Pineapple(PAPL) - 2025 Q3 - Quarterly Report

Forward-Looking Statements This report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from historical or anticipated results - This report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially from historical or anticipated results. These statements are based on management's current expectations and beliefs as of the report date[10][11] - Factors that could cause actual results to differ include market acceptance, pricing, regulatory environment, accounting policies, industry trends, financial resources, ability to attract key personnel, and other risks detailed in SEC filings[12] PART I. FINANCIAL INFORMATION This section encompasses the unaudited condensed interim consolidated financial statements, along with management's discussion and analysis of the company's financial condition and results of operations Item 1. Financial Statements This section presents the unaudited condensed interim consolidated financial statements for Pineapple Financial Inc., including the balance sheets, statements of operations and comprehensive loss, statements of shareholders' equity, and statements of cash flows, along with their accompanying notes. The company reported an accumulated deficit of $11.57 million as of May 31, 2025, and continues to operate with significant operating losses, raising substantial doubt about its ability to continue as a going concern Consolidated Balance Sheets (Unaudited) The unaudited consolidated balance sheets provide a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity as of May 31, 2025, and August 31, 2024 | As at: | May 31, 2025 ($) | August 31, 2024 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $1,134,583 | $580,356 | | Trade and other receivables | $180,462 | $155,224 | | Prepaid expenses and deposits | $81,821 | $157,911 | | Total Current Assets | $1,396,866 | $893,491 | | Investment | $9,847 | $10,042 | | Right-of-use asset | $656,070 | $828,674 | | Property and equipment | $84,570 | $152,610 | | Intangible assets | $2,555,050 | $2,211,775 | | Total Assets | $4,702,403 | $4,096,592 | | Liabilities | | | | Accounts payable and accrued liabilities | $1,462,844 | $1,125,477 | | Deferred revenue | $151,328 | $111,921 | | Short term loan | $633,259 | $- | | Current portion of lease liability | $166,355 | $161,508 | | Total Current Liabilities | $2,413,786 | $1,398,906 | | Deferred government incentive | $410,087 | $491,251 | | Lease liability | $672,622 | $815,599 | | Warrant liability | $363,343 | $41,520 | | Total Liabilities | $3,859,838 | $2,747,276 | | Shareholders' Equity | | | | Common shares | $9,920,070 | $8,559,856 | | Additional paid-in capital | $2,955,944 | $2,955,944 | | Accumulated other comprehensive loss | $(461,363) | $(408,510) | | Accumulated deficit | $(11,572,086) | $(9,757,974) | | Total Shareholders' Equity | $842,565 | $1,349,316 | | Total Liabilities and Shareholders' Equity | $4,702,403 | $4,096,592 | Consolidated Statements of Operations and Comprehensive Loss (Unaudited) The unaudited consolidated statements of operations and comprehensive loss present the company's financial performance, including revenue, expenses, and net loss, for the three and nine months ended May 31, 2025, and 2024 | For the period ended | May 31, 2025 (3 months, $) | May 31, 2024 (3 months, $) | May 31, 2025 (9 months, $) | May 31, 2024 (9 months, $) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $746,903 | $736,448 | $2,259,396 | $1,971,377 | | Total expenses | $1,443,434 | $1,632,596 | $4,249,088 | $4,421,957 | | Loss from operations | $(696,531) | $(896,148) | $(1,989,692) | $(2,450,580) | | Foreign exchange gain (loss) | $(6,018) | $- | $(1,905) | $10,751 | | Gain (loss) on change in fair value of warrant liability | $309,516 | $29,479 | $341,765 | $42,251 | | Financing costs – warrant issuance | $(164,703) | $- | $(164,280) | $- | | Loss before income taxes | $(557,736) | $(848,605) | $(1,814,112) | $(2,379,444) | | Net loss | $(557,736) | $(848,605) | $(1,814,112) | $(2,379,444) | | Net loss and comprehensive loss | $(592,439) | $(890,281) | $(1,761,259) | $(2,442,110) | | Loss per share - basic and diluted ($) | $(0.05) | $(0.12) | $(0.17) | $(0.33) | | Loss per share - basic and diluted ($) (Post reverse split) | $(0.93) | $(2.48) | $(3.50) | $(6.80) | Consolidated Statements of Shareholders' Equity (Unaudited) The unaudited consolidated statements of shareholders' equity detail changes in common shares, additional paid-in capital, accumulated other comprehensive loss, and accumulated deficit for the periods presented | | Common Shares | Additional Paid in Capital | Accumulated other comprehensive loss | Accumulated (deficit) earnings | Total Shareholders' Equity | | :--- | :--- | :--- | :--- | :--- | :--- | | Balance, August 31, 2023 | $4,903,031 | $2,955,944 | $(417,727) | $(5,655,315) | $1,785,933 | | Shares issued on Initial Public offering | $2,751,937 | - | - | - | $2,751,937 | | Warrants issued related to Initial Public Offering | $(48,283) | - | - | - | $(48,283) | | Foreign exchange translation | - | - | $(62,666) | - | $(62,666) | | Net loss | - | - | - | $(2,379,444) | $(2,379,444) | | Balance, May 31, 2024 | $7,606,685 | $2,955,944 | $(480,393) | $(8,034,759) | $2,047,477 | | Shares issued | $953,171 | - | - | - | $953,171 | | Foreign exchange translation | - | - | $71,883 | - | $71,883 | | Net loss | - | - | - | $(1,723,215) | $(1,723,215) | | Balance, August 31, 2024 | $8,559,856 | $2,955,944 | $(408,510) | $(9,757,974) | $1,349,316 | | Shares issued against S3 | $731,922 | - | - | - | $731,922 | | Shares issued against FPO | $628,292 | - | - | - | $628,292 | | Foreign exchange translation | - | - | $(52,853) | - | $(52,853) | | Net loss | - | - | - | $(1,814,112) | $(1,814,112) | | Balance, May 31, 2025 | $9,920,070 | $2,955,944 | $(461,363) | $(11,572,086) | $842,565 | Consolidated Statements of Cash Flows (Unaudited) The unaudited consolidated statements of cash flows present the cash inflows and outflows from operating, investing, and financing activities for the nine months ended May 31, 2025, and 2024 | For the period ended: | May 31, 2025 (9 months, $) | May 31, 2024 (9 months, $) | | :--- | :--- | :--- | | Cash provided by (used for) operating activities | $(439,198) | $(1,443,610) | | Cash provided by (used for) financing activities | $1,836,327 | $2,480,806 | | Cash provided by (used for) investing activities | $(811,443) | $(901,185) | | Net change in cash | $585,686 | $136,011 | | Effect of changes in foreign exchange rates | $(31,459) | $(107,607) | | Cash, beginning of period | $580,356 | $720,365 | | Cash, end of the period | $1,134,583 | $748,769 | Notes to Consolidated Financial Statements (Unaudited) These notes provide detailed explanations and additional information supporting the unaudited condensed interim consolidated financial statements Note 1. Description of Business and Going Concern This note describes Pineapple Financial Inc.'s business as a Canadian mortgage industry leader and addresses the significant operating losses that raise substantial doubt about its ability to continue as a going concern - Pineapple Financial Inc. is a Canadian mortgage industry leader, utilizing cloud-based tools and AI-driven systems with over 600 brokers. The company completed its IPO on October 31, 2023, trading on NYSE American under 'PAPL', but later received a delisting notice and now trades on OTC Markets under 'PAPLF'[20][21][22] - The company has incurred significant operating losses, with an accumulated deficit of $11,572,086 as of May 31, 2025, and negative cash flows from operating activities of $439,198. It raised $2.497 million through common shares, warrants, and pre-funded warrants, and borrowed $633,259 from directors to sustain operations. The ability to continue as a going concern is uncertain, dependent on achieving future profitability and securing necessary funding[25][26] Note 2. Significant Accounting Policies This note outlines the significant accounting policies used in preparing the financial statements, including US GAAP compliance, currency presentation, and adoption of new accounting pronouncements - The financial statements are prepared in accordance with US GAAP on a going concern basis, with all financial information presented in US Dollars, while the functional currency is Canadian Dollars. The company operates as a single operating segment[28][29][30] - As an 'emerging growth company,' Pineapple Financial Inc. has elected to use the extended transition period under the JOBS Act for new accounting pronouncements. Recently adopted standards include FASB 2023-03 and ASU 2023-07 (Segment Reporting), which resulted in expanded disclosures but no material financial impact[32][33][34] - New accounting standards not yet adopted include ASU 2023-09 (Income Taxes) and ASU 2024-01 (Stock Compensation), both effective for years beginning after December 15, 2024, and ASU 2024-03 (Expense Disaggregation Disclosure) effective for fiscal years beginning after December 15, 2026. The company is evaluating their potential impact[35][36][37][38] Note 3. Significant Accounting Judgments, Estimates and Assumptions This note details the critical accounting judgments, estimates, and assumptions made by management, particularly concerning fair value measurements, share-based compensation, and asset impairment - Key estimates and judgments include fair value determination for investments (Level 3 inputs), share-based compensation (volatility, forfeitures, expected lives), and warrant liability classification (equity vs. liability) and valuation (Black-Scholes method)[41][42][43][44][45][46] - Management also makes judgments regarding impairment of long-lived assets and the useful life of assets. The useful life of intangible assets (software) was revised from 5 to 7 years in June 2024[47][48][49][50] Note 4. Investment This note describes the company's investment in a private company, recorded at fair value through profit or loss using Level 3 inputs - The Company holds a 5% interest in a private company, recorded at FVTPL using Level 3 inputs. As of May 31, 2025, no change in fair value was recognized, with current period changes solely due to foreign exchange translation[51] Note 5. Property and Equipment This note provides details on the net carrying value of property and equipment, which includes various assets like IT equipment and leasehold improvements | | May 31, 2025 ($) | August 31, 2024 ($) | | :--- | :--- | :--- | | Net carrying value | $84,570 | $152,610 | - Property and equipment include equipment, furniture, IT equipment, leasehold improvements, and laptops. The net carrying value decreased from $152,610 at August 31, 2024, to $84,570 at May 31, 2025[52][53] Note 6. Intangible Assets This note details the company's intangible assets, primarily internally generated software, and the capitalized development costs incurred during the period | | May 31, 2025 ($) | August 31, 2024 ($) | | :--- | :--- | :--- | | Net carrying value | $2,555,050 | $2,211,775 | | Additions (9 months ended May 31, 2025) | $811,443 | $1,112,399 (for year ended Aug 31, 2024) | - The Company capitalized $811,443 in development costs for internally generated software during the nine months ended May 31, 2025, increasing the net carrying value of intangible assets to $2,555,050[54][55] Note 7. Share Capital This note outlines the changes in the company's share capital, including the issuance of common shares through various offerings and warrant exercises | | Number of Shares | Value ($) | | :--- | :--- | :--- | | Balance, August 31, 2024 | 8,425,358 | $8,559,856 | | Issuance of Common Shares against S3 | 382,667 | $232,708 | | Issuance of Common Shares against Pre-funded warrants | 1,284,000 | $780,769 | | Issuance of Common Shares against FPO | 10,000,000 | $834,000 | | Shares Issuance Costs | - | $(487,263) | | Balance, May 31, 2025 | 20,092,025 | $9,920,070 | - During the nine months ended May 31, 2025, the Company issued 382,667 common shares under its Form S-3 shelf registration and 10.00 million common shares under a Follow-up Public Offering (FPO). Additionally, 1,284,000 pre-funded warrants were exercised, resulting in the issuance of 1,284,000 common shares[57] Note 8. Warrants This note details the company's outstanding warrants, including those issued in connection with public offerings and their classification as financial liabilities | | Number of Warrants | | :--- | :--- | | Balance, August 31, 2024 (Common Share Purchase Warrants) | 1,652,988 | | Warrants issued against FPO | 10,000,000 | | Balance, May 31, 2025 (Common Share Purchase Warrants) | 11,652,988 | | Pre-funded warrants issued November 13, 2024 | 1,284,000 | | Shares exercised | (1,284,000) | | Balance, May 31, 2025 (Pre-funded warrants) | - | | Warrant Liability | Number | Value ($) | | :--- | :--- | :--- | | Balance at August 31, 2024 | 1,026,250 | $41,520 | | Warrants expired | (1,000,000) | $(1,455) | | Warrants issued (May 7, 2025) | 10,000,000 | $666,000 | | Change in fair value of warrant liability | - | $(341,765) | | Translation adjustment | - | $(957) | | Fair Value of Warrants at May 31, 2025 | 10,026,250 | $363,343 | - On May 7, 2025, the Company issued 10.00 million warrants with an exercise price of $0.15 and an expiry date of May 6, 2030. These warrants were classified as financial liabilities under ASC 815, contributing to a significant change in the fair value of warrant liability[61][62][63] Note 9. Share-based Benefits Reserve This note describes the company's share option plan, reserving 10% of common shares for grants, and the status of stock-based compensation expense | | May 31, 2025 | August 31, 2024 | | :--- | :--- | :--- | | Number of Options Outstanding | 565,689 | 565,689 | | Weighted Average Exercise Price | $3.61 | $3.61 | | Weighted Average Remaining Life | 1.10 years | 1.8 years | - The Company's share option plan reserves 10% of issued and outstanding common shares for grants to directors, officers, employees, and consultants. No stock-based compensation expense was recognized for the nine months ended May 31, 2025, as all options granted on June 14, 2021, were fully vested by August 31, 2023[66][67][68] Note 10. Right-of-Use Asset and Lease Liability This note provides information on the company's lease agreements for office premises, detailing the right-of-use asset and corresponding lease liabilities | | May 31, 2025 ($) | August 31, 2024 ($) | | :--- | :--- | :--- | | Right-of-use asset (carrying amount) | $656,070 | $828,674 | | Lease liability (total) | $838,977 | $977,107 | | Current portion of lease liability | $166,355 | $161,508 | | Non-current portion of lease liability | $672,622 | $815,599 | - The Company leases office premises in Ontario and British Columbia. The right-of-use asset decreased to $656,070, and total lease liability decreased to $838,977 as of May 31, 2025, reflecting depreciation and lease payments[69][71][72] Note 11. Expenses (SG&A Breakdown) This note provides a detailed breakdown of selling, general, and administrative expenses for the nine and three months ended May 31, 2025, and 2024 | Expense Category | Nine months ended May 31, 2025 ($) | Nine months ended May 31, 2024 ($) | | :--- | :--- | :--- | | Software Subscription | $624,587 | $663,424 | | Office and general | $114,864 | $117,213 | | Professional fees | $108,359 | $157,531 | | Dues and Subscriptions | $364,287 | $146,964 | | Rent | $140,168 | $155,628 | | Consulting fees | $45,483 | $45,167 | | Travel | $25,467 | $137,940 | | Donations | $789 | $7,406 | | Lease expense | $507 | $54,946 | | Insurance | $98,267 | $59,681 | | Total Selling, general and administrative | $1,522,778 | $1,545,900 | | Expense Category | Three months ended May 31, 2025 ($) | Three months ended May 31, 2024 ($) | | :--- | :--- | :--- | | Software Subscription | $174,116 | $260,951 | | Office and general | $31,170 | $61,515 | | Professional fees | $47,866 | $11,871 | | Dues and Subscriptions | $165,688 | $(5,149) | | Rent | $54,997 | $57,528 | | Consulting fees | $15,888 | $20,663 | | Travel | $2,108 | $51,867 | | Donations | $- | $2,759 | | Insurance | $36,002 | $29,661 | | Total Selling, general and administrative | $527,835 | $491,666 | - For the nine months, SG&A decreased by 1.50% due to reduced software subscriptions (Salesforce discontinuation), professional fees, travel, and lease expenses, partially offset by a significant increase in dues and subscriptions (147.87%) and insurance costs (64.65%). For the three months, SG&A increased by 7.36% due to higher professional fees (303.21%) and dues and subscriptions (from a net credit to $165,688), despite decreases in software subscriptions and travel[120][121][123][124][127][130][131][133][134][136][137][140] Note 12. Related Party Transactions and Balances This note discloses transactions and balances with related parties, including compensation for key management personnel and loans from directors | Compensation of key management personnel | May 31, 2025 ($) | May 31, 2024 ($) | | :--- | :--- | :--- | | Salaries, Wages and benefits | $382,151 | $554,828 | - Compensation for key management personnel (CEO, COO, CSO, CFO) for salaries, wages, and benefits decreased to $382,151 for the nine months ended May 31, 2025, from $554,828 in the prior year. The Company also obtained an unsecured loan of $587,520 from directors, with $45,739 in interest payable as of May 31, 2025[74][84] Note 13. Deferred Government Incentive This note details the government incentives received, primarily from the Scientific Research and Experimental Development (SRED) program, and their recognition as recovery of operating expenses | Government Incentive | May 31, 2025 ($) | May 31, 2024 ($) | | :--- | :--- | :--- | | Recognized as recovery of operating expenses | $(70,657) | $(176,326) | | SRED receivable | $86,937 | - (as of May 31, 2025) | - The Company was eligible for the Government of Canada Scientific Research and Experimental Development (SRED) program until November 3, 2023. As of May 31, 2025, $86,937 of SRED receivable was accrued, and $(70,657) was recognized as a recovery of operating expenses for the nine months ended May 31, 2025, a decrease from $(176,326) in the prior year[76] Note 14. Risk Management Arising from Financial Instruments This note discusses the company's management of financial risks, including credit risk, interest rate risk, and liquidity risk, and its capital management strategy - The Company's credit risk is low, primarily from cash and trade receivables, mitigated by monitoring customer creditworthiness and holding cash at financial institutions. No significant credit losses have been incurred historically[77][78][79] - The Company has no variable interest-bearing debt, thus no interest rate risk. Liquidity risk is managed by continuously monitoring cash flows to ensure sufficient liquidity to meet obligations[79] - Capital management focuses on ensuring continued operation as a going concern, with the capital structure adjusted based on economic conditions. The Company is not subject to externally imposed capital requirements[79][80] Note 15. Commitments and Contingencies This note addresses the company's commitments and contingencies, including management's assessment of potential legal claims and lease obligations - Management believes there are no current legal claims or possible claims that would individually or collectively result in a material adverse impact on the Company's financial position, results of operations, or cash flows. Lease commitments are detailed in Note 10[81][82] Note 16. Disaggregation of Revenue This note provides a detailed breakdown of revenue by type, including commission, subscription, sponsorship, and underwriting revenue, for the periods presented | Revenue Type | Nine months ended May 31, 2025 ($) | Nine months ended May 31, 2024 ($) | | :--- | :--- | :--- | | Gross Billing | $13,048,445 | $11,450,989 | | Commission expense | $11,969,345 | $10,456,703 | | Commission revenue | $1,079,099 | $994,286 | | Subscription revenue | $559,993 | $560,261 | | Sponsorship revenue | $169,928 | $- | | Other revenue | $357,592 | $301,585 | | Underwriting revenue | $92,784 | $115,245 | | Total revenue | $2,259,396 | $1,971,377 | | Revenue Type | Three months ended May 31, 2025 ($) | Three months ended May 31, 2024 ($) | | :--- | :--- | :--- | | Gross Billing | $4,400,201 | $4,128,220 | | Commission expense | $4,158,334 | $3,717,457 | | Commission revenue | $241,867 | $410,762 | | Subscription revenue | $191,927 | $181,874 | | Sponsorship revenue | $237,109 | $63,762 | | Other revenue | $40,857 | $38,556 | | Underwriting revenue | $35,143 | $41,494 | | Total revenue | $746,903 | $736,448 | Note 17. Loan This note details an unsecured loan obtained from directors, including the principal amount, interest rate, and total outstanding balance - The Company obtained an unsecured loan of $587,520 from directors, repayable within twelve months at a 12% interest rate. As of May 31, 2025, the total outstanding loan, including $45,739 in interest payable, was $633,259[84] Note 18. Subsequent Events This note discloses significant events occurring after the reporting period, including a reverse stock split and a delisting notice from NYSE American - On June 26, 2025, a 20-for-01 reverse stock split was approved by shareholders and the Board of Directors, intended to help regain compliance with NYSE American listing standards. The Company also received a delisting notice from NYSE American due to its shares trading below the minimum price requirement and is appealing this decision[85] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Pineapple Financial Inc.'s financial condition, cash flows, and results of operations for the nine and three months ended May 31, 2025. The company experienced a net loss improvement due to higher loan origination volumes and cost management, despite ongoing macroeconomic challenges and market volatility. Key operational and financial metrics are analyzed, along with critical accounting policies and liquidity management strategies Executive Summary Pineapple Financial Inc. is an Ontario, Canada-based fintech company focused on mortgages and insurance, aiming to provide an industry-leading experience through trusted digital solutions - Pineapple Financial Inc. is an Ontario, Canada-based fintech company focused on mortgages and insurance, aiming to provide an industry-leading experience through trusted digital solutions[90] Recent Developments Recent monetary policy easing by the Bank of Canada and ongoing economic uncertainties continue to impact mortgage origination volumes and the Canadian economy - The Bank of Canada began easing monetary policy in mid-2024 by reducing the policy rate by 1.75%, aiming to stabilize the economy and improve housing affordability. However, elevated interest rates and economic uncertainty, including U.S. tariff threats, continue to impact the Canadian economy[91] - These pressures have led to suppressed mortgage origination volumes for Pineapple Financial Inc., with real estate and lending activity remaining below pre-2022 levels. Future growth depends on macroeconomic stability, interest rate trends, and resolution of international trade uncertainties[92] Summary of the Nine Months Ended May 31, 2025 The company's net loss improved for the nine months ended May 31, 2025, driven by increased loan origination volumes and effective cost management initiatives | Metric | Nine months ended May 31, 2025 ($) | Nine months ended May 31, 2024 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Residential mortgage loans originated | $1,183.62 million | $1,083.77 million | $99.85 million | 9.21% | | Net loss | $(1.814) million | $(2.379) million | $0.565 million | 23.76% | | CAD depreciation vs. USD | - | - | - | 2.64% (average) | - The improvement in net loss is primarily due to higher loan origination volumes and ongoing cost management initiatives. The depreciation of the Canadian dollar had a modest impact on financial results[94][95] Key Performance Indicators This section presents key operational and financial metrics, including mortgage volume, gross billing, and various revenue streams, for the periods presented | KPI | Nine months ended May 31, 2025 ($) | Nine months ended May 31, 2024 ($) | Nine months ended May 31, 2023 ($) | | :--- | :--- | :--- | :--- | | Mortgage volume | $1,183,621,251 | $1,083,771,257 | $966,531,247 | | Gross billing | $13,048,445 | $11,450,989 | $11,097,689 | | Commission expense | $11,969,345 | $10,456,703 | $10,340,720 | | Net sales revenue | $1,079,099 | $994,286 | $756,969 | | Underwriting revenue | $92,784 | $115,244 | $181,022 | | Subscription revenue | $559,993 | $560,261 | $999,932 | | Other income | $527,520 | $301,585 | $- | | KPI | Three months ended May 31, 2025 ($) | Three months ended May 31, 2024 ($) | Three months ended May 31, 2023 ($) | | :--- | :--- | :--- | :--- | | Mortgage volume | $412,428,436 | $377,640,286 | $307,734,120 | | Gross billing | $4,400,201 | $4,449,848 | $3,814,083 | | Commission expense | $4,158,334 | $3,713,400 | $3,210,852 | | Net sales revenue | $241,867 | $736,448 | $603,231 | | Underwriting revenue | $35,143 | $41,454 | $16,751 | | Subscription revenue | $191,927 | $181,701 | $106,572 | | Other income | $277,966 | $- | $- | - Gross billing revenue is commission from financial institutions based on mortgage amounts. Subscription revenue comes from a flat monthly fee for the MyPineapple technology platform. Underwriting fees are charged for expert risk pre-assessment services, with approximately 40% of deals using this service. Other income includes technology setup and sponsorship fees[98][99][100][101] Components of Operating Expenses Operating expenses are categorized into salaries, commissions, team member benefits, selling, general and administrative expenses, and share-based compensation - Operating expenses include salaries, commissions, and team member benefits (all payroll expenses), selling, general and administrative expenses (software subscriptions, license fees, professional services, marketing, other operating expenses), and share-based compensation (equity awards measured under ASC 718)[103][104][105][106] Comparison of Nine Months Ended May 31, 2025 and May 31, 2024 This section provides a detailed comparison of financial performance metrics for the nine months ended May 31, 2025, versus the prior year, highlighting changes in revenue and expenses | Metric | May 31, 2025 ($) | May 31, 2024 ($) | Increase/ (Decrease) ($) | Increase/ (Decrease) (%) | | :--- | :--- | :--- | :--- | :--- | | Gross Billing | 14,228,741 | 13,422,366 | 806,375 | 15.23 | | Commission | 11,969,345 | 11,450,989 | 518,356 | 15.92 | | Revenue | 2,259,396 | 1,971,377 | 288,019 | 11.78 | | Selling, general and administrative | 1,522,778 | 1,545,900 | (23,122) | (3.56) | | Advertising and Marketing | 617,987 | 648,197 | (30,210) | (19.08) | | Salaries, wages and benefits | 1,223,722 | 1,825,786 | (602,064) | (30.14) | | Interest expense and bank charges | 306,267 | 42,825 | 263,442 | 448.93 | | Depreciation | 648,991 | 535,575 | 113,416 | 36.32 | | Government Incentive | (70,657) | (176,326) | 105,669 | (39.60) | | Total expense | 4,249,088 | 4,421,957 | (172,869) | (3.48) | | Loss from operations | (1,989,692) | (2,450,580) | 460,888 | (16.76) | | Foreign exchange gain (loss) | (1,905) | 10,751 | (12,656) | (62.67) | | Gain(loss) on change in fair value of warrant liability | 341,765 | 42,251 | 299,514 | 180.05 | | Financing cost – warrant issuance | (164,280) | - | (164,280) | (100) | | Loss before income taxes | (1,814,112) | (2,379,444) | (565,332) | (23.76) | Comparison of Three Months Ended May 31, 2025 and May 31, 2024 This section provides a detailed comparison of financial performance metrics for the three months ended May 31, 2025, versus the prior year, highlighting changes in revenue and expenses | Metric | May 31, 2025 ($) | May 31, 2024 ($) | Increase/ (Decrease) ($) | Increase/ (Decrease) (%) | | :--- | :--- | :--- | :--- | :--- | | Gross Billing | 4,905,237 | 4,449,848 | 455,389 | 10.23 | | Commission | 4,158,334 | 3,713,400 | 444,934 | 11.98 | | Revenue | 746,903 | 736,448 | 10,455 | 1.42 | | Selling, general and administrative | 527,835 | 491,666 | 36,169 | 7.36 | | Advertising and Marketing | 292,489 | 265,395 | 27,094 | 10.21 | | Salaries, wages and benefits | 394,648 | 593,202 | (198,554) | (33.47) | | Interest expense and bank charges | 31,216 | 40,373 | (9,157) | (22.68) | | Depreciation | 219,355 | 220,190 | (835) | (0.38) | | Government Incentive | (22,109) | (21,770) | (43,879) | (201.56) | | Total expense | 1,443,434 | 1,632,596 | (189,162) | (11.59) | | Loss from operations | (696,531) | (896,148) | (199,617) | (22.28) | | Foreign exchange gain (loss) | (6,018) | - | (6,018) | - | | Gain(loss) on change in fair value of warrant liability | 309,516 | 29,479 | 280,037 | 949.95 | | Gain(loss) on change in fair value of conversion feature liability | - | 18,064 | (18,064) | 100 | | Financing cost – warrants issued | (164,703) | - | (164,703) | 100 | | Loss before income taxes | (557,736) | (848,605) | 290,869 | (34.28) | Revenue and Cost Analysis This analysis examines the drivers behind changes in gross billings, revenue, commission expense, and total expenses, highlighting cost containment efforts and profitability optimization - For the nine months ended May 31, 2025, gross billings increased by 15.23% to $14.23 million, and revenue increased by 11.78% to $2.26 million, reflecting resilience in mortgage operations and optimized profitability[110][112] - Commission expense rose proportionately by 15.92% to $11.97 million, aligned with higher gross billings and the strategy of leveraging high-volume agents[111] - Total expenses decreased by 3.48% year-over-year, primarily due to a 30.14% reduction in salaries, wages, and benefits, reflecting cost containment and efficiency measures. This was partially offset by increases in depreciation and interest expenses[113] - The Company recognized a $341,765 gain on warrant liability fair value change (up from $42,251), and incurred $164,280 in financing costs for warrant issuance. Loss before income taxes improved to $(1.81) million from $(2.38) million[114] Quarterly Performance This section reviews the company's financial performance for the three months ended May 31, 2025, focusing on gross billings, revenue, expenses, and net loss before taxes - For the three months ended May 31, 2025, gross billings increased by 10.23% to $4.91 million, and revenue increased by 1.42% to $746,903. Total expenses decreased by 11.59% to $1.44 million, driven by lower salary and benefit costs[115][116][117] - A gain of $309,516 on warrant liability fair value change (compared to $29,479 in prior year) contributed to a 34.28% improvement in net loss before taxes, reducing it to $(557,736)[117] Outlook Management's outlook emphasizes balancing transaction volume growth with disciplined cost management and monitoring macroeconomic developments to capture future opportunities - Management is focused on balancing transaction volume growth with disciplined cost management to protect margins and shareholder value. The Company will monitor macroeconomic developments and aims to capture growth opportunities as housing and mortgage markets stabilize, while maintaining operational efficiencies[118] Selling, General and Administrative Expenses This section provides a detailed breakdown and analysis of changes in selling, general, and administrative expenses for the nine and three months ended May 31, 2025, and 2024 | Expense Category | Nine months ended May 31, 2025 ($) | Nine months ended May 31, 2024 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Software subscription | 624,587 | 663,424 | (38,837) | (5.85) | | Office and general | 114,864 | 117,213 | (2,349) | (2.00) | | Professional fee | 108,359 | 157,531 | (49,172) | (31.21) | | Dues and subscription | 364,287 | 146,964 | 217,323 | 147.87 | | Rent | 140,168 | 155,628 | (15,460) | (9.93) | | Consulting fee | 45,483 | 45,167 | 316 | 0.70 | | Travel | 25,467 | 137,940 | (112,473) | (81.54) | | Donations | 789 | 7,406 | (6,617) | (89.35) | | Lease expense | 507 | 54,946 | (54,439) | (99.08) | | Insurance | 98,267 | 59,681 | 38,586 | 64.65 | | Total SG&A | 1,522,778 | 1,545,900 | (23,122) | (1.50) | | Expense Category | Three months ended May 31, 2025 ($) | Three months ended May 31, 2024 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Software subscription | 174,116 | 260,951 | (86,835) | (33.28) | | Office and general | 32,112 | 60,558 | (28,446) | (46.97) | | Professional fee | 47,866 | 11,871 | 35,995 | 303.21 | | Dues and subscription | 165,688 | (5,149) | 170,837 | 3,317.88 | | Rent | 54,997 | 57,528 | (2,531) | (4.40) | | Consulting fee | 15,888 | 20,663 | (4,775) | (23.11) | | Travel | 2,108 | 51,867 | (49,759) | (95.94) | | Donations | - | 2,759 | (2,759) | (100.00) | | Lease expense | (942) | 956 | (1,898) | (198.55) | | Insurance | 36,002 | 29,661 | 6,341 | 21.38 | | Total SG&A | 527,835 | 491,666 | 36,169 | 7.36 | - For the nine months, SG&A decreased by 1.50% due to reduced software subscriptions (Salesforce discontinuation), professional fees, travel, and lease expenses, partially offset by a significant increase in dues and subscriptions (147.87%) and insurance costs (64.65%). For the three months, SG&A increased by 7.36% due to higher professional fees (303.21%) and dues and subscriptions (from a net credit to $165,688), despite decreases in software subscriptions and travel[120][121][123][124][127][130][131][133][134][136][137][140] Operating Expenses and Other Income This section analyzes changes in advertising, marketing, salaries, wages, benefits, interest expense, depreciation, and government incentives for the nine months ended May 31, 2025 | Expense Category | Nine months ended May 31, 2025 ($) | Nine months ended May 31, 2024 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Advertising and marketing | 617,987 | 648,197 | (30,210) | (4.66) | | Salaries, wages and benefits | 1,223,722 | 1,825,786 | (602,064) | (32.98) | | Interest expense and bank charges | 306,267 | 42,825 | 263,442 | 614.16 | | Depreciation | 648,991 | 535,575 | 113,416 | 21.18 | | Government incentive | (70,657) | (176,326) | (105,669) | (59.93) | - Advertising and marketing expenses decreased by 4.66% due to targeted campaigns. Salaries, wages, and benefits decreased by 32.98% due to workforce optimization. Interest expense and bank charges increased significantly by 614.16% due to new financing facilities and warrant issuance costs. Depreciation increased by 21.18% from new technology investments. Government incentives decreased by 59.93% due to lower grant funding[146][147][148][149][150] Liquidity and Capital Resources This section discusses the company's cash flow activities and liquidity position, highlighting improvements in operating cash flow and strategies for capital management | Cash Flow Activity | Nine months ended May 31, 2025 ($) | Nine months ended May 31, 2024 ($) | Increase/ (Decrease) ($) | | :--- | :--- | :--- | :--- | | Operating activities | (439,198) | (1,443,610) | (1,004,412) | | Financing activities | 1,836,327 | 2,480,806 | (644,479) | | Investing activities | (811,443) | (901,185) | (89,742) | | Cash at the end of the period | 1,134,583 | 748,769 | 385,814 | - Net cash used in operating activities improved significantly to $(439,198) from $(1,443,610), driven by improved operational efficiencies, cost discipline, and working capital management. Net cash provided by financing activities decreased to $1,836,327 due to lower net proceeds from financing transactions. Net cash used in investing activities decreased to $(811,443) due to disciplined investment in intangible assets[153][154][156] | Liquidity Position | May 31, 2025 ($) | August 31, 2024 ($) | | :--- | :--- | :--- | | Cash | 1,134,583 | 580,356 | | Trade and other receivables | 180,462 | 155,224 | | Prepaid expenses and deposit | 81,821 | 157,911 | | Total Current Liquid Assets | 1,396,866 | 893,491 | - Cash and cash equivalents increased to $1,134,583, and total current liquid assets rose to $1,396,866, reflecting new equity injection, stronger revenue, expense discipline, and successful financing activities. Management continues to evaluate funding options to strengthen the balance sheet and support growth[157][158][159][160] Critical Accounting Policies and Significant Judgments and Estimates This section outlines the critical accounting policies and significant judgments and estimates applied, including revenue recognition, lease accounting, investments, and share-based compensation - Revenue recognition follows ASC 606, requiring a five-step model to recognize revenue when goods or services are transferred to customers. The Company operates an online platform and its subsidiary, Pineapple Insurance Inc., earns commissions for providing mortgage insurance services[161][162][163][164] - Lease accounting adheres to ASC 842, recognizing lease liabilities and right-of-use assets for all leases except short-term and low-value ones. Investments in MCommercial and Mortgage Alliance Corporation are recorded at fair value, with impairment losses recognized in profit and loss[166][167][168][169][170][171] - Share-based compensation is accounted for under ASC 718, measuring the cost of employee, non-employee, and director services based on the grant-date fair value of equity awards. The Company's share option plan reserves 10% of common shares for grants[172][173][174][175][176] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Pineapple Financial Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, Pineapple Financial Inc. is exempt from providing quantitative and qualitative disclosures about market risk[193] Item 4. Controls and Procedures Pineapple Financial Inc. maintains disclosure controls and procedures designed to ensure timely and accurate reporting under the Exchange Act. Management concluded that these controls were effective as of May 31, 2025, with ongoing improvements in financial, accounting, and reporting processes - The Company's disclosure controls and procedures are designed to ensure timely and accurate reporting of information required under the Exchange Act. Management, including the principal executive and financial officers, evaluated and concluded that these controls were effective as of May 31, 2025[194][179] - Improvements include independent reviews, approval processes, hiring additional personnel, and documenting policies. There have been no material changes in internal control over financial reporting during the last fiscal quarter[180][195] PART II. OTHER INFORMATION This section provides supplementary information, including legal proceedings, risk factors, equity security sales, and other disclosures relevant to the company's operations Item 1. Legal Proceedings Pineapple Financial Inc. is not currently a party to any legal proceedings that are deemed material to its financial condition or results of operations - The Company is not currently involved in any legal proceedings that are considered material to its financial condition or results of operations[196] Item 1A. Risk Factors Pineapple Financial Inc. faces significant risks related to its common shares trading on the OTC Pink Open Market following a delisting notice from NYSE American, which could adversely affect liquidity and market price. Additionally, the recently approved reverse stock split may not achieve its intended results of increasing the trading price and regaining exchange compliance, potentially impacting investor perception and liquidity - The Company's common shares trading on the OTC Pink Open Market (OTCPK) after a NYSE American delisting notice may adversely affect liquidity and market price. There is no assurance the appeal will be successful or that relisting on a national exchange will occur[197][198][199][200] - The 1-for-20 reverse stock split, approved on June 26, 2025, aims to increase the trading price and regain NYSE American compliance, but there's no guarantee it will achieve the desired effect or avoid negative market perception and reduced liquidity[201] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities by Pineapple Financial Inc. during the nine months ended May 31, 2025 - No unregistered sales of equity securities occurred during the nine months ended May 31, 2025[203] Item 3. Defaults Upon Senior Securities Pineapple Financial Inc. reported no defaults upon senior securities - The Company reported no defaults upon senior securities[204] Item 4. Mine Safety Disclosures This item is not applicable to Pineapple Financial Inc - This disclosure item is not applicable to the Company[205] Item 5. Other Information On June 26, 2025, Pineapple Financial Inc. shareholders approved a 1-for-20 reverse stock split, authorized by the Board of Directors. This action is part of the Company's strategy to regain compliance with NYSE American's minimum share price requirements and maintain its public listing - On June 26, 2025, a 1-for-20 reverse stock split of the Company's common shares was approved by shareholders and authorized by the Board of Directors. This is part of the strategy to regain compliance with NYSE American listing standards, specifically minimum share price requirements[206] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, and Inline XBRL documents - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (pursuant to Rule 13a-14(a)/15d-14(a) and Section 906 of Sarbanes-Oxley Act), and various Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents)[207] SIGNATURES The report was signed on July 14, 2025, by the Chief Executive Officer and Chief Financial Officer, affirming compliance with the Securities Exchange Act of 1934 - The report was signed on July 14, 2025, by Shubha Dasgupta, Chief Executive Officer, and Sarfraz Habib, Chief Financial Officer, pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934[209][210]