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Item 9A. Controls and Procedures

2024-04-01 compared with 2023-04-14 · 36 added, 10 removed, 235 unchanged (16% of the section changed)

2 unchanged sentences

Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2023.

Based on that evaluation, management concluded that the Company’s disclosure controls and procedures are effective.

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.

Management Report on Internal Control over Financial Reporting

1 unchanged sentence

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 effective as of December 31, 2022.

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 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.

Inherent Limitations on Control Systems

5 unchanged sentences

Changes in Internal Control

There were no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting .

Except as discussed above, there were no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting .

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.

1 unchanged sentence

OTHER INFORMATION

During the three months ended December 31, 2023, 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).

In addition, the Company is reporting the following information in this Annual Report on Form 10-K in lieu of filing a Form 8-K under Item 1.01:

On March 27, 2024, the Company, Equiniti Trust Company, as Rights Agent, and the CVR holders’ representative, entered into a First Amendment (the “First Amendment") to Contingent Value Rights Agreement dated March 25, 2022 (the “CVR Agreement”).

The First Amendment extended the term of the CVR Agreement from March 28, 2022 to December 31, 2024, and provides for the Company to pay $25,000 to the CVR holders’ representative from funds available for distribution to the holders of the CVRs as compensation for services during the extended term.

The foregoing description of the First Amendment is not complete and is qualified by reference to the full text of the First Amendment, a copy of which is filed herewith as Exhibit 10.46 to this Annual Report on Form 10-K and is incorporated herein by reference.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

2 unchanged sentences

The information required by this item is hereby incorporated by reference to the definitive proxy statement for our 2024 Annual Meeting of Shareholders (the “2024 Proxy Statement”), or in an amendment to this Annual Report on Form 10-K (the “Form 10-K/A”), which we plan to file with the Securities and Exchange Commission within 120 days after December 31, 2023.

The information required by Item 405 regarding compliance with Section 16 (a) will be set forth under the caption “Delinquent Section 16(a) Reports” in the Company’s 2023 Proxy Materials, and is incorporated herein by reference.

The information required by Item 405 regarding compliance with Section 16 (a) will be set forth under the caption “Delinquent Section 16(a) Reports” in the Company’s 2024 Proxy Statement, and is incorporated herein by reference.

Alternatively, this information will be included in an amendment to this Form 10-K on Form 10-K/A within 120 days of December 31, 2023.

18 unchanged sentences

 Report of Independent Registered Public Accounting Firm

 Consolidated Balance Sheets as of December 31, 2023 and 2022

15 unchanged sentences

Filed as Exhibit 2.1 to Form 8-K filed on November 10, 2022 and incorporated herein by reference.

Third Amended and Restated Articles of Incorporation, as amended through December 9, 2022

Filed as Exhibit 3.2 to the Form 8-K filed on December 9, 2022 and incorporated herein by reference.

Fourth Amended and Restated Articles of Incorporation, as amended through January 30, 2024

Filed as Exhibit 3.2 to the Form 8-K filed on February 5, 2024 and incorporated herein by reference.

Restated Bylaws of Pineapple Energy Inc., as amended (effective as of April 13, 2022)

24 unchanged sentences

Pineapple Energy Inc.

2022 Employee Stock Purchase Plan

Filed as Exhibit 10.1 to the Form 8-K filed on December 9, 2022 and incorporated herein by reference.

2022 Employee Stock Purchase Plan , as amended

Filed as Appendix B to the 2023 Annual Meeting of Shareholders on Schedule 14A filed on November 3, 2023 and incorporated herein by reference.

Form of Communications Systems, Inc.

95 unchanged sentences

Filed as Exhibit 10.4 to the Quarterly Report on Form 10-Q filed on August 22, 2022 and incorporated herein by reference.

Revenue Loan and Security Agreement dated as of June 1, 2023 by and among Pineapple Energy Inc., the Guarantors party thereto, and Decathlon Specialty Finance, LLC

Filed as Exhibit 10.1 to Form 8-K filed on June 6, 2023 and incorporated herein by reference.

Consent and Amendment No.

2 to Loan and Security Agreement dated as of May 31, 2023 by and between Pineapple Energy LLC as Borrower and Hercules Capital, Inc.

as Lender and Agent

Filed as Exhibit 10.2 to Form 8-K filed on June 6, 2023 and incorporated herein by reference.

First Amendment to Contingent Value Rights Agreement, dated March 27, 2024, by and among the Company, Equiniti Trust Company, as Rights Agent, and Richard A.

Primuth in his capacity as the initial CVR Holders’ Representative.

Filed herewith.

Subsidiaries of the Registrant

2 unchanged sentences

Filed herewith.

Consent of Independent Registered Public Accounting Firm

Filed herewith.

Power of Attorney

6 unchanged sentences

Filed herewith.

Pineapple Energy Inc.

Compensation Recovery Policy

Filed herewith.

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)

41 unchanged sentences

April 1, 2024

/s/ Michael R.

April 14, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures