pegy-20240630x10q

‎ 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 June 30, 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 August 15, 2024	8,723,625



PINEAPPLE ENERGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

ASSETS
	June 30		December 31
	2024		2023
CURRENT ASSETS:
Cash and cash equivalents	$	1,046,343	$	3,575,283
Restricted cash and cash equivalents		1,085,712		1,821,060
Trade accounts receivable, less allowance for
credit losses of $159,949 and $94,085, respectively		4,764,055		5,010,818
Inventories, net		3,233,620		3,578,668
Prepaid income taxes		64,598		—
Related party receivables		24,871		46,448
Prepaid expenses		1,589,679		1,313,082
Costs and estimated earnings in excess of billings		4,615		57,241
Other current assets		416,954		376,048
TOTAL CURRENT ASSETS		12,230,447		15,778,648
PROPERTY, PLANT AND EQUIPMENT, net		1,377,150		1,511,878
OTHER ASSETS:
Goodwill		20,545,850		20,545,850
Operating lease right of use asset		4,298,661		4,516,102
Intangible assets, net		14,389,583		15,808,333
Other assets, net		12,000		12,000
TOTAL OTHER ASSETS		39,246,094		40,882,285
TOTAL ASSETS	$	52,853,691	$	58,172,811
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	8,499,765	$	7,677,261
Accrued compensation and benefits		924,068		1,360,148
Operating lease liability		415,675		394,042
Accrued warranty		261,489		268,004
Other accrued liabilities		635,634		867,727
Income taxes payable		-		5,373
Refundable customer deposits		1,337,839		2,112,363
Billings in excess of costs and estimated earnings		1,413,550		440,089
Contingent value rights		1,198,212		1,691,072
Earnout consideration		2,700,000		2,500,000
Current portion of loans payable		1,877,694		1,654,881
Current portion of loans payable - related party		3,511,341		3,402,522
Embedded derivative liability		1,055,600		-
TOTAL CURRENT LIABILITIES		23,830,867		22,373,482
LONG-TERM LIABILITIES:
Loans payable and related interest		7,357,475		8,030,562
Loans payable and related interest - related party		2,294,085		2,097,194
Deferred income taxes		41,579		41,579
Operating lease liability		3,978,013		4,193,205
Earnout consideration		-		1,000,000
Warrant liability		9,806,409		-
TOTAL LONG-TERM LIABILITIES		23,477,561		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; 14,515 and no shares issued and outstanding, respectively		16,442,945		—



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

	Three Months Ended June 30				Six Months Ended June 30
	2024		2023		2024		2023
Sales	$	13,549,420	$	19,836,291	$	26,768,617	$	41,901,716
Cost of sales		8,757,066		12,699,357		17,170,815		26,758,466
Gross profit		4,792,354		7,136,934		9,597,802		15,143,250
Operating expenses:
Selling, general and administrative expenses		6,558,923		7,230,555		13,187,950		15,292,678
Amortization expense		709,375		1,216,699		1,418,750		2,483,397
Transaction costs		—		—		—		2,020
Fair value remeasurement of SUNation earnout consideration		(450,000)		105,000		(800,000)		930,000
Total operating expenses		6,818,298		8,552,254		13,806,700		18,708,095
Operating loss		(2,025,944)		(1,415,320)		(4,208,898)		(3,564,845)
Other (expense) income:
Investment and other income		27,325		35,756		73,166		55,289
Gain on sale of assets		—		—		6,118		244,271
Fair value remeasurement of warrant liability		(3,267,571)		—		461,022		—
Fair value remeasurement of embedded derivative liability		(1,055,600)		—		(1,055,600)		—
Fair value remeasurement of contingent value rights		116,775		1,642,195		492,860		1,392,195
Interest and other expense		(735,633)		(599,335)		(1,500,503)		(1,057,553)
Other (expense) income, net		(4,914,704)		1,078,616		(1,522,937)		634,202
Net loss before income taxes		(6,940,648)		(336,704)		(5,731,835)		(2,930,643)
Income tax (benefit) expense		(6,633)		(2,894)		(471)		2,838
Net loss from continuing operations		(6,934,015)		(333,810)		(5,731,364)		(2,933,481)
Net loss from discontinued operations, net of tax		—		(1,216,934)		—		(1,172,252)
Net loss		(6,934,015)		(1,550,744)		(5,731,364)		(4,105,733)

Other comprehensive income (loss), net of tax:
Unrealized gain on available-for-sale securities		—		20,125		—		44,530
Total other comprehensive income		—		20,125		—		44,530
Comprehensive loss	$	(6,934,015)	$	(1,530,619)	$	(5,731,364)	$	(4,061,203)

Less: Deemed dividend on extinguishment of Convertible Preferred Stock		—		—		(10,571,514)		—
Less: Deemed dividend on modification of PIPE Warrants		—		—		(751,125)		—
Net loss attributable to common shareholders	$	(6,934,015)	$	(1,550,744)	$	(17,054,003)	$	(4,105,733)


Basic net loss per share⁽¹⁾:
Continuing operations	$	(1.11)	$	(0.50)	$	(3.83)	$	(4.43)
Discontinued operations		—		(1.83)		—		(1.77)
	$	(1.11)	$	(2.34)	$	(3.83)	$	(6.20)

Diluted net loss per share⁽¹⁾:
Continuing operations	$	(1.11)	$	(0.50)		(3.83)		(4.43)
Discontinued operations		—		(1.83)		—		(1.77)
	$	(1.11)	$	(2.34)	$	(3.83)	$	(6.20)

			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 Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)		6

	Condensed Consolidated Statements of Cash Flows		9

	Notes to Condensed Consolidated Financial Statements		11

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

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39

	Item 4.	Controls and Procedures	39

Part II.	Other Information		40

SIGNATURES CERTIFICATIONS			46

STOCKHOLDERS' EQUITY (DEFICIT)
Series A 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
Series B preferred stock, par value $1.00 per share; 3,000,000 shares authorized; 1 and no shares issued and outstanding, respectively		1		—
Common stock, par value $0.05 per share; 7,500,000 shares authorized;
7,243,258 and 683,107 shares issued and outstanding, respectively⁽¹⁾		362,163		34,155
Additional paid-in capital⁽¹⁾		21,520,759		47,456,045
Accumulated deficit		(32,780,605)		(27,081,411)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		(10,897,682)		20,436,789
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	52,853,691	$	58,172,811

(1) Prior period results have been adjusted to reflect the reverse stock split of the common stock at a ratio of 1-for-15 that became effective June 12, 2024. See Note 1, "Nature of Operations," for further details.

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

Weighted Average Basic Shares Outstanding⁽¹⁾	6,269,514	663,256	4,448,431	662,288
Weighted Average Dilutive Shares Outstanding⁽¹⁾	6,269,514	663,256	4,448,431	662,288

(1) Prior period results have been adjusted to reflect the reverse stock split of the common stock at a ratio of 1-for-15 that became effective June 12, 2024. See Note 1, "Nature of Operations," for further details.

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