Pineapple Financial Inc.: Form 10-Q for the period ended May 31, 2025

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 condensed interim consolidated financial statements and the related notes and other information included in this Quarter 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 condensed interim consolidated financial statements and notes in Part II, Item 8 of this Annual Report on Form 10Q.

Executive Summary

We are a fintech company based in Ontario, Canada. Our tech-driven businesses focus on mortgages and insurance. Our goal is to provide clients with an industry-leading experience through our trusted digital solutions, which are simple and fast.

Recent Developments

Business Trends

During 2022 and 2023, the Bank of Canada implemented multiple increases to the prime rate in response to heightened inflationary pressures, resulting in a significant rise in mortgage interest rates. In mid-2024, the Bank of Canada began easing monetary policy, reducing the policy rate by 1.75% in an effort to stabilize the economy and improve housing affordability. While this policy shift has helped improve consumer sentiment, elevated interest rates, coupled with renewed economic uncertainty, including emerging U.S. tariff threats, continue to weigh heavily on the Canadian economy.

These external pressures have heightened market volatility, slowed cross-border investment activity, and increased caution among Canadian businesses and consumers. As a result, Pineapple Financial Inc. has continued to experience suppressed mortgage origination volumes, with overall real estate and lending activity remaining below pre-2022 levels. Although early signs of recovery are evident, future growth remains dependent on macroeconomic stability, interest rate trends, and the resolution of international trade uncertainties.

Summary of the Nine months Ended May 31, 2025

Financial and Operational Highlights

During the nine-month period ended May 31, 2025, we originated $1,183.62 million in residential mortgage loans, representing an increase of $99.85 million or 9.21% compared to the $1,083.77 million originated during the same period in the prior year.

Our net loss for the period was $1.814 million, reflecting an improvement of $0.0.565 million, or 23.76%, compared to a net loss of $2.379 million in the nine months ended May 31, 2024. The improvement in net results is primarily attributable to higher loan origination volumes and ongoing cost management initiatives.

The Company’s functional currency is the Canadian dollar (CAD), while its reporting currency is the U.S. dollar (USD). During the reporting period, the CAD depreciated by an average of 2.64% compared to the average CAD/USD exchange rate during the same period in the prior year, which had a modest impact on the translation of financial results.

Key Performance Indicators

As part of our business operations, we closely track several key performance indicators (KPIs) that help us measure our performance. For example, we can evaluate our ability to generate revenue by monitoring our loan production KPIs and comparing our performance to that of the mortgage origination market. Additionally, we use KPIs related to our technology setup and underwriting processes to assess our performance further.

Gross Billing Revenue:

Gross billing revenue refers to commissions collected from financial institutions with which the Company has contracts. The Company’s gross billing is based on a percentage of the mortgage amount funded between individuals referred by the Company and the financial institutions providing the mortgage. We serve as an agent in these transactions by offering a platform for other parties to deliver services to the end-user. For each contract with a customer, the Company identifies the contract, recognizes the performance obligations, determines the transaction price for each distinct performance obligation based on the relative stand-alone selling price of the goods or services to be delivered, and acknowledges revenue when each performance obligation is fulfilled in a manner that reflects the transfer of goods or services promised to the customer. The Company recognizes revenue when: there is a contract with a lender party and agent broker, the contract specifies the use of the platform service to finalize a mortgage deal, the mortgage deal is completed with the lending financial institution, and commissions are paid by the lending institution based on various criteria of the mortgage deal, including but not limited to interest rates available at that time, term, seasonality, collateral, income, purpose, and so forth. Revenue is measured at the fair value of the consideration received or receivable, representing amounts due for services provided in the normal course of business. Revenue is recognized at the end of the transaction upon the completion of all the actions listed above. A typical transaction incurs a commission fee payable to Pineapple Financial Inc.

Subscription Revenue:

Users can access and use our technology platform, MyPineapple, for a flat monthly service fee of $107. In exchange for this fee, MyPineapple users gain access to a network management system that enables them to perform back-office procedures more efficiently and effectively. This platform allows them to process the previously mentioned deal, prepare it, and complete the package for submission to the financial institution for funding. We have a robust user base that has experienced significant growth since our inception. Revenue is recognized at the beginning of the month when users are invoiced and pay the fee.

Underwriting Fee:

Users can optionally use our expert risk pre-assessment service, which assists them in pre-underwriting their loans before submission to a lender for approval and funding. This service significantly reduces the time for the lender partners’ assessment of the deal. For mortgages of $395,450 and greater, we charge an underwriting fee of $356; for mortgages lesser than $395,450, the Company charges an underwriting fee of $249. The Company has undertaken a special program to educate and inform users of this service in further detail. Approximately 40% of the deals originated by users are using this service. This program is intended to further increase the number of deals and improve the services offered.

Other Income:

Other income includes a technology setup fee and sponsorship fee.

Components of operating expenses

Our operating expenses, as presented in the statement of operations data, include salaries, commissions and team member benefits, general and administrative expenses, marketing and advertising expenses, and others.

Salaries and commissions and team member benefits

All payroll expenses include our team members’ salaries, commissions, and benefits.

Selling, general and administrative expenses

Selling, general and administrative expenses include software subscriptions, license fees, professional services, marketing expenses, and other operating expenses.

Share-based compensation

Share-based compensation comprises equity awards and is measured and expensed accordingly under Accounting Standards Codification (“ASC”) 718 Compensation—Stock Compensation.

Comparison of the nine months ended May 31, 2025 and May 31, 2024

Comparison of the three months years ended May 31, 2025 and May 31, 2024

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Revenue and Cost Analysis

For the nine-month period ended May 31, 2025, gross billings increased to $14.23 million, compared to $13.42 million for the same period last year, representing an increase of 15.23%. This reflects the Company’s continued resilience in its core mortgage and brokerage operations despite macroeconomic headwinds. While interest rate adjustments by the Bank of Canada have supported early signs of housing market recovery, transaction volumes remain below pre-pandemic levels.

Commission expense, which primarily includes payments to mortgage agents, rose proportionately to $11.97 million, compared to $11.45 million in the same period last year, an increase of 15.92%. This increase is aligned with higher gross billings and demonstrates the Company’s strategy of leveraging experienced, high-volume agents to maintain transaction throughput.

Revenue for the period increased to $2.26 million, up from $1.97 million for the prior-year period, reflecting an increase of 11.78%. This improvement is attributable to a continued focus on optimizing profitability by carefully managing agent mix and strategically reallocating resources toward more profitable channels.

Margin Improvements and Operational Efficiency

Total expenses for the nine months decreased by 3.48% year-over-year, driven primarily by a reduction in salaries, wages, and benefits, which declined by 30.14% compared to the prior period. This reduction reflects ongoing cost containment initiatives and efficiency measures. Increases in depreciation and interest expenses were partially offset by these savings.

Other Items and Comprehensive Loss

The Company recognized a gain of $341,765 related to the change in fair value of its warrant liability, up from $42,251 for the same period last year, due to issuance of warrants on May 07, 2025 and adjustments tied to market conditions. Financing costs related to warrant issuance totaled $164,280 for the period. As a result, the loss before income taxes improved to $(1.81) million, compared to $(2.38) million for the same period last year, reflecting disciplined cost controls and improved non-cash valuation items.

Quarterly Performance

For the three-month period ended May 31, 2025, gross billings increased to $4.91 million, compared to $4.45 million for the same quarter in the prior year, an increase of 10.23%. This steady performance highlights the Company’s ongoing ability to maintain transaction flow despite seasonal variations and a gradually stabilizing market.

Commission expense rose by 11.98% to $4.16 million, in line with the increase in gross billings, as the Company continues to rely on high-volume agents to drive top-line growth. Revenue for the quarter increased slightly to $746,903 from $736,448 in the prior-year quarter, an increase of 1.42%.

Total expenses for the quarter decreased by 11.59% to $1.44 million, primarily due to lower salary and benefit costs and continued operational efficiencies. The Company also recognized a gain of $309,516 on the change in the fair value of its warrant liability, compared to $29,479 in the same quarter last year, further supporting an improvement in net loss before taxes to $(557,736) from $(848,605) for the prior-year quarter, an improvement of 34.28%.

Outlook

Management remains focused on balancing transaction volume growth with disciplined cost management to protect margins and shareholder value. The Company will continue to monitor macroeconomic developments closely and is positioned to capture growth opportunities as the housing and mortgage markets stabilize, while maintaining operational efficiencies and strengthening its financial position.

Selling, General and Administrative Expenses.

The breakdown of selling, general and administrative expenses are as follows:

Selling, General, and Administrative Expenses

For the nine-month period ended May 31, 2025, selling, general, and administrative (SG&A) expenses totaled $1,522,778, representing a slight decrease of 1.50% compared to $1,545,900 for the same period in the prior year. This reflects the Company’s continued commitment to disciplined cost management while strategically reallocating spending to priority areas.

Software Subscription

Software subscription expenses decreased by $38,837 (5.85%), from $663,424 to $624,587. The reduction is primarily due to the discontinuation of Salesforce subscriptions effective April 1, 2025, following the successful implementation of the Company’s internally developed system, which is expected to improve cost efficiency and data control.

Office and General

Office and general expenses decreased modestly by $2,349 (2.00%) year-over-year, reflecting tight cost discipline across day-to-day administrative expenditures.

Professional Fees

Professional fees decreased by $49,172 (31.21%), from $157,531 to $108,359. This reduction is due to decreased reliance on external legal and advisory services after the Company streamlined its compliance and reporting workflows following its public listing.

Dues and Subscriptions

Dues and subscriptions increased significantly by $217,323 (147.87%) to $364,287 from $146,964 in the prior period. This increase is attributable to the Company’s expanded engagement with industry groups, data services, and technology associations to strengthen market insights and maintain competitive positioning in a dynamic regulatory environment.

Rent

Rent expense decreased by $15,460 (9.93%) to $140,168 from $155,628, reflecting the renegotiation of lease terms and more efficient space utilization aligned with hybrid work arrangements.

Consulting Fees

Consulting fees remained broadly flat at $45,483, compared to $45,167 in the same period last year, reflecting consistent use of specialized external expertise for targeted strategic initiatives.

Travel

Travel expenses decreased significantly by $112,473 (81.54%), from $137,940 to $25,467. The decrease reflects continued restrictions on discretionary travel and the increased use of virtual collaboration tools across operations and stakeholder engagement.

Donations

Donations decreased by $6,617 (89.35%), from $7,406 to $789, in line with management’s decision to prioritize cost containment and focus resources on core business operations.

Lease Expense

Lease expense decreased materially by $54,439 (99.08%) to $507 from $54,946, primarily due to the termination of non-core leased assets and a shift toward more cost-effective operating arrangements.

Insurance

Insurance expenses increased by $38,586 (64.65%) to $98,267, compared to $59,681 in the prior year. The increase primarily reflects higher costs for enhanced coverage under the Company’s director and officer (D&O) insurance program and expanded liability protection requirements as a public company.

The breakdown of selling, general and administrative expenses are as follows:

Selling, General, and Administrative Expenses

For the three-month period ended May 31, 2025, selling, general, and administrative (SG&A) expenses totaled $527,835, representing an increase of 7.36% compared to $491,666 for the same period in the prior year. The increase reflects higher professional services and subscription costs to support operational requirements during the quarter.

Software Subscription

Software subscription expenses decreased by $86,835 (33.28%) to $174,116, compared to $260,951 for the same quarter last year. This decrease is primarily due to the Company’s decision to discontinue its Salesforce subscription effective April 1, 2025, following the launch of its internally developed system.

Office and General

Office and general expenses decreased by $28,446 (46.97%) to $32,112, reflecting tighter cost controls and reduced spending on day-to-day administrative costs during the quarter.

Professional Fees

Professional fees increased significantly by $35,995 (303.21%) to $47,866, compared to $11,871 in the same quarter last year. The increase is due to higher legal, audit, and advisory fees related to regulatory filings and corporate compliance activities during the quarter.

Dues and Subscriptions

Dues and subscriptions increased by $170,837, moving from a net credit of $(5,149) in the prior period to $165,688 in the current quarter. The increase reflects expanded participation in industry groups and access to specialized data platforms to enhance market positioning.

Rent

Rent expenses remained relatively stable, decreasing slightly by $2,531 (4.40%) to $54,997, reflecting continued optimization of office space.

Consulting Fees

Consulting fees decreased by $4,775 (23.11%) to $15,888, reflecting lower reliance on external consultants during the quarter as core projects were transitioned to in-house teams.

Travel

Travel expenses decreased by $49,759 (95.94%) to $2,108, compared to $51,867 in the prior-year quarter. The decrease is due to continued travel restrictions and increased use of virtual meetings for internal and external engagement.

Donations

No donations were made during the quarter, compared to $2,759 in the same period last year, consistent with the Company’s focus on directing funds toward operational priorities.

Lease Expense

Lease expense decreased by $1,898 (198.55%), reflecting adjustments for the reduction of non-core leased equipment.

Insurance

Insurance expenses increased by $6,341 (21.38%) to $36,002, reflecting ongoing adjustments for expanded coverage under the Company’s director and officer insurance program and general liability coverage.

Expenses

Operating Expenses and Other Income

For the nine-month period ended May 31, 2025, the Company continued to focus on disciplined cost control while investing in areas that support operational efficiency and regulatory compliance. Below is a breakdown of key expense line items:

Advertising and Marketing

Advertising and marketing expenses decreased by $30,210 (4.66%) to $617,987, compared to $648,197 in the same period last year. The decrease reflects more targeted marketing campaigns and improved allocation of digital marketing spend to higher-conversion channels.

Salaries, Wages and Benefits

Salaries, wages and benefits decreased by $602,064 (32.98%) to $1,223,722, compared to $1,825,786 in the prior year. The decrease is primarily due to workforce optimization initiatives, including streamlining certain non-core roles and aligning staffing levels with current transaction volumes.

Interest Expense and Bank Charges

Interest expense and bank charges increased significantly by $263,442 (614.16%) to $306,267, compared to $42,825 for the same period last year. The increase is primarily driven by higher interest costs related to new financing facilities secured to support working capital needs and costs associated with the issuance of warrants during the period.

Depreciation

Depreciation expense increased by $113,416 (21.18%) to $648,991, compared to $535,575 in the prior period. The increase reflects additional amortization of new capitalized technology investments, including the internally developed platform that replaced the Salesforce system.

Government Incentive

Government incentives decreased by $105,669 (59.93%) to $(70,657), compared to $(176,326) in the prior year. The reduction reflects lower available grant funding in the current fiscal period as prior-year government support programs concluded.

Liquidity and Capital Resources

Our primary liquidity needs include working capital and capital expenditures, particularly those related to technological enhancements, investments in skilled personnel, and marketing services. These three categories have represented a significant share of our liquidity and capital resource demands throughout the year. We primarily rely on cash on hand and cash flows generated from our operations to satisfy these needs.

The following table summarizes our cash flows from operating, investing and financing activities:

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Net cash flow from (used in) operating activities

For the nine-month period ended May 31, 2025, net cash used in operating activities was $(439,198), a substantial improvement compared to $(1,443,610) for the same period in the prior year. The reduction in operating cash outflows reflects improved operational efficiencies, continued cost discipline, and a more effective approach to managing working capital.

The net loss for the period was $(1,814,112), compared to $(2,379,444) for the same nine-month period last year. This improvement is primarily due to more efficient operations, tighter expense management, and adjustments related to non-cash fair value changes.

Key non-cash adjustments included:

• Amortization of intangible assets totaling $430,391, up from $369,993, reflecting continued investment in proprietary technology and systems.
• Depreciation of property and equipment was $64,201, in line with $65,300 last year, while depreciation on right-of-use assets increased to $154,399, compared to $100,282, due to new office and equipment lease commitments.
• Interest expense on lease liability totaled $39,601, slightly lower than $47,482 in the prior period.
• The Company recorded a gain on change in fair value of warrant liability of $341,765, compared to a loss of $(42,251) last year, due to updated valuations reflecting prevailing capital market conditions.
• A foreign exchange loss of $(1,905) was recorded, compared to a gain of $10,751 in the prior-year period.

Net changes in non-cash working capital provided further support for improved operating cash flow:

• Trade and other receivables increased slightly by $(25,238), reflecting timing differences on collections.
• Prepaid expenses and deposits increased by $76,090, up from $65,976, due to upfront payments for strategic services and subscriptions.
• Accounts payable and accrued liabilities increased by $337,367, compared to a reduction of $(74,756) last year, highlighting more effective management of vendor payments.
• Deferred government incentives rose by $81,164, compared to a decrease of $(175,032) in the prior year.
• Deferred revenue of $39,407 reflects upfront billings for services to be delivered in future periods.

Net cash provided by financing activities for the nine-month period amounted to $1,836,327, compared to $2,480,806 in the same period last year. The decrease of $644,479 is primarily attributable to lower net proceeds from financing transactions during the period, while the Company continued to utilize equity and debt facilities to support operations and growth initiatives.

Net cash used in investing activities was $(811,443), compared to $(901,185) in the prior period, a decrease of $89,742. This reflects disciplined investment in intangible assets and capital expenditures as the Company focuses on enhancing its proprietary systems and technology infrastructure.

As of May 31, 2025, the Company’s cash and cash equivalents stood at $1,134,583, an increase of $385,814 compared to $748,769 at the end of the same period last year, demonstrating progress in strengthening liquidity despite ongoing investments in technology and working capital.

Management remains focused on maintaining a healthy cash position to meet near-term operating requirements while supporting strategic investments. The Company continues to evaluate both non-dilutive and equity-based funding options to strengthen its balance sheet, expand its technology roadmap, and drive long-term shareholder value.

The following table presents our liquidity:

As of May 31, 2025, Pineapple Financial maintained a solid liquidity position with $1,134,583 in cash, supplemented by $180,462 in trade and other receivables and $81,821 in prepaid expenses and deposits, bringing total current liquid assets to $1,396,866. This compares favorably to $893,491 as at August 31, 2024, reflecting an increase of $503,375. The improvement is primarily attributable to new equity injection, stronger revenue generation, continued expense discipline, and the Company’s successful execution of targeted financing activities during the period.

Management remains focused on preserving adequate liquidity to meet short-term obligations while supporting strategic investments to drive sustainable growth. The Company continues to monitor its cash flows and working capital needs to ensure prudent resource allocation in line with its operational and expansion objectives.

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 reflects 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 reflects 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 judgement, 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 reflects the consideration expected to be received.

The Company operates an online platform powered by Salesforce, 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 requirement 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. Additionally, Pineapple Insurance has adopted ASC 606.

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.

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 MCommercial, a commercial mortgage firm based in Montreal and Toronto, Canada, representing 5% of the total issued and outstanding shares. This strategic partnership allows Pineapple residential mortgage agents to access 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 it acquired five Class A Shares of 7326904 Canada Inc. (doing business 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 total value of both investments was recorded at fair value, and any impairment loss is recognized in the profit and loss account.

Share Based Compensation

Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718, “Compensation — Stock Compensation” (“ASC 718”), which requires recognition in the financial statements of the cost of employee, non-employee and director services received in exchange for an award of equity instruments over the period the employee, non-employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee, non- employee, and director services received in exchange for an award based on the grant-date fair value of the award.

The Company has a share option plan (the “Plan”) to attract, retain and motivate qualified directors, officers, employees, and consultants whose present and future contributions are important to the success of the Company by offering them an opportunity to participate in the Company’s future performance through the award of share options.

Each share option converts into one common share of Pineapple Financial Inc. on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither right to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

In 2017, the Plan was amended such that the total number of common shares reserved and available for grant and issuance pursuant to the Plan is to equal 10% of the issued and outstanding common shares of the Company.

Options granted on June 14, 2021, vest over a 2-year period whereby 25% of the options granted vested on the date of grant, and the remaining unvested options vest in equal instalments every 6-months thereafter. The fair value of stock options granted was $1,317,155. These options were fully vested in year ended August 31, 2023.

On July 6, 2023, we completed a 1-for-3.9 reverse stock split, or the Reverse Split, effective immediately. Consequently, all the share numbers, shares prices, and exercise prices have been retroactively adjusted in these condensed interim consolidated financial statements for all periods presented.

Controls and Procedures

While the Company is not currently required to maintain an effective internal controls system, we recognize the importance of strong internal controls and have proactively initiated steps to establish and enhance our control environment. These measures include:

• Employing skilled staff in financial, accounting, and external reporting roles, focusing on segregation of duties.
• Conducting regular reconciliations to ensure accurate recording, correct classification, and balanced books.
• Ensuring timely and accurate recording of expenses, liabilities, and other accounting entries in accordance with the matching principle.
• Maintaining a detailed fixed assets register to track users, departments, and assets.
• Requiring internal review and approval of accounting transactions by at least two independent personnel.
• Documenting processes, assumptions, and conclusions related to significant estimates.
• Establishing comprehensive documentation of accounting policies and procedures.

As of May 31, 2025, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting. Based on this assessment, management concluded that our disclosure controls and procedures were effective as of May 31, 2025.

Improvements made during the year include carrying out independent reviews, establishing approval processes for transactions and reconciliations, and hiring additional personnel to enhance our control environment. Plans are in place to further improve controls by segregating duties and refining processes, thus ensuring robust and effective internal controls that uphold the integrity of our financial reporting.

Financial Instruments

As of May 31, 2025, the Company’s financial instruments include cash, trade and other receivables, investments, accounts payable, and accrued liabilities.

As per ASC 820, Fair value measurement establishes a fair value hierarchy based on the level of independence, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorising within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

i) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

iii) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The following table provides the fair values of the financial assets in the Company’s consolidated statements of financial position, categorized by hierarchical levels and their related classifications.

Risks and Uncertainties

The Company’s business is subject to numerous risks and uncertainties, including those described elsewhere in this MD&A, as well as general economic and market risks. These risk factors could materially affect the Company’s future operating results and could cause actual events to differ materially from those described in forward-looking information relating to the Company.

As part of our regular business operations, we face various risks that can impact our profitability and operations. These risks can be broadly categorized as interest rate risk, credit risk, counterparty risk, and risks associated with the pandemics like COVID-19.

Interest rate risk

We do not face interest rate risk as we do not have any variable-rate loans or borrowings.

Credit risk

Credit risk is the risk of financial loss to the Corporation if a counterparty to a financial instrument fails to meet its contractual obligations. The Corporation’s credit risk is mainly attributable to its cash and trade and other receivables.

The Corporation has determined that its exposure to credit risk on its cash is minimal as the Corporation’s cash are held with financial institutions in Canada.

Our primary source of credit risk relates to the possibility of Core Business Operation’s brokerages or other customers not paying receivables. Core Business Operations manages its credit risk by performing credit risk evaluations on its brokerages and agents and monitoring overdue trade and other receivables. As of May 31, 2025, $83,967 of our trade receivables are greater than 90 days outstanding, as compared to $57,165 for May 31, 2024. A decline in economic conditions or other adverse conditions experienced by brokerage and agents could impact the collectability of the Corporation’s accounts receivable.

Our maximum exposure to credit risk approximates the carrying value of the assets on the Corporation’s consolidated statements of financial position.

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Evaluation of Disclosure Controls and Procedures

We are transitioning to and will maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and timely reported as provided in SEC rules and forms and that such information is accumulated and communicated to our management, as appropriate, to allow for timely decisions regarding required disclosure. We will periodically review the design and effectiveness of our disclosure controls and procedures, including compliance with various laws and regulations that apply to our operations. We will make modifications to improve the design and effectiveness of our disclosure controls and procedures and may take other corrective action if our reviews identify a need for such modifications or actions. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we will apply judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our securities are currently quoted on the OTC Pink Open Market, which may adversely affect the liquidity and market price of our common shares.

Following a notice of delisting from the NYSE American due to non-compliance with certain continued listing standards, our common shares commenced trading on the OTC Pink Open Market (OTCPK). While we have appealed the delisting decision and the process remains pending, there is no assurance that the appeal will be successful or that we will be able to regain listing on a national securities exchange.

Trading on the OTC Pink Open Market is generally less liquid and more volatile than trading on a national exchange. Investors may find it more difficult to buy or sell our common shares, and the market price may be subject to greater fluctuations with limited trading volume. Additionally, trading on the OTC Markets may limit our ability to access capital markets, attract institutional investors, or maintain analyst coverage.

Should we be unable to regain listing on a national exchange, our business, financial condition, and shareholder value could be materially adversely affected.

The Reverse Stock Split may not achieve the intended results and could adversely affect the liquidity of our common shares.

On June 26, 2025, the Company’s shareholders approved, and the Board of Directors authorized, a reverse stock split of the Company’s common shares at a ratio of 1-for-20. While the reverse stock split is intended to increase the trading price of our common shares and assist in regaining compliance with the continued listing requirements of the NYSE American, there can be no assurance that the reverse stock split will have the desired effect. The trading price of our common shares may decline below the required levels despite the reverse split, or the market may perceive the reverse split negatively, resulting in reduced liquidity or increased volatility. In addition, the reverse split could adversely impact the perception of our Company among investors, analysts, and other market participants