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 February 29, 2024

 

OR

 

☐	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
(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 April 15, 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 six month period ended February 29, 2024

(Expressed in US Dollars)

 

 

Pineapple Financial Inc.

Condensed Interim Consolidated Balance Sheets (Unaudited)

For the six month period ended February 29, 2024

(Expressed in US Dollars)

 

						February 29, 2024 (Unaudited)				August 31, 2023
As at:
Assets
Current assets
Cash						$	1,339,618			$	720,365
Trade and other receivables			Note 13				690,366				758,988
Prepaid expenses and deposits							387,255				218,150
Total current assets							2,417,239				1,697,503
Investments			Note 4				9,984				10,013
Right-of-use asset			Note 10				890,757				960,377
Property and equipment			Note 5				195,373				242,091
Intangible assets			Note 6				2,058,420				1,718,954
Total Assets						$	5,571,773			$	4,628,938
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and accrued liabilities						$	500,188			$	605,319
Loan			Note 17				532,900				430,098
Current portion of lease liability			Note 10				155,078				138,372
Total current liabilities							1,188,166				1,173,790
Deferred government incentive			Note 13				503,258				699,627
Lease liability			Note 10				896,006				969,589
Warrant liability			Note 8				35,903				-
Total liabilities						$	2,623,333			$	2,843,005
Shareholders’ Equity
Common shares, no par value; unlimited authorized; 7,181,979 issued and outstanding shares as of February 29, 2024 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							(428,178	)			(417,727	)
Accumulated deficit							(7,186,011	)			(5,655,315	)
Total stockholders’ equity							2,948,440				1,785,933
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY						$	5,571,773			$	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)

For the three month and six month ended February 29, 2024

(Expressed in US Dollars)

 

						February 29, 2024				February 28, 2023				February 29, 2024				February 28, 2023
						Three months ended								Six months ended
						February 29, 2024				February 28, 2023				February 29, 2024				February 28, 2023
For the period ended						(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Revenue			Note 16			$	784,869				493,491			$	1,352,858				1,334,692
Expenses
Selling, general and administrative			Note 11				592,202				444,226				1,031,947				1,104,082
Advertising and Marketing							150,597				354,680				404,017				469,321
Salaries, wages and benefits							541,062				654,683				1,186,316				1,274,549
Interest expense and bank charges							28,450				19,164				49,881				39,391
Depreciation			Note 5,6,10				160,999				127,642				315,184				210,975
Share-based compensation			Note 9				-				(28,892	)			-				33,041
Government Incentive			Note 13				(29,109	)			(392,919	)			(80,334	)			(392,919	)
Total expenses						$	1,444,201				1,178,584			$	2,907,011				2,738,440
Loss from operations							(659,332	)			(685,093	)			(1,554,153	)			(1,403,748	)
Foreign exchange gain (loss)							-								10,772				-
Gain (loss) on change in fair value of warrant liability			Note 8				1,876				-				12,685				-
Loss before income taxes						$	(657,456	)			(685,093	)		$	(1,530,696	)			(1,403,748	)
Income taxes (recovery) expense											-
Net loss						$	(657,456	)			(685,093	)		$	(1,530,696	)			(1,403,748	)
Foreign currency translation adjustment							1,727				61,846				(10,451	)			(135,078	)
Net loss and comprehensive loss						$	(655,729	)			(623,247	)		$	(1,541,147	)			(1,538,826	)
Loss per share - basic and diluted ($)							(0.10	)			(0.10	)			(0.24	)			(0.24	)
Weighted average number of common shares outstanding - basic and diluted							6,475,300				6,306,979				6,475,300				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)

For the six month period ended February 29, 2024

(Expressed in US Dollars)

 

		Common Shares (note 7)				Additional Paid in Capital (note 8 and 9)				Accumulated other comprehensive loss				Accumulated (deficit)				Total shareholders’ equity
		Common Shares (note 7)				Additional Paid in Capital (note 8 and 9)				Accumulated other comprehensive loss				Accumulated (deficit)				Total shareholders’ equity
		$				$				$				$				$
Balance, August 31, 2022			4,903,031				2,922,853				(353,218	)			(2,846,278	)			4,626,388
Share-based compensation			-				33,091				-				-				33,091
Foreign exchange translation			-				-				(135,078	)			-				(135,078	)
Net loss			-				-				-				(1,403,748	)			(1,403,748	)
Balance, February 28, 2023			4,903,031				2,955,944				(488,296	)			(4,250,026	)			3,120,653
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			-				-				(10,451	)			-				(10,451	)
Net loss			-				-								(1,530,696	)			(1,530,696	)
Balance, February 29, 2024			7,606,685				2,955,944				(428,178	)			(7,186,011	)			2,948,440
Balance			7,606,685				2,955,944				(428,178	)			(7,186,011	)			2,948,440

 

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)

For the six months ended February 29, 2024

(Expressed in US Dollars)

 

For the period ended:						February 29, 2024 (Unaudited)				February 28, 2023 (Unaudited)
						Six Months Ended
For the period ended:						February 29, 2024 (Unaudited)				February 28, 2023 (Unaudited)
						$				$
Cash provided by (used for) the following activities
Operating activities
Net loss for the period							(1,530,696	)			(1,403,748	)
Adjustments for the following non-cash items:
Depreciation of property and equipment			Note 5				43,406				29,283
Depreciation of intangible assets			Note 6				204,786				128,807
Depreciation on right of use asset			Note 10				66,992				52,885
Interest expense on lease liability			Note 10				32,215				29,424
Share-based compensation			Note 9				-				33,041
Change in fair value of warrant liability			Note 8				(12,685	)			-
Net changes in non-cash working capital balances:
Trade and other receivables							68,622				(703,706	)
Prepaid expenses and deposits							(169,105	)			(29,590	)
Accounts payable and accrued liabilities							(73,808	)			(132,460	)
Deferred government incentive							(196,369	)			-
Income taxes receivable							-				71,078
Net cash used in operating activities							(1,566,642	)			(1,924,986	)
Financing activities
Proceeds from the loan			Note 17				71,479				-
Share capital issuance			Note 7				2,751,937				-
Repayment of lease obligations			Note 10				(86,024	))			(32,051	)
Net cash provided by financing activity							2,737,392				(32,051	)
Investing activities
Additions to intangible assets			Note 6				(557,970	)			(608,858	)
Additions to property and equipment			Note 5				(4,632	)			(51,193	)
Net cash used in investing activity							(562,602	)			(660,051	)
Net change in cash							608,148				(2,617,088	)
Effect of changes in foreign exchange rates							11,105				(99,775	)
Cash, beginning of period							720,365				3,896,839
Cash, end of period							1,339,618				1,179,976

 

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 (Unaudited)

For the six month period ended February 29, 2024

(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 second 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 April 15, 2024.

 

 

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

For six months period ended February 29, 2024

(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 (unaudited)

For period six month period ended February 29, 2024

(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 February 29, 2024, 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			4,632
Translation adjustment			(741	)
Balance, February 29, 2024		$	353,174
Accumulated depreciation
Balance, August 31, 2022		$	49,334
Depreciation			67,674
Translation adjustment			(9,816	)
Balance, August 31, 2023		$	107,192
Depreciation			43,406
Translation adjustment			7,203
Balance, February 29, 2024		$	157,801
Net carrying value
February 29, 2024		$	195,373
August 31, 2023		$	242,091

 

 

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

For the six month period ended February 29, 2024

(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			557,970
Translation adjustment			(14,982	)
Balance, February 29, 2024		$	2,600,513
Accumulated depreciation
Balance, August 31, 2022		$	77,102
Depreciation			265,150
Translation adjustment			(3,681	)
Balance, August 31, 2023		$	338,571
Depreciation			204,786
Translation adjustment			(1,264	)
Balance, February 29, 2024		$	542,093
Net carrying value
February 29, 2024		$	2,058,420
August 31, 2023		$	1,718,954

 

 

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

For the six month period ended February 29, 2024

(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							(748,063	)
Warrants issued							(48,283	)
Balance, February 29, 2024			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 (Unaudited)

For the six month period ended February 29, 2024

(Expressed in US Dollars)

 

8. Warrants

 

a)

Common Share purchase warrant

 

Schedule of Common Share Purchase Warrant 

		#				$
Balance, August 31, 2022			1,652,988				2,922,853
Share-based compensation expense			-				33,091
Balance, August 31, 2023 and February 29, 2024			1,652,988				2,955,944

 

b)

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 $1.50, exercise price of $4, term of 5 years, risk free rate of 4.42% and volatility of 179.75% as at February 29, 2024.

Schedule of Warrant Liability 

		#				$
Balance at August 31, 2023			-				-
Issuance of warrants			26,250				48,283
Change in fair value of warrant liability							(12,685	)
Fair Value of Warrants at February 29, 2024			26,250				35,903

 

 

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

For the six month period ended February 29, 2024

(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 six months ended February 29, 2024 (February 28, 2023 - $33,041).

 

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 February 29, 2024, stock-based compensation expense of $nil (February 28, 2023 - $48,458) 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 

		February 29, 2024								August 31, 2023
		Number of Options				Weighted Average Exercise Price				Number of Options				Weighted Average Exercise Price
		#				$				#				$
Balance, as at beginning of period			565,689				3.72				628,510				3.71
Forfeited during period			-				-				(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 (Unaudited)

For the six month period ended February 29, 2024

(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			(42,737	)
Balance, February 29, 2024		$	1,134,984

 

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			66,992
Translation adjustment			(40,109	)
Balance, February 29, 2024		$	244,227
Carrying Amount
February 29, 2024		$	890,757
August 31, 2023		$	960,377

 

 

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

For the six month period ended February 29, 2024

(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 

		February 29, 2024				August 31, 2023
Balance, beginning of period		$	1,107,961			$	1,020,585
Additions			-				141,799
Interest Expense			32,215				56,316
Lease payments			(86,024	)			(81,090	)
Translation Adjustment			(3,068	)			(29,649	)
Balance, end of period		$	1,051,084			$	1,107,961
Current			155,078				138,372
Non-Current			896,006				969,589
		$	1,051,084			$	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		$	125,651
2025			216,008
2026			217,196
2027			214,640
2028			227,992
2029			200,179
2030			16,682
Total Lease liability		$	1,218,348

 

 

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

For the six month period ended February 29, 2024

(Expressed in US Dollars)

 

11. Expenses

 

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

Schedule of Selling, General and Administrative Expenses 

		February 29, 2024				February 28, 2023
		Six Months ended
		February 29, 2024				February 28, 2023
		$				$
Software Subscription			402,289				455,639
Office and general			34,155				47,305
Professional fees			192,405				215,149
Dues and Subscriptions			152,441				118,568
Rent			98,078				78,884
Consulting fees			24,474				112,547
Travel			86,049				36,255
Donations			4,646				15,771
Lease expense			6,333				22,232
Insurance			31,078				1,732
Selling, general and administrative			1,031,947				1,104,082

 

12. Related party transactions

 

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

 

Schedule of Related Party Transactions

		February 29, 2024				February 28, 2023
		$				$
Salaries and Wages			364,450				366,183
Share-based compensation			-				28,946

 

 

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)

For the six month period ended February 29, 2024

(Expressed in US Dollars)

 

13. Deferred government incentive

 

The Company was eligible for the Government of Canada SRED program up to November 3, 2023. The Company has accrued $634,481 of SRED receivable as at February 29, 2024, 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 $503,258 of the balance received and accrued is recognized as deferred government incentive balance and will be recognized as recovery in the condensed interim consolidated statement of operations and comprehensive loss over the useful life of the intangible assets. As at February 29, 2024, $80,334 was recognized as reversal of recovery of operating expenses in the condensed interim consolidated statement of operations and comprehensive loss. As at February 28, 2023 $392,919 was recognized as recovery of operating expenses in the condensed interim consolidated statement of operations and comprehensive loss over the useful life of the intangible assets.

 

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 February 29, 2024 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 February 29, 2024 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 February 29, 2024.

 

 

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements

For the six month period ended February 29, 2024

(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

		February 29, 2024				February 28, 2023
		Six months ended
		February 29, 2024				February 28, 2023
		$				$
Sales revenue			7,358,172				7,938,884
Commission expense			6,740,307				7,129,867
Net sales revenue			617,864				809,017
Subscription revenue			378,632				361,192
Sponsorship revenue			139,859				-
Other revenue			142,722				-
Underwriting revenue			73,781				164,483
Total revenue			1,352,858				1,334,692

 

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 $71,479 related to the Loan during the six-month period ended February 29, 2024. The Company obtained the loan based on the qualified SRED amount to be obtained for fiscal year 2023 and six-month period ended February 29, 2024, noted in Note 13. The loan was subsequently settled in full during March 2024.

 

18. Subsequent events

 

The only subsequent event the company determined was the loan repayment in March 2024.

 

 

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 what was anticipated in these forward-looking statements. You can find more information about these risks and uncertainties under “Special Note Regarding Forward-Looking Statements” in Part I and 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 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

 

The Bank of Canada kept the prime interest rate high during 2023 to control high inflation. This resulted in high mortgage interest rates. Consequently, the mortgage interest rates increased significantly, leading to a considerable shrinkage in the mortgage origination market from 2022 to 2023 to 2024. The rise in mortgage interest rates, alongside the economic uncertainty, has resulted in a reduced demand for mortgage originations.

 

The mortgage business is aligned with the real estate industry, which is a seasonal business. The peak season is normally May to September of each year. Our quarterly results mostly fall in the off-peak season.

 

 

Summary of six months ended February 29, 2024.

 

During the period under review, we generated $697.411 million in residential mortgage loans compared to $650.664 million in the previous corresponding period, which ended on February 28, 2023. This amount represents an increase of $46.747 million or 7.18% compared to the same period that ended on February 28, 2023. Our Net Loss stood at $1.531 million, as compared to the $1.404 million recorded in the same period on February 28, 2023. We also generated a loss of $1.112 million of Adjusted EBITDA, which represents a increase of$1.045 million, or 1,555.37%, compared to the $0.067 million generated in the same period on February 28, 2023. For more information on Adjusted EBITDA, please refer to the “Non-GAAP Financial Measures” section.

 

Summary of three months ended February 29, 2024.

 

During the period under review, we generated $314.963 million in residential mortgage loans compared to $267.901 million in the previous corresponding period, which ended on February 28, 2023. This amount represents an increase of $47.062 million or 17.567% compared to the same period that ended on February 28, 2023. Our Net Loss stood at $0.657 million, as compared to the $0.685 million recorded in the same period on February 28, 2023. We also generated a loss of $0.527 million of Adjusted EBITDA, which represents a increase of $0.497 million, or 1,649.78%, compared to the $0.030 million generated in the same period on February 28, 2023. 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 added deferred government incentive to the 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
		February 29, 2024				February 28, 2023
Total revenue, net			784,869				493,491
Commission expense			3,135,578				3,374,690
Gross Revenue			3,920,447				3,868,181

 

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

 

		Three months ended
		February 29, 2024				February 28, 2023
Net Income attributable to Pineapple Financial			(657,456	)			(685,093	)
Share-based compensation			-				(28,892	)
Government based incentive			(29,109	)			556,200
Depreciation			160,999				127,642
Change in fair value of warrant liability			(1,876	)			-
Adjusted EBITDA			(527,442	)			(30,143	)

 

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

 

		Three months Ended
		February 29, 2024				February 28, 2023
Weighted average common shares outstanding			6,475,300				6,306,979
Adjusted Diluted (Loss)) Earning per share			(0. 08	)			(0.004	)
Adjusted EBITDA			(527,442	)			(30,143	)

 

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
		February 29, 2024				February 28, 2023
Mortgage volume			314,963,000				267,901,000
Sales revenue			3,478,883				3,581,771
Commission expense			3,135,578				3,374,690
Net sales revenue			343,305				207,081
Sponsorship revenue			140,884				-
Underwriting revenue			34,512				102,399
Subscription revenue			195,410				184,011
Other Income			70,758				-

 

 

Reconciliation of Adjusted Revenue to Total Revenue, net

 

		Six months ended
		February 29, 2024				February 28, 2023
Total revenue, net			1,352,858				1,334,692
Commission expense			6,740,307				7,129,867
Gross Revenue			8,093,165				8,464,559

 

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

 

		Six months ended
		February 29, 2024				February 28, 2023
Net Income attributable to Pineapple Financial			(1,530,695	)			(1,403,747	)
Share-based compensation			-				33,041
Government based incentive			116,035				1,092,546
Depreciation			315,184				210,975
Change in fair value of warrant liability			(12,685	)			-
Adjusted EBITDA			(1,112,161	)			(67,185	)

 

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

 

		Six months Ended
		February 29, 2024				February 28, 2023
Weighted average common shares outstanding			6,475,300				6,306,979
Adjusted Diluted (Loss)) Earning per share			(0. 17	)			(0.011	)
Adjusted EBITDA			(1,112,161	)			(67,185	)

 

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.

 

		Six months ended
		February 29, 2024				February 28, 2023
Mortgage volume			697,411,000				650,664,000
Sales revenue			7,358,172				7,938,884
Commission expense			6,740,307				7,129,867
Net sales revenue			617,864				809,017
Sponsorship revenue			139,860
Underwriting revenue			73,781				164,692
Subscription revenue			378,632				361,193
Other Income			73,781				-

 

 

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 contracts in place. The Company earns revenue based on a percentage of mortgage amount funded between individuals 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, and determines the transaction price to the separate performance obligations based on 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 acknowledges 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 are 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. Upon completing all the actions listed above, revenue is recognized at the end of the deal. 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 and 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 the lender partners take to assess 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 using this service. This program intends to increase the number of deals further 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 six months ended February 29, 2024 and February 28, 2023

 

		Six months ended												Percentage of
		February 29, 2024				February 28, 2023				Increase/ (decrease)				Increase/ (Decrease)
Description		$				$				$				%
Sales revenue			8,093,165				8,464,559				(371,394	)			(4.39	)
Commission			6,740,307				7,129,867				(389,560	)			(5.46	)
Net Revenue			1,352,858				1,334,692				18,166				1.36
Selling, general and administrative			1,031,947				1,104,082				(72,135	)			(6.53	)
Advertising and marketing			404,017				469,321				(65,304	)			(13.92	)
Salaries, wages and benefits			1,186,316				1,274,549				(88,233	)			(6.92	)
Interest expense and bank charges			49,881				39,390				10,491				26.63
Depreciation			315,184				210,975				104,209				49.39
Share-based compensation			-				33,041				(33,041	)			(100.00	)
Government based incentive			(80,334	)			(392,919	)			(312,585	)			(79.55	)
Total expenses			2,767,151				2,738,439				28,712				1.05
Foreign exchange gain (loss)			10,773				-				10,772				100.00
Change in fair value of warrant liability			12,682				-				12,682				100.00
Loss before income taxes			(1,530,695	)			(1,403,747	)			126,949				9.04
Income tax			-				-
Net loss			(1,530,695	)			(1,403,747	)			126,949				9.04
Foreign currency translation adjustment			(10,451	)			(135,078	)
Net loss and comprehensive loss			(1,541,146	)			(1,538,825	)

 

Revenue

 

Sales Revenue decreased from $8,465 million in the six months ending February 29, 2024, to $8.093 million in the six months ending February 28, 2023, representing a 4.39% 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 February 29, 2024. This resulted in decreased real estate transactions and, eventually, in the mortgage business.

 

 

Net revenue

 

Pineapple Financials’ net revenue increased 1.36% during the six months ending February 29, 2024. This increase was due to more volume by low-volume agents with low margins in second quarter of the financial year.

 

Cost of Revenue

 

During the six months ending February 29, 2024, the cost of revenue decreased to $6.74 million from $7.130 million during the six months ending February 28, 2023. 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:

 

		Six months ending
		February 29, 2024				February 28, 2023				Increase/ (Decrease)				Increase/ (Decrease)
Description		($)				($)				($)				(%)
Software subscription			402,289				455,639				(53,350	)			(11.71	)
Office and general			34,154				47,305				(13,151	)			(27.80	)
Professional fee			192,405				215,149				(22,744	)			(10.57	)
Dues and subscriptions			152,441				118,568				33,873				28.57
Rent			98,078				78,884				19,194				24.33
Consulting fee			24,474				112,547				(88,073	)			(78.25	)
Travel			86,049				36,255				49,794				137.35
Donations			4,646				15,771				(11,125	)			(70.54	)
Lease expense			6,333				22,232				(15,899	)			(71.51	)
Insurance			31,078				1,732				29,346				1,694.34
			1,031,947				1,104,082				(72,135	)			(6.53	)

 

General and administrative expenses decreased by $72,135 from $1,104,082 during the six months ending February 28, 2023, to $1,031,947 during the six months ending February 29, 2024. This decrease represents 6.53% from six months ended February 28, 2023, to February 29, 2024.

 

Software subscriptions decreased by $53,350, representing 11.71%, from $455,639 during the six months ended February 28, 2023, to $402,289 during the six months ended February 29, 2024. This is due to the usage of more in-house developed software.

 

Office and general expenses decreased to $13,151 during the six months ending February 29, 2024, from $47,305 during the six months ended February 28, 2023. This represents a decrease of 27.80%. This decrease represents control of the expenses.

 

Dues and subscriptions increased from $118,568 during the six months ended February 28, 2023, to $152,441 for the six months ended February 29, 2024, representing a 28.57% increase. This increase is due to Initial Public Offering on November 03, 2023.

 

Advertising and Marketing

 

		Six months ended
		February 29, 2024				February 28, 2023				Increase/ (Decrease)				Increase/ (Decrease)
Description		($)				($)				($)				(%)
Advertising and marketing			404,017				469,321				(65,304	)			(13.92	)

 

 

Advertising and marketing decreased to $404,017 during the six months ending February 29, 2024, compared to $469,321 during the previous six months ending February 28, 2023. This 13.92% decrease was due to fewer advertisement and marketing expenses during the depressed real estate market.

 

Salaries, Wages and benefits

 

		Six months ended
		February 29, 2024				February 28, 2023				Increase/ (Decrease)				Increase/ (Decrease)
Description		($)				($)				($)				(%)
Salaries, wages and benefits			1,186,316				1,274,549				(88,233	)			(6.92	)

 

Salaries, wages, and benefits decreased by $88,233, or 6.92%, from $1,274,549 during the six months ended February 28, 2023, to $1,186,316. This is due to management’s cost-cutting efforts.

 

Depreciation

 

		Six months ended
		February 29, 2024				February 28, 2023				Increase/ (Decrease)				Increase/ (Decrease)
Description		($)				($)				($)				(%)
Depreciation			315,184				210,975				104,209				49.39

 

Pineapple Financial is actively investing in the development of its software. During the six months under review, $0.558 million was added to intangible assets. This addition mostly represents the salaries, wages, and benefits of our staff working on intangible assets. These additions are the main cause of the depreciation increase during the six months that ended on February 29, 2024.

 

Government based incentive

 

		Six months Ended
		February 29, 2024				February 28, 2023				Increase/ (Decrease)				Increase/ (Decrease)
Description		($)				($)				($)				(%)
Government based incentive			(80,334	)			(392,919	)			(312,585	)			(79.55	)

 

The Company is no longer eligible for SR&ED incentives after its IPO.

 

Comparison of three months ended February 29, 2024, and February 28, 2023

 

		Three ended												Percentage of
		February 29, 2024				February 28, 2023				Increase/ (decrease)				Increase/ (Decrease)
Description		$				$				$				%
Sales revenue			3,920,447				3,868,181				52,266				1.35
Commission			3,135,578				3,374,690				(239,112	)			(7.09	)
Net Revenue			784,869				493,491				291,378				59.04
Selling, general and administrative			592,202				444,226				147,976				33.31
Advertising and marketing			150,597				354,680				(204,083	)			57.54
Salaries, wages and benefits			541,062				654,683				(113,621	)			(17.36	)
Interest expense and bank charges			28,450				19,164				9,286				48.46
Depreciation			160,999				127,642				33,357				26.13
Share-based compensation			-				(28,892	)			28,892				100.00
Government based incentive			(29,109	)			(392,919	)			(363,810	)			92.60
Total expenses			1,444,201				1,178,584				265,617				22.54
Foreign exchange gain (loss)			-				-
Change in fair value of warrant liability			1,876				-				1,876				100.00
Loss before income taxes			(657,456	)			(685,093	)			(27,637	)			(4.03	)
Income tax			-				-
Net loss			(657,456	)			(685,093	)
Foreign currency translation adjustment			1,727				61,846
Net loss and comprehensive loss			(655,729	)			(623,247	)

 

 

Revenue

 

Sales Revenue increased from $3.868 million in the three months ending February 29, 2024, to $3.920 million in the three months ending February 28, 2023, representing a 1.35% increase from period to period. Bank of Canada halted the interest rate hike, and the inflation is under control. This resulted in a better real estate market at the start of the year. The hope for interest rate cuts by the Bank of Canada led to an increase in volume.

 

Net Revenue

 

Pineapple Financials’ net revenue increased to $291,378 during the three months ending February 29, 2024. This represents a 59.04% increase as compared to the previous corresponding quarter ended February 28, 2023.

 

Cost of Revenue

 

During the three months ending February 29, 2024, the cost of revenue decreased by $0.239 million from $3.375 million during the three months ended February 28, 2023 to $3.375 million during the three months ended February 29, 2024. The decrease in the cost of revenue is due to the improved real estate market, which resulted in business by agents with low margins.

 

Selling, General and Administrative Expenses.

 

		Three months ended
		February 29, 2024				February 28, 2023				Increase/ (Decrease)				Increase/ (Decrease)
Description		($)				($)				($)				(%)
Selling, general and administrative			592,202				444,226				147,976				33.31

 

Selling, general and administrative expenses increased by $147,976 from $444,226 during the three months ending February 28, 2023, to $592,202 during the three months ending February 29, 2024. This increase represents 33.31%. This is due to expansion in other areas and travelling costs.

 

Advertising and Marketing

 

		Three months ended
		February 29, 2024				February 28, 2023				Increase/ (Decrease)				Increase/ (Decrease)
Description		($)				($)				($)				(%)
Advertising and marketing			150,597				354,680				(204,083	)			(57.54	)

 

Advertising and marketing decreased to $150,597 during the three months ending February 29, 2024, as compared to $354,680 during the previous corresponding three months ending February 28, 2023. Last year, our Horizon expense was booked in February 2023 as compared to the expense in March 2024. This is the reason for the decrease.

 

 

Salaries, Wages and benefits

 

		Three months ended
		February 29, 2024				February 28, 2023				Increase/ (Decrease)				Increase/ (Decrease)
Description		($)				($)				($)				(%)
Salaries, wages and benefits			541,062				654,683				(113,621	)			(17.36	)

 

Salaries, wages and benefits decreased by $113,621 or 17.36% from $654,683 during the three months ended February 28, 2023, to $541,062. This is due to management’s cost-cutting efforts.

 

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:

 

		Six months ended
		February 29, 2024				February 28, 2023				Increase/ (Decrease)
Description		$				$				$
Cash (used) provided in operating activities			(1,566,642	)			(1,924,986	)			327,021
Cash (used) provided by financing activities			2,737,392				(15,008	)			2,783,723
Cash (used) provided in investing activities			(562,602	)			(660,051	)			(97,449	)
Cash at the end of the period			1,339,618				1,179,976				159,642

 

Net cash flow from (used in) operating activities

 

		Six months ended
		February 29, 2024				February 28, 2023
Description		($)				($)
Operating activities
Net loss			(1,530,696	)			(1,403,748	)
Adjustments for the following non-cash items:
Depreciation of property and equipment			43,406				29,283
Depreciation of intangible assets			204,786				128,807
Depreciation on right of use asset			66,992				52,885
Interest expense on lease liability			32,215				29,424
Share-based compensation			-				33,041
Foreign exchange gain (loss)							-
Change in fair value of warrant liability			(12,685	)			-
Net changes in non-cash working capital balances:
Trade and other receivables			68,622				(703,706	)
Prepaid expenses and deposits			(169,105	)			29,590
Accounts payable and accrued liabilities			(73,808	)			(132,460	)
Deferred government incentive			(196,369	)
Income taxes receivable			-				71,078
			(1,566,642	)			(1,924,986	)

 

 

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

 

During the six-month period that ended on February 29, 2024, the Company’s net cash used in operating activities decreased to $1,566,642 from $1,924,986 in the previous corresponding period. This decrease in cash outflow is primarily due to accounts payable and accrued liability payments. Additionally, trade and other receivables add outflows to operating activities.

 

Net cash flow from (used in) financing activities

 

During the six months ending February 29, 2024, the Company issued 875,000 shares through an initial public offer of $4.00. The Company received $2.752 million after underwriting commission and other initial public offering expenses.

 

Net cash flow from (used in) investing activities

 

The Company invested $0.558 million to develop software for quick and accurate mortgage application filling by field agents during the six months ended February 29, 2024. These investments will help the Company acquire more mortgage agents in the future.

 

As of February 29, 2024, the Company’s cash balance was $1,339,618, as compared to $79,976 on February 28, 2023.

 

The Company’s capital structure comprises 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:

 

		February 29, 2024				August 31, 2023
Description		($)				($)
Cash and cash equivalents			1,339,618				720,365
Trade and other receivables			690,366				758,988
Prepaid expenses and deposit			387,255				218,151
			2,417,239				1,697,504

 

As of February 29, 2024, Pineapple has a healthy liquidity position with $1.340 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 standard’s core principle 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 an entity expects to be entitled to in exchange for transferring goods or services to a customer. The standard requires entities to exercise judgment, considering 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 expected consideration.

 

The company operates an online platform powered by Salesforce, enabling brokers and agents to close deals efficiently.

 

The Company’s subsidiary, Pineapple Insurance Inc., generates revenue by charging insurance policies and services premiums. 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 Canadian Dollars (CAD), with the presentation currency being U.S. Dollars (USD). The Company’s subsidiaries have a functional currency of CAD and presentation currency of USD, which have been applied consistently.

 

A foreign currency translation will be undertaken to report under US GAAP, which will be the basis of the 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 the profit and loss account.

 

Share-Based Compensation

 

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

 

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 2 years, whereby 25% of the options granted are vested on the grant date, and the remaining unvested options are vested in equal installments every six months after that. The fair value of the stock options granted was $1,317,155. A total stock-based compensation expense was recognized of $Nil for six months ended February 29, 2024 (February 28, 2023 - $33,041).

 

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 (February 28, 2023 - $48,458) was recognized.

 

 

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.

 

As of February 29, 2024, 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 February 29, 2024, our disclosure controls and procedures were not effective as a result of deficiencies in our internal control over financial reporting. We have made improvements during the current period and are implementing plans to improve these deficiencies, including implementation of independent review and approval of transactions and reconciliations in certain processes through hiring additional personnel and segregating duties amongst our team

 

Financial Instruments

 

As on February 29, 2024, 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 and objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based on 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 February 29, 2024

Level 1

Level 2

Level 3

Total

Assets:

Cash

1,339,618

1,339,618

Investment

9,984

9,984

 

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 February 29, 2024.

 

 

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 February 29, 2024, 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: April 15, 2024	By:	/s/ Shubha Dasgupta
		Shubha Dasgupta
		Chief Executive Officer
Date: April 15, 2024	By:	/s/ Sarfraz Habib
		Sarfraz Habib
		Chief Financial Officer