markdown [Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents Pineapple Energy Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with notes on accounting policies and a going concern warning [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$62.5 million** as of September 30, 2023, with liabilities and equity also declining due to asset dispositions and net loss Condensed Consolidated Balance Sheet Summary | Metric | September 30, 2023 ($) | December 31, 2022 ($) | | :--- | :--- | :--- | | **Total Current Assets** | $18,922,799 | $25,961,524 | | **Total Assets** | $62,515,472 | $74,695,487 | | **Total Current Liabilities** | $22,170,017 | $25,934,158 | | **Total Liabilities** | $40,654,199 | $47,473,195 | | **Total Stockholders' Equity** | $21,861,273 | $27,222,292 | - Cash and cash equivalents increased to **$3.4 million** from **$2.2 million**, while restricted cash decreased to **$2.2 million** from **$3.1 million**[12](index=12&type=chunk) - Assets held for sale, both current and non-current, were reduced to **zero** from a combined total of approximately **$3.4 million** at the end of 2022, following the sale of the JDL and Ecessa businesses[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q3 2023 sales surged to **$18.3 million** from the SUNation acquisition, resulting in **$7.0 million** gross profit, a narrowed operating loss of **$1.6 million**, and a net loss of **$2.4 million** or **($0.24)** per share Q3 2023 vs Q3 2022 Performance | Metric | Three Months Ended Sep 30, 2023 ($) | Three Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | | Sales | $18,288,697 | $5,888,162 | | Gross Profit | $7,032,458 | $1,404,173 | | Operating Loss | ($1,564,350) | ($2,423,771) | | Net Loss | ($2,363,036) | ($2,519,996) | | Diluted Net Loss Per Share | ($0.24) | ($0.34) | Nine Months 2023 vs 2022 Performance | Metric | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | | Sales | $60,190,413 | $10,338,483 | | Gross Profit | $22,175,708 | $2,372,324 | | Operating Loss | ($5,129,195) | ($6,903,563) | | Net Loss | ($6,468,769) | ($2,960,978) | | Diluted Net Loss Per Share | ($0.65) | ($0.49) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity decreased from **$27.2 million** to **$21.9 million** for the nine months ended September 30, 2023, primarily due to a **$6.5 million** net loss, partially offset by **$0.97 million** in share-based compensation - The accumulated deficit increased by **$6,468,769** during the first nine months of 2023, reflecting the company's net loss for the period[16](index=16&type=chunk) - Share-based compensation added **$966,825** to additional paid-in capital during the nine-month period[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$0.8 million**, while investing activities provided **$3.6 million**, and financing activities used **$2.4 million**, resulting in a **$0.3 million** increase in total cash to **$5.6 million** for the nine months ended September 30, 2023 Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Activity | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($825,114) | ($6,341,172) | | Net cash provided by (used in) investing activities | $3,608,534 | ($2,300,726) | | Net cash (used in) provided by financing activities | ($2,446,496) | $16,205,002 | | **Net Increase in Cash** | **$336,924** | **$7,563,104** | - Financing activities in 2023 included **$7.8 million** in new loan borrowings and nearly **$7.0 million** in loan payments, alongside a **$3.0 million** distribution for contingent value rights (CVRs)[22](index=22&type=chunk) - Investing activities in 2023 were driven by **$2.9 million** in proceeds from the sale of investments and **$1.1 million** from discontinued operations[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of financial statements, covering operations, accounting policies, business combinations (CSI, HEC, SUNation), debt, related party transactions, and a going concern warning due to liquidity issues - **Business Focus:** The company is an operator and consolidator of residential solar, battery storage, and grid services solutions, primarily through its Hawaii-based HEC and New York-based SUNation entities[28](index=28&type=chunk)[29](index=29&type=chunk) - **Discontinued Operations:** The legacy JDL and Ecessa businesses were sold on June 30, 2023, and are presented as discontinued operations[31](index=31&type=chunk)[89](index=89&type=chunk) - **Going Concern:** Management has identified substantial doubt about the company's ability to continue as a going concern due to insufficient cash to meet the SUNation earnout payment in Q2 2024[142](index=142&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting **$18.3 million** revenue, **38%** gross margin, and significant liquidity challenges, including a **$3.2 million** working capital deficit and a going concern warning Q3 2023 vs Q3 2022 Results Summary | Metric | Q3 2023 ($) | Q3 2022 ($) | | :--- | :--- | :--- | | Consolidated Sales | $18,288,697 | $5,888,162 | | Gross Profit | $7,032,458 | $1,404,173 | | Gross Margin | 38% | 24% | | Operating Loss | ($1,564,350) | ($2,423,771) | - The significant increase in revenue was primarily related to the SUNation acquisition, which contributed **$12.0 million** of the **$12.4 million** increase in Q3 2023[158](index=158&type=chunk) - The company had a working capital deficit of (**$3,247,218**) at September 30, 2023, a sharp decline from a positive working capital of **$27,366** at December 31, 2022[170](index=170&type=chunk) - A going concern issue is raised as forecasted cash flows indicate the company will not have sufficient cash to make the first SUNation earnout payment in Q2 2024[177](index=177&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item is marked as 'Not applicable' in the report, indicating that the company, as a smaller reporting company, is not required to provide this information - The company has indicated that this section is not applicable[184](index=184&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of the end of the reporting period and concluded that they were effective - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[186](index=186&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the third quarter of 2023[187](index=187&type=chunk) [Part II. Other Information](index=40&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that this item is 'Not Applicable,' indicating no material legal proceedings to disclose for the period - The company has indicated that this section is not applicable[189](index=189&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor addresses non-compliance with Nasdaq's minimum **$1.00** bid price requirement, with the company having until April 24, 2024, to regain compliance and considering a reverse stock split - A new risk factor was added concerning non-compliance with Nasdaq's minimum bid price requirement[190](index=190&type=chunk) - On October 27, 2023, the company received a notice from Nasdaq because its closing bid price was below **$1.00** for over **30** consecutive business days[191](index=191&type=chunk) - The company has a **180-day** period, until April 24, 2024, to regain compliance. It is considering a reverse stock split to address the issue[191](index=191&type=chunk)[192](index=192&type=chunk)
Pineapple Energy (PEGY) - 2023 Q3 - Quarterly Report