Forward-Looking Statements

Our Management's Discussion and Analysis of Financial Condition and Results of Operations section contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filings with the SEC.

Although the forward-looking statements in this Annual Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects. We do not undertake any obligation to update forward-looking statements as a result of new information, future events or developments or otherwise.

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Annual Report.

The independent registered public accounting firms' reports on the Company's financial statements as of December 31, 2020, and 2019, and for the years then ended, includes a "going concern" explanatory paragraph that describes substantial doubt about the Company's ability to continue as a going concern.





Introduction


The Company has spent the last several years recasting the direction of the Company. We intend to take advantage of the opportunities that have been identified in the cannabis sectors. The market opportunities that are opened to a cannabis company include PVI's involvement with cannabis delivery, retail, manufacturing, and cultivation. Our main focus has been to receive 45.17% of all net income (loss) generated by PVI from its business ventures, as well as selling the Top Shelf System to cannabis dispensaries.





Our Business


The Company was originally formed in the state of Nevada under the name Global Resources, Ltd. on August 3, 1983. It changed its name to "Helixphere Technologies Inc." on April 12, 1999, and to "New China Global Inc." on October 2, 2013. It reincorporated in Wyoming on October 30, 2013, and changed its name to "Globestar Industries" on July 15, 2014. On August 24, 2015, the Company entered into a share exchange agreement with Better Business Consultants, Inc. ("BBC" dba "MJ Business Consultants"), a corporation formed in California on January 29, 2015, all of BBC's shareholders, and the Company's majority shareholder at that time (the "BBC Share Exchange"). Pursuant to the BBC Share Exchange, BBC became a wholly owned subsidiary of the Company. Upon consummation of the BBC Share Exchange, the Company ceased its prior business of providing educational services and continued the business of BBC as its sole line of business. BBC has three wholly owned subsidiaries, Pineapple Express One LLC, a California limited liability company, Pineapple Express Two LLC, a California limited liability company, and Pineapple Properties Investments, LLC, a Washington limited liability company. Better Business Consultants, Inc. has since been sold by the Company. On September 3, 2015, the Company changed its name to "Pineapple Express, Inc." from "Globestar Industries."





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ln addition to having stakes in the foregoing business ventures, the Company was also assigned a patent for the proprietary Top Shelf Safe Display System ("SDS") for use in permitted cannabis dispensaries and delivery vehicles across the United States and internationally (where permitted by law), on July 20th, 2016 by Sky Island, Inc. (the "SDS Patent") via a Patent Assignment Agreement (the "Patent Assignment Agreement"). The SDS Patent was originally applied for and filed on August 11, 2015, by Sky Island, Inc. and received its notice of allowance from the United States Patent and Trademark Office on March 22, 2017. It is anticipated that the Top-Shelf SDS product shall retail for $30,000 per unit. Pineapple intends to sell the Top-Shelf SDS units to PVI for use in retail storefronts and delivery vehicles as well as to sell the Top Shelf SDS technology to other cannabis retail companies. The Company anticipated beginning sales of the Top Shelf SDS system in the second quarter of 2021.

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

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

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

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





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In October 2020, PNPXPRESS, Inc. (an entity managed by PVI) secured three cannabis licenses, including consumer delivery and statewide distribution, from the City of Los Angeles for a retail storefront location at the intersection of Hollywood & Vine (1704 N. Vine Street). The lease was signed in October 2020. This 3460 square foot dispensary will be called Pineapple Express and is scheduled to open by June of 2021, pending inspections from the city. PVI has received 30% equity and will receive a management fee of 10% of sales of this entity.





Impact of COVID-19



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

Year Ended December 31, 2020, as compared to Year Ended December 31, 2019





Revenue


Revenue from operations for the fiscal year ended December 31, 2020, was $0, which represents a decrease of $15,000, or 100% from $15,000 during the fiscal year ended December 31, 2019. The decrease in revenue was related to generating 3 months of consulting revenue from PVI in 2019 with no such revenue generated in 2020.

Operating Loss from Continuing Operations

Operating loss from continuing operations for the fiscal year ended December 31, 2020, was $668,418, a decrease of $947,756, or 58.6%, from an operating loss from continuing operations of $1,616,174 during the fiscal year ended December 31, 2019. We noted that general and administrative expenses were significantly higher for the fiscal year ended December 31, 2019, compared to the fiscal year ended December 31, 2020, resulting in a decrease of the operating loss.





General and Administrative


General and administrative expenses for the fiscal year ended December 31, 2020, were $661,557, a decrease of $960,988, or 59.2%, from $1,622,545 during the fiscal year ended December 31, 2019. The most significant changes include a decrease in legal and professional fees of approximately $576,000, a decrease in consultant fees by approximately $387,000, a decrease in rent expense by approximately $102,000, offset by an increase in directors consulting fees by approximately $150,000.





Depreciation


Depreciation expense for the fiscal years ended December 31, 2020, and 2019 was $6,861 and $8,629, respectively. The decrease comes from an asset which became fully depreciated in 2020.





Other Income/Expense


During the fiscal year ended December 31, 2020, the Company has total other expense of $480,410, consisting of $53,821 in interest expense, $388,099 in losses from the Company's equity method investment, $25,000 gain from debt settlement, and $63,490 of liquidated damages on litigations settlement.

During the fiscal year ended December 31, 2019, the Company has total other income of $447,712, consisting of $631,360 of other income from a mutual release agreement, net of $104,775 in losses on settlements of debt, $17,588 in interest expense and $61,285 in losses from the Company's equity method investment.





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Net Loss


As a result of the foregoing, the Company recorded a net loss of $1,148,828 for the fiscal year ended December 31, 2020, as compared to a net loss of $1,168,462 for the fiscal year ended December 31, 2019.

Liquidity and Capital Resources

As of December 31, 2020, the Company had a working capital deficit of $2,773,936, and $0 in cash. As of December 31, 2020, the Company's current liabilities included $869,911 in accounts payable and accrued liabilities, $615,000 in settlement payable, $52,408 in accrued interest payable, $857,175 in related party notes payable, $19,838 in other notes payable, $169,000 in advances on agreements and $100,048 in contingent liabilities. The Company has funded its operations since inception primarily through the issuance of its equity securities in private placements to third parties and/or promissory notes to related parties for cash. The cash was used primarily for operating activities, including cost of employees, management services, professional fees, consultants, and travel. Management expects that cash from operating activities will not provide sufficient cash to fund normal operations, support debt service, or undertake certain investments the Company anticipates prosecuting for its business proposition both in the near and intermediate terms. The Company will continue to rely on financing provided under notes from related and third- party sources, as well as sale of shares of its common stock in private placements, to fund its expected cash requirements.

We intend to continue raising additional capital through related party loans. Additionally, in 2021 the Company is planning to apply to have its common stock quoted on the OTC Markets, at which point the Company plans to raise money through issuances of debt and/or equity securities in private placements to accredited investors. There can be no assurance that these funds will be available on terms acceptable to us, if at all, or will be sufficient to enable us to fully complete our development activities or sustain operations. If we are unable to raise sufficient additional funds, we will have to develop and implement a plan to further extend payables, reduce overhead and operations, or scale back our current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

Our consolidated financial statements included elsewhere in this Annual Report have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in such consolidated financial statements, we had an accumulated stockholders' deficit of $14,567,489, and had a net loss of $1,148,828 and utilized net cash of $543,624 in operating activities as of and for the year ended December 31, 2020. These factors raise substantial doubt about our ability to continue as a going concern. In addition, our independent registered public accounting firms in their audit reports to our consolidated financial statements for the fiscal years ended December 31, 2020, and 2019, expressed substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern was raised due to our net losses and negative cash flows from operations since inception and our expectation that these conditions may continue for the foreseeable future. In addition, we will require additional financing to fund future operations. Our consolidated financial statements included elsewhere in this Annual Report do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Based on our management's estimates and expectation to continue to receive short-term debt funding from a related party on as needed basis, we believe that current funds on hand as of the date of issuance and proceeds of such loans will be sufficient for us to continue operations beyond twelve months from the filing of this Form 10-K. Our ability to continue as a going concern is dependent on our ability to execute our business strategy and in our ability to raise additional funds. Management is currently seeking additional funds, primarily through the issuance of equity and/or debt securities for cash to operate our business; however, we can give no assurance that any future financing will be available or, if at all, and if available, that it will be on terms that are satisfactory to us. Even if we can obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in the case of equity and/or convertible debt financing.





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Cash Flows Used In Operating Activities





Operating Activities


During the fiscal year ended December 31, 2020, we used $543,624 of cash in operating activities, primarily as a result of our net loss of $1,148,828, offset by amortization of right-of-use asset of $40,775, $66,303 in stock-based compensation, depreciation expense of $6,861, and a loss from the Company's equity method investment of $388,099.

Operating assets and liabilities increased by $138,457 primarily due to an increase in accrued interest payable of $53,117, an increase in due to affiliates of $51,508, and an increase in accounts payable and accrued liabilities of $25,888.

During the fiscal year ended December 31, 2019, we used $353,867 of cash in operating activities, primarily as a result of our net loss of $1,168,462, offset by amortization of right-of-use asset of $101,973, depreciation expense of $8,629, $631,360 in income from a debt mutual release agreement, net of $104,775 in losses on settlement of debts, $293,900 in stock-based compensation, and a loss from the Company's equity method of $61,285.

Operating assets and liabilities generated an increase in cash of $972,874, primarily due to an increase in accounts payable and accrued liabilities of $398,526, an increase of $447,320 in stock subscription receivable, an increase of $69,517 in contingent liabilities and an increase of $39,148 in due to affiliate.





Investing Activities



During the fiscal years ended December 31, 2020, and 2019, we had no cash flows from investing activities.





Financing Activities


During the fiscal year ended December 31, 2020, we received $551,824 in cash from financing activities, primarily from the proceeds of related party notes payable. During the fiscal year ended December 31, 2020, the Company repaid $8,200 of related party notes payable.

During the fiscal year ended December 31, 2019, we received $353,867 in cash from financing activities, primarily from $387,367 in proceeds from related party notes payable, offset by $30,000 repayment of advances on agreements and $1,000 repayment of related party notes payable.

Off-Balance Sheet Arrangements

During the fiscal year ended December 31, 2020, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.





Critical Accounting Policies



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, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the recoverability and useful lives of long-lived assets, fair value of right-of-use assets and lease liabilities, assessment of legal accruals, the fair value of our stock, stock-based compensation and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.





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Stock-based Compensation


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

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

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





Investments - Equity Method


The Company accounts for equity method investments at cost, adjusted for the Company's share of the investee's earnings or losses, which are reflected in the consolidated statements of operations. The Company periodically reviews the investments for other than temporary declines in fair value below cost and more frequently when events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. As of December 31, 2020, the Company believes the carrying value of its equity method investments were recoverable in all material respects.

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