Pineapple Financial Inc
For the period ended May 31, 2024. Filed Jul 15, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
May 31, 2024 · Filed Jul 15, 2024
PAPL$0.98+3.1%Stored close · as of Oct 23, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-02-29; filed 2024-04-15.
0001493152-24-014615
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-05-31; filed 2024-07-15.
0001493152-24-027861
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 142 previous paragraphs and 129 current paragraphs.
94 unchanged; 22 reworded; 13 added; 24 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 25 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Summary of nine months ended May 31, 2024.
Current report
Pineapple Financials’ net revenue increased by 1.73% during the nine months ending May 31, 2024. The volume remains consistent with the last year.
Current report
During the nine months ending May 31, 2024, the commission expense also increased to $10.457 million from $10.341 million during the nine months ending May 31, 2023. The increase is in line with the increase in gross billing.
Current report
Software subscriptions increased by $43,721, representing 7.06%, from $619,703 during the nine months ended May 31, 2023, to $663,424 during the nine months ended May 31, 2024. The increase is due to change in price of the software used.
Current report
Dues and subscriptions decreased from $188,810 during the nine months ended May 31, 2023, to $146,964 for the nine months ended May 31, 2024, representing a 22.16% decrease. This decrease represents the cost control efforts by the management.
Current report
Salaries, wages, and benefits decreased by $1,583, or 0.09%, from $1,827,369 during the nine months ended May 31, 2023, to $1,825,786. This is in line with the previous year.
Current report
Gross Billing
Current report
Commission
Current report
Selling, general and administrative expenses decreased by $206,902 from $698,568 during the three months ending May 31, 2023, to $491,666 during the three months ending May 31, 2024. This decrease represents 29.62%. This is due to cost control measures adopted by the company.
Current report
Advertising and marketing increased to $265,395 during the three months ending May 31, 2024, as compared to $169,655 during the previous corresponding three months ending May 31, 2023. This increase was due to more marketing efforts for the company to keep and increase the market share.
Current report
Salaries, wages and benefits increased by $40,383 or 7.31% from $552,819 during the three months ended May 31, 2023, to $593,202. This is in line with the precious quarter.
Current report
On July 08, 2024, company issued 91,437 shares against the convertible note as per the SPA agreement for $50,000. ($42,372.60 and $7,627.40 interest) on dated July 09, 2024.
Current report
Company also entered into equity line of credit agreement on May 10, 2024 through equity purchase agreement (“EPA”). The agreement was effective on July 08, 2024. As per the term of the agreement, company shall issue and sell to the Investor, from time to time, and the Investor shall purchase up to Fifteen Million Dollars ($15,000,000) of the Company’s common shares at a purchase price of 95 percent of the market price. The Company shall issue 200,000 Company’s common shares as a commitment fee under the EPA to the Investor. The put notice should be between $10,000 to $1,000,000 or 150 percent of the average daily trading value.
Removed paragraphs (24)
Previous report
Summary of six months ended February 29, 2024.
Previous report
Non-GAAP Financial Measures
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Limitations to our non-GAAP financial measures included, but are not limited to:
Previous report
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.
Previous report
Reconciliation of Adjusted Net (Loss) Income to Net Income Attributable to Pineapple Financial Inc.
Previous report
Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding
Previous report
Reconciliation of Adjusted Net (Loss) Income to Net Income Attributable to Pineapple Financial Inc.
Previous report
Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
Government based incentive
Previous report
The Company is no longer eligible for SR&ED incentives after its IPO.
Previous report
Net Revenue
Previous report
Cost of Revenue
Previous report
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.
Previous report
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.
Previous report
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.
Reworded paragraphs (22)
Previous wording
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.
Current wording
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.
Previous wording
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.
Current wording
During the period under review, we generated $1,445.028 million in residential mortgage loans compared to $1,288.708 million in the previous corresponding period, which ended on May 31, 2023. This amount represents an increase of $156.32 million or 12.13% compared to the same period that ended on May 31, 2023. Our Net Loss stood at $2.379 million, as compared to the $2.212 million recorded in the same period on May 31, 2023.
Previous wording
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.
Current wording
During the period under review, we generated $503.523 million in residential mortgage loans compared to $ 410.312 million in the previous corresponding period, which ended on May 31, 2023. This amount represents an increase of $93.211 million or 22.72% compared to the same period that ended on May 31, 2023. Our Net Loss stood at $0.848 million, as compared to the $0.808 million recorded in the same period on May 31, 2023.
Previous wording
Comparison of six months ended February 29, 2024 and February 28, 2023
Current wording
Comparison of nine months ended May 31, 2024 and May 31, 2023
Previous wording
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.
Current wording
Gross Billing increased from $12.279 million in the nine months ending May 31, 2023, to $12.428 million in the nine months ending May 31, 2024, representing a 1.22% increase 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 May 31, 2024.. This resulted in decreased real estate transactions and, eventually, in the mortgage business. However, on June 05, 2024, BOC has cut the interest rate by 0.25% bringing it down to 4.75%.
Previous wording
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.
Current wording
General and administrative expenses decreased by $71,331 from $1,617,231 during the nine months ending May 31, 2023, to $1,545,900 during the nine months ending May 31, 2024. This decrease represents 4.41% from nine months ended May 31, 2023, to May 31, 2024. This is because of cost-saving measures taken by the company.
Previous wording
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.
Current wording
Office and general expenses decreased to $17,419 during the nine months ending May 31, 2024, from $134,632 during the nine months ended May 31, 2023. This represents a decrease of 12.94%. This decrease is due to control of the expenses.
Previous wording
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.
Current wording
Advertising and marketing decreased to $648,197 during the nine months ending May 31, 2024, compared to $824,395 during the previous nine months ending May 31, 2023. This 21.37% decrease was due to fewer advertisement and marketing expenses during the depressed real estate market.
Previous wording
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.
Current wording
Pineapple Financial is actively investing in the development of its software. During the nine months under review, $0.940 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 nine months that ended on May 31, 2024.
Previous wording
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.
Current wording
Gross billing increased from $3.955million in the three months ending May 31, 2023, to $4.449 million in the three months ending May 31, 2024, representing a 12.50% 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 in June 2024 will lead to an increase in volume.
Previous wording
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.
Current wording
Pineapple Financials’ revenue increased to $736,448 during the three months ending May 31, 2024 as compared to $603,231 during the three months ended May 31, 2023. This represents a 22.08% increase as compared to the previous corresponding quarter ended May 31, 2023.
Previous wording
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.
Current wording
During the three months ending May 31, 2024, the cost of revenue increased by $0.361 million from $3.352 million during the three months ended May 31, 2023 to $3.713 million during the three months ended May 31, 2024. The increase in the commission is due to the business by agents with high margins.
Previous wording
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.
Current wording
During the nine-month period that ended on May 31, 2024, the Company’s net cash used in operating activities decreased to $1.444 million from $1.943 million in the previous corresponding period. This decrease in cash outflow is primarily due to accounts payable and accrued liability payments. Additionally increase in trade and other receivables add outflows to operating activities.
Previous wording
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.
Current wording
During the nine months ending May 31, 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. Further company issued convertible note payable for $300,000 which carries interest at the rate of 8% p.a. for two year or when the note will be converted into ordinary shares.
Previous wording
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.
Current wording
The Company invested $0.901 million to develop software for quick and accurate mortgage application filling by field agents during the nine months ended May 31, 2024. These investments will help the Company acquire more mortgage agents in the future.
Previous wording
As of February 29, 2024, the Company’s cash balance was $1,339,618, as compared to $79,976 on February 28, 2023.
Current wording
As of May 31, 2024, the Company’s cash balance was $748,769, as compared to $856,300 on May 31, 2023.
Previous wording
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.
Current wording
As of May 31, 2024, Pineapple has a liquidity position with $1.052 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.
Previous wording
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).
Current wording
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 nine months ended May 31, 2024 (May 31, 2023 - $57,140).
Previous wording
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.
Current wording
The former 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 former Chief Financial Officer options were forfeited during the year ended August 31, 2023. For period ended May 31, 2024, stock-based compensation expense of $nil (May 31, 2023 – a recovery of $24,165) was recognized.
Previous wording
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.
Current wording
On November 3, 2023, Company issued 26,250 warrants to our underwriters of initial public offering, EF Hutton. These are exercisable between May 31, 2024 to October 31, 2028. Strike price is $4.00 per warrant.
Previous wording
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.
Current wording
As on May 31, 2024, the Company’s financial instruments consist of cash, trade and other receivables, investments, accounts payable and accrued liabilities, loan, convertible loan and warrant liabilities.
Previous wording
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
Current wording
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
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Reconciliation of Adjusted Revenue to Total Revenue, net
Previous report — wording carried elsewhere
directly (i.e., as prices) or indirectly (i.e., derived from prices); and