Pineapple Financial Inc. Debt Disclosure
18. Convertible loan
On May 10, 2024, the Company issued an unsecured convertible debt (‘debt”) of $300,000 carrying a two-year term with interest on the outstanding principal amount from the date of issuance accrued at the rate of 8% per annum. The Company also issued 50,000 (pre-reverse split - ) warrants with exercise price of $5 in connection with the convertible debt (Note 8).
The Company has an option to prepay the loan prior to the maturity date subject to a prepayment fee of $75,000.
The conversion price of the debt shall equal to 75% of the volume weighted average price (VWAP) on the trading day immediately preceding the conversion date.
The conversion feature of the note was not clearly and closely related to the debt and should be recognized as a derivative liability. The Company determined that the estimate fair value of the derivative liability is $76,543. The prepayment option was not clearly and closely related to the debt and should be recognized a derivative liability. The Company determined the estimated fair value of the prepayment option to be $.
The Company incurred debt issuance cost of $94,687 which was applied against the principal of the debt. The debt component of the convertible debt was valued using the effective interest method, based on an estimated effective interest of 46%.
During the year ended August 31, 2024, the Company incurred interest of $4,411 recognized in interest expense in the consolidated statement of operations and comprehensive loss accretion expense of $223,059 recognized in the consolidated statement of operations and comprehensive loss.
The convertible note was converted into shares in July 2024. Company issued 25,094 (Pre-reverse split - ) shares against the convertible note and the accrued interest thereon.
Pineapple Financial Inc.
Notes to the Consolidated Financial Statements
For the years ended August 31, 2025 and 2024
(Expressed in US Dollars)
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 3, 2025 | Showing above |
| 2024 | Dec 20, 2024 | |
| 2023 | Dec 14, 2023 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.