pegy-20230930x10q

‎ 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, 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 November 10, 2023	10,201,757



PINEAPPLE ENERGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

ASSETS
	September 30		December 31
	2023		2022
CURRENT ASSETS:
Cash and cash equivalents	$	3,417,649	$	2,187,540
Restricted cash and cash equivalents		2,175,753		3,068,938
Investments		—		2,666,766
Trade accounts receivable, less allowance for
credit losses of $177,662 and $108,636, respectively		5,743,630		5,564,532
Inventories, net		4,626,764		6,054,493
Prepaid income taxes		27,431		—
Employee retention credit		—		1,584,541
Related party receivables		50,479		116,710
Prepaid expenses		1,720,937		2,152,058
Costs and estimated earnings in excess of billings		369,881		777,485
Other current assets		790,275		634,362
Current assets held for sale		—		1,154,099
TOTAL CURRENT ASSETS		18,922,799		25,961,524
PROPERTY, PLANT AND EQUIPMENT, net		1,565,722		1,190,932
OTHER ASSETS:
Goodwill		20,545,850		20,545,850
Operating lease right of use asset		4,622,387		4,166,838
Intangible assets, net		16,846,714		20,546,810
Other assets, net		12,000		12,000
Non-current assets held for sale		—		2,271,533
TOTAL OTHER ASSETS		42,026,951		47,543,031
TOTAL ASSETS	$	62,515,472	$	74,695,487
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	7,083,759	$	7,594,181
Accrued compensation and benefits		944,196		859,774
Operating lease liability		384,581		220,763
Accrued warranty		300,000		276,791
Other accrued liabilities		937,608		961,986
Related party payables		—		2,181,761
Income taxes payable		—		1,650
Refundable customer deposits		3,363,901		4,285,129
Billings in excess of costs and estimated earnings		1,750,256		2,705,409
Contingent value rights		3,213,765		—
Earnout consideration		2,370,000		—
Current portion of loans payable		1,461,228		346,290
Current portion of loans payable - related party		360,723		5,339,265
Current liabilities held for sale		—		1,161,159
TOTAL CURRENT LIABILITIES		22,170,017		25,934,158
LONG-TERM LIABILITIES:
Loans payable and related interest		8,264,318		3,138,194
Loans payable and related interest - related party		4,984,458		4,635,914
Operating lease liability		4,295,406		3,961,340
Earnout consideration		940,000		2,150,000
Contingent value rights		—		7,402,714
Long term liabilities held for sale		—		250,875



PINEAPPLE ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)


	Three Months Ended September 30				Nine Months Ended September 30
	2023		2022		2023		2022
Sales	$	18,288,697	$	5,888,162	$	60,190,413	$	10,338,483
Cost of sales		11,256,239		4,483,989		38,014,705		7,966,159
Gross profit		7,032,458		1,404,173		22,175,708		2,372,324
Operating expenses:
Selling, general and administrative expenses		7,150,110		2,702,005		22,442,788		5,792,270
Amortization expense		1,216,698		863,574		3,700,095		2,084,470
Transaction costs		—		262,365		2,020		1,399,147
Fair value remeasurement of SUNation earnout consideration		230,000		—		1,160,000		—
Total operating expenses		8,596,808		3,827,944		27,304,903		9,275,887
Operating loss		(1,564,350)		(2,423,771)		(5,129,195)		(6,903,563)
Other (expense) income:
Investment and other income		88,163		8,215		143,452		106,974
Gain on sale of assets		192,845		14,573		437,116		1,229,133
Fair value remeasurement of merger earnout consideration		—		13,000		—		4,684,000
Fair value remeasurement of contingent value rights		(239,922)		—		1,152,273		(1,214,560)
Interest and other expense		(810,023)		(154,805)		(1,867,576)		(640,536)
Other (expense) income, net		(768,937)		(119,017)		(134,735)		4,165,011
Net loss before income taxes		(2,333,287)		(2,542,788)		(5,263,930)		(2,738,552)
Income tax benefit		(4,234)		—		(1,396)		—
Net loss from continuing operations		(2,329,053)		(2,542,788)		(5,262,534)		(2,738,552)
Net (loss) income from discontinued operations, net of tax		(33,983)		22,792		(1,206,235)		(222,426)
Net loss		(2,363,036)		(2,519,996)		(6,468,769)		(2,960,978)

Other comprehensive gain (loss), net of tax:
Unrealized gain (loss) on available-for-sale securities		(34,108)		38		10,422		(32,760)
Total other comprehensive gain (loss)		(34,108)		38		10,422		(32,760)
Comprehensive loss	$	(2,397,144)	$	(2,519,958)	$	(6,458,347)	$	(2,993,738)


Basic net loss per share:
Continuing operations	$	(0.23)	$	(0.34)	$	(0.53)	$	(0.45)
Discontinued operations		(0.01)		—		(0.12)		(0.04)
	$	(0.24)	$	(0.34)	$	(0.65)	$	(0.49)

Diluted net loss per share:
Continuing operations	$	(0.23)		(0.34)		(0.53)		(0.45)
Discontinued operations		(0.01)		—		(0.12)		(0.04)
	$	(0.24)	$	(0.34)	$	(0.65)	$	(0.49)

Weighted Average Basic Shares Outstanding		10,050,015		7,435,586		9,973,311		6,049,611
Weighted Average Dilutive Shares Outstanding		10,050,015		7,435,586		9,973,311		6,049,611

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

‎


PINEAPPLE ENERGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
For the Nine Months Ended September 30, 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	—		—	—		—		—		(6,468,769)		—		(6,468,769)
Issuance of common stock under
Employee Stock Purchase Plan	—		—	84,995		4,250		121,148

			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		7

	Notes to Condensed Consolidated Financial Statements		9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38

	Item 4.	Controls and Procedures	38

Part II.	Other Information		39

SIGNATURES CERTIFICATIONS			40

TOTAL LONG-TERM LIABILITIES		18,484,182		21,539,037
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' EQUITY
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;
10,182,723 and 9,915,586 shares issued and outstanding, respectively		509,136		495,779
Additional paid-in capital		46,773,844		45,798,069
Accumulated deficit		(25,449,707)		(19,089,134)
Accumulated other comprehensive loss		—		(10,422)
TOTAL STOCKHOLDERS' EQUITY		21,861,273		27,222,292
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	62,515,472	$	74,695,487

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