DEF: Pineapple Financial Seeks Shareholder Approval for Reverse Stock Split and Major Share Issuance Amid NYSE American Delisting Threat

Pineapple Financial Inc. is convening a special meeting of stockholders to approve a reverse stock split and the issuance of over 20% of its common shares, critical steps to address its recent NYSE American delisting and low stock price.

Summary

• Pineapple Financial Inc. will hold a Special Meeting of Stockholders on June 26, 2025, at 9:30 a.m. Eastern Time, to vote on three key proposals.
• The first proposal is to approve a reverse stock split (consolidation) of common shares at a ratio between 1-for-10 and 1-for-20, at the Board's discretion, aimed at increasing the per-share trading price.
• The second proposal seeks approval for the issuance of 20% or more of the company's outstanding common shares as of November 13, 2024, upon the exercise of warrants issued under a November 13, 2024, securities purchase agreement, to comply with NYSE American listing rules.
• The third proposal is to approve an adjournment of the Special Meeting, if necessary, to solicit further proxies for the other two proposals.
• The company's common shares were suspended from trading on NYSE American on May 14, 2025, and delisting proceedings commenced due to a low selling price, with shares now trading on the OTC Markets system under the symbol PAPLF since May 15, 2025.
• Pineapple Financial intends to appeal the NYSE Regulation's delisting determination, with a hearing before the Listings Qualifications Panel scheduled for July 17, 2025.
• As of the Record Date (May 23, 2025), there were 20,092,020 common shares outstanding and entitled to vote.
• The warrants, issued at $0.01 per warrant, are exercisable at $0.60 per share and expire 5.5 years from issuance, with net proceeds from the associated offering totaling approximately $1.0 million.
• The issuance of shares upon warrant exercise is subject to an Exchange Cap of 1,761,516 shares (19.99% of outstanding shares on the closing date), unless stockholder approval is obtained to exceed this cap.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to the company's current delisting from NYSE American and trading on OTC Markets, indicating significant operational or market challenges. While the proposed actions (reverse split, share issuance approval) are attempts to rectify the situation and regain listing, their success is not guaranteed, and they carry inherent risks such as potential dilution and uncertain market response. The need for these defensive measures overshadows the past capital raise.

Positives

• The proposed reverse stock split aims to increase the per-share trading price, which could help the company regain compliance with NYSE American listing requirements and potentially avoid full delisting.
• Maintaining a NYSE American listing is expected to provide a more accessible market, increase liquidity, potentially minimize bid-ask spreads, enhance access to capital, and improve investor perception compared to trading on OTC Markets.
• The company has already secured approximately $1.0 million in net proceeds from the offering associated with the warrants, providing capital for operations.

Negatives

• The company's common shares have been suspended from trading on NYSE American and are currently trading on the less liquid OTC Markets due to low selling price, indicating significant market challenges.
• There is no assurance that the reverse stock split will result in a sustained increase in the share price or that the company will successfully appeal the delisting decision and regain its NYSE American listing.
• The reverse stock split will reduce the total number of outstanding common shares, which may decrease liquidity and lead to a smaller number of market makers.
• Existing stockholders will suffer dilution in their ownership interests upon the future exercise of warrants if the Share Issuance Proposal is approved.
• The sale of shares issued upon warrant exercise into the public market could materially and adversely affect the market price of the common shares.
• Stockholders may own 'odd-lots' (less than 100 shares) after the reverse split, which can incur higher brokerage commissions and transaction costs.
• Stockholders entitled to fractional shares after the reverse split will receive cash in lieu thereof, potentially reducing their overall equity interest.

Risks

• The reverse stock split may not result in a sustained increase in the price of the common shares, and the market price may not rise in proportion to the reduction in outstanding shares, potentially reducing overall market capitalization.
• The reverse stock split could decrease the liquidity of the common shares due to a reduced number of outstanding shares and potentially fewer market makers.
• Some stockholders may own odd lots (less than 100 shares) after the reverse split, which can be more difficult to sell and incur higher transaction costs per share.
• The failure of stockholders to approve the Share Issuance Proposal will prevent the full exercise of warrants and may lead to substantial additional costs and expenses for the company.
• The issuance of additional shares following the reverse stock split could, under certain circumstances, have an anti-takeover effect by diluting the stock ownership or voting rights of persons seeking control.
• The company's ability to maintain its listing on NYSE American is uncertain, and there is no guarantee that the appeal process will be successful even if the reverse stock split is implemented and the share price increases.
• The company's financial results, market conditions, and general market perception of its business could adversely affect the market price of the common shares regardless of the reverse stock split.

Future Outlook

The company's future outlook is focused on regaining its NYSE American listing by increasing its per-share trading price through a reverse stock split and securing shareholder approval for a significant share issuance related to prior financing. Management believes a NYSE American listing will enhance access to capital, improve liquidity, and positively influence investor perception. The company intends to appeal the NYSE Regulation's delisting determination.

Management Comments

• "The Board of Directors recommends that you vote your shares: (1) FOR the Reverse Stock Split Proposal; (2) FOR the Share Issuance Proposal; and (3) FOR the Adjournment Proposal."
• "The Boards primary objective in asking for authority to effect a reverse split is to increase the per-share trading price of our Common Shares and regain compliance with the requirements and policies of the NYSE American."
• "We believe that having our Common Shares traded on a national securities exchange such as the NYSE American will provide us with a market for the Common Shares that is more accessible than the OTC Markets where our Common Shares are currently trading."
• "The Board believes that if at the Special Meeting the number of votes represented by our Common Shares present or represented and voting in favor is insufficient to approve the Reverse Stock Split Proposal or the Share Issuance Proposal, it is in the best interests of the stockholders to enable the Board to continue to seek to obtain a sufficient number of additional votes..."

Industry Context

Pineapple Financial Inc. is navigating a common challenge for smaller public companies: maintaining listing on a major exchange like NYSE American when stock prices fall below minimum thresholds. The move to OTC Markets is typical for delisted companies, often resulting in reduced visibility and liquidity. The proposed reverse stock split and the need for shareholder approval for a significant share issuance are standard corporate actions taken to comply with exchange rules and facilitate financing, reflecting broader industry trends where companies must adapt to regulatory requirements to maintain market access and investor confidence.

Stakeholder Impact

• **Shareholders**: Will be directly impacted by the reverse stock split, which will reduce the number of shares they hold while proportionally increasing the per-share price. They face potential dilution from the exercise of warrants if the Share Issuance Proposal is approved. Those with fractional shares will receive cash in lieu, potentially altering their total equity. Their voting power percentage will remain unchanged post-split, but the overall market capitalization could decrease if the price does not rise proportionally.
• **Investors (Warrant Holders)**: Their ability to fully exercise their warrants and convert them into common shares is contingent upon shareholder approval of the Share Issuance Proposal.
• **Company**: The outcome of the proposals will significantly impact the company's ability to regain its NYSE American listing, which is crucial for its access to capital, market visibility, and overall financial flexibility. Failure to secure approvals could lead to continued trading on a less liquid market and potentially higher operational costs.

Next Steps

• The Special Meeting of Stockholders will be held on June 26, 2025, to vote on the proposed reverse stock split, share issuance, and adjournment.
• The company intends to announce preliminary voting results at the Special Meeting and publish final results in a Current Report on Form 8-K within four business days.
• A hearing before the NYSE American Listings Qualifications Panel is scheduled for July 17, 2025, as part of the company's appeal against the delisting determination.
• If the reverse stock split is approved and the Board decides to implement it, the company will publicly announce the final ratio and effective time.
• The authority to implement the reverse stock split will terminate if not exercised prior to the one-year anniversary of the Special Meeting.
• Stockholder proposals for the 2026 Annual Meeting must be submitted by December 29, 2025.

Key Dates

Recommendation

Keywords

Pineapple Financial, Reverse Stock Split, Share Issuance, NYSE American, Delisting, Proxy Statement, Stockholder Meeting, Warrants, Capital Raise, Corporate Governance, Financial Services, Securities Exchange Act