Netcapital Inc (NCPL)

[Arthur]

From the 8-K:

On October 10, 2017 ValueSetters, Inc. (the “Company”) accepted a conversion, assignment and settlement agreement (the “Agreement”) from a debt holder to convert a term note with an original balance of $314,000, which matured on June 30, 2017, into shares of the Company’s common stock at $0.01 per share. Unpaid interest amounted to $129,011. In total, 44,301,100 shares were issued under the Agreement.

From the 10-Q:

The Company owes $533,066 at July 31, 2017 and April 30, 2017 to two individual note holders. A $200,000 note is due in September 2017 and accrues interest at an annual rate of 2%. The holder can convert the note into shares of common stock at a price of $0.01 per share.
A second note for $333,066 accrues interest at 3% per annum and was due in June 2017. The note is technically in default, but the lender has not issued a default notice.

So they had borrowed $333K, they were supposed to pay it back in June, and instead they are paying it now with shares, but with a conversion rate if 1¢ a share. I suppose the lender is eating the loss.

There's another $200K note that is due now. Maybe the other lender will accept shares too.

VSTR also owes $1M to its founder, but this debt is unlikely to get called anytime soon.

As of July 31, 2017 and April 30, 2017, the Company owed its principal lender (“Lender”) $1,217,069 and $1,199,327, respectively, under a loan and security agreement (“Loan”) dated April 28, 2011, that was amended on July 26, 2014 to change the maturity date to June 30, 2017. The loan is now in default for non-payment, but the Lender has not issued a default notice. The maximum amount of the Loan is $1,250,000. The Lender is also the largest shareholder of the Company, owning 227,173,207 shares of common stock, or 40% of the 564,590,000 shares issued and outstanding.