UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 20202023

or

For the transition period from ___________ to ___________

Commission File Number: 000-55896

PINEAPPLE, INC.

(Exact name of registrant as specified in its charter)

10351 Santa Monica Blvd., Suite 420

Los Angeles, CA90025

(Address of principal executive offices)(Zip (Zip Code)

877-310-7675877-310-7675

(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 [ X ]☐

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 [X]☐

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

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 [X] ☒

As of April 9, 2021,May 23, 2023, there were 88,461,20071,763,569 shares of the registrant’s common stock, $0.0000001 par value per share, issued and outstanding.

PINEAPPLE, INC.

Table of Contents

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:

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.

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

Pineapple, Inc. and Subsidiaries

Condensed Consolidated Balance SheetsPINEAPPLE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

Pineapple, Inc. and Subsidiaries

Condensed Consolidated StatementsPINEAPPLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

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

(Unaudited)

PINEAPPLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

Pineapple, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2020 and 2019

(Unaudited)

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

Pineapple, Inc. and Subsidiaries

Condensed Consolidated StatementsPINEAPPLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

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

(Unaudited)

Pineapple, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(Unaudited)

PINEAPPLE, INC. AND SUBSIDIARY

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCHMarch 31, 20202023

(Unaudited)

Note 1 – Organization and Description of Business

Pineapple, Inc. (“Pineapple” or the “Company”) was originally formed in the stateState of Nevada under the name Global Resources, Ltd. on August 3, 1983.1983. On April 12, 1999, the Company changed its name to “Helixphere Technologies Inc.”. On October 2,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 August 24, 2015, the Company entered into a Share Exchange Agreement (the “BBC Agreement”) with Better Business Consultants, Inc. (“BBC”), a corporation incorporated under the laws of California on January 29, 2015, and Shane Oei, a majority shareholder of the Company at the time. Pursuant to the terms of the BBC Agreement, BBC shareholders exchanged all of the issued and outstanding capital of BBC for an aggregate of 50,000,000 newly and duly issued, fully paid and non-assessable shares of common stock of the Company. Upon closing, BBC became a wholly owned subsidiary of the Company. In addition, Mr. Oei and Gary Stockport, another former shareholder of the Company at the time, cancelled 100,000,000 and 500,000 shares of the Company’s common stock, respectively, in connection with the BBC Agreement. As the owners and management of BBC obtained voting and operating control of the Company after the share exchange and Globestar Industries was non-operating, the transaction was accounted for as a recapitalization of BBC, accompanied by the exchange of previously issued common stock for outstanding common stock of Globestar Industries, which was recorded at a nominal value. Upon consummation of the BBC Agreement, the Company ceased its prior business of providing educational services and continued the business of BBC as its sole line of business. BBC has three wholly owned subsidiaries, Pineapple Express One LLC, a California limited liability company, Pineapple Express Two LLC, a California limited liability company, and Pineapple Properties Investments, LLC, a Washington limited liability company.

On September 3, 2015, the Company changed its name to “Pineapple Express, Inc.” from “Globestar Industries.” The Company’s name hadhas no relation to the 2008 motion picture produced by Columbia Pictures. Currently, the Company is in the process of seeking regulatory approval from the Financial Industry Regulatory Authority (“FINRA”) to change its name to Pineapple, Inc.

On February 12, 2016,March 19, 2019, the Company entered into a Share Exchange Agreement (the “PVI Agreement”) with Pineapple Ventures, Inc. (“PVI”), the Company’s equity-method investment, and the stockholders of PVI (the “PVI Stockholders”) in which the Company acquired a total of 50% of the outstanding shares of PVI, in consideration for 2,000,000 shares of Series A Convertible Preferred Stock. The Series A Convertible Preferred Stock may, from time to time, be converted by the holder into shares of the Company’s Common Stock, par value $0.0000001 (the “Common Stock”), in an amount equal to ten (10) shares of Common Stock for each one share of Series A Convertible Preferred Stock. The PVI Stockholders elected to immediately convert the 2,000,000 shares of Series A Convertible Preferred Stock into 20,000,000 shares of common stock upon issuance.

On January 17, 2020, the Company entered into an Agreementagreement with Jaime Ortega whereby in exchange for Mr. Ortega cancelling $1,062,000 of Mergerexisting loans extended to acquire all of the assets and assume several liabilities of THC Industries, Inc. (“THC Parent”), a California corporation, through a two-step merger (the “THC Merger”) by and among the Company THC Parent, the Company’s wholly owned subsidiary THC Industries, LLC (“THC”), a California limited liability company, and the Company’s former wholly owned subsidiary THCMergerCo.,by Jaime Ortega, Neu-Ventures, Inc., a California corporation. In June 2016,and Sky Island, Inc., the Company begantransferred to anticipate significant difficultiesMr. Ortega 10,000 shares of capital stock of PVI. Subsequently, on February 11, 2021, the parties entered into amended agreement pursuant to which the original number of shares sold to Mr. Ortega was reduced from 10,000 shares of capital stock of PVI to 4,827 shares of capital stock of PVI. Accordingly, the Company owned 45,173 shares of capital stock of PVI representing 45.17% ownership interest in monetizingPVI. This amendment was entered into to correct the original agreement and properly reflected the value of the acquired intangible assets andCompany’s stock at the time of the initial agreement. In September 2022, the Company recorded anfull impairment on the equity investment of those assets.$10,787,652.

On August 5, 2016,March 10, 2023, the Company entered into a Forbearance Agreementan Amended Binding Letter of Intent effective as of December 31, 2022 with THC Industries, Inc. becauseMr. Ortega, amending the prior Letter of late payments. This sparked a temporary foreclosure of assets. On March 27, 2017,Intent executed January 4, 2023, where the Company entered into a Standstillagreed to sell 45.17% of its equity interest in Pineapple Ventures, Inc., 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 Waiver Agreement with THC Industries,the extinguishment of all of the Company’s debt to PVI and Neu-Ventures, Inc. because, respectively, of additional late payments. which both PVI and NVI are wholly owned by Ortega.

On June 22, 2017,September 28^th, 2022, the Company successfully completedsigned a letter of intent with Jaime Ortega for the conditionssale of 100% interest of Pineapple Park, LLC (“PP”), in exchange for forgiveness of $10,000 of the Standstillexisting note due to Ortega’s 100% owned entity, Neu-Ventures, Inc. The Entity has accordingly been removed from the Company’s basis of consolidated financial statements, which resulted in a decrease in the consolidated balance of accounts payable of $376,287 and Waiver Agreement signed betweena decrease in related party notes payable of $10,000. The sale of the parties on March 27, 2017. The Company made its payments and completed its conditionsEntity resulted in fulla gain of $386,287, which has been recorded in the consolidated statement of operations for the Forbearance Agreement. The Company gained back control of the assets relative to the purchase transaction.year ended December 31, 2022.

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. The Company’s executive team blends enterprise-level corporate expertise with decades of combined experience operating in the tightly-regulated cannabis industry.

ln addition to having stakes in the foregoing business ventures, the Company was also assigned a patent for the proprietary Top Shelf Safe Display System (“SDS”) for use in permitted cannabis dispensaries and delivery vehicles across the United States and internationally (where permitted by law), on July 20,^th, 2016, by Sky Island, Inc. (the “SDS Patent”) via a Patent Assignment Agreement (the “Patent Assignment Agreement”). The SDS Patent was originally applied for and filed on August 11, 2015, by Sky Island, Inc. and received its notice of allowance from the United States Patent and Trademark Office on March 22, 2017. It is anticipated that the Top-Shelf SDS product shall retail for $30,000$30,000 per unit. Pineapple intends to sell the Top-Shelf SDS units to PVI for use in retail storefronts and delivery vehicles as well as to sell the Top Shelf SDS technology to otheroperated by cannabis retail companies. The Company anticipatedanticipates beginning sales of the Top Shelf SDS system in the secondthird quarter of 2021.2023.

On March 14, 2017, the Company entered into a Share Purchase Agreement to sell BBC and its three wholly owned subsidiaries, Pineapple Express One LLC, Pineapple Express Two LLC, and Pineapple Property Investments, LLC to a related party, Jaime Ortega, in exchange for Mr. Ortega forgiving a debt of $10,000 owed to Sky Island, Inc., a related party of the Company owned by Mr. Ortega, so that Mr. Ortega can fund and prosecute litigation claims and settle debts for the subsidiaries resulting from unconsummated parcel purchases which the Company feels was purposely circumvented by third parties involved in those transactions. Mr. Ortega, as an interested party, took these steps so the Company’s claims can be addressed against the parties at fault without negatively impacting or distracting the Company. The sale of BBC and its subsidiaries also included the transfer of liabilities owed by those entities. In accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, as this subsidiary was sold to an entity under common control of the Company, the $841,511 in liabilities transferred, net of $10,000 in consideration received, has been recorded as an increase to the Company’s additional paid-in-capital equity account. On January 27, 2018, the Company completed the sale of BBC, Pineapple Express One LLC, Pineapple Express Two LLC and Pineapple Property Investments, LLC to Mr. Ortega.

On April 7, 2017, Orr Builders, Prest-Vuksic Architects, Inc. and MSA Consulting, Inc. (all California corporations), as plaintiffs, filed a complaint upon the Company, including subsidiaries Pineapple Express One LLC and BBC, and MJ Business Consultants; Clonenetics Laboratories Cooperative, Inc.; United Pentecostal Church; and Healing Nature, LLC; within the Superior Court of the State of California for the County of Riverside, Case No. PSC 1700746 (hereinafter referred to as the “Lead Case”), and a related and consolidated Case No. PSC1702268, alleging, among other things: (i) breaches of contracts related to the DHS Project/Pineapple Park (property on which the Company planned to build out space to lease to cultivators) in the amount of $1,250,000, (ii) foreclosure of mechanics’ lien, (iii) negligent misrepresentation, and (iii) unjust enrichment (against United Pentecostal Church only). The Company was not a named defendant in this action. In 2019, the land (which was leased by the Company and sold by the Company to a third party) and warehouse (which was being built for the Company, yet completed by a third party) at 65241 San Jacinto Lane in Desert Hot Springs, CA, were ordered sold by way of judgment and the plaintiffs were entitled to recovery. The Company and its subsidiaries were dismissed from this action and the property was subsequently sold, fully releasing the Company from any further liability.

On March 16, 2017, the Company formed Pineapple Express Consulting, Inc. (“PEC”) as a wholly owned subsidiary. On August 3, 2017, a letter of intent was entered into between PEC and Sky Island, Inc., whereby all the assets of Pineapple Park, LLC, a California limited liability company controlled by Sky Island, Inc. holding lease deposits, were to be transferred through a related party transfer to PEC. On December 1, 2017, the Pineapple Park project of warehouses that were to be leased out to clients was terminated. Effective December 31, 2018, Pineapple Park, LLC pulled out of this project and signed a mutual release agreement for all lessees and Pineapple Park, LLC to terminate each party’s obligations and responsibilities under the leases and the parties’ relationship.

On March 19, 2019, the Company entered into a Share Exchange Agreement (the “PVI Agreement”) with Pineapple Ventures, Inc. (“PVI”) and the stockholders of PVI (the “PVI Stockholders”) in which the Company acquired a total of 50% of the outstanding shares of PVI, in consideration for 2,000,000 shares of Series A Convertible Preferred Stock. The Series A Convertible Preferred Stock may, from time to time, be converted by the holder into shares of the Company’s common stock in an amount equal to ten shares of common stock for each one share of Series A Convertible Preferred Stock. The PVI Stockholders elected to immediately convert the 2,000,000 shares of Series A Convertible Preferred Stock into 20,000,000 shares of common stock upon issuance. As a result of the investment in PVI, the Company now has a portfolio asset with which it has entered the cannabis cultivation, production and distribution sector throughout California. PVI has several leased properties that are currently being developed to provide these cannabis-related services. PVI, through its affiliates, has obtained various cannabis-related licenses throughout California.

On January 17, 2020, the Company entered into an agreement with Jaime Ortega whereby in exchange for Mr. Ortega cancelling $1,062,000 of existing loans extended to the Company by Jaime Ortega, Neu-Ventures, Inc., and Sky Island, Inc., the Company transferred to Mr. Ortega 10,000 shares of capital stock of PVI. Subsequently, on February 11, 2021, the parties entered into amended agreement pursuant to which the original number of shares sold to Mr. Ortega was reduced from 10,000 shares of capital stock of PVI to 4,827 shares of capital stock of PVI. Accordingly, the Company currently owns 45,173 shares of capital stock of PVI. This amendment was entered into to correct the original agreement and properly reflect the value of the Company’s stock at the time of the initial agreement. As of March 31, 2020 and December 31, 2019, the Company has 45.17% and 50% ownership interest, respectively, in PVI.

During 2019, PVI took preliminary business steps towards a project with Nordhoff Leases, LLC (“Nordhoff”), a related party, in which Nordhoff subleased 38,875 square feet in a building to three 15% owned entities by PVI; however, the contemplated project never matriculated and the planned contribution of Nordhoff to PVI was nullified. In June and July of 2020 PVI sold its 15% investments in three entities, including the cannabis licenses associated with them, for $2.87 million to support its operations and assigned its three 15% owned entities’ subleases with Nordhoff to the buyer as part of the sale. PVI received 15% of the proceeds of the sale of the entities and their cannabis licenses. 

Pursuant to an Agreement and Plan of Merger (“Merger Agreement”), dated as of April 6, 2020, by and between, Pineapple Express, Inc., a Wyoming corporation (“Pineapple Express”), and Pineapple, Inc., a Nevada corporation (“Pineapple”) and wholly-owned subsidiary of Pineapple Express, effective as of April 15, 2020 (the “Effective Date”), Pineapple Express merged with and into Pineapple, with Pineapple being the surviving entity (the “Reincorporation Merger”). The Reincorporation Merger was consummated to complete Pineapple Express’ reincorporation from the State of Wyoming to the State of Nevada. The Merger Agreement, the Reincorporation Merger, the Name Change (as defined below) and the Articles of Incorporation and Bylaws of Pineapple were duly approved by the written consent of shareholders of Pineapple Express owning at least a majority of the outstanding shares of Pineapple Express’ common stock, par value $0.0000001 per share (the “PE Common Stock”). Pursuant to the Merger Agreement, the Company’s corporate name changed from “Pineapple Express, Inc.” to “Pineapple, Inc.”

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States. As a result, significant volatility has occurred in both the United States and international markets. While the disruption is currently expected to be temporary, there is uncertainty around the duration. To date, the Company has experienced declining revenues, difficulty meeting debt covenants, maintaining consistent service quality with reduced revenue, and a loss of access to customers. Management expects this matter to continue to impact our business, results of operations, and financial position, but the ultimate financial impact of the pandemic on the Company’s business, results of operations, financial position, liquidity or capital resources cannot be reasonably estimated at this time.

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 data presented hereininformation should be read in conjunction with the audited consolidated financial statements and accompanyingthe notes includedthereto in the 2019Company’s most recent Annual Report on Form 10-K.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-ownedwholly owned subsidiaries, THC Industries, LLC and Pineapple Express Consulting, Inc., doing business as Pineapple Express. Intercompany accounts and transactions have been eliminated.

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

Schedule of Consolidated Subsidiaries and/or Entities

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, fair values of right-of-use assets and lease liabilities, assessment of legal accruals, the fair value of the Company’s stock stock-based compensationIBR used for leases and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.

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:

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 expenses,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.

CashPrepaid Expense and Security Deposits

The Company considers all highly liquid investments with original maturitiesPrepaid expenses relate to prepaid rent for an office premise of three months or less$5,000., Security deposit relates to be cash equivalents. Cash security deposit paid office premises of $32,000and cash equivalents are held in operating accounts at a major financial institution. Cash balances may exceed federally insured limits. Management believes the financial risk associated with these balances is minimal and has not experienced any losses to date. As of March 31, 20202023 and December 31, 2019, the Company had no cash balances in excess of FDIC insured limits.2022, prepaid expense and security deposits was $37,000 and $0, 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:

Schedule of Estimated Useful Lives Property and Equipment

Investments
Investment – Equity Method

The Company accountsaccounted for its equity method investmentsinvestment (“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 investmentsinvestment 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 March 31,2020,December 31, 2022, management has identified indicators of other-than-temporary impairment that have led to the Company believesconclusion that the carrying value of its equity method investments were recoverableinvestment is not recoverable. As a result, the Company has recorded an impairment write-down in all material respects.the consolidated statements of operations for the year ended December 31, 2022. During the three months ended March 31, 2023 and March 2022, the Company recognized income from equity method investment of $0 and $504,136, 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 transaction. (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. 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.

Sublease

DepositsIncome 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)

Deposits consist of security deposits maintained with lessors for the Company’s facility leases.Revenue Recognition

ASC 606 “Revenue Recognition” does not apply to rental income that the Company recognized through sub-lease during the three months ended March 31, 2023.

LossNet Income (Loss) Per Share

Basic lossincome (loss) per share is computed by dividing net lossincome (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted lossincome (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 lossincome (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 March 31, 20202023 and December 31, 2019,2022, the Company had no options or warrants outstanding and no shares issuable for conversion of notes payable.

Revenue RecognitionRecently Adopted and Pending Accounting Pronouncements

The Company recognizes revenue in accordance withIn June 2022, the FASB issued ASU 2022-03, ASC 606, “Revenue from Contracts with Customers” (“ASC 606”)Subtopic “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. Under ASC 606, the Company recognizes revenue whenThese amendments clarify that a customer obtains control of the promised goods or services. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods or services, net of any variable consideration (e.g., rights to return product, sales incentives, others) and any taxes collected from customers and subsequently remitted to governmental authorities.

Our service revenues arise from contracts with customers and include consulting related to the licensing, development, and compliance areas of the cannabis business and operational dispensary management. The Company also provides marketing and branding consulting services. We did not identify any costs incurred during the three months ended March 31, 2020 and 2019 directly attributable to generating consulting revenue, and therefore have not categorized any costs as costs of sales.

We recognize revenue when the following criteria are met:

The parties to the contract have approved the contract and are committed to perform their respective obligations – our customary practice is to obtain written evidence, typically in the form of a contract or purchase order.

Each party’s rights regarding the goods or services have been identified – we have rights to payment when services are completed in accordance with the underlying contract, or forcontractual restriction on the sale of goods when custodyan equity security is transferred to our customers either upon shipment to or receipt at our customers’ locations, with no right of return or further obligations.

The payment terms for the goods or services have been identified – prices are typically fixed, and no price protections or variables are offered.

The contract has commercial substance – our practice is to only enter into contracts that will positively affect our future cash flows.

Collectability is probable – we often require a deposit for all or a portionnot considered part of the goods or services to be delivered, as well as continually monitoring and evaluating customers’ ability to pay. Payment terms are typically zero to fifteen days within deliveryunit of account of the good or service.

Customer deposits are contract liabilities with customers that represent our obligation to either transfer goods or servicesequity security and, therefore, is not considered in the future, or refund the amount received. Where possible, we obtain customer deposits to lessen our risk of non-payment by our customers. Customer deposits are recognized as revenue as we perform under the contract. As of March 31, 2020 and December 31, 2019, the Company did not have any customer deposits recognized as unearned revenue.

Changes to unearned revenue during the three months ended March 31, 2020 and 2019 are summarized as follows:

Advertising/Promotion

The Company’s advertising/promotion costs are expensed as incurred. The Company did not incur any advertising/promotion expense for the three months ended March 31, 2020 or 2019.

Stock-based Compensation

The Company periodically issues restricted stock and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for restricted stock and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (“FASB”) where the value of the award is measured on the date of grant and recognized as stock-based compensation expense on the straight-line basis over the vesting period.

The Company accounts for restricted stock and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB where the value of the stock-based compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. In certain circumstances where there are no future performance requirements by the non-employee, restricted stock and warrants grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date.

Themeasuring fair value of the Company’s warrant grants, including the put option liability from the THC Merger, are estimated using the Black-Scholes-Merton and Binomial Option Pricing models, which use certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton and Binomial Option Pricing models and based on actual experience. The assumptions used in the Black-Scholes-Merton and Binomial Option Pricing models could materially affect compensation expense recorded in future periods. In light of the very limited trading of our common stock, the market value of the shares issued was determined based on the then most recent price per share at which we sold common stock in a private placement during the periods then ended. As of March 31, 2020 and December 31,2019, there were no outstanding warrants.

Recent Accounting Pronouncements

In January 2017, the FASB has issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” These amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable.value. The amendments also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The guidance isin this update are effective for public business entities that are SEC filers for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019.2023. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-04 should be adopted on a prospective basis. The Company adopted this guidance on January 1, 2020 and determined that its adoption has not had a material impact on its financial position, results of operations or cash flows.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements, including eliminating the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and requiring the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption, either of the entire standard or only the provisions that eliminate or modify requirements, is permitted. The Company adoptedis currently assessing the impact of the adoption of this guidance on January 1, 2020 and determined that its adoption has not had a material impactstandard on its consolidated financial position, results of operations or cash flows.statements.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). The new ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in the ASU are effective for public business entities that meet the definition of an SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. ForCompany has considered all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board also specified that an entity should adopt the guidance as of the beginning of its annual fiscal yearrecently issued accounting pronouncements and is not permitted to adopt the guidance in an interim period. The Company is still evaluating the effect the adoption will have on its financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, as part as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 removes certain exceptions to the general principle of ASC 740 in order to reduce the cost and complexity of its application. ASU 2019-12 is effective for public business entities for annual reporting periods beginning after December 15, 2020, and interim periods within those reporting periods. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company does not believe the adoption of such pronouncements will have a material impact on its financial statements.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures.

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 $13,695,411 at$23,596,219 as of March 31, 20202023 and incurred a net loss of $276,750 and utilized$67,519 during the year ended March 31, 2023.

The Company has incurred net cash of $146,771 in operating activitieslosses during the three months ended March 31, 2020. The Company has not generated significant revenues2023 and has incurred net losses since inception.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-listingup 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. During the three months ended March 31, 2020, the Company raised $148,671 in cash proceeds from the issuance of related party notes.

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 and/or to consummate a public offering.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 the Company.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 March 31, 20202023 and December 31, 20192022 is summarized as follows:

Schedule of Property and Equipment

Depreciation expense for the three months ended March 31, 20202023 and 20192022 was $2,157$1,541 and $2,157,$1,600, respectively.

Note 5 – Equity Method Investment

In March 2019, the Company acquired a 50% investment in PVI in exchange for 2,000,000 shares of the Company’s Series A Preferred stock, which upon issuance were immediately converted into 20,000,000 shares of common stock. The investment has been accounted for under the equity method. In addition to having a direct investment, the Company also noted that common ownership with PVI represents an additional variable interest. However, it was determined that the Company does not have the power to direct the activities that most significantly impact PVI’s economic performance, and therefore, the Company is not the primary beneficiary of PVI and PVI has not been consolidated under the variable interest model.

The investment was recorded at cost, which was determined to be $11,000,000 based on a value of $0.55 per share of common stock. A total of 10,000,000 shares of common stock were issued as of December 31, 2019. The remaining 10,000,000 shares were issued in January 2020 and are recorded as a stock subscription payable at December 31, 2019.

On January 17, 2020, the Company entered into an agreement with Jaime Ortega whereby in exchange for Mr. Ortega cancelling $1,062,000 of existing loans extended to the Company by Jaime Ortega, Neu-Ventures, Inc., and Sky Island, Inc., the Company transferred to Mr. Ortega 10,000 shares of capital stock of PVI. Subsequently, on February 11, 2021, the parties entered into amended agreement pursuant to which the original number of shares sold to Mr. Ortega was reduced from 10,000 shares of capital stock of PVI to 4,827 shares of capital stock of PVI. Accordingly, the Company currently owns 45,173 shares of capital stock of PVI. This amendment was entered into to correct the original agreement and properly reflect the value of the Company’s stock at the time of the initial agreement. As of March 31, 2020 and December 31, 2019, the Company has 45.17% and 50% ownership interest, respectively, in PVI.

The following represents summarized financial information of PVI:

Based on its 45.17% equity investment, the Company has recorded a loss from equity investment of $50,168 and $2,592 for the three month ended March 31, 2020 and 2019, respectively. The carrying value of the equity investment as of March 31, 2020 and December 31, 2019 was $9,826,547 and $10,938,715, respectively.

In August 2019, PVI began advancing funds for payment of the Company’s monthly office rent. Total advances through December 31, 2019 and for the three months ended March 31, 2020 were $42,856 and $22,470, respectively.

Note 6 – Leases

The Company leases office space under an operating lease expiring in June 2020. The lease includes an option to extend for an additional 3-year term with rent adjusted to market rates. The Company does not anticipate exercising the option to extend. Upon adopting ASU 2016-02 on January 1, 2019, the Company recorded a right-of-use asset and lease liability for $122,985 related to the remaining term of this operating lease. As an implicit rate was not available for the lease, the Company has used our incremental borrowing rate as the discount rate to measure the operating lease liability. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease. The Company has determined its incremental borrowing rate as of the inception of this lease to be 25% per year.

In accordance with ASC 842, Leases, the depreciation for the Company’s operating lease right-of-use asset is recorded in periodic lease expense within the Company’s general and administrative expenses in the consolidated statements of operations. The periodic lease expense recorded during the three months ended March 31, 2020 and 2019 was $25,493 and $25,493, respectively. Total lease payments for the three months ended March 31, 2020 and 2019 were $24,474 and $18,171, respectively. Total amortization of the operating lease right-of-use asset for the three months ended March 31, 2020 and 2019 was $23,995 and $18,700, respectively.

Future minimum lease payments required for this operating lease as of March 31, 2020 total $18,832, all of which is payable through June 30, 2020. Upon expiration of the lease term in June 2020, the lease reverted to a month-to-month basis until PVI entered into a new lease for the property in August 2020. The Company has agreed to pay a rent allocation to PVI of $1,000 per month.

Note 75 – Notes Payable, Related Party

Notes payable, relatedpayable-related party, are comprised of the following as of March 31, 20202023 and December 31, 2019:2022:

Schedule of Notes Payable Related Party Transactions

The Company entered intoRob Novinger (shareholder)

Rob Novinger is a series of individual notes with Sky Island, Inc., a wholly owned entity by our majority shareholder Jaime Ortega, from December 14, 2015 through March 10, 2016 in an amount including principal and interest of $751,000 (the “Prior Notes”) that were cancelled and restructured on March 10, 2016creditor to a subsequent promissory note (the “1^st Subsequent Note”) in an amount of $750,000 after a payment of $1,000. The individual Prior Notes were all due and payable on demand by the holder with an interest rate of 10% per annum, interest of which would be due onCompany. There was no activity during the then unpaid principal balance on the last day of each calendar quarter beginningyear ended December 31, 2016, with all the remaining principal and interest due and payable in full on December 31, 2021.2022. The 1^st Subsequent Note was due and payable upon demand and bore interest of 10% per annum. If no demand was made, then payments of interest only would be payable on the unpaid principal amount on the last day of each calendar quarter beginning December 31, 2016, and any and all remaining principal and interest would be due in full on December 31, 2021.

On April 5, 2017, the Company entered into a “2^nd Subsequent Note” in an amount of $484,000 that cancelled the 1^st Subsequent Note. The 2^nd Subsequent Note bears interest of 10% per annum, an principal and interest on the 2^nd Subsequent Note is all due and payable upon demand by the holder. The 2^nd Subsequent Note may be prepaid, in whole, or in part, at any time without penalty. As a resultbalance of the cancellation on April 5, 2017, the Company recorded a Troubled Debt Restructure write-down of $178,500 as a gain on settlement of debt in the consolidated statements of operations.

On July 17, 2017, the Company issued an unsecured promissoryrelated party note to Sky Island for $700,000 to fund the purchase of a parcel of property necessary for the Company’s development projects from an unrelated third party. The note and accrued interest at 10% are due and payable on demand by Sky Island. In June 2020, Sky Island agreed to reduce interest charged on the outstanding balance of all notes payable to 0%.

Since January 1, 2018 to December 31, 2019, the Company increased the Sky Island promissory notes from a beginning balance of $1,158,000 to a balance of $1,757,124 from additional advances and payments on behalf of the Company. In January 2020, the Company entered into an agreement to reduce the outstanding loan by $1,062,000, first applied to accrued interest of $312,891, in exchange for ownership in the Company’s equity method investment. See Note 5. This reduced the outstanding balanceis $30,851 as of March 31, 2020 to $1,004,755.

The promissory note transactions were deemed a related party transaction because Jaime Ortega, Owner/COO/Director of Sky Island, Inc., was a founding shareholder of the Company. Mr. Ortega has an aggregate ownership of 56.9% and 51.7% of the issued and outstanding common stock of the Company as of March 31, 20202023 and December 31, 2019, respectively.2022.

In September 2016, the Company received a $50,000 loan from Matt Feinstein, a Director, related to the acquisition of a company investment in 2016, which was then sold in 2017. This loan and any subsequent advances are due on demand and do not incur interest. The Company received additional advances from Mr. Feinstein during the years ended December 31, 2019 and 2018 of $3,416 and $2,096, respectively. During 2019, Mr. Feinstein agreed to reduce the note balance by $14,871, which was recorded as a gain on settlement of related party debt in the consolidated statements of stockholders’ equity. The outstanding balance of Mr. Feinstein’s loan as of March 31, 2020 is $349.

In May 2019, the Company agreed to a settlement with Eric Kennedy, a Director, related to deferred cash compensation that had been accrued for in the Company’s accounts payable and accrued liabilities. The settlement reduced the amount owed to $35,000 and resulted in a gain on settlement of related party payables of $36,000, which was recorded in the consolidated statements of stockholders’ equity. The remaining $35,000 owed was reclassified to related party notes payable. The note does not incur interest and was originally to be repaid through an initial $10,000 payment with monthly payments of $5,000 thereafter, but the Company was only able to make one $5,000 payment, reducing the balance to $30,000 as of March 31, 2020.

As of December 31, 2018, Rob Novinger, a shareholder of the Company, has been paid $10,000 against his note with an original balance of $30,000, leaving a balance of $20,000. An additional $5,000 was added to the balance from a new advance received in 2019, leaving a balance of $25,000 at March 31, 2020.

Beginning in April 2019, the Company also began receiving advances from Neu-Ventures, Inc., another entity owned by our majority shareholder, Mr. Ortega. These advances are due on demand and do not incur interest. Advances from Neu-Ventures between April and December 2019 totalled $325,280. Advances from Neu-Ventures between January and March 2020 totalled $148,671.

Accrued interest payable on the Sky Island promissory notes as of March 31, 2020 and December 31, 2019 was $20,436 and $304,707, respectively. Interest expense of $28,620 and $35,543 was recorded for the three months ended March 31, 2020 and 2019, respectively. There was no interest paid on Notes Payable, Related Party, during the three months ended March 31, 2020 or 2019.

Note 86 – Note Payable

The Company, through our former subsidiary, BBC, entered into a $25,000$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 March 31, 20202023 and December 31, 20192022, is $27,313,$26,609, which includes principal of $19,838$19,838 and $7,475$6,771 of accrued interest from prior years. The balance has been guaranteed by Matt Feinstein, a Director.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 three months ended March 31, 2023 and 2022.

Note 7 – Settlement Payable-Related Party

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

Schedule of Settlement Payable Related Party

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 three months ended March 31, 2023. This balance remains outstanding as of March 31, 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 three months ended March 31, 2023 and 2022, the Company incurred management consulting fees of $75,000 and $59,000, respectively.

During the three months ended March 31, 2023, Pineapple Consolidated, Inc. (“PCI”), a company controlled by the Director of Pineapple, Inc., advanced $124,000 to the Company to support operating costs.

During the three months ended March 31, 2023, Pineapple Ventures, Inc. (“PVI”) advanced $24,000 to the Company to support operating costs.

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

As of March 31, 2023 and December 31, 2022, the amount due to affiliates is $148,000 and $0, respectively.

Note 9 – Leases

As of March 31, 2023 and December 31, 2022, the Company had the following lease obligations:

Schedule of Operating Lease Liability

On January 11, 2023, the Company entered into a lease agreement for an office premise located in 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 Jan 1, 2023. The Company will decide on the exercise of the extension option upon the expiry of the five-year lease term.

The following table summarizes the maturity of our lease liabilities as of March 31, 2023:

Schedule of Maturity of Lease Liabilities

As of March 31, 2023, the Company has right-of-use assets as follows:

Schedule of Right-of-Use Assets

Sublease

On January 15, 2023, the Company, the sublessor, entered into a sub-lease agreement with a sublessee for an office premise located in 8912 Reseda Blvd, Northridge, CA 91324 under a five-year term and monthly lease payment of $16,000. The sub-lease was effective on January 15, 2023 with the lease commencement date of January 1, 2023. The sub-lease agreement provides with rent abatement to the sublessee for the first three months from January to March 2023.

During the three months ended March 31, 2023, the Company recorded lease receivable and recognized sublease revenue of $45,600 which represents three months of the straight-line rental income of the total sublease payment over the 60-month lease term.

Note 910 – Advances on Agreements

At March 31, 20202023 and December 31, 2019,2022, advances on agreements balance consist of the following:

Schedule of Advance on Agreement

Investor One

On February 16, 2016, the Company entered into a Binding Letter of Intent (“BLOI1”) with Investor One that the Company deemed a financing agreement for the purchase of a certain property (APN: 665-030-044), and upon completion of development of the acquired property, subsequently a revenue share agreement that was for the following considerations: (i) payment by Investor One of $125,000,$125,000, representing one-half the purchase price of the property, (ii) the Company would have repurchased the financed property for $187,500$187,500 within one year of the purchase, and (iii) “rent” payments of $3,750/$3,750 per month would have occurred during the referenced one year period.

During March 2016, the $125,000$125,000 in financing from Investor One, in addition to $40,768$40,768 from the Company, was deposited in Escrow No.: 7101604737-ST with Chicago Title Company against the purchase of another property (APN: 665-030-043) that was the subject of additional funding by a Investor Two, described below.

Investor Two

On March 18, 2016, the Company entered into a Binding Letter of Intent (“BLOI2”), subsequently amended by a Real Property Purchase and Sale Agreement and Joint Escrow Instructions (“Subsequent Land Purchase Agreement”) dated March 21, 2016, both of which the Company deemed a financing agreement for the purchase of a certain property (APN: 665-030-043) for the following considerations: (i) payment by Investor Two of $350,000$350,000 of the $515,000$515,000 purchase price of the property, (ii) the Company would assign the existing escrow amount of $165,768$165,768 to Investor Two, who would close the transaction and take title to the property, (iii) the Company would pay any taxes, fees and other out-of-pocket expenses associated with the transaction, and (iv) the Company would have repurchased the property from Investor Two for a price of $500,000$500,000 within ninety days of the closing of the transaction.

On March 22, 2016, Investor Two deposited $350,000$350,000 into the escrow account referenced above and the transaction closed with title conveyed to Investor Two as required under BLOI2. Subsequent to closing, the Company defaulted under the BLOI2 and the Subsequent Land Purchase Agreement as the Companyit did not reacquire the property in the required ninety days after closing. As a consequence, the Company forfeited the $165,768$165,768 deposited into the Chicago Title Escrow account referenced above.

Investment Accounting Treatments for Investors One and Two

The escrow agreement closed and Investor Two took title to property. There is no provision in BLOI2, or in the Subsequent Land Purchase Agreement, that would impose any continuing liability on the Company other than the loss of the Company’s escrow deposit.

As no terms and conditions were established to characterize the $125,000$125,000 investment as a Note Payable, the Company has recorded a continuing liability to Investor One in connection with BLOI1 having been recorded as a deferred liability. Contrary to the case with Investor Two, the Company acknowledged the additional $62,500$62,500 liability provided for under BLOI1 and $187,500$187,500 was recorded as “advances on agreements” as a short-term deferred liability on the Company’s books and records. Additionally, BLOI1 provided for a “rent” payment of $3,750 for a period of twelve months after execution of BLOI1.

In February 2019, the Company entered into a settlement agreement with Investor One which required the issuance of 20,000 shares of the Company’s common stock and established an additional principal sum for repayment of $200,000.$200,000. The settlement includes installment payments of $10,000$10,000 per month beginning on February 15, 2019, until the balance is repaid and ends the accrual of interest. Prior to entering into the settlement agreement, the Company had recorded interest expense of $4,125,$4,125, bringing the balance from $187,500$187,500 at December 31, 2018 to $191,625.$191,625. The settlement agreement resulted in additional expense of $8,375.$8,375. The Company made three $10,000$10,000 payments during the year ended December 31, 2019, and also reduced the value by another $1,000$1,000 in connection with the 20,000 shares being valued at $11,000$11,000 instead of the $10,000$10,000 value initially discussed.

Investor Three

In December 2015, the Company entered into a Revenue Share Agreement for $750,000 that There 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, in accordance with a settlement discussed in further detail in Note 12. This balance remains outstanding at December 31, 2019.

Note 10 – Put Option Liability

In connection with the THC Merger, the Company granted the THC shareholders an option to require the Company to purchase from them up to 1,478,836 shares of the Company’s common stock at a price of $0.68 per share for the period commencing on the 24-month anniversary of the closing of the THC Merger and ending on the 30-month anniversary of the closing of the THC Merger; provided, however, that they may only exercise this option if the Company’s stock price is below $0.88 and trading volume is below 50,000 a day for a 90-day period. The accounting treatment requires that the Company records the fair value of the put option liability as of the inception date and to fair value the put option liability as of each subsequent reporting date.

The fair value of the Company’s put option liability from the THC Merger was estimated using the Binomial Pricing Model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options, and future dividends. Accordingly, the Company used three (3) comparables in the cannabis industry to determine a volatility range and elected to use our private placement stock price of $0.50 at issuance at December 31, 2017.

The fair value as of the date of issuance of the described put option liability was determined using the Binomial Pricing Model, with the following assumptions:

The put option liability on the date of issuance of February 12, 2016 was determined to be $706,616 and was included in the purchase price of the THC Merger. While the 30-month period expired prior to December 31, 2018, the Company is currently in arbitration related to an attempted exercise of the put option, in which the exercise of the put option was upheld by the arbitrator. Based on the Company’s asserted defenses, the Company is appealing the award. However, the Company has recorded a stock subscription receivable and a put option liability for the $1,000,000 exercise amount at March 31, 2020 and December 31, 2019 based on the pending award as discussed in Note 12. During activity during the three months ended March 31, 20202023 and 2019, there has not been any change in the fair value of the put option liability. The matter remains unresolved as of March 31, 2020 and both the stock subscription receivable and the put option liability for the $1,000,000 exercise remain outstanding.2022.

Note 11 – Stockholders’ Equity

The Company is authorized to issue 525,000,000shares of capital stock, $0.0000001 $0.0000001 par value per share, of which 5,000,000 shares are designated as Series A Convertible Preferred stock, 20,000,000 shares are designated as preferred stock and 500,000,000shares are designated as common stock. As of March 31, 20202023 and December 31, 2019,2022, there were noshares of preferred stock issued and outstanding, and 87,446,200 and 76,890,925, respectively,outstanding.

On February 16, 2023, the Company issued 600,000 shares of common stock issued and outstanding.for stock subscription of $150,000 received during the year ended December 31, 2022.

During the three months ended March 31, 2020 and 2019,2022, the Company did not issue any shares for services.

During the three months ended March 31, 2019, the Company paid a refund of additional paid-in-capital of $2,500.

During the three months ended March 31, 2019, the Company issued 10,000,000 shares of common stock in exchange for a 50% equity investment in PVI, with another 10,000,000 shares of common stock issued during the three months ended March 31, 2020.

The Company has areceived proceed from stock subscriptions payable balance of $6,000 and $5,940,720 as$100,000 for 400,000 shares at $0.25 per share.

As of March 31, 20202023 and December 31, 2019, respectively. A total of $5,500,000 of2022, the balance at December 31, 2019 represents 10,000,000 shares ofissued and outstanding common stock issued in exchange for the Company’s investment in PVI that were not issued until February 2020. An additional $444,220 of the balance at December 31, 2019 represents the settlement of 555,275was 71,763,569 shares payable to The Hit Channel discussed in Note 12, which were also issued during February 2020. The Company also awarded 10,000and 71,163,569 shares, with a value of $5,500 that were not yet issued as of March 31, 2020.respectively.

The value of the issued stock was determined based on the value at which the Company’s stock was sold close to when the services were provided or when the donation occurred.

Note 12 – Commitments and Contingencies

From time to time, the Company is party to certain legal proceedings that arise in the ordinary course and are incidental to our business. Future events or circumstances, currently unknown to management, will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on our consolidated financial position, liquidity, or results of operations in any future reporting periods. The following is a list of current litigation:

Salem, et al. v. Pineapple Express, Inc., et al.

JAMS Arbitration Reference Number: 1210035565 was filed July 13, 2018. This matter arises from a certain Agreement and Plan of Merger and Reorganization dated February 12, 2016. Claimants sought forfeiture of certain IP rights, more specifically, Registered Mark “THC” standard character mark (U.S. Trademark Reg. No. 1954405 registered on February 6, 1996) and Domain Name “www.thc.com”, together with proceeds Respondents have received from any royalty or licensing payments relating to the IP rights from the date of Forfeiture, as well as costs for reasonable attorneys’ fees. Arbitration was conducted on July 17-19, 2019. The arbitrator issued an award on December 23, 2019 upholding the Claimants’ exercise of the put option as discussed in Note 10 and the transfer of the IP rights. Claimants/Plaintiffs then filed a Petition to Confirm Arbitration Award and Respondents/Defendants filed a Petition to Vacate Arbitration Award in the matter entitled, Pineapple Express, Inc., et al. v. Salem, et al., bearing Los Angeles Superior Court Case Number SC129690. Both Petitions were heard on October 8, 2020, and Claimants/Plaintiffs’ Petition to Confirm Arbitration Award was granted. Pineapple Express, Inc. filed a Notice of Appeal on the same date, which is currently pending briefing schedule. Based on the pending award, the Company has accrued the $1,000,000 put option exercise amount and recorded a $1,000,000 stock subscription receivable as of March 31, 2020 and December 31, 2019.

Pineapple Express, Inc. v. Ramsey Salem

JAMS Arbitration Reference Number: 1220063897 was filed December 4, 2019. This matter arises from claims of breach of contract, more specifically the confidentiality provisions of certain Agreement and Plan of Merger and Reorganization dated February 12, 2016, entered into between the parties and arising from the disclosure of the interim arbitration award in the matter entitled and above-referenced as: Salem, et al. v. Pineapple Express, Inc., et al. JAMS Arbitration Reference Number: 1210035565, filed July 13, 2018, by Respondent. The matter was pending before JAMS and set for arbitration to be conducted on March 22, 2021, but the matter was continued as the parties are executing a settlement agreement resolving all claims on a global basis which is expected to be executed in April 2021.

Hawkeye v. Pineapple Express, Inc., et al.

Los Angeles Superior Court Case Number: BC708868 was filed June 6, 2018. Plaintiff claimed damages against Defendant in the excess of $900,000$900,000 arising from a series of successive amended and revised revenue sharing agreements pertaining to rental income from certain leasehold for premises more commonly known as 65421 San Jacinto Lane, Desert Hot Springs, CA 92240 which was not realized through no fault of Defendants, nor are Defendants contracting parties to the lease agreement or original revenue sharing agreement for which consideration was paid. Defendants deny all allegations of claims asserted in the Complaint. Notwithstanding, the parties settled the matter pursuant to a confidential settlement agreement in or about January 3, 2020. However, the matter was reduced to an entry of judgment by the court in or about February 21, 2020, for the amount of $615,000,$615,000, which monies remain due and outstanding and are accrued for in the Company’s advances on agreements liabilitysettlement payable as of March 31, 20202023 and December 31, 2019.2022. The parties are cooperating to resolve this matter pursuant to the terms of the agreed upon settlement.

Sharper, Inc. v. Pineapple Express, Inc., et al.

Los Angeles Superior Court Case Number: 18SMCV00149 was filed November 1, 2018. Complaint for money with an amount in controversy of $32,500.$32,500. The matter arises from certain claim for goods and services rendered beyond the contract claim which is wholly disputed. The court case matter was stayed on February 11, 2019, pending the outcome of Arbitration. Finnegan & Diba was substituted out of the matter on June 14, 2019. The matter was arbitrated through other counsel and the arbitrator issued a final award in favor of Petitioner in or about September 4, 2019, for the principal amount of $15,375.$15,375, which has been accrued for in the Company’s contingent liabilities as of December 31, 2018. The award was transitioned to an entry of judgment in the total amount of $18,692$18,692 on or about February 27, 2020, against Pineapple Express, Inc. without specificity as to the judgment debtor’s state of incorporation, and Pineapple Express Consulting Inc., which remains due and outstanding. The accrual in the Company’s contingent liabilities as of March 31, 20202023 and December 31, 20192022 is $18,692.$18,692.

Cunningham v. Pineapple Express, Inc.

Los Angeles Superior Court Case Number: BS171779BS171779: Judgment, ordered by the Department of Industrial Relations, Labor Commissioner’s Office was entered by the Court on December 11, 2017. The amount of judgment entered was $47,674.$47,684. Enforcement on the Judgment is continuing. Finnegan & Diba was retained to defend enforcement proceedings and substituted out of the matter in March 2019. This claim iswas accrued for in the Company’s contingent liabilities as of March 31, 20202023 and December 31, 2019.2022.

Pineapple Express, Inc. v. Cunningham

Los Angeles Superior Court Case Number: SC 127731 was filed June 21, 2017. This action arose from certain complaint and cross-complaint which were both dismissed. Defendant Cunningham pursued a cost judgment against Plaintiff and obtained a judgment in the amount of $2,367,$2,367, which remains outstanding to date and since January 22, 2018. This amount has been accrued for in the Company’s contingent liabilities as of March 31, 20202023 and December 31, 2019.2022. Enforcement proceedings have ensued and said judgment remains outstanding to date. Finnegan & Diba was not the counsel of record when judgment was entered and only addressed enforcement proceedings until such time it was substituted out as counsel of record in or about June 14, 2019.

The Hit Channel, Inc. v. Pineapple Express, Inc.

Los Angeles Superior Court Case Number: 19STCV09006 was filed in or about March 14, 2019. This action arose from certain complaint and cross-complaint arising from certain licensing agreement entered into between the parties for the commercial exploitation of the URL and Domain Name THC.com. The matter has since resolved pursuant to the confidential settlement agreement entered into by and between the parties. The licensing agreement has been deemed terminated, and the matter has been dismissed with prejudice by order of the court on February 14, 2020. The Hit Channel was awarded $40,000 and 555,275 shares of the Company’s restricted stock as settlement, for which the Company has accrued $40,000 in contingent liabilities and $444,220 in stock subscriptions payable as of December 31, 2019. This settlement shares were issued and the $40,000 was paid in February 2020. The Company also received the website, “www.THCExpress.com”, from The Hit Channel as part of the settlement agreement.

StoryCorp Consulting, dba Wells Compliance Group v. Pineapple Express, Inc.

JAMS Arbitration Reference Number: 1210037058 was , filed December 18, 2019. This matter arises from dispute over certain services agreement entered into between the parties in or about January 31, 2019. In 2020, the parties agreed on a settlement amount of $15,000. A$15,000. The parties self-represented in arbitration and a final arbitration award from arbitration also awarded arbitration fees towas issued in the claimant, increasingamount $23,805 on or about October 27, 2020, against the award from $15,000 to $23,805, which the Company has accrued in contingent liabilities as of March 31, 2020 and December 31, 2019.Company. Claimant has since filed a Petition to Confirm Arbitration Award against Pineapple Express, Inc., a California Corporation, with the Los Angeles Superior Court bearing Case Number 20STCP04003, set for hearing on April 12, 2021. On information and belief, Pineapple Express Inc., a California Corporation, is not affiliated with Pineapple Inc., a Nevada Corporation, formerly known as Pineapple Express, Inc., a Wyoming Corporation. Nonetheless,Claimant amended its complaint on or about February 3, 2021, to include Defendant Pineapple Express, Inc., a Wyoming corporation. A default judgement was entered on May 11, 2021, against Pineapple Express, Inc., in the amount of $29,280. Defendant, Pineapple Inc., a Nevada Corporation, is not a party to the pending matter to date. The parties are cooperatinghope to engage in settlement discussions and resolve this mattermatter. The $29,280 has been accrued for as of March 31, 2023 and December 31, 2021, in advance of hearing.the Company’s contingent liabilities.

Russ Schamun v. Pineapple Express Consulting, Inc.

This is a claimsmall claims matter for $7,500$7,500 filed by an independent contractor. There was a hearing date on August 23, 2019, and judgment was awarded to Russ Schamun. This creditor will be satisfied once the Company is in a position to satisfy the judgment. The $7,500$7,500 has been accrued for as of March 31, 20202023 and December 31, 20192022, in the Company’s contingent liabilities.

Orr Builders, et. al. v. Pineapple Express, Inc.

This action is the culmination of a multiplicity of actions and cross-actions arising from the claims to title relating to certain real property more commonly known as 65241 San Jacinto Lane, Desert Hot Springs, California 92240-5014 and construction disputes for building projects thereon. The Company and its subsidiaries were dismissed from this action and the property was subsequently sold, fully releasing the Company from any further liability.

SRFF v. Pineapple Express, Inc.

This matter resulted in a stipulated judgment whereas former SEC counsel claimed approximately $60,000$60,000 in legal work that was not paid for. The Company claimed that the work being charged for (a registration statement to be filed with the SEC) was not completed. Regardless of this fact, the Company signed a payment plan and confession of judgment if the plan was not honored. The result was a judgment entered in favor of SRFF because of the confession. This creditor will be satisfied once the Company is in a position to satisfy the judgment. The settlement amount has been accrued for in the Company’s accounts payable and accrued liabilities balance at March 31, 20202023 and December 31, 2019.2022.

Novinger v. Pineapple Express, Inc.

Los Angeles Superior Court Case Number: 20CHLC10510 was filed in or about March 11, 2020. This is a limited jurisdiction action arising from a claim for monies lent to Pineapple Express, Inc. without specificity as to the judgment debtor’s state of incorporation, for the total of $30,000,$30,851, which is accrued for in the Company’s related party notes payable.payable (Note 7) as of March 31, 2023 and December 31, 2022. On September 23, 2020, a default judgment was entered against the Company. The parties are working to resolve the matter or alternatively vacate and set aside the default judgment entered unbeknownst to the Company.

Note 13 – Subsequent Events

SubsequentThe Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q and has determined that there have been no events that have occurred that would require adjustments to March 31, 2020,the disclosures in the condensed consolidated financial statements, other than those described below and the binding letter of intent detailed in Note 2.

On September 28, 2022, the Company signed a totalletter of 1,015,000intent with Mathew Feinstein, a related party and 8% owner of Pineapple, Inc. and the current owner of Pineapple Wellness, Inc., (“PW”), for the purchase of PW, which also includes the website www.PineappleWellness.com and the retail storefront at 8783 W. Pico Blvd., Los Angeles, CA which will sell CBD products and apparel when launched. Per the agreement, Feinstein will sell 100% interest in the Entity in exchange for 2,500,000 shares of Pineapple, Inc, (“PNPL”) to be issued by Q2 2023, upon which the shares of the Company’s common stock were issued for compensation and debt extinguishment.

The Company entered into an Asset Purchase and Sale Agreement on September 4, 2019 (the “APA”) followed by a Letter Agreement on March 2, 2020, and closing on April 20, 2020, whereEntity shall transfer. There is no impact to the Company sold the domain “THC.com”, the trademarks bearing the “THC” name, and the URL “pineappleexpress.com” to Mr. Ortega in exchangefinancials for the cancellation of $1,000,000 of Sky Island notes payable. Subsequently, on December 17, 2020, the parties entered into a Recission Agreement pursuant to which the parties cancelled and rescinded the APA and all ancillary agreements. Accordingly, the intellectual property subject to the APA was returned to the Company and $1,000,000 of debt owed to Sky Island was returned to the books and records of the Company.three months ended March 31, 2023, as shares will be transferred in Q2 2023.

Also on December 17, 2020,On March 10, 2023, the Company entered into a lease agreement for an Intellectual Property Purchase Agreementoffice premise located in 8707 Venice Boulevard, Los Angeles, CA 90034 under a five-year term with PVI pursuant to which the Company sold alltwo 5-year extension options upon expiry and monthly lease payment of the Company’s trade dress and trade names, logos, Internet addresses and domain names, trademarks and service marks and related registrations and applications, including any intent to use applications, supplemental registrations and any renewals or extensions in exchange for Mr. Jaime Ortega, as majority principal$10,000 with an annual escalation rate of Buyer, waiving and cancelling $1,000,000 of the aggregate existing loans extended by Mr. Ortega to the Company.4%. The lease obligation will commence on April 1st, 2023.

SUPPLEMENTARY DATA

The Company is a smaller reporting Company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.

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

As used herein, “Pineapple,” the “Company,” “our,” “we” or “us” and similar terms include Pineapple, Inc., unless the context indicates otherwise. The following discussion and analysis of our business and results of operations for the three months ended March 31, 2020,2022, and our financial conditions at that date, should be read in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”). US Dollars are denoted herein by “USD,” “$” and “dollars.”

General

This management discussion and analysis of the financial condition and results of operations of the Company is for the three months ended March 31, 20202023, and 2019.2022. It is supplemental to and should be read in conjunction with the Company’s unaudited condensed consolidated financial statements as of March 31, 20202023, and the consolidated financial statements for the year ended December 31, 20192022, included in our Annual Report on Form 10-K for the year ended December 31, 20192022, and filed with the U.S. Securities and Exchange Commission and the accompanying notes for each respective periods.period. The Company’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Disclaimer Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report (or otherwise made by us or on our behalf from time to time in other reports, filings with the U.S. Securities and Exchange Commission, news releases, conferences, internet postings or otherwise) that are not statements of historical fact constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, notwithstanding that such statements are not specifically identified. These forward-looking statements relate to expectations or forecasts for future events, including without limitation our earnings, revenues, expenses or other future financial or business performance or strategies, or the impact of legal or regulatory matters on our business, results of operations or financial condition. These statements may be preceded by, followed by or include the words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intent,” “could,” “would,” “should,” “estimate,” “might,” “plan,” “predict” or “continue” or the negative or other variations thereof or comparable terminology intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are based on information available to us as of the date of this Quarterly Report and on our current expectations, forecasts and assumptions, and involve substantial risks and uncertainties. Actual results may vary materially from those expressed or implied by the forward-looking statements herein due to a variety of factors.

This Quarterly Reportquarterly report contains forward-looking statements, including statements regarding, among other things:

Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks and uncertainties discussed in Item 1A. Risk Factors of this Quarterly Report,quarterly report, section captioned “Risk Factors” of our annual report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 16, 2021,May 5, 2023 and matters described in this Quarterly Reportquarterly report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Quarterly Reportquarterly report will in fact occur. We caution you not to place undue reliance on these forward-looking statements. In addition to the information expressly required to be included in this Quarterly Report,quarterly report, we will provide such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading. All subsequent written and oral forward-looking statements attributable to our Company or to persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. All forward-looking statements included in this Quarterly Reportquarterly report are made only as of the date of this report or as indicated. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Introduction

Introduction

This filing includes, in one comprehensive filing, the business and financial information for the Company as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019, and the Company’s financial statements..

The Company has spent the last several years recasting the direction of the Company. We intend to take advantage of the opportunities that have been identified in the ancillary cannabis sectors. The market opportunities that are opened to a ancillary service provider to the cannabis company include PVI’s involvement withhemp CBD sales, property rentals to cannabis delivery, retail, manufacturing,operators at a profit and cultivation. Our main focus has been to receive approximately 45% of all net income generated by PVI from its business ventures, as well as selling the proprietary Top Shelf System to cannabis dispensaries.

Our Business

Pineapple, Inc. (f/k/a Pineapple Express, Inc). (“Pineapple”, the “Company,” “we,” “us” or “our”) is based in Los Angeles, California. The Company was originally formedprocures 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. The Company’s executive team blends enterprise-level corporate expertise with decades of combined experience operating in the state of Nevada under the name Global Resources, Ltd. on August 3, 1983. It changed its name to “Helixphere Technologies Inc.” on April 12, 1999 and to “New China Global Inc.” on October 2, 2013. It reincorporated in Wyoming on October 30, 2013 and changed its name to “Globestar Industries” on July 15, 2014. On August 24, 2015, the Company entered into a share exchange agreement with Better Business Consultants, Inc. (“BBC” dba “MJ Business Consultants”), a corporation formed in California on January 29, 2015, all of BBC’s shareholders, and the Company’s majority shareholder at that time (the “BBC Share Exchange”). Pursuant to the BBC Share Exchange, BBC became a wholly owned subsidiary of the Company. Upon consummation of the BBC Share Exchange, the Company ceased its prior business of providing educational services and continued the business of BBC as its sole line of business. BBC has three wholly owned subsidiaries, Pineapple Express One LLC, a California limited liability company, Pineapple Express Two LLC, a California limited liability company, and Pineapple Properties Investments, LLC, a Washington limited liability company. Better Business Consultants, Inc. has since been sold by the Company. On September 3, 2015, the Company changed its name to “Pineapple Express, Inc.” from “Globestar Industries.”tightly-regulated cannabis industry.

ln addition to having stakes in the foregoing business ventures, the Company was also assigned a patent for the proprietary Top Shelf Safe Display System (“SDS”) for use in permitted cannabis dispensaries and delivery vehicles across the United States and internationally (where permitted by law), on July 20,^th, 2016, by Sky Island, Inc. (the “SDS Patent”) via a Patent Assignment Agreement (the “Patent Assignment Agreement”). The SDS Patent was originally applied for and filed on August 11, 2015, by Sky Island, Inc. and received its notice of allowance from the United States Patent and Trademark Office on March 22, 2017. It is anticipated that the Top-Shelf SDS product shall retail for $30,000 per unit. Pineapple intends to sell the Top-Shelf SDS units to PVI for use in retail storefronts and delivery vehicles as well as to sell the Top Shelf SDS technology to otheroperated by cannabis retail companies. The Company anticipatedanticipates beginning sales of the Top Shelf SDS system in the secondthird quarter of 2021.2023.

In 2019 the Company entered into a Share Exchange Agreement, as amended (the “PVI Agreement”), with Pineapple Ventures, Inc. (“PVI”) and PVI’s stockholders. In connection with the PVI Agreement, the Company acquired a total of 50,000 shares of PVI’s outstanding capital stock, equaling 50% of the outstanding shares of PVI. The Company’s ownership interest in PVI was reduced to approximately 45% in January 2020. As a result of the investment in PVI, the Company entered the cannabis cultivation, production and distribution sector throughout California. PVI has several leased properties that are currently being developed to provide these cannabis-related services.

During 2019, PVI took preliminary business steps towards a project with Nordhoff Leases, LLC (“Nordhoff”), a related party, in which Nordhoff subleased 38,875 square feet in a building to three 15% owned entities by PVI; however, the contemplated project never matriculated and the planned contribution of Nordhoff to PVI was nullified. In June and July of 2020 PVI sold its 15% investments in three entities, including the cannabis licenses associated with them for $2.87 million to support its operations and assigned its three 15% owned entities’ subleases with Nordhoff to the buyer as part of the sale. PVI received 15% of the proceeds of the sale of the entities and their cannabis licenses.

Pursuant to an Agreement and Plan of Merger (“Merger Agreement”), dated as of April 6, 2020, by and between, Pineapple Express, Inc., a Wyoming corporation (“Pineapple Express”), and Pineapple, Inc., a Nevada corporation (“Pineapple”) and wholly-owned subsidiary of Pineapple Express, effective as of April 15, 2020 (the “Effective Date”), Pineapple Express merged with and into Pineapple, with Pineapple being the surviving entity (the “Reincorporation Merger”). The Reincorporation Merger was consummated to complete Pineapple Express’ reincorporation from the State of Wyoming to the State of Nevada. The Merger Agreement, the Reincorporation Merger, the Name Change (as defined below) and the Articles of Incorporation and Bylaws of Pineapple were duly approved by the written consent of shareholders of Pineapple Express owning at least a majority of the outstanding shares of Pineapple Express’ common stock. Pursuant to the Merger Agreement, the Company’s corporate name changed from “Pineapple Express, Inc.” to “Pineapple, Inc.”

The Company is based in Los Angeles, California. Through the Company’s operating subsidiary Pineapple Express Consulting, Inc. (“PEC”), as well as its PVI portfolio asset, the Company provides capital to its canna-business clientele, leases properties to those canna-businesses, takes equity positions and manages those operations, and provides consulting and technology to develop, enhance, or expand existing and newly formed infrastructures. Pineapple aims to become the leading portfolio management company in the U.S. cannabis sector. The Company’s executive team blends enterprise-level corporate expertise with a combined three decades of experience operating in the tightly-regulated cannabis industry. Pineapple’s strategic asset integration has provided it with the infrastructure to support its subsidiaries with cost-effective access to all segments of the vertical: from cultivation and processing, to distribution, retail and delivery. With its headquarters in Los Angeles, CA, Pineapple’s portfolio company, PVI, is rapidly increasing its footprint throughout the state and looking to scale into underdeveloped markets. While PVI is generating revenues from the above-mentioned means, PEC is currently still in development and is currently not generating revenues. The Company receives monthly dividends equal to approximately 45% of PVI’s income that provide regular operating cash flows.

Impact of COVID-19

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States. As a result, significant volatility has occurred in both the United States and International markets. While the disruption is currently expected to be temporary, there is uncertainty around the duration. To date, the Company has experienced declining revenues, difficulty staffing interpreters, difficulty meeting debt covenants, maintaining consistent service quality with reduced revenue, and a loss of access to customers. Management expects this matter to continue to impact our business, results of operations, and financial position, but the ultimate financial impact of the pandemic on the Company’s business, results of operations, financial position, liquidity, or capital resources cannot be reasonably estimated at this time.

Recent Developments

None

Recent Accounting Pronouncements

Please see section captioned “Recent Accounting Pronouncements” in Note 1 to our unaudited condensed consolidated financial statements included in this Quarterly Report for a discussion of recently issued and adopted accounting pronouncements.

Results of Operations

SummaryThe following summary of Resultsour results of Operations

Revenue

Revenue from operations should be read in conjunction with our unaudited condensed financial statements for the three months ended March 31, 2020 was $0,2023 and 2022, which represents a decreaseare included herein.

Three Months Ended March 31, 2023, Compared to Three Months Ended March 31, 2022

Revenues

The Company recognized sublease revenue of $15,000, or 100% from $15,000$45,600 during the three months year ended March 31, 2019. 2023 and had no revenue during the three months ended March 31, 2022.

Operating Expenses

The decrease in revenue was related to generating 3 monthsCompany incurred operating expenses of consulting revenue from PVI in 2019 with no such revenue generated in 2020.

Operating Loss from Continuing Operations

Operating loss from continuing operations$113,119 for the three months ended March 31, 2020 was $197,962, an increase2023, a decrease of $86,178, or 43.5%,12% from an operating loss from continuing operationsexpenses of $111,784 during the three months ended March 31, 2019. We noted that revenue decreased and general and administrative expenses increased$128,921 for the three months ended March 31, 2020 compared2022 mainly due to the three months ended March 31, 2019, resultingdecrease in an increase of the operating loss.professional fees.

General and AdministrativeOther Income (Expenses)

General and administrative expensesThe Company had no other income for the three months ended March 31, 2020 were $195,805, an increase2023 as compared to other income of $71,178, or 36.4%, from $124,627 during the three months ended March 31, 2019. The most significant changes were increases in legal expense of $32,474 and increases in payroll expense of $48,500. These were offset by a reduction in consultant expense of $14,103.