Netcapital Raises $402,743 in First Tranche of Convertible Note

Netcapital Inc. (NCPL ) closed the first tranche of a convertible promissory note financing with Hinterland Partners LLC on October 14, 2026, according to a Current Report on Form 8-K the company filed with the U.S. Securities and Exchange Commission on October 20, 2026. Under a Securities Purchase Agreement dated October 13, 2026, Netcapital issued Hinterland a promissory note dated October 13, 2026 in the aggregate principal amount of up to $641,936.66, for an aggregate purchase price of up to $577,743.00, reflecting an original issue discount of up to $64,193.66.

The note is to be funded in up to two tranches. At the closing of the first tranche, Hinterland paid a purchase price of $402,743.00 and the outstanding principal amount of the note became $447,492.22. Enclave Capital LLC acted as placement agent in connection with the transaction, and $17,500 was withheld from the purchase price to cover fees owed by the company to the placement agent. The report is signed by Chief Executive Officer Todd Violette and dated October 20, 2026.

Second Tranche Conditions and Note Economics

Hinterland is required to fund a second tranche with a purchase price of $175,000.00 within five business days after the satisfaction of four conditions within 90 calendar days of the date of the purchase agreement: no event of default, or event that with the passage of time would become one, has occurred under the note; the company has not breached the transaction documents; its common stock remains listed on the Nasdaq Capital Market; and it becomes current in its reporting obligations under the Securities Exchange Act of 1934. Becoming current includes filing its Annual Report on Form 10-K for the fiscal year ended April 30, 2026 and its Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2026, which the filing identifies as the Delinquent Filings. Upon the closing of the second tranche, the principal amount of the note will increase by $194,444.44 and accrued interest will increase by $23,333.33.

The note bears a one-time interest charge of 12% on the principal amount of each tranche, up to $77,032.39 in the aggregate, of which $53,699.06 is attributable to the first tranche. Each tranche matures 12 months after the date on which it is funded. At any time on or prior to the 180th calendar day after the funding date of a tranche, the company has a one-time right, upon five trading days’ prior written notice, to prepay that tranche by paying 99% of its outstanding principal amount and 100% of its accrued and unpaid interest, plus $750.00 for administrative fees. Hinterland may convert all or any portion of that amount during the notice period.

If the company or any of its subsidiaries receives cash proceeds from any source while the note is outstanding, including from customer payments, equity or debt issuances or asset sales, the company must notify Hinterland or publicly disclose the receipt within one business day, and Hinterland may require the company to apply up to 30% of such proceeds to repay the note. Amounts not paid when due bear default interest at the lesser of 18% per annum and the maximum amount permitted by law.

Events of default under the note include payment defaults, failure to deliver conversion shares or maintain the required share reserve, breach of covenants, breach of representations and warranties, receivership, judgments in excess of $100,000, bankruptcy or insolvency events, failure to comply with Exchange Act reporting requirements at any time after February 9, 2027, restatement of financial statements, trading suspension, halt or delisting, and failure to maintain a market capitalization of at least $3,000,000. Upon an event of default, the note becomes immediately due and payable in an amount equal to the then-outstanding principal amount plus accrued interest, including default interest, multiplied by 150%, plus costs of collection. Hinterland may, in its sole discretion, convert all or any portion of the note, including the default amount, into common stock.

Conversion Terms and KingsCrowd Share Pledge

The note is convertible at Hinterland’s option at any time on or after the issue date into shares of Netcapital common stock, par value $0.001 per share. The conversion price is 85% of the lowest traded price of the common stock on the principal market during the seven trading days immediately preceding the applicable conversion date, subject to adjustment, and Hinterland may deduct $1,950.00 from the conversion amount of each conversion to cover its fees. If the conversion price would be less than the par value of the common stock, Hinterland may elect to convert at par value with a corresponding increase to the conversion amount. The conversion price is also subject to reduction, at Hinterland’s option, to the effective price of any subsequent issuance of common stock or common stock equivalents at a lower price, subject to limited exceptions. The note contains a 4.99% beneficial ownership limitation, and the company is required to reserve for issuance upon conversion the greater of 5,000,000 shares of common stock and four times the number of shares issuable upon full conversion of the note at the then-applicable conversion price.

As additional consideration for each tranche, the company is required to issue to Hinterland, on the funding date of that tranche, commitment shares equal to 20% of the principal amount of the tranche divided by the closing price of the common stock on the trading day immediately preceding the funding date. In connection with the first tranche, the company issued 64,387 commitment shares to Hinterland. If the issuance of commitment shares for any tranche would cause Hinterland’s beneficial ownership to exceed the 4.99% limitation, the company will instead issue a common stock purchase warrant to purchase an equal number of shares at an initial exercise price of $0.01 per share. The aggregate number of shares of common stock that may be issued to Hinterland under the transaction documents is limited to 1,603,685 shares, subject to adjustment, unless shareholder approval is obtained in accordance with Nasdaq Rule 5635(d), and the purchase agreement requires the company to hold a special meeting of shareholders on or before the date that is 180 calendar days after the date of the agreement for the purpose of obtaining that approval.

The note is secured by a pledge of 3,209,685 shares of Class A common stock of KingsCrowd, Inc. held by Netcapital, under a Pledge Agreement dated October 13, 2026 among Netcapital, Hinterland and KingsCrowd. So long as no event of default has occurred, Netcapital may exercise voting and other consensual rights pertaining to the pledged shares; upon an event of default, those rights vest in Hinterland, which also holds a continuing option, exercisable until the note is extinguished, to effect the transfer of ownership of up to all of the pledged shares to itself, with the outstanding balance of the note reduced by $0.18 for each pledged share transferred. Until Hinterland provides written notice to KingsCrowd confirming that the note is repaid and extinguished in its entirety, Netcapital may not transfer or otherwise dispose of any of the pledged shares and KingsCrowd may not effectuate any such transfer or disposition. The pledge agreement is governed by Delaware law and was signed for Netcapital by Violette and for Hinterland by Patrick Hassani, its chief investment officer.

The securities were offered and sold in a private placement in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 and Rule 506(b) promulgated thereunder. Hinterland represented that it is an accredited investor and acquired the securities for investment purposes, and the company did not use general solicitation or general advertising in connection with the offering. Under the purchase agreement, Netcapital will use the proceeds for business development and general working capital, subject to specified restrictions.

The purchase agreement and the note also contain covenants including public information covenants with cash payments equal to 3% of the purchase price for public information failures, subject to an exception for the Delinquent Filings if they are filed within 90 calendar days after the date of the purchase agreement; piggy-back registration rights; a right of participation in subsequent financings; a prohibition on variable rate transactions, in each case for the later of 18 months after the date of the purchase agreement and the date the note is extinguished; a most favored nation provision; a requirement to purchase directors’ and officers’ insurance within 60 calendar days after closing; and restrictions on capital stock distributions, stock repurchases and debt repayments, asset sales, affiliate loans, and merchant cash advance and similar transactions.