pegy-20240331x10q

‎ 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.
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)



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.


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)

For the Three Months Ended March 31, 2023

Redeemable Convertible

Series A Convertible

Additional

Accumulated Other

Preferred Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Amount

Capital

Deficit

(Loss) Income

Total

BALANCE AT DECEMBER 31, 2022

			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

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.