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Item 1A. Risk Factors

2024-07-29 compared with 2023-07-26 · 814 added, 710 removed, 26 unchanged (98% of the section changed)

RISK FACTORS.

Certain factors

may have a material adverse effect on our business, financial condition, and results of operations.

You should consider carefully the

risks and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including our

consolidated financial statements and related notes.

factors may have a material adverse effect on our business, financial condition, and results of operations.

You should consider carefully

the risks and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including

our consolidated financial statements and related notes.

The risks and uncertainties described below are not the only ones we face.

3 unchanged sentences

and future prospects could be materially and adversely affected.

In that event, the trading price of our common stock could decline, and

you could lose part or all of your investment.

Risks Related to Our Need for Additional Capital

We will need to raise

additional funding, which may not be available on acceptable terms, or at all.

Failure to obtain this necessary capital when needed may

force us to delay, limit or terminate operations.

Our cash balances at April

30, 2023 and July 25, 2023 were $569,441 and $1,256,200, respectively.

We will need to raise additional capital following the date of

this report through the offering of additional equity and/or debt securities and/or the sale of equity positions in certain portfolio

companies for which Netcapital Advisors provides marketing and strategic advice.

In the event that we are not able to raise additional

working capital through these methods, we do not expect that our cash on hand will be sufficient to fund our current operations for the

next 12 months.

Our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional

funds sooner than planned, through public or private equity or debt financings, government or other third-party funding or a combination

of these approaches.

Raising funds in the current economic environment may present additional challenges.

Even if we believe we have sufficient

funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific

strategic considerations.

Any additional fundraising

efforts may divert our management from their day-to-day activities.

In addition, we cannot guarantee that future financing will be available

in sufficient amounts or on terms acceptable to us, if at all.

Moreover, the terms of any financing may adversely affect the holdings

or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such

issuance, may cause the market price of our shares of common stock to decline.

The sale of additional equity or convertible securities

may dilute our existing stockholders.

The incurrence of indebtedness would result in increased fixed payment obligations, and we may be

required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability

to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct

our business.

We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage

than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidates or otherwise

agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.

Risks Related to Our Business and Growth Strategy

We have a limited operating history and our

profits have been generated primarily by unrealized gains from equity securities we own in other companies.

Although we have been profitable,

the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently

encountered by a small developing company.

We were incorporated in the State of Utah

in April 1984.

Although we have reported earnings in the years ended April 30, 2023 and 2022, the majority of our earnings came from

unrealized gains in equity securities that we own.

These securities have observable prices but are not liquid.

Furthermore, the likelihood

of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by

a small developing company starting a new business enterprise and the highly competitive environment in which we will operate.

we have a limited operating history, we cannot assure you that our business will maintain profitability.

We have substantial customer concentration,

with a limited number of customers accounting for a substantial portion of our revenues.

We currently derive a significant

portion of our revenues from a limited number of customers.

For the year ended April 30, 2023, the Company had one customer that constituted

25% of its revenues, and four customers that each constituted 14% of its revenues.

In that event, the trading price of our common stock could decline,

and you could lose part or all of your investment.

Related to Our Business and Growth Strategy

financial situation creates doubt whether we will continue as a going concern.

of April 30, 2024, the Company had negative working capital of $2,074,163 and for the year ended April 30 2024, the Company had an operating

loss of $3,442,388 and net cash used in operating activities amounted to $4,879,838.There can be no assurances that we will be able to

achieve a level of revenues adequate to generate sufficient cash flow from operations or additional financing through private placements,

public offerings and/or bank financing necessary to support our working capital requirements.

Our management has recently reduced its

operating expenses and we have turned our focus to our funding portal business, which generates cash revenues and has seen a growth in

revenues on a year-to-year basis.

We plan to continue operating with lower fixed overhead amounts and seek to raise money from private

placements, public offerings and/or bank financing.

Our management has determined, based on its recent history and the negative cash

flow from operations, that it is unlikely that its plan will sufficiently alleviate or mitigate, to a sufficient level, the relevant

conditions or events noted above.

To the extent that funds generated from any private placements, public offerings and/or bank financing,

if available, are insufficient, we will have to raise additional working capital.

No assurance can be given that additional financing

will be available, or if available, will be on acceptable terms.

Accordingly, our management has concluded that these conditions raise

substantial doubt about our ability to continue as a going concern.

There can be no assurance that we will be able to achieve its business

plan objectives or be able to achieve or maintain cash-flow-positive operating results.

If we are unable to generate adequate funds from

operations or raise sufficient additional funds, we may not be able to repay our existing debt, continue to operate our business network,

respond to competitive pressures or fund our operations.

As a result, we may be required to significantly reduce, reorganize, discontinue,

or shut down our operations.

have a limited operating history and our profits have been generated primarily by unrealized gains from equity securities we own in other

Although we have been profitable, the likelihood of our success must be considered in light of the problems, expenses, difficulties,

complications and delays frequently encountered by a small developing company.

were incorporated in the State of Utah in April 1984.

We reported a net loss of $4,986,317 in the year ended April 30, 2024.

Although we reported earnings in the years ended April 30, 2023 and 2022, the majority of our earnings came from unrealized gains in

equity securities that we own.

These securities have a value on our books, but are not liquid.

Furthermore, the

likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently

encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will

Since we have a limited operating history, we cannot assure you that our business will maintain profitability.

have substantial customer concentration, with a limited number of customers accounting for a substantial portion of our revenues.

currently derive a significant portion of our revenues from a limited number of customers.

There are inherent risks whenever a large

percentage of total revenues are concentrated with a limited number of customers.

For the year ended April 30, 2024, the Company had

one customer that constituted 22% of its revenues, a second customer that constituted 22% of its revenues, and a third customer that constituted

18% of its revenues.

There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of

It is not possible for us to predict the future level of demand for our services that will be generated by these customers

or new customers, or the future demand for the products and services of these customers or new customers.

If any of these customers

experience declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we

charge for our products which could have an adverse effect on our margins and financial position and could negatively affect our revenues

and results of operations and/or trading price of our common stock.

We operate in a regulatory environment

that is evolving and uncertain.

The regulatory framework for online capital

formation or crowdfunding is very new.

The regulations that govern our operations have been in existence for a very few years.

there are constant discussions among legislators and regulators with respect to changing the regulatory environment.

New laws and regulations

could be adopted in the United States and abroad.

Further, existing laws and regulations may be interpreted in ways that would impact

our operations, including how we communicate and work with investors and the companies that use our services and the types of securities

that our clients can offer and sell on our platform.

We operate in a highly regulated industry.

We are subject to extensive regulation and failure

to comply with such regulation could have an adverse effect on our business.

Further, our subsidiary Netcapital Funding Portal Inc is

registered as a funding portal.

As a funding portal we have to comply with stringent regulations, and the operation of our funding portal

is frequently subject to examination, constraints on its business, and in some cases fines.

In addition, some of the restrictions and

rules applicable to our subsidiary could adversely affect and limit some of our business plans.

Our funding portal’s service offerings

are relatively new in an industry that is still quickly evolving .

The principal securities regulations that we

work with, Rule 506(c) and Reg CF, have only been in effect in their current form since 2013 and 2016, respectively.

Our ability to continue

to penetrate the market remains uncertain as potential issuer companies may choose to use different platforms or providers (including,

in the case of Rule 506(c) and Regulation A, using their own online platform), or determine alternative methods of financing.

may decide to invest their money elsewhere.

Further, our potential market may not be as large, or our industry may not grow as rapidly

as anticipated.

Success will likely be a factor of investing in the development and implementation of marketing campaigns, repeat business

from both issuer companies and investors, and favorable changes in the regulatory environment.

We have an evolving business model.

Our business model is one of innovation, including

continuously working to expand our product lines and services to our clients.

For example, we are evaluating an expansion into the broker-dealer

space as well as our foray into becoming an alternative trading system.

It is unclear whether these services will be successful.

we continuously try to offer additional types of services, and we cannot offer any assurance that any of them will be successful.

time to time, we may also modify aspects of our business model relating to our service offerings.

We cannot offer any assurance that these

or any other modifications will be successful or will not result in harm to the business.

We may not be able to manage growth effectively,

which could damage our reputation, limit our growth, and negatively affect our operating results.

We may be liable for misstatements made by issuers.

Under the Securities Act and the Securities

Exchange Act of 1934 (the “Exchange Act”), issuers making offerings through our funding portal may be liable for inappropriate

disclosures, including untrue statements of material facts or for omitting information that could make the statements misleading.

liability may also extend in Reg CF offerings to funding portals, such as our subsidiary.

Even though due diligence defenses may be available,

there can be no assurance that if we were sued, we would prevail.

one customer that constituted 25% of its revenues, a second customer that constituted 22% of its revenues, and a third customer that

constituted 22% of its revenues.

For the year ended April 30, 2023, the Company had one customer that constituted 25% of its revenues,

and four customers that each constituted 14% of its revenues.

It is not possible for us to predict the future level of demand for our

services that will be generated by these customers or new customers, or the future demand for the products and services of these customers

or new customers.

If any of these customers experience declining or delayed sales due to market, economic or competitive conditions,

we could be pressured to reduce the prices we charge for our products which could have an adverse effect on our margins and financial

position and could negatively affect our revenues and results of operations and/or trading price of our common stock.

debt level could negatively impact our financial condition, results of operations and business prospects.

of April 30, 2024, we had $2,420,124 of principal indebtedness outstanding and we have borrowed money on three occasions from the SBA.

Our level of debt could have significant consequences to our shareholders, including the following:

the dedication of a substantial portion of cash flow from operations to make payments on debt, thereby reducing the availability

of cash flow for working capital, capital expenditures and other general business activities;

a substantial portion of our corporate cash reserves to be held as a reserve for debt service, limiting our ability to invest in

new growth opportunities;

the ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and general corporate

and other activities;

the flexibility in planning for, or reacting to, changes in the business and industry in which we operate;

our vulnerability to both general and industry-specific adverse economic conditions;

us at a competitive disadvantage vs.

less leveraged competitors;

vulnerability to changes in the prevailing interest rates.

ability to make payments of principal and interest, or to refinance our indebtedness, depends on our future performance, which is subject

to economic, financial, competitive and other factors.

Our business may not generate sufficient cash flow in the future to service our

debt because of factors beyond our control, including but not limited to our ability to market our products and expand our operations.

If we are unable to generate sufficient cash flows, we may be required to adopt one or more alternatives, such as restructuring debt

or obtaining additional equity capital on terms that may be onerous or highly dilutive.

Our ability to refinance our indebtedness will

depend on the capital markets and our financial condition at such time.

We may not be able to engage in any of these activities or engage

in these activities on desirable terms, which could result in a default on our debt obligations.

operate in a highly regulated industry.

are subject to extensive regulation and failure to comply with such regulation could have an adverse effect on our business.

our subsidiary Netcapital Funding Portal Inc is registered as a funding portal.

As a funding portal we have to comply with stringent

regulations, and the operation of our funding portal is frequently subject to examination, constraints on its business, and in some cases

Our wholly-owned subsidiary Netcapital Securities Inc has applied for broker-dealer registration with FINRA.

In the event Netcapital

Securities Inc.

receives a broker-dealer license, it will become subject to additional regulation and supervision of the SEC and FINRA,

including without limitation Rule 15c3-1 under the Securities Exchange Act of 1934 (the Uniform Net Capital Rule).

In addition, some

of the restrictions and rules applicable to our subsidiary could adversely affect and limit some of our business plans.

funding portal’s service offerings are relatively new in an industry that is still quickly evolving .

principal securities regulations that we work with, Rule 506(c) and Reg CF, have only been in effect in their current form since 2013

and 2016, respectively.

Our ability to continue to penetrate the market remains uncertain as potential issuer companies may choose to

use different platforms or providers (including, in the case of Rule 506(c) and Regulation A, using their own online platform), or determine

alternative methods of financing.

Investors may decide to invest their money elsewhere.

Further, our potential market may not be as large,

or our industry may not grow as rapidly as anticipated.

Success will likely be a factor of investing in the development and implementation

of marketing campaigns, repeat business from both issuer companies and investors, and favorable changes in the regulatory environment.

may be liable for misstatements made by issuers in offerings through our funding portal.

the Securities Act and the Exchange Act, issuers making offerings through our funding portal may be liable for inappropriate disclosures,

including untrue statements of material facts or for omitting information that could make the statements misleading.

This liability may

also extend in Reg CF offerings to funding portals, such as our subsidiary.

Even though due diligence defenses may be available, there

can be no assurance that if we were sued, we would prevail.

Further, even if we do succeed, lawsuits are time consuming and expensive,

and being a party to such actions may cause us reputational harm that would negatively impact our business.

Moreover, even if we are not

liable or a party to a lawsuit or enforcement action, some of our clients have been and will be subject to such proceedings.

Any involvement

we may have, including responding to document production requests, may be time-consuming and expensive as well.

Our compliance is focused on U.S.

and we have not analyzed foreign laws regarding the participation of non-U.S.

Some of the investment opportunities posted

on our platform are open to non-U.S.

We have not researched all the applicable foreign laws and regulations, and we have not

set up our structure to be compliant with foreign laws.

It is possible that we may be deemed in violation of those laws, which could result

in fines or penalties as well as reputational harm.

Any violation of foreign laws may limit our ability in the future to assist companies

in accessing money from those investors, and compliance with those laws and regulations may limit our business operations and plans for

future expansion.

Our cash flow is reliant on one main

type of service.

Most of our cash-flow generating services are variants

on one type of service:

Moreover, even if we are

not liable or a party to a lawsuit or enforcement action, some of our clients have been and will be subject to such proceedings.

involvement we may have, including responding to document production requests, may be time-consuming and expensive as well.

operate in a regulatory environment that is evolving and uncertain.

regulatory framework for online capital formation or crowdfunding is very new.

The regulations that govern our operations have been in

existence for a very few years.

Further, there are constant discussions among legislators and regulators with respect to changing the

regulatory environment.

New laws and regulations could be adopted in the United States and abroad.

Further, existing laws and regulations

may be interpreted in ways that would impact our operations, including how we communicate and work with investors and the companies that

use our services and the types of securities that our clients can offer and sell on our platform.

have an evolving business model.

business model is one of innovation, including continuously working to expand our product lines and services to our clients.

example, our subsidiary Netcapital Securities has applied for broker-dealer registration with FINRA and we are continuing our

relationship with Templum into becoming an alternative trading system.

It is unclear whether these services will be successful.

Further, we continuously try to offer additional types of services, and we cannot offer any assurance that any of them will be

From time to time, we may also modify aspects of our business model relating to our service offerings.

We cannot offer

any assurance that these or any other modifications will be successful or will not result in harm to the business.

We may not be

able to manage growth effectively, which could damage our reputation, limit our growth, and negatively affect our operating

compliance is focused on U.S.

laws and we have not analyzed foreign laws regarding the participation of non-U.S.

of the investment opportunities posted on our platform are open to non-U.S.

We have not researched all the applicable foreign

laws and regulations, and we have not set up our structure to be compliant with foreign laws.

It is possible that we may be deemed in

violation of those laws, which could result in fines or penalties as well as reputational harm.

Any violation of foreign laws may limit

our ability in the future to assist companies in accessing money from those investors, and compliance with those laws and regulations

may limit our business operations and plans for future expansion.

cash flow is reliant on one main type of service.

of our cash-flow generating services are variants on one type of service:

providing a platform for online capital formation.

Our revenues are therefore dependent upon the market for online

capital formation.

As such, any downturn in the market could have a material adverse effect of our business and financial condition.

We depend on key personnel and face challenges

recruiting needed personnel.

Our future success depends on the efforts of a small

number of key personnel, including the founder of our subsidiary, Netcapital Funding Portal Inc., our Chief Executive Officer, Chief Financial

Officer, and our compliance, engineering and marketing teams.

Our software engineer team, as well as our compliance team and our marketing

team are critical to continually innovate and improve our products while operating in a highly regulated industry.

In addition, due to

the specialized expertise required, we may not be able to recruit the individuals needed for our business needs.

There can be no assurance

that we will be successful in attracting and retaining the personnel we require to operate and be innovative.

We are vulnerable to hackers and cyber

As an internet-based business, we may be vulnerable

to hackers who may access the data of our investors and the issuer companies that utilize our platform.

Further, any significant disruption

in service on our funding portal platform or in our computer systems could reduce the attractiveness of our platform and result in a loss

of investors and companies interested in using our platform.

Further, we rely on a third-party technology provider to provide some of

our back-up technology as well as act as our escrow agent.

Any disruptions of services or cyber-attacks either on our technology provider,

escrow agent, or on us could harm our reputation and materially negatively impact our financial condition and business.

Our funding portal relies on one escrow agent

to hold investment commitments for issuers.

We currently rely on First Citizens Bank to provide

all escrow services related to offerings on our platform.

Any change in this relationship will require us to find another escrow agent

and escrow bank.

This change may cause us delays as well as additional costs in transitioning our technology.

We are not allowed to operate

our funding portal business without a qualified third-party escrow bank.

There are a limited number of banks that provide this service.

As such, if our relationship with our escrow agent is terminated, we may have difficulty finding a replacement which could have a material

adverse effect on our business and results of operations.

If our wholly owned subsidiary, Netcapital Funding

Portal Inc., fails to comply with its obligations under the license agreement with Netcapital Systems LLC under which the technology to

operate our funding portal is licensed to Netcapital Funding Portal Inc., we could lose rights necessary to operate our funding portal

which are important to our business.

Our wholly owned subsidiary, Netcapital Funding Portal

has licensed the technology necessary to operate our funding portal from our majority stockholder, Netcapital Systems LLC, of which

are therefore dependent upon the market for online capital formation.

As such, any downturn in the market could have a material adverse

effect on our business and financial condition.

depend on key personnel and face challenges recruiting needed personnel.

future success depends on the efforts of a small number of key personnel, including the founder of our subsidiary, Netcapital Funding

Portal Inc., our Chief Executive Officer, Chief Financial Officer, and our compliance, engineering and marketing teams.

engineering team, as well as our compliance team and our marketing team are critical to continually innovate and improve our products

while operating in a highly regulated industry.

In addition, due to the specialized expertise required, we may not be able to recruit

the individuals needed for our business needs.

There can be no assurance that we will be successful in attracting and retaining the personnel

we require to operate and be innovative.

are vulnerable to hackers and cyber-attacks.

an internet-based business, we may be vulnerable to hackers who may access the data of our investors and the issuer companies that utilize

our platform.

Further, any significant disruption in service on our funding portal platform or in our computer systems could reduce the

attractiveness of our platform and result in a loss of investors and companies interested in using our platform.

Further, we rely on

a third-party technology provider to provide some of our back-up technology as well as act as our escrow agent.

Any disruptions of services

or cyber-attacks either on our technology provider, escrow agent, or on us could harm our reputation and materially negatively impact

our financial condition and business.

funding portal relies on one escrow agent to hold investment commitments for issuers.

currently rely on First Citizens Bank to provide all escrow services related to offerings on our platform.

Any change in this relationship

will require us to find another escrow agent and escrow bank.

This change may cause us delays as well as additional costs in transitioning

our technology.

We are not allowed to operate our funding portal business without a qualified third-party escrow bank.

There are a limited

number of banks that provide this service.

As such, if our relationship with our escrow agent is terminated, we may have difficulty finding

a replacement which could have a material adverse effect on our business and results of operations.

our wholly owned subsidiary, Netcapital Funding Portal Inc., fails to comply with its obligations under the license agreement with Netcapital

Systems LLC under which the technology to operate our funding portal is licensed to Netcapital Funding Portal Inc., we could lose rights

necessary to operate our funding portal which are important to our business.

wholly owned subsidiary, Netcapital Funding Portal Inc.

has licensed the technology necessary to operate our funding portal from our

majority stockholder, Netcapital Systems LLC, of which Mr.

Frishman owns a 29% interest.

These rights are extremely important to our business.

These rights are extremely important to our

If Netcapital Funding Portal Inc.

fails to comply

with any obligations under this license agreement, such license agreement may be subject to termination in whole or in part, which could

severely impact our ability to operate our funding portal which would have a material adverse effect on our business, financial position,

and results of operations.

In addition, disputes may arise regarding the technology

subject to a license agreement, including:

of rights granted under the license agreement and other interpretation-related issues;

to which our processes infringe on the technology of Netcapital Systems LLC that is not subject to the license agreement;

the ownership

of inventions and know-how resulting from the joint creation or use of technology by Netcapital Systems LLC and us.

Disputes over technology under the license agreement

with Netcapital Systems LLC may prevent or impair our ability to maintain our current license agreement on acceptable terms, and we may

be unable to successfully operate our funding portal.

In addition, any failure of Netcapital Systems LLC to service the technology subject

to the license agreement or to operate its website could result in our inability to operate our funding portal which would have a material

adverse effect on our business, financial condition, and results of operations.

Netcapital Systems LLC relies on third-party

software for the technology subject to the license agreement with Netcapital Funding Portal Inc.

that may be difficult to replace

or which could cause errors or failures of our funding portal.

Netcapital Systems

LLC relies on software licensed from third parties for the technology subject to the license agreement with Netcapital Funding Portal

fails to comply with any obligations under this license agreement, such license agreement

may be subject to termination in whole or in part, which could severely impact our ability to operate our funding portal which would

have a material adverse effect on our business, financial position, and results of operations.

addition, disputes may arise regarding the technology subject to a license agreement, including:

scope of rights granted under the license agreement and other interpretation-related issues;

extent to which our processes infringe on the technology of Netcapital Systems LLC that is not subject to the license agreement;

ownership of inventions and know-how resulting from the joint creation or use of technology by Netcapital Systems LLC and us.

over technology under the license agreement with Netcapital Systems LLC may prevent or impair our ability to maintain our current license

agreement on acceptable terms, and we may be unable to successfully operate our funding portal.

In addition, any failure of Netcapital

Systems LLC to service the technology subject to the license agreement or to operate its website could result in our inability to operate

our funding portal which would have a material adverse effect on our business, financial condition, and results of operations.

Systems LLC relies on third-party software for the technology subject to the license agreement with Netcapital Funding Portal Inc.

may be difficult to replace, or which could cause errors or failures of our funding portal.

Systems LLC relies on software licensed from third parties for the technology subject to the license agreement with Netcapital Funding

This software may not continue to be available at reasonable prices or on commercially reasonable terms, or at all.

Any loss by Netcapital

Systems LLC of the right to use any of this software could significantly increase our expenses and otherwise result in delays in the provisioning

of our funding portal until equivalent technology is either developed by us or Netcapital Systems LLC, or, if available, is identified,

obtained, and integrated, which could harm our business.

Any errors or defects in third-party software could result in errors or a failure

of our funding portal which could harm our business.

Our strategy to purchase a portion of

early-stage companies may provide us with investments that have no liquidity.

It is our strategy to sometimes purchase,

at an affordable price, part or all of early-stage companies and cross pollinate the ideas, technology and expertise within these companies

to enhance the operations, profits and market share of all the entities.

That strategy may result in us diverting management attention

and advisory resources to do work for early-stage companies that pay for the work with equity, which becomes impaired in value or never

becomes a liquid asset.

For all of these early-stage companies, the future liquidity and value of our investments cannot be guaranteed,

and no market may exist for us to generate gains from our investments in early-stage companies.

Our business depends on the reliability of the infrastructure that supports the Internet and the viability of the Internet.

The growth of Internet usage has caused frequent

interruptions and delays in processing and transmitting data over the Internet.

There can be no assurance that the Internet infrastructure

or the Company’s own network systems will continue to be able to support the demands placed on it by the continued growth of the

Internet, the overall online securities industry or that of our customers.

The Internet’s viability could be affected

if the necessary infrastructure is not sufficient, or if other technologies and technological devices eclipse the Internet as a viable

End-users of our software depend on Internet

Service Providers (“ISPs”), online service providers and our system infrastructure for access to the Internet sites that

Many of these services have experienced service outages in the past and could experience service outages, delays and other

difficulties due to system failures, stability or interruption.

As a result, we may not be able to meet a level of service that we have

promised to our subscribers, and we may be in breach of our contractual commitments, which could materially adversely affect our business,

revenues, operating results and financial condition.

We are dependent on general economic conditions.

Our business model is dependent on investors investing

in the companies presented on our platforms.

by Netcapital Systems LLC of the right to use any of this software could significantly increase our expenses and otherwise result in

delays in the provisioning of our funding portal until equivalent technology is either developed by us or Netcapital Systems LLC, or,

if available, is identified, obtained, and integrated, which could harm our business.

Any errors or defects in third-party software could

result in errors or a failure of our funding portal which could harm our business.

may not be able to protect all of our intellectual property.

profitability may depend in part on our ability to effectively protect our proprietary rights, including obtaining trademarks for our

brand names, protecting our products and websites, maintaining the secrecy of our internal workings and preserving our trade secrets,

as well as our ability to operate without inadvertently infringing on the proprietary rights of others.

There can be no assurance that

we will be able to obtain future protection for our intellectual property or defend our current trademarks and future trademarks and

Further, policing and protecting our intellectual property against unauthorized use by third parties is time-consuming and expensive,

and certain countries may not even recognize our intellectual property rights.

There can also be no assurance that a third party will

not assert infringement claims with respect to our products or technologies.

Any litigation for both protecting our intellectual property

or defending our use of certain technologies could have a material adverse effect on our business, operating results and financial condition,

regardless of the outcome of such litigation.

strategy to purchase a portion of early-stage companies may provide us with investments that have no liquidity.

is our strategy to sometimes purchase, at an affordable price, part or all of early-stage companies and cross pollinate the ideas, technology

and expertise within these companies to enhance the operations, profits and market share of all the entities.

That strategy may result

in us diverting management attention and advisory resources to do work for early-stage companies that pay for the work with equity, which

becomes impaired in value or never becomes a liquid asset.

For all of these early-stage companies, the future liquidity and value of

our investments cannot be guaranteed, and no market may exist for us to generate gains from our investments in early-stage companies.

business depends on the reliability of the infrastructure that supports the Internet and the viability of the Internet.

growth of Internet usage has caused frequent interruptions and delays in processing and transmitting data over the Internet.

be no assurance that the Internet infrastructure or the Company’s own network systems will continue to be able to support the demands

placed on it by the continued growth of the Internet, the overall online securities industry or that of our customers.

of our software depend on Internet Service Providers (“ISPs”), online service providers and our system infrastructure for

access to the Internet sites that we operate.

Many of these services have experienced service outages in the past and could experience

service outages, delays and other difficulties due to system failures, stability or interruption.

As a result, we may not be able to

meet a level of service that we have promised to our subscribers, and we may be in breach of our contractual commitments, which could

materially adversely affect our business, revenues, operating results and financial condition.

are dependent on general economic conditions.

business model is dependent on investors investing in the companies presented on our platforms.

Investment dollars are disposable income.

Our business model is thus dependent on national

and international economic conditions.

Adverse national and international economic conditions may reduce the future availability of investment

dollars, which would negatively impact our revenues and possibly our ability to continue operations.

It is not possible to accurately

predict the potential adverse impacts on the Company, if any, of current economic conditions on its financial condition, operating results

and cash flow.

We face significant market competition.

We facilitate online capital formation.

is a new market, we compete against a variety of entrants in the market as well as new entrants into the market.

Some of these follow

a regulatory model that is different from ours and might provide them competitive advantages.

New entrants could include those that may

already have a foothold in the securities industry, including some established broker-dealers.

Further, online capital formation is not

the only way to address helping start-ups raise capital, and the Company has to compete with a number of other approaches, including traditional

venture capital investments, loans and other traditional methods of raising funds and companies conducting crowdfunding raises on their

own websites.

Additionally, some competitors and future competitors may be better capitalized than us, which would give them a significant

advantage in marketing and operations.

Moreover, as we continue to expand our offerings,

we will continue to face headwinds and compete with companies that are more established and/or have more financial resources than we do

and/or new entrants bringing disruptive technologies and/or ideas.

Intense competition could prevent us

from increasing our market share and growing our revenues.

We compete with a number of public and private

companies and most of our competitors have significant financial resources and occupy entrenched positions in the market with name-brand

We also face challenges from new Internet sites that aim to attract subscribers who seek to play interactive games or invest

in public or private securities.

Such companies may be able to attract significantly more subscribers because of new marketing ideas and

user interface concepts.

Increased competition from current and future

competitors may in the future materially adversely affect our business, revenues, operating results and financial condition.

We may require additional financing in the future

to fund our operations.

We may need additional capital in the future to continue

to execute our business plan.

Therefore, we will be dependent upon additional capital in the form of either debt or equity to continue

our operations.

At the present time, we do not have arrangements to raise all of the needed additional capital, and we will need to identify

potential investors and negotiate appropriate arrangements with them.

Our ability to obtain additional financing will be subject to a

number of factors, including market conditions, our operating performance and investor sentiment.

If we are unable to raise additional

capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue our operations.

Raising additional capital may cause dilution

to our stockholders, restrict our operations or require us to relinquish certain rights.

We may seek additional capital through a combination

of equity offerings, debt financings, strategic collaborations and alliances or licensing arrangements.

To the extent that we raise additional

capital through the sale of equity, convertible debt securities or other equity-based derivative securities, your ownership interest will

be diluted and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder.

Any indebtedness

we incur could involve restrictive covenants, such as limitations on our ability to incur additional debt, acquire or license intellectual

property rights, declare dividends, make capital expenditures and other operating restrictions that could adversely impact our ability

to conduct our business.

Furthermore, the issuance of additional securities, whether equity or debt, by us, or the possibility of such

issuance, may cause the market price of our common stock to decline.

If we raise additional funds through strategic collaborations and

alliances or licensing arrangements with third parties, or otherwise agree to terms unfavorable to us, any of which may have a material

adverse effect on our business, operating results and prospects.

Adequate additional financing may not be available to us on acceptable

terms, or at all.

Our debt level could negatively impact our financial

condition, results of operations and business prospects.

As of April 30, 2023, we had approximately $2,735,800

of principal indebtedness outstanding and we have borrowed money on three occasions from the SBA.

Our level of debt could have significant

consequences to our shareholders, including the following:

requiring the dedication of

a substantial portion of cash flow from operations to make payments on debt, thereby reducing the availability of cash flow for working

capital, capital expenditures and other general business activities;

requiring a substantial portion

of our corporate cash reserves to be held as a reserve for debt service, limiting our ability to invest in new growth opportunities;

limiting the ability to obtain

additional financing in the future for working capital, capital expenditures, acquisitions and general corporate and other activities;

limiting the flexibility in

planning for, or reacting to, changes in the business and industry in which we operate;

increasing our vulnerability

to both general and industry-specific adverse economic conditions;

putting us at a competitive

disadvantage vs.

less leveraged competitors;

increasing vulnerability to

changes in the prevailing interest rates.

Our ability to make payments of principal and interest,

or to refinance our indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors.

Our business may not generate sufficient cash flow in the future to service our debt because of factors beyond our control, including

but not limited to our ability to market our products and expand our operations.

If we are unable to generate sufficient cash flows,

we may be required to adopt one or more alternatives, such as restructuring debt or obtaining additional equity capital on terms that

may be onerous or highly dilutive.

Our ability to refinance our indebtedness will depend on the capital markets and our financial condition

at such time.

We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result

in a default on our debt obligations.

We may make acquisitions or form joint ventures

that are unsuccessful.

Our ability to grow is partially dependent on our

ability to successfully acquire other companies, which creates substantial risk.

In order to pursue a growth by acquisition strategy successfully,

we must identify suitable candidates for these transactions;

however, because of our limited funds, we may not be able to purchase those

companies that we have identified as potential acquisition candidates.

Additionally, we may have difficulty managing post-closing issues

such as the integration into our corporate structure.

Integration issues are complex, time consuming and expensive and, without proper

planning and implementation, could significantly disrupt our business, including, but not limited to, the diversion of management's attention,

the loss of key business and/or personnel from the acquired company, unanticipated events, and legal liabilities.

Our future growth depends on our ability to

develop and retain customers.

Our future growth depends to a large extent on our

ability to effectively anticipate and adapt to customer requirements and offer services that meet customer demands.

If we are unable to

attract new customers and/or retain new customers, our business, results of operations and financial condition may be materially adversely

We will need to attract, train and retain additional

highly qualified senior executives and technical and managerial personnel in the future.

We continue to seek technical and managerial staff

members, although we have limited resources to compensate them until we have raised additional capital or developed a business that generates

consistent cash flow from operations.

We believe it is important to negotiate with potential candidates and, if appropriate, engage them

on a part-time basis or on a project basis and compensate them at least partially, with stock-based compensation, when appropriate.

is a high demand for highly trained and managerial staff members.

If we are not able to fill these positions, it may have an adverse effect

on our business.

Major health epidemics, such as the outbreak

caused by the COVID-19 pandemic, and other outbreaks or unforeseen or catastrophic events could continue to disrupt and adversely affect

our operations, financial condition and business.

Public health epidemics or outbreaks could adversely

impact our business.

The extent to which the coronavirus impacts our operations will depend on future developments, which are highly uncertain

and cannot be predicted with confidence, including the duration of the outbreak, new information which may emerge concerning the severity

of the coronavirus and the emergence of variants, among others.

In particular, the spread and treatment of the coronavirus globally could

adversely impact our operations and could have an adverse impact on our business and our financial results.

To date, our business has

not been impacted by COVID-19 but it could be in the future.

We may not be able to protect all of our intellectual

Our profitability may depend in part on our ability to effectively

protect our proprietary rights, including obtaining trademarks for our brand names, protecting our products and websites, maintaining

the secrecy of our internal workings and preserving our trade secrets, as well as our ability to operate without inadvertently infringing

on the proprietary rights of others.

There can be no assurance that we will be able to obtain future protections for our intellectual

property or defend our current trademarks and future trademarks and patents.

Further, policing and protecting our intellectual property

against unauthorized use by third parties is time-consuming and expensive, and certain countries may not even recognize our intellectual

property rights.

There can also be no assurance that a third party will not assert infringement claims with respect to our products or

technologies.

Any litigation for both protecting our intellectual property or defending our use of certain technologies could have a material

adverse effect on our business, operating results and financial condition, regardless of the outcome of such litigation.

Our revenues and profits are subject to fluctuations.

It is difficult to accurately forecast our revenues

and operating results, and these could fluctuate in the future due to a number of factors.

Our business model is thus dependent on national and international economic conditions.

Adverse national and international economic conditions

may reduce the future availability of investment dollars, which would negatively impact our revenues and possibly our ability to continue

It is not possible to accurately predict the potential adverse impacts on the Company, if any, of current economic conditions

on its financial condition, operating results and cash flow.

face significant market competition.

facilitate online capital formation.

Though this is a new market, we compete against a variety of entrants in the market as well as likely

new entrants into the market.

Some of these follow a regulatory model that is different from ours and might provide them with competitive

New entrants could include those that may already have a foothold in the securities industry, including some established

broker-dealers.

Further, online capital formation is not the only way to address helping start-ups raise capital, and the Company has

to compete with a number of other approaches, including traditional venture capital investments, loans and other traditional methods

of raising funds and companies conducting crowdfunding raises on their own websites.

Additionally, some competitors and future competitors

may be better capitalized than us, which would give them a significant advantage in marketing and operations.

as we continue to expand our offerings, we will continue to face headwinds and compete with companies that are more established and/or

have more financial resources than we do and/or new entrants bringing disruptive technologies and/or ideas.

competition could prevent us from increasing our market share and growing our revenues.

compete with a number of public and private companies and most of our competitors have significant financial resources and occupy entrenched

positions in the market with name-brand recognition.

We also face challenges from new Internet sites that aim to attract subscribers

who seek to play interactive games or invest in public or private securities.

Such companies may be able to attract significantly more

subscribers because of new marketing ideas and user interface concepts.

competition from current and future competitors may in the future materially adversely affect our business, revenues, operating results

and financial condition.

may require additional financing in the future to fund our operations.

may need additional capital in the future to continue to execute our business plan.

Therefore, we will be dependent upon additional capital

in the form of either debt or equity to continue our operations.

At the present time, we do not have arrangements to raise all of the

needed additional capital, and we will need to identify potential investors and negotiate appropriate arrangements with them.

to obtain additional financing will be subject to a number of factors, including market conditions, our operating performance and investor

If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale

back or discontinue our operations.

additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish certain rights.

may seek additional capital through a combination of equity offerings, debt financings, strategic collaborations and alliances or licensing

arrangements.

To the extent that we raise additional capital through the sale of equity, convertible debt securities or other equity-based

derivative securities, your ownership interest will be diluted and the terms may include liquidation or other preferences that adversely

affect your rights as a stockholder.

Any indebtedness we incur could involve restrictive covenants, such as limitations on our ability

to incur additional debt, acquire or license intellectual property rights, declare dividends, make capital expenditures and other operating

restrictions that could adversely impact our ability to conduct our business.

Furthermore, the issuance of additional securities, whether

equity or debt, by us, or the possibility of such issuance, may cause the market price of our common stock to decline.

If we raise additional

funds through strategic collaborations and alliances or licensing arrangements with third parties, or otherwise agree to terms unfavorable

to us, any of which may have a material adverse effect on our business, operating results and prospects.

Adequate additional financing

may not be available to us on acceptable terms, or at all.

may make acquisitions or form joint ventures that are unsuccessful.

ability to grow is partially dependent on our ability to successfully acquire other companies, which creates substantial risk.

to pursue a growth by acquisition strategy successfully, we must identify suitable candidates for these transactions;

however, because

of our limited funds, we may not be able to purchase those companies that we have identified as potential acquisition candidates.

Additionally,

we may have difficulty managing post-closing issues such as the integration into our corporate structure.

Integration issues are complex,

time consuming and expensive and, without proper planning and implementation, could significantly disrupt our business, including, but

not limited to, the diversion of management’s attention, the loss of key business and/or personnel from the acquired company, unanticipated

events, and legal liabilities.

future growth depends on our ability to develop and retain customers.

future growth depends to a large extent on our ability to effectively anticipate and adapt to customer requirements and offer services

that meet customer demands.

If we are unable to attract new customers and/or retain new customers, our business, results of operations

and financial condition may be materially adversely affected.

will need to attract, train and retain additional highly qualified senior executives and technical and managerial personnel in the future.

continue to seek technical and managerial staff members, although we have limited resources to compensate them until we have raised additional

capital or developed a business that generates consistent cash flow from operations.

We believe it is important to negotiate with potential

candidates and, if appropriate, engage them on a part-time basis or on a project basis and compensate them at least partially, with stock-based

compensation, when appropriate.

There is a high demand for highly trained and managerial staff members.

If we are not able to fill these

positions, it may have an adverse effect on our business.

health epidemics, such as the outbreak caused by the COVID-19 pandemic, and other outbreaks or unforeseen or catastrophic events could

continue to disrupt and adversely affect our operations, financial condition and business.

health epidemics or outbreaks could adversely impact our business.

The extent to which the coronavirus impacts our operations will depend

on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new

information which may emerge concerning the severity of the coronavirus and the emergence of variants, among others.

In particular, the

spread and treatment of the coronavirus globally could adversely impact our operations and could have an adverse impact on our business

and our financial results.

To date, our business has not been impacted by COVID-19 but it could be in the future.

may not be able to protect all of our intellectual property.

profitability may depend in part on our ability to effectively protect our proprietary rights, including obtaining trademarks for

our brand names, protecting our products and websites, maintaining the secrecy of our internal workings and preserving our trade

secrets, as well as our ability to operate without inadvertently infringing on the proprietary rights of others.

There can be no

assurance that we will be able to obtain future protections for our intellectual property or defend our current trademarks and

future trademarks and patents.

Further, policing and protecting our intellectual property against unauthorized use by third parties

is time-consuming and expensive, and certain countries may not even recognize our intellectual property rights.

There can also be no

assurance that a third party will not assert infringement claims with respect to our products or technologies.

Any litigation for

both protecting our intellectual property or defending our use of certain technologies could have a material adverse effect on our

business, operating results and financial condition, regardless of the outcome of such litigation.

revenues and profits are subject to fluctuations.

is difficult to accurately forecast our revenues and operating results, and these could fluctuate in the future due to a number of factors.

These factors may include adverse changes in:

number of investors and amount of investors’ dollars, the success of world securities markets, general economic conditions, our

ability to market our platform to companies and investors, headcount and other operating costs, and general industry and regulatory conditions

and requirements.

The Company's operating results may fluctuate from year to year due to the factors listed above and others not listed.

At times, these fluctuations may be significant and could impact our ability to operate our business.

Natural disasters and other events beyond our

control could materially adversely affect us.

Natural disasters or other catastrophic events may

cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative effect

Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond

Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for

us to deliver our services to our customers and could decrease demand for our services.

Since the spring of 2020, large segments of the

number of investors and amount of investors’ dollars, the success of world securities

markets, general economic conditions, our ability to market our platform to companies and investors, headcount and other operating costs,

and general industry and regulatory conditions and requirements.

The Company’s operating results may fluctuate from year to year

due to the factors listed above and others not listed.

At times, these fluctuations may be significant and could impact our ability to

operate our business.

disasters and other events beyond our control could materially adversely affect us.

disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy,

and thus could have a strong negative effect on us.

Our business operations are subject to interruption by natural disasters, fire, power

shortages, pandemics and other events beyond our control.

Although we maintain crisis management and disaster response plans, such events

could make it difficult or impossible for us to deliver our services to our customers and could decrease demand for our services.

the spring of 2020, large segments of the U.S.

and global economies were impacted by COVID-19, a significant portion of the U.S.

population were subject to “stay at home”

or similar requirements.

The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments,

including the duration and spread of the outbreak, impact on our customers (both issuers using our services and investors investing on

our platform) and our sales cycles, impact on our customer, employee or industry events, and effect on our vendors, all of which are uncertain

and cannot be predicted.

At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain.

To date, the COVID-19 outbreak has significantly impacted global markets, U.S.

employment numbers, as well as the business prospects of

many small businesses (our potential clients).

A significant part of our business model is based on receiving a percentage of the investments

made through our platform and services.

Further, we are dependent on investments in our offerings to fund our business.

However, to date,

other than working remotely, COVID-19 has not had a negative impact on the Company.

While our business has not yet been impacted by COVID-19,

to the extent COVID-19 continues and limits investment capital or personally impacts any of our key employees, it may have a significant

impact on our results and operations.

Acquisitions may have unanticipated

consequences that could harm our business and our financial condition.

Any acquisition that we pursue, whether successfully

completed or not, involves risks, including:

were subject to “stay at home” or similar requirements.

The extent of the impact of COVID-19 on our operational and financial

performance will depend on certain developments, including the duration and spread of the outbreak, impact on our customers (both issuers

using our services and investors investing on our platform) and our sales cycles, impact on our customer, employee or industry events,

and effect on our vendors, all of which are uncertain and cannot be predicted.

At this point, the extent to which COVID-19 may impact

our financial condition or results of operations is uncertain.

To date, the COVID-19 outbreak has significantly impacted global markets,

employment numbers, as well as the business prospects of many small businesses (our potential clients).

A significant part of our

business model is based on receiving a percentage of the investments made through our platform and services.

Further, we are dependent

on investments in our offerings to fund our business.

However, to date, other than working remotely, COVID-19 has not had a negative

impact on the Company.

While our business has not yet been impacted by COVID-19, to the extent COVID-19 continues and limits investment

capital or personally impacts any of our key employees, it may have a significant impact on our results and operations.

may have unanticipated consequences that could harm our business and our financial condition.

acquisition that we pursue, whether successfully completed or not, involves risks, including:

adverse effects on our operating results, particularly in the fiscal quarters immediately following the acquisition of acquired entities

6 unchanged sentences

of our ongoing business, including diversion of management’s attention from other business concerns.

Future acquisitions may be accomplished through a

cash purchase transaction, the issuance of our equity securities or a combination of both, could result in potentially dilutive issuances

of our equity securities, the incurrence of debt and contingent liabilities and impairment charges related to goodwill and other intangible

assets, any of which could harm our business and financial condition.

If we do not effectively protect our customers’

credit and debit card data, or other personal information, we could be exposed to data loss, litigation, liability and reputational damage.

In connection with credit and debit card sales, we

transmit confidential credit and debit card information by way of secure online networks.

Although we use private networks, third parties

may have the technology or know-how to breach the security of the customer information transmitted in connection with credit and debit

card sales, and our security measures and those of our technology vendors may not effectively prohibit others from obtaining improper

access to this information.

If a person were able to circumvent these security measures, he or she could destroy or steal valuable information

or disrupt our operations.

Any security breach could expose us to risks of data loss, litigation and liability and could seriously disrupt

our operations and any resulting negative publicity could significantly harm our reputation.

We could be harmed by improper disclosure or

loss of sensitive or confidential Company, employee, associate or customer data, including personal data.

In connection with the operation of our business,

we plan to store, process and transmit data, including personal and payment information, about our employees, customers, associates and

candidates, a portion of which is confidential and/or personally sensitive.

Unauthorized disclosure or loss of sensitive or confidential

data may occur through a variety of methods.

These include, but are not limited to, systems failure, employee negligence, fraud or misappropriation,

or unauthorized access to or through our information systems, whether by our employees or third parties, including a cyberattack by computer

programmers, hackers, members of organized crime and/or state-sponsored organizations, who may develop and deploy viruses, worms or other

malicious software programs.

Such disclosure, loss or breach could harm our reputation

and subject us to government sanctions and liability under our contracts and laws that protect sensitive or personal data and confidential

information, resulting in increased costs or loss of revenues.

It is possible that security controls over sensitive or confidential data

and other practices we and our third-party vendors follow may not prevent the improper access to, disclosure of, or loss of such information.

The potential risk of security breaches and cyberattacks may increase as we introduce new services and offerings, such as mobile technology.

Further, data privacy is subject to frequently changing rules and regulations, which sometimes conflict among the various jurisdictions

in which we provide services.

Any failure or perceived failure to successfully manage the collection, use, disclosure, or security of

personal information or other privacy related matters, or any failure to comply with changing regulatory requirements in this area, could

result in legal liability or impairment to our reputation in the marketplace.

Failure to recognize, respond to and effectively

manage the accelerated impact of social media could adversely impact our business.

In recent years, there has been a marked increase

in the use of social media platforms, including blogs, chat platforms, social media websites, and other forms of Internet based communications

which allow individuals access to a broad audience of consumers and other interested persons.

The rising popularity of social media and

other consumer-oriented technologies has increased the speed and accessibility of information dissemination.

Many social media platforms

immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted.

Information posted on such platforms at any time may be adverse to our interests and/or may be inaccurate.

The dissemination of information

via social media could harm our business, reputation, financial condition, and results of operations, regardless of the information’s

The damage may be immediate without affording us an opportunity for redress or correction.

In addition, social media is frequently used to communicate

with our customers and the public in general.

Failure by us to use social media effectively or appropriately, particularly as compared

to our brands’ respective competitors, could lead to a decline in brand value, customer visits and revenue.

Other risks associated

with the use of social media include improper disclosure of proprietary information, negative comments about our brands, exposure of personally

identifiable information, fraud, hoaxes or malicious dissemination of false information.

The inappropriate use of social media by our

customers or employees could increase our costs, lead to litigation or result in negative publicity that could damage our reputation and

adversely affect our results of operations.

Risks Related to Receipt of Securities for Services

We are not, and do not intend to become, regulated

as an investment company under the U.S.

Investment Company Act of 1940, as amended, or the 40 Act, (and similar legislation in other jurisdictions)

and if we are deemed an “investment company” under the 40 Act applicable restrictions would make it impractical for us to

operate as contemplated.

The 40 Act and the rules thereunder (and similar legislation

in other jurisdictions) provide certain protections to investors and impose certain restrictions on companies that are registered as investment

Among other things, such rules limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and

equity securities and impose certain governance requirements.

We have not been and do not intend to become regulated as an investment

company and we intend to conduct our activities so we will not be deemed to be an investment company under the 40 Act (and similar legislation

in other jurisdictions).

In order to ensure that we are not deemed to be an investment company, we may be required to materially restrict

or limit the scope of our operations or plans related to us, we will be limited in the types of acquisitions that we may make and we may

need to modify our organizational structure or dispose of assets that we would not otherwise dispose of.

Moreover, if anything were to

happen which would potentially cause us to be deemed an investment company under the 40 Act, it would be impractical for us to operate

as intended pursuant to our platform and our business, financial condition and results of operations would be materially adversely affected.

Accordingly, we would be required to take extraordinary steps to address the situation, such as the modification and restructuring of

our platform, which would materially adversely affect our ability to derive revenue.

Our consulting and advisory services are primarily

paid for in restricted shares of stock of our customers, which are often private companies with no established trading market for their

For our consulting and advisory services, payment

is often made through equity securities of customers instead of cash.

The securities issued are in private companies with no established

trading market for their securities.

In the absence of a trading market, we may be unable to liquidate our investment, which will result

in the loss of our investment.

Risk Factors Related to our Common Stock

Concentration of ownership

among our majority stockholders may prevent new investors from influencing significant corporate decisions.

As of July 26 2023, Netcapital

Systems LLC, our largest stockholder, beneficially owned, in the aggregate, approximately 18.2% of our outstanding shares of common stock.

As a result, this stockholder will be able to exercise a significant level of control over matters requiring stockholder approval, including

the election of directors, amendment of our certificate of incorporation and approval of significant corporate transactions.

could have the effect of delaying or preventing a change of control of our company or changes in management and will make the approval

of certain transactions difficult or impossible without the support of these stockholders.

There can be no assurance that we will be able

to comply with Nasdaq’s continued listing standards, a failure of which could result in a delisting of our common stock and warrants .

Nasdaq requires that the trading price of a company’s

listed stock on Nasdaq remain above one dollar in order for such stock to remain listed.

If a listed stock trades below one dollar for

more than 30 consecutive trading days, then it is subject to delisting from Nasdaq.

In addition, to maintain a listing on Nasdaq, we must

satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and

independent committee requirements, minimum stockholders’ equity, and certain corporate governance requirements.

If we are unable

to satisfy these requirements or standards, we could be subject to delisting, which would have a negative effect on the price of our common

stock and warrants and would impair your ability to sell or purchase our common stock when you wish to do so.

In the event of a delisting,

we would expect to take actions to restore our compliance with the listing requirements, but we can provide no assurance that any such

action taken by us would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common

stock, prevent our common stock from dropping below the minimum bid price requirement, or prevent future non-compliance with the listing

requirements.

We recently sold a substantial number

of shares of our common stock and warrants to purchase common stock in a public offering, which could cause the price of our common stock

In our May 2023 offering, we sold 1,100,000 shares

of common stock.

The existence of the potential additional shares of our common stock in the public market, or the perception that such

additional shares may be in the market, could adversely affect the price of our common stock.

We cannot predict the effect, if any, that

market sales of those shares of common stock or the availability of those shares of common stock for sale will have on the market price

of our common stock.

Any decline in the price of a share of common stock will also have a negative effect on the price in the market of

We do not expect to pay dividends and

investors should not buy our common stock expecting to receive dividends.

We have not paid any dividends on our common

stock in the past, and do not anticipate that we will declare or pay any dividends in the foreseeable future.

Consequently, you will only

realize an economic gain on your investment in our common stock if the price appreciates.

You should not purchase our common stock expecting

to receive cash dividends.

Since we do not pay dividends, then you may have a limited ability to liquidate or receive any payment on your

Therefore, our failure to pay dividends may cause you to not see any return on your investment even if we are successful in

our business operations.

In addition, because we do not pay dividends we may have trouble raising additional funds, which could affect

our ability to expand our business operations.

We may conduct future offerings of our

common stock and pay debt obligations with our common stock which may diminish our investors’ pro rata ownership and depress our

We reserve the right to make future offers

and sales, either public or private, of our securities, including shares of our common stock or securities convertible into common stock

at prices differing from the price of the common stock previously issued.

In the event that any such future sales of securities are affected

or we use our common stock to pay principal or interest on our debt obligations, an investor’s pro rata ownership interest may

be reduced to the extent of any such future sales.

The market price of our common stock is highly

volatile and could be subject to volatility related or unrelated to our operations.

You should consider an investment in our securities

to be risky, and you should invest in our securities only if you can withstand a significant loss and wide fluctuations in the market

value of your investment.

Some factors that may cause the market price of our common stock to fluctuate, in addition to the other risks

mentioned in this “Risk Factors” section and elsewhere in this prospectus, are:

actual or anticipated fluctuations in quarterly funding portal revenues or operating results, whether in our operations or in those of our competitors;

changes in financial estimates or opinions by research analysts, either with respect to us or other fintech companies;

our failure to accelerate user growth or new issuer growth;

any failure to meet investor or analyst expectations;

the public’s reaction to our press releases, other public announcements and our filings with the SEC;

actual or anticipated changes in domestic or worldwide economic, political or market conditions, such as recessions;

changes in the consumer spending environment;

terrorist acts;

changes in laws or regulations, or new interpretations or applications of laws and regulations, that are applicable to our business;

changes in accounting standards, policies, guidance, interpretations or principles;

short sales, hedging and other derivative transactions in the shares of our common stock;

future sales or issuances of our common stock, including sales or issuances by us, our directors or executive officers and our significant stockholders;

our dividend policy;

changes in the market valuations of other fintech companies;

actions by stockholders;

various market factors or perceived market factors, including rumors, involving us, our vendors and clients, whether accurate or not;

announcements by us or our competitors of new locations, technological advances, significant acquisitions, strategic partnerships, divestitures, joint ventures or other strategic initiatives;

a loss of a key member of management.

The stock markets in general have experienced substantial

volatility that has often been unrelated to the operating performance of individual companies.

These broad market fluctuations may adversely

affect the trading price of our common stock in any market that develops for it.

In addition, our stock price may be influenced by trading

activity in our common stock as a result of market commentary (including commentary that may be unreliable or incomplete in some cases);

changes in expectations about our business, our creditworthiness or investor confidence generally;

or actions by stockholders and others

seeking to influence our business strategies.

In the past, following periods of volatility in the

market price of a company’s securities, stockholders have instituted class action securities litigation against those companies.

Such litigation, if instituted, could result in substantial costs and a diversion of management attention and resources, which would significantly

harm our profitability and reputation.

FINRA sales practice requirements may limit

a stockholder’s ability to buy and sell our securities.

In addition to the “penny stock” rules

described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable

grounds for believing that the investment is suitable for that customer.

Prior to recommending speculative, low-priced securities to their

non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status,

tax status, investment objectives and other information.

The FINRA requirements may make it more difficult for broker-dealers to recommend

that their customers buy our common stock or our warrants, which may have the effect of reducing the level of trading activity in our

acquisitions may be accomplished through a cash purchase transaction, the issuance of our equity securities or a combination of both,

could result in potentially dilutive issuances of our equity securities, the incurrence of debt and contingent liabilities and impairment

charges related to goodwill and other intangible assets, any of which could harm our business and financial condition.

we do not effectively protect our customers’ credit and debit card data, or other personal information, we could be exposed to

data loss, litigation, liability and reputational damage.

connection with credit and debit card sales, we transmit confidential credit and debit card information by way of secure online networks.

Although we use private networks, third parties may have the technology or know-how to breach the security of the customer information

transmitted in connection with credit and debit card sales, and our security measures and those of our technology vendors may not effectively

prohibit others from obtaining improper access to this information.

If a person were able to circumvent these security measures, he or

she could destroy or steal valuable information or disrupt our operations.

Any security breach could expose us to risks of data loss,

litigation and liability and could seriously disrupt our operations and any resulting negative publicity could significantly harm our

could be harmed by improper disclosure or loss of sensitive or confidential Company, employee, associate or customer data, including

personal data.

connection with the operation of our business, we plan to store, process and transmit data, including personal and payment information,

about our employees, customers, associates and candidates, a portion of which is confidential and/or personally sensitive.

disclosure or loss of sensitive or confidential data may occur through a variety of methods.

These include, but are not limited to, systems

failure, employee negligence, fraud or misappropriation, or unauthorized access to or through our information systems, whether by our

employees or third parties, including a cyberattack by computer programmers, hackers, members of organized crime and/or state-sponsored

organizations, who may develop and deploy viruses, worms or other malicious software programs.

disclosure, loss or breach could harm our reputation and subject us to government sanctions and liability under our contracts and laws

that protect sensitive or personal data and confidential information, resulting in increased costs or loss of revenues.

It is possible

that security controls over sensitive or confidential data and other practices we and our third-party vendors follow may not prevent

the improper access to, disclosure of, or loss of such information.

The potential risk of security breaches and cyberattacks may increase

as we introduce new services and offerings, such as mobile technology.

Further, data privacy is subject to frequently changing rules

and regulations, which sometimes conflict among the various jurisdictions in which we provide services.

Any failure or perceived failure

to successfully manage the collection, use, disclosure, or security of personal information or other privacy related matters, or any

failure to comply with changing regulatory requirements in this area, could result in legal liability or impairment to our reputation

in the marketplace.

to recognize, respond to and effectively manage the accelerated impact of social media could adversely impact our business.

recent years, there has been a marked increase in the use of social media platforms, including blogs, chat platforms, social media websites,

and other forms of Internet based communications which allow individuals access to a broad audience of consumers and other interested

The rising popularity of social media and other consumer-oriented technologies has increased the speed and accessibility of

information dissemination.

Many social media platforms immediately publish the content their subscribers and participants post, often

without filters or checks on accuracy of the content posted.

Information posted on such platforms at any time may be adverse to our interests

and/or may be inaccurate.

The dissemination of information via social media could harm our business, reputation, financial condition,

and results of operations, regardless of the information’s accuracy.

The damage may be immediate without affording us an opportunity

for redress or correction.

addition, social media is frequently used to communicate with our customers and the public in general.

Failure by us to use social media

effectively or appropriately, particularly as compared to our brands’ respective competitors, could lead to a decline in brand

value, customer visits and revenue.

Other risks associated with the use of social media include improper disclosure of proprietary information,

negative comments about our brands, exposure of personally identifiable information, fraud, hoaxes or malicious dissemination of false

The inappropriate use of social media by our customers or employees could increase our costs, lead to litigation or result

in negative publicity that could damage our reputation and adversely affect our results of operations.

Related to Receipt of Securities for Services

significant portion of our total assets are held in equity securities of early-stage companies, which securities are illiquid and subject

to volatility, which factors could have a material adverse effect on our financial condition and results of operations.

related to the consulting and advisory services provided by Netcapital Advisors is often made through equity stakes from such customers.

As of April 30, 2024, approximately $25.2 million of our holdings are issued by companies whose securities do not trade on public markets.

The securities issued are typically in private companies with no established trading market for their securities, that often have limited

operating histories, limited operating cash, and negative cash flows.

Additionally, these securities are primarily restricted, and are

subject to legal holding periods pursuant to Rule 144 or other applicable exemptions.

The stock price of such issuers is often volatile,

unpredictable, and with limited liquidity, and the value of such securities on the date of receipt compared to the date when we are able

to legally sell the securities may decrease significantly.

The value ascribed to our assets in our financial statements as of a particular

date may be materially greater than or less than the value that would be realized if our assets were to be liquidated as of such date.

Accordingly, the value of such holdings may change over time due to factors that we do not control, such as issuance of securities by

such companies at lower prices or other market factors.

During the year ended April 30, 2024, we recognized an unrealized loss of approximately

$2.7 million on the value of our equity securities due to the decline in value of a single issuer, which represented an impairment of

more than 80% of the previous value of our holdings in such issuer, which resulted in a reduction of our retained earnings.

the value of our holdings could have a material adverse effect on our financial condition and results of operations.

are not, and do not intend to become, regulated as an investment company under the U.S.

Investment Company Act of 1940, as amended, or

the 40 Act, (and similar legislation in other jurisdictions) and if we are deemed an “investment company” under the 40 Act

applicable restrictions would make it impractical for us to operate as contemplated.

40 Act and the rules thereunder (and similar legislation in other jurisdictions) provide certain protections to investors and impose

certain restrictions on companies that are registered as investment companies.

Among other things, such rules limit or prohibit transactions

with affiliates, impose limitations on the issuance of debt and equity securities and impose certain governance requirements.

not been and do not intend to become regulated as an investment company and we intend to conduct our activities so we will not be deemed

to be an investment company under the 40 Act (and similar legislation in other jurisdictions).

In order to ensure that we are not deemed

to be an investment company, we may be required to materially restrict or limit the scope of our operations or plans related to us, we

will be limited in the types of acquisitions that we may make and we may need to modify our organizational structure or dispose of assets

that we would not otherwise dispose of.

Moreover, if anything were to happen which would potentially cause us to be deemed an investment

company under the 40 Act, it would be impractical for us to operate as intended pursuant to our platform and our business, financial

condition and results of operations would be materially adversely affected.

Accordingly, we would be required to take extraordinary steps

to address the situation, such as the modification and restructuring of our platform, which would materially adversely affect our ability

to derive revenue.

consulting and advisory services are primarily paid for in restricted shares of stock of our customers, which are often private companies

with no established trading market for their securities.

our consulting and advisory services, payment is often made through equity securities of customers instead of cash.

The securities issued

are in private companies with no established trading market for their securities.

In the absence of a trading market, we may be unable

to liquidate our investment, which will result in the loss of our investment.

Related to Operation of our Proposed Secondary Trading Platform

will be dependent on a third-party for operation of our proposed secondary trading platform.

Any disruption in the services provided

by such third-party provider could adversely affect our business.

January 2023, we entered into the Templum License Agreement, to provide issuers and investors on the Netcapital platform with the potential

for greater distribution and liquidity.

Templum is a company that provides capital markets infrastructure for trading private equity

securities, and operates an ATS with approval in 53 U.S.

states and territories for the trading of unregistered or private securities.

We are currently working with Templum on the design of the required software to enable issuers and investors on the Netcapital platform

the ability to access the Templum ATS in order to have the ability to engage in secondary trading of securities.

We do not control the

operations of Templum or own the equipment used to provide such services.

Further, the operation of the Templum ATS is subject to extensive

regulation and oversight.

Accordingly, any regulatory delays or objections will result in delays in our ability to launch the proposed

In addition, because we cannot easily switch between operators of secondary trading platforms of this nature, any disruption

of or interference, whether due to regulatory issues or natural disasters, cyber-attacks, terrorist attacks, power losses, telecommunications

failures, or other similar events, would impact our operations and may adversely affect the ability of issuers and investors to utilize

this platform.

There is no obligation for Templum to renew their agreements with us on commercially reasonable terms or at all.

are unable to renew our agreements on commercially reasonable terms, we may be forced to identify another suitable operator or develop

our own secondary trading capabilities, and we may incur significant costs and possible service interruption in connection with doing

addition, Templum may take actions beyond our control that could seriously harm our business, including:

discontinuing

or limiting our access to its platform;

pricing terms;

or seeking to terminate our contractual relationship altogether;

or interpreting its terms of service or other policies in a manner that impacts our ability to run our business and operations.

customers may encounter difficulties with investing through our proposed secondary trading platform.

and individual investors may face significant risk when buying securities on our proposed secondary trading platform.

These risks include

the following:

companies are not required to make periodic public filings, and therefore certain capitalization, operational and financial information

may not be available for evaluation;

investment may only be appropriate for investors with a long-term investment horizon and a capacity to absorb a loss of some or all

of their investment;

securities, when purchased, are generally highly illiquid, are often subject to further transfer restrictions, and no public market

exists for such securities;

may fail to settle, which could harm our reputation.

may become involved in disputes or litigation matters between customers with respect to failed transactions on our proposed secondary

trading platform (such as in the event of delayed delivery or a failure to deliver securities).

may become involved in disputes and litigation matters between customers with respect to transactions on our proposed secondary trading

There is a risk that clients may increasingly look to us to make them whole for delayed and/or broken trades.

Customers may

litigate over the failure of sellers to deliver securities or over the untimely deliveries of securities.

Any litigation to which we

are a party could be expensive and time consuming, regardless of the ultimate outcome, and the potential costs and risks of such litigation

may incentivize us to settle, which could harm our reputation or have a material adverse effect on our business or results or operations.

to launch our proposed secondary trading platform could result in continued lack of liquidity for investors in our target market.

this lack of liquidity cause reduced investor interest in investing in the unregistered or private securities offered by our clients,

they may be less inclined to use our platform which could have a material adverse effect on our business or results of operations.

of liquidity is a key issue for investors in private companies as private markets lack a liquidity feature in our targeted market.

we fail to launch our proposed secondary trading market, investors purchasing our clients’ securities may continue to have a lack

of liquidity.

Should such continued illiquidity cause reduced investor interest in investing in unregistered or private securities, our

clients may be less inclined to use our funding platform and may seek additional alternatives for raising capital, which could have a

material adverse effect on our business or results of operations.

Related to our Proposed Broker-Dealer Activities

and legal uncertainties related to broker-dealers could harm our business.

securities and derivatives businesses are heavily regulated.

Firms in financial service industries have been subject to an increasingly

regulated environment over recent years, and penalties and fines sought by regulatory authorities have increased accordingly.

our subsidiary, Netcapital Securities Inc.

receive its broker-dealer license, it will become subject to regulations in the U.S.

covering all aspects of their business.

Regulatory bodies in U.S., include without limitation, the SEC and FINRA.

Our mode of operation

and profitability may be directly affected by additional legislation changes in rules promulgated by various government agencies and

self-regulatory organizations that oversee our businesses, and changes in the interpretation or enforcement of existing laws and rules,

including the potential imposition of transaction taxes.

Noncompliance with applicable laws or regulations could result in sanctions

being levied against us, including fines and censures, suspension or expulsion from a certain jurisdiction or market or the revocation

or limitation of licenses.

Noncompliance with applicable laws or regulations could adversely affect our reputation, prospects, revenues

and earnings.

In addition, changes in current laws or regulations or in governmental policies could adversely affect our business, financial

condition and results of operations.

and foreign stock exchanges, other self-regulatory organizations and state and foreign securities commissions can censure, fine, issue

cease-and-desist orders, suspend or expel a broker-dealer or any of its officers or employees.

Our ability to comply with all applicable

laws and rules is largely dependent on our internal systems to ensure compliance, as well as our ability to attract and retain qualified

compliance personnel.

We could be subject to disciplinary or other actions in the future due to claimed noncompliance, which could have

a material adverse effect on our business, financial condition and results of operations.

To continue to operate and to expand our services

internationally, we may have to comply with the regulatory controls of each country in which we conduct, or intend to conduct business,

the requirements of which may not be clearly defined.

The varying compliance requirements of these different regulatory jurisdictions,

which are often unclear, may limit our ability to continue existing international operations and further expand internationally.

our subsidiary Netcapital Securities Inc.

receive its broker-license, it may be fined or subject to other disciplinary or corrective

actions if it does not maintain the capital and liquidity levels required by regulators.

SEC, FINRA, and various other regulatory agencies have stringent rules with respect to the maintenance of specific levels of net capital

by securities broker-dealers.

Should our subsidiary, Netcapital Securities Inc.

receive its broker-dealer license, failure to maintain

the required net capital could result in suspension or revocation of registration by the SEC or suspension or expulsion by FINRA, and

could ultimately lead to liquidation of Netcapital Securities Inc.

If such net capital rules are changed or expanded, or if there is

an unusually large charge against net capital, operations that require an intensive use of capital could be limited.

Such operations

may include investing activities, marketing and the financing of customer account balances.

Also, our ability to withdraw capital from

our brokerage subsidiary could be restricted.

Factors Related to our Common Stock

ability to have our securities traded on the Nasdaq Capital Market is subject to us meeting applicable listing criteria.

are currently listed on the Nasdaq Capital Market, a national securities exchange.

Nasdaq requires companies desiring to list their common

stock to meet certain listing criteria including total number of shareholders:

minimum stock price, total value of public float, and

in some cases total shareholders’ equity and market capitalization.

Our failure to meet such applicable listing criteria could

prevent us from listing our common stock on Nasdaq.

In the event we are unable to have our shares traded on Nasdaq, our common stock

could potentially trade on the OTCQX or the OTCQB, each of which is generally considered less liquid and more volatile than Nasdaq.

failure to have our shares traded on the Nasdaq could make it more difficult for you to trade our shares, could prevent our common stock

trading on a frequent and liquid basis and could result in the value of our common stock being less than it would be if we were able

to list our shares on Nasdaq.

As previously disclosed on a Current Report on Form 8-K filed by the Company on September 1, 2023, the Company received

a notification from The Nasdaq Stock Market, LLC (“Nasdaq”) notifying the Company that it was not in compliance with the minimum

bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market.

Specifically, Nasdaq

Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A)

provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business

Therefore, in accordance with Listing Rule 5810(c)(3)(A), the Company was provided 180 calendar days, or until February 28, 2024,

to regain compliance with the Rule.

Subsequently, on February 29, 2024, Nasdaq determined the Company was eligible for an additional 180

calendar days, or until August 26, 2024, to regain compliance with the Rule.

Since then, Nasdaq has determined that as of July 22, 2024,

the Company’s securities had a closing bid price of $0.10 or less for ten consecutive trading days.1 Accordingly, the Company is

subject to the provisions contemplated under Listing Rule 5810(c)(3)(A)(iii) (the “Low Priced Stocks Rule”).

As a result, on July 23, 2024, Nasdaq delivered written notice to the Company under which it advised the Company

that Nasdaq has determined to delist the Company’s securities from The Nasdaq Capital Market (the “Nasdaq Letter”).

The Company may appeal Nasdaq’s determination to a Hearings Panel (the “Panel”), pursuant to the

procedures set forth in the Nasdaq Listing Rule 5800 Series.

A hearing request will stay any further action pending final resolution of

the Hearing Panel or any extension provided by the Panel.

The Company intends to appeal Nasdaq’s determination and will timely submit a plan to a hearing panel to regain

compliance to the Nasdaq Listing Qualifications Department.

Notwithstanding the Company’s intention

to request a hearing, there can be no assurance that the Panel will grant the Company any compliance period or that the Company will

ultimately regain compliance with all applicable requirements for continued listing on The Nasdaq Capital Market.

The Company is monitoring

the closing bid price of its common stock and will consider options to regain compliance with Nasdaq’s minimum bid price requirement,

including effectuating a reverse stock split.

On July 24, 2024, the Company’s stockholders approved the implementation of a reverse

stock split of the Company’s common stock at a ratio between 1-for-2 and 1-for-100, inclusive, with the ultimate ratio to be determined

by the Company’s board of directors in its sole discretion.

On September 25, 2024, our Board approved a reverse split ratio of

1-for-70 for the reverse split of the issued shares of our common stock.

The Company intends to promptly effectuate a reverse split to

regain compliance with Nasdaq Listing Rules related to minimum bid price for its common stock.

we are unable to regain compliance with the Nasdaq minimum bid price requirement and Nasdaq delists our common stock and warrants and

we are unable to obtain listing on another national securities exchange, a reduction in some or all of the following may occur, each

of which could have a material adverse effect on our shareholders:

liquidity of our common stock;

market price of our common stock;

ability to obtain financing for the continuation of our operations;

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

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

number of market makers in our common stock;

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

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

can be no assurance that we will be able to comply with Nasdaq’s continued listing standards, a failure of which could result in

a delisting of our common stock and warrants .

requires that the trading price of a company’s listed stock on Nasdaq remain above one dollar in order for such stock to remain

If a listed stock trades below one dollar for more than 30 consecutive trading days, then it is subject to delisting from Nasdaq.

In addition, to maintain a listing on Nasdaq, we must satisfy minimum financial and other continued listing requirements and standards,

including those regarding director independence and independent committee requirements, minimum stockholders’ equity, and certain

corporate governance requirements.

If we are unable to satisfy these requirements or standards, we could be subject to delisting, which

would have a negative effect on the price of our common stock and warrants and would impair your ability to sell or purchase our common

stock when you wish to do so.

In the event of a delisting, we would expect to take actions to restore our compliance with the listing

requirements, but we can provide no assurance that any such action taken by us would allow our common stock to become listed again, stabilize

the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the minimum bid price requirement,

or prevent future non-compliance with the listing requirements.

recently sold a substantial number of shares of our common stock and warrants to purchase common stock in a public offering, which could

cause the price of our common stock to decline .

a December 2023 offering, we sold 4,800,000 shares of common stock, pre-funded warrants to purchase up to 11,200,000 shares of our common

stock and common stock warrants to purchase up to 32,000,000 shares of common stock.

In May 2024, we induced some of the warrant holders

to exercise their warrants, and we issued additional warrants to purchase up to 28,640,000 shares of our common stock.

The existence

of the potential additional shares of our common stock in the public market, or the perception that such additional shares may be in

the market, could adversely affect the price of our common stock.

We cannot predict the effect, if any, that market sales of those shares

of common stock or the availability of those shares of common stock for sale will have on the market price of our common stock.

do not expect to pay dividends and investors should not buy our common stock expecting to receive dividends.

have not paid any dividends on our common stock in the past, and do not anticipate that we will declare or pay any dividends in the foreseeable

Consequently, you will only realize an economic gain on your investment in our common stock if the price appreciates.

not purchase our common stock expecting to receive cash dividends.

Since we do not pay dividends, then you may have a limited ability

to liquidate or receive any payment on your investment.

Therefore, our failure to pay dividends may cause you to not see any return on

your investment even if we are successful in our business operations.

In addition, because we do not pay dividends we may have trouble

raising additional funds, which could affect our ability to expand our business operations.

may conduct future offerings of our common stock and pay debt obligations with our common stock which may diminish our investors’

pro rata ownership and depress our stock price.

reserve the right to make future offers and sales, either public or private, of our securities, including shares of our common stock

or securities convertible into common stock at prices differing from the price of the common stock previously issued.

In the event that

any such future sales of securities are affected or we use our common stock to pay principal or interest on our debt obligations, an

investor’s pro rata ownership interest may be reduced to the extent of any such future sales.

market price of our common stock is highly volatile and could be subject to volatility related or unrelated to our operations.

should consider an investment in our securities to be risky, and you should invest in our securities only if you can withstand a significant

loss and wide fluctuations in the market value of your investment.

Some factors that may cause the market price of our common stock to

fluctuate, in addition to the other risks mentioned in this “Risk Factors” section and elsewhere in this prospectus, are:

or anticipated fluctuations in quarterly funding portal revenues or operating results, whether in our operations or in those of our

in financial estimates or opinions by research analysts, either with respect to us or other fintech companies;

failure to accelerate user growth or new issuer growth;

failure to meet investor or analyst expectations;

public’s reaction to our press releases, other public announcements and our filings with the SEC;

or anticipated changes in domestic or worldwide economic, political or market conditions, such as recessions;

in the consumer spending environment;

in laws or regulations, or new interpretations or applications of laws and regulations, that are applicable to our business;

in accounting standards, policies, guidance, interpretations or principles;

sales, hedging and other derivative transactions in the shares of our common stock;

sales or issuances of our common stock, including sales or issuances by us, our directors or executive officers and our significant

stockholders;

dividend policy;

in the market valuations of other fintech companies;

by stockholders;

market factors or perceived market factors, including rumors, involving us, our vendors and clients, whether accurate or not;

announcements

by us or our competitors of new locations, technological advances, significant acquisitions, strategic partnerships, divestitures,

joint ventures or other strategic initiatives;

loss of a key member of management.

stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual

These broad market fluctuations may adversely affect the trading price of our common stock in any market that develops for

In addition, our stock price may be influenced by trading activity in our common stock as a result of market commentary (including

commentary that may be unreliable or incomplete in some cases);

changes in expectations about our business, our creditworthiness or investor

confidence generally;

or actions by stockholders and others seeking to influence our business strategies.

the past, following periods of volatility in the market price of a company’s securities, stockholders have instituted class action

securities litigation against those companies.

Such litigation, if instituted, could result in substantial costs and a diversion of management

attention and resources, which would significantly harm our profitability and reputation.

sales practice requirements may limit a stockholder’s ability to buy and sell our securities.

has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing

that the investment is suitable for that customer.

Prior to recommending speculative, low-priced securities to their non-institutional

customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status,

investment objectives and other information.

The FINRA requirements may make it more difficult for broker-dealers to recommend that their

customers buy our common stock or our warrants, which may have the effect of reducing the level of trading activity in our securities.

As a result, fewer broker-dealers may be willing to make a market in our common stock or our warrants, reducing a stockholder’s

ability to resell shares of our common stock and warrants.

If securities or industry analysts do not publish

or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our securities

adversely, the price of our common stock or warrants and trading volume could decline.

The trading market for our common stock may be influenced

by the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors.

any of the analysts who may cover us change their recommendation regarding our securities adversely, or provide more favorable relative

recommendations about our competitors, the price of our common stock or warrants would likely decline.

If any analyst who may cover us

was to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which

in turn could cause the price of our common stock or warrants or trading volume to decline.

Our issuance of common stock upon the exercise

of options granted under our 2023 Omnibus Equity Incentive Plan may dilute all other stockholders.

We have issued options to purchase 1,950,000 shares

of common stock under our 2023 Omnibus Equity Incentive Plan and we expect to issue options to purchase the remaining 50,000 shares of

common stock in the future to officers, directors, employees and consultants under our 2023 Omnibus Equity Incentive Plan.

Any such issuances

of common stock underlying stock options may cause stockholders to experience dilution of their ownership interests and the per share

value of our common stock to decline.

Our compliance with complicated U.S.

concerning corporate governance and public disclosure is expensive and diverts management’s attention from our core business, which

could adversely affect our business, results of operations, and financial condition.

As a publicly reporting company, we are faced with

expensive, complicated and evolving disclosure, governance and compliance laws, regulations and standards relating to corporate governance

and public disclosure, including the Sarbanes-Oxley Act and the Dodd-Frank Act, and Nasdaq rules.

As a result of the complexity involved

in complying with the applicable rules and regulations, our management’s attention may be diverted from other business concerns,

which could harm our business, results of operations and financial condition.

We may need to hire more personnel in the future or engage

outside consultants, which will increase our operating expenses, to assist us in complying with these requirements.

In addition, changing laws, regulations and standards

relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial

compliance costs, and making some activities more time-consuming.

These laws, regulations and standards are subject to varying interpretations,

in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance

is provided by regulatory and governing bodies.

This could result in continuing uncertainty regarding compliance matters and higher costs

necessitated by ongoing revisions to disclosure and governance practices.

We intend to invest substantial resources to comply with evolving

laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s

time and attention from business operations to compliance activities.

If our efforts to comply with new laws, regulations and standards

differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory

authorities may initiate legal proceedings against us, and our business may be harmed.

Failure to maintain

effective internal control over our financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could cause our financial

reports to be inaccurate.

We are required pursuant

to Section 404 of the Sarbanes-Oxley Act, or Section 404, to maintain internal control over financial reporting and to assess and report

on the effectiveness of those controls.

This assessment includes disclosure of any material weaknesses identified by our management in

our internal control over financial reporting.

Although we prepare our financial statements in accordance with accounting principles generally

accepted in the United States, our internal accounting controls may not meet all standards applicable to companies with publicly traded

If we fail to implement any required improvements to our disclosure controls and procedures, we may be obligated to report

control deficiencies in which case, we could become subject to regulatory sanction or investigation.

Further, these outcomes could damage

investor confidence in the accuracy and reliability of our financial statements.

Claims for indemnification by our directors

and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available

Our articles of incorporation and bylaws provide that

we will indemnify our directors and officers, in each case to the fullest extent permitted by Utah law.

In addition, as permitted by the Utah Business Corporation

Act, our bylaws and the indemnification agreements that we have entered into with our directors and officers provide that:

we will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Utah law.

Utah law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful;

we may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law;

we are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification;

we will not be obligated pursuant to our bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors, or Board, or brought to enforce a right to indemnification;

the rights conferred in our bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees and agents and to obtain insurance to indemnify such persons;

we may not retroactively amend our bylaw provisions to reduce our indemnification obligations to directors, officers, employees and agents.

Limitations on liability and indemnification

As permitted by the corporate laws of the state of

Utah, our articles of incorporation include a provision to eliminate the personal liability of our directors for monetary damages for

breach or alleged breach of their fiduciary duties as directors, subject to certain exceptions.

In addition, our bylaws provide that we

are required to indemnify our officers and directors under certain circumstances, including those circumstances in which indemnification

would otherwise be discretionary, and we will be required to advance expenses to our officers and directors as incurred in connection

with proceedings against them for which they may be indemnified.

If we are required to indemnify, both for the costs of their defense

in any action or to pay monetary damages upon a finding of a court or in any settlement, our business and financial condition could be

materially and adversely affected.

UNRESOLVED STAFF COMMENTS

We are a smaller reporting company as defined by Rule

12b-2 of the Exchange Act and are not required to provide information under this item.

securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they

change their recommendations regarding our securities adversely, the price of our common stock or warrants and trading volume could decline.

trading market for our common stock may be influenced by the research and reports that securities or industry analysts may publish about

us, our business, our market or our competitors.

If any of the analysts who may cover us change their recommendation regarding our securities

adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock or warrants would

likely decline.

If any analyst who may cover us was to cease coverage of our company or fail to regularly publish reports on us, we could

lose visibility in the financial markets, which in turn could cause the price of our common stock or warrants or trading volume to decline.

issuance of common stock upon the exercise of options granted under our 2021 Equity Incentive Plan and our 2023 Omnibus Equity Incentive

Plan may dilute all other stockholders.

have issued options to purchase 2,202,000 shares of common stock under our 2021 Equity Incentive Plan and our 2023 Omnibus Equity Incentive

Plan and we expect to issue options to purchase the remaining 98,000 shares of common stock in the future to officers, directors, employees

and consultants under our 2023 Omnibus Equity Incentive Plan.

Any such issuances of common stock underlying stock options may cause stockholders

to experience dilution of their ownership interests and the per share value of our common stock to decline.

As options are forfeited

we plan to reissue options to other officers, directors, employees and consultants.

compliance with complicated U.S.

regulations concerning corporate governance and public disclosure is expensive and diverts management’s

attention from our core business, which could adversely affect our business, results of operations, and financial condition.

a publicly reporting company, we are faced with expensive, complicated and evolving disclosure, governance and compliance laws, regulations

and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and the Dodd-Frank Act, and Nasdaq

As a result of the complexity involved in complying with the applicable rules and regulations, our management’s attention

may be diverted from other business concerns, which could harm our business, results of operations and financial condition.

to hire more personnel in the future or engage outside consultants, which will increase our operating expenses, to assist us in complying

with these requirements.

addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for

public companies, increasing legal and financial compliance costs, and making some activities more time-consuming.

These laws, regulations

and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application

in practice may evolve over time as new guidance is provided by regulatory and governing bodies.

This could result in continuing uncertainty

regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

invest substantial resources to comply with evolving laws, regulations and standards, and this investment may result in increased general

and administrative expenses and a diversion of management’s time and attention from business operations to compliance activities.

If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies

due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, and our

business may be harmed.

to maintain effective internal control over our financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could cause

our financial reports to be inaccurate.

are required pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to maintain internal control over financial reporting

and to assess and report on the effectiveness of those controls.

This assessment includes disclosure of any material weaknesses identified

by our management in our internal control over financial reporting.

Although we prepare our financial statements in accordance with accounting

principles generally accepted in the United States, our internal accounting controls may not meet all standards applicable to companies

with publicly traded securities.

If we fail to implement any required improvements to our disclosure controls and procedures, we may

be obligated to report control deficiencies in which case, we could become subject to regulatory sanction or investigation.

these outcomes could damage investor confidence in the accuracy and reliability of our financial statements.

for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us

and may reduce the amount of money available to us.

articles of incorporation and bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted

addition, as permitted by the Utah Business Corporation Act, our bylaws and the indemnification agreements that we have entered into

with our directors and officers provide that:

will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request,

to the fullest extent permitted by Utah law.

Utah law provides that a corporation may indemnify such person if such person acted

in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and,

with respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful;

may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law;

are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that

such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled

to indemnification;

will not be obligated pursuant to our bylaws to indemnify a person with respect to proceedings initiated by that person against us

or our other indemnitees, except with respect to proceedings authorized by our board of directors, or Board, or brought to enforce

a right to indemnification;

rights conferred in our bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors,

officers, employees and agents and to obtain insurance to indemnify such persons;

may not retroactively amend our bylaw provisions to reduce our indemnification obligations to directors, officers, employees and

on liability and indemnification matters.

permitted by the corporate laws of the state of Utah, our articles of incorporation include a provision to eliminate the personal liability

of our directors for monetary damages for breach or alleged breach of their fiduciary duties as directors, subject to certain exceptions.

In addition, our bylaws provide that we are required to indemnify our officers and directors under certain circumstances, including those

circumstances in which indemnification would otherwise be discretionary, and we will be required to advance expenses to our officers

and directors as incurred in connection with proceedings against them for which they may be indemnified.

If we are required to indemnify,

both for the costs of their defense in any action or to pay monetary damages upon a finding of a court or in any settlement, our business

and financial condition could be materially and adversely affected.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors