Annual Report (10-k)
0001710495 false FY
http://fasb.org/us-gaap/2023#RelatedPartyMember
http://fasb.org/us-gaap/2023#RelatedPartyMember 0001710495
2022-02-01 2023-01-31 0001710495 2023-05-22 0001710495 2023-01-31
0001710495 2022-01-31 0001710495 2021-02-01 2022-01-31 0001710495
us-gaap:CommonStockMember 2021-01-31 0001710495
us-gaap:AdditionalPaidInCapitalMember 2021-01-31 0001710495
us-gaap:RetainedEarningsMember 2021-01-31 0001710495 2021-01-31
0001710495 us-gaap:CommonStockMember 2022-01-31 0001710495
us-gaap:AdditionalPaidInCapitalMember 2022-01-31 0001710495
us-gaap:RetainedEarningsMember 2022-01-31 0001710495
us-gaap:CommonStockMember 2021-02-01 2022-01-31 0001710495
us-gaap:AdditionalPaidInCapitalMember 2021-02-01 2022-01-31
0001710495 us-gaap:RetainedEarningsMember 2021-02-01 2022-01-31
0001710495 us-gaap:CommonStockMember 2022-02-01 2023-01-31
0001710495 us-gaap:AdditionalPaidInCapitalMember 2022-02-01
2023-01-31 0001710495 us-gaap:RetainedEarningsMember 2022-02-01
2023-01-31 0001710495 us-gaap:CommonStockMember 2023-01-31
0001710495 us-gaap:AdditionalPaidInCapitalMember 2023-01-31
0001710495 us-gaap:RetainedEarningsMember 2023-01-31 0001710495
2023-01-31 2023-01-31 0001710495 2020-02-01 2021-01-31 iso4217:USD
xbrli:shares iso4217:USD xbrli:shares xbrli:pure
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
|
☒ |
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the fiscal year ended
January 31,
2023
or
|
☐ |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the transition period from ___________ to
___________
Commission
File Number:
333-223963
PINEAPPLE EXPRESS CANNABIS COMPANY
(Exact
name of registrant as specified in its charter)
|
Nevada |
36-4864568 |
|
|
(State
of |
(I.R.S.
Identification |
10351 Santa Monica Blvd.,
Suite 420
Los Angeles,
CA
90025
(Address
of principal executive offices) (Zip Code)
888–245-5703
(Registrant’s
telephone number, including area code)
Minaro Corp
(Former
name, former address and former fiscal year, if changed since last
report)
Securities
registered pursuant to Section 12(b) of the Securities Exchange Act
of 1934: None
Securities
registered pursuant to Section 12(g) of the Exchange Act: Common
Stock, $0.0000001 par value
Common stock, par value $0. 001
(Title
of each class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. ☐ Yes ☒
No
Indicate
by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☒
No
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ☐
No ☒
Indicate
by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (Section 232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the
registrant was required to submit such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large-accelerated filer,
an accelerated filer, a non-accelerated filer, 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 |
☐ |
Non-accelerated filer |
☒ | Smaller reporting company |
☒ |
| Emerging growth company |
☐ |
If an
emerging growth company, indicate by checkmark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and
attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes ☐
No ☒
State
the number of shares outstanding of each of the issuer’s classes of
common equity, as of the latest practicable date: common shares issued and outstanding as of May
22, 2023.
TABLE
OF CONTENTS
Use
of Market and Industry Data
This
Annual Report on Form 10-K for the fiscal year ended January 31,
2023 (this “Annual Report”) includes market and industry data that
we have obtained from third-party sources, including industry
publications, as well as industry data prepared by our management
on the basis of its knowledge of and experience in the industries
in which we operate (including our management’s estimates and
assumptions relating to such industries based on that knowledge).
Management has developed its knowledge of such industries through
its experience and participation in these industries. While our
management believes the third-party sources referred to in this
Annual Report are reliable, neither we nor our management have
independently verified any of the data from such sources referred
to in this Annual Report or ascertained the underlying economic
assumptions relied upon by such sources. Furthermore, references in
this Annual Report to any publications, reports, surveys, or
articles prepared by third parties should not be construed as
depicting the complete findings of the entire publication, report,
survey, or article. The information in any such publication,
report, survey, or article is not incorporated by reference in this
Annual Report.
Forecasts
and other forward-looking information obtained from these sources
involve risks and uncertainties and are subject to change based on
various factors, including those discussed in sections entitled
“Forward-Looking Statements,” “Item 1A. Risk Factors” and “Item 7.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in this Annual Report.
Trademarks,
Service Marks and Trade Names
This
Annual Report contains references to our trademarks, service marks
and trade names and to trademarks, service marks and trade names
belonging to other entities. Solely for convenience, trademarks,
service marks and trade names referred to in this Annual Report,
including logos, artwork, and other visual displays, may appear
without the ® or TM symbols, but such
references are not intended to indicate, in any way, that their
respective owners will not assert, to the fullest extent under
applicable law, their rights thereto. We do not intend our use or
display of other companies’ trade names, service marks or
trademarks or any artists’ or other individuals’ names to imply a
relationship with, or endorsement or sponsorship of us by, any
other companies or persons.
PART
I
Item 1. Description of Business
This
Annual Report (including, but not limited to, the following
disclosures regarding our Business) contains forward-looking
statements regarding our business, financial condition, results of
operations and prospects. Words such as “expects,” “anticipates,”
“intends,” “plans,” “believes,” “seeks,” “estimates” and similar
expressions or variations of such words are intended to identify
forward-looking statements but are not the exclusive means of
identifying forward-looking statements in this Annual Report.
Additionally, statements concerning future matters such as the
development of new products, enhancements or technologies, sales
levels, expense levels and other statements regarding matters that
are not historical are forward-looking statements.
Forward-looking
statements in this Annual Report reflect our good faith judgment
based on facts and factors currently known to us. Forward-looking
statements are inherently subject to risks and uncertainties and
actual results and outcomes may differ materially from the results
and outcomes discussed in or anticipated by the forward-looking
statements. Readers are urged not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
Annual Report. We undertake no obligation to revise or update any
forward-looking statements in order to reflect any event or
circumstance that may arise after the date of this Annual Report.
Readers are urged to carefully review and consider the various
disclosures made in this Annual Report, which attempt to advise
interested parties of the risks and factors that may affect our
business, financial condition, results of operations and
prospects.
Corporate History
The
Company was incorporated as “Minaro Corp.” under the laws of the
State of Nevada on March 14, 2017.
On
December 18, 2022, Minaro Corp., a Nevada corporation (the
“Company”), Yulia Lazaridou, the majority shareholder of the
Company (“Lazaridou”), Pineapple Consolidated, Inc., a California
corporation (“PCI”) and the shareholders of PCI (“PCI
Shareholders”), entered into a Share Exchange Agreement (the
“Exchange Agreement”). Pursuant to the Exchange Agreement, the PCI
Shareholders exchanged (the “Exchange Transaction”) 50,000
outstanding shares of common stock of PCI, representing fifty
percent (50%) of the outstanding shares of PCI common stock, for
eighteen million (18,000,000) newly issued shares of Minaro common
stock.
In
addition, on December 18, 2022, in a transaction related to and a
condition to the Exchange Transaction, Lazaridou and the Company
entered into that certain Resignation, Separation and Release
Agreement (the “Resignation Agreement”), pursuant to which (a) the
Company redeemed 2,800,000 shares of Company common stock owned by
Lazaridou (the “Lazaridou Shares’) in exchange for a payment by the
Company of $540,904 and (b) Lazaridou, as of December 21, 2022,
resigned as the sole director, officer and employee of the
Company.
In
order to fund the payment for the Lazaridou Shares, contemporaneous
with the Exchange, on December 18, 2022, PCI loaned $540,904 to the
Company. 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, Lazaridou, as sole director and
majority shareholder, executed a written consent in lieu of a
meeting providing that (i) Matthew Feinstein be elected as the sole
director of the Company as well as Chief Executive Officer,
President, Secretary, Chairman of the Board and Interim Chief
Financial Officer, (ii) accepted the resignation of Lazaridou and
(iii) approved the Exchange Agreement and Resignation Agreement. As
a result of these transactions, the PCI Shareholders own a majority
of the shares of Minaro common stock, and the Company owns fifty
percent (50%) of the PCI common stock.
On
January 5, 2023, the Company filed Restated Articles of
Incorporation with the State of Nevada following approval of the
sole director and majority shareholder (“Restated Articles”). The
Restated Articles (i) changed the name of the Company to Pineapple
Express Cannabis Company, (ii) added an additional authorized class
of capital stock, namely ten million (10,000,000) shares of
Preferred Stock, in addition to the previously authorized
seventy-five million (75,000,000) shares of Common Stock. As a
result, the name of the Company now has been changed to Pineapple
Express Cannabis Company.
On
December 30, 2022 the Company applied to the Financial Industry
Regulatory Authority (“FINRA”) for approval with respect to the
change of the Company’s name in the Restated Articles. The Company
separately applied to FINRA to change the Company’s stock ticker
trading symbol. When that application is granted, the Company
intends to announce the symbol change.
Business Operations
Pineapple
Express Cannabis Company FKA Minaro Corp. is based in Los Angeles,
California. The Company’s 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 engaged in legal cannabis retail under the
brand name of Pineapple Express though its 50% owned asset,
Pineapple Consolidated Inc. (pineappleconsolidated.com) which runs
a cannabis delivery service, Pineapple Express, via
www.PineappleExpress.com. Pineapple Consolidated also owns and
manages retail cannabis ventures under the Pineapple Express name,
and seeks to become the leading portfolio management company in the
U.S. cannabis industry. With its headquarters in Los Angeles,
California, Pineapple Express is rapidly increasing its footprint
throughout the state and looking to scale into underdeveloped
markets.
Office facilities
The
Company currently subleases office space at 10351 Santa Monica
Blvd. #420, Los Angeles, CA 90025 through its 50% owned asset,
Pineapple Consolidated, Inc. (“PCI”). The lease contract is on a
month-to-month basis while the Company looks for a more permanent
office location.
Research
And Development Expenditures
We
have not incurred any research expenditures since our
incorporation.
Bankruptcy
Or Similar Proceedings
There
has been no bankruptcy, receivership or similar proceeding entered
into either voluntarily by the Company and involuntarily against
the Company.
Reorganizations,
Purchase Or Sale Of Assets
On
December 18, 2022, the Company executed a Share Exchange Agreement,
resulting in the exchange of 50,000 shares of PCI common stock (50%
ownership) for 18 million newly issued shares of the Company’s
common stock. The previous majority shareholder of the Company,
Lazaridou, redeemed 2,800,000 of Company common stock and no longer
holds any of the Compay’s common stock.
As
part of the transaction, Lazaridou resigned as the sole director,
officer, and employee of the Company, while Matthew Feinstein was
elected as the new director and assumed multiple executive roles.
Additionally, the Company changed its name to Pineapple Express
Cannabis Company by filing Restated Articles of Incorporation with
the State of Nevada and added a new class of capital stock
(10,000,000 shares of Preferred Stock in addition to the previously
authorized 75,000,000 shares of Common Stock).
Compliance
With Government Regulation
We
will be required to comply with all regulations, rules and
directives of governmental authorities and agencies applicable to
the construction and operation of any facility in any jurisdiction
which we would conduct activities.
We do
not believe that any existing or probable government regulation on
our business will have a material impact on the way we conduct our
business.
Employees
And Employment Agreements
We
have no employees as of the date of this report. Our sole officer
and director, Matthew Feinstein, currently devotes as much time as
needed to provide management services to company matters. As our
business and operations increase, we will assess the need for
full-time management and administrative support
personnel.
Regulatory
Overview
As of
the date of this filing, 37 states and four (4) territories allow
for the medical use of cannabis products, while 17 of those
states, the District of Columbia, the Northern Mariana Islands, and
Guam have also legalized the adult-use of cannabis. Although
legalized in some states, cannabis is a “Schedule 1” drug under the
Controlled Substances Act (21 U.S.C. § 811) (“CSA”) and is illegal
under federal law.
On
August 29, 2013, the Department of Justice set out its
prosecutorial priorities in light of various states legalizing
cannabis for medicinal and/or recreational use. The “Cole
Memorandum” provided that when states have implemented strong and
effective regulatory and enforcement systems to control the
cultivation, distribution, sale, and possession of cannabis,
conduct in compliance with those laws and regulations is less
likely to threaten the federal priorities. Indeed, a robust system
may affirmatively address those priorities by, for example,
implementing effective measures to prevent diversion of cannabis
outside of the regulated system and to other states, prohibiting
access to cannabis by minors, and replacing an illicit cannabis
trade that funds criminal enterprises with a tightly regulated
market in which revenues are tracked and accounted for. In those
circumstances, consistent with the traditional allocation of
federal-state efforts in this area, the Cole Memorandum provided
that enforcement of state law by state and local law enforcement
and regulatory bodies should remain the primary means of addressing
cannabis-related activity. If state enforcement efforts are not
sufficiently robust to protect against the harms set forth above,
the federal government may seek to challenge the regulatory
structure itself in addition to continuing to bring individual
enforcement actions, including criminal prosecutions, focused on
those harms.
On
January 4, 2018, Attorney General Jeff Sessions issued a memorandum
for all United States Attorneys concerning cannabis enforcement
under the Controlled Substances Act (CSA). Mr. Sessions rescinded
all previous prosecutorial guidance issued by the Department of
Justice regarding cannabis, including the August 29, 2013 “Cole
Memorandum”.
In
rescinding the Cole Memorandum, Mr. Sessions stated that U.S.
Attorneys must decide whether or not to pursue prosecution of
cannabis activity based upon factors including: the seriousness of
the crime, the deterrent effect of criminal prosecution, and the
cumulative impact of particular crimes on the community. Mr.
Sessions reiterated that the cultivation, distribution, and
possession of marijuana continues to be a crime under the U.S.
Controlled Substances Act.
On
March 23, 2018, President Donald J. Trump signed into law a $1.3
trillion-dollar spending bill that included an amendment known as
“Rohrabacher-Blumenauer,” which prohibits the Justice Department
from using federal funds to prevent certain states “from
implementing their own State laws that authorize the use,
distribution, possession or cultivation of medical
cannabis.”
On
December 20, 2018, President Donald J. Trump signed into law the
Agriculture Improvement Act of 2018, otherwise known as the “Farm
Bill”. Prior to its passage, hemp, a member of the cannabis family,
was classified as a Schedule 1 controlled substance, and so illegal
under the federal CSA.
With
the passage of the Farm Bill, hemp cultivation is now broadly
permitted. The Farm Bill explicitly allows the transfer of
hemp-derived products across state lines for commercial or other
purposes. It also puts no restrictions on the sale, transport, or
possession of hemp-derived products, so long as those items are
produced in a manner consistent with the law.
Under
Section 10113 of the Farm Bill, hemp cannot contain more than 0.3
percent THC. THC refers to the chemical compound found in cannabis
that produces the psychoactive “high” associated with cannabis. Any
cannabis plant that contains more than 0.3 percent THC would be
considered non-hemp cannabis—or marijuana—under the CSA and would
not be legally protected under this new legislation and would be
treated as an illegal Schedule 1 drug.
Additionally,
there will be significant, shared state-federal regulatory power
over hemp cultivation and production. Under Section 10113 of the
Farm Bill, state departments of agriculture must consult with the
state’s governor and chief law enforcement officer to devise a plan
that must be submitted to the Secretary of the United States
Department of Agriculture (hereafter referred to as the “USDA”). A
state’s plan to license and regulate hemp can only commence once
the Secretary of USDA approves that state’s plan. In states opting
not to devise a hemp regulatory program, USDA will construct a
regulatory program under which hemp cultivators in those states
must apply for licenses and comply with a federally run program.
This system of shared regulatory programming is similar to options
states had in other policy areas, such as health insurance
marketplaces under the Affordable Care Act, or workplace safety
plans under the Occupational Health and Safety Act—both of which
had federally-run systems for states opting not to set up their own
systems.
The
Farm Bill outlines actions that are considered violations of
federal hemp law (including such activities as cultivating without
a license or producing cannabis with more than 0.3 percent THC).
The Farm Bill details possible punishments for such violations,
pathways for violators to become compliant, and even which
activities qualify as felonies under the law, such as repeated
offenses.
One
of the goals of the previous 2014 Farm Bill was to generate and
protect research into hemp. The 2018 Farm Bill continues this
effort. Section 7605 re-extends the protections for hemp research
and the conditions under which such research can and should be
conducted. Further, section 7501 of the Farm Bill extends hemp
research by including hemp under the Critical Agricultural
Materials Act. This provision recognizes the importance, diversity,
and opportunity of the plant and the products that can be derived
from it, but also recognizes that there is a still a lot to learn
about hemp and its products from commercial and market
perspectives.
On
January 21, 2021, Joseph R. Biden, Jr. was sworn in as President of
the United States. President Biden’s Attorney General, Merrick
Garland, was confirmed by the United States Senate on March 10,
2021. It is not yet known whether the Department of Justice
(“DOJ”), under President Biden and Attorney General Garland, will
re-adopt the Cole Memorandum or announce a substantive marijuana
enforcement policy. During his Senate confirmation, Merrick Garland
told Senator Cory Booker (D-NJ), “It does not seem to me useful the
use of limited resources that we have to be pursuing prosecutions
in states that have legalized and are regulating the use of
marijuana, either medically or otherwise.” Such statements are not
official declarations or policies of the DOJ and are not binding on
the DOJ, any United States Attorney, or the United States federal
courts. Substantial uncertainty regarding United States federal
enforcement remains. To date, there have been no new federal
cannabis memorandums issued by the Biden Administration or any
published change in federal enforcement policy.
Item 1A. Risk Factors
Risks
Related to Our Company and Our Business
We have a limited operating history and operate in a new industry,
and we may not succeed.
We
have a limited operating history and may not succeed. We are
subject to all risks inherent in a developing business enterprise.
Our likelihood of continued success must be considered in light of
the problems, expenses, difficulties, complications, and delays
frequently encountered in connection with manufacturing specialty
products and the competitive and regulatory environment in which we
operate. For example, the cannabis industry is a new industry that
may not succeed, particularly should the Federal government change
course and decide to prosecute those dealing in medical or
recreational cannabis. In such event, there may not be an adequate
market for our products. As a new industry, there are few
established players whose business models we can follow. Similarly,
there is little information about comparable companies for
potential investors to review in making a decision about whether to
invest in the Company.
Potential
investors should consider, among other factors, our prospects for
success in light of the risks and uncertainties encountered by
companies that, like us, are in their early stages. For example,
unanticipated expenses, unexpected problems, and technical
difficulties may occur and they may result in material delays in
the operation of our business, in particular with respect to our
new products. We may not successfully address these risks and
uncertainties or successfully implement our operating strategies.
If we fail to do so, it could materially harm our business to the
point of having to cease operations and could impair the value of
our Common Stock to the point investors may lose their entire
investment.
Uncertainty of profitability.
Our
business strategy may result in increased volatility of revenues
and earnings. As we will only develop a limited number of products
and services at a time, our overall success will depend on a
limited number of products and services, which may cause
variability and unsteady profits and losses depending on the
products and services offered and their market
acceptance.
Our
revenues and our profitability may be adversely affected by
economic conditions and changes in the market for medical and
recreational marijuana. Our business is also subject to general
economic risks that could adversely impact the results of
operations and financial condition.
Because
of the anticipated nature of the products and services that we
offer and attempt to develop, it is difficult to accurately
forecast revenues and operating results and these items could
fluctuate in the future due to a number of factors. These factors
may include, among other things, the following:
| ● |
Our ability to raise sufficient capital to take advantage of opportunities and generate sufficient revenues to cover expenses. |
|
| ● |
Our ability to source strong opportunities with sufficient risk adjusted returns. |
|
| ● |
Our ability to manage our capital and liquidity requirements based on changing market conditions generally and changes in the developing legal medical marijuana and recreational marijuana industries. |
|
| ● |
The acceptance of the terms and conditions of our services. |
|
| ● |
The amount and timing of operating and other costs and expenses. |
|
| ● |
The nature and extent of competition from other companies that may reduce market share and create pressure on pricing and investment return expectations. |
|
| ● |
Adverse changes in the national and regional economies in which we will participate, including, but not limited to, changes in our performance, capital availability, and market demand. |
|
| ● |
Adverse changes in the projects in which we plan to invest which result from factors beyond our control, including, but not limited to, a change in circumstances, capacity and economic impacts. |
|
| ● |
Adverse developments in the efforts to legalize marijuana or increased federal enforcement. |
|
| ● |
Changes in laws, regulations, accounting, taxation, and other requirements affecting our operations and business. |
|
| ● |
Our operating results may fluctuate from year to year due to the factors listed above and others not listed. At times, these fluctuations may be significant. |
Cannabis remains illegal under federal law.
Cannabis
is a categorized as a Schedule I controlled substance by the Drug
Enforcement Agency and the United States Department of Justice and
is illegal to grow, possess and consume under federal law. Even in
those jurisdictions in which the use of medical cannabis has been
legalized at the state level, its use remains a violation of
federal law. The United States Supreme Court has ruled in United
States v. Oakland Cannabis Buyers’ Coop. and Gonzales v. Raich that
it is the federal government that has the right to regulate and
criminalize cannabis, even for medical purposes. Therefore, federal
law criminalizing the use of cannabis preempts state laws that
legalize its use for medicinal or adult-retail purposes. Strict
enforcement of federal law regarding cannabis would likely result
in our inability to proceed with our business plan.
The
previous Obama administration has effectively stated that it is not
an efficient use of resources to direct federal law enforcement
agencies to prosecute those lawfully abiding by state-designated
laws allowing the use and distribution of medical cannabis. In
furtherance thereof, on August 29, 2013, the Department of Justice
provided guidance to all U.S. federal prosecutors with respect to
the enforcement of laws regarding cannabis via the publication of a
memorandum authored by former US Attorney General James M. Cole
(the “Cole Memo”). The Cole Memo stated that enforcement should be
focused on eight priorities, which is to prevent: (1) distribution
of cannabis to minors; (2) revenue from sale of cannabis to
criminal enterprises, gangs and cartels; (3) transfer of cannabis
from states where it is legal to states where it is illegal; (4)
cannabis activity from being a pretext for trafficking of other
illegal drugs or illegal activity; (5) violence of use of firearms
in cannabis growth and distribution; (6) drugged driving and
adverse public health consequences from cannabis use; (7) growth of
cannabis on federal lands; and (8) cannabis possession or use on
federal property.
On
January 4, 2017, the U.S. Attorney General Jeff Sessions rescinded
the Cole Memo and restored the “rule of law.” Such rescission
essentially shifts federal policy from the hands-off approach
adopted under the Obama administration to allowing federal
prosecutors across the U.S. to decide individually how to
prioritize resources to crack down on pot possession, distribution
and cultivation of the drug in states where it is legal.
Furthermore, the Trump administration has previously indicated that
it will pursue the enforcement of federal cannabis laws.
While
we do not believe our current activities involve those enumerated
in the Cole Memo, in light of the rescission of the memo by the
current Attorney General, federal prosecutors will now have
significant discretion on their interpretation of these priorities,
and no assurances can be given that federal prosecutors will agree
with our position. We therefore cannot provide assurance that our
actions are in full compliance with the Cole Memo or any other
state or federal laws or regulations. In addition, there is no
guarantee that the current administration will not further change
its policy regarding the strict enforcement of federal laws or the
eight listed priorities. Additionally, any new administration that
follows could change this policy and decide to enforce the federal
laws even stronger. Any such change in the federal government’s
enforcement of current federal laws could cause significant
financial damage to us and our shareholders.
The cannabis industry faces strong opposition.
It is
believed by many that large well-funded businesses may have a
strong economic opposition to the cannabis industry. We believe
that the pharmaceutical industry does not want to cede control of
any product that could generate significant revenue. For example,
medical cannabis will likely adversely impact the existing market
for medicines sold by mainstream pharmaceutical companies that
contain active ingredients from cannabis. Furthermore, the medical
marijuana industry could face a material threat from the
pharmaceutical industry, should marijuana displace other drugs or
encroach upon the pharmaceutical industry’s products. The
pharmaceutical industry is well funded with a strong and
experienced lobby that eclipses the funding of the medical cannabis
movement. Any inroads the pharmaceutical industry could make in
halting or impeding the cannabis industry could have a detrimental
impact on our proposed business.
Additionally,
we are substantially dependent on continued market acceptance and
proliferation of consumers of cannabis, medical marijuana, and
recreational marijuana. We believe that as marijuana becomes more
accepted the stigma associated with marijuana use will diminish and
as a result consumer demand will continue to grow. While we believe
that the market and opportunity in the marijuana space continues to
grow, we cannot predict the future growth rate and size of the
market. Any negative outlook on the marijuana industry will
adversely affect our business operations.
There is uncertainty regarding the availability of U.S. federal
patent and trademark protection.
As
long as cannabis remains illegal under U.S. federal law, the
benefit of certain federal laws and protections which may be
available to most businesses, such as federal trademark and patent
protection regarding the intellectual property of a business, may
not be available to us. As a result, our intellectual property may
never be adequately or sufficiently protected against the use or
misappropriation by third parties. In addition, since the
regulatory framework of the cannabis industry is in a constant
state of flux, we can provide no assurance that it will ever obtain
any protection of its intellectual property, whether on a federal,
state, or local level.
There may be a U.S. Food and Drug Administration (“FDA”)
risk.
If
legalization occurs federally, the FDA could impose additional
regulations or risks on cannabis.
We could experience difficulty enforcing our
contracts.
Due
to the nature of our business and the fact that our equity method
investee, Pineapple Consolidated, Inc. contracts involve cannabis
and other activities that are not legal under U.S. federal law and
in some jurisdictions, we may face difficulties in enforcing our
contracts in federal and certain state courts. The inability to
enforce any of our contracts could have a material adverse effect
on our business, operating results, financial condition, or
prospects.
We and our customers and clients may have difficulty accessing the
service of banks, which may make it difficult for them to
operate.
Since
the use of cannabis is illegal under federal law, there is a
compelling argument that banks cannot accept for deposit funds from
businesses involved with cannabis. While the Financial Crimes
Enforcement Network (“FinCEN”) has provided guidance to financial
institutions on how to provide services to marijuana-related
businesses consistent with their Bank Secrecy Act obligations, the
decision to open, close, or refuse accounts and/or relationships
are made at the discretion of the banking institution.
Consequently, businesses involved in the cannabis industry often
have trouble finding a bank willing to accept their business. The
inability to open bank accounts may make it difficult for us and
our clients to operate.
Due to our ancillary involvement in the cannabis industry, we may
have a difficult time obtaining the various insurances that are
desired to operate our business, which may expose us to additional
risk and financial liability.
Insurance
that is otherwise readily available, such as general liability, and
directors and officer’s insurance, is more difficult for us to
find, and more expensive, because we are service providers to
companies in the cannabis industry. There are no guarantees that we
will be able to find such insurances in the future, or that the
cost will be affordable to us. If we are forced to go without such
insurances, it may prevent us from entering into certain business
sectors, may inhibit our growth, and may expose us to additional
risk and financial liabilities.
The cannabis industry is relatively new.
We
are operating in a relatively new industry and market. In addition
to being subject to general business risks, we must continue to
build brand awareness in this industry and market share through
significant investments in our strategy, production capacity,
quality assurance and compliance with regulations. Research in the
United States and internationally regarding the medical benefits,
viability, safety, efficacy and dosing of cannabis or isolated
cannabinoids, such as cannabidiol, or CBD, and
tetrahydrocannabinol, or THC, remains in relatively early stages.
Few clinical trials on the benefits of cannabis or isolated
cannabinoids have been conducted. Future research and clinical
trials may draw opposing conclusions to statements contained in the
articles, reports and studies currently favored, or could reach
different or negative conclusions regarding the medical benefits,
viability, safety, efficacy, dosing or other facts and perceptions
related to medical cannabis, which could adversely affect social
acceptance of cannabis and the demand for our products and
dispensary services.
Accordingly,
there is no assurance that the cannabis industry and the market for
medicinal and/or adult-use cannabis will continue to exist and grow
as currently anticipated or function and evolve in a manner
consistent with management’s expectations and assumptions. Any
event or circumstance that adversely affects the cannabis industry,
such as the imposition of further restrictions on sales and
marketing or further restrictions on sales in certain areas and
markets could have a material adverse effect on our business,
financial condition, and results of operations.
We face risks due to industry immaturity or limited comparable,
competitive, or established industry best
practices.
As a
relatively new industry, there are not many established operators
in the medical and adult use cannabis industries whose business
models we can follow or build upon. Similarly, there is no or
limited information about comparable companies available for
potential investors to review in making a decision about whether to
invest in us.
Shareholders
and investors should consider, among other factors, our prospects
for success in light of the risks and uncertainties encountered by
companies, like us, that are in their early stages. For example,
unanticipated expenses and problems or technical difficulties may
occur, which may result in material delays in the operation of our
business. We may fail to successfully address these risks and
uncertainties or successfully implement our operating strategies.
If we fail to do so, it could materially harm our business to the
point of having to cease operations and could impair the value of
the Subordinate Voting Shares to the extent that investors may lose
their entire investments.
Our ability to grow our medical and adult-use cannabis product
offerings and dispensary services may be
limited.
As we
introduce or expand our medical and adult-use cannabis product
offerings and dispensary services, we may incur losses or otherwise
fail to enter certain markets successfully. Our expansion into new
markets may place us in competitive and regulatory environments
with which we are unfamiliar and involve various risks, including
the need to invest significant resources and the possibility that
returns on those investments will not be achieved for several
years, if at all. In attempting to establish new product offerings
or dispensary services, we may incur significant expenses and face
various other challenges, such as expanding our work force and
management personnel to cover these markets and complying with
complicated cannabis regulations that apply to these markets. In
addition, we may not successfully demonstrate the value of these
product offerings and dispensary services to consumers, and failure
to do so would compromise our ability to successfully expand these
additional revenue streams.
Laws and regulations affecting the cannabis industry are constantly
changing, which could detrimentally affect our business, and we
cannot predict the impact that future regulations may have on
us.
Local,
state and federal medical cannabis laws and regulations are broad
in scope, and they are subject to evolving interpretations, which
could require our licensees to incur substantial costs associated
with compliance or to alter one or more of their sales or marketing
practices. For example, the rescission of the Cole Memo by U.S.
Attorney General Jeff Sessions on January 4, 2018. In addition,
violations of these laws, or allegations of such violations, could
disrupt our license business and result in a material adverse
effect on our revenues under our license agreements, which would
negatively affect our profitability and financial
condition.
In
addition, it is possible that regulations may be enacted in the
future that will be directly applicable to us and our business. We
cannot predict the nature of any future laws, regulations,
interpretations or applications, nor can we determine what effect
additional governmental regulations or administrative policies and
procedures, when and if promulgated, could have on our business.
These potential effects could include, however, requirements for
the revisions to our business model to meet new standards, the
recall or discontinuance of certain products, or additional record
keeping and reporting requirements. Any or all of these
requirements could have a material adverse effect on our business,
financial condition, and results of operations.
We are subject to complex laws and regulations, including
environmental laws and regulations, which can adversely affect the
cost, manner and feasibility of doing business.
We
are subject to complex laws and regulations, including
environmental laws and regulations, which can adversely affect the
cost, manner and feasibility of doing business. The operations and
facilities of our facilities will be subject to extensive federal,
state, and local laws and regulations relating to the growth of
cannabis and the manufacture and distribution of products
containing cannabis (and/or its psychoactive compound, THC). Such
existing laws or regulations regarding cannabis and its
psychoactive compound, as currently interpreted or reinterpreted in
the future, or future laws or regulations, may adversely affect our
businesses and sales. Consequently, our revenues would thereby
decrease, which may have a material adverse effect on our results
of operations.
Ordinary and necessary business deduction other than the cost of
goods sold are disallowed by the Internal Revenue Service for
Cannabis companies under the Internal Revenue Code (the “IRC”)
Section 280E.
IRC
Section 280E prohibits cannabis businesses from deducting ordinary
and necessary business expenses pertaining to cannabis sale,
forcing the Company to contend with higher effective federal tax
rates than similar companies in other industries. This onerous tax
burden significantly impacts the profitability of the cannabis
businesses and may make the pricing of its products less
competitive.
If no additional states allow the medicinal or adult-retail use of
cannabis, or if one or more states that currently allow it, reverse
their position, we may not be able to continue our growth, or the
market for our products and services may
decline.
As of
January 31, 2023, 37 states and the District of Columbia, the
Northern Mariana Islands, Guam and Puerto Rico have passed laws
allowing some degree of medical use of cannabis, while eighteen
(18) of those states and the District of Columbia, the Northern
Mariana Islands, and Guam, have also legalized the adult-use of
cannabis. There can be no assurance that number of states that
allow the use of medicinal and recreational cannabis will grow, and
if it does not, there can be no assurance that the 37 existing
states and/or the District of Columbia will not reverse their
position and make medicinal and recreational cannabis illegal
again. If either of these things happens, then not only will the
growth of our business be materially impacted, but we may
experience declining revenue as the market for our products and
services declines.
Arizona,
Montana, New Jersey, South Dakota, New York, Virginia, Connecticut,
and New Mexico passed laws allowing recreational (adult-use)
marijuana and Mississippi and Alabama passed an initiative allowing
medical marijuana.
We may not be able to effectively control and manage our
growth.
Our
strategy envisions a period of potentially rapid growth. We
currently maintain nominal administrative and personnel capacity
due to the startup nature of our business, and our expected growth
may impose a significant burden on our future planned
administrative and operational resources. The growth of our
business may require significant investments of capital and
increased demands on our management, workforce and facilities. We
will be required to substantially expand our administrative and
operational resources and attract, train, manage and retain
qualified management and other personnel. Failure to do so or
satisfy such increased demands would interrupt or would have a
material adverse effect on our business and results of
operations.
Our industry is highly competitive, and we have less capital and
resources than many of our competitors which may give them an
advantage in developing and marketing products similar to ours or
make our products obsolete.
We
are involved in a highly competitive industry where we may compete
with numerous other companies who offer alternative methods or
approaches, who may have far greater resources, more experience,
and personnel perhaps more qualified than we do. Such resources may
give our competitors an advantage in developing and marketing
products similar to ours or products that make our products
obsolete. There can be no assurance that we will be able to
successfully compete against these other entities.
The success of our new and existing partnerships, products, and
services is uncertain, and large resources may be required to
sustain our current business model.
We
have committed, and expect to continue to commit, significant
resources and capital to develop and market existing partnership,
product, and service enhancements as well as new partnerships,
products and services. These partnerships, products and services
are relatively new and untested, and we cannot assure you that we
will achieve market acceptance for these partnerships, products,
and services, or other new partnerships, products and services that
we may offer in the future. Moreover, these and other new
partnerships, products and services may be subject to significant
competition with offerings by new and existing competitors in our
sector. In addition, new partnerships, products, services and
enhancements may pose a variety of technical challenges and require
us to attract additional qualified employees. The failure to
successfully develop and market these new partnerships, products,
services, or enhancements could seriously harm our business,
financial condition and results of operations.
Our business is dependent upon continued market acceptance by
consumers.
We
are substantially dependent on continued market acceptance of our
products and our licensees’, lessee’s, or tenant’s products by
consumers. Although we believe that the use of cannabis in the
United States is gaining stronger consumer acceptance, we cannot
predict the future growth rate and size of this market.
If we fail to successfully introduce new partnerships or products,
we may lose market position.
New
partnerships, products, and product improvements, and line
extensions will be an important factor in our sales growth. If we
fail to identify emerging consumer and technological trends, to
maintain and improve the competitiveness of our existing
partnerships and products or to successfully introduce new products
on a timely basis, we may lose market position. Continued business
development, product development, and marketing efforts have all
the risks inherent in the development of new partnerships,
products, and line extensions, including development delays, the
failure of new partnerships, products and line extensions to
achieve anticipated levels of market acceptance and the cost of
failed product introductions.
We may be unable to adequately protect or enforce our patents and
proprietary rights.
Our
continuing success depends, in part, on our ability to protect our
intellectual property and maintain the proprietary nature of our
technology through a combination of patents, trademarks, licenses
and other intellectual property arrangements, without infringing
the proprietary rights of third parties. We cannot assure that
these patents, trademarks, licenses and other intellectual property
arrangements will be held valid if challenged, or that other
parties will not claim rights in or ownership of our patent and
other proprietary rights. We also cannot assure that our pending
patents will be issued. Moreover, patents issued to us or those we
license patents from may be circumvented or fail to provide
adequate protection.
Litigation brought by third parties claiming infringement of their
intellectual property rights or trying to invalidate intellectual
property rights owned or used by us may be costly and time
consuming.
We
may face lawsuits from time to time alleging that our intellectual
property infringes on third-party intellectual property, and/or
seeking to invalidate or limit our ability to use our intellectual
property.
If we
become involved in litigation, we may incur substantial expense
defending these claims and the proceedings may divert the attention
of management, even if we prevail. An adverse determination in
proceedings of this type could subject us to significant
liabilities, allow our competitors to market competitive products
without a license from us, prohibit us from marketing our products
or require us to seek licenses from third parties that may not be
available on commercially reasonable terms, if at all.
If we are deemed an investment company under the Investment Company
Act, applicable restrictions could have an adverse effect on our
business.
The
Investment Company Act contains substantive legal requirements that
regulate the manner in which “investment companies” are permitted
to conduct their business activities. We believe that we have
conducted our business in a manner that does not result in being
characterized as an “investment company” under the Investment
Company Act because we are primarily engaged in a non-investment
company business. Although a portion of our assets may constitute
investments in non-controlled entities, namely our subsidiary, PEC,
provided capital to canna-related business clientele, we believe
that we are not an investment company as defined by the Investment
Company Act. While we intend to conduct our operations such that we
will not be deemed an investment company, such a determination
would require us to initiate burdensome compliance requirements and
comply with restrictions imposed by the Investment Company Act that
would limit our activities, including limitations on our capital
structure and our ability to transact with affiliates, which would
have an adverse effect on our financial condition. To avoid such a
determination, we may be required to conduct our business in a
manner that does not subject us to the requirements of the
Investment Company Act, which could have an adverse effect on our
business. For example, we may be required to sell certain of our
assets and pay significant taxes upon the sale or transfer of such
assets.
Damage from catastrophic weather and other natural events and
climate change could result in losses to our
Company.
Our
buildings and land are susceptible to natural disaster type of
events that could interrupt and halt our tenant’s ability to grow
and cultivate marijuana. They are located in areas that may
experience catastrophic weather and other natural events from time
to time, including fires, windstorms or hurricanes, earthquakes,
flooding or other severe weather. These adverse weather and natural
events could cause substantial damages or losses to our properties
which could exceed our insurance coverage. In the event of a loss
in excess of insured limits, we could lose our capital invested in
the affected property, as well as anticipated future revenue from
that property. We could also continue to be obligated to repay any
obligations related to the property. Any such loss could materially
and adversely affect our business and our financial condition and
results of operations. In addition, changes in federal and state
legislation and regulation on climate change could result in
increased capital expenditures to improve the energy efficiency of
our existing properties and could also require us to spend more on
our new development properties without a corresponding increase in
revenue.
We may be required to recognize impairment charges that could
materially affect our results of operations.
We
assess our goodwill and other intangible assets, and our other
long-lived assets as and when required by accounting principles
generally accepted in the United States (“GAAP”) to determine
whether they are impaired. If they are impaired, we would record
appropriate impairment charges. It is possible that we may be
required to record significant impairment charges in the future
and, if we do so, our results of operations could be materially
adversely affected.
Our industry is subject to intense competition.
The
Company has entered the cannabis distribution business as a result
of the Pineapple Consolidated, Inc. (PCI) share exchange. There is
potential that PCI will face intense competition from other
companies, some of which can be expected to have longer operating
histories and more financial resources and experience than the
Company. Increased competition by larger and better-financed
competitors could materially and adversely affect the business,
financial condition, results of operations or prospects of the
PCI.
Because
of the early stage of the industry in which the PCI operates, the
Company expects to face additional competition from new entrants.
To become and remain competitive, PCI will require research and
development, marketing, sales and support. PCI may not have
sufficient resources to maintain research and development,
marketing, sales and support efforts on a competitive basis which
could materially and adversely affect the business, financial
condition, results of operations or prospects of the
Company.
As
well, the legal landscape for medical and recreational marijuana is
changing internationally. More countries have passed laws that
allow for the production and distribution of medical marijuana in
some form or another. We have some international partnerships in
place, which may be affected if more countries legalize medical
marijuana. Increased international competition might lower the
demand for our products on a global scale.
New well-capitalized entrants into our industry may develop
large-scale operations which will make it difficult for our
business to compete and remain profitable.
Currently,
the marijuana industry generally is comprised of individuals and
small to medium-sized entities, however, the risk remains that
large conglomerates and companies who also recognize the potential
for financial success through investment in this industry could
strategically purchase or assume control of larger dispensaries and
cultivation facilities. In doing so, these larger competitors could
establish price setting and cost controls which would effectively
“price out” many of the individuals and small to medium-sized
entities who currently make up the bulk of the participants in the
varied businesses operating within and in support of the medical
marijuana industry. While the trend in most state laws and
regulations seemingly deters this type of takeover, this industry
remains quite nascent, so what the landscape will be in the future
remains largely unknown, which in itself is a risk.
Our
proposed business plan is subject to all business risks associated
with new business enterprises, including the absence of any
significant operating history upon which to evaluate an investment.
The likelihood of our success must be considered in light of the
problems, expenses, difficulties, complications and delays
frequently encountered in connection with the formation of a new
business, the development of new strategy and the competitive
environment in which the Company will operate. It is possible that
the Company will incur losses in the future. There is no guarantee
that the Company will be profitable.
Risks
Related to Ownership of Our Common Stock
Due to our connection to the cannabis industry, there can be no
assurance that our shares of common stock will ever be approved for
listing on a national securities exchange.
Currently,
shares of our common stock are traded on the OTC Pink Market and
are not listed on any national securities exchange, such as the New
York Stock Exchange or the NASDAQ Stock Market. Even if we desire
to have our shares listed on a national securities exchange, the
fact that our business is associated with the use of cannabis, the
legal status of which is uncertain in some states and at the
federal level, may make any efforts to become listed on a
securities exchange more problematic as we believe national
exchanges may be reluctant to list shares of companies whose
business is associated with the recreational use of cannabis. While
we plan to work with NASDAQ or other exchanges in an attempt to
change their views of responsible cannabis related businesses,
there can be no assurance that our common stock will ever be listed
on NASDAQ or any other national securities exchange. As a result,
our common stock may never develop an active trading market which
may limit our investors’ ability to liquidate their investments or
cause our stock price to be particularly volatile.
Our stock may be traded infrequently and in low volumes, so you may
be unable to sell your shares at or near the quoted bid prices if
you need to sell your shares.
Until
our common stock is listed on a national securities exchange, our
common stock may only trade on one of the OTC Markets (if we are
successful in applying to trade on such marketplaces) or on the OTC
Pink Market. In those markets, however, the shares of our common
stock may trade infrequently and in low volumes, meaning that the
number of persons interested in purchasing our common stock at or
near bid prices at any given time may be relatively small or
non-existent. An investor may find it difficult to obtain accurate
quotations as to the market value of our common stock or to sell
his or her shares at or near bid prices or at all. In addition, if
we fail to meet the criteria set forth in SEC reporting
regulations, various requirements would be imposed by law on
broker-dealers who sell our securities to persons other than
established customers and accredited investors. Consequently, such
regulations may deter broker-dealers from recommending or selling
our common stock, which may further affect the liquidity of our
common stock. This would also make it more difficult for us to
raise capital.
There currently is no active public market for our common stock and
there can be no assurance that an active public market will ever
develop. Failure to develop or maintain a trading market could
negatively affect the value of our common stock and make it
difficult or impossible for you to sell your
shares.
There
is currently no active public market for shares of our common
stock, and one may never develop. Our common stock is currently
traded on the OTC Pink Market. The OTC Pink Market is a thinly
traded market and lacks the liquidity of certain other public
markets with which some investors may have more experience. We may
not ever be able to satisfy the requirements to be quoted on the
OTC Markets or satisfy the listing requirements to be listed on a
national securities exchange, which are often more widely traded
and liquid markets. Some, but not all, of the factors which may
delay or prevent the quotation or listing of our common stock on a
more widely-traded and liquid market include the following: our
stockholders’ equity may be insufficient; the market value of our
outstanding securities may be too low; our net income from
operations may be too low; our common stock may not be sufficiently
widely held; we may not be able to secure market makers for our
common stock; and we may fail to meet the rules and requirements
mandated by the several exchanges and markets to have our common
stock listed. Should we fail to satisfy the initial listing
standards of the national exchanges or OTC Markets, or our common
stock is otherwise rejected for listing or quotation, and remains
traded on the OTC Pink Market, the trading price of our common
stock could suffer and the trading market for our common stock may
be less liquid, and our common stock price may be subject to
increased volatility, making it difficult or impossible to sell
shares of our common stock.
We do not intend to pay dividends in the foreseeable
future.
We do
not intend to pay any cash dividends in the foreseeable future. We
do not plan on making any cash distributions in the manner of a
dividend or otherwise. Our Board of Directors presently intends to
follow a policy of retaining earnings, if any.
Investors may experience dilution of their ownership interests
because of the future issuance of additional shares of our common
or preferred stock or other securities that are convertible into or
exercisable for our common or preferred stock.
In
the future, we may issue our authorized but previously unissued
equity securities, resulting in the dilution of the ownership
interests of our present stockholders. We are authorized to issue
an aggregate of 75,000,000 shares of common stock and 10,00,000
shares of “blank check” preferred stock. We may issue additional
shares of our common stock or other securities that are convertible
into or exercisable for our common stock in connection with hiring
or retaining employees, future acquisitions, future sales of our
securities for capital raising purposes, or for other business
purposes. The future issuance of any such additional shares of our
common stock may create downward pressure on the trading price of
the common stock. We will need to raise additional capital in the
near future to meet our working capital needs, and there can be no
assurance that we will not be required to issue additional shares,
warrants or other convertible securities in the future in
conjunction with these capital raising efforts, including at a
price (or exercise or conversion prices) below the price an
investor paid for stock.
Being a public company is expensive and administratively
burdensome.
As a
company whose common stock is registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
we are fully subject to the information and reporting requirements
of the Exchange Act and other federal securities laws, rules and
regulations related thereto, including compliance with the
Sarbanes-Oxley Act. Complying with these laws and regulations
requires the time and attention of our Board of Directors and
management and increases our expenses.
Among
other things, we are required to:
| ● |
maintain and evaluate a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board; |
|
| ● |
maintain policies relating to disclosure controls and procedures; |
|
| ● |
prepare and distribute periodic reports in compliance with our obligations under federal securities laws; |
|
| ● |
institute a more comprehensive compliance function, including corporate governance; and |
|
| ● |
involve, to a greater degree, our outside legal counsel and accountants in the above activities. |
The
costs of preparing and filing annual and quarterly reports, proxy
statements and other information with the SEC and furnishing
audited reports to stockholders are expensive and much greater than
that of a privately-held company, and compliance with these rules
and regulations may require us to hire additional financial
reporting, internal controls and other finance personnel, and will
involve a material increase in regulatory, legal and accounting
expenses and the attention of management. There can be no assurance
that we will be able to comply with the applicable regulations in a
timely manner, if at all. In addition, being a public company makes
it more expensive for us to obtain director and officer liability
insurance. In the future, we may be required to accept reduced
coverage or incur substantially higher costs to obtain this
coverage.
Our common stock is subject to the “penny stock” rules of the SEC
and the trading market in the securities is limited, which makes
transactions in the stock cumbersome and may reduce the value of an
investment in the stock.
Rule
15g-9 under the Exchange Act establishes the definition of a “penny
stock,” for the purposes relevant to us, as any equity security
that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless
exempt, the rules require: (a) that a broker or dealer approve a
person’s account for transactions in penny stocks; and (b) the
broker or dealer receive from the investor a written agreement to
the transaction, setting forth the identity and quantity of the
penny stock to be purchased.
In
order to approve a person’s account for transactions in penny
stocks, the broker or dealer must: (a) obtain financial information
and investment experience objectives of the person and (b) make a
reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks.
The
broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prescribed by the SEC relating
to the penny stock market, which, in highlight form: (a) sets forth
the basis on which the broker or dealer made the suitability
determination; and (b) confirms that the broker or dealer received
a signed, written agreement from the investor prior to the
transaction. Generally, brokers may be less willing to execute
transactions in securities subject to the “penny stock” rules. This
may make it more difficult for investors to dispose of our common
stock and cause a decline in the market value of our common
stock.
Disclosure
also has to be made about the risks of investing in penny stocks in
both public offerings and in secondary trading and about the
commissions payable to both the broker or dealer and the registered
representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in
penny stock transactions. Finally, monthly statements have to be
sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny
stocks.
Offers or availability for sale of a substantial number of shares
of our common stock may cause the price of our common stock to
decline.
If
our stockholders sell substantial amounts of our common stock in
the public market, including upon the expiration of any lockup
periods or the statutory holding period under Rule 144, or issued
upon the conversion of preferred stock, it could create a
circumstance commonly referred to as an “overhang” and in
anticipation of which the market price of our common stock could
fall. The existence of an overhang, whether or not sales have
occurred or are occurring, also could make more difficult our
ability to raise additional financing through the sale of equity or
equity-related securities in the future at a time and price that we
deem reasonable or appropriate.
An investment in our securities is speculative and there can be no
assurance of any return on any such investment.
An
investment in our securities is speculative and there is no
assurance that investors will obtain any return on their
investment. Investors will be subject to substantial risks involved
in an investment in our Company, including the risk of losing their
entire investment.
Our Articles of Incorporation provide that, unless we consent in
writing to the selection of an alternative forum, the Eighth
Judicial District Court of Clark County, Nevada will be the sole
and exclusive forum for substantially all disputes between us and
our stockholders, which could limit our stockholders’ ability to
obtain a favorable judicial forum for disputes with us or our
directors, officers, or employees.
Our
Articles of Incorporation provide that, unless we consent in
writing to the selection of an alternative forum, the Eighth
Judicial District Court of Clark County, Nevada will be the
exclusive forum for any derivative action or proceeding brought on
our behalf; any action asserting a breach of fiduciary duty; any
action asserting a claim against us arising pursuant to the Nevada
Revised Statutes, our Articles of Incorporation or our bylaws. This
choice of forum provision does not preclude or contract the scope
of exclusive federal or concurrent jurisdiction for any actions
brought under the Securities Act or the Exchange Act. Accordingly,
our exclusive forum provision will not relieve us of our duties to
comply with the federal securities laws and the rules and
regulations thereunder, and our stockholders will not be deemed to
have waived our compliance with these laws, rules and
regulations.
Any
person or entity purchasing or otherwise acquiring any interest in
any of our securities shall be deemed to have notice of and
consented to these provisions. These exclusive-forum provisions may
limit a stockholder’s ability to bring a claim in a judicial forum
of its choosing for disputes with us or our directors, officers or
other employees, which may discourage lawsuits against us and our
directors, officers and other employees.
If a
court were to find the choice of forum provision contained in our
Articles of Incorporation to be inapplicable or unenforceable in an
action, we may incur additional costs associated with resolving
such action in other jurisdictions, which could harm our business,
results of operations, and financial condition. Even if we are
successful in defending against these claims, litigation could
result in substantial costs and be a distraction to management and
other employees.
Item 1B. Unresolved Staff Comments
Not
applicable.
Item 2. Description of Property
We do
not own any real estate or other properties.
Item 3. Legal Proceedings
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.
Item 4. Mine Safety Disclosures
Not
applicable.
PART II
Item 5. Market for Common Equity and Related Stockholder
Matters
Market Information
There
is a limited public market for our common shares. Our common shares
are not quoted on the OTC Bulletin Board at this time. Trading in
stocks quoted on the OTC Bulletin Board is often thin and is
characterized by wide fluctuations in trading prices due to many
factors that may be unrelated to a company’s operations or business
prospects. We cannot assure you that there will be a market in the
future for our common stock.
OTC
Bulletin Board securities are not listed or traded on the floor of
an organized national or regional stock exchange. Instead, OTC
Bulletin Board securities transactions are conducted through a
telephone and computer network connecting dealers in stocks. OTC
Bulletin Board issuers are traditionally smaller companies that do
not meet the financial and other listing requirements of a regional
or national stock exchange.
As of
January 31, 2023, we have had limited trading volume.
Number of Holders
As of
January 31, 2023, the 19,004,550 issued and outstanding shares of
common stock were held by a total of 10 shareholders of
record.
Dividends
No
cash dividends were paid on our shares of common stock during the
fiscal year ended January 31, 2023 and 2022.
Recent Sales of Unregistered Securities
The
Company has 75,000,000, $0.001 par value shares of common stock
authorized.
On
July 27, 2017, the Company issued 2,800,000 shares of common stock
to a director for cash proceeds of $2,800 at $0.001 per
share.
In
January 2019, the Company issued 30,000 shares of common stock for
cash proceeds of $600 at $0.02 per share.
In
December 2019, the Company issued 95,000 shares of common stock for
cash proceeds of $1,865 at $0.02 per share.
In
January 2020, the Company issued 25,000 shares of common stock for
cash proceeds of $500 at $0.02 per share.
In
November 2020, the Company issued 330,000 shares of common stock
for cash proceeds of $6,600 at $0.02 per share.
In
December 2020, the Company issued 300,000 shares of common stock
for cash proceeds of $6,000 at $0.02 per share.
In
February 2021, the Company issued 154,550 shares of common stock
for cash proceeds of $3,091 at $0.02 per share.
In
December 2022, the Company canceled 2,800,000 shares of common
stock to former officer and director, Yulia Lazaridou,
In
December 2022, the Company issued 18,000,000 shares of common stock
through a share exchange.
In
January 2023, the Company issued 70,000 shares of common stock for
services rendered to the Company.
There
were 19,004,550 shares of common stock issued and outstanding as of
January 31, 2022.
Purchase of our Equity Securities by Officers and
Directors
On
July 27, 2017, the Company offered and sold 2,800,000 restricted
shares of common stock to former president and director, Yulia
Lazaridou, for a purchase price of $0.001 per share, for aggregate
offering proceeds of $2,800, pursuant to Section 4(2) of the
Securities Act of 1933 as she is a sophisticated investor and is in
possession of all material information relating to us. Further, no
commissions were paid to anyone in connection with the sale of
these shares and general solicitation was not made to anyone. Those
shares were canceled as part of a share exchange occurring on
December 18, 2022.
Other Stockholder Matters
None.
Item 6. Selected Financial Data
Not
applicable to smaller reporting companies.
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The
following discussion should be read in conjunction with our
financial statements, including the notes thereto, appearing
elsewhere in this annual report. The following discussion contains
forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those
discussed in the forward-looking statements. Our audited financial
statements are stated in United States Dollars and are prepared in
accordance with United States Generally Accepted Accounting
Principles.
Results
of Operations for the year ended January 31, 2023 and
2022:
Revenue
and cost of goods sold
For
the years ended January 31, 2023 and 2022 the Company generated
total revenue of $5,385 and $7,750 from selling products to the
customer. Cost of goods sold for the years ended January 31, 2023
and 2022 was $0 and $0.
Operating
expenses
Total
operating expenses for the years ended January 31, 2023 and 2022
were $21,704 and $53,833. The operating expenses for the year ended
January 31, 2023 bank charges of $147; depreciation expense of
$2,816; legal fees of $4,113; audit fees of $3,000; consulting fees
of $70; professional fees of $11,558. The operating expenses for
the year ended January 31, 2022 included advertising expense of
$826; bank charges of $511; depreciation expense of $13,140; legal
fees of $3,000; audit fees of $23,000; professional fees of
$11,487; rent expense of $1,869.
Net
Loss
The
net loss for the years ended January 31, 2023 and 2022 was $44,443
and $46,083 respectively.
Liquidity
and Capital Resources and Cash Requirements
As of
the year ended January 31, 2023, the Company had cash of $0.
Furthermore, the Company had an accumulated deficit of
$544,350.
During
the year ended January 31, 2023, the Company used $16,726 of cash
in operating activities due to its net loss and decrease in
accounts payable of $3,293 and depreciation of $2,816.
During
the year ended January 31, 2023 the Company has generated $0 of
cash in investing activities.
During
the year ended January 31, 2023, the Company generated $11,457 of
cash in financing activities.
During the year ended January 31, 2022, the Company used $25,648 of
cash in operating activities due to its net loss and decrease in
prepaid expenses of $2,696, increase in accounts payable of $4,599
and depreciation of $13,140.
During
the year ended January 31, 2022 the Company used $0 of cash in
investing activities.
During
the year ended January 31, 2022, the Company generated $27,371 of
cash in financing activities.
We
cannot guarantee that we will manage to sell all the shares
required within current offerings. We will attempt to raise the
necessary funds to proceed with all phases of our plan of
operation.
Management
believes that current trends toward lower capital investment in
start-up companies pose the most significant challenge to the
Company’s success over the next year and in future years.
Additionally, the Company will have to meet all the financial
disclosure and reporting requirements associated with being a
publicly reporting company. The Company’s management will have to
spend additional time on policies and procedures to make sure it is
compliant with various regulatory requirements, especially that of
Section 404 of the Sarbanes-Oxley Act of 2002. This additional
corporate governance time required of management could limit the
amount of time management has to implement is business plan and
impede the speed of its operations.
Limited
operating history; need for additional capital
There
is no historical financial information about us upon which to base
an evaluation of our performance. We are in a start-up stage of
operations and have generated minimal revenues since inception. We
cannot guarantee that we will be successful in our business
operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited
capital resources and possible cost overruns due to price and cost
increases in services and products.
Off-Balance
Sheet Arrangements
The
Company does not have any off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on the
Company’s financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources.
Item 7A. Quantitative and Qualitative Disclosures about
Market Risk
Not
applicable to smaller reporting companies.
Item 8. Financial Statements and Supplementary
Data
PINEAPPLE EXPRESS CANNABIS COMPANY
FINANCIAL STATEMENTS
Year ended January 31, 2022 and January 31, 2021
Table of Contents
|
|
M.S.
316,
Tel |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
| To | The Board of Directors and Shareholders |
| Pineapple Express Cannabis Company |
|
| 10351 Santa Monica Blvd. Suite 420 |
|
| Los Angeles, CA 90025 |
Opinion
on the financial statements
We
audited the accompanying balance sheets of Pineapple Express
Cannabis Company (“the Company”) as of January 31, 2023 and 2022
and the related statements of operations, stockholders’ equity, and
cash flows for years then ended and the related notes (collectively
referred to as “financial statements”). In our opinion, the
financial statements present fairly, in all material respects, the
financial position of the Company as of January 31, 2023 and 2022,
and the results of its operations and cash flows for the year then
ended, in conformity with accounting principles generally accepted
in the United States of America.
Going
Concern
The
Company’s financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of the
liabilities in the normal course of business. The Company has an
accumulated deficit of $544,350 for the year ended January 31,
2023. These factors as discussed in Note 2 of the financial
statements raise substantial doubt about the Company’s ability to
continue as a going concern. Management’s plans in regard to these
matters are also described in Note 2. The financial statements do
not include any adjustments that might result from the outcome of
this uncertainty.
Basis
of Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud. The
Company is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. As part of
our audits. we are required to obtain an understanding of internal
control over financial reporting not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such
opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical
Audit Matters
Critical
audit matters arising from the current period of the financial
statements that were communicated or required to be communicated to
the audit committee and that (1) relate to accounts or disclosure
that are material to the financial statements and (2) involve
especially challenging, subjective, or complex judgements. The
communication of critical audit matters does not alter in any way
our opinion on the financial statements, taken as a whole, and we
are not, by communicating the critical audit below, providing
separate opinions on the critical audit matters or the accounts or
disclosures to which they relate.
Related
party transactions.
As
discussed in Note 4 to the financial statement, the Company has
borrowed from related parties $546,650 as of the date of January
31, 2023. The procedure performed to address the matter included:
obtaining confirmation from related party.
We
have served as the Company’s auditor since 2021.
M. S. Madhava Rao, Chartered Accountant
Bangalore, India
May
24, 2023
PINEAPPLE EXPRESS CANNABIS
COMPANY
BALANCE SHEET
As of January 31, 2023
(Audited)
| January 31, 2023 | January 31, 2022 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents |
$ | – | 5,269 | |||||
| Prepaid expenses | – | – | ||||||
| Total Current Assets |
– | 5,269 | ||||||
| Fixed Assets | ||||||||
| Equipment, software, leasehold improvement, net | $ | 2,300 | 12,940 | |||||
| Total Fixed Assets |
2,300 | 12,940 | ||||||
| Total Assets |
$ | 2,300 | 18,209 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable |
$ | 1,306 | 4,599 | |||||
| 45,344 | 72,515 | |||||||
| Deposit for Stock Purchase | 500,000 | – | ||||||
| Total Current Liabilities |
546,650 | 77,114 | ||||||
| Total Liabilities |
$ | 546,650 | 77,114 | |||||
| Commitments and Contingencies | – | |||||||
| Stockholders’ Equity | ||||||||
| Common stock, par value $; shares authorized, and shares issued and outstanding |
19,005 | 3,735 | ||||||
| Additional paid in capital |
19,641 | 17,756 | ||||||
| Retained earnings (accumulated deficit) | (582,996 | ) | (80,396 | ) | ||||
| Total Stockholders’ Deficit |
(544,350 | ) | (58,905 | ) | ||||
| Total Liabilities and Stockholders’ Equity |
$ | 2,300 | 18,209 | |||||
See
accompanying notes, which are an integral part of these financial
statements
PINEAPPLE EXPRESS CANNABIS
COMPANY
STATEMENTS OF OPERATIONS
Years ended January 31, 2023 and January 31,
2022
(Audited)
| Year ended January 31, 2023 |
Year ended January 31, 2022 |
|||||||
| REVENUES | $ | 5,385 | 7,750 | |||||
| Cost of Goods Sold |
– | – | ||||||
| Gross Profit | 5,385 | 7,750 | ||||||
| OPERATING EXPENSES | ||||||||
| General and Administrative Expenses |
(21,704 | ) | (53,883 | ) | ||||
| TOTAL OPERATING EXPENSES |
(21,704 | ) | (53,833 | ) | ||||
| Operating loss | (16,319 | ) | (46,083 | ) | ||||
| Other Income (Expense) |
||||||||
| Income (loss) from equity-method investment |
(18,000 | ) | – | |||||
| Loss on disposal of fixed assets |
(10,124 | ) | – | |||||
| Total Other Expense |
(28,124 | ) | – | |||||
| PROVISION FOR INCOME TAXES |
– | – | ||||||
| NET LOSS |
$ | (44,443 | ) | (46,083 | ) | |||
| NET INCOME PER SHARE: BASIC AND DILUTED |
$ | (0.00 | ) | (0.00 | ) | |||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED |
19,004,550 | 3,734,550 | ||||||
See
accompanying notes, which are an integral part of these financial
statements
PINEAPPLE EXPRESS CANNABIS
COMPANY
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
As of January 31, 2023
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Common Stock |
Additional Paid-in | Accumulated | Total Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
| Balance, January 31, 2021 | 3,580,000 | $ | 3,580 | $ | 14,820 | $ | (34,313 | ) | $ | (15,913 | ) | |||||||||
| Issuance of common stock | 154,550 | 155 | 2,936 | – | 3,091 | |||||||||||||||
| Net loss for the year ended January 31, 2022 |
– | – | – | (46,083 | ) | (46,083 | ) | |||||||||||||
| Balance, January 31, 2022 |
3,734,550 | $ | 3,735 | $ | 17,756 | $ | (80,396 | ) | $ | (58,905 | ) | |||||||||
| Balance | 3,734,550 | $ | 3,735 | $ | 17,756 | $ | (80,396 | ) | $ | (58,905 | ) | |||||||||
| Retirement of common stock | (2,800,000 | ) | (2,800 | ) | – | (458,157 | ) | (460,957 | ) | |||||||||||
| Issuance of common stock | 18,070,000 | 18,070 | 1,885 | – | 19,955 | |||||||||||||||
| Net loss for the year ended January 31, 2023 |
– | – | – | (44,443 | ) | (44,443 | ) | |||||||||||||
| Net loss | – | – | – | (44,443 | ) | (44,443 | ) | |||||||||||||
| Balance, January 31, 2023 |
19,004,550 | $ | 19,005 | $ | 19,641 | $ | (582,996 | ) | $ | (544,350 | ) | |||||||||
| Balance | 19,004,550 | $ | 19,005 | $ | 19,641 | $ | (582,996 | ) | $ | (544,350 | ) | |||||||||
See
accompanying notes, which are an integral part of these financial
statements
PINEAPPLE EXPRESS CANNABIS
COMPANY
STATEMENTS OF CASH FLOWS
Years ended January 31, 2023 and January 31,
2022
(Audited)
| Year ended January 31, 2023 |
Year ended January 31, 2022 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||
| Net Income | (44,443 | ) | $ | (46,083 | ) | |||
| Adjustments to reconcile net loss to net cash from operating activities: |
||||||||
| Depreciation | 2,816 | 13,140 | ||||||
| Change in prepaid expenses | – | 2,696 | ||||||
| Change in accounts payable | (3,293 | ) | 4,599 | |||||
| Loss (income) from equity-method investment |
18,000 | – | ||||||
| Stock-based compensation | 70 | – | ||||||
| Loss on disposal of equipment |
10,124 | – | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
(16,726 | ) | (25,648 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||
| Related party loan | 11,872 | 24,280 | ||||||
| Capital Stock | – | 3,091 | ||||||
| Loss of cash account in reverse merger transaction |
(415 | ) | – | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
11,457 | 27,371 | ||||||
| NET CHANGE IN CASH |
(5,269 | ) | 1,723 | |||||
| Cash, beginning of period |
5,269 | 3,546 | ||||||
| Cash, end of period |
– | $ | 5,269 | |||||
| SUPPLEMENTAL CASH FLOW INFORMATION: |
||||||||
| Interest paid | $ | – | $ | – | ||||
| Income taxes paid | $ | – | $ | – | ||||
See
accompanying notes, which are an integral part of these financial
statements
PINEAPPLE EXPRESS CANNABIS
COMPANY
NOTES TO THE FINANCIAL STATEMENTS
January 31, 2023
(Audited)
Note 1 – ORGANIZATION
AND NATURE OF BUSINESS
Pineapple
Express Cannabis Company FKA Minaro Corp. is based in Los Angeles,
California. The Company’s 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 engaged in legal cannabis retail under the
brand name of Pineapple Express though its 50% owned asset,
Pineapple Consolidated Inc. (pineappleconsolidated.com) which runs
a cannabis delivery service, Pineapple Express, via
www.PineappleExpress.com. Pineapple Consolidated also owns and
manages retail cannabis ventures under the Pineapple Express name,
and seeks to become the leading portfolio management company in the
U.S. cannabis industry. With its headquarters in Los Angeles,
California, Pineapple Express is rapidly increasing its footprint
throughout the state and looking to scale into underdeveloped
markets.
Note 2 – GOING
CONCERN
The
accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States
(“GAAP”), which contemplate continuation of the Company as a going
concern. Therefore, there is substantial doubt about the Company’s
ability to continue as a going concern. Management anticipates that
the Company will be dependent, for the near future, on additional
investment capital to fund operating expenses The Company intends
to position itself so that it will be able to raise additional
funds through the capital markets. In light of management’s
efforts, there are no assurances that the Company will be
successful in this or any of its endeavors or become financially
viable and continue as a going concern.
Note 3 – SUMMARY OF
SIGNIFCANT ACCOUNTING POLICIES
Basis of
presentation
The
accompanying financial statements have been prepared in accordance
with GAAP. The Company’s year-end is January 31.
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 one and five years and the cost of leasehold
improvement is depreciated using the straight-line method over one
year. Expenditures for maintenance and repairs are charged to
expense as incurred. Additions, major renewals and replacements
that increase the equipment’s useful life are capitalized.
Equipment sold or retired, together with the related accumulated
depreciation is removed from the appropriated accounts and the
resultant gain or loss is included in net income.
The
Company computes income (loss) per share in accordance with ASC 260
“Earnings per Share”. Basic 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 year ended January 31, 2023 there were no
potentially dilutive debt or equity instruments issued or
outstanding.
PINEAPPLE EXPRESS CANNABIS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
January 31, 2023
(Audited)
Revenue
Recognition
The
Company recognizes revenue in accordance with Accounting Standards
Codification (“ASC”) 606, “Revenue from Contracts with Customers”.
ASC 606 adoption is 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; d. Significant judgments, and changes in judgments,
made in applying the requirements to those contracts. For the year
ended January 31, 2023, the Company has generated $5,385
revenue.
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 4 – RELATED PARTY
TRANSACTIONS
The
Company owes $40,904 to its related party equity
method investee, PCI, as of January 31, 2023. This loan is
unsecured, non-interest bearing and due on demand.
Note 5 – COMMITMENTS AND
CONTINGENCIES
The
Company currently subleases office space at 10351 Santa Monica
Blvd. #420, Los Angeles, CA 90025 through its 50% owned asset PCI.
The lease contract is on a month-to-month basis while the Company
looks for a more permanent office location.
PINEAPPLE EXPRESS CANNABIS COMPANY
NOTES TO THE FINANCIAL STATEMENTS
January 31, 2022
(Audited)
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 6 – INCOME
TAXES
The
Company adopted the provisions of uncertain tax positions as
addressed in ASC 740 “Income Taxes” (“ASC 740”). As a result of the
implementation of ASC 740, the Company recognized no increase in
the liability for unrecognized tax benefits. As of January 31,
2023, the Company had net operating loss carry forwards of
approximately $80,396 that may be
available to reduce future years’ taxable income in varying amounts
through 2031. Future tax benefits which may arise as a result of
these losses have not been recognized in these financial
statements, as their realization is determined not likely to occur
and accordingly, the Company has recorded a valuation allowance for
the deferred tax asset relating to these tax loss
carryforwards.
The
valuation allowance at January 31, 2023 was approximately
$16,883. The net change in
valuation allowance during the year ended January 31, 2023 was
$9,678. In
assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or
all of the deferred income tax assets will not be
realized.
The
ultimate realization of deferred income tax assets is dependent
upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management
considers the scheduled reversal of deferred income tax
liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based on consideration of
these items, management has determined that enough uncertainty
exists relative to the realization of the deferred income tax asset
balances to warrant the application of a full valuation allowance
as of January 31, 2023. All tax years since inception remain open
for examination by taxing authorities.
The
provision for Federal income tax consists of the
following:
SCHEDULE OF FEDERAL INCOME TAX
| As of January 31, 2022 |
As of January 31, 2021 |
|||||||
| Non-current deferred tax assets: | ||||||||
| Net operating loss carry forward |
$ | (16,757 | ) | (7,205 | ) | |||
| Valuation allowance |
$ | 16,757 | 7,205 | |||||
| Net deferred tax assets |
$ | – | – | |||||
The
actual tax benefit at the expected rate of 21% differs from the expected tax
benefit for the year ended January 31, 2022 as follows:
SCHEDULE OF ACTUAL TAX BENEFIT
| For the year ended January 31, 2022 |
For the year ended January 31, 2021 |
|||||||
| Computed “expected” tax expense (benefit) |
$ | (9,552 | ) | (4,096 | ) | |||
| Change in valuation allowance |
$ | 9,552 | 4,096 | |||||
| Actual tax expense (benefit) |
$ | – | – | |||||
The
related deferred tax benefit on the above unutilized tax losses has
a full valuation allowance not recognized against it as there is no
certainty of its realization. Management has evaluated tax
positions in accordance with ASC 740 and has not identified any
significant tax positions, other than those disclosed.
Note 7 – SUBSEQUENT
EVENTS
In
accordance with ASC 855, “Subsequent Events”, the Company has
analyzed its operations subsequent to January 31, 2023, through
April 31, 2023, and has determined that it does not have any
material subsequent events to disclose in these financial
statements, other than shares issuances.
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure
None
Item 9A(T) Controls and Procedures
Disclosure Controls and Procedures.
The Company maintains disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of
1934, as amended) that are designed to ensure that information
required to be disclosed in the Company’s Securities Exchange Act
reports is recorded, processed, summarized and reported within the
time periods specified in SEC rules and forms and that such
information is accumulated and communicated to the Company’s
management, as appropriate, to allow timely decisions regarding
required disclosure.
The Company’s management, with the participation of our principal
executive and principal financial officer evaluated the
effectiveness of the Company’s disclosure controls and procedures
as of the end of the period covered by this report. Based upon that
evaluation, our principal executive and principal financial officer
concluded that, as of the end of the period covered by this report,
the Company’s disclosure controls and procedures were not
effective.
Management’s Report on Internal Controls over Financial Disclosure
Controls and Procedures
Management
is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Exchange Act Rule
13a-15(f)). The Company’s internal control over financial reporting
is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with accounting
principles generally accepted in the United States of America.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. Under the supervision and
with the participation of management, including the Chief Executive
Officer and Chief Financial Officer, the Company conducted an
evaluation of the effectiveness of the Company’s internal control
over financial reporting as of January 31, 2023 using the criteria
established in “Internal Control – Integrated Framework” issued by
the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”).
A
material weakness is a deficiency, or combination of deficiencies,
in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the
Company’s annual or interim financial statements will not be
prevented or detected on a timely basis. In its assessment of the
effectiveness of internal control over financial reporting as of
January 31, 2023, the Company determined that there were control
deficiencies that constituted material weaknesses, as described
below.
| 1. |
We do not have an Audit Committee – While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities. |
|
| 2. |
We did not maintain appropriate cash controls – As of January 31, 2023, the Company has not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on the Company’s bank accounts. Alternatively, the effects of poor cash controls were mitigated by the fact that the Company had limited transactions in their bank accounts. |
|
| 3. |
We did not implement appropriate information technology controls – As at January 31, 2023, the Company retains copies of all financial data and material agreements; however, there is no formal procedure or evidence of normal backup of the Company’s data or off-site storage of data in the event of theft, misplacement, or loss due to unmitigated factors. |
Accordingly,
the Company concluded that these control deficiencies resulted in a
reasonable possibility that a material misstatement of the annual
or interim financial statements will not be prevented or detected
on a timely basis by the company’s internal controls.
As a
result of the material weaknesses described above, management has
concluded that the Company did not maintain effective internal
control over financial reporting as of January 31, 2023 based on
criteria established in Internal Control- Integrated Framework
issued by COSO.
System of Internal Control over Financial
Reporting
Our
management is responsible for establishing and maintaining a system
of disclosure controls and procedures (as defined in Rule 13a-15(e)
and 15d-15(e) under the Exchange Act) that is designed to ensure
that information required to be disclosed by us in the reports that
we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the
Commission’s rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in
the reports that it files or submits under the Exchange Act is
accumulated and communicated to the issuer’s management, including
its principal executive officer or officers and principal financial
officer or officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.
An
evaluation was conducted under the supervision and with the
participation of our management of the effectiveness of the design
and operation of our disclosure controls and procedures as of
January 31, 2023. Based on that evaluation, our management
concluded that our disclosure controls and procedures were not
effective as of such date to ensure that information required to be
disclosed in the reports that we file or submit under the Exchange
Act, is recorded, processed, summarized and reported within the
time periods specified in SEC rules and forms.
Changes in Internal Control over Financial
Reporting
There
was a change in the Company’s internal control over financial
reporting during the annual period covered by this report by virtue
of the management and control change occurring on December 18,
2022. However, that has not materially affected, or is reasonably
likely to materially affect, the Company’s internal control over
financial reporting.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers, Promoters and
Control Persons of the Company
The
name, age and titles of our executive officer and director are as
follows:
|
Name
Officer |
Age | Position | ||
|
Matthew
10351 |
54 |
President,
(Principal |
ADD
MATT BIO and relation to company
During
the past ten years, Matthew Feinstein has not been the subject to
any of the following events:
| 1. |
Any bankruptcy petition filed by or against any business of which Matthew Feinstein was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. |
| 2. |
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding. |
| 3. |
An order, judgment, or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting Mr. Feinstein’s involvement in any type of business, securities or banking activities. |
| 4. |
Found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Future Trading Commission to violate a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. |
| 5. |
Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity; |
| 6. |
Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; |
| 7. |
Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: |
| i. |
Any Federal or State securities or commodities law or regulation; or |
|
| ii. |
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or |
|
| iii. |
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| 8. |
Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a) (26) of the Exchange Act (15 U.S.C. 78c(a) (26))), any registered entity (as defined in Section 1(a) (29) of the Commodity Exchange Act (7 U.S.C. 1(a) (29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
TERM
OF OFFICE
Our
director is appointed to hold office until the next annual meeting
of our stockholders or until her respective successor is elected
and qualified, or until he resigns or is removed in accordance with
the provisions of the Nevada Revised Statues.
DIRECTOR
INDEPENDENCE
Mr.
Feinstein does not qualify as an independent director in accordance
with the published listing requirements of the NASDAQ Global Market
(the Company has no plans to list on the NASDAQ Global Market). The
NASDAQ independence definition includes a series of objective
tests, such as that the director is not, and has not been for at
least three years, one of our employees and that neither the
director, nor any of his family members has engaged in various
types of business dealings with us. In addition, our board of
directors has not made a subjective determination as to Matthew
Feinstein that no relationships exist which, in the opinion of our
board of directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director, though such subjective determination is required by the
NASDAQ rules. Had our board of directors made these determinations,
our board of directors would have reviewed and discussed
information provided by directors and us regarding our director’s
business and personal activities and relationships as they may
relate to us and our management.
Item 11. Executive Compensation
MANAGEMENT
COMPENSATION
The
following tables set forth certain information about compensation
paid, earned or accrued for services by our Executive Officer as of
January 31, 2023 and 2022:
Summary
Compensation Table
|
Name Principal Position |
Year | Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Nonqualified Deferred Compensation ($) |
All Other Compensation ($) |
Total ($) |
|||||||||||||||||||||||||
| Matthew Feinstein, | January 31, 2023 | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||
| President and Treasurer | January 31, 2022 | -0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||||||
There
are no current employment agreements between the company and its
officer.
Matthew
Feinstein currently devotes all his time needed for planning and
organizing activities to manage the affairs of the Company. He has
agreed to work with no remuneration until such time as the company
receives sufficient revenues necessary to provide management
salaries. At this time, we cannot accurately estimate when
sufficient revenues will occur to implement this compensation, or
what the amount of the compensation will be. There is no annuity,
pension or retirement benefit proposed to be paid to the officer or
director or employees in the event of retirement at normal
retirement date pursuant to any presently existing plan provided or
contributed to by the company or any of its subsidiaries, if
any.
Director
Compensation
The
following table sets forth director compensation as of January 31,
2022 and 2021:
| Name |
Fees Earned or Paid in Cash ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
|||||||||||||||||||||
| Matthew Feinstein |
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
The
following table sets forth certain information concerning the
number of shares of our common stock, owned beneficially as of
January 31, 2022 by: (i) each person (including any group), known
to us to own more than five percent (5%) of any class of our voting
securities, (ii) our director, and or (iii) our officer. Unless
otherwise indicated, the stockholder listed possesses sole voting
and investment power with respect to the shares shown.
|
Title of Class |
Name
Beneficial |
Amount
Beneficial |
Percentage | |||||
| Common Stock | Matthew Feinstein | 15,000,000 shares of common stock (direct) |
74.97 | % | ||||
| Common Stock | Shawn Credle | 1,000,000 shares of common stock (direct) |
5.1 | % | ||||
| Common Stock | Marco Rullo | 1,000,000 shares of common stock (direct) |
5.1 | % | ||||
| Common Stock | Joshua Eisenberg | 1,000,000 shares of common stock (direct) |
5.1 | % | ||||
(1) A
beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (i) voting power, which
includes the power to vote, or to direct the voting of shares; and
(ii) investment power, which includes the power to dispose or
direct the disposition of shares. Certain shares may be deemed to
be beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by
a person if the person has the right to acquire the shares (for
example, upon exercise of an option) within 60 days of the date as
of which the information is provided. In computing the percentage
ownership of any person, the amount of shares outstanding is deemed
to include the number of shares beneficially owned by such person
(and only such person) by reason of these acquisition
rights.
Item 13. Certain Relationships and Related
Transactions
Matthew
Feinstein is our officer, director, control person and promoter and
he shall receive no compensation for the placement of any offerings
from the Company.
Item 14. Principal Accountant Fees and
Services
During
fiscal year ended January 31, 2023, we incurred approximately
$15,500 in fees to our principal independent accountants for
professional services rendered for the reviews of our financial
statements for the quarters ended April 30, 2022, July 31, 2022 and
October 31, 2022.
PART IV
Item 15. Exhibits
The
following exhibits are included as part of this report by
reference:
| * | Filed herewith. |
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized in Los Angeles on May 23,
2023.
|
PINEAPPLE EXPRESS CANNABIS COMPANY |
||
| By: |
/s/ Matthew Feinstein |
|
| Name: | Matthew Feinstein |
|
| Title: | President | |
| (Principal Executive, Financial and Accounting Officer) |
||
Historical Stock Chart
From Apr 2023 to May 2023
Historical Stock Chart
From May 2022 to May 2023
Loading Messages….
See More Message Board Posts
| Your Recent History | |||||||||||||||||||||||
|
|||||||||||||||||||||||
