10-K: Pineapple Financial Reports Reduced Loss, Strategic Digital Asset Shift

Pineapple Financial Inc. reported a narrower net loss for fiscal year 2025, driven by increased mortgage originations and cost efficiencies, while strategically expanding into digital assets and insurance.

Summary

• Net loss for the fiscal year ended August 31, 2025, improved to $3.538 million, down from $4.093 million in the prior fiscal year.
• Residential mortgage loan originations increased by $70 million, or approximately 4.6%, year-over-year, reaching $1.599 billion in fiscal 2025.
• Revenue grew by 11.08% to $2.987 million in fiscal 2025, up from $2.689 million in fiscal 2024.
• Gross billings increased by 7.18% to $17.431 million in fiscal 2025, primarily from lender partner service commissions (approximately 95% of total gross revenue).
• Established a digital asset treasury strategy in fiscal 2025, holding a capped allocation of liquid digital assets (INJ tokens) to support R&D and ecosystem partnerships.
• Launched Pineapple Insurance Inc. in October 2024, a wholly-owned subsidiary acting as a Managing General Agent (MGA) for Industrial Alliance, aiming to diversify revenue and enhance client retention.
• Net cash used in operating activities improved by $761,441, from $1,708,261 in fiscal 2024 to $946,820 in fiscal 2025.
• Cash balance significantly increased to $2.12 million as of August 31, 2025, from $0.58 million in the prior year.
• A material weakness in internal control over financial reporting related to segregation of duties within the finance function was identified due to limited personnel.
• Subsequent to year-end, the company raised approximately $100 million in aggregate proceeds (cash and INJ tokens) from a private placement, held in escrow pending SEC and NYSE American approvals.
• Entered into a revolving credit facility of up to $15.0 million with Voltedge Finance Inc., drawing $11.8 million by November 2025 and investing it in INJ tokens.
• Established an equity line of credit (ELOC) of up to $250 million with White Lion Capital LLC, though no shares have been issued and it is not yet SEC registered.

Sentiment

Score: 6

Explanation: The company shows significant improvements in key financial metrics like net loss, revenue, and operating cash flow, alongside strategic diversification into digital assets and insurance. However, the persistent 'going concern' doubt, working capital deficit, and reliance on future capital raises, coupled with the inherent volatility and regulatory uncertainty of digital assets, temper the overall positive sentiment.

Positives

• Net loss significantly narrowed to $3.538 million in FY2025 from $4.093 million in FY2024, an 11.31% improvement.
• Residential mortgage loan originations increased by $70 million (4.6%) to $1.599 billion in FY2025, driven by higher renewal/refinance volumes and improved broker productivity.
• Total revenue increased by 11.08% to $2.987 million in FY2025, reflecting stronger net mortgage-brokerage revenue.
• Net cash used in operating activities improved by $761,441, indicating better operational cash management.
• Cash balance at year-end increased by $1.54 million to $2.12 million, strengthening liquidity.
• Successful launch of Pineapple Insurance Inc. in October 2024, diversifying revenue streams and enhancing client retention.
• Implementation of a digital asset treasury strategy and on-chain mortgage development initiatives position the company for future innovation and ecosystem partnerships.
• Significant cost reductions in selling, general, and administrative expenses (-5.38%), advertising and marketing (-22.16%), and salaries, wages, and benefits (-32.49%).
• Optimization of technology infrastructure led to a 16.87% decrease in software subscription expenses, reflecting progress towards self-sufficiency with the Pineapple Plus platform.
• Shareholder approval obtained on October 31, 2025, for the issuance of common shares underlying the $100 million private placement, a key step for escrow release.

Negatives

• Company incurred recurring operating losses and negative operating cash flows, with a net loss of $3.638 million and negative operating cash flows of $946,820 in FY2025.
• Accumulated deficit increased to $13.396 million as of August 31, 2025, from $9.757 million in the prior year.
• Working capital deficit of $682,096 as of August 31, 2025, indicating current assets are insufficient to cover current liabilities.
• Substantial doubt exists about the company's ability to continue as a going concern.
• Interest expense and bank charges increased significantly by 259.59% to $336,115 in FY2025 due to higher short-term financing and director-related loans.
• Recognized a non-cash loss of $608,537 on the change in fair value of warrant liabilities in FY2025, compared to a gain in the prior year.
• Incurred $164,280 in financing costs related to warrant issuance.
• Dues and subscriptions expenses increased by 127.60% to $612,476, primarily due to higher NYSE American listing and regulatory compliance costs.
• Identified a material weakness in internal control over financial reporting related to segregation of duties within the finance function due to limited personnel.

Risks

• The company's digital asset holdings (INJ tokens) are highly volatile and subject to significant price fluctuations, potentially leading to substantial losses.
• The digital asset treasury strategy is new and may not be successfully implemented or achieve anticipated profitability, requiring specialized skills and infrastructure.
• Common Shares may trade at a discount to net asset value, and investors could experience losses unrelated to the performance of underlying digital asset holdings.
• Operational risks associated with the Injective ecosystem, including frequent upgrades, protocol changes, and reliance on third-party service providers, could adversely affect the treasury strategy.
• Concentration of INJ holdings limits risk mitigation and enhances the impact of any disruption to the Injective network.
• Digital assets are novel and subject to significant legal, commercial, regulatory, and technical uncertainty, with potential for adverse regulatory actions or new laws.
• Changes in regulatory interpretations could require registration as a money services business or money transmitter, leading to increased compliance costs or operational shutdowns.
• Classification of digital assets as securities or commodities could subject the company to extensive regulation (SEC, CFTC), resulting in significant costs or forced cessation of operations.
• Lack of legal recourse and insurance for digital assets increases the risk of total loss in the event of theft or destruction.
• Irreversibility of digital asset transactions exposes the company to risks of theft, loss, and human error.
• Dependence on the residential real estate market, which is subject to macroeconomic conditions, interest rate fluctuations, and government policies beyond the company's control.
• Inability to secure additional capital and achieve adequate liquidity to grow and compete, potentially leading to substantial dilution for existing shareholders.
• Limited operating history makes it difficult to accurately project revenues and operating expenses, and there is no assurance of achieving or maintaining profitability.
• Currency exchange rate fluctuations between Canadian and US dollars could adversely affect operating results and financial statements.
• Operating results may be subject to seasonality and vary significantly among quarters, making comparisons difficult.
• Growth strategy may not achieve anticipated results, requiring investments that may be dilutive to earnings without generating current revenue.
• Inability to effectively manage rapid growth could strain operational infrastructure, impact brand reputation, and make it difficult to maintain corporate culture.
• Continued dependence on relationships with third parties (insurance companies, financial institutions, lenders) for business growth, with risks of non-renewal or competitive incentives.
• Insurance business is highly regulated, and statutory/regulatory changes may materially adversely affect operations.
• Exposure to fraudulent activity associated with handling borrower or lending partner information, potentially impacting operating results, brand, and reputation.
• Security breaches could result in loss or misuse of data, harming business and reputation, and exposing the company to litigation.
• Software systems may contain errors, defects, or security vulnerabilities that could interrupt operations or impact compliance.
• Failure to protect the privacy and personal information of customers, agents, or employees could lead to legal claims and reputational damage.
• Need to develop new products and services in a rapidly changing technological environment; failure to do so could harm the business.
• Failure to sustain or increase mortgage origination from independent mortgage brokers could have a material adverse effect.
• Global economy risk, including geopolitical conflicts (e.g., Russia-Ukraine), could negatively impact business operations and ability to raise capital.
• Failure to maintain compliance with NYSE American listing requirements could lead to delisting and a limited trading market for Common Shares.
• Substantial future sales or issuances of Common Shares and digital-asset-backed financings could cause the market price to decline and dilute existing shareholders.

Future Outlook

Management anticipates benefiting from a gradual recovery in mortgage activity as interest rates normalize and borrower confidence improves heading into fiscal 2026. The company expects to maintain adequate liquidity through disciplined working-capital management and access to non-dilutive financing sources, believing existing cash resources are sufficient for at least the next 12 months. Future growth is expected from increasing agent revenue through optimized analytics, expanding the insurance product suite, national expansion into new provinces, and developing borrower-facing technology. The growth timeline for Pineapple Insurance is projected at 12 to 24 months post-launch, contingent on marketing effectiveness and customer adoption. The company intends to activate the White Lion ELOC only after SEC registration is effective and market conditions are favorable.

Management Comments

• Management believes that the current interest rate environment is close to its maturity level and that core inflation is being contained, with further interest rate increases by the Bank of Canada possible.
• Management believes that the current liquidity, combined with expected operating cash flows, is sufficient to meet all short-term obligations and support near-term growth initiatives.
• Management believes that the terms of the loans from directors are consistent with those available in arms-length commercial transactions.
• Management believes that the legal proceeding with Centurion One Capital Corp. is without merit and intends to vigorously defend the action, not expecting a material adverse effect on business, financial condition, or results of operations.
• Management believes that these equity-linked financings collectively enhance liquidity and position the Company for long-term growth while maintaining prudent capital-structure discipline.
• Management will continue to prioritize non-dilutive financing options and intends to activate the White Lion ELOC only after SEC registration is effective and market conditions are favorable.

Industry Context

The Canadian mortgage market, valued at over $1.6 trillion, demonstrated resilience in fiscal 2025 despite lingering affordability constraints and limited housing supply. The Bank of Canada's monetary policy easing, with cumulative rate reductions, gradually improved affordability. Renewal and refinance activity dominated, while new-purchase originations grew moderately. Government policies, including 30-year amortizations for insured mortgages and increased price caps, are creating a more favorable environment. The industry is seeing a surge in renewals (over 30% of mortgages in the next 12 months) and continued housing shortages. Technology adoption, like Pineapple's MyPineapple platform, is transforming brokerage by streamlining processes. Pineapple Financial is positioned to leverage these trends through organic expansion, recruitment, technological integration, and alignment with government initiatives, competing with traditional brokerages, digital mortgage companies, and specialized technology providers.

Comparison to Industry Standards

• The company's growth rate in recruiting Field Agents and Users is higher than many competitors, indicating strong talent acquisition in the Canadian mortgage brokerage industry.
• MyPineapple platform is designed to offer competitive advantages relative to traditional broker arrangements, which are described as high-touch, labor-intensive, and costly.
• The company's proprietary technology and centralized workflow aim to improve agent productivity and reduce turnaround times, addressing key industry inefficiencies.
• Pineapple Insurance's strategy to consolidate multiple mortgage amounts into one insurance policy for real estate investors and offer tailored solutions for self-employed individuals addresses specific market needs not always met by standard offerings.
• The company's focus on renewals and refinances aligns with the significant portion of the Canadian mortgage market (over 30%) expected to renew within the next 12 months, indicating a strategic response to current market drivers.

Management Changes

Corporate Governance

Legal Proceedings

• On June 2025, Centurion One Capital Corp., Kia Besharat, and Break Point Ventures Ltd. commenced a civil proceeding in the Ontario Superior Court of Justice against Pineapple Financial Inc. The claim relates to alleged fees and compensation under two consulting and advisory agreements.
• The Company filed a Statement of Defense dated July 10, 2025, denying all allegations and asserting that both agreements were properly terminated in November 2024 following repudiation by the plaintiffs. Management believes the matter is without merit and intends to vigorously defend the action, not expecting a material adverse effect on its business, financial condition, or results of operations.

Related Party Transactions

• During the year ended August 31, 2025, the Company entered into unsecured loan agreements with its directors and shareholders, totaling $608,940. These loans bear interest at 12% per annum, are non-compounding, and are repayable after the S1 registration statement filing in December 2025. Total interest during the year was $48,570.
• Drew Green, Chairman of the Board, receives monthly compensation of $7,887 for his service.
• Nima Besharat received monthly compensation of $3,943 until his compensation terminated in February 2025.

Stakeholder Impact

• Shareholders face potential dilution from future equity issuances (private placement, ELOC) and share-price volatility due to digital asset holdings and market conditions.
• Employees and management are impacted by organizational streamlining efforts and workforce efficiency initiatives, but also benefit from equity-based compensation designed for retention and alignment with long-term value.
• Customers (mortgage agents, brokers, consumers) benefit from enhanced technology (MyPineapple), diversified service offerings (insurance), and improved efficiency in mortgage processing.
• Lender partners benefit from the company's platform facilitating mortgage transactions and potentially increased volume through the company's network.
• Creditors (Voltedge Finance Inc., directors) are impacted by the company's ability to meet debt obligations, which is currently a going concern risk, though secured by corporate guarantee and digital assets in some cases.

Next Steps

• Prepare a registration statement on Form S-1 to register the resale of approximately 25.7 million shares related to the Injective Digital Asset Treasury Initiative.
• Monitor subsequent developments related to escrow releases, SEC registration processes, and loan facility utilization for disclosure in future filings.
• Continue to expand the mortgage broker distribution channel to gain further market share and consumer adoption.
• Grow Pineapple Insurance to provide an insurance option for all mortgage approvals and leverage the growing database and brand recognition.
• Streamline the insurance approval and application process for mortgage clients using technology.
• Introduce services offered by Industrial Alliance to users on the MyPineapple platform, create a knowledge base, and support structure.
• Set up internal infrastructure for Pineapple Insurance, including hiring senior management and additional sales personnel.
• Continue to analyze past borrower data to determine opportunities for re-servicing and revenue generation.
• Expand business and operations into new provinces such as British Columbia and Quebec.
• Further develop MyPineapple into a marketplace for clients to select mortgage products and track transaction progress.
• Adhere to strict hiring and training policies for insurance agents and continuously recruit top performers.
• Replicate and customize the MyPineapple system for data transfer and client management in the insurance sector.
• Strengthen segregation of duties within the finance function as additional resources become available to address the material weakness in internal control.

Key Dates

Recommendation

Pineapple Financial Inc. demonstrates improved financial performance with a narrower net loss, increased revenue, and better operating cash flow, indicating positive operational momentum. Strategic diversification into digital assets and insurance, coupled with technological advancements, presents significant long-term growth potential. However, the company's 'going concern' warning, accumulated deficit, and working capital deficit highlight substantial financial risks. The high volatility and regulatory uncertainty surrounding its digital asset treasury strategy, along with potential future dilution from capital raises, introduce considerable speculative elements. A 'hold' recommendation is appropriate for seasoned investors, acknowledging the positive operational trajectory and strategic initiatives while remaining cautious about the significant financial and market-related risks that could impact share price volatility and long-term viability.

Keywords

Mortgage Technology, Fintech, Canada Mortgage, Digital Assets, Injective Protocol, Insurance Brokerage, SEC Filing, 10-K, Financial Services, Real Estate, Corporate Governance, Risk Management, Capital Raise