Pineapple Financial Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES. 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. Management’s Report on Internal Control Over Financial Reporting This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by the rules of the SEC for newly public companies. 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. Attestation Report of Independent Registered Public Accounting Firm This Annual Report does not include an attestation report of our registered independent public accounting firm regarding internal control over financial reporting due to an exemption established by the JOBS Act for “emerging growth companies.” ITEM 9B. OTHER INFORMATION. None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 41 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Executive Officers and Directors The following table sets forth the name, age and position of each of our executive officers, key employees and directors. Name Age Position(s) Date Appointed Shubha Dasgupta 43 Chief Executive Officer and Director October 16, 2015 Sarfraz Habib 52 Chief Financial Officer April 10, 2023 Christa Mitchell 41 Chief Strategy Officer and Director April 1, 2020 Kendall Marin 47 President, COO, and Director October 16, 2015 Drew Green 48 Chairman of the Board May 6, 2019 Paul Baron 60 Director August 19, 2016 Tasis Giannoukakis 60 Director August 19, 2016 Nima Besharat 42 Director May 26, 2021 Shubha Dasgupta , Chief Executive Officer and Director Since entering the mortgage industry in 2008, Shubha has been focused on positively disrupting the sector by leveraging technology and putting people at the heart of the business. Shubha’s unique vision and expertise have allowed him to build and grow the Company (formerly CLC Network), which now has over 500 brokers in its network. Under his leadership, the company has built a world-class proprietary data-driven Client Relationship Management (CRM) Platform, which is the first full-circle mortgage process for agents, offering a more personalized experience for clients. Shubha’s deep understanding of business and industry trends, coupled with the ability to drive best-in-class customer experience and profitability have enabled him to infuse vision and purpose in his professional endeavors throughout his career. An award-winning executive and seasoned industry expert, Shubha was recognized among the “2020 Mortgage Global 100” top executives who are inciting positive change and growth within the field. Since 2018, he has also been featured for four consecutive years in the annual Canadian Mortgage Professional’s Hot List which highlights the industry’s top leaders. In 2021, he was appointed President of the Canadian Mortgage Brokers Association (CMBA) Ontario Board of Directors, after serving a second year on the Board of Directors. An active member in the Toronto community, Shubha is a philanthropic leader for various non-profit organizations. Since 2010, he has been a devoted advocate in the fight against cancer. Prior to joining the mortgage industry, he headed a group of volunteers for the Canadian Cancer Society for eight years. In 2017, he also co-founded CMI Cancer Fighters, a group of Canadian mortgage industry professionals dedicated to the fight against cancer on which he currently chairs. Mr. Dasgupta has been the Chief Executive Officer and a director of the Company since October 16, 2015 and before that was a Mortgage Broker at Bedrock Financial Group between August 2008 and October 2016. Sarfraz Habib, Chief Financial Officer Sarfraz Habib is a finance executive with over 25 years of expertise in finance and accounting. As the current CFO of Pineapple, Sarfraz oversees the company’s financial operations and strategy. He is an experienced professional in the finance and accounting arena, with a notable background working for several large publicly listed organizations. He has extensive knowledge of financial planning and analysis, budgeting, forecasting, and financial reporting. Sarfraz holds Chartered Accountant qualifications. Sarfraz’s experience includes serving as Controller and a board member of Keystroke Group Inc., where he streamlined the company’s accounting and finance processes and was twice awarded the Employee of the Year honors. In his current role at Pineapple, Sarfraz oversees all financial operations, including accounting, financial planning, and analysis. Mr. Habib has been the Chief Financial Officer of the Company since April 10, 2023. 42 Christa Mitchell , Chief Strategy Officer and Director An established professional in the mortgage industry, Christa has more than 15 years of experience in sales, technology, and executive management. In previous roles at Mortgage Alliance, she succeeded in growing and managing a 90-members independently owned affiliate brokerage network and championing the company’s enterprise technology platform, where she was responsible for sales, education and the support team. While Vice President of Operations at her previous position, she directed corporate administration, payroll systems, broker recognition and networking events. In 2020, she was recognized in the Canadian Mortgage Professional’s annual ‘Women of Influence’, which highlights female leaders who have been breaking down barriers in the mortgage industry and making it more inclusive. Christa brings over 15 years of sales, technology, and administrative experience in the mortgage industry. Most recently Christa excelled as the company’s Vice President of Operations where she directed corporate administration, payroll systems, broker recognition and networking events. Ms. Mitchell has been the Chief Strategy Officer and a director of the Company since April 2020. Before that, Ms. Mitchell was the Vice President of Operations and Vice President of Sales, Service and User Experience of Mortgage Alliance between September 2005 and March 2020. Kendall Marin , President, Chief Operating Officer and Director Mr. Marin has been the President and Chief Operating Officer and a director of the Company since October 16, 2015. Before that, Kendall was a Mortgage Broker for InTrend Mortgage Inc. between January 2012 and October 2015 and prior to that was a franchise owner at Property Guys between May 2010 and January 2013. Kendall has been leading the growth of the company with regard to fine-tuning of business processes to ensure maximum productivity. His proven expertise, focus on excellence and dedication have enabled him to build and expand the Company’s network, as well as the company’s proprietary data-driven Client Relationship Management (CRM) platform. Kendall has had a career both in the corporate world and as a seasoned entrepreneur. At the age of 16, he created his own entertainment and promotion company, which was highly successful in Toronto throughout the 2000s. Later on, when Kendall was ready to take on his next challenge, he joined Canada’s top telecom company Bell, where he became the youngest Associate Director. In 2012, he made his debut in the mortgage industry where he has applied his leadership, organizational and management skills to a new industry. Since 2018, he has been featured for three consecutive years in the annual Canadian Mortgage Professional’s Hot List which recognizes the industry’s top leaders. Drew Green , Chairman of the Board Drew Green is President and Chief Executive Officer of INDOCHINO, growing the brand by over 600% between 2015- 2022, delivering nine figures in revenue in 2018, currently with 86 showrooms across North America and operations globally. Mr. Green has been recognized as Entrepreneur of the Year by Ernst & Young, US Retailer of the Year, Innovator of the Year, along with other awards during his career. At INDOCHINO, Mr. Green has established strategic capital from Madrona Venture Partners, Highland Consumer, Dayang Group, Mitsui & Co. (TSE: 8031) and Postmedia Network, (TSX: PNC.B) along with partnerships with the New York Yankees, Boston Red Sox, Nordstrom, and hundreds of National Basketball Association (NBA), Major League Baseball (MLB), National Football League (NFL), and National Hockey League (NHL) teams, athletes and celebrities. In addition, Mr. Green is a Founder and Chairman of the Board of Directors of EMERGE Commerce Ltd. (TSXV: ECOM), a diversified, acquirer and operator of Direct to Consumer (DTC) e-commerce brands across North America. He also serves as Chairman of Real Luck Group Ltd. (TSXV: LUCK), a company that offers legal, real-money betting, live streams, and statistics on all major e-sports and sports on desktop and mobile devices and Chairman American Aires Inc. (CSE: WIFI) a Canadian-based nanotechnology company which has developed proprietary silicon-based microprocessors that reduce the harmful effects of electromagnetic radiation (EMR) along with being Chairman of Gravitas III (TSXV:TRIG.P). Through his family office DREWGREEN.CA INC., Mr. Green has become a mentor to dozens of Canadian entrepreneurs, becoming a founder, chairman, and/ or a shareholder in dozens of private and public companies that drive innovation and growth, including Riverdale Rentals, Pineapple Financial, Apollo Insurance, Parvis Invest (TSXV: PVIS), OR Collective, Yourika, Cloudrep AI and Between Co., a company founded by York University alumni. 43 Drew served as a Director at The Scarborough Hospital Foundation for many years, and has established the Drew Green Thunderbird Award at the University of British Columbia and The Drew Green Lions Award at York University, providing student-athletes at both institutions with scholarships. He currently is a director on York University’s Alumni Board, Canada’s fourth-largest university, with approximately 55,700 students, 7,000 faculty and staff, and over 325,000 alumni worldwide. Paul Baron , Director Paul is a veteran Real Estate Executive with over 30 years of experience working with both residential and commercial properties. In his first year as a Sales Representative for Family Trust Realty, he sold 37 homes, quickly demonstrating both his sales smarts and entrepreneurial drive. He has held various positions with increasing responsibility and is currently the owner of Century 21 Leading Edge Realty, a real estate brokerage with nine offices, six satellite offices, and over 800 agents and employees. He is currently serving as the Central Brokerage Director on the Toronto Real Estate Board’s (TREB) Board of Directors. Mr. Baron has been a Director of the Company since August 19, 2016. Prior to his position with the Company, Mr. Baron was the President of Century 21 Leading Edge Reality Inc. since November 1994. Tasis Giannoukakis , Director Tasis is an owner, broker, and manager of Century 21 Leading Edge Realty, a real estate brokerage with nine offices, six satellite offices, and over 800 agents and employees. In 2019, his team had more sales than any other Century 21 franchise in Canada and broke into the company’s worldwide top five. He has been with Century 21 Leading Edge Realty for over 20 years, and the firm continues its expansion through acquisitions of other firms to further solidify their position in the Canadian Real Estate market. Mr. Giannoukakis has been a Director of the Company since August 19, 2016. Prior to such, he was a Broker/Owner of Century 21 Leading Edge Reality Inc. since August 2004. Nima Besharat , Director Nima currently serves as Director of Investment Banking at Gravitas Securities Inc., a Canadian leading full-service investment dealer where he helps with the advisory, restructuring, corporate finance, and mergers and acquisitions mandates across the firm’s platform. Gravitas Securities Inc. is a full-service investment dealer platform registered with Investment Industry Regulatory Organization of Canada (IIROC) and a member of Canadian Investor Protection Fund. Nima has experience in wealth management and asset management at Scotiabank (TSX: BNS) and TD Bank Group (TSX: TD). Nima holds a Bachelor of Arts in Economics and History from Western University, a Bachelor of Laws (Hons.) from the University of Sheffield, a Master of Laws in International Business Law from King’s College London, University of London (Dr. Peter Dyne Scholar), and a Postgraduate Diploma in Legal Practice (Corporate Finance) from the University of Law (UK). Nima was called to the bar in Ontario in 2017. He has completed the Canadian Securities Course, Conduct and Practices Handbook Course, Chief Compliance Officers Qualifying Exam and the Partners, Directors and Senior Officers Course through the Canadian Securities Institute. Nima was nominated for the Investment Industry Association of Canada (IIAC) Top 40 Under 40 Award in 2020, recognizing professionals whose accomplishments have brought distinction to the investment/financial industry. 44 Directorships Some of the directors of the Company serve on the boards of directors of other reporting issuers (or the equivalent) in Canada or foreign jurisdictions. The following table lists the directors of the Company who serve on boards of directors of other reporting issuers (or the equivalent) and the identities of such reporting issuers (or the equivalent). Name of Director Reporting Issuers (or the Equivalent) Drew Green EMERGE Commerce Ltd. American Aires Inc. Real Luck Group Ltd. Parvis Invest Inc. Gravitas III Capital Corp. The Board has determined that these inter-locking directorships do not adversely impact the effectiveness of these directors on the Board or create any potential for conflicts of interest. However, certain of the Company’s directors are, or may become, directors, officers or shareholders of other companies with businesses which may conflict with the Company’s business. Orientation and Continuing Education The Company has not yet established a formal orientation or education procedure for newly incoming directors. Board members are encouraged to communicate with management and auditors, to keep themselves current with industry trends and developments, and to attend related industry seminars. Board members have full access to the Company’s records. Family Relationships None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.. Director Assessment The Board is responsible for ensuring that an appropriate system is in place to evaluate the effectiveness of the Board as a whole, the individual committees of the Board, and the individual members of the Board and such committees with a view of ensuring that they are fulfilling their respective responsibilities and duties. In connection with such evaluations, each director is required to provide his assessment of the effectiveness of the Board and each committee as well as the performance of the individual directors, annually. Such evaluations take into account the competencies and skills each director is expected to bring to his particular role on the Board or on a committee, as well as any other relevant factors. Arrangements between Officers and Directors Except as set forth herein, to our knowledge, there is no arrangement or understanding between any of our officers or directors and any other person pursuant to which the officer or director was selected to serve as an officer or director. Involvement in Certain Legal Proceedings We are not aware of any of our directors or officers being involved in any legal proceedings in the past ten years relating to any matters in bankruptcy, insolvency, criminal proceedings (other than traffic and other minor offenses), or being subject to any of the items set forth under Item 401(f) of Regulation S-K. Board Committees Our Board directs the management of our business and affairs and conducts its business through meetings of the Board and its standing committees. As of the date hereof, the Board has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. In addition, from time to time, special committees may be established under the direction of the board of directors when necessary to address specific issues. Audit Committee The Company has formed an Audit Committee comprised of Paul Baron, Drew Green (Chair) and Tasis Giannoukakis. Our Board has affirmatively determined that each meets the definition of “independent director” under the listing rules of the NYSE American, and that they meet the independence standards under Rule 10A-3. Each member of our audit committee can read and understand fundamental financial statements in accordance with the SEC and the NYSE American audit committee requirements. In arriving at this determination, the Board has examined each audit committee member’s scope of experience and the nature of their prior and/or current employment. 45 The Audit Committee provides assistance to the Board in fulfilling its obligations relating to the integrity of the internal financial controls and financial reporting of the Company. The external auditors of the Company report directly to the Audit Committee. The Audit Committee’s primary duties and responsibilities set forth in the Audit Committee’s charter include the following: (i) reviewing and reporting to the Board on the annual audited financial statements (including the auditor’s report thereon) and unaudited interim financial statements and any related management’s discussion and analysis, if any, and other financial disclosure related thereto that may be required to be reviewed by the Audit Committee pursuant to applicable legal and regulatory requirements; (ii) overseeing the audit function, including engaging in required discussions with the Company’s external auditor and reviewing a summary of the annual audit plan, overseeing the independence of the Company’s external auditor, overseeing the Company’s internal auditor, and pre-approving any non-audit services to the Company; (iii) reviewing with management and the Company’s external auditors the integrity of the internal controls over financial reporting and disclosure; (iv) reviewing management reports related to legal or compliance matters that may have a material impact on the Company and the effectiveness of the Company’s compliance policies; and (v) maintaining, reviewing and updating the Company’s whistleblowing procedures. Relevant Education and Experience Each proposed member of the Audit Committee has adequate education and experience that is relevant to their performance as an Audit Committee member and, in particular, the requisite education and experience that have provided the member with: (a) an understanding of the accounting principles used by the Company to prepare its financial statements and the ability to assess the general application of those principles in connection with estimates, accruals and reserves; (b) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements or experience actively supervising individuals engaged in such activities; and (c) an understanding of internal controls and procedures for financial reporting. For a summary of the experience and education of the Audit Committee members see “Directors and Executive Officers”. Audit Committee Oversight At no time since the commencement of the Company’s financial year was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board. Pre-Approval Policies and Procedures The Audit Committee mandate requires that the Audit Committee pre-approve any retainer of the auditor of the Company to perform any non-audit services to the Company that it deems advisable in accordance with applicable legal and regulatory requirements and policies and procedures of the Board. The Audit Committee is permitted to delegate pre-approval authority to one of its members; however, the decision of any member of the Audit Committee to whom such authority has been delegated must be presented to the full Audit Committee at its next scheduled meeting. 46 Compensation Committee The Company has formed a Compensation Committee comprised of Drew Green, Paul Baron and Tasis Giannoukakis. Our Board has affirmatively determined that each satisfy the “independence” requirements defined under the applicable listing standards of the NYSE American, including the standards specific to members of a compensation committee and meet the independence standards under Rule 10A-3 under the Exchange Act. Our Compensation Committee assists the Board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. No officer may be present at any committee meeting during which such officer’s compensation is deliberated upon. The Compensation Committee is responsible for, among other things: ● reviewing and approving to the Board with respect to the total compensation package for our most senior executive officers; ● approving and overseeing the total compensation package for our executives other than the most senior executive officers; ● reviewing and recommending to the Board with respect to the compensation of our directors; ● reviewing periodically and approving any long-term incentive compensation or equity plans; ● selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and ● programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans Nominating and Corporate Governance Committee The Company has formed a Nominating and Corporate Governance Committee comprised of three directors, Drew Green, Paul Baron and Tasis Giannoukakis, that satisfy the “independence” requirements for independence under the NYSE American listing standards and SEC rules and regulations. The Nominating and Corporate Governance Committee is responsible for overseeing the selection of persons to be nominated to serve on our Board. The Nominating and Corporate Governance Committee considers persons identified by its members, management, shareholders, investment bankers and others. Code of Business Code and Ethics Conduct Our Board has adopted a written Code of Ethics and Business Conduct which emphasizes the importance of matters relating to honest and ethical conduct, conflicts of interest, confidentiality of corporate information, protection and proper use of corporate assets and opportunities, compliance with applicable laws, rules and regulations and the reporting of any illegal or unethical behavior. A copy of the code posted on our website, gopineapple.com . In addition, we intend to post on our website all disclosures that are required by law or rules concerning any amendments to, or waivers from, any provision of the code. 47 Changes in Nominating Procedures None. ITEM 11. EXECUTIVE COMPENSATION Summary Compensation Table The following table sets out the compensation paid or payable to the Named Executive Officers (“NEO”) of the Company during the last two fiscal years: Name and Principal Position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Shubha Dasgupta, 2023 188,256 $ $ 0 $ 0 $ 0 $ 0 $ 11,357 199,613 Chief Executive Officer 2022 189,288 0 11,357 200,645 Rupen Shah (1), 2023 77,389 $ $ 0 $ 0 $ 0 $ 0 $ 1,508 78,897 Chief Financial Officer 2022 185,344 92,468 6,625 284,437 Christa Mitchell, 2023 188,256 $ $ 0 $ 0 $ 0 $ 0 $ 11,357 199,613 Chief Strategy Officer 2022 189,288 $ $ 0 $ 0 $ 0 $ 0 $ 11,357 200,645 Kendall Marin, President and 2023 188,256 $ $ 0 $ $ 0 0 11,357 199,613 Chief Operating Officer 2022 189,288 $ $ 0 $ 0 $ 0 $ 0 $ 11,357 200,645 (1) Mr. Shah resigned as CFO of the Company in April 2023. Outstanding Equity Awards at 2023 Fiscal Year-End The following table sets forth information concerning outstanding equity awards for each of the NEOs and directors as of the end of the fiscal year ended August 31, 2023. Option Awards Stock Awards Name and Principal Position Number of Securities. Underlying Unexercised Options (#) Exercisable Weighted Average Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested Shubha Dasgupta, 126,652 $ 3.60 June 14, 2026 N/A N/A Chief Executive Officer and Director Tasis Giannoukakis, 10,214 $ 3.60 June 14, 2026 N/A N/A Director Drew Green, 102,138 $ 3.60 June 14, 2026 N/A N/A Chairman of the Board Kendall Marin, 126,652 $ 3.60 June 14, 2026 N/A N/A President, Chief Operating Officer, and Director Christa Mitchell, 32,684 $ 3.60 June 14, 2026 N/A N/A Chief Strategy Officer and Director Paul Baron, 10,214 $ 3.60 June 14, 2026 N/A N/A Director Nima Besharat, 157,136 $ 3.60 June 14, 2026 N/A N/A Director 48 Compensation Governance The Company has not been a reporting issuer during any financial period to date. The significant elements of future compensation to be awarded or paid to the Company’s directors and/or executive officers, including NEOs, once the Company becomes a reporting issuer is expected to consist primarily of management fees, stock options and cash bonuses. The amount to be paid for each element of compensation will not be based on any formula or specific objective criteria but is expected to be the result of a subjective determination of the Board in consideration of a number of factors, including, but not limited to: the overall financial and operating performance of the Company, each NEO’s individual performance and contribution towards meeting corporate objectives, each NEO’s level of responsibility, each NEO’s length of service, industry comparable and the Company’s ability to pay compensation. Payments may be made from time to time to executive officers, including Named Executive Officers, or companies they control for the provision of consulting or management services. Such services are paid for by the Company at competitive industry rates for work of a similar nature by reputable arm’s length services providers. Following the date of Listing, the Company expects to pay fees for management services pursuant to the terms of the agreement summarized under “ Employment, Consulting and Management Agreements ” below. Other than the Stock Option Plan, the Company has not established any other long-term incentive plan. Other than 2,206,189 Options under the Stock Option Plan, the Company has no stock options or other incentive securities outstanding ; however, the Company may issue more stock options pursuant to its Stock Option Plan. See “ Stock Option Plan ” below and “ Options to Purchase Securities ”. In addition, it is anticipated that the Board may award bonuses, in its sole discretion, to executive officers, including NEOs, from time to time. In assessing the compensation of its directors and executive officers, including the NEOs, the Company does not have in place any formal objectives, criteria or analysis. The general objectives of our compensation strategy are to: (a) compensate management in a manner that encourages and rewards a high level of performance and outstanding results with a view to increasing long term shareholder value; (b) align management’s interests with the long term interests of shareholders; (c) provide a compensation package that is commensurate with other companies to enable us to attract and retain talent; and (d) ensure that the total compensation package is designed in a manner that takes into account the Company’s financial condition and long term interests. Compensation payable to executive officers and directors is currently reviewed and recommended by the Board, on an annual basis. See “ Statement of Corporate Governance – Compensation ”. The Company has not established any specific performance criteria or goals to which total compensation or any significant element of total compensation to be paid to any NEO is dependent. Specifically, in the most recently completed financial year, no compensation was directly tied to a specific performance goal such as a milestone or the completion of a transaction, no significant events occurred that significantly affected compensation, and no peer group was formally used to determine compensation. NEOs’ performance is reviewed in light of the Company’s objectives from time to time and such officers’ compensation is also compared to that of executive officers of companies of similar size and stage of development in the Company’s industry. Though the Company does not have pre-existing performance criteria, objectives or goals, it is anticipated that, once the Company becomes a reporting issuer, the Board will review all compensation arrangements and policies in place and consider the adoption of formal compensation guidelines. Director Compensation To date, we have not compensated our directors for their service to the Company, except that Drew Green receives monthly compensation of $7,887 and Nima Besharat received monthly compensation of $3,943 until his compensation terminated in February 2022. External Management Companies Other than as disclosed below under “ Employment, Consulting and Management Agreements ”, the Company has not entered into any agreement with any external management company that employs or retains one or more of the NEOs or directors and, other than as disclosed below, the Company has not entered into any understanding, arrangement or agreement with any external management company to provide executive management services to the Company, directly or indirectly, in respect of which any compensation was paid by the Company. Stock Options and Other Compensation Securities As of the date of this prospectus, the Company has granted 628,510 Options under the Stock Option Plan to directors and/or NEOs of the Company, 62,820 of which were subsequently forfeited, and no other compensation securities were granted or issued to any director and/or NEO for services provided or to be provided, directly or indirectly, to the Company or any of its subsidiaries. During the year ended August 31, 2023 there was no exercise of Options granted under the Stock Option Plan or other rights to acquire securities of the Company by NEOs or directors of the Company. Stock Option Plan On June 14, 2021 the Board approved our 2487269 Ontario Ltd. Stock Option Plan (the “Stock Option Plan”). As of the date of this prospectus, there are 565,689 options outstanding under the Stock Option Plan. 49 The purpose of the Stock Option Plan is to provide the Company with a share-related mechanism to attract, retain and motivate qualified directors, officers, employees and consultants, to reward those individuals from time to time for their contributions toward the long-term goals of the Company and to enable and encourage those individuals to acquire Common Shares as long-term investments. The material features of the Stock Option Plan are reflected in the disclosure below. Key Terms Summary Administration The Stock Option Plan is administered by the Board, or such director or other senior officer of the Company as may be designated as administrator by the Board. The Board or such committee may make, amend and repeal at any time, and from time to time, such regulations not inconsistent with the Stock Option Plan. Number of Common Shares The maximum number of Common Shares issuable under the Stock Option Plan shall not exceed 10% of the number of Common Shares issued and outstanding as of each date on which the Board grants the Option (the “ Award Date ”) with certain limits on grants to Optionees (as defined in the Stock Option Plan), Optionees who are Insiders (as defined in the Stock Option Plan), Eligible Employees (as defined in the Stock Option Plan) and Optionees conducting Investor Relations Activities (as defined in the Stock Option Plan). The number of Common Shares underlying Options that have been cancelled, that have expired without being exercised in full, and that have been issued upon exercise of Options shall not reduce the number of Common Shares issuable under the Stock Option Plan and shall again be available for issuance thereunder. Securities Each Option entitles the holder thereof (an “ Option Holder ”) to purchase one Common Share at an exercise price determined by the Board. Participation Any director, senior officer, management company, employee or consultant of the Company (including any subsidiary of the Company), as the Board may determine. Exercise Price The exercise price of an option will be determined by the Board in its sole discretion, provided that the exercise price will not be less than the Discounted Market Price (as defined in the Stock Option Plan). Exercise Period The exercise period of an Option will be the period from and including the award date through to and including the expiry date that will be determined by the Board at the time of grant (the “ Expiry Date ”), provided that the Expiry Date of an Option will be no later than the fifth anniversary of the Award Date of the Option, provided that such date does not fall within a blackout period imposed by the Company, and any Options granted to any Optionee who is a Director, Eligible Employee, or other Optionee will expire within 12 months following the date that such Optionee ceases to be engaged in such role. Cessation of Employment Subject to certain limitations, in the event that an Option Holder ceases to be a director of the Company or ceases to be employed by the Company, other than by reason of death, the Expiry Date of the Option will be 90 days after the date of such termination, except as otherwise provided in any employment contract. Notwithstanding the foregoing or any employment contract, in no event shall such right be extended beyond the Option Period or one year from the date of termination. In the event that an Option Holder should die while he or she is still director, senior officer, management company, employee or consultant of the Company, the Expiry Date will be 12 months from the date of death of the Option Holder. Acceleration Events If a third party makes a bona fide formal offer to the Company or its shareholders which would constitute an acceleration event, the Board may (i) permit the Option Holders to exercise their Options, as to all or any of such Options that have not previously been exercised (regardless of any vesting restrictions), but in no event later than the Expiry Date of the Option, so that the Option Holders may participate in such transaction; and (ii) require the acceleration of the time for the exercise of the Options and of the time for the fulfilment of any conditions or restrictions on such exercise. Notwithstanding any other provision of the Stock Option Plan or the terms of any Option, if at any time when Options remains unexercised and the Company completes any transaction which constitutes an acceleration event, all outstanding unvested Options will automatically vest. Any proposed acceleration of vesting provisions is subject to the policies and necessary approvals of the TSXV, if applicable. Limitations The maximum number of Common Shares which may be issued, within any one-year period, to Insiders under the Stock Option Plan, together with any other share-based compensation arrangements of the Company, will be 10% of the total number of Common Shares issued and outstanding. The total number of Options awarded to any one individual in any twelve-month period will not exceed 5% of the issued and outstanding Common Shares of the Company at the Award Date unless the Company has obtained disinterested shareholder approval.. The total number of Options awarded to any one consultant of the Company in any twelve-month period will not exceed 2% of the issued and outstanding Common Shares of the Company at the Award Date unless consent is obtained as set forth in the Stock Option Plan. The total number of Options awarded to all persons retained by the Company to provide Investor Relations Activities will not exceed 2% of the issued and outstanding Common Shares of the Company, in any twelve-month period, calculated at the Award Date unless consent is obtained as set forth in the Stock Option Plan. Options granted to persons retained to provide Investor Relations Activities will vest in stages over not less than twelve months with no more than one quarter of the options vesting in any three-month period. Amendments The Board may from time to time, subject to applicable law and to the prior approval, if required, of the shareholders, relevant stock exchanges or any other regulatory body having authority over the Company or the Stock Option Plan, suspend, terminate or discontinue the Stock Option Plan at any time, or amend or revise the terms of the Stock Option Plan or of any Option granted under the Stock Option Plan and the Option Agreement relating thereto, provided that no such amendment, revision, suspension, termination or discontinuance shall in any manner adversely affect any Option previously granted to an Optionee under the Stock Option Plan without the consent of that Optionee. 50 Employment, Consulting and Management Agreements As of the date hereof, other than as described below, the Company does not have any contract, agreement, plan or arrangement that provides for payments to the named executive officers (the “NEOs”) at, following, or in connection with any termination (whether voluntary, involuntary or constructive), resignation, retirement, a change in control of the Company or a change in a director or NEO’s responsibilities. On April 10, 2023, the Company entered into an executive employment agreement with Sarfraz Habib (the “Sarfraz Employment Agreement”) pursuant to which Mr. Habib agreed to serve as the Company’s Chief Financial Officer. In consideration of the services provided by Mr. Habib, the Company agreed to pay a base salary of $133,668 per annum On March 1, 2022, we entered into a Consulting Services Agreement with Kia Besharat, pursuant to which we pay a fee of $3,943 per month for broad financial and securities advisory services. We have also entered into an agreement with Drew Green for board fees, pursuant to which we pay a fee of $7,887 per month. Pension Plan Benefits The Company does not anticipate having any deferred compensation plan or pension plan that provides for payments or benefits at, following or in connection with retirement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information regarding beneficial ownership of shares of our common shares as of December 12, 2023 by (i) each person known to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, (iii) each of our named executive officers and (iv) all of our directors and named executive officers as a group. Except as otherwise indicated, the persons named in the table below have sole voting and investment power with respect to all shares beneficially owned, subject to community property laws, where applicable. Beneficial Owner Shares (1) Percentage Directors and Named Executive Officers Shubha Dasgupta(2) 998,457 13.6 % Sarfraz Habib - * Christa Mitchell(3) 275,735 3.8 % Kendall Marin(4) 998,457 13.6 % Drew Green (5) 820,097 11.2 % Paul Baron (6) 74,317 1.0 % Tasis Giannoukakis (7) 99,558 1.4 % Nima Besharat (8) 208,439 2.8 % All Directors and Officers as a group (8 persons) 3,475,460 44.2 % 5% Stockholders Prodigy Capital Corp. (9) 756,311 10.5 % * Represents beneficial ownership of less than 1%. (1) Based on 7,181,978 common shares outstanding. (2) Includes 126,652 options at an exercise price of $3.60 and 25,641 warrants to purchase common shares at an exercise price of CAD$2.93. The securities beneficially owned by Shubha Dasgupta are directly held by 5032771 Ontario Inc., an entity controlled by Mr. Dasgupta (3) Includes 32,684 options at an exercise price of $3.60 and 12,281 warrants to purchase common shares at an exercise price of CAD$2.93. 51 (4) Includes 126,652 options at an exercise price of $3.60 and 25,651 warrants to purchase common shares at an exercise price of CAD$2.93. (5) Includes 102,138 options at an exercise price of $3.60 and 25,651 warrants to purchase common shares at an exercise price of CAD$2.93.The securities beneficially owned by Drew Green are directly held by DREWGREEN.CA INC., an entity controlled by Mr. Green. (6) Includes 10,214 options at an exercise price of $3.60. (7) Includes 10,214 options at an exercise price of $3.60. (8) Includes 157,136 options at an exercise price of $3.60 and 25,651 warrants to purchase common shares at an exercise price of CAD$2.93. The shares beneficially owned by Nima Besharat are directly held by Break Point Ventures Ltd., an entity controlled by Mr. Besharat. (9) Includes 38,262 warrants to purchase common shares at an exercise price of CAD$2.93. Kia Besharat, principal of Prodigy Capital Corp., has the power to vote or dispose of the shares held of record by Prodigy Capital Corp., and may be deemed to beneficially own those shares. Securities Authorized for Issuance Under Equity Compensation Plans The following table summarizes information about our equity compensation plans as of August 31, 2023. Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holder 2,218,677 $ 3.78 - Equity compensation plans not approved by security holder - - Total 2,218,677 $ 3.78 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Transactions with Related Persons Except as described below [ and except for employment arrangements which are described under “Executive Compensation,”] during the fiscal years ended August 31, 2023 and August 31, 2022, there have not been, nor are there currently proposed, any transaction in which we are or were a participant, the amount involved exceeds the lesser of $120,000 or 1% of the average of the total assets at August 31, 2023, and any of our directors, executive officers, holders of more than 5% of our common shares, or any immediate family member of any of the foregoing had or will have a direct or indirect material interest. Related Person Transaction Policy We expect to adopt a related person transaction policy that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions. The policy will become effective immediately upon the execution of the underwriting agreement for this offering. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person are, were or will be participants in which the amount involved exceeds the lesser of $120,000 or 1% of our total assets at year-end for our last two completed fiscal years. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons. 52 Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit committee approval would be inappropriate, to another independent body of our Board, for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant shareholder to enable us to identify any existing or potential related-person transactions and to effectuate the terms of the policy. In addition, under our code of business conduct and ethics, our employees and directors will have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our audit committee, or other independent body of our Board, will take into account the relevant available facts and circumstances including, but not limited to: ● the risks, costs and benefits to us; ● the impact on a director’s independence in the event that the related person is a director, immediate family member of a director or an entity with which a director is affiliated; ● the availability of other sources for comparable services or products; and ● the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our Board, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our shareholders, as our audit committee, or other independent body of our Board, determines in the good faith exercise of its discretion. Director Independence The NYSE American requires that a majority of our board of directors must be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. The Board has determined that Paul Baron, Tasis Giannoukakis, Drew Green and Nima Besharat are considered to be independent. Our Board currently consists of seven directors, four of whom are independent. we ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following table sets forth the aggregate fees billed by MNP LLP as described below: 2023 2022 Audit Fees $ 148,057 $ 73,660 Audit Related Fees $ 39,040 $ - Tax Fees $ 5,893 $ - All Other Fees $ - $ - Total $ 192,990 $ 73,660 53 Pre-Approval Policies and Procedures The Audit Committee mandate requires that the Audit Committee pre-approve any retainer of the auditor of the Company to perform any non-audit services to the Company that it deems advisable in accordance with applicable legal and regulatory requirements and policies and procedures of the Board. The Audit Committee is permitted to delegate pre-approval authority to one of its members; however, the decision of any member of the Audit Committee to whom such authority has been delegated must be presented to the full Audit Committee at its next scheduled meeting PART IV ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES (a) Financial Statements For a list of the consolidated financial statements included herein, see Index to Consolidated Financial Statements on page F-1 of this Annual Report, which is incorporated into this Item by reference. (b) Exhibits Exhibit No. Description 1.1 Underwriting Agreement between Pineapple Financial Inc and EF Hutton dated October 31, 2023, incorporated by reference to Exhibit 1.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on November 6, 2023. 3.1 Articles of Continuance incorporated by reference to Exhibit 3.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-268636) filed with the Securities and Exchange Commission on September 28, 2023. 3.2 Bylaws incorporated by reference to Exhibit 3.2 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-268636) filed with the Securities and Exchange Commission on September 28, 2023. 10.1 Stock Option Plan incorporated by reference to Exhibit 10.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-268636) filed with the Securities and Exchange Commission on September 28, 2023. 10.2 Salesforce Agreement, between the Company and Salesforce.com, dated December 1, 2020, incorporated by reference to Exhibit 10.2 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-268636) filed with the Securities and Exchange Commission on September 28, 2023. 10.3 Employment Agreement, dated April 4, 2023 between the Company and Sarfraz Habib incorporated by reference to Exhibit 10.3 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-268636) filed with the Securities and Exchange Commission on September 28, 2023. 10.4 Form of Mortgage Broker Affiliation Agreement incorporated by reference to Exhibit 10.4 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-268636) filed with the Securities and Exchange Commission on September 28, 2023. 21.1 List of Subsidiaries of the Registrant, incorporated by reference to Exhibit 21.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-268636) filed with the Securities and Exchange Commission on September 28, 2023. 31.1 Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended. 31.2 Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended. 32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(b) or 15d-14(b) of the Securities Exchange Act, as amended, and 18 U.S.C. Section 1350. 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) ITEM 16. FORM 10-K SUMMARY None. 54 Pineapple Financial Inc. Consolidated Financial Statements For the Years Ended August 31, 2023 and 2022 (Expressed in US Dollars) F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Pineapple Financial Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Pineapple Financial Inc. (the “Company”) as of August 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for each of the years in the two-year period ended August 31, 2023, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of August 31, 2023 and 2022, and the results of its consolidated operations and its consolidated cash flows for each of the years in the two-year period ended August 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Chartered Professional Accountants Licensed Public Accountants We have served as the Company’s auditor since 2020. Mississauga, Canada December 14, 2023 F- 2 Pineapple Financial Inc. Consolidated Balance Sheets (Expressed in US Dollars) August 31, 2023 August 31, 2022 As at: Assets Current assets Cash $ 720,365 $ 3,896,839 Trade and other receivables Note 13 758,988 33,119 Prepaid expenses and deposits 218,150 483,695 Income tax receivable - 71,078 Total current assets 1,697,503 4,484,731 Investments Note 4 10,013 38,211 Right-of-use asset Note 11 960,377 954,091 Property and equipment Note 5 242,091 247,665 Intangible assets Note 6 1,718,954 702,388 Total Assets $ 4,628,938 $ 6,427,086 Liabilities and Shareholders’ Equity Current liabilities Accounts payable and accrued liabilities $ 605,319 $ 780,113 Loan Note 17 430,098 Current portion of lease liability Note 11 138,372 2,024 Total current liabilities 1,173,789 782,137 Deferred government grant Note 13 699,627 Lease liability Note 11 969,589 1,018,561 Total liabilities $ 2,843,005 $ 1,800,698 Shareholders’ Equity Common shares, no par value; unlimited authorized; 6,306,979 issued and outstanding as at August 31, 2023 and 2022 Note 7 4,903,031 4,903,031 Additional paid-in capital Note 8,9 2,955,944 2,922,853 Accumulated other comprehensive loss ( 417,727 ) ( 353,218 ) Accumulated deficit ( 5,655,315 ) ( 2,846,278 ) Total stockholders’ equity 1,785,933 4,626,388 TOTAL LIABILITIES AND STOCKHOLDERS’ $ 4,628,938 $ 6,427,086 Description of business (note 1) Contingencies and commitments (note 18) Subsequent events (note 19) Approved on behalf of Board of Directors “Shuba Dasgupta” “Drew Green” The accompanying notes are an integral part of these consolidated financial statements F- 3 Pineapple Financial Inc. Consolidated Statements of Operations and Comprehensive Loss (Expressed in US Dollars) For the year ended: August 31, 2023 August 31, 2022 Net Revenue Note 16 $ 2,502,264 $ 3,600,851 Expenses Selling, general and administrative Note 12 3,014,945 2,977,277 Salaries, wages and benefits 2,330,127 2,360,344 Interest expense and bank charges 56,316 94,202 Depreciation Notes 5,6,11 441,159 255,871 Share-based compensation Note 9 33,091 723,217 Government based incentive Note 13 ( 591,480 ) - Total expenses $ 5,284,158 $ 6,410,911 Loss from operations Writedown of investment Note 4 ( 27,143 ) - Loss before income taxes $ ( 2,809,037 ) $ ( 2,810,061 ) Income taxes (recovery) expense Note 10 - - Net loss ( 2,809,037 ) ( 2,810,061 ) Foreign currency translation adjustment ( 64,509 ) ( 205,223 ) Net loss and comprehensive loss $ ( 2,873,546 ) $ ( 3,015,284 ) Loss per share - basic and diluted ($) $ ( 0.45 ) ( 0.45 ) Weighted average number of common shares outstanding - basic and diluted 6,306,979 6,306,979 The accompanying notes are an integral part of these consolidated financial statements F- 4 Pineapple Financial Inc. Consolidated Statement of Shareholders’ Equity (Expressed in US Dollars) Common Shares (note 7) Additional Paid in Capital (note 8 and 9) Accumulated other comprehensive loss Accumulated (deficit) earnings Total shareholders’ equity $ $ $ $ $ Balance, August 31, 2021 4,903,031 2,199,636 ( 147,995 ) ( 36,217 ) 6,918,455 Share-based compensation - 723,217 - - 723,217 Foreign exchange translation - - ( 205,223 ) - ( 205,223 ) Net loss - - - ( 2,810,061 ) ( 2,810,061 ) Balance, August 31, 2022 4,903,031 2,922,853 ( 353,218 ) ( 2,846,278 ) 4,626,388 Balance 4,903,031 2,922,853 ( 353,218 ) ( 2,846,278 ) 4,626,388 Share-based compensation - 33,091 - - 33,091 Foreign exchange translation - - ( 64,509 ) - ( 64,509 ) Net Loss - - - ( 2,809,037 ) ( 2,809,037 ) Balance, August 31, 2023 4,903,031 2,955,944 ( 417,727 ) ( 5,655,315 ) 1,785,933 Balance 4,903,031 2,955,944 ( 417,727 ) ( 5,655,315 ) 1,785,933 The accompanying notes are an integral part of these consolidated financial statements F- 5 Pineapple Financial Inc. Consolidated Statements of Cash Flows (Expressed in US Dollars) For the years ended: August 31, 2023 August 31, 2022 Cash provided by (used for) the following activities Operating activities Net (loss) and comprehensive (loss) ( 2,809,037 ) ( 2,810,061 ) Adjustments for the following non-cash items: Depreciation of property and equipment Note 5 67,674 42,218 Depreciation of intangible assets Note 6 265,150 79,489 Depreciation on right of use asset Note 11 108,335 90,049 Interest expense on lease liability Note 11 56,316 32,017 Share-based compensation Note 9 33,091 723,217 Writedown of investment 27,143 - Net changes in non-cash working capital balances: Trade and other receivables ( 26,242 ) ( 32,284 ) Prepaid expenses and deposits 265,545 ( 336,360 ) Accounts payable and accrued liabilities ( 174,795 ) 382,294 Income taxes receivable 70,715 ( 5,488 ) Net cash used in operating activities ( 2,116,105 ) ( 1,834,909 ) Financing activities Issuance costs paid in connection with the private Proceeds from Loan Note 17 430,098 - Lease payments Note 11 ( 81,090 ) ( 61,470 ) Net cash provided by financing activity 349,008 ( 61,470 ) Investing activities Investments Note 4 - - Additions to intangible assets Note 6 ( 1,300,225 ) ( 803,610 ) Additions to property and equipment Note 5 ( 62,073 ) ( 249,322 ) Net cash used in investing activity ( 1,362,298 ) ( 1,052,932 ) Net change in cash ( 3,129,395 ) ( 2,949,311 ) Effect of changes in foreign exchange rates ( 47,079 ) ( 165,386 ) Cash, beginning of year 3,896,839 7,011,535 Cash, end of year 720,365 3,896,839 Supplementary cash flow information: Interest paid - - Income taxes paid - - The accompanying notes are an integral part of these consolidated financial statements F- 6 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 1. Description of business Pineapple Financial Inc. (the” Company”) is a leader in the Canadian mortgage industry, breaking the mould by focusing on both the long-term success of agents and brokerages, as well as the overall experience of homeowners. With 600 brokers within the network, the Company utilizes cutting-edge cloud-based tools and AI-driven systems to enable its brokers to help Canadians realize their ultimate dream, owning a home. The Company was incorporated in 2006, under the Ontario Business Corporations Act. The Company’s head office is located at 200-111 Gordon Baker Road, Toronto, Ontario, M2H 3R1 Canada and its securities are publicly listed on the New York Stock Exchange American (NYSEAmerican) under ticker “PAPL”. The Company completed an Initial Public Offering on October 31, 2023 for gross proceeds of $ 3,220,000 and the first day of trading was November 1, 2023. Impact from the global inflationary pressures leading to higher interest rates During the fiscal year, due to inflationary pressures that were felt around the globe, central banks all over the world increased interest rates steadily to reduce these pressures. The impact on the real estate market has been to reduce the price wars, bidding, and control over the runaway prices. This has led to modifications in all businesses associated with real estate including the Company. With the interest rates increases which reduces prices has led to reduced volume for the Company, seasonality kicked in which is the increase in financing that is experienced from March to October in Canada has offset the interest rates increase paradigm. It is unknown how long the increased interest rates will last. The Company determined that there were no material expectations of increased credit losses, and no material indicators of impairment of long-term assets. 2. Significant accounting policies Statement of compliance These consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”). The financial statements were authorized for issue by the Board of Directors on December 14, 2023. Basis of preparation, functional and presentation currency The financial statements have been prepared in accordance with US GAAP applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business on the historical cost basis except for certain financial instruments that are measured at fair value, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. All financial information is in US Dollars (“USD”) as the Company’s presentation currency and transactions are conducted in the functional currency of Canadian dollars (“CAD”). Adjustment for Reverse Stock Split In July 2023, the Board approved a 1-for-3.9 reverse stock split , or the Reverse Split, which was implemented on July 14, 2023. Consequently, all the share numbers, shares prices, and exercise prices have been retroactively adjusted in these consolidated financial statements for all periods presented. Operating segments The Company determines its reporting units in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280, Segment Reporting. The Company evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company operates as one operating segment which is reported in a manner consistent with the internal reporting provided to the chief operating decision-makers. The chief operating decision-makers are responsible for the allocation of resources and assessing the performance of the operating segment and have been identified as the CEO and CFO of the Company. F- 7 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 2. Significant accounting policies (continued from previous page) Basis of consolidation The consolidated financial statements include the accounts of the Company, and its wholly owned subsidiary, Pineapple Insurance Inc and Pineapple National Inc. All transactions with the subsidiary and any intercompany balances, gains or losses have been eliminated upon consolidation. The subsidiary has a USD presentation currency, and the functional currency is in CAD, and accounting policies have been applied consistently to the subsidiary. ASC 842 Leases At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, less any lease incentives received. The right-of-use assets are depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the straight-line method. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. In addition, the right-of-use asset can be periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. The Company recognized a lease liability and right-of-use asset for most leases and applied ASC 842. The lease liability was measured at the present value of the remaining lease payments, discounted using the Company’s estimated incremental borrowing rate at the date of initial application, estimated to be 6 %. Right-of-use assets were measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the consolidated statement of financial position immediately before the date of initial application. Financial instruments The following table shows the classification categories under US GAAP ASC 825 for each class of the Company’s financial assets and financial liabilities. Asset / liability: Classification: Cash FVTPL Trade and other receivables Amortized cost Investments FVTPL Accounts payable and accrued liabilities Amortized cost Financial assets Recognition and initial measurement The Company recognizes financial assets when it becomes party to the contractual provisions of the instrument. Financial assets are measured initially at their fair value plus, in the case of financial assets not subsequently measured at fair value through profit or loss, transaction costs that are directly attributable to their acquisition. Transaction costs attributable to the acquisition of financial assets subsequently measured at fair value through profit or loss are expensed in profit or loss when incurred. F- 8 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 2. Significant accounting policies (continued from previous page) Classification and subsequent measurement On initial recognition, financial assets are classified and subsequently measured at amortized cost, fair value through other comprehensive income (“FVOCI”) or fair value through profit or loss (“FVTPL”). The Company determines the classification of its financial assets, together with any embedded derivatives, based on the business model for managing the financial assets and their contractual cash flow characteristics. Financial assets are classified as follows: ● Amortized cost - Assets that are held for collection of contractual cash flows where those cash flows are solely payments of principal and interest are measured at amortized cost. Interest revenue is calculated using the effective interest method and gains or losses arising from impairment, foreign exchange and derecognition are recognized in profit or loss. Financial assets measured at amortized cost are comprised of trade and other receivables. ● Fair value through other comprehensive income - Assets that are held for collection of contractual cash flows and for selling the financial assets, and for which the contractual cash flows are solely payments of principal and interest, are measured at fair value through other comprehensive income. Interest income calculated using the effective interest method and gains or losses arising from impairment and foreign exchange are recognized in profit or loss. All other changes in the carrying amount of the financial assets are recognized in other comprehensive income. Upon derecognition, the cumulative gain or loss previously recognized in other comprehensive income is reclassified to profit or loss. The Company does not hold any financial assets measured at fair value through other comprehensive income. ● Mandatorily at fair value through profit or loss - Assets that do not meet the criteria to be measured at amortized cost, or fair value through other comprehensive income, are measured at fair value through profit or loss. All interest income and changes in the financial assets’ carrying amount are recognized in profit or loss. Financial assets mandatorily measured at fair value through profit or loss are comprised of cash and investments. ● Designated at fair value through profit or loss – On initial recognition, the Company may irrevocably designate a financial asset to be measured at fair value through profit or loss in order to eliminate or significantly reduce an accounting mismatch that would otherwise arise from measuring assets or liabilities, or recognizing the gains and losses on them, on different bases. All interest income and changes in the financial assets’ carrying amount are recognized in profit or loss. The Company does not hold any financial assets designated to be measured at fair value through profit or loss. Contractual cash flow assessment The cash flows of financial assets are assessed as to whether they are solely payments of principal and interest on the basis of their contractual terms. For this purpose, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money, the credit risk associated with the principal amount outstanding, and other basic lending risks and costs. In performing this assessment, the Company considers factors that would alter the timing and amount of cash flows such as prepayment and extension features, terms that might limit the Company’s claim to cash flows, and any features that modify consideration for the time value of money. F- 9 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 2. Significant accounting policies (continued from previous page) Financial instruments (continued from previous page) Impairment The Company recognizes a loss allowance for the expected credit losses associated with its financial assets, other than financial assets measured at fair value through profit or loss. Expected credit losses are measured to reflect a probability-weighted amount, the time value of money, and reasonable and supportable information regarding past events, current conditions, and forecasts of future economic conditions. The Company applies the simplified approach for trade receivables. Using the simplified approach, the Company records a loss allowance equal to the expected credit losses resulting from all possible default events over the assets’ contractual lifetime The Company assesses whether a financial asset is credit-impaired at the reporting date. Regular indicators that a financial instrument is credit-impaired include significant financial difficulties as evidenced through borrowing patterns or observed balances in other accounts and breaches of borrowing contracts such as default events or breaches of borrowing covenants. For financial assets assessed as credit- impaired at the reporting date, the Company continues to recognize a loss allowance equal to lifetime expected credit losses. For financial assets measured at amortized cost, loss allowances for expected credit losses are presented in the statements of financial position as a deduction from the gross carrying amount of the financial asset. Financial assets are written off when the Company has no reasonable expectations of recovering all or any portion thereof. Derecognition of financial assets The Company derecognizes a financial asset when its contractual rights to the cash flows from the financial asset expire. Financial liabilities Recognition and initial measurement The Company recognizes a financial liability when it becomes party to the contractual provisions of the instrument. At initial recognition, the Company measures financial liabilities at their fair value plus transaction costs that are directly attributable to their issuance, except for financial liabilities subsequently measured at fair value through profit or loss for which transaction costs are immediately recorded in profit or loss. Where an instrument contains both a liability and equity component, these components are recognized separately based on the substance of the instrument, with the liability component measured initially at fair value and the equity component assigned the residual amount. Classification and subsequent measurement Subsequent to initial recognition, all financial liabilities are measured at amortized cost using the effective interest rate method. Interest, gains and losses relating to a financial liability are recognized in profit or loss. Derecognition of financial liabilities The Company derecognizes a financial liability only when its contractual obligations are discharged, cancelled or expire. F- 10 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 2. Significant accounting policies (continued from previous page) Financial instruments (continued from previous page) Impairment of non-financial assets Property and equipment, and intangible assets (other than goodwill) are tested for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. When an indication of impairment is identified, the carrying value of the asset or group of assets is measured against the recoverable amount. The Company evaluates impairments losses, other than goodwill impairment, for potential reversals when events or circumstances warrant such consideration. Fair value Assets and liabilities carried at fair value must be classified using a three-level hierarchy that reflects the significance and transparency of the inputs used in making the fair value measurements. Level 1 inputs are unadjusted quoted prices of identical instruments in active markets; Level 2 inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs that are not based on observable market data (unobservable data). Determination of fair value and the resulting hierarchy requires the use of observable market data whenever available. The classification of a financial instrument in the hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. Cash is recorded at fair value using level 1 inputs and investments are recorded at fair value using level 3 inputs. During the year, there were no transfers between the levels of fair value. Income taxes The liability method is used in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recorded in the results of operations in the period that includes the enactment date under the law. We establish valuation allowances for deferred tax assets based on a more likely than not standard. Deferred income tax assets are evaluated quarterly to determine if valuation allowances are required or should be adjusted. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidence factors. It is difficult to conclude a valuation allowance is not required when there is significant objective and verifiable negative evidence, such as cumulative losses in recent years. We utilize a rolling three years of actual and current year results as the primary measure of cumulative losses in recent years. Income tax expense (benefit) for the year is allocated between continuing operations and other categories of income such as Other comprehensive income (loss). In periods in which there is a pre-tax loss from continuing operations and pre-tax income in another income category, the tax benefit allocated to continuing operations is determined by taking into account the pre-tax income of other categories. We record Global Intangible Low Tax Income (GILTI) as a current period expense when incurred. We record uncertain tax positions on the basis of a two-step process whereby we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and for those tax positions that meet the more likely than not criteria, we recognize the largest amount of tax benefit that is greater than 50 % likely to be realized upon ultimate settlement with the related tax authority. We record interest and penalties on uncertain tax positions in Income tax expense (benefit). F- 11 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 2. Significant accounting policies (continued from previous page) Share Capital Common shares are classified as equity. Incremental costs directly attributable to the issuance of shares are recognized as a deduction from shareholders’ equity. Earnings per share The Company calculates basic earnings per share amounts for earnings attributable to common shareholders. Basic earnings per share is calculated by dividing earnings attributable to common shareholders (the numerator) by the weighted average number of common shares outstanding (the denominator) during the year. For the purpose of calculating diluted earnings per share, the Company adjusts the earnings attributable to common shareholders, and the weighted average number of common shares outstanding during the year, for the effects of all dilutive potential common shares. Potential common shares are treated as dilutive when, and only when, their conversion to common shares would decrease earnings per share or increase earnings per share from continuing operations. Share-based payment arrangements Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in Note 8. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company’s estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the additional paid-in capital. Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. Property and equipment Property and equipment are recorded at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes all expenditures incurred to bring the assets to the location and condition necessary for them to be operated in the manner intended by management. Depreciation is calculated using the following terms and methods: Schedule of estimated useful life of property and equipment Equipment 5 years Straight Line Furniture 5 years Straight Line IT Equipment 3 years Straight Line Leasehold Improvement 5 years Straight Line Laptops 3 years Straight Line An item of equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in profit or loss in the year the asset is derecognized. F- 12 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 2. Significant accounting policies (continued from previous page) Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated depreciation and accumulated impairment losses. Development costs for internally-generated intangible assets are capitalized when all of the following conditions are met: ● The costs attributable to the asset can be measured reliably. ● It is probable that the intangible asset will generate future economic benefits. ● The Company can demonstrate the control and ability to use the intangible asset. The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognized, development expenditures are charged to the consolidated statement of loss and comprehensive loss in the period in which the expense is incurred. Intangible assets with finite lives are amortised over the estimated useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The depreciation period and the depreciation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the depreciation period or method, as appropriate, and are treated as changes in accounting estimates. The depreciation expense on intangible assets with finite lives is recognised in the consolidated statements of operations and comprehensive loss and in the expense category that is consistent with the function of the intangible assets. Intangible assets with indefinite useful lives are not depreciated, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of operations and comprehensive loss. Intangible assets are recorded at cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes all expenditures incurred to bring the assets to the location and condition necessary for them to be operated in the manner intended by management. Depreciation is calculated using the following terms and methods: Schedule of estimated useful life of intangible assets Software 5 years Straight Line An intangible asset is derecognized upon disposal or termination. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in profit or loss in the year the asset is derecognized. Revenue recognition The Company generates its revenue by charging commissions on mortgages that are applied for through the automation and digitalization process that the Company has in place. F- 13 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 2. Significant accounting policies (continued from previous page) Revenue recognition (continued) The Company has adopted ASC 606 (Revenue from Contracts with Customers). The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognize revenue to depict the transfer of promised goods or services 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 ASC 606, revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring good 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. The standard also specifies the accounting for incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. Revenue is recognized at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for transferring goods or services to a customer. Rendering of services – The Company hosts an online website, using Salesforce, that brokers and agents can utilize to close out deals. The Company’s subsidiary, Pineapple Insurance Inc., generates its revenue by charging premiums for insurance policies and services. Pineapple Insurance is associated with a major insurance company from which it earns commissions for the provision of these services, primarily mortgage insurance. Mortgage insurance is a requirement of each mortgage. Pineapple Insurance has also adopted ASC 606. Typically, Pineapple Insurance is the agent supplying insurance services to the consumer and paid a commission from the premiums collected by the insurance company whose products and services it provides to the end consumer. The Company has three revenue streams: a) Sales Revenue is commission collected from financial institutions with whom it has contracts in place. The Company earns revenue based on a percentage of mortgage amount funded between individual referred by the Company and financial institutions funding the mortgage. We are an agent in these deals as we provide the platform for other parties to provide services to the end-user. For each contract with a customer, the Company identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognizes revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. The Company recognizes revenue when: a contract exists with a lender party and an agent broker, the contract identifies the use of the platform service to close a mortgage deal, the mortgage deal has been closed with the lending financial institution, and commissions paid by the lending financial 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, etc. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business. Revenue is recognized at the end of the deal upon completion of all the actions listed above. A typical transaction attracts a commission fee payable to Pineapple Financial Inc. b) Subscription Revenue is a flat fee that is charged to the brokers and agents for use of the platform. Revenue is recognized at the beginning of the month when an agent is invoiced and pays the fee. c) Underwriting Revenue is a flat fee charged for risk pre-assessment of the deal before it is submitted to the Lender Partner for funding. The flat fee is based on the amount of funded volume being financed in the deal. Revenue is recognized at the end of the deal upon completion of the actions listed in a). F- 14 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 2. Significant accounting policies (continued from previous page) Principal versus Agent considerations Judgement is required in determining whether the Company is a principal or agent in transactions with the lending financial institutions (“Lender Partner”). The Company evaluates the presentation of revenue on a gross basis, or a net basis based on whether the Company controls the service provided to the end user and are the principal (i.e., “Gross”) or the Company arranges the brokers to provide the service to the end user and are an agent ( i.e., “Net”). This determination impacts the presentation of the commission payable to the brokers. For the transactions with the Lender partner our role is to provide instructions to the brokers on the information required from homeowners to complete a successful mortgage application that would be presented to the Lender partner to review and accept and pay a commission to Pineapple for facilitating a successful mortgage application. The Company concluded that the control of the mortgage application is with brokers as the ultimate information that is to be obtained from the homeowners to provide to the lender partner is controlled by the broker and the Company only facilitates the information transfer from the broker to the Lender partner to obtain mortgage for the homeowner as such the Company is an agent. Provisions A provision is recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be reliably estimated. The amount of a provision is the best estimate of the consideration at the end of the reporting period. Provisions measured using estimated cash flows required to settle the obligation are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The Company had no material provisions as at August 31, 2023 and 2022. F- 15 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 3. Significant accounting judgments, estimates and assumptions The preparation of financial statements requires the directors and management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The following are the critical estimates and judgments applied by management that most significantly affect the Company’s financial statements. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods. Investments (level 3) Where the fair values of financial assets and financial liabilities recorded on the statements of financial position, cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible; where observable market data is not available, Management’s judgment is required to establish fair values. Share based compensation Management is required to make certain estimates when determining the fair value of stock options awards, and the number of awards that are expected to vest. These estimates affect the amount recognized as stock-based compensation in the statements of income and comprehensive income based on estimates of volatility, forfeitures and expected lives of the underlying stock options which are at a maximum of 36 months vesting period. Useful life of Assets Significant judgement is involved in determination of useful life for the property plant and equipment and intangible assets. Management assesses the reasonability of the useful life on an annual basis to record the depreciation of the intangibles and property plant and equipment. 4. Investments During the year ended August 31, 2021, the Company purchased an investment in a private company. The Company holds a 5 % interest with no significant influence. The investment is recorded at FVTPL using level 3 inputs. The valuation of the Company’s investment is determined based on the most recent private placement financing completed by the investment and the reviewed financial information of the investment. As at August 31, 2023, the Company recognized an $ 27,143 (August 31, 2023 - $ Nil ) write down of investments in the consolidated statement of operations and comprehensive loss. F- 16 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 5. Property and Equipment The Company’s property and equipment consist of laptops, furniture and office equipment. Schedule of property and equipment Property and equipment Cost Balance, August 31, 2021 $ 67,377 Additions 249,322 Translation adjustment ( 19,700 ) Balance, August 31, 2022 $ 296,999 Additions 62,073 Translation adjustment ( 9,789 ) Balance, August 31, 2023 $ 349,283 Accumulated depreciation Balance, August 31, 2021 $ 8,711 Depreciation $ 42,218 Translation adjustment ( 1,595 ) Balance, August 31, 2022 $ 49,334 Depreciation 67,674 Translation adjustment ( 9,816 ) Balance, August 31, 2023 $ 107,192 Net carrying value August 31, 2022 $ 247,665 August 31, 2023 $ 242,091 F- 17 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 6. Intangible Assets The intangible assets additions in current year are related to development costs capitalized for internally generated software with a useful life of 5 years . Schedule of cost and accumulated depreciation Intangible assets Cost Balance, August 31, 2021 $ - Additions 803,610 Translation adjustment ( 24,120 ) Balance, August 31, 2022 $ 779,490 Additions 1,300,225 Translation adjustment ( 22,190 ) Balance, August 31, 2023 $ 2,057,525 Accumulated depreciation Balance, August 31, 2021 $ - Depreciation $ 79,489 Translation adjustment ( 2,387 ) Balance, August 31, 2022 $ 77,102 Depreciation $ 265,150 Translation adjustment ( 3,681 ) Balance, August 31, 2023 $ 338,571 Net carrying value August 31, 2022 $ 702,388 August 31, 2023 $ 1,718,954 F- 18 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 7. Share capital Authorized share capital The authorized share capital of the Company consists of an unlimited number of common shares with a nominal par value. Schedule of authorized share capital # $ Balance, August 31, 2020 2,564,103 78 Issue of common shares and warrants in connection with the private placement of Units 2,836,164 6,115,978 Issue of common shares for consulting services received 906,712 2,833,478 Issue of warrants for consulting services received - Issuance costs: - - paid in cash ( 1,003,373 ) - paid by issuance of warrants ( 3,043,130 ) Balance, August 31, 2021, 2022 and 2023 6,306,979 4,903,031 (i) 2021 private placement In 2021, the Company completed a private placement of 1,548,472 Units for aggregate proceeds of $ 1,973,047 (CAD $ 1.56 per Unit) and 1,287,692 Units for aggregate proceeds of $ 4,142,931 (CAD $ 3.94 per Unit) (the “2021 private placement”). Each Unit consisted of one common share and one-half of one common share purchase warrant of Pineapple Financial Inc. Each warrant entitles the holder thereof to acquire one-half of one common share of the Company for a price of $ 2.42 and $ 6.01 for a period of 2 years from the date of the Liquidity Event; listing of the common shares of the Company on a public exchange, sale of substantially all the assets of the Company or a transfer of the shares of the Company. The allocation of proceeds between common shares and warrants was made when the equity instruments were issued using a relative fair value method. The Company completed a private placement of 2,836,164 units for aggregate proceeds of $ 7,538,024 . There were two private placements one with the unit price of CAD $ 1.56 per unit and other for unit price of CAD $ 3.94 . Each unit consisted of one common share and one-half warrant which entitles the holder to purchase a common share for 2 years at an exercise price of CAD $ 2.93 and CAD $ 7.29 . F- 19 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 7. Share capital (continued from previous page) (ii) Issue of common shares for consulting services received The Company entered into an arrangement with Gravitas Securities Inc. (“Gravitas”), a related party and shareholder, pursuant to which Gravitas agreed to act as an agent for and on behalf of the Company in connection with the 2021 private placement. In 2021, the Company issued 906,712 common shares with a fair value of $ 2,833,478 for services received in obtaining subscriptions for the 2021 private placement. The fair value of the services received could not be estimated reliably. Accordingly, the fair value of the services received, and the corresponding increase in equity, was measured by reference to the fair value of the common shares issued. The corresponding cost of the services received was recognized as an issuance cost directly in equity. In 2021, $ 212,963 was recognized as a deduction to common shares and $ 48,747 was recognized as a deduction to the common share purchase warrants reserve (Note 8). The issuance costs were allocated in the same proportion as how the proceeds from the 2021 private placement were allocated between common shares and warrants. (iii) Issuance costs paid in cash In 2021, the Company paid a total $ 1,003,373 (2020 - $ NIL ) of cash issuance costs in connection with the 2021 private placement. The issuance costs were allocated in the same proportion as how the proceeds from the 2021 private placement were allocated between common shares and warrants. The issuance costs paid in cash include $ 788,185 (2020 - $ NIL ) paid to Gravitas in connection with the arrangement described in Note 7(ii). The fair value of the warrants was estimated to be $ 0.27 using the Black-Scholes formula and the following inputs: Schedule of Fair Value of Warrants Issuance on March 29, 2021 Estimated fair value per common share CAD $ 1.56 Exercise price of the warrant CAD $ 2.93 Expected volatility of the underlying common share 100 % Expected life of the warrant 2.75 years Expected dividend yield 0.00 % Risk-free interest rate 0.42 % Issuance on April 21, 2021 Estimated fair value per common share CAD $ 3.94 Exercise price of the warrant CAD $ 7.29 Expected volatility of the underlying common share 100 % Expected life of the warrant 2.75 years Expected dividend yield 0.00 % Risk-free interest rate 0.45 % F- 20 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 8. Common share purchase warrants reserve Schedule of common share purchase warrants reserve # $ Balance, August 31, 2020 and 2019 - - Issue of common shares and warrants in connection with the private placement of Units 1,418,903 1,422,045 Issue of warrants for consulting services received 234,086 258,400 Share-based compensation expense - 567,938 Issuance costs: - paid by issuance of warrants - ( 48,747 ) Balance, August 31, 2021 1,652,989 2,199,636 Share-based compensation expense - 723,217 Balance, August 31, 2022 1,652,989 2,922,853 Share-based compensation expense - 33,091 Balance, August 31, 2023 1,652,989 2,955,944 Issue of warrants for consulting services received In 2021, the Company issued 234,086 common share purchase warrants with an estimated fair value of $ 258,400 to consultants in connection with 2021 private placement of which: ● Total of 100,651 common share purchase warrants entitle the holder thereof to acquire one common share of the Company for a price of CAD $ 2.93 for a period of 2 years from the date of Liquidity Event ● Total of 133,435 common share purchase warrants entitle the holder thereof to acquire one common share of the Company for a price of CAD $ 7.29 for a period of 2 years from the date of Liquidity Event The fair value of consulting services received, and the corresponding increase in equity, was measured by reference to the fair value of equity instruments granted. The cost of the services received was recognized as an issuance cost directly in equity, of which $ 258,400 was recognized as a deduction to common shares (Note 7) and $ 60,122 was recognized as a deduction to the common share purchase warrants reserve. The issuance cost was allocated in the same proportion as how the proceeds from the 2018 private placement were allocated between common shares and warrants. The following reconciles the warrants outstanding at the beginning and the end of the year: Schedule of Warrants Outstanding Number of Warrants Weighted Average Exercise Price # $ Balance, August 31, 2020 - - Issued during the year 1,652,988 3.94 Balance, August 31, 2022 and 2023 1,652,988 3.94 F- 21 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 9. Share-based benefits reserve 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 rights 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 installments every 6-months thereafter. The fair value of stock options granted was $ 1,317,155 . A total stock-based compensation expense was recognized of $ 57,340 for the vested options (August 31, 2021 - $ 637,517 ). The Chief Financial Officer was granted 63,821 Stock options on November 15, 2021 as part of his compensation package. The options vest over a 3-year period whereby 8,974 of the options granted vested on the grant date and the remaining unvested options vest in equal installments every 6-months thereafter. The fair value of the stock options granted was $ 141,885 . The Chief Financial Officer options were forfeited and a recovery on stock-based compensation of $ 24,250 was recognized during the year ended August 31, 2023. For year ended August 31, 2023, stock-based compensation expense of $ nil (August 31, 2022 - $ 85,700 ) was recognized. The following reconciles the options outstanding at the beginning and end of the year that were granted to eligible participants pursuant to the Plan: Schedule of Options Outstanding Granted Number of Options Weighted Average Exercise Price # $ Balance, August 31, 2021 565,689 3.72 Granted during the year 62,821 3.82 Balance, August 31, 2022 628,510 3.71 Forfieted during year ( 62,821 ) 3.82 Balance, August 31, 2023 565,689 3.72 Exercisable, August 31, 2023 565,689 3.72 The Company used the Black-Scholes formula to estimate the fair value of share options granted during the year, based on the following inputs: Schedule of Fair Value Of Share Options Granted August 31, 2023 August 31, 2022 Weighted average estimated fair value per common share $ n/a 3.00 Weighted average exercise price of the share option $ n/a 3.20 Weighted average expected volatility of the underlying common share n/a 100 % Weighted average expected life of the share option n/a 5 years Weighted average expected dividend yield n/a 0 % Weighted average risk-free interest rate n/a 1.48 % F- 22 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 10. Income taxes The reconciliation of the combined federal and state income tax rate of 26.5 % (2022 – 26.5 %) to the effective tax rate is as follows: Schedule of Federal and State Income Tax Rate August 31, 2023 August 31, 2022 $ $ (Loss) before recovery of income taxes ( 2,809,037 ) ( 2,810,061 ) Expected income tax (recovery) expense ( 744,395 ) ( 744,670 ) Non-deductible expenses 45,338 197,240 Valuation Allowance 699,057 547,430 Income tax expense (recovery) - - Deferred income taxes The following table summarizes the components of deferred tax: Schedule of Deferred Income Taxes August 31, 2023 August 31, 2022 Deferred tax assets Property and equipment - 18,760 Intangible assets - 26,820 Finance lease liabilities 293,610 270,460 Investments 3,930 - Share issuance costs 435,920 651,140 Operating tax losses carried forward 1,844,180 853,230 SR&ED Pool from T661 67,569 - Charitable donations carryforward 28,990 - Total deferred tax assets 2,674,199 1,820,410 Valuation Allowance ( 2,266,630 ) ( 1,567,580 ) Total net deferred tax assets 407,569 252,830 F- 23 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 10. Income taxes (continued from previous page) Deferred tax liabilities August 31, 2023 August 31, 2022 Property and equipment ( 41,190 ) - Right-of-use asset ( 254,500 ) ( 252,830 ) Intangible Assets ( 110,960 ) - Loan ( 919 ) - Total deferred tax liabilities ( 407,569 ) ( 252,830 ) Net deferred tax liability - - The Canadian non-capital losses carried forward expire in 2043. The remaining deductible temporary differences may be carried forward indefinitely. The Company has adopted the provisions of ASC 740-10, which clarifies the accounting for uncertain tax positions. ASC 740-10 requires that the Company recognize the impact of a tax position in its financial statements if the position is more likely than not to be sustained upon examination based on the technical merits of the position. For the year ended August 31, 2023, the Company had no material unrecognized tax benefits, and based on the information currently available, no significant changes in unrecognized tax benefits are expected in the next 12 months. 11. Right-of-use asset and lease liability The Company leases all its office premises in Ontario and British Columbia, Canada. The Company extended the current Ontario premises of 4,894 sq. ft. lease to January 1, 2030, and acquired additional premises of 8,368 square feet adjacent to the current office premises with the same landlord. The additional premises lease also expires on January 1, 2030. The total area of use by The Company is 13,262 sq. ft. The Company acquired a 1,454 square feet premise lease in British Columbia commencing August 1, 2023 and expiring on July 31, 2028. The Company recognized a right-of-use asset and corresponding lease liability in respect of this lease. The lease liability was measured at the present value of the remaining lease payments, discounted using the Company’s estimated incremental borrowing rate as at September 1, 2017 (date of initial application), estimated to be 6%. The right-of-use asset was measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the interim condensed balance sheet immediately before the date of initial application. F- 24 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 11. Right-of-use asset and lease liability (continued from previous page) The following schedule shows the movement in the Company’s right-of-use asset: Schedule of Right-Of-Use Asset Right-of-use asset Cost Balance, August 31, 2021 $ 297,723 Additions 786,800 Balance, August 31, 2022 $ 1,084,523 Additions 141,799 Translation adjustment ( 48,601 ) Balance, August 31, 2023 $ 1,177,721 Accumulated Depreciation Balance, August 31, 2021 $ 40,383 Depreciation 90,049 Balance, August 31, 2022 $ 130,432 Depreciation 108,335 Translation adjustment ( 21,423 ) Balance, August 31, 2023 $ 217,344 Carrying Amount August 31, 2022 $ 954,091 August 31, 2023 $ 960,377 F- 25 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 11. Right-of-use asset and lease liability (continued from previous page) The following schedule shows the movement in the Company’s lease liability during the year: Schedule of Lease Liability August 31, 2023 August 31, 2022 Balance, beginning of year $ 1,020,585 $ 263,238 Additions 141,799 786,800 Interest Expense 56,316 32,017 Lease payments ( 81,090 ) ( 61,470 ) Translation Adjustment ( 29,649 ) - Balance, end of year $ 1,107,961 $ 1,020,585 Current 138,372 2,024 Non-Current 969,589 1,018,561 $ 1,107,961 $ 1,020,585 The following table provides a maturity analysis of the Company’s lease liability. The amounts disclosed in the maturity analysis are the contractual undiscounted cash flows before deducting interest or finance charges: Schedule of Maturity Lease Liability 2024 $ 213,288 2025 217,856 2026 219,055 2027 216,476 2028 229,943 2029 201,891 2030 16,824 Total Lease liability $ 1,315,334 F- 26 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 12. Expenses The following table provides a breakdown of the selling, general and administrative expenses: Schedule of Selling, General and Administrative Expenses August 31, 2023 August 31, 2022 Software Subscription 816,913 923,137 Marketing, Advertising and promotions 649,934 795,588 Events and award shows 194,863 - Office and generai 183,870 259,480 Professional fees 661,265 243,100 Dues and Subscriptions 58,366 174,743 Rent 165,750 150,141 Consulting fees 210,063 146,554 Travel 97,372 104,812 Donations 46,002 61,206 Lease expense 7,534 63,425 Insurance ( 80,934 ) 54,867 Repair and maintenance 2,489 223 Utilities 1,459 - Selling, general and administrative 3,014,945 2,977,277 13. Deferred government grant The Company was eligible for the Government of Canada SRED program and received $607,080 as at August 31, 2023 for the historical SRED claimed. The Company has accrued $ 710,320 of SRED receivable as at August 31, 2023 for the fiscal year 2023 SRED which is recognized in trades and other receivables in the consolidated balance sheet. A portion of the funds received is related to costs that have been capitalized for the development of internally generated software recognized as intangible asset in Note 6 as such $ 699,627 of the balance received and accrued is recognized as deferred government grant balance and will be recognized as recovery in the consolidated statement of operations and comprehensive loss over the useful life of the intangible assets. As at August 31, 2023, $ 591,480 ($ Nil – August 31, 2022) has been recognized as recovery of operating expenses in the consolidated statements of operations and comprehensive loss. 14. Related party transactions Compensation of key management personnel includes the CEO, COO, CSO, and CFO: Schedule of Related Party Transactions August 31, 2023 August 31, 2022 $ $ Salaries and Wages 522,916 776,615 Share-based compensation 28,989 410,192 F- 27 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 15. Risk management arising from financial instruments a) Credit risk Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company’s principal financial assets that expose it to credit risk are cash and trade receivables. The Company mitigates this risk by monitoring the credit worthiness of its customers and holding cash at financial institutions. The maximum credit exposure at August 31, 2023 is the carrying amount of cash and trade receivables. The Company’s exposure to credit risk is considered to be low, given the size and nature of the various counterparties involved and their history of performance. The Company has not historically incurred any significant credit loss in respect of its trade receivables. Based on consideration of all possible default events over the assets’ contractual lifetime, the expected credit loss in respect of the Company’s trade receivables was minimal as at August 31, 2023 and 2022. b) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company does not have any interest-bearing debt. c) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach in managing liquidity is to ensure, to the extent possible, that it will have sufficient liquidity to meet its liabilities when due, by continuously monitoring actual and forecasted cash flows. d) Management of capital The Company’s objective of managing capital, comprising of shareholders’ equity, is to ensure its continued ability to operate as a going concern. The Company manages its capital structure and makes changes to it based on economic conditions. Management and the Board of Directors review the Company’s capital management approach on an ongoing basis and believe this approach, given the relative size of the Company, is reasonable. The Company is not subject to externally imposed capital requirements. The Company’s capital management objectives, policies and processes have remained unchanged during the year ended August 31, 2023. F- 28 Pineapple Financial Inc. Notes to the Consolidated Financial Statements For the years ended August 31, 2023 and 2022 (Expressed in US Dollars) 16. Disaggregation of Revenue Schedule of Disaggregation of Revenue August 31, 2023 August 31, 2022 $ $ Sales revenue 15,026,896 19,497,519 Commission expense 13,931,836 16,780,133 Net sales revenue 1,095,060 2,717,385 Subscription revenue 736,708 616,734 Other revenue 332,448 - Sponsorship revenue 189,968 - Underwriting revenue 148,080 266,731 Total revenue 2,502,264 3,600,851 17. Loan The Company entered into a loan on July 31, 2023, with a one-year term and maturity date of July 31, 2024 . The Company obtained a loan of $ 430,098 with an annual compounded interest rate of 12 % per annum. The Company paid a 2 % advance fee to obtain the loan as at August 31, 2023. The Company obtained the loan based on the qualified SRED amount to be obtained for fiscal year 2023 noted in Note 13. The Company recognized an interest and accretion expense of $ 8,643 which is recognized as part of interest expense and bank charges in statement of operations and comprehensive loss. 18. Commitments and contingencies In the ordinary course of operating, the Company may from time to time be subject to various claims or possible claims. Management believes that there are no claims or possible claims that if resolved would either individually or collectively result in a material adverse impact on the Company’s financial position, results of operations, or cash flows. These matters are inherently uncertain, and management’s view of these matters may change in the future. See note 11 related to lease commitments. 19. Subsequent Events The Company was listed on the New York stock exchange (NYSE) subsequent to year under the ticker PAPL. The Company issued 875,000 shares on the initial public offering and received gross proceeds of $ 3,220,000 on closing of the public offering. F- 29 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in City of North York, Province of Ontario, Canada on December 14, 2023. PINEAPPLE FINANCIAL INC. By: /s/ Shubha Dasgupta Shubha Dasgupta Chief Executive Officer By: /s/ Sarfraz Habib Sarfraz Habib Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date /s/ Shubha Dasgupta Chief Executive Officer December 14, 2023 Shubha Dasgupta (Principal Executive Officer) /s/ Sarfraz Habib Chief Financial Officer December 14, 2023 Sarfraz Habib (Principal Accounting and Financial Officer) /s/ Kendall Marin President; Chief Operating Officer; and Director December 14, 2023 Kendall Marin /s/ Christa Mitchell Chief Strategy Officer and Director December 14, 2023 Christa Mitchell /s/ Drew Green Chairman of the Board December 14, 2023 Drew Green /s/ Paul Baron Director December 14, 2023 Paul Baron /s/ Tasis Giannoukakis Director December 14, 2023 Tasis Giannoukakis /s/ Nima Besharat Director December 14, 2023 Nima Besharat 55