Pineapple Financial Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS. Please read the following management’s discussion and analysis of our financial condition and results of operations, along with our consolidated financial statements and the related notes and other information included in this Annual Report on Form 10-K. It is important to note that this discussion and analysis contain forward-looking statements with certain risks and uncertainties. These risks and uncertainties could cause our results to differ materially from anticipated in these forward-looking statements. You can find more information about these risks and uncertainties under the heading “Special Note Regarding Forward-Looking Statements” in Part I and elsewhere in this Form 10- K. Special Note Regarding Forward-Looking Statements This Form 10-K includes forward-looking statements that entail potential risks and uncertainties. These statements are usually identified by the use of specific terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and other comparable terminology. All the statements in this Form 10-K that are not about historical facts, including those related to our future operations, financial position, Revenue, projected costs, strategy, plans, management objectives, and expected market growth, are forward-looking. While reading this Form 10-K, you should know that these statements do not guarantee our performance or results. They include known and unknown risks, uncertainties, and assumptions, as mentioned under the “Risk Factors” section in this Form 10-K. We believe that these forward- looking statements are based on reasonable assumptions. Still, you must be aware that many factors, including those mentioned under the “Risk Factors” section in this Form 10-K, could affect our financial results or operations and cause actual results to differ from those stated in the forward-looking statements. These statements were made as of the date of this Form 10-K, and we are not obligated to update or revise any forward-looking statements made here to reflect any change in our expectations or any change in events, conditions, or circumstances on which these statements are based. All written or oral forward-looking statements made by us or on our behalf are qualified by the cautionary statements mentioned in this Form 10-K. Objective In this section, we provide an analysis of the Company’s financial condition, cash flows, and results of operations from management’s perspective. We recommend you read this with the consolidated financial statements and notes in Part II, Item 8 of this Annual Report on Form 10K. Executive Summary We are a fintech company based in Ontario, Canada. Our tech-driven businesses are focused on mortgages and insurance. Our goal is to provide clients with an industry-leading experience through our trusted digital solutions that are simple and fast. 39 Recent Developments Business Trends Throughout fiscal 2025, the Canadian mortgage market continued to adjust following the Bank of Canada’s multi-stage monetary policy easing that began in mid-2024. The Bank reduced its benchmark overnight rate by a cumulative 225 basis points through September 2025, helping to stabilize borrowing costs and gradually improve affordability in several regional housing markets. While these rate reductions provided meaningful relief to borrowers, overall mortgage origination volumes remained below pre-2022 levels due to lingering affordability constraints, limited housing supply, and sustained lender prudence. Within this environment, renewal and refinance activity continued to represent a larger proportion of total mortgage transactions, while new-purchase originations grew at a more measured pace. Despite these headwinds, Pineapple Financial Inc. remained resilient and continued to expand its operational footprint. The Company also advanced its technology capabilities through continued development of its proprietary Pineapple Plus platform, including upgraded workflow automation tools, enhanced CRM features, and integrated insurance and financial-product modules. These improvements contributed to higher productivity per agent and stronger client engagement, even in a subdued housing market. In addition, the Company’s investments in data-driven marketing and digital lead-generation tools supported stable fee-based revenues during the year. Early fourth-quarter indicators reflected increased application activity and lead generation driven primarily by renewal and refinance transactions, positioning the Company to benefit from a gradual recovery in mortgage activity as interest rates normalize and borrower confidence continues to improve heading into fiscal 2026. Summary of the Year Ended August 31, 2025. During the fiscal year ended August 31, 2025, we generated approximately $1.599 billion in residential mortgage loan originations, compared to $1.529 billion in the prior fiscal year ended August 31, 2024. This represents an increase of $70 million, or approximately 4.6 percent year over year, driven primarily by higher renewal and refinance volumes, improved broker productivity, and continued adoption of our Pineapple Plus digital platform. Our net loss for the year ended August 31, 2025, was approximately $3.538 million, compared to a net loss of $4.093 million for the prior fiscal year. The year-over-year improvement in net loss primarily reflects higher funded mortgage volumes, efficiency gains from technology investments, and disciplined cost management, partially offset by continued expenditures in platform development, compliance enhancements, and strategic growth initiatives. Key Performance Indicators As part of our business operations, we closely track several key performance indicators (KPIs) that help us measure our performance. We can evaluate our ability to generate revenue by monitoring our loan production KPIs and comparing our performance to the mortgage origination market. Additionally, we use KPIs related to our technology setup and underwriting processes to assess our performance further. Year ended August 31, 2025 2024 2023 Mortgage volume 1,598,776,840 1,528,926,510 1,398,464,338 Gross billing 17,431,300 16,264,172 15,026,896 Commission expense 15,826,657 14,895,885 13,931,836 Net sales revenue 1,604,644 1,368,287 1,095,060 Insurance 197,852 - - Underwriting revenue 125,828 153,757 148,080 Subscription revenue 750,042 738,697 736,708 Other income 308,458 428,246 522,416 Our sources of revenue include commissions from lenders, underwriting revenue, membership fees from mortgage agents, and other income. 40 Gross Billing: The Company earns revenue from its mortgage brokerage operations based on commissions received from financial institutions with whom it has contractual arrangements. Gross billing represents the total commission earned from lending institutions on funded mortgage transactions. As the Company engages licensed mortgage agents and brokers who are responsible for originating and closing mortgage transactions, a significant portion of the gross billing is paid out as commissions and referral fees to those agents. Accordingly, the Company presents revenue on a net basis, calculated as gross billing less commissions and payouts to mortgage agents, as the Company acts as an agent in these arrangements. Under ASC 606, Revenue from Contracts with Customers, the Company evaluates each contract to identify performance obligations, determine the transaction price, allocate the transaction price to the performance obligations, and recognize revenue when control of the promised service is transferred to the customer. For each mortgage transaction, revenue is recognized when: ● A binding contract exists between the borrower, the mortgage agent, and the lending institution; ● The Company provides access to, and support through, its technology platform to facilitate the mortgage transaction; ● The mortgage loan is funded by the lender; and ● The Company’s commission from the lender becomes fixed and collectible. The Company’s performance obligation is satisfied at a point in time, when the mortgage is funded and all platform-related services for that transaction have been completed. Revenue is measured as the net amount retained by the Company after remitting the applicable commission and referral fees to mortgage agents and sub-brokers. This net revenue reflects the Company’s role as an intermediary providing technology infrastructure, compliance oversight, and workflow support, rather than acting as the primary obligor in the mortgage funding transaction. Subscription Revenue: Users access and use our technology platform, Pineapple Plus, for a flat monthly service fee of $145.00 In exchange for this fee, users of Pineapple Plus have access to a network management system that allows them to perform back- office procedures more efficiently and effectively. This platform will enable them to process the deal described above prepare, and complete the package for submission to be funded by the financial institution. We have a strong user base, which has experienced significant growth since our inception. Revenue is recognized at the beginning of the month when a user is invoiced and pays the fee. Underwriting Fee: Users can optionally use our expert risk pre-assessment service, which assists them in pre-underwriting their loans before submission to a lender for approval and funding. This service significantly reduces the time for the lender partners’ assessment of the deal. For mortgages of $179,575 and less, we charge an underwriting fee of $251; for mortgages greater than $179,575, the Company charges an underwriting fee of $359. The Company has undertaken a special program to educate and inform users of this service in further detail. Approximately 40% of the deals originated by users are using this service. This program is intended to further increase the number of deals and improve the services offered. Insurance commission Revenue: The Company earns insurance commission revenue through Pineapple Insurance, which acts as a broker for third-party insurance carriers. When customers purchase insurance policies through our platform, the Company receives commissions from the insurance providers based on premiums written. The Company acts as a principal in these transactions because it is responsible for sourcing customers, facilitating the placement of insurance products, and managing the full service process. Commission revenue is recognized at the point in time when the underlying insurance policy becomes effective and our performance obligations are satisfied. Insurance commission revenue is presented net of referral fees, agent commissions, and other consideration payable to mortgage agents or third-party partners, as these amounts represent direct transaction-related costs. Renewal commissions are recognized only when they become fixed and determinable based on confirmation from the insurance carriers. Other Income: Other income includes a technology setup fee and sponsorship fee. 41 Components of operating expenses Our operating expenses, as presented in the statement of operations data, include salaries, commissions and team member benefits, general and administrative expenses, marketing and advertising expenses, and others. Salaries and commissions and team member benefits All payroll expenses include our team members’ salaries, commissions, and benefits. Selling, general and administrative expenses Selling, general and administrative expenses include software subscriptions, license fees, professional services, marketing expenses, and other operating expenses. Share-based compensation Share-based compensation comprises equity awards and is measured and expensed accordingly under Accounting Standards Codification (“ASC”) 718 Compensation—Stock Compensation. Comparison of the years ended August 31, 2025 and 2024 Year Ended August 31, 2025 ($) August 31, 2024 ($) Increase/ (Decrease) ($) Increase/ (Decrease) % Revenue 2,986,823 2,688,987 297,836 11.08 Expenses Selling, general and administrative 2,253,944 2,382,225 (128,281 ) (5.38 ) Advertising and Marketing 669,482 860,047 (190,565 ) (22.16 ) Salaries, wages and benefits 1,645,024 2,436,783 (791,759 ) (32.49 ) Interest expense and bank charges 336,115 93,472 242,643 259.59 Depreciation 862,104 838,843 23,261 2.77 Share-based compensation 235,006 - 235,006 100.00 Government incentive (70,555 ) (97,646 ) 27,091 (27.74 ) Loss on disposal of asset 3,596 - 3,596 100.00 Total expense 5,934,716 6,513,724 (578,008 ) (8.89 ) Loss from operations (2,947,893 ) (3,824,737 ) 876,844 (22.93 ) (Loss) Gain on extinguishment of liability - (156,339 ) 156,339 100 Foreign exchange gain (loss) 10,133 (38,836 ) 48,969 (126.09 ) Gain(loss) on change in fair value of warrant liability (608,537 ) 63,769 (672,306 ) (1,054.28 ) Gain(loss) on change in fair value of conversion feature liability - 76,543 (76,543 ) (100.00 ) Accretion expense - (223,059 ) 223,059 100.00 Financing cost – Warrant issue (164,280 ) - (164,280 ) (100.00 ) Other income 72,113 - 72,113 100.00 Net loss (3,638,465 ) (4,102,659 ) 464,194 (11.31 ) Revenue Gross billings increased from $16.264 million for the fiscal year ended August 31, 2024, to $17.431 million for the fiscal year ended August 31, 2025, representing a year-over-year increase of approximately 7.18%. This growth was primarily driven by a moderate recovery in mortgage origination activity, improved renewal and refinance volumes, and higher agent productivity. The Bank of Canada’s continued monetary easing, reducing the policy rate from 5.00% in mid-2024 to 3.25% by August 31, 2025, contributed to improved affordability and renewed consumer confidence, though housing market activity remained below pre-2022 levels. Revenue for the year ended August 31, 2025 was $2.987 million, compared to $2.689 million for the year ended August 31, 2024, representing an increase of $297,836, or 11.08% year-over-year. The increase was primarily driven by stronger net mortgage-brokerage revenue, supported by higher funded volumes and improved agent productivity. Subscription revenue and underwriting fees remained stable, reflecting continued adoption and usage of the Company’s Pineapple Plus platform. The overall growth in revenue demonstrates the resilience of the Company’s core operations despite ongoing softness in the Canadian real estate market and tighter lending conditions. Cost of Gross Billing The cost of gross billing, represented primarily by commission expense, increased from $14.896 million in fiscal 2024 to $15.827 million in fiscal 2025, reflecting a 6.25% increase year-over-year. This increase was consistent with higher funded mortgage volumes and the Company’s strategic focus on supporting high-volume agents. While these agents typically operate at lower commission margins, they generate higher overall transaction throughput, leading to higher aggregate commission payouts. The Company continues to balance growth in gross billings with disciplined cost management through enhanced automation, centralized underwriting, and agent-performance analytics to improve profitability margins over time. 42 Selling, General and Administrative Expenses. The breakdown of selling, general and administrative expenses are as follows: Year Ended August 31, 2025 ($) August 31, 2024 ($) Increase/ (Decrease) ($) Increase/ (Decrease) % Software subscription 747,234 898,870 (151,636 ) (16.87 ) Office and general 206,180 199,756 6,424 3.22 Professional fee 291,084 414,482 (123,398 ) (29.77 ) Dues and subscription 612,476 269,106 343,370 127.60 Rent 210,206 207,560 2,646 1.27 Consulting fee 58,890 62,598 (3,708 ) (5.92 ) Travel 33,289 160,643 (127,355 ) (79.28 ) Donations 788 7,449 (6,661 ) (89.42 ) Lease expense 1,805 71,148 (69,343 ) (97.46 ) Insurance 91,993 90,613 1,380 1.52 2,253,944 2,382,225 (128,281 ) (5.38 ) Selling, General and Administrative (“SG&A”) Expenses Selling, general, and administrative (“SG&A”) expenses decreased by $128,281, or 5.38%, from $2,382,225 for the fiscal year ended August 31, 2024, to $2,253,944 for the fiscal year ended August 31, 2025. The reduction reflects the Company’s continued focus on prudent cost management and operational efficiency while maintaining robust support for its national mortgage network and technology-driven growth initiatives. Management implemented targeted efficiency measures, particularly in software, administrative overhead, and travel, without compromising business effectiveness or service quality. Software Subscription Software subscription expenses decreased by $151,636, or 16.87%, to $747,234 in fiscal 2025, primarily reflecting the optimization of technology infrastructure and the consolidation of third-party software tools into the Company’s proprietary Pineapple Plus platform. This reduction demonstrates the Company’s strategic progress toward self-sufficiency and reduced reliance on external software providers. Office and General Office and general expenses increased by $6,424, or 3.22%, to $206,180 for fiscal 2025, reflecting modest increases in administrative expenditures associated with operational support and office-related costs. Professional Fees Professional fees decreased by $123,398, or 29.77%, to $291,084, due to reduced reliance on external advisors following the completion of post-IPO regulatory and compliance activities. The Company has continued to strengthen internal accounting and legal functions to maintain cost efficiency while ensuring regulatory compliance. Dues and Subscriptions Dues and subscriptions increased by $343,370, or 127.60%, to $612,476 in fiscal 2025. This increase primarily reflects higher listing and regulatory compliance costs associated with maintaining the Company’s NYSE American listing, as well as expanded use of data-analytics subscriptions supporting the Pineapple Plus platform. Rent Rent expense remained consistent, rising slightly by $2,646, or 1.27%, to $210,206, reflecting stable lease terms and effective space-utilization management. Consulting Fees Consulting fees decreased marginally by $3,708, or 5.92%, to 58,890, as the Company continues to transition project-based consulting functions to in-house resources. Travel Travel expenses declined significantly by $127,355, or 79.28%, to $33,289, as management prioritized virtual engagement and implemented cost controls for non-essential travel. Donations Donations decreased by $6,661, or 89.42%, to $788, reflecting the Company’s ongoing focus on cost efficiency and resource reallocation toward growth and technology investments. Lease Expense Lease expenses decreased by $69,343, or 97.46%, to $1,805, following the expiration of prior-year short-term lease commitments. Insurance Insurance expenses increased slightly by $1,380, or 1.52%, to $91,993, due to normal fluctuations in annual premiums and policy renewals. 43 Expenses Year Ended August 31, 2025 ($) August 31, 2024 ($) Increase/ (Decrease) ($) Increase/ (Decrease) % Advertising and marketing 669,482 860,047 (190,565 ) (22.16 ) Salaries, wages and benefits 1,645,024 2,436,783 (791,759 ) (32.49 ) Interest expense and bank charges 336,115 93,472 242,643 259.59 Depreciation 862,104 838,843 23,261 2.77 Share based compensation 235,006 - 235,006 100.00 Government incentive (70,555 ) (97,646 ) 27,091 27.74 Advertising and Marketing Advertising and marketing expenses decreased by $190,565, or 22.16%, from $860,047 in fiscal 2024 to $669,482 in fiscal 2025. The decrease reflects a continued shift toward cost-efficient, digital-first marketing initiatives and reduced discretionary brand-promotion spending. Management focused on targeted agent-acquisition and retention campaigns, which require lower cash investment while maintaining brand visibility and market engagement. Salaries, Wages, and Benefits Salaries, wages, and benefits decreased by $791,759 or 32.49%, from $2,436,783 in fiscal 2024 to $1,645,024 in fiscal 2025. This reduction was primarily driven by organizational streamlining efforts and the reallocation of certain operational functions. The decrease also reflects improved workforce efficiency and cost optimization initiatives implemented during the year, with further benefits expected to be realized in future periods. Interest Expense and Bank Charges Interest expense and bank charges increased by $242,643, or 259.59%, from $93,472 in fiscal 2024 to $336,115 in fiscal 2025. This increase primarily reflects higher interest costs arising from short-term financing arrangements and director-related loans used to support working-capital needs. These borrowings were undertaken at higher interest rates due to prevailing market conditions, contributing to the year-over-year increase. Depreciation Depreciation expense increased slightly by $23,261, or 2.77%, from $838,843 in fiscal 2024 to $862,104 in fiscal 2025. The modest increase was driven by continued investment in technology infrastructure and capitalized software development that supports the Company’s digital operating model and internal systems. Share-Based Compensation Share-based compensation totaled $235,006 in fiscal 2025, compared to nil in fiscal 2024. The increase relates to the issuance of restricted stock units (“RSUs”) and stock options granted to directors, officers, and employees during fiscal 2025. These awards were issued to strengthen retention, align employee incentives with long-term shareholder value, and support the Company’s compensation strategy as a public issuer. Government Incentive Government incentives decreased by $27,091, or 27.74%, from $97,646 in fiscal 2024 to $70,555 in fiscal 2025. Incentives continue to reflect refundable credits and minor program support; however, eligibility for certain prior-year scientific research credits declined following the Company’s public listing and reversal of last year excess amount booked. Operating Income (Loss) For the fiscal year ended August 31, 2025, the Company recorded a loss from operations of $2.948 million, compared to a loss of $3.825 million for the fiscal year ended August 31, 2024, representing an improvement of approximately $0.877 million or 22.93% year-over-year. This improvement primarily reflects: ● Higher revenue, which increased by $346,727 (12.89%) driven by stronger funded mortgage volume and stable subscription and underwriting income. ● Reductions in selling, general, and administrative expenses, which decreased by $128,281 (5.38%) as the Company continued to implement cost-containment measures, optimize technology usage, and streamline discretionary spending. ● Lower salaries, wages, and benefits, which declined by $791,759 (32.49%) following strategic workforce realignment undertaken during the fiscal year. These favorable impacts were partially offset by increases in certain cost categories, including: ● Interest expense and bank charges, which rose by $242,643 (259.59%) due to higher borrowings from third-party lenders and related parties. ● Share-based compensation, which totaled $235,006 following the issuance of stock options and RSUs under the Company’s equity incentive plans. 44 Despite ongoing macroeconomic pressures, including elevated interest rates, slower real estate activity, and muted origination volumes, the Company’s disciplined operational management and targeted cost-efficiency initiatives contributed to a meaningful reduction in operating losses. These measures continue to position the Company for improved financial performance as the mortgage market gradually stabilizes. Net Loss and Comprehensive Loss For the fiscal year ended August 31, 2025, the Company reported a net loss of $3.638 million, compared to a net loss of $4.103 million for the fiscal year ended August 31, 2024, representing an improvement of $464,194, or 11.31%. The narrowing of the net loss reflects: ● Higher revenue generation, ● Reduced SG&A and personnel-related expenses, ● Improved operational efficiencies across the business. However, several non-operating items offset a portion of these gains: Fair Value Changes – Warrant Liability The Company recognized a non-cash loss of $608,537 on the change in fair value of warrant liabilities, compared to a gain of $63,769 in the prior year. This variance reflects mark-to-market valuation under ASC 480, as the Company classifies its warrants as financial liabilities. The newly issued warrants were “at the money” at year-end, resulting in a fair-value adjustment loss. This is a book-only, non-cash adjustment that does not affect operating cash flow. Financing Cost – Warrant Issuance The Company incurred $164,280 in financing costs related to the issuance of warrants associated with certain equity and financing arrangements. Interest Expense Interest expense increased by $242,643, reflecting higher borrowings during the year. While necessary to support working capital and technology development, these borrowings elevated the Company’s financing cost profile. Other Income Other income for the fiscal year includes a gain from the sale of an insurance book, reflecting the divestiture of a non-core portfolio of insurance accounts. The sale generated one-time income of $72,112 and is consistent with management’s strategy to streamline operations and focus on scalable, technology-driven revenue streams. No recurring income is expected from this transaction. Other Items ● The Company recognized a foreign exchange gain of $10,133, compared to a loss in the prior year. ● No gains were recorded on conversion feature liabilities or extinguishment of liabilities in FY2025. ● Accretion expense declined as prior-year liabilities matured or were settled. After accounting for the foreign currency translation adjustment of $100,790, the comprehensive loss for FY2025 was $3.537 million, an improvement from $4.093 million in FY2024. Liquidity and Capital Resources Our primary liquidity needs encompass working capital, capital expenditures, and technology investments, particularly those related to enhancing our proprietary Pineapple Plus platform, supporting skilled personnel, and maintaining compliance infrastructure. These items continue to represent the largest components of our capital deployment. We finance these needs primarily through cash on hand, cash flow from operations, and strategic financing facilities obtained from external lenders and related parties. The following table summarizes our cash flows from operating, investing and financing activities: Year Ended August 31, 2025 ($) August 31, 2023 ($) Increase/ (Decrease) ($) Cash (used) provided in operating activities (946,820 ) (1,708,261 ) 761,441 Cash (used) provided by financing activities 3,458,306 2,912,627 545,679 Cash (used) provided in investing activities (944,187 ) (1,117,390 ) (173,203 ) Cash at the end of the period 2,117,371 580,356 1,537,015 Net cash flow from (used in) operating activities Year Ended Description August 31, 2025 ($) August 31, 2024 ($) Operating activities Net loss (3,638,465 ) (4,102,659 ) Adjustments for the following non-cash items: Depreciation of property and equipment 82,113 87,803 Amortization of intangible assets 592,942 616,532 Depreciation on right of use asset 187,048 134,508 Interest expense on lease liability 51,431 62,604 Share-based compensation 235,006 - Bad debt written off 48,524 - Change in fair value of warrant liabilities 608,537 63,769 Accretion expense - 223,059 Loss on extinguishment of liability - 156,339 Loss on derecognition of right of use asset and liability 3,596 - Foreign exchange gain (loss) - 38,836 Chang in fair value of conversion feature liability - (76,543 ) Net changes in non-cash working capital balances: Trade and other receivables 14,477 603,764 Prepaid expenses and deposits 47,910 60,239 Accounts payable and accrued liabilities 999,683 519,943 Deferred Government Grant (176,253 ) (208,376 ) Deferred revenue (3,369 ) 111,921 (946,820 ) (1,708,261 ) 45 Liquidity Outlook and Ability to Continue as a Going Concern The Company has incurred recurring operating losses and continues to experience negative cash flows from operations. For the fiscal year ended August 31, 2025, the Company recorded a net loss of $3.64 million and negative operating cash flows of $946,820. As at August 31, 2025, the Company had an accumulated deficit of $13.396 million and a working-capital deficit. These factors raise substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date of these financial statements. ● Management has developed plans intended to improve liquidity and address these uncertainties. These plans include: ● Accessing additional capital through the Injective Digital Asset Treasury Initiative, including the expected realization of $2.1 million held in escrow upon the filing and effectiveness of the Company’s Form S-1 (see Subsequent Events , Note 21). ● Pursuing additional financing and capital-raising activities as required to support ongoing operations and fund strategic initiatives. ● Continuing cost-management measures, including reductions in payroll, operating expenses, and discretionary spending. ● Investing in Injective digital assets, which totaled approximately $11.4 million subsequent to year-end, and which management believes may generate future economic benefit depending on market performance. While management believes these plans are achievable, there can be no assurance that the Company will obtain the necessary financing or that the planned initiatives will be successful. If the Company is unable to secure adequate funding or generate positive operating results, it may be unable to meet its obligations as they become due. Net Cash Used in Operating Activities Net cash used in operating activities was $946,820 for the fiscal year ended August 31, 2025, compared to $1,708,261 for the fiscal year ended August 31, 2024, an improvement of $761,441. The reduction in operating cash outflows was driven by a smaller net loss, higher non-cash adjustments (including depreciation, amortization, and the change in fair value of warrant liabilities), and stronger working-capital performance. In particular, higher accounts payable and accrued liabilities, combined with stable collections on trade receivables, contributed to improved liquidity. Non-cash items such as share-based compensation, lease-related adjustments, and fair-value remeasurements increased the reconciliation to operating cash but did not affect cash usage. Net Cash Provided by Financing Activities Net cash provided by financing activities totaled $3,458,306 in fiscal 2025, compared with $2,912,627 in fiscal 2024. The increase primarily reflects additional borrowings obtained from external lenders and related parties to fund working-capital requirements and support continued investment in technology and operations. These borrowings increased interest-expense recognition but provided essential liquidity during the fiscal year. No equity financing was completed during the year. Net Cash Used in Investing Activities Net cash used in investing activities was $944,187 for the fiscal year ended August 31, 2025, compared with $1,117,390 in the prior year. The majority of the outflows relate to the capitalization of internally developed software and enhancements to the Pineapple Plus platform. These investments are aligned with management’s ongoing strategy to strengthen the Company’s digital infrastructure, expand automation, and improve long-term scalability. Overall Liquidity Position As of August 31, 2025, the Company had a cash balance of $2.12 million, compared to $0.58 million at August 31, 2024, representing an increase of approximately $1.54 million. The year-over-year improvement reflects disciplined cost management, stronger working-capital inflows, and access to financing facilities. The Company’s capital structure includes common equity, additional paid-in capital, accumulated deficit, and warrant liabilities. Management continues to monitor liquidity closely to ensure sufficient resources are available to fund operating requirements, service debt obligations, and support ongoing technology development. Although interest costs are expected to remain elevated due to the use of credit facilities, the Company expects to maintain adequate liquidity through disciplined working-capital management and access to non-dilutive financing sources. Based on current forecasts, management believes existing cash resources are sufficient to meet operating needs for at least the next 12 months and to support the Company’s strategic growth initiatives. 46 The following table presents our liquidity: Year Ended August 31, 2025 ($) August 31, 2024 ($) Cash 2,117,371 580,356 Trade and other receivables 92,223 155,224 Prepaid expenses and deposit 110,001 157,910 2,319,595 893,490 As of August 31, 2025, the Company’s total current assets increased to $2,319,595, compared to $893,490 as of August 31, 2024, representing a year-over-year improvement of approximately $1.43 million. The increase was driven primarily by a significant strengthening of the Company’s cash position. Cash increased to $2,117,371 as of August 31, 2025, compared to $580,356 in the prior year. This improvement reflects proceeds from financing activities, tighter operating-cost management, and more efficient cash planning during the fiscal year. Trade and other receivables decreased to $92,223, from $155,224 as of August 31, 2024. The decrease is mainly due to reversal of Govt Incentives during the year. Prepaid expenses and deposits totaled $110,001, compared to $157,910 in the prior year, reflecting the timing of annual software, insurance, and service contracts that require advance payment. Overall, the Company’s enhanced liquidity position demonstrates strengthened financial flexibility, supported by disciplined spending, operational efficiencies, and strategic use of financing to fund technology development and working-capital requirements. Management believes that current liquidity, combined with expected operating cash flows, is sufficient to meet all short-term obligations and support near-term growth initiatives. Critical Accounting Policies and Significant Judgments and Estimates This management’s discussion and analysis of the financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of Revenue and expenses during the reported period. Per U.S. GAAP, we base our estimates on historical experience and various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates if conditions differ from our assumptions. While our significant accounting policies are more fully described in Note 2 in the “Notes to Financial Statements,” we believe the following accounting policies are critical to making effective judgments and estimates in preparing our financial statements. 47 Revenue Recognition The Company has adopted ASC 606, Revenue from Contracts with Customers, which provides a single comprehensive model for revenue recognition. The core principle of the standard is that Revenue should be recognized when goods or services are transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract- based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. It establishes a five-step model to account for revenue arising from contracts with customers. Under this standard, Revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The standard requires entities to exercise Judgment, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with customers. Additionally, the standard specifies the accounting for incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. When the Company transfers goods or services to a customer, Revenue is recognized at an amount that reflects the consideration expected to be received. The Company operates an online platform, that enables brokers and agents to efficiently close deals. The Company’s subsidiary, Pineapple Insurance Inc., generates Revenue by charging premiums for insurance policies and services. Pineapple Insurance is affiliated with a major insurance company, from which it earns commissions for providing services, primarily mortgage insurance. Mortgage insurance is a offered for each mortgage. Pineapple Insurance acts as the agent that supplies insurance services to the consumer and is paid a commission from the premiums collected by the insurance company whose products and services it provides to the end consumer. Basis of presentation, functional and presentation currency The Company’s headquarters is in Ontario, Canada, and the functional currency is in Canadian Dollars (CAD) with the presentation currency being US Dollars (USD). The Company’s subsidiaries have a functional currency of CAD and presentation currency of USD which have been applied consistently. There will be a foreign currency translation undertaken to report under US GAAP which will be the basis of presentation. Foreign Currency Transactions and Translation Although the Company conducts substantially all of its operating activities and generates nearly all revenues and expenses in Canadian dollars (“CAD”), it engages in certain financing and vendor transactions that are denominated in U.S. dollars (“USD”). These USD-denominated balances include equity proceeds raised in USD, payments to U.S.-based service providers, and other non-operating expenditures. Foreign currency transactions are translated into CAD at the exchange rate in effect on the transaction date. Monetary assets and liabilities denominated in USD are remeasured at the closing exchange rate at each reporting date, and the resulting foreign exchange gains or losses are recognized in the consolidated statements of operations. In addition, because the Company reports its consolidated financial statements in U.S. dollars, CAD-denominated assets, liabilities, revenues, and expenses are translated into USD using appropriate period-end or average exchange rates. These translation adjustments are recorded within other comprehensive income (loss) and do not impact the Company’s underlying cash flows or economic performance. Lease Accounting The relevant criteria applicable is ASC 842. We assess at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. We apply a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. We recognize lease liabilities to make lease payments and right-of- use assets representing the right to use the underlying assets. 48 At the commencement date of the lease, we recognize lease liabilities measured at the present value of lease payments to be made over the lease term. Lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. Lease payments also include the exercise price of a purchase option reasonably certain to be exercised by us and payments of penalties for terminating the lease, if the lease term reflects us exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, we use our incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. We recognize right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. Investments We invested in a commercial mortgage firm, MCommercial, based in Montreal and Toronto, Canada representing 5% of the total issued and outstanding shares. This strategic partnership allows Pineapple residential mortgage agents to have access to a leading commercial mortgage firm and experts, which will expand their product offerings, service levels and corporate Revenue through increased transactions. The Company entered into a share purchase agreement with 9142-2964 Quebec Inc. pursuant to which the Company acquired five Class A Shares of 7326904 Canada Inc. (dba as Mortgage Alliance Corporation) (“Alliance”), representing 5% of the total issued and outstanding shares of Alliance. Alliance is a mortgage brokerage firm based in Ontario, Canada with locations in Calgary, Vancouver and Halifax. The total amount of both investments was recorded at fair value, and any impairment loss is recognized in profit and loss account. 49 Share-Based Compensation The Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation, which requires the recognition of the fair value of equity awards granted to employees, directors, and consultants as compensation expense over the vesting period. The fair value of share options and restricted share units (“RSUs”) is determined at the grant date and expensed on a straight-line basis over the service period, net of estimated forfeitures. Equity Incentive Plans Pineapple Financial Inc. maintains two equity-based compensation plans: 1. the 2021 Stock Option Plan, and 2. the 2022 Omnibus Equity Incentive Plan. Together, these plans authorize the issuance of awards representing up to 10 % of the Company’s issued and outstanding common shares at any given time. Awards may be granted as stock options, RSUs, or other equity-linked instruments intended to attract, retain, and motivate qualified directors, officers, employees, and consultants whose performance contributes to the Company’s success. 2025 Grants On July 16, 2025, the Board of Directors approved the grant of an aggregate 120,007 RSUs and stock options under the above plans, in accordance with the Board resolution dated June 26, 2025. These awards were made to recognize past contributions and to further align management and employee interests with those of shareholders. These RSU awards were fully vested at the date of grant and issued in recognition of historical performance, subject to statutory tax withholdings and required regulatory filings. The fair value of these awards was determined based on the market price of the Company’s common shares on the grant date. No cash consideration was received upon issuance, and the RSUs carry no voting or dividend rights prior to settlement. Prior Awards Stock options granted under the 2021 Legacy Plan in prior fiscal years remain outstanding and are exercisable at prices adjusted for the 1-for-20 reverse stock split completed in July 2025. Those awards were fully vested as of August 31, 2023. Accounting Impact For the fiscal year ended August 31, 2025, total share-based compensation expense recognized in the consolidated statement of operations amounted to $235,006, reflecting the fair-value recognition of RSU and option grants under ASC 718. The Company expects future share-based compensation expense to remain modest relative to revenue as the current pool of awards covers key management for the next fiscal cycle. 50 Item 9A. Controls and Procedures Disclosure Controls and Procedures As of August 31, 2025, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on this evaluation, management concluded that the Company’s disclosure controls and procedures were effective as of August 31, 2025, in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified by the SEC’s rules and forms, and (ii) accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Management’s Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”) as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s internal control framework is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. While the Company, as an emerging growth company, is not currently required to maintain or formally attest to an effective system of internal control under Section 404(b) of the Sarbanes-Oxley Act, management recognizes the importance of strong controls and has taken proactive steps to enhance its control environment. These measures include: ● Employing qualified accounting and financial reporting personnel with clear segregation of duties. ● Conducting regular reconciliations and reviews to ensure accurate classification and reporting of transactions. ● Implementing dual-authorization procedures for significant accounting entries and payments. ● Maintaining a comprehensive fixed-asset register and supporting documentation for material balances. ● Establishing documentation for key estimates, judgments, and accounting policies. ● Enhancing oversight and review of financial information by senior management and the Audit Committee. As of August 31, 2025, management evaluated the effectiveness of the Company’s internal control over financial reporting and concluded that a material weakness existed related to segregation of duties within the finance function due to the limited number of personnel involved in financial reporting. Notwithstanding this material weakness, management believes the consolidated financial statements included in this Annual Report fairly present, in all material respects, the Company’s financial position, results of operations and cash flows in conformity with GAAP. The Company is taking steps to enhance its internal control environment and expects to strengthen segregation of duties as additional resources become available. Changes in Internal Control Over Financial Reporting During the fiscal year ended August 31, 2025, the Company implemented several improvements to strengthen its control environment. These included (i) independent review and approval processes for journal entries and account reconciliations, (ii) enhancements to segregation of duties through staffing changes and workflow automation, and (iii) updated documentation of accounting policies and procedures. There were no changes during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Financial Instruments As on August 31, 2025, the Company’s financial instruments consist of cash, trade and other receivables, investments, accounts payable and accrued liabilities. 51 As per ASC 820, Fair value measurement establishes a fair value hierarchy based on the level of independence, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorizing within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. i) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and iii) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). The following table provides the fair values of the financial assets in the Company’s consolidated statements of financial position, categorized by hierarchical levels and their related classifications. As of August 31, 2025 Level 1 Level 2 Level 3 Total Assets: Cash 2,117,371 2,117,371 Investment 9,733 9,733 Risks and Uncertainties The Company’s business is subject to numerous risks and uncertainties, including those described elsewhere in this MD&A, as well as general economic and market risks. These risk factors could materially affect the Company’s future operating results and could cause actual events to differ materially from those described in forward-looking information relating to the Company.