Netcapital Inc. 8-K

What Happened
Netcapital Inc. announced it closed the transactions under a Securities Purchase Agreement with Dune Equity Holdings LLC on July 2, 2026. The Company issued a convertible promissory note dated July 1, 2026 with a $290,000 principal amount and a common stock purchase warrant to buy 250,000 shares at $0.50 per share. Dune paid $250,000 for the Note (reflecting a $40,000 original issue discount); after withholding $8,000 for legal fees and $17,500 for placement agent fees, Netcapital received net cash proceeds of $224,500. The Note matures July 1, 2027 and includes a one-time interest charge of 12% ($34,800) earned as of July 1, 2026.

Key Details

• Note principal: $290,000; purchase price paid: $250,000; net proceeds: $224,500.
• Interest and payments: one-time 12% interest ($34,800); amortization begins Jan 2, 2027 with an initial payment of $162,400, then five monthly payments of $27,066.66, remaining balance due July 1, 2027. Default interest capped at lesser of 22% or legal maximum.
• Conversion & warrants: Note convertible at holder’s option upon certain triggers; conversion price = 75% of the lowest closing bid over the 10 trading days before conversion (floor $0.10, not applicable after default). Warrant: 250,000 shares, $0.50 exercise price, exercisable Jan 1, 2027–July 1, 2029; cashless exercise permitted if resale registration unavailable.
• Dilution & approvals: Aggregate shares issuable under the Note and Warrant capped at 1,569,579 shares unless shareholder approval is obtained. Company must hold a special shareholder meeting within 180 days of July 1, 2026 to seek Nasdaq Rule 5635(d) approval.
• Defaults and remedies: Events of default include payment and registration failures, among others; on default the note accelerates and payable amount can be 150% of outstanding principal/interest plus collection costs; holder may convert default amount into shares.
• Other: Beneficial ownership limits for the holder set at 4.99% (adjustable up to 9.99% with notice and delay). The Company also furnished the script from a July 7, 2026 investor call discussing strategy and recent acquisitions.

Why It Matters
This filing documents a short-term financing that provides Netcapital roughly $224.5k in immediate cash but creates a secured convertible obligation with meaningful near-term cash outflows (large Jan 2027 amortization) and potential equity dilution if conversion or warrant exercise occurs. The conversion mechanics, beneficial ownership caps, and the 1.57M-share cap (subject to shareholder approval) are material to shareholders because they define how much future dilution could occur and require a special meeting to comply with Nasdaq rules. The covenant and default provisions (including potentially large default penalties and forced conversion rights) are also important for investors assessing the company’s liquidity and capital structure risk. The July 7, 2026 investor call script was filed under Regulation FD and provides management’s strategic update.