Pineapple Energy Inc

As previously disclosed, on May 16, 2024, the Company received a notice (the “May Notice”) from the Staff informing the Company that it no longer complies with the requirement under Nasdaq Listing Rule 5550(b)(1) to maintain a minimum of $2,500,000 in stockholders’ equity for continued listing on The Nasdaq Capital Market (the “Stockholders’ Equity Rule”)because the Company reported stockholders’ equity of negative $11.2 million in its Form 10-Q for the period ended March 31, 2024, and, as of the date of the May Notice, the Company did not meet the alternatives of market value of listed securities or net income from continuing operations. Accordingly, the May Notice indicated that this matter serves as an additional basis for delisting the Company’s securities from Nasdaq.

The Notice provides in its formal notification that the Nasdaq Hearings Panel (the “Panel”) will consider this matter in their decision regarding the Company’s continued listing on the Nasdaq Capital Market. The Company presented its views with respect to this additional deficiency to the Panel in writing on May 23, 2024. In particular, the Company believes that, if the increase in the number of authorized shares of our common stock as proposed by this Proposal 6 is approved by our shareholders at the Annual Meeting, the Company would be able to reclassify the Series A Preferred Stock from mezzanine equity to stockholders' equity in its financial statements, which would result in compliance with the Stockholders' Equity Rule.

In addition to satisfying our conversion obligations, our Board believes that it is important for us to have additional authorized shares of common stock for the 2022 Equity Incentive Plan to provide sufficient reserved shares for a level of grants that will attract, retain, and motivate employees and other service providers to our Company, as well as to have additional available shares of common stock for the 2022 Employee Stock Purchase Plan to encourage stock ownership by our employees.

Further, our Board believes it is important for our Company to have available for issuance a number of authorized shares of common stock sufficient to support our growth and to provide flexibility for future corporate needs that may be identified by the Board in the future, including, if needed, for financing our business, for acquiring other businesses, and for forming strategic partnerships and alliances. Accordingly, to the extent any authorized shares are not used to satisfy our conversion obligations under our Series A convertible preferred stock and warrants, we would retain them for such potential uses in the future; provided, that, we currently have no such plans, proposals, or arrangements, written or otherwise, to issue any of the additional authorized shares for such purposes except in connection with equity compensation plans. Approving an Authorized Share Amendment Proposal may help the Company in future capital raises. An increase in the number of authorized shares of the Company's common stock also would be utilized to assist the Company in regaining compliance with the Stockholders' Equity Rule, as discussed above. There can be no assurances that the Company will be able to regain compliance with the Stockholders’ Equity Rule at all or by applicable deadlines. If the Company is unable to regain or maintain compliance with these Nasdaq requirements, its common stock will be delisted from Nasdaq.

After careful consideration, our Board approved the amendment to our Amended and Restated Articles of Incorporation to increase the number of authorized shares of our common stock from 112,500,000 to 2,000,000,000 (or, if the June 2024 Reverse Stock Split is implemented, from 7,500,000 to 133,333,333), subject to a proportional downward adjustment for any reverse stock split (as further described below). This increase was designed to provide us with sufficient authorized but unissued and unreserved shares of common stock to allow the reservation of 655,601,023 additional authorized and unreserved shares to permit the reset of the conversion price of our Series A convertible preferred stock to $0.07 or $0.14 (for preferred shares held by the Purchasers), as applicable, which would lead to a corresponding increase to the shares of common stock issuable upon conversion of the Series A convertible preferred stock to 203,675,570 shares, and the adjustment of the warrants to purchase common stock issued in the PIPE Offering to an exercise price of $0.07 per warrant, which would lead to a corresponding increase to the shares of common stock issuable upon exercise of the warrants to 454,531,558 shares, as well as to increase our additional authorized but unissued and unreserved shares by approximately 1110% of our authorized shares, which is 1,248,237,352 shares. We note that the issuance of common stock upon conversion of the Series A convertible preferred stock and exercise of the warrants in connection with the PIPE Offering was approved by our shareholders at our special meeting of shareholders in March 2022.