PINEAPPLE EXPRESS CANNABIS Co 10-Q for FY2024 Q2
PINEAPPLE EXPRESS CANNABIS Co (PNXP)
About this 10-Q
PINEAPPLE EXPRESS CANNABIS Co filed this 10-Q on September 28, 2023, covering the quarter ended July 31, 2023 (FY2024 Q2).
Headline figures
Quarter ended July 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net income
- $613.91K
- compared with a net loss of $1360 a year earlier
- Diluted EPS
- $0.03
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to ___________
Commission
File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of September 26, 2023, there were shares of common stock, par value $0.001, issued and outstanding.
Table of Contents
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report includes “forward-looking statements” within the meaning of the federal securities laws that involve risks and uncertainties. Forward-looking statements include statements we make concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs and other information that is not historical information. When used in this quarterly report, the words “estimates,” “expects,” “anticipates,” “projects,” “forecasts,” “plans,” “intends,” “believes,” “foresees,” “seeks,” “likely,” “may,” “might,” “will,” “should,” “goal,” “target” or “intends” and variations of these words or similar expressions (or the negative versions of any such words) are intended to identify forward-looking statements. All forward-looking statements are based upon information available to us on the date of this Quarterly Report.
These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. These risks and uncertainties are discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended January 31, 2023, filed with the Securities and Exchange Commission on May 24, 2023, as the same may be updated from time to time.
All forward-looking statements attributable to us in this Quarterly Report apply only as of the date of this Quarterly Report and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events, except as required by law.
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PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PINEAPPLE EXPRESS CANNABIS COMPANY AND SUBSIDIARIES
BALANCE SHEET
(Unaudited)
| July 31, 2023 (Unaudited) | January 31, 2023 (Audited) | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Other Assets | ||||||||
| Investment in subsidiary | ||||||||
| Due from related party | ||||||||
| Total Other Assets | ||||||||
| Fixed Assets | ||||||||
| Equipment, software, leasehold improvement, net | ||||||||
| Total Fixed Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | $ | ||||||
| Related party loan | ||||||||
| Deposit for stock purchase | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | $ | $ | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Common stock, par value $ per share; shares authorized; and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Retained Earnings / (Accumulated Deficit) | ( | ) | ||||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ||||||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | $ | ||||||
See accompanying notes, which are an integral part of these financial statements.
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PINEAPPLE EXPRESS CANNABIS COMPANY AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
Three and six months ended July 31, 2023 and July 31, 2022
(Unaudited)
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| For the Three Months Ended July 31, | For the Six Months Ended July 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| REVENUES | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| TOTAL OPERATING EXPENSES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income | ||||||||||||||||
| Income from equity-method investment | ||||||||||||||||
| Total Other Income | ||||||||||||||||
| Income (loss) from operations before taxes | ( | ) | ( | ) | ||||||||||||
| PROVISION FOR INCOME TAXES | ||||||||||||||||
| NET INCOME (LOSS) | ( | ) | ( | ) | ||||||||||||
| NET INCOME (LOSS) PER SHARE: BASIC AND DILUTED | ) | ) | ||||||||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED | ||||||||||||||||
See accompanying notes, which are an integral part of these financial statements.
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PINEAPPLE EXPRESS CANNABIS COMPANY AND SUBSIDIARIES
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Three and six months ended July 31, 2023 and 2022
(Unaudited)
| Shares | Amount | Capital | Deficit) | (Deficit) | ||||||||||||||||
| Common Stock | Additional Paid-in | Retained Earnings (Accumulated | Total Stockholders’ Equity | |||||||||||||||||
| Shares | Amount | Capital | Deficit) | (Deficit) | ||||||||||||||||
| Balance, January 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net loss for the six months ended July 31, 2022 | - | ( | ) | ( | ) | |||||||||||||||
| Balance, July 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Balance, January 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Issuance of common stock | ||||||||||||||||||||
| Net income for the six months ended July 31, 2023 | - | |||||||||||||||||||
| Balance, July 31, 2023 | $ | $ | $ | $ | ||||||||||||||||
| Balance, April 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net loss for the three months ended July 31, 2022 | - | ( | ) | ( | ) | |||||||||||||||
| Balance, July 31, 2022 | $ | ( | ) | ( | ) | |||||||||||||||
| Balance, April 30, 2023 | $ | $ | ( | ) | $ | |||||||||||||||
| Net gain for the three months ended July 31, 2023 | - | |||||||||||||||||||
| Balance, July 31, 2023 | ||||||||||||||||||||
See accompanying notes, which are an integral part of these financial statements
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PINEAPPLE EXPRESS CANNABIS COMPANY AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
Six months ended July 31, 2023 and 2022
(Unaudited)
| Six Months Ended July 31, 2023 | Six Months Ended July 31, 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash from operating activities: | ||||||||
| Depreciation | ||||||||
| Change in prepaid expenses | ||||||||
| Change in accounts payable | ( | ) | ||||||
| Income from equity-method investment | ( | ) | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Related party loan | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| NET CHANGE IN CASH | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | |||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
See accompanying notes, which are an integral part of these financial statements.
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PINEAPPLE
EXPRESS CANNABIS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2023
Note 1 – ORGANIZATION AND NATURE OF BUSINESS
Pineapple
Express Cannabis Company is based in Los Angeles, California. The Company’s wholly owned operating subsidiary, Ananas Growth Ventures,
serves as an incubator, helping early-stage ventures and startups in the cannabis sector through funding, mentoring, and training. The
Company is also engaged in legal cannabis retail through its
PCI
has executed management contracts for
| ● | PNPLXpress
X, Inc. (“Van Nuys Dispensary”): |
| ● | Goldstar
Industrees (“Northridge Dispensary”): |
| ● | PNPLXpress,
Inc. (“Hollywood Dispensary”): |
| ● | PNPLXpress
II, Inc. (“Northeast LA Dispensary”): |
| ● | Pineapple
Equities, Inc. (“Beverly Grove Dispensary”): |
| ● | 5660
W. Pico & Hope (Mid-Wilshire Dispensary): |
| ● | 2378
Westwood Partners (Westwood Dispensary): |
| ● | 19841
Ventura & Hope (Woodland Hills Dispensary): |
| ● | 1485
W. Sunset & Hope (Echo Park Dispensary): |
Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.
In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of July 31, 2023 and the results of operations and cash flows for the periods presented. The results of operations for the three and six months ended July 31, 2023 are not necessarily indicative of the operating results for the full fiscal year or any future period.
These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the period ended January 31, 2023 filed with the SEC on May 24, 2023.
Management acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations for the periods presented.
Principles of Consolidation
These unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.
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PINEAPPLE EXPRESS CANNABIS COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2023
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Equipment
Equipment
is stated at cost, net of accumulated depreciation. The cost of equipment and software is depreciated using the straight-line method
over and
The Company computes income (loss) per share in accordance with the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) 260 “Earnings per Share”. Basic income (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted income (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For the three months ended July 31, 2023, there were potentially dilutive debt or equity instruments issued or outstanding.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, “Revenue from Contracts with Customers”. ASC 606 was adopted on February 1, 2018. The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Specifically, Section 606-10-50 requires an entity to provide information about: (a) revenue recognized from contracts with customers, including the disaggregation of revenue into appropriate categories; (b) contract balances, including the opening and closing balances of receivables, contract assets, and contract liabilities; (c) performance obligations, including when the entity typically satisfies its performance obligations and the transaction price that is allocated to the remaining performance obligations in a contract; and (d) significant judgments, and changes in judgments, made in applying the requirements to those contracts. For the six months ended July 31, 2023, the Company did not generate any revenues.
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Recent Accounting Pronouncements
We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on the Company.
Impact of COVID-19 on the Company
The global outbreak of COVID-19 has led to severe disruptions in general economic activities, as businesses and governments have taken broad actions to mitigate this public health crisis. Although the Company has not experienced any significant disruption to its business to date, these conditions could significantly negatively impact the Company’s business in the future.
The extent to which the COVID-19 outbreak ultimately impacts the Company’s business, future revenues, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity and longevity, the actions to curtail the virus and treat its impact (including an effective vaccine), and how quickly and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, the Company may be at risk of experiencing a significant impact to its business as a result of the global economic impact, including any economic downturn or recession that has occurred or may occur in the future.
As a result of the impact of COVID-19 on capital markets, the availability, amount, and type of financing available to the Company in the near future is uncertain and cannot be assured and is largely dependent upon evolving market conditions and other factors.
The Company intends to continue to monitor the situation and may adjust its current business plans as more information and guidance become available.
Note 3 – RELATED PARTY TRANSACTIONS
The
Company is owed $
Note 4 – COMMITMENTS AND CONTINGENCIES
The
Company currently subleases office space at 12301 Wilshire Blvd. #302, Los Angeles, CA 90025 through PCI, the Company’s
From time-to-time, the Company is subject to various litigation and other claims in the normal course of business. The Company establishes liabilities in connection with legal actions that management deems to be probable and estimable. No amounts have been accrued in the financial statements with respect to any matters.
Note 5 – SUBSEQUENT EVENTS
In accordance with ASC 855, “Subsequent Events”, the Company has analyzed its operations subsequent to July 31, 2023, through Sep 25, 2023, and has determined that it does not have any material subsequent events to disclose in these unaudited financial statements.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results of operations of Pineapple Express Cannabis Company and its subsidiaries (together, the “Company” or “Pineapple Express Cannabis”) should be read in conjunction with our unaudited consolidated financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our,” and similar terms refer to the Company. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors section of our Annual Report on Form 10-K for the year ended January 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on May 24, 2023, as the same may be updated from time to time. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.
Overview
We are based in Los Angeles, California. Our wholly owned operating subsidiary, Ananas Growth Ventures, serves as an incubator, helping early-stage ventures and startups in the cannabis sector through funding, mentoring, and training. We are also engaged in legal cannabis retail through our 50% owned equity method investee, Pineapple Consolidated Inc. (“PCI”). PCI runs Pineapple Express, a cannabis retailer, and owns and manages retail cannabis ventures. PCI seeks to become a leading portfolio management company in the U.S. cannabis industry. With its headquarters in Los Angeles, Pineapple Express is rapidly increasing its footprint throughout California and is looking to scale into underdeveloped markets.
PCI has executed management contracts for 10% revenue sharing with eight entities in which it holds an equity interest through its wholly owned subsidiary, PNPL Holdings, Inc. Those entities are shown below:
| ● | PNPLXpress X, Inc. (“Van Nuys Dispensary”): 10% as of July 31, 2023 (dispensary and delivery). |
| ● | Goldstar Industrees (“Northridge Dispensary”): 39% as of July 31, 2023 (dispensary and delivery). |
| ● | PNPLXpress, Inc. (“Hollywood Dispensary”): 10% equity interest as of July 31, 2023 (dispensary and delivery). |
| ● | PNPLXpress II, Inc. (“Northeast LA Dispensary”): 49% interest as of July 31, 2023 (dispensary and delivery). |
| ● | Pineapple Equities, Inc. (“Beverly Grove Dispensary”): 24% equity interest as of July 31, 2023 (dispensary and delivery). |
| ● | 5660 W. Pico & Hope (Mid-Wilshire Dispensary): 49% equity interest as of July 31, 2023 (dispensary and delivery). |
| ● | 2378 Westwood Partners (Westwood Dispensary): 49% equity interest as of July 31, 2023 (dispensary and delivery). |
| ● | 19841 Ventura & Hope (Woodland Hills Dispensary): 49% equity interest as of July 31, 2023 (dispensary and delivery). |
| ● | 1485 W. Sunset & Hope (Echo Park Dispensary): 29% equity interest as of July 31, 2023 (dispensary and delivery). |
Recent Developments
On December 18, 2022, we entered into a Share Exchange Agreement (the “Exchange Agreement”) with Yulia Lazaridou, our then-majority stockholder, PCI, and the PCI stockholders (collectively, the “PCI Stockholders”). Pursuant to the terms of the Exchange Agreement, the PCI Stockholders exchanged an aggregate of 50,000 shares of PCI common stock, representing 50% of the outstanding PCI common stock, for 18,000,000 shares of our common stock.
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In addition, on December 18, 2022, in a transaction related to and a condition to the Exchange, Ms. Lazaridou and the Company entered into that certain Resignation, Separation and Release Agreement (the “Resignation Agreement”), pursuant to which (i) we redeemed 2,800,000 shares of Company common stock owned by Ms. Lazaridou (the “Lazaridou Shares”) in exchange for a payment by us of $540,904; and (b) Ms. Lazaridou resigned as our sole director and officer, effective as of December 21, 2022.
In order to fund the payment for the Lazaridou Shares, contemporaneous with the Exchange, on December 18, 2022, PCI loaned $540,904 to us. The loan (the “PCI Loan”) matures on June 30, 2023 and earns interest at an annual rate of 1%.
In addition, on December 18, 2022, Ms. Lazaridou, as sole director and majority stockholder, (i) elected Matthew Feinstein as sole director of the Company; (ii) appointed Mr. Feinstein as Chief Executive Officer, President, Chairman of the Board and Interim Chief Financial Officer of the Company; (iii) accepted Ms. Lazaridou’s resignation; (iv) approved the Exchange Agreement; and (v) approved the Resignation Agreement.
As a result of the above-described transactions, the Company is 50% owned by the PCI Stockholders and PCI is 50% owned by the Company.
On December 30, 2022, we notified Financial Industry Regulatory Authority (“FINRA”) of our intent to change our corporate name from “Minaro Corp.” to “Pineapple Express Cannabis Company” and to change our trading symbol to PNXP. These corporate actions were subject to FINRA review and clearance which was received during this reporting period.
On January 5, 2023, we filed Restated Articles of Incorporation (the “Restated Articles”) with the State of Nevada. The Restated Articles had the effect of (i) changing our corporate name to “Pineapple Express Cannabis Company”; and (ii) creating a class of 10,000,000 authorized shares of preferred stock.
Results of Operations
Three Months Ended July 31, 2023 Compared to Three Months Ended July 31, 2022
Revenues
For the three months ended July 31, 2023 and 2022, the Company generated revenues of $0 and $0, respectively. No change has been noted from the respective periods.
Cost of Goods Sold
For the three months ended July 31, 2023 and 2022, the cost of goods sold was $0 and $0, respectively.
Total Operating Expenses
Total operating expenses for the three months ended July 31, 2023 and 2022 were $19,247 and $1,360, respectively. The increase was primarily due to an increase in legal fees and audit fees, partly due to the sale of the Company and the acquisition of PCI by the Company. Operating expenses for the three months ended July 31, 2023 consisted of depreciation expense of $115; legal fees of $10,359; audit fees of $2,000; and professional fees of $6,773. Operating expenses for the three months ended July 31, 2022 consisted of bank charges of $32; depreciation expense of $938; professional fees of $235; and other expenses of $155.
Net Income (Loss)
Net income (loss) for the three months ended July 31, 2023 and 2022 was $613,913 and ($1,360) respectively. The increase in net income was primarily due to recognition of gain from the PCI subsidiary using the equity-investment method.
Six Months Ended July 31, 2023 Compared to Six Months Ended July 31, 2022
Revenues
For the six months ended July 31, 2023 and 2022, the Company generated revenues of $0 and $4,560, respectively. The decrease in revenue is due to the company’s transition from focusing on architectural design services to a focus on the cannabis industry.
Cost of Goods Sold
For the six months ended July 31, 2023 and 2022, the cost of goods sold was $0 and $0, respectively.
Total Operating Expenses
Total operating expenses for the six months ended July 31, 2023 and 2022 were $48,953 and $11,637, respectively. The increase was primarily due to an increase in legal fees and audit fees, largely due to the sale of the Company and subsequent acquisition of PCI by the Company. Operating expenses for the six months ended July 31, 2023, consisted of depreciation expense of $230; legal fees of $26,381; audit fees of $14,500; and professional fees of $7,842. Operating expenses for the six months ended July 31, 2022 consisted of bank charges of $99; depreciation expense of $1,712; professional fees of $9,661; and other expenses of $165.
Net Income (Loss)
Net income (loss) for the six months ended July 31, 2023 and 2022 was $613,913 and ($6,987) respectively. The increase in net income was primarily due to recognition of gain from the PCI subsidiary using the equity-investment method.
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Liquidity and Capital Resources
As of July 31, 2023, the Company had cash of $0 and retained earnings of $211,511. To date, we have financed our operations primarily through the issuance of debt and equity sourced capital.
The following table sets forth a summary of our cash flows for the six months ended July 31, 2023 and 2022:
Six Months Ended July 31, | ||||||||
| 2023 | 2022 | |||||||
| Net cash used in operating activities | $ | (34,358 | ) | $ | (9,555 | ) | ||
| Net cash provided by investing activities | - | - | ||||||
| Net cash provided by financing activities | 34,358 | 4,333 | ||||||
| Net decrease in cash | - | (5,222 | ) | |||||
| Cash, beginning of period | - | 5,269 | ||||||
| Cash, end of period | $ | - | $ | 47 | ||||
Since inception, we have financed our cash flow requirements primarily through issuance of common stock and debt financing. As we expand our activities, we may continue to experience net negative cash flows from operations. We anticipate obtaining additional financing to fund operations through additional common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. There can be no assurance that we will be able to obtain financing on commercially acceptable terms, if at all.
We anticipate that we will incur operating losses in the next 12 months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of our unaudited consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A smaller reporting company is not required to provide the information required by this Item.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Principal Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, 2023. Based upon his evaluation, our Chief Executive Officer and Principal Financial Officer concluded that, as of July 31, 2023, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were deemed effective.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
During the six months ended July 31, 2023, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we are involved in ordinary routine litigation typical for companies engaged in our line of business. As of the date of this Quarterly Report on Form 10-Q, there are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company that we believe would be likely, individually or in the aggregate, to have a material adverse effect on our financial condition or results of operations.
ITEM 1A. RISK FACTORS
Smaller reporting companies are not required to provide disclosure pursuant to this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the six months ended July 31, 2023, the Company issued unregistered equity securities as follows:
| ● | The Company issued 1,340,000 shares of common stock for an aggregate purchase price of $670,000 (equal to a per share purchase price of $0.50). |
The above securities issuances were exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided by Regulation D and Section 4(a)(2), as applicable under the Securities Act.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
(a) None.
(b) There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors since we last provided disclosure in response to the requirements of Item 407(c)(3) of Regulation S-K promulgated under the Exchange Act.
ITEM 6. EXHIBITS
| Exhibit No. | Description | |
| 31.1* | Certification of Chief Executive Officer pursuant to Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Principal Financial Officer pursuant to Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1** | Certification by the Chief Executive Officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS* | Inline XBRL Instance Document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase. | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Document. | |
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PINEAPPLE EXPRESS CANNABIS COMPANY | ||
| Date: September 28, 2023 | By: | /s/ Matthew Feinstein |
| Name: | Matthew Feinstein | |
| Title: | Chief Executive Officer, President and Interim Chief Financial Officer (principal executive officer, principal financial officer and principal accounting officer) | |
| 16 |
Exhibit 31.1
CERTIFICATIONS
I, Matthew Feinstein, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2023 of Pineapple Express Cannabis Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: September 28, 2023
| /s/ Matthew Feinstein | |
| Matthew Feinstein | |
| Chief Executive Officer, President and Interim Chief Financial Officer (principal executive officer) |
Exhibit 31.2
CERTIFICATIONS
I, Matthew Feinstein, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2023 of Pineapple Express Cannabis Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: September 28, 2023
| /s/ Matthew Feinstein | |
| Matthew Feinstein | |
| Chief Executive Officer, President and Interim Chief Financial Officer (principal financial officer) |
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Pineapple Express Cannabis Company (the “Company”) for the quarterly period ended July 31, 2023 as filed with the Securities and Exchange Commission (the “Report”), I, Matthew Feinstein, Chief Executive Officer, President and Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| Date: September 28, 2023 | /s/ Matthew Feinstein |
| Matthew Feinstein | |
| Chief Executive Officer, President and Interim Chief Financial Officer (principal executive officer and principal financial officer) |
This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.