31, 2023 Three Months Ended Jan. 31, 2022 Nine Months Ended Jan. 31, 2023 Nine Months Ended Oct. 31, 2022
Consulting services $ 2,028,260 $ 1,389,200 $ 4,784,650 $ 2,395,395
Fees from online services 232,154 421,841 595,310 1,240,655
Total revenues $ 2,260,414 $ 1,811,041 $ 5,379,960 $ 3,636,050
Schedule of Disaggregation of Revenue
Three Months
Ended
Jan. 31, 2024 Three Months
Ended
Jan. 31, 2023 Nine Months
Ended
Jan. 31, 2024 Nine Months
Ended
Jan. 31, 2023
Consulting services $ 862,846 $ 2,028,260 $ 3,585,213 $ 4,784,650
Fees from online services 179,947 232,154 1,019,047 595,310
Total revenues $ 1,042,793 $ 2,260,414 $ 4,604,260 $ 5,379,960
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Note 4 – Earnings Per Common Share

Net income per common and diluted share were calculated as follows for the three- and nine-month periods ended January 31, ~~2023~~2024 and ~~2022:~~2023:

Schedule of earnings per share
Three Months Ended January 31, 2023 Three Months Ended January 31, 2022 Nine Months Ended January 31, 2023 Nine Months Ended January 31, 2022
Net income attributable to common stockholders – basic $ 1,696,499 $ 1,821,006 $ 1,944,114 $ 3,004,260
Adjustments to net income —   —   —   —
Net income attributable to common stockholders – diluted $ 1,696,499 $ 1,821,006 $ 1,944,114 $ 3,004,260

Weighted average common shares outstanding - basic 5,166,299 2,842,924 4,208,216 2,589,142
Effect of dilutive securities 250 39,901 250 39,901
Weighted average common shares outstanding – diluted 5,166,549 2,882,825 4,208,466 2,629,043

Earnings per common share - basic $ 0.33 $ 0.64 $ 0.46 $ 1.16
Earnings per common share - diluted $ 0.33 $ 0.63 $ 0.46 $ 1.14
Schedule of Earnings Per Share
Three Months
Ended
January 31, 2024 Three Months
Ended
January 31, 2023 Nine Months
Ended
January 31, 2024 Nine Months
Ended
January 31, 2023
Net income (loss) attributable to common stockholders – basic $ (2,227,542 ) $ 1,696,499 $ (2,379,581 ) $ 1,944,114
Adjustments to net income — — — —
Net income (loss) attributable to common stockholders – diluted $ (2,227,542 ) $ 1,696,499 $ (2,379,581 ) $ 1,944,144

Weighted average common shares outstanding - basic 11,466,523 5,166,299 9,457,740 4,208,216
Effect of dilutive securities — 250 — 250
Weighted average common shares outstanding – diluted 11,466,523 5,166,549 9,457,740 4,208,466

Earnings (loss) per common share - basic $ (0.19 ) $ 0.33 $ (0.25 ) $ 0.46
Earnings (loss) per common share - diluted $ (0.19 ) $ 0.33 $ (0.25 ) $ 0.46

250 shares of common stock that are issuable pursuant to a stock subscription ~~agreements~~agreement are included in the calculation of diluted earnings per share for the three and nine months ended January 31, 2023. ~~39,901~~The 250 shares ~~that were issuable to satisfy a supplemental consideration liability were~~are not included ~~for~~in the calculation of diluted earnings per share for the three and nine months ended January 31, ~~2022~~2024 because their effect is anti-dilutive.

Outstanding vested warrants to purchase 11,110,932 and 1,541,682 shares of common stock are not included in the calculation of earnings per share for the three and nine months ended January 31, 2024 and 2023, respectively, because their effect is anti-dilutive.
Outstanding vested options to purchase ~~1,852,000~~635,146 and 169,333 shares of common stock are not included in the calculation of earnings per share for the three and nine months ended January 31, 2024 and 2023, respectively, because their effect is anti-dilutive.
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Note 5 – Principal Financing Arrangements

The following table summarizes components debt as of January 31, ~~2023~~2024 and April 30, ~~2022:~~2023:

Schedule of debt
January 31,
2023 April 30, 2022 Interest Rate

Secured lender $ 350,000 $ 1,400,000 8.0 %
Notes payable – related parties 15,000 22,860 0.0 %
Convertible promissory notes — 300,000 8.0 %
U.S. SBA loan 500,000 500,000 3.75 %
U.S. SBA loan 1,885,800 1,885,800 1.0 %
Loan payable – bank 34,324 34,324 7.50 %
Total Debt 2,785,124 4,142,984
Less: current portion of long-term debt 2,285,124 3,647,911
Total long-term debt $ 500,000 $ 495,073
Schedule of Debt
January 31, 2024 April 30, 2023 Interest Rate

Secured lender $ — $ 350,000 12.0 %
Notes payable – related parties 15,000 15,000 0.0 %
U.S. SBA loan 500,000 500,000 3.75 %
U.S. SBA loan 1,885,800 1,885,800 1.0 %
Loan payable – bank 34,324 34,324 10.9 %
Total Debt 2,435,124 2,785,124
Less: current portion of long-term debt 1,935,124 2,285,124
Total long-term debt $ 500,000 $ 500,000

As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owed its principal lender ~~(“Lender”) $350,000~~$0 and ~~$1,400,000,~~$350,000, respectively, under an amended loan and security agreement ~~(“Loan”)~~ dated July 26, 2014, ~~and~~ amended several times thereafter ~~so that the maturity date is now April 30,~~and paid in full in May 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 the Lender a continuing security interest and first lien on all of the assets of the Company.

As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company’s related-party unsecured notes payable totaled ~~$15,000 and $22,860, respectively.~~$15,000
As of January 31, 2023 and April 30, 2022, the company owed $0 and $300,000 in convertible notes payable. On July 14, 2022, the Company issued 93,432 shares of common stock valued at $266,272 to retire the $300,000 in convertible promissory notes plus accrued interest of $10,192..

The Company owes ~~$34,324~~$34,324 as of January 31, ~~2023~~2024 and April 30, ~~2022~~2023 to Chase Bank. ~~The~~For the loan from Chase Bank, the Company pays interest ~~expense to Chase Bank,~~only on a monthly basis, which ~~is calculated at~~represents a rate of ~~7.50%~~10.9% per ~~annum.~~annum as of January 31, 2024.

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

The May loan bore interest at a rate of 1% per annum and was forgiven in its entirety, including accrued interest of $18,502. As a result, the Company recognized debt forgiveness of $1,904,296 in the three and nine months ended January 31, 2022.
~~The~~ June Loan required installment payments of ~~$2,594~~$2,437 monthly, beginning on June 17, 2021, over a term of thirty ~~years.~~years. However, the SBA postponed the first installment payment for 18 months, and the first payment became due on December 17, ~~2022.~~2022. The monthly payments of ~~$2,594~~$2,437 are first applied to accrued interest payable. The monthly payments will not be applied to any of the outstanding principal balance until ~~August of~~ 2026. Consequently, the entire loan balance of ~~$500,000~~$500,000 is classified as a long term liability. Interest accrues at a rate of ~~3.75%~~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~~Loan bears interest at a rate of 1%1% per annum and the due date of the first payment has been postponed by the SBA because the Company has applied for forgiveness of the February Loan.
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Note 6 – Income Taxes

~~As of~~For the three and nine months ended January 31, ~~2023 and April 30, 2022,~~2024, the Company ~~had net operating loss carryforwards for Federal~~recorded an income tax ~~purposes~~benefit of ~~approximately~~ $~~925,000~~1,713,999 and $~~1,108,000~~2,339,288, ~~respectively, expiring in the years of 2037 through 2042.~~
respectively. For the ~~three-~~three and ~~nine-month periods~~nine months ended January 31, 2023, the Company recorded income tax expense of ~~$697,000~~$697,000 and ~~$499,000,~~$499,000, respectively. ~~For~~Included in the ~~three- and nine-month periods~~income tax benefit for the nine months ended January 31, ~~2022,~~2024 is an employee retention credit (“ERC”) of $508,292, as provided under the Coronavirus Aid, Relief and Economic Security Act. The ERC is a tax incentive available to the Company ~~recorded an income tax benefit of $73,000 and an income tax expense of $548,000, respectively.~~for retaining employees during the economic challenges posed by the COVID-19 pandemic.
~~As of January 31, 2023 and April 30, 2022, the Company had deferred tax assets calculated at an expected federal rate of~~ 21~~%, and a state and local rate of~~ 9%, when applicable, or approximately $641,000 and $719,000, respectively. As a result of unrealized book gains on equity securities, the Company also has a deferred tax liability of $2,117,000 and $1,696,000 as of January 31, 2023 and April 30, 2022, 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 January 31, 2023 and April 30, 2022 were as follows:
Schedule of income taxes
January 31, 2023 April 30, 2022

Deferred tax assets, net:
Net operating loss carryforwards $ 207,000 $ 322,000
Bad debt allowance 40,000 40,000
Stock-based compensation 394,000 357,000
Deferred tax assets 641,000 719,000

Deferred tax liability
Unrealized gain 2,117,000 1,696,000

Net deferred tax liability $ (1,476,000 ) $ (977,000 )

Note 7 – Related Party Transactions

The Company’s largest shareholder, Netcapital Systems LLC (“Systems”), of which Jason Frishman, Founder, owns a 29% interest, owns 1,711,261 shares of common stock, or ~~28%~~9.9% of the Company’s ~~6,071,777~~17,231,132 outstanding shares as of January 31, 2023. As of April 30, 2022, the Company accrued a payable to Systems of $294,054 for supplemental consideration owed in conjunction with its purchase of Netcapital Funding Portal Inc., which was paid in full on July 14, 2022, with the issuance to Systems of 39,901 shares of the Company’s common stock. The Company provided professional services to Systems in the three and nine months ended January 31, 2023 and recorded revenue of $4,660 for those services.
~~In total, the Company owed Systems $0 and $294,054 as of January 31, 2023 and April 30, 2022, respectively.~~2024. The company paid Systems ~~$100,000~~$95,000 and ~~$300,000~~$100,000 in the ~~three~~three- and ~~nine months~~nine-month periods ended January 31, ~~2023, respectively,~~2024, and ~~$100,000~~$100,000 and ~~$257,429~~$300,000 in the ~~three~~three- and nine ~~months~~month periods ended January 31, ~~2022,~~2023, respectively, for use of the software that runs the website ~~www.netcapital.com.~~www.netcapital.com.

15
~~The~~Cecilia Lenk, the Chief Executive Officer of Netcapital Advisors Inc., (“Advisors”), our wholly owned subsidiary, ~~Netcapital Advisors Inc.,~~ is a member of the board of directors of KingsCrowd Inc. The Company sold 606,060 shares of KingsCrowd in June 2022 for proceeds of ~~$200,000~~$200,000 and recorded a realized loss on the sale of the investment of ~~$406,060.~~$406,060 during the nine months ended January 31, 2023. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owned 3,209,685 ~~and 3,815,745~~ shares of KingsCrowd Inc., valued at ~~$3,209,685~~$513,550 and ~~$3,815,745,~~$3,209,685, respectively.

~~The~~Cecilia Lenk, the Chief Executive Officer of ~~our wholly owned subsidiary, Netcapital~~ Advisors ~~Inc.~~ is a member of the board of directors of Deuce Drone LLC. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owns 2,350,000 membership interest units of Deuce Drone LLC., valued at ~~$2,350,000.~~$2,350,000. The Company has notes receivable aggregating ~~$152,000~~to $152,000 from Deuce Drone LLC as of January 31, ~~2023~~2024 and April 30, ~~2022.~~2023.

Compensation to officers in the three- and nine-month periods ended January 31, 2024 consisted of stock-based compensation valued at $94,631 and $281,689, respectively, and cash salary of $218,471 and $751,488, respectively.

Compensation to officers in the three- and nine-month periods ended January 31, 2023 consisted of stock-based compensation valued at ~~$32,382~~$32,382 and ~~$44,464,~~$44,464, respectively, and cash salary of ~~$141,769~~$141,769 and ~~$391,384,~~$391,384, respectively.
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Compensation to ~~officers~~a related party consultant, John Fanning Jr., son of our CFO, in the three- and nine-month periods ended January 31, ~~2022~~2024 consisted of ~~stock-based compensation valued at $89,436~~cash wages of $14,624 and ~~$190,763,~~$44,641, respectively, and ~~cash salary of $73,688 and $217,688, respectively.~~
~~During~~for the three- and nine-month periods ended January 31, 2023 ~~we paid $0 and $12,019 to a related party to retire a note payable of $3,200 and expenses payable of $8,819.~~
~~Compensation to a related party consultant in the three- and nine-month periods ended January 31, 2023 and 2022~~ consisted of cash wages of ~~$15,000~~$15,000 and ~~$45,000,~~$45,000, respectively ~~and stock-based compensation of $0 and $25,908 for the three and nine months ended January 31, 2022, respectively.~~ This consultant is also the controlling shareholder of Zelgor Inc. and ~~$16,500~~$0 and ~~$44,000~~$33,000 of the Company’s revenues in the ~~three~~three- and ~~nine months~~nine-month periods ended January 31, 2024, respectively, and $16,500 and $44,000 of the Company’s revenues in the three- and nine-month periods ended January 31, 2023, respectively, were from Zelgor Inc. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owned 1,400,000 shares which are valued at ~~$1,400,000.~~$1,400,000.

As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company has invested ~~$240,080~~$240,080 in an affiliate, 6A Aviation Alaska Consortium, Inc., in conjunction with a land lease in an airport in Alaska. ~~The~~Cecilia Lenk, the Chief Executive Officer of ~~our wholly owned subsidiary, Netcapital~~ Advisors ~~Inc.,~~ is also the Chief Executive Officer of 6A Aviation Alaska Consortium, Inc.

We owe Steven Geary, a director, ~~$31,680~~$31,680 as of January 31, ~~2023~~2024 and April 30, ~~2022.~~2023. This obligation is not interest bearing. ~~$16,680~~$16,680 is recorded as a related party trade accounts payable and ~~$15,000~~$15,000 as a related party note payable. We have no signed agreements for the indebtedness to Mr. ~~Geary.~~Geary and accordingly such obligations are not deemed in default. We owe Paul Riss, a director of our Netcapital Funding Portal Inc., $58,524, which is recorded as a related party trade accounts payable, and along with the $16,680 amount due to Mr. Geary, accounts for the total related party trade accounts payable amount of $75,204. The related party trade accounts payable obligations are not interest bearing and are not deemed in default.
During the nine months ended January 31, 2023, we paid $12,019 to a related party to retire a note payable of $3,200 and expenses payable of $8,819.

In January 2023 we granted stock options to purchase an aggregate of 1,600,000 shares of our common stock to four related parties as follows: ~~Our~~our Chief Executive Officer, Martin Kay, 1,000,000 shares; our Chief Financial Officer, Coreen Kraysler 200,000 shares; our Founder, Jason Frishman, 200,000 shares; and a director of ~~one of our subsidiaries,~~ Netcapital Funding Portal, Inc., Paul Riss, 200,000 shares. The options have an exercise price of ~~$1.43,~~$1.43, vest monthly on a straight-line basis over a ~~4-year~~4-year period and expire in 10 years.
On April 25, 2023, the Company also granted an aggregate of 80,000 options, or 20,000 options each to the following board members: Cecilia Lenk, Avi Liss, Steven Geary and Arnold Scott, to purchase shares of our common stock at an exercise price of $1.40 per share. The options vest monthly on a straight-line basis over a 4-year period and expire in 10 years.
Coreen Kraysler, our Chief Financial Officer, has personally guaranteed a $500,000 promissory note from the U.S. Small Business Administration. The note bears interest at an annual rate of 3.75%, has a 30-year term, and monthly payments of $2,437 began on December 17, 2022.

Note 8 – Stockholders’ Equity

The Company is authorized to issue 900,000,000 shares of its common stock, par value ~~$0.~~$~~001~~0.001. ~~6,071,777~~17,231,132 and ~~2,934,344~~6,440,527 shares were outstanding as of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, respectively.
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. On February 2, 2022, the Company granted an aggregate of 272,000 options to purchase shares of common stock of the company at a price of $10.50 per share. The options were granted to employees, consultants, and members of the board of directors. The options vest monthly on a straight-line basis over a 4-year period and expire in 10 years. As of January 31, 2023 and April 30, 2022, 252,000 and 271,000 options, respectively, were outstanding.

During the quarter ended July 31, 2022, the Company issued 39,901 shares of common stock with a value of ~~$113,714~~$113,714 to settle a related party payable of ~~$294,054.~~$294,054. The Company also issued 93,432 shares of common stock valued at ~~$266,272~~$266,272 to retire ~~$300,000~~$300,000 of convertible promissory notes plus accrued interest of ~~$10,192.~~$10,192. The convertible note holders also received warrants to purchase shares of common stock at a per share exercise price of ~~$5.19,~~$5.19, that are exercisable immediately, and expire five years from the date of issuance. These equity issuances resulted in a gain from the conversion of debt totaling ~~$224,260,~~$224,260, which is recorded as other income in the income statement.
16

On July 15, 2022, the Company completed an underwritten public offering of 1,205,000 shares of the Company’s common stock and warrants to purchase 1,205,000 shares of the Company’s common stock at a combined public offering price of ~~$4.15~~$4.15 per share and warrant. The gross proceeds from the offering were ~~$5,000,750~~$5,000,750 prior to deducting underwriting discounts, commissions, and other offering expenses, which resulted in net proceeds of ~~$3,949,117.~~$3,949,117. The warrants have a per share exercise price of ~~$5.19,~~$5.19, are exercisable immediately, and expire five years from the date of issuance.
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In addition, the Company granted the underwriter a 45-day option to purchase up to an additional 180,750 shares of common stock and/or up to 180,750 additional warrants to cover over-allotments, if any. In connection with the closing of the offering, the underwriter partially exercised its over-allotment option and purchased an additional 111,300 warrants, and the Company issued an aggregate of 60,250warrants to ~~purchase 60,250 shares~~20 individual representatives of ~~our common stock to~~ the ~~underwriter and its designees.~~underwriter.

On December 16, 2022 the Company completed an underwritten public offering of 1,247,000 shares of the Company’s common stock, at a price to the public of ~~$1.40~~$1.40 per share. Pursuant to the terms of an underwriting agreement, the Company also granted the underwriters a 45-day option to purchase up to an additional 187,000 shares of common stock solely to cover over-allotments, at the same price per share of ~~$1.40,~~$1.40, less the underwriting discounts and commissions. In conjunction with this offering, the Company issued the underwriter and its designees warrants to purchase 62,350 shares of our common stock at an exercise price of ~~$1.75.~~$1.75. The underwriters exercised their over-allotment option and on January 5, 2023, the Company issued an additional 187,000 shares of its common stock. The Company received net proceeds of ~~$1,621,459~~$1,621,459 for the issuance of a total of 1,434,000 shares of common stock for both the initial and over-allotment offering. In conjunction with the exercise of the over-allotment, the Company issued the underwriter and its designees warrants to purchase 9,350 shares of our common stock with an exercise price of ~~$1.75.~~$1.75
The Securities were offered, issued and sold to the public pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-267921) previously filed with the Securities and Exchange Commission (the “Commission”) on October 18, 2022 and declared effective by the Commission on October 26, 2022 and related prospectus supplements dated December 13, 2022, as amended on December 16, 2022.
~~The following tables summarize information about warrants outstanding as of January 31, 2023 and April 30, 2022:~~
Schedule of warrants outstanding
Warrants Outstanding Warrants Exercisable
Weighted-
Average Weighted- Weighted-
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life (Years) Price Outstanding Price

As of April 30, 2022
— — — $ — — $ —

As of January 31, 2023
$1.75 - $5.19 1,541,682 4.49 $ 5.03 1,469,982 $ 5.19
Schedule of warrants activity
Number of
Shares Exercise Price
Per Share Average
Exercise
Price
Outstanding May 1, 2021 — — $ —

Issued during year ended April 30, 2022 — — $ —

Exercised/canceled during year ended April 30, 2022 — — $ —

Outstanding April 30, 2022 — — $ —

Issued during nine months ended January 31, 2023 1,541,682 $ 1.75 - $5.19 $ 5.03

Exercised/canceled during nine months ended January 31, 2023 — — $ —

Warrants outstanding January 31, 2023 1,541,682 $ $ 1.75 - $5.19 $ 5.03

Warrants exercisable, January 31, 2023 1,469,982 $ 5.19 $ 5.19
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As a result of the two offerings, the company has warrants outstanding, with a five-year term, to purchase a total of 1,469,982 shares of its common stock at an exercise price of $5.19 and 71,700 shares of its common stock at an exercise price of $1.75. The warrants issued to the underwriter’s representatives and to the underwriter were not part of a unit, consisting of one share of common stock and one warrant and are valued based upon unadjusted quoted prices on the Nasdaq market. The value of the 60,250 representatives’ warrants amounted to $26,510 and the value of the 111,300 underwriter’s warrants amounted to $48,972. The value of the warrants is not an addition to capital in excess of par value because the value of the warrants is also an offsetting offering cost..

During the ~~quarter~~year ended ~~October 31, 2022,~~April 30, 2023, in addition to the public offerings, the Company issued ~~37,500~~75,000 shares of common stock, valued at ~~$366,375,~~$732,751, in conjunction with the purchase of a ~~10%~~10% equity stake in Caesar Media Group, Inc. ~~The Company also issued~~ , 300,000 shares of common stock, valued at $435,000 to purchase the website and intellectual property of a real-time video conferencing website, 2,600 shares of common stock in conjunction with a stock subscription agreement with accredited investors, valued at ~~$23,400.~~$23,400
During the quarter ended January 31, 2023, in addition to the public offering, the Company issued 18,750 shares of common stock, valued at $171,124, in conjunction with the purchase of a 10% equity stake in Caesar Media Group, Inc., ~~300,000 shares of common stock, valued at $435,000 to purchase the website~~ and ~~intellectual property of a real-time video conferencing website, and~~ 6,250 shares of common stock in conjunction with an acquisition agreement that requires shares to be issued by the Company. ~~As a result of this issuance, the value of the account for Shares to be issued decreased by $61,063 to $183,187 as of January 31, 2023, from a balance of $244,250 as of April 30, 2022.~~

On January 5, 2023, the Company ~~filed a Current Report on Form 8-K and~~ announced the formation of the Netcapital Inc. 2023 Omnibus Equity Incentive Plan (the “Plan”)~~. The purposes~~, which was subsequently approved by a vote of the Plan are to (i) provide an additional incentive to selected employees, directors, and independent contractors of the Company or its affiliates whose contributions are essential to the growth and success of the Company, (ii) strengthen the commitment of such individuals to the Company and its affiliates, (iii) motivate those individuals to faithfully and diligently perform their responsibilities and (iv) attract and retain competent and dedicated individuals whose efforts will result in the long-term growth and profitability of the Company.shareholders. In ~~conjunction with these purposes,~~January 2023, the Company granted stock options to four individuals to purchase an aggregate of 1,600,000 of ~~our~~the Company’s common stock at a price of ~~$1.43~~$1.43 per share and on April 25, 2023 also granted 350,000 stock options under the Plan to employees, consultants, and directors at an exercise price of $1.40 per share. ~~See Note 7. The~~All stock options in the Plan vest monthly on a straight-line basis over a ~~4-year~~4-year period and expire in 10 years. As
In May 2023, the Company issued 100,000 shares of ~~January 31,~~its common stock, valued at $144,000, in conjunction with a consulting agreement with a business.
On May 23, 2023, ~~options~~the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company agreed to issue and sell to such investors, in a registered direct offering (the “Offering”), 1,100,000 shares of the Company’s common stock, par value $0.001 per share, at a price of $1.55 per Share, for aggregate gross proceeds of $1,705,000, before deducting the placement agent’s fees and other offering expenses payable by the Company. The Offering closed on May 25, 2023.
Also, in connection with the Offering, on May 23, 2023, the Company entered into a placement agency agreement with ThinkEquity LLC, pursuant to which, the Company issued warrants to purchase ~~1,600,000~~up to 55,000 shares of common stock at an exercise price of $1.94, which were issued on May 25, 2023.
In July 2023, the Company issued 49,855 shares of its common stock in consideration of a release from an unrelated third party in conjunction with the settlement of an outstanding ~~under~~debt between such third party and Netcapital Systems LLC.
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On July 24, 2023 the ~~Plan.~~Company completed an underwritten public offering of 1,725,000 shares of the Company’s common stock, at a price to the public of $0.70 per share for aggregate gross proceeds of $1,207,500, before deducting underwriting discounts and offering expenses payable by the Company. In conjunction with this offering, the Company issued the underwriter, and its designees, warrants to purchase 86,250 shares of the Company’s common stock at an exercise price of $0.875.
On July 31, 2023 and on October 26, 2023, the Company issued 18,750 shares of its common stock in conjunction with the purchase of a 10% interest in Caesar Media Group Inc. October 26, 2023, the Company issued 6,250 shares of its common stock in conjunction with its purchase of MSG Development Corp. (“MSG”), a wholly owned subsidiary. As a result of the issuance to MSG, the equity account for shares to be issued decreased by $61,063 from $183,187 to $122,124. The Company did not receive any proceeds for the issuance of these shares.
On December 27, 2023, the Company completed a public offering of (i) 4,800,000 shares of common stock, ~~options are subject~~par value $0.001 per share, of the Company (the “Common Share”); (ii) 11,200,000 prefunded warrants (the “Prefunded Warrants”) to ~~stockholder approval,~~purchase 11,200,000 shares of Common Stock of the Company (the “Prefunded Warrant Shares”); (iii) 16,000,000 Series A-1 warrants (the “Series A-1 Common Warrants”) to purchase 16,000,000 shares of Common Stock of the Company (the “Series A-1 Common Warrant Shares”) and (iv) 16,000,000 Series A-2 warrants (the “Series A-2 Common Warrants,” together with the Series A-1 Warrants, the “Common Warrants”) to purchase 16,000,000 shares of Common Stock of the Company (the “Series A-2 Common Warrant Shares,” together with the Series A-1 Common Warrants Shares, the “Common Warrant Shares”). The offering price of each Common Share and accompanying Series A-1 Common Warrant and Series A-2 Common Warrant was $0.25, and the ~~Company~~offering price of each Prefunded Warrant and accompanying Series A-1 Common Warrant and Series A-2 Common Warrant was $0.249. The Common Shares, Prefunded Warrants, Prefunded Warrant Shares, Series A-1 Common Warrants, Series A-1 Common Warrant Shares, Series A-2 Common Warrants, Series A-2 Common Warrant Shares are collectively referred to as the “Securities.”
Each Common Warrant has ~~called a special meeting~~an exercise price of ~~stockholders~~$0.25 per share. The Common Warrants became exercisable on ~~March 28, 2023 to approve the adoption~~February 23, 2024. The Series A-1 Common Warrants expire on February 23, 2029. The Series A-2 Common Warrants expire on August 23, 2025. A holder may not exercise any portion of the ~~Plan.~~Common Warrants to the extent the Purchaser would own more than 4.99% of the outstanding Common Stock immediately after exercise. A holder may increase or decrease this percentage with respect to either the Series A-1 Common Warrants or the Series A-2 Common Warrants to a percentage not in excess of 9.99%, except that any such increase shall require at least 61 days’ prior notice to the Company.

The Prefunded Warrants were immediately exercisable and may be exercised at a nominal exercise price of $0.001 per share of Common Stock at any time until all of the Prefunded Warrants are exercised in full. A holder may not exercise any portion of the Prefunded Warrants to the extent the Purchaser would own more than 4.99% of the outstanding Common Stock immediately after exercise. The holder may increase or decrease this percentage with respect to Prefunded Warrants to a percentage not in excess of 9.99%, except that any such increase shall require at least 61 days’ prior notice to the Company.
As compensation to H.C. Wainwright & Co., LLC as the exclusive placement agent in connection with the offering of the Securities (the “Placement Agent”), the Company paid the Placement Agent a cash fee of 7.5% of the aggregate gross proceeds raised in the offering, plus a management fee equal to 1.0% of the gross proceeds raised in the offering and reimbursement of certain expenses and legal fees. The Company also issued warrants to designees of the Placement Agent (the “Placement Agent Warrants”) to purchase up to 1,200,000 shares of Common Stock. The Placement Agent Warrants have substantially the same terms as the Common Warrants, except that the Placement Agent Warrants have an exercise price equal to $0.3125 per share and expire on December 27, 2028.
On January 19, 2024, the Company issued 1,390,000 shares of common stock upon the exercise of Prefunded Warrants and receipt of the exercise price of $1,390. On January 31, 2024, the Company issued 1,582,000 shares of common stock upon the exercise of 1,582,000 Prefunded Warrants and receipt of the exercise price of $1,582.

Note 9 – Fair Value

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

● Level 1: inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the company has the ability to access at the measurement date.
● Level 2: inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
● Level 3: inputs are unobservable inputs for the asset or liability.

Under the Fair Value Measurements Topic of the FASB Accounting Standards Codification, we base fair value on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy. Fair value measurements for assets and liabilities where there exists limited or no observable market data and, therefore, are based primarily upon management’s own estimates, are often calculated based on current pricing policy, the economic and competitive environment, the characteristics of the asset or liability and other such factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used.
Note 10 – Stock-Based Compensation Plans

In addition to cash payments, the Company enters agreements to issue common stock and records the applicable non-cash expense in accordance with the authoritative guidance of the Financial Accounting Standards Board.

For the three and nine months ended January 31, 2024, stock-based compensation expense amounted to $280,522 and $1,044,395, respectively. For the three and nine months ended January 31, 2023, stock-based compensation expense amounted to $63,057 and $128,963~~, respectively. This expense is the estimated value of the vesting of 1,852,000 stock options that are outstanding as of January 31, 2023, and vest monthly over a 48-month period.~~
~~For the three and nine months ended January 31, 2022, stock-based compensation expense amounted to $653,975~~ ~~and $1,137,042~~, respectively.

The table below presents the components of compensation expense for the issuance of shares of common stock and stock options to employees and consultants for the three- and nine-month periods ended January 31, ~~2023~~2024 and ~~2022.~~2023.

Schedule of Stock-based Compensation Expense
Stock-based compensation expense Three Months
Ended
Jan. 31, 2024 Three Months
Ended
Jan. 31, 2023 Nine Months
Ended
Jan. 31, 2024 Nine Months
Ended
Jan. 31, 2023
Chief Executive Officer $ 62,493 $ 20,023 $ 187,479 $ 22,440
Chief Financial Officer 14,914 6,179 44,742 11,012
Chief Executive Officer, Advisors 2,310 1,221 4,726 3,663
Founder 14,914 — 44,742 —
Marketing consultant — — 144,000 —
Marketing consultant — — 58,829 —
Employee and consultant options 44,740 35,634 136,424 91,848
Business consultant 141,151 — 423,453 —
Total stock-based compensation expense $ 280,522 $ 63,057 $ 1,044,395 $ 128,963
18
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Schedule of stock based compensation expense
Stock-based compensation expense Three Months Ended Jan. 31, 2023 Three Months Ended Jan. 31, 2022 Nine Months Ended Jan. 31, 2023 Nine Months Ended Jan. 31, 2022
Chief Executive Officer $ 20,023 $ —   $ 22,440 $ 40,608
Chief Financial Officer 6,179 —   11,012 40,608
Chief Marketing Officer —   89,436 —   109,547
Related party consultant —   —   —   25,908
VP of Digital Strategy —   1,586 —   5,603
Marketing consultant —   37,052 —   111,156
Marketing consultant —   125,901 —   377,704
Employee and consultant options 36,855 —   95,511 —
Member of board of directors —   100,000 —   100,000
Business consultant —   300,000 —   300,000
Business consultant —   —   —   25,908
Total stock-based compensation expense $ 63,057 $ 653,975 $ 128,963 $ 1,137,042
~~The following tables summarize information about stock options outstanding as of January 31, 2023 and April 30, 2022:~~
Schedule of stock option outstanding
Options Outstanding Options Exercisable
Weighted-
Average Weighted- Weighted-
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life (Years) Price Outstanding Price

As of April 30, 2022
$10.50 - $10.50 271,000 9.79 $ 10.50 16,945 $ 10.50

As of January 31, 2023
$1.43 - $10.50 1,852,000 9.81 $ 2.66 91,083 $ 7.18
Schedule of stock options activity
Number of
Shares Exercise Price
Per Share Average
Exercise
Price
Outstanding May 1, 2021 — — $ —

Issued during year ended April 30, 2022 272,000 $ 10.50 $ 10.50

Exercised/canceled during year ended April 30, 2022 (1,000 ) $ 10.50 $ 10.50

Outstanding April 30, 2022 271,000 $ 10.50 $ 10.50

Issued during nine months ended January 31, 2023 1,600,000 $ 1.43 $ 1.43

Exercised/canceled during nine months ended January 31, 2023 (19,000 ) $1.43 - $10.50 $ 10.50

Options outstanding January 31, 2023 1,852,000 $1.43 - $10.50 $ 2.66

Options exercisable, January 31, 2023 91,083 $1.43 - $10.50 $ 7.18
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Note 11 – Deposits and Commitments

We utilize an office at 1 Lincoln Street in Boston, Massachusetts. We currently pay a membership fee of approximately ~~$5,700~~$6,400 a month, under a virtual office agreement that expires in ~~September 2023~~March 2025 and includes a deposit of ~~$6,300.~~$6,300.

Note 12 – Intangible Assets

Intangible assets with defined useful lives are generally measured at cost less straight-line amortization. The useful life is determined using the period of the underlying contract or the period of time over which the intangible asset can be expected to be used. Impairments are recognized if the recoverable amount of the asset is lower than the carrying amount. The recoverable amount is the higher of either the fair value less costs to sell or the value in use. The value in use is determined on the basis of future cash inflows and outflows, and the weighted average cost of capital. Intangible assets with indefinite useful lives, such as trade names and trademarks, that have been acquired as part of acquisitions are measured at cost and tested for impairment annually, or if there is an indication that their value has declined.

In December 2022, the Company purchased the website, intellectual property, source code and domain names of 1ON1.FANS and ONEONONE.FANS (the “Assets”). Pursuant to the guidance of Topic 805, it was determined that the purchase of the Assets did not meet the definition of a business and the asset purchase was accounted for as an asset acquisition. The fair value of the consideration, consisting of 300,000 shares of the Company’s common stock, valued at $435,000, was attributed to a single asset and is classified as acquired intellectual property and website.
The following table sets forth the major categories of the intangible assets as of January 31, ~~2023~~2024 and April 30, ~~2022~~2023

Schedule of intangible assets
January 31, 2023 April 30, 2022

Acquired users $ 14,288,695 $ 14,288,695
Acquired brand 583,429 583,429
Acquired intellectual property and website 435,000 —
Professional practice 556,830 556,830
Literary works and contracts 107,750 107,750
Total intangible assets $ 15,971,704 $ 15,536,704
Schedule of Intangible Assets
January 31, 2024 April 30, 2023

Acquired users $ 14,288,695 $ 14,288,695
Acquired brand 583,429 583,429
Acquired IP and Website 435,000 435,000
Professional practice 556,830 556,830
Literary works and contracts 107,750 107,750
Total intangible assets 15,971,704 15,971,704
Less: accumulated amortization 181,400 96,407
Net intangible assets $ 15,790,304 $ 15,875,297

As of January 31, ~~2023,~~2024, the weighted average remaining useful life for technology, trade names, professional practice, literary works and domains is ~~14.3~~13.41 years. Accumulated amortization amounted to $~~68,076~~181,400 and $96,407 as of January 31, 2024 and April 30, 2023, resulting in net intangible assets of ~~$15,903,628.~~$15,790,304 and $15,875,297, respectively.

Note 13 – Investments
In the three-month period ended January 31, 2024, the Company received equity securities from 6 issuers that closed on the sale of securities on the Netcapital Funding Portal. In addition to cash fees, various issuers pay the Company a fee of 1% of the equity securities sold on the funding portal. As of January 31, 2024, the Company received 8,989 shares of common stock of Avadain, Inc., valued at $44,945; 12 membership units of Averroes Software LLC, valued at $120; 13 shares of common stock of NeuraMetrix, Inc., valued at $117; 1,366 shares of common stock of Recruiting Analytics Inc., valued at $1,626; 422 membership units of Harvest Today, LLC, valued at $1,266; and 939 shares of common stock of VideoXRM, Inc., valued at $939.
In May 2023, the Company received 2,853,659 units of RealWorld LLC as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at $0.41 per unit based on a sales price of $0.41 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of $1,170,000. As of January 31, 2024, the Company owned 2,853,659 units which are valued at $1,170,000.
In April 2023, the Company received 2,853,659 units of HeadFarm LLC as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at $0.41 per unit based on a sales price of $0.41 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of $1,170,000. As of January 31, 2024 and April 30, 2023, the Company owned 2,853,659 units which are valued at $1,170,000.
In April 2023, the Company received 2,853,659 units of CupCrew LLC as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at $0.41 per unit based on a sales price of $0.41 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of $1,170,000. As of January 31, 2024 and April 30, 2023, the Company owned 2,853,659 units which are valued at $1,170,000.
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In April 2023, the Company received 2,853,659 units of CountSharp LLC as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at $0.41 per unit based on a sales price of $0.41 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of $1,170,000. As of January 31, 2024 and April 30, 2023, the Company owned 2,853,659 units which are valued at $1,170,000.

In January 2023, the Company received 2,100,000 units of Dark LLC as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at ~~$1.00~~$1.00 per unit based on a sales price of ~~$1.00~~$1.00 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of ~~$2,100,000.~~$2,100,000. As of January 31, 2024 and April 30, 2023, the Company owned 2,100,000 units which are valued at ~~$2,100,000.~~$2,100,000.

In August 2022, the Company received 1,911,765 units of NetWire LLC as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at ~~$0.68~~$0.68 per unit based on a sales price of ~~$0.68~~$0.68 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of ~~$1,300,000.~~$1,300,000. As of January 31, 2024 and April 30, 2023, the Company owned 1,911,765 units which are valued at ~~$1,300,000.~~$1,300,000.

In May 2022, the Company received 1,764,706 units of Reper LLC as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at ~~$0.68~~$0.68 per unit based on a sales price of ~~$0.68~~$0.68 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of ~~$1,200,000.~~$1,200,000. As of January 31, 2024 and April 30, 2023, the Company owned 1,764,706 units which are valued at ~~$1,200,000.~~$1,200,000.

In April 2022, the Company received 3,000,000 units of Cust Corp. as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at ~~$0.40~~$0.40 per unit based on a sales price of ~~$0.40~~$0.40 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of ~~$1,200,000.~~$1,200,000. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owned 3,000,000 units which are valued at ~~$1,200,000.~~$1,200,000.

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~~$0.25 per unit based on a sales price of ~~$0.25~~$0.25 per unit on an online funding portal. The receipt of the units satisfied ~~$425,000~~$425,000 of an accounts receivable balance. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owned 1,700,000 units which are valued at ~~$425,000.~~$425,000.

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In January 2022, the Company received 2,850,000 units of Hiveskill LLC as payment for services rendered in conjunction with a crowdfunding offering. The units are valued at ~~$0.25~~$0.25 per unit based on a sales price of ~~$0.25~~$0.25 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of ~~$712,500.~~$712,500. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owned 2,850,000 units which are valued at ~~$712,500.~~$712,500.
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In fiscal 2022, the Company purchased a ~~10%~~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.~~$500,000. Caesar is a marketing and technology solutions provider. The purchase agreement ~~includes~~included 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. The Company~~period, which have all been issued ~~37,500 shares~~as of ~~its common stock in April 2022, 25,000 shares of its common stock in September 2022, 12,500 shares of its common stock in~~ October ~~2022, and 18,750 shares of its common stock in January 2023, as part of its contractual payment obligations.~~31, 2023. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, there have been no observable price changes in the value of ~~Caesar's~~the Caesar’s common stock and the Company has valued its ownership in Caesar at cost, which ~~is $1,437,500~~amounted to $1,999,127 as of January 31, 2024, and $1,632,752 as of April 30, 2023.

In May 2020, the Company entered a consulting contract with Watch Party LLC (“WP”), which allowed the Company to receive 110,000 membership interest units of WP in return for ~~services rendered in conjunction with a crowdfunding offering.~~consulting services. The Company earned 97,500 membership interest units in the quarter ended July 31, 2020. The WP units are valued at $4$2.14 per unit based on a sales price of $4$2.14 per unit on an online funding portal. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owned 110,000 WP units, which are valued at ~~$440,000 and $235,400, respectively. The $204,600 increase in value of the WP units owned by the Company is recorded as an unrealized gain in the three- and nine-month periods ended January 31, 2023.~~$440,000.

In May 2020, the Company entered a consulting contract with ChipBrain LLC (“Chip”), which allowed the Company to receive 710,200 membership interest units of Chip in return for ~~services rendered in conjunction with a crowdfunding offering.~~consulting services. The Chip units were initially valued at ~~$0.93~~$0.93 per unit based on a sales price of ~~$0.93~~$0.93 per unit on an online funding portal. Subsequently, Chip sold identical units for ~~$4.74~~$2.40 per unit, and as of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the 710,200 units owned by the Company are valued at $3,366,348 and $1,704,480, respectively. The $1,661,868 increase in value of the Chip units owned by the Company is recorded as an unrealized gain in the three- and nine-month periods ended January 31, 2023.$3,366,348.

In May 2020, the Company entered a consulting contract with a related party, Zelgor Inc. (“Zelgor”), which allowed the Company to receive 1,400,000 shares of common stock of Zelgor in return for ~~services rendered in conjunction with a crowdfunding offering.~~consulting services. The Zelgor shares are valued at ~~$1.00~~$1.00 per share based on a sales price of ~~$1.00~~$1.00 per share on an online funding portal. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owned 1,400,000 shares which are valued at ~~$1,400,000.~~$1,400,000.

On January 2, 2020, the Company entered a consulting contract with Deuce Drone LLC (“Drone”), which allowed the Company to receive 2,350,000 membership interest units of Drone in return for ~~services rendered in conjunction with a crowdfunding offering.~~consulting services. The Drone units were originally valued at ~~$0.35~~$0.35 per unit based on a sales price of ~~$0.35~~$0.35 per unit when the units were earned, or ~~$822,500.~~$822,500. Drone subsequently sold identical Drone units for ~~$1.00~~$1.00 per unit on an online funding portal and as of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the units owned by the Company are valued at ~~$2,350,000.~~$2,350,000.

In August 2019, the Company entered into a consulting contract with KingsCrowd LLC (“KingsCrowd”), which allowed the Company to receive 300,000 membership interest units of KingsCrowd in return for ~~services rendered in conjunction with a crowdfunding offering.~~consulting services. The KingsCrowd units were valued at ~~$1.80~~$1.80 per unit based on a sales price of ~~$1.80~~$1.80 per unit when the units were earned, or ~~$540,000.~~$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 and is selling shares at ~~$1.00~~$1.00 per share. In connection with the conversion to a corporation, each membership interest unit converted into 12.71915 shares of common ~~stock.~~stock. The Company sold 606,060 shares of KingsCrowd in June 2022 for proceeds of ~~$200,000~~$200,000 and recorded a realized loss on the sale of the investment of ~~$406,060.~~$406,060. KingsCrowd filed a post qualification offering circular amendment on July 21, 2022 and ~~continues~~continued to sell shares of common stock to the public for ~~$1.00~~$1.00 per share. On March 1, 2024, KingsCrowd filed a Form 1-SA that disclosed it had sold shares of common stock at a price of $0.16 per share. The Company noted that this observable price change occurred before January 31, 2024, and consequently recorded an unrealized loss on equity securities of $2,696,135 for the three- and nine-month periods ended January 31, 2024. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owned 3,209,685 ~~and 3,815,745~~ shares of KingsCrowd valued at ~~$3,209,685~~$513,550 and ~~$3,815,745,~~$3,209,685, 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 all 1,000 Netcapital units but sold a portion of the units in fiscal 2020 at a sales price of ~~$91.15~~$91.15 per unit. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owned 528 Netcapital units, at a value of ~~$48,128.~~$48,128.

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In July 2020 the Company entered a consulting agreement with Vymedic, Inc. for a ~~$40,000~~$40,000 fee over a 5-month period. Half the fee was payable in stock and half was payable in cash. As of January ~~31, 2023~~ 31, 2024 and April 30, ~~2022,~~2023, the Company owned 4,000 units, at a value of $11,032 and $20,000, respectively. Based upon recent sales of shares of common stock of Vymedic Inc., the per share value dropped from $5.00 per share to $2.758 per share, and the Company recorded an unrealized loss on equity securities of $0 and $8,968 for the three and nine months ended January 31, 2023, respectively. This unrealized loss of $8,968 is netted with the unrealized gains of $204,600 and $1,661,868 in the WP and Chip securities, respectively, and results in an unrealized gain in equity securities of $1,866,468 and $1,857,500 in the three- and nine-month periods ended January 31, 2023.$11,032.

In August 2020 the Company entered a consulting agreement with C-Reveal Therapeutics LLC (“CRT”). for a ~~$120,000~~$120,000 fee over a 12-month period. ~~$50,000~~$50,000 of the fee was payable in CRT units. As of January 31, ~~2023~~2024 and April 30, ~~2022,~~2023, the Company owned 5,000 units, at a value of ~~$50,000.~~$50,000.

The following table summarizes the components of investments as of January 31, ~~2023~~2024 and April 30, ~~2022:~~2023:

Schedule of investments
Jan. 31, 2023 April 30, 2022

Netcapital Systems LLC $ 48,128 $ 48,128
Watch Party LLC 440,000 235,400
Zelgor Inc. 1,400,000 1,400,000
ChipBrain LLC 3,366,348 1,704,480
Vymedic Inc. 11,032 20,000
C-Reveal Therapeutics LLC 50,000 50,000
Deuce Drone LLC 2,350,000 2,350,000
Hiveskill LLC 712,500 712,500
ScanHash LLC 425,000 425,000
Caesars Media Group Inc. 1,437,500 900,000
Cust Corp. 1,200,000 1,200,000
Reper LLC 1,200,000 —
Kingscrowd Inc. 3,209,685 3,815,745
Dark LLC 2,100,000 —
Netwire LLC 1,300,000 —
Total $ 19,250,193 $ 12,861,253
Schedule of Investments
January 31, 2024 April 30, 2023

Netcapital Systems LLC $ 48,128 $ 48,128
MustWatch LLC 440,000 440,000
Zelgor Inc. 1,400,000 1,400,000
ChipBrain LLC 3,366,348 3,366,348
Vymedic Inc. 11,032 11,032
C-Reveal Therapeutics LLC 50,000 50,000
Deuce Drone LLC 2,350,000 2,350,000
Hiveskill LLC 712,500 712,500
ScanHash LLC 425,000 425,000
Caesar Media Group Inc. 1,999,127 1,632,752
Cust Corp. 1,200,000 1,200,000
Kingscrowd Inc. 513,550 3,209,685
Reper LLC 1,200,000 1,200,000
Dark LLC 2,100,000 2,100,000
Netwire LLC 1,300,000 1,300,000
CountSharp LLC 1,170,000 1,170,000
CupCrew LLC 1,170,000 1,170,000
HeadFarm LLC 1,170,000 1,170,000
RealWorld LLC 1,170,000 —
Avadain, Inc. 44,945 —
Averroes Software LLC 120 —
NeuraMetrix, Inc. 117 —
Recruiting Analytics Inc. 1,626 —
Harvest Today, LLC 1,266 —
VideoXRMn Inc. 939 —
Total $ 21,844,698 $ 22,955,445
Investment Owned, at cost $ 21,844,698 $ 22,955,445

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.
Note 14 – Going Concern Matters and Realization of Assets
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the ordinary course of business. However, as of January 31, 2024, the Company had working capital of $2,719,419 and for the nine months ended January 31, 2024, the Company had an operating loss of $1,901,957 and net cash used in operating activities amounted to $3,565,953.
There can be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or additional financing through private placements, public offerings and/or bank financing necessary to support our working capital requirements. The Company has recently reduced its operating expenses and has turned its focus to its funding portal business, which generates cash revenues and has seen a growth in revenues on a year-to-year basis. The Company plans to continue operating with lower fixed overhead amounts and seeks to raise money from private placements, public offerings and/or bank financing. The Company’s management has determined, based on its recent history and the negative cash flow from operations, that it is unlikely that its plan will sufficiently alleviate or mitigate, to a sufficient level, the relevant conditions or events noted above. To the extent that funds generated from any private placements, public offerings and/or bank financing, if available, are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Accordingly, the Company’s management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance date of these financial statements. There can be no assurance that the Company will be able to achieve its business plan objectives or be able to achieve or maintain cash-flow-positive operating results. If the Company is unable to generate adequate funds from operations or raise sufficient additional funds, the Company may not be able to repay its existing debt, continue to operate its business network, respond to competitive pressures or fund its operations. As a result, the Company may be required to significantly reduce, reorganize, discontinue or shut down its operations. The financial statements do not include any adjustments that might result from this uncertainty.

Note 1415 – Subsequent Events
The Company evaluated subsequent events through the date these financial statements were available to be issued.

On February 20, 2024 the Company received a warrant exercise notice of Prefunded Warrants to purchase 1,390,000 Warrant Shares and issued 1,390,000 shares of its common stock upon the receipt of the exercise price of $1,390. On March 8, 2024 the Company received a warrant exercise notice of Prefunded Warrants to purchase 1,390,000 Warrant Shares and issued 1,390,000 shares of its common stock upon the receipt of the exercise price of $1,390. There were no other material subsequent events that required recognition or additional disclosure in these financial statements.

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PART I

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~~Netcapital Inc. (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. Unless the context otherwise requires, references in this prospectus to the “Company,” “we,” “us,” and “our” refer to Netcapital Inc. and its subsidiaries.

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

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

Overview

Netcapital Inc. is a fintech company with a scalable technology platform that allows private companies to raise capital online from accredited and non-accredited investors. We give ~~virtually all~~ investors the opportunity to access investments in private companies. ~~Our~~We believe our model is disruptive to traditional private equity investing and is based on Title III, Reg CF of the JOBS Act. In addition, we have recently expanded our model to include Regulation A (“Reg A”) offerings. We generate fees from listing private companies on our ~~portal.~~funding portal located at www.netcapital.com. We generate fees from listing private companies on netcapital.com. We also generate fees from advising companies with respect to their Reg A offerings posted on www.netcapital.com. Our consulting group, Netcapital Advisors, Inc. (Netcapital Advisors), which is a wholly-owned subsidiary, provides marketing and strategic advice in exchange for equity positions ~~and~~and/or cash fees. The Netcapital funding portal is registered with the SEC, is a member of the Financial Industry Regulatory Authority, or FINRA, a registered national securities association, and provides investors with opportunities to invest in private companies. Neither Netcapital Advisors, nor any Netcapital entity or subsidiary, is a broker- dealer, nor do any of such entities operate as a broker-dealer with respect to any Reg A offering listed on the www.netcapital.com website.
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We provide private company investment access to accredited ~~retail~~ and non-accredited ~~retail~~ investors through our online portal (www.netcapital.com)., which is operated by our wholly owned subsidiary Netcapital Funding Portal, Inc. The Netcapital funding portal charges a $5,000 engagement fee and a 4.9% success fee for capital raised at closing. In addition, the portal generates fees for other ancillary services, such as rolling closes. Netcapital Advisors generates fees and equity stakes from consulting in select portfolio and non-portfolio clients. With respect to its services for Reg A offerings, Netcapital Advisors charges a monthly flat fee for each month the offering is listed on the netcapital.com website as well as a nominal administrative flat fee for each investor that is processed to cover out-of-pocket costs.
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We generated revenues of $4,604,260, with costs of service of $97,062, in the nine months ended January 31, 2024 for a gross profit of $4,507,198 (consisting of $3,489,013 in equity securities for payment of services and $1,115,247 in cash-based revenues, offset by $97,062 for costs of services) in the nine months ended January 31, 2024 as compared to revenues of $5,379,960 with costs of service of $61,603 in the nine months ended January 31, 2023 for a gross profit of $5,318,357 (consisting of $4,375,000 in equity securities for the payment of services and $1,004,960 in cash-based revenues, offset by $61,603 for costs of services) in the nine months ended January 31, 2023. Our cash-based gross profits as a percentage of gross profits were approximately 7% and 2%, respectively in the nine month periods ended January 31, 2024 and 2023, entities (for which we performed services) in which we own equity during such periods. The total number of offerings on the Netcapital funding portal in the nine months ended January 31, 2024 and 2023 that closed was 36 and 30, respectively, of which 11 and 7 offerings hosted on the Netcapital funding platform in the nine months ended January 31, 2024 and 2023, respectively, terminated their listings without raising the required minimum dollar amount of capital. The total number of offerings on the Netcapital funding portal in fiscal 2023 and 2022 that closed was 63 and 81, respectively, of which 13 and 17 offerings hosted on the Netcapital funding platform in fiscal 2023 and 2022, respectively, terminated their listings without raising the required minimum dollar amount of capital. As of the date of this report, we own minority equity positions in 25 portfolio companies that have utilized the funding portal to facilitate their offerings, which equity was received as payment for services.
Netcapital.com is an SEC-registered funding portal that enables private companies to raise capital online, while investors are able to invest from almost 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~~investments from virtually anyone, including friends, family, customers, ~~employees, etc.~~and employees. Customer accounts on our platform are not permitted to hold or use digital securities to make an investment.

In addition to access to the funding portal, Netcapital provides the following services:

● a fully automated onboarding process;
● automated filing of required regulatory documents;
● compliance review;
● a custom-built offering page on our portal website;
● third party transfer agent and custodial services;
● email marketing to our proprietary list of investors;
● rolling closes, which provide potential access to liquidity before final close date of offering;
● assistance with annual filings; and
● direct access to our team for ongoing support.

~~The company’s~~Our consulting group, Netcapital Advisors helps companies at all stages to raise capital. Netcapital Advisors provides strategic advice, technology consulting and digital marketing services to assist with fundraising campaigns on the Netcapital platform. The company also acts as an incubator and accelerator for select disruptive start-ups.

Netcapital Advisors’ services include:

● incubation of technology start-ups;
● investor introductions;
● ~~digital~~online marketing;
● website design, software and software development;
● message crafting, including pitch decks, offering pages, and ad creation;
● strategic advice; and
● technology consulting.

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Recent Developments
Extension Notice from Nasdaq to Regain Compliance with the Minimum Bid Price Rule
As previously disclosed on a Current Report on Form 8-K filed by us on September 1, 2023, we received a notification from The Nasdaq Stock Market, LLC (“Nasdaq”) notifying us that we were not in compliance with the minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market. Specifically, Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. We initially had 180 calendar days, or until February 28, 2024, to regain compliance with the minimum bid price requirement. We were unable to regain compliance with the minimum bid price requirement by February 28, 2024.
On February 29, 2024, we received a letter (the “Extension Notice”) from Nasdaq notifying us that our request for an extension to regain compliance with the minimum bid price requirement has been granted, and we have an additional 180 calendar days, or until August 26, 2024, to regain compliance with the minimum bid price requirement. Nasdaq’s determination was based on us meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on the Nasdaq Capital Market with the exception of the bid price requirement, and our written notice of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. The Extension Notice has no immediate effect on the listing or trading of our common stock on The Nasdaq Capital Market and, at this time, our common stock will continue to trade on The Nasdaq Capital Market under the symbol “NCPL.”
If at any time before August 26, 2024, the bid price of our common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will notify us that we are in compliance with the minimum bid price requirement. However, if compliance with the minimum bid price requirement cannot be demonstrated by August 26, 2024, Nasdaq will notify us that our common stock will be delisted from The Nasdaq Capital Market, at which time, we may appeal Nasdaq’s determination to a Hearings Panel.
We intend to monitor the closing bid price of its common stock and may, if appropriate, consider implementing available options, including, but not limited to, implementing a reverse stock split of our outstanding securities during the second compliance period, to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules.
December 2023 Public Offering
On December 27, 2023, we completed a public offering of (i) 4,800,000 shares of our common stock; (ii) 11,200,000 prefunded warrants to purchase 11,200,000 shares of our common stock; (iii) 16,000,000 Series A-1 warrants to purchase 16,000,000 shares of our common and (iv) 16,000,000 Series A-2 warrants to purchase 16,000,000 shares of our common stock of the Company for gross proceeds of $4 million, before deducting underwriting discounts and offering expenses payable by us. The offering price of each common share and accompanying Series A-1 warrant and Series A-2 warrant was $0.25, and the offering price of each prefunded warrant and accompanying Series A-1 warrant and Series A-2 warrant was $0.249. Each Common Warrant has an exercise price of $0.25 per share. The Series A-1 Common Warrants will expire on February 23, 2029. The Series A-2 Common Warrants will expire August 23, 2025 following the date of Shareholder Approval. We received net proceeds of approximately $3.37 million from this offering, after deducting the estimated offering expenses payable by us, including the placement agent fees. We also issued warrants to designees of the H.C. Wainwright, who served as placement agent for this offering to purchase up to 1,200,000 shares of our common stock, which warrants have substantially the same terms as the Series A-1 warrants and Series A-2 warrants, except that warrants issued to the designees of the placement agent have an exercise price equal to $0.3125 per share and expire on December 27, 2028.
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Results of Operations

Comparison of the Three Months Ended January 31, ~~2023~~2024 and ~~2022~~2023

Our revenues for the three months ended January 31, ~~2023, increased~~2024, decreased by ~~$449,373,~~$1,217,621, or approximately ~~25%~~54%, to ~~$2,260,414,~~$1,042,793 as compared to ~~$1,811,041~~$2,260,414 during the three months ended January 31, ~~2022.~~2023. The ~~increase~~decrease in revenues was primarily attributed to ~~an increase~~a decrease in revenues for consulting services that we provide in exchange for equity securities ~~which amounted~~during the quarter ended January 31, 2024, as compared to the quarter ended January 31, 2023. In the three months ended January 31, 2024, revenues from equity-based contracts decreased by $1,087,654, or 56%, to $862,346, as compared to revenues of $1,950,000 ~~during~~in the three months ended January 31, 2023. A decrease of $52,245, or 23%, was also noted in funding portal revenues in the three months ended January 31, 2024, when compared to the prior year fiscal quarter. In the three months ended January 31, 2024, we recorded $179,588 in funding portal revenues, consisting of portal fees of $84,548 and listing fees of $95,040, as compared to funding portal revenues of $231,833 in the three months ended January 31, 2023, ~~as compared to $1,200,000 during~~consisting of portal fees of $99,333 and listing fees of $132,500. The decrease in funding portal revenues in the three months ended January 31, ~~2022.~~ 2024 is primarily attributable to fewer issuers listing to raise capital on the funding portal platform.
The components of revenue were as follows:

Jan. 31, 2023 Jan. 31, 2022 Jan. 31, 2024 Jan. 31, 2023
Consulting services for equity securities $ 1,950,000 $ 1,200,000 $ 862,346 $ 1,950,000
Consulting revenue 78,260 189,200 500 78,260
Portal fees 99,333 345,332 84,548 99,333
Listing fees 132,500 76,000 95,040 132,500
Other revenue 321 509 359 321
Total $ 2,260,414 $ 1,811,041 $ 1,042,793 $ 2,260,414

Costs of revenues ~~decreased~~increased by ~~$35,044~~$54,570 to ~~$4,305,~~$58,875, or approximately ~~89%~~1,268% for the three months ended January 31, ~~2023~~2024 from ~~$39,349~~$4,305 during the three months ended January 31, ~~2022.~~2023. The ~~decrease represents lower~~increase was attributed to additional costs ~~of sales from our non-funding~~for funding portal ~~sources of income.~~services.

Payroll and payroll related expenses decreased by ~~$295,289,~~$76,526, or ~~24%~~8%, to ~~$946,043~~$869,517 for the three months ended January 31, ~~2023,~~2024, as compared to ~~$1,241,332~~$946,043 during the three months ended January 31, ~~2022.~~2023. The decrease was attributed to ~~a decrease in staff and wages.~~the elimination of certain positions during the quarter ended January 31, 2024.

Marketing expense ~~decreased~~increased by ~~$396,~~$8,649, or approximately 2%37%, to ~~$23,549~~$32,198 for the three months ended January 31, ~~2023,~~2024, as compared to ~~$23,945~~$23,549 during the three months ended January 31, ~~2022. We used similar~~2023. The increase in expense was primarily attributed to an increase in marketing ~~efforts~~outlets that we utilized in ~~both quarters and do not consider~~ the ~~decrease to be noteworthy.~~three months ended January 31, 2024.

Rent expense increased by ~~$5,318,~~$2,357, or approximately ~~45%~~14%, to ~~$17,187~~$19,544 for the three months ended January 31, ~~2023,~~2024, as compared to ~~$11,869~~$17,187 during the three months ended January 31, ~~2022.~~2023. The increase was primarily attributed to a new office-space agreement that became effective in the current fiscal year.

General and administrative expenses increased by ~~$247,529,~~$524,206, or ~~77%~~92%, to ~~$568,253~~$1,092,459 for the three months ended January 31, ~~2023,~~2024, from ~~$320,724~~$568,253 during the three months ended January 31, ~~2022.~~2023. The increase was primarily attributed to ~~outside~~stock-based compensation utilized to pay for professional ~~fees.~~fees and increased legal costs.

Consulting expense ~~decreased~~increased by ~~$179,045,~~$44,857, or approximately ~~58%~~34%, to ~~$130,500~~$175,357 for the three months ended January 31, ~~2023~~2024 from ~~$309,545~~$130,500 during the three months ended January 31, ~~2022.~~2023. The ~~decrease~~increase was primarily attributed to ~~a decrease~~an increase in overseas programmers.

~~Interest expense decreased by $2,941 to $17,632, or approximately 14%,~~We recognized an unrealized loss in the value of our equity securities of $2,696,135 for the three months ended January 31, ~~2023,~~2024, as compared to ~~$20,573 during~~an unrealized gain of $1,866,468 in the ~~three months ended January 31, 2022. The decrease in interest expense is attributed to a reduction in debt owed to~~value of our ~~secured lender.~~
~~Unrealized gains on~~ equity securities for the three months ended January 31, 2023. The loss in fiscal 2024 was attributable to a decrease in value to $0.16 per share from $1.00 per share for 3,209,685 shares that we own of KingCrowd, Inc. The gain in fiscal 2023 ~~amount~~resulted from an increase in value of $204,000 for our 110,000 units of MustWatch LLC, from $2.14 per unit to ~~$1,866,468, as compared~~$4.00 per unit, and an increase in value of $1,661,868 for our 710,200 units of ChipBrain LLC, from $0.93 per unit to $0$4.74 per unit
Interest expense decreased by $5,714 to $11,918, or approximately 32%, for the three months ended January 31, 2022. During the three months ended January 31, 2023, the Company recorded observable prices changes of $1,661,868 for its investment in ChipBrain LLC and $204,600 for its investment in Watch Party LLC. No prices changes were recorded in equity security investments2024, as compared to $17,632 during the three months ended January 31, ~~2022.~~2023. The decrease in interest expense was primarily attributed to lower debt amounts that resulted from paying off a secured term loan.

Comparison of the Nine Months Ended January 31, ~~2023~~2024 and ~~2022~~2023

Our revenues for the nine months ended January 31, ~~2023, increased~~2024, decreased by ~~$1,743,910,~~$775,700, or approximately ~~48%~~14%, to ~~$5,379,960,~~$4,604,260, as compared to ~~$3,636,050~~$5,379,960 during the nine months ended January 31, ~~2022.~~2023. The decrease in revenues is attributable to a decrease in revenue of $885,987, or 20%, in consulting services that are provided in exchange for equity securities, and a decrease in cash-based consulting revenue of $313,450, or 77%. These decreases were offset by an increase in funding portal revenues in the nine-month period ended January 31, 2024, as compared to the nine-month period ended January 31, 2023, consisting of an increase in portal fees of $375,683, or 152%, and an increase in listing fees of $48,040, or 14%. The increase in funding portal revenues ~~was primarily attributed to an increase~~ in ~~consulting services for equity securities, which amounted to $4,375,000 during~~ the nine months ended January 31, ~~2023, as compared~~2024 is primarily attributable to ~~$2,102,174 during~~increased offering activity on the ~~nine months ended January 31, 2022.~~ platform that generated increased investments by investors who purchased securities on the portal.
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The components of revenue were as follows:
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Jan. 31, 2023 Jan. 31, 2022 Jan. 31, 2024 Jan. 31, 2023
Consulting services for equity securities $ 4,375,000 $ 2,102,174 $ 3,489,013 $ 4,375,000
Consulting revenue 409,650 293,221 96,200 409,650
Portal fees 247,927 951,760 623,610 247,927
Listing fees 346,500 288,000 394,540 346,500
Other revenue 883 895 897 883
Total $ 5,379,960 $ 3,636,050 $ 4,604,260 $ 5,379,960

Costs of revenues ~~decreased~~increased by ~~$23,826~~$35,459 to ~~$61,603,~~$97,062, or approximately ~~28%~~58%, for the nine months ended January 31, ~~2023~~2024 from ~~$85,429~~$61,603 during the nine months ended January 31, ~~2022.~~2023. The ~~decrease represents lower~~increase was primarily attributed to an increase in costs ~~of sales from our non-funding portal sources of income.~~for the funding portal.

Payroll and payroll related expenses ~~decreased~~increased by ~~$440,096,~~$364,503, or approximately ~~15%~~14%, to ~~$2,592,891~~$2,957,394 for the nine months ended January 31, ~~2023,~~2024, as compared to ~~$3,032,987~~$2,592,891 during the nine months ended January 31, ~~2022.~~2023. The ~~decrease~~increase was attributed to ~~lower~~higher wages in the ~~three-month period ended July 31, 2022~~first half of the fiscal year and ~~the three-month period ended January 31, 2023.~~additional stock-based compensation.

Marketing ~~expenses decreased~~expense increased by ~~$3,560,~~$256,606, or approximately 5%400%, to ~~$64,211~~$320,817 for the nine months ended January 31, ~~2023,~~2024, as compared to ~~$67,771~~$64,211 during the nine months ended January 31, ~~2022.~~2023. The ~~decrease in expense~~increase was ~~primarily attributed~~ to ~~small adjustments in marketing efforts by our marketing department.~~bring awareness to the funding portal operations and the Company to attract new issuers and investors.

Rent expense increased by ~~$17,106,~~$5,947, or approximately ~~50%~~12%, to ~~$51,586~~$57,533 for the nine months ended January 31, ~~2023,~~2024, as compared to ~~$34,480~~$51,586 during the nine months ended January 31, ~~2022.~~2023. The increase was primarily attributed to a new office-space agreement that became effective in the current fiscal year.

General and administrative expenses ~~decreased~~increased by ~~$35,781,~~$1,288,013, or approximately 3%104%, to ~~$1,241,365~~$2,529,378 for the nine months ended January 31, ~~2023,~~2024, from ~~$1,277,146~~$1,241,365 during the nine months ended January 31, ~~2022.~~2023. The ~~decrease~~increase was primarily attributed to ~~a decrease in~~ professional ~~fees.~~fees, including stock-based compensation.

Consulting expense ~~decreased~~increased by ~~$219,288,~~$88,141, or ~~approximately 33%~~19%, to ~~$455,892~~$544,033 for the nine months ended January 31, ~~2023~~2024 from ~~$675,180~~$455,892 during the nine months ended January 31, ~~2022.~~2023. The ~~decrease~~increase was primarily attributed to ~~a decrease in overseas programmers.~~increased payments to software engineers.

~~Interest expense decreased by $13,922 to $76,922, or approximately 15%,~~We recognized an unrealized loss in the value of our equity securities of $2,696,135 for the nine months ended January 31, ~~2023,~~2024, as compared to ~~$90,844 during the nine months ended January 31, 2022. The decrease in interest expense is attributed to a reduction in debt owed to our secured lender.~~
~~A realized loss~~an unrealized gain of ~~$406,060 was recorded~~$1,857,500 in the ~~nine months ended January 31, 2023, as compared to no realized losses in the nine months ended January 31, 2022. The Company sold 606,060 shares~~value of ~~KingsCrowd Inc. in June 2022 for proceeds of $200,000 that had been valued at 606,060 and recorded a realized loss on the sale of the investment of $406,060.~~
~~Unrealized gains on~~our equity securities for the nine months ended January 31, 2023. The loss in fiscal 2024 was attributable to a decrease in value to $0.16 per share from $1.00 per share for 3,209,685 shares of common stock that we own of KingCrowd, Inc. The gain in fiscal 2023 resulted from an increase in value of $204,000 for our 110,000 units of MustWatch LLC, from $2.14 per unit to $4.00 per unit, and an increase in value of $1,661,868 in our 710,200 units of ChipBrain LLC, from $0.93 per unit to $4.74 per unit, less an unrealized loss of $8,968 in the value of the 4,000 shares of Vymedic Inc. from $5.00 per share to $2.76 per share.
Interest expense decreased by ~~$1,418,245,~~$41,138 to $35,784, or approximately ~~43%~~54%, ~~to $1,857,500,~~for the nine months ended January 31, 2024, as compared to ~~$3,275,745~~$76,922 during the nine months ended January 31, ~~2022.~~2023. The decrease in ~~unrealized gains is attributable~~interest expense was primarily attributed to ~~the sale of common stock at $1.00 per share in~~lower debt amounts that resulted from paying off a public offering by Kingscrowd Inc., which exceeded the carrying value on our books by $3,275,745, during the nine months ended January 31, 2022, as compared to a net gain of $1,857,500 from observable price changes in investment securities of three investments held by the Company during the nine months ended January 31, 2023.secured term loan.

Liquidity and Capital Resources

AtAs of January 31, ~~2023,~~2024, we had cash and cash equivalents of ~~$1,771,927~~$2,172,099 and ~~negative~~ working capital of ~~$844,802~~$2,719,419 as compared to cash and cash equivalents of ~~$473,925~~$569,441 and negative working capital of ~~$3,113,403~~$2,622,670 at April 30, ~~2022.~~2023.

We have been successful in raising capital by ~~selling restricted common stock and by~~ completing a public ~~offering~~offerings of our common stock.
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On July 15, 2022, ~~the Company~~we completed an underwritten public offering of 1,205,000 shares of ~~the Company’s~~our common stock and warrants to purchase 1,205,000 shares of ~~the Company’s~~our common stock at a combined public offering price of $4.15 per share and warrant. The gross proceeds from the offering were $5,000,750 prior to deducting underwriting discounts, commissions, and other offering expenses. The warrants have a per share exercise price of $5.19, are exercisable immediately, and expire five years from the date of issuance. With the use of proceeds, we paid $1 million of debt to our secured ~~lender.~~ lender, to reduce the outstanding principal balance to $400,000.
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On December 16, 2022 we completed an underwritten public offering of 1,247,000 shares of our common stock, at a price to the public of $1.40 per share. In conjunction with this offering, we issued the underwriter and its designees warrants to purchase 62,350 shares of our common stock at an exercise price of $1.75. The underwriters exercised their over-allotment option and on January 5, 2023, we issued an additional 187,000 shares of its common stock at a price of $1.40 per share. We received net proceeds of $1,621,459 for the issuance of a total of 1,434,000 shares of common stock in both the initial and over-allotment offering. In conjunction with the exercise of the over-allotment, the Company issued the underwriter and its designees warrants to purchase 9,350 shares of our common stock with an exercise price of $1.75.

~~Netcapital Funding Portal Inc.~~On May 23, 2023, we entered into a securities purchase agreement with certain institutional investors, pursuant to which sold to such investors, in a registered direct offering (the ~~“Funding Portal”~~“Offering”), 1,100,000 shares of our common stock, at a ~~wholly owned subsidiary~~price of $1.55 per share, for aggregate gross proceeds of $1,705,000, before deducting the placement agent’s fees and other offering expenses payable by us. This offering closed on May 25, 2023.
With the use of proceeds, we paid our secured lender $350,000 in principal plus accrued interest of $17,167.23 to retire all outstanding obligations to the secured lender.
On July 24, 2023 we completed an underwritten public offering of 1,725,000 shares of our common stock, at a price to the public of $0.70 per share for aggregate gross proceeds of $1,207,500, before deducting underwriting discounts and offering expenses payable by us. In conjunction with this offering, we issued the underwriter, and its designees, warrants to purchase 86,250 shares of our common stock at an exercise price of $0.875.
On December 27, 2023, we completed a public offering of (i) 4,800,000 shares of our common stock; (ii) 11,200,000 prefunded warrants to purchase 11,200,000 shares of our common stock; (iii) 16,000,000 Series A-1 warrants to purchase 16,000,000 shares of our common and (iv) 16,000,000 Series A-2 warrants to purchase 16,000,000 shares of our common stock of the Company ~~maintained~~for gross proceeds of $4 million, before deducting underwriting discounts and offering expenses payable by us. The offering price of each common share and accompanying Series A-1 warrant and Series A-2 warrant was $0.25, and the offering price of each prefunded warrant and accompanying Series A-1 warrant and Series A-2 warrant was $0.249. Each Common Warrant has an ~~operating account at Silicon Valley Bank, Santa Clara, CA (“SVB”) with cash balances~~exercise price of $0.25 per share. The Series A-1 Common Warrants will expire on February 23, 2029. The Series A-2 Common Warrants will expire August 23, 2025 following the date of Shareholder Approval. We received net proceeds of approximately ~~$330,000 at~~$3.37 million from this offering, after deducting the ~~time SVB was closed on March 10, 2023 and subsequently placed into receivership~~estimated offering expenses payable by us, including the ~~FDIC. The $330,000 was withdrawn from SVB after March 10, 2023 and deposited in our accounts with other national U.S. banks. Furthermore,~~placement agent fees. We also issued warrants to designees of the Company and its affiliates maintained accounts at other U.S. banks with cash balances of approximately $979,000 as of March 10, 2023.   Accordingly, the Company believes it has no exposure to loss as a result of SVB’s receivership.
~~SVB also~~H.C. Wainwright, who served as ~~a qualified third-party escrow~~placement agent for ~~investors~~this offering to purchase up to 1,200,000 shares of our common stock, which warrants have substantially the same terms as the Series A-1 warrants and Series A-2 warrants, except that ~~use~~warrants issued to the ~~Funding Portal to make investments in companies that seek to raise capital under the exemption provided by Section 4(a)(6)~~designees of the ~~Securities Act of 1933, by listing their securities for sale~~placement agent have an exercise price equal to $0.3125 per share and expire on the Funding Portal’s website. At the time SVB was closed, the cash balances in the escrow account totaled approximately $755,000.    The FDIC has stated that all deposits are guaranteed. Currently, all amounts held in the SVB escrow account are insured and available for withdrawal.December 27, 2028.
We believe that our existing cash investment balances, ~~sources of capital and~~ our anticipated cash flows from operations ~~will~~and liquidity sources includingoffering of equity and/or debt securities and/or the sale of equity positions in certain portfolio companies for which we provide marketing and strategic advice may not be sufficient to meet our working capital and expenditure requirements for the next 12 months. ~~Although~~Consequently, beginning in November 2023, we ~~believe we have adequate sources of liquidity over the next 12 months, the success of our operations, the global economic outlook,~~laid off some employees, and took other steps to reduce operating expenses. We plan to continue operating with lower fixed overhead amounts and seek to raise money from private placements, public offerings and/or bank financing. Our management has determined, based on its recent history and the ~~pace of sustainable growth in~~negative cash flow from operations, that it is unlikely that its plan will sufficiently alleviate or mitigate, to a sufficient level, the relevant conditions or events noted above. To the extent that funds generated from any private placements, public offerings and/or bank financing, if available, are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms. Accordingly, the Company’s management has concluded that these conditions raise substantial doubt about our ~~markets, in each case, in light of the market volatility and uncertainty~~ability to continue as a ~~result of the COVID-19 pandemic, among other factors, could impact~~going concern. There can be no assurance that we will be able to achieve our business ~~and liquidity. Up~~plan objectives or be able to ~~this point in time,~~achieve or maintain cash-flow-positive operating results. If we ~~believe the pandemic has helped drive people~~are unable to ~~online investing, as~~generate adequate funds from operations or raise sufficient additional funds, we ~~see regular monthly increases in users and dollars invested, and an increase in issuers seeking~~may not be able to ~~use online fund-raising services in lieu of face-to-face meetings.~~repay our existing debt, continue to operate our business network, respond to competitive pressures or fund our operations. As a result, we may be required to significantly reduce, reorganize, discontinue or shut down our operations.

Year over Year Changes

Net cash used in operating activities amounted to ~~$3,414,714~~$3,565,953 and ~~$2,303,458~~$3,414,714 for the nine months ended January 31, 2024 and 2023, respectively. The principal sources of cash from operating activities in the nine months ended January 31, 2024 were an unrealized loss on equity securities of $2,696,135 and ~~2022, respectively.~~stock-based compensation of $1,044,395. However, the sources of cash were offset by a net loss of $2,379,581, a receipt of equity in lieu of cash of $1,219,012, changes in deferred taxes of $1,657,000 and an increase in accounts receivable of $2,319,001. The principal sources of cash from operating activities for the nine months ended January 31, 2023 was net income of $1,944,114, a realized loss on investments of $406,060, ~~and changes~~a change in deferred taxes of ~~$499,000.~~$499,000, and stock-based compensation of $128,963. However, these sources of cash were offset by the receipt of equity securities in lieu of cash of $4,600,000, a gain on a debt conversion of $224,260, and an unrealized gain on equity securities of ~~$1,857,500, and a gain on a debt conversion of $224,260. The principal source of~~$1,857,500.
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Net cash ~~from operating~~used in investing activities in the nine months ended January 31, ~~2022 was net income~~2024 of ~~$3,004,260,~~$20,000 is a non-cash item, stock-based compensation of $1,137,042, and a non-cash item, changes in deferred taxes of $548,000. However, these sources of cash were offset by an unrealized gain on equity securities of $3,275,745, debt forgiveness of $1,904,302, and receipt of equity securities in lieu of cash of $1,187,500.
27
note receivable. Net cash provided by investing activities ~~amounted to $200,000~~ in the nine months ended January 31, ~~2023. The cash provided~~2023 consisted of proceeds of $200,000 from the sale of 606,060 shares of an investment in KingsCrowd Inc. ~~Net cash used in investing activities in~~
For the nine months ended January ~~2022~~31, 2024, net cash provided by financing activities amounted to ~~$319,166. The use of cash~~$5,188,611, which consisted of ~~loans~~proceeds from the sale of common stock of $5,538,611, which was offset by repayment of $350,000 in principal to ~~affiliates of $202,000 and an investment in an affiliate of $117,166.~~
our secured lender. For the nine months ended January 31, 2023, net cash provided from financing activities amounted to $4,512,716, which included proceeds from the sale of common stock of $5,570,576, which was offset by a payment of $7,860 for a related party note, and payment of $1,050,000 to a secured lender. ~~For the nine months ended January 31, 2022, net cash provided by financing activities amounted to $625,799, which consisted of proceeds from stock subscriptions for the sale of common stock.~~

In the nine months ended January 31, ~~2023~~2024 and ~~2022,~~2023, there were no expenditures for capital assets. We do not anticipate any capital expenditures in fiscal 2024.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act.

ITEM 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 January 31, ~~2023.~~2024. Based on that evaluation, the PEO and the PFO concluded that, as of January 31, ~~2023,~~2024, such controls and procedures were effective.
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(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 January 31, ~~2023,~~2024, 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 January 31, ~~2023.~~2024.

The Company’s annual report on Form 10-K for the year ended April 30, ~~2022~~2023 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 January 31, ~~2023~~2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

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

ITEM 1A. RISK FACTORS.

Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended April 30, ~~2022~~2023 as filed with the SEC on ~~August 8, 2022~~July 27, 2023 (“Annual Report”). There have been no material changes in our risk factors from those previously disclosed in our Annual ~~Report.~~Report, except as discussed below. You should carefully consider the risks described in our Annual Report, which could materially affect our business, financial condition, or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.

~~ITEM~~Our financial situation creates doubt whether we will continue as a going concern.
As of January 31, 2024, we had working capital of $2,719,419 and for the nine months ended January 31, 2024, we had an operating loss of $1,901,957 and net cash used in operating activities amounted to $3,565,953. There can be no assurances that we will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or additional financing through private placements, public offerings and/or bank financing necessary to support our working capital requirements. Our management has recently reduced its operating expenses and we have turned our focus to our funding portal business, which generates cash revenues and has seen a growth in revenues on a year-to-year basis. We plan to continue operating with lower fixed overhead amounts and seek to raise money from private placements, public offerings and/or bank financing. Our management has determined, based on its recent history and the negative cash flow from operations, that it is unlikely that its plan will sufficiently alleviate or mitigate, to a sufficient level, the relevant conditions or events noted above. To the extent that funds generated from any private placements, public offerings and/or bank financing, if available, are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms. Accordingly, our management has concluded that these conditions raise substantial doubt about our ability to continue as a going concern. There can be no assurance that we will be able to achieve its business plan objectives or be able to achieve or maintain cash-flow-positive operating results. If we are unable to generate adequate funds from operations or raise sufficient additional funds, we may not be able to repay our existing debt, continue to operate our business network, respond to competitive pressures or fund our operations. As a result, we may be required to significantly reduce, reorganize, discontinue, or shut down our operations.
Our ability to have our securities traded on the Nasdaq Capital Market is subject to us meeting applicable listing criteria.
We are currently listed on the Nasdaq Stock Market, LLC (“Nasdaq”), a national securities exchange. The Nasdaq requires companies desiring to list their common stock to meet certain listing criteria including total number of shareholders: minimum stock price, total value of public float, and in some cases total shareholders’ equity and market capitalization. Our failure to meet such applicable listing criteria could prevent us from listing our common stock on the Nasdaq. In the event we are unable to have our shares traded on Nasdaq, our common stock could potentially trade on the OTCQX or the OTCQB, each of which is generally considered less liquid and more volatile than the Nasdaq. Our failure to have our shares traded on the Nasdaq could make it more difficult for you to trade our shares, could prevent our common stock trading on a frequent and liquid basis and could result in the value of our common stock being less than it would be if we were able to list our shares on the Nasdaq.
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On September 1, 2023, we received written notice from Nasdaq that we were not in compliance with Nasdaq Listing Rule 5550(a)(2), as the minimum bid price of our common stock had been below $1.00 per share for 30 consecutive business days. We initially had 180 calendar days, or until February 28, 2024, to regain compliance with the minimum bid price requirement. We were unable to regain compliance with the minimum bid price requirement by February 28, 2024. On February 29, 2024, we received a letter from Nasdaq notifying us that our request for an extension to regain compliance with the minimum bid price requirement has been granted, and we have an additional 180 calendar days, or until August 26, 2024, to regain compliance with the minimum bid price requirement. To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for at least 10 consecutive business days during this 180-calendar day period. In the event we do not regain compliance by August 26, 2024, then Nasdaq will notify us of its determination to delist our common stock, at which point we would have an option to appeal the delisting determination to a Nasdaq hearings panel. We intend to actively monitor the closing bid price of our common stock and may, if appropriate, consider implementing available options to regain compliance with the minimum bid price under the Nasdaq Listing Rules.
If we are unable to regain compliance with the Nasdaq minimum bid price requirement and Nasdaq delists our common stock and we are unable to obtain listing on another national securities exchange, a reduction in some or all of the following may occur, each of which could have a material adverse effect on our shareholders:
● the liquidity of our common stock;
● the market price of our common stock;
● our ability to obtain financing for the continuation of our operations;
● the number of institutional and general investors that will consider investing in our common stock;
● the number of investors in general that will consider investing in our common stock;
● the number of market makers in our common stock;
● the availability of information concerning the trading prices and volume of our common stock; and
● the number of broker-dealers willing to execute trades in shares of our common stock.
A significant portion of our total assets are held in equity securities of early-stage companies, which securities are illiquid and subject to volatility, which factors could have a material adverse effect on our financial condition and results of operations.
Payment related to the consulting and advisory services provided by Netcapital Advisors is often made through equity stakes from such customers. As of January 31, 2024 and April 30, 2023, approximately $21.8 million and $22.9 million, respectively, of our holdings are issued by companies whose securities do not trade on public markets. The securities issued are typically in private companies with no established trading market for their securities, that often have limited operating histories, limited operating cash, and negative cash flows. Additionally, these securities are primarily restricted, and are subject to legal holding periods pursuant to Rule 144 or other applicable exemptions. The stock price of such issuers is often volatile, unpredictable, and with limited liquidity, and the value of such securities on the date of receipt compared to the date when we are able to legally sell the securities may decrease significantly. The value ascribed to our assets in our financial statements as of a particular date may be materially greater than or less than the value that would be realized if our assets were to be liquidated as of such date. Accordingly, the value of such holding may change over time due to factors that we do not control, such as issuance of securities by such companies at lower prices or other market factors. For the period ended January 31, 2024, we recognized an unrealized loss of approximately $2.7 million on the value of our equity securities due to the decline in value of a single issuer, which represented an impairment of more than 80% of the previous value of our holdings in such issuer, which resulted in a reduction of our retained earnings. Changes to the value of our holdings could have a material adverse effect on our financial condition and results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

1. On January 31, 2023, we issued 18,750 shares of our common stock in conjunction with the 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.None.
29
2. On November 28, 2022, we issued 6,250 shares of our common stock in conjunction with the purchase a 100% interest in 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 16, 2022, we issued ThinkEquity, LLC and their designees warrants to purchase 62,350 shares of our common stock at an exercise price of $1.75 as compensation for their services as underwriter in our public offering. We did not receive any proceeds from this issuance. The issuance was exempt under Section 4(a)(2) and/or Rule 506 of the Securities Act of 1933, as amended.
4. On January 5, 2023, we issued ThinkEquity, LLC and their designees warrants to purchase 9,350 shares of our common stock at an exercise price of $1.75 as compensation for their services as underwriter in the over-allotment exercise of our public offering. We did not receive any proceeds from this issuance. The issuance was exempt under Section 4(a)(2) and/or Rule 506 of the Securities Act of 1933, as amended.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

30
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ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

Netcapital Funding Portal Inc. (the “Funding Portal”), a wholly owned subsidiary of the Company, maintained an operating account at Silicon Valley Bank, Santa Clara, CA (“SVB”) with cash balances of approximately $330,000 at the time SVB was closed on March 10, 2023 and subsequently placed into receivership by the FDIC. The $330,000 was withdrawn from SVB after March 10, 2023 and deposited in our accounts with other national U.S. banks. Furthermore, the Company and its affiliates maintained accounts at other national banks with cash balances of approximately $979,000 as of March 10, 2023.   Accordingly, the Company believes it has no exposure to loss as a result of SVB’s receivership.None
SVB also served as a qualified third-party escrow agent for investors that use the Funding Portal to make investments in companies that seek to raise capital under the exemption provided by Section 4(a)(6) of the Securities Act of 1933, by listing their securities for sale on the Funding Portal’s website. At the time SVB was closed, the cash balances in the escrow account totaled approximately $755,000.    The FDIC has stated that all deposits are guaranteed. Currently, all amounts held in the SVB escrow account are insured and available for withdrawal.

ITEM 6. EXHIBITS.

Exhibit No.
31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1** Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2** Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS* Inline XBRL Instance Document
101.SCH* Inline XBRL Taxonomy Extension Schema Document
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
104* Cover Page Interactive Data File - the cover page from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended January 31, ~~2023~~2024 is formatted in Inline XBRL
*Filed herewith
31
-32-

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: March ~~16, 2023~~18, 2024 NETCAPITAL INC.

By: /s/ Martin Kay
Martin Kay

Chairman of the Board and Chief Executive Officer
(~~Principa1~~Principal Executive Officer)

By: /s/ Coreen Kraysler

Coreen Kraysler
Chief Financial Officer

~~Chief Financial Officer~~
((Principal Financial and Accounting ~~Officer)~~Officer)

32
-33-


Assets:	January 31, 2023 (Unaudited)		April 30, 2022 (Audited)
Cash and cash equivalents	$	1,771,927	$	473,925
Related party receivable		668		668
Accounts receivable net		2,163,931		2,433,900
Prepaid expenses		36,844		5,694
Total current assets		3,973,370		2,914,187

Deposits		6,300		6,300
Notes receivable – related parties		202,000		202,000
Purchased technology, net		15,903,628		15,536,704
Investment in affiliate		240,080		240,080
Equity securities		19,250,193		12,861,253
Total assets	$	39,575,571	$	31,760,524

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Trade	$	634,970	$	536,508
Related party		75,204		378,077
Accrued expenses		246,665		229,867
Stock subscription payable		10,000		33,400
Deferred revenue		718		2,532
Interest payable		89,491		222,295
Deferred tax liability, net		1,476,000		977,000
Related party debt		15,000		22,860
Secured note payable		350,000		1,400,000
Current portion of SBA loans		1,885,800		1,890,727
Loan payable - bank		34,324		34,324
Convertible notes payable		—		300,000
Total current liabilities		4,818,172		6,027,590

Long-term liabilities:
Long-term SBA loans, less current portion		500,000		495,073
Total liabilities		5,318,172		6,522,663

Commitments and contingencies		—		—

Stockholders’ equity:
Common stock, $.001 par value; 900,000,000 shares authorized, 6,071,777 and 2,934,344 shares issued and outstanding		6,072		2,934
Shares to be issued		183,187		244,250
Capital in excess of par value		29,613,118		22,479,769
Retained earnings		4,455,022		2,510,908
Total stockholders’ equity		34,257,399		25,237,861
Total liabilities and stockholders’ equity	$	39,575,571	$	31,760,524


	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	January 31, 2023			January 31, 2022			January 31, 2023			January 31, 2022

Revenues	$	2,260,414		$	1,811,041		$	5,379,960		$	3,636,050
Costs of services		4,305			39,349			61,603			85,429
Gross profit		2,256,109			1,771,692			5,318,357			3,550,621

Costs and expenses:
Consulting expense		130,500			309,345			455,892			675,180
Marketing		23,549			23,945			64,211			67,771
Rent		17,187			11,869			51,586			34,480
Payroll and payroll related expenses		946,043			1,241,332			2,592,891			3,032,987
General and administrative costs		568,253			320,724			1,241,365			1,277,146
Total costs and expenses		1,685,532			1,907,415			4,405,945			5,087,564
Operating income (loss)		570,577			(135,723	)		912,412			(1,536,973	)

Other income (expense):
Interest expense		(17,632	)		(20,573	)		(76,922	)		(90,844	)
Gain on debt conversion		—			—			224,260			—
Debt forgiveness		—			1,904,302			—			1,904,302
Amortization of intangible assets		(25,914	)		—			(68,076	)		—
Realized loss on sale of investment		—			—			(406,060	)		—
Unrealized gain on equity securities		1,866,468			—			1,857,500			3,275,745
Total other income (expense)		1,822,922			1,883,729			1,530,702			5,089,203
Net income before taxes		2,393,499			1,748,006			2,443,114			3,552,260
Income tax expense (benefit)		697,000			(73,000	)		499,000			548,000
Net income	$	1,696,499		$	1,821,006		$	1,944,114		$	3,004,260

Basic earnings per share	$	0.33		$	0.64		$	0.46		$	1.16
Diluted earnings per share	$	0.33		$	0.63		$	0.46		$	1.14

Weighted average number of common shares outstanding:
Basic		5,166,299			2,842,924			4,208,216			2,589,142
Diluted		5,166,549			2,882,825			4,208,466			2,629,043


	January 31, 2024 (Unaudited)		April 30, 2023 (Audited)
Assets:
Cash and cash equivalents	$	2,172,099	$	569,441
Accounts receivable net		3,701,501		1,388,500
Note receivable		20,000		-
Prepaid expenses		158,465		583,030
Total current assets		6,052,065		2,540,971

Deposits		6,300		6,300
Notes receivable - related parties		202,000		202,000
Purchased technology, net		15,790,304		15,875,297
Investment in affiliate		240,080		240,080
Equity securities		21,844,698		22,955,445
Total assets	$	44,135,447	$	41,820,093

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Trade	$	828,836	$	578,331
Related party		75,204		75,204
Accrued expenses		394,911		285,065
Stock subscription payable		10,000		10,000
Deferred revenue		487		661
Interest payable		88,084		98,256
Current taxes payable		-		174,000
Deferred tax liability, net		-		1,657,000
Related party debt		15,000		15,000
Secured note payable		-		350,000
Current portion of SBA loans		1,885,800		1,885,800
Loan payable - bank		34,324		34,324
Total current liabilities		3,332,646		5,163,641

Long-term liabilities:
Long-term SBA loans, less current portion		500,000		500,000
Total liabilities		3,832,646		5,663,641

Commitments and contingencies		-		-

Stockholders’ equity:
Common stock, $.001 par value; 900,000,000 shares authorized, 17,231,132 and 6,440,527 shares issued and outstanding		17,231		6,441
Shares to be issued		122,124		183,187
Capital in excess of par value		37,077,147		30,500,944
Retained earnings		3,086,299		5,465,880
Total stockholders’ equity		40,302,801		36,156,452
Total liabilities and stockholders’ equity	$	44,135,447	$	41,820,093



	Common Stock
	Shares		Amount		Shares To Be Issued			Capital in Excess of Par Value		Retained Earnings (Deficit)			Total Equity
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

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		244,250			488,450		—			732,750
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		244,250			22,050,777		2,011,638			24,309,561

Q4 stock-based compensation	—		—		—			29,030		—			29,030
Purchase of equity interest	37,500		38		—			399,962		—			400,000
Net income, April 30, 2022	—		—		—			—		499,270			499,270
Balance, April 30, 2022	2,934,344		2,934		244,250			22,479,769		2,510,908			25,237,861

Shares issued for debt conversion	133,333		134		—			379,852		—			379,986
Sale of common stock	1,205,000		1,205		—			3,947,912		—			3,949,117
Vesting of stock options	—		—		—			32,953		—			32,953
Net income for July 31, 2022 quarter	—		—		—			—		64,477			64,477
Balance, July 31, 2022	4,272,677		4,273		244,250			26,840,486		2,575,385			29,664,394

Sale of common stock	2,600		3		—			23,397					23,400
Purchase of equity interest	37,500		37					366,338					366,375
Vesting of stock options								32,953					32,953
Net income for Oct. 31, 2022 quarter	—		—		—			—		183,138			183,138
Balance October 31, 2022	4,312,777		4,313		244,250			27,263,174		2,758,523			30,270,260

Sale of common stock	1,434,000		1,434		—			1,620,025		—			1,621,459
Purchase of equity interest	18,750		19		—			171,105		—			171,124
Purchase of intellectual property	300,000		300		—			434,700		—			435,000
Reduction in shares to be issued	6,250		6		(61,063	)		61,057		—			—
Vesting of stock options	—		—		—			63,057		—			63,057
Net income for January 31, 2023 quarter	—		—		—			—		1,696,499			1,696,499
Balance January 31, 2023	6,071,777	$	6,072	$	183,187		$	29,613,118	$	4,455,022		$	34,257,399


	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	January 31, 2024			January 31, 2023			January 31, 2024			January 31, 2023

Revenues	$	1,042,793		$	2,260,414		$	4,604,260		$	5,379,960
Costs of services		58,875			4,305			97,062			61,603
Gross profit		983,918			2,256,109			4,507,198			5,318,357

Costs and expenses:
Consulting expense		175,357			130,500			544,033			455,892
Marketing		32,198			23,549			320,817			64,211
Rent		19,544			17,187			57,533			51,586
Payroll and payroll related expenses		869,517			946,043			2,957,394			2,592,891
General and administrative costs		1,092,459			568,253			2,529,378			1,241,365
Total costs and expenses		2,189,075			1,685,532			6,409,155			4,405,945
Operating income (loss)		(1,205,157	)		570,577			(1,901,957	)		912,412

Other income (expense):
Interest expense		(11,918	)		(17,632	)		(35,784	)		(76,922	)
Gain on debt conversion		-			-			-			224,260
Amortization of intangible assets		(28,331	)		(25,914	)		(84,993	)		(68,076	)
Unrealized gain (loss) on equity securities		(2,696,135	)		1,866,468			(2,696,135	)		1,857,500
Realized loss on sale of investment		-			-			-			(406,060	)
Total other income (expense)		(2,736,384	)		1,822,922			(2,816,912	)		1,530,702
Net income (loss) before taxes		(3,941,541	)		2,393,499			(4,718,869	)		2,443,114
Income tax expense (benefit)		(1,713,999	)		697,000			(2,339,288	)		499,000
Net income (loss)	$	(2,227,542	)	$	1,696,499		$	(2,379,581	)	$	1,944,114

Basic earnings (loss) per share	$	(0.19	)	$	0.33		$	(0.25	)	$	0.46
Diluted earnings (loss) per share	$	(0.19	)	$	0.33		$	(0.25	)	$	0.46

Weighted average number of common shares outstanding:
Basic		11,466,523			5,166,299			9,457,740			4,208,216
Diluted		11,466,523			5,166,549			9,457,740			4,208,466


	Common Stock				Shares to			Capital in Excess of		Retained			Total
	Shares		Amount		Be Issued			Par Value		Earnings			Equity
Balance, April 30, 2022		2,934,344	$	2,934	$	244,250		$	22,479,769	$	2,510,908		$	25,237,861

Shares issued for debt conversion		133,333		134		-			379,852		-			379,986
Sale of common stock		1,205,000		1,205		-			3,947,912		-			3,949,117
Vesting of stock options		-		-		-			32,953		-			32,953
Net income for July 31, 2022 quarter		-		-		-			-		64,477			64,477
Balance, July 31, 2022		4,272,677		4,273		244,250			26,840,486		2,575,385			29,664,394

Sale of common stock		2,600		3		-			23,397		-			23,400
Purchase of equity interest		37,500		37		-			366,338		-			366,375
Vesting of stock options		-		-		-			32,953		-			32,953
Net income for Oct. 31, 2022 quarter		-		-		-					183,138			183,138
Balance October 31, 2022		4,312,777		4,313		244,250			27,263,174		2,758,523			30,270,260

Sale of common stock		1,434,000		1,434		-			1,620,025		-			1,621,459
Purchase of equity interest		18,750		19		-			171,105		-			171,124
Purchase of intellectual property		300,000		300		-			434,700		-			435,000
Reduction in shares to be issued		6,250		6		(61,063	)		61,057		-			-
Vesting of stock options		-		-		-			63,057		-			63,057
Net income for Jan. 31, 2023 quarter		-		-		-			-		1,696,499			1,696,499
Balance January 31, 2023		6,071,777		6,072		183,187			29,613,118		4,455,022			34,257,399

Purchase of equity interest		18,750		19		-			195,233		-			195,252
Vesting of stock options		-		-		-			132,943		-			132,943
Stock-based compensation		350,000		350		-			559,650		-			560,000
Net income Q4		-		-		-					1,010,858			1,010,858
Balance April 30, 2023		6,440,527		6,441		183,187			30,500,944		5,465,880			36,156,452

Vesting of stock options		-		-		-			139,371		-			139,371
Stock-based compensation		100,000		100		-			143,900		-			144,000
Sale of common stock		2,825,000		2,825		-			2,272,375		-			2,275,200
Purchase of equity interest		18,750		18		-			183,170		-			183,188
Stock-based settlement		49,855		50		-			58,779		-			58,829
Net loss July 31, 2023 quarter		-		-		-			-		(491,655	)		(491,655	)
Balance July 31, 2023		9,434,132		9,434		183,187			33,298,539		4,974,225			38,465,385

Vesting of stock options		-		-		-			139,371		-			139,371
Reduction in shares to be issued		6,250		6		(61,063	)		61,057		-			-
Purchase of equity interest		18,750		19		-			183,170		-			183,189
Net income October 31, 2023 quarter		-		-		-			-		339,616			339,616
Balance October 31, 2023		9,459,132		9,459		122,124			33,682,137		5,313,841			39,127,561
Balance		9,459,132		9,459		122,124			33,682,137		5,313,841			39,127,561

Vesting of stock options		-		-		-			139,371		-			139,371
Sale of common stock		4,800,000		4,800		-			3,255,639		-			3,260,439
Warrant exercise		2,972,000		2,972		-			-		-			2,972
Net loss January 31, 2024 quarter		-		-		-			-		(2,227,542	)		(2,227,542	)
Net income (loss)		-		-		-			-		(2,227,542	)		(2,227,542	)
Balance January 31, 2024		17,231,132	$	17,231	$	122,124		$	37,077,147	$	3,086,299		$	40,302,801
Balance		17,231,132	$	17,231	$	122,124		$	37,077,147	$	3,086,299		$	40,302,801


	Nine Months Ended January 31, 2023			Nine Months Ended January 31, 2022
OPERATING ACTIVITIES
Net income	$	1,944,114		$	3,004,260
Adjustments to reconcile net income to net cash used in operating activities:
Stock-based compensation		128,963			1,137,042
Receipt of equity in lieu of cash		(4,600,000	)		(1,187,500	)
Unrealized gain on equity securities		(1,857,500	)		(3,275,745	)
Debt forgiveness		—			(1,904,302	)
Gain on debt conversion		(224,260	)		—
Provision for bad debts		2,600			—
Realized loss on investment		406,060			—
Changes in deferred taxes		499,000			548,000
Amortization of intangible assets		68,076			—
Changes in non-cash working capital balances:
Accounts receivable		267,369			(900,242	)
Prepaid expenses		(31,150	)		21,983
Accounts payable and accrued expenses		115,259			138,797
Deferred revenue		(1,814	)		24,991
Accrued interest payable		(122,612	)		89,258
Accounts payable – related party		(8,819	)		—
Net cash used in operating activities		(3,414,714	)		(2,303,458	)

INVESTING ACTIVITIES
Proceeds from sale of investment		200,000			—
Loans to affiliates		—			(202,000	)
Investment in affiliate		—			(117,166	)
Net cash provided by (used in) investing activities		200,000			(319,166	)

FINANCING ACTIVITIES
Payment to secured lender		(1,050,000	)		—
Payment of related party note		(7,860	)		—
Proceeds from stock subscriptions		5,570,576			625,799
Net cash provided by financing activities		4,512,716			625,799

Net increase (decrease) in cash		1,298,002			(1,996,825	)
Cash and cash equivalents, beginning of the period		473,925			2,473,959
Cash and cash equivalents, end of the period	$	1,771,927		$	477,134

Supplemental disclosure of cash flow information:
Cash paid for taxes	$	—		$	—
Cash paid for interest	$	2,077		$	1,592

Supplemental Non-Cash Investing and Financing Information:
Common stock issued to pay promissory notes	$	266,272		$	—
Common stock issued to pay related party payable	$	113,714		$	3,523,462
Common stock issued to purchase subsidiary	$	61,063		$	488,500
Common stock issued to purchase 10% interest in Caesar Media Group Inc.	$	537,499		$	500,000
Common stock issued to purchase intellectual property	$	435,000		$	—

●	Identification of the contract, or contracts, with a customer.

●	Identification of the performance obligations in the contract.

●	Determination of the transaction price.

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

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

Schedule of revenue
	Three Months Ended Jan. 31, 2023		Three Months Ended Jan. 31, 2022		Nine Months Ended Jan. 31, 2023		Nine Months Ended Oct. 31, 2022
Consulting services	$	2,028,260	$	1,389,200	$	4,784,650	$	2,395,395
Fees from online services		232,154		421,841		595,310		1,240,655
Total revenues	$	2,260,414	$	1,811,041	$	5,379,960	$	3,636,050

	Three Months Ended Jan. 31, 2024		Three Months Ended Jan. 31, 2023		Nine Months Ended Jan. 31, 2024		Nine Months Ended Jan. 31, 2023
Consulting services	$	862,846	$	2,028,260	$	3,585,213	$	4,784,650
Fees from online services		179,947		232,154		1,019,047		595,310
Total revenues	$	1,042,793	$	2,260,414	$	4,604,260	$	5,379,960

Schedule of earnings per share
	Three Months Ended January 31, 2023		Three Months Ended January 31, 2022		Nine Months Ended January 31, 2023		Nine Months Ended January 31, 2022
Net income attributable to common stockholders – basic	$	1,696,499	$	1,821,006	$	1,944,114	$	3,004,260
Adjustments to net income		—		—		—		—
Net income attributable to common stockholders – diluted	$	1,696,499	$	1,821,006	$	1,944,114	$	3,004,260

Weighted average common shares outstanding - basic		5,166,299		2,842,924		4,208,216		2,589,142
Effect of dilutive securities		250		39,901		250		39,901
Weighted average common shares outstanding – diluted		5,166,549		2,882,825		4,208,466		2,629,043

Earnings per common share - basic	$	0.33	$	0.64	$	0.46	$	1.16
Earnings per common share - diluted	$	0.33	$	0.63	$	0.46	$	1.14

	Three Months Ended January 31, 2024			Three Months Ended January 31, 2023		Nine Months Ended January 31, 2024			Nine Months Ended January 31, 2023
Net income (loss) attributable to common stockholders – basic	$	(2,227,542	)	$	1,696,499	$	(2,379,581	)	$	1,944,114
Adjustments to net income		—			—		—			—
Net income (loss) attributable to common stockholders – diluted	$	(2,227,542	)	$	1,696,499	$	(2,379,581	)	$	1,944,144

Weighted average common shares outstanding - basic		11,466,523			5,166,299		9,457,740			4,208,216
Effect of dilutive securities		—			250		—			250
Weighted average common shares outstanding – diluted		11,466,523			5,166,549		9,457,740			4,208,466

Earnings (loss) per common share - basic	$	(0.19	)	$	0.33	$	(0.25	)	$	0.46
Earnings (loss) per common share - diluted	$	(0.19	)	$	0.33	$	(0.25	)	$	0.46

Schedule of debt
	January 31, 2023		April 30, 2022		Interest Rate

Secured lender	$	350,000	$	1,400,000		8.0	%
Notes payable – related parties		15,000		22,860		0.0	%
Convertible promissory notes		—		300,000		8.0	%
U.S. SBA loan		500,000		500,000		3.75	%
U.S. SBA loan		1,885,800		1,885,800		1.0	%
Loan payable – bank		34,324		34,324		7.50	%
Total Debt		2,785,124		4,142,984
Less: current portion of long-term debt		2,285,124		3,647,911
Total long-term debt	$	500,000	$	495,073

	January 31, 2024		April 30, 2023		Interest Rate

Secured lender	$	—	$	350,000		12.0	%
Notes payable – related parties		15,000		15,000		0.0	%
U.S. SBA loan		500,000		500,000		3.75	%
U.S. SBA loan		1,885,800		1,885,800		1.0	%
Loan payable – bank		34,324		34,324		10.9	%
Total Debt		2,435,124		2,785,124
Less: current portion of long-term debt		1,935,124		2,285,124
Total long-term debt	$	500,000	$	500,000

Schedule of income taxes
	January 31, 2023			April 30, 2022

Deferred tax assets, net:
Net operating loss carryforwards	$	207,000		$	322,000
Bad debt allowance		40,000			40,000
Stock-based compensation		394,000			357,000
Deferred tax assets		641,000			719,000

Deferred tax liability
Unrealized gain		2,117,000			1,696,000

Net deferred tax liability	$	(1,476,000	)	$	(977,000	)

Schedule of warrants activity
	Number of Shares		Exercise Price Per Share		Average Exercise Price
Outstanding May 1, 2021		—		—	$	—

Issued during year ended April 30, 2022		—		—	$	—

Exercised/canceled during year ended April 30, 2022		—		—	$	—

Outstanding April 30, 2022		—		—	$	—

Issued during nine months ended January 31, 2023		1,541,682		$ 1.75 - $5.19	$	5.03

Exercised/canceled during nine months ended January 31, 2023		—		—	$	—

Warrants outstanding January 31, 2023		1,541,682	$	$ 1.75 - $5.19	$	5.03

Warrants exercisable, January 31, 2023		1,469,982	$	5.19	$	5.19


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


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

Stock-based compensation expense	Three Months Ended Jan. 31, 2024		Three Months Ended Jan. 31, 2023		Nine Months Ended Jan. 31, 2024		Nine Months Ended Jan. 31, 2023
Chief Executive Officer	$	62,493	$	20,023	$	187,479	$	22,440
Chief Financial Officer		14,914		6,179		44,742		11,012
Chief Executive Officer, Advisors		2,310		1,221		4,726		3,663
Founder		14,914		—		44,742		—
Marketing consultant		—		—		144,000		—
Marketing consultant		—		—		58,829		—
Employee and consultant options		44,740		35,634		136,424		91,848
Business consultant		141,151		—		423,453		—
Total stock-based compensation expense	$	280,522	$	63,057	$	1,044,395	$	128,963

Schedule of stock based compensation expense
Stock-based compensation expense	Three Months Ended Jan. 31, 2023		Three Months Ended Jan. 31, 2022		Nine Months Ended Jan. 31, 2023		Nine Months Ended Jan. 31, 2022
Chief Executive Officer	$	20,023	$	—	$	22,440	$	40,608
Chief Financial Officer		6,179		—		11,012		40,608
Chief Marketing Officer		—		89,436		—		109,547
Related party consultant		—		—		—		25,908
VP of Digital Strategy		—		1,586		—		5,603
Marketing consultant		—		37,052		—		111,156
Marketing consultant		—		125,901		—		377,704
Employee and consultant options		36,855		—		95,511		—
Member of board of directors		—		100,000		—		100,000
Business consultant		—		300,000		—		300,000
Business consultant		—		—		—		25,908
Total stock-based compensation expense	$	63,057	$	653,975	$	128,963	$	1,137,042

Schedule of stock options activity
	Number of Shares			Exercise Price Per Share		Average Exercise Price
Outstanding May 1, 2021		—			—	$	—

Issued during year ended April 30, 2022		272,000		$	10.50	$	10.50

Exercised/canceled during year ended April 30, 2022		(1,000	)	$	10.50	$	10.50

Outstanding April 30, 2022		271,000		$	10.50	$	10.50

Issued during nine months ended January 31, 2023		1,600,000		$	1.43	$	1.43

Exercised/canceled during nine months ended January 31, 2023		(19,000	)		$1.43 - $10.50	$	10.50

Options outstanding January 31, 2023		1,852,000			$1.43 - $10.50	$	2.66

Options exercisable, January 31, 2023		91,083			$1.43 - $10.50	$	7.18

Schedule of intangible assets
	January 31, 2023		April 30, 2022

Acquired users	$	14,288,695	$	14,288,695
Acquired brand		583,429		583,429
Acquired intellectual property and website		435,000		—
Professional practice		556,830		556,830
Literary works and contracts		107,750		107,750
Total intangible assets	$	15,971,704	$	15,536,704

Schedule of investments
	Jan. 31, 2023		April 30, 2022

Netcapital Systems LLC	$	48,128	$	48,128
Watch Party LLC		440,000		235,400
Zelgor Inc.		1,400,000		1,400,000
ChipBrain LLC		3,366,348		1,704,480
Vymedic Inc.		11,032		20,000
C-Reveal Therapeutics LLC		50,000		50,000
Deuce Drone LLC		2,350,000		2,350,000
Hiveskill LLC		712,500		712,500
ScanHash LLC		425,000		425,000
Caesars Media Group Inc.		1,437,500		900,000
Cust Corp.		1,200,000		1,200,000
Reper LLC		1,200,000		—
Kingscrowd Inc.		3,209,685		3,815,745
Dark LLC		2,100,000		—
Netwire LLC		1,300,000		—
Total	$	19,250,193	$	12,861,253

●	a fully automated onboarding process;
●	automated filing of required regulatory documents;
●	compliance review;
●	a custom-built offering page on our portal website;
●	third party transfer agent and custodial services;
●	email marketing to our proprietary list of investors;
●	rolling closes, which provide potential access to liquidity before final close date of offering;
●	assistance with annual filings; and
●	direct access to our team for ongoing support.

●	incubation of technology start-ups;
●	investor introductions;
●	~~digital~~online marketing;
●	website design, software and software development;
●	message crafting, including pitch decks, offering pages, and ad creation;
●	strategic advice; and
●	technology consulting.

	Jan. 31, 2023		Jan. 31, 2022		Jan. 31, 2024		Jan. 31, 2023
Consulting services for equity securities	$	1,950,000	$	1,200,000	$	862,346	$	1,950,000
Consulting revenue		78,260		189,200		500		78,260
Portal fees		99,333		345,332		84,548		99,333
Listing fees		132,500		76,000		95,040		132,500
Other revenue		321		509		359		321
Total	$	2,260,414	$	1,811,041	$	1,042,793	$	2,260,414

	●	the liquidity of our common stock;

	●	the market price of our common stock;

	●	our ability to obtain financing for the continuation of our operations;

	●	the number of institutional and general investors that will consider investing in our common stock;

	●	the number of investors in general that will consider investing in our common stock;

	●	the number of market makers in our common stock;

	●	the availability of information concerning the trading prices and volume of our common stock; and

	●	the number of broker-dealers willing to execute trades in shares of our common stock.

Exhibit No.

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		Cover Page Interactive Data File - the cover page from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended January 31, ~~2023~~2024 is formatted in Inline XBRL

Date: March ~~16, 2023~~18, 2024	NETCAPITAL INC.

	By:	/s/ Martin Kay
		Martin Kay
		Chairman of the Board and Chief Executive Officer (~~Principa1~~Principal Executive Officer)

	By:	/s/ Coreen Kraysler
		Coreen Kraysler Chief Financial Officer
		~~Chief Financial Officer~~ ((Principal Financial and Accounting ~~Officer)~~Officer)