Pineapple Financial Inc.: Form 10-Q for the period ended May 31, 2026

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

Please read the following management’s discussion and analysis of our financial condition and results of operations, along with our consolidated financial statements and the related notes and other information included in this Quarterly Report on Form 10-Q. It is important to note that this discussion and analysis contain forward-looking statements with certain risks and uncertainties. These risks and uncertainties could cause our results to differ materially from anticipated in these forward-looking statements. You can find more information about these risks and uncertainties under the heading “Special Note Regarding Forward-Looking Statements” in Part I and elsewhere in this Form 10- Q.

Special Note Regarding Forward-Looking Statements

This Form 10-Q includes forward-looking statements that entail potential risks and uncertainties. These statements are usually identified by the use of specific terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and other comparable terminology. All the statements in this Form 10-Q that are not about historical facts, including those related to our future operations, financial position, Revenue, projected costs, strategy, plans, management objectives, and expected market growth, are forward-looking. While reading this Form 10-Q, you should know that these statements do not guarantee our performance or results. They include known and unknown risks, uncertainties, and assumptions, as mentioned under the “Risk Factors” section in this Form 10-Q. We believe that these forward- looking statements are based on reasonable assumptions. Still, you must be aware that many factors, including those mentioned under the “Risk Factors” section in this Form 10-Q, could affect our financial results or operations and cause actual results to differ from those stated in the forward-looking statements. These statements were made as of the date of this Form 10-Q, and we are not obligated to update or revise any forward-looking statements made here to reflect any change in our expectations or any change in events, conditions, or circumstances on which these statements are based. All written or oral forward-looking statements made by us or on our behalf are qualified by the cautionary statements mentioned in this Form 10-Q.

Objective

In this section, we provide an analysis of the Company’s financial condition, cash flows, and results of operations from management’s perspective. We recommend you read this with the consolidated financial statements and notes in Part I, Item 1 of this Quarterly Report on Form 10Q.

Executive Summary

During the nine months ended May 31, 2026, the Company expanded its business through the implementation of a Digital Asset Treasury strategy while continuing to operate its core Canadian mortgage brokerage and technology platform. As a result, the Company now operates through two reportable operating segments: Mortgage Operations and Crypto Asset Operations.

Mortgage Operations continued to generate revenue through mortgage brokerage, underwriting, insurance, subscription-based software, sponsorship and other technology-enabled financial services. During the period, management remained focused on operating efficiency, expense management and the continued expansion of recurring revenue streams despite a mortgage market that remained affected by housing affordability, elevated borrowing costs and reduced origination activity.

During the period, the Company also established its Digital Asset Treasury strategy as part of its broader capital allocation framework. The strategy includes the acquisition, financing, custody and staking of digital assets and is governed by the Company’s Treasury Reserve Policy, which establishes liquidity, governance, custody, financing and risk management requirements. As of May 31, 2026, the Company held digital assets with a fair value of approximately $49.4 million, generated $620,849 of staking income during the period and maintained financing arrangements designed to support its treasury activities.

The Company’s reported financial results were significantly affected by the application of ASC 350-60, which requires digital assets to be measured at fair value with changes recognized in earnings each reporting period. Accordingly, reported net income included significant non-cash fair value gains resulting from changes in the market value of the Company’s digital asset holdings. Management believes investors should evaluate these non-cash fair value adjustments together with the Company’s operating performance, liquidity position and capital management activities when assessing period-to-period financial results.

Business Model Transformation

Historically, the Company’s operations were primarily focused on mortgage brokerage services and related technology-enabled solutions within the Canadian residential mortgage market. Revenue was largely derived from mortgage origination activity together with subscription, underwriting, insurance and other ancillary service offerings.

During fiscal 2026, the Company expanded its business through the implementation of its Digital Asset Treasury strategy, establishing Crypto Asset Operations as a second reportable operating segment. As a result, management now evaluates the business through two complementary operating platforms: Mortgage Operations and Crypto Asset Operations.

Mortgage Operations continue to focus on growing mortgage origination volumes, expanding subscription-based and other recurring revenue streams, enhancing agent productivity through technology, and improving operating efficiency.

Crypto Asset Operations focus on the disciplined deployment and management of treasury assets through digital asset ownership, staking activities, financing arrangements and other treasury management activities conducted pursuant to the Company’s Treasury Reserve Policy. These activities are intended to complement, rather than replace, the Company’s core mortgage operations by providing an additional framework for capital allocation and treasury management.

Management believes this operating structure provides greater diversification of earnings while maintaining a disciplined approach to liquidity, governance and risk management.

Recent Developments

Business Trends

During the nine months ended May 31, 2026, the Canadian mortgage market continued to adjust to evolving monetary policy following the Bank of Canada’s easing cycle that commenced in mid-2024. While lower benchmark interest rates improved borrowing conditions and reduced financing costs relative to prior periods, mortgage origination activity continued to be influenced by housing affordability constraints, limited housing supply, underwriting standards and borrower qualification requirements.

Within this operating environment, mortgage renewal and refinance activity represented a greater proportion of industry volume, while purchase-related mortgage originations continued to recover gradually. The Company remained focused on supporting its mortgage agent network, expanding technology-enabled services and maintaining disciplined expense management while continuing to invest in its proprietary Pineapple Plus platform.

During the period, the Company continued to enhance its technology platform through workflow automation, customer relationship management capabilities and additional insurance and ancillary financial service integrations. Management believes these initiatives will continue to support agent productivity, operational efficiency and the expansion of recurring revenue streams over time.

As part of its broader capital allocation strategy, the Company also implemented its Digital Asset Treasury strategy during fiscal 2026. The strategy is governed by the Company’s Treasury Reserve Policy and is designed to deploy excess treasury assets in a disciplined manner while maintaining appropriate liquidity, governance and risk management standards. Activities undertaken during the period included digital asset acquisitions, treasury financing arrangements and delegated staking activities.

As of May 31, 2026, the Company held digital assets with a fair value of approximately $49.4 million, generated $620,849 of staking income during the nine-month period and recognized $2.8 million of non-cash fair value gains resulting from changes in market prices. Because the Company’s digital assets are measured at fair value under U.S. GAAP, reported earnings may experience significant period-to-period volatility that does not necessarily correspond to realized cash flows or underlying operating performance.

Management continues to evaluate both mortgage market conditions and digital asset markets in allocating capital, managing liquidity and assessing future operating opportunities.

RESULTS OF OPERATIONS

The Company’s results of operations for the three and nine months ended May 31, 2026 reflect the combination of its traditional mortgage operations together with the implementation of its Digital Asset Treasury strategy. As a result, comparisons with prior periods should be viewed in the context of the Company’s expanded business activities.

Reported operating results during the current period were significantly influenced by:

• the fair value remeasurement of digital assets under ASC 350-60;
• staking income generated from digital asset holdings;
• financing costs associated with the Company’s treasury financing arrangements;
• interest income generated from treasury placement and financing activities; and
• continued mortgage brokerage and technology platform operations.

Because fair value adjustments are recognized in earnings each reporting period, reported net income may vary significantly based on changes in digital asset market prices and may not correspond to realized cash flows during the period.

Net Income

For the three months ended May 31, 2026, the Company reported net income of $25.3 million, compared to a net loss of $0.6 million during the prior-year period. The improvement primarily reflects the implementation of the Company’s Digital Asset Treasury strategy during fiscal 2026, which contributed non-cash fair value gains on digital assets, staking income and interest income. These benefits were partially offset by higher financing costs associated with the Company’s treasury financing arrangements and continued operating expenses related to its mortgage platform.

The principal drivers of the period-over-period change were:

• A $25.8 million non-cash, market-driven fair value gain on the Company’s recognized digital asset holdings;
• $0.4 million of staking income generated from the Company’s digital asset treasury activities;
• $0.2 million of interest income earned on treasury financing and lending activities; and
• Continued cost management across the Company’s mortgage operations.

These items were partially offset by:

• Interest expense and bank charges of $0.4 million, primarily related to borrowings supporting the Company’s Digital Asset Treasury strategy;
• A $0.4 million loss on the change in fair value of warrant liabilities;
• Advertising and marketing expenses of $0.3 million;
• Salaries, wages and benefits of $0.4 million; and
• Depreciation and amortization of $0.3 million.

Because the Company measures its recognized digital assets at fair value under ASC 350-60, reported net income includes significant non-cash gains and losses resulting from changes in market prices. Accordingly, period-to-period comparisons of reported earnings may not necessarily reflect changes in the Company’s underlying operating cash flows or core mortgage operations.

Revenue

Revenue for the three months ended May 31, 2026 was $0.6 million, compared to $0.7 million for the comparable prior-year period, representing a decrease of $0.1 million, or approximately 16.7%.

The decrease primarily reflects lower mortgage origination activity within the Company’s Mortgage Operations segment as the Canadian residential mortgage market continued to experience reduced transaction volumes, housing affordability constraints and disciplined underwriting standards despite improving interest rate conditions. These factors reduced commission-based revenue associated with funded mortgage transactions during the period.

The decrease in mortgage brokerage revenue was partially offset by continued contributions from the Company’s recurring and ancillary revenue streams, including subscription-based software, underwriting, insurance and sponsorship revenues, which continue to diversify the Company’s revenue base beyond traditional mortgage origination activity.

Income generated from the Company’s Digital Asset Treasury strategy, including staking income, is presented separately from revenue and is therefore not included within revenue from contracts with customers.

Operating Expenses

Total operating expenses and other income for the three months ended May 31, 2026 resulted in a net recovery of approximately $24.3 million, compared to total operating expenses of approximately $0.6 million for the comparable prior-year period. The year-over-year change primarily reflects the implementation of the Company’s Digital Asset Treasury strategy, including the recognition of non-cash fair value gains on recognized digital assets and staking income, partially offset by financing costs associated with treasury activities and ongoing mortgage operating expenses.

Excluding the impact of digital asset fair value remeasurement and staking income, the Company continued to incur operating expenses related to:

• Selling, general and administrative expenses;
• Advertising and marketing;
• Salaries, wages and benefits;
• Interest expense and bank charges; and
• Depreciation and amortization.

Interest expense increased significantly from the prior-year period as a result of financing arrangements established to support the Company’s Digital Asset Treasury strategy.

Fair Value and Treasury Activities

During the quarter, the Company recognized a $25.8 million non-cash fair value gain on its recognized digital assets resulting from increases in the market price of Injective (“INJ”) during the reporting period. Under ASC 350-60, recognized digital assets are measured at fair value, with changes in fair value recognized in earnings each reporting period. Accordingly, these gains do not represent realized cash gains.

In addition, the Company recognized:

• Staking income of $399,134;
• Interest income of $155,480;
• A gain on derivative liabilities of $26,812; and
• A loss on the remeasurement of warrant liabilities of $52,018.

Collectively, these items materially affected reported operating results for the quarter but do not necessarily reflect the performance of the Company’s core mortgage operations or operating cash flows.

Operating Income and Net Income

As a result of the factors discussed above, the Company reported income from operations of approximately $24.9 million for the three months ended May 31, 2026, compared to an operating loss of approximately $0.7 million for the comparable prior-year period.

The improvement primarily reflects the implementation of the Company’s Digital Asset Treasury strategy, including non-cash fair value gains on recognized digital assets and staking income, partially offset by financing costs associated with treasury activities and ongoing operating expenses.

Interest income generated from treasury activities is presented below income from operations and therefore contributed to net income but not operating income.

Management believes operating income should be considered together with the Company’s underlying operating performance, as fair value accounting for digital assets under ASC 350-60 may introduce significant period-to-period volatility that does not necessarily correspond to realized cash flows or changes in the Company’s core mortgage operations.

For the three months ended May 31, 2026, the Company reported basic and diluted earnings per share of approximately $0.99, compared to a basic and diluted loss per share of approximately $0.93 for the comparable prior-year period.

Nine Months Ended May 31, 2026 Compared to May 31, 2025

The Company’s nine-month results reflect the combined impact of its Mortgage Operations segment and its Digital Asset Treasury strategy, including digital asset acquisitions, staking income, fair value remeasurement of digital assets, financing costs, interest expense and warrant-related fair value adjustments.

Non-GAAP Financial Measures

Management supplements its U.S. GAAP results with certain non-GAAP financial measures, including Adjusted Operating Income (Loss) and Adjusted EBITDA, which management uses to evaluate the underlying operating performance of the Company’s business.

These measures exclude items that management believes are not indicative of ongoing operating performance or that may significantly affect comparability between reporting periods, including:

• Non-cash fair value adjustments related to digital assets;
• Changes in the fair value of warrant and derivative liabilities;
• Financing-related costs associated with capital-raising activities; and
• Certain other items that may not be comparable across reporting periods.

Because the Company’s Digital Asset Treasury strategy is accounted for under ASC 350-60, reported GAAP results may include significant non-cash gains or losses resulting from changes in the market value of digital assets. Management believes these supplemental measures assist investors in evaluating operating performance exclusive of such market-driven accounting adjustments.

These measures should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP and may not be comparable to similarly titled measures presented by other companies.

Adjusted Operating Income (excluding fair value changes)

Management uses Adjusted Operating Income as a supplemental measure to evaluate the underlying operating performance of the Company’s business by excluding items that management believes are not reflective of ongoing operating activities or that may reduce comparability between reporting periods. During the nine months ended May 31, 2026, the most significant adjustments related to non-cash fair value gains on digital assets, financing-related costs associated with capital raising activities, and changes in the fair value of financial instruments.

While these adjustments provide additional insight into operating trends, they should not be considered in isolation or as a substitute for U.S. GAAP results.

Adjusted EBITDA

Management also evaluates Adjusted EBITDA as a supplemental measure of operating performance. Adjusted EBITDA further excludes depreciation, amortization, interest income, interest expense and other non-operating items to facilitate period-over-period comparisons of operating performance.

Because the Company’s Digital Asset Treasury strategy introduces significant non-cash fair value adjustments under U.S. GAAP, management believes Adjusted EBITDA provides investors with an additional perspective on operating performance exclusive of these accounting-driven fluctuations. However, Adjusted EBITDA has important limitations and should not be considered a substitute for net income, operating income or cash flows determined in accordance with U.S. GAAP.

Operating Performance Metrics

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Note: Gross billing represents total commissions billed to lending institutions on funded mortgage transactions. Commission expense represents amounts payable to mortgage agents, brokers and referral partners. Net sales revenue represents gross billing less commission expense and is presented on a net basis because the Company acts as an agent in these arrangements. The other revenue categories presented above include underwriting revenue, insurance revenue, subscription revenue, sponsorship revenue and other ancillary revenue streams. Staking income and fair value gains or losses on digital assets are excluded from the table above and are presented separately in the condensed interim consolidated statements of operations and comprehensive loss.

In addition to U.S. GAAP and non-GAAP financial measures, management monitors several operating metrics that it believes provide additional insight into the performance of the Company’s Mortgage Operations segment. These metrics include mortgage volume, gross billings, net sales revenue, subscription revenue, underwriting revenue, insurance revenue, sponsorship revenue and other ancillary revenue streams.

Management believes these operating metrics provide useful information regarding the scale of the Company’s mortgage platform, the level of customer activity and the continued diversification of revenue sources, which was supported by:

• Consistent mortgage-related revenue generation despite continued softness in Canadian mortgage origination activity;
• Growth in subscription revenue compared with the prior-year period;
• Continued contribution from insurance, sponsorship, underwriting, and other mortgage-related revenue streams;
• Improved cost structure following optimization initiatives across headcount, overhead, and selling, general and administrative expenses; and
• Early contributions from the Company’s digital asset treasury activities, including staking income.

Nine Months Ended May 31, 2026

For the nine months ended May 31, 2026, mortgage volume was $1.15 billion, compared to $1.18 billion for the same period in 2025. Gross billing decreased to $10.5 million from $13.0 million, while commission expense decreased to $9.4 million from $11.9 million. Net sales revenue was $1.1 million, compared to $1.2 million for the prior-year period.

Subscription revenue increased to $625,019 for the nine months ended May 31, 2026, compared to $559,993 for the same period in 2025. This increase partially offset decreases in net sales revenue, underwriting revenue, insurance revenue, sponsorship revenue and other income.

This improvement in adjusted operating performance was driven by the combined impact of revenue stability, growth in recurring and fee-based revenue streams, and a structural reduction in the Company’s operating cost base. Management believes these actions position the Company for improved operating leverage as revenue scales.

Management believes that this adjusted measure provides a more meaningful view of the Company’s core operating performance, as it removes the effects of:

• Market-driven volatility in digital asset fair value remeasurements;
• Financing activities and related accounting impacts, including non-recurring financing costs;
• Non-cash remeasurement adjustments; and
• Certain costs that management does not consider indicative of ongoing operating performance.

However, this non-GAAP measure should not be considered in isolation or as a substitute for financial results prepared in accordance with U.S. GAAP. This measure may also not be comparable to similarly titled measures used by other companies.

Three Months Ended May 31, 2026

For the three months ended May 31, 2026, mortgage volume was $318.8 million, compared to $412.4 million for the same period in 2025. Gross billing decreased to $3.0 million from $4.4 million, while commission expense decreased to $2.7 million from $4.2 million.

Despite lower mortgage volume and gross billing, net sales revenue increased to $308,349 for the three months ended May 31, 2026, compared to $288,161 for the same period in 2025. The increase in net sales revenue reflects changes in revenue mix and commission expense relative to gross billing.

Subscription revenue increased to $206,529 for the three months ended May 31, 2026, compared to $191,927 for the same period in 2025. This increase was partially offset by decreases in underwriting revenue, insurance revenue, sponsorship revenue and other income.

Management believes the three-month period reflects the Company’s current operating profile following recent financing, restructuring and cost optimization initiatives. The Company continues to focus on improving operating leverage, maintaining its mortgage platform capabilities, and expanding recurring and ancillary revenue streams.

Digital Asset Treasury Strategy

During fiscal 2026, the Company implemented its Digital Asset Treasury (“DAT”) strategy as part of its broader capital allocation framework. The strategy complements the Company’s Mortgage Operations by providing a disciplined framework for managing excess treasury assets while maintaining appropriate liquidity, governance and risk management.

The Company’s DAT strategy is governed by its Treasury Reserve Policy and overseen by the Board of Directors through its Special Advisory Committee. The strategy currently includes:

• Digital Asset Ownership – Acquisition and long-term ownership of digital assets, primarily Injective (“INJ”) tokens, as treasury reserve assets.
• Treasury Yield Generation – Participation in delegated staking activities designed to generate additional income on treasury-held digital assets.
• Treasury Financing – Utilization of secured financing arrangements intended to improve capital efficiency while maintaining prudent collateral coverage and liquidity.
• Treasury Placement Arrangements – Short-duration lending and treasury placement activities designed to generate additional yield on excess treasury assets, subject to the Company’s Treasury Reserve Policy and corporate governance procedures.
• Risk Management and Governance – Formal oversight of treasury activities through established liquidity thresholds, custody requirements, counterparty standards, financing limits and approval procedures.

As of May 31, 2026, the Company:

• Held recognized digital assets with a fair value of approximately $49.4 million;
• Generated $620,849 of staking income during the nine-month period;
• Maintained secured financing arrangements totaling approximately $21.4 million;
• Maintained approximately $12.0 million of treasury-related loan receivables; and
• Maintained approximately $5.4 million of restricted collateral balances supporting treasury financing arrangements.

Management’s objective is to prudently deploy capital while maintaining sufficient liquidity to support the Company’s operating business. Accordingly, treasury activities are conducted alongside ongoing evaluations of working capital requirements, financing obligations, collateral maintenance requirements, market conditions and overall risk management considerations.

Under U.S. GAAP, recognized digital assets within the scope of ASC 350-60 are measured at fair value, with unrealized gains and losses recognized in earnings each reporting period. As a result, reported operating results may experience significant volatility arising from changes in digital asset market prices, even where no assets have been sold and no corresponding cash flows have been realized.

Modified Net Asset Value (mNAV)

Management monitors Modified Net Asset Value (“mNAV”) as a supplemental treasury performance metric in evaluating the relationship between the Company’s market valuation and the capital deployed through its Digital Asset Treasury strategy.

Management believes mNAV provides useful supplemental information because the Company’s Digital Asset Treasury strategy includes not only digital assets, but also financing arrangements, collateral balances and treasury placement activities that support the overall treasury portfolio. Accordingly, management believes evaluating enterprise value relative to the broader treasury asset base provides additional context when assessing the Company’s capital allocation strategy.

For purposes of this metric:

• Enterprise Value represents the Company’s market capitalization adjusted for debt and cash balances.
• Treasury Value represents the fair value of digital assets together with capital deployed in treasury-related activities, including restricted collateral balances, loan receivables and other assets directly supporting the Company’s Digital Asset Treasury strategy.

The following table summarizes management’s calculation of mNAV as of May 31, 2026:

As of May 31, 2026, the Company’s Treasury Value consisted primarily of:

• Recognized digital assets with a fair value of approximately $49.4 million;
• Treasury-related loan receivables of $12.0 million;
• Restricted collateral balances of $5.4 million; and
• Other treasury-related assets and liabilities supporting the Company’s Digital Asset Treasury strategy.

Management believes mNAV is a useful supplemental metric for evaluating the Company’s treasury activities; however, it is not a measure of financial performance under U.S. GAAP and should not be considered in isolation or as a substitute for GAAP financial measures. The calculation of mNAV involves management judgment, including the determination of which assets and liabilities are included within Treasury Value, and may not be comparable to similarly titled measures presented by other companies.

The Company’s cash balance is currently managed at the corporate level and is not fully allocated between operating liquidity and treasury activities. Accordingly, unrestricted cash has been excluded from Treasury Value for purposes of the mNAV calculation in this period. To the extent cash is deployed into digital asset strategies in future periods, it is expected to be included within Treasury Value.

In addition, certain amounts related to financing and collateral arrangements, including restricted cash, loan receivable balances and derivative-related balances, may be included within Treasury Value where such amounts represent capital actively deployed in support of the Company’s digital asset strategy.

The Company’s treasury strategy is governed by internal policies that prioritize liquidity and risk management, including:

• Maintaining minimum operating cash reserves;
• Limiting the use of leverage;
• Avoiding rehypothecation of assets; and
• Implementing governance through internal review processes.

Staking rewards generated from digital asset holdings represent an incremental yield component of the Company’s capital allocation strategy.

Recognized digital assets are measured at fair value under ASC 350-60, with changes in fair value recognized in earnings each reporting period. Accordingly, reported financial results may experience significant volatility arising from changes in market prices, which may not correspond to realized cash flows or management’s assessment of the Company’s underlying operating performance.

The calculation of mNAV involves significant judgment, including the determination of which assets and liabilities are included in Enterprise Value and Treasury Value, and may differ from methodologies used by other companies. Accordingly, this measure may not be comparable to similarly titled measures and could produce materially different results if calculated under alternative assumptions.

Revenue and Operating Metrics

The Company’s primary sources of revenue include:

• Commissions earned from mortgage originations;
• Underwriting income;
• Subscription fees charged to mortgage agents;
• Insurance commission revenue;
• Sponsorship revenue; and
• Other ancillary income streams.

In addition, the Company recognizes digital asset-related income, including staking income, separately from revenue from contracts with customers.

Nine Months Ended May 31, 2026

For the nine-month period, the Company generated revenue from a diversified set of sources, supported by its mortgage operations, together with income generated from its digital asset treasury strategy.

• Mortgage volume was $1.15 billion, compared to $1.18 billion in the prior-year period, reflecting a modest decrease in origination activity.
• Gross billings were $10.4 million, compared to $13.0 million in the prior-year period, primarily reflecting market conditions, transaction mix and competitive pricing dynamics.
• Commission expense totaled $9.4 million, compared to $11.9 million in the prior-year period, consistent with the decrease in gross billings and mortgage activity.
• Net sales revenue was approximately $1.0 million, compared to $1.2 million in the prior-year period.

Additional revenue and income streams included:

• Underwriting revenue of $0.08 million;
• Insurance revenue of $0.07 million;
• Subscription revenue of $0.63 million, reflecting continued agent platform engagement;
• Sponsorship revenue of $0.14 million;
• Staking income of $0.62 million, representing income generated from the Company’s digital asset holdings; and
• Other revenue of approximately $0.13 million.

Overall, while mortgage-related revenues remained affected by continued softness in the Canadian mortgage market, the Company’s subscription revenue remained stable and its digital asset treasury strategy contributed incremental income through staking activities.

Three Months Ended May 31, 2026

For the three-month period ended May 31, 2026:

• Mortgage volume was $318.8 million, compared to $412.4 million in the prior-year period;
• Gross billings were approximately $3.0 million, compared to $4.4 million in the prior-year period;
• Commission expense totaled $2.7 million, compared to $4.0 million in the prior-year period; and
• Net sales revenue was approximately $0.30 million, compared to $0.36 million in the prior-year period.

Other revenue and income components included:

• Underwriting revenue of $0.03 million;
• Insurance revenue of $0.02 million;
• Subscription revenue of $0.21 million;
• Sponsorship revenue of $0.04 million;
• Staking income of $0.40 million, reflecting the Company’s digital asset treasury strategy; and
• Other revenue of approximately $0.03 million.

The decrease in mortgage-related revenue metrics during the quarter was driven by lower mortgage volume, ongoing market softness, affordability constraints and competitive pressures. These factors were partially offset by stable subscription revenue and contributions from digital asset staking activities.

Overall Performance Commentary

Management believes that the Company’s operating results for both the three- and nine-month periods demonstrate:

• Resilience in core mortgage operations despite a challenging macroeconomic environment;
• Continued contribution from recurring and ancillary revenue streams, including subscription, insurance, sponsorship and underwriting revenue;
• Successful diversification into digital asset activities, including staking income generation; and
• Continued focus on cost management and operational efficiency.

Reported results were significantly impacted by non-cash, market-driven fair value remeasurement of recognized digital asset holdings and financing-related costs. For the three months ended May 31, 2026, the Company recognized a $25.8 million fair value gain on digital assets and $0.4 million of staking income. For the nine months ended May 31, 2026, the Company recognized a $2.8 million fair value gain on digital assets and $0.6 million of staking income.

These results reflect the impact of the Company’s digital asset treasury strategy, structural cost reduction initiatives, and continued efforts to reduce fixed costs and improve operating leverage.

The Company’s primary sources of revenue include commissions earned from lenders on mortgage originations, underwriting income, subscription fees charged to mortgage agents, insurance commission revenue, sponsorship revenue and other ancillary income. In addition, the Company recognizes staking income from digital asset holdings separately from revenue from contracts with customers.

Path to Operating Leverage

As the Company advances its strategic initiatives, management is focused on driving operating leverage and improving earnings quality through:

• Increasing revenue per mortgage transaction;
• Expanding higher-margin ancillary and subscription-based revenue streams;
• Driving efficiency across operations and reducing cost per funded loan;
• Enhancing agent productivity through technology and automation; and
• Improving capital efficiency through its digital asset treasury strategy.

The Company expects that improvements in agent productivity, data monetization, recurring revenue, and capital efficiency will contribute to a more scalable and profitable operating model over time.

Gross Billing

The Company earns revenue from its mortgage brokerage operations based on commissions received from financial institutions with whom it has contractual arrangements. Gross billing represents the total commission earned from lending institutions on funded mortgage transactions. As the Company engages licensed mortgage agents and brokers who are responsible for originating and closing mortgage transactions, a significant portion of the gross billing is paid out as commissions and referral fees to those agents.

Accordingly, the Company presents revenue on a net basis, calculated as gross billing less commissions and payouts to mortgage agents, as the Company acts as an agent in these arrangements.

Under ASC 606, Revenue from Contracts with Customers, the Company evaluates each contract to identify performance obligations, determine the transaction price, allocate the transaction price to the performance obligations, and recognize revenue when control of the promised service is transferred to the customer.

For each mortgage transaction, revenue is recognized when:

• A binding contract exists between the borrower, the mortgage agent, and the lending institution;
• The Company provides access to, and support through, its technology platform to facilitate the mortgage transaction;
• The mortgage loan is funded by the lender; and
• The Company’s commission from the lender becomes fixed and collectible.

The Company’s performance obligation is satisfied at a point in time, when the mortgage is funded and all platform-related services for that transaction have been completed. Revenue is measured as the net amount retained by the Company after remitting the applicable commission and referral fees to mortgage agents and sub-brokers.

This net revenue is driven by the Company’s role as an intermediary providing technology infrastructure, compliance oversight, and workflow support, rather than acting as the primary obligor in the mortgage funding transaction.

Subscription Revenue

Users access and use the Company’s technology platform, Pineapple Plus, for a flat monthly service fee of $145.00. In exchange for this fee, users of Pineapple Plus have access to a network management system that allows them to perform back-office procedures more efficiently and effectively. The platform enables users to process mortgage transactions, prepare documentation, and complete packages for submission to financial institutions for funding.

The Company has a strong user base, which has experienced significant growth since inception. Subscription revenue is recognized over the period during which access to the platform is provided.

The Company continues to expand the functionality of its Pineapple Plus platform, including initiatives focused on data standardization, workflow digitization, and the development of a unified data architecture across mortgage transactions. These efforts are expected to form the foundation for future data-driven products, including analytics, benchmarking, and other value-added services that may be offered on a subscription or recurring revenue basis.

Management believes that, over time, these initiatives may enable the Company to monetize its platform beyond traditional transaction-based revenue, supporting higher-margin recurring revenue streams and improved earnings quality. However, these capabilities remain under development, and there can be no assurance as to their timing, scope or ultimate commercial impact.

These initiatives may also support the structured digitization and utilization of mortgage-related data assets, enabling new forms of data accessibility, reporting and monetization over time.

Staking Income

The Company earns staking income from its digital asset holdings by participating in blockchain network validation activities. Staking rewards are received in the form of additional digital tokens and are not considered revenue from contracts with customers under ASC 606.

Staking income is recognized within other income when the Company obtains control of the reward tokens, which generally occurs when the rewards are received or become claimable by the Company. Such rewards are measured at fair value at the time of receipt using quoted market prices in active markets in accordance with ASC 820, Fair Value Measurement.

Subsequent to initial recognition, the related digital assets are included within digital assets and are remeasured at fair value at each reporting date, with changes in fair value recognized in earnings in accordance with the Company’s accounting policy for digital assets.

Underwriting Fee

Users can optionally use the Company’s expert risk pre-assessment service, which assists them in pre-underwriting their loans before submission to a lender for approval and funding. This service is designed to reduce the time required for lender partners to assess mortgage applications.

The Company charges an underwriting fee based on the size of the mortgage transaction. The Company has undertaken programs to educate and inform users of this service in further detail. Management believes this service may increase user engagement, improve deal quality, and enhance the services offered through the platform.

Insurance Commission Revenue

The Company earns insurance commission revenue through Pineapple Insurance, which acts as a broker for third-party insurance carriers. When customers purchase insurance policies through the Company’s platform, the Company receives commissions from insurance providers based on premiums written.

Commission revenue is recognized at the point in time when the underlying insurance policy becomes effective and the Company’s performance obligations are satisfied. Insurance commission revenue is presented net of referral fees, agent commissions, and other consideration payable to mortgage agents or third-party partners, as these amounts represent direct transaction-related costs. Renewal commissions are recognized only when they become fixed and determinable based on confirmation from the insurance carriers.

Other Income

Other income includes technology setup fees, sponsorship fees, and other ancillary income streams.

Components of Operating Expenses

The Company’s operating expenses, as presented in the statement of operations data, include salaries, commissions and team member benefits, selling, general and administrative expenses, marketing and advertising expenses, depreciation and amortization, interest expense, share-based compensation, financing-related costs and other expenses.

Salaries, Commissions and Team Member Benefits

Payroll expenses include team members’ salaries, commissions, payroll taxes and benefits.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include software subscriptions, license fees, professional services, insurance, rent, dues and subscriptions, travel, office and general expenses, consulting fees and other operating expenses.

Share-Based Compensation

Share-based compensation comprises equity awards and is measured and expensed under ASC 718, Compensation—Stock Compensation.

Comparison of the Nine Months Ended May 31, 2026 and 2025

Comparison of the Three Months Ended May 31, 2026 and 2025

43

RESULTS OF OPERATIONS

Selling, General and Administrative Expenses

The breakdown of selling, general and administrative expenses for the nine-month period ended May 31, 2026 is as follows:

Selling, general and administrative expenses for the nine months ended May 31, 2026 were $1.7 million, compared to $1.5 million for the same period in the prior year, representing an increase of $224,457, or 14.74%. The increase was primarily driven by higher professional, compliance, insurance and corporate costs associated with the Company’s public company reporting obligations, financing activities and expanded business activities, partially offset by cost optimization initiatives.

Revenue

Revenue for the nine months ended May 31, 2026 was $2.1 million, compared to $2.3 million in the comparable prior-year period, representing a decrease of $0.2 million, or 9.2%.

The decrease in revenue was primarily attributable to:

• Lower mortgage volume and gross billings compared with the prior-year period;
• Continued softness in Canadian mortgage origination activity; and
• Changes in the timing and mix of mortgage-related revenue streams.

These decreases were partially offset by higher subscription revenue and continued contribution from insurance, sponsorship, underwriting and other mortgage-related revenue streams.

In addition, the Company recognized staking income of $620,849 during the nine months ended May 31, 2026, generated from its digital asset holdings. In accordance with U.S. GAAP, staking income is presented separately and is not included in revenue from contracts with customers.

Operating Expenses

Total operating expenses and other income for the nine months ended May 31, 2026 resulted in net expenses of approximately $1.5 million, compared to total expenses of $4.2 million in the prior-year period.

The change was primarily driven by:

• A $2.8 million non-cash, market-driven fair value gain on digital assets;
• $620,849 of staking income;
• Lower salaries, wages and benefits due to cost optimization initiatives;
• Partially offset by $1.5 million of financing costs related to the ELOC arrangement;
• $1.3 million of warrant-related financing costs; and
• Higher interest expense associated with new borrowings related to the Company’s digital asset treasury strategy.

Other notable changes in operating expenses include:

• Advertising and marketing expenses increased by 14.7%, reflecting continued investments in growth and customer acquisition initiatives;
• Salaries, wages and benefits decreased by 39.5%, primarily due to workforce optimization initiatives; and
• Selling, general and administrative expenses increased by 14.7%, reflecting higher professional and public company-related costs, partially offset by cost management initiatives.

Operating Income and Net Loss

As a result of the foregoing, the Company reported:

• Income from operations of $0.6 million, compared to a loss from operations of $2.0 million in the prior-year period; and
• A net loss of $1.3 million, compared to a net loss of $1.8 million in the prior-year period.

The reduction in net loss was primarily attributable to:

• A non-cash, market-driven fair value gain on digital assets;
• Staking income generated from digital asset holdings;
• Interest income; and
• A gain on remeasurement of warrant liabilities.

These were partially offset by financing-related costs, including warrant and ELOC-related expenses, higher interest expense and other operating expenses.

Other Income and Expenses

Other income and expenses for the nine-month period included:

• Interest income of $369,539;
• Financing cost related to ELOC of $1.5 million;
• Financing cost related to warrants of $1.3 million;
• Gain on change in fair value of warrant liabilities of $467,408;
• Gain on change in fair value of derivative liabilities of $42,556;
• Foreign exchange gain of $22,787; and
• Staking income of $620,849, recognized separately from revenue.

These items reflect the Company’s financing activities and exposure to digital asset markets and are not directly related to its core mortgage brokerage operations.

Three Months Ended May 31, 2026 Compared to May 31, 2025

Revenue

Revenue for the three months ended May 31, 2026 was $0.6 million, compared to $0.7 million in the comparable prior-year period, representing a decrease of $0.1 million, or 16.7%.

The decrease in revenue was driven by:

• Lower mortgage volume compared with the prior-year period;
• Lower gross billings; and
• Continued market softness and affordability constraints in the Canadian mortgage market.

During the quarter, the Company also recognized staking income of $399,134, which is presented separately from revenue.

Operating Expenses

Total operating expenses and other income for the three months ended May 31, 2026 resulted in a net recovery of $24.3 million, compared to total expenses of $1.4 million in the prior-year period.

The change was primarily attributable to:

• A $25.8 million non-cash, market-driven fair value gain on digital assets;
• $399,134 of staking income; and
• Partially offset by higher interest expense and other normal-course operating expenses.

Additional changes include:

• Advertising and marketing expenses remained consistent with the prior-year period;
• Salaries, wages and benefits remained relatively stable compared with the prior-year period;
• Selling, general and administrative expenses increased by 4.7%, primarily driven by professional, administrative and compliance costs; and
• Interest expense and bank charges increased significantly due to borrowings associated with the Company’s digital asset treasury strategy.

Operating Income and Net Income

As a result of the foregoing, the Company reported:

• Income from operations of $24.9 million, compared to a loss from operations of $0.7 million in the prior-year period; and
• Net income of $24.9 million, compared to a net loss of $0.6 million in the prior-year period.

The improvement in net income was primarily driven by:

• A non-cash, market-driven fair value gain on digital assets;
• Staking income; and
• Interest income.

These were partially offset by higher interest expense, warrant liability remeasurement loss and normal-course operating expenses.

Other Income and Expenses

Other income and expenses for the quarter included:

• Interest income of $155,480;
• Foreign exchange gain of $186,281;
• Loss on change in fair value of warrant liabilities of $52,018;
• Gain on derivative liabilities of $26,812; and
• Staking income of $399,134, recognized separately from revenue.

Earnings Per Share

For the three months ended May 31, 2026, the Company reported basic and diluted earnings per share of approximately $0.99, compared to basic and diluted loss per share of $0.93 for the same period in the prior year.

For the nine months ended May 31, 2026, the Company reported basic and diluted loss per share of approximately $0.09. The basic weighted-average number of common shares outstanding for the nine months ended May 31, 2026 was approximately 14.5 million. Because the Company reported a net loss for the nine-month period, all potentially dilutive securities were excluded from diluted loss per share because their inclusion would have been anti-dilutive. Accordingly, the diluted weighted-average number of common shares outstanding was the same as the basic weighted-average number of common shares outstanding.

Warrants, stock options and restricted share units were excluded from diluted loss per share for the nine-month period because their effect would have been anti-dilutive.

Critical Accounting Policies and Significant Judgments and Estimates

This management’s discussion and analysis of the financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us 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 Revenue and expenses during the reported period. Per U.S. GAAP, we base our estimates on historical experience and various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates if conditions differ from our assumptions. While our significant accounting policies are more fully described in Note 2 in the “Notes to Financial Statements,” we believe the following accounting policies are critical to making effective judgments and estimates in preparing our financial statements.

Revenue Recognition

The Company has adopted ASC 606, Revenue from Contracts with Customers, which provides a single comprehensive model for revenue recognition. The core principle of the standard is that Revenue should be recognized when goods or services are transferred to customers at an amount that was driven by the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract- based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. It establishes a five-step model to account for revenue arising from contracts with customers. Under this standard, Revenue is recognized at an amount that was driven by the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The standard requires entities to exercise Judgment, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with customers. Additionally, the standard specifies the accounting for incremental costs of obtaining a contract and the costs directly related to fulfilling a contract.

When the Company transfers goods or services to a customer, Revenue is recognized at an amount that was driven by the consideration expected to be received.

The Company operates an online platform, that enables brokers and agents to efficiently close deals.

The Company’s subsidiary, Pineapple Insurance Inc., generates Revenue by charging premiums for insurance policies and services. Pineapple Insurance is affiliated with a major insurance company, from which it earns commissions for providing services, primarily mortgage insurance. Mortgage insurance is a offered for each mortgage. Pineapple Insurance acts as the agent that supplies insurance services to the consumer and is paid a commission from the premiums collected by the insurance company whose products and services it provides to the end consumer.

Basis of presentation, functional and presentation currency

The Company’s headquarters is in Ontario, Canada, and the functional currency is in Canadian Dollars (CAD) with the presentation currency being US Dollars (USD). The Company’s subsidiaries have a functional currency of CAD and presentation currency of USD which have been applied consistently.

There will be a foreign currency translation undertaken to report under US GAAP which will be the basis of presentation.

Foreign Currency Transactions and Translation

The Company presents its consolidated financial statements in U.S. dollars (“USD”), which is the Company’s reporting currency. The functional currency of the Company’s Canadian mortgage brokerage and insurance operations is the Canadian dollar (“CAD”), as those operations primarily generate revenues and incur expenses in CAD and operate in the Canadian mortgage market. The functional currency of the Company’s digital asset treasury activities, including activities related to Injective tokens, is USD, as those activities are primarily managed, financed, measured and monitored in USD.

Transactions denominated in a currency other than the applicable functional currency are remeasured into the applicable functional currency at the exchange rate in effect on the transaction date. Monetary assets and liabilities denominated in a currency other than the applicable functional currency are remeasured at the closing exchange rate at each reporting date, and the resulting foreign exchange gains or losses are recognized in the consolidated statements of operations and comprehensive loss.

For consolidated reporting, assets and liabilities of CAD functional currency operations are translated into USD at exchange rates in effect at the balance sheet date. Revenues and expenses of CAD functional currency operations are translated into USD using average exchange rates for the applicable period. Equity transactions are translated at historical exchange rates. Resulting translation adjustments are recorded within accumulated other comprehensive income or loss as foreign currency translation adjustments.

USD functional currency digital asset treasury activities are measured and reported directly in USD. Accordingly, those activities do not generate foreign currency translation adjustments from translation into the Company’s USD reporting currency, although transactions or balances denominated in currencies other than USD are remeasured through earnings.

Lease Accounting

The relevant criteria applicable is ASC 842. We assess at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. We apply a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. We recognize lease liabilities to make lease payments and right-of- use assets representing the right to use the underlying assets.

At the commencement date of the lease, we recognize lease liabilities measured at the present value of lease payments to be made over the lease term. Lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. Lease payments also include the exercise price of a purchase option reasonably certain to be exercised by us and payments of penalties for terminating the lease, if the lease term reflects us exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, we use our incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

We recognize right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

Investments

We invested in a commercial mortgage firm, MCommercial, based in Montreal and Toronto, Canada representing 5% of the total issued and outstanding shares. This strategic partnership allows Pineapple residential mortgage agents to have access to a leading commercial mortgage firm and experts, which will expand their product offerings, service levels and corporate Revenue through increased transactions.

The Company entered into a share purchase agreement with 9142-2964 Quebec Inc. pursuant to which the Company acquired five Class A Shares of 7326904 Canada Inc. (dba as Mortgage Alliance Corporation) (“Alliance”), representing 5% of the total issued and outstanding shares of Alliance. Alliance is a mortgage brokerage firm based in Ontario, Canada with locations in Calgary, Vancouver and Halifax.

The investments are measured at fair value, with changes in fair value or impairment losses, if any, recognized in the condensed consolidated statements of operations and comprehensive loss.

Digital Assets and Digital Asset Treasury Strategy

During fiscal 2026, the Company expanded its business activities to include a Digital Asset Treasury strategy, which is reported as part of its Crypto Asset Operations segment. The strategy includes the acquisition, custody, financing, staking, treasury management and investment of digital assets, primarily Injective (“INJ”) tokens. These activities are managed separately from the Company’s mortgage brokerage operations and are subject to internal treasury, custody, liquidity, counterparty risk management, accounting and compliance policies.

As of May 31, 2026, the Company held 7,561,000 INJ tokens, with an aggregate carrying value of $49.4 million, compared to no digital assets as of August 31, 2025. During the nine months ended May 31, 2026, the Company acquired digital assets through financing arrangements, staking rewards and equity issuance transactions. The Company recognized a net unrealized fair value gain of $2.81 million on its digital assets for the nine months ended May 31, 2026, reflecting changes in quoted market prices during the period. The Company also recognized staking income of $620,849 for the nine months ended May 31, 2026 and $399,134 for the three months ended May 31, 2026.

The Company measures its digital assets at fair value in accordance with U.S. GAAP, with changes in fair value recognized in earnings. As a result, the Company’s results of operations may experience significant period-to-period volatility due to changes in digital asset market prices. Fair value gains and losses are non-cash in nature unless and until the related digital assets are sold, exchanged, transferred or otherwise monetized. Staking income is recognized separately from revenue from contracts with customers and is not included in mortgage-related revenue.

The Company’s digital asset treasury activities are subject to significant risks, including volatility in digital asset prices, liquidity risk, custody and counterparty risk, regulatory uncertainty, collateral and financing risks, cybersecurity risks, staking protocol risks, and the risk that digital assets may decline materially in value. Management continues to monitor these risks and the impact of digital asset market conditions on the Company’s financial condition, results of operations, liquidity and capital resources.

Evaluation of Disclosure Controls and Procedures

Management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of May 31, 2026.

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of May 31, 2026 due to the material weakness in internal control over financial reporting described below.

Management has identified a material weakness in the Company’s internal control over financial reporting related to insufficient segregation of duties within the finance function, primarily due to a limited number of personnel responsible for financial reporting, accounting, review and disclosure functions. This limitation affects the Company’s ability to consistently maintain an appropriate level of independent review over complex accounting areas, including, among others, share-based compensation, warrant liability valuation, derivative instruments, digital asset transactions, staking income, crypto asset custody reconciliations, restricted cash and financing arrangements, and related financial statement disclosures.

During the nine months ended May 31, 2026, the Company expanded its activities to include a Digital Asset Treasury strategy involving digital assets. As part of management’s evaluation of disclosure controls and procedures, management considered controls over the existence, custody and valuation of digital assets, wallet and custodian reconciliations, authorization of digital asset transactions, recognition of staking income, assessment of the principal market and fair value pricing inputs, restricted cash and collateral arrangements, and completeness and accuracy of related disclosures. Management continues to enhance its control environment in these areas; however, due to the limited number of finance personnel and the resulting segregation of duties limitation described above, the material weakness remained unremediated as of May 31, 2026.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s financial statements will not be prevented or detected on a timely basis.

Notwithstanding the material weakness described above, management believes that the condensed interim consolidated financial statements included in this Quarterly Report fairly present, in all material respects, the Company’s financial position, results of operations and cash flows in accordance with U.S. GAAP.

Remediation Plan

Management is committed to improving the Company’s internal control over financial reporting. Subject to available resources, management intends to continue enhancing the Company’s control environment by implementing additional review procedures, improving documentation of complex accounting estimates and judgments, enhancing reconciliations and review controls over digital asset activities, and evaluating the need for additional finance, accounting, valuation or compliance resources. The material weakness will not be considered remediated until the applicable controls have been designed, implemented and operated effectively for a sufficient period of time.

Changes in Internal Control over Financial Reporting

Other than the ongoing enhancements described above, there were no changes in the Company’s internal control over financial reporting during the quarter ended May 31, 2026 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The following risk factors reflect material changes to, and should be read together with, the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2025. The risks described below are not the only risks facing the Company. Additional risks and uncertainties that are not presently known to the Company, or that the Company currently considers immaterial, may also materially adversely affect its business, financial condition, results of operations, liquidity, cash flows and the market price of its common shares.

The Company commenced its Digital Asset Treasury strategy during fiscal 2026. Because this represents a material change to the Company’s business, capital structure and risk profile, the related risks should be disclosed as updates to the risks included in the prior Form 10-K. Form 10-Q requires disclosure of material changes to previously disclosed risk factors, while Item 105 of Regulation S-K calls for material, company-specific risks organized under relevant headings and an explanation of how each risk affects the registrant or its securities.

Risks Related to Our Digital Asset Treasury Strategy

Our substantial concentration in INJ exposes us to significant price volatility and could materially adversely affect our financial condition, results of operations and liquidity.

Our digital asset holdings are substantially concentrated in Injective tokens (“INJ”). As of May 31, 2026, we recognized 7,561,000 INJ tokens with a fair value of approximately $49.4 million. Accordingly, our financial condition, results of operations and shareholders’ equity are materially exposed to changes in the market price of a single digital asset.

Digital asset prices, including the price of INJ, have historically experienced significant volatility and may decline rapidly for reasons that may be difficult to predict, including changes in market sentiment, trading activity, token supply, protocol use, staking economics, regulatory developments, technological developments, cybersecurity incidents, macroeconomic conditions, actions by large token holders and developments affecting the Injective ecosystem.

Because our INJ holdings are measured at fair value, changes in the market price of INJ are recognized in earnings each reporting period. As a result, even when we do not sell any INJ, a decline in its market price could produce significant non-cash losses, reduce our assets and shareholders’ equity, adversely affect our ability to comply with collateral requirements and increase the risk that we will be required to provide additional collateral, repay borrowings or liquidate digital assets at unfavorable prices. Conversely, reported fair value gains may not represent realized cash proceeds or liquidity available to fund our operations.

We have not established a diversified portfolio of digital assets that would materially mitigate our exposure to INJ. A material or sustained decline in the price or utility of INJ could therefore have a disproportionate adverse effect on our business, financial condition, results of operations, liquidity and the market price of our common shares.

We may be unable to liquidate our INJ holdings at quoted market prices or in the amounts and within the time periods required to meet our obligations.

Although INJ is traded on digital asset markets, the liquidity, trading volume and market depth for INJ may vary significantly over time and across trading venues. The quoted market price used to measure our INJ holdings may not represent the price at which we could sell a significant quantity of INJ, particularly during periods of market stress, reduced trading activity or rapid price declines.

An attempt to sell a material portion of our holdings could adversely affect the market price of INJ, result in significant price slippage, incur substantial transaction costs or take longer than anticipated. Our ability to liquidate INJ may also be limited by custody procedures, collateral restrictions, staking arrangements, withdrawal delays, exchange limitations, blockchain congestion, regulatory restrictions or counterparty requirements.

If we are required to monetize INJ to meet operating expenses, debt maturities, collateral calls or other obligations, we may be unable to do so on acceptable terms or within the required time. This could materially adversely affect our liquidity, require us to seek additional financing on unfavorable terms or cause a default under our financing arrangements.

The custody of our digital assets exposes us to risks of loss, theft, cyberattack, unauthorized transactions and loss of access.

Our digital assets are maintained through institutional custody arrangements and digital wallets. Digital asset custody presents risks that differ from the custody of traditional financial assets, including risks associated with private keys, wallet credentials, transaction authorization, blockchain settlement, cybersecurity, operational controls and the technological infrastructure of custodians and service providers.

Our digital assets could be lost, stolen, misappropriated, transferred without authorization or rendered inaccessible as a result of cyberattacks, phishing, malware, compromised credentials, private-key loss, employee or service-provider misconduct, inadequate segregation of duties, software vulnerabilities, protocol failures or failures in our or a custodian’s operational controls.

Transactions on a blockchain may be irreversible. If INJ is transferred to an incorrect address, obtained through unauthorized access or otherwise lost, we may have no effective means of recovering the assets. Insurance maintained by us or our custodians, if any, may not cover all types of losses, may be subject to exclusions and limits, and may not be sufficient to compensate us fully.

Any loss of or inability to access our digital assets could materially reduce our assets, impair our ability to meet financing and collateral obligations and materially adversely affect our business, financial condition, results of operations, liquidity and reputation.

The failure, insolvency or misconduct of a custodian, lender, trading venue, asset manager or other digital asset counterparty could result in the loss of assets or restrict our access to liquidity.

We use a limited number of institutional counterparties in connection with digital asset custody, financing, trading, staking, treasury placement and collateral arrangements. These counterparties may hold our cash, stablecoins, INJ or other assets, execute transactions on our behalf, maintain collateral accounts or provide financing and related services.

A counterparty could experience insolvency, bankruptcy, liquidity constraints, cybersecurity incidents, fraud, operational failures, regulatory enforcement, suspension of withdrawals or other events that impair its ability to return our assets or satisfy its obligations. The legal status of assets held through a digital asset custodian or trading counterparty may be uncertain in an insolvency proceeding, and such assets may be treated as part of the counterparty’s bankruptcy estate rather than as assets held solely for our benefit.

Our contractual rights, security interests and legal remedies may be limited, delayed or difficult to enforce, particularly where a counterparty, custodian, wallet or relevant asset is located in a different jurisdiction. Any material counterparty failure could result in losses, delayed access to assets, inability to satisfy collateral or operating requirements and material adverse effects on our business, financial condition, results of operations and liquidity.

Staking our digital assets exposes us to lock-up, validator, slashing, protocol, liquidity and income-recognition risks.

We stake certain INJ holdings to generate staking rewards. Staking may require tokens to be delegated, committed or subject to unbonding or withdrawal periods during which they cannot be immediately transferred or sold. As a result, staked tokens may not be available when needed to satisfy operating requirements, collateral calls, debt obligations or other liquidity needs.

Staking rewards depend on factors outside our control, including protocol rules, validator performance, token inflation, participation rates, network activity and changes made by the Injective protocol or its governance participants. Staking yields may decline, rewards may be delayed or suspended, and the value of rewards may decline before they can be monetized.

Our staked assets may also be subject to slashing, penalties or loss if a validator fails to perform required functions, engages in prohibited conduct, experiences technical failures or is compromised. Even where staking is conducted through a third-party validator, we may bear some or all of the economic loss.

Changes in protocol design, network security, tax treatment, accounting requirements or regulatory treatment could reduce or eliminate the anticipated benefits of staking. Any such development could reduce staking income, result in losses of digital assets or restrict access to our tokens and could materially adversely affect our business, financial condition, results of operations and liquidity.

Our secured financing arrangements expose us to collateral calls, forced liquidation and loss of digital assets.

We have entered into secured financing arrangements in connection with our Digital Asset Treasury strategy, including arrangements with FalconX. These arrangements contain collateral maintenance requirements that may be affected by changes in the value of INJ, stablecoins or other collateral, as well as changes in applicable advance rates, valuation methodologies, eligibility criteria and contractual terms.

A decline in the value of collateral or an increase in required collateral levels could require us to deposit additional cash, stablecoins, INJ or other eligible assets on short notice. We may not have sufficient unrestricted liquidity or eligible collateral to satisfy such requirements. Failure to satisfy a collateral call or other financing obligation could constitute an event of default and permit the lender to seize, liquidate or otherwise enforce against pledged assets.

Forced liquidation could occur during a period of significant market volatility or depressed INJ prices, resulting in losses substantially greater than those that would have occurred through an orderly sale. Liquidation of collateral could also reduce our ability to participate in a subsequent market recovery and could adversely affect the market price of INJ.

The enforcement of security interests, guarantees or other creditor remedies could materially reduce our digital asset holdings and liquidity and materially adversely affect our business, financial condition, results of operations and ability to continue as a going concern.

Our use of leverage increases our exposure to market losses, interest expense, refinancing risk and debt maturity obligations.

As of May 31, 2026, we reported loans payable of approximately $21.4 million. Our borrowings increase our fixed obligations and expose us to interest expense, collateral requirements, repayment obligations, refinancing risk and potential events of default.

Leverage magnifies the effect of declines in the value of our digital assets. If the value of INJ declines while the principal amount of our debt remains fixed, our net asset value, liquidity and ability to repay the debt could deteriorate rapidly. Income from staking or other treasury activities may not be sufficient to cover interest expense, operating expenses and principal repayments.

We may be required to repay or refinance our debt under unfavorable market conditions. Additional financing may not be available when required or may be available only on terms that involve higher interest rates, additional collateral, restrictive covenants or substantial dilution to existing shareholders. If we cannot repay, refinance or otherwise satisfy our debt obligations, we may be required to sell assets at unfavorable prices, curtail operations or face enforcement by creditors.

Our derivative and option transactions may result in significant losses, collateral requirements and valuation uncertainty.

We have entered into derivative transactions relating to digital assets, including purchased puts, written calls and written put options. These instruments expose us to market, liquidity, counterparty, collateral, settlement and valuation risks.

Written call options may limit our participation in increases in the value of the underlying digital assets, while written put options may require us to acquire digital assets at prices above their market value or make cash payments under unfavorable market conditions. The combination of derivative positions may not provide the expected economic protection, particularly where market movements, volatility, liquidity or correlations differ from the assumptions used when the transactions were entered into.

Certain derivative values may depend on models and assumptions involving volatility, interest rates, remaining term, market liquidity and other inputs. Actual settlement values may differ materially from recorded fair values. Derivative transactions may also require additional collateral and could contribute to liquidity pressure or cross-default risk under related financing arrangements.

Losses or liquidity requirements arising from our derivative transactions could be material and could adversely affect our financial condition, results of operations, cash flows and ability to satisfy other obligations.

Our fair value measurements depend on our determination of a principal market and may not reflect realizable values.

We measure our recognized INJ holdings at fair value using quoted prices in the principal market that is accessible to us. We have identified Coinbase as our principal market for INJ as of May 31, 2026. This determination requires judgment regarding market accessibility, volume and level of activity.

Prices for INJ may differ among trading venues because of differences in liquidity, trading volume, market participants, geographic access, transaction costs, withdrawal restrictions and market disruption. The price used for financial reporting may therefore differ from prices available on other platforms or from the net amount we could realize through an actual sale.

Our principal market may change, cease supporting INJ, restrict our access, experience an outage or become less active. If observable market activity declines, we may be required to use different valuation inputs or methodologies that involve greater judgment and valuation uncertainty. Changes in the principal market or pricing methodology could result in material changes in recorded fair value and earnings.

Digital asset laws and regulations are evolving and could restrict or adversely affect our treasury activities.

The legal and regulatory treatment of digital assets, staking, digital asset custody, derivatives, stablecoins, lending and related activities continues to evolve in the United States, Canada and other jurisdictions. Regulatory authorities or courts may adopt differing or changing interpretations regarding whether a digital asset, transaction or service is subject to securities, commodities, banking, money-transmission, derivatives, tax, sanctions, anti-money-laundering, consumer-protection or other laws.

INJ or activities involving INJ could become subject to new or additional regulation, registration, licensing, reporting, custody, trading or transfer restrictions. Digital asset exchanges, custodians, lenders, validators and other counterparties on which we rely could also become subject to enforcement actions, operating restrictions or requirements that limit the services available to us.

New laws, regulations, interpretations or enforcement actions could increase compliance costs, restrict our ability to acquire, hold, stake, finance, transfer or liquidate INJ, reduce the liquidity or market value of INJ, require changes to our business strategy or expose us to fines, penalties, litigation or reputational damage. The SEC has historically emphasized disclosure of material regulatory, counterparty, custody, liquidity and market risks arising from crypto-asset activities, although its 2022 crypto-market sample letter was withdrawn in May 2025. The obligation to disclose material, company-specific risks under Item 105 and Form 10-Q nevertheless remains.

Unidentified or potentially returnable tokens could result in claims, liabilities, accounting adjustments and weaknesses in our wallet-reconciliation controls.

As of May 31, 2026, we observed 295,436 additional INJ tokens in certain wallets, with an estimated fair value of approximately $1.9 million, for which management had not confirmed the source, ownership or right to retain the tokens. These tokens were excluded from recognized Company-owned digital assets and related income pending completion of management’s assessment.

The tokens may belong to a lender, custodian, counterparty, staking participant or another third party and may be subject to return, transfer or other settlement. We may receive claims from one or more parties, and the ultimate resolution may require us to transfer the tokens, recognize a liability, incur legal or professional costs, modify previously reported accounting or strengthen our custody and wallet-reconciliation controls.

If management later determines that the tokens should have been recognized, returned or otherwise accounted for differently, we may be required to record an adjustment or, depending on materiality and the circumstances, revise or restate previously issued financial statements. The presence of unidentified tokens also indicates risks relating to completeness, ownership verification, wallet reconciliation, transaction authorization and segregation of duties in our digital asset activities.

We cannot assure investors when the ownership and nature of these tokens will be resolved or that the resolution will not materially adversely affect our financial statements, internal control over financial reporting, reputation or relationships with counterparties.

Risks Related to Related-Party and Counterparty Arrangements

Certain financing, collateral and treasury arrangements involve significant shareholders or related parties, which may create actual or perceived conflicts of interest.

The Injective Foundation became a significant shareholder following the completion of the Company’s private placement and has provided support in connection with certain financing and collateral arrangements. The Company has also entered into treasury placement, financing or related arrangements involving entities that may be affiliated with shareholders, advisors, directors or other related parties.

Related-party transactions may create actual or perceived conflicts between the interests of the related party and the interests of the Company and its other shareholders. A related party may have interests relating to financing terms, collateral, repayment, strategic decisions, token prices or other matters that differ from the interests of the Company or its unaffiliated shareholders.

Although the Company has established governance and approval procedures for related-party transactions, these procedures may not eliminate all conflicts or ensure that the terms obtained are as favorable as those that could have been obtained from an unrelated third party. Any failure to identify, disclose, review or appropriately approve a related-party transaction could result in financial loss, regulatory scrutiny, litigation, reputational harm or deficiencies in internal control over financial reporting.

If a related-party guarantee, collateral arrangement or other form of support is withdrawn, reduced, challenged or found to be unenforceable, the Company may be required to provide replacement collateral, repay financing or obtain alternative financing on unfavorable terms.

Risks Related to Our Capital Structure

Future issuances under equity-linked financing arrangements may result in substantial dilution and downward pressure on the market price of our common shares.

We have issued, and may continue to issue, common shares, warrants, pre-funded warrants, restricted share units, stock options or other equity-linked securities in connection with private placements, equity lines of credit, debt repayment, acquisitions, compensation arrangements and other financing transactions.

The issuance of additional common shares or securities convertible into or exercisable for common shares will dilute the ownership and voting interests of existing shareholders and may reduce earnings or book value per share. The degree of dilution may be significant, particularly if a financing permits shares to be issued based on market prices prevailing at the time of each issuance or if warrants and other convertible instruments become exercisable.

Sales or potential sales of a substantial number of common shares, or the perception that such sales may occur, could place downward pressure on the market price of our common shares. A decline in our share price could increase the number of shares required to raise a given amount of capital, resulting in further dilution.

Certain financing arrangements may also contain limitations based on trading volume, exchange rules, shareholder-approval requirements, registration-statement effectiveness or other conditions. We may therefore be unable to access the anticipated amount of financing when required. If equity financing is unavailable or insufficient, we may be required to use additional debt, sell digital assets or reduce operating expenditures.

Closing paragraph for Item 1A

Except as described above, there have been no material changes to the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2025.