パイナップルファイナンシャルの四半期報告

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-41738

PINEAPPLE FINANCIAL INC.

(Exact name of registrant as specified in its charter)

Canada

Not applicable 00-0000000

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

Unit 200, 111 Gordon Baker Road

North York, Ontario M2H 3R1

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (416) 669-2046

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated Filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging Growth Company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol		Name of each exchange on which registered
Common Shares, no par value		PAPL		NYSE American

The number of shares of the registrant’s common stock issued and outstanding, as of January 12, 2024 was 7,181,979.

PINEAPPLE FINANCIAL INC.

TABLE OF CONTENTS FOR FORM 10-Q

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	2
	Consolidated Balance Sheets (unaudited)	3
	Consolidated Statements of Operations and Comprehensive Loss(unaudited)	4
	Consolidated Statements of Shareholders’ Equity (unaudited)	5
	Consolidated Statements of Cash Flows (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	34

	SIGNATURES	35

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, or the “Securities Act,” and Section 21E of the Securities Exchange Act of 1934 or the “Exchange Act.” These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results.

In some cases, you can identify forward-looking statements by terms such as “may,” “intend,” “might,” “will,” “should,” “could,” “would,” “expect,” “believe,” “anticipate,” “estimate,” “predict,” “potential,” or the negative of these terms. These terms and similar expressions are intended to identify forward-looking statements. The forward-looking statements in this report are based upon management’s current expectations and beliefs, which management believes are reasonable. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor or combination of factors, or factors we are aware of, may cause actual results to differ materially from those contained in any forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements. These statements represent our estimates and assumptions only as of the date of this report. Except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

You should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including:

●	the timing of the development of future services,

●	projections of revenue, earnings, capital structure and other financial items,

●	statements regarding the capabilities of our business operations,

●	statements of expected future economic performance,

●	statements regarding competition in our market, and

●	assumptions underlying statements regarding us or our business.

Other risks and uncertainties include such factors, among others, as market acceptance and market demand for our products and services, pricing, the changing regulatory environment, the effect of our accounting policies, industry trends, adequacy of our financial resources to execute our business plan, our ability to attract, retain and motivate key personnel, and other risks described from time to time in periodic and current reports we file with the United States Securities and Exchange Commission, or the “SEC.” You should consider carefully the statements under this report, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements.

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

Pineapple Financial Inc.

Condensed Interim Consolidated Financial Statements (Unaudited)

For the three month period ended November 30, 2023

(Expressed in US Dollars)

Pineapple Financial Inc.

Condensed Interim Consolidated Balance Sheets - Unaudited

(Expressed in US Dollars)

		November 30, 2023 (Unaudited)			August 31, 2023
As at:
Assets
Current assets
Cash		$	2,341,537		$	720,365
Trade and other receivables	Note 13		871,279			758,988
Prepaid expenses and deposits			206,177			218,150
Total current assets			3,418,993			1,697,503

Investments	Note 4		9,976			10,013
Right-of-use asset	Note 10		923,450			960,377
Property and equipment	Note 5		220,800			242,091
Intangible assets	Note 6		1,851,519			1,718,954
Total Assets		$	6,424,738		$	4,628,938

Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities		$	469,552		$	605,319
Loan	Note 17		517,467			430,098
Current portion of lease liability	Note 10		144,446			138,372
Total current liabilities			1,131,465			1,173,790

Deferred government incentive	Note 13		710,867			699,627
Lease liability	Note 10		928,150			969,589
Warrant liability	Note 8		37,848			-
Total liabilities		$	2,808,330		$	2,843,005

Shareholders’ Equity
Common shares, no par value; unlimited authorized; 7,181,979 issued and outstanding shares as of November 30, 2023 and 6,306,979 as at August 31, 2023.	Note 7		7,606,685			4,903,031
Additional paid-in capital	Note 8,9		2,955,944			2,955,944
Accumulated other comprehensive loss			(393,149	)		(417,727	)
Accumulated deficit			(6,553,072	)		(5,655,315	)
Total stockholders’ equity			3,616,408			1,785,933
TOTAL LIABILITIES AND STOCKHOLDERS’		$	6,424,738		$	4,628,938

Description of business (note 1)
Contingencies and commitments (note 15)
Subsequent events (note 18)

Approved on behalf of Board of Directors

“Shuba Dasgupta”	“Drew Green”

The accompanying notes are an integral part of these condensed interim consolidated financial statements

Pineapple Financial Inc.

Condensed Interim Consolidated Statements of Operations and Comprehensive Loss - Unaudited

(Expressed in US Dollars)

For the period ended:		November 30, 2023 (Unaudited)			November 30, 2022 (Unaudited)
		Three Months Ended
For the period ended:		November 30, 2023 (Unaudited)			November 30, 2022 (Unaudited)

Net Revenue	Note 16	$	569,355		$	892,024

Expenses
Selling, general and administrative	Note 11		560,151			699,724
Advertising and marketing			133,470			121,567
Salaries, wages and benefits			644,273			657,317
Interest expense and bank charges			21,407			21,448
Depreciation	Note 5,6,10		137,427			88,368
Government based incentive	Note 13		(51,047	)		-
Share-based compensation	Note 9		-			65,674
Total expenses		$	1,445,681		$	1,654,098

Loss from operations
Foreign exchange gain (loss)			(10,691	)		-
Change in fair value of warrant liability	Note 8		(10,740	)		-

Loss before income taxes		$	(897,757	)	$	(762,073	)

Income taxes (recovery) expense			-			-

Net loss			(897,757	)		(762,073	)

Foreign currency translation adjustment			24,578			(73,232	)

Net loss and comprehensive loss		$	(873,179	)	$	(835,305	)

Loss per share - basic and diluted ($)			(0.14	)		(0.12	)
Weighted average number of common shares outstanding - basic and diluted			6,566,594			6,306,979

The accompanying notes are an integral part of these condensed interim consolidated financial statements

Pineapple Financial Inc.

Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity - Unaudited

(Expressed in US Dollars)

	(note 7)			(note 8 and 9)		loss			earnings			equity
				Additional		Accumulated
	Common			Paid in		other			Accumulated			Total
	Shares			Capital		comprehensive			(deficit)			shareholders’
	(note 7)			(note 8 and 9)		loss			earnings			equity
		$			$		$			$			$
Balance, August 31, 2022		4,903,031			2,922,853		(353,218	)		(2,846,278	)		4,626,388
Share-based compensation		-			65,674		-			-			65,674
Foreign exchange translation		-			-		(73,232	)		-			(73,232	)
Net loss		-			-		-			(762,073	)		(762,073	)
Balance, November 30, 2022		4,903,031			2,988,527		(426,450	)		(3,608,351	)		3,856,757

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
Shares issued on Initial Public offering on November 3, 2023		2,751,937											2,751,937
Warrants issued related to Initial Public Offering		(48,283	)		-		-			-			(48,283	)
Foreign exchange translation		-			-		24,578			-			24,578
Net loss		-			-					(897,757	)		(897,757	)
Balance, November 30, 2023		7,606,685			2,955,944		(393,149	)		(6,553,072	)		3,616,408
Balance		7,606,685			2,955,944		(393,149	)		(6,553,072	)		3,616,408

The accompanying notes are an integral part of these condensed interim consolidated financial statements

Pineapple Financial Inc.

Condensed Interim Consolidated Statements of Cash Flow - Unaudited

(Expressed in US Dollars)

			2023		2022
		Three Months Ended
For the period ended:		November 30, 2023 (Unaudited)			November 30, 2022 (Unaudited)
			$			$
Cash provided by (used for) the following activities

Operating activities
Net (loss) income and comprehensive (loss) income			(897,757	)		(762,073	)
Adjustments for the following non-cash items:
Depreciation of property and equipment	Note 5		15,067			15,556
Depreciation of intangible assets	Note 6		89,483			40,851
Depreciation on right of use asset	Note 10		32,877			26,446
Interest expense on lease liability	Note 10		(16,179	)		(14,687	)
Share-based compensation	Note 9		-			65,674
Foreign exchange gain (loss)			(10,691	)
Change in fair value of warrant liability	Note 8		(10,740	)		-
Net changes in non-cash working capital balances:
Trade and other receivables			(112,290	)		(11,500	)
Prepaid expenses and deposits			11,974			4,306
Accounts payable and accrued liabilities			(124,526	)		(595,480	)
Income taxes receivable			-			71,078
Net cash used in operating activities			(1,022,782	)		(1,159,829	)

Financing activities
Advances received from related parties Proceeds from the loan	Note 17		87,369			-
Share capital issuance	Note 7		2,731,658			-
Lease payments Repayment of lease obligations	Note 10		(40,633	)		(15,008	)
Net cash provided by financing activity			2,778,394			(15,008	)

Investing activities
Additions to intangible assets	Note 6		(266,825	)		(284,589	)
Additions to property and equipment	Note 5		(2,032	)		(39,678	)
Net cash used in investing activity			(268,857	)		(324,267	)

Net change in cash			1,486,755			(1,499,104	)
Effect of changes in foreign exchange rates			134,418			(15,869	)
Cash, beginning of period			720,365			3,896,839
Cash, end of period			2,341,537			2,381,866

The accompanying notes are an integral part of these condensed interim consolidated financial statements

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(Expressed in US Dollars)

1. Description of business

Pineapple Financial Inc. (the” Company”) is a leader in the Canadian mortgage industry, breaking the mold by focusing on both the long-term success of agents and brokerages, as well as the overall experience of homeowners. With over 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 $3,500,000 and the first day of trading was November 1, 2023.

Impact from the global inflationary pressures leading to higher interest rates

During the first quarter of 2024, 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. 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

Basis of Presentation

The Company’s condensed interim consolidated financial statements have been prepared in accordance with US Generally Accepted Accounting Principles (“GAAP”) and Securities and Exchange Commission (“SEC”) rules and regulations and include the accounts of the Company and its consolidated subsidiaries. These unaudited condensed interim consolidated financial statements do not include all disclosures normally provided in annual financial statements and should be read in conjunction with the Company’s audited consolidated financial statements for the year ended August 31, 2023. Accordingly, accounting policies, estimates, and judgements applied are the same as those applied in the Company’s financial statements for the year ended August 31, 2023, unless otherwise indicated. The Company assesses its accounting estimates and judgements every reporting period.

The condensed interim consolidated financial statements were authorized for issue by the Board of Directors on January 16, 2024.

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(Expressed in US Dollars)

2. Significant accounting policies (continued)

Basis of preparation, functional and presentation currency

The condensed interim consolidated financial statements have been prepared in accordance with 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. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

All financial information is presented in US Dollars (“USD”) as the Company’s presentation currency and functional currency is in Canadian Dollars (“CAD”). The interim financial statements are condensed and should be read in conjunction with the Company’s latest annual year-end consolidated financial statements for the year ended August 31, 2023. It is management’s opinion that all adjustments necessary for a fair statement of the results for the interim period has been made, and all adjustments are of a recurring nature or a description of the nature of and any amount of any adjustments other than normal recurring nature has been stated. Sufficient disclosures have been so as to not make the interim financial information misleading. There are no prior-period adjustments in these condensed interim consolidated financial statements.

Operating segments

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 consolidated operating segment and have been identified as the CEO and CFO of the Company.

Basis of consolidation

The condensed interim 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 subsidiaries have a CAD functional currency and accounting policies have been applied consistently to the subsidiaries.

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.

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(Expressed in US Dollars)

3. Significant accounting judgments, estimates and assumptions (continued)

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. As at November 30, 2023, the Company recognized a $Nil change in fair value (2022- $nil). Change in fair value during the current period due to foreign exchange translation.

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, 2022	$	296,999
Additions		62,073
Translation adjustment		(9,789	)
Balance, August 31, 2023	$	349,283
Additions		2,032
Translation adjustment		(1,367	)
Balance, November 30, 2023	$	349,948

Accumulated depreciation
Balance, August 31, 2022	$	49,334
Depreciation		67,674
Translation adjustment		(9,816	)
Balance, August 31, 2023	$	107,192
Depreciation		15,067
Translation adjustment		6,889
Balance, November 30, 2023	$	129,148

Net carrying value
November 30, 2023	$	220,800
August 31, 2023	$	242,091

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(Expressed in US Dollars)

6. Intangible assets

The intangible assets additions in the current period 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, 2022	$	779,490
Additions		1,300,225
Translation adjustment		(22,190	)
Balance, August 31, 2023	$	2,057,525
Additions		266,825
Translation adjustment		(45,538	)
Balance, November 30, 2023	$	2,278,812

Accumulated depreciation
Balance, August 31, 2022	$	77,102
Depreciation		265,150
Translation adjustment		(3,681	)
Balance, August 31, 2023	$	338,571
Depreciation		89,483
Translation adjustment		(761	)
Balance, November 30, 2023	$	427,293

Net carrying value
November 30, 2023	$	1,851,519
August 31, 2023	$	1,718,954

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(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, 2022 and 2023		6,306,979		4,903,031

Issuance of Common Shares on Initial Public Offering		875,000		3,500,000
Share Issuance Costs (SRF Bills)				(748,063	)
Warrants issued				(48,283	)

Balance, November 30, 2023		7,181,979		7,606,685

On November 3, 2023, the Company completed was listed on the New York Stock Exchange (NYSE) under the ticker PAPL. The Company issued 875,000 shares on the initial public offering and received gross proceeds of $3,500,000 on closing of the public offering. The Company incurred $796,346 in share issue costs related to underwriter fee and legal cost fees. The share issue cost balance includes the fair value of $48,284 related to 26,250 representative warrants that were issued on November 3, 2023 to the underwriters for an exercise price of $4 and expiring on October 31, 2028.

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(Expressed in US Dollars)

8. Warrants

Common Share purchase warrant

Schedule of Common Share Purchase Warrant

	#		$
Balance, August 31, 2022		6,446,655		2,922,853
Share-based compensation expense		-		33,091
Balance, August 31, 2023 and November 30, 2023		6,446,655		2,955,944

Warrant Liability

As noted in Note 7 above on November 3, 2023, the Company issued 26,250 warrants at an exercise price of $4 with an expiry date of October 31, 2028. As per ASC 815 the instruments did not meet the criteria to be classified as equity instruments as such were classified as a financial liability. Below is the continuity of the warrant liability valuation.

The warrants were valued using the Black-Scholes method with the share price of $1.86, exercise price of $4, term of 5 years, risk free rate of 4.62% and volatility of 251% at issuance and share price of $1.46, exercise price of $4, term of 5 years, risk free rate of 4.44% and volatility of 251% as at November 30, 2023.

Schedule of Warrant Liability

	#		$
Balance at August 31, 2023		-		-
Issuance of warrants		26,250		48,283
Change in fair value of warrant liability				(10,740	)
Fair Value of Warrants at November 30, 2023		26,250		37,848

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(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 the Company. 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 instalments every 6-months thereafter. The fair value of stock options granted was $1,317,155. A total stock-based compensation expense was recognized of $Nil for three months ended November 30, 2023 (November 30, 2022 $52,904).

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 instalments every 6-months thereafter. The fair value of the stock options granted was $141,885. The Chief Financial Officer options were forfeited during the year ended August 31, 2023. For period ended November 30, 2023, stock-based compensation expense of $nil (November 30, 2022 - $12,770) was recognized.

The following reconciles the options outstanding at the beginning and end of the period that were granted to eligible participants pursuant to the Plan:

Schedule of Options Outstanding Granted

	November 30, 2023				August 31, 2023
	Number of Options		Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
	#		$		#			$
Balance, August 31, 2023		565,689		3.72		628,510			3.71
Forfeited during period		-		3.82		(62,821	)		3.82
Balance as at period end		565,689		3.72		565,689			3.72
Exercisable as at period end		565,689		3.72		565,689			3.72

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(Expressed in US Dollars)

10. 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.

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, 2022	$	1,084,523
Additions		141,799
Translation adjustment		(48,601	)
Balance, August 31, 2023		1,177,721
Translation adjustment		43,792
Balance, November 30, 2023	$	1,133,929

The right-of-use asset is being depreciated on a straight-line basis over the remaining lease term.

Accumulated Depreciation
Balance, August 31, 2022	$	130,432
Depreciation		108,335
Translation adjustment		(21,423	)
Balance, August 30, 2023	$	217,344
Depreciation		32,877
Translation adjustment		(39,742	)
Balance, November 30, 2023	$	210,479

Carrying Amount
November 30, 2023	$	923,450
August 31, 2023	$	960,377

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(Expressed in US Dollars)

10. Right-of-use asset and lease liability (continued)

The following schedule shows the movement in the Company’s lease liability during the period:

Schedule of Lease Liability

	November 30, 2023			August 31, 2023

Balance, beginning of period	$	1,107,961		$	1,020,585
Additions		-			141,799
Interest Expense		(16,179	)		56,316
Lease payments		(40,633	)		(81,090	)
Translation Adjustment		21,447			(29,649	)
Balance, end of period	$	1,072,596		$	1,107,961

Current		144,446			138,372
Non-Current		928,150			969,589
	$	1,072,596		$	1,107,961

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	$	170,629
2025		216,008
2026		217,196
2027		214,640
2028		227,992
2029		200,179
2030		16,682
Total Lease liability	$	1,263,326

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(Expressed in US Dollars)

11. Expenses

The following table provides a breakdown of the selling, general and administrative expenses:

Schedule of Selling, General and Administrative Expenses

	November 30, 2023		November 30, 2022
	Three Months ended
	November 30, 2023		November 30, 2022
	$		$
Software Subscription		180,920		247,320
Office and general		65,824		207,560
Professional fees		-		39,337
Dues and Subscriptions		40,031		19,110
Rent		45,745		41,433
Consulting fees		166,313		88,976
Travel		39,177		30,289
Donations		476		12,807
Lease expense		16,104		12,027
Insurance		3,264		865
Repair and maintenance		2,089		-
Utilities		209		-
Selling, general and administrative		560,151		699,724

12. Related party transactions

Compensation of key management personnel includes the CEO, COO, CSO, and CFO:

Schedule of Related Party Transactions

	November 30, 2023		November 30, 2022
		$		$
Salaries and Wages		176,153		183,116
Share-based compensation		-		37,586

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(Expressed in US Dollars)

13. Deferred government grant

The Company was eligible for the Government of Canada SRED program up to November 3, 2023. The Company has accrued $816,507 of SRED receivable as at November 30, 2023, 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 $710,867 of the balance received and accrued is recognized as deferred government incentive 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 November 30, 2023, $51,047 (November 30, 2022 $nil) has been recognized as recovery of operating expenses in the consolidated statements of operations and comprehensive loss.

14. 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 November 30, 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 November 30, 2023 and August 31, 2023.

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 variable 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 period ended November 30, 2023.

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements for period ended November 30, 2023 - Unaudited

(Expressed in US Dollars)

15. 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 10 related to lease commitments.

16. Disaggregation of revenue

Schedule of Disaggregation of Revenue

	November 30, 2023		November 30, 2022
	$		$
Sales revenue		3,873,320		4,308,609
Commission expense		3,600,073		3,654,284
Net sales revenue		273,246		654,325

Subscription revenue		183,245		187,886
Other revenue		70,757		-
Underwriting revenue		42,106		49,813
Total revenue		569,355		892,024

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 received an additional advance of $87,369 related to the Loan during the three-month period ended November 30, 2023. The Company obtained the loan based on the qualified SRED amount to be obtained for fiscal year 2023 and three-month period ended November 30, 2023, noted in Note 13.

18. Subsequent events

The Company has performed an evaluation of subsequent events through the time of filing this quarterly statements and has determined that there are no such events to report.

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operation

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 unaudited condensed interim consolidated financial statements and the related notes and other information. 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 10Q.

Special Note Regarding Forward-Looking Statements

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

Objective

In this section, we provide an analysis of the Company’s financial condition, cash flows, and results of operations from management’s perspective. We recommend you read this with the unaudited condensed interim consolidated financial statements and notes in Part II, Item 8 of this Annual Report on Form 10-Q.

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.

Recent Developments

Business Trends

Throughout 2022 and 2023, the Bank of Canada raised the prime rate several times to curb inflationary pressures. Consequently, the mortgage interest rates increased significantly, leading to a considerable shrinkage in the mortgage origination market from 2022 to 2023. The rise in mortgage interest rates, alongside the economic uncertainty, has resulted in a reduced demand for mortgage originations.

Mortgage business is aligned with the real estate industry which is a seasonal business. Normally May to September of each year is the peak season. Our quarterly results mostly fall in off peak season.

Summary of three months ended November 30, 2023.

During the period under review, we generated $381.987 million in residential mortgage loans compared to $386.778 million in the previous corresponding period, which ended on November 30, 2022. This amount represents a decrease of $4.791 million or 1.24% compared to the same period that ended on November 30, 2022. Our Net Loss stood at $0.0.897 million, as compared to the $0.762 million recorded in the same period on November 30, 2022. We also generated loss $0.609 million of Adjusted EBITDA, which represents a decrease of $0.086 million, or 16.55%, compared to the $0.517 million generated in the same period on November 30, 2022. For more information on Adjusted EBITDA, please refer to the “Non-GAAP Financial Measures” section.

Non-GAAP Financial Measures

We provide investors with additional information in addition to our GAAP results. We do this by disclosing our non-GAAP financial measures: Adjusted Revenue, adjusted net (Loss) income, adjusted diluted (Loss) earnings per share, and adjusted EBITDA. These measures, which GAAP does not calculate, are believed to be useful by management in providing investors with useful information regarding the performance and value of our business. Our non-GAAP financial measures serve as performance indicators unaffected by fluctuations in certain costs or other items. While other companies may define these measures differently, they allow for better comparisons of general operating performance from period to period. It is important to note that our non-GAAP financial measures should not be viewed as substitutes for Revenue, net Income, or any other operating performance measure calculated by GAAP. Finally, we rely on these non-GAAP financial measures to plan and forecast for future periods.

Our definition of “Adjusted Revenue” is the sum of all gross revenues. Similarly, we define “Adjusted Net (Loss) Income” as pre-tax earnings before accounting for share-based compensation expense, impairment loss on investments, accrual of legal fees and deferred tax accrual, and the applicable tax effects of these adjustments. We add back Salesforce expenses and capitalize them with a 20% depreciation rate. We also add deferred government grants in current Income to arrive at Adjusted EBITDA. Lastly, our definition of “Adjusted Diluted (Loss) Earnings Per Share” is derived after adjusting for the abovementioned items.

Our definitions of each non-GAAP financial measure allow us to add back certain cash and non-cash charges and deduct certain gains included in calculating total revenues, net, and net Income attributable to Pineapple Financial Inc. or net Income. However, these expenses and gains vary greatly and are difficult to predict. From time to time in the future, we may include or exclude other items if we believe that doing so is consistent with providing useful information to investors.

Although we use non-GAAP financial measures to evaluate our business performance, it’s important to note that they do not include certain necessary costs to operate our business. These measures can help demonstrate the long term impact of our strategies. Still, they should not be considered an indication that our future results will be unaffected by unusual or non-recurring items. It’s important to note that non-GAAP financial measures have limitations as analytical tools and should not be used in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. These measures cannot be relied upon as a measure of discretionary cash available to invest in the growth of our business or as a measure of money available to us to meet our obligations.

Limitations to our non-GAAP financial measures included, but are not limited to:

	(a)	they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;

	(b)	Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;

	(c)	although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted Revenue, Adjusted Net Income (Loss) and Adjusted EBITDA do not reflect any cash requirement for such replacements or improvements; and

	(d)	they are not adjusted for all non-cash income or expense items reflected in our Consolidated Statements of Cash Flows.

To better evaluate our operating performance, we utilize non-GAAP financial measures and other comparative tools, in addition to U.S. GAAP measurements, which address certain limitations. The reconciliation of our non-GAAP financial measures to their corresponding U.S. GAAP measures can be found below. Furthermore, our U.S. GAAP based measures are available in the consolidated financial statements and related notes, which are included in Form 10-Q.

Reconciliation of Adjusted Revenue to Total Revenue, net

	Three months ended November 30,
	2023		2022
Total Revenue, net		569,355		892,024
Commission expense		3,600,073		3,654,284
Gross Revenue		4,169,428		4,546,308

Reconciliation of Adjusted Net (Loss) Income to Net Income Attributable to Pineapple Financial Inc.

	Three months ended November 30,
	2023			2022
Net Income attributable to Pineapple Financial		(897,757	)		(762,073	)
Share-based compensation		-			65,674
Salesforce expenses		89,968			91,098
Government based incentive		51,047			-
Depreciation		137,427			88,368
Change in fair value of warrant liability		10,740			-
Adjusted EBITDA		(608,575	)		(516,933	)

Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding

	Year Ended August 31,
	2023			2022
Weighted average common shares outstanding		6,566,594			6,306,978

Adjusted Diluted (Loss)) Earning per share		(0. 09	)		(0.08	)
Adjusted EBITDA		(602,463	)		(516,933	)

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.

	Three months ended November 30,
	2023		2022
Mortgage volume		381,987,099		386,777,717
Sales revenue		3,873,320		4,308,609
Commission expense		3,570,110		3,654,284
Net sales revenue		303,210		654,325
Underwriting revenue		42,106		49,813
Subscription revenue		183,245		187,886
Other income		70,758		-

Description of Certain Components of Financial Data

Components of Revenue

Our sources of Revenue include commissions from lenders, underwriting revenue, membership fees from mortgage agents, and other income.

Sales revenue

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.

Subscription Revenue:

Users access and use our technology platform, MyPineapple, for a flat monthly service fee of $118. In exchange for this fee, users of MyPineapple 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 $197,475 and less, we charge an underwriting fee of $276; for mortgages greater than $197,475, the Company charges an underwriting fee of $395. 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 intends to further increase the number of deals and improve the services offered.

Other Income:

Other Income includes a technology setup fee and sponsorship fee.

Components of operating expenses

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

Salaries and commissions and team member benefits

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

Selling, general and administrative expenses

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

Share-based compensation

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

Comparison of three months ended November 30, 2023 and 2022

	Three months ended November 30,						Increase/			Percentage of Increase/
	2023			2022			(decrease)			(Decrease)
Description	$			$			$			%
Sales revenue		4,169,428			4,546,308			(376,880	)		(8.29	)
Commission		3,600,073			3,654,284			(54,211	)		(1.48	)
Net revenue		569,355			892,024			(322,669	)		(36.17	)
Selling, general and administrative		560,150			699,724			(139,574	)		(19.95	)
Advertising and marketing		133,470			121,567			11,903			9.79
Salaries, wages and benefits		644,273			657,317			(13,044	)		(1.98	)
Interest expense and bank charges		21,407			21,448			(41	)		(0.19	)
Depreciation		137,427			88,368			49,059			55.52
Share-based compensation		-			65,674			(65,674	)		(100.00	)
Government based incentive		(51,047	)		-			51,047			100.00
Total expenses		1,445,681			1,654,098			(208,417	)		(12.60	)
Foreign exchange gain (loss)		(10,691	)		-			10,691			100.00
Change in fir value of warrant liability		(10,740	)		-			10,740			100.00
Loss before income taxes		(897,757	)		(762,073	)		135,684			17.80
Income tax		-			-
Net loss		(897,757	)		(762,073	)		135,684			17.80
Foreign currency translation adjustment		24,578			(73,232	)		97,810			133.56
Net loss and comprehensive loss		(873,179	)		(835,305	)		37,874			(4.53	)

Revenue

Sales Revenue decreased from $4,546 million in the three months ending November 30, 2022, to $4.169 million in the three months ending November 30, 2023, representing a 8.29% decrease from period to period. To control high inflation, The Bank of Canada increased the interest rate from 3.75% as of December 01, 2022, to 5.00% as of November 30, 2023. This resulted in decreased real estate transactions and, eventually, in the mortgage business. The number of real estate transactions in Canada during the three months ended November 30, 2023 was 107,831 houses as compared to 104,890 houses during the previous corresponding three months ending November 30, 2022, representing a gain of 2.80%. This gain is quite encouraging. Keep in mind that typically, mortgage transactions are normally completed after two to three months from the sale of the house. This pick-up activity, if continued will give positive impacts in second and third quarter.

Gross Profit Percentage

Pineapple Financials’ gross margin decreased to 36.17% during the three months ending November 30, 2023 as compared to previous corresponding three months ending November 30, 2022. This decrease was due to more volume by high-volume agents with low margins.

Cost of Revenue

During the three months ending November 30, 2023, the cost of revenue decreased to $3.600 million from $3.654 million during the three months ending November 31, 2022. The decrease in the cost of Revenue is due to the decline in Revenue.

Selling, General and Administrative Expenses.

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

	Three months ending November 30,				Increase/			Increase/
	2023		2022		(Decrease)			(Decrease)
Description	($)		($)		($)			(%)
Software subscription		180,919		247,319		(66,400	)		(26.85	)
Events and award shows				-
Office and general		65,824		207,560		(141,736	)		(68.29	)
Professional fee		-		39,337		(39,337	)		(100.00	)
Dues and subscriptions		40,031		19,110		20,921			109.48
Rent		45,745		41,433		4,312			10.41
Consulting fee		166,313		88,976		77,337			86.92
Travel		39,177		30,289		8,888			29.34
Donations		476		12,807		(12,331	)		(96.28	)
Lease expense		16,104		12,027		4,077			33.90
Insurance		3,264		865		2,399			277.34
Repair and maintenance		2,089		-		2,089			100.00
Utilities		209		-		209			100.00
		560,151		699,724		(139,574	)		(19.95	)

Selling, general and administrative expenses decreased by $139,574 from $699,724 during the three months ending November 30, 2022, to $560,150 during the three months ended November 30, 2023. This decrease represents a 19.95% from three months ended November 30, 2022 to November 30, 2023.

Software subscriptions decreased by $66,400, representing 26.851% from $247,319 during the three months ended November 30, 2022, to $65,824 during the three months ended November 30, 2023. This is due to less reliance on third-party software as internal software develops more.

Office and general expenses decreased to $65,824 during the three months ending November 30, 2023, from $207,560 during the three months ended November 30, 2022. This represents a decrease of $141,736 or 68.29%. This decrease is mainly due to reduced revenue.

Dues and subscriptions increase from $19,110 during the three months ended November 30, 2022, to $40,031 for the three months ended November 30, representing a 109.48% increase. This increase is due to Initial Public Offering on November 03, 2023.

The consulting fee was increased from $88,976 during the three months ended November 30, 2022, to $166,313 during the three months ended November 30, 2023. This 86.92% increase was due to hiring consultants for our IPO process.

Advertising and Marketing

	Three months ended November 30				Increase/		Increase/
	2023		2022		(Decrease)		(Decrease)
Description	($)		($)		($)		(%)
Advertising and marketing		133,470		121,567		11,903		9.79

Advertising and marketing increased to $133,470 during the three months ended November 30, 2023 as compared to $121,567 as compared to $121,567 during the previous corresponding three months ended November 30, 2022. This 9.79 percent increase was due to continued investment in advertisement and marketing to retain and increase the market share during depressed real estate market.

Salaries, Wages and benefits

	Three months ended November 30				Increase/			Increase/
	2023		2022		(Decrease)			(Decrease)
Description	($)		($)		($)			(%)
Salaries, wages and benefits		644,273		657,317		(13,044	)		(1.98	)

Salaries, wages and benefits remain almost the same during the three months ended November 30, 2023 compared to the previous corresponding period, which ended on November 30, 2022.

Depreciation

	Three months ended November 30,				Increase/		Increase/
	2023		2022		(Decrease)		(Decrease)
Description	($)		($)		($)		(%)
Depreciation		137,427		88,368		49,059		55.52

Pineapple financial is actively investing in the development of its software. During the three months period under review, $0.266 million were added in intangible assets. This addition represents mostly the salaries, wages and benefits of our staff working on intangible asset. These additions are the main cause of increase of depreciation during the three months ended November 30, 2023.

Government based incentive

	Year Ended August 31,					Increase/		Increase/
	2023			2022		(Decrease)		(Decrease)
Description	($)			($)		($)		(%)
Government based incentive		(51,047	)		-		54,047		100.00

During the three months period ended November 30, 2023, the Company charges portion of Scientific Research and Experimental Development (SR&ED) amount.

Liquidity and Capital Resources

Our primary liquidity needs encompass working capital and capital expenditures, specifically those associated with technological enhancements, investments in skilled personnel, and marketing services. These three categories have constituted a significant portion of our liquidity and capital resource demands throughout the year. We primarily utilize cash on hand and cash flows generated from our operations to meet these requirements.

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

	Three months ended November 30,						Increase/
	2023			2022			(Decrease)
Description	$			$			$
Cash (used) provided in operating activities		(1,022,782	)		(1,159,829	)		(137,047	)
Cash (used) provided by financing activities		2,778,394			(15,008	)		2,793,402
Cash (used) provided in investing activities		(268,857	)		(324,267	)		(55,410	)
Cash at the end of the period		2,341,537			2,381,866			(40,329	)

Net cash flow from (used in) operating activities

	Three months ended November 30
	2023			2022
Description	($)			($)
Operating activities
Net loss		(897,757	)		(762,073	)
Adjustments for the following non-cash items:
Depreciation of property and equipment		15,067			15,556
Depreciation of intangible assets		89,483			40,851
Depreciation on right of use asset		32,877			26,446
Interest expense on lease liability		(16,179	)		(14,687	)
Share-based compensation		-			65,674
Foreign exchange gain (loss)		(10,691	)		-
Change in fair value of warrant liability		(10,740	)		-
Net changes in non-cash working capital balances:
Trade and other receivables		(112,290	)		(11,500	)
Prepaid expenses and deposits		11,974			4,306
Accounts payable and accrued liabilities		(124,526	)		(595,480	)
Income taxes receivable		-			71,078
		(1,022,782	)		(1,159,829	)

Our primary source of cash flow comes from our core business operations.

During the three months period ended November 30, 2023, the Company’s net cash used in operating activities decreased to $1,022,782 from $1,159,829 in the previous corresponding period. This decrease of outflow of cash was primarily due to payments for accounts payable and accrued liabilities. Additionally, trade and other receivable add outflows in the operating activities.

Net cash flow from (used in) financing activities

During the three months period ended November 30, 2023, the Company issued 875,000 shares through initial public offering at the offering price of $4.00 per share. The company received $2.732 million after underwriting commission and other initial public offering expenses.

Net cash flow from (used in) investing activities

The Company invested $0.267 million to develop software for quick and accurate mortgage application filling by field agents during the three months period ended November 30, 2023. These investments will help the company acquire more mortgage agents in the future.

As of November 30, 2023, the Company’s cash balance was $2,341,537, as compared to $2,381,866 on November 30, 2022.

The Company’s capital structure comprises of contributed common shares, an accumulated deficit, additional paid in capital, and other comprehensive losses. Its primary sources of liquidity are cash generated through operations and cash received from investors in exchange for the issuance of common shares. The business aims to meet all its financial and other obligations as they come due.

Future capital requirements will depend on various factors, including our investment in technology and growth rate. However, certain aspects, like interest rates and real estate markets, are beyond our control.

The following table presents our liquidity:

	November 30, 2023		August 31, 2023
Description	($)		($)
Cash and cash equivalents		2,341,537		720,365
Trade and other receivables		871,279		758,988
Prepaid expenses and deposit		206,177		218,151
		3,418,993		1,697,504

As of August 31, 2023, Pineapple has a healthy liquidity position with $2.287 million in cash and cash equivalents. The trade and other receivables, prepaid expenses and deposits indicate that the Company can meet its obligations. The company’s liquidated assets are under pressure mainly due to the expansion of our operations and investment in technology. Additionally, the Canadian real estate market, inflation, and the continuous hike of interest rates by the Bank of Canada have also affected the Company’s operations and impacted its liquidity.

Critical Accounting Policies and Significant Judgments and Estimates

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

Revenue Recognition

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

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

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

The Company’s subsidiary, Pineapple Insurance Inc., generates Revenue by charging premiums for insurance policies and services. Pineapple Insurance is affiliated with a major insurance company, from which it earns commissions for providing services, primarily mortgage insurance. Mortgage insurance is a requirement for each mortgage. Pineapple Insurance acts as the agent that supplies insurance services to the consumer and is paid a commission from the premiums collected by the insurance company whose products and services it provides to the end consumer. Additionally, Pineapple Insurance has adopted ASC 606.

Basis of presentation, functional and presentation currency

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

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

Lease Accounting

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

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

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

Investments

We invested in 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.

Share Based Compensation

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

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

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

On November 3, 2023, company issued 26,250 warrants to our underwriters of initial public offering, EF Hutton. These are excisable between May 31, 2024 to October 31, 2028. Strike price is $4.00 per warrant.

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

Controls and Procedures

Although we are currently not required to maintain an effective internal controls system, we have assessed and already started creating our internal controls as we have determined the need to maintain effective and controlled systems including but not limited to:

●	skilled staffing for financial, accounting and external reporting areas, including segregation of duties;

●	reconciliation of accounts as necessary to ensure correct classification, accurate recording and balancing of books;

●	proper recording of expenses, liabilities, and other accounting entries in the period to which they relate as per the matching principle;

●	maintaining a fixed assets register that identifies user, department, and detailed tracking;

●	evidence of internal review and approval of accounting transactions by 2 or more independent personnel;

●	documentation of processes, assumptions and conclusions underlying significant estimates; and

●	documentation of accounting policies and procedures.

The Company currently uses NetSuite, a proprietary financial accounting software from Oracle Corporation for recording, tracking and financial reporting. However, external resources may be required such as professional consultants to determine more specific internal controls to decrease exposure to erroneous financial reporting which the Company is significantly deficient to meet the necessary regulatory requirements and responsibilities, and ensure compliance in all respects thereby incurring significant expenses in meeting these needs. As of November 30, 2023, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting and based on this assessment, our management concluded that, as of November 30, 2023, our internal controls over financial reporting lacked adequate segregation of duties within the accounting and system process, inadequate documentation to evidence the operation of controls, inconsistent procedures and approvals and insufficient written policies and procedures for accounting, IT and financial reporting and record keeping. We are implementing plans to improve such internal control.

Financial Instruments

As on November 30, 2023, the Company’s financial instruments consist of cash, trade and other receivables, investments, accounts payable and accrued liabilities and loan.

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

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

ii) Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly (i.e., as prices) or indirectly (i.e., derived from prices); and

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

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

As of November 30, 2023

Level 1

Level 2

Level 3

Total

Assets:

Cash

2,341,537

Investment

9,976

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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, this disclosure is not required.

Item 4. 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.

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.

PART II. OTHER INFORMATION

Item 1 Legal Proceedings.

To our best knowledge, we are currently not a party to any legal proceedings that, individually or in the aggregate, are deemed to be material to our financial condition or results of operations.

Item 1A Risk Factors.

Smaller reporting companies are not required to provide the information required by this item.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds.

There were no issuances of unregistered sales of equity securities during the three months ended November 30, 2023.

Use of Proceeds

On November 3, 2023, we completed the initial public offering, or IPO, of our common shares pursuant to which we issued and sold 875,000 common shares at a price to the public of $4.00 per share. All of the common shares issued and sold in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (Registration No. 333-268636), which was declared effective by the SEC on October 12, 2023. We received net proceeds of approximately $2.73 million, after deducting underwriting discounts and commissions and offering expenses borne by us. None of the expenses incurred by us were direct or indirect payments to any of (i) our directors or officers or their associates, (ii) persons owning 10% or more of our common shares, or (iii) our affiliates. There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC on November 2, 2023 pursuant to Rule 424(b)(4). EF Hutton, division of Benchmark Investments, LLC, acted as representative of the underwriters of the offering. The offering commenced on October 31, 2023 and did not terminate before all securities registered in the registration statement were sold.

Item 3 Defaults Upon Senior Securities.

None.

Item 4 Mine Safety Disclosures.

Not applicable.

Item 5 Other Information.

None.

Item 6. EXHIBITS

Exhibit No.		Description
31.1 *		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).

31.2 *		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).

32.1 *		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 *		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS *		Inline XBRL Instance Document.

101.SCH* *		Inline XBRL Taxonomy Extension Schema Document.

101.CAL* *		Inline XBRL Taxonomy Extension Calculation Linkbase 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		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2023, formatted in Inline XBRL (included in Exhibit 101).

*	Filed herewith.

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.

	PINEAPPLE FINANCIAL INC.

Date: January 16, 2024	By:	/s/ Shubha Dasgupta
		Shubha Dasgupta
		Chief Executive Officer

Date: January 16, 2024	By:	/s/ Sarfraz Habib
		Sarfraz Habib
		Chief Financial Officer

EX-31.1 2 ex31-1.htm

EXHIBIT 31.1

SECTION 302

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Shubha Dasgupta, certify that:

(1) I have reviewed this Quarterly Report on Form 10-Q of Pineapple Financial Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	January 16, 2024

	By:	/s/ Shubha Dasgupta
		Shubha Dasgupta Chief Executive Officer (Principal Executive Officer)

EX-31.2 3 ex31-2.htm

EXHIBIT 31.2

SECTION 302

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Sarfraz Habib, certify that:

(1) I have reviewed this Quarterly Report on Form 10-Q of Pineapple Financial Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	January 16, 2024

	By:	/s/ Sarfraz Habib
		Sarfraz Habib Chief Executive Officer (Principal Financial Officer and Principal Accounting Officer)

EX-32.1 4 ex32-1.htm

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Shubha Dasgupta, hereby certify pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and 18 U.S.C. Section 1350, that the Quarterly Report on Form 10-Q of Pineapple Financial Inc., (the “Company”) for the quarterly period ended November 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Shubha Dasgupta
	Shubha Dasgupta, Chief Executive Officer (Principal Executive Officer)

January 16, 2024

The certification set forth above is being furnished as an Exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document of Pineapple Financial Inc. or the certifying officers.

EX-32.2 5 ex32-2.htm

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Sarfraz Habib, hereby certify pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and 18 U.S.C. Section 1350, that the Quarterly Report on Form 10-Q of Pineapple Financial Inc., (the “Company”) for the quarterly period ended November 30, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Sarfraz Habib
	Sarfraz Habib, Chief Financial Officer and Principal Accounting Officer)

January 16, 2024