What changed in this filing

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Item 9A. Controls and Procedures

2021-08-31 compared with 2020-08-11 · 1130 added, 954 removed, 153 unchanged (93% of the section changed)

Controls and Procedures.

and Procedures.

(a) Evaluation

of Disclosure Controls and Procedures

The Company’s

management, with the participation of the Chief Executive Officer (the “PEO”) and Chief Financial Officer (the “PFO”),

has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in SEC Rule 13a-15(e)) as

of April 30, 2020.

That evaluation revealed the two material weaknesses identified below (under (b) Management’s Assessment

of Internal Control over Financial Reporting ).

Based on that evaluation, the PEO and the PFO concluded that, as of April

30, 2020, such controls and procedures were not effective.

(b) Management’s

The Company’s management, with the participation

of the Principal Executive Officer (the “PEO”) and Principal Financial Officer (the “PFO”), has evaluated the

effectiveness of the Company’s disclosure controls and procedures (as defined in SEC Rule 13a-15(e)) as of April 30, 2021.

on that evaluation, the PEO and the PFO concluded that, as of April 30, 2021, such controls and procedures were effective.

(b) Management’s

Assessment of Internal Control over Financial Reporting

is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in

the Exchange Act Rules 13a-15(f).

A system of internal control over financial reporting is a process designed to provide

reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external

purposes in accordance with generally accepted accounting principles.

supervision and with the participation of management, including the PEO and the PFO, the Company’s management has evaluated

the effectiveness of its internal control over financial reporting as of April 30, 2020, based on the criteria established in

a report entitled “2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the

Treadway Commission”

and the interpretive guidance issued by the Commission in Release No.

this evaluation, the Company’s management has evaluated and concluded that the Company’s internal control over financial

reporting was ineffective as of April 30, 2020, and identified the following material weaknesses:

is a lack of accounting personnel with the requisite knowledge of Generally Accepted Accounting Principles in the US (“GAAP”),

taxation requirements and the financial reporting requirements of the SEC;

are insufficient written policies and procedures to insure the correct application of accounting and financial reporting with

respect to the current requirements of GAAP and SEC disclosure requirements.

will continue its assessment on a quarterly basis.

We plan to hire personnel and resources to address these material

We believe these issues can be solved with hiring in-house accounting support and plan to do so as soon

as we have funds available for this purpose.

report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal

control over financial reporting.

The Company’s registered public accounting firm was not required to issue an

attestation on its internal controls over financial reporting pursuant to the rules of the SEC.

The Company will continue

to evaluate the effectiveness of internal controls and procedures on an ongoing basis.

in Internal Control over Financial Reporting

been no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under

the Securities Exchange Act) during the quarter ended April 30, 2020 that have materially affected, or are reasonably likely to

materially affect, our internal control over financial reporting.

Management is responsible

for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rules

A system of internal control over financial reporting is a process designed to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles.

Under the supervision

and with the participation of management, including the PEO and the PFO, the Company’s management has evaluated the effectiveness

of its internal control over financial reporting as of April 30, 2021, based on the criteria established in a report entitled “2013

Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission” and the

interpretive guidance issued by the Commission in Release No.

Based on this evaluation, the Company’s management

has evaluated and concluded that the Company’s internal control over financial reporting was effective as of April 30, 2021.

This annual report

does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control

over financial reporting.

The Company’s registered public accounting firm was not required to issue an attestation on

its internal controls over financial reporting pursuant to the rules of the SEC.

The Company will continue to evaluate the

effectiveness of internal controls and procedures on an ongoing basis.

Internal Control over Financial Reporting

There have been no

changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities

Exchange Act) during the quarter ended April 30, 2021 that have materially affected, or are reasonably likely to materially affect, our

internal control over financial reporting.

Executive Officers and Corporate Governance.

and Executive Officers

The following

table and biographical summaries set forth information, including principal occupation and business experience, about our directors

and executive officers at July 29, 2020.

Our executive

officers and directors are as follows:

Directors and

Executive Officers

The following table

and biographical summaries set forth information, including principal occupation and business experience, about our directors and executive

officers as of August 31, 2021.

Our executive officers

and directors are as follows:

Director Since

Chairman of the Board

Chairman of the Board and Chief

Executive Officer

4 unchanged sentences

September 2017

Kathy Kraysler

Chief Marketing Officer

Our directors

serve in such capacity until the first annual meeting of our shareholders and until their successors have been elected and qualified.

Our officers serve at the discretion of our board of directors, until their death, or until they resign or have been removed from

Officers and Directors

Lenk, Chairman of the Board and Chief Executive Officer

is the Chairman of the Board and Chief Executive Officer.

Our directors serve

in such capacity until the first annual meeting of our shareholders and until their successors have been elected and qualified.

serve at the discretion of our board of directors, until their death, or until they resign or have been removed from office.

Executive Officers

and Directors

Cecilia Lenk,

Chairman of the Board and Chief Executive Officer

Cecilia Lenk is the

Chairman of the Board and Chief Executive Officer.

She accepted the position on July 28, 2017.

For the past five year she

has worked as a self-employed business consultant and a town councilor in Watertown, MA.

specialized in technology and health care.

Formerly Vice President of Technology and Digital Design at Decision Resources Inc.,

a global company serving the biopharmaceutical market, she oversaw the implementation of new technologies, products, and business

Prior to joining Decision Resources, Cecilia founded a technology firm that built a patented platform for online research.

She has managed large-scale technology projects for leading corporations, universities, government agencies, and major non-profit

organizations.

For the previous five years she worked

as a self-employed business consultant and a town councilor in Watertown, MA.

Lenk has specialized

in technology and health care.

Formerly Vice President of Technology and Digital Design at Decision Resources Inc., a global company

serving the biopharmaceutical market, she oversaw the implementation of new technologies, products, and business processes.

joining Decision Resources, Cecilia founded a technology firm that built a patented platform for online research.

She has managed large-scale

technology projects for leading corporations, universities, government agencies, and major non-profit organizations.

Lenk has a Ph.D.

in Biology from Harvard University and a B.A.

from Johns Hopkins University in Geography and Environmental Engineering.

She has served on a number of non-profit boards, including Chair of the Johns Hopkins Engineering Alumni.

She is currently on

the Alumni Advisory Board for the Hopkins School of Engineering and is the Chief Executive Officer of our largest shareholder,

to our board of directors key leadership experience in high-growth technology companies and possesses a strong mix of strategic,

finance, and operating skills.

Carmody, Director

She has served

on a number of non-profit boards, including Chair of the Johns Hopkins Engineering Alumni.

She is currently on the Alumni Advisory Board

for the Hopkins School of Engineering.

Lenk brings to

our board of directors key leadership experience in high-growth technology companies and possesses a strong mix of strategic, finance,

and operating skills.

Thomas Carmody,

has served as a Director of the Company since August 2010.

Thomas Carmody has

served as a Director of the Company since August 2010.

He has over 40 years experience as a marketing executive.

five years he has worked as a self-employed marketing consultant for Summit International LLC.

He currently serves on the Board

of Directors of Continental Materials Corporation, Chicago, Illinois, and serves on that company’s audit committee.

Carmody also served as the Vice President of U.S.

Operations and Vice President of the sports division at Reebok International

For the past five years

he has worked as a self-employed marketing consultant for Summit International LLC.

He currently serves on the Board of Directors of

Continental Materials Corporation, Chicago, Illinois, and serves on that company’s audit committee.

Carmody also served as

the Vice President of U.S.

Operations and Vice President of the sports division at Reebok International Inc.

from 1988 to 1996.

As a long-term

marketing expert, Mr.

As a long-term marketing

Carmody brings strategic insight and extensive experience with product distribution to our board of directors.

He also has significant experience serving on the board of another public company.

Director and Secretary

served as a Director and Secretary of the Company since August 2010.

From August 2009 to present, he has served as the President

of Liss Law, LLC, a law firm specializing in real estate conveyances.

Prior to founding Liss Law, he worked as a judicial law

clerk for the Honorable Stephen S.

significant experience serving on the board of another public company.

Avi Liss, Director

and Secretary

Avi Liss has served

as a Director and Secretary of the Company since August 2010.

From August 2009 to present, he has served as the President of Liss Law,

LLC, a law firm specializing in real estate conveyances.

Prior to founding Liss Law, he worked as a judicial law clerk for the Honorable

Mitchell, a bankruptcy court judge for the Eastern District of Virginia.

well qualified to serve as a director of the company due to his knowledge and working experience with legal governance matters.

Geary, Director

has served as a Director of the Company since June 2006.

Since 2009, he has served in several management positions at Statera

and is currently the Vice President of Strategy and Business Development.

From 2008 to 2009, he was the Chief Executive Officer

of ImproveSmart, Inc.

From April 2006 to June 2008, he served as our President and Chief Operating Officer, and as our Chief Executive

Officer from June 2008 to December 2009.

has significant business development and brand marketing expertise in consumer products and services.

Kraysler, Chief Financial Officer

Coreen Kraysler has served as the

Chief Financial Officer of the Company since September 2017.

is a Chartered Financial Analyst, with over 30 years of investment experience.

Formerly a Senior Vice President and Principal

at Independence Investments, she managed several 5-star rated mutual funds as well as institutional accounts and served on the

Investment Committee.

She also worked at Eaton Vance as a Vice President, Equity Analyst on the Large and Midcap Value teams.

A specialist in financial services, household and consumer products, she guest

lectures at local colleges and universities.

She received a B.A.

in Economics and French, Cum Laude, from Wellesley College and

a Master of Science in Management from MIT Sloan.

qualified to serve as a director of the company due to his knowledge and working experience with legal governance matters.

Steven Geary,

Steven Geary has

served as a Director of the Company since June 2006.

Since 2009, he has served in several management positions at Statera and is currently

the Vice President of Strategy and Business Development.

From 2008 to 2009, he was the Chief Executive Officer of ImproveSmart, Inc.

From April 2006 to June 2008, he served as our President and Chief Operating Officer, and as our Chief Executive Officer from June 2008

to December 2009.

Geary has significant

business development and brand marketing expertise in consumer products and services.

Coreen Kraysler,

is the sister of Kathryn Kraysler, the Company’s Chief Marketing Officer

Kraysler, Chief Marketing Officer

Kathryn Kraysler

has served as the Chief Marketing Officer of the Company since May 2018.

She is a Yale M.B.A.

with over 20 years of digital marketing,

strategy, and analytics experience.

She has held Senior Marketing positions at multiple high profile institutions, including PayPal,

Dow Jones and MIT, as well as several early-stage companies.

Her expertise encompasses a broad range of digital marketing,

from demand generation, account based marketing, and inbound marketing, to marketing operations, digital advertising, and analytics.

past five years, she has served as the Director of Marketing Operations and Director of Demand Generation, NewStore, Inc., a Senior

Digital Marketing Manager at TandemSeven, and a Research and Analytics Manager at PayPal Holdings, Inc.

Kathryn Kraysler

is the sister of Coreen Kraysler, the Company’s Chief Financial Officer

CFA, Chief Financial Officer

Kraysler has served as the Chief Financial Officer of the Company since September 2017.

Kraysler is a Chartered Financial

Analyst, with over 30 years of investment experience.

Formerly a Senior Vice President and Principal at Independence Investments,

she managed several 5-star rated mutual funds as well as institutional accounts and served on the Investment Committee.

worked at Eaton Vance as a Vice President, Equity Analyst on the Large and Midcap Value teams.

A specialist in financial services,

household and consumer products, she guest lectures at local colleges and universities.

She received a B.A.

in Economics and French,

Cum Laude, from Wellesley College and a Master of Science in Management from MIT Sloan.

Carole Murko,

CFA, Chief Marketing Officer

Murko is a Chartered

Financial Analyst who spent nearly 20 years in the financial services industry with her primary focus on marketing complex equity and

fixed income strategies to the institutional marketplace for PCM International, State Street Global Advisors and Independence Investments.

She has an AB in Economics from Smith College and an MA in International Economics from NYU.

principal occupation and employment during the past five years was as Membership Director for The Westmoor Club, a private field club

on Nantucket.

The Westmoor Club is neither a parent, subsidiary or affiliate of the Company.

Director Independence

stock is currently quoted on the OTC Pink market and is not listed on the NASDAQ Stock Market or any other national securities

Accordingly, we are not currently subject to the NASDAQ continued listing requirements or the requirements of any other

national securities exchange.

Nevertheless, in determining whether a director or nominee for director should be considered “independent”

the board utilizes the definition of independence set forth in Rule 4200(a)(15) of the NASDAQ Marketplace Rules.

to that definition, Avi Liss and Steven Geary are independent members of our Board of Directors.

Involvement in Certain Legal

Our directors, executive officers

and control persons have not been involved in any of the following events during the past five years:

bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either

at the time of the bankruptcy or within two years prior to that time;

conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other

minor offenses);

Our common stock

is currently quoted on the OTCQX market.

To be eligible for the OTCQX market, the Company is required to have a board of directors that

includes at least 2 independent directors, and the Company must have an audit committee, a majority of the members of which are independent

Pursuant to these requirements, Avi Liss, Thomas Carmody, and Steven Geary are independent members of our Board of Directors.

Involvement in Certain Legal Proceedings

Our directors, executive officers and

control persons have not been involved in any of the following events during the past five years:

bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the

time of the bankruptcy or within two years prior to that time;

conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor

subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,

1 unchanged sentence

or banking activities;

Being found by a court of

competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a

federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Meetings and Committees;

Being found by a court of competent

jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state

securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Board Meetings

and Committees;

Management Matters

of directors took actions on one occasion during the fiscal year ended April 30, 2020.

No fees are paid to directors for attendance

at meetings or for agreeing to a unanimous consent or the board of directors.

of directors does not have a compensation committee.

of directors does not have a nominating committee.

Our board of directors

took actions on five occasions during the fiscal year ended April 30, 2021.

No fees are paid to directors for attendance at meetings

or for agreeing to a unanimous consent or the board of directors.

Compensation Committee

Our board of directors

does not have a compensation committee.

Nominating Committee

Our board of directors

does not have a nominating committee.

Our entire board of directors is responsible for this function.

to the relatively small size of our company and the resulting efficiency of a board of directors that is also limited in size,

our board of directors has determined that it is not necessary or appropriate at this time to establish a separate nominating

Our board of directors intends to review periodically whether such a nominating committee should be established.

of directors uses a variety of methods for identifying and evaluating nominees for director.

It regularly assesses

the appropriate size of the board of directors and whether any vacancies exist or are expected due to retirement or otherwise.

If vacancies exist, are anticipated or otherwise arise, our board of directors considers various potential candidates for director.

may come to their attention through current members of our board of directors, shareholders or other persons.

candidates are evaluated at regular or special meetings of our board of directors and may be considered at any point during the

Qualifications

for consideration as a director nominee may vary according to the particular areas of expertise that may be desired in order to

complement the qualifications that already exist among our board of directors.

Among the factors that our directors

consider when evaluating proposed nominees are their independence, financial literacy, business experience, character, judgment

and strategic vision.

Other considerations would be their knowledge of issues affecting our business, their leadership

experience and their time available for meetings and consultation on company matters.

Our directors seek a diverse

group of candidates who possess the background skills and expertise to make a significant contribution to our board of directors,

our company and our shareholders.

relatively small size of our company and the resulting efficiency of a board of directors that is also limited in size, our board of

directors has determined that it is not necessary or appropriate at this time to establish a separate nominating committee.

board of directors intends to review periodically whether such a nominating committee should be established.

Our board of directors

uses a variety of methods for identifying and evaluating nominees for director.

It regularly assesses the appropriate size

of the board of directors and whether any vacancies exist or are expected due to retirement or otherwise.

If vacancies exist, are anticipated

or otherwise arise, our board of directors considers various potential candidates for director.

Candidates may come to their

attention through current members of our board of directors, shareholders or other persons.

These candidates are evaluated

at regular or special meetings of our board of directors and may be considered at any point during the year.

Qualifications for

consideration as a director nominee may vary according to the particular areas of expertise that may be desired in order to complement

the qualifications that already exist among our board of directors.

Among the factors that our directors consider when evaluating

proposed nominees are their independence, financial literacy, business experience, character, judgment and strategic vision.

considerations would be their knowledge of issues affecting our business, their leadership experience and their time available for meetings

and consultation on company matters.

Our directors seek a diverse group of candidates who possess the background skills and

expertise to make a significant contribution to our board of directors, our company and our shareholders.

Audit Committee

of directors does not have an audit committee.

16(a) Beneficial Ownership Reporting Compliance

Our board of directors

formed an audit committee in 2021 consisting of two independent directors, Thomas Carmody and Avi Liss, and our Chief Executive Officer,

Cecilia Lenk.

The audit committee did not meet until after April 30, 2021.

Section 16(a)

of the Exchange Act of 1934, requires our directors and executive officers, and persons who own more than ten percent of a registered

class of our equity securities (“10% Shareholders”), to file with the Commission initial reports of ownership and

reports of changes in ownership of our common stock and other equity securities.

Officers, directors and 10% Shareholders are

required by Commission regulation to furnish us with copies of all Section 16(a) forms they file.

on our review of the copies of such reports received by us, we believe that for the fiscal year ended April 30, 2019, that our

directors and 10% shareholders did comply with Section 16(a) filing requirements.

We have adopted

a code of business conduct and ethics for our directors, officers and employees, including our Chief Executive Officer.

text of our code is posted on our Internet website at www.valuesetters.com.

Beneficial Ownership Reporting Compliance

Section 16(a) of

the Exchange Act of 1934, requires our directors and executive officers, and persons who own more than ten percent of a registered class

of our equity securities (“10% Shareholders”), to file with the Commission initial reports of ownership and reports of changes

in ownership of our common stock and other equity securities.

Officers, directors and 10% Shareholders are required by Commission regulation

to furnish us with copies of all Section 16(a) forms they file.

Based solely on our

review of the copies of such reports received by us, we believe that for the fiscal year ended April 30, 2021, that our directors and

10% shareholders did comply with Section 16(a) filing requirements.

Code of Ethics

We have adopted a

code of business conduct and ethics for our directors, officers and employees, including our Chief Executive Officer.

our code is posted on our Internet website at www.netcapitalinc.com.

Compensation.

The following

table sets forth, for the fiscal years indicated, all compensation awarded to, earned by or paid to Cecilia Lenk, our Chief Executive

Officer, Coreen Kraysler, our Chief Financial Officer and Kathryn Kraysler our Chief Marketing Officer (collectively, the “Named

Executives”).

We have no other executive officers.

Executive Compensation Table

The following table

sets forth, for the fiscal years indicated, all compensation awarded to, earned by or paid to Cecilia Lenk, our Chief Executive Officer,

Coreen Kraysler, our Chief Financial Officer and Carole Murko, our Chief Marketing Officer (collectively, the “Named Executives”).

have no other executive officers.

Summary Executive

Compensation Table

in pension value and nonqualified

Kraysler, CFO

Kraysler, CMO

(1) Represents the dollar amount

of vested equity awards during the fiscal year.

retirement, pension, profit sharing, stock option or insurance programs or other similar programs.

Outstanding Equity Awards at

Fiscal Year End

no outstanding equity awards at April 30, 2020.

no stock option grants or exercises in fiscal 2020 for Named Executives.

do not compensate our directors for their services as directors.

(1) Represents the dollar amount of vested

equity awards during the fiscal year.

We have no retirement,

pension, profit sharing, stock option or insurance programs or other similar programs for the benefit of our officers and directors.

Outstanding Equity Awards at Fiscal

Carole Murko received

a grant of 12,500 shares of common stock that vests over a 48-month period.

As of April 30, 2021, 8,855 shares remain unvested.

Stock Option Grants

There were no stock

option grants or exercises in fiscal 2021 for Named Executives.

Compensation of

We currently do not

compensate our directors for their services as directors.

Employment Agreements

have an employment agreement in place with our Chief Executive Officer and our Chief Financial Officer.

The agreements expire

on July 31, 2021 and are incorporated by reference to Exhibit 10.1 and Exhibit 10.2 to our Quarterly Report for the quarterly

period ended July 31, 2019.

We currently have

an employment agreement in place with our Chief Executive Officer and our Chief Financial Officer.

The agreements expire on July 31,

2021 and are incorporated by reference to Exhibit 10.1 and Exhibit 10.2 to our Quarterly Report for the quarterly period ended July 31,

We have an employment agreement in place with our Chief Marketing Officer.

The agreement expires on March 10, 2024 and is incorporated

by reference to Exhibit 10.1 to our Current Report dated January 7, 2021.

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following

table sets forth information with respect to the beneficial ownership of shares of our common stock as of July 29, 2020 by:

each person whom we know

beneficially owns more than 5% of any class of equity security;

The following table

sets forth information with respect to the beneficial ownership of shares of our common stock as of August 31, 2021 by:

each person whom we know beneficially

owns more than 5% of any class of equity security;

each of our directors individually;

2 unchanged sentences

Unless otherwise

indicated, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of common

Shares of common stock that an individual or group has the right to acquire within 60 days of July 29, 2020, pursuant to

the exercise of options or restricted stock are, deemed to be outstanding for the purpose of computing the percentage ownership

of such person or group, but are not deemed outstanding for the purpose of calculating the percentage owned by any other person

indicated, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of common stock.

Shares of common stock that an individual or group has the right to acquire within 60 days of August 31, 2021, pursuant to the exercise

of options or restricted stock are, deemed to be outstanding for the purpose of computing the percentage ownership of such person or

group, but are not deemed outstanding for the purpose of calculating the percentage owned by any other person listed.

of Shares and Nature

3 unchanged sentences

_________________

Based on 831,269,212 shares of common stock outstanding as of July 29, 2020.

Based on 2,717,436 shares of common stock outstanding as of August 31, 2021.

** Less than 1%

otherwise noted, the business address of each member of our Board of Directors is c/o

Valuesetters Inc.

745 Atlantic Avenue, Boston Massachusetts 02111

otherwise noted, the business address of each member of our Board of Directors is c/o Netcapital

1 Lincoln Street, Boston Massachusetts 02111

Liss is our Secretary.

individual is a current member of the Board of Directors.

Includes 1,250,000 shares

that vest within 60 days of July 29, 2020.

Such individual

is a current member of the Board of Directors.

Includes 521 shares that vest within

60 days of August 31, 2021.

Relationships and Related Transactions, and Director Independence.

shareholder, Vaxstar LLC, is also our working capital lender.

As of April 30, 2020, we owe our largest shareholder $1,000,000,

under a term note agreement that bears interest at an annual rate of 1.25%.

We have not made any principal or interest payments

to our working capital lender.

Unpaid interest has been accrued and added to the note.

Our Chief Executive Officer, Cecilia Lenk,

is also the Chief executive Officer of Vaxstar LLC.

In connection

with the financing, the Company has agreed to certain restrictive covenants, including, among others, that the Company may not

convey, sell, lease, transfer or otherwise dispose of any part of its business or property, except as permitted in the agreement,

dissolve, liquidate or merge with any other party unless, in the case of a merger, the Company is the surviving entity, incur

any indebtedness except as defined in the agreement, create or allow a lien on any of its assets or collateral that has been pledged

to the Lender, make any loans to any person, except for prepaid items or deposits incurred in the ordinary course of business,

or make any material capital expenditures.

We owe Steven

Geary, a director, $31,680 as of April 30, 2020.

The Company’s

majority shareholder, Netcapital Systems LLC, owns 1,671,360 shares of common stock, or 76.7% of the Company as of April 30, 2021.

Company has a demand note payable to Netcapital Systems LLC of $4,600 and a demand note payable to one of its managers of $3,200.

addition, the Company has accrued a payable of $3,817,516 for supplemental consideration owed in conjunction with its purchase of Netcapital

Funding Portal Inc.

In total the Company owed its largest shareholder $3,822,176 as of April 30, 2021.

The company paid its majority

shareholder $100,000 in fiscal 2021 for use of the software that runs the website www.netcapital.com.

Compensation to officers

in the years ended April 30, 2021 and 2020 consisted of common stock valued at $353,907 and $231,131, respectively, and cash compensation

of $332,724 and $72,000, respectively.

Compensation to a

related party consultant in the years ended April 30, 2021 and 2020 consisted of common stock valued at $76,882 and $49,711, respectively,

and cash compensation of $81,431 and $26,200, respectively.

This consultant is also the controlling shareholder of Zelgor Inc.

Company earned revenues from Zelgor Inc.

of $1,400,000 in the year ended April 30, 2021.

Compensation to two

board members of Netcapital Systems LLC amounted to $162,123 and $0 in the years ended April 30, 2021 and 2020, respectively.

these board members also received stock-based compensation of $76,882 and $49,711 for the years ended April 30, 2021 and 2020, respectively.

We owe Steven Geary,

a director, $31,680 as of April 30, 2021 and 2020.

This obligation is not interest bearing.

$16,680 is recorded as a related party

trade accounts payable and $15,000 as a related party note payable.

$16,680 is recorded as a related party trade

accounts payable and $15,000 as a related party note payable.

We have no signed agreements for the indebtedness to Mr.

have no equity compensation plan either approved or not approved by security holders, and there are no securities currently authorized

for issuance under any equity compensation plan.

However, our Board of Directors has previously approved share-based compensation

in lieu of cash compensation to various consultants and employees.

Such share-based compensation is recognized at the time the

Accounting Fees and Services.

Associates II, PLLC is the Company’s independent registered public accounting firm.

The following

table presents fees for professional audit services rendered by our independent registered public accounting firm during the past

two fiscal years.

Audit related fees

All other fees

on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

with SEC policies regarding auditor independence, our board of directors has responsibility for appointing, setting compensation

and overseeing the work of the independent auditor.

In recognition of this responsibility, the board of directors has established

a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor.

The Company made an investment of $122,914 in an affiliate,

6A Aviation Alaska Consortium, Inc., in conjunction with a land lease in an airport in Alaska.

Our Chief Executive Officer is also the

Chief Executive Officer of 6A Aviation Alaska Consortium, Inc.

As of April 30, 2021

and 2020, we owed $9,490 and $0 to a company controlled by one of our directors.

We paid cash compensation of $29,738 and $0 to this

director for the years ended April 30, 2021 and 2020, respectively.

On April 30, 2020, we sold 722 membership interest units (the "Units")

of Netcapital Systems LLC ("Netcapital") to the company controlled by this related party at a price of $91.15 per Unit for

a total of $65,823, which paid off all debt and accrued interest payable to the related party as of that date.

The price per Unit was

similar to an offer to purchase Units directly from Netcapital.

We currently have

no equity compensation plan either approved or not approved by security holders, and there are no securities currently authorized for

issuance under any equity compensation plan.

However, our Board of Directors has previously approved share-based compensation in lieu

of cash compensation to various consultants and employees.

Such share-based compensation is recognized at the time the shares vest.

Principal Accounting

Fees and Services.

Fruci & Associates

II, PLLC is the Company’s independent registered public accounting firm.

The following table

presents fees for professional audit services rendered by our independent registered public accounting firm during the past two fiscal

Audit related

Policy on Audit

Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Consistent with SEC

policies regarding auditor independence, our board of directors has responsibility for appointing, setting compensation and overseeing

the work of the independent auditor.

In recognition of this responsibility, the board of directors has established a policy to pre-approve

all audit and permissible non-audit services provided by the independent auditor.

Prior to engagement

of the independent auditor for the next year's audit, management will submit an aggregate of services expected to be rendered

during that year for each of four categories of services to the board of directors for approval.

of the independent auditor for the next year's audit, management will submit an aggregate of services expected to be rendered during

that year for each of four categories of services to the board of directors for approval.

Audit services include audit work performed in the preparation of financial statements, as well as work that generally

only the independent auditor can reasonably be expected to provide, including comfort letters and reviews of our financials statements

only the independent auditor can reasonably be expected to provide, including comfort letters and reviews of our financial statements

included in our Quarterly Reports on Form 10-Q.

Audit-Related services are for assurance and related services that are traditionally performed by the independent

auditor, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required

to meet certain regulatory requirements.

Audit-Related services are for assurance and related services that are traditionally performed by the independent auditor,

including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain

regulatory requirements.

Tax services include all services performed by the independent auditor's tax personnel except those services specifically

1 unchanged sentence

Other services are those associated with services not captured in the other categories.

We generally do not request

such services from the independent auditor.

FINANCIAL STATEMENTS

AND EXHIBITS.

Asset Purchase Agreement, dated November 23, 2010, between Valuesetters, Inc.

and NetGames.com, incorporated by reference to Exhibit 2.1 to our Form 10/A dated July 25, 2014.

Articles of Incorporation of Valuesetters, Inc.

We generally do not request such

services from the independent auditor.

FINANCIAL STATEMENTS AND

Purchase Agreement, dated November 23, 2010, between Valuesetters, Inc.

and NetGames.com, incorporated by reference to Exhibit 2.1

to our Form 10/A dated July 25, 2014.

of Incorporation of Valuesetters, Inc.

filed on April 25, 1984, incorporated by reference to Exhibit 3.1 to our Form 10 dated September

Amendment to Articles of Incorporation of Valuesetters, Inc.

filed on September 7, 1999, incorporated by reference to Exhibit 3.2 to our Form 10 dated September 3, 2013.

Amendment to Articles of Incorporation of Valuesetters, Inc.

filed on December 4, 2003, incorporated by reference to Exhibit 3.3 to our Form 10 dated September 3, 2013.

By-Laws of Valuesetters, Inc, incorporated by reference to Exhibit 3.4 to our Form 10 dated September 3, 2013.

Amended Secured Lending Agreement between Valuesetters, Inc.

and Vaxstar LLC incorporated by reference to Exhibit 10.1 to our Form 10/A dated July 25, 2014 and to our Current Report on Form 8-K dated October 31, 2017.

to Articles of Incorporation of Valuesetters, Inc.

filed on September 7, 1999, incorporated by reference to Exhibit 3.2 to our Form

10 dated September 3, 2013.

to Articles of Incorporation of Valuesetters, Inc.

filed on December 4, 2003, incorporated by reference to Exhibit 3.3 to our Form

10 dated September 3, 2013.

of Valuesetters, Inc, incorporated by reference to Exhibit 3.4 to our Form 10 dated September 3, 2013.

to Articles of Incorporation of Netcapital Inc.

filed on September 29, 2020, incorporated

by reference to Exhibit 3.1 to our Form 8-K dated November 5, 2020.

Secured Lending Agreement between Valuesetters, Inc.

and Vaxstar LLC incorporated by reference to Exhibit 10.1 to our Form 10/A dated

July 25, 2014 and to our Current Report on Form 8-K dated October 31, 2017.

and Plan of Merger by and Among Netcapital Funding Portal Inc., ValueSetters, Inc.

and Netcapital

Acquisition Vehicle Inc.

incorporated by reference to Exhibit 10.1 to our Current Report

on Form 8-K dated August 23, 2020.

Certification by the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a) or Rule 15d-14(a)).*

5 unchanged sentences

* filed herewith

Pursuant to the requirements of

Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the

undersigned, thereunto duly authorized.

VALUESETTERS,

of the Board and Chief Executive Officer

Pursuant to the requirements of Section

12 of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned,

thereunto duly authorized.

Chairman of the

Board and Chief Executive Officer

(Principal Executive Officer)

Coreen Kraysler

Chief Financial Officer

2 unchanged sentences

August 31, 2021

Thomas Carmody

August 31, 2021

1 unchanged sentence

August 31, 2021

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

To the Board of Directors and Stockholders

of Valuesetters, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Valuesetters, Inc.

(“the Company”) as of April 30, 2020 and 2019, and the related consolidated statements

of operations, stockholders’

equity (deficit), and cash flows for each of the years in the two-year period ended April 30,

2020, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of April 30, 2020 and 2019, and the results of its operations

and its cash flows for each of the years in the two-year period ended April 30, 2020, in conformity with accounting principles

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of NetCapital Inc.

(f/k/a Valuesetters, Inc.) and Subsidiaries

on the Financial Statements

have audited the accompanying consolidated balance sheets of NetCapital Inc.

and Subsidiaries (“the Company”) as of April

30, 2021 and 2020, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the

years then ended, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements

present fairly, in all material respects, the financial position of the Company as of April 30, 2021 and 2020, and the results of its

operations and its cash flows for the each of the years in the two-year period ended April 30, 2021, in conformity with accounting principles

generally accepted in the United States of America.

Going Concern

The accompanying financial statements

have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements,

the Company has a significant accumulated deficit, has negative working capital, and its ability to make future debt repayments

is uncertain.

These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s

plans in regard to these matters are also described in Note 2.

The financial statements do not include any adjustments that might

result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based

on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)

and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable

rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with

the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have,

nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required

to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control over financial reporting.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures

to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures

in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made

by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a

reasonable basis for our opinion.

We have served as the Company’s auditor since 2017.

Spokane, Washington

August 10, 2020

VALUESETTERS,

Balance Sheets

April 30, 2020

April 30, 2019

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

of Investments

of the Critical Audit Matter

discussed in Note 10 to the consolidated financial statements, the Company has investments in several entities which require the Company

to initially value based on offering prices that are not considered observable and to periodically evaluate potential impairment by assessing

whether the carrying value of the investments exceeds the estimated fair value, or by monitoring observable price changes from orderly

transactions to measure estimated fair value.

Auditing management's analysis includes tests that are complex and highly judgmental due

to the estimation required to determine the fair value of each of the underlying investees.

In particular, fair value estimates are sensitive

to significant assumptions and factors such as expectations about future market and economic conditions, revenue growth rates, strategic

plans, and historical operating results, among others.

the Critical Audit Matter Was Addressed in the Audit

principal audit procedures to evaluate management’s valuation of investments consisted of the following, among others:

and test management assumptions and analysis.

and review third-party market data, public filings, and funding activities of the investee

management’s key indicators of the investee operations, including analysis of operational

growth, public filings, and future strategic and funding plans.

of Intangibles

of the Critical Audit Matter

discussed in Note 11 to the consolidated financial statements, the Company recognized $14.8 million of intangibles during November 2020,

related to consideration paid for the acquisition of Netcapital Funding Portal Inc.

intangible valuation was complex and highly judgmental due to the significant estimation required to determine the fair value of the

identifiable intangible assets acquired within the underlying business unit.

In particular, the fair value estimate was sensitive to

significant assumptions, such as the Company’s financial forecast, revenue growth rate, and operating costs, which are impacted

by expectations about future market and economic conditions, along with the Company’s historical operating results.

the Critical Audit Matter Was Addressed in the Audit

principal audit procedures to evaluate management’s valuation of intangibles consisted of the following, among others:

and review management’s analysis and projections of future growth rates, including

assessing methodologies and testing significant assumptions underlying the data.

and review data used in management’s analysis from third-party and public sources.

the historical basis for estimates of future operating results, including data based on our

audit results and knowledge of the Company’s historical activity.

the fair value of consideration exchanged and overall valuation of business combination.

have served as the Company’s auditor since 2017.

ENDED APRIL 30, 2021 AND 2020

TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Stockholders’

Consolidated Statements of Cash

Notes to Consolidated Financial

NETCAPITAL INC.

Consolidated Balance

and cash equivalents

Accounts receivable

current assets

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts

of $0 in 2020 and $6,750 in 2019

Contract assets

Deferred income tax asset

Prepaid expenses

Total current assets

Non-current prepaid expenses

Investments at cost

Liabilities and Stockholders’

Equity (Deficit)

Equity securities at fair value

Liabilities and Stockholders'

Current liabilities:

Accounts payable

Related party

Accrued expenses

Deferred revenue - current

Notes payable –

related parties

Secured noted payable to related party

Loan payable –

Interest payable –

related party

Demand notes payable

Total current liabilities

Long-term secured note payable to related party

Stock subscription payable

Deferred revenue

Interest payable

Deferred tax liability

Related party debt

Secured note payable

Current portion of SBA loans

Loan payable - bank

notes payable

current liabilities

Long-term liabilities:

SBA loans, less current portion

Commitments and contingencies

Stockholders’

equity (deficit):

Common stock, $.001 par value;

900,000,000 shares authorized, 831,269,212 and 752,519,212 shares issued and outstanding in 2020 and 2019, respectively

Stockholders' equity:

Common stock,

900,000,000 shares

authorized, 2,178,766

shares issued and outstanding

Capital in excess of par value

Accumulated deficit

Total stockholders’

equity (deficit)

Total liabilities and stockholders’

equity (deficit)

See Accompanying

Notes to the Financial Statements

VALUESETTERS, INC.

( 2,462,282 )

stockholders' equity

liabilities and stockholders' equity

See Accompanying Notes

to the Financial Statements

Statements of Operations

Years Ended April 30,

Costs of revenues

Cost and expenses:

Consulting fees

Bad debt provision

General and administrative

Costs and expenses:

Stock-based compensation

Total costs and expenses

Income from operations

Consulting expense

Payroll and payroll related

and administrative closts

costs and expenses

income (loss)

Other income (expense):

Interest expense

Realized loss on sale of investments

Impairment loss

Total other income (expense)

Net income before taxes

Net income tax (expense) benefit

Change in deferred tax assets

Net income tax (expense) benefit

Basic and diluted earnings per share

Basic and diluted Weighted average number of shares outstanding

See Accompanying

Notes to the Financial Statements

VALUESETTERS, INC.

Consolidated Statements of Stockholders' Equity (Deficit)

For the years ended April 30, 2020 and 2019

Realized loss on sale of

Unrealized gain on equity securities

other income (expense)

income before taxes

Net income tax (expense)

in deferred tax assets

income tax (expense) benefit

Basic earnings per

Diluted earnings per share

Weighted average number

of common shares outstanding:

See Accompanying Notes

to the Financial Statements

Statements of Stockholders' Equity

the Years Ended April 30, 2021 and 2020

Balance, April 30, 2019

1 unchanged sentence

$ ( 865,258 )

Net loss, July 31, 2018

Q1 stock-based compensation

Q1 stock issued for purchase

Net income, July 31, 2019

Balance, July 31, 2019

Net loss, October 31, 2018

( 3,042,658 )

Q2 stock-based compensation

Q2 sale of common stock

Net income, October 31,

Balance, October 31, 2019

Net income, January 31, 2019

( 2,500,207 )

Q3 stock-based compensation

Net income, January 31,

Balance, January 31, 2020

Net income, April 30, 2019

( 1,905,033 )

Q4 stock-based compensation

Net loss, April 30, 2020

Balance, April 30, 2020

Net income, July 31, 2019

( 2,462,282 )

Q1 stock-based compensation

Net income, July 31, 2020

Balance, July 31, 2020

Net income, October 31, 2019

( 2,431,411 )

Q2 stock-based compensation

Net income, October 31,

Balance, October 31, 2020

Net income, January 31, 2020

( 2,401,389 )

Shares issued to acquire funding

Return of shares of common stock

Q3 stock-based compensation

Net income, January 31,

Balance, January 31, 2021

Net loss, April 30, 2020

( 2,358,747 )

Q4 stock-based compensation

Shares issued for debt settlement

Net income, April 30, 2021

Balance, April 30, 2021

$ ( 992,622 )

See Accompanying

Notes to the Financial Statements

VALUESETTERS, INC.

Consolidated Statements of Cash Flows

Operating activities

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Stock-based compensation

Impairment of assets

Realized loss on sale of investment

Changes in deferred assets

Provision for bad debts

Changes in non-cash working capital balances:

Accounts receivable

Contract receivable

Accounts payable

Interest payable –

related party

Accrued expenses

Deferred revenue

Cash provided by (used in) operating activities

Financing activities

Payments on bank loan

Payment on demand note

Payment on related party notes

Proceeds from sale of common stock

Cash used in financing activities

Increase (decrease) in cash and cash equivalents during the period

Cash and cash equivalents, beginning of the period

Cash and cash equivalents, end of the period

Cash paid for:

See Accompanying

Notes to the Financial Statements

VALUESETTERS,

See Accompanying Notes

to the Financial Statements

Statements of Cash Flows

Adjustment to reconcile net

income (loss) to net cash used in operating activities:

revenue from the receipt of equity

( 2,319,532 )

( 1,538,980 )

for bad debts

Unrealized gain on equity securities

( 2,571,494 )

in deferred taxes

Changes in non-cash working

capital balances:

( 1,417,257 )

payable and accrued expenses

interest payable

party payable

cash used in operating activities

( 3,250,868 )

from purchase of funding portal subsidiary

cash provided by investing activities

from SBA loans

from stock subscriptions

on related party note

flow provided by (used in) financing activities

(decrease) in cash

and cash equivalents, beginning of the period

and cash equivalents, end of the period

disclosure of cash flow information:

paid for taxes

paid for interest

Non-Cash Investing and Financing Information:

stock issued as prepaid compensation

stock issued to purchase subsidiary

See Accompanying Notes

to the Financial Statements

NETCAPITAL INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

FOR THE YEARS ENDED APRIL 30, 2019 AND 2018

of Business and Summary of Accounting Principles

AS OF AND FOR THE

YEARS ENDED APRIL 30, 2021 AND 2020

Description of Business and Summary of Accounting Principles

of Business and Concentrations

ValueSetters,

(“ValueSetters,”

“we,”

“our,”

or the “Company”) is a provider of consulting

services, subscription services, advertising and digital goods using technology distribution platforms like the Internet and mobile

devices in the media and entertainment markets.

financial statements are presented in United States dollars and have been prepared in accordance with generally accepted accounting

principles in the United States of America.

The Company’s fiscal year end is April 30.

(“Netcapital,” “we,” “our,” or the “Company”) is a fintech company with a scalable

technology platform that allows private companies to raise capital online and provides private equity investment opportunities to investors.

The company's consulting group, Netcapital Advisors, provides marketing and strategic advice and takes equity positions in select companies

with disruptive technologies.

The Netcapital funding portal is registered with the U.S.

Securities & Exchange Commission (SEC) and

is a member of the Financial Industry Regulatory Authority (FINRA), a registered national securities association.

The consolidated

financial statements are presented in United States dollars and have been prepared in accordance with generally accepted accounting principles

in the United States of America.

The Company’s fiscal year end is April 30.

of Consolidation

consolidated financial statements include the accounts of the Company and its wholly owned subsidiary after elimination of significant

intercompany balances and transactions.

Company accounts for income taxes under the asset and liability method in accordance with ASC 740.

Deferred tax assets and liabilities

are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of

existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets

and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary

differences are expected to be recovered or settled.

The ultimate realization of deferred tax assets is dependent upon the generation

of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences

become deductible.

Based upon several profitable quarters over the past two years, and the Company's ability to generate operating

income of $1,147,222 and $624,433 in fiscal 2020 and 2019, respectively, and taxable income in both fiscal years, the Company

recorded a current deferred tax asset of $180,000 as of April 30, 2020, and reduced the valuation allowance to zero dollars, as

it is more likely than not that the deferred tax asset will be realized.

Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will

be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized

in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent

likelihood of being realized upon

settlement with the tax authorities.

Changes in recognition or measurement are reflected in the period in which the change in

judgment occurs.

The Company records interest related to unrecognized tax benefits in interest expense and penalties in income

The Company has determined that it had no significant uncertain tax positions requiring recognition or disclosure.

Revenue Recognition

under ASC 606

Company adopted ASC 606 for the year ended April 30, 2019 on a modified retrospective basis.

The Company had no material contracts

outstanding at the prior year-end, and consequently there were no material effects upon adoption or on prior period activity.

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

The consolidated

financial statements include the accounts of the Company and its wholly owned subsidiaries after elimination of significant intercompany

balances and transactions.

The wholly owned subsidiaries are Netcapital Funding Portal Inc., an equity-based funding portal registered with the SEC, Netcapital Advisors

Inc., which provides marketing and strategic advice to select companies, and AthenaSoft Corp., which has been inactive for the past two

accounts for income taxes under the asset and liability method in accordance with ASC 740.

Deferred tax assets and liabilities are recognized

for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities

and their respective tax bases and operating loss and tax credit carryforwards.

Deferred tax assets and liabilities are measured using

enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal

of deferred tax liabilities during the period in which related temporary differences become deductible.

recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained

on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial

statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized

upon settlement with the tax authorities.

Changes in recognition or measurement are reflected in the period in which the change in judgment

The Company records interest related to unrecognized tax benefits in interest expense and penalties in income tax expense.

Company has determined that it had no significant uncertain tax positions requiring recognition or disclosure.

Recognition under ASC 606

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

Identification of the contract, or contracts, with a customer;

3 unchanged sentences

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

Company identifies performance obligations in contracts with customers, which primarily are professional services and subscription

The transaction price is determined based on the amount the Company expects to be entitled to receive in exchange for

transferring the promised services to the customer.

The transaction price in the contract is allocated to each distinct performance

obligation in an amount that represents the relative amount of consideration expected to be received in exchange for satisfying

each performance obligation.

identifies performance obligations in contracts with customers, which primarily are professional services, listing fees on our funding

portal, and a portal fee of 4.9% of the money raised on the funding portal.

The transaction price is determined based on the amount the

Company expects to be entitled to receive in exchange for transferring the promised services to the customer.

The transaction price in

the contract is allocated to each distinct performance obligation in an amount that represents the relative amount of consideration expected

to be received in exchange for satisfying each performance obligation.

Revenue is recognized when performance obligations are satisfied.

The Company usually bills its customers

before it provides any services, and begins performing services after the first payment is received.

Contracts are typically one

year or less.

For larger contracts, in addition to the initial payment, the Company may allow for progress payments throughout

the term of the contract.

The Company usually bills its customers before it provides any services and begins performing services after the first payment is received.

Contracts are typically one year or less.

For larger contracts, in addition to the initial payment, the Company may allow for progress

payments throughout the term of the contract.

and Estimates

estimation of variable consideration for each performance obligation requires the Company to make subjective judgments.

enters into contracts with customers that regularly include promises to transfer multiple services, such as digital marketing,

web-based videos, offering statements, and professional services.

For arrangements with multiple services, the Company evaluates

whether the individual services qualify as distinct performance obligations.

In its assessment of whether a service is a distinct

performance obligation, the Company determines whether the customer can benefit from the service on its own or with other readily

available resources, and whether the service is separately identifiable from other services in the contract.

This evaluation requires

the Company to assess the nature of each individual service offering and how the services are provided in the context of the contract,

including whether the services are significantly integrated, highly interrelated, or significantly

modify each other, which may require judgment based on the facts and circumstances of the contract.

agreements involve multiple distinct performance obligations, the Company allocates arrangement consideration to all performance

obligations at the inception of an arrangement based on the relative standalone selling prices (SSP) of each performance obligation.

Where the Company has standalone sales data for its performance obligations which are indicative of the price at which the Company

sells a promised service separately to a customer, such data is used to establish SSP.

In instances where standalone sales data

is not available for a particular performance obligation, the Company estimates SSP by the use of observable market and cost-based

The Company continues to review the factors used to establish list price and will adjust standalone selling price methodologies

as necessary on a prospective basis.

The estimation

of variable consideration for each performance obligation requires the Company to make subjective judgments.

The Company enters into

contracts with customers that regularly include promises to transfer multiple services, such as digital marketing, web-based videos,

offering statements, and professional services.

For arrangements with multiple services, the Company evaluates whether the individual

services qualify as distinct performance obligations.

In its assessment of whether a service is a distinct performance obligation, the

Company determines whether the customer can benefit from the service on its own or with other readily available resources, and whether

the service is separately identifiable from other services in the contract.

This evaluation requires the Company to assess the nature

of each individual service offering and how the services are provided in the context of the contract, including whether the services

are significantly integrated, highly interrelated, or significantly modify each other, which may require judgment based on the facts

and circumstances of the contract.

When agreements

involve multiple distinct performance obligations, the Company allocates arrangement consideration to all performance obligations at

the inception of an arrangement based on the relative standalone selling prices (SSP) of each performance obligation.

Where the Company

has standalone sales data for its performance obligations which are indicative of the price at which the Company sells a promised service

separately to a customer, such data is used to establish SSP.

In instances where standalone sales data is not available for a particular

performance obligation, the Company estimates SSP by the use of observable market and cost-based inputs.

The Company continues to review

the factors used to establish list price and will adjust standalone selling price methodologies as necessary on a prospective basis.

revenue from subscriptions to the Company's game website is recognized over time on a ratable basis over the contractual subscription

term beginning on the date that the platform is made available to the customer.

Payments received in advance of subscription

services being rendered are recorded as a deferred revenue.

Professional services revenue is recognized over time as the services

are rendered.

Consequently, when an upfront fee does not relate to the transfer of a promised

good or service, the fee is an advance payment for future goods or services and the Company does not recognize the fee as revenue

until the future services are provided.

a contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable.

Company estimates the amount to reserve for uncollectible amounts based on the aging of the contract balance, current and historical

customer trends, and communications with its customers.

These reserves are recorded as operating expenses against the contract

asset (Accounts Receivable).

assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are

Payments received in advance of subscription services

being rendered are recorded as a deferred revenue.

Professional services revenue is recognized over time as the services are rendered.

contract with a customer is signed, the Company assesses whether collection of the fees under the arrangement is probable.

estimates the amount to reserve for uncollectible amounts based on the aging of the contract balance, current and historical customer

trends, and communications with its customers.

These reserves are recorded as operating expenses against the contract asset (Accounts

assets are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed.

The revenue is recognized when the customer receives services.

Contract assets are included in other current assets

in the consolidated balance sheets and will be recognized during the succeeding twelve-month period .

Contract assets are included in other current assets in the consolidated

balance sheets and will be recognized during the succeeding twelve-month period.

revenues represent billings or payments received in advance of revenue recognition and is recognized upon transfer of control.

Balances consist primarily of annual plan subscription services and professional and training services not yet provided as of

the balance sheet date.

Deferred revenues that will be recognized during the succeeding twelve-month period are recorded as current

deferred revenues in

the consolidated balance sheets, with the remainder recorded as other non-current liabilities in the consolidated balance sheets.

consist primarily of annual plan subscription services and professional services not yet provided as of the balance sheet date.

revenues that will be recognized during the succeeding twelve-month period are recorded as current deferred revenues in the consolidated

balance sheets, with the remainder recorded as other non-current liabilities in the consolidated balance sheets.

to Obtain a Customer Contract

commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts.

are capitalized as other current or non-current assets and amortized on a straight-line basis over the life of the contract, which

approximates the benefit period.

The benefit period was estimated by taking into consideration the length of customer contracts,

technology lifecycle, and other factors.

All sales commissions are recorded as consulting fees within the Company's consolidated

statement of operations.

These costs are capitalized

as other current or non-current assets and amortized on a straight-line basis over the life of the contract, which approximates the benefit

The benefit period was estimated by taking into consideration the length of customer contracts, technology lifecycle, and other

commissions are recorded as consulting fees within the Company's consolidated statement of operations.

Performance Obligations

Company's subscription terms are typically less than one year.

All of the Company’s revenues in the years ended April

30, 2020 and 2019, which amounted to $1,753,558 and $1,013,612, respectively, are considered contract revenues.

revenue as of April 30, 2020 and 2019, which has not yet been recognized, amounted to $656 and $15,711, respectively, and is

recorded on the balance sheet as deferred revenue.

The Company's

subscription terms are typically less than one year.

All of the Company’s revenues in the years ended April 30, 2021 and 2020,

which amounted to $ 4,721,003

and $ 1,753,558 ,

respectively, are considered contract revenues.

Contract revenue as of April 30, 2021 and 2020, which has not yet been recognized, amounted

respectively, and is recorded on the balance sheet as deferred revenue.

The Company expects to recognize revenue on all of its remaining

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per share is computed by dividing net income by the weighted-average number of shares outstanding.

To the extent that stock options

and convertible debt are anti-dilutive, they are excluded from the calculation of diluted earnings per share.

As of April 30,

2019, the Company had stock options outstanding to purchase 18,000,000 shares of common stock at $0.03 per share, which were not

considered in the earnings per share calculation because of their anti-dilutive effect.

The options expired on May

7, 2019 and no options were outstanding as of April 30, 2020.

The Company has no stock options,

warrants or convertible debt, but has a contingent consideration liability that requires it to issue up to 397,293 shares of common stock,

and is dilutive.

and Cash Equivalents

Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

The Company did not have any cash equivalents during fiscal 2020 and 2019.

The Company uses one financial institution for its

cash balances and on occasion maintains cash balances that exceed federally insured limits.

Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation –

Stock Compensation which requires all share-based payments to employees, including the vesting of restricted stock grants to employees,

to be recognized in the financial statements based on their fair values.

The fair value of the equity instrument is charged directly

to compensation expense and credited to common stock and capital in excess of par value during the period during which services

are rendered.

In June 2018,

the FASB issued ASU 2018-07, Improvement to Nonemployee Share-based Payment Accounting, which simplifies the accounting for share-based

The company elected early adoption of this ASU, using the modified retrospective approach, so that all stock compensation

to employees and nonemployees is treated under the same guidance as in ASC 718.

No outstanding stock option grants were required

to be revalued upon the adoption of this ASU.

considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

did not have any cash equivalents during fiscal 2021 and 2020.

The Company uses three financial institutions for its cash balances and

has maintained cash balances that exceed federally insured limits.

extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers, maintaining

an allowance for potential credit losses.

Accounts receivable is reported net of the allowance for doubtful accounts.

The allowance is

based on management’s estimate of the amount of receivables that will be collected.

The Company recorded an allowance for doubtful

accounts of $60,325 and $0 as of April 30, 2021 and 2020, respectively.

accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation

which requires all share-based payments to employees, including the vesting of restricted stock grants to employees, to be recognized

in the financial statements based on their fair values.

The fair value of the equity instrument is charged directly to compensation expense

and credited to common stock and capital in excess of par value during the period during which services are rendered.

follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring,

or in Conjunction with Selling Goods and Services,” for common stock issued to consultants and other non-employees.

of common stock are issued as compensation for services provided to the Company and are accounted for based upon the fair market value

of the common stock.

The fair value of the equity instrument is charged directly to compensation expense, or to prepaid expenses in instances

where stock was issued under a contractual arrangement to a consultant who agreed to provide services over a period of time.

and marketing expenses are recorded separately in the Statements of Operations and are expensed as incurred.

are accounted for at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions

for the identical or a similar investment of the same issuer.

The Company holds three investments that are recorded on its balance

The Company owns 2,350,000 membership interest units of Deuce Drone LLC, at a cost of $0.35 per unit, for a total value

The Company owns 300,000 membership interest units of Kingscrowd LLC, at a cost of $1.80 per unit, for a total value

The Company owns 488 membership interest units of Netcapital Systems LLC, at cost minus impairment of $91.15 per

unit, for a total value of $44,482.

preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates

and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities

at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

significant estimate relates to investments and the accruals for income tax valuation allowance.

On a continual basis, management

reviews its estimates, utilizing currently available information, changes in facts and circumstances, historical experience and

reasonable assumptions.

After such reviews, and if deemed appropriate, those estimates are adjusted accordingly.

Actual results

could differ from those estimates.

All investments in equity securities are

initially measured at cost.

Cost is based upon either the cost of the investment, the fair value of the services provided or the estimated

market value of the investment at the time it was acquired, whichever can be more clearly determined.

If the Company identifies an observable

price change in an orderly transaction for an identical or similar investment of the same issuer, the Company measures the equity security

at fair value as of the date that the observable transaction occurred.

financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions

that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial

statements, and the reported amounts of revenues and expenses during the reporting period.

The most significant estimate relates to investments,

the allowance for doubtful accounts and the income tax valuation allowance.

On a continual basis, management reviews its estimates, utilizing

currently available information, changes in facts and circumstances, historical experience and reasonable assumptions.

After such reviews,

and if deemed appropriate, those estimates are adjusted accordingly.

Actual results could differ from those estimates.

Determination

1 unchanged sentence

and cash equivalents, accounts receivable, and accounts payable

general, carrying amounts approximate fair value because of the short maturity of these instruments.

carrying amounts approximate fair value because of the short maturity of these instruments.

Revenue represents revenues collected but not earned as of the year end.

The Company renders services, or rights to use its

software, over a specific time period and revenues are recognized as earned as time passes.

April 30, 2020 and 2019, the Company’s secured debt was carried at its face value plus accrued interest.

Based on the financial

condition of the Company, it is impracticable for the Company to estimate the fair value of its debt.

Company has no instruments with significant off balance sheet risk.

The Company renders services, or rights to use its software,

over a specific time period and revenues are recognized as earned as time passes.

30, 2021 and 2020, the Company’s secured and unsecured debt was carried at its face value plus accrued interest.

has no instruments with significant off balance sheet risk.

Accounting Pronouncements

In June 2016,

the FASB issued ASU No.

In June 2016, the

FASB issued ASU No.

2016-13 Financial Instruments-Credit Losses .

The new guidance provides better representation

about expected credit losses on financial instruments.

This update requires the use of a methodology that reflects expected losses

and requires consideration of a broader range of reasonable and supportive information to inform credit loss estimates.

This ASU is effective for reporting periods beginning after December 15, 2022, with early adoption permitted.

is studying the impact of adopting the ASU in fiscal year 2023, and what effect it could have.

The Company believes the accounting

change would not have a material effect on the financial statements.

2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which makes modifications to disclosure requirements

on fair value measurements.

The amendment is effective for public companies with fiscal years beginning after December 15, 2019.

Early adoption is permitted.

The Company is currently assessing the impact of this pronouncement to its consolidated financial

2018, the FASB issued 2018-15, Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40), which reduces complexity

for the accounting for costs of implementing a cloud computing service arrangement.

The amendment is effective for public companies

with fiscal years beginning after December 15, 2019.

Early adoption is permitted.

The Company is currently assessing the impact

of this pronouncement to its consolidated financial statements.

In June 2018,

the FASB issued ASU 2018-07, Improvement to Nonemployee Share-based Payment Accounting, which simplifies the accounting for share-based

elected early adoption of this ASU, using the modified retrospective approach, so that all stock compensation to employees and

nonemployees is treated under the same guidance as in ASC 718.

The new guidance provides better representation about

expected credit losses on financial instruments.

This update requires the use of a methodology that reflects expected losses and requires

consideration of a broader range of reasonable and supportive information to inform credit loss estimates.

This ASU is effective

for reporting periods beginning after December 15, 2022, with early adoption permitted.

The company is studying the impact of adopting

the ASU in fiscal year 2023, and what effect it could have.

The Company believes the accounting change would not have a material effect

on the financial statements.

In June 2018, the

FASB issued ASU 2018-07, Improvement to Nonemployee Share-based Payment Accounting, which simplifies the accounting for share-based payments.

The company elected early adoption of this ASU, using the modified retrospective approach, so that all stock compensation to employees

and nonemployees is treated under the same guidance as in ASC 718.

December 2019, the FASB issued Accounting Standard Update No.

1 unchanged sentence

the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes.

This guidance will be

effective for us in the first quarter of 2021 on a prospective basis, and early adoption is permitted.

We are currently evaluating

the impact of the new guidance on our consolidated financial statements.

does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the

accompanying financial statements.

As new accounting pronouncements are issued, we will adopt those that are applicable under

the circumstances.

Concern Matters and Realization of Assets

accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and

the satisfaction of liabilities in the ordinary course of business.

However, the Company had negative working capital of $1,057,581

This guidance will be effective

for us in the first quarter of fiscal 2022 on a prospective basis, and early adoption is permitted.

We are currently evaluating the impact

of the new guidance on our consolidated financial statements.

Management does not

believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying

financial statements.

As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.

Concentrations

ended April 30, 2021, the Company had one customer that constituted 30 %

of its revenues, a second customer that constituted 15 %

of its revenues, a third customer that constituted 14 %

of its revenues and a fourth customer that accounted for 11 %

of its revenues.

For the year ended April 30, 2020, the Company had one customer that constituted 47 %

of its revenues, a second customer that constituted 31 %

of its revenues and a third customer that accounted for 13 %

of its revenues.

The following table

summarizes components debt as of April 30, 2021 and 2020:

payable – related parties

notes payable

payable – bank

current portion of long-term debt

long-term debt

As of April 30, 2021

In addition, the Company is not certain how the COVID-19 pandemic will impact its future operations.

the Company may not be able to meet its obligations as they become due.

Although the Company borrowed an aggregate of $2,385,800

in May and June of 2020 from the U.S.

Small Business Administration, and believes it may have the cash resources to fund its continuing

operations, it may not be able to generate the cash flow it needs to make debt and interest payments, including a principal payment

of $1,000,000 that is due on October 31, 2020 to a related party.

Accordingly, the management of the Company has concluded that

there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date of

these financial statements.

Company may not be able to raise sufficient additional debt, equity or other cash on acceptable terms, if at all.

Failure to generate

sufficient revenues, achieve certain other business plan objectives or raise additional funds could have a material adverse effect

on the Company’s results of operations, cash flows and financial position, including its ability to continue as a going

concern, and may require it to significantly reduce, reorganize, discontinue or shut down its operations.

view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying

balance sheet is dependent upon continued operations of the Company which, in turn, is dependent upon the Company’s ability

to meet its financing requirements on a continuing basis, and to succeed in its future operations.

The financial statements do

not include any adjustments

relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that

might be necessary should the Company be unable to continue in its existence.

Management’s plans include:

to merge its business operations with some of the revenue-generating early-stage companies that it has incubated.

Company already owns a portion of more than a dozen companies, and believes that the combination of some of those entities

with ValueSetters will provide an efficient use of fixed overhead and create additional cash flow from operations.

to look for software niches and digital products that can be sold via an Internet-based store.

to provide consulting services and continue to charge both a cash fee and an equity-based fee, when possible, in exchange

for these services.

can be no assurance that the Company will be able to achieve or maintain cash-flow-positive operating results.

If the Company

is unable to generate adequate funds from operations or raise sufficient additional funds, the Company may not be able to repay

its existing debt, continue to operate its business network, respond to competitive pressures or fund its operations.

the Company may be required to significantly reduce, reorganize, discontinue or shut down its operations.

The financial statements

do not include any adjustments that might result from this uncertainty.

following table summarizes components debt as of April 30, 2020 and 2019:

Interest Rate

Secured lender (affiliate)

Notes payable –

related parties

Demand notes payable

Loan payable –

of April 30, 2020 and 2019, the Company owed its principal lender (“Lender”) $1,000,000 under a loan and security

agreement (“Loan”) dated April 28, 2011, that was amended on July 26, 2014 and again on October 31, 2017.

is also the largest shareholder of the Company, owning 271,371,454 shares of common stock, or 32.6% of the 831,269,212 shares

issued and outstanding, as of April 30, 2020.

Loan was amended on October 31, 2017 to change the maturity date to October 31, 2020, reduce the interest rate from 8% to 1.25%

per annum, and reduce the default interest rate from 15% to 8% per annum (the “Amendments”).

In conjunction with the

Amendments, the Lender also agreed to reduce the total debt and accrued interest payable by $453,031 to $1,000,000, in exchange

for the Company issuing to the Lender 44,198,246 shares of its common stock.

Consequently, upon issuance of the 44,198,246

shares, the Company recorded an increase of $44,198 in common stock and $408,833 in capital in excess of par value.

connection with the financing, the Company has agreed to certain restrictive covenants, including, among others, that the Company

may not convey, sell, lease, transfer or otherwise dispose of any part of its business or property, except as permitted in the

agreement, dissolve, liquidate or merge with any other party unless, in the case of a merger, the Company is the surviving entity,

incur any indebtedness except as defined in the agreement, create or allow a lien on any of its assets or collateral that has

been pledged to the Lender, make any loans to any person, except for prepaid items or deposits incurred in the ordinary course

of business, or make any material capital expenditures.

To secure the payment of all obligations to the Lender, the Company granted

to the Lender a continuing security interest and first lien on all of the assets of the Company.

of April 30, 2020 and 2019, the Company’s related-party unsecured notes payable totaled $15,000 and $76,100, respectively.

The Company also owes $34,324 as of April 30, 2020 and 2019 to Chase Bank.

For the loan from Chase Bank, the Company pays interest

only on a monthly basis, which is calculated at a rate of 5.5% per annum.

debt to Chase Bank had been personally guaranteed by a former Chief Executive Officer and Chairman of the Board (the “Former

The Former CEO sold shares of the Company to a third-party, and in addition to payments to the Former CEO, the contract

of sale required the third-party make monthly payments to Chase Bank to pay down the money owed to Chase Bank.

Total payments

received from the third-party in fiscal 2020 and 2019 amounted to $0 and $4,600, respectively.

The receipt of the $4,600 in fiscal

2019 was recorded as other income.

fiscal 2020, the Company received a $10,000 advance from the U.S.

Small Business Administration (“SBA”) in conjunction

with an Economic Injury Disaster Loan application.

Based upon SBA information regarding the advance payments that were made to

businesses, the Company considers the $10,000 received as a grant and recorded the $10,000 as other income.

notes payable totaled $7,860 as of April 30, 2020 and 2019.

Value Measurements

Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair

value disclosures of financial instruments on a recurring basis.

Value Hierarchy

Fair Value Measurements Topic of the FASB Accounting Standards Codification establishes a fair value hierarchy that prioritizes

the inputs to valuation techniques used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices

in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving

significant unobservable inputs (Level 3 measurements).

and 2020, the Company owed its principal lender (“Lender”) $ 1,000,000

under a loan and security agreement (“Loan”)

dated April 28, 2011, that was amended on July 26, 2014 and again on October 31, 2017, October 31, 2020, January 31, 2021 and April 30,

The Lender was the largest shareholder of the Company owning 32.6% of the shares issued and outstanding as of April 30, 2020.

with the purchase of Netcapital Funding Portal Inc., the Lender owns less than 10% of the Company and is no longer considered a related

The Loan was amended

on October 31, 2020 to change the maturity date to January 31, 2021, and increase the interest rate from 1.25% to 8% per annum.

has been further amended to change the maturity date to April 30, 2022.

connection with the financing, the Company has agreed to certain restrictive covenants, including, among others, that the Company may

not convey, sell, lease, transfer or otherwise dispose of any part of its business or property, except as permitted in the agreement,

dissolve, liquidate or merge with any other party unless, in the case of a merger, the Company is the surviving entity, incur any indebtedness

except as defined in the agreement, create or allow a lien on any of its assets or collateral that has been pledged to the Lender, make

any loans to any person, except for prepaid items or deposits incurred in the ordinary course of business, or make any material capital

expenditures.

To secure the payment of all obligations to the Lender, the Company granted to the Lender a continuing security interest

and first lien on all of the assets of the Company.

As of April 30, 2021

and 2020, the Company’s related-party unsecured notes payable totaled $22,860

and $15,000 ,

respectively.

Demand notes payable totaled $ 0 and

of April 30, 2021 and 2020.

The demand notes totaling $ 7,860

were determined to be related party notes as

of the date of the acquisition of Netcapital Funding Portal Inc.

(“Funding Portal”) because the notes are from a board member

of the Funding Portal and the former parent of the Funding Portal, which is now the Company’s largest shareholder, owning 1,671,360

shares of common stock of the Company, or 76.7%

as of April 30, 2021.

The Company also

as of April 30, 2021 and 2020 to Chase Bank.

For the loan from Chase Bank, the Company pays interest only on a monthly basis, which is calculated at a rate of 5.5% per annum.

On May 6, 2020, the

Company borrowed $1,885,800 (the “May Loan”), on June 17, 2020 the Company borrowed $500,000 (the “June Loan”),

and on February 2, 2021, the Company borrowed $1,885,800 (the “February Loan”) from an SBA loan program.

The May loan bears interest at a

rate of 1% per annum and the SBA has postponed any installment payments until September 6, 2021.

The Company is applying for

forgiveness of the May Loan and believes it will be forgiven in its entirety.

The June Loan requires

installment payments of $2,437 monthly, beginning on June 17, 2021, over a term of thirty years.

However, the SBA has postponed the first

installment payment for 12 months.

Interest accrues at a rate of 3.75% per annum.

The Company agreed to grant a continuing security interest

in its assets to secure payment and performance of all debts, liabilities, and obligations to the SBA.

The June Loan was personally guaranteed

by the Company’s Chief Financial Officer.

The February loan

bears interest at a rate of 1% per annum and the due date of the first payment is May 22, 2022.

The Company plans to apply for forgiveness

of the February Loan and believes will be forgiven in its entirety.

In fiscal 2020, the

Company received a $10,000 advance from the U.S.

Small Business Administration (“SBA”) in conjunction with an Economic Injury

Disaster Loan application.

Based upon SBA information regarding the advance payments that were made to U.S.

businesses, the Company considers

the $10,000 received as a grant and recorded the $10,000 as other income.

April 30, 2021 future payments under debt obligations over each of the next five years and thereafter were as

of future payments under short-and long-term debt agreements

months ended April 30:

future payments of principal

Fair Value Measurements

The Company uses

fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures of

financial instruments on a recurring basis.

The Fair Value Measurements

Topic of the FASB Accounting Standards Codification establishes a fair value hierarchy that prioritizes the inputs to valuation techniques

used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets

or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are as follows:

1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability

to access at the measurement date.

1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access

at the measurement date.

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

1 unchanged sentence

3 inputs are unobservable inputs for the asset or liability.

Financial assets

measured at fair value on a recurring basis are summarized below as of April 30, 2021 and 2020:

of Financial assets measured at fair value on a recurring basis

April 30, 2021

Equity securities

at fair value

April 30, 2020

Equity securities at fair value

Determination

of Fair Value

the Fair Value Measurements Topic of the FASB Accounting Standards Codification, the Company bases its fair value on the price

that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date.

It is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable

inputs when developing fair value measurements, in accordance with the fair value hierarchy.

Fair value measurements for assets

and liabilities where there exists limited or no observable market data and, therefore, are based primarily upon management’s

own estimates, are often calculated based on current pricing policy, the economic and competitive environment, the characteristics

of the asset or liability and other such factors.

Therefore, the results cannot be determined with precision and may not be realized

in an actual sale or immediate settlement of the asset or liability.

Additionally, there may be inherent weaknesses in any calculation

technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, that could

significantly affect the results of current or future value.

Note 1 for a description of valuation methodologies used for assets and liabilities recorded at fair value and for estimating

fair value where it is practicable to do so for financial instruments not recorded at fair value (disclosures required by the

Fair Value Measurements Topic of the FASB Accounting Standards Codification).

Tax Cuts and Jobs Act ("Tax Act") was enacted on December 22, 2017.

Among numerous provisions, the Tax Act reduced the

federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign

subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings.

As a result of the

Tax Act, the Company remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse

in the future, which is generally 21%.

of April 30, 2020, the Company had net operating loss carryforwards for Federal income tax purposes of approximately $700,000

expiring in the years of 2021 through 2034.

Utilization of the net operating losses may be subject to annual limitations provided

by Section 382 of the Internal Revenue Code and similar state provisions.

income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial

reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets

and liabilities as of April 30, 2020 and 2019 were as follows:

Under the Fair Value

Measurements Topic of the FASB Accounting Standards Codification, the Company bases its fair value on the price that would be received

to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair

value measurements, in accordance with the fair value hierarchy.

Fair value measurements for assets and liabilities where there exists

limited or no observable market data and, therefore, are based primarily upon management’s own estimates, are often calculated

based on current pricing policy, the economic and competitive environment, the characteristics of the asset or liability and other such

Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement

of the asset or liability.

Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying

assumptions used, including discount rates and estimates of future cash flows, that could significantly affect the results of current

or future value.

See Note 1 for a

description of valuation methodologies used for assets and liabilities recorded at fair value and for estimating fair value where it

is practicable to do so for financial instruments not recorded at fair value (disclosures required by the Fair Value Measurements Topic

of the FASB Accounting Standards Codification).

The Tax Cuts and

Jobs Act ("Tax Act") was enacted on December 22, 2017.

Among numerous provisions, the Tax Act reduced the U.S.

federal corporate

tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously

tax deferred, and creates new taxes on certain foreign sourced earnings.

As a result of the Tax Act, the Company re-measured certain

deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%.

As of April 30, 2021,

the Company had net operating loss carryforwards for Federal income tax purposes of approximately $ 890,000

in the years of 2022 through 2035 .

Utilization of the

net operating losses may be subject to annual limitations provided by Section 382 of the Internal Revenue Code and similar state provisions.

Deferred income taxes

reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes

and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities as of

April 30, 2021 and 2020 were as follows:

of Income Taxes

Deferred tax assets, net:

Net operating loss carryforwards

Asset impairment loss

Deferred tax assets

Valuation allowance

Net deferred assets

April 30, 2020, the Company had net deferred tax assets calculated at an expected rate of 21%, or approximately $180,000.

30, 2019, the Company recognized the net deferred asset to the extent of the impact on current book earnings.

Effective April

30, 2020, Company management believes that historical, current and expected earnings are sufficient to meet the more likely than

not standard to enable the Company to recognize the net deferred tax asset.

As allowable under accounting standards, the Company

elected to fully remove the valuation allowance as of April 30, 2020.

following is a reconciliation of the tax provisions for the years ended April 30, 2020 and 2019 with the statutory Federal income

Percentage of Pre-Tax Income

Statutory Federal income tax rate

Loss generating no tax benefit

Effective tax rate

Company recorded no interest and penalties relating to unrecognized tax benefits as of and during the years ended April 30, 2020

operating loss carryforwards

Stock-based compensation

impairment loss

Deferred tax liability

Unrealized gain

Total deferred tax liability

net deferred tax assets (liabilities)

$ ( 433,000 )

The valuation allowance is $ 0 as

of April 30, 2021 and April 30, 2020.

Company management believes that historical, current and expected earnings

are sufficient to meet the more likely than not standard to enable the Company to utilize the deferred tax asset.

The Company did not

have any material unrecognized tax benefits as of April 30, 2021 and 2020.

The Company does not expect the unrecognized tax benefits

to significantly increase or decrease within the next twelve months.

The Company recorded no interest and penalties relating to

unrecognized tax benefits as of and during the years ended April 30, 2021 and 2020.

The Company is subject to U.S.

federal income tax, as well as taxes by various state jurisdictions.

The Company is currently

open to audit under the statute of limitations by the federal and state jurisdictions for the years ending April 30, 2018 through

and Contingencies

Company is subject to legal proceedings and claims that arise in the ordinary course of its business.

In the opinion of management,

the amount of ultimate liability, if any, is not likely to have a material effect on the financial condition, results of operations

or liquidity of the Company.

However, as the outcome of litigation or legal claims is difficult to predict, significant changes

in the estimated exposures could occur.

federal income tax,

as well as taxes by various state jurisdictions.

The Company is currently open to audit under the statute of limitations by the federal

and state jurisdictions for the years ending April 30, 2019 through 2021.

Commitments and Contingencies

The Company is subject

to legal proceedings and claims that arise in the ordinary course of its business.

In the opinion of management, the amount of ultimate

liability, if any, is not likely to have a material effect on the financial condition, results of operations or liquidity of the Company.

However, as the outcome of litigation or legal claims is difficult to predict, significant changes in the estimated exposures could occur.

There are no known legal complaints or claims against the Company.

Company utilizes office space in Boston, Massachusetts, at a cost of approximately $4,200 per month, under a month-to-month lease

agreement that allows the company to end its lease by providing 30-day written notice.

The lease agreement includes a deposit

Stockholders’

Equity (Deficit)

The Company utilizes

office space in Boston, Massachusetts, at a cost of approximately $3,600

per month, one-year membership agreement that

ends on March 31, 2022.

The membership agreement includes a deposit of $6,300 .

A novel strain of

coronavirus, or COVID-19, has spread throughout the world and has been declared to be a pandemic by the World Health Organization.

of the date this report was issued, our operations have not been significantly impacted by the COVID-19 outbreak.

The number of people

establishing accounts on our website Netcapital.com has more than doubled during the pandemic.

Most of our employees work remotely from

a home office to access our technology, which runs 24 hours a day on the internet.

However, we cannot at this time predict the specific

extent, duration, or full impact that the COVID-19 outbreak will have on our financial condition, operations, and business plans for

fiscal year 2022.

Our operations have adapted social distancing practices, and the next expected milestones of our product may be impacted,

and we may experience delays in anticipated timelines and milestones.

Stockholders’ Equity

Company is authorized to issue 900,000,000 shares of its common stock, par value $0.001.

831,269,212 and 752,519,212 shares were

outstanding as of April 30, 2020 and 2019, respectively.

fiscal 2020, 78,750,000 shares were issued for stock-based compensation.

In fiscal 2019, 17,825,002 shares were issued for stock-based

compensation, 2,800,000 shares were issued in conjunction with a private placement memorandum for the private sale of common stock,

and 200,000 shares were issued for the purchase of an Internet game company.

the years ended April 30, 2020 and 2019, the Company recorded $356,252 and $65,153, respectively, in stock-based compensation

As of April 30, 2020 and 2019, there was $609,010 and $25,699 of prepaid stock-based compensation expense.

expense was recorded from the issuance of shares of our common stock.

25 million shares of our common stock, valued at $305,000,

were issued on September 7, 2019 for consulting services for the service period from September

7, 2019 to August 31, 2021, which accounts for $205,580 of the prepaid expense at April 30, 2020.

The remaining $403,430 in prepaid

expenses as of April 30, 2020 is the result of the issuance of 50 million shares of our common stock, valued initially at $610,000,

for services of our Chief Executive Officer and Chief Financial Officer for the service period from September 9, 2019 to July

The prepaid balances are being amortized on a straight-line basis over the respective service periods.

May 7, 2014, the Company granted 5-year stock options that fully vest over a three-year period to three consultants.

Each consultant

was granted an option to purchase up to 6 million shares of the Company’s common stock at a price of $0.03 per share.

Company entered consulting agreements to issue common stock and options to purchase common stock and recorded the applicable non-cash

expense in accordance with the authoritative guidance of the Financial Accounting Standards Board.

All such stock option grants

expired on May 7, 2019 and none of the option holders exercised their option to buy common stock.

table below presents the components of stock-based compensation expense for the years ended April 30, 2020 and 2019.

April 30, 2020

April 30, 2019

Chief Executive Officer

Chief Financial Officer

Chief Marketing Officer

Related party consultant

Marketing consultant

Business consultant

table below presents the shares issued as compensation for the years ended April 30, 2020 and 2019:

April 30, 2020

April 30, 2019

Chief Executive Officer

Chief Financial Officer

Chief Marketing Officer

Related party consultant

Business consultant

Marketing consultant

table below presents the prepaid compensation expense as of April 30, 2020 and 2019:

April 30, 2020

April 30, 2019

Chief Executive Officer

Chief Financial Officer

Related party consultant

Business consultant

Marketing consultant

following tables present the outstanding and exercisable options, and the new issuances and deletions for the two-year period

ended April 30, 2020.

of Exercise Prices

As of April 30, 2019

As of April 30, 2020

Outstanding April 30, 2018

Granted during year ended April 30, 2019

Exercised/canceled

during year ended April 30, 2019

Outstanding April 30, 2019

Granted during year ended April 30, 2020

Exercised/canceled

during year ended April 30, 2020

Outstanding April

Options exercisable,

April 30, 2020

2,178,766 and 417,059 shares were outstanding

as of April 30, 2021 and 2020, respectively.

In August 2020, the board of directors authorized a reverse split of the common stock on

a 1-for-2,000 basis, whereby the Company issued to each of its stockholders one share of Common Stock for every 2,000 shares of common

stock held by such stockholder.

The reverse split was effective on November 5, 2020.

The financial statements for the year ended April

30, 2020 have been adjusted to give effect to the reverse split.

As of April 30, 2020, the balance sheet accounts for capital in excess

of par value and for common stock were increased and decreased by $830,852, respectively.

In fiscal 2021, 99,270

shares of common stock were issued for stock-based compensation, 1,666,360 shares of common stock were issued to purchase Netcapital

Funding Portal Inc., and 5,000 shares of common stock were returned to the Company in exchange for a 20% ownership of AthenaSoft Corp.

that was acquired by the Company during fiscal 2018.

The book value of the AthenaSoft Corp.

shares surrendered by the Company was zero

dollars, as the Company had recognized an impairment loss in a prior year.

The Company also issued 1,077 shares of common stock, valued

at $15,000, to pay a $15,000 liability.

In fiscal 2020, 39,375

shares of common stock were issued for stock-based compensation.

For the years ended

April 30, 2021 and 2020, the Company recorded $ 680,611

and $ 356,252 ,

respectively, in stock-based compensation expense.

As of April 30, 2021 and 2020, there was $ 631,878

and $ 609,010

of prepaid stock-based compensation expense.

below presents the components of stock-based compensation expense for the years ended April 30, 2021 and 2020.

Schedule of stock-based

compensation expense

Executive Officer

Financial Officer

Marketing Officer

party consultant

below presents the shares issued as compensation for the years ended April 30, 2021 and 2020:

Executive Officer

Financial Officer

Marketing Officer

party consultant

below presents the prepaid stock-based compensation expense as of April 30, 2021 and 2020:

Executive Officer

Financial Officer

party consultant

Earnings Per Common Share

common share data was computed as follows:

Weighted average common shares outstanding

Effect of dilutive securities

Weighted average dilutive common shares outstanding

Earnings per common share –

Earnings per common

share data was computed as follows:

of earnings per share

income (loss)

Weighted average common

shares outstanding

of dilutive securities

average dilutive common shares outstanding

per common share – basic

per common share – diluted

397,293 shares that are issuable to satisfy a supplemental

consideration liability were included for the calculation of earnings per share for the year ended April 30, 2021 because their effect

No dilutive securities existed as of April 30, 2020.

For the year ended April 30, 2019 the Company excluded 18,000,000 shares

of common stock issuable upon the exercise of outstanding stock options from the calculation of earnings per share because the

exercise price of the stock options was greater than the closing market price of the common stock on April 30, 2019, and the effect

would be anti-dilutive.

Related Party Transactions

largest shareholder, Vaxstar LLC, is also our working capital lender.

As of April 30, 2020 and 2019, we owe our largest shareholder

$1,000,000, under a term note agreement that bears interest at an annual rate of 1.25%.

We have not made any principal or interest

payments to our working capital lender.

Unpaid interest has been accrued.

Our Chief Executive Officer is also the Chief Executive

Officer of Vaxstar LLC.

connection with the financing, the Company has agreed to certain restrictive covenants, including, among others, that the Company

may not convey, sell, lease, transfer or otherwise dispose of any part of its business or property, except as permitted in the

agreement, dissolve, liquidate or merge with any other party unless, in the case of a merger, the Company is the surviving entity,

incur any indebtedness except as defined in the agreement, create or allow a lien on any of its assets or collateral that has

been pledged to the Lender, make any loans to any person, except for

prepaid items or deposits incurred in the ordinary course of business, or make any material capital expenditures.

to officers in the years ended April 30, 2020 and 2019 consisted of common stock valued at $231,131 and $20,438, respectively,

and cash compensation of $72,000 and $125,000, respectively.

to a related party consultant in the years ended April 30, 2020 and 2019 consisted of common stock valued at $49,711 and $0, respectively,

and cash compensation of $26,200 and $10,000, respectively.

owe Steven Geary, a director, $31,680 as of April 30, 2020 and 2019.

This obligation is not interest bearing.

$16,680 is recorded

as a related party trade accounts payable and $15,000 as a related party note payable.

We have no signed agreements for the indebtedness

of April 30, 2019, we owed $61,000 to a company controlled by one of our directors.

Payment in full was rendered to the related

party with cash payments during fiscal 2020 of $4,300 and by the sale of membership interest units (the "Units") of

Netcapital Systems LLC ("Netcapital") on April 30, 2020.

722 Units were sold to the related party at a price of $91.15

per Unit for a total of $65,823, which paid off all remaining debt and accrued interest payable to the related party.

per Unit was similar to an offer to purchase Units directly from Netcapital.

carrying amount of the 722 Units was $659,186, and the sale resulted in a realized loss of $527,540.

Based upon the price of $91.15

per Unit, for the year ended April 30, 2020, the Company recorded an impairment loss of $185,952, which is not tax deductible,

on the remaining Units in its possession.

fiscal 2019, the Company entered into a consulting contract with NetCapital, which allowed the Company to receive up to

1,000 membership interest units of NetCapital in return for consulting services.

As of April 30, 2020, 960 membership units were

The Company initially earned 709 membership interest units in fiscal 2019 and valued the 709 membership interest units

at $647,317, based upon a private sale of Netcapital membership interest units in which an accredited investor purchased

Netcapital membership interest units at a per unit price of $913 in an arms-length transaction.

Such value was consistent with

the standard hourly billing rate of $500 per hour charged by the Company for consulting services.

The services rendered by the

Company aggregated approximately 1,250 hours.

Company continued to earn additional membership interest units of Netcapital in fiscal 2020, and for three quarters, recorded

the membership interest units at a value of $913 per until.

However, as part of a tax-planning strategy, upon receiving notice

of a proposed sale of membership interest units by Netcapital, the Company sold 722 Units

on April 30, 2020 and incurred a realized loss on the sale of such units of $527,540.

As of April 30, 2020, the Company owns 488

units of Netcapital at cost minus impairment value of $91.15 per unit, or $44,482 in total.

January 2, 2020, the Company entered into a consulting contract with Deuce Drone LLC (“Drone”), which allowed the

Company to receive up to 2,350,000 membership interest units of Drone in return for consulting services.

The Company earned all

2,350,000 membership interest units in fiscal 2020.

The Drone units are valued at $0.35 per unit based on a sales price of $0.35

per unit when the units were earned, or $822,500.

Drone is currently selling Drone units for $1.00 per unit on an online funding

The Company owns less than 20% of Drone.

August 2019, the Company entered into a consulting contract with Kingscrowd LLC (“Kingscrowd”), which allowed the

Company to receive 300,000 membership interest units of Kingscrowd in return for consulting services.

The Kingscrowd units are

valued at $1.80 per unit based on a sales price of $1.80 per unit when the units were earned, or $540,000.

Kingscrowd units currently

trade at a price of $1.80 per unit on a secondary trading platform.

The Company owns less than 20% of Kingscrowd.

The following table

summarizes the components of investments as of April 30, 2020 and 2019:

The Company’s

majority shareholder, Netcapital Systems LLC, owns 1,671,360 shares of common stock, or 76.7% of the Company as of April 30, 2021.

Company has a demand note payable to Netcapital Systems LLC of $4,600 and a demand note payable to one of its managers of $3,200.

addition, the Company has accrued a payable of $3,817,516 for supplemental consideration owed in conjunction with its purchase of Netcapital

Funding Portal Inc.

See Note 12 for details of an issuance of common stock to pay off $3,461,462 of this liability.

In total the Company

owed its largest shareholder $3,822,116 as of April 30, 2021.

The company paid its majority shareholder $100,000 in fiscal 2021 for use

of the software that runs the website www.netcapital.com.

to officers in the years ended April 30, 2021 and 2020 consisted of common stock valued at $353,907

and $ 231,131 ,

respectively, and cash compensation of $332,724

and $72,000 ,

respectively.

to a related party consultant in the years ended April 30, 2021 and 2020 consisted of common stock valued at $76,882

and $49,711 ,

respectively, and cash compensation of $81,431

and $26,200 ,

respectively.

This consultant is also the controlling shareholder of Zelgor Inc.

and the Company

earned revenues from Zelgor Inc.

of $1,400,000

in the year ended

April 30, 2021.

to two board members of Netcapital Systems LLC amounted to $162,123

in the years ended April 30, 2021 and 2020, respectively.

One of these board members also received stock-based compensation of $76,882

for the years ended April 30, 2021 and 2020,

respectively.

Steven Geary, a director, $31,680

as of April 30, 2021 and 2020.

This obligation

is not interest bearing.

is recorded as a related party trade accounts

payable and $15,000

as a related party note payable.

We have no signed

agreements for the indebtedness to Mr.

made an investment of $122,914 in an affiliate, 6A Aviation Alaska Consortium, Inc., in conjunction with a land lease in an airport in

Our Chief Executive Officer is also the Chief Executive Officer of 6A Aviation Alaska Consortium, Inc.

As a result of the investment,

the Company is a 10% owner of 6A Aviation Consortium Inc.

April 30, 2021 and 2020, we owed $9,490 and $0 to a company controlled by one of our directors.

We paid cash compensation of $29,738

to this director for the years ended April 30,

2021 and 2020, respectively.

On April 30, 2020, we sold 722 membership interest units (the "Units") of Netcapital Systems LLC

("Netcapital") to the company controlled by this related party at a price of $91.15 per Unit for a total of $65,823, which paid

off all debt and accrued interest payable to the related party as of that date.

The price per Unit was similar to an offer to purchase

Units directly from Netcapital.

amount of the 722 Units was $659,186, and the sale resulted in a realized loss of $593,363.

Based upon the price of $91.15 per Unit,

for the year ended April 30, 2020, the Company recorded an impairment loss of $185,952, which is not tax deductible, on the remaining

Units in its possession.

2020, the Company entered a consulting contract with Watch Party LLC (“WP”), which allowed the Company to receive up to 110,000

membership interest units of WP in return for consulting services.

The WP units are valued at $2.14 per unit based on a sales price of

$2.14 per unit on an online funding portal, resulting in revenues of $235,400

for the year ended April 30, 2021.

2020, the Company entered a consulting contract with ChipBrain LLC (“ChipBrain”), which allowed the Company to receive up

to 710,200 membership interest units of ChipBrain in return for consulting services.

The ChipBrain units are valued at $0.93 per unit

based on a sales price of $0.93 per unit on an online funding portal, resulting in revenues of $ 660,486

for the year ended April 30, 2021.

subsequently sold identical ChipBrain units for $2.40 per unit on an online funding portal.

2020, the Company entered a consulting contract with a related party, Zelgor Inc.

(“Zelgor”), which allowed the Company to

receive up to 1,400,000 shares of common stock of Zelgor in return for consulting services.

The Company earned 1,050,000 shares in the

quarter ended July 31, 2020 and 350,000 shares in the quarter ending October 31, 2020.

The Zelgor shares are valued at $1.00 per share

based on a sales price of $1.00 per share on an online funding portal, resulting in revenues of $1,400,000 for the year ended April 30,

The $1.00 per share valuation was derived based on a combination of multiple transactions on a secondary trading platform in which

shares were purchased at $1.00 per share, and two private offerings of shares, one at a selling price of $0.50 per share and the other

at $2.00 per share.

2, 2020, the Company entered a consulting contract with Deuce Drone LLC (“Drone”), which allowed the Company to receive up

to 2,350,000 membership interest units of Drone in return for consulting services.

The Company earned all 2,350,000 membership interest

units in fiscal 2020.

The Drone units are valued at $0.35 per unit based on a sales price of $0.35 per unit when the units were earned,

Drone subsequently sold identical Drone units for $1.00 per unit on an online funding portal.

2019, the Company entered a consulting contract with KingsCrowd LLC (“KingsCrowd”), which allowed the Company to receive

300,000 membership interest units of KingsCrowd in return for consulting services.

The KingsCrowd units were valued at $1.80 per unit

based on a sales price of $1.80 per unit when the units were earned, or $540,000.

In December 2020, KingsCrowd converted from a limited

liability company to a corporation to facilitate raising capital under Regulation A.

KingsCrowd filed a Form 1-A Offering Statement under

the Securities Act of 1933.

In connection with the conversion to a corporation, each membership interest unit converted into 12.71915

shares of common stock.

As of April 30, 2021, the Company owns 3,815,745 shares of KingsCrowd Inc.

The selling price of the stock is

set at $1.00 per share in the preliminary offering circular.

fiscal 2019, the Company entered a consulting contract with Netcapital Systems LLC (“Netcapital”), which allowed the Company

to receive up to 1,000 membership interest units of Netcapital in return for consulting services.

The Company earned 40 units in the

quarter ended July 31, 2020, at a value of $91.15 per unit, or $3,646.

The Company earned all 1,000 Netcapital units but sold a portion

of the units in fiscal 2020 at a sales price of $91.15 per unit.

As of April 30, 2021, the Company owns 528 Netcapital units, at a value

20, 2020 the Company entered a consulting agreement with Vymedic, Inc.

for a $40,000 fee over a 5-month period.

Half the fee is payable

in stock and half is payable in cash.

As of April 30, 2021, the Company earned $20,000 worth of stock.

The following

table summarizes the components of equity securities as of April 30, 2021 and 2020:

of investments

April 30, 2021

Total Investments at cost

above investments do not have a readily determinable fair value, as identified in ASC 321-10-35-2, and all investments are measured

at cost less impairment.

April 30, 2020

Investments at cost

The above investments in equity

securities are within the scope of ASC 321.

The Company monitors the investments for any changes in observable prices from orderly transactions.

fiscal 2018, the Company acquired a 20% interest in AthenaSoft Corp., an entity that provides programming services and sales to

its wholly owned subsidiary, AthenaSoft Inc.

The Company has no influence over the operations of AthenaSoft Corp.

its investment at cost, which amounted to $23,000.

On April 30, 2019, the Company determined its investment in AthenaSoft Corp.

was impaired.

Company recorded a valuation loss on investments as of April 30, 2020 and 2019 of $185,952 and $23,000, respectively.

Concentrations

the year ended April 30, 2020, the Company had one customer that constituted 47% of its revenues, a second customer that constituted

31% of its revenues and a third customer that accounted for 13% of its revenues.

For the year ended April 30, 2019, the Company

had one customer that constituted 65% of its revenues and a second customer that constituted 23% of its revenues.

All investments are initially measured at cost and evaluated for impairment.

Impairment expense of $0 and $185,952 was recognized in

the years ended April 30, 2021 and 2020, respectively.

The Company identified that two securities, ChipBrain LLC and Deuce Drone LLC,

that had an observable price change.

The result of these price changes was an increase in the fair value of the equity securities totaling

$2,571,494 in the fiscal year ended April 30, 2021, which was recorded in the income statement as an unrealized gain on equity securities.

Business Acquisition

August 23, 2020, the Company entered into an Agreement and Plan of Merger (“Agreement”) whereby Netcapital Systems LLC (“Systems”)

would become an 80% owner of the Company.

Pursuant to the requirements of this agreement, the Company filed a definitive information

statement on September 21, 2020 to change the Company’s c orporate

name from ValueSetters, Inc.

to Netcapital Inc and to a mend the Company’s Articles of Incorporation

to effect a stock combination, or reverse stock split, pursuant to which 2,000 shares of the Company’s common stock would be exchanged

for one new share of common stock.

In conjunction with the merger agreement, the Company issued 1,666,360 to Systems on November 5, 2020.

The Agreement

is a tax-free merger of Netcapital Funding Portal Inc.

(“FP”), a wholly owned subsidiary of Systems, with Netcapital Acquisition

Vehicle Inc., an indirect wholly owned subsidiary of the Company, wherein FP was the surviving corporation.

This transaction is designed

to enhance the Company’s revenues and ability to provide services to democratize the private capital markets while helping companies

at all stages to build, grow and fund their businesses with a full range of services from strategic advice to raising capital.

of the transaction, the company is expected to be a leading provider of private capital transactions for entrepreneurs seeking to raise

money under the exemption provided by section 4(a)(6) of the Securities Act of 1933, which allows private companies to raise up to $5

million every 12 months.

ASC 805-10-25-4

requires the identification of one of the combining entities in each business combination as the acquirer.

Upon evaluation of the components

of the business combination, including the relative voting rights in the combined entity, the composition of the governing body and senior

management of the combined entity, the relative size of each entity and the terms of the exchange of equity interests, the Company recorded

the transaction in the third quarter of fiscal 2021 as a purchase.

In conjunction with the purchase, Systems agreed to vote all of its

shares of common stock to support the resolutions of the existing board of directors of the Company.

The following

table summarizes the value of the consideration for FP and the amounts of the assets acquired and liabilities assumed in conjunction

with the Agreement.

of Merger agreement

Consideration:

1,666,360 shares of common stock of the Company

of promissory notes and interest

consideration

Recognized amounts of identifiable

assets acquired and liabilities assumed:

Current assets

Accounts payable

Platform users

Platform investors

Platform issuers

identifiable net assets

value of the common shares issued as the consideration for FP was determined by the most recent (the prior day’s) closing price

of the Company’s common shares at the time the shares were issued.

The fair value of the assets and the liabilities of FP equaled

their book value.

Four identifiable intangible assets were valued;

platform users, platform investors, platform issuers and unpatented

technology (collectively the “Intangible Assets”).

The estimated market value of the Intangible Assets is approximately $27,800,000 .

This amount is derived from valuing the IP functionality, brand, and license of FP at $1,000,000;

valuing current issuers and pipeline

issuers at approximately $14,000 each;

valuing platform users at $382 each;

and valuing investors at $1,025 each.

These values are derived

from comparing the FP Intangible Assets to the values recorded by funding portal offerings of FP’s competitors in public filings

via Regulations CF and Regulation A.

of purchase price over the total identifiable tangible net assets of $344,810 ,

leaves an aggregate value of $14,803,954 to be assigned to the Intangible Assets.

The estimated value of the $27,800,000

of Intangible Assets is allocated on a percentage

basis in the above table to equal $14,803,954 .

FP’s revenues and earnings are included in the Company’s consolidated income statements through the day of closing of November

The consolidated income statements for the year ended April 30, 2021 include $834,981 in revenues from FP.

If the entities had

been combined for the two reporting periods, the supplemental pro forma revenues and earnings are as follows:

of Pro forma revenue and earnings

pro forma for 4/1/20 – 11/04/20

Supplemental pro forma

for 4/1/19 – 11/04/19

in the supplemental pro forma information above is revenue earned by the Company from Netcapital Systems LLC of $ 18,646

and $ 152,864

in the periods ended November 4, 2020 and 2019,

respectively.

Subsequent Events

Company evaluated subsequent events through the date these financial statements were available to be issued.

May 6, 2020 the Company borrowed $1,885,800 (the “May Loan”) and on June 17, 2020 the Company borrowed $500,000 (the

“June Loan”) from a U.S.

Small Business Administration (the "SBA") loan program.

The May Loan has an initial

terms of two years and an interest rate of 1% per annum.

June Loan requires installment payments of $2,437 monthly, beginning on June 17, 2021 over a term of thirty years.

Interest accrues

at a rate of 3.75% per annum.

The Company agreed to grant a continuing security interest in its assets to secure payment and performance

of all debts, liabilities, and obligations to the SBA.

The June Loan was personally guaranteed by the Company’s Chief Financial

July 31, 2020 312,500 shares of the Company's common stock vested in accordance with the terms of a stock grant to the Company's

Chief Marketing Officer.

evaluated subsequent events through the date these financial statements were available to be issued.

2, 2021, the Company loaned $50,000

to a related party.

The unpaid principal balance

on the note is subject to an interest rate of 5 %

per annum and matures on June

30, 2021, the Company loaned $50,000

to a related party.

The unpaid principal balance

on the note is subject to an interest rate of 8 %

per annum and matures on June

Company issued 361,736 shares of its common stock as payment of $3,523,462 of supplemental consideration that was owed to its affiliate,

Netcapital Systems Inc.

The 361,736 shares of common stock include an aggregate of 32,458 shares of common stock, that paid off liabilities

totaling $316,130, that were made to a company controlled by a member of the board of managers of Netcapital Systems LLC and to an individual

2021, the Company completed an offering for gross proceeds of $1,592,400

in conjunction with the sale of restricted shares

of common stock at a price of $9.00

A total of 176,934

shares of common stock were issued.

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 9A. Controls and Procedures