Netcapital Inc. 8-K

What Happened

• Netcapital Inc. announced it closed a Securities Purchase Agreement with FirstFire Global Opportunities Fund, LLC on June 10, 2026. The Company issued a promissory note dated June 9, 2026 with a principal amount of $290,000 (issued for $250,000) and a common stock purchase warrant to buy 250,000 shares at $0.50 per share. Netcash proceeds to Netcapital were $224,500 after fees and withholdings. The company said proceeds will be used for business development and general working capital.

Key Details

• Note size and economics: Principal $290,000; issued for $250,000 (original issue discount $40,000); one-time interest charge of 12% ($34,800) earned as of June 9, 2026; unsecured; matures June 9, 2027.
• Amortization & prepayment: Initial payment of $162,400 due December 9, 2026, then five monthly payments of $27,066.66 (Jan–May 2027); remaining balance due June 9, 2027. Prepayment permitted before day 181 with 3 trading days’ notice and a prepayment percentage schedule (96% → 97% → 98% as time elapses).
• Conversion & dilution caps: Note convertible at holder’s option upon certain events (including missed payments or after 180 days); conversion price = 75% of the lowest closing bid over the prior 10 trading days, subject to a $0.10 floor (floor not applicable after default). Warrant exercisable beginning Dec 9, 2026, expires June 9, 2029, at $0.50 per share; both Note and Warrant carry a 4.99% beneficial ownership limit (adjustable up to 9.99% with notice/61-day delay).
• Share issuance and shareholder vote: Aggregate shares issuable under the Note and Warrant limited to 1,569,579 shares unless shareholder approval is obtained. The Company must hold a special shareholder meeting within 180 days to seek Nasdaq Rule 5635(d) approval to increase the share cap.

Why It Matters

• This transaction provides Netcapital with modest near-term cash (net $224,500) but creates a convertible debt obligation with scheduled large amortization and conversion features that could dilute existing shareholders if converted or if shareholder approval expands the share cap. The initial $162,400 payment due December 9, 2026 and ongoing amortization payments will affect cash flow planning. The registration and shareholder-approval requirements create deadlines that, if not met, could trigger conversion rights or defaults under the note. Retail investors should watch upcoming cash flows, any shareholder vote outcomes, and registration filings that enable resale of conversion/warrant shares.