What changed in this filing

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Item 1. Business

2023-07-26 compared with 2022-08-08 · 395 added, 368 removed, 27 unchanged (97% of the section changed)

is a fintech company with a scalable technology platform that allows private companies to raise capital online from accredited

and non-accredited investors.

We give all investors the opportunity to access investments in private companies.

Our model is disruptive

to traditional private equity investing and is based on Title III, Reg CF of the JOBS Act.

We generate fees from listing private

companies on our portals.

Our consulting group, Netcapital Advisors, provides marketing and strategic advice in exchange for cash

and equity positions.

The Netcapital funding portal is registered with the SEC, is a member of the Financial Industry Regulatory

Authority, or FINRA, a registered national securities association, and provides investors with opportunities to invest in private

Netcapital Inc.

is a fintech company with a

scalable technology platform that allows private companies to raise capital online from accredited and non-accredited investors.

virtually all investors the opportunity to access investments in private companies.

Our model is disruptive to traditional private equity

investing and is based on Title III, Reg CF of the JOBS Act.

We generate fees from listing private companies on our portal.

Our consulting

group, Netcapital Advisors, provides marketing and strategic advice in exchange for cash and equity positions.

The Netcapital funding

portal is registered with the SEC, is a member of the Financial Industry Regulatory Authority, or FINRA, a registered national securities

association, and provides investors with opportunities to invest in private companies.

Development of Business

Company was incorporated in Utah in 1984 as DBS Investments, Inc., or DBS.

DBS merged with ValueSetters L.L.C.

in December 2003

and changed its name to ValueSetters, Inc.

in December 2003 and changed

its name to ValueSetters, Inc.

In November 2020, the Company purchased Netcapital Funding Portal Inc.

(the “Funding

Portal”) and changed the name of the Company from ValueSetters, Inc.

(the “Funding Portal”)

and changed the name of the Company from ValueSetters, Inc.

to Netcapital Inc.

Company has three operating subsidiaries.

The Funding Portal provides private companies with access to investments from accredited

and non-accredited retail investors through our online portal (www.netcapital.com).

The Funding Portal charges a $5,000 engagement

fee and a 4.9% success fee for capital raised at closing.

In addition, the Funding Portal generates fees for other ancillary services,

such as rolling closes.

The Company has three operating subsidiaries.

Funding Portal provides private companies with access to investments from accredited and non-accredited retail investors through our online

portal (www.netcapital.com).

The Funding Portal charges a $5,000 to $10,000 engagement fee, a 4.9% success fee for capital raised at closing

and sometimes is paid with equity from the issuer that has listed on the Funding Portal.

In addition, the Funding Portal generates fees

for other ancillary services, such as rolling closes.

Netcapital Advisors Inc.

generates fees and equity stakes from consulting in select portfolio and non-portfolio

generates fees and equity stakes from consulting in select

portfolio and non-portfolio clients.

MSG Development Corp.

provides corporate valuation services to businesses and individuals.

Netcapital.com

is an SEC-registered funding portal that enables private companies to raise capital online, while investors are able to invest

from anywhere in the world, at any time, with just a few clicks.

Securities offerings on the portal are accessible through individual

offering pages, where companies include product or service details, market size, competitive advantages, and financial documents.

Companies can accept investment from anyone, including friends, family, customers, employees, etc.

Customer accounts on our platform

will not be permitted to hold digital securities.

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

fully automated onboarding process;

filing of required regulatory documents;

● custom-built

offering page on our portal website;

party transfer agent and custodial services;

marketing to our proprietary list of investors;

closes, which provide potential access to liquidity before final close date of offering;

with annual filings;

access to our team for ongoing support.

consulting group, Netcapital Advisors helps companies at all stages to raise capital.

Netcapital Advisors provides strategic advice,

technology consulting and online marketing services to assist with fundraising campaigns on the Netcapital platform.

as an incubator and accelerator, taking equity stakes in select disruptive start-ups.

Advisors’ services include:

of technology start-ups;

introductions;

design, software and software development;

crafting, including pitch decks, offering pages, and ad creation;

valuation group, MSG Development Corp.

prepares valuations that are always reviewed by an Accredited Senior Business Appraiser

licensed by the American Society of Appraisers.

valuation services include:

and solvency opinions;

feasibility and valuation;

charitable contributions;

analysis of damages;

● intellectual

property appraisals;

● compensation

noted above, in 2014, we began our consulting business, and we now own a portion of several companies as a result of our consulting

Many of these businesses operate solely on the Internet and many use the Internet to raise capital.

We believe the value

of our ownership interests in several of these companies may be significant.

In 2016, we began consulting for companies seeking

to raise capital via Reg CF.

In 2020, we purchased Netcapital Funding Portal Inc., a regulated funding portal operating under

the provisions of Reg CF.

On November 5, 2020, we changed our name to Netcapital Inc.

to leverage the strength of Netcapital’s

well-established brand and unique private capital markets platform.

compete with a number of public and private companies that provide assistance with capital raising, strategy, technology consulting,

and digital marketing.

Most of our competitors have significant financial resources and occupy entrenched positions in the market

with name-brand recognition.

The majority of our capital raising and digital marketing business is on the Internet.

barriers to entry into most Internet markets are relatively low, making them accessible to a large number of entities and individuals.

We believe the principal competitive factors in our industry that create certain barriers to entry include but are not limited

to reputation, technology, financial stability and resources, proven track record of successful operations, critical mass, and

independent oversight and transparency of business practices.

Obtaining approval from FINRA to operate as a funding portal is

also a barrier to entry due to the significant internal control and capital requirements.

While these barriers will limit those

able to enter or compete effectively in the market, it is likely that new competitors as well as laws and regulations of governmental

authority will be established in the future, in addition to our known current competitors.

face significant competition in every aspect of our business, including from companies that facilitate online capital formation

and the sharing of content and information, companies that enable marketers to display advertising, companies that distribute

video and other forms of media content, and companies that provide development platforms for applications developers.

compete to attract, engage, and retain customers, to attract and retain marketers, and to attract and retain developers to build

compelling applications that integrate with our products.

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

results and financial condition.

an effort to enhance economic growth and to democratize access to private investment opportunities, Congress finalized the Jumpstart

Our Business Startups Act (JOBS Act) in 2016.

Title III of the JOBS Act enabled early-stage companies to offer and sell securities

to the general public for the first time.

The SEC then adopted Regulation Crowdfunding, or Reg CF, in order to implement the JOBS

Act’s crowdfunding provisions.

CF has several important features that changed the landscape for private capital raising and investment.

For the first time, this

Allowed the general

public to invest in private companies, no longer limiting early-stage investment opportunities to less than 10% of the population;

Enabled private

companies to advertise their securities offerings to the public (general solicitation);

Conditionally exempted

securities sold under Section 4(a)(6) from the registration requirements of the Securities and Exchange Act of 1934.

are subject, both directly and indirectly, to various laws and regulations relating to our business.

If any of the laws are amended,

compliance could become more expensive and directly affect our income.

We intend to comply with such laws, but new restrictions

may arise that could materially adversely affect our Company.

Specifically, the SEC regulates our funding portal business, and

our funding portal is also a member of FINRA and is regulated by FINRA.

We are also subject to the USA Patriot Act of 2001, which

contains anti-money laundering and financial transparency laws and mandates various regulations applicable to financial services

companies, including standards for verifying client identification at account opening, and obligations to monitor client transactions

and report suspicious activities.

Anti-money laundering laws outside of the United States contain some similar provisions.

failure to comply with these requirements as applicable to us could have a material adverse effect on us.

traditional funding model restricts access to capital, investments and liquidity.

According to Harvard Business Review,

VCs invest in fewer than 1% of the companies they consider and only 10% of VC meetings are obtained through cold outreach.

In addition, under 5% of VC funding went to women and minority-owned firms in 2020, according to Forbes.

under the traditional model, the average investor lacked access to early-stage investments.

Prior to the JOBS Act, almost

households were precluded from investing in private deals, per dqydj.com.

Liquidity has also been an issue,

as private investments are generally locked up until IPO or takeout.

JOBS Act helped provide a solution to these issues by establishing the funding portal industry which is currently in its infancy.

Title III of the JOBS Act outlines Reg CF, which traditionally allowed private companies to raise up to $1.07 million from all

In March 2021, regulatory enhancements by the SEC went into effect and increased the limit to $5 million.

These amendments

increased the offering limits for Reg CF, Regulation A and Regulation D Rule 504 offerings as follows;

Reg CF increased to $5

million, Regulation D, Rule 504 increased to $10 million from $5 million;

and Regulation A Tier 2 increased to $75 million from

CF private company investments accounted for approximately $490 million in 2021, according to KingsCrowd, versus $205 million

We believe a significant opportunity exists to disrupt private capital markets via the Netcapital funding portal.

capital markets reached $7.4 trillion at the end of 2020, per Morgan Stanley, and this number is expected to reach $13 trillion

over the next five years.

Within this market, private equity represents the largest share, with assets in excess of $3 trillion

and a 10-year CAGR of 10%.

Since 2000, global PE net asset value has increased almost tenfold, nearly three times faster than

the size of the public equity market.

Both McKinsey and Boston Consulting Group predict that this strong growth will continue,

as investors allocate increasing amounts to private equity, due to historically higher returns and lower volatility than public

In addition, Boston Consulting Group estimates that there are $42 trillion held in retail investment accounts, which

we believe represents a large pool of potential account holders for us.

Netcapital platform is a scalable, real-time, transaction processing engine that runs without human intervention, 24 hours a day,

seven days a week.

For companies raising capital, the technology provides fully automated onboarding with integrated regulatory

Funds are collected from investors and held in escrow until the offering closes.

entrepreneurs, the technology facilitates access to capital at low cost.

Funding Portal

Netcapital.com is an SEC-registered funding

portal that enables private companies to raise capital online, while investors are able to invest from almost anywhere in the world, at

any time, with just a few clicks.

Securities offerings on the portal are accessible through individual offering pages, where companies

include product or service details, market size, competitive advantages, and financial documents.

Companies can accept investment from

virtually anyone, including friends, family, customers, employees, etc.

Customer accounts on our platform are not permitted to hold digital

In addition to access to the Funding Portal,

the Funding Portal provides the following services:

a fully automated onboarding process;

automated filing of required regulatory

compliance review;

custom-built offering page on our portal

third party transfer agent and custodial

rolling closes, which provide potential

access to liquidity before final close date of offering;

assistance with annual filings;

direct access to our team for ongoing support.

Consulting Business

Our consulting group, Netcapital Advisors helps

companies at all stages to raise capital.

Netcapital Advisors provides strategic advice, technology consulting and online marketing services

to assist with fundraising campaigns on the Netcapital platform.

We also act as an incubator and accelerator, taking equity stakes in

select disruptive start-ups.

Netcapital Advisors’ services include:

incubation of technology start-ups;

investor introductions;

online marketing;

website design, software and software development;

message crafting, including pitch decks,

offering pages, and ad creation;

strategic advice;

technology consulting.

Valuation Business

Our valuation group, MSG Development Corp.

prepares valuations.

The valuation services include:

business valuations;

fairness and solvency opinions;

ESOP feasibility and valuation;

non-cash charitable contributions;

economic analysis of damages;

intellectual property appraisals;

compensation studies.

We compete with a number of public and private companies

that provide assistance with capital raising, strategy, technology consulting, and digital marketing.

Most of our competitors have significant

financial resources and occupy entrenched positions in the market with name-brand recognition.

The majority of our capital raising and

digital marketing business is on the Internet.

The barriers to entry into most Internet markets are

relatively low, making them accessible to a large number of entities and individuals.

We believe the principal competitive factors in

our industry that create certain barriers to entry include but are not limited to reputation, technology, financial stability and resources,

proven track record of successful operations, critical mass, and independent oversight and transparency of business practices.

approval from FINRA to operate as a funding portal is also a barrier to entry due to the significant internal control and capital requirements.

While these barriers may limit those able to enter or compete effectively in the market, it is likely that new competitors as well as

laws and regulations of governmental authority may be established in the future, in addition to our known current competitors.

We face significant

competition in every aspect of our business, including from companies that facilitate online capital formation and the sharing of content

and information, companies that enable marketers to display advertising, companies that distribute video and other forms of media content,

and companies that provide development platforms for applications developers.

We compete to attract, engage, and retain customers,

to attract and retain marketers, and to attract and retain developers to build compelling applications that integrate with our products.

Increased competition from current and future competitors

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

Industry Regulation

In an effort to enhance economic growth and

to democratize access to private investment opportunities, Congress finalized the Jumpstart Our Business Startups Act (JOBS Act) in 2016.

Title III of the JOBS Act enabled early-stage companies to offer and sell securities to the general public for the first time.

then adopted Regulation Crowdfunding, or Reg CF, in order to implement the JOBS Act’s crowdfunding provisions.

Reg CF has several important features that

changed the landscape for private capital raising and investment.

For the first time, this regulation:

Allowed the general public

to invest in private companies, no longer limiting early-stage investment opportunities to less than 10% of the population;

Enabled private companies to

advertise their securities offerings to the public (general solicitation);

Conditionally exempted securities

sold under Section 4(a)(6) from the registration requirements of the Securities and Exchange Act of 1934.

We are subject, both directly and indirectly,

to various laws and regulations relating to our business.

If any of the laws are amended, compliance could become more expensive and

directly affect our income.

We intend to comply with such laws, but new restrictions may arise that could materially adversely affect

Specifically, the SEC regulates our funding portal business, and our funding portal is also a member of FINRA and is regulated

We are also subject to the USA Patriot Act of 2001, which contains anti-money laundering and financial transparency laws and

mandates various regulations applicable to financial services companies, including standards for verifying client identification at account

opening, and obligations to monitor client transactions and report suspicious activities.

Anti-money laundering laws outside of the United

States contain some similar provisions.

Our failure to comply with these requirements as applicable to us could have a material adverse

effect on us.

The traditional funding model restricts access

to capital, investments and liquidity.

According to Harvard Business Review, venture capital firms, or VCs, invest in fewer than 1% of

the companies they consider and only 10% of VC meetings are obtained through cold outreach.

In addition, only 2% of VC funding went to

women in 2022, according to PitchBook, while only 1% went to black-owned firms, according to TechCrunch.

Furthermore, under the traditional model, the

average investor lacked access to early-stage investments.

Prior to the JOBS Act, almost 90% of U.S.

households were precluded from investing

in private deals, per dqydj.com.

Liquidity has also been an issue, as private investments are generally locked up until IPO or takeout.

The JOBS Act helped provide a solution to these

issues by establishing the funding portal industry, which is currently in its infancy.

Title III of the JOBS Act outlines Reg CF, which

traditionally allowed private companies to raise up to $1.07 million from all Americans.

In March 2021, regulatory enhancements by the

SEC went into effect and increased the limit to $5 million.

These amendments increased the offering limits for Reg CF, Regulation A and

Regulation D, Rule 504 offerings as follows:

Reg CF increased to $5 million;

Regulation D, Rule 504 increased to $10 million from $5 million;

and Regulation A Tier 2 increased to $75 million from $50 million.

There was $494 million raised via Reg CF in

2022, according to Crowdwise.

We believe a significant opportunity exists to disrupt private capital markets via the Netcapital funding

Private capital markets reached $12 trillion

by the first half of 2022, per McKinsey.

Within this market, private equity represents the largest share, with assets in excess of $3

trillion and a 10-year CAGR of 10%.

Since 2000, global private equity, or PE, net asset value has increased almost tenfold, nearly three

times faster than the size of the public equity market.

Both McKinsey and Boston Consulting Group predict that this strong growth will

continue, as investors allocate increasing amounts to private equity, due to historically higher returns and lower volatility than public

In addition, Boston Consulting Group estimates that there are $42 trillion held in retail investment accounts, which we believe

represents a large pool of potential account holders for us.

Our Technology

The Netcapital platform is a scalable, real-time,

transaction-processing engine that runs without human intervention, 24 hours a day, seven days a week.

For companies raising capital, the technology provides

fully automated onboarding with integrated regulatory filings.

Funds are collected from investors and held in escrow until the offering

For entrepreneurs, the technology facilitates access to capital at low cost.

For investors, the platform provides access to investments

in private, early-stage companies that were previously unavailable to the general public.

Both entrepreneurs and investors can

track and view their investments through their dashboard on netcapital.com.

The platform currently has almost 100,000 users.

was demonstrated in November 2021, when the platform processed more than 2,000 investments in less than two hours, totaling more

than $2 million.

infrastructure is designed in a way that can horizontally scale to meet our capacity needs.

Docker containers and Amazon ECS, we are able to automate the creation and launch of our production web and API endpoints in order

to replicate them as needed behind Elastic Load Balancers (ELBs).

Additionally,

all of our public facing endpoints live behind CloudFlare to ensure protection from large scale traffic fluctuations (including

DDoS attacks).

main database layer is built on Amazon RDS and features a Multi-AZ deployment that can also be easily scaled up or down as needed.

General queries are cached in our API layer, and we monitor to optimize very complex database queries that are generated by the

Additionally, we cache the most complex queries (such as analytics data) in our NoSQL (Mongo) data store for improved performance.

of our CPU intensive data processing happens asynchronously through a worker/jobs system managed by AWS ElastiCache’s Redis

This component can be easily fine-tuned for any scale necessary.

technology necessary to operate our funding portal is licensed from our affiliate, Netcapital Systems LLC under a license agreement

with our wholly owned subsidiary Netcapital Funding Portal Inc., where we have the exclusive right to use the technology with

respect to our funding portal, for an annual license fee of $380,000 paid in quarterly installments.

believe we provide the lowest cost solution for online capital raising versus our peer group (StartEngine Crowdfunding, Inc.,

Wefunder Inc.and Republic Core LLC.

We also believe that our access and onboarding of new clients are superior due to our facilitated

technology platforms.

Our network is rapidly expanding as a result of our enhanced marketing and broad distribution to reach new

Given the rapid growth in the industry and its potential to disrupt the multi-billion dollar private capital market,

we believe there is sufficient room for multiple players.

major tailwinds are driving accelerated growth in the shift to the use of online funding portals:

Both entrepreneurs and investors can track and

view their investments through their dashboard on netcapital.com.

The platform currently has more than 100,000 users.

Scalability was demonstrated in November 2021, when

the platform processed more than 2,000 investments in less than two hours, totaling more than $2 million.

Our infrastructure is designed in a way that can horizontally

scale to meet our capacity needs.

Using Docker containers and Amazon Elastic Container Service, or Amazon ECS, we are able to automate

the creation and launch of our production web and application programming interface, or API, endpoints in order to replicate them as needed

behind Elastic Load Balancers (ELBs).

Additionally, all of our public facing endpoints live

behind CloudFlare to ensure protection from large scale traffic fluctuations (including DDoS attacks).

Our main database layer is built on Amazon RDS and

features a Multi-AZ deployment that can also be easily scaled up or down as needed.

General queries are cached in our API layer, and we

monitor to optimize very complex database queries that are generated by the API.

Additionally, we cache the most complex queries (such

as analytics data) in our NoSQL (Mongo) data store for improved performance.

Most of our central processing unit, or CPU, intensive

data processing happens asynchronously through a worker/jobs system managed by AWS ElastiCache’s Redis endpoint.

This component

can be easily fine-tuned for any scale necessary.

The technology necessary to operate our funding portal

is licensed from Netcapital Systems LLC, a Delaware limited liability company, of which Jason Frishman, Netcapital Founder, owns a 29%

interest, under a license agreement with the Funding Portal.

Payments under the licensing agreement amounted to $430,000 and $357,429

in the years ended April 30, 2023 and 2022, respectively.

Proposed Alternative Trading System (“ATS”)

On January 2, 2023, our wholly owned subsidiary, Netcapital

Systems LLC entered into a software license and services agreement (“Templum License Agreement”) with Templum, Inc (“Templum”)

to provide issuers and investors on the Netcapital funding portal with the potential for greater distribution and liquidity.

a company that provides capital markets infrastructure for trading private equity securities and operates an ATS with approval in 53 U.S.

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

The Templum License Agreement allows us to launch

a customized marketplace for the trading of private securities issued under an exemption to the Securities Act of 1933, as amended.

operates an alternative trading system under the provisions of Regulation ATS.

The Templum License Agreement is for an initial term of

three (3) years and will automatically renew for consecutive terms of one (1) year unless (i) either party upon at least ninety (90) days

prior to the expiration of the initial term or then-current renewal term, provides written notice to the other party of its intention

not to renew, in which case the agreement and the applicable order and technology services and pricing outline will expire, as the case

may be, at the end of the then current initial term or renewal term;

or (ii) either party terminates the agreement pursuant to and in

accordance with the terms and conditions set forth in the agreement.

Netcapital Systems paid Templum an implementation fee upon signing

of the Agreement.

The Templum License Agreement

grants Netcapital Systems a limited, revocable, non-exclusive, non-transferable, and non-sublicensable right and license to use Templum’s

software and to provide its users access to the software.

Notwithstanding the foregoing, Netcapital Systems shall be Templum’s exclusive

registered crowdfunding platform partner and Templum shall not provide services to any third-party whose primary business is providing

services as a registered crowdfunding platform except as noted in the agreement.

Netcapital Systems agreed to pay Templum a discounted

license fee in year 1, and a standard license fee in years 2 and 3.

After conclusion of the initial 3-year term, the annual license fee

will increase by the greater of CPI+3% or 5% for each renewal term.

A beta testing platform has been established and the

functionality is currently being tested.

Additional milestones required to launch the platform to the public include, but are not limited

to, development of the know-your-customer (KYC) and anti-money laundering (AML) functionality as well as a launch of the beta version

to a closed group of users, which is currently expected in the fourth quarter of 2023.

Currently, we do not know when, or if, this platform

will be fully completed and launched, as there are many details that remain to be completed as well as certain regulatory matters that

are required to be satisfied regarding the proposed operation of the ATS.

Any regulatory delays or objections will result in delays in

our ability to launch the proposed platform.

It is currently contemplated that the Templum ATS

will be integrated with the Netcapital funding platform, and that issuers and investors will not be able to directly access the Templum

Rather, we will be responsible for collecting and delivering any required information to the Templum ATS.

Once an order request

has been submitted and the Templum ATS has identified two-order (bid/ask) matching at the price level, it will inform us so that we can

initiate the process of wallet reconciliation between the two proposed parties in the transaction.

Competitive Advantages

We believe we provide a low-cost solution for

online capital raising versus our peer group (StartEngine Crowdfunding, Inc., Wefunder Inc.

and Republic Core LLC).

We also believe that

our access and onboarding of new clients are superior due to our facilitated technology platforms.

Our network is expanding as a result

of our enhanced marketing and broad distribution to reach new investors.

Given the rapid growth in the industry and its potential to disrupt

the multi-billion dollar private capital market, we believe there is sufficient room for multiple players.

Two major tailwinds are driving accelerated

growth in the shift to the use of online funding portals:

(i) the COVID-19 pandemic;

the increase in funding limits under Reg CF;

and (iii) the recent private equity outperformance of public markets.

drove a rapid need to bring as many processes as possible online.

With travel restrictions in place and most people in lockdown,

entrepreneurs were no longer able to fundraise in person and have increasingly turned to online capital raising through funding

are numerous industry drivers and tailwinds that complement investor demand for access to investments in private companies.

and (ii) the increase in funding limits under Reg

The pandemic drove a rapid need to bring as many processes as possible online.

With travel restrictions in place and most people

in lockdown, entrepreneurs were no longer able to fundraise in person and have increasingly turned to online capital raising through

funding portals.

There are numerous industry drivers and tailwinds that complement investor demand for access to investments in private companies.

capitalize on these, our strategy is to:

Generate New Investor

Generate New Investor Accounts.

Growing the number of investor accounts on our platform is a top priority.

Investment dollars continuing to flow

through our platform is a key revenue driver.

When issuers advertise their offerings, they are generating new investor accounts

for us at no cost to Netcapital.

We plan to supplement our issuers’ spend on advertising by increasing our online marketing

spend as well, which may include virtual conferences going forward.

Hire Additional

Business Development Staff.

We seek to hire additional business development staff that is technology and financially passionate

about capital markets to handle our growing backlog of potential customers.

Increase the Number

of Companies on Our Platform via Marketing.

When a new company lists on our platform, they bring their customers, supporters,

and brand ambassadors as new investors to Netcapital.

We plan to increase our marketing budget to help grow our portal and

advisory clients.

Investment dollars continuing to flow through our platform is a key revenue driver.

When issuers advertise their offerings, they are generating new investor accounts for us at no cost to Netcapital.

We plan to supplement our issuers’ spend on advertising by increasing our online marketing spend as well, which may include virtual conferences going forward.

Hire Additional Business Development Staff.

We seek to hire additional business development staff that is technology and financially passionate about capital markets to handle our growing backlog of potential customers.

Increase the Number of Companies on Our Platform via Marketing.

When a new company lists on our platform, they bring their customers, supporters, and brand ambassadors as new investors to Netcapital.

We plan to increase our marketing budget to help grow our portal and advisory clients.

Invest in Technology.

Technology is critical to everything that we do.

We plan to invest in developing innovative technologies that enhance our

platform and allow us to pursue additional service offerings.

For example, we plan on developing a dedicated mobile app to

make our platform more accessible.

Incubate and Accelerate

Our Advisory Portfolio Clients.

The advisory portfolio and our equity interests in select advisory clients represent potential

upside for our shareholders.

We plan to invest in developing innovative technologies that enhance our platform and allow us to pursue additional service offerings.

For example, we plan on offering the ability to purchase securities sold under Regulation A.

Incubate and Accelerate Our Advisory Portfolio Clients.

The advisory portfolio and our equity interests in select advisory clients represent potential upside for our shareholders.

We seek to grow this model of advisory clients.

1 unchanged sentence

We believe there is a significant opportunity to expand into Europe and Asia as an appetite abroad grows for U.S.

Open ATS/Secondary

Transfer Feature.

Lack of liquidity is a key issue for investors in private companies as private markets lack a liquidity

feature in our targeted market.

We plan to open a Secondary Transfer Feature and are exploring various alternatives to provide

potential liquidity for secondary offerings to investors who participate in our primary offerings on the Netcapital platform.

New Verticals Represent

a Compelling Opportunity.

Open ATS/Secondary Transfer Feature.

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

In January 2023, we entered into software license and services agreement with Templum Markets LLC, operator of an ATS with approval in 53 U.S.

states and territories, for the trading of unregistered or private securities to provide issuers and investors on the Netcapital funding portal with the potential for greater distribution and liquidity.

A beta testing platform has been established and the functionality is currently being tested.

New Verticals Represent a Compelling Opportunity.

We operate in a regulated market supported by the JOBS Act.

We may pursue expansion to our model

to include Regulation A and Regulation D offerings.

major tailwinds are driving accelerated growth in the shift to digital fundraising:

the COVID-19 pandemic and regulatory enhancements

to the Jobs Act.

The pandemic drove a rapid need to bring as many processes as possible online.

With travel restrictions in place

and most people in lockdown, entrepreneurs were no longer able to fundraise in person and have increasingly turned to online capital

raising through funding portals.

addition, exempt offering regulatory enhancements proposed by the SEC in 2020 went into effect in March 2021.

These amendments

increased the offering limits for Reg CF, Regulation A and Rule 504 of Regulation D offerings as follows:

the Reg CF limit increased

to $5 million from $1.07 million, every twelve months.

Rule 504 of Regulation D moved to $10 million from $5 million and Regulation

A Tier 2 rose to $75 million from $50 million.

by this rule change, Reg CF commitments of $56 million in March 2021 were more than five times higher than in March of the previous

We believe that the recent increase in offering limits in combination with pandemic-driven acceleration in the need for

digital fundraising have been the primary drivers of the increase in Reg CF commitments.-.

We expect these changes to continue

to have a significant, positive impact on demand as they increase the attractiveness of digital fundraising options and pave the

way for larger companies to utilize the exempt framework.

This could also potentially drive higher demand for Netcapital Advisors’

another important regulatory development, the U.S.

Department of Labor, or DOL, recently expressed their support for retail investment

in private equity.

In 2020, the DOL released an information letter backing private equity as an investment option for defined

contribution plans.

As a result, large asset managers are working on adding private investment choices to their retirement products,

according to a study conducted by BCG.

key part of our story involves the potential value creation driven by our portfolio companies.

In our portfolio, we focus on companies

with emerging, disruptive technologies.

A partial list of our investment portfolio is described below:

We may pursue expansion to our model to include Regulation A and Regulation D offerings.

Industry Tailwinds

Two major tailwinds are driving accelerated growth

in the shift to digital fundraising:

the COVID-19 pandemic and regulatory enhancements to the Jobs Act.

The pandemic drove a rapid need

to bring as many processes as possible online.

With travel restrictions in place and most people in lockdown, entrepreneurs were no longer

able to fundraise in person and have increasingly turned to online capital raising through funding portals.

In addition, exempt offering regulatory enhancements

proposed by the SEC in 2020 went into effect in March 2021.

These amendments increased the offering limits for Reg CF, Regulation A and

Rule 504 of Regulation D offerings as follows:

the Reg CF limit increased to $5 million from $1.07 million, every twelve months.

504 of Regulation D moved to $10 million from $5 million and Regulation A Tier 2 rose to $75 million from $50 million.

Investment Portfolio

A key part of our story involves the potential value

creation driven by our portfolio companies.

In our portfolio, we focus on companies with emerging, disruptive technologies.

list of our investment portfolio is described below:

by over 300,000 investors to vet startup investments, KingsCrowd, Inc.

is a leader in ratings and analytics for online private

The company aggregates, analyzes, and rates companies raising on platforms like Netcapital to help investors make more

informed decisions.

is a leader in ratings and analytics for online private markets.

The company aggregates, analyzes, and rates companies raising on platforms like Netcapital to help investors make more informed decisions.

communicators close more deals.

ChipBrain LLC’s emotionally intelligent AI assistant provides real-time emotion, tone, and

facial expression feedback in live conversations across text, voice, and video.

Taking the guesswork out of identifying conversational

cues, the company’s technology enables sales professionals to see at a glance how they are coming across to customers.

Drone Delivery Technology

Drone LLC solves the last mile delivery problem for “brick and mortar” retailers.

The company designs, builds, and

operates drone delivery systems, transforming retail stores into customer fulfillment centers.

Deuce Drone LLC provides a cost-effective,

technology-driven solution for same-day delivery that allows retailers to compete with major e-commerce players.

ChipBrain LLC’s emotionally intelligent AI assistant provides real-time emotion, tone, and facial

expression feedback in live conversations across text, voice, and video.

Taking the guesswork out of identifying conversational cues,

the company’s technology enables sales professionals to see at a glance how they are coming across to customers.

the click of a button and the wallet owner’s permission, ScanHash’s innovative program launches and immediately integrates

with customers' technology systems to search for clues and traces of their private key, digital wallets and other crypto-enabling logs

Thanks to ScanHash’s proprietary digital forensics technology, recovering lost cryptocurrency is affordable, accessible,

by famous venture capitalist Tim Draper, napster founder, Shawn Fanning, and co-creator of Guitar Hero, Kai Huang, Zelgor Inc.

is an interactive entertainment company featuring a new species of rambunctious alien characters called The Noobs.

The Noobs are

a unique and original intellectual property introduced to the world through mobile games, multimedia content, and strategic partnerships.

is an interactive

entertainment company featuring a new species of rambunctious alien characters called The Noobs.

The Noobs are a unique and original intellectual

property introduced to the world through mobile games, multimedia content, and strategic partnerships.

MustWatch LLC brings

your friends and favorite shows together all in one place.

The Watch Party app makes it easy to find new shows, see what your

friends are watching, and recommend great shows to each other.

The company’s platform delivers targeted show recommendations

based on the television viewing tastes of users’ friends and family.

It’s not a single streaming platform’s

media catalog, but a cross-platform television guide, crowdsourced from your friends and family.

The Watch Party app makes it easy to find new shows, see what your friends

are watching, and recommend great shows to each other.

The company’s platform delivers targeted show recommendations based on the

television viewing tastes of users’ friends and family.

It’s not a single streaming platform’s media catalog, but a

cross-platform television guide, crowdsourced from your friends and family.

C-Reveal Therapeutics

Cancer Immunotherapy

Therapeutics’s proprietary technology, developed at Massachusetts General Hospital and Harvard University, helps the body's

immune system to identify and destroy cancer cells by inhibiting key enzymes that conceal the disease.

This patent pending approach

is designed to improve the efficacy of treating a broad range of cancers.

product is an AI-powered database and CRM hybrid that uses data and emotionally intelligent AI to boost direct one-to-one marketing

Therapeutics’s proprietary technology, developed at Massachusetts General Hospital and Harvard University, helps the body's immune

system to identify and destroy cancer cells by inhibiting key enzymes that conceal the disease.

This patent pending approach is designed

to improve the efficacy of treating a broad range of cancers.

Hiveskill LLC

product is an AI-powered database and CRM hybrid that uses data and emotionally intelligent AI to boost direct one-to-one marketing efforts.

It also provides specialized experts who know how to leverage your company’s data.

Media Group Inc.

Caesar Media Group Inc.

Media Group, Inc.

1 unchanged sentence

Caesar Media Group is designed to leverage its technology

and data to provide lead generation, search engine optimization (SEO) website development, project development, digital marketing,

content management, customer service, and sales management.

Portfolio Company Progress

Inc., a fintech company that provides ratings and analytics for online private markets, grew their subscriber base to 350,000,

generated almost half a million in revenues last year, rated over half a billion dollars in transactions with their proprietary

rating algorithm, and launched a $15 million Reg A+ round at a $45 million pre-money valuation.

Drone recently secured an exclusive contract for food delivery at the BB&T Center, in Mobile, Alabama.

They successfully completed

their first food delivery run:

Operation Smoothie.

The Deuce Drone team was joined by several notable community leaders for the

demo, including Representative Jerry Carl, the chief executive officer of the Mobile Chamber of Commerce, staff from Senator Tommy

Tuberville’s office, and representatives from Innovation Portal, a local incubator that recently invested in the company.

Local Fox 10 News and Alabama.com covered the event.

launched their television show recommendation app in the Apple app store, which has been awarded a 5-star rating by users.

also added acclaimed Hollywood producer and screenwriter Jason Keller to their team.

Keller brings nearly two decades of experience

in the film and entertainment industry to the MustWatch team.

Most recently Keller wrote the Oscar winning film Ford vs.

(starring Christian Bale and Matt Damon) which was nominated for four Academy Awards, including Best Picture.

His other notable

writing credits include Mirror, Mirror (starring Julia Roberts), Escape Plan (starring Arnold Schwarzenegger and Sylvester Stallone)

and Machine Gun Preacher (starring Gerard Butler), as well as an executive producer for the fifth movie in the Die Hard franchise,

A Good Day to Die Hard (starring Bruce Willis).

completed a stability test launch of their first mobile game, Noobs in Space, and generated thousands of downloads in the first

They sold out their recent offering on the Netcapital platform.

which develops emotionally intelligent AI, has built out their core machine learning models and performed pilot programs with

multiple customers.

With the help of Netcapital Advisors, the Company sold out two rounds of financing on Netcapital, and just

closed a venture round at a $20 million pre-money valuation.

with Netcapital Advisors, C-Reveal raised over $1 million on the Netcapital platform, and then closed a $3 million venture round.

the year ended April 30, 2022, the Company had one customer that constituted 22% of its revenues, a second customer that constituted

22% of its revenues, and a third customer that constituted 18% of its revenues.

For the year 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.

Uplist Offering

July 15, 2022, we completed an underwritten public offering of 1,205,000 shares of our common stock and warrants to purchase 1,205,000

shares of our common stock at a combined public offering price of $4.15 per share and warrant.

The gross proceeds from the offering

were $5,000,750 prior to deducting underwriting discounts, commissions, and other offering expenses.

The warrants have a per share

exercise price of $5.19, are exercisable immediately, and expire five years from the date of issuance.

conjunction with this offering, the shares and warrants began trading on The Nasdaq Capital Market on July 13, 2022, under the

ticker symbols “NCPL” and “NCPLW,” respectively.

addition, we granted the underwriter a 45-day option to purchase up to an additional 180,750 shares of common stock and/or up

to 180,750 additional warrants to cover over-allotments, if any.

In connection with the closing of the offering, the underwriter

partially exercised its over-allotment option and purchased an additional 111,300 warrants.

The underwriter retains the right

to exercise the balance of its over-allotment option within the 45-day period.

of Secured Debt

July 21, 2022 the company paid $1 million to its secured lender, Vaxstar LLC, to reduce the principal balance on its debt from

$1,400,000 to $400,000.

Company was incorporated in Utah in 1984 as DBS Investments, Inc., or DBS.

DBS merged with Valuesetters L.L.C.

in December 2003

and changed its name to Valuesetters, Inc.

In November 2020, the Company purchased Netcapital Funding Portal Inc.

from Netcapital

Systems LLC and changed the name of the Company from Valuesetters, Inc.

to Netcapital Inc.

principal executive offices are located at State Street Financial Center, One Lincoln Street, Boston, Massachusetts and our telephone

number is 781-925-1700.

We maintain a website at www.netcapitalinc.com .

Information contained on or accessible through

our website is not, and should not be considered, part of, or incorporated by reference into, this prospectus and you should not

consider any information contained on, or that can be accessed through, our website as part of this prospectus in deciding whether

to purchase our securities.

maintain a corporate website with the address http://www.netcapitalinc.com, our funding portal maintains a website with the address

http://www.netcapital.com, Netcapital Advisors maintains a website at http://www.netcapitaladvisors.com and our valuation business

maintains a website at https://valucorp.com/.

We have not incorporated by reference into this Report on Form 10-K the information

on any of our websites and you should not consider any of such information to be a part of this document.

Our website addresses

are included in this document for reference only.

make available free of charge through our corporate website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and

Current Reports on Form 8-K, and amendments to these reports through a link to the EDGAR database as soon as reasonably practicable

after we electronically file such material with, or furnish such material to the SEC.

You can also read and copy any

materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549.

You can obtain additional

information about the operation of the Public Reference Room by calling the SEC at 1.800.SEC.0330.

In addition, the SEC maintains

a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that

file electronically with the SEC, including all of our filings.

and data to provide lead generation, search engine optimization (SEO) website development, project development, digital marketing, content

management, customer service, and sales management.

Although each of the above companies possesses potential

to be a valuable liquid asset for our Company, they are subject to swings in their valuation and on a quarter-to-quarter basis, may create

extreme volatility in our earnings report, as we mark the value of the investment to the most recent observable price.

Some of our investments

may decrease to a value of zero dollars.

Major Customers

For the year ended April 30, 2023,

the Company had one customer that constituted 25% of its revenues, and four customers that each constituted 14% of its revenues.

year ended April 30, 2022, the Company had one customer that constituted 22% of its revenues, a second customer that constituted 22% of

its revenues, and a third customer that constituted 18% of its revenues.

Recent Developments

May 2023 Registered Direct

On May 23, 2023, we entered

into a securities purchase agreement with certain institutional investors, pursuant to which we agreed to issue and sell to such investors,

in a registered direct offering (the “Offering”), 1,100,000 shares (the “Shares”) of our common stock at a price

of $1.55 per Share, for aggregate gross proceeds of $1,705,000, before deducting the placement agent's fees and other offering expenses

payable by the Company.

The Offering closed on May 25, 2023 and we received aggregate net proceeds of $1,468,700.

The Shares were offered

and issued and sold pursuant to the Company’s shelf registration statement on Form S-3 (File 333-267921) filed by the Company with

the SEC under the Securities Act of 1933, as amended (the “Securities Act”), on October 18, 2022 and declared effective on

October 26, 2022.

We used approximately $365,000

of the net proceeds from the Offering to repay certain indebtedness, and the remainder of net proceeds for working capital and general

corporate purposes.

Also in connection with the

Offering, on May 23, 2023, we entered into a placement agency agreement with ThinkEquity (the “Placement Agent”), pursuant

to which (i) the Placement Agent agreed to act as placement agent on a “best efforts” basis in connection with the Offering,

(ii) we agreed to pay the Placement Agent an aggregate fee equal to 8.0% of the gross proceeds raised in the Offering, and to reimburse

the Placement Agent for certain expenses, and (iii) we agreed to issue to the Placement Agent warrants to purchase up to 55,000 shares

of Common Stock at an exercise price of $1.94 (the “Placement Agent Warrants”), which were issued on May 25, 2023.

The Placement

Agent Warrants (and the shares of Common Stock issuable upon the exercise of the Placement Agent Warrants) were not registered under the

Securities Act, and were offered pursuant to an exemption from the registration requirements of the Securities Act provided in Section

4(a)(2) of the Securities Act and Rule 506(b) promulgated thereunder.

Repayment of Secured Debt

On May 25, 2023, we paid $367,167 to our secured lender,

Vaxstar LLC, to pay off the remaining $350,000 principal balance and $17,167 in interest, using a portion of the net proceeds of the Offering.

Following repayment to Vaxstar LLC the facility was closed and all related agreements were terminated in accordance with their terms.

Recent Common Stock Issuances.

In April and May 2023, we issued an aggregate of 450,000

shares of common stock to consultants in consideration of services rendered.

In addition, in July 2023, we issued 49,855 shares of common

stock to an unrelated third party, in consideration of a release from such third party related to settlement of an outstanding debt between

such third-party and Netcapital DE LLC.

We did not receive any proceeds from these issuances.

Such shares were issued as restricted securities

and were issued pursuant to the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

July 2023 Public Offering

On July 24, 2023 the Company completed an underwritten

public offering of 1,725,000 shares of the Company’s common stock, at a price to the public of $0.70 per share for aggregate gross

proceeds of $1,207,500, before deducting underwriting discounts and offering expenses payable by the Company.

In conjunction with this

offering, the Company issued the underwriter and its designees warrants to purchase 86,250 shares of our common stock at an exercise price

Corporate Information

Our principal executive offices

are located at State Street Financial Center, One Lincoln Street, Boston, Massachusetts and our telephone number is 781-925-1700.

a corporate website with the address http://www.netcapitalinc.com, our funding portal maintains a website with the address http://www.netcapital.com,

Netcapital Advisors maintains a website at http://www.netcapitaladvisors.com and our valuation business maintains a website at https://valucorp.com/.

have not incorporated by reference into this Report on Form 10-K the information on any of our websites and you should not consider any

of such information to be a part of this document.

Our website addresses are included in this document for reference only.

We make available free of charge through our corporate

website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports

through a link to the EDGAR database as soon as reasonably practicable after we electronically file such material with, or furnish such

material to the SEC.

You can also read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100

F Street, NE, Washington, DC 20549.

You can obtain additional information about the operation of the Public Reference Room by calling

the SEC at 1.800.SEC.0330.

In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements,

and other information regarding issuers that file electronically with the SEC, including all of our filings.

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 1. Business