Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 15, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Current Fiscal Year End Date | --12-31 | |
Document Period End Date | Mar. 31, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Transition Report | false | |
Entity File Number | 001-31588 | |
Entity Registrant Name | PINEAPPLE ENERGY INC. | |
Entity Incorporation, State or Country Code | MI | |
Entity Tax Identification Number | 41-0957999 | |
Entity Address, Address Line One | 10900 Red Circle Drive | |
Entity Address, City or Town | Minnetonka | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55343 | |
City Area Code | 952 | |
Local Phone Number | 996-1674 | |
Title of 12(b) Security | Common Stock, par value $0.05 per share | |
Trading Symbol | PEGY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 7,435,586 | |
Entity Central Index Key | 0000022701 | |
Amendment Flag | false | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 5,750,143 | $ 18,966 |
Restricted cash | 3,969,096 | |
Investments | 786,787 | |
Trade accounts receivable, less allowance for doubtful accounts of $59,000 and $0, respectively | 2,804,070 | |
Inventories, net | 1,625,666 | 0 |
Prepaid income taxes | 3,374 | |
Other current assets | 960,688 | |
Current assets held for sale | 6,566,855 | |
TOTAL CURRENT ASSETS | 22,466,679 | 18,966 |
PROPERTY, PLANT AND EQUIPMENT, net | 298,895 | |
OTHER ASSETS: | ||
Investments | 2,302,395 | |
Goodwill | 15,776,014 | |
Operating lease right of use asset | 127,902 | |
Intangible assets, net | 18,778,947 | 2,780,270 |
Other assets, net | 41,139 | |
TOTAL OTHER ASSETS | 37,026,397 | 2,780,270 |
TOTAL ASSETS | 59,791,971 | 2,799,236 |
CURRENT LIABILITIES: | ||
Accounts payable | 2,922,795 | 2,233,371 |
Accrued compensation and benefits | 797,473 | 307,828 |
Operating lease liability | 93,721 | |
Other accrued liabilities | 8,904 | |
Working capital note payable | 350,000 | |
Dividends payable | 506,212 | |
Deferred revenue | 114,277 | |
Contingent value rights | 6,566,855 | |
TOTAL CURRENT LIABILITIES | 11,010,237 | 2,891,199 |
LONG TERM LIABILITIES: | ||
Loan payable and related interest | 974,460 | 6,194,931 |
Related party payables | 2,350,000 | |
Operating lease liability | 39,122 | |
Deferred revenue | 68,729 | |
Contingent consideration | 4,684,000 | |
Contingent value rights | 11,710,375 | |
TOTAL LONG-TERM LIABILITIES | 17,476,686 | 8,544,931 |
COMMITMENTS AND CONTINGENCIES (Note 8) | ||
STOCKHOLDERS’ EQUITY | ||
Convertible preferred stock, par value $1.00 per share; 3,000,000 shares authorized; 32,000 and 0 issued and outstanding, respectively | 32,000 | |
Common stock, par value $0.05 per share; 37,500,000 shares authorized; 7,435,586 and 3,074,998 shares issued and outstanding, respectively | 371,779 | 153,750 |
Additional paid-in capital | 41,538,864 | (53,750) |
Accumulated deficit | (10,620,528) | (8,736,894) |
Accumulated other comprehensive loss | (17,067) | |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | 31,305,048 | (8,636,894) |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 59,791,971 | $ 2,799,236 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Condensed Consolidated Balance Sheets [Abstract] | ||
Trade accounts receivable, allowance for doubtful accounts | $ 59 | $ 0 |
Preferred stock, par value | $ 1 | $ 1 |
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, shares issued | 32,000 | 0 |
Preferred stock, shares outstanding | 32,000 | 0 |
Common stock, par value | $ 0.05 | $ 0.05 |
Common stock, shares authorized | 37,500,000 | 37,500,000 |
Common stock, shares issued | 7,435,586 | 3,074,998 |
Common stock, shares outstanding | 7,435,586 | 3,074,998 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss | ||
Sales | $ 318,800 | |
Cost of sales | 223,668 | |
Gross profit | 95,132 | |
Operating expenses: | ||
Selling, general and administrative expenses | 297,272 | $ 231,227 |
Amortization expense | 357,463 | 357,324 |
Transaction costs | 968,505 | 168,445 |
Total operating expenses | 1,623,240 | 756,996 |
Operating loss | (1,528,108) | (756,996) |
Other expenses: | ||
Investment and other income (expense) | (5,144) | |
Interest and other expense | (350,382) | (311,413) |
Other expense, net | (355,526) | (311,413) |
Operating loss before income taxes | (1,883,634) | (1,068,409) |
Net loss | (1,883,634) | (1,068,409) |
Other comprehensive loss, net of tax: | ||
Unrealized loss on available-for-sale securities | (17,067) | |
Total other comprehensive loss | (17,067) | |
Comprehensive loss | $ (1,900,701) | $ (1,068,409) |
Basic net loss per share: | $ (0.58) | $ (0.35) |
Diluted net loss per share: | $ (0.58) | $ (0.35) |
Weighted Average Basic Shares Outstanding | 3,231,461 | 3,074,998 |
Weighted Average Dilutive Shares Outstanding | 3,231,461 | 3,074,998 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders’ Equity - USD ($) | Preferred Stock [Member]Series A Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Series A Preferred Stock [Member] | Total |
BALANCE at Dec. 31, 2020 | $ 153,750 | $ (153,750) | $ (2,501,344) | $ (2,501,344) | |||
BALANCE, Shares at Dec. 31, 2020 | 3,074,998 | ||||||
Net loss | (1,068,409) | (1,068,409) | |||||
BALANCE at Mar. 31, 2021 | $ 153,750 | (153,750) | (3,569,753) | (3,569,753) | |||
BALANCE, Shares at Mar. 31, 2021 | 3,074,998 | ||||||
BALANCE at Dec. 31, 2021 | $ 153,750 | (53,750) | (8,736,894) | (8,636,894) | |||
BALANCE, Shares at Dec. 31, 2021 | 3,074,998 | ||||||
Net loss | (1,883,634) | (1,883,634) | |||||
Issuance of common stock for professional services | $ 625 | (625) | |||||
Issuance of common stock for professional services, Shares | 12,499 | ||||||
Issuance of common stock for conversion of related party payables | $ 14,688 | 2,335,313 | 2,350,000 | ||||
Issuance of common stock for conversion of related party payables, Shares | 293,750 | ||||||
Issuance of common stock for conversion of working capital note payable | $ 3,125 | 496,875 | 500,000 | ||||
Issuance of common stock for conversion of working capital note payable, Shares | 62,500 | ||||||
Effect of reverse capitalization | $ 121,467 | 1,473,312 | 1,594,779 | ||||
Effect of reverse capitalization, Shares | 2,429,341 | ||||||
Issuance of common stock for HEC asset acquisition | $ 78,125 | 12,703,109 | 12,781,234 | ||||
Issuance of common stock for HEC asset acquisition, Shares | 1,562,498 | ||||||
Issuance of preferred stock and warrants to PIPE investors, net of issuance costs | $ 32,000 | 29,268,630 | $ 24,200,000 | 29,300,630 | |||
Issuance of preferred stock and warrants to PIPE investors, net of issuance costs, Shares | 32,000 | ||||||
Contingent consideration related to merger transaction | (4,684,000) | (4,684,000) | |||||
Other comprehensive loss | $ (17,067) | (17,067) | |||||
BALANCE at Mar. 31, 2022 | $ 32,000 | $ 371,779 | $ 41,538,864 | $ (10,620,528) | $ (17,067) | $ 31,305,048 | |
BALANCE, Shares at Mar. 31, 2022 | 32,000 | 7,435,586 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,883,634) | $ (1,068,409) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 358,582 | 357,324 |
Interest and accretion expense | 336,405 | 313,369 |
Changes in assets and liabilities: | ||
Trade accounts receivables | (90,753) | |
Inventories | 85,164 | |
Other assets, net | 292,141 | |
Accounts payable | (2,532,508) | 116,423 |
Accrued compensation and benefits | (503,595) | 62,196 |
Other accrued liabilities | (47,367) | |
Accrued interest | (1,056,876) | |
Net cash used in operating activities | (5,042,441) | (219,097) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (245) | |
Acquisition of business, net of cash acquired | (10,256,865) | |
Proceeds from the sale of property, plant and equipment held for sale | 344,918 | |
Proceeds from the sale of investments | 49,194 | |
Net cash (used in) provided by investing activities | (10,207,916) | 344,918 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings against working capital note payable | 150,000 | 50,000 |
Payments against loan payable principal | (4,500,000) | |
Payments related to equity issuance costs | (2,699,370) | |
Proceeds from the issuance of preferred stock upon closing of private placement | 32,000,000 | |
Net cash provided by financing activities | 24,950,630 | 50,000 |
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 9,700,273 | 175,821 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD | 18,966 | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | 9,719,239 | 175,821 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Interest paid | 1,070,853 | $ 542 |
NONCASH FINANCING AND INVESTING ACTIVITIES: | ||
Issuance of common stock for conversion of related party payables | 2,350,000 | |
Issuance of common stock for conversion of working capital note payable | 500,000 | |
Issuance of common stock for the acquisition of HEC and E-Gear | 12,781,234 | |
Effect of reverse capitalization | 1,594,779 | |
Operating right of use assets obtained in exchange for lease obligations | $ 127,902 |
Nature of Operations
Nature of Operations | 3 Months Ended |
Mar. 31, 2022 | |
Nature of Operations [Abstract] | |
Nature of Operations | NOTE 1 – NATURE OF OPERATIONS Description of Business Pineapple Energy Inc. (formerly Communications Systems, Inc. and Pineapple Holdings, Inc.) (“PEGY”, “we” or the “Company”), was originally organized as a Minnesota corporation in 1969. On March 28, 2022, the Company completed its previously announced merger transaction with Pineapple Energy LLC (“Pineapple Energy”) in accordance with the terms of that certain Agreement and Plan of Merger dated March 1, 2021, as amended by an Amendment No. 1 to Merger Agreement dated December 16, 2021 (collectively the “merger agreement”), by and among the Company, Helios Merger Co., a Delaware corporation and a wholly-owned subsidiary of the Company (the “Merger Sub”), Pineapple Energy LLC, a Delaware limited liability company, Lake Street Solar LLC as the Members’ Representative, and Randall D. Sampson as the Shareholders’ Representative, pursuant to which Merger Sub merged with and into Pineapple Energy, with Pineapple Energy surviving the merger as a wholly-owned subsidiary of the Company (the “merger”). Following the closing of the merger (the “Closing”) the Company changed its name from Communications Systems, Inc. to Pineapple Holdings, Inc. and commenced doing business using the Pineapple name, and subsequently, on April 13, 2022, changed its name to Pineapple Energy Inc. In addition, on March 28, 2022 and immediately prior to the closing of the merger, Pineapple Energy completed its acquisition (“HEC Asset Acquisition”) of substantially all of the assets of two Hawaii-based solar energy companies, Hawaii Energy Connection, LLC (“HEC”) and E-Gear, LLC (“E-Gear”). Subsequent to these transactions, the Company will operate in two distinct business segments – the Solar segment, which consists of the residential and commercial solar businesses of Pineapple Energy, HEC, and E-Gear and the IT Solutions & Services segment, which consists of the solutions services business of legacy Communications Systems, Inc (“CSI”). The Company is a growing domestic operator and consolidator of residential solar, battery storage, and grid service solutions. The Company’s focus is acquiring and growing leading local and regional solar, storage and energy service companies nationwide, which commenced with the Pineapple Energy’s acquisitions of certain assets of Horizon Solar Power and Sungevity in December 2020. Through the Company’s HEC business, the Company also operates as a recognized solar integrator, dedicated to providing affordable energy solutions in Hawaii with its offerings of solar panels, communication filters, web monitoring systems, batteries, water heating systems, and other related products that help residential and commercial users reduce electric costs and earn tax credits related to installing renewable energy systems. The Company’s E-Gear business is a renewable energy innovator that offers proprietary patented and patent pending edge-of-grid energy management and storage solutions that offer intelligent and real-time adaptive control, flexibility, visibility, predictability and support to energy consumers, energy service companies, and utilities. Through the Company’s legacy CSI subsidiaries, JDL Technologies, Inc. (“JDL”) and Ecessa Corporation (“Ecessa”), the Company provides technology solutions, including virtualization, managed services, wired and wireless network design and implementation, and hybrid cloud infrastructure and deployment, and designs, develops and sells SD-WAN (software-designed wide-area network) solutions. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned operating subsidiaries. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted. The condensed consolidated financial statements and notes thereto should be read in conjunction with the Pineapple Energy’s audited financial statements and notes thereto for the year ended December 31, 2021 included on Form 8-K/A, as filed with the Securities and Exchange Commission (“SEC”) on May 19, 2022. The accompanying condensed balance sheet at December 31 , 2021 has been derived from the audited balance sheet at December 31, 2021 contained in the above referenced Form 8-K/A. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year. Impact of the Merger The Company accounted for the March 28, 2022 merger as a reverse recapitalization whereby it was determined that Pineapple Energy was the accounting acquirer and CSI was the accounting acquiree. This determination was primarily based on: Former Pineapple Energy stockholders having the largest voting interest in the Company following the merger; The implied enterprise value of Pineapple Energy in the merger was well in excess of the market capitalization of CSI prior to the merger; At the Closing, the board of directors of the Company was fixed at seven members, two of which were selected by CSI and five of which were selected by Pineapple Energy; Pineapple Energy’s Chief Executive Officer serves as the Chief Executive Officer of the Company subsequent to the merger; The post-combination company assumed the “Pineapple Energy” name; and The Company expects to dispose of the pre-existing CSI headquarters and its legacy subsidiaries, JDL and Ecessa and will continue Pineapple Energy operations in Hawaii. Accordingly, for accounting purposes, the merger was treated as the equivalent of Pineapple Energy issuing stock for the net assets of CSI, accompanied by a recapitalization. While CSI was the legal acquirer in the merger, because Pineapple Energy was determined to be the accounting acquirer, the historical financial statements of Pineapple Energy became the historical financial statements of the combined company upon the consummation of the merger. As a result, the financial statements included in the accompanying condensed consolidated financial statements reflect (i) the historical operating results of Pineapple Energy prior to the merger; (ii) the consolidated results of legacy CSI, Pineapple Energy, HEC, and E-Gear following the closing of the merger; (iii) the assets and liabilities of Pineapple Energy at their historical cost; (iv) the assets and liabilities of CSI, HEC and E-Gear at fair value as of the merger date in accordance with ASC 805, Business Combinations, and (v) the Company’s equity structure for all periods presented. In connection with the merger transaction, we have converted the equity structure for the periods prior to the merger to reflect the number of shares of the Company’s common stock issued to Pineapple Energy’s members in connection with the recapitalization transaction. As such, the shares, corresponding capital amounts and earnings per share, as applicable, related to Pineapple Energy member units prior to the merger have been retroactively converted by applying the exchange ratio established in the merger agreement. PIPE Transaction On March 28, 2022, following the closing of the merger, the Company closed on a $ 32.0 million private investment in public entity (“PIPE”) transaction pursuant to a securities purchase agreement. Under the terms of the securities purchase agreement, for their $ 32.0 million investment, the PIPE Investors received shares of newly authorized CSI Series A convertible preferred stock convertible at a price of $ 13.60 per share into the Company’s common stock, together with five year warrants to purchase an additional $ 32.0 million of common shares at that same price. The Company used the proceeds from the PIPE to fund the cash portion of the HEC Asset Acquisition, to repay $ 4.5 million ($ 5.6 million including interest) of Pineapple Energy’s $ 7.5 million term loan from Hercules Capital, Inc., to pay for transaction expenses, and for working capital to support Pineapple Energy’s growth strategy of acquiring leading local and regional solar installers around the United States. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and accounts have been eliminated. Use of Estimates The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company uses estimates based on the best information available in recording transactions and balances resulting from operations. Actual results could materially differ from those estimates. The Company’s estimates consist principally of reserves for doubtful accounts, asset impairment evaluations, accruals for compensation plans, lower of cost or market inventory adjustments, the fair value of the term loan payable and related assets at the date of acquisition, the fair value of the contingent value rights and contingent consideration, provisions for income taxes and deferred taxes, depreciable lives of fixed assets, and amortizable lives of intangible assets. Restricted Cash and Cash Equivalents For purposes of the condensed consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. The Company may invest in short-term money market funds that are not considered to be bank deposits and are not insured or guaranteed by the federal deposit insurance company (“FDIC”) or other government agency. These money market funds seek to preserve the value of the investment at $ 1.00 per share; however, it is possible to lose money investing in these funds. The restricted cash and cash equivalents on the balance sheet as of March 31, 2022 are funds that can only be used to support the legacy CSI business, will be distributed to CVR holders and cannot be used to support the working capital needs of the Pineapple Energy business. Investments Investments consist of corporate notes and bonds and commercial paper that are traded on the open market and are classified as available-for-sale and minority investments in strategic technology companies. Available-for-sale investments are reported at fair value with unrealized gains and losses excluded from operations and reported as a separate component of stockholders’ equity, net of tax. The investments on the balance sheet as of March 31, 2022 can only be used to support the legacy CSI business, will be distributed to CVR holders and cannot be used to support the working capital needs of the Pineapple Energy business. Accounts Receivable, Net Accounts receivable are recorded at their net realizable value and are not collateralized. Accounts receivable include amounts earned less payments received and allowances for doubtful accounts. Management continually monitors and adjusts its allowances associated with the Company’s receivables to address any credit risks associated with the accounts receivable and periodically writes off receivables when collection is not considered probable. The Company does not charge interest on past due accounts. When uncertainty exists as to the collection of receivables, the Company records an allowance for doubtful accounts and a corresponding charge to bad debt expense. Inventories, Net Inventories, which consist primarily of materials and supplies used in the installation of solar systems, are stated at the lower of cost or net realizable value, with costs computed on a weighted average cost basis. The Company periodically reviews its inventories for excess and obsolete items and adjusts carrying costs to estimated net realizable values when they are determined to be less than cost. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is computed using the straight-line method. Maintenance and repairs are charged to operations and additions or improvements are capitalized. Items of property sold, retired or otherwise disposed of are removed from the asset and accumulated depreciation accounts and any gains or losses on disposal are reflected in the statements of operations. Goodwill and Other Intangible Assets Goodwill represents the amount by which the purchase prices (including liabilities assumed) of acquired businesses exceed the estimated fair value of the net tangible assets and separately identifiable intangible assets of these businesses. Definite lived intangible assets, consisting primarily of trade names, technology, and customer relationships are amortized on a straight-line basis over the estimated useful life of the asset. Goodwill is not amortized but is tested at least annually for impairment. The Company reassesses the value of our reporting units and related goodwill balances annually on October 1 and at other times if events have occurred or circumstances exist that indicate the carrying amount of goodwill may not be recoverable. Recoverability of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If indicators of impairment exist, management identifies the asset group that includes the potentially impaired long-lived asset, at the lowest level at which there are separate, identifiable cash flows. If the fair value, determined as the total of the expected undiscounted future net cash flows for the asset group is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, net of tax, is comprised of unrealized losses on debt securities. Revenue Recognition Within the Company’s Solar segment, revenue is recognized when there is a transfer of control of promised goods or services to customers in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services. The Company sells solar power systems under construction and development agreements to residential and commercial customers. The completed system is sold as a single performance obligation. For residential contracts, revenue is recognized at the point-in-time when the systems are placed into service. Any advance payments received in the form of customer deposits are recorded as contract liabilities. Commercial contracts are generally completed within three to twelve months from commencement of construction. Construction on large projects may be completed within eighteen to twenty-four months, depending on the size and location of the project. Revenue from commercial contracts are recognized as work is performed based on the estimated ratio of costs incurred to date to the total estimated costs at the completion of the performance obligation. The Company also arranges for solar power systems to be installed for residential customers by a third party, for which it earns a commission upon the end customer’s acceptance of the installation. As there are more than two parties involved in the sales transaction, the Company has determined it has an agent relationship in the contracts with these customers, due to the fact that the Company is not primarily responsible for fulfilling the promise to provide the installation of solar arrays to the Customer, the Company does not have inventory risk and has only limited discretion in pricing. Accordingly, the Company has determined that revenue under these arrangements should be recognized on a net basis. Within the Company’s IT Solutions & Services segment, revenue is recognized over time for managed services and professional services (time and materials (“T&M”) and fixed price) performance obligations. This segment’s managed services performance obligation is a bundled solution, a series of distinct services that are substantially the same and that have the same pattern of transfer to the customer and are recognized evenly over the term of the contract. T&M professional services arrangements are measured over time with an input method based on hours expended towards satisfying this performance obligation. Fixed price professional service arrangements under a relatively longer-term service will also be measured over time with an input method based on hours expended. The Company has also identified the following performance obligations within its IT Solutions & Services segment that are recognized at a point in time which include resale of third-party hardware and software, installation services, arranging for another party to transfer services to the customer, and certain professional services. The resale of third-party hardware and software is recognized at a point in time, when the goods are shipped or delivered to the customer’s location, in accordance with the agreed upon shipping terms. Installation services are recognized at a point in time when the services are completed. The service the Company provides to arrange for another party to transfer services to the customer is satisfied at a point in time as the Company has transferred control upon the service first being made available to the customer by the third-party vendor, which are required to be presented on a net basis. Depending on the nature of the service, certain professional services transfer control at a point in time. The Company evaluates these circumstances on a case-by-case basis to determine if revenue should be recognized over time or at a point in time. See Note 4, Revenue Recognition, for further discussion regarding revenue recognition. Gross Excise Tax The State of Hawaii imposes a gross receipts tax on all business operations done in Hawaii. Employee Retirement Benefits The Company has an Employee Savings Plan (401(k)) and matches a percentage of employee contributions up to six percent of compensation. Share Based Compensation The Company accounts for share-based compensation awards on a fair value basis. The estimated grant date fair value of each stock-based award is recognized in income over the requisite service period (generally the vesting period). The estimated fair value of each option is calculated using the Black-Scholes option-pricing model. Net Loss Per Share Basic net loss per common share is based on the weighted average number of common shares outstanding during each year. Diluted net loss per common share adjusts for the dilutive effect of potential common shares outstanding. The Company’s only potential common shares outstanding are common shares that would result from the conversion of the Series A preferred shares, stock options, warrants and shares associated with the long-term incentive compensation plans. Due to the net loss in the first three months ended March 31, 2022 and 2021, there was no dilutive impact from outstanding preferred shares, options, warrants or unvested shares. The Company calculates the dilutive effect of outstanding options and unvested shares using the treasury stock method. There were no options or deferred stock awards excluded from the calculation of diluted earnings per share because there were no outstanding options or deferred stock awards as of both March 31, 2022 and 2021. Convertible shares and warrants totaling 32,000 and 2,353,936 , respectively, would have been excluded from the calculation of diluted earnings per share for the three months ended March 31, 2022 because the exercise price was greater than the average market price of common stock during the period. Accounting Standards Issued In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.” The amendments in this update replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses. This ASU is intended to provide financial statement users with more decision-useful information about expected credit losses and is effective for annual periods and interim periods for those annual periods beginning after December 15, 2022, which for us is the first quarter ending March 31, 2023. Entities may early adopt beginning after December 15, 2018. We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" (“ASU 2021-08”). The standard requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, “Revenue from Contracts with Customers,” as if it had originated the contracts. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2021-08 on our consolidated financial statements. Accounting Standards Adopted In August 2020, FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The amendments in this update reduce the number of accounting models for convertible debt instruments and convertible preferred stock and amend the guidance for the derivative scope exception for contracts in an entity’s own equity. Convertible instruments that continue to be subject to separation models are a) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and b) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The reduction of accounting models is intended to simplify the accounting for convertible instruments, reduce complexity for preparers and practitioners, and improve the decision usefulness and relevance of the information provided to financial statement users. The amendments to the derivative scope exception guidance a) removes the following conditions from the settlement guidance: settlement in unregistered shares, collateral, and shareholder rights; b) clarifies that penalty payments do not preclude equity classification within the settlement guidance in the situation where there is a failure to timely file; c) requires instruments that are required to be classified as an asset or liability under ASC 815-40-15-8A to be measured subsequently at fair value, with changes reported in earnings and disclosed in the financial statements; d) clarifies that the scope of the disclosure requirements in ASC 815-40-50 applies only to freestanding instruments, not embedded features; and e) clarifies that the scope of the reassessment guidance in ASC 815-40-35 on subsequent measurement applies to both freestanding instruments and embedded features. The amendment to this guidance is intended to reduce form-over-substance-based accounting conclusions. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this update as of January 1, 2022 and has incorporated this guidance in our evaluation of the accounting for our warrants, which are classified as equity in our condensed consolidated financial statements. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2022 | |
Business Combinations [Abstract] | |
Business Combinations | NOTE 3 – BUSINESS COMBINATIONS CSI Merger On March 28, 2022, the Company and Pineapple Energy consummated the transactions contemplated by the merger agreement. At the Closing, each member unit of Pineapple Energy that was issued and outstanding immediately prior to the effective time of the merger was cancelled and converted into the right to receive the Company’s common stock. The Company issued an aggregate of 5,006,245 shares of its common stock, which is inclusive of common shares issued to HEC and E-Gear owners as discussed further below. The purpose of the merger was to provide a path to allow the Company to deliver value to its legacy shareholders through a combination of (i) the opportunity for the legacy CSI shareholders to receive an attractive return from dividends or distributions of the net proceeds from the divestiture of the Company’s pre-merger operating and non-operating assets and properties, and (ii) the opportunity for the legacy CSI shareholders, through ownership of the Company’s common stock following the merger, to participate in the potential growth of the combined company’s residential solar, battery storage, and grid services solutions business. The Company accounted for the merger as a reverse recapitalization whereby it was determined that Pineapple Energy was the accounting acquirer and CSI was the accounting acquiree. Refer to Note 2, Summary of Significant Accounting Policies, for further details. The accompanying condensed consolidated financial statements and related notes reflect the historical results of Pineapple Energy prior to the merger and do not include the historical results of CSI prior to the consummation of the merger. As a result of the reverse merger, the acquired assets and assumed liabilities of CSI were remeasured and recognized at fair value as of the acquisition date. The total purchase price represents the fair value of the Company common stock held by legacy CSI shareholders at the time of the merger ( 2,429,341 shares of common stock). The fair value of this purchase consideration was $ 19,872,000 using the publicly traded Company stock price at the merger date, which is allocated at the merger date between the liability associated with the Company’s obligation to pay legacy CSI shareholders cash as part of the contingent value rights (“CVRs”) discussed below and equity based on their respective fair values (Level 3 fair values). The merger agreement also included the execution of CVR agreements with holders of record of CSI stock at the close of business on March 25, 2022. Each shareholder of record received one contractual non-transferable CVR per share of common stock held, which entitles the holders of the CVRs to receive a portion of the cash, cash equivalents, investments and net proceeds of any divestiture, assignment, or other disposition of all legacy assets of CSI and/or its legacy subsidiaries, JDL and Ecessa, that are related to CSI’s pre-merger business, assets, and properties that occur during the 24-month period following the closing of the merger. As of the merger date, the fair value of the CVR liability was estimated at $ 18,277,000 , a Level 3 fair value, which was determined based on the provisional fair value of the tangible and definite-lived intangibles assets of CSI discussed below. The CVR liability will be adjusted to fair value each reporting period. The Company is required to review the availability of funds for disbursement to CVR holders on a quarterly basis, starting on June 30, 2022. If the funds available are less than $ 200,000 , then the amount gets aggregated with the next payment. The assets and liabilities of CSI were recorded within the IT Solutions & Services segment and reporting unit as of the merger date at their respective fair value. The purchase price allocation for the merger is based on the estimated fair value of assets acquired and liabilities assumed and has been provisionally allocated as follows: Cash and cash equivalents $ 1,920,000 Investments 3,155,000 Accounts receivable 1,821,000 Inventory 139,000 Other assets 1,316,000 Property, plant, and equipment 118,000 Current assets held for sale 6,567,000 Intangible assets 2,556,000 Goodwill 5,989,000 Total assets 23,581,000 Accounts payable 2,547,000 Accrued expenses 1,013,000 Deferred revenue 149,000 Total liabilities 3,709,000 Net assets acquired $ 19,872,000 The identifiable intangible assets from the merger are definite-lived assets. These assets include trade names, developed te chnology, and customer relationships and have a provisional weighted average amortization period of four years. Goodwill recorded as part of the purchase price allocation is not tax deductible. The trade name preliminary fair values were determined using the relief-from-royalty method, an income approach, which included the following significant assumptions: projected revenue by business, royalty rate, income tax rate, and discount rate. The preliminary fair values of the developed technology associated with the Ecessa business and customer relationships associated with the JDL business were determined using the multiple period excess-earnings method, an income approach, which included the following significant assumptions: projected Ecessa revenues, obsolescence factor, margins, depreciation, contributory asset charges, discount rates, and income tax rates. The preliminary fair value of the customer relationships associated with the Ecessa business was determined using the distributor method, an income approach, which included the following significant assumptions: projected Ecessa revenue, customer attrition, margins, contributory asset charges, discount rates, and income tax rates. The initial accounting for the acquired assets and liabilities is incomplete due to the timing of the closing of the merger in proximity to the quarter-end and is expected to be finalized during the twelve-month post-closing measurement period. The areas of the purchase price allocation that are not yet finalized for the merger include the valuation of intangible assets and income tax related matters. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required. The merger included the acquisition of current assets held for sale related to CSI’s company headquarters building located in Minnetonka, Minnesota, pursuant to a purchase agreement entered into with Buhl Investors LLC on November 18, 2021. The agreement was further amended on February 15, 2022, April 11, 2022 and April 26, 2022, to allow for additional time to complete due diligence. The assets are recorded at the purchase price of $ 6,800,000 less the costs to sell the building. These assets were recorded as held for sale as the Company expects to close on the sale in the second or third quarter of 2022. The condensed consolidated financial statements include results of operations of CSI following the consummation of the merger for the quarter ended March 31, 2022, which included $ 87,000 of revenue and a net loss of $ 36,000 . HEC Asset Acquisition On March 28, 2022, immediately prior to the closing of the merger, Pineapple Energy completed its acquisition of substantially all of the assets of HEC and E-Gear and assumed certain liabilities of HEC and E-Gear pursuant to the Asset Purchase Agreement dated March 1, 2021, as amended by Amendment No. 1 to Asset Purchase Agreement dated December 16, 2021, by and among Pineapple Energy as Buyer, HEC and E-Gear as Sellers, and Steve P. Godmere, as representative for the Sellers. This acquisition is an expansion in the residential solar market and is a strategic start to the Company’s overall acquisition growth plan as it looks to expand further through the acquisition of regional residential solar companies and energy technology solution providers. At the closing of this acquisition, Pineapple Energy issued 6,250,000 Class B units, which upon the closing of the merger were converted into 1,562,498 shares of the Company’s common stock, with a fair value of $ 12,781,000 using the publicly traded stock price at the merger date. The sellers received $ 12,500,000 in initial cash consideration, less $ 108,000 in estimated working capital adjustments, bringing the aggregate purchase price to $ 25,173,000 , with cash acquired totaling $ 216,000 . The assets and liabilities of HEC and E-Gear were recorded within the Solar segment as of the merger date at their respective fair values. The purchase price allocation is based on the estimated fair value of assets acquired and liabilities assumed and has been provisionally allocated as follows: Cash and cash equivalents $ 216,000 Accounts receivable 892,000 Inventory 1,572,000 Other assets 108,000 Property, plant, and equipment 182,000 Intangible assets 13,800,000 Goodwill 9,787,000 Total assets 26,557,000 Total liabilities 1,384,000 Net assets acquired $ 25,173,000 The identifiable intangible assets from the HEC Asset Acquisition are definite-lived assets. These assets include a trade name and developed technology and have a weighted average amortization period of seven years. Goodwill recorded as part of the purchase price allocation is tax deductible. The fair value of the acquired identifiable intangible assets is provisional depending on the final valuation of those assets. The developed technology preliminary fair values were determined using the relief-from-royalty method, an income approach, which included the following significant assumptions: projected revenue, obsolescence, royalty rate, income tax rate, and discount rate. The preliminary fair values of the trade names were determined using the multiple period excess-earnings method, an income approach, which included the following significant assumptions: projected revenues, estimated probability of continued used of tradenames, margins, depreciation, contributory asset charges, discount rates, and income tax rates. The initial accounting for the acquired assets and liabilities is incomplete due to the timing of the closing of the acquisition in proximity to the quarter-end and is expected to be finalized during the twelve-month post-closing measurement period. The areas of the purchase price allocation that are not yet finalized for the HEC Asset Acquisition include the valuation of intangible assets and income tax related matters. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required. The condensed consolidated financial statements include results of operations of HEC and E-Gear following the consummation of the HEC Asset Acquisition for the quarter ended March 31, 2022, which included $ 221,000 of revenue and net income of $ 19,000 . Transaction costs related to the merger and HEC Asset Acquisition totaled $ 969,000 and $ 168,000 incurred by Pineapple Energy during the three months ended March 31, 2022 and 2021, respectively, and were recorded in operating expenses within the condensed consolidated statements of operations and comprehensive loss. Pro Forma Information The following unaudited pro forma information represents the results of operations as if the Company had completed the merger and HEC Asset Acquisition as of January 1, 2021. The unaudited pro forma financial information below includes adjustments to amortization expense for intangible assets totaling $ 531,000 and $ 537,000 and excludes transaction costs totaling $ 2,699,000 and $ 1,041,000 for the three months ended March 31, 2022 and 2021, respectively. The unaudited pro forma financial information below is not necessarily indicative of consolidated results of operations of the combined business had the acquisition occurred at the beginning of the respective period, nor is it necessarily indicative of future results of operations of the combined company. Three Months Ended March 31 2022 2021 Net revenue $ 5,525,000 $ 4,463,000 Net loss ( 2,556,000 ) ( 3,164,000 ) Earnout Shares As part of the merger, the Company agreed to issue up to 3.25 million shares of the Company common stock to the holders of pre-merger Pineapple Energy units, subject to meeting certain milestone events (collectively, the “Merger Earnout Shares”). The Merger Earnout Shares are issuable in three tranches. The milestone for the issuance of the first tranche of the Merger Earnout Shares involves repayment of certain of pre-merger Pineapple Energy’s debt obligations within three months of the merger closing, which would result in the issuance of 750,000 shares of the Company’s common stock. This milestone was met at the merger closing and the 750,000 shares of the Company’s common stock were issued and are reflected in the Company’s condensed consolidated statement of stockholders’ equity as of March 31, 2022. The milestone for the second tranche of the Merger Earnout Shares is triggered upon the volume weighted average price (“VWAP”) of the Company’s common stock equaling or exceeding $ 24.00 for 30 consecutive trading days within 24 -months of the merger closing. The milestone for the third tranche of the Merger Earnout Shares is triggered upon the VWAP of the Company’s common stock equaling or exceeding $ 32.00 for 30 consecutive trading days within 24 -months of the merger closing. Under the second or third tranches, the number of shares of Company common stock to be issued is also affected by whether the Company has disposed or sold certain assets of its business within 24 months of the merger closing date, which could ultimately impact whether 1.0 million or 1.25 million shares of the Company’s common stock are issued under each tranche. The first tranche of 750,000 shares issued of the Company’s common stock is accounted for as permanent equity in accordance with ASC 815-40, and no subsequent remeasurement is required as long as the shares continue to be classified in equity. The shares of the Company’s common stock contingently issuable under the second and third tranches, up to an additional 2.5 million shares of the Company’s common stock are classified as a liability, similar to the accounting for written equity options, which requires an initial measurement of the liability at fair value with subsequent remeasurements to fair value at each reporting date and changes in the fair value recognized in the condensed consolidated statement of operations. As of March 28, 2022, the fair value of the Merger Earnout Shares for the second and third tranches was approximately $ 4.7 million, which is presented in the condensed consolidated balance sheet as of March 31, 2022 as a long-term liability. The Company utilized a Monte Carlo simulation to determine the fair value of the liability, which included the following significant assumptions: the expected probability and timing of achievement of milestone events. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2022 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | NOTE 4 – REVENUE RECOGNITION Disaggregation of revenue Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that best reflects the consideration we expect to receive in exchange for those goods or services. In accordance with ASC 606-10-50-5, the following tables present how we disaggregate our revenues for the three months ended March 31, 2022. There were no revenues during the three months ended March 31, 2021. The Solar segment classifies its revenue by type as follows: Solar Revenue by Type Three Months Ended March 31 2022 Residential contracts $ 222,000 Commission revenue 10,000 $ 232,000 The IT Solutions & Services segment classifies its revenue by customer group and type as follows: IT Solutions & Services Revenue by Customer Group Three Months Ended March 31 2022 Financial $ 23,000 Healthcare 12,000 Other commercial clients 52,000 $ 87,000 IT Solutions & Services Revenue by Type Three Months Ended March 31 2022 Project & product revenue $ 46,000 Services & support revenue 41,000 $ 87,000 |
Restricted Cash Equivalents and
Restricted Cash Equivalents and Investments | 3 Months Ended |
Mar. 31, 2022 | |
Restricted Cash Equivalents and Investments [Abstract] | |
Restricted Cash Equivalents and Investments | NOTE 5 – RESTRICTED CASH EQUIVALENTS AND INVESTMENTS The following tables show the Company’s restricted cash equivalents and available-for-sale securities’ amortized cost, gross unrealized gains, gross unrealized losses and fair value by significant investment category recorded as restricted cash and cash equivalents or short- and long-term investments as of March 31, 2022. There were no restricted cash equivalents or investments as of December 31, 2021. March 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash Equivalents Short-Term Investments Long-Term Investments Cash equivalents: Money Market Funds $ 682,000 $ — $ — $ 682,000 $ 682,000 $ — $ — Subtotal 682,000 — — 682,000 682,000 — — Investments: Corporate Notes/Bonds 2,895,000 — ( 56,000 ) 2,839,000 — 787,000 2,052,000 Subtotal 2,895,000 — ( 56,000 ) 2,839,000 — 787,000 2,052,000 Total $ 3,577,000 $ — $ ( 56,000 ) $ 3,521,000 $ 682,000 $ 787,000 $ 2,052,000 The Company tests for other-than-temporary losses on a quarterly basis and has considered the unrealized losses indicated above to be temporary in nature. The Company intends to hold the investments until it can recover the full principal amount and has the ability to do so based on other sources of liquidity. The Company expects such recoveries to occur prior to the contractual maturities. The following table summarizes the estimated fair value of our investments, designated as available-for-sale and classified by the contractual maturity date of the securities as of March 31, 2022: Amortized Cost Estimated Market Value Due within one year $ 797,000 $ 787,000 Due after one year through five years 2,098,000 2,052,000 $ 2,895,000 $ 2,839,000 As part of the merger, the Company acquired an investment totaling $ 250,000 in preferred shares of Kogniz, Inc., a privately owned artificial intelligence company based in Silicon Valley, CA. The Company’s investment represented less than 10 % of the outstanding equity of Kogniz. The Company uses the cost method to account for investments in common stock of entities such as Kogniz if the Company does not have the ability to exercise significant influence over the operating and financial matters of the entity. The Company also uses the cost method to account for its investments that are not in the form of common stock or in-substance common stock in entities if the Company does not have the ability to exercise significant influence over the entity’s operating and financial matters. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2022 | |
Inventories [Abstract] | |
Inventories | NOTE 6 – INVENTORIES Inventories are summarized below. There were no inventories as of December 31, 2022. March 31, 2022 Finished goods $ 21,000 Raw materials 1,605,000 $ 1,626,000 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill and Intangible Assets | NOTE 7 – GOODWILL AND INTANGIBLE ASSETS The Company recorded a provisional goodwill balance totaling $ 15,776,000 as of March 31, 2022. See further discussion within Note 3, Business Combinations. Excluding the provisional intangible assets totaling $ 16,356,000 discussed within Note 3, Business Combinations, the Company’s identifiable intangible assets with finite lives are being amortized over their estimated useful lives and were as follows: March 31, 2022 Gross Carrying Amount Accumulated Amortization Net Tradename & trademark $ 4,288,000 $ ( 1,865,000 ) $ 2,423,000 $ 4,288,000 $ ( 1,865,000 ) $ 2,423,000 December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Tradename & trademark $ 4,288,000 $ ( 1,508,000 ) $ 2,780,000 $ 4,288,000 $ ( 1,508,000 ) $ 2,780,000 Amortization expense on these identifiable intangible assets was $ 357,000 in each of the first three months of 2022 and 2021. The estimated future amortization expense for identifiable intangible assets during the next fiscal years is as follows: Year Ending December 31: Q2 – Q4 2022 $ 1,072,000 2023 1,351,000 |
Commitments & Contingencies
Commitments & Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments & Contingencies [Abstract] | |
Commitments & Contingencies | NOTE 8 – COMMITMENTS AND CONTINGENCIES Loan Payable As of March 31, 2022 and December 31, 2021, Pineapple Energy had $ 3,000,000 and $ 7,500,000 , respectively, in a loan payable to Hercules Capital, Inc. (“Hercules”) under a loan and security agreement (the “Term Loan Agreement”). This loan accrues interest at 10 %, payable-in-kind and was initially due and payable on December 10, 2023. There are no financial covenants associated with this loan. This loan was used to acquire fixed assets, inventory, and intangible assets of Sungevity in an asset acquisition in December 2020. As the transaction did not involve the exchange of monetary consideration, the assets were valued at the Company’s most reliable indication of fair value, which was debt issued in consideration for the assets. Accordingly, Pineapple Energy assessed the fair market value of the debt instrument at $ 4,768,000 at the asset acquisition date (a non-recurring Level 3 fair value input). The Company initially accreted the value of the debt over its life at a discount rate of approximately 25 %. On December 16, 2021, the Term Loan Agreement was amended, whereby the maturity date was extended to December 31, 2024 , subject to various prepayment criteria. In addition, the amendment provided that $ 4,500,000 plus all accrued and unpaid interest and expenses were to be repaid upon closing of the merger and receipt of the PIPE funds, with the remaining principal to be paid upon the loan maturity date. The amendment represented a modification to the loan agreement with the existing lender as both the original loan agreement and the amendment allow for immediate prepayment and the Company passed the cash flow test. At December 31, 2021, the combined loan and accrued interest balance was $ 6,195,000 . The balance at March 31, 2022, after giving effect to the $ 5,557,000 payment of principal and accrued interest on March 29, 2022, was $ 974,000 . A new effective interest rate of approximately 52.9 % was established based on the carrying value of the revised cash flows. Interest and accretion expense was $ 336,000 and $ 311,000 for the three months ended March 31, 2022 and 2021, respectively. The loan is collateralized by all of Pineapple Energy’s personal property and assets. Working Capital Note On January 8, 2021, Pineapple Energy and Hercules, as agent for itself and the lenders, entered into a Working Capital Loan and Security Agreement (the “ Working Capital Agreement”) for a working capital loan in the maximum principal amount of $ 500,000 . The lenders, Hercules and Northern Pacific Growth Investment Advisors, LLC, made working capital loan commitments of $ 400,000 and $ 100,000 , respectively. Northern Pacific Growth Investment Advisors, LLC is an affiliate of Northern Pacific Group, which controls Lake Street Solar, LLC, a then-member of Pineapple Energy. Borrowings under the Working Capital Agreement bore interest at 10.00 % per annum with interest compounded daily and payable monthly. At December 31, 2021, the balance outstanding on the working capital loan was $ 350,000 . The working capital loan had an initial maturity date of January 7, 2022 and was collateralized by all of Pineapple Energy’s assets. The Working Capital Agreement included provisions relating to the mandatory and optional conversion of the underlying loan amount into equity of the Company under certain circumstances. In the case of either a mandatory or optional conversion of the Hercules working capital loan, the working capital loan of Northern Pacific Growth Investment Advisors, LLC, including all accrued and unpaid interest, would be immediately due and payable. On December 16, 2021, an amendment to the Working Capital Agreement was executed that extended the maturity date to December 31, 2022 and added an additional mandatory conversion provision. In the event that, on or before the maturity date, Pineapple Energy consummated the merger, then immediately prior to the consummation of the merger, the working capital loan and all accrued and unpaid interest and expenses thereon would automatically convert into Class C Units of Pineapple Energy calculated based on one Class C Unit being issued for every $ 2.00 to be converted. The conversion option under the amendment was considered clearly and closely related to the host contract. During the first three months of 2022, Pineapple Energy borrowed an additional $ 150,000 and had $ 500,000 outstanding prior to the merger on March 28, 2022. Immediately prior to the merger on March 28, 2022, the $ 500,000 outstanding loan balance was converted to 250,000 Class C Units immediately prior to the merger, which upon close of the merger were converted into 62,500 shares of Company common stock . Related Party Payables During December 2020, Pineapple Energy incurred acquisition-related costs and accrued a payable totaling $ 2,350,000 , with $ 2,000,000 due to one then-member and $ 350,000 to another then-member. Under the Term Loan Agreement, this $ 2,350,000 in related party payables was subordinate to the payment to Hercules of the amounts due under the Term Loan Agreement and could only be repaid under certain conditions, including the requirement that no obligations were outstanding under the Term Loan Agreement and Pineapple Energy or its subsidiaries had closed on an equity transaction generating at least $ 30 million in proceeds. On December 16, 2021, the then-members signed subscription agreements where the then-members agreed, in consideration for the full cancellation of the accrued payables, to convert the accrued payables into convertible promissory notes of Pineapple Energy, effective immediately prior to the consummation of the merger. The convertible promissory notes automatically converted into 1,175,000 Class C Units of Pineapple Energy after issuance of the convertible note to the then-members and immediately prior to the consummation of the merger. This conversion option was considered clearly and closely related to the host contract and the payables were converted to 1,175,000 Class C Units of Pineapple Energy immediately prior to the merger, which upon close of the merger were converted into 293,750 shares of the Company’s common stock. Other Contingencies In the quarter ended March 31, 2022, the two lawsuits that were filed on behalf of purported CSI shareholders relating to the Registration Statement on S-4 that we filed on November 12, 2021 (the “Registration Statement”) in connection with the merger, among other matters, were voluntarily dismissed. The first complaint was filed on December 13, 2021 by Bashir Rivera in the United States District Court for the Southern District of New York and is captioned Rivera v. Communications Systems, Inc., et al. , No. 1:21-cv-10637-NRB. The second complaint was filed on December 28, 2021 by Allen Chaidez in the United States District Court for the Eastern District of New York and is captioned Chaidez v. Communications Systems, Inc., et al. , No. 1:21-cv-07155-MKB-VMS. The Rivera action was voluntarily dismissed on February 24, 2022. The Chaidez action was voluntarily dismissed on March 24, 2022. As of March 31, 2022, there were no material legal proceedings pending relating to the Registration Statement. In the ordinary course of business, the Company is exposed to legal actions and claims and incurs costs to defend against these actions and claims. Company management is not aware of any outstanding or pending legal actions or claims that could materially affect the Company’s financial position or results of operations. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | NOTE 9 – STOCK-BASED COMPENSATION 2022 Equity Incentive Plan On January 24, 2022 the CSI board of directors adopted, and on March 16, 2022 the Company’s shareholders approved the Company’s 2022 Equity Incentive Plan (“2022 Plan”), which became effective on March 28, 2022. The 2022 Plan authorizes incentive awards to officers, key employees, non-employee directors, and consultants in the form of options (incentive and non-qualified), stock appreciation rights, restricted stock awards, stock unit awards, and other stock-based awards. The 2022 Plan authorizes the issuance of up to 750,000 shares of common stock. The Company did no t have any outstanding awards under the 2022 Plan at March 31, 2022. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2022 | |
Equity [Abstract] | |
Equity | NOTE 10 – EQUITY Convertible Preferred Stock and Warrants On June 28, 2021, the Company entered into a securities purchase agreement (“SPA”) in which, subsequent to the closing of the merger, the Company would authorize the issuance and sale of 25,000 restricted shares of Series A Preferred Stock, par value $ 1.00 per share (“Convertible Preferred Stock”), to certain investors in a private offering (“PIPE Investors”). On September 15, 2021, the Company amended the SPA to issue 32,000 restricted shares of Convertible Preferred Stock, to the PIPE Investors for $ 32.0 million in cash. This Convertible Preferred Stock is convertible into underlying shares of the Company’s Common Stock at any time after the issuance date at the option of the PIPE Investors, subject to certain restrictions, and has a liquidation preference over the Company’s Common Stock. The Convertible Preferred Stock may be converted by the Company to Common Stock upon meeting certain market conditions, of which none had been met as of March 31, 2022, and may be redeemed by the Company for cash upon delivery of written notice for a redemption price as defined in the SPA. The PIPE investors in the Convertible Preferred Stock were granted certain registration rights as set forth in the SPA. Holders of the Convertible Preferred Stock have no voting rights and no dividend preference over Common Stock. Concurrent with the amendment, the Company entered into warrant agreements with the PIPE Investors to purchase Common Stock (the “Warrant Agreement”), whereby the Company would issue 2,352,936 warrants (“PIPE Warrants”) to purchase restricted shares of the Company’s Common Stock for cash or in a cashless exercise. These PIPE Warrants have an exercise price of $ 13.60 with a five year term, commencing on the date of issuance. These Convertible Preferred Stock and PIPE Warrants were issued on March 28, 2022 upon the consummation of the merger. As of March 31, 2022, there were 3,000,000 shares of Convertible Preferred Stock authorized and 32,000 shares of Convertible Preferred Stock issued and outstanding. No PIPE Warrants were exercised prior to March 31, 2022. All 2,352,936 PIPE Warrants remain outstanding as of March 31, 2022. The proceeds from the issuance of Convertible Preferred Stock were allocated between the Convertible Preferred Stock and PIPE Warrants using a relative fair value method. As of March 28, 2022, the fair value of the Convertible Preferred Stock was estimated at $ 756.06 per share with a total fair value recognized in the condensed consolidated financial statements of approximately $ 24.2 million. The fair value of the PIPE Warrants was estimated at $ 3.32 per share with a total fair value of approximately $ 7.8 million. The Company utilized a Monte Carlo simulation to determine the fair value of these instruments, which included the following significant assumptions: the expected volatility, risk-free rate, expected annual dividend yield, and expected conversion dates. The Convertible Preferred Stock is reported as part of permanent equity in the condensed consolidated balance sheet and condensed consolidated statement of stockholders’ equity as of March 31, 2022. The PIPE Warrants were determined to be equity-classified and the fair value of $ 7.8 million was recognized in APIC during the quarter ended March 31, 2022. In addition, approximately $ 2.0 million and $ 0.7 million of offering costs were recorded as a reduction to the carrying values of the Convertible Preferred Stock and PIPE Warrants, respectively. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Taxes [Abstract] | |
Income Taxes | NOTE 11 – INCOME TAXES In the preparation of the Company’s condensed consolidated financial statements, management calculates income taxes based upon the estimated effective rate applicable to operating results for the full fiscal year. This includes estimating the current tax liability as well as assessing differences resulting from different treatment of items for tax and book accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded on the balance sheet. Management analyzes these assets and liabilities regularly and assesses the likelihood that deferred tax assets will be recovered from future taxable income. The Company’s effective income tax rate was 0 % for the first quarter of 2022. The effective tax rate differs from the federal tax rate of 21 % due to state income taxes and changes in valuation allowances related to deferred tax assets. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2022 | |
Segment Information [Abstract] | |
Segment Information | NOTE 12 – SEGMENT INFORMATION The Company classifies its business operations into two segments as follows: Solar: generates revenue through the sale and installation of residential and commercial solar systems, battery storage, and grid service solutions. IT Solutions & Services: provides technology solutions that address prevalent IT challenges, including network resiliency, security products and services, network virtualization, and cloud migrations, IT managed services, wired and wireless network design and implementation, and converged infrastructure configuration, deployment and management . Our chief operating decision maker evaluates segment financial performance based on segment revenues and segment operating income and allocates resources to achieve our operating profit goals through these two operating segments. Management has chosen to organize the Company and disclose reportable segments based on our products and services. Intercompany revenues are eliminated upon consolidation. Information concerning the Company’s operations in its segments for the three-month periods ended March 31, 2022 and 2021 are as follows: IT Solutions & Solar Services Total Three Months Ended March 31, 2022 Sales $ 232,000 $ 87,000 $ 319,000 Cost of sales 166,000 58,000 224,000 Gross profit 66,000 29,000 95,000 Selling, general and administrative expenses 256,000 41,000 297,000 Amortization expense 357,000 — 357,000 Transaction costs 950,000 19,000 969,000 Operating loss ( 1,497,000 ) ( 31,000 ) ( 1,528,000 ) Other expense ( 351,000 ) ( 5,000 ) ( 356,000 ) Loss before income tax $ ( 1,848,000 ) $ ( 36,000 ) $ ( 1,884,000 ) Depreciation and amortization $ 358,000 $ 4,000 $ 362,000 Assets $ 43,021,000 $ 16,771,000 $ 59,792,000 IT Solutions & Solar Services Total Three Months Ended March 31, 2021 Sales $ — $ — $ — Cost of sales — — — Gross profit — — — Selling, general and administrative expenses 231,000 — 231,000 Amortization expense 357,000 — 357,000 Transaction costs 169,000 — 169,000 Operating loss ( 757,000 ) — ( 757,000 ) Other expense ( 311,000 ) — ( 311,000 ) Loss before income tax $ ( 1,068,000 ) $ — $ ( 1,068,000 ) Depreciation and amortization $ 357,000 $ — $ 357,000 Assets $ 4,163,000 $ — $ 4,163,000 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | NOTE 13 – FAIR VALUE MEASUREMENTS The accounting guidance establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 2 – Observable inputs such as quoted prices for similar instruments and quoted prices in markets that are not active, and inputs that are directly observable or can be corroborated by observable market data. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities. Level 3 – Significant inputs to pricing that have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as the complex and subjective models and forecasts used to determine the fair value of financial instruments. Financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 are summarized below. There were no assets or liabilities measured at fair value on a recurring basis as of December 31, 2021. March 31, 2022 Level 1 Level 2 Level 3 Total Fair Value Cash equivalents: Money Market Funds $ 682,000 $ — $ — $ 682,000 Subtotal 682,000 — — 682,000 Short-term investments: Corporate Notes/Bonds — 787,000 — 787,000 Subtotal — 787,000 — 787,000 Long-term investments: Corporate Notes/Bonds — 2,052,000 — 2,052,000 Subtotal — 2,052,000 — 2,052,000 Liabilities: Contingent Value Rights — — ( 18,277,000 ) ( 18,277,000 ) Contingent Consideration — — ( 4,684,000 ) ( 4,684,000 ) Subtotal — — ( 22,961,000 ) ( 22,961,000 ) Total $ 682,000 $ 2,839,000 $ (22,961,000) $ (19,440,000) We record transfers between levels of the fair value hierarchy, if necessary, at the end of the reporting period. There were no transfers between levels during the three months ended March 31, 2022. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 14 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date of this filing. We do not believe there are any material subsequent events other than those disclosed in the footnotes to these financial statements that require further disclosure. |
Nature of Operations (Policy)
Nature of Operations (Policy) | 3 Months Ended |
Mar. 31, 2022 | |
Nature of Operations [Abstract] | |
Description of Business | Description of Business Pineapple Energy Inc. (formerly Communications Systems, Inc. and Pineapple Holdings, Inc.) (“PEGY”, “we” or the “Company”), was originally organized as a Minnesota corporation in 1969. On March 28, 2022, the Company completed its previously announced merger transaction with Pineapple Energy LLC (“Pineapple Energy”) in accordance with the terms of that certain Agreement and Plan of Merger dated March 1, 2021, as amended by an Amendment No. 1 to Merger Agreement dated December 16, 2021 (collectively the “merger agreement”), by and among the Company, Helios Merger Co., a Delaware corporation and a wholly-owned subsidiary of the Company (the “Merger Sub”), Pineapple Energy LLC, a Delaware limited liability company, Lake Street Solar LLC as the Members’ Representative, and Randall D. Sampson as the Shareholders’ Representative, pursuant to which Merger Sub merged with and into Pineapple Energy, with Pineapple Energy surviving the merger as a wholly-owned subsidiary of the Company (the “merger”). Following the closing of the merger (the “Closing”) the Company changed its name from Communications Systems, Inc. to Pineapple Holdings, Inc. and commenced doing business using the Pineapple name, and subsequently, on April 13, 2022, changed its name to Pineapple Energy Inc. In addition, on March 28, 2022 and immediately prior to the closing of the merger, Pineapple Energy completed its acquisition (“HEC Asset Acquisition”) of substantially all of the assets of two Hawaii-based solar energy companies, Hawaii Energy Connection, LLC (“HEC”) and E-Gear, LLC (“E-Gear”). Subsequent to these transactions, the Company will operate in two distinct business segments – the Solar segment, which consists of the residential and commercial solar businesses of Pineapple Energy, HEC, and E-Gear and the IT Solutions & Services segment, which consists of the solutions services business of legacy Communications Systems, Inc (“CSI”). The Company is a growing domestic operator and consolidator of residential solar, battery storage, and grid service solutions. The Company’s focus is acquiring and growing leading local and regional solar, storage and energy service companies nationwide, which commenced with the Pineapple Energy’s acquisitions of certain assets of Horizon Solar Power and Sungevity in December 2020. Through the Company’s HEC business, the Company also operates as a recognized solar integrator, dedicated to providing affordable energy solutions in Hawaii with its offerings of solar panels, communication filters, web monitoring systems, batteries, water heating systems, and other related products that help residential and commercial users reduce electric costs and earn tax credits related to installing renewable energy systems. The Company’s E-Gear business is a renewable energy innovator that offers proprietary patented and patent pending edge-of-grid energy management and storage solutions that offer intelligent and real-time adaptive control, flexibility, visibility, predictability and support to energy consumers, energy service companies, and utilities. Through the Company’s legacy CSI subsidiaries, JDL Technologies, Inc. (“JDL”) and Ecessa Corporation (“Ecessa”), the Company provides technology solutions, including virtualization, managed services, wired and wireless network design and implementation, and hybrid cloud infrastructure and deployment, and designs, develops and sells SD-WAN (software-designed wide-area network) solutions. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policy) | 3 Months Ended |
Mar. 31, 2022 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned operating subsidiaries. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted. The condensed consolidated financial statements and notes thereto should be read in conjunction with the Pineapple Energy’s audited financial statements and notes thereto for the year ended December 31, 2021 included on Form 8-K/A, as filed with the Securities and Exchange Commission (“SEC”) on May 19, 2022. The accompanying condensed balance sheet at December 31 , 2021 has been derived from the audited balance sheet at December 31, 2021 contained in the above referenced Form 8-K/A. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year. |
Impact of the Merger | Impact of the Merger The Company accounted for the March 28, 2022 merger as a reverse recapitalization whereby it was determined that Pineapple Energy was the accounting acquirer and CSI was the accounting acquiree. This determination was primarily based on: Former Pineapple Energy stockholders having the largest voting interest in the Company following the merger; The implied enterprise value of Pineapple Energy in the merger was well in excess of the market capitalization of CSI prior to the merger; At the Closing, the board of directors of the Company was fixed at seven members, two of which were selected by CSI and five of which were selected by Pineapple Energy; Pineapple Energy’s Chief Executive Officer serves as the Chief Executive Officer of the Company subsequent to the merger; The post-combination company assumed the “Pineapple Energy” name; and The Company expects to dispose of the pre-existing CSI headquarters and its legacy subsidiaries, JDL and Ecessa and will continue Pineapple Energy operations in Hawaii. Accordingly, for accounting purposes, the merger was treated as the equivalent of Pineapple Energy issuing stock for the net assets of CSI, accompanied by a recapitalization. While CSI was the legal acquirer in the merger, because Pineapple Energy was determined to be the accounting acquirer, the historical financial statements of Pineapple Energy became the historical financial statements of the combined company upon the consummation of the merger. As a result, the financial statements included in the accompanying condensed consolidated financial statements reflect (i) the historical operating results of Pineapple Energy prior to the merger; (ii) the consolidated results of legacy CSI, Pineapple Energy, HEC, and E-Gear following the closing of the merger; (iii) the assets and liabilities of Pineapple Energy at their historical cost; (iv) the assets and liabilities of CSI, HEC and E-Gear at fair value as of the merger date in accordance with ASC 805, Business Combinations, and (v) the Company’s equity structure for all periods presented. In connection with the merger transaction, we have converted the equity structure for the periods prior to the merger to reflect the number of shares of the Company’s common stock issued to Pineapple Energy’s members in connection with the recapitalization transaction. As such, the shares, corresponding capital amounts and earnings per share, as applicable, related to Pineapple Energy member units prior to the merger have been retroactively converted by applying the exchange ratio established in the merger agreement. |
PIPE Transaction | PIPE Transaction On March 28, 2022, following the closing of the merger, the Company closed on a $ 32.0 million private investment in public entity (“PIPE”) transaction pursuant to a securities purchase agreement. Under the terms of the securities purchase agreement, for their $ 32.0 million investment, the PIPE Investors received shares of newly authorized CSI Series A convertible preferred stock convertible at a price of $ 13.60 per share into the Company’s common stock, together with five year warrants to purchase an additional $ 32.0 million of common shares at that same price. The Company used the proceeds from the PIPE to fund the cash portion of the HEC Asset Acquisition, to repay $ 4.5 million ($ 5.6 million including interest) of Pineapple Energy’s $ 7.5 million term loan from Hercules Capital, Inc., to pay for transaction expenses, and for working capital to support Pineapple Energy’s growth strategy of acquiring leading local and regional solar installers around the United States. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and accounts have been eliminated. |
Use of Estimates | Use of Estimates The presentation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company uses estimates based on the best information available in recording transactions and balances resulting from operations. Actual results could materially differ from those estimates. The Company’s estimates consist principally of reserves for doubtful accounts, asset impairment evaluations, accruals for compensation plans, lower of cost or market inventory adjustments, the fair value of the term loan payable and related assets at the date of acquisition, the fair value of the contingent value rights and contingent consideration, provisions for income taxes and deferred taxes, depreciable lives of fixed assets, and amortizable lives of intangible assets. |
Restricted Cash and Cash Equivalents | Restricted Cash and Cash Equivalents For purposes of the condensed consolidated statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. The Company may invest in short-term money market funds that are not considered to be bank deposits and are not insured or guaranteed by the federal deposit insurance company (“FDIC”) or other government agency. These money market funds seek to preserve the value of the investment at $ 1.00 per share; however, it is possible to lose money investing in these funds. The restricted cash and cash equivalents on the balance sheet as of March 31, 2022 are funds that can only be used to support the legacy CSI business, will be distributed to CVR holders and cannot be used to support the working capital needs of the Pineapple Energy business. |
Investments | Investments Investments consist of corporate notes and bonds and commercial paper that are traded on the open market and are classified as available-for-sale and minority investments in strategic technology companies. Available-for-sale investments are reported at fair value with unrealized gains and losses excluded from operations and reported as a separate component of stockholders’ equity, net of tax. The investments on the balance sheet as of March 31, 2022 can only be used to support the legacy CSI business, will be distributed to CVR holders and cannot be used to support the working capital needs of the Pineapple Energy business. |
Accounts Receivable, Net | Accounts Receivable, Net Accounts receivable are recorded at their net realizable value and are not collateralized. Accounts receivable include amounts earned less payments received and allowances for doubtful accounts. Management continually monitors and adjusts its allowances associated with the Company’s receivables to address any credit risks associated with the accounts receivable and periodically writes off receivables when collection is not considered probable. The Company does not charge interest on past due accounts. When uncertainty exists as to the collection of receivables, the Company records an allowance for doubtful accounts and a corresponding charge to bad debt expense. |
Inventories, Net | Inventories, Net Inventories, which consist primarily of materials and supplies used in the installation of solar systems, are stated at the lower of cost or net realizable value, with costs computed on a weighted average cost basis. The Company periodically reviews its inventories for excess and obsolete items and adjusts carrying costs to estimated net realizable values when they are determined to be less than cost. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation is computed using the straight-line method. Maintenance and repairs are charged to operations and additions or improvements are capitalized. Items of property sold, retired or otherwise disposed of are removed from the asset and accumulated depreciation accounts and any gains or losses on disposal are reflected in the statements of operations. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the amount by which the purchase prices (including liabilities assumed) of acquired businesses exceed the estimated fair value of the net tangible assets and separately identifiable intangible assets of these businesses. Definite lived intangible assets, consisting primarily of trade names, technology, and customer relationships are amortized on a straight-line basis over the estimated useful life of the asset. Goodwill is not amortized but is tested at least annually for impairment. The Company reassesses the value of our reporting units and related goodwill balances annually on October 1 and at other times if events have occurred or circumstances exist that indicate the carrying amount of goodwill may not be recoverable. |
Recoverability of Long-Lived Assets | Recoverability of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. If indicators of impairment exist, management identifies the asset group that includes the potentially impaired long-lived asset, at the lowest level at which there are separate, identifiable cash flows. If the fair value, determined as the total of the expected undiscounted future net cash flows for the asset group is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Accumulated other comprehensive loss, net of tax, is comprised of unrealized losses on debt securities. |
Revenue Recognition | Revenue Recognition Within the Company’s Solar segment, revenue is recognized when there is a transfer of control of promised goods or services to customers in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services. The Company sells solar power systems under construction and development agreements to residential and commercial customers. The completed system is sold as a single performance obligation. For residential contracts, revenue is recognized at the point-in-time when the systems are placed into service. Any advance payments received in the form of customer deposits are recorded as contract liabilities. Commercial contracts are generally completed within three to twelve months from commencement of construction. Construction on large projects may be completed within eighteen to twenty-four months, depending on the size and location of the project. Revenue from commercial contracts are recognized as work is performed based on the estimated ratio of costs incurred to date to the total estimated costs at the completion of the performance obligation. The Company also arranges for solar power systems to be installed for residential customers by a third party, for which it earns a commission upon the end customer’s acceptance of the installation. As there are more than two parties involved in the sales transaction, the Company has determined it has an agent relationship in the contracts with these customers, due to the fact that the Company is not primarily responsible for fulfilling the promise to provide the installation of solar arrays to the Customer, the Company does not have inventory risk and has only limited discretion in pricing. Accordingly, the Company has determined that revenue under these arrangements should be recognized on a net basis. Within the Company’s IT Solutions & Services segment, revenue is recognized over time for managed services and professional services (time and materials (“T&M”) and fixed price) performance obligations. This segment’s managed services performance obligation is a bundled solution, a series of distinct services that are substantially the same and that have the same pattern of transfer to the customer and are recognized evenly over the term of the contract. T&M professional services arrangements are measured over time with an input method based on hours expended towards satisfying this performance obligation. Fixed price professional service arrangements under a relatively longer-term service will also be measured over time with an input method based on hours expended. The Company has also identified the following performance obligations within its IT Solutions & Services segment that are recognized at a point in time which include resale of third-party hardware and software, installation services, arranging for another party to transfer services to the customer, and certain professional services. The resale of third-party hardware and software is recognized at a point in time, when the goods are shipped or delivered to the customer’s location, in accordance with the agreed upon shipping terms. Installation services are recognized at a point in time when the services are completed. The service the Company provides to arrange for another party to transfer services to the customer is satisfied at a point in time as the Company has transferred control upon the service first being made available to the customer by the third-party vendor, which are required to be presented on a net basis. Depending on the nature of the service, certain professional services transfer control at a point in time. The Company evaluates these circumstances on a case-by-case basis to determine if revenue should be recognized over time or at a point in time. See Note 4, Revenue Recognition, for further discussion regarding revenue recognition. |
Gross Excise Tax | Gross Excise Tax The State of Hawaii imposes a gross receipts tax on all business operations done in Hawaii. |
Employee Retirement Benefits | Employee Retirement Benefits The Company has an Employee Savings Plan (401(k)) and matches a percentage of employee contributions up to six percent of compensation. |
Share Based Compensation | Share Based Compensation The Company accounts for share-based compensation awards on a fair value basis. The estimated grant date fair value of each stock-based award is recognized in income over the requisite service period (generally the vesting period). The estimated fair value of each option is calculated using the Black-Scholes option-pricing model. |
Net Loss Per Share | Net Loss Per Share Basic net loss per common share is based on the weighted average number of common shares outstanding during each year. Diluted net loss per common share adjusts for the dilutive effect of potential common shares outstanding. The Company’s only potential common shares outstanding are common shares that would result from the conversion of the Series A preferred shares, stock options, warrants and shares associated with the long-term incentive compensation plans. Due to the net loss in the first three months ended March 31, 2022 and 2021, there was no dilutive impact from outstanding preferred shares, options, warrants or unvested shares. The Company calculates the dilutive effect of outstanding options and unvested shares using the treasury stock method. There were no options or deferred stock awards excluded from the calculation of diluted earnings per share because there were no outstanding options or deferred stock awards as of both March 31, 2022 and 2021. Convertible shares and warrants totaling 32,000 and 2,353,936 , respectively, would have been excluded from the calculation of diluted earnings per share for the three months ended March 31, 2022 because the exercise price was greater than the average market price of common stock during the period. |
Accounting Standards Issued and Adopted | Accounting Standards Issued In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.” The amendments in this update replace the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses. This ASU is intended to provide financial statement users with more decision-useful information about expected credit losses and is effective for annual periods and interim periods for those annual periods beginning after December 15, 2022, which for us is the first quarter ending March 31, 2023. Entities may early adopt beginning after December 15, 2018. We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" (“ASU 2021-08”). The standard requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, “Revenue from Contracts with Customers,” as if it had originated the contracts. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted. We are currently evaluating the impact of the adoption of ASU 2021-08 on our consolidated financial statements. Accounting Standards Adopted In August 2020, FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The amendments in this update reduce the number of accounting models for convertible debt instruments and convertible preferred stock and amend the guidance for the derivative scope exception for contracts in an entity’s own equity. Convertible instruments that continue to be subject to separation models are a) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and b) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The reduction of accounting models is intended to simplify the accounting for convertible instruments, reduce complexity for preparers and practitioners, and improve the decision usefulness and relevance of the information provided to financial statement users. The amendments to the derivative scope exception guidance a) removes the following conditions from the settlement guidance: settlement in unregistered shares, collateral, and shareholder rights; b) clarifies that penalty payments do not preclude equity classification within the settlement guidance in the situation where there is a failure to timely file; c) requires instruments that are required to be classified as an asset or liability under ASC 815-40-15-8A to be measured subsequently at fair value, with changes reported in earnings and disclosed in the financial statements; d) clarifies that the scope of the disclosure requirements in ASC 815-40-50 applies only to freestanding instruments, not embedded features; and e) clarifies that the scope of the reassessment guidance in ASC 815-40-35 on subsequent measurement applies to both freestanding instruments and embedded features. The amendment to this guidance is intended to reduce form-over-substance-based accounting conclusions. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company adopted this update as of January 1, 2022 and has incorporated this guidance in our evaluation of the accounting for our warrants, which are classified as equity in our condensed consolidated financial statements. |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
CSI Merger [Member] | |
Business Acquisition [Line Items] | |
Schedule of Assets Acquired and Liabilities Assumed | Cash and cash equivalents $ 1,920,000 Investments 3,155,000 Accounts receivable 1,821,000 Inventory 139,000 Other assets 1,316,000 Property, plant, and equipment 118,000 Current assets held for sale 6,567,000 Intangible assets 2,556,000 Goodwill 5,989,000 Total assets 23,581,000 Accounts payable 2,547,000 Accrued expenses 1,013,000 Deferred revenue 149,000 Total liabilities 3,709,000 Net assets acquired $ 19,872,000 |
HEC Asset Acquisition [Member] | |
Business Acquisition [Line Items] | |
Schedule of Assets Acquired and Liabilities Assumed | Cash and cash equivalents $ 216,000 Accounts receivable 892,000 Inventory 1,572,000 Other assets 108,000 Property, plant, and equipment 182,000 Intangible assets 13,800,000 Goodwill 9,787,000 Total assets 26,557,000 Total liabilities 1,384,000 Net assets acquired $ 25,173,000 |
Schedule of Proforma Information | Three Months Ended March 31 2022 2021 Net revenue $ 5,525,000 $ 4,463,000 Net loss ( 2,556,000 ) ( 3,164,000 ) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue Recognition [Abstract] | |
Schedule of Disaggregation of Revenues | The Solar segment classifies its revenue by type as follows: Solar Revenue by Type Three Months Ended March 31 2022 Residential contracts $ 222,000 Commission revenue 10,000 $ 232,000 The IT Solutions & Services segment classifies its revenue by customer group and type as follows: IT Solutions & Services Revenue by Customer Group Three Months Ended March 31 2022 Financial $ 23,000 Healthcare 12,000 Other commercial clients 52,000 $ 87,000 IT Solutions & Services Revenue by Type Three Months Ended March 31 2022 Project & product revenue $ 46,000 Services & support revenue 41,000 $ 87,000 |
Restricted Cash Equivalents a_2
Restricted Cash Equivalents and Investments (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Restricted Cash Equivalents and Investments [Abstract] | |
Schedule of Cash Equivalents and Available-for-Sale Securities | March 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash Equivalents Short-Term Investments Long-Term Investments Cash equivalents: Money Market Funds $ 682,000 $ — $ — $ 682,000 $ 682,000 $ — $ — Subtotal 682,000 — — 682,000 682,000 — — Investments: Corporate Notes/Bonds 2,895,000 — ( 56,000 ) 2,839,000 — 787,000 2,052,000 Subtotal 2,895,000 — ( 56,000 ) 2,839,000 — 787,000 2,052,000 Total $ 3,577,000 $ — $ ( 56,000 ) $ 3,521,000 $ 682,000 $ 787,000 $ 2,052,000 |
Schedule of Estimated Fair Value of Available-for-Sale Securities | Amortized Cost Estimated Market Value Due within one year $ 797,000 $ 787,000 Due after one year through five years 2,098,000 2,052,000 $ 2,895,000 $ 2,839,000 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Inventories [Abstract] | |
Schedule of Inventories | March 31, 2022 Finished goods $ 21,000 Raw materials 1,605,000 $ 1,626,000 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets [Abstract] | |
Schedule of Finite-Lived Intangible Assets | March 31, 2022 Gross Carrying Amount Accumulated Amortization Net Tradename & trademark $ 4,288,000 $ ( 1,865,000 ) $ 2,423,000 $ 4,288,000 $ ( 1,865,000 ) $ 2,423,000 December 31, 2021 Gross Carrying Amount Accumulated Amortization Net Tradename & trademark $ 4,288,000 $ ( 1,508,000 ) $ 2,780,000 $ 4,288,000 $ ( 1,508,000 ) $ 2,780,000 |
Schedule of Estimated Future Amortization Expense | Year Ending December 31: Q2 – Q4 2022 $ 1,072,000 2023 1,351,000 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Information [Abstract] | |
Schedule of Segment Information | IT Solutions & Solar Services Total Three Months Ended March 31, 2022 Sales $ 232,000 $ 87,000 $ 319,000 Cost of sales 166,000 58,000 224,000 Gross profit 66,000 29,000 95,000 Selling, general and administrative expenses 256,000 41,000 297,000 Amortization expense 357,000 — 357,000 Transaction costs 950,000 19,000 969,000 Operating loss ( 1,497,000 ) ( 31,000 ) ( 1,528,000 ) Other expense ( 351,000 ) ( 5,000 ) ( 356,000 ) Loss before income tax $ ( 1,848,000 ) $ ( 36,000 ) $ ( 1,884,000 ) Depreciation and amortization $ 358,000 $ 4,000 $ 362,000 Assets $ 43,021,000 $ 16,771,000 $ 59,792,000 IT Solutions & Solar Services Total Three Months Ended March 31, 2021 Sales $ — $ — $ — Cost of sales — — — Gross profit — — — Selling, general and administrative expenses 231,000 — 231,000 Amortization expense 357,000 — 357,000 Transaction costs 169,000 — 169,000 Operating loss ( 757,000 ) — ( 757,000 ) Other expense ( 311,000 ) — ( 311,000 ) Loss before income tax $ ( 1,068,000 ) $ — $ ( 1,068,000 ) Depreciation and amortization $ 357,000 $ — $ 357,000 Assets $ 4,163,000 $ — $ 4,163,000 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Measurements [Abstract] | |
Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | March 31, 2022 Level 1 Level 2 Level 3 Total Fair Value Cash equivalents: Money Market Funds $ 682,000 $ — $ — $ 682,000 Subtotal 682,000 — — 682,000 Short-term investments: Corporate Notes/Bonds — 787,000 — 787,000 Subtotal — 787,000 — 787,000 Long-term investments: Corporate Notes/Bonds — 2,052,000 — 2,052,000 Subtotal — 2,052,000 — 2,052,000 Liabilities: Contingent Value Rights — — ( 18,277,000 ) ( 18,277,000 ) Contingent Consideration — — ( 4,684,000 ) ( 4,684,000 ) Subtotal — — ( 22,961,000 ) ( 22,961,000 ) Total $ 682,000 $ 2,839,000 $ (22,961,000) $ (19,440,000) |
Nature of Operations (Narrative
Nature of Operations (Narrative) (Details) | Mar. 28, 2022item |
HEC Asset Acquisition [Member] | |
Business Acquisition [Line Items] | |
Number of companies acquired | 2 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Narrative) (Details) $ / shares in Units, $ in Millions | Mar. 28, 2022USD ($)item$ / shares | Sep. 15, 2021USD ($) | Mar. 31, 2022$ / sharesshares |
Summary of Significant Accounting Policies [Line Items] | |||
Number of board of director members | item | 7 | ||
Value of the investment in short-term money market funds sought to be preserved (in dollars per share) | $ / shares | $ 1 | ||
Selected by CSI [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Number of board of director members | item | 2 | ||
Selected by Pineapple Energy [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Number of board of director members | item | 5 | ||
Securities Purchase Agreement [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Private placement investment | $ 32 | $ 32 | |
Additional common shares available to purchase during warrant period | $ 32 | ||
Warrant Agreement [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Warrant term | 5 years | ||
Term Loan from Hercules Capital, Inc. [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Repayments of debt | $ 4.5 | ||
Repayment of debt including interest | 5.6 | ||
Debt instrument, face amount | $ 7.5 | ||
Series A Preferred Stock [Member] | Securities Purchase Agreement [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Per share conversion price of preferred stock | $ / shares | $ 13.60 | ||
Convertible Shares and Warrants [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Shares not included in the computation of diluted earnings per share | shares | 32,000 | ||
Convertible Shares [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Shares not included in the computation of diluted earnings per share | shares | 32,000 | ||
Warrants [Member] | |||
Summary of Significant Accounting Policies [Line Items] | |||
Shares not included in the computation of diluted earnings per share | shares | 2,353,936 |
Business Combinations (Narrativ
Business Combinations (Narrative) (Details) $ / shares in Units, $ in Thousands | Mar. 28, 2022USD ($)item$ / sharesshares | Mar. 31, 2022USD ($)shares | Mar. 31, 2021USD ($) | Mar. 25, 2022USD ($) | Dec. 31, 2021shares |
Business Acquisition [Line Items] | |||||
Common stock, shares outstanding | shares | 7,435,586 | 3,074,998 | |||
Transaction costs | $ 969 | $ 168 | |||
Contingent consideration, issued shares | shares | 3,250,000 | ||||
Number Of Issuable Share Tranches | item | 3 | ||||
Adjustments to amortization expense for intangible assets | 531 | 537 | |||
Adjustments, transaction costs | 2,699 | $ 1,041 | |||
Merger Earnout Shares [Member] | |||||
Business Acquisition [Line Items] | |||||
Shares issued for merger | shares | 750,000 | ||||
Fair value of shares issued | $ 4,700 | ||||
Tranche One [Member] | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration, issued shares | shares | 750,000 | ||||
Tranche Two [Member] | |||||
Business Acquisition [Line Items] | |||||
Volume weighted average price of common stock | $ / shares | $ 24 | ||||
Threshold consecutive trading days | 30 days | ||||
Merger period | 24 months | ||||
Tranche Three [Member] | |||||
Business Acquisition [Line Items] | |||||
Volume weighted average price of common stock | $ / shares | $ 32 | ||||
Threshold consecutive trading days | 30 days | ||||
Merger period | 24 months | ||||
Tranches Two And Three [Member] | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration, issued shares | shares | 2,500,000 | ||||
Maximum [Member] | Tranche Two [Member] | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration, issued shares | shares | 1,250,000 | ||||
Maximum [Member] | Tranche Three [Member] | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration, issued shares | shares | 1,250,000 | ||||
Minimum [Member] | Tranche Two [Member] | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration, issued shares | shares | 1,000,000 | ||||
Minimum [Member] | Tranche Three [Member] | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration, issued shares | shares | 1,000,000 | ||||
CSI Merger [Member] | |||||
Business Acquisition [Line Items] | |||||
Shares issued for merger | shares | 5,006,245 | ||||
Total purchase price of acquired entity | $ 19,872 | ||||
Cash acquired in acquisition | 1,920 | ||||
Purchase price less cost to sell building | 6,800 | ||||
Revenue since acquisition | 87 | ||||
Operating (loss) since acquisition | 36 | ||||
CSI Merger [Member] | Minimum [Member] | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration liability, funds available benchmark | $ 200 | ||||
HEC Asset Acquisition [Member] | |||||
Business Acquisition [Line Items] | |||||
Conversion of stock, shares converted | shares | 1,562,498 | ||||
Conversion of stock, amount converted | $ 12,781 | ||||
Total purchase price of acquired entity | 25,173 | ||||
Cash acquired in acquisition | 216 | 216 | |||
Business acquisition, initial cash consideration paid | 12,500 | ||||
Business acquisition, working capital adjustment | $ 108 | ||||
Revenue since acquisition | 221 | ||||
Operating (loss) since acquisition | $ 19 | ||||
HEC Asset Acquisition [Member] | Common Class B [Member] | |||||
Business Acquisition [Line Items] | |||||
Shares issued for merger | shares | 6,250,000 | ||||
Legacy CSI Shareholders [Member] | |||||
Business Acquisition [Line Items] | |||||
Common stock, shares outstanding | shares | 2,429,341 | ||||
Fair Value, Inputs, Level 3 [Member] | CSI Merger [Member] | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration at fair value | $ 18,277 |
Business Combinations (Schedule
Business Combinations (Schedule of Assets Acquired and Liabilities Assumed) (Details) - USD ($) | Mar. 31, 2022 | Mar. 28, 2022 |
Business Acquisition [Line Items] | ||
Goodwill | $ 15,776,014 | |
CSI Merger [Member] | ||
Business Acquisition [Line Items] | ||
Cash and cash equivalents | 1,920,000 | |
Investments | 3,155,000 | |
Accounts receivable | 1,821,000 | |
Inventory | 139,000 | |
Other assets | 1,316,000 | |
Property, plant and equipment | 118,000 | |
Current assets held for sale | 6,567,000 | |
Intangible assets | 2,556,000 | |
Goodwill | 5,989,000 | |
Total assets | 23,581,000 | |
Accounts payable | 2,547,000 | |
Accrued expenses | 1,013,000 | |
Deferred revenue | 149,000 | |
Total liabilities | 3,709,000 | |
Net assets acquired | 19,872,000 | |
HEC Asset Acquisition [Member] | ||
Business Acquisition [Line Items] | ||
Cash and cash equivalents | 216,000 | $ 216,000 |
Accounts receivable | 892,000 | |
Inventory | 1,572,000 | |
Other assets | 108,000 | |
Property, plant and equipment | 182,000 | |
Intangible assets | 13,800,000 | |
Goodwill | 9,787,000 | |
Total assets | 26,557,000 | |
Total liabilities | 1,384,000 | |
Net assets acquired | $ 25,173,000 |
Business Combinations (Schedu_2
Business Combinations (Schedule of Proforma Information) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Business Combinations [Abstract] | ||
Net revenue | $ 5,525 | $ 4,463 |
Net loss | $ (2,556) | $ (3,164) |
Revenue Recognition (Narrative)
Revenue Recognition (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2022segment | |
Revenue Recognition [Abstract] | |
Number of segments | 2 |
Revenue Recognition (Schedule o
Revenue Recognition (Schedule of Disaggregation of Revenues) (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Disaggregation of Revenue [Line Items] | |
Revenues | $ 318,800 |
Solar [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenues | 232,000 |
Solar [Member] | Residential Contracts [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenues | 222,000 |
Solar [Member] | Commission Revenue [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenues | 10,000 |
IT Solutions & Services [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenues | 87,000 |
IT Solutions & Services [Member] | Financial [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenues | 23,000 |
IT Solutions & Services [Member] | Healthcare [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenues | 12,000 |
IT Solutions & Services [Member] | Other Commercial Clients [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenues | 52,000 |
IT Solutions & Services [Member] | Project & Product [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenues | 46,000 |
IT Solutions & Services [Member] | Services & Support [Member] | |
Disaggregation of Revenue [Line Items] | |
Revenues | $ 41,000 |
Restricted Cash Equivalents a_3
Restricted Cash Equivalents and Investments (Narrative) (Details) - Preferred Stock [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Debt and Equity Securities, FV-NI [Line Items] | |
Investment | $ 250 |
Minority investment, ownership percentage | 10.00% |
Restricted Cash Equivalents a_4
Restricted Cash Equivalents and Investments (Schedule of Cash Equivalents and Available-for-Sale Securities) (Details) | Mar. 31, 2022USD ($) |
Schedule of Available-for-sale Securities [Line Items] | |
Amortized Cost | $ 3,577,000 |
Gross Unrealized Gains | |
Gross Unrealized Losses | (56,000) |
Fair Value | 3,521,000 |
Cash Equivalents | 682,000 |
Short-Term Investments | 786,787 |
Long-Term Investments | 2,052,000 |
Cash and Cash Equivalents [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Amortized Cost | 682,000 |
Gross Unrealized Gains | |
Gross Unrealized Losses | |
Fair Value | 682,000 |
Cash Equivalents | 682,000 |
Short-Term Investments | |
Long-Term Investments | |
Money Market Funds [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Amortized Cost | 682,000 |
Gross Unrealized Gains | |
Gross Unrealized Losses | |
Fair Value | 682,000 |
Cash Equivalents | 682,000 |
Short-Term Investments | |
Long-Term Investments | |
Investments [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Amortized Cost | 2,895,000 |
Gross Unrealized Gains | |
Gross Unrealized Losses | (56,000) |
Fair Value | 2,839,000 |
Cash Equivalents | |
Short-Term Investments | 787,000 |
Long-Term Investments | 2,052,000 |
Corporate Notes/Bonds [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Amortized Cost | 2,895,000 |
Gross Unrealized Gains | |
Gross Unrealized Losses | (56,000) |
Fair Value | 2,839,000 |
Cash Equivalents | |
Short-Term Investments | 787,000 |
Long-Term Investments | $ 2,052,000 |
Restricted Cash Equivalents a_5
Restricted Cash Equivalents and Investments (Schedule of Estimated Fair Value of Available-for-Sale Securities) (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Schedule of Available-for-sale Securities [Line Items] | |
Amortized Cost | $ 3,577 |
Estimated Market Value | 3,521 |
Investments [Member] | |
Schedule of Available-for-sale Securities [Line Items] | |
Amortized Cost, Due within one year | 797 |
Amortized Cost, Due after one year through five years | 2,098 |
Amortized Cost | 2,895 |
Estimated Market Value, Due within one year | 787 |
Estimated Market Value, Due after one year through five years | 2,052 |
Estimated Market Value | $ 2,839 |
Inventories (Schedule of Invent
Inventories (Schedule of Inventories) (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Inventories [Abstract] | ||
Finished goods | $ 21,000 | |
Raw and processed materials | 1,605,000 | |
Inventories | $ 1,625,666 | $ 0 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Goodwill and Intangible Assets [Abstract] | |
Goodwill impairment loss | $ 15,776,000 |
Impairment of intangible assets | 16,356,000 |
Amortization expense | $ 357,000 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Schedule of Finite-Lived Intangible Assets) (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 4,288,000 | $ 4,288,000 |
Accumulated Amortization | (1,865,000) | (1,508,000) |
Net | 2,423,000 | 2,780,000 |
Trade Name/Trademark/Internet Domain Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,288,000 | 4,288,000 |
Accumulated Amortization | (1,865,000) | (1,508,000) |
Net | $ 2,423,000 | $ 2,780,000 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Schedule of Estimated Future Amortization Expense) (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Goodwill and Intangible Assets [Abstract] | |
Q2-Q4 2022 | $ 1,072,000 |
2023 | $ 1,351,000 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) | Mar. 29, 2022USD ($) | Mar. 28, 2022USD ($)shares | Dec. 16, 2021shares | Dec. 31, 2020USD ($) | Mar. 31, 2022USD ($)itemshares | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($)shares | Jan. 08, 2021USD ($)$ / shares |
Commitments and Contingencies [Line Items] | ||||||||
Acquisition retaled costs and accrued payable | $ 2,350,000 | |||||||
Preferred stock, par value | $ 32,000 | |||||||
Common stock, shares outstanding | shares | 7,435,586 | 3,074,998 | ||||||
Number of lawsuits | item | 2 | |||||||
One Then-Member [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Acquisition retaled costs and accrued payable | 2,000,000 | |||||||
Another Then-Member [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Acquisition retaled costs and accrued payable | 350,000 | |||||||
Term Loan from Hercules Capital, Inc. [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Loans payable | $ 3,000,000 | $ 7,500,000 | ||||||
Debt amount and accrued interest | $ 974,000 | 6,195,000 | ||||||
Repayments of debt | $ 4,500,000 | |||||||
Debt instrument, face amount | 7,500,000 | |||||||
Interest rate | 10.00% | |||||||
Maturity date | Dec. 31, 2024 | |||||||
Amount to be repaid at closing of merger | $ 4,500,000 | |||||||
Interest and accretion expense | $ 336,000 | $ 311,000 | ||||||
Debt payment, principal and accrued interest | $ 5,557,000 | |||||||
Effective interest rate | 52.90% | |||||||
Working Capital Note [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Debt carrying amount | $ 500,000 | $ 350,000 | ||||||
Additional borrowing | $ 150,000 | |||||||
Debt instrument, face amount | $ 500,000 | |||||||
Interest rate | 10.00% | |||||||
Maturity date | Dec. 31, 2022 | |||||||
Possible conversion from debt instrument based on one unit | $ / shares | $ 2 | |||||||
Working Capital Note [Member] | Hercules [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Debt instrument, face amount | $ 400,000 | |||||||
Working Capital Note [Member] | Northern Pacific Growth Investment Advisors, LLC [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Debt instrument, face amount | $ 100,000 | |||||||
Class C Units [Member] | Then-Members [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | shares | 1,175,000 | |||||||
Class C Units [Member] | Working Capital Note [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | shares | 250,000 | |||||||
Minimum [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Transaction amount benchmark | $ 30,000,000 | |||||||
Fair Value, Inputs, Level 3 [Member] | Term Loan from Hercules Capital, Inc. [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Debt, fair value | $ 4,768,000 | |||||||
Fair Value, Inputs, Level 3 [Member] | Term Loan from Hercules Capital, Inc. [Member] | Measurement Input, Discount Rate [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Debt Instrument, Measurement Input | 25 | |||||||
Common Stock [Member] | Then-Members [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | shares | 293,750 | |||||||
Common Stock [Member] | Working Capital Note [Member] | ||||||||
Commitments and Contingencies [Line Items] | ||||||||
Stock Issued During Period, Shares, Conversion of Convertible Securities | shares | 62,500 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) - 2022 Plan [Member] | Mar. 31, 2022shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of awards authorized | 750,000 |
Number of options outstanding | 0 |
Equity (Narrative) (Details)
Equity (Narrative) (Details) - USD ($) | Mar. 28, 2022 | Sep. 15, 2021 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 28, 2021 |
Class of Stock [Line Items] | |||||
Preferred stock, shares authorized | 3,000,000 | 3,000,000 | |||
Preferred stock, par value | $ 1 | $ 1 | |||
Preferred stock, shares issued | 32,000 | 0 | |||
Preferred stock, shares outstanding | 32,000 | 0 | |||
Issuance fair value | $ 29,300,630 | ||||
Series A Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Issuance fair value per share | $ 756.06 | ||||
Issuance fair value | $ 24,200,000 | ||||
Offering costs | $ 2,000,000 | ||||
PIPE Warrants [Member] | |||||
Class of Stock [Line Items] | |||||
Warrants exercised | 0 | ||||
Warrants outstanding | 2,352,936 | ||||
Issuance fair value per share | $ 3.32 | ||||
Issuance fair value | $ 7,800,000 | ||||
Additional paid in capital, warrants | 7,800,000 | ||||
Offering costs | $ 700,000 | ||||
Securities Purchase Agreement [Member] | |||||
Class of Stock [Line Items] | |||||
Private placement investment | $ 32,000,000 | $ 32,000,000 | |||
Securities Purchase Agreement [Member] | Series A Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred stock, shares authorized | 32,000 | 25,000 | |||
Preferred stock, par value | $ 1 | ||||
Warrant Agreement [Member] | |||||
Class of Stock [Line Items] | |||||
Warrant term | 5 years | ||||
Warrant Agreement [Member] | PIPE Warrants [Member] | |||||
Class of Stock [Line Items] | |||||
Warrants issued | 2,352,936 | ||||
Warrant exercise price | $ 13.60 | ||||
Warrant term | 5 years |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Income Taxes [Abstract] | |
Effective tax rate | 0.00% |
Tax at U.S. statutory rate | 21.00% |
Segment Information (Narrative)
Segment Information (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2022segment | |
Segment Information [Abstract] | |
Number of segments | 2 |
Segment Information (Schedule o
Segment Information (Schedule of Segment Information) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Segment Reporting Information [Line Items] | |||
Sales | $ 318,800 | ||
Cost of sales | 223,668 | ||
Gross profit | 95,132 | ||
Selling, general and administrative expenses | 297,272 | $ 231,227 | |
Amortization expense | 357,463 | 357,324 | |
Transaction costs | 968,505 | 168,445 | |
Operating loss | (1,528,108) | (756,996) | |
Other (expense) income | (355,526) | (311,413) | |
Operating loss before income taxes | (1,883,634) | (1,068,409) | |
Depreciation and amortization | 362,000 | 357,000 | |
Assets | 59,791,971 | 4,163,000 | $ 2,799,236 |
Solar [Member] | |||
Segment Reporting Information [Line Items] | |||
Sales | 232,000 | ||
Cost of sales | 166,000 | ||
Gross profit | 66,000 | ||
Selling, general and administrative expenses | 256,000 | 231,000 | |
Amortization expense | 357,000 | 357,000 | |
Transaction costs | 950,000 | 169,000 | |
Operating loss | (1,497,000) | (757,000) | |
Other (expense) income | (351,000) | (311,000) | |
Operating loss before income taxes | (1,848,000) | (1,068,000) | |
Depreciation and amortization | 358,000 | 357,000 | |
Assets | 43,021,000 | $ 4,163,000 | |
IT Solutions & Services [Member] | |||
Segment Reporting Information [Line Items] | |||
Sales | 87,000 | ||
Cost of sales | 58,000 | ||
Gross profit | 29,000 | ||
Selling, general and administrative expenses | 41,000 | ||
Transaction costs | 19,000 | ||
Operating loss | (31,000) | ||
Other (expense) income | (5,000) | ||
Operating loss before income taxes | (36,000) | ||
Depreciation and amortization | 4,000 | ||
Assets | $ 16,771,000 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Fair Value Measurements [Abstract] | |
Goodwill impairment loss | $ 15,776,000 |
Transfers between levels | $ 0 |
Fair Value Measurements (Schedu
Fair Value Measurements (Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Cash equivalents | $ 682 |
Short-term investments | 787 |
Long-term investments | 2,052 |
Liabilities | (22,961) |
Fair Value, Inputs, Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Cash equivalents | 682 |
Fair Value, Inputs, Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Short-term investments | 787 |
Long-term investments | 2,052 |
Fair Value, Inputs, Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | (22,961) |
Money Market Funds [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Cash equivalents | 682 |
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Cash equivalents | 682 |
Corporate Notes/Bonds [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Short-term investments | 787 |
Long-term investments | 2,052 |
Corporate Notes/Bonds [Member] | Fair Value, Inputs, Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Short-term investments | 787 |
Long-term investments | 2,052 |
Contingent Value Rights [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | (18,277) |
Contingent Value Rights [Member] | Fair Value, Inputs, Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | (18,277) |
Contingent Consideration [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | (4,684) |
Contingent Consideration [Member] | Fair Value, Inputs, Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Liabilities | $ (4,684) |