Pineapple Energy LLC entered into a definitive merger agreement to acquire Communications Systems, Inc. (NasdaqGM:JCS) (CSI) for $83.4 million in a reverse merger transaction on March 1, 2021. Under the terms of the Merger Agreement, CSI has agreed to issue to the members of Pineapple 15.6 million shares of CSI's common stock (the "Common Stock"), subject to certain adjustments, as consideration for the Merger (the "Base Consideration"). The Base Consideration will be increased for any outstanding convertible notes issued by Pineapple in a pre-closing financing, which will convert into additional shares of CSI common stock. Any equity issued by the combined company after closing of the merger would increase the number of post-merger shares outstanding and decrease the percentage ownership of continuing Communications Systems, Inc shareholders. In addition to the Base Consideration, certain members of Pineapple may receive additional shares pursuant to an earnout. Additional shares of common stock will be issued to such members of Pineapple upon the occurrence of the following milestones: (i) If Pineapple discharges its Permitted Indebtedness of $22.5 million within three months of closing, then such members will be entitled to an additional 3 million shares of Common Stock, (ii) If, within two years of closing, the Common Stock achieves a 30-day VWAP (volume weighted average price) of at least $6 per share, such members will be entitled to receive up to 4 million shares of Common Stock (to be increased to 5 million if CSI consummates the "Dispositions," by the 18-month anniversary of the closing) and (iii) If, within two years of closing, the Common Stock achieves a 30-day VWAP of at least $8 per share, such members will be entitled to receive up to an additional 4 million shares of Common Stock (to be increased to 5 million if CSI consummates the "Dispositions" by the 18-month anniversary of the closing). Pursuant to the CVR agreement, each shareholder of CSI as of immediately prior to the closing of the merger will receive one contractual non-transferable Contingent Value Right (CVR) per share of CSI common stock held. CSI has 9,720,627 shares of common stock outstanding. At the effective time of the merger, CSI's shareholders will continue to own and hold their existing shares of CSI common stock. In conjunction with the merger, CSI and Pineapple Energy are exploring equity financing through a private placement that would close in connection with the closing of merger, with proceeds to be used by the combined company to finance additional acquisitions and working capital needs of the combined company. Following the completion CSI will be renamed “Pineapple Holdings, Inc.” and will trade under the new Nasdaq ticker symbol “PEGY”.

Communications Systems expects shares of the combined company to continue to trade on the Nasdaq Capital Market under the new ticker symbol “PEGY.” The merger agreement provides that both CSI and Pineapple will be obligated to pay the other a termination fee of $2.5 million plus reimbursement of certain expenses, up to $750,000, if the merger agreement is terminated under certain circumstances. Members of both CSI's and Pineapple's management teams will assume leadership roles in the combined company. Roger H.D. Lacey, Executive Chairman of Communications Systems, and Mark Fandrich, Communications Systems's Chief Financial Officer, are expected to remain in these same roles. Pineapple's Chief Executive Officer Kyle Udseth, an industry veteran who previously served as an executive at leading residential solar energy providers Sunnova and Sunrun, will assume the Chief Executive Officer position of the combined company. Upon the closing of the merger, the combined company will formally appoint Marilyn Adler and Tom Holland to its Board of Directors. Kyle Udseth, Roger Lacey, Randall Sampson, Scott Honour and Michael Zapata will also serve as directors of the combined company. Communications Systems expects to remain in its current headquarters near Minneapolis, Minnesota.

The transaction is subject to approval by at least two-thirds of CSI's shareholders, approval by Pineapple members, a registration statement becoming effective under the Securities Act of 1933, as amended, related to the merger and the filing of an amendment to CSI's Articles of Incorporation in order to increase the number of shares of Common Stock authorized for issuance to a number at least necessary to consummate the merger. The definitive merger agreement and transaction have been unanimously approved by CSI's Board of Directors and recommends the shareholders to vote in favor of the transaction. The special committee of the CSI board of directors, consisting solely of independent directors including two board members identified by the Company's two largest shareholders, also unanimously approved the proposed merger. The transaction has been unanimously approved by Board of Managers of Pineapple. CSI filed a registration statement on Form S-4 with the Securities and Exchange Commission (SEC) on November 12, 2021, and was declared effective by the SEC on February 3, 2022. CSI has scheduled a shareholder vote to approve the merger on March 16, 2022. As of March 16, 2022, CSI shareholders meeting has been adjourned to March 23, 2022, to approve the agreement. More than 63% of the CSI total outstanding shares have already voted in favor of the transaction which requires the affirmative vote of at least two-thirds (66.67%) of CSI total outstanding shares. As of March 23, 2022, CSI shareholders meeting has been adjourned to March 25, 2022. As of March 25, 2022, CSI shareholders approved the merger transaction. Pineapple Holdings, Inc. common stock will begin to trade on the Nasdaq Capital Market on Tuesday, March 29, 2022. The transaction is expected to close in the second quarter of 2021. As of March 16, 2022, CSI anticipates that the Merger will close on or about March 28, 2022.

Northland Capital Markets serves as financial advisor to CSI in connection with the transaction and JMP Securities serves at financial advisor to Pineapple Energy. Barbara Rummel and Peter Jaslow of Ballad Spahr LLP acted as legal advisors to CSI and Steven Kennedy, Jonathan Zimmerman and Jonathan Nygren of Faegre Drinker Biddle & Reath LLP acted as legal advisors to Pineapple Energy. Equiniti Trust Company acted as a transfer agent for CSI. Craig-Hallum Capital Group LLC acted as a financial advisor and fairness opinion provider for CSI. The Proxy Advisory Group, LLC is acting as proxy solicitor to CSI for a fee of $40,000. Craig-Hallum Capital Group LLC will receive a fee of $0.3 million from CSI.

Pineapple Energy LLC completed the acquisition of Communications Systems, Inc. (NasdaqGM:JCS) (CSI) in a reverse merger transaction on March 28, 2022. In connection with the closing, the Company changed its name to “Pineapple Holdings, Inc.” on March 28, 2022 and its common stock is expected to trade on the Nasdaq Capital Market under the new symbol “PEGY” on Tuesday, March 29, 2022.