Cover
Cover - shares | 6 Months Ended | |
Oct. 31, 2021 | Dec. 14, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Oct. 31, 2021 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --04-30 | |
Entity File Number | 000-55036 | |
Entity Registrant Name | NETCAPITAL INC. | |
Entity Central Index Key | 0001414767 | |
Entity Tax Identification Number | 87-0409951 | |
Entity Incorporation, State or Country Code | UT | |
Entity Address, Address Line One | 1 Lincoln Street | |
Entity Address, City or Town | Boston | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02111 | |
City Area Code | (781) | |
Local Phone Number | 925-1700 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 2,865,610 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Oct. 31, 2021 | Apr. 30, 2021 |
Assets: | ||
Cash and cash equivalents | $ 940,966 | $ 2,473,959 |
Accounts receivable net | 2,149,674 | 1,356,932 |
Receivable from bank | 212,252 | |
Prepaid expenses | 177,940 | 653,861 |
Total current assets | 3,480,832 | 4,484,752 |
Deposits | 6,300 | 6,300 |
Notes receivable - related parties | 130,000 | |
Purchased technology | 14,803,954 | 14,803,954 |
Investment in affiliate | 240,080 | 122,914 |
Equity securities at fair value | 9,623,753 | 6,298,008 |
Total assets | 28,284,919 | 25,715,928 |
Current liabilities: | ||
Trade | 357,623 | 308,506 |
Related party | 320,224 | 3,843,686 |
Accrued expenses | 316,285 | 306,308 |
Stock subscription payable | 219,900 | 1,199,996 |
Deferred revenue | 670 | 622 |
Interest payable | 185,650 | 116,483 |
Deferred tax liability, net | 1,054,000 | 433,000 |
Related party debt | 22,860 | 22,860 |
Secured note payable | 1,000,000 | 1,000,000 |
Current portion of SBA loans | 2,518,965 | 1,885,800 |
Loan payable - bank | 34,324 | 34,324 |
Demand notes payable | ||
Total current liabilities | 6,030,501 | 9,151,585 |
Long-term liabilities: | ||
Long-term SBA loans, less current portion | 1,752,635 | 2,385,800 |
Total Liabilities | 7,783,136 | 11,537,385 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $.001 par value; 900,000,000 shares authorized, 2,719,310 and 2,178,766 shares issued and outstanding | 2,719 | 2,178 |
Capital in excess of par value | 20,308,432 | 15,168,987 |
Retained earnings (deficit) | 190,632 | (992,622) |
Total stockholders’ equity | 20,501,783 | 14,178,543 |
Total liabilities and stockholders’ equity | $ 28,284,919 | $ 25,715,928 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Oct. 31, 2021 | Apr. 30, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 900,000,000 | 900,000,000 |
Common Stock, Issued | 2,719,310 | 2,178,766 |
Common Stock, Outstanding | 2,719,310 | 2,178,766 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | |
Income Statement [Abstract] | ||||
Revenues | $ 1,199,822 | $ 731,164 | $ 1,825,009 | $ 2,493,486 |
Costs of services | 17,775 | 283,205 | 46,080 | 714,224 |
Gross profit | 1,182,047 | 447,959 | 1,778,929 | 1,779,262 |
Costs and expenses: | ||||
Consulting expense | 183,030 | 3,094 | 365,635 | 5,085 |
Marketing | 22,000 | 4,681 | 43,826 | 8,782 |
Rent | 10,481 | 12,719 | 22,611 | 26,798 |
Payroll and payroll related expenses | 730,296 | 338,744 | 1,791,655 | 1,556,242 |
General and administrative costs | 561,370 | 34,361 | 956,422 | 75,500 |
Total costs and expenses | 1,507,177 | 393,599 | 3,180,149 | 1,672,407 |
Operating income (loss) | (325,130) | 54,360 | (1,401,220) | 106,855 |
Other income (expense): | ||||
Interest expense | (35,026) | (13,281) | (70,271) | (23,564) |
Unrealized gain on equity securities | 3,275,745 | |||
Total other income (expense) | (35,026) | (13,281) | 3,205,474 | (23,564) |
Net income before taxes | (360,156) | 41,079 | 1,804,254 | 83,291 |
Income tax provision (benefit) | (86,000) | 11,057 | 621,000 | 22,398 |
Net income | $ (274,156) | $ 30,022 | $ 1,183,254 | $ 60,893 |
Basic earnings per share | $ (0.10) | $ 0.07 | $ 0.48 | $ 0.15 |
Diluted earnings per share | $ (0.10) | $ 0.07 | $ 0.47 | $ 0.15 |
Weighted average number of common shares outstanding: | ||||
Basic | 2,718,383 | 415,815 | 2,462,251 | 415,726 |
Diluted | 2,718,383 | 415,815 | 2,497,808 | 415,726 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Apr. 30, 2019 | $ 378 | $ 2,201,497 | $ (3,067,133) | $ (865,258) |
Beginning balance (in shares) at Apr. 30, 2019 | 377,685 | |||
Q2 stock-based compensation | $ 1 | 19,687 | 19,688 | |
Stock-based compensation, shares | 1,406 | |||
Net loss, October 31, 2021 | 24,475 | 24,475 | ||
Ending balance, value at Jul. 31, 2019 | $ 379 | 2,221,184 | (3,042,658) | (821,095) |
Ending balance (in shares) at Jul. 31, 2019 | 379,091 | |||
Q2 stock-based compensation | $ 38 | 917,305 | 917,343 | |
Stock-based compensation, shares | 37,656 | |||
Net loss, October 31, 2021 | 542,451 | 542,451 | ||
Ending balance, value at Oct. 31, 2019 | $ 417 | 3,138,489 | (2,500,207) | 638,699 |
Ending balance (in shares) at Oct. 31, 2019 | 416,747 | |||
Q2 stock-based compensation | 1,500 | 1,500 | ||
Stock-based compensation, shares | 156 | |||
Net loss, October 31, 2021 | 595,174 | 595,174 | ||
Ending balance, value at Jan. 31, 2020 | $ 417 | 3,139,989 | (1,905,033) | 1,235,373 |
Ending balance (in shares) at Jan. 31, 2020 | 416,903 | |||
Q2 stock-based compensation | 1,032 | 1,032 | ||
Stock-based compensation, shares | 156 | |||
Net loss, October 31, 2021 | (557,249) | (557,249) | ||
Ending balance, value at Apr. 30, 2020 | $ 417 | 3,141,021 | (2,462,282) | 679,156 |
Ending balance (in shares) at Apr. 30, 2020 | 417,059 | |||
Q2 stock-based compensation | 1,406 | 1,406 | ||
Stock-based compensation, shares | 156 | |||
Net loss, October 31, 2021 | 30,871 | 30,871 | ||
Ending balance, value at Jul. 31, 2020 | $ 417 | 3,142,427 | (2,431,411) | 711,433 |
Ending balance (in shares) at Jul. 31, 2020 | 417,215 | |||
Q2 stock-based compensation | $ 2 | 18,555 | 18,557 | |
Stock-based compensation, shares | 2,240 | |||
Net loss, October 31, 2021 | 30,022 | 30,022 | ||
Ending balance, value at Oct. 31, 2020 | $ 419 | 3,160,982 | (2,401,389) | 760,012 |
Ending balance (in shares) at Oct. 31, 2020 | 419,455 | |||
Shares issued to acquire funding portal | $ 1,666 | 11,329,582 | 11,331,248 | |
Shares issued to acquire funding portal, shares | 1,666,360 | |||
Return of shares of common stock | $ (5) | 5 | ||
Return of shares of common stock, shares | (5,000) | |||
Q2 stock-based compensation | $ 1 | 6,239 | 6,240 | |
Stock-based compensation, shares | 937 | |||
Net loss, October 31, 2021 | 42,642 | 42,642 | ||
Ending balance, value at Jan. 31, 2021 | $ 2,081 | 14,496,808 | (2,358,747) | 12,140,142 |
Ending balance (in shares) at Jan. 31, 2021 | 2,081,752 | |||
Q2 stock-based compensation | $ 96 | 657,180 | 657,276 | |
Stock-based compensation, shares | 95,937 | |||
Shares issued for debt settlement | $ 1 | 14,999 | 15,000 | |
Shares issued for debt settlement, shares | 1,077 | |||
Net loss, October 31, 2021 | 1,366,125 | 1,366,125 | ||
Ending balance, value at Apr. 30, 2021 | $ 2,178 | 15,168,987 | (992,622) | 14,178,543 |
Ending balance (in shares) at Apr. 30, 2021 | 2,178,766 | |||
Shares issued to acquire funding portal | $ 362 | 3,523,100 | 3,523,462 | |
Shares issued to acquire funding portal, shares | 361,736 | |||
Q2 stock-based compensation | $ 2 | 14,054 | 14,056 | |
Stock-based compensation, shares | 937 | |||
Sale of common stock | $ 176 | 1,592,219 | 1,592,395 | |
Sale of common stock, shares | 176,934 | |||
Net loss, October 31, 2021 | 1,457,410 | 1,457,410 | ||
Ending balance, value at Jul. 31, 2021 | $ 2,718 | 20,298,360 | 464,788 | 20,765,866 |
Ending balance (in shares) at Jul. 31, 2021 | 2,718,373 | |||
Q2 stock-based compensation | $ 1 | 10,072 | 10,073 | |
Stock-based compensation, shares | 937 | |||
Net loss, October 31, 2021 | (274,156) | (274,156) | ||
Ending balance, value at Oct. 31, 2021 | $ 2,719 | $ 20,308,432 | $ 190,632 | $ 20,501,783 |
Ending balance (in shares) at Oct. 31, 2021 | 2,719,310 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
OPERATING ACTIVITIES | ||
Net income | $ 1,183,254 | $ 60,893 |
Adjustment to reconcile net income to net cash used in operating activities: | ||
Stock-based compensation | 483,067 | 259,909 |
Non-cash revenue from the receipt of equity | (50,000) | (2,314,532) |
Unrealized gain on equity securities | (3,275,745) | |
Changes in deferred taxes | 621,000 | 22,398 |
Changes in non-cash working capital balances: | ||
Accounts receivable | (792,742) | (40,671) |
Receivable from bank | (212,252) | |
Prepaid expenses | 16,983 | (5,166) |
Accounts payable and accrued expenses | 59,094 | 30,515 |
Deferred revenue | 48 | 4,851 |
Accrued interest payable | 69,167 | 40,791 |
Net cash used in operating activities | (1,898,126) | (1,941,012) |
INVESTING ACTIVITIES | ||
Loans to affiliates | (130,000) | |
Investment in affiliate | (117,166) | |
Net cash used in investing activities | (247,166) | |
FINANCING ACTIVITIES | ||
Proceeds from SBA loans | 2,385,800 | |
Proceeds from stock subscriptions | 612,299 | |
Net cash provided by financing activities | 612,299 | 2,385,800 |
Net increase (decrease) in cash | (1,532,993) | 444,788 |
Cash and cash equivalents, beginning of the period | 2,473,959 | 11,206 |
Cash and cash equivalents, end of the period | 940,966 | 455,994 |
Supplemental disclosure of cash flow information: | ||
Cash paid for taxes | ||
Cash paid for interest | 1,110 | 1,113 |
Supplemental Non-Cash Financing Information: | ||
Common stock issued to reduce related party payable | $ 3,523,462 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Oct. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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 six- and three-month periods ended October 31, 2021, are not necessarily indicative of the results that may be expected for the fiscal year ended April 30, 2022. For further information, refer to the audited financial statements and footnotes thereto in our Annual Report on Form 10-K for the year ended April 30, 2021. In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses In December 2019, the FASB issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes 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. |
Concentrations
Concentrations | 6 Months Ended |
Oct. 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Note 2 – Concentrations For the six- and three-month periods ended October 31, 2021, the Company had one customer that constituted 28 42 22 33 56 48 26 27 |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Oct. 31, 2021 | |
Revenue Recognition | |
Revenue Recognition | Note 3 – Revenue Recognition Revenue Recognition under ASC 606 The Company recognizes service revenue from its consulting contracts and its game website using the five-step model as prescribed by ASC 606: ● Identification of the contract, or contracts, with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when or as, the Company satisfies a performance obligation. The Company identifies performance obligations in contracts with customers, which primarily are professional services, listing fees on our funding portal, and a success fee of 4.9% of the money raised on the funding portal. The transaction price is determined based on the amount the Company expects to be entitled to receive in exchange for transferring the promised services to the customer. The transaction price in the contract is allocated to each distinct performance obligation in an amount that represents the relative amount of consideration expected to be received in exchange for satisfying each performance obligation. Revenue is recognized when performance obligations are satisfied. The Company usually bills its customers before it provides any services and begins performing services after the first payment is received. Contracts are typically one year or less. For larger contracts, in addition to the initial payment, the Company may allow for progress payments throughout the term of the contract. 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. 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 six- and three-month periods ended October 31, 2021, which amounted to $ 1,825,009 1,199,822 2,493,486 731,164 670 622 |
Earnings Per Common Share
Earnings Per Common Share | 6 Months Ended |
Oct. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Note 4 – Earnings Per Common Share Net income (loss) per common and diluted share share were calculated as follows for the six- and three-month periods ended October 31, 2021 and 2020: Schedule of earnings per share Six Months Six Months Three Months Three Months Net income (loss) attributable to common stockholders – basic $ 1,183,254 $ 60,893 $ (274,156 ) $ 30,022 Adjustments to net loss — — — — Net income (loss) attributable to common stockholders – diluted $ 1,183,254 $ 60,893 $ (274,156 ) $ 30,022 Weighted average common shares outstanding - basic 2,462,251 415,726 2,718,383 415,815 Effect of dilutive securities 35,557 — — — Weighted average common shares outstanding – diluted 2,497,808 415,726 2,718,383 415,815 Earnings (loss) per common share - basic $ 0.48 $ 0.15 $ (0.10 ) $ 0.07 Earnings (loss) per common share - diluted $ 0.47 $ 0.15 $ (0.10 ) $ 0.07 35,557 shares that are issuable to satisfy a supplemental consideration liability were included for the calculation of earnings per share for the six months ended October 31, 2021 because their effect is dilutive. 35,557 shares that are issuable to satisfy a supplemental consideration liability were excluded for the calculation of loss per share for the three months ended October 31, 2021 because their effect is antidilutive. No dilutive securities existed for the six- and three-month periods ended October 31, 2020. |
Principal Financing Arrangement
Principal Financing Arrangements | 6 Months Ended |
Oct. 31, 2021 | |
Principal Financing Arrangements | |
Principal Financing Arrangements | Note 5 – Principal Financing Arrangements The following table summarizes components debt as of October 31, 2021 and April 30, 2021: Schedule of debt October 31, April 30, 2021 Interest Rate Secured lender $ 1,000,000 $ 1,000,000 8.0 % Notes payable – related parties 22,860 22,860 0.0 % U.S. SBA loan 1,885,800 1,885,800 1.0 % U.S. SBA loan 500,000 500,000 3.75 % U.S. SBA loan 1,885,800 1,885,800 1.0 % Loan payable – bank 34,324 34,324 5.5 % Total Debt 5,328,784 5,328,784 Less: current portion of long-term debt 3,576,149 2,942,984 Total long-term debt $ 1,752,635 $ 2,385,800 As of October 31, 2021 and April 30, 2021, the Company owed its principal lender (“Lender”) $1,000,000 under a loan and security agreement (“Loan”) dated April 28, 2011, that was amended on July 26, 2014 and again on October 31, 2017, October 31, 2020, January 31, 2021 and April 30, 2021. The Lender was the largest shareholder of the Company owning 32.6% of the shares issued and outstanding until the Company purchased Netcapital Funding Portal Inc. on November 5, 2020. With the purchase of Netcapital Funding Portal Inc., the Lender owns less than 10% of the Company and is no longer considered a related party. The Loan was amended on October 31, 2020 to change the maturity date to January 31, 2021, and increase the interest rate from 1.25% to 8% per annum. The Loan has been further amended to change the maturity date to April 30, 2022. In connection with the financing, the Company has agreed to certain restrictive covenants, including, among others, that the Company may not convey, sell, lease, transfer or otherwise dispose of any part of its business or property, except as permitted in the agreement, dissolve, liquidate or merge with any other party unless, in the case of a merger, the Company is the surviving entity, incur any indebtedness except as defined in the agreement, create or allow a lien on any of its assets or collateral that has been pledged to the Lender, make any loans to any person, except for prepaid items or deposits incurred in the ordinary course of business, or make any material capital expenditures. To secure the payment of all obligations to the Lender, the Company granted to the Lender a continuing security interest and first lien on all of the assets of the Company. As of October 31, 2021 and April 30, 2021, the Company’s related-party unsecured notes payable totaled $22,860. The Company also owes $34,324 as of October 31, 2021 and April 30, 2021 to Chase Bank. The Company pays interest expense to Chase Bank, which is calculated at a rate of 5.5% per annum. On May 6, 2020, the Company borrowed $1,885,800 (the “May Loan”), on June 17, 2020 the Company borrowed $500,000 (the “June Loan”), and on February 2, 2021, the Company borrowed $1,885,800 (the “February Loan”) from an a U.S. Small Business Administration (“SBA”) loan program. The May loan bears interest at a rate of 1% per annum and the SBA postponed any installment payments until September 6, 2021. In September and October of 2021, the SBA debited the Company’s bank account for a total of $212,252 even though the Company had applied for forgiveness of the May Loan. In November 2021 the May Loan was forgiven in its entirety, including accrued interest, and the payments of $212,252, which are reflected on the balance sheet as a receivable from the bank, were returned to the Company. The June Loan required installment payments of $2,594 monthly, beginning on June 17, 2021, over a term of thirty years. However, the SBA has postponed the first installment payment for 12 months. Interest accrues at a rate of 3.75% per annum. The Company agreed to grant a continuing security interest in its assets to secure payment and performance of all debts, liabilities, and obligations to the SBA. The June Loan was personally guaranteed by the Company’s Chief Financial Officer. The February loan bears interest at a rate of 1% per annum and the due date of the first payment is May 22, 2022. The Company has applied for forgiveness of the February Loan and believes it will be forgiven in its entirety. |
Income Taxes
Income Taxes | 6 Months Ended |
Oct. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 6 – Income Taxes As of October 31, 2021 and April 30, 2021, the Company had net operating loss carryforwards for Federal income tax purposes of approximately $ 2,010,000 890,000 For the six- and three-month periods ended October 31, 2021, the Company recorded income tax expense of $621,000 and a tax benefit of $86,000, respectively. For the six- and three- month periods ended October 31, 2020, the Company recorded income tax expense of $22,398 and $11,057, respectively. As of October 31, 2021 and April 30, 2021, the Company had net deferred tax assets calculated at an expected federal rate of 21%, and a state rate of 8%, when applicable, or approximately $642,000 and $313,000, respectively. As a result of unrealized book gains on equity securities, the Company also has a deferred tax liability of $1,696,000 and $746,000 as of October 31, 2021 and April 30, 2021, respectively. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of October 31, 2021 and April 30, 2021 were as follows: Schedule of income taxes October 31, 2021 April 30, 2021 Deferred tax assets, net: Net operating loss carryforwards $ 422,000 $ 141,000 Bad debt allowance 27,000 17,000 Stock-based compensation 193,000 155,000 Deferred tax assets 642,000 313,000 Deferred tax liability Unrealized gain 1,696,000 746,000 Net deferred tax liability $ (1,054,000 ) $ (433,000 ) |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Oct. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 7 – Related Party Transactions The Company’s majority shareholder, Netcapital Systems LLC, owns 1,671,360 shares of common stock, or 61.5% of the Company as of October 31, 2021. The Company has a demand note payable to Netcapital Systems LLC of $4,660 and a demand note payable to one of its managers of $3,200. In addition, as of April 30, 2021, the Company accrued a payable of $3,817,516 for supplemental consideration owed in conjunction with its purchase of Netcapital Funding Portal Inc., which was reduced to $294,054 as of October 31, 2021, because of the issuance to 361,736 shares of common stock, valued at $3,523,462. In total, the Company owed its largest shareholder $298,714 and $3,822,116 as of October 31, 2021 and April 30, 2021, respectively. The company paid its majority shareholder $157,429 and $107,429 in the six- and three-month periods ended October 31, 2021, respectively, for use of the software that runs the website www.netcapital.com. Compensation to officers in the six- and three-month periods ended October 31, 2021 consisted of common stock valued at $101,327 and $8,396, respectively, and cash salary of $144,000 and $72,000, respectively. Compensation to officers in the six- and three-month periods ended October 31, 2020 consisted of common stock valued at $164,885 and $82,263 respectively, and cash wages of $138,462 and $72,000, respectively. Compensation to a related party consultant in the six- and three-month periods ended October 31, 2021 consisted of common stock valued at $25,908 and $6,530 respectively, and cash wages of $30,000 and $15,000, respectively. Compensation to a related party consultant in the six- and three-month periods ended October 31, 2020 consisted of common stock valued at $38,757 and $19,379 respectively, and cash wages of $46,154 and $24,000, respectively. This consultant is also the controlling shareholder of Zelgor Inc. and $1,400,000 and $350,000 of the Company’s revenues in the six- and three-month periods ended October 31, 2020 were from Zelgor Inc. Compensation to managers of Netcapital Systems LLC in the six and three-month periods ended October 31, 2021 consisted of common stock valued at $19,378 and $0, respectively, and cash wages of $72,000 and $24,000, respectively. Compensation to managers of Netcapital Systems LLC in the six and three-month periods ended October 31, 2020 consisted of common stock valued at $38,757 and $19,379, respectively, and cash wages of $93,308 and $48,000, respectively. The Company owes a director $16,680 as of October 31, 2021 and April 30, 2021, which is recorded as accounts payable, plus $15,000 in a non-interest-bearing note payable. |
Stockholders_ Equity
Stockholders’ Equity | 6 Months Ended |
Oct. 31, 2021 | |
Equity [Abstract] | |
Stockholders’ Equity | Note 8 – Stockholders’ Equity The Company is authorized to issue 900,000,000 shares of its common stock, par value $0.001. 2,719,310 and 2,178,766 shares were outstanding as of October 31, 2021 and April 30, 2021, respectively. In August 2020, the board of directors authorized a reverse split of the common stock on a 1-for-2,000 basis, whereby the Company issued to each of its stockholders one share of Common Stock for every 2,000 shares of common stock held by such stockholder. The reverse split was effective on November 5, 2020. The financial statements for the six- and three-month periods ended October 31, 2020 have been adjusted to give effect to the reverse split. On July 26, 2021, the Company issued 361,736 shares of its common stock as payment of $3,523,462 of supplemental consideration that was owed to its affiliate, Netcapital Systems LLC. The 361,736 shares of common stock include an aggregate of 35,609 shares of common stock, that paid off liabilities totaling $346,821, that were made to our Chief Executive Officer, a company controlled by a member of the board of managers of Netcapital Systems LLC and to an individual manager. On July 27, 2021, the Company completed an offering for gross proceeds of $1,592,395 in conjunction with the sale of restricted shares of common stock at a price of $9.00 per share. A total of 176,934 shares of common stock were issued. Effective October 31, 2021 and July 31, 2021, the Company issued an aggregate of 937 shares of restricted stock to two employees. The shares were valued at $10,073 and $14,056, respectively. |
Fair Value
Fair Value | 6 Months Ended |
Oct. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value | 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. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 6 Months Ended |
Oct. 31, 2021 | |
Stock-based Compensation Plans | |
Stock-Based Compensation Plans | Note 10 – Stock-Based Compensation Plans The Company entered consulting agreements to issue common stock and recorded the applicable non-cash expense in accordance with the authoritative guidance of the Financial Accounting Standards Board. For the six- and three-month periods ended October 31, 2021, the Company recorded $483,067 and $186,087, respectively, in stock-based compensation expense and for the six- and three-month periods ended October 31, 2020, the Company recorded $259,909 and $138,531, respectively, in stock-based compensation expense. As of October 31, 2021 and April 30, 2021, there was $172,939 and $631,878, respectively of prepaid stock-based compensation expense for services. As of October 31, 2021, two consulting agreements are effective, which expire in February 2022. As of October 31, 2021, an aggregate of 7,607 shares of common stock can be earned by the Company’s employees from unvested stock grants. 157 shares vest quarterly over the next two quarters and 781 shares vest quarterly over the next 9.3 quarters. The table below presents the components of stock-based compensation expense for the six- and three-month periods ended October 31, 2021 and 2020. The components of the stock-based compensation expense are presented in the following table: Schedule of stock based compensation expense Stock-based compensation expense Six Months Six Months Three Months Three Months Chief Executive Officer $ 40,608 $ 81,216 $ — $ 40,608 Chief Financial Officer 40,608 81,216 — 40,608 Chief Marketing Officer 20,111 2,453 8,396 1,047 Related party consultant 25,908 38,757 6,530 19,379 VP of Digital Strategy 4,017 17,510 1,677 17,510 Marketing consultant 74,104 — 37,052 — Marketing consultant 251,803 — 125,902 — Business consultant 25,908 38,757 6,530 19,379 Total stock-based compensation expense $ 483,067 $ 259,909 $ 186,087 $ 138,531 The table below presents the prepaid compensation expense as of October 31, 2021 and April 30, 2021: Schedule of prepaid compensation Description Oct. 31, 2021 April 30, 2021 Chief Executive Officer $ — $ 40,608 Chief Financial Officer — 40,608 Related party consultant — 25,908 Business consultant — 25,908 Marketing consultant 128,638 380,441 Marketing consultant 44,301 118,405 Total $ 172,939 $ 631,878 For the six- and three-month periods ended October 31, 2021, $325,907 and 162,954 of stock-based compensation was recorded as consulting expense, respectively, and $157,160 and 23,133 was recorded as payroll and payroll related expenses. For the six- and three-month periods ended October 31, 2020, all of the stock-based compensation was recorded as a component of payroll and payroll related expenses. |
Deposits and Commitments
Deposits and Commitments | 6 Months Ended |
Oct. 31, 2021 | |
Deposits And Commitments | |
Deposits and Commitments | Note 11 – Deposits and Commitments The Company utilizes office space in Boston, Massachusetts, under a month-to-month lease agreement that allows to company to end its lease by providing 30-day written notice. The lease agreement includes a deposit of $6,300. |
Business Acquisition
Business Acquisition | 6 Months Ended |
Oct. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Acquisition | Note 12 – Business Acquisition 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 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 is 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 is 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: $ 11,331,248 Payment of promissory notes and interest 3,817,516 Total consideration $ 15,148,764 Recognized amounts of identifiable assets acquired and liabilities assumed: Cash $ 358,634 Current assets 8,894 Accounts payable (22,718 ) Platform users 7,080,319 Platform investors 6,288,392 Platform issuers 903,125 Unpatented technology 532,118 Total identifiable net assets $ 15,148,764 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. |
Investments
Investments | 6 Months Ended |
Oct. 31, 2021 | |
Investments | |
Investments | Note 13 – Investments In May 2020, the Company entered a consulting contract with Watch Party LLC (“WP”), which allowed the Company to receive up to 110,000 membership interest units of WP in return for consulting services. The Company earned 97,500 membership interest units in the quarter ended July 31, 2020. The WP units are valued at $2.14 per unit based on a sales price of $2.14 per unit on an online funding portal, resulting in revenues of $235,400 and $208,650 for the six- and three-month periods ended October 31, 2020. As of October 31, 2021 and April 30, 2021, the Company owns 110,000 WP units, which are valued at $235,400. In May 2020, the Company entered a consulting contract with ChipBrain LLC (“Chip”), which allowed the Company to receive up to 710,200 membership interest units of Chip in return for consulting services. The Company earned 500,000 membership interest units in the quarter ended July 31, 2020 and earned the remaining units in the quarter ending October 31, 2020. The Chip units were initially valued at $0.93 per unit based on a sales price of $0.93 per unit on an online funding portal, resulting in revenues of $465,000 and $0 for the six and three-month periods ended October 31, 2020. Subsequently, ChipBrain sold identical units for $2.40 per unit, and as of October 31, 2021 and April 30, 2021, the units owned by the Company are valued at $1,704,480. In May 2020, the Company entered a consulting contract with Zelgor Inc. (“Zelgor”), which allowed the Company to receive up to 1,400,000 shares of common stock of Zelgor in return for consulting services. The Company earned 1,050,000 shares in the quarter ended July 31, 2020 and earned the remaining shares in the quarter ending October 31, 2020. The Zelgor shares are valued at $1.00 per share based on a sales price of $1.00 per share on an online funding portal, resulting in revenues of $1,400,000 and $350,000 for the six- and three-month periods ended October 31, 2020. The $1.00 per share valuation continues to be the observable price at which the shares trade and the Zelgor shares are valued at $1,400,000 as of October 31, 2021 and April 30, 2021. On January 2, 2020, the Company entered a consulting contract with Deuce Drone LLC (“Drone”), which allowed the Company to receive up to 2,350,000 membership interest units of Drone in return for consulting services. The Company earned all 2,350,000 membership interest units in fiscal 2020. The Drone units were initially valued at $0.35 per unit based on a sales price of $0.35 per unit when the units were earned, or $822,500. Drone subsequently sold identical Drone units for $1.00 per unit on an online funding portal and as of October 31, 2021 and April 30, 2021, the units owned by the Company are valued at $2,350,000. In August 2019, the Company entered a consulting contract with KingsCrowd LLC (“KingsCrowd”), which allowed the Company to receive 300,000 membership interest units of KingsCrowd in return for consulting services. The KingsCrowd units were initially valued at $1.80 per unit based on a sales price of $1.80 per unit when the units were earned, or $540,000. In December 2020, KingsCrowd converted from a limited liability company to a corporation to facilitate raising capital under Regulation A. KingsCrowd filed a Form 1-A Offering Statement under the Securities Act of 1933. In connection with the conversion to a corporation, each membership interest unit converted into 12.71915 shares of common stock. As of October 31, 2021 and April 30, 2021, the Company owns 3,815,745 shares of KingsCrowd Inc. In July 2021, KingsCrowd subsequently sold identical shares of common stock for $1.00 per share, and as of October 31, 2021 and April 30, 2021, the units owned by the Company are valued at $3,815,745 and $540,000, respectively. During fiscal 2019, the Company entered a consulting contract with NetCapital Systems LLC (“NetCapital”), which allowed the Company to receive up to 1,000 membership interest units of NetCapital in return for consulting services. The Company earned 40 units in the quarter ended July 31, 2020, at a value of $91.15 per unit, or $3,646. The Company earned all 1,000 Netcapital units but sold a portion of the units in fiscal 2020 at a sales price of $91.15 per unit. As of October 31, 2021 and April 30, 2021, the Company owns 528 Netcapital units, at a value of $48,128. In July 2020 the Company entered a consulting agreement with Vymedic, Inc. for a $40,000 fee over a 5-month period. Half the fee is payable in stock and half is payable in cash. As of April 30, 2021, the Company earned $20,000 worth of stock. As of October 31, 2021 and April 30, 2021, the Company owns 4,000 units, at a value of $20,000. In August 2020 the Company entered a consulting agreement with C-Reveal Therapeutics LLC (“CRT”). for a $120,000 fee over a 12-month period. $50,000 of the fee is payable in CRT units. The Company earned the units in fiscal 2021 and received them in the first quarter of fiscal 2022. As of October 31, 2021 the Company owns 5,000 units, at a value of $50,000. The following table summarizes the components of investments as of October 31, 2021 and April 30, 2021: Schedule of investments Oct. 31, 2021 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 50,000 — Deuce Drone LLC 2,350,000 2,350,000 Kingscrowd Inc. 3,815,745 540,000 Total Investments at cost $ 9,623,753 $ 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 six months ended October 31, 2021, 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 six months ended October 31, 2021, which was recorded in the income statement as an unrealized gain on equity securities. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Oct. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 14 – Subsequent Events On November 2, 2021, the owners of ValuCorp Inc. (“ValuCorp”), a business valuation firm, formed a new company MSG Development Corp. (“MSG”) and transferred most of the assets of ValuCorp to MSG. The Company entered into an exchange agreement (“Agreement”) whereby the Company received 100% of the outstanding shares of MSG in exchange for 75,000 shares of common stock of the Company. 50,000 shares of the Company’s common stock were issued in December 2021 and four annual installments of 6,250 shares are due over the next four years. MSG’s assets were less than 20% of the value of the Company’s assets and the Company’s investment in MSG is less than 20% of the Company’s market value. Furthermore, the revenue and operating income of MSG’s predecessor, ValuCorp, for the prior two years, is less than 20% of the revenue and operating income of the Company. Upon evaluation of the components of the business combination, including the relative voting rights in the combined entity, the composition of the governing body and senior management of the combined entity, the relative size of each entity and the terms of the exchange of equity interests, the Company recorded the transaction in the third quarter of fiscal 2022 as a purchase. The following table summarizes the value of the consideration for MSG and the amounts of the assets acquired in conjunction with the Agreement. MSG had no liabilities. Schedule of assets acquired Total consideration: 75,000 shares of common stock of the Company $ 750,000 Recognized amounts of identifiable assets acquired: Professional practice goodwill $ 570,000 Technology-related intangibles 37,500 Marketing-related intangibles 15,000 Computer-related intangibles 50,250 Customer-related intangibles 17,250 Contract-related intangibles 30,000 Human capital and artistic-related intangibles 30,000 Total identifiable net assets $ 750,000 The fair value of the common shares issued as the consideration for MSG was determined by the most recent (the prior day’s) closing price of the Company’s common shares at the time the shares were issued. In November 2021, the Company received notice that an SBA loan (see Note 5 the “May Loan”) was forgiven in its entirety. In November 2021, the Company issued 46,300 shares of its common stock as stock-based compensation. In December 2021, the company issued 50,000 shares of its common stock in conjunction with the purchase of a ten percent interest in Caesar Media Group, Inc., a marketing and technology solutions provider. The Company evaluated subsequent events through the date these financial statements were available to be issued. There were no material subsequent events that required recognition or additional disclosure in these financial statements. |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 6 Months Ended |
Oct. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share | Schedule of earnings per share Six Months Six Months Three Months Three Months Net income (loss) attributable to common stockholders – basic $ 1,183,254 $ 60,893 $ (274,156 ) $ 30,022 Adjustments to net loss — — — — Net income (loss) attributable to common stockholders – diluted $ 1,183,254 $ 60,893 $ (274,156 ) $ 30,022 Weighted average common shares outstanding - basic 2,462,251 415,726 2,718,383 415,815 Effect of dilutive securities 35,557 — — — Weighted average common shares outstanding – diluted 2,497,808 415,726 2,718,383 415,815 Earnings (loss) per common share - basic $ 0.48 $ 0.15 $ (0.10 ) $ 0.07 Earnings (loss) per common share - diluted $ 0.47 $ 0.15 $ (0.10 ) $ 0.07 |
Principal Financing Arrangeme_2
Principal Financing Arrangements (Tables) | 6 Months Ended |
Oct. 31, 2021 | |
Principal Financing Arrangements | |
Schedule of debt | Schedule of debt October 31, April 30, 2021 Interest Rate Secured lender $ 1,000,000 $ 1,000,000 8.0 % Notes payable – related parties 22,860 22,860 0.0 % U.S. SBA loan 1,885,800 1,885,800 1.0 % U.S. SBA loan 500,000 500,000 3.75 % U.S. SBA loan 1,885,800 1,885,800 1.0 % Loan payable – bank 34,324 34,324 5.5 % Total Debt 5,328,784 5,328,784 Less: current portion of long-term debt 3,576,149 2,942,984 Total long-term debt $ 1,752,635 $ 2,385,800 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Oct. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of income taxes | Schedule of income taxes October 31, 2021 April 30, 2021 Deferred tax assets, net: Net operating loss carryforwards $ 422,000 $ 141,000 Bad debt allowance 27,000 17,000 Stock-based compensation 193,000 155,000 Deferred tax assets 642,000 313,000 Deferred tax liability Unrealized gain 1,696,000 746,000 Net deferred tax liability $ (1,054,000 ) $ (433,000 ) |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 6 Months Ended |
Oct. 31, 2021 | |
Stock-based Compensation Plans | |
Schedule of stock based compensation expense | Schedule of stock based compensation expense Stock-based compensation expense Six Months Six Months Three Months Three Months Chief Executive Officer $ 40,608 $ 81,216 $ — $ 40,608 Chief Financial Officer 40,608 81,216 — 40,608 Chief Marketing Officer 20,111 2,453 8,396 1,047 Related party consultant 25,908 38,757 6,530 19,379 VP of Digital Strategy 4,017 17,510 1,677 17,510 Marketing consultant 74,104 — 37,052 — Marketing consultant 251,803 — 125,902 — Business consultant 25,908 38,757 6,530 19,379 Total stock-based compensation expense $ 483,067 $ 259,909 $ 186,087 $ 138,531 |
Schedule of prepaid compensation | Schedule of prepaid compensation Description Oct. 31, 2021 April 30, 2021 Chief Executive Officer $ — $ 40,608 Chief Financial Officer — 40,608 Related party consultant — 25,908 Business consultant — 25,908 Marketing consultant 128,638 380,441 Marketing consultant 44,301 118,405 Total $ 172,939 $ 631,878 |
Business Acquisition (Tables)
Business Acquisition (Tables) | 6 Months Ended |
Oct. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of merger agreement | Schedule of merger agreement Consideration: $ 11,331,248 Payment of promissory notes and interest 3,817,516 Total consideration $ 15,148,764 Recognized amounts of identifiable assets acquired and liabilities assumed: Cash $ 358,634 Current assets 8,894 Accounts payable (22,718 ) Platform users 7,080,319 Platform investors 6,288,392 Platform issuers 903,125 Unpatented technology 532,118 Total identifiable net assets $ 15,148,764 |
Schedule of pro forma and earnings | 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 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Oct. 31, 2021 | |
Investments | |
Schedule of investments | Schedule of investments Oct. 31, 2021 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 50,000 — Deuce Drone LLC 2,350,000 2,350,000 Kingscrowd Inc. 3,815,745 540,000 Total Investments at cost $ 9,623,753 $ 6,298,008 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Oct. 31, 2021 | |
Subsequent Events [Abstract] | |
Schedule of assets acquired | Schedule of assets acquired Total consideration: 75,000 shares of common stock of the Company $ 750,000 Recognized amounts of identifiable assets acquired: Professional practice goodwill $ 570,000 Technology-related intangibles 37,500 Marketing-related intangibles 15,000 Computer-related intangibles 50,250 Customer-related intangibles 17,250 Contract-related intangibles 30,000 Human capital and artistic-related intangibles 30,000 Total identifiable net assets $ 750,000 |
Concentrations (Details Narrati
Concentrations (Details Narrative) - Revenue Benchmark [Member] | 3 Months Ended | 6 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | |
One Customer [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk, Percentage | 42.00% | 48.00% | 28.00% | 56.00% |
Second Customer [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration Risk, Percentage | 33.00% | 27.00% | 22.00% | 26.00% |
Revenue Recognition (Details Na
Revenue Recognition (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Apr. 30, 2021 | |
Revenue Recognition | |||||
Revenues, Net of Interest Expense | $ 1,199,822 | $ 731,164 | $ 1,825,009 | $ 2,493,486 | |
Deferred Revenue | $ 670 | $ 670 | $ 622 |
Schedule of earnings per share
Schedule of earnings per share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) attributable to common stockholders – basic | $ (274,156) | $ 30,022 | $ 1,183,254 | $ 60,893 |
Adjustments to net loss | ||||
Net income (loss) attributable to common stockholders – diluted | $ (274,156) | $ 30,022 | $ 1,183,254 | $ 60,893 |
Weighted average common shares outstanding - basic | 2,718,383 | 415,815 | 2,462,251 | 415,726 |
Effect of dilutive securities | $ 35,557 | |||
Weighted average common shares outstanding – diluted | 2,718,383 | 415,815 | 2,497,808 | 415,726 |
Earnings (loss) per common share - basic | $ (0.10) | $ 0.07 | $ 0.48 | $ 0.15 |
Earnings (loss) per common share - diluted | $ (0.10) | $ 0.07 | $ 0.47 | $ 0.15 |
Schedule of debt (Details)
Schedule of debt (Details) - USD ($) | Oct. 31, 2021 | Apr. 30, 2021 |
Debt Instrument [Line Items] | ||
Debt, Current | $ 5,328,784 | $ 5,328,784 |
Long-term Debt, Current Maturities | 3,576,149 | 2,942,984 |
Long-term Debt | 1,752,635 | 2,385,800 |
Secured Debt [Member] | ||
Debt Instrument [Line Items] | ||
Debt, Current | $ 1,000,000 | 1,000,000 |
Debt Instrument, Interest Rate, Effective Percentage | 8.00% | |
Notes Payable Related Parties [Member] | ||
Debt Instrument [Line Items] | ||
Debt, Current | $ 22,860 | 22,860 |
Debt Instrument, Interest Rate, Effective Percentage | 0.00% | |
U.S. SBA loan | ||
Debt Instrument [Line Items] | ||
Debt, Current | $ 1,885,800 | 1,885,800 |
Debt Instrument, Interest Rate, Effective Percentage | 1.00% | |
U S S B A Loan One [Member] | ||
Debt Instrument [Line Items] | ||
Debt, Current | $ 500,000 | 500,000 |
Debt Instrument, Interest Rate, Effective Percentage | 3.75% | |
U S S B A Loan Two [Member] | ||
Debt Instrument [Line Items] | ||
Debt, Current | $ 1,885,800 | 1,885,800 |
Debt Instrument, Interest Rate, Effective Percentage | 1.00% | |
Loan Payable Bank [Member] | ||
Debt Instrument [Line Items] | ||
Debt, Current | $ 34,324 | $ 34,324 |
Debt Instrument, Interest Rate, Effective Percentage | 5.50% |
Schedule of income taxes (Detai
Schedule of income taxes (Details) - USD ($) | Oct. 31, 2021 | Apr. 30, 2021 |
Deferred tax assets, net: | ||
Net operating loss carryforwards | $ 422,000 | $ 141,000 |
Bad debt allowance | 27,000 | 17,000 |
Stock-based compensation | 193,000 | 155,000 |
Deferred tax assets | 642,000 | 313,000 |
Deferred tax liability | ||
Unrealized gain | 1,696,000 | 746,000 |
Net deferred tax liability | $ (1,054,000) | $ (433,000) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Oct. 31, 2021 | Apr. 30, 2021 |
Income Tax Disclosure [Abstract] | ||
Operating Loss Carryforwards | $ 2,010,000 | $ 890,000 |
Schedule of stock based compens
Schedule of stock based compensation expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Share-based Payment Arrangement, Noncash Expense | $ 186,087 | $ 138,531 | $ 483,067 | $ 259,909 |
Chief Executive Officer [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Share-based Payment Arrangement, Noncash Expense | 40,608 | 40,608 | 81,216 | |
Chief Financial Officer [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Share-based Payment Arrangement, Noncash Expense | 40,608 | 40,608 | 81,216 | |
Chief Marketing Officer [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Share-based Payment Arrangement, Noncash Expense | 8,396 | 1,047 | 20,111 | 2,453 |
Relatedpartyconsultant [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Share-based Payment Arrangement, Noncash Expense | 6,530 | 19,379 | 25,908 | 38,757 |
V P Digitial Strategy [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Share-based Payment Arrangement, Noncash Expense | 1,677 | 17,510 | 4,017 | 17,510 |
Marketing Consultant [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Share-based Payment Arrangement, Noncash Expense | 37,052 | 74,104 | ||
Marketing Consultant One [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Share-based Payment Arrangement, Noncash Expense | 125,902 | 251,803 | ||
Business Consultant [Member] | ||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||||
Share-based Payment Arrangement, Noncash Expense | $ 6,530 | $ 19,379 | $ 25,908 | $ 38,757 |
Schedule of prepaid compensatio
Schedule of prepaid compensation (Details) - USD ($) | Oct. 31, 2021 | Apr. 30, 2021 |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
[custom:PrepaidStockbasedCompensationExpense-0] | $ 172,939 | $ 631,878 |
Chief Executive Officer [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
[custom:PrepaidStockbasedCompensationExpense-0] | 40,608 | |
Chief Financial Officer [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
[custom:PrepaidStockbasedCompensationExpense-0] | 40,608 | |
Relatedpartyconsultant [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
[custom:PrepaidStockbasedCompensationExpense-0] | 25,908 | |
Business Consultant [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
[custom:PrepaidStockbasedCompensationExpense-0] | 25,908 | |
Marketing Consultant [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
[custom:PrepaidStockbasedCompensationExpense-0] | 128,638 | 380,441 |
Marketing Consultant One [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
[custom:PrepaidStockbasedCompensationExpense-0] | $ 44,301 | $ 118,405 |
Schedule of merger agreement (D
Schedule of merger agreement (Details) | Oct. 31, 2021USD ($) |
Business Combination and Asset Acquisition [Abstract] | |
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 |
Cash | 358,634 |
Current assets | 8,894 |
Accounts payable | (22,718) |
Platform users | 7,080,319 |
Platform investors | 6,288,392 |
Platform issuers | 903,125 |
Unpatented technology | 532,118 |
Total identifiable net assets | $ 15,148,764 |
Schedule of pro forma and earni
Schedule of pro forma and earnings (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 7 Months Ended | |||
Oct. 31, 2021 | Oct. 31, 2020 | Oct. 31, 2021 | Oct. 31, 2020 | Nov. 04, 2020 | Nov. 04, 2019 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Revenues | $ 1,199,822 | $ 731,164 | $ 1,825,009 | $ 2,493,486 | ||
Pro Forma [Member] | ||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||
Revenues | $ 2,866,063 | $ 1,018,200 | ||||
Earnings | $ 282,264 | $ 680,212 |
Schedule of investments (Detail
Schedule of investments (Details) - USD ($) | Oct. 31, 2021 | Apr. 30, 2021 |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Investment Owned, at Cost | $ 9,623,753 | $ 6,298,008 |
Netcapital Systems L L C [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Investment Owned, at Cost | 48,128 | 48,128 |
Watch Party L L C [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Investment Owned, at Cost | 235,400 | 235,400 |
Zelgor [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Investment Owned, at Cost | 1,400,000 | 1,400,000 |
Chip Brain L L C [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Investment Owned, at Cost | 1,704,480 | 1,704,480 |
Vymedic [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Investment Owned, at Cost | 20,000 | 20,000 |
C Reveal [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Investment Owned, at Cost | 50,000 | |
Deuce Drone L L C [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Investment Owned, at Cost | 2,350,000 | 2,350,000 |
Kingscrowd Inc [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Investment Owned, at Cost | $ 3,815,745 | $ 540,000 |
Schedule of assets acquired (De
Schedule of assets acquired (Details) | Oct. 31, 2021USD ($) |
Subsequent Events [Abstract] | |
Total consideration: 75,000 shares of common stock of the Company | $ 750,000 |
Professional practice goodwill | 570,000 |
Technology-related intangibles | 37,500 |
Marketing-related intangibles | 15,000 |
Computer-related intangibles | 50,250 |
Customer-related intangibles | 17,250 |
Contract-related intangibles | 30,000 |
Human capital and artistic-related intangibles | 30,000 |
Total identifiable net assets | $ 750,000 |