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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, 2024

 

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 9, 2024

95,943,576


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 Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

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

25

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

30

 

 

 

 

 

Item 4.

Controls and Procedures

30

 

 

 

 

Part II. 

Other Information

31

 

 

SIGNATURES CERTIFICATIONS

35


1


PINEAPPLE ENERGY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

ASSETS

March 31

December 31

2024

2023

CURRENT ASSETS:

Cash and cash equivalents

$

1,789,956

$

3,575,283

Restricted cash and cash equivalents

1,502,495

1,821,060

Trade accounts receivable, less allowance for

credit losses of $132,586 and $94,085, respectively

4,976,483

5,010,818

Inventories, net

2,919,861

3,578,668

Related party receivables

27,387

46,448

Prepaid expenses

1,630,106

1,313,082

Costs and estimated earnings in excess of billings

6,570

57,241

Other current assets

293,923

376,048

TOTAL CURRENT ASSETS

13,146,781

15,778,648

PROPERTY, PLANT AND EQUIPMENT, net

1,442,561

1,511,878

OTHER ASSETS:

Goodwill

20,545,850

20,545,850

Operating lease right of use asset

4,408,207

4,516,102

Intangible assets, net

15,098,958

15,808,333

Other assets, net

12,000

12,000

TOTAL OTHER ASSETS

40,065,015

40,882,285

TOTAL ASSETS

$

54,654,357

$

58,172,811

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:

Accounts payable

$

6,993,067

$

7,677,261

Accrued compensation and benefits

1,311,762

1,360,148

Operating lease liability

404,744

394,042

Accrued warranty

253,176

268,004

Other accrued liabilities

915,975

867,727

Income taxes payable

11,535

5,373

Refundable customer deposits

1,818,487

2,112,363

Billings in excess of costs and estimated earnings

202,867

440,089

Contingent value rights

1,314,987

1,691,072

Earnout consideration

2,500,000

2,500,000

Current portion of loans payable

1,762,300

1,654,881

Current portion of loans payable - related party

3,456,631

3,402,522

TOTAL CURRENT LIABILITIES

20,945,531

22,373,482

LONG-TERM LIABILITIES:

Loans payable and related interest

7,708,979

8,030,562

Loans payable and related interest - related party

2,195,940

2,097,194

Deferred income taxes

41,579

41,579

Operating lease liability

4,087,012

4,193,205

Earnout consideration

650,000

1,000,000

Warrant liability

6,863,627

-

TOTAL LONG-TERM LIABILITIES

21,547,137

15,362,540

COMMITMENTS AND CONTINGENCIES (Note 7)

 

 

MEZZANINE EQUITY:

Redeemable convertible preferred stock, par value $1.00 per share;
3,000,000 shares authorized; 20,597 and no shares issued and outstanding, respectively

23,333,613

STOCKHOLDERS' EQUITY (DEFICIT)

2


Convertible preferred stock, par value $1.00 per share;
3,000,000 shares authorized; no and 28,000 shares issued and outstanding, respectively

28,000

Common stock, par value $0.05 per share; 112,500,000 shares authorized;

64,154,286 and 10,246,605 shares issued and outstanding, respectively

3,207,714

512,330

Additional paid-in capital

11,470,950

46,977,870

Accumulated deficit

(25,850,588)

(27,081,411)

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)

(11,171,924)

20,436,789

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

$

54,654,357

$

58,172,811

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

3


PINEAPPLE ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three Months Ended March 31

2024

2023

Sales

$

13,219,197

$

22,065,424

Cost of sales

8,413,749

14,059,109

Gross profit

4,805,448

8,006,315

Operating expenses:

Selling, general and administrative expenses

6,629,027

8,062,123

Amortization expense

709,375

1,266,698

Transaction costs

2,020

Fair value remeasurement of SUNation earnout consideration

(350,000)

825,000

Total operating expenses

6,988,402

10,155,841

Operating loss

(2,182,954)

(2,149,526)

Other income (expense):

Investment and other income

45,841

19,533

Gain on sale of assets

6,118

244,271

Fair value remeasurement of warrant liability

3,728,593

Fair value remeasurement of contingent value rights

376,085

(250,000)

Interest and other expense

(764,870)

(458,218)

Other income (expense), net

3,391,767

(444,414)

Net income (loss) before income taxes

1,208,813

(2,593,940)

Income tax expense

6,162

5,732

Net income (loss) from continuing operations

1,202,651

(2,599,672)

Net income from discontinued operations, net of tax

44,683

Net income (loss)

1,202,651

(2,554,989)

Other comprehensive income (loss), net of tax:

Unrealized gain on available-for-sale securities

24,405

Total other comprehensive income

24,405

Comprehensive income (loss)

$

1,202,651

$

(2,530,584)

Less: Deemed dividend on extinguishment of Convertible Preferred Stock

(751,125)

Less: Deemed dividend on modification of PIPE Warrants

(10,571,514)

Net loss attributable to common shareholders

$

(10,119,988)

$

(2,554,989)

Basic net loss per share:

Continuing operations

$

(0.26)

$

(0.26)

Discontinued operations

$

(0.26)

$

(0.26)

Diluted net loss per share:

Continuing operations

$

(0.26)

$

(0.26)

Discontinued operations

$

(0.26)

$

(0.26)

Weighted Average Basic Shares Outstanding

39,410,206

9,919,650

Weighted Average Dilutive Shares Outstanding

39,410,206

9,919,650

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 (DEFICIT)

(Unaudited)

For the Three Months Ended March 31, 2024

Redeemable Convertible

Series A Convertible

Additional

Accumulated Other

Preferred Stock

Preferred Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

Income

Total

BALANCE AT DECEMBER 31, 2023

$

28,000 

$

28,000 

10,246,605 

$

512,330 

$

46,977,870 

$

(27,081,411)

$

$

20,436,789 

Net income

1,202,651 

1,202,651 

Issuance of common stock under Employee Stock Purchase Plan

2,080 

104 

936 

1,040 

Issuance of common stock under Equity Incentive Plan

116,034 

5,802 

(5,802)

Issuance of common stock under registered direct offering, net of issuance costs

2,702,703 

135,135 

783,853 

918,988 

Reclassification of Series A Preferred Stock to temporary equity

28,000 

30,968,875 

(28,000)

(28,000)

(30,940,875)

(30,968,875)

Deemed dividend on extinguishment of Convertible Preferred Stock

751,125 

(751,125)

(751,125)

Reclassification of PIPE Warrants to liabilities

(10,592,220)

(10,592,220)

Conversion of Redeemable Convertible Preferred Stock to Common Stock

(7,403)

(8,386,387)

51,127,811 

2,556,390 

5,829,997 

8,386,387 

Share based compensation

197,306 

197,306 

Other share retirements

(40,947)

(2,047)

(28,990)

28,172 

(2,865)

BALANCE AT MARCH 31, 2024

20,597 

$

23,333,613 

$

64,154,286 

$

3,207,714 

$

11,470,950 

$

(25,850,588)

$

$

(11,171,924)

5


For the Three Months Ended March 31, 2023

Redeemable Convertible

Series A Convertible

Additional

Accumulated Other

Preferred Stock

Preferred Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit

(Loss) Income

Total

BALANCE AT DECEMBER 31, 2022