Netcapital Inc. 8-K

What Happened

• Netcapital Inc. announced on June 4, 2026 (8‑K filed) that it closed a securities purchase with Labrys Fund II, L.P. under a June 3, 2026 Purchase Agreement. The Company issued a $145,000 convertible promissory note (principal) and a common‑stock purchase warrant to buy 125,000 shares at $0.50 per share. The note was sold for $125,000 (reflecting a $20,000 original issue discount); after fee withholdings the Company received net cash proceeds of $111,250. The note matures June 3, 2027.

Key Details

• Note principal: $145,000; purchase price paid by investor: $125,000; net cash to company: $111,250 (withholdings: $4,000 legal fees, $1,000 due diligence, $8,750 placement agent).
• One‑time interest charge: 12% of principal ($17,400) earned as of June 3, 2026. Amortization starts Dec 3, 2026 (initial payment $81,200, then five monthly payments of $13,533.33 Jan–May 2027; remaining amounts due Jun 3, 2027).
• Conversion and warrants: Note convertible at holder’s option upon certain triggers (including failure to pay an amortization payment or after 180 days). Conversion price = 75% of the lowest closing bid in the prior 10 trading days, floor $0.10/share (floor waived on default). Warrant: 125,000 shares, exercise price $0.50, exercisable Dec 3, 2026–Jun 3, 2029; cashless exercise if resale registration not available.
• Ownership and shareholder approval: Both the Note and Warrant include a 4.99% beneficial ownership cap (can be increased up to 9.99% with notice and delay). Aggregate shares issuable under the Note and Warrant are capped at 1,569,579 unless shareholder approval is obtained; the Company must seek Nasdaq Rule 5635(d) shareholder approval within 180 days of June 3, 2026.
• Defaults and remedies: Events of default include payment/covenant breaches and failures related to registration statements. On default the amount due may include a 150% multiplier and the holder may convert under the Note’s terms.

Why It Matters

• This filing discloses a short‑term financing that provides roughly $111K in immediate cash for business development and working capital but also creates convertible debt and potential share dilution (warrant exercise and conversion features). The transaction includes significant conversion protections for the investor (discounted conversion pricing, early conversion triggers, ownership caps) and requires the Company to seek shareholder approval to exceed share issuance limits, which investors should watch for because it affects potential dilution and Nasdaq listing considerations.