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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    March 31, 2023

 

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 May 12, 2023

9,948,836


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 Loss

4

 

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity

5

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

6

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

8

 

 

 

 

 

Item 2.

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

31

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

36

 

 

 

 

 

Item 4.

Controls and Procedures

36

 

 

 

 

Part II. 

Other Information

37

 

 

SIGNATURES CERTIFICATIONS

38


1


PINEAPPLE ENERGY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS

March 31

December 31

2023

2022

CURRENT ASSETS:

Cash and cash equivalents

$

1,920,414

$

2,187,540

Restricted cash and cash equivalents

3,672,510

3,068,938

Investments

2,018,057

2,666,766

Trade accounts receivable, less allowance for

credit losses of $112,581 and $108,636, respectively

6,118,196

5,564,532

Inventories, net

5,679,961

6,054,493

Employee retention credit

1,584,541

Related party receivables

76,847

116,710

Prepaid expenses

1,663,536

2,152,058

Costs and estimated earnings in excess of billings

507,564

777,485

Other current assets

634,095

634,362

Current assets held for sale

1,301,823

1,154,099

TOTAL CURRENT ASSETS

23,593,003

25,961,524

PROPERTY, PLANT AND EQUIPMENT, net

1,473,464

1,190,932

OTHER ASSETS:

Goodwill

20,545,850

20,545,850

Operating lease right of use asset

4,672,439

4,166,838

Intangible assets, net

19,280,111

20,546,810

Other assets, net

12,000

12,000

Non-current assets held for sale

2,264,810

2,271,533

TOTAL OTHER ASSETS

46,775,210

47,543,031

TOTAL ASSETS

$

71,841,677

$

74,695,487

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$

7,748,143

$

7,594,181

Accrued compensation and benefits

737,793

859,774

Operating lease liability

322,378

220,763

Other accrued liabilities

1,328,544

1,238,777

Related party payables

549,720

2,181,761

Income taxes payable

1,318

1,650

Refundable customer deposits

2,752,156

4,285,129

Billings in excess of costs and estimated earnings

3,104,435

2,705,409

Current portion of loans payable

371,264

346,290

Current portion of loans payable - related party

5,413,170

5,339,265

Current liabilities held for sale

1,069,199

1,161,159

TOTAL CURRENT LIABILITIES

23,398,120

25,934,158

LONG-TERM LIABILITIES:

Loans payable and related interest

3,444,316

3,138,194

Loans payable and related interest - related party

4,731,778

4,635,914

Operating lease liability

4,379,432

3,961,340

Earnout consideration

2,975,000

2,150,000

Contingent value rights

7,652,714

7,402,714

Long term liabilities held for sale

262,455

250,875

TOTAL LONG-TERM LIABILITIES

23,445,695

21,539,037

COMMITMENTS AND CONTINGENCIES (Note 9)

 

 

STOCKHOLDERS' EQUITY

2


Convertible preferred stock, par value $1.00 per share;

3,000,000 shares authorized; 28,000 shares issued and outstanding

28,000

28,000

Common stock, par value $0.05 per share; 75,000,000 shares authorized;

9,948,836 and 9,915,586 shares issued and outstanding, respectively

497,442

495,779

Additional paid-in capital

46,088,941

45,798,069

Accumulated deficit

(21,630,504)

(19,089,134)

Accumulated other comprehensive income (loss)

13,983

(10,422)

TOTAL STOCKHOLDERS' EQUITY

24,997,862

27,222,292

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

71,841,677

$

74,695,487

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 March 31

2023

2022

Sales

$

22,065,424

$

231,868

Cost of sales

14,059,109

166,160

Gross profit

8,006,315

65,708

Operating expenses:

Selling, general and administrative expenses

8,062,123

273,750

Amortization expense

1,266,698

357,463

Transaction costs

2,020

968,505

Fair value remeasurement of SUNation earnout consideration

825,000

Total operating expenses

10,155,841

1,599,718

Operating loss

(2,149,526)

(1,534,010)

Other income (expense):

Investment and other income (expense)

19,533

(5,144)

Gain on sale of assets

244,271

Fair value remeasurement of contingent value rights

(250,000)

Interest and other expense

(458,218)

(350,382)

Other expense, net

(444,414)

(355,526)

Net loss before income taxes

(2,593,940)

(1,889,536)

Income tax expense

5,732

Net loss from continuing operations

(2,599,672)

(1,889,536)

Net income from discontinued operations, net of tax

44,683

5,902

Net loss

(2,554,989)

(1,883,634)

Other comprehensive gain (loss), net of tax:

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

24,405

(17,067)

Total other comprehensive gain (loss)

24,405

(17,067)

Comprehensive loss

$

(2,530,584)

$

(1,900,701)

Basic net loss per share:

Continuing operations

$

(0.26)

$

(0.58)

Discontinued operations

$

(0.26)

$

(0.58)

Diluted net loss per share:

Continuing operations

$

(0.26)

(0.58)

Discontinued operations

$

(0.26)

$

(0.58)

Weighted Average Basic Shares Outstanding

9,919,650

3,231,461

Weighted Average Dilutive Shares Outstanding

9,919,650

3,231,461

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 Three Months Ended March 31, 2023

Accumulated

Series A

Additional

Other

Preferred Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Shares

Amount

Shares

Amount

Capital

Deficit

Income (Loss)

Total

BALANCE AT DECEMBER 31, 2022

28,000 

$

28,000 

9,915,586 

$

495,779 

$

45,798,069 

$

(19,089,134)

$

(10,422)

$

27,222,292 

Net loss

(2,554,989)

(2,554,989)

Issuance of common stock under

Equity Incentive Plan

37,500 

1,875 

(1,875)

Share based compensation

312,445 

312,445 

Other share retirements

(4,250)

(212)

(19,698)

13,619 

(6,291)

Other comprehensive income

24,405 

24,405 

BALANCE AT MARCH 31, 2023

28,000 

$

28,000 

9,948,836 

$

497,442 

$

46,088,941 

$

(21,630,504)

$

13,983 

$

24,997,862 

For the Three Months Ended March 31, 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

(1,883,634)

(1,883,634)

Issuance of common stock for

professional services

12,499 

625 

(625)

Issuance of common stock for

conversion of related party payables

293,750 

14,688 

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