Pineapple Energy Inc. (NASDAQ:PEGY), a company specializing in telephone and telegraph apparatus manufacturing, announced on Monday that it has entered into two separate bridge loan agreements for working capital purposes, totaling $1 million in principal amount.
The Minnetonka, Minnesota-based company disclosed in a recent 8-K filing with the Securities and Exchange Commission that it secured a $500,000 bridge loan from Conduit Capital U.S. Holdings LLC, an unaffiliated lender, and another $500,000 from MBB Energy, LLC, an affiliate of the company. Both loans were issued on an original issue discount (OID) basis of 20%, meaning Pineapple Energy received $400,000 in funds from each lender.
The loans, which are secured by a pledge of all the company's assets, carry an annual interest rate of 20% and are due on July 21, 2025. If Pineapple Energy carries out equity offerings before the maturity date raising at least $3.15 million, it must repay the initial loan principal and OID at closing. If the proceeds reach $4.4 million or more, the company is obliged to repay all outstanding loan principals and OIDs.
Additionally, as part of the agreement with Conduit, Pineapple Energy will nominate a designee of Conduit for election to its Board of Directors.
In related financial restructuring, Pineapple Energy also amended its existing debt agreement with Decathlon Growth Credit, LLC, designating Scott Maskin as the "Key Person" and approving the new working capital loans from Conduit and MBB. Furthermore, Conduit and MBB have agreed to subordinate their security interests in the company's assets to Decathlon and Hercules Capital (NYSE:HTGC), Inc.
This financial maneuvering comes after Pineapple Energy received a notice from Nasdaq in May 2024, indicating non-compliance with the minimum stockholders' equity requirement for continued listing. However, as of Friday, the company has been deemed compliant with the equity rule by the Nasdaq Hearings Panel and will remain under a one-year Nasdaq Panel Monitor.
The full texts of the loan agreements and other related documents are attached as exhibits to the 8-K filing, which serves as the basis for this report.
In other recent news, Pineapple Energy Inc., a Minnesota-based company, has reported a series of significant changes. Following a shareholder vote, the company expanded its share authorization, increasing the number of authorized shares of common stock from 7,500,000 to 133,333,333. Amendments were also made to the company's 2022 Equity Incentive Plan, reflecting adjustments for a 1-for-15 reverse stock split that occurred in June 2024.
In terms of financial performance, Pineapple Energy reported a decrease in both revenue and gross profit for Q1 2024 compared to the previous year. However, the company managed to increase its net income from continuing operations by 146%, amounting to a total of $1.2 million. Additionally, the company is actively pursuing growth strategies, including the acquisition of local and regional rooftop solar companies.
The company's 2024 Annual Meeting of Shareholders was adjourned due to insufficient shareholder turnout, preventing any resolutions or company matters from being addressed. Despite this, Pineapple Energy continues to operate under the interim leadership of CEO Scott Maskin. These are some of the recent developments at Pineapple Energy Inc., as the company strives to achieve profitability in the upcoming quarters.
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