UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q/A~~10-Q

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

For the quarterly period ended: ~~January~~July 31, 2022

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

Commission file number: ~~000-55036~~001-41443

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

BostonMA02111

(Address of principal executive offices)

(781) 925-1700

(Registrant’s telephone number, including area code)

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~~[X]~~ [X] No [ ]

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

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

Large accelerated filer [ ]	Accelerated filer [ ]	Non-accelerated filer [X]	Smaller reporting company [X]
			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~~[X]~~ [X]

As of ~~March 17,~~September 12, 2022 the Company had ~~2,896,844~~ 4,297,677Shares of its common stock, par value $0.001 per share, issued and outstanding.

~~EXPLANATORY NOTE~~

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

TABLE OF CONTENTS

	Page
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.	4 6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	20 21

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

Item 4. Controls and Procedures.	24

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.	26 25

Item1A. Risk Factors.	26 25

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

Item 3. Defaults Upon Senior Securities.	26 25

Item 4. Mine Safety Disclosures.	26

Item 5. Other Information.	26

Item 6. Exhibits.	27 26

Signatures.	28 27

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;

●	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 on Amazon Web Services;

●	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;

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

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.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

NETCAPITAL INC.

~~Condensed Consolidated Balance Sheets~~CONDENSED CONSOLIDATED BALANCE SHEETS

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

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

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

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

Commitments and contingencies —   —

Stockholders' equity:

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

Assets: July 31, 2022 (Unaudited) April 30, 2022 (Audited)
  Cash and cash equivalents $ 2,556,170 $ 473,925
  Related party receivable 668 668
  Accounts receivable, net 2,154,700 2,433,900
  Prepaid expenses 41,536 5,694
Total current assets 4,753,074 2,914,187

  Deposits 6,300 6,300
Notes receivable – related parties 202,000 202,000
Purchased technology, net 15,515,623 15,536,704
Investment in affiliate 240,080 240,080
Equity securities at fair value 13,455,193 12,861,253
Total assets $ 34,172,270 $ 31,760,524

Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable
   Trade $ 457,826 $ 536,508
   Related party 75,204 378,077
  Accrued expenses 173,161 229,867
  Stock subscription payable 33,400 33,400
  Deferred revenue 602 2,532
  Interest payable 247,899 222,295
  Deferred tax liability, net 680,000 977,000
  Related party debt 19,660 22,860
  Secured note payable 400,000 1,400,000
  Current portion of SBA loans 1,893,719 1,890,727
  Loan payable - bank 34,324 34,324
  Convertible notes payable —   300,000
Total current liabilities 4,015,795 6,027,590

Long-term liabilities:
  Long-term SBA loans, less current portion 492,081 495,073
Total liabilities 4,507,876 6,522,663

Commitments and contingencies —   —

Stockholders' equity:
  Common stock, $.001 par value; 900,000,000 shares authorized, 4,272,677 and 2,934,344 shares issued and outstanding 4,273 2,934
Shares to be issued 244,250 244,250
Capital in excess of par value 26,840,486 22,479,769
Retained earnings 2,575,385 2,510,908
Total stockholders' equity 29,664,394 25,237,861
Total liabilities and stockholders' equity $ 34,172,270 $ 31,760,524

4
~~NETCAPITAL INC.~~
~~Condensed Consolidated Statements of Operations~~
~~(Unaudited)~~

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

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

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

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

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

Weighted average number of common shares outstanding:
Basic 2,589,142 948,058 2,842,924 2,012,723
Diluted 2,629,043 948,058 2,882,825 2,012,729
See Accompanying Notes to the Condensed Consolidated Financial Statements

56

~~NETCAPITAL INC.~~
~~Statements of Changes in Stockholders’ Equity (Unaudited)~~

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

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

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

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

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

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

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

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

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

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

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

NETCAPITAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

Three Months Ended Three Months Ended
July 31, 2022 July 31, 2021

Revenues $ 1,340,573 $ 625,187
Costs of services 21,063 28,305
Gross profit 1,319,510 596,882

Costs and expenses:
Consulting expense 125,611 316,631
Marketing 7,780 21,826
Rent 17,212 12,130
Payroll and payroll related expenses 769,940 927,333
General and administrative costs 392,297 395,052
               Total costs and expenses 1,312,840 1,672,972
Operating income (loss) 6,670 (1,076,090 )

Other income (expense):
Interest expense (36,312 ) (35,245 )
Gain on debt conversion 224,260 —
Amortization of intangible assets (21,081 ) —
Realized loss on sale of investment (406,060 ) —
Unrealized gain on equity securities —   3,275,745
Total other income (expense) (239,193 ) 3,240,500
               Net income (loss) before taxes (232,523 ) 2,164,410
Income tax expense (benefit) (297,000 ) 707,000
Net income $ 64,477 $ 1,457,410

Basic earnings per share $ 0.02 $ 0.66
Diluted earnings per share $ 0.02 $ 0.65

Weighted average number of common shares outstanding:
Basic 3,168,547 2,206,118
Diluted 3,171,397 2,241,675

See Accompanying Notes to the Condensed Consolidated Financial Statements
67
NETCAPITAL INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
For the Three Months Ended July 31, 2022 and the Year Ended April 30, 2022

Common Stock
Shares Amount
Common Stock
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 settle related party accounts payable 361,736 362 3,523,100 —   3,523,462
Net income, July 31, 2021 —   —   —   —   1,457,410 1,457,410
Balance, July 31, 2021 2,718,373 2,718 —   20,298,360 464,788 20,765,866

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

Q3 stock-based compensation 55,312 55 553,967 —   554,022
Purchase of equity interest 50,000 50 499,950 —   500,000
Purchase of MSG Development Corp. 50,000 50 244,250 488,450 —   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
See Accompanying Notes to the Condensed Consolidated Financial Statements
8

NETCAPITAL INC.
~~Condensed Consolidated Statements of Cash Flows~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
~~(Unaudited)~~(UNAUDITED)

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

Three Months Ended
July 31, 2021
OPERATING ACTIVITIES
Net income $ 3,004,260 $ 103,535 $ 64,477 $ 1,457,410
Adjustment to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Stock-based compensation 1,137,042 386,121 32,953 296,980
Non-cash revenue from the receipt of equity (1,187,500 ) (2,319,532 )
Receipt of equity in lieu of cash (1,200,000 ) (50,000 )
Unrealized gain on equity securities (3,275,745 ) —   —   (3,275,745 )
Debt forgiveness (1,904,302 )
Provision for bad debts —   29,000
Gain on debt conversion (224,260 ) —
Realized loss on investment 406,060 —
Changes in deferred taxes 548,000 42,288 (297,000 ) 707,000
Amortization of intangible assets 21,081 —
Changes in non-cash working capital balances:
Accounts receivable (900,242 ) (1,001,586 ) 279,200 24,714
Prepaid expenses 21,983 (3,144 ) (35,842 ) (60,858 )
Accounts payable and accrued expenses 138,797 250,587 (135,388 ) (21,904 )
Accounts payable - related party —   37,314
Deferred revenue 24,991 (67 ) (1,930 ) (9 )
Accrued interest payable 89,258 —   35,796 34,771
Accounts payable – related party (8,819 ) —
Net cash used in operating activities (2,303,458 ) (2,475,484 ) (1,063,672 ) (887,641 )

INVESTING ACTIVITIES
Proceeds from purchase of funding portal —   364,939
Proceeds from sale of investment 200,000 —
Loans to affiliates (202,000 ) —   —   (100,000 )
Investment in affiliate (117,166 ) —   —   (4,501 )
Net cash provided by (used in) investing activities (319,166 ) 364,939 200,000 (104,501 )

FINANCING ACTIVITIES
Proceeds from SBA loans —   2,385,800
Proceeds from stock subscriptions 625,799 —
Proceeds from (payments to) secured lender (1,000,000 ) —
Payment of related party note (3,200 ) —
Proceeds from sale of common stock 3,949,117 577,399
Net cash provided by financing activities 625,799 2,385,800 2,945,917 577,399

Net increase (decrease) in cash (1,996,825 ) 275,255 2,082,245 (414,743 )
Cash and cash equivalents, beginning of the period 2,473,959 11,206 473,925 2,473,959
Cash and cash equivalents, end of the period $ 477,134 $ 286,461 $ 2,556,170 $ 2,059,216

Supplemental disclosure of cash flow information:
Cash paid for taxes $ —   $ —   $ —   $ —
Cash paid for interest $ 1,592 $ 1,595 $ 516 $ 477

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

See Accompanying Notes to the Condensed Consolidated Financial Statements

79

NETCAPITAL INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~Notes To Condensed Consolidated Financial Statements (Unaudited)~~

Note 1– Basis of Presentation

The accompanying unaudited condensed financial statements of Netcapital Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the ~~nine- and~~ three-month ~~periods~~period ended ~~January~~July 31, 2022, are not necessarily indicative of the results that may be expected for the fiscal year ended April 30, ~~2022.~~2023. For further information, refer to the audited financial statements and footnotes thereto in our Annual Report on Form 10-K for the year ended April 30, ~~2021.~~2022.

In ~~June 2016,~~November 2021, the ~~FASB~~Financial Accounting Standards Board (FASB) issued ASU No. ~~2016-13~~ 2021-10,~~Financial Instruments-Credit Losses~~~~. The new guidance provides better representation~~ Government Assistance (Topic 832): Disclosure by Business Entities about ~~expected credit losses on financial instruments. This update~~Government Assistance (ASU 2021-10), which requires the ~~use~~disclosure of government assistance received by most business entities relating to: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance on a ~~methodology that reflects expected losses and requires consideration of a broader range of reasonable and supportive information to inform credit loss estimates.~~business entity's financial statements. This ~~ASU is~~guidance will be effective for ~~reporting periods beginning after December 15, 2022, with early adoption permitted. The company is studying~~our annual financial statements for the year ended April 30, 2023. We are currently evaluating the impact of ~~adopting~~ the ~~ASU in fiscal year 2023, and what effect it could have. The Company believes the accounting change would not have a material effect~~new guidance on ~~the~~our consolidated financial statements.

In ~~December 2019,~~June 2022, the FASB issued ~~Accounting Standard Update~~ASU No. ~~2019-12,~~2022-03, ~~Income Taxes~~Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (~~Topic 740):~~~~Simplifying the Accounting for Income Taxes~~ ~~(ASU 2019-12)~~ASU 2022-03), which ~~simplifies~~clarifies and amends the ~~accounting for income taxes. This~~ guidance ~~had no~~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 will not have a material impact on our condensed consolidated financial statements.

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

Note 2 – Concentrations

For the ~~nine- and~~ three-month ~~periods~~period ended ~~January~~July 31, 2022, the Company had one customer that constituted 30~~% and~~ 3352% of revenues and a second customer that constituted 28~~% and~~ 3324% of ~~revenues, respectively.~~revenues. For the ~~nine- and~~ three-month ~~periods~~period ended ~~January~~July 31, 2021, the Company had one ~~related party~~ customer that constituted 37~~% and~~ 0~~% of its revenues, a second customer that constituted~~ 18~~% and~~ 0~~% of its revenues, a third customer that constituted~~ 13~~% and~~ 3719% of its revenues and a ~~fourth~~second customer that constituted 9~~% and~~ 2816% of its ~~revenues, respectively.~~revenues.

Note 3 – Revenue Recognition

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

• Identification of the contract, or contracts, with a customer;
• Identification of the performance obligations in the contract;
• Determination of the transaction price;
• Allocation of the transaction price to the performance obligations in the contract; and
• Recognition of revenue when or as, the Company satisfies a performance obligation.

8
The Company identifies performance obligations in contracts with customers, which primarily are professional services, listing fees on our funding portal, and a ~~success~~portal fee of 4.9% of the money raised on the funding portal. The transaction price is determined based on the amount the Company expects to be entitled to receive in exchange for transferring the promised services to the customer. The transaction price in the contract is allocated to each distinct performance obligation in an amount that represents the relative amount of consideration expected to be received in exchange for satisfying each performance obligation. Revenue is recognized when performance obligations are satisfied. The Company usually bills its customers before it provides any services and begins performing services after the first payment is received. Contracts are typically one year or less. For larger contracts, in addition to the initial payment, the Company may allow for progress payments throughout the term of the contract.
10
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 asset (Accounts Receivable).

Contract Assets
Contract assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed. The revenue is recognized when the customer receives services. Contract assets are included in other current 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.
911

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 ~~nine- and~~ three-month ~~periods~~period ended ~~January~~July 31, 2022, which amounted to $~~3,636,050~~ ~~and $1,811,041, respectively, and for the nine- and three-month periods ended January 31, 2021, which amounted to $3,770,813~~ ~~and $1,277,327, respectively~~$1,340,573, are considered contract revenues. Contract revenue as of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, which has not yet been recognized, amounted to $~~25,613~~$602 and $~~622~~,$2,532, 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

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

Revenues disaggregated by revenue source consist of the following:
~~Schedule of revenue~~

Schedule of revenue
Nine Months Ended Jan. 31, 2022 Nine Months Ended Jan. 31, 2021 Three Months Ended Jan. 31, 2022 Three Months Ended Jan. 31, 2021 Three Months Ended July 31, 2022 Three Months Ended July 31, 2021
Consulting services $ 2,395,395 $ 3,416,802 $ 1,389,200 $ 924,286 $ 1,161,830 $ 91,687
Fees from online services 1,240,655 354,011 421,841 353,041 178,743 533,500
Total revenues $ 3,636,050 $ 3,770,813 $ 1,811,041 $ 1,277,327 $ 1,340,573 $ 625,187

Note 4 – Earnings Per Common Share

Net income per common and diluted share ~~share~~ were calculated as follows for the ~~nine- and~~ three-month periods ended ~~January~~July 31, 2022 and 2021:
~~Schedule of earnings per share~~

Schedule of earnings per share
Nine Months Ended January 31, 2022 Nine Months Ended January 31, 2021 Three Months Ended January 31, 2022 Three Months Ended January 31, 2021 Three Months Ended July 31, 2022 Three Months Ended July 31, 2021
Net income attributable to common stockholders – basic $ 3,004,260 $ 103,535 $ 1,821,006 $ 42,642 $ 64,477 $ 1,457,410
Adjustments to net income —   —   —   —   —   —
Net income attributable to common stockholders – diluted $ 3,004,260 $ 103,535 $ 1,821,006 $ 42,642 $ 64,477 $ 1,457,410

Weighted average common shares outstanding - basic 2,589,142 948,058 2,842,924 2,012,723 3,168,547 2,206,118
Effect of dilutive securities 39,901 —   39,901 —   2,850 35,557
Weighted average common shares outstanding – diluted 2,629,043 948,058 2,882,825 2,012,723 3,171,397 2,241,675

Earnings per common share - basic $ 1.16 $ 0.11 $ 0.64 $ 0.02 $ 0.02 $ 0.66
Earnings per common share - diluted $ 1.14 $ 0.11 $ 0.63 $ 0.02 $ 0.02 $ 0.65

1012

~~39,901~~2,850 shares of common stock that are issuable pursuant to stock subscription agreements are included in the calculation of diluted earnings per share for the three-month period ended July 31, 2022. Outstanding warrants to purchase 1,409,732 shares of common stock are not included in the calculation of earnings per share for the three-month period ended July 31, 2022 because their effect is anti-dilutive. Outstanding options to purchase 271,000 shares of common stock are not included in the calculation of earnings per share for the three-month period ended July 31, 2022 because their effect is anti-dilutive. 35,557 shares of common stock that are issuable to satisfy a supplemental consideration liability were included for the calculation of earnings per share for the ~~nine- and~~ three-month ~~periods~~period ended ~~January~~July 31, ~~2022~~2021 because their effect iswas dilutive. ~~No dilutive securities existed for the nine- and three-month periods ended January 31, 2021.~~

Note 5 – Principal Financing Arrangements

The following table summarizes components debt as of ~~January~~July 31, 2022 and April 30, ~~2021:~~2022:
~~Schedule of debt~~
Schedule of debt
January 31,
2022 April 30, 2021 Interest Rate July 31,
2022
April 30,
2022
Interest Rate

Secured lender $ 1,000,000 $ 1,000,000 8.0 % $ 400,000 $ 1,400,000 8.0 %
Notes payable – related parties 22,860 22,860 0.0 % 19,660 22,860 0.0 %
U.S. SBA loan —   1,885,800 1.0 %
Convertible promissory notes —   300,000 1.0 %
U.S. SBA loan 500,000 500,000 3.75 % 500,000 500,000 3.75 %
U.S. SBA loan 1,885,800 1,885,800 1.0 % 1,885,800 1,885,800 1.0 %
Loan payable – bank 34,324 34,324 5.5 % 34,324 34,324 5.5 %
Total Debt 3,442,984 5,328,784 2,839,784 4,142,984
Less: current portion of long-term debt 1,008,601 2,942,984 2,347,703 3,647,911
Total long-term debt $ 2,434,383 $ 2,385,800 $ 492,081 $ 495,073


As of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, the Company owed its principal lender (“Lender”) ~~$1,000,000~~$400,000 and $1,400,000, respectively, under an amended loan and security agreement (“Loan”) dated July 26, 2014 and amended on October 31, 2017, October 31, 2020, January 31, 2021, April 30, 2021, January 28, 2022 and February 3, 2022. The Lender was the largest shareholder of the Company owning 32.6% of the shares issued and outstanding until the Company purchased Netcapital Funding Portal Inc. on November 5, 2020. With the purchase of Netcapital Funding Portal Inc., the Lender owns less than 10% of the Company and is no longer considered a related party. The interest rate is 8% per annum andseveral times thereafter so that the maturity date is now April 30, 2023.

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

As of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, the Company’s related-party unsecured notes payable totaled ~~$22,860.~~$19,660 and $22,860, respectively.
As of July 31, 2022 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 ~~also~~ owes $34,324 as of ~~January~~July 31, 2022 and April 30, ~~2021~~2022 to Chase Bank. The Company pays interest expense to Chase Bank, which is calculated at a rate of ~~5.5%~~7.0% per annum.

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

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The May loan bore interest at a rate of 1% per annum and ~~the SBA postponed any installment payments until September 6, 2021. In November 2021 the May Loan~~ was forgiven in its entirety, including accrued interest of $18,502. As a result, the Company recognized debt forgiveness of ~~$1,904,302~~$1,904,296 in the ~~nine- and three-month periods~~year ended ~~January 31,~~April 30, 2022.

11
The June Loan required installment payments of $2,594 monthly, beginning on June 17, 2021, over a term of thirty years. However, the SBA ~~has~~ postponed the first installment payment for ~~12 months.~~18 months, and the first payment is now due on December 17, 2022. Interest accrues at a rate of 3.75% per annum. The Company agreed to grant a continuing security interest in its assets to secure payment and performance of all debts, liabilities, and obligations to the SBA. The June Loan was personally guaranteed by the Company’s Chief Financial Officer.

The February loan bears interest at a rate of 1% per annum and the due date of the first payment ~~is May 22, 2022. The~~has been postponed by the SBA because the Company ~~intends to apply~~has applied for forgiveness of the February ~~Loan and believes it will be forgiven in its entirety.~~Loan.
Note 6 – Income Taxes
As of ~~January~~July 31, 2022, ~~and April 30, 2021,~~ the Company had net operating loss carryforwards for Federal income tax purposes of approximately $~~1,675,000~~ ~~and $890,000~~1,839,000, ~~respectively,~~ expiring in the years of ~~2022~~2023 through ~~2041.~~2042.

For the ~~nine- and~~ three-month periods ended ~~January~~July 31, 2022 ~~the Company recorded income tax expense of $548,000~~ and ~~a tax benefit of $73,000, respectively. For the nine- and three- month periods ended January 31,~~ 2021, the Company recorded an income tax benefit of $297,000 and tax expense of ~~$42,288 and $19,890,~~$707,000, respectively.

As of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, the Company had ~~net~~ deferred tax assets calculated at an expected federal rate of 21%, and a state and local rate of 8%10%, when applicable, or approximately ~~$715,000~~$898,000 and ~~$313,000,~~$719,000, respectively. As a result of unrealized book gains on equity securities, the Company also has a deferred tax liability of ~~$1,696,000~~$1,578,000 and ~~$746,000~~$1,696,000 as of ~~January~~July 31, 2022 and April 30, ~~2021,~~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~~July 31, 2022 and April 30, ~~2021~~2022 were as follows:
~~Schedule of income taxes~~

Schedule of income taxes
January 31, 2022 April 30, 2021 July 31, 2022 April 30, 2022

Deferred tax assets, net:
Net operating loss carryforwards $ 352,000 $ 141,000 $ 492,000 $ 322,000
Bad debt allowance 27,000 17,000 40,000 40,000
Stock-based compensation 336,000 155,000 366,000 357,000
Deferred tax assets 715,000 313,000 898,000 719,000

Deferred tax liability
Unrealized gain 1,696,000 746,000 1,578,000 1,696,000

Net deferred tax liability $ (981,000 ) $ (433,000 ) $ (680,000 ) $ (977,000 )

Note 7 – Related Party Transactions

The Company’s ~~majority~~largest shareholder, Netcapital Systems LLC (“Systems”), owns ~~1,671,360~~1,711,261 shares of common stock, or ~~57.7%~~40% of the Company’s ~~2,896,844~~4,272,677 outstanding shares as of ~~January~~July 31, 2022. The Company has a demand note payable to Netcapital Systems LLC of ~~$4,660 and a demand note payable to one of its former managers of $3,200.~~$4,660. In addition, as of April 30, ~~2021,~~2022, the Company accrued a payable to Systems of ~~$3,817,516~~$294,054 for supplemental consideration owed in conjunction with its purchase of Netcapital Funding Portal Inc., which was ~~reduced to $294,054 as of January 31,~~paid in full on July 14, 2022, ~~because of~~with the issuance to ~~361,736~~Systems of 39,901 shares of the Company’s common stock, valued at $3,523,462. Of the 361,736 shares that were issued, a total of 32,458 shares, representing a reduction in the payable amount of $346,821, were issued to managers of Netcapital Systems LLC, and 3,151 shares, representing a reduction in the payable amount of $30,691, were issued to our Chief Executive Officer.stock.

In total, the Company owed ~~its largest shareholder $298,714~~Systems $4,660 and ~~$3,822,116~~$294,054 as of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, respectively. The company paid ~~its majority shareholder $257,429~~Systems $150,000 and ~~$100,000~~$50,000 in the ~~nine- and~~ three-month periods ended ~~January~~July 31, 2022 and 2021, respectively, for use of the software that runs the website www.netcapital.com. ~~The~~
~~Company also had a sale of $15,000 for consulting services to its largest shareholder during the nine- and three-month periods ended January 31, 2022.~~
1214

The Company earned revenues of $26,500 and $0 for the three months ended July 31, 2022 and 2021, respectively from ChipBrain, Inc. Our Chief Executive Officer was formerly a member of the board of directors of ChipBrain, Inc. As of July 31, 2022 and April 30, 2022, the Company owned 710,200 shares of ChipBrain, Inc., valued at $1,704,480.
Our Chief Executive Officer 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 and recorded a realized loss on the sale of the investment of $406,060. As of July 31, 2022 and April 30, 2022, the Company owned 3,209,685 and 3,815,745 shares of KingsCrowd Inc., valued at $3,209,685 and $3,815,745, respectively.
Our Chief Executive Officer is a member of the board of directors of Deuce Drone LLC. As of July 31, 2022 and April 30, 2022, the Company owns 2,350,000 membership interest units of Deuce Drone LLC., valued at $2,350,000. The Company has notes receivable aggregating $152,000 from Deuce Drone LLC as of July 31, 2022 and April 30, 2022.

Compensation to officers in the ~~nine- and~~ three-month periods ended ~~January~~July 31, 2022 and 2021 consisted of ~~common stock~~stock-based compensation valued at ~~$190,763~~$3,664 and ~~$89,436,~~$92,931, respectively, and cash salary of ~~$217,688~~$90,000 and ~~$73,688,~~$101,538, respectively. ~~Compensation~~
During the three months ended July 31, 2022, we paid $12,019 to ~~officers in the nine-~~a related party to retire a note payable of $3,200 and ~~three-month periods ended January 31, 2021 consisted~~expenses payable of ~~common stock valued at $301,783 and $86,417 respectively, and cash wages of $210,462 and $72,000, respectively.~~$8,819.

Compensation to a related party consultant in the ~~nine- and~~ three-month periods ended ~~January~~July 31, 2022 ~~consisted of common stock valued at $25,908~~ and ~~$0 respectively, and cash wages of $45,000 and $15,000, respectively. Compensation to a related party consultant in the nine- and three-month periods ended January 31,~~ 2021 consisted of common stock valued at ~~$38,757~~$0 and $19,378 respectively, and cash wages of ~~$46,154~~$16,154 and ~~$24,000,~~$25,846, respectively. This consultant is also the controlling shareholder of Zelgor Inc. and ~~$1,400,000~~$11,000 and $0 of the Company’s revenues in the ~~nine- and~~ three-month periods ended ~~January~~July 31, ~~2021~~2022 were from Zelgor Inc.
~~Compensation to employees who are also managers~~As of ~~Netcapital Systems LLC in the nine and three-month periods ended January~~July 31, 2022 ~~consisted of common stock~~and April 30, 2022, the Company owned 1,400,000 shares which are valued at $19,378 and $0, respectively, and cash wages of $96,000 and $24,000, respectively. Compensation to managers of Netcapital Systems LLC in the nine and three-month periods ended January 31, 2021 consisted of common stock valued at $58,135 and $19,378, respectively, and cash wages of $141,308 and $48,000, respectively.$1,400,000.

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

~~In November 2021 we issued a member of our board of directors 10,000 shares of common stock, for board and audit committee services, valued at $100,000.~~
~~The Company owes~~We owe Steven Geary, a director, ~~$16,680~~$31,680 as of ~~January~~July 31, 2022 and April 30, ~~2021, which~~2022. This obligation is not interest bearing. $16,680 is recorded as a related party trade accounts payable ~~plus~~and $15,000 inas a ~~non-interest-bearing~~related party note payable. We have no signed agreements for the indebtedness to Mr. Geary.

Note 8 – Stockholders’ Equity

The Company is authorized to issue 900,000,000 shares of its common stock, par value $0.001. ~~2,896,844~~4,272,677 and ~~2,178,766~~2,934,344 shares were outstanding as of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, respectively. In August 2020, the board of directors authorized a reverse split of the common stock on a 1-for-2,000 basis, whereby the Company issued to each of its stockholders one share of Common Stock for every 2,000 shares of common stock held by such stockholder. The reverse split was effective on November 5, 2020. The financial statements for the nine- and three-month periods ended January 31, 2021 have been adjusted to give effect to the reverse split.

On January 27, 2022, the Company filed a Form S-8 registration statement for securities to be offered in employee benefit plans, to register 300,000 shares of common stock from the Company’s 2021 Equity Incentive Plan. ~~Stock options were granted under this plan in~~On February 2, 2022, ~~see Note 14.~~
~~On July 26, 2021,~~ the Company ~~issued 361,736 shares~~granted an aggregate of ~~its common stock as payment of $3,523,462 of supplemental consideration that was owed~~272,000 options to ~~its affiliate, Netcapital Systems LLC. The 361,736~~purchase shares of common stock ~~include an aggregate~~ of ~~35,609 shares~~the company at a price of ~~common stock, that paid off liabilities totaling $346,821, that~~$10.50 per share. The options were ~~made~~granted to ~~our Chief Executive Officer, a company controlled by a member~~employees, consultants, and members of the board of ~~managers~~directors. The options vest monthly on a straight-line basis over a 4-year period and expire in 10 years. As of ~~Netcapital Systems LLC and to an individual manager.~~
On July 27, 2021, the Company completed a private placement for gross proceeds of $1,592,395 in conjunction with the sale of restricted shares of common stock at a price of $9.00 per share. A total of 176,934 shares of common stock were issued.
~~Effective October 31, 2021 and~~ July 31, ~~2021, the Company issued an aggregate of 937 shares of restricted stock to two employees. The shares~~2022 and April 30, 2022, 271,000 options were ~~valued at $10,073 and $14,056, respectively.~~outstanding.
13

During the quarter ended ~~January~~July 31, 2022, the Company issued ~~a total of 55,312~~39,901 shares of common stock with a value of $113,714 to ~~personnel, valued at $554,022, for services rendered.~~settle a related party payable of $294,054. The Company also issued ~~22,222~~93,432 shares ~~in conjunction with a private placement~~of common stock valued at ~~$9.00 for a $200,000 stock subscription; 50,000 shares in conjunction with the purchase~~$266,272 to retire $300,000 of ~~a business, MSG Development Corp.; and 50,000 shares~~convertible promissory notes plus accrued interest of $10,192. The convertible note holders also received warrants to purchase shares of common stock at a ~~10% interest~~per share exercise price of $5.19, that are exercisable immediately, and expire five years from the date of issuance. These equity issuances resulted in a ~~marketing firm, Caesar Media Group Inc.~~gain from the conversion of debt totaling $224,260, which is recorded as other income in the income statement.
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 per share and warrant. The gross proceeds from the offering were $5,000,750 prior to deducting underwriting discounts, commissions, and other offering expenses, which resulted in net proceeds of $3,949,117. The warrants have a per share exercise price of $5.19, are exercisable immediately, and expire five years from the date of issuance.
15

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 60,250 warrants to 20 individual representatives of the underwriter.
As a result of the offering, 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. 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 trading price of a warrant with an identical term and exercise price, under the trading symbol of NCPLW, had a closing price of $0.44 on the day the representatives’ warrants and the underwriter’s warrants were issued. 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.
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 nine- and three-month periods ended January 31, 2022, the Company recorded $1,137,042 and $653,975, respectively, in stock-based compensation expense and for the nine- and three-month periods ended January 31, 2021, the Company recorded $386,121 and $126,212, respectively, in stock-based compensation expense.

AsFor the three-month period ended July 31, 2022, stock-based compensation expense amounted to $32,953. This expense is the estimated value of ~~January~~the vesting of 271,000 stock options that are outstanding as of July 31, 2022, and April 30, 2021, there was $9,987 and $631,878, respectively of prepaid stock-based compensation expense for services. As of January 31, 2022, two consulting agreements are effective, which expire in February 2022.vest on a monthly basis over a 48-month period.

AsFor the three-month period ended July 31, 2021, stock-based compensation expense amounted to $296,980. This expense was the result of ~~January 31, 2022, an aggregate~~the issuance of ~~157~~ shares of common ~~stock can be earned by one Company employee from an unvested stock grant. The 157 shares vest on April 30, 2022.~~stock.

The table below presents the components of ~~stock-based~~ compensation expense for the ~~nine-~~issuance of shares of common stock and stock options to employees and consultants for the three-month periods ended ~~January~~July 31, 2022 and 2021.

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

1416

~~Schedule of stock based compensation expense~~
Schedule of stock based compensation expense
Three Months Ended July 31, 2022 Three Months Ended July 31, 2021
Stock-based compensation expense Nine Months Ended Jan. 31, 2022 Nine Months Ended Jan. 31, 2021 Three Months Ended Jan. 31, 2022 Three Months Ended Jan. 31, 2021
Chief Executive Officer $ 40,608 $ 121,824 $ —   $ 40,608 $ 1,221 $ 40,608
Chief Financial Officer 40,608 121,824 —   40,608 2,443 40,608
Chief Marketing Officer 109,547 3,492 89,436 5,201 —   11,715
Related party consultant 25,908 58,135 —   19,378 —   19,378
VP of Digital Strategy 5,603 22,711 1,586 1,039 —   2,340
Marketing consultant 111,156 —   37,052 —   —   37,052
Marketing consultant 377,704 —   125,901 —   —   125,901
Member of board of directors 100,000 —   100,000 —
Director of Business Development 300,000 —   300,000 —
Business consultant 25,908 58,135 —   19,378 —   19,378
Employee and consultant options 29,289 —
Total stock-based compensation expense $ 1,137,042 $ 386,121 $ 653,975 $ 126,212 $ 32,953 $ 296,980

The ~~table below presents the prepaid compensation expense~~following tables summarize information about stock options outstanding as of ~~January~~July 31, 2022 and April 30, ~~2021:~~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 July 31, 2022
$10.50 - $10.50 271,000 9.54 $ 10.50 39,521 $ 10.50
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 quarter ended July 31, 2022 — — $ —

Exercised/canceled during quarter ended July 31, 2022 — — $ —

Options outstanding July 31, 2022 271,000 $10.50 $ 10.50

Options exercisable, July 31, 2022 39,521 $10.50 $ 10.50
~~Schedule of prepaid compensation~~

Description Jan. 31, 2022 April 30, 2021
Chief Executive Officer $ —   $ 40,608
Chief Financial Officer —   40,608
Related party consultant —   25,908
Business consultant —   25,908
Marketing consultant 7,249 380,441
Marketing consultant 2,738 118,405
Total $ 9,987 $ 631,878
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For the nine- and three-month periods ended January 31, 2022, $488,860 and $162,953 of stock-based compensation was recorded as consulting expense, respectively, and $648,182 and $491,022 was recorded as payroll and payroll related expenses. For the nine- and three-month periods ended January 31, 2021, all the stock-based compensation was recorded as a component of payroll and payroll related expenses.

Note 11 –Deposits and Commitments

~~The Company utilizes~~We utilize an office ~~space~~at 1 Lincoln Street in Boston, ~~Massachusetts,~~Massachusetts. We currently pay a membership fee of approximately $5,700 a month, under a ~~month-to-month lease~~virtual office agreement that ~~allows to company to end its lease by providing 30-day written notice. The lease agreement~~expires in September 2023 and includes a deposit of $6,300.

Note 12 – ~~Business Acquisitions~~Intangible Assets

~~On November 2, 2021,~~Intangible assets with defined useful lives are generally measured at cost less straight-line amortization. The useful life is determined using the ~~owners of ValuCorp Inc. (“ValuCorp”), a business valuation firm, formed a new company MSG Development Corp. (“MSG”) and transferred most~~period of the ~~assets~~underlying contract or the period of ~~ValuCorp~~time over which the intangible asset can be expected to ~~MSG. The Company entered into an exchange agreement (“Agreement”) whereby~~be used. Impairments are recognized if the ~~Company received 100%~~recoverable amount of the ~~outstanding shares~~asset is lower than the carrying amount. The recoverable amount is the higher of ~~MSG~~either the fair value less costs to sell or the value in ~~exchange~~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 ~~75,000 shares of common stock~~impairment annually, or if there is an indication that their value has declined.
The following table sets forth the major categories of the Company. 50,000 shares of the Company’s common stock were issued in December 2021 and four annual installments of 6,250 shares are due over the next four years. As a result, the Company has recorded $244,250 in stock subscriptions payableintangible assts as of ~~January~~July 31, ~~2022.~~2022 and April 30, 2022
Schedule of intangible assets
July 31, 2022 April 30, 2022

Acquired users $ 14,288,695 $ 14,288,695
Acquired brand 583,429 583,429
Professional practice 556,830 556,830
Literary works and contracts 107,750 107,750
Total intangible assets $ 15,536,704 $ 15,536,704

~~MSG’s~~As of July 31, 2022, the weighted average remaining useful life for technology, trade names, professional practice, literary works and domains is 14.75 years. Accumulated amortization amounted to $21,081 as of July 31, 2022, resulting in net intangible assets ~~were less than 20%~~ of the value of the Company’s assets and the Company’s investment in MSG is less than 20% of the Company’s market value. Furthermore, the revenue and operating income of MSG’s predecessor, ValuCorp, for the prior two years, is less than 20% of the revenue and operating income of the Company. Upon evaluation of the components of the business combination, including the relative voting rights in the combined entity, the composition of the governing body and senior management of the combined entity, the relative size of each entity and the terms of the exchange of equity interests, the Company recorded the transaction in the third quarter of fiscal 2022 as a purchase.
15
~~The following table summarizes the value of the consideration for MSG and the amounts of the assets acquired in conjunction with the Agreement. MSG had no liabilities.~~$15,515,623.
~~Schedule of msg agreement~~

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

Recognized amounts of identifiable assets acquired:
Professional practice intangible $ 556,830
Technology-related intangibles 36,650
Marketing-related intangibles 14,660
Computer-related intangibles 49,111
Customer-related intangibles 16,859
Contract-related intangibles 36,650
Human capital and artistic-related intangibles 21,990
Total identifiable net assets $ 732,750
The fair value of the common shares issued as the consideration for MSG was determined by the most recent closing price of the Company’s common shares at the time the shares were issued. Seven identifiable intangible assets were valued, as noted in the above table (the “Intangible Assets”). The estimated market value of the Intangible Assets on the date of purchase was $1,000,000, and the value of the 75,000 shares of common stock of the Company, payable as consideration was $9.77 per share, or $732,750. The value of the Intangible Assets has been recorded at an aggregate value of $732,750. The Company has not finished its evaluation of the Intangible Assets. The fair value of the acquired Intangible Assets is provisional pending receipt of the final valuation of those assets.
On August 23, 2020, the Company entered into an Agreement and Plan of Merger (“Agreement”) whereby Netcapital Systems LLC (“Systems”) would become an 80% owner of the Company. Pursuant to the requirements of this agreement, the Company filed a definitive information statement on Form 14C on September 21, 2020 to change the Company’s corporate name from ValueSetters, Inc. to Netcapital Inc. and to amend the Company’s Articles of Incorporation to effect a stock combination, or reverse stock split, pursuant to which 2,000 shares of the Company’s common stock would be exchanged for one new share of common stock. In conjunction with the merger agreement, the Company issued 1,666,360 shares of common stock to Systems on November 5, 2020.

The Agreement was a tax-free merger of Netcapital Funding Portal Inc. (“FP”), a wholly owned subsidiary of Systems, with Netcapital Acquisition Vehicle Inc., an indirect wholly owned subsidiary of the Company, wherein FP was the surviving corporation. This transaction was designed to enhance the Company’s revenues and ability to provide services to democratize the private capital markets while helping companies at all stages to build, grow and fund their businesses with a full range of services from strategic advice to raising capital. As a result of the transaction, the Company is expected to be a leading provider of private capital transactions for entrepreneurs seeking to raise money under the exemption provided by section 4(a)(6) of the Securities Act of 1933, which allows private companies to raise up to $5 million every 12 months.
ASC 805-10-25-4 requires the identification of one of the combining entities in each business combination as the acquirer. Upon evaluation of the components of the business combination, including the relative voting rights in the combined entity, the composition of the governing body and senior management of the combined entity, the relative size of each entity and the terms of the exchange of equity interests, the Company recorded the transaction in the third quarter of fiscal 2021 as a purchase. In conjunction with the purchase, Systems agreed to vote all of its shares of common stock to support the resolutions of the existing board of directors of the Company.
~~The following table summarizes the value of the consideration for FP and the amounts of the assets acquired and liabilities assumed in conjunction with the Agreement.~~
~~Schedule of merger agreement~~

Consideration:
1,666,360 shares of common stock of the Company $ 11,331,248
Payment of promissory notes and interest 3,817,516
Total consideration $ 15,148,764
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Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash $ 358,634
Current assets 8,894
Accounts payable (29,023 )
Platform users 7,080,319
Platform investors 6,288,392
Platform issuers 903,125
Unpatented technology 532,118
Total identifiable net assets $ 15,148,764
The fair value of the common shares issued as the consideration for FP was determined by the most recent (the prior day’s) closing price of the Company’s common shares at the time the shares were issued. The fair value of the assets and the liabilities of FP equaled their book value. Four identifiable intangible assets were valued; platform users, platform investors, platform issuers and unpatented technology (collectively the “Intangible Assets”). The estimated market value of the Intangible Assets is approximately $27,800,000. This amount is derived from valuing the IP functionality, brand, and license of FP at $1,000,000; valuing current issuers and pipeline issuers at approximately $14,000 each; valuing platform users at $382 each; and valuing investors at $1,025 each. These values are derived from comparing the FP Intangible Assets to the values recorded by funding portal offerings of FP’s competitors in public filings via Regulations CF and Regulation A.
The excess of purchase price over the total identifiable tangible net assets of $344,810, leaves an aggregate value of $14,803,954 to be assigned to the Intangible Assets. The estimated value of the $27,800,000 of Intangible Assets is allocated on a percentage basis in the above table to equal $14,803,954.
None of FP’s revenues and earnings are included in the Company’s consolidated income statements through the day of closing of November 5, 2020. The consolidated income statements for the year ended April 30, 2021 include $834,981 in revenues from FP. If the entities had been combined for the two reporting periods, the supplemental pro forma revenues and earnings are as follows:
~~Schedule of pro forma and earnings~~
Revenues Earnings
Supplemental pro forma for 4/1/20 – 11/04/20 $ 2,866,063 $ 282,264
Supplemental pro forma for 4/1/19 – 11/04/19 $ 1,018,200 $ 680,212
Included in the supplemental pro forma information above is revenue earned by the Company from Netcapital Systems LLC of $18,646 and $152,864 in the periods ended November 4, 2020 and 2019, respectively.
Note 13 – Investments
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 per unit based on a sales price of $0.68 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of $1,200,000. As of July 31, 2022, the Company owned 1,764,706 units which are valued at $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 per unit based on a sales price of $0.40 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of $1,200,000. As of July 31, 2022 and April 30, 2022, the Company owned 3,000,000 units which are valued at $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 per unit based on a sales price of $0.25 per unit on an online funding portal. The receipt of the units satisfied $425,000 of an accounts receivable balance. As of ~~January~~July 31, 2022 and April 30, 2022, the Company ~~owns~~owned 1,700,000 units which are valued at $425,000.

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In January 2022, the Company received 2,850,000 units of Hiveskill LLC as a payment for services rendered in conjunction with a crowdfunding offering. The units are valued at $0.25 per unit based on a sales price of $0.25 per unit on an online funding portal. The receipt of the units satisfied an accounts receivable balance of $712,500. As of ~~January~~July 31, 2022 and April 30, 2022, the Company ~~owns~~owned 2,850,000 units which are valued at $712,500.

In ~~November 2021,~~fiscal 2022, the Company purchased a 10% interest, or 400 shares of common stock, in Caesar Media Group Inc. (“Caesar”) for an initial purchase price of 50,000 shares of the Company’s common stock, valued at $500,000. Caesar is a marketing and technology solutions provider. The purchase agreement includes additional contractual requirements for the Company and Caesar, including the issuance of an additional 150,000 shares of common stock of the Company over a two-year period. The Company issued 37,500 shares of its common stock in April 2022 as part of its contractual payment obligations. As of ~~January~~July 31, 2022 and April 30, 2022, there have been no observable price changes in the value of the Caesar’s common stock and the Company has valued its ownership in Caesar at cost, which is ~~$500,000.~~
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$900,000.

In May 2020, the Company entered a consulting contract with Watch Party LLC (“WP”), which allowed the Company to receive ~~up to~~ 110,000 membership interest units of WP in return for consulting services. The Company earned 97,500 membership interest units in the quarter ended July 31, 2020. The WP units are valued at $2.14 per unit based on a sales price of $2.14 per unit on an online funding ~~portal, resulting in revenues of $235,400 and $0 for the nine- and three-month periods ended January 31, 2021.~~portal. As of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, the Company ~~owns~~owned 110,000 WP units, which are valued at $235,400.

In May 2020, the Company entered a consulting contract with ChipBrain LLC (“Chip”), which allowed the Company to receive ~~up to~~ 710,200 membership interest units of Chip in return for consulting services. ~~The Company earned 500,000 membership interest units in the quarter ended July 31, 2020 and earned the remaining units in the quarter ending October 31, 2020.~~ The Chip units were initially valued at $0.93 per unit based on a sales price of $0.93 per unit on an online funding ~~portal, resulting in revenues of $660,486 and $0 for the nine and three-month periods ended January 31, 2021.~~portal. Subsequently, Chip sold identical units for $2.40 per unit, and as of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, the 710,200 units owned by the Company are valued at $1,704,480. ~~In fiscal 2022 the Company received additional revenues from Chip, amounting to $39,360 and $20,000 for the nine- and three-month periods ended January 31, 2022.~~

In May 2020, the Company entered a consulting contract with a related party, Zelgor Inc. (“Zelgor”), which allowed the Company to receive ~~up to~~ 1,400,000 shares of common stock of Zelgor in return for consulting services. ~~The Company earned 1,050,000 shares in the quarter ended July 31, 2020 and earned the remaining shares in the quarter ending October 31, 2020.~~ The Zelgor shares are valued at $1.00 per share based on a sales price of $1.00 per share on an online funding ~~portal, resulting in revenues~~portal. As of $1,400,000 and $0 for the nine- and three-month periods ended January 31, 2021. The $1.00 per share valuation continues to be the observable price at which the shares trade and the Zelgor shares are valued at $1,400,000 as of JanuaryJuly 31, 2022 and April 30, ~~2021.~~2022, the Company owned 1,400,000 shares which are valued at $1,400,000.

On January 2, 2020, the Company entered a consulting contract with Deuce Drone LLC (“Drone”), which allowed the Company to receive ~~up to~~ 2,350,000 membership interest units of Drone in return for consulting services. The ~~Company earned all 2,350,000 membership interest units in fiscal 2020. The~~ Drone units were ~~initially~~originally valued at $0.35 per unit based on a sales price of $0.35 per unit when the units were earned, or $822,500. Drone subsequently sold identical Drone units for $1.00 per unit on an online funding portal and as of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, the units owned by the Company are valued at ~~$2,350,000.~~$2,350,000

In August 2019, the Company entered a consulting contract with KingsCrowd LLC (“KingsCrowd”), which allowed the Company to receive 300,000 membership interest units of KingsCrowd in return for consulting services. The KingsCrowd units were ~~initially~~ valued at $1.80 per unit based on a sales price of $1.80 per unit when the units were earned, or $540,000. In December 2020, KingsCrowd converted from a limited liability company to a corporation to facilitate raising capital under Regulation A. KingsCrowd filed a Form 1-A Offering Statement under the Securities Act of ~~1933.~~1933 and is selling shares at $1.00 per share. In connection with the conversion to a corporation, each membership interest unit converted into 12.71915 shares of common stock. The Company sold 606,060 shares of KingsCrowd in June 2022 for proceeds of $200,000 and recorded a realized loss on the sale of the investment of $406,060. KingsCrowd filed a post qualification offering circular amendment on July 21, 2022 and continues to sell shares of stock to the public for $1.00 per share. As of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, the Company ~~owns~~owned 3,209,685 and 3,815,745 shares of KingsCrowd, ~~Inc. In July 2021, KingsCrowd subsequently sold identical shares of common stock for $1.00 per share, and as of January 31, 2022 and April 30, 2021, the shares owned by the Company are~~ valued at ~~$3,815,745~~$3,209,685 and ~~$540,000,~~$3,815,745, respectively.

During fiscal 2019, the Company entered a consulting contract with NetCapital Systems LLC (“NetCapital”), which allowed the Company to receive up to 1,000 membership interest units of NetCapital in return for consulting services. The Company earned ~~40 units in the quarter ended July 31, 2020, at a value of $91.15 per unit, or $3,646. The Company earned~~ all 1,000 Netcapital units but sold a portion of the units in fiscal 2020 at a sales price of $91.15 per unit. As of ~~January~~July 31, 2022 and April 30, ~~2021,~~2022, the Company ~~owns~~owned 528 Netcapital units, at a value of $48,128.

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In July 2020 the Company entered a consulting agreement with Vymedic, Inc. for a $40,000 fee over a 5-month period. Half the fee was payable in stock and half was payable in cash. As of ~~April 30, 2021, the Company earned $20,000 worth of stock. As of January~~July 31, 2022 and April 30, ~~2021,~~2022, the Company ~~owns~~owned 4,000 units, at a value of $20,000.

In August 2020 the Company entered a consulting agreement with C-Reveal Therapeutics LLC (“CRT”). for a $120,000 fee over a 12-month period. $50,000 of the fee iswas payable in CRT units. ~~The Company earned the units in~~ ~~fiscal 2021 and received them in the first quarter of fiscal 2022.~~ As of ~~January~~July 31, 2022 and April 30, 2022, the Company ~~owns~~owned 5,000 units, at a value of $50,000.
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The following table summarizes the components of investments as of ~~January~~July 31, 2022 and April 30, ~~2021:~~2022:
Schedule of investments
July 31, 2022 April 30, 2022

Netcapital Systems LLC $ 48,128 $ 48,128
Watch Party LLC 235,400 235,400
Zelgor Inc. 1,400,000 1,400,000
ChipBrain LLC 1,704,480 1,704,480
Vymedic Inc. 20,000 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. 900,000 900,000
Cust Corp. 1,200,000 1,200,000
Reper LLC 1,200,000 —
Kingscrowd Inc. 3,209,685 3,815,745
Total $ 13,455,193 $ 12,861,253
~~Schedule of investments~~

Jan. 31, 2022 April 30, 2021

Netcapital Systems LLC $ 48,128 $ 48,128
Watch Party LLC 235,400 235,400
Zelgor Inc. 1,400,000 1,400,000
ChipBrain LLC 1,704,480 1,704,480
Vymedic Inc. 20,000 20,000
C-Reveal Therapeutics LLC 50,000 —
Deuce Drone LLC 2,350,000 2,350,000
Hiveskill LLC 712,500 —
ScanHash LLC 425,000 —
Caesar Media Group Inc. 500,000 —
Kingscrowd Inc 3,815,745 540,000
Total Investments at cost $ 11,261,253 $ 6,298,008

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

Note 14 – Subsequent Events
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 under the Company’s 2021 Equity Incentive Plan. The options vest monthly on a straight-line basis over a 4-year period and expire in 10 years.
On February 9, 2022, the Company sold two convertible promissory notes to accredited investors for total proceeds of $300,000. The notes accrue interest at a rate of 8% per annum and have a maturity date of February 9, 2023. The notes automatically convert into shares of common stock at a price per share that is the lesser of $10.00 or the 80% of the price paid per share for a subsequent round of securities sold, as defined in the promissory note. The promissory notes also convert automatically with a change in control.

The Company evaluated subsequent events through the date these financial statements were available to be issued.
On September 1, 2022, the Company issued 25,000 shares of common stock valued at $83,250, in conjunction with its agreement to purchase a 10% interest in Caesar Media Group, Inc.
There were no other material subsequent events that required recognition or additional disclosure in these financial statements.

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PART I
~~Item~~ITEM 2. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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

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

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

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 all investors the opportunity to access investments in private companies. Our model is disruptive to traditional private equity investing and is based on Title III, Reg CF of the JOBS Act. We generate fees from listing private companies on our portal. Our consulting group, Netcapital Advisors, provides marketing and strategic advice in exchange for equity positions and 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.
We provide private company investment access to accredited retail and non-accredited retail investors through our online portal (www.netcapital.com). The Netcapital funding portal charges a $5,000 engagement fee and a 4.9% success fee for capital raised at closing. In addition, the 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.
2021

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 from virtually anyone, including friends, family, customers, employees, etc.
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;
● 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 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, taking equity stakes in select disruptive start-ups.
Netcapital Advisors’ services include:
● incubation of technology start-ups;
● investor introductions;
● digital marketing;
● website design, software and software development;
● message crafting, including pitch decks, offering pages, and ad creation;
● strategic advice; and
● technology consulting.
Recent Developments
Nasdaq Uplist Offering
On July 15, 2022, we completed an underwritten public offering of 1,205,000 shares of our common stock and warrants to purchase 1,205,000 shares of 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.
In conjunction with this offering, the shares and warrants began trading on The Nasdaq Capital Market on July 13, 2022, under the ticker symbols “NCPL” and “NCPLW,” respectively.
Repayment of Secured Debt
On July 21, 2022 the company paid $1 million to its secured lender, Vaxstar LLC, to reduce the principal balance on its debt from $1,400,000 to $400,000.
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Results of Operations

~~For the Nine Months Ended January 31, 2022 Compared to the Nine Months Ended January 31, 2021~~
Our revenues for the nine months ended January 31, 2022 decreased by $134,763, or 4%, to $3,636,050, as compared to $3,770,813 reported for the nine months ended January 31, 2021. The decrease in revenues is attributable to a decreaseComparison of $1,044,025 in non-cash revenue from the receipt of equity, which amounted to $2,102,174 in the nine months ended January 31, 2022, as compared to $3,146,199 in the nine months ended January 31, 2021. This decrease was offset by revenues from our funding portal. Funding portal revenues began for us in November 2020. Funding portal revenues consisted of a listing fee that we charge when an issuer signs an engagement letter to raise capital on our funding portal, and portal fees that are equal to 4.9% of the capital that was raised by the issuers. The components of revenue for the nine-month periods ended January 31, 2022 and 2021 are as follows:
Jan. 31, 2022 Jan 31, 2021
Consulting services for equity securities $ 2,102,174 $ 3,146,198
Consulting revenue 293,221 270,604
Portal fees 951,760 250,541
Listing fees 288,000 102,500
Other revenue 895 970
Total $ 3,636,050 $ 3,770,813

Costs of revenues decreased by $644,914 to $85,429 for the nine-months ended January 31, 2022 from $730,343 reported in the nine-months ended January 31, 2021. The decrease is attributable to a decrease in non-cash revenues from the receipt of equity.
Payroll and payroll related expenses increased by $879,426, or 41%, to $3,032,987 for the nine months ended January 31, 2022, as compared to $2,153,561 reported for the nine months ended January 31, 2021. The increase is attributable to an increase in staff.
Marketing expense increased by $46,151, or 213%, to $67,771 for the nine months ended January 31, 2022, as compared to $21,620 reported for the nine months ended January 31, 2021. The increase in expense is due to additional marketing outlets that we utilized in the nine months ended January 31, 2022.
Rent expense decreased by $5,036, or 13%, to $34,480 for the nine months ended January 31, 2022, as compared to $39,516 reported for the nine months ended January 31, 2021. The decrease in expense is a result of discounts available to us in fiscal 2022 and our ability to have personnel work from home.
General and administrative expenses increased by $1,042,092, or 443%, to $1,277,146 for the nine months ended January 31, 2022, from $235,054 for the nine months ended January 31, 2021. The increase is primarily attributed to additional expenses we incurred in the current fiscal year for our newly acquired funding portal business.
Consulting expense increased by $283,974, to $675,180, or 73%, for the nine months ended January 31, 2022 from $391,206 reported in the nine months ended January 31, 2021. The increase in expense is due to issuance of stock-based compensation to two outside consulting firms.
Interest expense increased by $37,154 to $90,844 for the nine months ended January 31, 2022, as compared to $53,690 for the nine months ended January 31, 2021. The increase in interest expense is attributable to higher debt amounts and a higher interest rate on our secured debt.
Our net income increased by $2,900,725 to $3,004,260, or 2,802% for the nine months ended January 31, 2022, as compared to $103,535 for the nine months ended January 31, 2021. The increase in net income is primarily attributable to debt forgiveness of $1,904,302 during the period related to our loan with the SBA.
22
~~For~~ the Three Months Ended ~~January~~July 31, 2022 ~~Compared to the Three Months Ended January 31,~~and 2021

Our revenues for the three months ended ~~January~~July 31, 2022, increased by ~~$533,714,~~$715,386, or ~~42%~~114%, to ~~$1,811,041,~~$1,340,573, as compared to ~~$1,277,327 reported for~~$625,187 during the three months ended ~~January~~July 31, 2021. The increase in revenues ~~is attributable~~was primarily attributed to an increase ~~of $368,333, or 44%,~~ in ~~non-cash revenue from~~consulting services for equity securities, which amounted to $1,025,000 during the receipt of equity and an increase of $94,791, or 38%, in portal fee revenues from our funding portal. Funding portal revenues consist of a listing fee that we charge when an issuer signs an engagement letterthree months ended July 31, 2022, as compared to ~~raise capital on our funding portal, and portal fees that are equal to 4.9% of~~$50,000 during the ~~capital that was raised by the issuers.~~three months ended July 31, 2021. The components of revenue ~~for the three-month periods ended January 31, 2022 and 2021 are~~were as follows:

Jan. 31, 2022 Jan 31, 2021
Consulting services for equity securities $ 1,200,000 $ 831,667
Consulting revenue 189,200 92,082
Portal fees 345,332 250,541
Listing fees 76,000 102,500
Other revenue 509 537
Total $ 1,811,041 $ 1,277,327

July 31, 2022 July 31, 2021
Consulting services for equity securities $ 1,025,000 $ 50,000
Consulting revenue 136,830 41,687
Portal fees 51,000 437,317
Listing fees 127,500 96,000
Other revenue 243 183
Total $ 1,340,573 $ 625,187

Costs of revenues ~~increased~~decreased by ~~$23,230, or 144%,~~$7,242 to ~~$39,349~~$21,063 for the ~~three-months~~three months ended ~~January~~July 31, 2022 from ~~$16,119 reported in~~$28,305 during the ~~three-months~~three months ended ~~January~~July 31, 2021. The ~~increase is attributable~~decrease was primarily attributed to a decrease in portal fees during the ~~increase in revenues from our funding portal.~~three months ended July 31, 2022.

Payroll and payroll related expenses ~~increased~~decreased by ~~$384,104,~~$157,393, or ~~45%~~17%, to ~~$1,241,332~~$769,940 for the three months ended ~~January~~July 31, 2022, as compared to ~~$857,228 reported for~~$927,333 during the three months ended ~~January~~July 31, 2021. The ~~increase is attributable~~decrease was primarily attributed to ~~stock-based compensation of $400,000 that did not occur~~a reduction in ~~the prior year.~~staff.

Marketing expense ~~increased~~decreased by ~~$11,107,~~$14,046, or ~~87%~~64.4%, to ~~$23,945~~$7,780 for the three months ended ~~January~~July 31, 2022, as compared to ~~$12,838 reported for~~$21,826 during the three months ended ~~January~~July 31, 2021. The ~~increase~~decrease in expense ~~is due~~was primarily attributed to ~~additional~~a decrease in marketing outlets that we utilized in the three months ended ~~January~~July 31, 2022.

Rent expense ~~decreased~~increased by ~~$849,~~$5,082, or 7%42%, to ~~$11,869~~$17,212 for the three months ended ~~January~~July 31, 2022, as compared to ~~$12,718 reported for~~$12,130 during the three months ended ~~January~~July 31, 2021. The ~~decrease in expense is~~increase was primarily attributed to a ~~result of discounts available to us~~new office-space agreement that became effective in the ~~three-month period ended January 31, 2022, and our ability to have personnel work from home.~~current fiscal year.

General and administrative expenses ~~increased~~decreased by ~~$161,170,~~$2,755, or ~~101%~~1%, to ~~$320,724~~$392,297 for the three months ended ~~January~~July 31, 2022, from ~~$159,554 for~~$395,052 during the three months ended ~~January~~July 31, 2021. The ~~increase is~~decrease was primarily attributed to ~~additional expenses we incurred~~a decrease in ~~the current fiscal year for our newly acquired funding portal business.~~personnel.

Consulting expense ~~increased~~decreased by ~~$183,333~~$191,020, or 60%, to ~~$309,545, or 145%,~~$125,611 for the three months ended ~~January~~July 31, 2022 from ~~$126,212 reported in~~$316,631 during the three months ended ~~January~~July 31, 2021. The ~~increase~~decrease was primarily attributed to the decrease in stock-based consulting expense ~~is due to issuance of stock-based compensation to two outside consulting firms. Stock-based consulting compensation amount to $162,954 in~~during the ~~three-month period~~three months ended ~~January~~July 31, ~~2022, as compared to $0 in the three-month period ended January 31, 2021.~~2022.

Interest expense ~~decreased~~increased by ~~$9,553~~$1,067 to ~~$20,573~~$36,312 for the ~~three-months~~three months ended ~~January~~July 31, 2022, as compared to ~~$30,126 for~~$35,245 during the three months ended ~~January 31, 2021. The decrease in interest expense is attributable to lower debt amounts due to debt forgiveness.~~
~~Our net income increased by $1,778,364 to $1,821,006, or 4,170% for the three months ended January 31, 2022, as compared to $42,642 for the three months ended January~~July 31, 2021. The increase in ~~net income is~~interest expense was primarily ~~attributable~~attributed to higher debt ~~forgiveness of $1,904,302 during the period related to~~amounts with our ~~loan with the SBA.~~
secured lender and a higher interest rate on our secured debt.

Liquidity and Capital Resources

At ~~January~~July 31, 2022, we had cash and cash equivalents of ~~$477,134~~$2,556,170 and ~~negative~~ working capital of ~~$502,393~~$737,279 as compared to cash and cash equivalents of ~~$2,473,959~~$473,925 and negative working capital of ~~$4,666,833~~$3,113,403 at April 30, ~~2021.~~2022.
Our net income increased by $1,778,364 to $1,821,006, or 4,170% for the three months ended January 31, 2022 as compared to $42,642 for the three months ended January 31, 2021. The increase in net income is primarily attributable to debt forgiveness of $1,904,302 during the period related to our loan with the SBA.
23

We have been successful in raising capital by selling restricted common stock ~~in private placements~~ and by ~~borrowing funds~~completing a public offering of our common stock.
23
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 per share and warrant. The gross proceeds from the ~~U.S. Small Business Administration. In addition, we sold $300,000 worth~~offering were $5,000,750 prior to deducting underwriting discounts, commissions, and other offering expenses. The warrants have a per share exercise price of ~~convertible promissory notes in February 2022. We believe our negative working capital balance as of January 31, 2022 will eliminated by the forgiveness of $1,885,800 in borrowings~~$5.19, are exercisable immediately, and expire five years from the ~~SBA.~~date of issuance. With the use of proceeds, we paid $1 million of debt to our secured lender, to reduce the outstanding principal balance to $400,000.

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

Year over Year Changes
Net cash used in operating activities amounted to ~~$2,303,458~~$1,063,672 and ~~$2,475,484 in~~$887,641 for the ~~nine~~three months ended ~~January~~July 31, 2022 and 2021, respectively. The principal sources of cash from operating activities for the three months ended July 31, 2022 was net income of $64,477, a realized loss on investments of $406,060 and stock-based compensation of $32,953. However, these sources of cash were offset by the receipt of equity securities in lieu of cash of $1,200,000, changes in deferred taxes of $297,000 and a decrease in accounts payable and accrued expenses of $135,388. The principal source of cash from operating activities in the ~~nine~~three months ended ~~January~~July 31, ~~2022~~2021 was net income of ~~$3,004,260~~$1,457,410 and a non-cash item, stock-based compensation of ~~$1,137,042.~~$296,980. However, these sources of cash were offset by an unrealized gain on equity securities of $3,275,745, an increase in accounts receivable of $900,242, debt forgiveness of $1,904,302 and non-cash revenue from the receipt of equity of $1,187,500. The principal source of cash from operating activities in the nine months ended January 31, 2021 was net income of $103,535 and a non-cash item, stock-based compensation of $386,121. However, these items were offset by changes in non-cash revenue from the receipt of equity of $2,319,532 and an increase in accounts receivable of $1,001,586.$3,275,745.

Net cash provided by investing activities amounted to $200,000 in the three months ended July 31, 2022. The cash provided consisted of proceeds from the sale of 606,060 shares of an investment in KingsCrowd Inc. Net cash used in investing activities amounted to ~~$319,166~~$104,501 in the ~~nine~~three months ended ~~January~~July 31, ~~2022.~~2021. The use of cash consisted of loans to affiliates of ~~$202,000~~$100,000 and an investment in an affiliate of ~~$117,166. Cash provided by investing activities in the nine months ended January 31, 2021 amounted to $364,939, from the purchase of Netcapital Funding Portal Inc.~~$4,501.

For the ~~nine~~three months ended ~~January~~July 31, 2022, cash provided from financing activities amounted to ~~$625,799,~~$2,945,917, which included proceeds from the sale of common stock of $3,949,117, a payment of $3,200 for a related party note, and payment of $1,000,000 to a secured lender. For the three months ended July 31, 2021, cash provided by financing activities amounted to $577,399, which consisted of proceeds from stock subscriptions for the sale of common stock. ~~For the nine months ended January 31, 2021, cash provided by financing activities amounted to $2,385,800, which consisted of two loans from the U.S. Small Business Administration.~~

In the ~~nine~~three months ended ~~January~~July 31, 2022 and 2021, there were no expenditures for capital assets. We do not anticipate any capital expenditures in fiscal ~~2022.~~2023.

~~Item~~ITEM 3. ~~Quantitative and Qualitative Disclosures about Market Risk.~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

~~We are~~The Company is not required to provide the information required by this Item as it is a ~~smaller~~“smaller reporting company,” as defined byin Rule 12b-2 of the ~~Securities~~ Exchange ~~Act of 1934, as amended, and are not required to provide information under this item.~~Act.

~~Item~~ITEM 4. ~~Controls and Procedures.~~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~~July 31, 2022. Based on that evaluation, the PEO and the PFO concluded that, as of ~~January~~July 31, 2022, such controls and procedures were effective.

24
(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.
24

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

The Company’s annual report on Form 10-K for the year ended April 30, ~~2021~~2022 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~~July 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
25

PART II – OTHER INFORMATION

~~Item~~ITEM 1. ~~Legal Proceedings.~~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~~ITEM 1A. ~~Risk Factors.~~RISK FACTORS.

WeRisk factors that affect our business and financial results are ~~a smaller reporting company~~discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended April 30, 2022 as ~~defined by Rule 12b-2~~filed with the SEC on August 8, 2022 (“Annual Report”). There have been no material changes in our risk factors from those previously disclosed in our Annual Report. 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 ~~Securities Exchange Act~~risks actually occur, our business, financial condition, and/or results of ~~1934, as amended, and are not required to provide information under this item.~~operations could be negatively affected.

~~Item~~ITEM 2. ~~Unregistered Sales of Equity Securities and Use of Proceeds.~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

~~1. On November 18, 2021, we issued 46,300 shares of unregistered common stock as stock-based compensation, for services rendered to~~See Item 3.02 in the ~~Company. We did not receive any proceeds for this issuance. The issuance was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.~~
2. On December 10, 2021, we issued 50,000 shares of our common stock to purchase all of the outstanding stock of MSG Development Corp. We did not receive any proceeds from this issuance. The issuance was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.
3. On December 10, 2021, we issued 50,000 shares of our common stock to purchase a 10% interest in Caesar Media Group Inc. We did not receive any proceeds from this issuance. The issuance was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.
4. On January 31, 2021, we issued 22,222 shares of common stock to an accredited investor for gross proceeds of $200,000. We used the proceeds for working capital and general corporate purposes. The issuance was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.
5. On January 31, 2021, we issued 9,012 shares of unregistered common stock as stock-based compensation, for services rendered to the Company. We did not receive any proceeds for this issuance. The issuance was exempt under Section 4(a)(2) of the Securities Act of 1933, as amended.
~~6. See our~~ Current Report filed on Form 8-K dated ~~February 9,~~July 12, 2022.
~~Item~~ITEM 3. ~~Defaults Upon Senior Securities.~~DEFAULTS UPON SENIOR SECURITIES.

None.
25

~~Item~~ITEM 4. ~~Mine Safety Disclosures.~~MINE SAFETY DISCLOSURES.

Not applicable.

~~Item~~ITEM 5. ~~Other Information.~~OTHER INFORMATION.

None.

~~Item~~ITEM 6. ~~Exhibits.~~EXHIBITS.
31       ~~Rule 13a-14(a) Certification~~
32       ~~Rule 13a-14(b) Certification~~

Exhibit No. ~~101.INS~~ ~~XBRL Instance~~
~~101.SCH~~
31.1* ~~XBRL Schema~~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
~~101.CAL~~ ~~XBRL Calculation~~
~~101.DEF~~
31.2* ~~XBRL Definition~~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
~~101.LAB~~
32.1** ~~XBRL Label~~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
~~101.PRE~~
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 July 31, 2022 is formatted in Inline XBRL

26

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 18,~~September 12, 2022 NETCAPITAL INC.

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

27


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

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

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

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

Commitments and contingencies		—		—

Stockholders' equity:

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



Assets:	July 31, 2022 (Unaudited)		April 30, 2022 (Audited)
Cash and cash equivalents	$	2,556,170	$	473,925
Related party receivable		668		668
Accounts receivable, net		2,154,700		2,433,900
Prepaid expenses		41,536		5,694
Total current assets		4,753,074		2,914,187

Deposits		6,300		6,300
Notes receivable – related parties		202,000		202,000
Purchased technology, net		15,515,623		15,536,704
Investment in affiliate		240,080		240,080
Equity securities at fair value		13,455,193		12,861,253
Total assets	$	34,172,270	$	31,760,524

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
Trade	$	457,826	$	536,508
Related party		75,204		378,077
Accrued expenses		173,161		229,867
Stock subscription payable		33,400		33,400
Deferred revenue		602		2,532
Interest payable		247,899		222,295
Deferred tax liability, net		680,000		977,000
Related party debt		19,660		22,860
Secured note payable		400,000		1,400,000
Current portion of SBA loans		1,893,719		1,890,727
Loan payable - bank		34,324		34,324
Convertible notes payable		—		300,000
Total current liabilities		4,015,795		6,027,590

Long-term liabilities:
Long-term SBA loans, less current portion		492,081		495,073
Total liabilities		4,507,876		6,522,663

Commitments and contingencies		—		—

Stockholders' equity:
Common stock, $.001 par value; 900,000,000 shares authorized, 4,272,677 and 2,934,344 shares issued and outstanding		4,273		2,934
Shares to be issued		244,250		244,250
Capital in excess of par value		26,840,486		22,479,769
Retained earnings		2,575,385		2,510,908
Total stockholders' equity		29,664,394		25,237,861
Total liabilities and stockholders' equity	$	34,172,270	$	31,760,524


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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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


NETCAPITAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

		Three Months Ended			Three Months Ended
		July 31, 2022			July 31, 2021

Revenues	$	1,340,573		$	625,187
Costs of services		21,063			28,305
Gross profit		1,319,510			596,882

Costs and expenses:
Consulting expense		125,611			316,631
Marketing		7,780			21,826
Rent		17,212			12,130
Payroll and payroll related expenses		769,940			927,333
General and administrative costs		392,297			395,052
Total costs and expenses		1,312,840			1,672,972
Operating income (loss)		6,670			(1,076,090	)

Other income (expense):
Interest expense		(36,312	)		(35,245	)
Gain on debt conversion		224,260			—
Amortization of intangible assets		(21,081	)		—
Realized loss on sale of investment		(406,060	)		—
Unrealized gain on equity securities		—			3,275,745
Total other income (expense)		(239,193	)		3,240,500
Net income (loss) before taxes		(232,523	)		2,164,410
Income tax expense (benefit)		(297,000	)		707,000
Net income	$	64,477		$	1,457,410

Basic earnings per share	$	0.02		$	0.66
Diluted earnings per share	$	0.02		$	0.65

Weighted average number of common shares outstanding:
Basic		3,168,547			2,206,118
Diluted		3,171,397			2,241,675



	January 31, 2022			January 31, 2021			Three Months Ended July 31, 2022			Three Months Ended July 31, 2021
OPERATING ACTIVITIES
Net income	$	3,004,260		$	103,535		$	64,477		$	1,457,410
Adjustment to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Stock-based compensation		1,137,042			386,121			32,953			296,980
Non-cash revenue from the receipt of equity		(1,187,500	)		(2,319,532	)
Receipt of equity in lieu of cash								(1,200,000	)		(50,000	)
Unrealized gain on equity securities		(3,275,745	)		—			—			(3,275,745	)
Debt forgiveness		(1,904,302	)
Provision for bad debts		—			29,000
Gain on debt conversion								(224,260	)		—
Realized loss on investment								406,060			—
Changes in deferred taxes		548,000			42,288			(297,000	)		707,000
Amortization of intangible assets								21,081			—
Changes in non-cash working capital balances:
Accounts receivable		(900,242	)		(1,001,586	)		279,200			24,714
Prepaid expenses		21,983			(3,144	)		(35,842	)		(60,858	)
Accounts payable and accrued expenses		138,797			250,587			(135,388	)		(21,904	)
Accounts payable - related party		—			37,314
Deferred revenue		24,991			(67	)		(1,930	)		(9	)
Accrued interest payable		89,258			—			35,796			34,771
Accounts payable – related party								(8,819	)		—
Net cash used in operating activities		(2,303,458	)		(2,475,484	)		(1,063,672	)		(887,641	)

INVESTING ACTIVITIES
Proceeds from purchase of funding portal		—			364,939
Proceeds from sale of investment								200,000			—
Loans to affiliates		(202,000	)		—			—			(100,000	)
Investment in affiliate		(117,166	)		—			—			(4,501	)
Net cash provided by (used in) investing activities		(319,166	)		364,939			200,000			(104,501	)

FINANCING ACTIVITIES
Proceeds from SBA loans		—			2,385,800
Proceeds from stock subscriptions		625,799			—
Proceeds from (payments to) secured lender								(1,000,000	)		—
Payment of related party note								(3,200	)		—
Proceeds from sale of common stock								3,949,117			577,399
Net cash provided by financing activities		625,799			2,385,800			2,945,917			577,399

Net increase (decrease) in cash		(1,996,825	)		275,255			2,082,245			(414,743	)
Cash and cash equivalents, beginning of the period		2,473,959			11,206			473,925			2,473,959
Cash and cash equivalents, end of the period	$	477,134		$	286,461		$	2,556,170		$	2,059,216

Supplemental disclosure of cash flow information:
Cash paid for taxes	$	—		$	—		$	—		$	—
Cash paid for interest	$	1,592		$	1,595		$	516		$	477

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


Schedule of revenue
	Nine Months Ended Jan. 31, 2022		Nine Months Ended Jan. 31, 2021		Three Months Ended Jan. 31, 2022		Three Months Ended Jan. 31, 2021		Three Months Ended July 31, 2022		Three Months Ended July 31, 2021
Consulting services	$	2,395,395	$	3,416,802	$	1,389,200	$	924,286	$	1,161,830	$	91,687
Fees from online services		1,240,655		354,011		421,841		353,041		178,743		533,500
Total revenues	$	3,636,050	$	3,770,813	$	1,811,041	$	1,277,327	$	1,340,573	$	625,187


Schedule of earnings per share
	Nine Months Ended January 31, 2022		Nine Months Ended January 31, 2021		Three Months Ended January 31, 2022		Three Months Ended January 31, 2021		Three Months Ended July 31, 2022		Three Months Ended July 31, 2021
Net income attributable to common stockholders – basic	$	3,004,260	$	103,535	$	1,821,006	$	42,642	$	64,477	$	1,457,410
Adjustments to net income		—		—		—		—		—		—
Net income attributable to common stockholders – diluted	$	3,004,260	$	103,535	$	1,821,006	$	42,642	$	64,477	$	1,457,410

Weighted average common shares outstanding - basic		2,589,142		948,058		2,842,924		2,012,723		3,168,547		2,206,118
Effect of dilutive securities		39,901		—		39,901		—		2,850		35,557
Weighted average common shares outstanding – diluted		2,629,043		948,058		2,882,825		2,012,723		3,171,397		2,241,675

Earnings per common share - basic	$	1.16	$	0.11	$	0.64	$	0.02	$	0.02	$	0.66
Earnings per common share - diluted	$	1.14	$	0.11	$	0.63	$	0.02	$	0.02	$	0.65

Schedule of debt
	January 31, 2022		April 30, 2021		Interest Rate			July 31, 2022		April 30, 2022		Interest Rate

Secured lender	$	1,000,000	$	1,000,000		8.0	%	$	400,000	$	1,400,000		8.0	%
Notes payable – related parties		22,860		22,860		0.0	%		19,660		22,860		0.0	%
U.S. SBA loan		—		1,885,800		1.0	%
Convertible promissory notes									—		300,000		1.0	%
U.S. SBA loan		500,000		500,000		3.75	%		500,000		500,000		3.75	%
U.S. SBA loan		1,885,800		1,885,800		1.0	%		1,885,800		1,885,800		1.0	%
Loan payable – bank		34,324		34,324		5.5	%		34,324		34,324		5.5	%
Total Debt		3,442,984		5,328,784					2,839,784		4,142,984
Less: current portion of long-term debt		1,008,601		2,942,984					2,347,703		3,647,911
Total long-term debt	$	2,434,383	$	2,385,800				$	492,081	$	495,073


Schedule of income taxes
	January 31, 2022			April 30, 2021			July 31, 2022			April 30, 2022

Deferred tax assets, net:
Net operating loss carryforwards	$	352,000		$	141,000		$	492,000		$	322,000
Bad debt allowance		27,000			17,000			40,000			40,000
Stock-based compensation		336,000			155,000			366,000			357,000
Deferred tax assets		715,000			313,000			898,000			719,000

Deferred tax liability
Unrealized gain		1,696,000			746,000			1,578,000			1,696,000

Net deferred tax liability	$	(981,000	)	$	(433,000	)	$	(680,000	)	$	(977,000	)

Schedule of stock based compensation expense
									Three Months Ended July 31, 2022		Three Months Ended July 31, 2021
Stock-based compensation expense	Nine Months Ended Jan. 31, 2022		Nine Months Ended Jan. 31, 2021		Three Months Ended Jan. 31, 2022		Three Months Ended Jan. 31, 2021
Chief Executive Officer	$	40,608	$	121,824	$	—	$	40,608	$	1,221	$	40,608
Chief Financial Officer		40,608		121,824		—		40,608		2,443		40,608
Chief Marketing Officer		109,547		3,492		89,436		5,201		—		11,715
Related party consultant		25,908		58,135		—		19,378		—		19,378
VP of Digital Strategy		5,603		22,711		1,586		1,039		—		2,340
Marketing consultant		111,156		—		37,052		—		—		37,052
Marketing consultant		377,704		—		125,901		—		—		125,901
Member of board of directors		100,000		—		100,000		—
Director of Business Development		300,000		—		300,000		—
Business consultant		25,908		58,135		—		19,378		—		19,378
Employee and consultant options										29,289		—
Total stock-based compensation expense	$	1,137,042	$	386,121	$	653,975	$	126,212	$	32,953	$	296,980

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 quarter ended July 31, 2022		—		—	$	—

Exercised/canceled during quarter ended July 31, 2022		—		—	$	—

Options outstanding July 31, 2022		271,000		$10.50	$	10.50

Options exercisable, July 31, 2022		39,521		$10.50	$	10.50


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

Schedule of intangible assets
	July 31, 2022		April 30, 2022

Acquired users	$	14,288,695	$	14,288,695
Acquired brand		583,429		583,429
Professional practice		556,830		556,830
Literary works and contracts		107,750		107,750
Total intangible assets	$	15,536,704	$	15,536,704


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

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


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


Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash	$	358,634
Current assets		8,894
Accounts payable		(29,023	)
Platform users		7,080,319
Platform investors		6,288,392
Platform issuers		903,125
Unpatented technology		532,118
Total identifiable net assets	$	15,148,764

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

Schedule of investments
	July 31, 2022		April 30, 2022

Netcapital Systems LLC	$	48,128	$	48,128
Watch Party LLC		235,400		235,400
Zelgor Inc.		1,400,000		1,400,000
ChipBrain LLC		1,704,480		1,704,480
Vymedic Inc.		20,000		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.		900,000		900,000
Cust Corp.		1,200,000		1,200,000
Reper LLC		1,200,000		—
Kingscrowd Inc.		3,209,685		3,815,745
Total	$	13,455,193	$	12,861,253

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

	~~101.SCH~~
31.1*	~~XBRL Schema~~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

	~~101.DEF~~
31.2*	~~XBRL Definition~~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

	~~101.LAB~~
32.1**	~~XBRL Label~~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

	~~101.PRE~~
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 July 31, 2022 is formatted in Inline XBRL


Date: ~~March 18,~~September 12, 2022	NETCAPITAL INC.

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