Item 1A. Risk Factors 16
Item 1B. Unresolved Staff Comments 38
Item IC. Cybersecurity 38
Item 2. Properties 38
Item 3. Legal Proceedings 38
Item 4. Mine Safety Disclosures 38
Part II
Item 6. [Reserved] 39
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 52
Item 8. Financial Statements and Supplementary Data 54
Item 9A. Controls and Procedures 54
Item 9B. Other Information 54
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 54
Part III
Item 10. Directors, Executive Officers and Corporate Governance 55
Item 11. Executive Compensation 61
Item 14. Principal Accountant Fees and Services 66
Part IV
Item 15. Exhibit and Financial Statement Schedules 67
Signatures 68
i
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Any statements in this Annual Report on Form 10-K about our expectations, beliefs, plans, objectives, assumptions or future
events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through
the use of words or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,”
“intend,” “plan” and “would.” For example, statements concerning financial condition, possible or
assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management, markets for our common
stock and future management and organizational structure are all forward-looking statements. Forward-looking statements are not guarantees
of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity,
performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied
by any forward-looking statement.
Any
forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this Annual Report on
Form 10-K. Some of the risks, uncertainties and assumptions that could cause actual results to differ materially from estimates or projections
contained in the forward-looking statements include, but are not limited to:
● 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.
The
foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any forward-looking
statements. You should read this Annual Report on Form 10-K and the documents that we reference herein and have filed as exhibits to
the Annual Report on Form 10-K, completely and with the understanding that our actual future results may be materially different from
what we expect. You should assume that the information appearing in this Annual Report on Form 10-K is accurate as of the date hereof.
Because the risk factors referred to on page 15 of Annual Report on Form 10-K could cause actual results or outcomes to differ materially
from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking
statements. Further, any forward-looking statement speaks only as of the date on which it is made, and except as required by law, we
undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement
is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to
predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
We qualify all of the information presented in this Annual Report on Form 10-K, and particularly our forward-looking statements, by these
cautionary statements.
ii
SUMMARY
OF RISK FACTORS
Our
business is subject to numerous risks described in the section titled “Risk Factors” and elsewhere in this prospectus. The
main risks set forth below and others you should consider are discussed more fully in the section entitled “Risk Factors”
beginning on page 15, which you should read in its entirety.
● risks associated with our digital assets and digital asset treasury
●
our operations could be adversely affected by possible future government legislation, policies and controls or by changes in applicable
laws and regulations;
●
public health crises such as the COVID-19 pandemic may adversely impact our business;
●
the volatility of global capital markets over the past several years has generally made the raising of capital more difficult;
●
risks associated with political instability and changes to the regulations governing our business operations;
●
our success is largely dependent on the performance of our directors and officers, Field Agents, and employees;
●
our Common Shares may be subject to significant price volatility;
●
internal controls cannot provide absolute assurance with respect to the reliability of financial reporting and financial statement preparation;
●
we may be unable to manage our growth;
●
risks associated with security breaches;
●
risks associated with software errors or defects;
●
our operations depend on information technology systems; and on continuous reliable internet access;
●
our business now or in the future may be adversely affected by risks outside our control;
●
risks associated with the Company’s reliance on strategic partnerships;
●
reputational risk, and
●
risks associated with protection of intellectual property.
iii
ITEM
1. BUSINESS
General
Pineapple
Financial is a Canadian mortgage technology and brokerage company. We provide mortgage brokerage services and technology solutions to
Canadian mortgage agents, brokers, sub-brokers, brokerages and consumers. Through data-driven systems and cloud-based tools, we believe
we offer competitive advantages in the Canadian mortgage industry relative to traditional broker arrangements.
We
also provide back-office and pre-underwriting support services (together, the “Brokerage Services”) to Canadian mortgage
brokerages (the “Brokerages”). In connection with the provision of the Brokerage Services, we employ and engage licensed
mortgage brokers and agents (collectively, “Field Agents”). As of the date of this filing, we have 39 full-time employees.
In addition, we enter into affiliation agreements with certain licensed mortgage brokers (“Affiliate Brokers” and, together
with Field Agents and Brokerages, the “Users”) under which we jointly market mortgage brokerage and other financial services
as affiliated entities. This “white-label” model allows Affiliate Brokers to offer mortgages under their own brand to their
client base while operating on our platform and within our controls.
We
offer Brokerage Services for both residential and commercial mortgage opportunities through our proprietary technology platform, Pineapple+
[and related tools, together, the “Platform”]. The Platform supports the mortgage life cycle from lead intake and pre-qualification
through underwriting support, documentation, compliance, and funded-deal analytics.
Revenue
Model
Our
revenue model is diversified across platform subscriptions, pre-risk assessment services and lender partner commissions. Percentages
below are approximate and subject to period-to-period variation.
1.Subscription
services. Agents who use the Platform to manage the life cycle of a mortgage from initiation to funding pay subscription fees of $141.50
per month. This stream represents approximately 3% of total gross revenue.
2.Pre-risk
assessment services. We charge a per-deal fee for pre-underwriting support and documentation preparation. For mortgages with a funded
amount of $390,000 and over, the fee is $390 per deal. For mortgages under $390,000, the fee is $273 per deal. This stream represents
approximately 1.3% of total gross revenue.
3.Lender
partner service commissions. The balance of total gross revenue, approximately 95%, is derived from commissions and volume-based compensation
from lender partners. Commission structures vary by rate, amount, promotional programs, bonus eligibility and funded volume. Our lender
partners include banks, trust companies, mortgage finance companies and other financial institutions, including but not limited to; Bank
of Nova Scotia (Scotiabank), Manulife Bank of Canada, Toronto-Dominion Bank, MCAP, First National Financial LP, Home Trust Company, Equitable
Bank, Community Trust, Bank of Montreal (BMO) and Desjardins Mortgage Financing Services.
Geographic
Footprint and Licensing
We
currently operate in Canada, with active brokerage operations in Ontario, Newfoundland and Labrador, New Brunswick, Nova Scotia, British
Columbia, Prince Edward Island, Manitoba and Alberta. We launched our first brokerage in Ontario in November 2016, opened our Alberta
office on July 1, 2021, expanded into Newfoundland and Labrador, Nova Scotia, New Brunswick and Prince Edward Island on May 4, 2022,
and opened our first British Columbia brokerage office in 2024. We have been approved by applicable provincial mortgage regulators to
operate in the following provinces and territories: Alberta, British Columbia, New Brunswick, Newfoundland and Labrador, Northwest Territories,
Nova Scotia, Nunavut, Prince Edward Island, Quebec and Yukon, and we are pursuing additional licensing in Saskatchewan.
Technology
Our
Platform integrates lead routing, CRM, document collection, compliance workflows, lender connectivity and analytics. By centralizing
workflow and data, we aim to improve agent productivity, reduce turnaround times and enhance compliance monitoring. The Platform is cloud-hosted
with role-based access controls, audit trails and data security protocols that are designed to meet or exceed applicable regulatory expectations.
Digital
Asset Treasury Strategy
In
fiscal 2025, we established a digital asset treasury strategy (the “Treasury Strategy”) as a component of our corporate
treasury and strategic partnership program. The Treasury Strategy permits the Company, subject to internal policies, board oversight
and applicable law, to hold a capped allocation of liquid digital assets to support research and development, ecosystem partnerships
and potential future integrations with our mortgage technology stack. As of the date of this filing, the Treasury Strategy is managed
separately from brokerage operations. The Treasury Strategy is subject to strict custody, risk, accounting and compliance policies, including
segregation of assets, volatility limits, impairment monitoring and disclosure controls.
On-Chain
Mortgage Development
We
are conducting research and development to explore the application of distributed ledger and smart-contract technologies to selected
elements of the mortgage lifecycle (“On-Chain Mortgage Development”). Areas of exploration include, among others, identity
and document attestations, collateral and lien data registries, payment and remittance workflows, servicing data integrity, and potential
future pathways for asset issuance and investor reporting. These initiatives are currently in development and do not contribute material
revenue. Any commercial deployment will require successful technical validation, market acceptance, appropriate regulatory permissions
and the establishment of robust compliance, privacy and security controls. We may pursue pilot programs with ecosystem partners and service
providers to evaluate feasibility and cost-benefit outcomes.
Compliance
and Regulatory
Our
brokerage activities are subject to provincial mortgage brokerage laws and regulations, consumer protection requirements, anti-money
laundering and anti-terrorist financing obligations, privacy and data protection laws and related guidance. We maintain policies, procedures,
training and supervision designed to promote compliance, including for third-party affiliates who operate on our Platform. Our Treasury
Strategy and On-Chain Mortgage Development are subject to additional legal, accounting, tax and regulatory considerations. We evaluate
these programs with external legal counsel and advisors and implement governance, risk and control frameworks that we believe are appropriate
for their scope and scale.
MyPineapple
At
the heart of our Brokerage Services is an innovative technology system, MyPineapple, that provides real time data management and reporting,
lead generation opportunities, customer relationship management, deal processing, education and knowledge center, payroll, regulatory
compliance, data analytics, document collection and storage, automated onboarding, lender access, back office support and direct underwriting
support, all in one. MyPineapple offers network management capabilities for Users, including hundreds of qualified Field Agents, to create
an efficient marketplace for the provision of mortgage lending and insurance industry services. MyPineapple integrates directly with
Equifax, OneSpan, G Suite and Filogix and manages Users’ day-to-day business through automated triggers and tasks, ensuring nothing
falls through the cracks. MyPineapple syncs up with Users’ calendar and emails, produces robust reporting, advanced analytics,
and real-time notifications on marketing communications, and more. MyPineapple is a sophisticated and fundamental tool for revenue growth
and relationship development. It plays a significant role in what we believe makes our Brokerage Services distinct and cutting-edge.
MyPineapple
was created to address key issues within the mortgage brokerage industry. We built MyPineapple to create a long-term competitive advantage
relative to traditional service providers, who have comparatively high-touch, labor intensive and costly operations. We believe that,
through MyPineapple, we are able to deliver faster services and with fewer errors. Our MyPineapple platform is completely automated,
simplifying the mortgage process while providing efficiencies to and alleviating pressure on Users’ staff in completing traditional
administrative tasks, which in turn reduces the Users’ cost structure and results in increased profit margins and scalability.
MyPineapple reduces manual processes through robust quality control mechanisms, logistics management capabilities, capacity planning
tools and end-to-end transaction management. MyPineapple also includes a leading education technology platform, which enables Users to
continuously stay informed and educated on what mortgage solutions and market conditions could impact Canadian consumers.
Our
primary objectives and goals include, but are not limited to, the following:
●
Grow our mortgage broker distribution channel to gain further market share and consumer adoption, including increasing organic (non-acquisition
related) market share and to achieve growth on the number of mortgages funded annually;
●
Become the go-to mortgage experience platform for mortgage agents, lenders and homebuyers;
●
For Pineapple Insurance to provide an insurance option for all our mortgage approvals;
●
To ensure that we are providing a well-rounded and custom-tailored approach to insurance solutions that may best suit the clients’
needs;
●
To leverage the power of our growing database and brand recognition to open further insurance opportunity channel; and
Streamline
the insurance approval and application process for mortgage clients using technology.
Services
and Products Brokerage Services
The
following is a detailed description of the Brokerages Services that we offer:
1.
Mortgage Brokering: We employ and engage a number of licensed Field Agents who originate clients, provide mortgage consultation services,
advise clients on the various mortgage products offered by financial institutions in Canada, offer clients access to rate information
and mortgage options from a range of lenders, including major banks and lending institutions and assist clients in selecting the most
appropriate and effective mortgage solution for their particular needs.
2.
Technology: MyPineapple is a full spectrum, robust and comprehensive technology system, which allows Users to conduct their brokerage
services more effectively and efficiently. Amongst other things, MyPineapple syncs up with Users’ calendar and emails, produces
robust reporting, advanced analytics, and real-time notifications for email opens, and link clicks. MyPineapple also provides Users with
cloud storage. We also provide marketing support to Users in order to systematically manage the marketing process, segmentation and client
conversions. We ensure that all clients stay well informed with highly relevant information; it also increases the conversion ratios
and engagement metric for its Users. This provides Users the ability to focus on higher probability clients and deliver a high level
of value and service while the system manages the relationship with others.
3.
Back Office Support Services: Through MyPineapple, we offer our Users back office support services, including digital and automated onboarding
and set up, loan packaging and processing, digital document collection and client portals, loan maintenance activities, payroll, lender
communication, reporting requirements for regulators and business management, cloud services, expense collections, document preparation,
compliance, training, administration and marketing.
4.
Pre-Underwriting Support: Technology enabled and together with back-office support, we offer our Users pre-underwriting support services
that establish appropriate qualifying processes in a mortgage application, providing borrowers a digital environment ensuring mortgage
agents has the necessary data and providing borrowers with an instant pre-qualification. We use our diverse exposure to the mortgage
industry to save Users from spending valuable resources on mortgage applications that have fewer chances of reaching approval. In particular,
we offer our Users the following pre-underwriting services, aimed at speeding up the underwriting process and helping mortgage lenders
make accurate decisions:
●
Credit Review: We verify all information that is supplied by the client in vital loan documents and other personal information. Thereafter,
we meticulously review client credit records and tax return documents to ensure the client has the required financial stability to make
monthly payments for the mortgage. We follow checklist-based system to ensure that all the critical aspects pertaining to underwriting
are covered.
●
Data Validation: Our pre-underwriting support services include recording and digitizing our findings in the data validation process.
By digitizing these vital information sets about the client, we are able to establish the accuracy and speed needed to expedite the underwriting
process.
●
Fraud Analysis and Compliance: We pride ourselves in diligently checking for identity fraud and ensuring that applications are compliant
and contain complete information. Our mortgage experts have the experience and acumen to spot missing or mala fide information. This
obviates the need for the underwriter to send client files back for incomplete information and thereby speeds up the underwriting process.
Our fraud analysis encompasses all aspects of the client file review process including running third-party reports. This ensures the
underwriter has to focus only on decision-making.
●
Appraisal Ordering and Review: We take charge of title ordering and dispatching verified property information to the appraiser to boost
the turnaround times of the appraisal process. Once the appraisal is over, we carefully review the appraisal report to ensure that the
process has been completed in a fair and error-free manner.
●
Data Analytics: Through MyPineapple, we are able to use data to analyze customer benefit opportunities as they become available. In particular,
MyPineapple allows us to utilize the data that has been acquired through the mortgage approval process along with real time real estate
and credit data to thereby reduce costs and overall debt process timelines.
Insurance
Products
Pineapple
Insurance Inc. is a wholly owned subsidiary of Pineapple Financial Inc. This entity is to serve the insurance needs of our brand mortgage
brokers and agents across Canada. Pineapple Insurance is to act as a Managing General Agent (MGA) supported by Industrial Alliance. This
entity will create both a revenue channel and retention strategy for borrowers that live within our database. This will also allow a
growth opportunity and an overall holistic financial services opportunity for us. We are currently in the early stages of development
of Pineapple Insurance Inc. Operational infrastructure and a budget has been prepared alongside technology modifications to our MyPineapple
system in order to manage the delivery of this product. We have also created a sales and marketing plan alongside assets and materials,
which will be used for initial launch. Our next steps are staffing and human capital requirements in order to execute on the business
plan and goals of developing Pineapple Insurance.
Pineapple
Insurance provides the following services:
●
We will complete a needs analysis on each client to ensure the most suitable product to meet both their needs and their goals. In our
product suite, we will offer term life insurance which will provide a low-cost coverage at a fixed rate of payments for a limited period
of time for the life of the mortgage. The goal of this product is to ensure that in the event of the insurer’s untimely death with
their term policy their beneficiaries will be covered in the amount of the policy during the life of the term. No insurance will be paid
to the beneficiary should the insured pass away after the end of the term or if the insured did not make the required payments.
●
Whole Life Insurance is a life insurance policy which is guaranteed to remain in force for the insured’s entire lifetime, provided
required premiums are paid, or to the maturity date. In addition to paying a death benefit, whole life insurance also contains a savings
component in which cash value may accumulate on a tax-advantaged basis. The policies can be leveraged as collateral or an asset with
our lenders through the Company.
●
For both our personal and our business clients, we offer permanent life insurance policies, which offer a death benefit and cash value.
The death benefit is money that is paid to your beneficiaries when you pass away. Cash value is a separate savings component that you
may be able to access while you are still alive. Permanent insurance can help cover the business owner for their entire life. And unlike
term insurance, it includes the potential for a cash accumulation fund. Investments in the fund are tax-preferred, including at death
when the tax-free death benefit is paid out to a named beneficiary. An additional benefit of permanent life insurance is that allocating
funds in a corporation away from taxable investments to a permanent life insurance policy can help reduce overall annual taxable investment
income. Permanent life insurance lasts from the time you buy a policy to the time you pass away, as long as you pay the required premiums.
The policies can be leveraged as collateral or an asset with our lenders through the Company.
●
Critical Illness Insurance provides additional coverage for medical emergencies like heart attacks, strokes, or cancer. Because these
emergencies or illnesses often incur greater-than-average medical costs, these policies pay out cash to help cover those overruns where
traditional health insurance may fall short and help cover living expenses while the client recovers. These policies come at a relatively
low cost. However, the instances that they will cover are generally limited to a few illnesses or emergencies. The key element is to
ensure that the mortgagor does not fall behind in their mortgage payments.
●
Credit Insurance is a type of life insurance that can cover the remaining amount of your loan in the event of your death. Your insurance
company will use the death benefit to pay down or pay off the remaining balance on the loan, up to a maximum amount outlined in the certificate
of insurance. The money from your death benefit will go to your creditor. The money will not go to your family or beneficiaries.
We
offer a wide range of investment options to suit clients risk tolerance and investment preferences. A financial advisor will review and
assess the needs of each client to determine the short- and long-term goals for financial success. Such options may include segregated
funds or mutual funds for registered (registered education savings plans (RESPs), registered retirement savings plans (RRSPs), tax-free
savings accounts (TFSAs), etc.) and non-registered accounts. A segregated fund, or seg fund, is a type of investment fund administered
by Canadian insurance companies in the form of individual, variable life insurance contracts offering certain guarantees to the policyholder
such as reimbursement of capital upon death and mutual funds. As a regulatory requirement, all Canadian mortgage approvals being presented
by the mortgage broker channel must include the option for a client to consider an insurance option in an effort to protect the liability
in the case of death or disability. Pineapple Insurance Inc. will be presenting this insurance option for a client to accept or not via
the products that we have available. This will be presented to all mortgage approvals being offered via our parent company, Pineapple
Financial Inc.
As
a complementary service to our parent company, Pineapple Financial Inc., this insurance subsidiary was created to easily serve the needs
of the homeowners whose mortgages originate with us. With any mortgage product in Canada, an insurance component is a requirement, hence
the diversification and business development into insurance.
Our
insurance services identified above currently are provided by a third-party insurance company, Industrial Alliance Inc., with whom we
are affiliated as a managing general agent (MGA). We, therefore, act as an agent earning commissions from the premiums charged by the
insurance company.
We
believe the material steps for Pineapple Insurance to grow form its early stages of development are as follows:
1.
To introduce the services offered by Industrial Alliance and to serve the Users on our platform, MyPineapple, is to market these services,
create a knowledge base for them to understand and pass on the learning to their customers, create a support structure for both Users
and Users’ customers.
2.
Set up an internal infrastructure for the management and offering of these services, i.e. hire a senior management person to manage the
operational affairs and thereafter additional personnel, as needed when the business grows. The additional personnel will be mostly sales
commissionable personnel with a retainer.
Pineapple
Insurance officially launched in October 2024, marking a significant milestone in Pineapple Financial’s diversification strategy.
The costs anticipated for Pineapple Insurance are largely tied to marketing efforts, human capital, and platform development. Human capital
costs include a fixed expense for senior leadership, along with variable costs for additional personnel as the business scales. With
the strategic integration of Pineapple Insurance into the MyPineapple platform, our development costs are aimed at ensuring seamless
client experiences and operational efficiency.
The
growth timeline for Pineapple Insurance is projected at 12 to 24 months post-launch, reflecting strong initial demand and the effectiveness
of our comprehensive go-to-market strategy. This timeline is contingent upon the effectiveness of marketing campaigns, customer adoption
of the services offered by Industrial Alliance, and the competitiveness of pricing and premiums. The early success of our launch indicates
promising customer acceptance, supported by focused efforts to educate users on product variations and benefits. These efforts are expected
to accelerate market penetration and drive sustained growth for this subsidiary.
InsurTech
MyPineapple
is a key reason for our success and has the ability to drive interested and timely insurance prospects to a replicated module that we
have built in order to streamline and manage the customer flow for insurance products. The process is designed to create a unique synchronicity
between the client obtaining a mortgage approval and insurance approval.
Combined,
the simplicity of the two platforms with its connectivity and integrations will allow Pineapple Insurance to successfully process and
approve insurance applications.
We
have also created client segmentations and retention programs to ensure that we can maximize our database of over 150,000 potential clients.
Growth
Strategy
Brokerage
Services
We
aim to gain further market share and consumer adoption by focusing on the following areas of growth:
1.
Increase Agent Revenue From Optimized Analytics: We will continue to analyze past borrower data to determine opportunities to beneficially
re-service them in the future, potentially creating revenue generating activities and significantly enhancing the borrower experience.
2.
Added Product Suite - Insurance. As discussed above, we are establishing an insurance channel that provides borrowers with a full suite
of insurance products, which we believe will increase revenue.
3.
National Expansion: We expect to continue to expand our business and operations into current jurisdictions along with new provinces such
as British Colombia and Quebec.
4.
Borrower-Facing Technology. We believe MyPineapple will be a marketplace where clients can select from a variety of mortgage products
that will suit their individual needs while tracking the progress and status of the transaction for the life of the mortgage and beyond.
Insurance
Products
In
order to achieve our objectives and goals, Pineapple Insurance will focus on four main areas:
1.
Insurance originations: Our files will be obtained exclusively through the Pineapple Financial referral network. This will be achieved
through technology integration where Pineapple Insurance agents are immediately notified of a mortgage approval which requires an insurance
option. Our agents will be highly trained in an effort to service the growth of our referral network. Consistency in service level and
approach is key to building our brand.
2.
Emphasizing core values: Servicing our clients, maintaining relationships, ongoing and continued support, education and training, ongoing
lines of communication between mortgage agent and insurance agent and ensuring a smooth and efficient closing process. We expect our
agents to conduct themselves with the highest level of professionalism and carry out the fundamental and core values of Pineapple Insurance
at all times.
3.
Hiring and training insurance agents: We will follow and adhere to strict hiring and training policies as set out in our training manuals.
Development of education and training programs working in conjunction with our partners. Ensuring that we are consistently working on
recruiting top performing insurance agents that will be able to meet the growth and scale of the needs of the Company.
4.
Technologies and relationship management tools: We will be replicating and customizing our robust MyPineapple system for data transfer
and client management. This will be broken into the following areas:
●
Operational Excellence: notifying insurance agents at the optimal time to increase conversion metrics and customer satisfaction. Integration
of client data so the process is convenient for all involved parties. Visibility of status and automations of workflow and requirements;
●
Client Relationship Management (CRM): Advancing client relationships towards application indication, application completion and client
retention; and
●
Acquisition: marketing funnels to leverage the overall database and identity opportunities from older missed opportunities.
Markets
for our Services
Brokerage
Services
The
clients for our Brokerage Services include mortgage agents, brokers, sub-brokers, brokerages and consumers. Our customer activity is
intrinsically linked to the health of the real estate or commercial markets generally, particularly in Canada.
Strong
housing demand during 2020, 2021 and the first quarter of 2022 positively impacted the seasonal variations. With the onset of inflationary
pressures around the globe, not only the seasonality but the normal trends of the housing markets have declined with the increase of
interest rates. Although our business may be negatively impacted, we believe our multiple channels of revenue help to mitigate any such
impact.
In
alignment with the Canadian government’s commitment to improving housing affordability and accessibility, several new housing measures
have been introduced to support homeowners and first-time buyers. These include enabling homeowners to refinance their mortgages to construct
secondary rental suites and borrowing up to 90% of their home’s value with a 30-year amortization period. Additionally, the mortgage
insurance price limit has been increased to $2 million, ensuring broader access to financing across Canada’s diverse housing markets.
The
government has also proposed consultations on taxing vacant land to encourage development and incentivize landowners to build homes.
Collaboration with provinces, territories, and municipalities is underway to implement these measures effectively. Starting December
15, 2024, two key rules will further aid affordability: 30-year mortgage amortizations will become available to all first-time homebuyers
and buyers of new-build properties, and the price cap for insured mortgages will rise to $1.5 million from $1 million.
Moreover,
the federal government has expanded the Canada Public Land Bank by adding 14 underused federal properties, bringing the total to 70.
These properties across major cities are slated for affordable housing developments. This initiative supports the government’s
broader plan to unlock public lands for housing and address the growing demand for homes while strengthening Canadian communities.
These
measures, alongside the influx of new immigrants and the rising demand for home renovations, refurbishments, and innovative financing
solutions, create a favorable environment for Pineapple Financial Inc. to continue expanding its offerings and capitalizing on these
growth opportunities.
Insurance
Products
The
insurance market for Pineapple Insurance is focused around growth in the Canadian mortgage landscape as well as market share growth for
Pineapple Financial.
●
Real estate investors: we are able to consolidate multiple mortgage amounts into one insurance policy to help minimize risk if an investor
has multiple properties.
●
Residential Home purchase: with Canadian housing prices hitting all-time highs, we will help clients provide insurance to fill the gap
between their current coverage and the mortgage amount
●
Refinance: can help clients reduce existing coverage or apply/consolidate if they require additional coverage.
●
Reverse Mortgage: these clients can use the income from the reverse mortgage to help plan their final expense through insurance as well
as enrich their retirement years.
●
Switch: transferring to another lender at renewal. The insurance we offer is not tied to the lender directly and can assist clients in
locking in their rates long term when they can still qualify for insurance
●
Renovation and construction: Clients will be able to access their cash values in their permanent insurance policies to help fund their
renovations and construction projects. If additional financing is required, we can provide the added insurance coverage needed.
●
Self-Employed: As large numbers of Canadians move into business for themselves, we have found a great need for an insurance product that
can suit their needs since they generally do not have a company benefits plan. Income protection will also be a key component of our
business here.
●
Commercial Mortgages: We can provide the proper insurance to clients for the right amount of coverage and timeline for one or multiple
investors. Coverages can go up to $20 million.
●
Private Lending: Customized insurance can be provided to private lenders who may have a different set of circumstances in terms of investment
type and timeline horizon.
●
High Risk Health & Uninsurable: We can offer guaranteed issue insurance to clients who may have declining health or were previously
declined for insurance in the past.
Pineapple
Financial Inc. and Mortgage Market Dependency
As
of November 2024, Canada’s mortgage market continues to demonstrate resilience despite ongoing challenges. According to the Bank
of Canada, the total residential mortgage market is valued at over $1.6 trillion, driven by population growth, increasing borrower demand,
and evolving consumer sentiment. This figure excludes mortgages held by provincially regulated entities such as credit unions and mortgage
investment corporations.
Mortgage
lenders offer a broad range of products, including fixed and variable rates, varying terms, and flexible amortization periods. Recent
interest rate cuts by the Bank of Canada have rejuvenated the market, improving affordability for new buyers and creating opportunities
for existing homeowners to refinance or renew at more favorable terms. The practice of negotiating discounted rates remains prevalent,
highlighting the importance of mortgage brokers in securing competitive deals for clients.
Mortgage
brokers are critical intermediaries, leveraging their volume-based bargaining power to erode lender price discrimination and secure advantageous
rates. These professionals are provincially regulated and must meet stringent licensing and training requirements. While the barriers
to entry remain relatively low, successful brokers rely on experience, negotiating skills, and technological support to thrive in an
increasingly competitive market.
Key
trends currently influencing the market include:
●
Renewals Surge: Over 30% of Canadian mortgages are expected to renew within the next 12 months, a significant driver of market activity.
●
Housing Shortages: A growing population, combined with limited housing supply, has led to increased pressure on the market, with demand
consistently outstripping available inventory.
●
Government Policies: Recent adjustments, such as the introduction of a 30-year amortization period for insured mortgages and incentives
for affordable housing, have bolstered consumer confidence and created new opportunities.
●
Consumer Sentiment: Improved confidence, spurred by rate cuts and stabilizing economic conditions, has increased buyer activity despite
affordability challenges.
●
Technology Adoption: Platforms like MyPineapple are transforming the brokerage landscape by streamlining processes and providing brokers
with data-driven tools to enhance efficiency and client satisfaction.
Industry
Growth Strategy
Our
growth strategy focuses on organic expansion, targeting increased market share through:
1.
Recruitment: We have successfully recruited a significant number of Field Agents and Users, driving a growth rate higher than
many competitors. By leveraging detailed insights into competitive models, we have tailored our value proposition to attract and retain
top talent.
2.
Technological Integration: Our proprietary platform, MyPineapple, empowers brokers with tools to increase sales volume, productivity,
and efficiency. This system also supports the seamless integration of complementary services, such as insurance products, creating additional
revenue streams and enhancing the overall client experience.
3.
Policy Alignment: By aligning our offerings with government initiatives to support housing affordability and address shortages,
we have positioned ourselves as a key player in addressing critical market needs.
4.
Focus on Renewals and Refinances: With a large portion of the mortgage market up for renewal in the next year, we have tailored
solutions to help brokers optimize their client retention and capitalize on refinancing opportunities.
Our
strategy is underpinned by a commitment to delivering superior value, leveraging data and insights to support broker success, and maintaining
flexibility to adapt to evolving market conditions. This approach ensures we remain a leader in the Canadian mortgage and brokerage industry.
Recent
Developments
Subsequent
to August 31, 2025, the Company entered into several material financing and digital-asset transactions. Management has evaluated
these events in accordance with ASC 855, Subsequent Events, and determined that they represent non-recognized subsequent
events require ing disclosure but no adjustment to the consolidated financial statements as of and for the year ended August 31,
2025.
a) Injective Digital Asset Treasury Initiative
On
September 2, 2025, the Company entered into a Securities Purchase Agreement with certain accredited investors to issue 24,642,700
subscription receipts at an offering price of US $3.80 per subscription receipt, with respect to certain purchasers, and US $4.16
per subscription receipt, with respect to certain purchasers.
The
private placement closed on September 4, 2025, raising approximately US $100 million in aggregate proceeds consisting of cash and
Injective (INJ) tokens, all of which are held in escrow pending satisfaction of specified escrow release conditions under the
Subscription Receipt Agreement.
On
October 31, 2025, shareholders approved the issuance of the underlying common shares. The Company is preparing a registration statement
on Form S-1 to register the resale of approximately 25.7 million shares, including those issuable upon exercise of associated warrants.
Escrowed funds will be released upon SEC effectiveness of the registration statement and NYSE American approval of listing of the underlying
shares.
b) Voltedge Loan Facility
On
September 15, 2025, the Company executed a Master Loan and Security Agreement with Voltedge Finance Inc., providing for a revolving credit
facility of up to US $15.0 million. As of November 2025, US $11.4 million had been drawn under the facility and invested in INJ tokens
as part of the Company’s digital-asset treasury strategy. The facility is secured by a corporate guarantee from Cooppers Financial
Group and pledges over certain digital-asset holdings.
c) White Lion Equity Line of Credit (ELOC)
On
September 4, 2025, the Company entered into a Common Stock Purchase Agreement with White Lion Capital LLC, establishing an equity
line of credit of up to US $250 million. The agreement allows the Company, at its discretion, to issue and sell common shares over a
24-month period, subject to volume and pricing limitations. As of the date of issuance of these financial statements, no shares have
been issued, and the arrangement has not yet been registered with the SEC.
Management
concluded that these transactions occurred after year-end and therefore did not require adjustment to the accompanying consolidated financial
statements. The Company will continue to monitor subsequent developments related to the escrow releases, SEC registration processes,
and loan facility utilization for disclosure in future filings.
Industry
Overview
The Canadian Mortgage and Mortgage Brokerage Industry
The
Canadian mortgage market represents one of the largest and most stable segments of the national financial system, with residential mortgage
credit exceeding $1.8 trillion as of 2025, according to data from the Bank of Canada. This total does not include mortgages held by provincially
regulated entities such as credit unions or mortgage investment corporations.
Mortgage
lenders in Canada offer a broad range of products featuring fixed or variable interest rates, varying terms and amortization periods,
and differing provisions for pre-payments, rate holds, and other features. Interest rates are typically renegotiated every three to five
years. While lenders post benchmark rates, actual mortgage pricing is widely negotiated—a practice referred to as “discounting”—which
has become an established norm across the industry. This approach enables lenders to offer customized pricing based on borrower risk
profiles and market conditions.
This
environment has elevated the role of the independent mortgage broker as a key intermediary between borrowers and lenders. Brokers leverage
their lender relationships and market insight to secure competitive rates and terms for their clients. In return for a fee, typically
paid by the lender, brokers help borrowers navigate an increasingly complex rate and qualification environment. Mortgage brokers are
provincially regulated and must meet licensing and continuing-education standards. Although barriers to entry remain modest, a broker’s
ability to negotiate advantageous terms is closely tied to their volume, reputation, and lender relationships.
Pineapple’s
Market Position and Growth Strategy
Pineapple’s
growth strategy focuses on expanding market share organically by increasing the number of mortgages funded annually and strengthening
our network of mortgage professionals. Our approach emphasizes recruitment, retention, and empowerment of high-performing Field Agents
through superior technology, marketing support, and operational efficiency.
Our
proprietary platform, MyPineapple, is designed to enhance agent productivity and client service through advanced deal management tools,
marketing automation, and real-time data analytics. This digital infrastructure allows our agents to process applications more efficiently,
improve client conversion, and increase overall sales volume.
We
continue to invest in recruitment and training initiatives that have positioned Pineapple among the fastest-growing mortgage brokerages
in Canada. By maintaining a deep understanding of competing brokerage models, we continually refine our value proposition to attract
and retain top-performing agents.
Our
long-term vision is to establish Pineapple as Canada’s leading digital-first mortgage platform, connecting brokers, lenders, and
consumers through a unified ecosystem built on transparency, technology, and trust. Through innovation and scale, we aim to strengthen
our competitive position and create sustained value for our stakeholders.