pegy-20240930x10q

‎ 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, 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 November 1, 2024	1,814,743



PINEAPPLE ENERGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

ASSETS
	September 30		December 31
	2024		2023
CURRENT ASSETS:
Cash and cash equivalents	$	1,062,323	$	3,575,283
Restricted cash and cash equivalents		1,099,763		1,821,060
Trade accounts receivable, less allowance for
credit losses of $221,170 and $94,085, respectively		4,228,470		5,010,818
Inventories, net		2,667,880		3,578,668
Prepaid income taxes		77,689		—
Related party receivables		25,749		46,448
Prepaid expenses		1,759,905		1,313,082
Costs and estimated earnings in excess of billings		384,020		57,241
Other current assets		376,723		376,048
TOTAL CURRENT ASSETS		11,682,522		15,778,648
PROPERTY, PLANT AND EQUIPMENT, net		1,307,007		1,511,878
OTHER ASSETS:
Goodwill		20,545,850		20,545,850
Operating lease right of use asset		3,771,749		4,516,102
Intangible assets, net		13,680,208		15,808,333
Other assets, net		12,000		12,000
TOTAL OTHER ASSETS		38,009,807		40,882,285
TOTAL ASSETS	$	50,999,336	$	58,172,811
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	8,248,106	$	7,677,261
Accrued compensation and benefits		849,664		1,360,148
Operating lease liability		314,058		394,042
Accrued warranty		272,041		268,004
Other accrued liabilities		1,228,721		867,727
Income taxes payable		-		5,373
Refundable customer deposits		1,841,459		2,112,363
Billings in excess of costs and estimated earnings		464,970		440,089
Contingent value rights		1,212,263		1,691,072
Earnout consideration		2,700,000		2,500,000
Current portion of loans payable		2,920,027		1,654,881
Current portion of loans payable - related party		4,389,487		3,402,522
Embedded derivative liability		484,993		-
TOTAL CURRENT LIABILITIES		24,925,789		22,373,482
LONG-TERM LIABILITIES:
Loans payable and related interest		6,953,203		8,030,562
Loans payable and related interest - related party		2,393,309		2,097,194
Deferred income taxes		41,579		41,579
Operating lease liability		3,554,992		4,193,205
Earnout consideration		—		1,000,000
TOTAL LONG-TERM LIABILITIES		12,943,083		15,362,540
COMMITMENTS AND CONTINGENCIES (Note 7)
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



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

	Three Months Ended September 30				Nine Months Ended September 30
	2024		2023		2024		2023
Sales	$	14,718,386	$	18,288,697	$	41,487,003	$	60,190,413
Cost of sales		9,482,661		11,256,239		26,653,476		38,014,705
Gross profit		5,235,725		7,032,458		14,833,527		22,175,708
Operating expenses:
Selling, general and administrative expenses		6,133,087		7,150,110		19,321,037		22,444,808
Amortization expense		709,375		1,216,698		2,128,125		3,700,095
Fair value remeasurement of SUNation earnout consideration		—		230,000		(800,000)		1,160,000
Total operating expenses		6,842,462		8,596,808		20,649,162		27,304,903
Operating loss		(1,606,737)		(1,564,350)		(5,815,635)		(5,129,195)
Other (expense) income:
Investment and other income		25,410		88,163		98,576		143,452
(Loss) gain on sale of assets		(6,940)		192,845		(822)		437,116
Fair value remeasurement of warrant liability		(1,435,845)		—		(974,823)		—
Fair value remeasurement of embedded derivative liability		587,271		—		(468,329)		—
Fair value remeasurement of contingent value rights		(14,051)		(239,922)		478,809		1,152,273
Interest and other expense		(811,551)		(810,023)		(2,312,054)		(1,867,576)
Loss on debt extinguishment		(35,657)		—		(35,657)		—
Other (expense) income, net		(1,691,363)		(768,937)		(3,214,300)		(134,735)
Net loss before income taxes		(3,298,100)		(2,333,287)		(9,029,935)		(5,263,930)
Income tax (benefit) expense		509		(4,234)		38		(1,396)
Net loss from continuing operations		(3,298,609)		(2,329,053)		(9,029,973)		(5,262,534)
Net loss from discontinued operations, net of tax		—		(33,983)		—		(1,206,235)
Net loss		(3,298,609)		(2,363,036)		(9,029,973)		(6,468,769)

Other comprehensive income (loss), net of tax:
Unrealized (loss) gain on available-for-sale securities		—		(34,108)		—		10,422
Total other comprehensive (loss) income		—		(34,108)		—		10,422
Comprehensive loss	$	(3,298,609)	$	(2,397,144)	$	(9,029,973)	$	(6,458,347)

Deemed dividend on extinguishment of Convertible Preferred Stock		(3,464,426)		—		(4,215,551)		—
Deemed dividend on modification of PIPE Warrants		(875,737)		—		(11,447,251)		—
Deemed contribution on exchange of equity instruments		4,075,681		—		4,075,681		—
Net loss attributable to common shareholders	$	(3,563,091)	$	(2,363,036)	$	(20,617,094)	$	(6,468,769)


Basic net loss per share⁽¹⁾:
Continuing operations	$	(11.77)	$	(173.81)	$	(128.25)	$	(395.75)
Discontinued operations		—		(2.54)		—		(90.71)
	$	(11.77)	$	(176.35)	$	(128.25)	$	(486.46)

Diluted net loss per share⁽¹⁾:
Continuing operations	$	(11.77)	$	(173.81)		(128.25)		(395.75)
Discontinued operations		—		(2.54)		—		(90.71)
	$	(11.77)	$	(176.35)	$	(128.25)	$	(486.46)

			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		11

	Notes to Condensed Consolidated Financial Statements		13

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46

	Item 4.	Controls and Procedures	46

Part II.	Other Information		47

SIGNATURES CERTIFICATIONS			54

Series C preferred stock, par value $1.00 per share; 35,000 shares authorized; 10,808 and no shares issued and outstanding, respectively		10,808		—
Common stock, par value $0.05 per share; 2,666,667 shares authorized;
940,385 and 13,663 shares issued and outstanding, respectively⁽¹⁾		47,021		683
Additional paid-in capital⁽¹⁾		49,151,849		47,489,517
Accumulated deficit		(36,079,214)		(27,081,411)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		13,130,464		20,436,789
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	50,999,336	$	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-50 that became effective October 17, 2024 and 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⁾		302,756			13,400			160,751			13,298