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 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________ 

 

FORM 10-Q

_____________________________________________________ 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended     September 30, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from  ______to  _____

 

Commission File Number: 001-31588  

 

PINEAPPLE ENERGY INC.

 

(Exact name of registrant as specified in its charter)  

 

  MINNESOTA

 

  41-0957999

(State or other jurisdiction of

incorporation or organization)

 

(Federal Employer

Identification No.)

 

 

 

10900 Red Circle Drive, Minnetonka, MN

 

55343

(Address of principal executive offices)

 

(Zip Code)

 

(952) 996-1674 

 

Registrant’s telephone number, including area code

 

Securities Registered Pursuant to Section 12(b) of the Act 

Title of Each Class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.05 per share

PEGY

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES NO

 

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer Accelerated Filer Non-accelerated Filer

Smaller Reporting Company Emerging growth company    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. YES NO

 

APPLICABLE ONLY TO CORPORATE ISSUERS: 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Outstanding at November 11, 2022

9,415,586


PINEAPPLE ENERGY INC.

INDEX

 

 

 

Page No.

Part I.

Financial Information

 

 

 

 

 

 

Item 1.

Financial Statements (Unaudited)

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

2

 

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

4

 

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity

5

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

7

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

8

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

36

 

 

 

 

 

Item 4.

Controls and Procedures

36

 

 

 

 

Part II. 

Other Information

37

 

 

SIGNATURES CERTIFICATIONS

40


1


PINEAPPLE ENERGY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS

September 30

December 31

2022

2021

CURRENT ASSETS:

Cash and cash equivalents

$

5,658,354

$

18,966

Restricted cash and cash equivalents

1,923,716

Investments

2,654,383

Trade accounts receivable, less allowance for

doubtful accounts of $70,000 and $0, respectively

3,938,002

Inventories, net

1,793,093

Prepaid income taxes

14,671

Other current assets

1,223,013

TOTAL CURRENT ASSETS

17,205,232

18,966

PROPERTY, PLANT AND EQUIPMENT, net

341,518

OTHER ASSETS:

Investments

250,000

Goodwill

16,566,853

Operating lease right of use asset

63,684

Intangible assets, net

16,777,225

2,780,270

Other assets, net

44,843

TOTAL OTHER ASSETS

33,702,605

2,780,270

TOTAL ASSETS

$

51,249,355

$

2,799,236

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

2,404,964

$

2,233,371

Accrued compensation and benefits

458,177

307,828

Operating lease liability

53,879

Other accrued liabilities

96,631

Working capital note payable

350,000

Customer deposits

4,992,632

Deferred revenue

663,480

TOTAL CURRENT LIABILITIES

8,669,763

2,891,199

LONG-TERM LIABILITIES:

Loan payable and related interest

1,257,038

6,194,931

Related party payables

2,350,000

Operating lease liability

16,632

Deferred revenue

327,189

Contingent value rights

10,743,224

TOTAL LONG-TERM LIABILITIES

12,344,083

8,544,931

COMMITMENTS AND CONTINGENCIES (Note 8)

 

 

STOCKHOLDERS' EQUITY

Convertible preferred stock, par value $1.00 per share;
3,000,000 shares authorized; 32,000 and 0 shares issued and outstanding, respectively

32,000

Common stock, par value $0.05 per share; 37,500,000 shares authorized;

7,435,586 and 3,074,998 shares issued and outstanding, respectively

371,779

153,750

Additional paid-in capital

41,562,362

(53,750)

Accumulated deficit

(11,697,872)

(8,736,894)

Accumulated other comprehensive loss

(32,760)

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

30,235,509

(8,636,894)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

51,249,355

$

2,799,236

2


The accompanying notes are an integral part of the condensed consolidated financial statements.

3


PINEAPPLE ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

Three Months Ended September 30

Nine Months Ended September 30

2022

2021

2022

2021

Sales

$

7,709,062

$

25,417

$

13,918,498

$

25,417

Cost of sales

5,695,320

10,533,362

Gross profit

2,013,742

25,417

3,385,136

25,417

Operating expenses:

Selling, general and administrative expenses

3,122,976

241,728

6,653,796

697,985

Amortization expense

1,026,362

357,324

2,410,045

1,071,971

Transaction costs

265,383

545,934

1,447,284

1,977,436

Total operating expenses

4,414,721

1,144,986

10,511,125

3,747,392

Operating loss

(2,400,979)

(1,119,569)

(7,125,989)

(3,721,975)

Other income (expense):

Investment and other income

8,215

106,974

Gain on sale of assets

14,573

1,229,133

Fair value remeasurement of earnout consideration

13,000

4,684,000

Fair value remeasurement of contingent value rights

(1,214,560)

Interest and other expense

(154,805)

(275,694)

(640,536)

(1,004,964)

Other income (expense), net

(119,017)

(275,694)

4,165,011

(1,004,964)

Net loss before income taxes

(2,519,996)

(1,395,263)

(2,960,978)

(4,726,939)

Income tax expense

Net loss

(2,519,996)

(1,395,263)

(2,960,978)

(4,726,939)

Other comprehensive gain (loss), net of tax:

Unrealized gain (loss) on available-for-sale securities

38

(32,760)

Total other comprehensive gain (loss)

38

(32,760)

Comprehensive loss

$

(2,519,958)

$

(1,395,263)

$

(2,993,738)

$

(4,726,939)

Basic net loss per share:

$

(0.34)

$

(0.45)

$

(0.49)

$

(1.54)

Diluted net loss per share:

$

(0.34)

$

(0.45)

$

(0.49)

$

(1.54)

Weighted Average Basic Shares Outstanding

7,435,586

3,074,998

6,049,611

3,074,998

Weighted Average Dilutive Shares Outstanding

7,435,586

3,074,998

6,049,611

3,074,998

The accompanying notes are an integral part of the condensed consolidated financial statements.


4


PINEAPPLE ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Unaudited)

For the Nine Months Ended September 30, 2022

Accumulated

Series A

Additional

Other

Preferred Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Shares

Amount

Shares

Amount

Capital

Deficit

Loss

Total

BALANCE AT DECEMBER 31, 2021

$

3,074,998 

$

153,750 

$

(53,750)

$

(8,736,894)

$

$

(8,636,894)

Net loss

(2,960,978)

(2,960,978)

Issuance of common stock for

professional services

12,499 

625 

(625)

Issuance of common stock for

conversion of related party payables

293,750 

14,687 

2,335,313 

2,350,000 

Issuance of common stock for

conversion of working capital note payable

62,500 

3,125 

496,875 

500,000 

Effect of reverse capitalization

2,429,341 

121,467 

1,473,312 

1,594,779 

Issuance of common stock for

HEC Asset Acquisition

1,562,498 

78,125 

12,703,109 

12,781,234 

Issuance of preferred stock and warrants

to PIPE investors, net of issuance costs

32,000 

32,000 

29,268,630 

29,300,630 

Contingent consideration related to

merger transaction

(4,684,000)

(4,684,000)

Share based compensation

23,498 

23,498 

Other comprehensive loss

(32,760)

(32,760)

BALANCE AT SEPTEMBER 30, 2022

32,000 

$

32,000