falseQ320240000022701YesYesP3MP24MP18Mhttp://fasb.org/us-gaap/2024#IncomeLossFromDiscontinuedOperationsNetOfTax0.070.500.070.070.070.070.070.0050.50.020.020.020.020.020000022701us-gaap:CommonStockMember2024-02-052024-02-050000022701us-gaap:CommonStockMember2023-01-012023-12-310000022701us-gaap:SubsequentEventMemberpegy:October2024ReverseStockSplitMember2024-10-012024-10-010000022701srt:MinimumMemberpegy:October2024ReverseStockSplitMember2024-07-192024-07-190000022701srt:MaximumMemberpegy:October2024ReverseStockSplitMember2024-07-192024-07-1900000227012024-06-122024-06-120000022701srt:MinimumMemberpegy:June2024ReverseStockSplitMember2024-01-032024-01-030000022701srt:MaximumMemberpegy:June2024ReverseStockSplitMember2024-01-032024-01-030000022701us-gaap:RetainedEarningsMember2024-09-300000022701us-gaap:AdditionalPaidInCapitalMember2024-09-300000022701us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-09-300000022701srt:ScenarioPreviouslyReportedMemberus-gaap:AdditionalPaidInCapitalMember2024-06-300000022701srt:RestatementAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2024-06-300000022701us-gaap:RetainedEarningsMember2024-06-300000022701us-gaap:AdditionalPaidInCapitalMember2024-06-300000022701us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-06-300000022701srt:ScenarioPreviouslyReportedMemberus-gaap:AdditionalPaidInCapitalMember2023-12-310000022701srt:RestatementAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2023-12-310000022701us-gaap:RetainedEarningsMember2023-12-310000022701us-gaap:AdditionalPaidInCapitalMember2023-12-310000022701us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310000022701srt:ScenarioPreviouslyReportedMemberus-gaap:AdditionalPaidInCapitalMember2023-09-300000022701srt:RestatementAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2023-09-300000022701us-gaap:RetainedEarningsMember2023-09-300000022701us-gaap:AdditionalPaidInCapitalMember2023-09-300000022701us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300000022701us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2023-06-300000022701us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2023-06-300000022701srt:ScenarioPreviouslyReportedMemberus-gaap:AdditionalPaidInCapitalMember2023-06-300000022701srt:RestatementAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2023-06-300000022701us-gaap:RetainedEarningsMember2023-06-300000022701us-gaap:AdditionalPaidInCapitalMember2023-06-300000022701us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000022701srt:ScenarioPreviouslyReportedMemberus-gaap:AdditionalPaidInCapitalMember2022-12-310000022701srt:RestatementAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2022-12-310000022701us-gaap:RetainedEarningsMember2022-12-310000022701us-gaap:AdditionalPaidInCapitalMember2022-12-310000022701us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000022701us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2024-09-300000022701us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2024-09-300000022701us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2024-09-300000022701us-gaap:RedeemableConvertiblePreferredStockMemberus-gaap:PreferredStockMember2024-09-300000022701us-gaap:CommonStockMember2024-09-300000022701us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2024-06-300000022701us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2024-06-300000022701us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2024-06-300000022701us-gaap:RedeemableConvertiblePreferredStockMemberus-gaap:PreferredStockMember2024-06-300000022701srt:ScenarioPreviouslyReportedMemberus-gaap:CommonStockMember2024-06-300000022701srt:RestatementAdjustmentMemberus-gaap:CommonStockMember2024-06-300000022701us-gaap:CommonStockMember2024-06-300000022701us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2023-12-310000022701us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2023-12-310000022701us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2023-12-310000022701us-gaap:RedeemableConvertiblePreferredStockMemberus-gaap:PreferredStockMember2023-12-310000022701srt:ScenarioPreviouslyReportedMemberus-gaap:CommonStockMember2023-12-310000022701srt:RestatementAdjustmentMemberus-gaap:CommonStockMember2023-12-310000022701us-gaap:CommonStockMember2023-12-310000022701us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2023-09-300000022701us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2023-09-300000022701us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2023-09-300000022701us-gaap:RedeemableConvertiblePreferredStockMemberus-gaap:PreferredStockMember2023-09-300000022701us-gaap:ConvertiblePreferredStockMemberus-gaap:PreferredStockMember2023-09-300000022701srt:ScenarioPreviouslyReportedMemberus-gaap:CommonStockMember2023-09-300000022701srt:RestatementAdjustmentMemberus-gaap:CommonStockMember2023-09-300000022701us-gaap:CommonStockMember2023-09-300000022701us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2023-06-300000022701us-gaap:RedeemableConvertiblePreferredStockMemberus-gaap:PreferredStockMember2023-06-300000022701us-gaap:ConvertiblePreferredStockMemberus-gaap:PreferredStockMember2023-06-300000022701srt:ScenarioPreviouslyReportedMemberus-gaap:CommonStockMember2023-06-300000022701srt:RestatementAdjustmentMemberus-gaap:CommonStockMember2023-06-300000022701us-gaap:CommonStockMember2023-06-300000022701us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2022-12-310000022701us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2022-12-310000022701us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2022-12-310000022701us-gaap:RedeemableConvertiblePreferredStockMemberus-gaap:PreferredStockMember2022-12-310000022701srt:ScenarioPreviouslyReportedMemberus-gaap:CommonStockMember2022-12-310000022701srt:RestatementAdjustmentMemberus-gaap:CommonStockMember2022-12-310000022701us-gaap:CommonStockMember2022-12-310000022701pegy:EquityIncentivePlan1Member2024-01-012024-09-300000022701us-gaap:EmployeeStockOptionMember2024-09-300000022701pegy:DeferredStockAwardMember2024-09-300000022701us-gaap:EmployeeStockOptionMember2023-09-300000022701pegy:DeferredStockAwardMember2023-09-300000022701pegy:SeniorVicePresidentsMemberus-gaap:RestrictedStockUnitsRSUMember2022-11-062022-11-060000022701srt:ChiefFinancialOfficerMemberus-gaap:RestrictedStockUnitsRSUMember2022-10-102022-10-100000022701us-gaap:EmployeeStockMember2024-09-300000022701pegy:EquityIncentivePlan1Member2023-12-310000022701pegy:EquityIncentivePlan1Member2022-12-070000022701us-gaap:RestrictedStockUnitsRSUMemberpegy:EquityIncentivePlan1Member2024-09-300000022701pegy:EquityIncentivePlan1Member2024-09-300000022701us-gaap:RestrictedStockUnitsRSUMemberpegy:EquityIncentivePlan1Member2023-12-310000022701us-gaap:TransferredOverTimeMember2024-07-012024-09-300000022701us-gaap:TransferredAtPointInTimeMember2024-07-012024-09-300000022701us-gaap:ServiceMember2024-07-012024-09-300000022701pegy:ResidentialContractsMember2024-07-012024-09-300000022701pegy:CommercialContractsMember2024-07-012024-09-300000022701us-gaap:TransferredOverTimeMember2024-01-012024-09-300000022701us-gaap:TransferredAtPointInTimeMember2024-01-012024-09-300000022701us-gaap:ServiceMember2024-01-012024-09-300000022701pegy:ResidentialContractsMember2024-01-012024-09-300000022701pegy:CommercialContractsMember2024-01-012024-09-300000022701us-gaap:TransferredOverTimeMember2023-07-012023-09-300000022701us-gaap:TransferredAtPointInTimeMember2023-07-012023-09-300000022701us-gaap:ServiceMember2023-07-012023-09-300000022701pegy:SoftwareMember2023-07-012023-09-300000022701pegy:ResidentialContractsMember2023-07-012023-09-300000022701pegy:CommercialContractsMember2023-07-012023-09-300000022701us-gaap:TransferredOverTimeMember2023-01-012023-09-300000022701us-gaap:TransferredAtPointInTimeMember2023-01-012023-09-300000022701us-gaap:ServiceMember2023-01-012023-09-300000022701pegy:SoftwareMember2023-01-012023-09-300000022701pegy:ResidentialContractsMember2023-01-012023-09-300000022701pegy:OtherProductOrServiceMember2023-01-012023-09-300000022701pegy:CommercialContractsMember2023-01-012023-09-300000022701pegy:CommunicationSystemsIncMember2024-09-300000022701pegy:TermLoanFromHerculesCapitalInc.Member2023-05-312023-05-310000022701pegy:PurchaseSharesMember2024-02-052024-02-050000022701us-gaap:SeriesCPreferredStockMember2024-09-300000022701us-gaap:ConvertiblePreferredStockMember2024-09-300000022701us-gaap:SeriesBPreferredStockMember2024-05-130000022701us-gaap:ConvertiblePreferredStockMember2023-12-310000022701us-gaap:SeriesCPreferredStockMember2024-09-090000022701us-gaap:SeriesCPreferredStockMember2023-12-310000022701pegy:IssuanceOfFirstAmendedConduitNoteMemberus-gaap:SeriesCPreferredStockMember2024-07-012024-09-300000022701pegy:IssuanceOfFirstAmendedConduitNoteMemberus-gaap:SeriesCPreferredStockMember2024-01-012024-09-300000022701pegy:TaxPaymentsDueRelatedToPeriodPriorToAcquisitionMember2024-09-300000022701pegy:SUNationAcquisitionMemberpegy:TaxPaymentsDueRelatedToPeriodPriorToAcquisitionMember2023-12-310000022701pegy:TaxPaymentsDueRelatedToPeriodPriorToAcquisitionMember2023-12-310000022701pegy:SUNationAcquisitionMemberpegy:RefundableTaxCreditAgainstCertainEmploymentTaxesMember2022-12-310000022701us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300000022701us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300000022701pegy:MinnesotaOfficeLandlordMember2024-09-300000022701us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberpegy:DerivativeLiabilityMember2024-09-300000022701us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberpegy:ContingentValueRightsMember2024-09-300000022701us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberpegy:ContingentConsiderationMember2024-09-300000022701us-gaap:FairValueMeasurementsRecurringMemberpegy:DerivativeLiabilityMember2024-09-300000022701us-gaap:FairValueMeasurementsRecurringMemberpegy:ContingentValueRightsMember2024-09-300000022701us-gaap:FairValueMeasurementsRecurringMemberpegy:ContingentConsiderationMember2024-09-300000022701us-gaap:FairValueInputsLevel3Memberpegy:ContingentValueRightsMember2024-09-300000022701pegy:PipeInvestmentMemberus-gaap:FairValueInputsLevel3Member2024-09-300000022701us-gaap:FairValueInputsLevel3Member2024-09-300000022701us-gaap:FairValueInputsLevel3Memberpegy:ContingentValueRightsMember2023-12-310000022701pegy:PipeInvestmentMemberus-gaap:FairValueInputsLevel3Member2023-12-310000022701us-gaap:FairValueInputsLevel3Member2023-12-310000022701us-gaap:RetainedEarningsMember2024-07-012024-09-300000022701pegy:SecondConduitAdvanceMember2024-09-300000022701pegy:SecondConduitAdvanceMember2023-12-310000022701pegy:MbbEnergyBridgeLoanMember2023-12-310000022701pegy:TermLoanFromHerculesCapitalInc.Member2023-05-300000022701pegy:ContingentValueRightsMember2024-07-012024-09-300000022701pegy:ContingentValueRightsMember2024-01-012024-09-300000022701pegy:ContingentConsiderationMember2024-01-012024-09-300000022701pegy:ContingentConsiderationMember2023-07-012023-09-300000022701pegy:ContingentConsiderationMember2023-01-012023-09-300000022701pegy:SUNationAcquisitionMemberpegy:PromissoryNoteMember2024-07-012024-09-300000022701pegy:SUNationAcquisitionMemberpegy:EquipmentLoansMember2024-07-012024-09-300000022701pegy:SUNationAcquisitionMemberpegy:PromissoryNoteMember2024-01-012024-09-300000022701pegy:SUNationAcquisitionMemberpegy:EquipmentLoansMember2024-01-012024-09-300000022701pegy:SUNationAcquisitionMemberpegy:PromissoryNoteMember2023-07-012023-09-300000022701pegy:SUNationAcquisitionMemberpegy:EquipmentLoansMember2023-07-012023-09-300000022701pegy:DecathlonFixedLoanMember2023-07-012023-09-300000022701pegy:SUNationAcquisitionMemberpegy:PromissoryNoteMember2023-01-012023-09-300000022701pegy:SUNationAcquisitionMemberpegy:EquipmentLoansMember2023-01-012023-09-300000022701pegy:DecathlonFixedLoanMember2023-01-012023-09-300000022701srt:ScenarioPreviouslyReportedMember2023-07-012023-09-300000022701srt:RestatementAdjustmentMember2023-07-012023-09-300000022701srt:ScenarioPreviouslyReportedMember2023-01-012023-09-300000022701srt:RestatementAdjustmentMember2023-01-012023-09-300000022701pegy:SUNationAcquisitionMemberpegy:ShortTermLimitedRecourseSecuredPromissoryNoteMember2024-01-012024-09-300000022701pegy:MinnesotaOfficeLandlordMember2024-07-012024-09-300000022701srt:MinimumMemberpegy:TradenamesAndTrademarksMember2023-12-310000022701srt:MaximumMemberpegy:TradenamesAndTrademarksMember2023-12-310000022701pegy:TradenamesAndTrademarksMember2024-09-300000022701pegy:DevelopedTechnologyMember2024-09-300000022701pegy:BacklogMember2024-09-300000022701pegy:TradenamesAndTrademarksMember2023-12-310000022701pegy:DevelopedTechnologyMember2023-12-310000022701pegy:BacklogMember2023-12-310000022701us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-09-300000022701pegy:DerivativeLiabilityMember2024-09-300000022701pegy:ContingentValueRightsMember2024-09-300000022701pegy:ContingentConsiderationMember2024-09-300000022701pegy:WarrantLiabilityMember2024-06-300000022701pegy:DerivativeLiabilityMember2024-06-300000022701pegy:ContingentValueRightsMember2024-06-300000022701pegy:ContingentConsiderationMember2024-06-3000000227012024-06-300000022701pegy:ContingentValueRightsMember2023-12-310000022701pegy:ContingentConsiderationMember2023-12-310000022701pegy:ContingentValueRightsMember2023-09-300000022701pegy:ContingentConsiderationMember2023-09-300000022701pegy:ContingentValueRightsMember2023-06-300000022701pegy:ContingentConsiderationMember2023-06-3000000227012023-06-300000022701pegy:ContingentValueRightsMember2022-12-310000022701pegy:ContingentConsiderationMember2022-12-310000022701pegy:ContingentValueRightsMember2023-07-012023-09-300000022701pegy:ContingentValueRightsMember2023-01-012023-09-300000022701pegy:DerivativeLiabilityMember2024-07-012024-09-300000022701pegy:DerivativeLiabilityMember2024-01-012024-09-300000022701us-gaap:RestrictedStockUnitsRSUMember2024-09-300000022701pegy:InitialConduitLoanMemberus-gaap:BridgeLoanMember2024-07-012024-09-300000022701pegy:DecathlonFixedLoanMember2024-07-012024-09-300000022701pegy:DecathlonFixedLoanMember2024-01-012024-09-300000022701pegy:MbbEnergyBridgeLoanMember2024-09-300000022701pegy:MbbEnergyBridgeLoanMember2024-06-3000000227012023-04-012023-06-300000022701pegy:InititalConsiderationMemberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberpegy:JdlTechnologiesInc.AndEcessaCorporationMember2023-06-300000022701pegy:HeldInEscrowMemberus-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberpegy:JdlTechnologiesInc.AndEcessaCorporationMember2023-06-300000022701pegy:InitialConduitLoanMemberus-gaap:BridgeLoanMember2024-09-300000022701pegy:TermLoanFromHerculesCapitalInc.Memberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputDiscountRateMember2024-09-300000022701pegy:SUNationAcquisitionMemberpegy:LongTermPromissoryNoteMemberus-gaap:MeasurementInputDiscountRateMember2022-11-090000022701srt:MinimumMemberpegy:SUNationAcquisitionMemberpegy:EquipmentLoansMember2024-09-300000022701srt:MaximumMemberpegy:SUNationAcquisitionMemberpegy:EquipmentLoansMember2024-09-300000022701pegy:TermLoanFromHerculesCapitalInc.Member2023-05-310000022701pegy:ThreeMonthAnniversaryMemberpegy:SUNationAcquisitionMemberpegy:ShortTermLimitedRecourseSecuredPromissoryNoteMember2022-11-090000022701pegy:ThereafterUntilPaidInFullMemberpegy:SUNationAcquisitionMemberpegy:ShortTermLimitedRecourseSecuredPromissoryNoteMember2022-11-090000022701pegy:ThereafterUntilPaidInFullMemberpegy:SUNationAcquisitionMemberpegy:LongTermPromissoryNoteMember2022-11-090000022701pegy:SixMonthAnniversaryMemberpegy:SUNationAcquisitionMemberpegy:ShortTermLimitedRecourseSecuredPromissoryNoteMember2022-11-090000022701pegy:FirstAnniversaryMemberpegy:SUNationAcquisitionMemberpegy:LongTermPromissoryNoteMember2022-11-090000022701pegy:DecathlonFixedLoanMemberus-gaap:BridgeLoanMember2024-07-220000022701pegy:TermLoanFromHerculesCapitalInc.Member2023-06-300000022701pegy:TermLoanFromHerculesCapitalInc.Memberus-gaap:FairValueInputsLevel3Member2024-09-300000022701pegy:SecondConduitAdvanceMember2024-09-230000022701pegy:SecondConduitAdvanceMember2024-09-110000022701pegy:MbbEnergyBridgeLoanMember2024-08-160000022701pegy:InitialConduitLoanMemberus-gaap:BridgeLoanMember2024-07-220000022701pegy:MbbEnergyBridgeLoanMember2024-07-220000022701pegy:DecathlonFixedLoanMember2023-06-010000022701pegy:SecondConduitAdvanceMember2024-09-090000022701pegy:SecondConduitAdvanceMember2024-06-120000022701pegy:SUNationAcquisitionMemberpegy:PromissoryNoteMember2024-09-300000022701pegy:SUNationAcquisitionMemberpegy:LongTermPromissoryNoteMember2024-09-300000022701pegy:SUNationAcquisitionMemberpegy:EquipmentLoansMember2024-09-300000022701pegy:SUNationAcquisitionMemberpegy:PromissoryNoteMember2023-12-310000022701pegy:SUNationAcquisitionMemberpegy:LongTermPromissoryNoteMember2023-12-310000022701pegy:SUNationAcquisitionMemberpegy:EquipmentLoansMember2023-12-310000022701srt:MaximumMemberus-gaap:SubsequentEventMemberpegy:AtmOfferingMember2024-10-210000022701us-gaap:SubsequentEventMemberpegy:October2024ReverseStockSplitMember2024-10-170000022701pegy:June2024ReverseStockSplitMember2024-06-120000022701pegy:June2024ReverseStockSplitMember2024-01-030000022701us-gaap:SubsequentEventMember2024-10-170000022701pegy:October2024ReverseStockSplitMember2024-07-190000022701pegy:June2024ReverseStockSplitMember2023-12-310000022701pegy:PurchaseSharesMember2024-02-050000022701pegy:PurchaseSharesMember2023-12-3100000227012023-09-3000000227012022-12-310000022701us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-09-300000022701us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2024-09-300000022701us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-09-300000022701us-gaap:FairValueMeasurementsRecurringMember2024-09-300000022701us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-310000022701us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2023-12-310000022701us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000022701pegy:SUNationAcquisitionMemberpegy:SecondEarnoutPeriodMember2024-09-300000022701pegy:SUNationAcquisitionMemberpegy:FirstEarnoutPeriodMember2024-09-300000022701pegy:SUNationAcquisitionMember2024-09-300000022701pegy:SUNationAcquisitionMember2023-12-310000022701pegy:SUNationAcquisitionMemberpegy:ShortTermLimitedRecourseSecuredPromissoryNoteMember2022-11-092022-11-090000022701pegy:HECAssetAcquisitionMemberpegy:LongTermPromissoryNoteMember2022-11-092022-11-090000022701us-gaap:WarrantMember2024-01-012024-09-300000022701us-gaap:RestrictedStockUnitsRSUMember2024-01-012024-09-300000022701us-gaap:EmployeeStockOptionMember2024-01-012024-09-300000022701pegy:DeferredStockAwardMember2024-01-012024-09-300000022701us-gaap:WarrantMember2023-01-012023-09-300000022701us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300000022701us-gaap:EmployeeStockOptionMember2023-01-012023-09-300000022701pegy:DeferredStockAwardMember2023-01-012023-09-300000022701us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberpegy:ContingentValueRightsMember2023-12-310000022701us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberpegy:ContingentConsiderationMember2023-12-310000022701us-gaap:FairValueMeasurementsRecurringMemberpegy:ContingentValueRightsMember2023-12-310000022701us-gaap:FairValueMeasurementsRecurringMemberpegy:ContingentConsiderationMember2023-12-310000022701us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000022701us-gaap:FairValueMeasurementsRecurringMember2023-12-310000022701pegy:WorkmanshipMember2024-01-012024-09-300000022701pegy:SolarPanelsMember2024-01-012024-09-300000022701pegy:InvertersMember2024-01-012024-09-300000022701us-gaap:RestrictedStockUnitsRSUMemberpegy:EquityIncentivePlan1Member2024-01-012024-09-300000022701us-gaap:RedeemableConvertiblePreferredStockMemberus-gaap:PreferredStockMember2024-07-012024-09-300000022701pegy:OnOrBefore12MonthsAfterEffectiveDateMemberpegy:DecathlonFixedLoanMember2023-06-012023-06-010000022701pegy:After36MonthsAfterEffectiveDateMemberpegy:DecathlonFixedLoanMember2023-06-012023-06-010000022701pegy:After24MonthsAndOnOrBefore36MonthsAfterEffectiveDateMemberpegy:DecathlonFixedLoanMember2023-06-012023-06-010000022701pegy:After12MonthsAndOnOrBefore24MonthsAfterEffectiveDateMemberpegy:DecathlonFixedLoanMember2023-06-012023-06-010000022701us-gaap:EmployeeStockMember2022-12-072022-12-070000022701us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberpegy:JdlTechnologiesInc.AndEcessaCorporationMember2023-06-302023-06-3000000227012024-07-192024-07-190000022701us-gaap:SubsequentEventMemberpegy:AtmOfferingMember2024-10-212024-10-210000022701us-gaap:RetainedEarningsMember2024-01-012024-09-300000022701us-gaap:RetainedEarningsMember2023-07-012023-09-300000022701us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300000022701us-gaap:RetainedEarningsMember2023-01-012023-09-300000022701us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300000022701us-gaap:CommonStockMember2023-07-012023-09-300000022701us-gaap:CommonStockMember2023-01-012023-09-300000022701us-gaap:SubsequentEventMember2024-10-172024-10-170000022701us-gaap:SubsequentEventMember2024-11-082024-11-080000022701pegy:MinnesotaOfficeLandlordMember2024-01-012024-09-300000022701pegy:PipeInvestmentMemberus-gaap:FairValueInputsLevel3Member2024-01-012024-03-310000022701pegy:WarrantLiabilityMember2024-07-012024-09-300000022701pegy:WarrantLiabilityMember2024-01-012024-09-300000022701us-gaap:SeriesCPreferredStockMember2024-01-012024-09-300000022701us-gaap:SeriesAPreferredStockMember2024-01-012024-03-3100000227012024-01-012024-03-310000022701us-gaap:DisposalGroupDisposedOfBySaleNotDiscontinuedOperationsMemberpegy:JdlTechnologiesInc.AndEcessaCorporationMember2023-06-300000022701us-gaap:RedeemableConvertiblePreferredStockMemberus-gaap:PreferredStockMember2024-01-012024-09-300000022701pegy:SUNationAcquisitionMemberpegy:LongTermPromissoryNoteMember2022-11-092022-11-090000022701pegy:InitialConduitLoanMember2024-07-222024-07-220000022701pegy:DecathlonFixedLoanMember2024-09-122024-09-120000022701pegy:InitialConduitLoanMemberus-gaap:BridgeLoanMember2024-01-012024-09-300000022701pegy:TermLoanFromHerculesCapitalInc.Member2024-07-012024-09-300000022701pegy:SUNationAcquisitionMember2024-07-012024-09-300000022701pegy:SecondConduitAdvanceMember2024-07-012024-09-300000022701pegy:MbbEnergyBridgeLoanMember2024-07-012024-09-300000022701pegy:SecondConduitAdvanceMember2024-01-012024-09-300000022701pegy:MbbEnergyBridgeLoanMember2024-01-012024-09-300000022701pegy:TermLoanFromHerculesCapitalInc.Member2023-07-012023-09-300000022701pegy:SUNationAcquisitionMember2023-07-012023-09-300000022701pegy:TermLoanFromHerculesCapitalInc.Member2023-01-012023-09-300000022701pegy:TermLoanFromHerculesCapitalInc.Member2024-09-300000022701pegy:DecathlonFixedLoanMember2024-09-300000022701pegy:TermLoanFromHerculesCapitalInc.Member2023-12-310000022701pegy:DecathlonFixedLoanMember2023-12-310000022701us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2024-09-092024-09-090000022701us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2024-07-192024-07-190000022701us-gaap:SeriesCPreferredStockMemberus-gaap:CommonStockMember2024-07-192024-07-190000022701us-gaap:SeriesCPreferredStockMemberus-gaap:CommonStockMember2024-01-012024-09-300000022701us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2024-07-012024-09-300000022701us-gaap:SeriesCPreferredStockMemberus-gaap:PreferredStockMember2024-01-012024-09-300000022701us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2024-07-012024-09-300000022701us-gaap:CommonStockMember2024-07-012024-09-300000022701us-gaap:SeriesAPreferredStockMemberus-gaap:PreferredStockMember2024-01-012024-09-300000022701us-gaap:CommonStockMember2024-01-012024-09-300000022701us-gaap:FairValueInputsLevel3Memberpegy:ContingentValueRightsMember2024-01-012024-09-300000022701us-gaap:FairValueInputsLevel3Member2024-01-012024-09-300000022701pegy:PipeInvestmentMember2024-01-012024-09-300000022701us-gaap:FairValueInputsLevel3Memberpegy:ContingentValueRightsMember2023-01-012023-09-300000022701us-gaap:FairValueInputsLevel3Member2023-01-012023-09-300000022701pegy:PipeInvestmentMember2023-01-012023-09-300000022701pegy:SUNationAcquisitionMember2024-01-012024-09-3000000227012023-07-012023-09-300000022701pegy:SUNationAcquisitionMember2023-01-012023-09-3000000227012023-01-012023-09-300000022701srt:MinimumMember2024-01-012024-09-300000022701srt:MaximumMember2024-01-012024-09-300000022701us-gaap:SubsequentEventMember2024-10-012024-10-0100000227012024-02-290000022701us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2024-07-012024-09-300000022701us-gaap:SeriesBPreferredStockMemberus-gaap:PreferredStockMember2024-01-012024-09-300000022701pegy:SUNationAcquisitionMemberpegy:LongTermPromissoryNoteMember2022-11-0900000227012024-09-3000000227012023-12-310000022701pegy:TermLoanFromHerculesCapitalInc.Member2024-01-012024-09-300000022701us-gaap:SubsequentEventMemberpegy:October2024ReverseStockSplitMember2024-10-172024-10-170000022701pegy:June2024ReverseStockSplitMember2024-06-122024-06-120000022701us-gaap:AdditionalPaidInCapitalMember2024-07-012024-09-300000022701us-gaap:AdditionalPaidInCapitalMember2024-01-012024-09-300000022701pegy:InitialConduitLoanMemberus-gaap:BridgeLoanMember2024-07-222024-07-220000022701pegy:MbbEnergyBridgeLoanMember2024-07-222024-07-2200000227012024-07-012024-09-3000000227012024-11-0100000227012024-01-012024-09-30pegy:segmentpegy:itemxbrli:pureiso4217:USDxbrli:sharesiso4217:USDxbrli:shares


‎ 美國

證券和交易委員會

華盛頓特區 20549

_____________________________________________________ 

 

表格 10-Q

_____________________________________________________ 

（標記一）

☒

根據1934年證券交易法第13或15(d)節的季度報告

 

截至季度末 2024年9月30日

 

☐

根據1934年證券交易法第13或15(d)節的轉型報告書

 

從______到_____的過渡期

 

委託文件編號：001-39866001-31588  

 

菠蘿能源股份有限公司。

 

（根據公司章程指定的準確名稱）  

 

  MI明尼蘇達州

 

  41-0957999

（國家或其他管轄區的

公司成立或組織）

 

(聯邦僱主

唯一識別號碼）

 

 

 

10900 Red Circle Drive, Minnetonka。, 明尼蘇達州

 

55343

(主要行政辦公室地址)

 

(郵政編碼)

 

(952) 996-1674 

 

公司電話號碼，包括區號

 

根據法案第12(b)節註冊的證券

每種類別的證券

交易標的

在其上註冊的交易所的名稱

普通股，每股面值0.05美元

納斯達克股票市場有限責任公司。

納斯達克股票市場有限責任公司

 

請勾選註冊人是否（1）在過去12個月內（或註冊人被要求提交此類報告的較短時間內）按照1934年證券交易法第13節或第15(d)節提交了所有報告，以及（2）在過去90天內是否受此類提交要求的約束。是 ☒ 不 ☐

 

請用複選標記表示，註冊人是否已根據S-t條例第405條規定必須提交的每個互動數據文件電子提交 （本章第232.405節） 在過去的12個月內（或在註冊人被要求提交此類文件的較短期間內）。是 ☒ 否 ☐

 

請通過勾選標記表明註冊人是大型加速報告人、加速報告人、非加速報告人、較小報告公司，還是新興成長公司。有關 "大型加速報告人"、"加速報告人"、"較小報告公司" 和 "新興成長公司" 的定義，請參見《交易所法》第120億.2條。

 

大型加速申報人☐ 加速歸檔者 ☐ 非加速申報人 ☒

小型報告公司☒ 新興成長公司 ☐    

如果是新興成長型企業，請勾選此項，表示註冊者已選擇不使用根據《交易所法》第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期進行遵守。☐

請勾選註冊者是否爲空殼公司（按《交易法》第120億.2條的定義）。 是 ☐ 否 ☒

 

僅適用於公司發行人：

請註明在最新適用日期時本發行人每種普通股的流通股數。

 

截至2024年11月1日尚未清償

1,814,743

菠蘿能源股份有限公司。

指數

 

 

 

頁碼。

第一部分

財務信息

 

 

 

 

 

 

項目 1.

基本報表(未經審計)

 

 

 

 

 

 

彙編的綜合資產負債表

2

 

 

 

 

 

聯合綜合收益及損失簡明合併報表

4

 

 

 

 

 

可贖回可轉換優先股和股東權益變動的簡明合併報表(赤字)

6

 

 

 

 

 

簡明的綜合現金流量表

11

 

 

 

 

 

簡明合併財務報表註釋

13

 

 

 

 

 

項目 2。

分銷計劃

38

 

 

 

 

 

項目 3。

市場風險的定量和定性披露

46

 

 

 

 

 

第4項。

控制和程序

46

 

 

 

 

第二部分。

其他信息

47

 

 

簽名及認證

54


‎

1

菠蘿能源股份有限公司。

簡明合併資產負債表

（未經審計）

資產

9月30日

12月31日

2024

2023

流動資產：

現金及現金等價物

$

1,062,323

$

3,575,283

限制性現金及現金等價物

1,099,763

1,821,060

應收賬款減少準備金交易

信用損失達到$221,170 和$94,085分別

4,228,470

5,010,818

淨存貨

2,667,880

3,578,668

預付所得稅

77,689

—

關聯方應收款項

25,749

46,448

預付費用

1,759,905

1,313,082

成本和預計收入超額賬單

384,020

57,241

其他流動資產

376,723

376,048

總流動資產

11,682,522

15,778,648

房地產、廠房及設備，淨值

1,307,007

1,511,878

其他資產:

商譽

20,545,850

20,545,850

經營租賃權資產

3,771,749

4,516,102

無形資產-淨額

13,680,208

15,808,333

其他資產淨額

12,000

12,000

其他資產總額

38,009,807

40,882,285

資產總計

$

50,999,336

$

58,172,811

負債和股東權益(赤字)

流動負債：

應付賬款

$

8,248,106

$

7,677,261

應計補償和福利

849,664

1,360,148

經營租賃負債

314,058

394,042

應計保脩金

272,041

268,004

其他應計負債

1,228,721

867,727

應付所得稅

-

5,373

可退還客戶存款

1,841,459

2,112,363

賬單超過成本和預計收入

464,970

440,089

有價證券授權

1,212,263

1,691,072

Earnout consideration

2,700,000

2,500,000

應付貸款的流動部分

2,920,027

1,654,881

與他方應付貸款的流動部分

4,389,487

3,402,522

嵌入式衍生工具負債

484,993

-

流動負債合計

24,925,789

22,373,482

長期負債：

應付貸款及相關利息

6,953,203

8,030,562

與他方應付貸款及相關利息的應付貸款

2,393,309

2,097,194

遞延所得稅

41,579

41,579

經營租賃負債

3,554,992

4,193,205

業績考慮

—

1,000,000

總長期負債

12,943,083

15,362,540

承諾和 contingencies（見注 7）

 

 

股東權益（赤字）

A輪可轉換優先股，面值$1.00 發起人根據發起人支持協議，將

3,000,000 授權股份; 不 和 28,000股已發行並流通，分別爲

—

28,000

2

C系列優先股，面值$1.00 發起人根據發起人支持協議，將

35,000 授權股份; 10,808 和 不股已發行並流通，分別爲

10,808

—

普通股，每股面值 $，授權股數：百萬股；發行股數：分別爲2024年6月30日和2023年12月31日：百萬股；流通股數：分別爲2024年6月30日和2023年12月31日：百萬股0.05 每股; 2,666,667 授權股數；

940,385 和 13,663 已發行和流通的股份(1)

47,021

683

其他資本公積(1)

49,151,849

47,489,517

累積赤字

(36,079,214)

(27,081,411)

總股東權益（赤字）

13,130,464

20,436,789

總負債和股東權益（赤字）

$

50,999,336

$

58,172,811

(1) 之前的期間結果已經調整，以反映普通股的比率 1股配售50股 自2024年10月17日生效，普通股的股票逆向拆分比例爲 1比15 自2024年6月12日生效。有關詳細信息，請參閱《經營性質》第1條註釋。

附註是這份簡明合併財務報表的不可分割部分。

3

菠蘿能源股份有限公司。

綜合收益及損失的壓縮綜合報表（以千爲單位）

（未經審計）

截至2019年9月30日三個月的收入

截至九月三十日的九個月

2024

2023

2024

2023

銷售

$

14,718,386

$

18,288,697

$

41,487,003

$

60,190,413

銷售成本

9,482,661

11,256,239

26,653,476

38,014,705

毛利潤

5,235,725

7,032,458

14,833,527

22,175,708

營業費用：

銷售、一般和管理費用

6,133,087

7,150,110

19,321,037

22,444,808

攤銷費用

709,375

1,216,698

2,128,125

3,700,095

對SUNation盈利的補償進行公允價值重新計量

—

230,000

(800,000)

1,160,000

營業費用總額

6,842,462

8,596,808

20,649,162

27,304,903

營業虧損

(1,606,737)

(1,564,350)

(5,815,635)

(5,129,195)

其他（費用）收益：

投資收益及其他收益

25,410

88,163

98,576

143,452

(資產)出售損益

(6,940)

192,845

(822)

437,116

權證負債的公允價值重新計量

(1,435,845)

—

(974,823)

—

嵌入式衍生負債的公允價值重新計量

587,271

—

(468,329)

—

待定金額權益的公允價值重新計量

(14,051)

(239,922)

478,809

1,152,273

利息和其他費用

(811,551)

(810,023)

(2,312,054)

(1,867,576)

債務註銷損失

(35,657)

—

(35,657)

—

其他(費用)收入，淨額

(1,691,363)

(768,937)

(3,214,300)

(134,735)

稅前淨損失

(3,298,100)

(2,333,287)

(9,029,935)

(5,263,930)

所得稅（收益）費用

509

(4,234)

38

(1,396)

持續經營的淨虧損

(3,298,609)

(2,329,053)

(9,029,973)

(5,262,534)

停止運營的淨損失，稅後

—

(33,983)

—

(1,206,235)

淨損失

(3,298,609)

(2,363,036)

(9,029,973)

(6,468,769)

其他綜合收益(損失), 淨額(稅後):

可供出售證券的未實現（損失）收益

—

(34,108)

—

10,422

其他全面收益（損失）總額爲

—

(34,108)

—

10,422

綜合損失

$

(3,298,609)

$

(2,397,144)

$

(9,029,973)

$

(6,458,347)

轉換優先股滅失所致的被視爲股利

(3,464,426)

—

(4,215,551)

—

PIPE認股權證修改所致的被視爲股利

(875,737)

—

(11,447,251)

—

交換權益工具所致的被視爲出資

4,075,681

—

4,075,681

—

歸屬於普通股股東的淨虧損

$

(3,563,091)

$

(2,363,036)

$

(20,617,094)

$

(6,468,769)

每股基本淨虧損(1):

持續經營

$

(11.77)

$

(173.81)

$

(128.25)

$

(395.75)

已停止經營

—

(2.54)

—

(90.71)

$

(11.77)

$

(176.35)

$

(128.25)

$

(486.46)

每股攤薄淨虧損（1.00）(1):

持續經營

$

(11.77)

$

(173.81)

(128.25)

(395.75)

已中止的業務

—

(2.54)

—

(90.71)

$

(11.77)

$

(176.35)

$

(128.25)

$

(486.46)

4

加權平均基本流通股數(1)

302,756

13,400

160,751

13,298

加權平均稀釋流通股數(1)

302,756

13,400

160,751

13,298

(1) 先前期間的結果已調整以反映普通股按比例進行的反向拆股，比例為 1比50 ，於2024年10月17日生效，及普通股按比例進行的反向拆股，比例為 已於2024年5月24日進行1股拆分為15股（請參閱基本報表注釋2）。 ，於2024年6月12日生效。詳情請參見註釋1，「業務性質」。

附註是簡明合併財務報表的一個重要組成部分。


‎

5

pineapple energy inc.

股東權益（赤字）變動表之簡明合併財務報表

（未經審核）

截至2024年9月30日九個月的數據

可贖回可轉換

A系可換股

B輪

C系列

其他

其他累計

優先股

優先股

優先股

優先股

普通股

Paid-in

累積

綜合

股份

金額

股份

金額

分享

金額

股數

金額

股數(1)

金額(1)

資本(1)

資本總額

收入

總計

2023年12月31日的資產負債表

—

$

—

28,000 

$

28,000 

—

$

—

—

$

—

13,663 

$

683 

$

47,489,517 

$

(27,081,411)

$

—

$

20,436,789 

凈虧損

—

—

—

—

—

—

—

—

—

—

—

(9,029,973)

—

(9,029,973)

員工股票購買計劃下的普通股發行

—

—

—

—

—

—

—

—

153 

8 

9,764 

—

—

9,772 

根據股權激勵計劃發行普通股票

—

—

—

—

—

—

—

—

331 

17 

(17)

—

—

—

在注冊直接發行中發行普通股，扣除發行成本後淨發行

—

—

—

—

—

—

—

—

3,604 

180 

918,808 

—

—

918,988 

發行系列b優先股

—

—

—

—

1 

1 

—

—

—

—

14 

—

—

15 

取消系列b優先股

—

—

—

—

(1)

(1)

—

—

—

—

—

—

—

(1)

根據PIPE權證行使發行普通股票

—

—

—

—

—

—

—

—

16,545 

827 

323,963 

324,790 

將A系列優先股重新分類為臨時股本

28,000 

30,968,875 

(28,000)

(28,000)

—

—

—

—

—

—

(30,940,875)

—

—

(30,968,875)

6

可轉換優先股終止時被視為股息

—

751,125 

—

—

—

—

—

—

—

—

(751,125)

—

—

(751,125)

PIPE認股權憑證的重新分類為負債

—

—

—

—

—

—

—

—

—

—

(10,592,220)

—

—

(10,592,220)

可贖回可轉換優先股轉換為普通股

(13,485)

(15,277,055)

—

—

—

—

—

—

126,098 

6,305 

15,270,750 

—

—

15,277,055 

A系列可轉換優先股轉換為普通股

—

—

(1,490)

(1,490)

—

—

—

—

14,195 

710 

780 

—

—

—

暫時權益重新分類為A系列優先股

(14,515)

(16,442,945)

14,515 

14,515 

—

—

—

—

—

—

—

—

16,428,430 

—

—

16,442,945 

PIPE認股權憑證的重新分類為權益

—

—

—

—

—

—

—

—

—

—

—

—

11,242,257 

—

—

11,242,257 

A系列優先股和PIPE認股權憑證換取C系列優先股

—

—

(13,025)

(13,025)

—

—

28,041 

28,041 

—

—

(15,016)

—

—

—

換取A系列優先股和PIPE認股權憑證的發行成本換取C系列優先股

—

—

—

—

—

—

—

—

—

—

(156,524)

—

—

(156,524)

Series C優先股轉換為普通股

—

—

—

—

—

—

(17,233)

(17,233)

765,912 

38,297 

(21,064)

—

—

—

在股票逆向拆分下針對碎股的現金補償付款

—

—

—

—

—

—

—

—

(14)

(1)

(1,131)

—

—

(1,132)

7

基於股份的補償

—

—

—

—

—

—

—

—

—

—

(16,199)

—

—

(16,199)

其他分享退休

—

—

—

—

—

—

—

—

(102)

(5)

(38,263)

32,170 

—

(6,098)

2024年9月30日結餘

—

$

—

—

$

—

—

$

—

10,808 

$

10,808 

940,385 

$

47,021 

$

49,151,849 

$

(36,079,214)

$

—

$

13,130,464 

截至2024年9月30日結束的三個月

可贖回可轉換

A輪系列

B輪

C系列

追加

累計其他

優先股

優先股

優先股

優先股

普通股

實收資本

累積

綜合

股份

金額

分享

金額

分享

金額

股份

金額

股份(1)

金額(1)

資本(1)

赤字

收入

總計

2024年6月30日的結餘:

14,515 

$

16,442,945 

—

$

—

1 

$

1 

—

$

—

144,865 

$

7,244 

$

21,875,678 

$

(32,780,605)

$

—

$

(10,897,682)

淨損失

—

—

—

—

—

—

—

—

—

—

—

(3,298,609)

—

(3,298,609)

取消系列b優先股

—

—

—

—

(1)

(1)

—

—

—

—

—

—

—

(1)

根據PIPE權證行使發行普通股票

—

—

—

—

—

—

—

—

15,413 

770 

(770)

—

將A系可轉換優先股轉換為普通股

—

—

(1,490)

(1,490)

—

—

—

—

14,195 

710 

780 

—

—

—

將暫時性股權重新歸類為A系優先股

(14,515)

(16,442,945)

14,515 

14,515 

—

—

—

—

—

—

—

—

16,428,430 

—

—

16,442,945 

將PIPE認股權重新分類為股權

—

—

—

—

—

—

—

—

—

—

—

—

11,242,257 

—

—

11,242,257 

交換A系優先股和PIPE認股權以獲得C系優先股，扣除發行成本

—

—

(13,025)

(13,025)

—

—

28,041 

28,041 

—

—

(15,016)

—

—

—

8

發行股票A序列及PIPE認股權轉換成C序列優先股的費用

—

—

—

—

—

—

—

—

—

—

(156,524)

—

—

(156,524)

C序列優先股轉換成普通股

—

—

—

—

—

—

(17,233)

(17,233)

765,912 

38,297 

(21,064)

—

—

—

基於股份的補償

—

—

—

—

—

—

—

—

—

—

(201,922)

—

—

(201,922)

2024年9月30日結餘

—

$

—

—

$

—

—

$

—

10,808 

$

10,808 

940,385 

$

47,021 

$

49,151,849 

$

(36,079,214)

$

—

$

13,130,464 

截至2023年9月30日的九個月結束

可贖回可轉換

A系可換股

B輪

C系列

追加

累計其他

優先股

優先股

優先股

優先股

普通股

實收資本

累積

綜合

股份

金額

股份

金額

股份

金額

股份

金額

股份(1)

金額(1)

資本(1)

赤字

（虧損）收益

總計

2022年12月31日的資產負債表

—

$

—

28,000 

$

28,000 

—

$

—

—

$

—

13,221 

$

661 

$

46,293,187 

$

(19,089,134)

$

(10,422)

$

27,222,292 

淨損失

—

—

—

—

—

—

—

—

—

—

—

(6,468,769)

—

(6,468,769)

員工股票購買計劃下的普通股發行

—

—

—

—

—

—

—

—

113 

6 

125,392 

—

—

125,398 

根據股權激勵計劃發行普通股票

—

—

—

—

—

—

—

—

283 

14 

(14)

—

—

—

與相關方債務清償收益

—

—

—

—

—

—

—

—

—

—

36,291 

—

—

36,291 

基於股份的補償

—

—

—

—

—

—

—

—

—

—

966,825 

—

—

966,825 

其他股份退休

—

—

—

—

—

—

—

—

(40)

(2)

(139,380)

108,196 

—

(31,186)

其他綜合收益

—

—

—

—

—

—

—

—

—

—

—

—

10,422 

10,422 

2023年9月30日的資產負債表

—

$

—

28,000 

$

28,000 

—

$

—

—

$

—

13,577 

$

679 

$

47,282,301 

$

(25,449,707)

$

—

$

21,861,273 

截至2023年9月30日止三個月

累積

9

可贖回可轉換

A系可換股

B輪

C系列

追加

其他

優先股

優先股

優先股

優先股

普通股

實收資本

累積

綜合

股份

金額

分享

金額

分享

金額

分享

金額

股份(1)

金額(1)

資本(1)

赤字

收益（損失）

總計

2023年6月30日結算餘額

—

$

—

28,000 

$

28,000 

—

$

—

—

$

—

13,378 

$

670 

$

47,047,939 

$

(23,181,248)

$

34,108 

$

23,929,469 

淨損失

—

—

—

—

—

—

—

—

—

—

—

(2,363,036)

—

(2,363,036)

根據股權激勵計劃發行普通股票

—

—

—

—

—

—

—

—

233 

11 

(11)

—

—

—

基於股份的補償

—

—

—

—

—

—

—

—

—

—

353,843 

—

—

353,843 

其他分享退休

—

—

—

—

—

—

—

—

(34)

(2)

(119,470)

94,577 

—

(24,895)

其他綜合損失

—

—

—

—

—

—

—

—

—

—

—

—

(34,108)

(34,108)

2023年9月30日的資產負債表

—

$

—

28,000 

$

28,000 

—

$

—

—

$

—

13,577 

$

679 

$

47,282,301 

$

(25,449,707)

$

—

$

21,861,273 

(1) 先前期間的結果已調整以反映普通股按比例進行的反向拆股，比例為 1比50 ，於2024年10月17日生效，及普通股按比例進行的反向拆股，比例為 已於2024年5月24日進行1股拆分為15股（請參閱基本報表注釋2）。 ，於2024年6月12日生效。詳情請參見註釋1，「業務性質」。

附註是簡明合併財務報表的一個重要組成部分。


‎

10

pineapple energy inc.

簡明財務報表現金流量表

(未經審核)

截至九月三十日止之九個月

2024

2023

營業活動之現金流量：

淨損失

$

(9,029,973)

$

(6,468,769)

來自已停止營運項目的淨損失，稅後

—

(1,206,235)

繼續經營的淨虧損

(9,029,973)

(5,262,534)

調整為使淨虧損轉化為經營活動所使用現金：

折舊與攤銷

2,373,312

4,002,939

基於股份的補償

(16,199)

966,825

盈餘考慮的公允價值重新衡量

(800,000)

1,160,000

認股權負債的公允價值重新衡量

974,823

—

嵌入衍生工具負債的公允價值重新衡量

468,329

—

附帶價值權利的公允價值重新衡量

(478,809)

(1,152,273)

債務解除損失

35,657

—

資產銷售虧損（盈餘）

822

(437,116)

租約終止損失

215,415

—

利息和增值費用

2,312,054

1,867,576

資產和負債的變動：

交易應收賬款

803,047

(112,868)

存貨

893,281

1,427,729

所得稅

(83,062)

(29,081)

其他淨資產

(809,709)

2,198,423

應付帳款

570,844

(510,422)

應計薪酬與福利

(510,484)

84,421

客戶存款

(270,905)

(921,228)

其他應計負債

236,089

(3,095,746)

應計利息

(1,278,378)

(716,188)

用於營運活動的淨現金

(4,393,846)

(529,543)

用於營運活動的淨現金 - 停止營運

—

(295,571)

用於營運活動的淨現金

(4,393,846)

(825,114)

投資活動產生的現金流量:

資本支出

(29,749)

(614,435)

出售物業、廠房及設備所得款項

6,118

450

投資出售所得

—

2,869,584

資產出售所獲收益

—

250,000

由投資活動提供或使用的淨現金

(23,631)

2,505,599

關閉業務後由投資活動提供的淨現金

—

1,102,935

由投資活動提供或使用的淨現金

(23,631)

3,608,534

融資活動產生的現金流量:

據貸款應付款項

1,604,000

7,814,844

應付貸款的支付

(1,161,654)

(6,970,811)

與債務發行成本相關的支付

(24,150)

(348,065)

與股權發行成本相關的支付

(237,536)

—

透過註冊直接發行普通股的收益

1,000,000

—

發行B系列優先股的收益

15

—

對或有價值權利分配的支付

—

(3,036,676)

發行普通股的收益，扣除被扣取的股份

9,775

125,398

因逆向股票拆分而支付的現金以取代碎股

(1,132)

—

購買普通股

(6,098)

(31,186)

經融活動提供的（使用的）淨現金

1,183,220

(2,446,496)

11

現金、現金等價物及受限現金的變動（減少）增加

(3,234,257)

336,924

期初現金、現金等價物及受限現金

5,396,343

5,256,478

現金、現金等價物和受限現金期末餘額

$

2,162,086

$

5,593,402

現金流量資訊的補充披露：

所得稅已支付金額

$

83,100

$

28,672

支付利息

1,216,577

688,954

非現金融資及投資活動：

解除關聯方債務的利得

—

36,291

債務清償損失

(35,657)

—

可轉換優先股和PIPE warrants的視同股息

11,587,121

—

可贖回可轉換優先股轉換為普通股

15,277,055

—

以租賃義務換取的使用權資產

—

753,972

附註是簡明合併財務報表的一個重要組成部分。


‎

12

pineapple energy inc.

基本報表附註

(未經審核)

 

註釋 1 – 經營性質

業務描述

pineapple energy inc.（「PEGY」、「Pineapple」、「我們」、「我們的」或「公司」）最初於1969年在明尼蘇達州組織成立。2022年3月28日，公司根據2021年3月1日簽署的一份合併協議及其2021年12月16日的修訂版的條款，完成了與pineapple energy llc（「pineapple energy」）之前公告的合併交易（合稱「合併協議」），該合併協議由公司、helios merger co.（一家德拉瓦州公司暨公司的全資子公司）（「合併子公司」）、pineapple energy llc（一家德拉瓦州有限責任公司）、lake street solar llc作為成員代表，以及randall d. sampson作為股東代表共同簽署。根據該協議，合併子公司與pineapple energy合併，pineapple energy作為公司的全資子公司繼續存續（「合併」）。合併完成後（「結束」），公司更名為pineapple holdings, inc.並開始以Pineapple名稱進行業務，隨後在2022年4月13日更名為pineapple energy inc。

 

pineapple的願景是通過草根增長的太陽能電力與電池儲能相結合，推動能源轉型。公司是一家國內運營商及住宅和商業太陽能、電池儲能及電網服務解決方案的整合商。我們的策略專注於收購、整合和發展全國領先的地方和區域型太陽能、儲能和能源服務公司。  

我們目前的業務單位， 夏威夷能源連結公司（“HEC”）以及位於紐約的子公司，SUNation實體（統稱為“SUNation”）。 我們專注於設計、安裝和維護住宅、商業和市政領域的太陽能系統。我們的團隊專門提供量身定制的太陽能解決方案，以滿足每個客戶的特定能源需求，確保效率和可持續性。除了我們的核心太陽能服務外，我們還提供能源儲存系統，以優化能源使用並提高可靠性。我們位於紐約的業務單位進一步整合了更廣泛的服務，包括住宅屋頂解決方案，以確保無縫的太陽能安裝和長期耐用性。此外，我們提供社區太陽能服務，使一群個人、企業或組織能夠共享單一太陽能陣列的好處，使可再生能源能夠為社區內更多人所獲得。

在2023年6月30日，公司透過出售其JDL Technologies, Inc.（“JDL”）和Ecessa Corporation（“Ecessa”）業務的大部分資產，剝離了其舊有業務和運營資產。請參見第5條，停止運營。因此，除非另有說明，所有在本季度報告的10-Q表格中與JDL和Ecessa業務相關的信息均被討論和呈現為停止運營，而公司報告其剩餘的業務運營為持續運營。

在2024年10月10日，公司向證券交易委員會（“SEC”）提交了DEF 14A表格的最終代理聲明，涉及尋求股東批准將公司由明尼蘇達州重新註冊至特拉華州的特別股東會議，並更改公司名稱為SUNation Energy, Inc.特別股東會議於2024年11月4日召開，根據2024年11月8日向SEC提交的8-K表格披露，股東批准了將公司重新註冊至特拉華州和更改公司的名稱，並已獲得董事會批准。我們將在相關事項完成後，公佈此事項的進展。

13

反向拆股並股

2024年6月進行逆向拆股並股

2024年1月3日，公司股東批准對公司普通股進行為期一段區間內的逆向拆股並股1-for-2 和 已於2024年5月24日進行1股拆分為15股（請參閱基本報表注釋2）。 並授予公司董事會判斷在該區間內進行拆股的時間和比率的自由裁量權。

2024年5月28日，公司董事會決定對普通股進行逆向拆股並股至一個1比15 比率（“June Reverse Stock Split”）並批准了對公司第四次修訂和重述章程的修正（“June Reverse Stock Split Amendment”），以實現“June Reverse Stock Split”。

自2024年6月12日起，公司 修改了其第四次修訂和重述章程，以實施“June Reverse Stock Split”。公司的普通股從2024年6月12日市場開盤時開始在分拆調整基礎上交易（“June Effective Date”）。

 

由於“June Reverse Stock Split”，在“June Effective Date”當天的中部時間12:01，每15股普通股自動合併為一股普通股，每股面值不變。在“June Reverse Stock Split”後，沒有碎股未結算，並且將以現金解決任何可能由“June Reverse Stock Split”導致的碎股。普通股的股份數量減少了 108,546,773 年逐年獲得 7,235,731，其中％的股票在授予之日後一年實現，其餘的股票在之後的相等季度分期進行。 720.901 現金支付的碎股總額為$1,132認可發行的股份總數已經減少到 7,500,000 與六月拆股並股比率成比例。
‎

2024年10月逆向股票拆分

於2024年7月19日，公司股東批准了公司普通股的拆股並股比率區間為1比2 和1比200 並授予公司董事會判斷拆股和合股的時間和比率的自由裁量權。此外，股東們還批准了增加授權股份至 133,333,333 股。

於2024年10月1日，公司董事會決定以指定的比率進行普通股的拆股，並批准修訂公司第四次修訂的發行文件以實施10月反向拆股。1比50 比率（「10月反向拆股」）並批准對公司第四次修訂的公司章程進行10月反向拆股修正案（「10月反向拆股修正案」）。

自2024年10月17日起，公司 修訂了其第四次修訂的公司章程以實施10月反向拆股。公司的普通股在2024年10月17日市場開盤時即開始按照調整過的方式進行交易（「10月生效日期」）。

 

由於10月反向拆股，於10月生效日期當天中部時間12:01，每50股普通股則自動合併為1股普通股，每股面值不變。反向拆股後沒有碎股，任何可能由10月反向拆股引起的碎股均以現金結算。普通股的股份總數從 67,260,696 在權利益分享區間內， 1,344,841，附加的碎股以現金支付總共 $ 372.92 碎股總金額為 $1,891。授權發行的股份總數從 133,333,333 減少到 2,666,667 ，按照十月反向拆股並股比例。

從 2024年6月和2024年10月反向拆股並股（總稱「反向拆股並股」）生效的同一時刻起，公司股權報酬計劃下發行的普通股數量將自動按照反向拆股並股比例進行調整。生效後，反向拆股並股還將導致行使或授予股權獎勵的普通股數量按照反向拆股並股比例減少，並導致行使價格或股票績效標準（如有）相應增加。

14

反向拆股的影響已在這份季度報告（Form 10-Q）中反映出來，適用於所有所示期間。

反向拆股的影響

反向拆股的影響已根據適用指導準則追溯應用於所有所示期間。因此，之前的期數金額與之前報告的不同。

下表顯示了普通股（以股數和金額計）及額外實收資本的變化，之前的報告及反向拆股影響後的調整：

2023年9月30日

如先前報告

反向拆股的影響

調整後

普通股股份

10,182,723

(10,169,146)

13,577

普通股數量

$

509,136

$

(508,457)

$

679

額外實收資本

$

46,773,844

$

508,457

$

47,282,301

2023年6月30日

2024年6月30日

如先前報告

反向拆股的影響

調整後

如先前報告

反向拆股的影響

調整後

普通股股份

10,033,831

(10,020,453)

13,378

7,243,258

(7,098,393)

144,865

普通股數量

$

501,692

$

(501,022)

$

670

$

362,163

$

(354,919)

$

7,244

額外實收資本

$

46,546,917

$

501,022

$

47,047,939

$

21,520,759

$

354,919

$

21,875,678

2022年12月31日

2023年12月31日

如先前報告

反向拆股的影響

調整後

如先前報告

反向拆股的影響

調整後

普通股股份

9,915,586

(9,902,365)

13,221

10,246,605

(10,232,942)

13,663

普通股數量

$

495,779

$

(495,118)

$

661

$

512,330

$

(511,647)

$

683

額外實收資本

$

45,798,069

$

495,118

$

46,293,187

$

46,977,870

$

511,647

$

47,489,517

下表展示了每股損失及加權平均流通股份數的變化，根據之前報告的資料及經逆向拆股影響調整後的情況，並回溯調整至所呈現的期間：

截至2023年9月30日的三個月

如先前報告

逆向拆股的影響

調整後

加權平均股本-基本及稀釋

10,050,015

(10,036,615)

13,400

持續經營業務的每股損失 - 基本和攤薄

$

(0.23)

$

(173.58)

$

(173.81)

來自已終止業務的每股損失 - 基本及稀釋

$

(0.01)

$

(2.53)

$

(2.54)

15

2023年9月30日止九個月

如先前報告

拆股並股的影響

調整後

加權平均股本-基本及稀釋

9,973,311

(9,960,013)

13,298

持續營運單位的每股虧損-基本和稀釋

$

(0.53)

$

(395.22)

$

(395.75)

已停業營運部門的每股虧損-基本和稀釋

$

(0.12)

$

(90.59)

$

(90.71)

註2 - 重要會計政策摘要

報告基礎

所附的簡明合併財務報表已按照美國普遍公認的會計原則（“GAAP”）準備，包括公司及其全資擁有的經營子公司的賬目。這些備註中對適用指導意見的引用旨在指稱會計標準整合（“ASC”）中所包含的權威GAAP，以及財務會計準則委員會（“FASB”）的會計標準更新（“ASU”）。

根據GAAP準備的合併財務報表通常包含的某些信息和附註披露已被縮短或省略。 在管理層的意見中，所附的簡明合併財務報表包括所有調整，僅包括正常循環性的調整，這些調整是為了對呈報的中期結果進行公正的表述。簡明合併財務報表及相關附註應與公司截至2023年12月31日年度報告Form 10-K中包含的經已提交給證券交易委員會（“SEC”）的審計財務報表及相關附註一同閱讀。所附的簡明合併資產負債表在… 2023年12月31日， 2023年的簡明合併資產負債表是根據所包含於上述Form 10-K中的2023年12月31日審計資產負債表獲得的。中期營運結果不一定代表整年營運結果。

已登記 直接公開發售

2024年2月5日，公司與某些機構投資者簽訂了一項證券購買協議，該協議是公司出售股票給該機構投資者的。 3,604 股票份額 (2,702,703 在進行拆股並股之前，公司在一項直接發行登記的方式下出售了其普通股。這次發行中的購買者以每股$ 的價格購買，而公司則賣出。277.50 ($0.37 在拆股並股之前，這筆交易於2024年2月7日結束，總計獲得了$ 的總收益，未扣除配售代理費用和相關發行費用。1.0 總計營業收入為$ 百萬美元，未扣除配售代理費用及與發行相關的費用，該銷售於2024年2月7日結束。

合併原則

精簡合併基本報表包含公司及其子公司的帳戶。所有內部交易和帳戶均予以消除。

估計的使用

依據GAAP準則編製基本報表，需要管理層進行對資產和負債金額、公告的資產和負債及基本報表日期當日的收入和支出金額的估計和假設。公司在記錄交易和業務運作產生的餘額時使用基於最佳資訊的估計。實際結果可能與該估計存在實質差異。公司的估計主要包括信用損失準備、商業項目收入認列(根據完工百分比)、資產減損評估、補償計劃應計、存貨成本或市場價值低於者調整、公允價值衡量(認股權負債、條件性價值權益、條件性成交、債務工具，包括嵌入衍生負債)，所得稅條款和递延税款、固定資產折舊壽命以及無形資產攤銷壽命。

16

現金、受限現金及現金等價物

就簡化合併現金流量表的目的而言，公司認為所有在購買時到期為三個月或更短的高流動性投資皆為現金等價物。公司可能會投資於被視為非銀行存款且不受聯邦存款保險公司（“FDIC”）或其他政府機構保險或保證的短期貨幣市場基金。這些貨幣市場基金旨在保持投資價值為$1.00 每股；然而，投資這些基金可能會虧損。於2024年9月30日及2023年12月31日，投資於短期貨幣市場基金的現金等價物總額為$1,240,882 和$1,799,357 。截至2024年9月30日，資本表上的$1.1 百萬的受限現金和現金等價物僅可用於支持舊有hk銀行業務，並將分配給公司的或有價值權利（“CVRs”）持有者，不能用於支持Pineapple Energy業務的營運資金需求。

應收帳款淨額

應收賬款以其淨可實現價值記錄，並且沒有抵押。應收賬款包括已賺取的金額減去已收到的付款和信用損失準備金。管理層不斷監控並調整與公司的應收賬款相關的準備金，以解決與應收賬款相關的任何信用風險，並定期在追收不被認為可能時註銷應收賬款。公司不對逾期賬戶收取利息。在收款存在不確定性時，公司會記錄信用損失準備金及相應的信用損失費用。

存貨淨額

存貨主要由用於安裝太陽能系統的材料和用品組成，按成本或可實現淨值較低者列示，成本按加權平均成本基準計算。 公司定期檢查其存貨，以了解是否有過剩和過時項目，並在確定其可實現淨值低於成本時調整攤銷成本。存貨儲備為 $221,170 和$126,990 。

固定資產淨值

不動產、工廠和設備按成本記錄。折舊采用直線法計算。維護和修理費用計入業務運營，增建或改善則資本化。出售、報廢或以其他方式處置的不動產項目將從資產和累計折舊帳戶中刪除，任何處置的收益或損失都會反映在簡明綜合運營報表中。

商譽及其他無形資產，淨額

商譽代表購買價格（包括承擔的負債）超過所收購業務的淨有形資產和可單獨識別的無形資產的估計公允價值的金額。有限使用壽命的無形資產，主要由商標和科技組成，按照資產的估計使用年限以直線法進行攤銷。商譽是 不進行攤銷，但至少每年進行一次減值測試。 該公司在每年的10月1日重新評估我們的報告單位及相關商譽餘額，並在發生事件或存在情況表明商譽的帳面金額可能無法回收的情況下，於其他時間進行評估。

長期資產和無形資產的可回收性

該公司每當發生事件或情況變化表明資產的帳面價值可能無法完全回收時，會檢查其長期資產和有限使用壽命的無形資產 以確認減值。如果存在減值指標，管理層識別出包括潛在減值的長期資產的資產組，並在具有可單獨識別的現金流的最低層級進行識別。如果 資產組的公允價值，根據預期的未折現未來淨現金流的總和，低於資產的帳面金額，則對公允價值和資產帳面金額之間的差額確認損失.

17

中期股權

本公司已發行各種金融工具，包括優先股票。包含在持有人控制範圍內的贖回權或在發生不確定事件發生不僅屬於公司控制範圍內可能被贖回的工具，將被歸類為可贖回或間隔股權。本分類的目的是表達該等證券可能不是永久性股權的一部分，並可能導致未來實體現金、證券或其他資產的需求。有關公司可換股優先股的 2024 年第一季將可換股優先股從永久股權重新分類為夾期股權，以及 2024 年第三季將間隔股權重新分類為永久股權的進一步討論，請參閱附註 10「可換股優先股」。

認股權證

本公司根據認股證的具體條款及適用權威指引，ASC 480「負債與股權區分」及 ASC 815「衍生產品及對沖」的評估，將認股權證視為股權分類或負債類別的工具。 管理層評估考慮認股權證是否為根據 ASC 480 的獨立金融工具、是否符合 ASC 480 規定的負債定義，以及認股權證是否符合 ASC 815 所有股權分類要求。有關本公司的 PIPE 認股權證從 2024 年第一季重新分類為負債，以及 2024 年第三季從負債重新分類為權益的進一步討論，請參閱附註 10「股權」。

對於未符合所有股票分類標準的發行或修訂認股權證，則該認股權證須先以發行日期的公平價值記錄為負債，然後在其後每個資產負債表日重新評估為公平價值。負債類別認股權證的估計公平價值的變動會被納入變動期間的簡明綜合業務報表中的其他收入（費用）中。

收入認知

當對承諾商品或服務的控制權轉讓給客戶，其金額反映本公司預期為該等商品或服務獲得的代價而獲得的代價時，收入會被記錄。該公司向住宅和商業客戶出售正在建造和開發協議中的太陽能電系統。完成的系統作為單一履行義務出售。對於住宅合約，收入會在系統投入服務時的時間記錄。以客戶存款形式收到的任何預付款均被記錄為合約負債。

商業合約一般在內完成 三 至 十二個月 從施工開始。大型項目的建設可能在內完成 十八 至 二十四 數月，取決於項目的大小和位置。商業合約的收入以完成百分比方法來記錄，以迄今為止產生的小時百分比與每份合約預算的估計總時數計算出來計算。由於估算成本中存在的不確定性，使用的估計至少在不久的將來會發生變化的合理可能性。合約成本包括所有直接材料、人力成本以及與合同履行相關的間接成本，例如間接勞動和其他供應。銷售、一般費用和行政費用按照產生的費用收取。未完成合約的估計損失的預訂，是在確定該等損失的期間訂立。工作表現、工作條件和估計盈利能力的變化可能會導致修訂的成本和收入，這些成本和收入在確定修訂的期間內被記錄。由於工作績效、工作條件、合約罰款條文、索償、變更命令和結算所導致的估計工作盈利能力的變化，將作為目前期間的估計變化計算。

有關收入認知的進一步討論，請參閱註 3，收入認知。

總消費稅

夏威夷州對在夏威夷進行的所有業務業務徵收總收入稅。本公司以總計算稅收入和開支。

18

Cost of Sales

Cost of sales consists of direct and indirect material and labor costs for solar energy system installations as well as warranty costs, permitting fees, financing fees and overhead, including costs related to procurement, warehousing and inventory management.

Share-Based Compensation

The Company accounts for share-based compensation awards on a fair value basis. The estimated grant date fair value of each stock-based award is recognized in the condensed consolidated statements of operations over the requisite service period (generally the vesting period). The Company recognizes forfeitures as they occur.

Warranty

SUNation offers product warranties for various periods against defects in material or installation workmanship. The manufacturers of the solar panels and the inverters provide a warranty period of generally 25 years and 10 years, respectively. SUNation will assist its customers in the event that the manufacturers' warranty needs to be used to replace a defective solar panel or inverter. SUNation provides for warranty up to the lifetime of the system on the installation of a system and all equipment and incidental supplies other than solar panels and inverters that are recovered under the manufacturers' warranty. SUNation provides extended workmanship warranties to the customer for up to 25 years for the service of inverters, which is reimbursed by the manufacturer.

The Company estimates its warranty obligations upon installation, an expense included in cost of sales, based on management’s best estimate of the probable cost to be incurred in honoring its warranty commitment.

Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. Our chief operating decision maker is comprised of our Interim Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer. Based on the financial information presented to and reviewed by our chief operating decision maker in deciding how to allocate resources and in assessing performance, we have determined we have two operating segments, but meet the aggregation criteria in order to aggregate into one reportable segment.

Net Loss Per Share

Basic net loss attributable to common shareholders per common share is based on the weighted average number of common shares outstanding during each period. Diluted net loss attributable to common shareholders per common share adjusts for the dilutive effect of potential common shares outstanding. The Company had $264,482 and $11,587,121 in deemed dividends during the three and nine months ended September 30, 2024, respectively, which decreases the numerator in the net loss per share calculation. The Company’s only potential additional common shares outstanding are common shares that would result from the conversion of the convertible preferred shares, warrants, convertible debt and shares associated with the long-term incentive compensation plans, which resulted in no dilutive effect for the three and nine months ended September 30, 2024 and for the three and nine months ended September 30, 2023. The Company calculates the dilutive effect of outstanding warrants and unvested shares using the treasury stock method and the dilutive effect of outstanding preferred shares and convertible debt using the if-converted method. There were no options or deferred stock awards excluded from the calculation of diluted earnings per share because there were no outstanding options or deferred stock awards as of both September 30, 2024 and 2023. Warrants totaling 0 and 6,902 and restricted stock units totaling 357 and 1,128 would have been excluded from the calculation of diluted earnings per share for the nine months ended September 30, 2024 and 2023, respectively, even if there had not been a net loss in those periods, because the exercise price was greater than the average market price of common stock during the period.

19

Accounting Standards Issued

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating this ASU and the impact it may have on its consolidated financial statements.

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,” which is intended to clarify or improve disclosure and presentation requirements of a variety of topics. Many of the amendments will allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements and align the requirements in the FASB accounting standard codification with the SEC’s regulations. The amendments in ASU 2023-06 will become effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC, and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited. The Company is currently evaluating this ASU and the impact it may have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which expands disclosures in an entity’s income tax rate reconciliation table and regarding cash taxes paid both in the U.S. and foreign jurisdictions. This ASU is effective for fiscal periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating this ASU and the impact it may have on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating this ASU and the impact it may have on its consolidated financial statements.

NOTE 3 – REVENUE RECOGNITION

Disaggregation of revenue

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that best reflects the consideration we expect to receive in exchange for those goods or services.

The following table disaggregates revenue based on type:

Revenue by Type

Three Months Ended September 30

Nine Months Ended September 30

2024

2023

2024

2023

Residential contracts

$

10,600,999

$

15,300,411

$

34,501,450

$

48,635,741

Commercial contracts

3,618,023

2,201,888

5,107,418

8,789,930

Service revenue

499,364

764,063

1,878,135

2,429,433

Software revenue

—

22,335

—

323,815

Other

—

—

—

11,494

$

14,718,386

$

18,288,697

$

41,487,003

$

60,190,413

20

The following table disaggregates revenue based on the timing of satisfaction of the performance obligations:

Three Months Ended September 30

Nine Months Ended September 30

2024

2023

2024

2023

Performance obligations satisfied at a point in time

$

11,100,363

$

16,086,809

$

36,379,585

$

51,400,483

Performance obligations satisfied over time

3,618,023

2,201,888

5,107,418

8,789,930

$

14,718,386

$

18,288,697

$

41,487,003

$

60,190,413

Contract Balances

Contract assets represent costs and earnings in excess of amounts billed and direct costs, including commissions, financing and permitting fees paid prior to recording revenue. Contract liabilities represent amounts billed to clients in excess of revenue recognized to date and billings in excess of costs and earnings. Contract assets were $384,020 and $57,241 at September 30, 2024 and December 31, 2023, respectively. Contract liabilities were $2,306,429 and $2,552,452 at September 30, 2024 and December 31, 2023, respectively. Due to the shorter-term nature of our contracts, the balances within contract assets and liabilities as of December 31, 2023 has been recognized within cash and revenue, respectively, during the nine months ended September 30, 2024.

NOTE 4 – CONTRACTS IN PROGRESS

Billings in excess of costs and estimated earnings as of September 30, 2024 and December 31, 2023 are as follows:

September 30, 2024

December 31, 2023

Billings to date

$

2,302,747

$

2,131,579

Costs incurred on uncompleted contracts

840,716

1,208,444

Estimated earnings

997,061

483,046

Cost plus estimated earnings

1,837,777

1,691,490

Billings in excess of costs plus estimated earnings on uncompleted contracts

$

464,970

$

440,089

Costs and estimated earnings in excess of billings as of September 30, 2024 and December 31, 2023 are as follows:

September 30, 2024

December 31, 2023

Costs incurred on uncompleted contracts

$

1,162,957

$

119,782

Estimated earnings

1,108,077

396,174

Total costs and estimated earnings

2,271,034

515,956

Billings to date

1,887,014

458,715

Costs and estimated earnings in excess of billings on uncompleted contracts

$

384,020

$

57,241

NOTE 5 – DISCONTINUED OPERATIONS

On June 30, 2023, the Company sold substantially all of the assets of its legacy non-core subsidiaries, JDL and Ecessa, to TheIPGuys.net LLC doing business as OneNet Global for total net proceeds of $1,231,616. The Company received net

21

initial proceeds of $1,106,616, consisting of $1,175,000 in initial consideration less $68,384 in adjustments. An additional $125,000 in consideration is held in escrow for potential indemnification claims that may arise under the asset purchase agreement. The amount in escrow represented a consideration receivable that is included in other current assets within the condensed consolidated balance sheet as of September 30, 2024, as it was considered to be probable that the amount will be received in full at the conclusion of the escrow period. The amount of escrow proceeds that will be received will depend on whether any indemnification obligations arise under the asset purchase agreement and the receivable will be monitored for potential impairment. There were no indemnification obligations identified and the escrow funds will be released in the fourth quarter of 2024. The Company recorded a loss on sale of $1,190,002 during the second quarter of 2023. The presentation of discontinued operations with respect to this transaction has been retrospectively applied to all prior periods presented.

The financial results of the discontinued operations are as follows:

Three Months Ended September 30

Nine Months Ended September 30

2024

2023

2024

2023

Sales

$

—

$

—

$

—

$

3,414,810

Cost of sales

—

—

—

2,444,014

Selling, general and administrative expenses

—

37,697

—

916,911

Transaction costs

—

—

—

14,426

Restructuring expenses

—

—

—

56,717

Loss on sale of assets

—

—

—

1,190,002

Operating loss before income taxes

—

(37,697)

—

(1,207,260)

Income tax expense

—

(3,714)

—

(1,025)

Loss from discontinued operations

$

—

$

(33,983)

$

—

$

(1,206,235)

During the three and nine months ended September 30, 2023, the Company recorded a total of $56,717 in expected restructuring expenses, which consisted of severance and related benefits costs. The Company paid $56,717 in restructuring charges in 2023 and had no restructuring accruals recorded at either September 30, 2024 or December 31, 2023.

NOTE 6 –INTANGIBLE ASSETS

The Company’s identifiable intangible assets with finite lives are being amortized over their estimated useful lives and were as follows:

September 30, 2024

Estimated Useful Life

Gross Carrying Amount

Accumulated Amortization

Net

Tradenames & trademarks

8 years

$

17,900,000

$

(5,119,792)

$

12,780,208

Developed technology

4 years

2,400,000

(1,500,000)

900,000

Backlog

1 year

600,000

(600,000)

—

$

20,900,000

$

(7,219,792)

$

13,680,208

December 31, 2023

Estimated Useful Life

Gross Carrying Amount

Accumulated Amortization

Net

Tradenames & trademarks

3-8 years

$

22,187,882

$

(7,729,549)

$

14,458,333

Developed technology

4 years

2,400,000

(1,050,000)

1,350,000

Backlog

1 year

600,000

(600,000)

—

$

25,187,882

$

(9,379,549)

$

15,808,333

22

Amortization expense on these identifiable intangible assets was $709,375 and $1,216,698 during the three months ended September 30, 2024 and 2023, respectively and $2,128,125 and $3,700,095 during the nine months ended September 30, 2024 and 2023, respectively. The estimated future amortization expense for identifiable intangible assets during the next fiscal years is as follows:

Quarter Ending and Year Ending December 31:

Q4 2024

$

709,375

2025

2,837,500

2026

2,387,500

2027

2,237,500

2028

2,237,500

Thereafter

3,270,833

Total

$

13,680,208

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Loan Payable

Pineapple Energy has a loan in an original amount of $7,500,000 payable to Hercules Capital, Inc. (“Hercules”) under a loan and security agreement (the “Term Loan Agreement”). This loan accrues interest at 10%, payable-in-kind (“PIK”) and was initially due and payable on December 10, 2023. There are no financial covenants associated with this loan. This loan was used to acquire fixed assets, inventory, and intangible assets of Sungevity in an asset acquisition in December 2020. As the transaction did not involve the exchange of monetary consideration, the assets were valued at the Company’s most reliable indication of fair value, which was debt issued in consideration for the assets. Accordingly, Pineapple Energy assessed the fair market value of the debt instrument at $4,768,000 at the asset acquisition date (a non-recurring Level 3 fair value input). The Company initially accreted the value of the debt over its life at a discount rate of approximately 25%.

On December 16, 2021, the Term Loan Agreement was amended, whereby, among other things, the maturity date was extended to December 31, 2024, subject to various prepayment criteria. In addition, the amendment provided that $4,500,000 plus all accrued and unpaid interest and expenses were to be repaid upon Closing and receipt of the PIPE funds, with the remaining principal to be paid upon the loan maturity date. The amendment represented a modification to the loan agreement with the existing lender as both the original loan agreement and the amendment allow for immediate prepayment and the Company passed the cash flow test.

On May 31, 2023, the Term Loan Agreement was further amended (the “Second Amendment”), primarily for the purpose of obtaining consent for the senior financing from Decathlon Specialty Finance, LLC (the “Decathlon Financing”), the proceeds of which were partially applied to repay $1,500,000 of the principal amount of the term loan. At the time of the Second Amendment and prior to the repayment, the aggregate remaining balance of the term loan, including principal and interest, was $3,375,742. The Second Amendment also extended the maturity date of the term loan to June 2, 2027 and set the interest rate at ten percent (10.0%) payable monthly and removing the PIK interest. The aggregate remaining principal balance of $1,875,742 along with interest is payable in equal monthly installments of principal and interest beginning on July 3, 2023 and continuing on the first business day of each month thereafter. The Second Amendment represented a modification under ASC 470-50 as the original loan agreement and the amended agreement are not substantially different.

On July 22, 2024, the Term Loan Agreement was further amended (the “Third Amendment”), primarily for the purpose of obtaining consent for the bridge loan financing from Conduit Capital U.S. Holdings LLC and MBB Energy, LLC. The Third Amendment represented a modification under ASC 470-50 as the original loan agreement and the amended agreement were not substantially different. The Company also entered into a Joinder and Amendment to Subordination Agreement (the “Joinder Agreement”) with Decathlon, Hercules Capital, Inc., Conduit and MBB. Pursuant thereto, Conduit and MBB became parties to the Subordination Agreement dated June 21, 2023, among the Company, Decathlon, and Hercules Capital, Inc. In accordance with the Joinder Agreement, Conduit and MBB agreed to subordinate their

23

respective security interests in the Company’s assets, to the first priority security interest of Decathlon and the second security priority interest of Hercules.

On September 20, 2024, the Term Loan Agreement was further amended (the “Fourth Amendment”), whereby Hercules waived the October 2024 amortization payment. The Company made payment of monthly interest on October 1, 2024 and will resume making monthly payment of principal on November 1, 2024 pursuant to the loan agreement. The Fourth Amendment represented a modification as both the original loan agreement and the amendment allow for immediate prepayment and the Company passed the cash flow test.

At September 30, 2024 and December 31, 2023, the combined loan and accrued interest balance was $628,469 and $497,052, respectively. A new effective interest rate of approximately 48.6% was established during the second quarter of 2023 based on the carrying value of the revised cash flows.

Interest and accretion expense was $179,295 and $227,975 for three months ended September 30, 2024 and 2023, respectively, and $574,415 and $640,616 for the nine months ended September 30, 2024 and 2023, respectively. The loan is collateralized by all of Pineapple Energy’s personal property and assets.

SUNation Short-Term and Long-Term Notes

In connection with the SUNation acquisition, on November 9, 2022, the Company issued a $5,000,000 Short-Term Limited Recourse Secured Promissory Note (the “Short-Term Note”) and a $5,486,000 Long-Term Promissory Note (the “Long-Term Note”). The $5,000,000 Short-Term Note was secured by a pledge by the Company and Merger Sub of the equity of SUNation purchased under the Transaction Agreement and was scheduled to mature on August 9, 2023. It carried an annual interest rate of 4% until the three-month anniversary of issuance, 8% thereafter until the six-month anniversary of issuance, then 12% thereafter until the Short-Term Note was paid in full. On June 1, 2023 the Company used funds from the Decathlon Financing to repay the Short-Term Note in full. The repayment of Short-Term Note has been recorded as a debt extinguishment as the Company is relieved of its obligation under the Short-Term Note and the related pledge by the Company of the equity of SUNation to secure the repayment of the Short-Term Note has been terminated. Since the Short-Term Note was with a related party, the Company recorded a capital contribution of $36,291 based on the difference between the carrying amount and reacquisition price of the Short-Term Note.

The $5,486,000 Long-Term Note is unsecured and matures on November 9, 2025. It carries an annual interest rate of 4% until the first anniversary of issuance, then 8% thereafter until the Long-Term Note is paid in full. Interest is due annually on each December 31st. The Company was unable to make the second interest payment totaling $250,703 due on December 31, 2023. The Company was required to make a principal payment of $2,740,000 on November 9, 2024. The Company is not permitted to make any payments under the Long-Term Note unless Decathlon (defined below) has provided prior written consent to such payment pursuant to the Loan Agreement.  Pursuant to that certain subordination letter dated May 31, 2023, each holder of the Long-Term Note has subordinated all payments under the Long-Term Note to the obligations owed to Decathlon under the Loan Agreement (the “Decathlon Obligations”) and has agreed that, until the Decathlon Obligations have been paid in full, any payment under the Long-Term Note is subject to Decathlon’s prior written consent. As the debt was part of the SUNation purchase price allocation, the Company assessed the fair market value of the debt instrument at $4,830,533 at the asset acquisition date (a non-recurring Level 3 fair value input). The Company accretes the value of the debt over its life at a discount rate of approximately 11.2%. The Long-Term Note may be prepaid at the Company’s option at any time without penalty.

The balance of Long-Term Note recorded at September 30, 2024 and December 31, 2023 was $5,959,961 and $5,499,716, respectively. Interest and accretion expense related to the notes totaled $154,535 and $154,535 for the three months ended September 30, 2024 and 2023 respectively, and $460,245 and $624,954 for the nine months ended September 30, 2024 and 2023, respectively.

Decathlon Fixed Loan

On June 1, 2023, the Company entered into a Revenue Loan and Security Agreement (the “Loan Agreement”) with Decathlon Specialty Finance, LLC (“Decathlon”). The Loan Agreement provides for a loan facility for the Company in the maximum amount of $7.5 million with a maturity date of June 1, 2027 (the “Decathlon Fixed Loan”), with the full amount being advanced to the Company upon execution of the Loan Agreement. The Decathlon Fixed Loan contains

24

customary conditions, representations and warranties, affirmative and negative covenants, mandatory prepayment provisions and events of default. The advances are secured by all present and hereafter acquired property of the Company.

At issuance of the Loan Agreement, the Company concluded that the potential acceleration of amounts outstanding under the Loan Agreement upon an event of default included a substantial premium and met the requirement to be bifurcated and recorded as a derivative liability at fair value at inception and at the end of each quarterly reporting period. However, based on management’s estimates of the likelihood of certain events, the embedded derivative liability had no fair value at issuance and at the end of each of the reporting periods ended prior to June 30, 2024. As of September 30, 2024, the fair value of this embedded derivative liability was estimated to be $403,400 and was recorded within current liabilities. For the three months ended September 30, 2024, the Company recorded a gain of $652,200 from the change in fair value of the derivative liability from June 30, 2024, which is included in “Other (expense) income, net" in the consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2024, the Company recorded a loss of $403,400 from the change in fair value of the derivative liability, which is included in “Other (expense) income, net" in the consolidated statements of operations and comprehensive loss.

The Decathlon Fixed Loan is repayable in fixed monthly payments, which generally aggregate to $960,000 that was paid in 2023, $2,220,000 payable in 2024, $2,580,000 payable in 2025, $2,760,000 payable in 2026 and $3,480,000 payable in 2027 to the maturity date. All outstanding advances and interest under the Loan Agreement are due at maturity on June 1, 2027 (unless accelerated upon a change of control or the occurrence of other events of default). Interest accrues on the amounts advanced pursuant to the Loan Agreement at such rate as is necessary to generate an amount equal to the Minimum Interest, which is defined in the Loan Agreement as the following multiple of the advanced amount depending on the period during which all amounts due under the Loan Agreement are paid: (i) 0.25 times if on or before 12 months after the Effective Date (as defined in the Loan Agreement); (ii) 0.35 times if after 12 months and on or before 24 months after the Effective Date; (iii) 0.50 times if after 24 months and on or before 36 months after the Effective Date; and 0.60 times if after 36 months after the Effective Date. The Company may at its option prepay the advance(s) and accrued but unpaid interest from time to time without penalty or premium (other than payment of the Minimum Interest (as defined in the Loan Agreement)).

On September 12, 2024, the Loan Agreement was amended, whereby Decathlon postponed the due date of the monthly payment due on September 15, 2024 to the earlier of (i) the closing of an equity raise resulting in gross proceeds of at least $2,000,000, and (ii) October 15, 2024. The amendment represented a modification as both the original loan agreement and the amendment allow for immediate prepayment and the Company passed the cash flow test. The Company made this payment on September 30, 2024.

The Company incurred an aggregate of $348,065 in debt issuance costs that are recorded as a discount and are amortized using the effective interest method over the life of the Decathlon Fixed Loan using an effective interest rate of 21%. A new effective interest rate of approximately 21.4% was established during the third quarter of 2024 based on the carrying value of the revised cash flows. At September 30, 2024 and December 31, 2023, the combined loan and accrued interest balance was $6,818,982 and $7,408,925, respectively, and the unamortized debt issuance costs balance was $198,863 and $280,856, respectively. The Company recorded interest expense of $372,872 and $407,082 for the three months ended September 30, 2024 and 2023, respectively, and $1,142,049 and $534,780 for the nine months ended September 30, 2024 and 2023, respectively.

Conduit Capital Bridge Loan

On July 22, 2024, the Company obtained bridge loan financing for working capital purposes from Conduit Capital U.S. Holdings LLC (“Conduit”), an unaffiliated lender (the “Original Conduit Note”). On such date, Conduit loaned the principal sum of $500,000 to the Company on an original issue (“OID”) basis of 20% and accordingly, Conduit advanced $400,000 to the Company (the “Initial Conduit Loan”). The loans due to Conduit will accrue interest on the unpaid principal amount, without deduction for the OID, at an annual rate of 20%; provided that payment in full on the Conduit Maturity Date (as defined below) satisfies the interest accrual on the loans from initial issuance to the Conduit Maturity Date. The Company may request that Conduit provide additional advances for working capital on identical terms, conditions and interest rate as the Initial Conduit Loan on an OID basis, up to an aggregate principal sum of $500,000, and Conduit shall have the right, without commitment or obligation, to make such requested loan(s) by advancing 80%

25

percent of the principal thereof. All such loans are secured by a pledge of all of the Company’s assets. As a condition to such loan(s), the Company agreed to cause the nomination of a designee of Conduit for election to its Board of Directors.

The loans due to Conduit will become due on July 21, 2025 (the “Conduit Maturity Date”). In accordance with the terms of the loan agreements with Conduit, if the Company consummates one or more equity offerings prior to the Conduit Maturity Date in which it derives aggregate gross proceeds of at least $3.15 million, it will be required to repay the unpaid principal balance of the Initial Conduit Loan, including the OID, simultaneous with the closing(s) of such offering(s). Further, if the Company consummates one or more equity offerings prior to the Conduit Maturity Date in which it derives aggregate gross proceeds of at least $4.4 million, the Company will be required to repay the entire unpaid principal amount of all loans due to Conduit, including the OID, simultaneous with the closing(s) of such offering(s).

At issuance of the Original Conduit Note, the Company concluded that the potential acceleration of amounts outstanding under the loan agreements with Conduit upon an event of default or if the Company consummates one or more equity offerings meeting certain criteria (as noted above) included a substantial premium and met the requirement to be bifurcated and recorded as a derivative liability at fair value at inception and revalued at the end of each quarterly reporting period. The Company determined the initial fair value of this embedded derivative liability to be $8,080 and recorded a corresponding debt discount. As of September 30, 2024, the fair value of this embedded derivative liability was estimated to be $38,868 and was recorded within current liabilities. For the three and nine months ended September 30, 2024, the Company recorded a loss of $30,284 from the change in fair value of the derivative liability, which is included in “Other (expense) income, net" in the consolidated statements of operations and comprehensive loss.

The Company incurred $18,150 in debt issuance costs in connection with the Initial Conduit Loan that were recorded as a discount and initially amortized using the effective interest method over the life of the Initial Conduit Loan along with the OID of $100,000 and initial fair value of the embedded derivative liability using an effective interest rate of approximately 29.1%.

On September 9, 2024, the Company and Conduit entered into an Amended and Restated Convertible Secured Note (the “First Amended Conduit Note”) which amended the Original Conduit Note, which provided for an additional principal advance of $120,000 (the “Second Conduit Advance”). The First Amended Conduit Note also provides that Conduit may convert all or any portion of the Second Conduit Advance and all accrued but unpaid interest thereon into a number of shares (the “Conduit Note Conversion Shares”) of the Company’s common stock calculated as the total dollar amount to be converted divided by $22.50 ($0.45 prior to the Reverse Stock Splits) (the “Conversion Price”). The Company analyzed the changes made in the First Amended Conduit Note under ASC 470-50 to determine if extinguishment accounting was applicable. Under ASC 470-50-40-10, a modification or an exchange that adds or eliminates a substantive conversion option as of the conversion date is always considered substantial and requires extinguishment accounting. Since the First Amended Conduit Note added a substantive conversion option, extinguishment accounting is applicable. In accordance with the extinguishment accounting guidance, the Company recorded a loss on extinguishment of $35,657 which represents the difference between (a) the fair value of the modified loans due to Conduit less the net cash proceeds received from the Second Conduit Advance and (b) the carrying amount of the loans due to Conduit immediately prior to the Second Conduit Advance.

On September 23, 2024, the Company and Conduit entered into a further amended and restated convertible secured credit note (the “Second Amended Conduit Note”), which amends and restates the First Amended Conduit Note. Under the terms of the Second Amended Conduit Note, Conduit loaned an additional principal sum of $380,000 to the Company (the “Third Conduit Advance”) on an OID basis of 20%. Additionally, pursuant to the Second Amended Conduit Note, Conduit was granted a demand registration right, which is in addition to the piggyback registration rights set forth in the First Amended Conduit Note, which registration rights are inclusive of all convertible shares issuable for the Second Conduit Advance and Third Conduit Advance, if converted; however, all out of pocket costs and expenses incurred in connection with this demand registration right shall borne by Conduit. The Third Conduit Advance, together with all accrued but unpaid interest thereon, are convertible into shares of common stock at the Conversion Price. The Second Amended Conduit Note represented a modification under ASC 470-50 as the First Amended Conduit Note and the Second Amended Conduit Note are not substantially different. A new effective interest rate of approximately 22.9% was established following the Third Conduit Advance based on the carrying value of the revised cash flows.

26

Notwithstanding anything to the contrary as set forth in the Conduit Note or any tranche or amendment related thereto, in no event shall the Original Issue Discount, together with interest payable under the Conduit Note or such other documents related thereto, exceed an aggregate of twenty percent on the then outstanding principal sum, except in the event of a default, which shall include an additional 5% on the then outstanding principal sum.

At September 30, 2024 and December 31, 2023, the loan balance was $1,000,000 and $0, respectively, and the unamortized debt issuance costs balance was $168,911 and $0, respectively. The Company recorded interest and accretion expense of $24,167 for the three and nine months ended September 30, 2024.

MBB Energy Bridge Loan

On July 22, 2024, the Company obtained bridge loan financing for working capital purposes from MBB Energy, LLC (“MBB”), an affiliate of the Company (the “Original MBB Note”). On such date, MBB loaned the principal sum of $500,000 to the Company on an OID basis of 20% and accordingly, MBB advanced the sum of $400,000 to the Company (the “Initial MBB Loan”). The loans due to MBB will accrue interest on the unpaid principal amount, without deduction for the OID, at an annual rate of 20%; provided that payment in full on the MBB Maturity Date (as defined below) satisfies the interest accrual on the loans from initial issuance to the Conduit Maturity Date. The Company may request that MBB provide additional advances for working capital on identical terms, conditions and interest rate as the Initial MBB Loan on an OID basis, up to an aggregate principal sum of $500,000, and MBB shall have the right, without commitment or obligation, to make such requested loan(s) by advancing 80% percent of the principal thereof. All such loans are secured by a pledge of all of the Company’s assets. MBB has granted Conduit the exclusive right to enforce MBB’s loans on MBB’s behalf.

The loans due to MBB will become due on July 21, 2025 (the “MBB Maturity Date”). In accordance with the terms of the loan agreements with MBB, if the Company consummates one or more equity offerings prior to the MBB Maturity Date in which it derives aggregate gross proceeds of at least $3.15 million, it will be required to repay the unpaid principal balance of the Initial MBB Loan, including the OID, simultaneous with the closing(s) of such offering(s). Further, if the Company consummates one or more equity offerings prior to the MBB Maturity Date in which the Company derives aggregate gross proceeds of at least $4.4 million, the Company will be required to repay the entire unpaid principal amount of all loans due to MBB, including the OID, simultaneous with the closing(s) of such offering(s).

At issuance of the Original MBB Note, the Company concluded that the potential acceleration of amounts outstanding under the loan agreements with MBB upon an event of default or if the Company consummates one or more equity offerings meeting certain criteria (as noted above) included a substantial premium and met the requirement to be bifurcated and recorded as a derivative liability at fair value at inception and at the end of each quarterly reporting period. The Company determined the initial fair value of this embedded derivative liability to be $8,080 and recorded a corresponding debt discount. As of September 30, 2024, the fair value of this embedded derivative liability was estimated to be $42,725 and was recorded within current liabilities. For the three and nine months ended September 30, 2024, the Company recorded a loss of $34,645 from the change in fair value of the derivative liability, which is included in “Other (expense) income, net" in the consolidated statements of operations and comprehensive loss.

The OID of $100,000 was recorded as a discount and initially amortized using the effective interest method over the life of the Initial MBB Loan along with the initial fair value of the embedded derivative liability using an effective interest rate of approximately 24.3%.

On August 16, 2024, MBB provided an additional principal advance of $500,000 (the “Second MBB Advance”). The Second MBB Advance represented a modification under ASC 470-50. A new effective interest rate of approximately 24.1% was established following the Second MBB Advance based on the carrying value of the revised cash flows.

Notwithstanding anything to the contrary as set forth in the MBB Note or any tranche or amendment related thereto, in no event shall the Original Issue Discount, together with interest payable under the MBB Note or such other documents related thereto, exceed an aggregate of twenty percent on the then outstanding principal sum, except in the event of a default, which shall include an additional 5% on the then outstanding principal sum.

27

At September 30, 2024 and December 31, 2023, the loan balance was $1,000,000 and $0, respectively, and the unamortized debt issuance costs balance was $177,140 and $0, respectively. The Company recorded interest and accretion expense of $30,940 for the three and nine months ended September 30, 2024.

Equipment Loans

The Company obtains various equipment loan agreements through SUNation. These loans are secured by machinery and equipment and expire at various dates through August 2029 with interest rates ranging from 4.5 to 9.7% per annum. The balance for the equipment loans recorded at September 30, 2024 and December 31, 2023 was $256,607 and $333,717, respectively. Interest expense was $5,299 and $6,150 for the three months ended September 30, 2024 and 2023, respectively, and $16,859 and $11,802 for the nine months ended September 30, 2024 and 2023, respectively.

Promissory Note

Through the SUNation acquisition, the Company acquired a promissory note with a former shareholder and member of SUNation through a buyout agreement. The promissory note includes monthly payments of principal and interest at an annual rate of 3.25%. The promissory note matures on March 1, 2031. The balance for the promissory note recorded at September 30, 2024 and December 31, 2023 was $1,471,843 and $1,656,416, respectively. Interest expense was $12,295 and $15,337 for the three months ended September 30, 2024 and 2023, respectively, and $38,385 and $44,243 for the nine months ended September 30, 2024 and 2023, respectively.

Lease Termination

Effective September 30, 2024, the Company entered into a lease termination agreement with our Minnesota office landlord for the property located at 10900 Red Circle Drive, Minnetonka, MN 55343, pursuant to which the Company will pay a termination fee totaling $189,000 to be paid at $13,500 per month for a period of fourteen (14) months from entry into this lease termination, as well as the Company waiving its right to its original security deposit provided at entry into the original lease in the amount of $35,434. The lease termination resulted is a decrease to the Company’s operating lease right of uses assets totaling $415,674 and operating lease liabilities totaling $424,694, which along with the termination fee and write off the security deposit resulted in a loss on the termination of the lease totaling $215,415 recorded in operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2024. The $189,000 liability for the termination fee is recorded within other accrued liabilities in the Condensed Consolidated Balance Sheets at September 30, 2024.

Other Contingencies

In the ordinary course of business, the Company is exposed to legal actions and claims and incurs costs to defend against these actions and claims. Company management is not aware of any outstanding or pending legal actions or claims that could materially affect the Company’s financial position or results of operations.

We have accrued $400,000 for estimated loss contingencies related to certain prior securities issuances, and if such contingencies become payable, they may take the form of payment in stock, cash or some combination of the foregoing.

NOTE 8 – RELATED PARTY TRANSACTIONS

Related party receivables

The Company has provided advances to employees resulting in a balance as of September 30, 2024 and December 31, 2023 of $25,749 and $46,448, respectively.

28

Related party payables

As part of the acquisition of SUNation, the Company agreed to reimburse the sellers for proceeds received related to SUNation’s employee retention credit (a refundable tax credit against certain employment taxes incurred during the first nine months of 2021), totaling $1,584,541 as of December 31, 2022. The full amount of this credit was received by the Company and subsequently remitted to the sellers during the three months ended March 31, 2023. The Company also agreed to reimburse the sellers approximately $597,219 for tax payments due related to the period prior to acquisition, of which the full amount was paid during 2023, leaving no remaining balance at either September 30, 2024 or December 31, 2023.

Leases

The Company leases its offices in Hawaii from a company owned by the prior owner of HEC, of whom is still an employee. The Company leased its New York office from a company owned by the prior owners of SUNation, one of whom is an officer and another the Interim Chief Executive Officer and director of the Company, until September 12, 2024, when the building and related lease was sold to a third-party.

NOTE 9 – SHARE-BASED COMPENSATION

2022 Equity Incentive Plan

On January 24, 2022 the CSI board of directors adopted, and on March 16, 2022 the Company’s shareholders approved, the Company’s 2022 Equity Incentive Plan (“2022 Plan”), which became effective on March 28, 2022. The 2022 Plan authorizes incentive awards to officers, key employees, non-employee directors, and consultants in the form of options (incentive and non-qualified), stock appreciation rights, restricted stock awards, stock unit awards, and other stock-based awards. Following amendments approved on December 7, 2022 and July 19, 2024, the 2022 Plan authorizes the issuance of up to 13,333 shares of common stock (10,000,000 prior to the Reverse Stock Splits). At September 30, 2024, 614 shares had been issued under the 2022 Plan, 237 shares were subject to currently outstanding unvested restricted stock units (“RSUs”), and 12,482 shares were available for grant under future awards.

Inducement Grants

On October 10, 2022, the board of directors approved an inducement grant of 110 RSUs in connection with the hiring of a new Chief Financial Officer. On November 6, 2022, the board of directors approved inducement grants totaling 179 RSUs in connection with the hiring of Senior Vice Presidents in connection with the SUNation acquisition.

Changes in Restricted Stock Units Outstanding

The following table summarizes the changes in the number of RSUs during the nine months ended September 30, 2024:

RSUs

Weighted Average Grant Date Fair Value Per Share

Outstanding – December 31, 2023

1,047

$

1,513.36

Units Granted

168

442.50

Shares Issued

(331)

1,264.71

Forfeited

(527)

1,065.74

Outstanding – September 30, 2024

357

1,350.17

All RSUs and weighted average grant date fair value per share values have been adjusted to reflect the impact of the Reverse Stock Splits of the common stock at ratios of 1-for-50 that became effective on October 17, 2024 and 1-for-15 that became effective on June 12, 2024. See Note 1, "Nature of Operations," for further details.

29

Compensation Expense

Share-based compensation expense recognized for the three months ended September 30, 2024 and 2023 was $(201,922) and $353,843, respectively, and $(16,199) and $966,825 for the nine months ended September 30, 2024 and 2023. Unrecognized compensation expense related to outstanding RSUs was $141,894 at September 30, 2024 and is expected to be recognized over a weighted-average period of 1.4 years. Share-based compensation expense is recorded as a part of selling, general and administrative expenses.

Employee Stock Purchase Plan

On December 7, 2022, the Company’s shareholders approved an Employee Stock Purchase Plan (“ESPP”), pursuant to which eligible employees are able to acquire shares of common stock at a purchase price determined by the board of directors or compensation committee prior to the start of each six-month plan phase, which price may not be less than 85% of the fair market value of the lower of the value on the first day or the last day of the phase, or the value on the last day of the phase. The ESPP is considered compensatory under current Internal Revenue Service rules. At September 30, 2024, 400 shares remained available for purchase under the ESPP.

NOTE 10 – EQUITY

Series A Preferred Stock

In June 2021, the Company entered into a stock purchase agreement to issue Series A Preferred Stock. At such time, the Series A Preferred Stock contained certain anti-dilution provisions. In November 2022, the Company amended and restated the agreement under which Series A Preferred shareholders agreed to waive such provisions in exchange for certain concessions from the Company. The Company’s outstanding Series A Preferred Stock contained anti-dilution provisions that would increase the number of shares issuable upon conversion, and lower the conversion price of the Series A Preferred Stock if the Company issues equity securities at a price less than the current conversion price of the Series A Preferred Stock at the time of such issuance. In February 2024, the Company entered into a Limited Waiver and Amendment (“Waiver”) and the investors agreed to a floor of $105.00 ($0.14 prior to the Reverse Stock Splits) with respect to the adjustment set forth for the conversion price and to waive future anti-dilution protection with respect to 50% of the shares of Preferred Stock held by such purchasers as of the date of the Waiver.

The Company is required to analyze amendments to preferred stock terms to determine the appropriate method of accounting to be applied. While guidance exists in ASC 470-50 to address the accounting for debt modifications, including preferred stock that is accounted for as a liability, there is no comparable guidance to address the accounting for modifications to preferred stock instruments that are accounted for as equity or temporary equity, which necessitates the subjective determination of whether a modification or exchange represents an extinguishment. Current accounting guidance permits the analysis of preferred stock modifications by using either the qualitative approach, the fair value approach or the cash flow approach. Due to the nature of the amendment made to the preferred stock terms and consistent with its prior policy, the Company determined that the fair value approach was the most appropriate methodology. Based on the quantitative method, the Company determined that the Waiver resulted in an extinguishment of the Series A Preferred Stock. As a result, the Series A Preferred Stock was revalued immediately after the Waiver in February 2024. The difference between the previous carrying amount and the fair value of $751,125 was recognized as a deemed dividend in the three months ended March 31, 2024 that reduced additional paid-in-capital (“APIC”) and income available to common shareholders in calculating earnings per share.

In addition, management evaluated the Series A Preferred Stock after the modifications and determined that they should be reclassified to mezzanine equity under ASC 480-10-S99 as a result of the Company not having sufficient authorized and unissued shares to settle a conversion to Common Stock.

On July 19, 2024, the shareholders of the Company approved an amendment to the Company’s Fourth Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) to increase the number of authorized shares of common stock and as a result the Company now had sufficient authorized and unissued shares to settle a conversion to common

30

stock. Accordingly, the Series A Preferred Stock was reclassified to permanent equity at the date of the event that caused the reclassification.

On September 9, 2024, as a result of the issuance of the First Amended Conduit Note (see Note 7, “Commitments and Contingencies,” for further details), the adjustment provisions in the Series A Preferred Stock were triggered and caused certain adjustments in the currently effective conversion price of the Series A Preferred Stock. The Company recognized the effect of the down round feature triggered on September 9, 2024 as the difference between: (1) the fair value of the Series A Preferred Stock using the pre-trigger conversion price, and (2) the fair value of the Series A Preferred Stock using the reduced conversion price. The value of the effect of the down round feature of $3,464,426 was recognized as a deemed dividend in the three and nine months ended September 30, 2024 that reduced APIC and income available to common shareholders in calculating earnings per share.

Warrants

In September 2021, the Company entered into transactions with holders of its outstanding Series A Preferred Stock to issue PIPE Warrants to purchase the Company's common stock. At such time, the PIPE Warrants contained certain anti-dilution provisions. In November 2022, the Company amended and restated the agreement under which PIPE Warrant holders agreed to waive such provisions in exchange for certain concessions from the Company. The Company’s outstanding Series A Warrants have anti-dilution provisions that would increase the number of shares issuable upon exercise and lower the exercise price of the Series A Warrants if the Company issues equity securities at a price less than the current exercise price of the Series A Warrants at the time of such issuance. Pursuant to the Waiver, investors agreed to a floor of $22.50 ($0.14 prior to the Reverse Stock Splits) with respect to the anti-dilution adjustments in the warrants and extend the term of the warrants until March 28, 2029.

The PIPE Warrants were valued immediately before and immediately after the modifications to calculate the $10.6 million incremental value of the modified PIPE Warrants. The Company considered this incremental value to be a deemed dividend that reduced income available to common shareholders in calculating earnings per share.

Management evaluated the warrants after the modifications made in February 2024 and determined that they should be reclassified from equity to liability based on the guidance in ASC 815-40 and the Company failing to have enough authorized and unissued shares available to settle an exercise of the contract. In accordance with ASC 815-40, the carrying value of the warrants were adjusted to fair value through an adjustment in stockholders’ equity immediately prior to the reclassification. Subsequent to the reclassification, management remeasured the warrant liability to fair value and recorded the change in fair value to other income (expense) in the condensed consolidated statement of operations. 

On July 19, 2024, the shareholders of the Company approved an amendment to the Articles of Incorporation to increase the number of authorized shares of common stock and as a result the Company now has sufficient authorized and unissued shares to settle an exercise of the contract. Accordingly, management determined that the warrants should be reclassified to equity. In accordance with the guidance in ASC 815-40-35-10, management remeasured the warrant liability to fair value immediately before the reclassification and recorded the change in fair value to other income (expense) in the condensed consolidated statement of operations.

On September 9, 2024, as a result of the issuance of the First Amended Conduit Note (see Note 7, “Commitments and Contingencies,” for further details), the adjustment provisions in the warrants were triggered and caused certain adjustments in the currently effective exercise price of the warrants and a proportional increase in the amount of shares of common stock issuable under the warrants. The Company recognized the effect of the down round feature triggered on September 9, 2024 as the difference between: (1) the fair value of the warrants using the pre-trigger conversion price, and (2) the fair value of the warrants using the reduced conversion price. The value of the effect of the down round feature of $875,737 was recognized as a deemed dividend in the three months ended September 30, 2024 that reduced income available to common shareholders in calculating earnings per share.

On September 9, 2024, the Company entered into a Securities Exchange Agreement with the holders of the Series A Preferred Stock and warrants to cancel and retire the Series A Preferred Stock and warrants in exchange for shares of Series C Convertible Preferred Stock of the Company (the “Series C Preferred Stock”). The Company determined that the exchange of the Series A Preferred Stock and warrants for the Series C Preferred Stock resulted in the extinguishment of the Series A

31

Preferred Stock and warrants. As a result, the difference between the carrying amount of the Series A Preferred Stock and warrants and the fair value of the Series C Preferred Stock of $4,075,681 was recognized as a deemed contribution in the three and nine months ended September 30, 2024 that increased APIC and income available to common shareholders in calculating earnings per share.

Series C Preferred Stock

On September 9, 2024, the Company’s board of directors authorized the issuance of up to 35,000 shares of Series C Preferred Stock. As a result of the exchanged noted above, the Company issued 28,041 shares of Series C Preferred Stock. Each share of Series C Preferred Stock is convertible, at any time after issuance and at the option of the holder subject to certain beneficial ownership limitations, into a number of shares of common stock determined by dividing the Stated Value of such share by the Conversion Price. The Stated Value per share of Series C Preferred Stock is $1,000.00 and the Conversion Price per share of Series C Preferred Stock is $22.50 ($0.45 prior to the October Reverse Stock Split). The Series C Preferred Stock does not contain any of the price resets set forth in the Series A Preferred Stock, except in the case of stock splits, recapitalizations and similar transactions by the Company. At issuance, the Series C Preferred Stock was convertible into 1,246,262 shares of common stock (62,313,111 prior to the October Reverse Stock Split). During the third quarter of 2024, 17,233 shares of Series C Preferred Stock were converted into 765,912 shares of common stock (38,295,627 prior to the October Reverse Stock Split). As of September 30, 2024, there were 10,808 shares of Series C Preferred Stock outstanding, which were convertible into 480,350 shares of common stock (24,017,484 prior to the October Reverse Stock Split).

The holders of Series C Preferred Stock are entitled to vote exclusively with respect to a proposal submitted to the Company’s shareholders at a meeting of shareholders to be held by the Company to approve the changing of the Company’s state of incorporation from the State of Minnesota to the State of Delaware together as a single class with the common stock on an as-converted basis, subject to the beneficial ownership limitations, as follows: each share of Series C Preferred Stock shall be entitled to such number of votes equal to the quotient obtained by dividing: (i) the Stated Value by (ii) $39.573 ($0.79146 prior to the Reverse Stock Splits). As long as any shares of Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of Series C Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series C Preferred Stock or alter or amend the Certificate of Designation, (b) authorize or create any class of stock ranking as to redemption senior to the Series C Preferred Stock, (c) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of the holders of the Series C Preferred Stock, (d) increase the number of authorized shares of the Company’s preferred stock, or (e) enter into any agreement with respect to any of the foregoing. The holders of Series C Preferred Stock are not entitled to voting rights except for the foregoing and to the extent required by law.

Series B Preferred Stock

On May 13, 2024, the Company entered into a Subscription and Investment Representation Agreement pursuant to which the Company agreed to issue and sell one share of the Company’s Series B Preferred Stock, par value $1.00 per share (“Series B Preferred Stock”), for $15. The sale closed on May 14, 2024.

On May 13, 2024, the Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of State of Minnesota, effective as of May 13, 2024, designating the rights, preferences, privileges and restrictions of the share of the Series B Preferred Stock. The Certificate of Designation provides that the share of Series B Preferred Stock has 5,000,000,000 votes and will vote together with the outstanding shares of the Company’s common stock as a single class exclusively with respect to (i) any proposal to amend the Company’s Fourth Amended and Restated Articles of Incorporation (the “Articles”) to effect a reverse stock split of the Company’s common stock (the “Reverse Stock Split Proposal”) and (ii) any proposal to adopt an amendment to the Articles, or any other proposal to otherwise approve or ratify, to increase the authorized number of shares of common stock, either by increasing the total number of authorized shares or by effecting a reverse stock split without a corresponding decrease in the number of authorized shares (the “Authorized Shares Increase Proposal”). The Series B Preferred Stock will also be entitled to vote in the election of directors, but will only have one vote to cast with respect to each director nominee.

 

32

The Series B Preferred Stock must be voted, without action by the holder, in the same proportion as shares of common stock are voted. The Series B Preferred Stock otherwise has no voting rights except as otherwise required by the Minnesota Business Corporation Act.

 

The Series B Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company, nor is it redeemable for cash or any other consideration. The Series B Preferred Stock has no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution, or winding up of the Company, whether voluntarily or involuntarily. The holder of the Series B Preferred Stock will not be entitled to receive dividends of any kind. 

 

Under the Certificate of Designation, the outstanding share of Series B Preferred Stock will be cancelled in whole, but not in part, at any time (i) if such cancellation is ordered by the Company’s board of directors in its sole discretion or (ii) automatically upon the approval by the Company’s shareholders of the Reverse Stock Split Proposal and Authorized Shares Increase Proposal at any meeting of shareholders. The holder of the share of Series B Preferred Stock was not entitled to any consideration upon such cancellation. The shareholders approved the Reverse Stock Split Proposal and Authorized Shares Increase Proposal on July 19, 2024 and, as a result, the share of Series B Preferred Stock was automatically cancelled at that time.

NOTE 11 – INCOME TAXES

In the preparation of the Company’s condensed consolidated financial statements, management calculates income taxes based upon the estimated effective rate applicable to operating results for the full fiscal year. This includes estimating the current tax liability as well as assessing differences resulting from different treatment of items for tax and book accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded on the balance sheet. Management analyzes these assets and liabilities regularly and assesses the likelihood that deferred tax assets will be recovered from future taxable income.

The Company’s effective income tax rate from continuing operations was 0.0% for the nine months ended September 30, 2024 and 2023. The effective tax rate differs from the federal tax rate of 21% due to state income taxes and changes in valuation allowances related to deferred tax assets.

 

NOTE 12 – FAIR VALUE MEASUREMENTS

The accounting guidance establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.

Level 2 – Observable inputs such as quoted prices for similar instruments and quoted prices in markets that are not active, and inputs that are directly observable or can be corroborated by observable market data. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities.

Level 3 – Significant inputs to pricing that have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as the complex and subjective models and forecasts used to determine the fair value of financial instruments.

33

Financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 are summarized below.

September 30, 2024

Level 1

Level 2

Level 3

Total Fair Value

Cash equivalents:

Money market funds

$

1,240,882

$

—

$

—

$

1,240,882

Subtotal

1,240,882

—

—

1,240,882

Liabilities:

Contingent value rights

—

—

(1,212,263)

(1,212,263)

Embedded derivative liability

—

—

(484,993)

(484,993)

Earnout consideration

—

—

(2,700,000)

(2,700,000)

Subtotal

—

—

(4,397,256)

(4,397,256)

Total

$

1,240,882

$

—

$

(4,397,256)

$

(3,156,374)

December 31, 2023

Level 1

Level 2

Level 3

Total Fair Value

Cash equivalents:

Money market funds

$

1,799,357

$

—

$

—

$

1,799,357

Subtotal

1,799,357

—

—

1,799,357

Current Liabilities:

Contingent value rights

—

—

(1,691,072)

(1,691,072)

Earnout consideration

—

—

(3,500,000)

(3,500,000)

Subtotal

—

—

(5,191,072)

(5,191,072)

Total

$

1,799,357

$

—

$

(5,191,072)

$

(3,391,715)

The following tables present reconciliations of recurring fair value measurements that use significant unobservable inputs (Level 3):

Three Months Ended September 30, 2024

Contingent value rights

Warrant liability

Embedded derivative liability

Earnout consideration

Total

June 30, 2024

$

(1,198,212)

$

(9,806,409)

$

(1,055,600)

$

(2,700,000)

$

(14,760,221)

Additions

—

—

(16,664)

—

(16,664)

Fair value adjustments

(14,051)

(1,435,845)

587,271

—

(862,625)

Reclassification to equity

—

11,242,254

—

—

11,242,254

September 30, 2024

$

(1,212,263)

$

—

$

(484,993)

$

(2,700,000)

$

(4,397,256)

34

Three Months Ended September 30, 2023

Contingent value rights

Earnout consideration

Total

June 30, 2023

$

(6,010,520)

$

(3,080,000)

$

(9,090,520)

Distribution

3,036,677

—

3,036,677

Fair value adjustments

(239,922)

(230,000)

(469,922)

September 30, 2023

$

(3,213,765)

$

(3,310,000)

$

(6,523,765)

Nine Months Ended September 30, 2024

Contingent value rights

Warrant liability

Embedded derivative liability

Earnout consideration

Total

December 31, 2023

$

(1,691,072)

$

—

$

—

$

(3,500,000)

$

(5,191,072)

Reclassification from equity

—

(10,592,220)

—

—

(10,592,220)

Additions

—

—

(16,664)

—

(16,664)

Warrant exercise

—

324,789

—

—

324,789

Fair value adjustments

478,809

(974,823)

(468,329)

800,000

(164,343)

Reclassification to equity

—

11,242,254

—

—

11,242,254

September 30, 2024

$

(1,212,263)

$

—

$

(484,993)

$

(2,700,000)

$

(4,397,256)

Nine Months Ended September 30, 2023

Contingent value rights

Earnout consideration

Total

December 31, 2022

$

(7,402,715)

$

(2,150,000)

$

(9,552,715)

Distribution

3,036,677

—

3,036,677

Fair value adjustments

1,152,273

(1,160,000)

(7,727)

September 30, 2023

$

(3,213,765)

$

(3,310,000)

$

(6,523,765)

The estimated fair value of the CVRs as of September 30, 2024 and December 31, 2023 was $1,212,263 and $1,691,072, respectively, as noted above. The Company recorded a $478,809 gain on the fair value remeasurement of the CVRs during the nine months ended September 30, 2024 and a $1,152,273 gain on the fair value of the remeasurement of the CVRs during the nine months ended September 30, 2023.

The estimated fair value of earnout consideration related to the acquisition of SUNation as of September 30, 2024 and December 31, 2023 was $2,700,000 and $3,500,000, respectively. Included in the $2,700,000 at September 30, 2024 is $2,500,000 related to the first earnout period and $200,000 related to the second earnout period, both recorded in current liabilities. The estimated fair value is considered a Level 3 measurement. In order to update the fair value of the earnout consideration, the Company utilized a Monte Carlo simulation, which included the following significant assumptions: the expected probability and timing of achievement of milestone events. As a result of the fair value remeasurement, the Company recorded a remeasurement gain of $800,000 and a remeasurement loss of $1,160,000 during the nine months ended September 30, 2024 and 2023, respectively.

The estimated fair value of the PIPE warrants was $0 as of both September 30, 2024 and December 31, 2023, respectively. As noted in Note 10, the warrants were classified as a liability during the first quarter of 2024, resulting in a $10,592,202 reclassification from equity. During the third quarter of 2024, the warrants met equity classification requirements upon the shareholder approval of an increase in authorized outstanding shares and reclassified the fair value liability totaling $11,242,254 back to equity. The estimated fair value is considered a Level 3 measurement and the fair value of the warrant liability is determined using a Monte Carlo simulation to model future movement of the stock price.

35

As a result of the fair value remeasurement, the Company recorded a remeasurement gain of $974,823 and $0 during the nine months ended September 30, 2024 and 2023, respectively.

The estimated fair value of the embedded derivative liability was $484,993 and $0 as of September 30, 2024 and December 31, 2023, respectively. As a result of the fair value remeasurement, the Company recorded a remeasurement loss of $468,329 and $0 during the nine months ended September 30, 2024 and 2023, respectively. The estimated fair value is considered a Level 3 measurement and the fair value of the embedded derivative liability is determined based on a comparison of the present value of cash flows with and without the embedded derivative. This analysis includes management estimates of the likelihood of events of prepayment and default on the Decathlon, MBB and Conduit loans.

The fair value remeasurement related to the SUNation earnout was recorded within operating expenses. The other fair value remeasurements noted above were recorded within other (expense) income in the condensed consolidated statements of operations.

We record transfers between levels of the fair value hierarchy, if necessary, at the end of the reporting period. There were no transfers between levels during the nine months ended September 30, 2024.

NOTE 13 – GOING CONCERN

The Company’s financial statements as of September 30, 2024 have been prepared in accordance with GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Based on the Company’s current financial position, which includes approximately $1.1 million of restricted cash and cash equivalents that are restricted under the CVR agreement and cannot be used by the Company for its own working capital needs, the Company did not have sufficient cash to make the first earnout payment under the SUNation Transaction Agreement, which was due on May 6, 2024, and the Company’s forecasted future cash flows for the twelve months beyond the date of issuance of the financial statements in this report indicate that the Company does not have sufficient cash to make the first principal payment of the Long-Term Note that was due on November 9, 2024, a factor which raises substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. Notwithstanding the Company’s ability to make such payments, the Company is not permitted to make any earnout payments under the SUNation Transaction Agreement or any payments under the Long-Term Note unless Decathlon has provided prior written consent to such payment pursuant to the Loan Agreement.  Pursuant to that certain subordination letter dated May 31, 2023, each holder of the Long-Term Note has subordinated all payments under the Long-Term Note to the obligations owed to Decathlon under the Loan Agreement and has agreed that, until the Decathlon Obligations have been paid in full, any payment under the Long-Term Note is subject to Decathlon’s prior written consent.  Therefore, if Decathlon does not consent to the first principal payment of the Long-Term Note, such non-payment will not result in a default under the Long-Term Note. Failure to make earnout payments under the SUNation Transaction Agreement, which are prohibited under the Loan Agreement, could result in a breach under the SUNation Transaction Agreement.

In order to continue as a going concern, the Company will need additional capital resources. Management plans to raise capital through sources that may include public or private equity offerings, debt financings and/or strategic alliances. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 14 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date of this filing.

Reverse Stock Split

Effective October 17, 2024, the Company amended its Fourth Amended and Restated Articles of Incorporation (“Articles of Amendment”) to implement a one-for-fifty reverse stock split. The Company’s common stock began trading on a split-adjusted basis when the market opened on October 17, 2024 (the “Effective Date”). The Board of Directors of the

36

Company approved the amendment to the Company’s Articles of Incorporation to meet the share bid price requirements of the NASDAQ Capital Market. The Company’s stockholders approved the Articles of Amendment at its annual meeting held on July 19, 2024.

As a result of the reverse stock split, at 12:01 a.m. Central Time on the Effective Date, every 50 shares of common stock then issued and outstanding automatically were combined into one share of common stock, with no change in par value per share. No fractional shares were outstanding following the reverse stock split, and any fractional shares that would have resulted from the reverse stock split will be settled in cash. The total number of shares authorized for issuance was reduced to 2,666,667 in proportion to the reverse stock split.

Nasdaq Compliance

On October 1, 2024, the Company received a letter (the “Minimum Bid Price Deficiency Letter”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market (“Nasdaq”) notifying the Company that, for the 30 consecutive business day period from August 16 through September 30, 2024, the Company’s common stock had not maintained a minimum closing bid price of $1.00 per share (the “Minimum Bid Price Requirement”) required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). The Nasdaq letter did not result in the immediate delisting of the Company’s common stock from The Nasdaq Capital Market.

Pursuant to the previously disclosed Nasdaq hearing panel decision, dated July 18, 2024, the Company was subject to a mandatory panel monitor (“Panel”) under Nasdaq’s listing Rule 5815(d)(4)(B) for a period of one year. Accordingly, due to the most recent minimum bid price deficiency, as is customary in similar situations, the Staff notified the Company that it will not be afforded a Cure Period. Instead, the Company was offered an opportunity to appeal any deficiency related to a delisting determination to Nasdaq by or before October 8, 2024. The Company timely requested a hearing before the Hearing Panel and received a hearing date of November 21, 2024 and submitted an expedited bid price compliance plan on October 14, 2024. The hearing request automatically stayed any suspension or delisting action pending the hearing and the expiration of any additional extension period if granted by the Panel following the hearing.

On November 8, 2024, the Company received notice from the Nasdaq Listing Qualifications staff that the Company has regained compliance with the bid price requirement in Listing Rule 5550(a)(2) and that the Company is, therefore, in compliance with the Nasdaq Capital Market’s listing requirements. Consequently, the scheduled hearing before the Hearings Panel on November 21, 2024, was deemed moot and has been cancelled. The Company’s securities will continue to be listed and traded on The Nasdaq Stock Market.

At the Market Offering

On October 21, 2024, the Company entered into an At the Market (“ATM”) Offering Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (the “Sales Agent”). The Company has authorized the sale, at its discretion, of common stock shares in an aggregate offering amount up to $10,000,000 under the Sales Agreement. The Sales Agent will use commercially reasonable efforts consistent with normal trading and sales practices. The shares will be sold and issued pursuant to the Company’s Registration Statement on Form S-3 which was filed on August 25, 2022 with, and declared effective on September 2, 2022 by, the Securities and Exchange Commission (File No. 333-267066, the “Registration Statement”), and a related prospectus, as supplemented by a prospectus supplement. The Company will pay the Sales Agent a cash commission in an amount up to 3.0% of the gross proceeds from each sale of shares sold pursuant to the Sales Agreement. To date, we have sold an aggregate of 394,381 shares for gross proceeds of $2,310,547 under the ATM facility.

Contingent Value Rights Payment

On November 8, 2024, the Company announced that it will distribute to the holders of its non-transferable CVRs a payment of $850,269, or $0.35 per CVR, which payment is expected to commence by November 15, 2024.


‎

37

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

The following discussion and analysis should be read in conjunction with our interim unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q (“Quarterly Report”) and our audited financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (“SEC”) on April 1, 2024.

Forward-Looking Statements

This quarterly report and, from time to time, reports filed with the SEC, in press releases, and in other communications to shareholders or the investing public, may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.  Words such as “may,” “will,” “can,” “should,” “would,” “could,” “anticipate,” “expect,” “plan,” “seek,” “believe,” “are confident that,” “look forward to,” “predict,” “estimate,” “potential,” “project,” “target,” “forecast,” “see,” “intend,” “design,” “strive,” “strategy,” “future,” “opportunity,” “assume,” “guide,” “position,” “continue” and similar expressions are intended to identify forward-looking statements.  Forward-looking statements are based on current beliefs, expectations and assumptions that are subject to significant risks, uncertainties and changes in circumstances that could cause actual results to differ materially from such forward-looking statements.  These risks, uncertainties and changes in circumstances include, but are not limited to:

if our shareholders sell, or indicate an intention to sell, substantial amounts of our stock in the public market, the trading price of our common stock could decline;

if we fail to design and implement and maintain effective internal controls over financial reporting, we may be subject to sanctions or investigations by regulatory authorities or lose investor confidence in the accuracy and completeness of our financial reports;

if our common stock market price continues to be highly volatile, it may harm the value of the investment of our shareholders in our common stock;

if we issue additional common stock, it may materially dilute the ownership interests of our shareholders;

anti-takeover provisions in our organizational documents and agreements may discourage or prevent a change in control, even if a sale of Pineapple could be beneficial to our shareholders;

our board of directors may establish shares of preferred stock in series and fix the designation, powers, preferences and rights of the shares of each series which may be senior to or on parity with our common stock, which may reduce its value;

our growth strategy depends on the continued origination of solar installation agreements;

if we fail to manage our operations and growth effectively, we may be unable to execute our business plan, maintain high levels of customer service or adequately address competitive challenges;

we need to raise additional capital to fund our operations and repay our obligations, which funding may not be available on favorable terms or at all and may lead to substantial dilution to our existing shareholders. Further, there is substantial doubt about our ability to continue as a going concern, which conditions may adversely affect our stock price and our ability to raise capital;

our common stock may be delisted from the Nasdaq Capital Market if we cannot maintain compliance with the applicable listing standards;

we may face claims for monetary damages, penalties, and other significant items pursuant to existing contractual arrangements, as well as litigation or threatened litigations, which, if material, may strain our cashflow and operations, as well as take away substantial time and attention from management that is necessary to for business operations and potential growth opportunities;

we depend on a limited number of suppliers of solar energy system components and technologies to adequately meet demand for our solar energy systems;

increases in the cost of our solar energy systems due to tariffs and other trade restrictions imposed by the U.S. government could have a material adverse effect on our business, financial condition and results of operations;

our operating results and our ability to grow may fluctuate from quarter to quarter and year to year, which could make our future performance difficult to predict and could cause our operating results for a particular period to fall below expectations.

38

we may have difficulty integrating the businesses from the SUNation transaction with our existing operations or otherwise obtaining the strategic benefits of the acquisition;

if we are unable to make acquisitions on economically acceptable terms, our future growth would be limited, and any acquisitions we may make could reduce, rather than increase, our cash flows;

product liability and property damage claims against us or accidents could result in adverse publicity and potentially significant monetary damages;

we will not be able to insure against all potential risks and we may become subject to higher insurance premiums;

damage to our brand and reputation or change or loss of use of our brand could harm our business and results of operations;

the loss of one or more members of our senior management or key employees may adversely affect our ability to implement our strategy;

our inability to protect our intellectual property could adversely affect our business. We may also be subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies;

we may be subject to interruptions or failures in our information technology systems;

our information technology systems may be exposed to various cybersecurity risks and other disruptions that could impair our ability to operate, adversely affect our business, and damage our brand and reputation;

our failure to hire and retain a sufficient number of key employees, such as installers and electricians, would constrain our growth and our ability to timely complete projects;

our business is concentrated in certain markets, putting us at risk of region-specific disruptions;

if sufficient additional demand for residential solar energy systems does not develop or takes longer to develop than we anticipate, our ability to originate solar installation agreements may decrease;

our business prospects are dependent in part on a continuing decline in the cost of solar energy system components and our business may be adversely affected to the extent the cost of these components stabilize or increase in the future;

we face competition from centralized electric utilities, retail electric providers, independent power producers and renewable energy companies;

developments in technology or improvements in distributed solar energy generation and related technologies or components may materially adversely affect demand for our offerings;

a material reduction in the retail price of electricity charged by electric utilities or other retail electricity providers could harm our business, financial condition and results of operations;

terrorist or cyberattacks against centralized utilities could adversely affect our business;

climate change may have long-term impacts on our business, industry, and the global economy;

increases in the cost of our solar energy systems due to tariffs imposed by the U.S. government could have a material adverse effect on our business, financial condition and results of operations;

we are not currently regulated as an electric public utility under applicable law, but may be subject to regulation as an electric utility in the future;

electric utility policies and regulations, including those affecting electric rates, may present regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for our solar energy systems and adversely impact our ability to originate new solar installation agreements;

we rely on net metering and related policies to sell solar systems to our customers in most of our current markets, and changes to policies governing net metering may significantly reduce demand for electricity from residential solar energy systems and thus for our installation services;

a customer’s decision to procure installation services from us depends in part on the availability of rebates, tax credits and other financial incentives. The expiration, elimination or reduction of these rebates, credits or incentives or our ability to monetize them could adversely impact our business;

technical and regulatory limitations regarding the interconnection of solar energy systems to the electrical grid may significantly delay interconnections and customer in-service dates, harming our growth rate and customer satisfaction; and

compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant monetary penalties, operational delays and adverse publicity.

39

Other risks and uncertainties are discussed more fully under the caption “Risk Factors” in our filings with the SEC, including in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023 and in Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q. Accordingly, you should not place undue reliance on forward-looking statements. To the extent permitted by applicable law, we expressly disclaim any intent or obligation to update any forward-looking statements to reflect subsequent events or circumstances.

Overview

Pineapple Energy Inc. (“Pineapple,” “PEGY,” “we,” “our”, “us” or the “Company”) was originally organized as a Minnesota corporation in 1969.

Pineapple’s vision is to power the energy transition through grass-roots growth of solar electricity paired with battery storage. The Company is a domestic operator and consolidator of residential and commercial solar, battery storage, and grid services solutions. Our strategy is focused on acquiring, integrating, and growing leading local and regional solar, storage, and energy services companies nationwide.  

Our current business units, Hawaii Energy Connection, LLC (“HEC”), and New York-based subsidiaries, the SUNation entities (collectively, “SUNation”). are engaged in the design, installation, and maintenance of solar energy systems across residential, commercial, and municipal sectors. Our team specializes in providing tailored solar solutions that meet the specific energy needs of each client, ensuring both efficiency and sustainability. In addition to our core solar services, we also offer energy storage systems to optimize energy use and increase reliability. Our New York business unit further integrates a broader range of services, including residential roofing solutions, to ensure seamless solar installations and long-term durability. Additionally, we provide community solar services that allow groups of individuals, businesses, or organizations to share the benefits of a single solar array, making renewable energy accessible to more people in the community.  

Our comprehensive approach enables us to effectively meet the diverse needs of our customers, ensuring that we play a pivotal role in advancing the clean energy transition across various sectors. The depth, versatility, and proven track record of our business units form the foundation of our success. This strong combination of experience, innovation, and a commitment to quality empowers us to deliver exceptional value, positioning us as a reliable leader in the solar and energy services industry.

Through its E-Gear business, Pineapple also develops, manufactures, and sells patented edge-of-grid energy management software and hardware technology, such as energy management control devices. These products allow homeowners to get the most out of their installed photovoltaic solar energy systems and utility grid support benefits. Our primary customers for this technology are energy services companies and other utilities.

On June 30, 2023, the Company divested its legacy operations and operating assets through the sale of substantially all of the assets of its JDL Technologies, Inc. (“JDL”) and Ecessa Corporation (“Ecessa”) businesses. As a result, unless otherwise noted, all information in this quarterly report on Form 10-Q related to the JDL and Ecessa businesses are discussed and presented as discontinued operations and the Company reports its remaining business operations as continuing operations.

For a more complete description of the Company, see Note 1, Nature of Operations, to the Condensed Consolidated Financial Statements included in this report.

Reverse Stock Splits

June 2024 Reverse Stock Split

On January 3, 2024, the Company’s shareholders approved a reverse stock split of the Company’s common stock at a ratio within a range of 1-for-2 and 1-for-15 and granted the Company’s board of directors the discretion to determine the timing and ratio of the split within such range.

40

On May 28, 2024, the Company’s board of directors determined to effect the reverse stock split of the common stock at a 1-for-15 ratio (the “June Reverse Stock Split”) and approved an amendment (“June Reverse Stock Split Amendment”) to the Fourth Amended and Restated Articles of Incorporation of the Company to effect the June Reverse Stock Split.

Effective June 12, 2024, the Company amended its Fourth Amended and Restated Articles of Incorporation to implement the June Reverse Stock Split. The Company's common stock began trading on a split-adjusted basis when the market opened on June 12, 2024 (the "June Effective Date").

 

As a result of the June Reverse Stock Split, at 12:01 a.m. Central Time on the June Effective Date, every 15 shares of common stock then issued and outstanding automatically were combined into one share of common stock, with no change in par value per share. No fractional shares were outstanding following the June Reverse Stock Split, and any fractional shares that would have resulted from the June Reverse Stock Split were settled in cash. The number of shares of common stock outstanding was reduced from 108,546,773 to 7,235,731, with 720.901 fractional shares paid out in cash totaling $1,132. The total number of shares authorized for issuance was reduced to 7,500,000 in proportion to the June Reverse Stock Split ratio.
‎

October 2024 Reverse Stock Split

On July 19, 2024, the Company’s shareholders approved a reverse stock split of the Company’s common stock at a ratio within a range of 1-for-2 and 1-for-200 and granted the Company’s board of directors the discretion to determine the timing and ratio of the split within such range.

On October 1, 2024, the Company’s board of directors determined to effect the reverse stock split of the common stock at a 1-for-50 ratio (the “October Reverse Stock Split”) and approved an amendment (“October Reverse Stock Split Amendment”) to the Fourth Amended and Restated Articles of Incorporation of the Company to effect the October Reverse Stock Split.

Effective October 17, 2024, the Company amended its Fourth Amended and Restated Articles of Incorporation to implement the October Reverse Stock Split. The Company's common stock began trading on a split-adjusted basis when the market opened on October 17, 2024 (the "October Effective Date").

 

As a result of the October Reverse Stock Split, at 12:01 a.m. Central Time on the October Effective Date, every 50 shares of common stock then issued and outstanding automatically were combined into one share of common stock, with no change in par value per share. No fractional shares were outstanding following the Reverse Stock Split, and any fractional shares that would have resulted from the October Reverse Stock Split were settled in cash. The number of shares of common stock outstanding was reduced from 67,260,696 to 1,344,841, with 372.92 fractional shares payable in cash totaling $1,891. The total number of shares authorized for issuance was reduced from 133,333,333 to 2,666,667 in proportion to the October Reverse Stock Split ratio.

Effective as of the same time as the June 2024 Reverse Stock Split and October 2024 Reverse Stock Split (collectively known as the “Reverse Stock Splits”), the number of shares of common stock available for issuance under the Company's equity compensation plans were automatically reduced in proportion to the Reverse Stock Splits ratio. Upon effectiveness, the Reverse Stock Splits also resulted in reductions in the number of shares of common stock issuable upon exercise or vesting of equity awards in proportion to the Reverse Stock Splits ratios and caused a proportionate increase in exercise price or share-based performance criteria, if any, applicable to such awards.

Results of Operations

Comparison of the Three Months Ended September 30, 2024 and 2023

Consolidated sales decreased $3,570,311, or 19.5% to $14,718,386 in the third quarter of 2024 from $18,288,697 in the third quarter of 2023. Sales in the third quarter of 2024 and 2023 by type were as follows:

41

Revenue by Type

Three Months Ended September 30

2024

2023

Residential contracts

$

10,600,999

$

15,300,411

Commercial contracts

3,618,023

2,201,888

Service revenue

499,364

764,063

Software revenue

—

22,335

Other

—

—

$

14,718,386

$

18,288,697

Residential contract sales decreased $4,699,412, or 31%, due to a 22% reduction in residential kilowatts installed and also a decrease in average price per system installed as result of lower battery attachment rate. The residential market within the solar industry is seeing an overall decline in installations due to higher interest rates. Commercial contract sales increased $1,416,135, or 64%, due to larger commercial projects that were pushed into the third quarter of 2024 with lower projects in prior quarters of 2024 whereas the prior year had more consistent commercial projects throughout the year.

Consolidated gross profit decreased to $5,235,725 in the third quarter of 2024 as compared to gross profit of $7,032,458 in the third quarter of 2023 due primarily to the decrease in revenue during the quarter. Gross margin decreased slightly to 36% during the third quarter of 2024 as compared to 38% in the third quarter of 2023 due primarily to certain fixed costs on lower revenue.

Consolidated operating expenses, which include selling, general and administrative expenses, amortization expense, and a fair value remeasurement gain (loss) of SUNation earnout consideration, decreased to $6,842,462 in the third quarter of 2024 as compared to $8,596,808 in the third quarter of 2023. Consolidated selling, general and administrative expenses decreased $1,017,023, or 14%, to $6,133,087 in the third quarter of 2024 from $7,150,110 in the third quarter of 2023, due primarily to a $555,765 decrease in stock compensation expense and overall decreased personnel expenses on lower headcount. Amortization expense decreased by $507,323 to $709,375 in the third quarter of 2024 as compared to $1,216,698 in the same period of the prior year due to the completion of the amortization of certain intangible assets in late 2023. There was not a fair value remeasurement related to the SUNation acquisition earnout consideration in the third quarter of 2024 compared to a loss of $230,000 in the same period of the prior year.

Consolidated other (expense) income decreased by $922,426 to expense of $1,691,363 in the third quarter of 2024 as compared to $768,937 in expense in the third quarter of 2023. The decrease was primarily related to a $1,435,845 fair value remeasurement loss on the warrant liability, a $587,271 fair value remeasurement gain on the embedded derivative liability, a $199,785 decrease in gain on sale of assets, and a $225,871 decrease in fair value remeasurement loss on the contingent value rights (“CVRs”).

Consolidated operating loss from continuing operations in the third quarter of 2024 was $1,606,737 as compared to $1,564,350 in the third quarter of 2023. Net loss from continuing operations attributable to shareholders in the third quarter of 2024 (after taking into effect $264,482 in deemed dividends) was $3,563,091, or $(11.77) per diluted share, compared to net loss from continuing operations of $2,329,053, or $(176.35) per diluted share, in the third quarter of 2023.

Comparison of the Nine Months Ended September 30, 2024 and 2023

Consolidated sales decreased $18,703,410, or 31.1% to $41,487,003 in the first nine months of 2024 from $60,190,413 in the first nine months of 2023. Sales in the first nine months of 2024 and 2023 by type were as follows:

42

Revenue by Type

Nine Months Ended September 30

2024

2023

Residential contracts

$

34,501,450

$

48,635,741

Commercial contracts

5,107,418

8,789,930

Service revenue

1,878,135

2,429,433

Software revenue

—

323,815

Other

—

11,494

$

41,487,003

$

60,190,413

Residential contract sales decreased $14,134,291, or 29%, due to a 17% reduction in residential kilowatts installed and also a decrease in average price per system installed as result of lower financing fees and lower battery attachment rate. Overall the acceleration of projects in the last quarter of 2023 led to approval bottlenecks at the outset of 2024 which was further hampered by some supply chain disruption from a change in suppliers. The residential market within the solar industry is seeing an overall decline in installations due to higher interest rates. Commercial contract sales decreased $3,682,512, or 42%, due primarily to a delay in the start of commercial pipeline projects into the second half of 2024.

Consolidated gross profit decreased to $14,833,527 in the first nine months of 2024 as compared to gross profit of $22,175,708 in the first nine months of 2023 due primarily to the decrease in revenue during the quarter. Gross margin decreased slightly to 36% during the first nine months of 2024 from 37% during the first nine months of 2023 due primarily to certain fixed costs on lower revenue.

Consolidated operating expenses, which include selling, general and administrative expenses, amortization expense, and a fair value remeasurement gain of SUNation earnout consideration, decreased to $20,649,162 in the first nine months of 2024 as compared to $27,304,903 in the first nine months of 2023. Consolidated selling, general and administrative expenses decreased $3,123,771, or 14%, to $19,321,037 in the first nine months of 2024 from $22,444,808 in the first nine months of 2023, due primarily to a $983,024 decrease in stock compensation expense, decreased sales and marketing expense, including commissions, on lower revenue in the period, and decreased personnel expenses on lower headcount. Amortization expense decreased by $1,571,970 to $2,128,125 in the first nine months of 2024 as compared to $3,700,095 in the same period of the prior year due to the completion of the amortization of certain intangible assets in late 2023. The fair value remeasurement related to the SUNation acquisition earnout consideration in the first nine months of 2024 was a gain of $800,000 compared to a loss of $1,160,000 in the same period of the prior year.

Consolidated other (expense) income decreased by $3,079,565 to expense of $3,214,300 in the first nine months of 2024 as compared to $134,735 in expense in the first nine months of 2023. The decrease was primarily related to a $444,833 increase in interest and accretion expense, a $468,329 fair value remeasurement loss on the embedded derivative liability, a $673,464 decrease in fair value remeasurement gain on the CVRs, a $974,823 fair value remeasurement loss on the warrant liability, and a $437,938 decrease in gain on sale of assets.

Consolidated operating loss from continuing operations in the first nine months of 2024 was $5,815,635 as compared to $5,129,195 in the first nine months of 2023. Net loss from continuing operations attributable to shareholders in the first nine months of 2024 (after taking into effect $11,587,121 in deemed dividends) was $20,617,094, or $(128.25) per diluted share, compared to net loss from continuing operations of $5,262,534, or $(395.75) per diluted share, in the first nine months of 2023.

Liquidity and Capital Resources

As of September 30, 2024, the Company had $2,162,086 in cash, restricted cash and cash equivalents. Of this amount, $1,240,882 was invested in short-term money market funds that are not considered to be bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or other government agency. These money market funds seek to preserve the value of the investment at $1.00 per share; however, it is possible to lose money investing in these funds. The remainder in cash and cash equivalents is operating cash.

43

Of the amounts of cash, restricted cash and cash equivalents on the balance sheet at September 30, 2024, $1,099,763 consisted of funds that can only be used to support the legacy CSI business, will be distributed to CVR holders and cannot be used to support the working capital needs of the Pineapple Energy business.

The Company had working capital deficit of $(13,243,267) at September 30, 2024, consisting of current assets of $11,682,522 and current liabilities of $24,925,789 compared to working capital deficit of $(6,594,834) at December 31, 2023.

Cash used in operating activities was $4,393,846 in the first nine months of 2024 as compared to $825,114 in the same period of 2023. Significant working capital changes in the nine months ended September 30, 2024 included a decrease of accounts receivable of $803,047, a decrease in inventories of $893,281, an increase in accounts payable of $570,844, a decrease in accrued compensation and benefits for $510,484, and an increase in other assets, primarily due to an increase in costs and estimated earnings in excess of billings as we are completing commercial projects in the quarter.

Net cash used in investing activities was $23,631 in the first nine months of 2024 compared to $3,608,534 provided by investing activities in the same period of 2023. Net cash provided in the 2023 period was the result of proceeds from the sale of investments, proceeds from the sale of JDL and Ecessa assets included within discontinued operations, partially offset by capital expenditures.

Net cash provided by financing activities was $1,183,220 in the first nine months of 2024 compared to $2,446,496 used in the same period of 2023. Net cash provided by financing activities in the first nine months of 2024 was due to $1,000,000 in proceeds from the issuance of common stock under a registered direct offering and $1,604,000 in borrowings from Conduit Capital US Holdings LLC (“Conduit”) and MBB Energy, LLC (“MBB”), partially offset by payments against loans payable. Net cash used in financing activities in the nine months of 2023 was due to $3,036,676 in CVR distribution payments, $5,000,000 in payments against the SUNation Short-Term Note and $1,500,000 in payments against the Hercules Capital, Inc. (“Hercules”) term loan, partially offset by $7,500,000 in borrowings from Decathlon Specialty Finance, LLC (“Decathlon”).

In connection with the SUNation acquisition, on November 9, 2022, the Company issued a $5,000,000 Short-Term Limited Recourse Secured Promissory Note (the “Short-Term Note”) and a $5,486,000 Long-Term Promissory Note (the “Long-Term Note”). The Short-Term Note was secured as described below and was scheduled to mature on August 9, 2023. It carried an annual interest rate of 4% until the three-month anniversary of issuance, 8% thereafter until the six-month anniversary of issuance, then 12% thereafter until the Short-Term Note is paid in full. The Short-Term Note was paid in full in conjunction with the Decathlon loan. The Long-Term Note is unsecured and matures on November 9, 2025. It carries an annual interest rate of 4% until the first anniversary of issuance, then 8% thereafter until the Long-Term Note is paid in full. The Company was required to make a principal payment of $2.74 million on the second anniversary of the Long-Term Note. The Long-Term Note may be prepaid at our option at any time without penalty.

Based on the Company’s current financial position, the Company did not have sufficient cash to make the first SUNation earnout payment, which was due on May 6, 2024, or the first principal payment of the Long-Term Note that was due on November 9, 2024, a factor which raises substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. Notwithstanding the Company’s ability to make such payments, the Company is not permitted to make any earnout payments under the SUNation Transaction Agreement or any payments under the Long-Term Note unless Decathlon has provided prior written consent to such payment pursuant to the Company’s Revenue Loan and Security Agreement, dated as of June 1, 2023, by and among the Company, Decathlon, and the other parties thereto (the “Loan Agreement”).  Pursuant to that certain subordination letter dated May 31, 2023, each holder of the Long-Term Note has subordinated all payments under the Long-Term Note to the obligations owed to Decathlon under the Loan Agreement (the “Decathlon Obligations”) and has agreed that, until the Decathlon Obligations have been paid in full, any payment under the Long-Term Note is subject to Decathlon’s prior written consent.  Therefore, if Decathlon does not consent to the first principal payment of the Long-Term Note, such non-payment will not result in a default under the Long-Term Note.  Failure to make earnout payments under the SUNation Transaction Agreement, which are prohibited under the Loan Agreement, could result in a breach under the SUNation Transaction Agreement.

As a result, the Company requires additional funding and seeks to raise capital through sources that may include public or private equity offerings, debt financings and/or strategic alliances. On October 21, 2024, the Company entered into an At

44

the Market (“ATM”) Offering Agreement to sell shares up to $10,000,000. While the Company has raised over $2 million to date, it is not sufficient to be able to cover all of the Company’s outstanding obligations. Additional funding may not be available on terms acceptable to the Company, or at all. If the Company is unable to raise additional funds, it would have a negative impact on the Company’s business, results of operations and financial condition. To the extent that additional funds are raised through the sale of equity or securities convertible into or exercisable for equity securities, the issuance of securities will result in dilution to the Company’s shareholders.

Contingent Value Rights and Impact on Cash

The Company issued CVRs prior to the Closing to CSI shareholders of record on the close of business on March 25, 2022. The CVR entitles the holder to a portion of the cash, cash equivalents, investments and net proceeds of any divestiture, assignment, or other disposition of all legacy assets of CSI and/or its legacy subsidiaries, JDL and Ecessa, that are related to CSI’s pre-merger business, assets, and properties that occur during the 24-month period following the Closing. The CVR liability as of September 30, 2024 was estimated at $1,212,263 and represented the estimated fair value as of that date of the legacy CSI assets to be distributed to CVR holders as of that date. This amount is recorded as a current liability that includes the remaining restricted cash and cash equivalents, investments, along with the other tangible and intangible assets related to the legacy CSI business. The proceeds from CSI’s pre-merger business working capital and related long-term assets and liabilities are not available to fund the working capital needs of the post-merger company.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances. Actual results may differ from these estimates and such differences could be material to our financial position and results of operations. Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. For additional information, please see the discussion of our critical accounting estimates in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no changes to our critical accounting estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2023, except as set forth below.

Convertible Preferred Stock and Warrants: In March 2022, the Company issued shares of Series A convertible preferred stock (the “Convertible Preferred Stock”) and PIPE Warrants to investors as part of a $32.0 million private investment in public equity (“PIPE”) transaction. The proceeds from the issuance of the Convertible Preferred Stock were allocated between the Convertible Preferred Stock and PIPE Warrants using a relative fair value method. The Company accounts for the Convertible Preferred Stock and PIPE Warrants based on an assessment of the specific terms and applicable authoritative guidance in Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity”, and ASC 815, “Derivatives and Hedging”. The Convertible Preferred Stock was originally reported as part of permanent equity and the PIPE Warrants were originally determined to be equity-classified. As discussed in Notes 10 and 11, the Convertible Preferred Stock and PIPE Warrants were modified during the first quarter of 2024, which resulted in the Company not having sufficient authorized and unissued shares to settle the conversion and exercise to common stock and the reclassification of the Convertible Preferred Stock to mezzanine equity and the PIPE Warrants to a liability. During the third quarter of 2024, the Company received the appropriate shareholder approval on an increase in authorized shares and the Convertible Preferred Stock and PIPE Warrants were reclassified to equity.

Embedded Derivative Liability: The Company’s Decathlon Fixed Loan includes a mandatory prepayment feature upon a contingent event that is considered an embedded derivative that requires bifurcation under ASC 815. The Company’s Conduit and MBB loans include an acceleration of amounts outstanding under the loan agreements upon an event of default or if the Company consummates one or more equity offerings meeting certain criteria that is considered an embedded derivative that requires bifurcation. Under ASC 815, the embedded derivative is bifurcated and recorded at fair value at inception and each subsequent reporting period. However, based on management’s estimates of the likelihood of certain events, the embedded derivative liability related to the Decathlon Fixed Loan had no fair value at issuance and at

45

the end of each of the reporting periods ended prior to June 30, 2024. As of June 30, 2024, the fair value of this embedded derivative was ascribed value. See further discussion in Note 7. The Conduit and MBB embedded derivatives were ascribed a fair value at issuance and were fair valued at September 30, 2024 with the change in fair value recorded within Other (expense) income within the condensed consolidated statements of operations and comprehensive income (loss).

Recently Issued Accounting Pronouncements

Recently issued accounting standards and their estimated effect on the Company’s condensed consolidated financial statements are also described in Note 2, Summary of Significant Accounting Policies, to the Condensed Consolidated Financial Statements included in this report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. 

Management, with the participation of the Company’s Interim Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rules 13a-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on that evaluation, management concluded that the Company’s disclosure controls and procedures were not effective because of material weaknesses in the Company’s internal control over financial reporting described below.

Material Weakness in Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of the Company’s management, including the CEO and CFO, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, based on Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “Framework”). Based on that evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2023, due to material weaknesses in the Company’s internal control over financial reporting. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We identified material weaknesses in our internal control over financial reporting due to our limited accounting and finance resources, which resulted in inappropriate preparation, review and maintenance of documentation and information that is critical to the design and consistent execution of internal controls. These material weaknesses could result in a misstatement of account balances or disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected.

Remediation Plan

To address the material weaknesses in our internal control over financial reporting, the Company is in the process of formalizing a remediation plan that will address our limited resources and also includes implementing a new Enterprise Resource Planning (“ERP”) system which provides the necessary control environment to help mitigate the potential for

46

misstatements in financial reporting, including but not limited to segregation of duties, user permission and access controls, and automated processes. While we believe that these efforts will improve our internal control over financial reporting, the design and implementation of our remediation is ongoing and will require validation and testing of the design and operating effectiveness of our internal controls over a sustained period of time. We will not be able to conclude whether the steps we are taking will fully remediate the material weaknesses in our internal control over financial reporting until we have completed our remediation efforts and subsequent evaluation of their effectiveness. Until these weaknesses are remediated, we plan to continue to perform additional analyses and other procedures to ensure that our consolidated financial statements are prepared in accordance with U.S. GAAP.

Inherent Limitations on Control Systems

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected. These inherent limitations include the realities that judgments in decision making can by faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that occurred during the three months ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As reported in our Annual Report on Form 10-K for the year ended December 31, 2023, we concluded that our internal control over financial reporting was not effective.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Not Applicable.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”), which could materially affect our business, financial condition or future results.

There have been no material changes in the risk factors disclosed in the Form 10-K, except the following risk factors are hereby amended and restated as reflected below:

Our failure to maintain compliance with the Nasdaq Stock Market’s continued listing requirements could result in the delisting of our common stock, which could negatively affect the market price of our common stock, our liquidity and our ability to raise capital.

Our common stock is currently listed on The Nasdaq Capital Market. In order to maintain this listing, we must satisfy minimum financial and other requirements. On October 1, 2024, we received a letter (the “Minimum Bid Price Deficiency Letter”) from the Listing Qualifications Department (the “Staff”) of The Nasdaq Stock Market (“Nasdaq”) notifying the Company that, for the 30 consecutive business day period from August 16 through September 30, 2024, the Company’s common stock had not maintained a minimum closing bid price of $1.00 per share (the “Minimum Bid Price Requirement”) required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2).

47

Pursuant to the previously disclosed Nasdaq hearing panel decision, dated July 18, 2024, the Company was subject to a mandatory panel monitor (“Panel”) under Nasdaq’s listing Rule 5815(d)(4)(B) for a period of one year. Accordingly, due to the most recent minimum bid price deficiency, the Staff notified the Company that it will not be afforded a 180-day cure period (as we had received for our prior minimum bid price deficiency). Instead, the Company was offered an opportunity to appeal any deficiency related to a delisting determination to Nasdaq by or before October 8, 2024, which appeal we timely filed on October 8, 2024.

The hearing request automatically stayed any suspension or delisting action pending the hearing and the expiration of any additional extension period if granted by the Panel following the hearing. To this end, the stockholders of the Company had approved a share consolidation on July 19, 2024, pursuant to which the board of directors of the Company has effectuated a 1-50 reverse stock split on October 17, 2024 in relevant part to resolve the above noted Nasdaq listing compliance deficiency prior to such hearing date.

On November 8, 2024, the Company received notice from the Nasdaq Listing Qualifications staff that the Company has regained compliance with the bid price requirement in Listing Rule 5550(a)(2) and that the Company is, therefore, in compliance with the Nasdaq Capital Market’s listing requirements. Consequently, the scheduled hearing before the Hearings Panel on November 21, 2024, was deemed moot and has been cancelled, and the Company’s securities will continue to be listed and traded on The Nasdaq Stock Market.

Notwithstanding the successful outcome of the above-described event, the perception among investors that we are at a heightened risk of delisting could negatively affect the market price and trading volume of our common stock. If our common stock is delisted from Nasdaq, the delisting could: substantially decrease trading in our common stock; adversely affect the market liquidity of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws; adversely affect our ability to issue additional securities or obtain additional financing in the future on acceptable terms, if at all; result in the potential loss of confidence by investors, suppliers, partners and employees and fewer business development opportunities; and result in limited analyst interest. Additionally, the market price of our common stock may decline further, and shareholders may lose some or all of their investment.

Shareholders may experience future dilution as a result of future equity offerings and other issuances of our Common Stock or other securities, including securities that are exercisable for or convertible into Common Stock. In addition, this offering and future equity offerings and other issuances of our Common Stock or other securities may adversely affect our Common Stock price.


‎In order to raise additional capital, we may in the future offer additional shares of our Common Stock or other securities convertible into or exchangeable for our Common Stock at prices that may not be the same as the price per share in this offering. We may not be able to sell shares or other securities in any other offering at a price per share that is equal to or greater than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional shares of our Common Stock or securities convertible into Common Stock in future transactions may be higher or lower than the price per share at this time. You will incur dilution upon exercise of any outstanding stock options, warrants or upon the issuance of shares of Common Stock under our stock incentive programs. In addition, the sale of shares in any current or future sales of a substantial number of shares of our Common Stock in the public market, or the perception that such sales may occur, could adversely affect the price of our Common Stock. We cannot predict the effect, if any, that market sales of those shares of Common Stock or the availability of those shares of Common Stock for sale will have on the market price of our Common Stock.

Changes in our business strategy or restructuring of our businesses may increase our costs or otherwise affect our businesses.

We continually review our operations with a view toward reducing our cost structure, including, but not limited to, reducing our labor cost-to-revenue ratio, improving process and system efficiencies and increasing our revenues and operating margins. Despite these efforts, we have needed and may continue to need to adjust our business strategies to meet these changes, or we may otherwise find it necessary to restructure our operations or particular businesses or assets. When these changes or events occur, we may incur costs to change our business strategy and may need to write down the

48

value of assets or sell certain assets. Additionally, any of these events could result in disruptions or adversely impact our relationships with our workforce, suppliers and customers. In any of these events our costs may increase, and we may have significant charges or losses associated with the write-down or divestiture of assets and our business may be materially and adversely affected.

We may not fully realize the anticipated benefits from our restructuring efforts.

In regard to our realigned strategy and exploration of strategic alternatives, we may not achieve the expected benefits of such activities. Our ability to achieve the anticipated cost savings and other benefits from our restructuring, or other efforts within expected time frames is subject to many estimates and assumptions, and may vary materially based on factors such as market conditions and the effect of our efforts on our workforce. These estimates and assumptions are subject to significant economic, competitive and other uncertainties, some of which are beyond our control. There can be no assurance that we will fully realize the anticipated positive impacts to our operations, liquidity or future financial results from our current or future efforts. If our estimates and assumptions are incorrect or if other unforeseen events occur, we may not achieve the cost savings expected from such strategic alternative efforts, and our business and results of operations could be adversely affected.

We have significant obligations under payables and debt obligations and other contracts. Our ability to operate as a going concern are contingent upon successfully obtaining additional financing and/or renegotiating terms of selected existing indebtedness in the near future. Failure to do so could adversely affect our ability to continue or successfully grow our operations.

  

If capital is not available or we are not able to agree on reasonable terms with our lenders or creditors, we may then need to scale back or postpone our organic growth plans, reduce expenses, and/or curtail future acquisition plans to manage our liquidity and capital resources. From time to time, we receive claims for significant monetary damages, penalties, or seeking additional securities. Such claims, if material, and if accurate, can place significant pressure on our financials, cashflow, operations and place a strain on management’s time and focus, each of which could result in a material adverse event in relation to our operations and future prospects. Additionally, as a result of certain prior securities offerings involving convertible or exercisable securities containing anti-dilution provisions that provided for significant per share price reset features, causing more shares to be issued than initially anticipated, we have faced periods of time where we were ultimately required to seek shareholder approval to increase our authorized share capital, in large measure to satisfy the conversion, exercise, exchange or delivery of such shares, which is a time consuming and costly approval processes. While we have ultimately satisfied our delivery obligations, including the issuance of shares under these securities, failing to satisfy or timely satisfy such contractual obligations could lead to material financial claims, and if proven accurate, could subject us to substantial financial penalties and damages, potentially materially impacting the Company’s financial stability, interrupt operations and cause reputational harm. For example, we have informally received a financial claim alleging liquidated damages, which we have been investigating. If such preliminary claim is ultimately found accurate or any settlement be substantial, we may not be able timely pay, finance, refinance or otherwise extend or repay our past, current or future obligations if and as they arise, which could materially impact our ability to continue to operate as a going concern.

We need to obtain substantial additional financing arrangements to provide working capital and growth capital. If financing is not available to us on acceptable terms when needed, our ability to continue to fund our operations and grow our business would be materially adversely impacted.

Distributed solar power is a capital-intensive business that relies heavily on the availability of debt and equity financing sources to fund solar energy system purchase, design, engineering and other capital and operational expenditures. Our future success depends in part on our ability to raise capital from third-party investors and commercial sources, such as banks and other lenders, on competitive terms to help finance the deployment of our solar energy systems. We seek to minimize our cost of capital in order to improve profitability and maintain the price competitiveness of the electricity produced by the payments for and the cost of our solar energy systems. We rely on access to capital, including through equity financing, convertible notes, revenue loans and other forms of debt facilities, asset-backed securities and loan-backed securities, to cover the costs related to bringing our solar energy systems in service.

To meet the capital and liquidity needs of our business, we will need to obtain additional debt or equity financing from current and new investors. We have limited cash resources with which to operate our business and we may have difficulty

49

in accessing financing on a timely basis or at all. The contract terms in certain of our existing investment and securities documents contain various conditions, penalty and liquidated damages clauses. If we are not able to satisfy such conditions due to events related to our business, a specific investment fund, developments in our industry, including tax or regulatory changes, or otherwise, and as a result, we are unable to draw on existing funding commitments or raise capital through equity, equity derivative or debt instruments, we could experience a material adverse effect on our business, liquidity, financial condition, results of operations and prospects. Any delays in accessing financing could have an adverse effect on our ability to pay our operational expenses, make capital expenditures, repay loans and fund other general corporate purposes. Further, our flexibility in planning for and reacting to changes in our business may be limited and our vulnerability to adverse changes in general economic, industry, regulatory and competitive conditions may be increased.

If any of our current debt or equity investors decide not to invest in us in the future for any reason or decide to invest at levels inadequate to support our anticipated needs or materially change the terms under which they are willing to provide future financing, we will need to identify new investors and financial institutions to provide financing and negotiate new financing terms. In addition, our ability to obtain additional financing through the asset-backed securities market, loan-backed securities market or other secured debt markets is subject to our having sufficient assets eligible for securitization as well as our ability to obtain appropriate credit ratings. If we are unable to raise additional capital in a timely manner, our ability to meet our capital needs and fund future growth and profitability may be limited.

Delays in obtaining financing could cause delays in expansion in existing markets or entering into new markets and hiring additional personnel. Any future delays in capital raising could similarly cause us to delay deployment of a substantial number of solar energy systems for which we have signed solar service agreements with customers. Our future ability to obtain additional financing depends on banks’ and other financing sources’ continued confidence in our business model and the renewable energy industry as a whole. It could also be impacted by the liquidity needs of such financing sources themselves. We face intense competition from a variety of other companies, technologies and financing structures for such limited investment capital. If we are unable to continue to offer a competitive investment profile, we may lose access to these funds or they may only be available to us on terms less favorable than those received by our competitors. Any inability to secure financing could lead us to cancel planned installations, impair our ability to accept new customers or increase our borrowing costs, any of which could have a material adverse effect on our business, financial condition and results of operations.

 

Litigation brought by third parties claiming breach of contract, contractual defaults or other claims for may be costly and time consuming.

Although we may, from time to time, be involved in litigation and government proceedings, as well as contractual financial claims arising in the course of business, we are not a party to any litigation or governmental or other proceeding that we believe will have a material adverse impact on our financial position, results of operations or liquidity. These claims have in the past, and may in the future, arise from a wide variety of business practices and initiatives, including current or new product releases, significant business transactions, securities offerings, convertible notes, warrants, loans, warranty or product claims, employment practices, and regulation, among other matters. Adverse outcomes in some or all of these claims may result in significant monetary damages or injunctive relief that could adversely affect our ability to conduct our business. Litigation threatened litigation and other claims are subject to inherent uncertainties and management’s view of these matters may change in the future. A material adverse impact in our consolidated financial statements could occur for the period in which the effect of an unfavorable outcome becomes probable and reasonably estimable.

If we become involved in material litigation or a significant number of litigations, we may incur substantial expense defending these claims and the proceedings may divert the attention of management, even if we prevail. An adverse outcome could have a material adverse impact on our business, including causing us to seek protection under the bankruptcy laws, forcing us to reduce or discontinue our operations entirely, subject us to significant liabilities, allow our competitors to market competitive products without a license from us, prohibit us from marketing our products or require us to seek licenses from third parties that may not be available on commercially reasonable terms, if at all. If a judgment is entered against us, and we are unable to satisfy the judgment, a plaintiff may attempt to levy on our assets. We may be forced to sell material assets to satisfy such judgment, which may, in turn, force us to reduce or discontinue our operations.

50

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

See Note 10 for a more complete description of the Company’s Series A Preferred Stock and warrants exchange for Series C Preferred Stock. On September 9, 2024, the Company and the holders of Series A Preferred Stock and warrants entered into a Securities Exchange Agreement, dated September 9, 2024, pursuant to which the holders of the Series A Preferred Stock and warrants to cancel and retire the Series A Preferred Stock and warrants in exchange for shares of Series C Convertible Preferred Stock of the Company.

Item 3.  Defaults Upon Senior Securities

Not Applicable.

Item 4.  Mine Safety Disclosures

Not Applicable.

Item 5.  Other Information

Trading Arrangements

During the three months ended September 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified, or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).

Item 6.  Exhibits

The following exhibits are included herewith:

3.1

Fourth Amended and Restated Articles of Incorporation, dated January 30, 2024 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on February 5, 2024)

3.2

Articles of Amendment of Fourth Amended and Restated Articles of Incorporation, effective as of June 12, 2024 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 17, 2024)

3.3

Articles of Amendment to the Articles of Incorporation, dated July 24, 2024 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 25, 2024)

3.4

Articles of Amendment to Articles of Incorporation, dated October 17, 2024 (incorporated by reference in Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 17, 2024)

3.5

Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of Communications Systems, Inc. (n/k/a Pineapple Energy Inc.) filed on March 25, 2022 (included in Exhibit 3.1)

3.6

Restated Bylaws of Pineapple Energy Inc., as amended (effective as of April 13, 2022) (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on April 13, 2022)

3.7

Certificate of Designation of Series B Preferred Stock, dated May 14, 2024 (incorporated by reference in Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 17, 2024)

3.8

Statement of Cancellation of the Certificate of Designation of Series B Preferred Stock, effective as of August 14, 2024 (incorporated by reference in Exhibit 3.7 to the Company’s Current Report on Form 10-Q filed on August 19, 2024)

3.9

Certificate of Designation of Series C Convertible Preferred Stock, dated September 9, 2024 (incorporated by reference in Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 9, 2024)

3.10

Certificate of Correction to Certificate of Designation, dated September 23, 2024 (incorporated by reference in Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 23, 2024)

51

10.1

Form of Limited Waiver and Amendment (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 22, 2024)

10.2

Separation Agreement between Kyle Udseth and Pineapple Energy Inc. dated May 19, 2024 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 23, 2024)

10.3

Pineapple Energy Inc. 2022 Equity Incentive Plan, as amended through July 19, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 25, 2024)

10.4

Secured Credit Agreement, dated July 22, 2024, between Pineapple Energy Inc. and Conduit Capital U.S. Holdings LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 26, 2024)

10.5

Secured Credit Note, dated July 22, 2024, between Pineapple Energy Inc. and Conduit Capital U.S. Holdings LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 26, 2024)

10.6

Security Agreement, dated July 22, 2024, between Pineapple Energy Inc. and Conduit Capital U.S. Holdings LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on July 26, 2024)

10.7

Secured Credit Agreement, dated July 22, 2024, between Pineapple Energy Inc. and MBB Energy, LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on July 26, 2024)

10.8

Secured Credit Note, dated July 22, 2024, between Pineapple Energy Inc. and MBB Energy, LLC (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on July 26, 2024)

10.9

Security Agreement, dated July 22, 2024, between Pineapple Energy Inc. and MBB Energy, LLC (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on July 26, 2024)

10.10

First Amendment to Revenue Loan and Security Agreement, dated July 22, 2024, by and among Pineapple Energy Inc., the Guarantors party thereto, and Decathlon Specialty Finance LLC (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on July 26, 2024)

10.11

Amendment and Joinder to Subordination Agreement, dated July 22, 2024 among Pineapple Energy Inc., Decathlon Growth Credit, LLC, Hercules Capital, Inc., and MBB Energy, LLC and Conduit Capital U.S. Holdings, LLC (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on July 26, 2024)

10.12

Consent and Amendment No. 3 to Loan and Security Agreement, dated July 22, 2024 by and among Pineapple Energy LLC, Pineapple Energy Inc. and each other person that has delivered a Joinder Agreement (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on July 26, 2024)

10.13

Amended and Restated Convertible Secured Credit Note, dated September 9, 2024, between Pineapple Energy Inc. and Conduit Capital U.S. Holdings, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 9, 2024)

10.14

Securities Exchange Agreement, September 9, 2024 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on September 9, 2024)

10.15

Second Amendment to Revenue Loan and Security Agreement, dated September 12, 2024, by and among Pineapple Energy Inc., the Guarantors party thereto, and Decathlon Specialty Finance LLC

10.16

Consent and Amendment No. 4 to Loan and Security Agreement, dated September 20, 2024, by and among Pineapple Energy LLC, Pineapple Energy Inc. and each other person that has delivered a Joinder Agreement

10.17

Second Amended and Restated Convertible Secured Credit Note, dated September 23, 2024, between Pineapple Energy Inc. and Conduit Capital U.S. Holdings, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 26, 2024)

10.18

At The Market Offering Agreement, dated October 21, 2024, between Pineapple Energy Inc. and Roth Capital Partners, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 21, 2024)

10.19

Amendment to Secured Credit Note, dated November 1, 2024, between Pineapple Energy Inc. and MBB Energy, LLC

52

10.20

Amendment to Second Amended and Restated Convertible Secured Credit Note; and to the Credit Agreement, dated November 1, 2024, between Pineapple Energy Inc. and Conduit Capital U.S. Holdings LLC

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act).

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14 and 15d-14 of the Exchange Act).

32

Certifications pursuant Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §1350).

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


‎

53

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.

Pineapple Energy Inc.

By

/s/ Scott Maskin

Scott Maskin

Date:  November 14, 2024

Interim Chief Executive Officer

By

/s/ Andrew Childs

Andrew Childs

Date:  November 14, 2024

Interim Chief Financial Officer

54