10-K: Pineapple Express Cannabis Company Shifts Focus to Blockchain with GROOVY Acquisition After Divesting PCI Stake

Pineapple Express Cannabis Company divested its cannabis retail operations and acquired a majority stake in GROOVY Company, a blockchain-based platform for the cannabis industry, as detailed in its Form 10-K filing for the fiscal year ended January 31, 2025.

Summary

• Pineapple Express Cannabis Company filed its Form 10-K for the fiscal year ended January 31, 2025.
• The company divested its 50% equity interest in Pineapple Consolidated Inc. (PCI) on January 30, 2025.
• On March 5, 2025, the company acquired a majority voting interest in GROOVY Company, Inc., a blockchain-based platform for the cannabis industry.
• The company reported total revenue of $16,168 for the year ended January 31, 2025, compared to $0 in the previous year, but recognized a bad debt expense of $14,204.
• The net loss for the year ended January 31, 2025, was $31,153, compared to $59,497 in the previous year.
• As of January 31, 2025, the company had cash of $0 and an accumulated deficit of $673,646.
• The company's management has concluded that these conditions raise substantial doubt about its ability to continue as a going concern.
• The company identified material weaknesses in its internal control over financial reporting, including the lack of an audit committee, inadequate cash controls, and insufficient information technology controls.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the company's losses, going concern warning, and material weaknesses in internal control, despite the strategic shift towards blockchain technology.

Positives

• The company generated revenue of $16,168 for the year ended January 31, 2025, compared to $0 in the previous year.
• The net loss decreased from $59,497 in 2024 to $31,153 in 2025.
• The acquisition of GROOVY Company, Inc. provides a strategic entry into blockchain-driven authentication and supply chain transparency for the regulated cannabis sector.

Negatives

• The company recognized a bad debt expense of $14,204 for the year ended January 31, 2025, offsetting most of the revenue generated.
• The company reported a net loss of $31,153 for the year ended January 31, 2025.
• As of January 31, 2025, the company had cash of $0 and an accumulated deficit of $673,646.
• The company's management has concluded that these conditions raise substantial doubt about its ability to continue as a going concern.
• The company identified material weaknesses in its internal control over financial reporting.

Risks

• The company has a limited operating history and operates in a new industry, which may not succeed.
• The company's business strategy may result in increased volatility of revenues and earnings.
• Cannabis remains illegal under federal law, which could impact the company's ability to proceed with its business plan.
• The company may experience difficulty enforcing its contracts due to the nature of its business.
• The company and its customers and clients may have difficulty accessing banking services.
• The company may have a difficult time obtaining insurance.
• The company may be deemed an investment company under the Investment Company Act, which could have an adverse effect on its business.
• The company may be required to recognize impairment charges that could materially affect its results of operations.
• There is no assurance that the company's shares of common stock will ever be approved for listing on a national securities exchange.
• The company's common stock may be traded infrequently and in low volumes.
• The company does not intend to pay dividends in the foreseeable future.
• Investors may experience dilution of their ownership interests because of the future issuance of additional shares of the company's common or preferred stock.
• Being a public company is expensive and administratively burdensome.
• The company's common stock is subject to the penny stock rules of the SEC.
• An investment in the company's securities is speculative and there can be no assurance of any return on any such investment.

Future Outlook

Management plans to address the company's financial challenges by acquiring and integrating GROOVY Company, pursuing additional financing, realigning the business to improve operational efficiency, and commercializing blockchain and authentication technology.

Management Comments

• 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.
• The Company's management has concluded that these conditions raise substantial doubt about our ability to continue as a going concern.

Industry Context

The company's shift towards blockchain technology reflects a growing trend in the cannabis industry to enhance transparency, authenticity, and supply chain management. The acquisition of GROOVY positions Pineapple Express Cannabis Company at the intersection of cannabis, compliance technology, and Web3 infrastructure.

Comparison to Industry Standards

• It is difficult to compare Pineapple Express Cannabis Company's financial performance to industry standards due to its unique business model and the evolving nature of the cannabis and blockchain sectors.
• Companies like SinglePoint, Inc. and Global Payout, Inc. have also explored blockchain solutions for the cannabis industry, but their specific financial results and business strategies may differ significantly.
• Comparing the company's technology platform to established supply chain management solutions like SAP or Oracle is not directly applicable due to the specific regulatory and compliance requirements of the cannabis industry.

Management Changes

Corporate Governance

Related Party Transactions

• Sale of Interest in Pineapple Consolidated, Inc. to Matthew Feinstein, the Company's then-President, Chief Executive Officer, Treasurer, and a member of the Board of Directors.
• Change in Control and Executive Transition resulting in Franjose Frank Yglesias becoming CEO of both Pineapple Express and GROOVY Company, Inc.
• Acquisition of GROOVY Company, Inc. with Mr. Yglesiass dual role as CEO of both companies at the time of the transaction.

Stakeholder Impact

• Shareholders face significant risks due to the company's financial condition and the speculative nature of its business.
• Employees may be affected by potential business realignments and cost-cutting measures.
• Customers and partners may benefit from the company's focus on blockchain technology and supply chain transparency.
• Creditors face uncertainty regarding the company's ability to repay its debts.

Next Steps

• Acquiring and integrating GROOVY Company, Inc.
• Pursuing additional financing.
• Realigning the business to improve operational efficiency.
• Commercializing blockchain and authentication technology in existing cannabis distribution networks.

Key Dates

Keywords

cannabis, blockchain, GROOVY, Pineapple Express, financial results, acquisition, divestiture, risk factors, internal control, going concern