UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

or

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 000-55896

PINEAPPLE, INC.

(Exact name of registrant as specified in its charter)

Nevada	47-5185484
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

12301 Wilshire Blvd. Suite 302

Los Angeles, CA 90025

(Address of principal executive offices) (Zip Code)

877-310-7675

(Registrant’s telephone number, including area code)

n/a

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: None.

Securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:

Common stock, par value $0.0000001

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large-accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large-accelerated filer,” “accelerated-filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large-accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of January 12, 2024, there were 73,103,569 shares of the registrant’s common stock, $0.0000001 par value per share, issued and outstanding.

PINEAPPLE, INC.

Table of Contents

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	11
Item 4.	Controls and Procedures	11
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	13
Item 1A.	Risk Factors	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Mine Safety Disclosures	14
Item 5.	Other Information	14
Item 6.	Exhibits	15
	Signatures	18

2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by such forward-looking terminology as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:

● our projected financial position and estimated cash burn rate;

● our estimates regarding expenses, future revenues and capital requirements;

● our ability to continue as a going concern;

● our need to raise substantial additional capital to fund our operations;

● our ability to compete in the global space industry;

● our ability to obtain and maintain intellectual property protection for our current products and services;

● our ability to protect our intellectual property rights and the potential for us to incur substantial costs from lawsuits to enforce or protect our intellectual property rights;

● the possibility that a third party may claim we have infringed, misappropriated or otherwise violated their intellectual property rights and that we may incur substantial costs and be required to devote substantial time defending against these claims;

● our reliance on third-party suppliers and manufacturers;

● the success of competing products or services that are or become available;

● our ability to expand our organization to accommodate potential growth and our ability to retain and attract key personnel;

● the potential for us to incur substantial costs resulting from lawsuits against us and the potential for these lawsuits to cause us to limit our commercialization of our products and services;

All of our forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of, or any material adverse change in, one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the U.S. Securities and Exchange Commission (the “SEC”) could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q may contain estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. We obtained the industry and market data in this annual report on Form 10-Q from our own research as well as from industry and general publications, surveys and studies conducted by third parties. This data involves a number of assumptions and limitations and contains projections and estimates of the future performance of the industries in which we operate that are subject to a high degree of uncertainty, including those discussed in “Risk Factors.” We caution you not to give undue weight to such projections, assumptions, and estimates. Further, industry and general publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that these publications, studies, and surveys are reliable, we have not independently verified the data contained in them. In addition, while we believe that the results and estimates from our internal research are reliable, such results and estimates have not been verified by any independent source.

3

PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

The following unaudited interim condensed consolidated financial statements of Pineapple, Inc. are included in this Quarterly Report on Form 10-Q:

INDEX TO FINANCIAL STATEMENTS

Unaudited Condensed Consolidated Balance Sheets	F-2
Unaudited Condensed Consolidated Statements of Operations	F-3
Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit)	F-4
Unaudited Condensed Consolidated Statements of Cash Flows	F-5
Notes to the Unaudited Condensed Consolidated Financial Statements	F-6

F-1

PINEAPPLE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,			December 31,
	2023			2022
				(As Adjusted)
Assets
Current Assets:
Inventory	$	4,710		$	27,336
Total Current Assets		4,710			27,336
Security deposits		375,971			-
Property and equipment, net		-			2,358
Operating lease right-of-use assets, net		7,729,619			-
Total Assets	$	8,110,300		$	29,694
Liabilities and Stockholders’ Deficit
Current Liabilities:
Accounts payable and accrued liabilities	$	402,289		$	398,551
Accounts payable - related party		31,666			31,500
Accrued interest payable		6,771			6,771
Settlement payable - related party		615,000			615,000
Due to affiliates		910,242			21,456
Notes payable-related party		46,733			46,733
Notes payable		19,838			19,838
Advances on agreements		169,000			169,000
Contingent liabilities		105,523			105,523
Operating lease liabilities		1,618,330			-
Total Current Liabilities		3,925,392			1,414,372
Operating lease liabilities, non-current		6,508,196			-
Total Liabilities		10,433,588			1,414,372
Commitments and contingencies (note 14)
Stockholders’ Deficit:
Preferred stock, $0.0000001 par value, 20,000,000 shares authorized, no shares issued and outstanding		-			-
Series A Convertible Preferred stock, $0.0000001 par value, 5,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $0.0000001 par value, 500,000,000 shares authorized, 73,103,569 shares and 71,163,569 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		7			7
Subscription received – shares to be issued		-			150,000
Additional paid-in-capital		22,239,079			22,004,079
Accumulated deficit		(24,562,374	)		(23,538,764	)
Total Stockholders’ Deficit		(2,323,288	)		(1,384,678	)
Total Liabilities and Stockholders’ Deficit	$	8,110,300		$	29,694

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

F-2

PINEAPPLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
				(As Adjusted)						(As Adjusted)
Revenue
Sublease revenue - related parties	$	105,000		$	-		$	157,500		$	-
Lease expense		474,996			-			798,130			-
		(369,996	)		-			(640,630	)		-
Sales revenue		90			331			90			1,153
Cost of sales		-			268			-			756
		90			63			90			397
Gross Profit (Loss)		(369,906	)		63			(640,540	)		397
Operating Expenses
General and administrative		28,851			66,139			85,623			204,638
Lease expense		48,253			-			48,253			-
Management consulting fees - related parties		69,500			59,000			219,500			177,000
Depreciation		-			933			2,358			4,129
Total Operating Expenses		146,604			126,072			355,734			385,767
Operating loss		(516,510	)		(126,009	)		(996,274	)		(385,370	)
Other Income (Expense)
Income from equity-method investment		-			757,991			-			1,499,355
Gain on forgiveness of related party note payable		-			-			-			30,000
Impairment of inventory		-			-			(27,336	)		-
Gain on sale of subsidiary		-			386,287			-			386,287
Loss on impairment of equity-method investment		-			(10,787,652	)		-			(10,787,652	)
Total Other Income (expense)		-			(9,643,374	)		(27,336	)		(8,872,010	)
Loss before taxes		(516,510	)		(9,769,383	)		(1,023,610	)		(9,257,380	)
Provision for income taxes		-			-			-			-
Net Loss	$	(516,510	)	$	(9,769,383	)	$	(1,023,610	)	$	(9,257,380	)
Net Loss Per Share – Basic and Diluted	$	(0.01	)	$	(0.11	)	$	(0.01	)	$	(0.10	)
Weighted Average Common Shares – Basic and Diluted		73,103,569			91,163,569			72,204,741			91,163,569

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

F-3

PINEAPPLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

Nine Months Ended September 30, 2023

										Subscriptions
	Common Stock				Additional Paid in		Accumulated			received, shares to			Total Stockholders’
	Shares		Amount		Capital		Deficit			be issued			Deficit
*Balance as of December 31, 2022 (As Adjusted)		71,163,569	$	7	$	22,004,079	$	(23,538,764	)	$	150,000		$	(1,384,678	)
Common stock issued on subscription received		600,000		-		150,000		-			(150,000	)		-
Net loss		-		-		-		(67,519	)		-			(67,519	)
*Balance as of March 31, 2023		71,763,569	$	7	$	22,154,079	$	(23,606,283	)	$	-		$	(1,452,197	)
Common stock issued for cash		340,000		-		85,000		-			-			85,000
Common stock issued for acquisition of corporation under common control		1,000,000		-		-		-			-			-
Net loss		-		-		-		(439,581	)		-			(439,581	)
Balance as of June 30, 2023		73,103,569	$	7	$	22,239,079	$	(24,045,864	)	$	-		$	(1,806,778	)
Net loss		-		-		-		(516,510	)		-			(516,510	)
Balance as of September 30, 2023		73,103,569	$	7	$	22,239,079	$	(24,562,374	)	$	-		$	(2,323,288	)

* Retrospectively reflect Pineapple Wellness accounts under transactions between entities under common control

Nine Months Ended September 30, 2022

					Additional					Subscriptions received,		Total Stockholders’
	Common Stock				Paid in		Accumulated			shares to		Equity
	Shares		Amount		Capital		Deficit			be issued		(Deficit)
*Balance as of December 31, 2021		91,163,569	$	9	$	22,004,077	$	(15,687,151	)	$	-	$	6,316,935
Common stock subscription received		-		-		-		-			100,000		100,000
Net income		-		-		-		375,247			-		375,247
*Balance as of March 31, 2022		91,163,569	$	9	$	22,004,077	$	(15,311,904	)	$	100,000	$	6,792,182
Common stock subscription received		-		-		-		-			50,000		50,000
Net income		-		-		-		136,756			-		136,756
*Balance as of June 30, 2022		91,163,569	$	9	$	22,004,077	$	(15,175,148	)	$	150,000	$	6,978,938
Common stock subscription received		-		-		-		-			50,000		50,000
Net loss		-		-		-		(9,769,383	)		-		(9,769,383	)
*Balance as of September 30, 2022		91,163,569	$	9	$	22,004,077	$	(24,944,531	)	$	200,000	$	(2,740,445	)

* Retrospectively reflect Pineapple Wellness accounts under transactions between entities under common control

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

F-4

PINEAPPLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended September 30,
	2023			2022
				(As Adjusted)
Cash Flows from Operating Activities
Net Loss	$	(1,023,610	)	$	(9,257,380	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Impairment of inventory		27,336			-
Depreciation of property and equipment		2,358			4,129
Income from equity-method investment		-			(1,499,355	)
Gain on forgiveness of related party note payable		-			(30,000	)
Loss on impairment of equity-method investment		-			10,787,652
Gain on sale of subsidiary		-			(386,287	)
Changes in operating assets and liabilities:
Inventory		(4,710	)		(3,961	)
Security deposits		(375,971	)		-
Right-of-use assets		581,764			-
Accounts payable and accrued liabilities		3,738			90,758
Accounts payable - related party		166			31,000
Operating lease liabilities		(184,857	)		-
Due to affiliates		1,036,917			159,449
Net cash provided by (used in) operating activities		63,131			(103,995	)
Cash Flows from Financing Activities
Proceeds from related parties		86,241			-
Repayment to related parties		(234,372	)		-
Proceeds from issuance of common stock		85,000			-
Proceeds from stock subscription		-			150,000
Proceeds from related party notes payable		-			5,995
Repayments of related party notes payable		-			(52,000	)
Net cash provided by (used in) financing activities		(63,131	)		103,995
Net Change in Cash		-			-
Cash, Beginning of Period		-			-
Cash, End of Period	$	-		$	-
Supplemental Disclosures of Cash Flow Information
Cash paid for interest	$	-		$	-
Cash paid for taxes	$	-		$	-
Supplemental Disclosures of Non-Cash Investing and Financing Activities
Recognition of right-of-use assets	$	8,311,383		$	-
Common stock issued on subscription received	$	150,000		$	-

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

F-5

PINEAPPLE, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

(Unaudited)

Note 1 – Organization and Description of Business

Pineapple, Inc. (“Pineapple” or the “Company”) was originally formed in the State of Nevada under the name Global Resources, Ltd. on August 3, 1983. On April 12, 1999, the Company changed its name to “Helixphere Technologies Inc.”. On September 19, 2013, the Company changed its name to “New China Global Inc.” On October 30, 2013, the Company filed its Articles of Continuance with the Secretary of State of Wyoming pursuant to which the Company was re-domiciled from the State of Nevada to the State of Wyoming. On July 15, 2014, the Company filed an amendment to its Articles of Incorporation to change its name from “New China Global Inc.” to “Globestar Industries”. On September 3, 2015, the Company changed its name to “Pineapple Express, Inc.” from “Globestar Industries.” The Company’s name has no relation to the 2008 motion picture produced by Columbia Pictures. The Company later received regulatory approval from the Financial Industry Regulatory Authority (“FINRA”) to change its name to Pineapple, Inc.

On March 10, 2023, the Company entered into an Amended Binding Letter Agreement with Mr. Ortega, effective as of December 31, 2022 amending a prior Binding Letter Agreement executed January 4, 2023, where the Company agreed to sell 45.17% of its equity interest in Pineapple Ventures, Inc. (“PVI”), in exchange for the purchase price of 20,000,000 shares of the Company’s common stock at $0.0000001 par value per share and the extinguishment of all of the Company’s debt to PVI and Neu-Ventures, Inc., respectively, of which both PVI and NVI are wholly owned by Ortega. During the year ended December 31, 2022, the Company recognized a gain on extinguishment of debt to PVI and NVI of $1,477,032.

On June 12, 2023, the Company entered into an Amendment to the Letter of Intent, by and between the Company and Matthew Feinstein (the “Amended LOI”), which amends the Binding Letter of Intent, dated September 28, 2022. Pursuant to the Amended LOI, the Company shall acquire 100% of the issued and outstanding shares of the common stock of Pineapple Wellness, Inc., a California corporation (“PW”) from Matthew Feinstein, the Chief Financial Officer, Director and shareholder of the Company and also the sole shareholder of PW, in exchange for 1,000,000 shares of the Company’s common stock, valued at $0.90, the Company’s stock price on the date of acquisition. The investment in the common controlled entity and additional paid in capital of $900,000 were eliminated upon consolidation due to the acquisition of the entity under common control.

F-6

Presently, the Company procures and leases properties to licensed cannabis operators and provides nationwide hemp-derived CBD sales via online and in-store transactions. Through the Company’s operating subsidiary, Pineapple Express Consulting Inc., it also offers cannabis business licensing and consulting services.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles accepted in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). They do not include all of the information and footnotes required by GAAP for complete financial statements and, accordingly, certain information, footnotes, and disclosures normally included in the annual financial statements, prepared in accordance with GAAP, have been condensed or omitted in accordance with SEC rules and regulations. The accompanying financial information should be read in conjunction with the financial statements and the notes thereto in the Company’s most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on May 5, 2023. In the opinion of management, the financial data presented includes all adjustments necessary to present fairly the financial position, results of operations, and cash flows for the periods presented. Results of interim periods should not be considered indicative of the results for the full year. These unaudited condensed consolidated financial statements include estimates and assumptions of management that affect the amounts reported in the unaudited condensed consolidated financial statements. Actual results could differ from these estimates.

Basis of Consolidation

The consolidated financial statements include the accounts of Pineapple, Inc. and its wholly owned subsidiaries, THC Industries, LLC and Pineapple Express Consulting, Inc. and Pineapple Wellness, Inc., doing business as Pineapple Wellness. Intercompany accounts and transactions have been eliminated.

The Company’s consolidated subsidiaries and/or entities are as follows:

Name of Consolidated Subsidiary or Entity	State or Other Jurisdiction of Incorporation or Organization	Date of Incorporation or Formation (Date of Acquisition, if Applicable)	Attributable Interest
THC Industries, LLC	California	12/23/2015 (formed) 2/16/2016 (acquired by the Company)		100	%
Pineapple Express Consulting, Inc.	California	3/16/2017		100	%
Pineapple Wellness, Inc.	California	6/24/2019 (formed) 6/12/2023 (acquired by the Company)		100	%

Use of Estimates in Financial Reporting

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the recoverability and useful lives of long-lived assets, assessment of legal accruals, the fair value of the Company’s stock, Incremental borrowing rate (“IBR”) used for leases and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.

During the third quarter ended September 30, 2023, we completed an assessment of the IBR used on our operating leases entered into during the nine months ended September 30, 2023. We determined to modify the general rate we applied to all leases of 6.5% to use IBR rates estimated on the day of operating lease commencement, ranging from 6.2% to 6.95%, which allow for more accurate valuation of ROU assets and lease liability for each individual leased office premise. This change in accounting estimate was effective July 1, 2023 and was accounted for prospectively in the condensed consolidated financial statements.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current period presentation. (Note 13)

F-7

Fair Value of Financial Instruments

The Company follows the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for disclosures about fair value of its financial instruments and to measure the fair value of its financial instruments. The FASB ASC establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy are described below:

Level 1-	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2-	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3-	Pricing inputs that are generally unobservable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts of the Company’s financial assets and liabilities, including cash, accounts payable and accrued liabilities, and other current liabilities, approximate their fair values because of the short maturity of these instruments. The fair value of notes payable approximates their fair values since the current interest rates and terms on these obligations are the same as prevailing market rates.

Acquisition Under Common Control

Under ASC 805-50-30-5, when accounting for a transfer of assets or exchange of shares between entities under common control, the receiving entity shall recognize the assets and liabilities transferred at their historical cost and under ASC 805-50-45-5 the financial statements presented for prior years shall be retrospectively adjusted for the periods during which the entities were under common control.

Security Deposits

As of September 30, 2023, security deposits relate to security deposits paid for ten office premises of $375,971.

Inventory

Inventory is stated at lower of cost or net realizable value, with cost being determined on the first-in, first-out (“FIFO”) method.

During the nine months ended September 30, 2023, the Company acquired inventory of hemp CBD wellness products of $4,710 and recorded inventory impairment of $27,336. As of September 30, 2023 and December 31, 2022, the Company had inventory of $4,710 and $27,336, respectively.

Property and Equipment

Property and equipment consist of furniture and fixtures and office equipment. They are recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

The estimated useful lives of the classes of property and equipment are as follows:

Office equipment	5 years
Furniture and fixtures	7 years

F-8

Investment – Equity Method

The Company accounted for its equity method investment PVI at cost, adjusted for the Company’s share of the investee’s earnings or losses, which are reflected in the consolidated statements of operations. The Company periodically reviews the investment for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. As of December 31, 2022, management identified indicators of other-than-temporary impairment that at that period led to the conclusion that the carrying value of its equity method investment is not recoverable. As a result, the Company has recorded an impairment write-down in the consolidated statements of operations for the year ended December 31, 2022. During the nine months ended September 30, 2023 and September 30, 2022, the Company recorded income from equity method investment of $0 and $1,499,355, respectively.

Related Party Balances and Transactions

The Company follows FASB ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions. (Note 8)

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Non-lease components such as common area maintenance (“CAM”), variable expenses, and late fees were excluded from calculation for ROU assets and lease liabilities. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease expense is reported under cost of sales in the Consolidated Statements of Operations in line with the Company’s main operation of procuring and leasing properties to licensed cannabis operators. For office premises that are not used for subleasing, leases expense is reported under lease expense of operating expenses in the Consolidated Statements of Operations.

Sublease

Under ASC 842, income for a sublessor operating lease is recognized as a single lease income item on a straight-line basis over the lease term and reflected in the appropriate income statement line item based on the lease asset’s function. For transactions where the company is considered the sublessor, revenue for operating leases is recognized on a monthly basis over the term of the lease. Sublessor revenue relates to operating leases that the Company is subleasing. The Company recognizes sublease revenue on a gross basis. (see note 9)

Revenue Recognition

The Company’s revenue derives from sublease revenue and sales of CBD products.

The Company recognizes revenue from the sale of CBD products in accordance with ASC 606, “Revenue Recognition” following the five steps procedure:

Step 1: Identify the contract(s) with customers

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to performance obligations

Step 5: Recognize revenue when the entity satisfies a performance obligation

F-9

For the nine months ended September 30, 2023 and 2022, the Company recognized revenue from the sale of CBD products of $90 and $1,153 and incurred cost of sales from CBD products of $0 and $756, resulting in gross profit of $90 and $397 from CBD products, respectively.

The Company recognizes revenue from subleasing of office premises in accordance with ASC842, “Lease Accounting”. The Company recognizes sublease revenue on monthly straight-line basis over the lease term on gross basis.

For the nine months ended September 30, 2023 and 2022, the Company recognized sublease revenue from related parties of $157,500 and $0 and incurred lease expense of $798,130 and $0, resulting in gross loss of $640,630 and $0 from subleases, respectively.

Net Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted income (loss) per share reflects the potential dilution, using the treasury stock method, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the Company. In computing diluted income (loss) per share, the treasury stock method assumes that outstanding options and warrants are exercised, and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. At September 30, 2023 and December 31, 2022, the Company had no options or warrants outstanding and no shares issuable for conversion of notes payable.

Recently Adopted and Pending Accounting Pronouncements

In June 2022, the FASB issued ASU 2022-03, ASC Subtopic “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. These amendments clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments in this update are effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. The Company is currently assessing the impact of the adoption of this standard on its consolidated financial statements.

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.

Note 3 – Going Concern

The Company’s consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in its consolidated financial statements, the Company has an accumulated deficit of $24,562,374 as of September 30, 2023 and incurred a net loss of $1,023,610 during the nine months ended September 30, 2023.

The Company has incurred net losses during the nine months ended September 30, 2023 and in all prior years. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date that the consolidated financial statements are issued. The Company’s consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

The Company’s primary source of operating funds since inception has been cash proceeds from the private placements of its common stock and from issuance of its short-term on demand loans, primarily from related parties. The Company intends to raise additional capital in the short term through addition of demand loans and, once the up listing to a higher exchange is completed, through private placements to sell restricted shares of common stock to investors. There can be no assurance that these funds will be available on terms acceptable to the Company, or at all, or will be sufficient to enable the Company to fully complete its development activities or sustain operations.

F-10

If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, scale back its current business plan and/or curtail operations until sufficient additional capital is raised to support further operations.

The Company’s ability to continue as a going concern is dependent on its ability to execute its strategy and on its ability to raise additional funds. Management is currently seeking additional funds, primarily through the issuance of equity and/or debt securities for cash to operate the Company’s business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to it. Even if the Company is able to obtain additional financing, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity and/or convertible debt financing.

Note 4 – Property and Equipment

Property and equipment as of September 30, 2023 and December 31, 2022 is summarized as follows:

	September 30, 2023			December 31, 2022
Furniture and fixtures	$	43,152		$	43,152
Office equipment		12,321			12,321
Total property and equipment		55,473			55,473
Less: Accumulated depreciation		(55,473	)		(53,115	)
Total property and equipment, net	$	-		$	2,358

Depreciation expense for the nine months ended September 30, 2023 and 2022 was $2,358 and $4,129, respectively.

Note 5 – Notes Payable, Related Party

Notes payable-related party, are comprised of the following as of September 30, 2023 and December 31, 2022:

Noteholder	Due		Interest Rate			Secured		September 30, 2023		December 31, 2022
Rob Novinger		Demand		0	%		No	$	30,851	$	30,851
Neu-Ventures, Inc.		Demand		0	%		No	$	15,882	$	15,882
								$	46,733	$	46,733

Rob Novinger (shareholder)

Rob Novinger is a shareholder and creditor to the Company. There was no activity during the nine months ended September 30, 2023. The balance of the related party note payable is $30,851 as of September 30, 2023 and December 31, 2022.

Neu-Ventures, Inc.

Neu-Ventures, Inc. is an entity owned by our former majority shareholder and current shareholder, Mr. Ortega. These advances are due on demand and do not incur interest. The balance of the related party note payable is $15,882 as of September 30, 2023 and December 31, 2022.

F-11

Note 6 – Note Payable

The Company, through our former subsidiary, Better Business Consultants, Inc., entered into a $25,000 small business “line of credit” with Kabbage, Inc. on July 2, 2016, for purposes of funding periodic capital needs. The original agreement provided for a term of six months but has been extended month-to-month thereafter by mutual verbal consent of the parties. The total balance of that credit line as of September 30, 2023 and December 31, 2022, is $26,609, which includes principal of $19,838 and $6,771 of accrued interest from prior years. The balance has been guaranteed by Matt Feinstein, a director of the Company. The Company is currently in talks with a collection company to settle this debt and has stopped accruing interest. There has been no activity during the nine months ended September 30, 2023 and 2022.

Note 7 – Settlement Payable-Related Party

At September 30, 2023 and December 31, 2022, the settlement payable related party balance consists of the following:

Noteholder	September 30, 2023		December 31, 2022
Investor Three		615,000		615,000
Settlement payable	$	615,000	$	615,000

Investor Three

In December 2015, the Company entered into a Revenue Share Agreement for $750,000 that was recorded as “advances on agreements” liability. As per the Revenue Share Agreement, in the event that, for the period from February 5, 2016, through the three-year anniversary of the Effective Date, if Lessee fails to pay the Company any Fixed Minimum Rent, the Company shall be required to pay to Investor Three, in full, Investor Three’s share each month until the Company has paid Investor Three an aggregate of $825,000 under this Revenue Share Agreement. Thereafter, the Company shall have no further obligations or responsibilities to Investor Three in connection with this Revenue Share Agreement. Due to the above clause, by reason of defaults on the DHS Project (as defined elsewhere herein), an additional penalty of $75,000 was incurred which was recorded as deferred finance cost. During the fiscal year 2018, the Company reduced $200,000 of principal by transferring land to Investor Three. During the fiscal year 2018, the Company also recorded a loss on settlement of debt in the consolidated statements of operations increasing the balance by $97,800 to $615,000 at December 31, 2018. There has been no activity during the nine months ended September 30, 2023. This balance remains outstanding as of September 30, 2023 and December 31, 2022, and is classified as settlement payable-related party on the Company’s consolidated balance sheets.

Note 8 – Related Party Transactions

During the nine months ended September 30, 2023, the Company recognized sublease revenue of $17,500 and recorded sublease receivable of $17,500 for an office premise located at 8912 Reseda Blvd, Northridge, CA 91324 in pursuant to sublease agreement entered with a cannabis company who is affiliated with the Director of Pineapple, Inc. (Note 9)

During the nine months ended September 30, 2023, the Company recognized sublease revenue of $140,000 and for an office premise located at 1704 N.Vine St. Unit 102 Hollywood CA 90028 in pursuant to sublease agreement entered with an entity who is affiliated with the Director of Pineapple, Inc. (Note 9)

During the nine months ended September 30, 2023 and 2022, the Company incurred management consulting fees of $219,500 and $177,000, respectively. As of September 30, 2023 and December 31, 2022, the management consulting fee payable was $31,666, and $31,500, respectively.

During the nine months ended September 30, 2023, Pineapple Consolidated, Inc. (“PCI”), a company controlled by the Director of Pineapple, Inc., advanced $86,241 to the Company, made lease payment, security deposit payment, management consulting fees and other operating expenses of $1,042,637 on behalf of the Company and was repaid for $234,282. During the nine months ended September 30, 2023, the amount due to PCI was also repaid through $50,000 proceeds from issuance of common stock. (Note 11) As of September 30, 2023 and December 31, 2022, the amount due to PCI was $844,596 and $0, respectively.

F-12

During the nine months ended September 30, 2023, PVI, a company owned and controlled by shareholder Jaime Ortega, made lease payment of $44,280 on behalf of the Company and was repaid for $90. As of September 30, 2023 and December 31, 2022, the amount due to PVI was $65,646 and $21,456, respectively.

The loans from the related parties are due on demand and non-interest bearing.

As of September 30, 2023 and December 31, 2022, the total amount due to affiliates is $910,242 and $21,456, respectively.

Note 9 – Leases

							As of September 30, 2023				Nine months ended September 30, 2023 Lease Expense				Nine months ended September 30, 2023
Location	Entity	Nature	Start	End	Security Deposit		ROU Assets		Lease Liabilities		COGS		Operating Expense		Sublease Revenue
8707 Venice Blvd, Los Angeles, CA 90034	Pineapple Inc.	Subleasing	4/1/2023	3/31/2028	$	20,000	$	472,286	$	493,636	$	61,550	$	-	$	-
8912 Reseda Blvd, Northridge, CA 91324	Pineapple Inc.	Subleasing	1/1/2023	12/31/2027	$	12,000	$	539,571	$	551,570	$	108,000	$	-	$	17,500
467 S.La Brea Ave., Los Angeles, CA 90036	Pineapple Inc.	Subleasing	5/1/2023	4/30/2028	$	37,998	$	918,470	$	1,016,173	$	111,005	$	-	$	-
4830 Huntington Drive South Los Angeles CA 90032	Pineapple Inc.	Subleasing	6/1/2023	5/31/2028	$	-	$	-	$	-	$	17,000	$	-	$	-
8342-8344 West 3rd St Los Angeles CA 90048	Pineapple Inc.	Subleasing	5/1/2023	4/30/2028	$	38,000	$	918,975	$	979,135	$	98,210	$	-	$	-
19841 Ventura Blvd. Woodland Hills CA 91364	Pineapple Inc.	Subleasing	8/1/2023	1/31/2029	$	21,330	$	563,955	$	574,458	$	22,528	$	-	$	-
7542-7544 Balboa Blvd. Lake Balboa, CA	Pineapple Inc.	Subleasing	4/15/2023	10/14/2027	$	92,000	$	984,527	$	1,048,847	$	139,320	$	-	$	-
2378 Westwood Boulevard, Los Angeles CA 90064	Pineapple Inc.	Subleasing	9/1/2023	8/31/2028	$	26,650	$	668,317	$	681,642	$	13,881	$	-	$	-
1485 W.Sunset Blvd., Los Angeles, CA	Pineapple Inc.	Subleasing	5/15/2023	11/14/2030	$	20,280	$	1,384,139	$	1,489,290	$	105,150	$	-	$	-
1704 N.Vine St. Unit 102 Hollywood CA 90028	Pineapple Inc.	Subleasing	6/1/2023	9/30/2025	$	50,000	$	583,628	$	583,628	$	121,486	$	-	$	140,000
12301 Wilshire Blvd. Suite 302 Los Angeles CA	Pineapple Inc.	Headquarter	8/1/2023	9/1/2026	$	57,713	$	366,371	$	377,474	$	-	$	22,645	$	-
8783 W.Pico Blvd., Los Angeles, CA 90035	Pineapple Wellness	Retail Store	7/1/2023	2/1/2028	$	-	$	329,380	$	330,673	$	-	$	25,607	$	-
					$	375,971	$	7,729,619	$	8,126,526	$	798,130	$	48,253	$	157,500

On January 11, 2023, the Company entered into a lease agreement for an office premise located at 8912 Reseda Blvd, Northridge, CA 91324 under a five-year term with two 5-year extension options upon expiry and monthly lease payment of $12,000. The lease agreement commenced on January 1, 2023. During the nine months ended September 30, 2023, the Company made lease payments of $96,000 for base lease and security deposit of $12,000. As of September 30, 2023, lease payable was $12,000 for September 2023 base lease. During the nine months ended September 30, 2023, the Company recorded lease expense of $108,000 for base lease recorded under cost of sales in the Consolidated Statements of Operations. As of September 30, 2023, the right-of-use asset was $539,571 and operating lease liability was $551,570.

On March 10, 2023, the Company entered into a lease agreement for an office premise located at 8707 Venice Blvd, Los Angeles, CA 90034 under a