Pineapple Financial Inc. Announces Fiscal 2024 First Quarter Results

Company Projects Profitability in Fiscal 2024

TORONTO, Jan. 16, 2024 /PRNewswire/ – Pineapple Financial Inc. (NYSE American: PAPL), a leading tech-focused mortgage firm with an integrated network of partner brokerages and agents across Canada, today announced its fiscal 2024 first-quarter ended November 30, 2023 results.

Financial Performance Amidst Market Challenges

In the face of highly challenging market conditions in the Canadian mortgage landscape, including persistently high-interest rates and suppressed consumer sentiment, Pineapple Financial Inc., nevertheless continued to grow its user base and market share. Though experiencing a revenue decline in the first quarter of fiscal 2024, Pineapple Financial showcased its ability to adapt and thrive in a dynamic environment.

Strengthened Liquidity Position:

During Q1 of fiscal 2024, Pineapple increased its unrestricted cash, trade and other receivables, and prepaid expenses and deposits by $1.721 million, bringing its total by the end of the quarter to $3.419 million.

Net Revenue:

Facing market headwinds, Pineapple closed this quarter with net revenue of $0.569 million, a decrease of 36.17% from the previous fiscal year’s quarter. This decrease stems from Canadian mortgage borrowers, faced with high-interest rates, preferring to take shorter than typical term mortgages, resulting in lesser revenue from lenders in turn lower revenue to Pineapple. Opting for these shorter 1 to 3-year mortgage terms allows borrowers to refinance mortgages earlier, providing potential relief should rates come down. Importantly, however, this approach positions Pineapple to significantly grow revenue in the next 1 to 3 years by concentrating on this customer base.

Net Loss:

Net loss for the fiscal 2024 first quarter period was $0.898 million, or $(.14) per share, as compared to $0.762 million, or $(.12) per share for the previous fiscal year period.

Adjusted EBITDA Management:

The company’s adjusted EBITDA loss during Q1 of Fiscal 2024 stood at $0.609 million, a moderate increase from $0.517 million in the previous corresponding period. This demonstrates its disciplined approach to managing financial metrics, optimizing resources, and maintaining operational efficiency during challenging times.

Streamlined Operational Expenses:

Pineapple Financial achieved a significant milestone in the reduction of selling, general, and administrative expenses by 19.95%, totaling $0.560 million compared to $0.700 million in the previous corresponding quarter. This disciplined cost management reflects our commitment to operational efficiency and sustained growth.

Employee Cost Optimization:

Salaries, wages, and benefits decreased to $0.644 million, representing a 1.98% reduction compared to the corresponding previous quarter ended November 30, 2022.

Prudent Mortgage Portfolio Management:

In navigating the intricate mortgage market, Pineapple Financial recorded a total mortgage volume of $381.987 million during the first quarter of fiscal 2024, representing a minor decrease of 1.24% compared to the same period in fiscal 2023.

“Despite facing adverse economic conditions during our first fiscal quarter, Pineapple has continued to progress by adding market share, continuing to increase our technology presence, expanding our user base, and growing our geographic presence. We believe, based on this progress, as well as decreasing interest rates, and improved consumer sentiment that Pineapple will demonstrate improved top and bottom line performance with each remaining quarter this fiscal year.

We therefore project significant top-line growth and profitability in fiscal 2024.” said Shubha Dasgupta, Co-Founder and Chief Executive Officer.

Business Highlights and Recent Updates

During the first fiscal quarter of 2024, Pineapple Financial achieved several significant milestones and shared important updates:

NYSE American Listing and IPO Success:

On November 1, 2023, Pineapple Financial made history by becoming the first Canadian mortgage fintech company to commence trading on the NYSE American. This landmark event was swiftly followed by the successful closure of its Initial Public Offering, generating gross proceeds of $3.5 million. These funds bolster our strategic initiatives and position the company for continued growth in the dynamic mortgage landscape.

Broker Expansion:

In this fiscal quarter, Pineapple experienced robust user growth, welcoming 64 new brokers. This increase represents a 10% expansion of our user base, elevating the total count to 700. Notably, among the newly added users, Pineapple gained the valuable expertise of industry-seasoned professionals, some of whom have contributed to significant volume increases exceeding $100,000,000. This upward trajectory in user acquisition underscores Pineapple’s appeal and value proposition within the market, reinforcing our commitment to fostering a diverse and influential user community.

Strategic Investor Relations Partnership:

Recognizing the importance of transparent and effective communication with our stakeholders, on November 13, 2023, Pineapple announced a strategic partnership with Skyline Corporate Communications Group, LLC. This collaboration enhances our investor relations and corporate communications activities, ensuring a broader and more compelling narrative within financial and investor communities.

Globe and Mail Recognition:

Pineapple Financial proudly secured the 27th position on the Globe and Mail 2023 Listing of Canada’s fastest-growing companies. With an impressive three-year growth rate of 1,452%, this recognition underscores our robust performance and establishes Pineapple as a key player in the Canadian mortgage industry.

Strategic Expansion in Metro Vancouver:

Since the end of our fiscal first quarter, Pineapple Financial expanded its geographical reach by opening an office in Metro Vancouver, British Columbia. This strategic move is anticipated to yield a 10% increase in gross revenue, driven by an ambitious projection of $225 million in new mortgage origination over the next twelve months.

Innovative Online Application System:

On December 1, 2023, Pineapple Financial introduced a cutting-edge online application system, revolutionizing the mortgage application process. This innovation empowers borrowers to swiftly determine their affordable mortgage amount and receive pre-qualification within minutes.

Strategic Presence in Ottawa:

Expanding our footprint further, Pineapple Financial opened an office in Ottawa, Canada’s capital, on December 21, 2023. This strategic move positions us to leverage the vibrant market in Ottawa, contributing significantly to our overall growth strategy and bottom line.

Participation in Multiple Small and Micro-Cap Investor Conferences:

Since the end of our first fiscal quarter, PIneapple has presented at several notable industry and investment conferences:

Harvard Investor Club:

December 1, 2023
January 11, 2024

Noble Con19:

December 4-5, 2023

Sidoti Conference:

December 6-7, 2023

Moneyball Event:

December 11, 2023

Visit our website to see upcoming conference participation.

These achievements collectively highlight Pineapple Financial’s commitment to innovation, strategic expansion, and creating long-term value for our shareholders. We look forward to continued success and growth in the evolving landscape of the Canadian mortgage industry.

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

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

Pineapple Financial Inc.

Condensed Interim Consolidated Balance Sheets – Unaudited

(Expressed in U.S. Dollars)

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

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

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

Deferred government incentive		710,867		699,627
Lease liability		928,150		969,589
Warrant liability		37,848		–
	$	2,808,330	$	2,843,005

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

Pineapple Financial Inc.

Condensed Interim Consolidated Statements of Operations and Comprehensive Loss – Unaudited

(Expressed in U.S. Dollars)

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

Net Revenue	$	569,355	$	892,024

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

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

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

Income taxes (recovery) expense		–		–

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

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

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

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

Pineapple Financial Inc.

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

(Expressed in U.S. Dollars)

Additional

Accumulated

Common

Paid in

other

Accumulated

Total

Shares

Capital

comprehensive

(deficit)

shareholders’

loss

earnings

equity

Balance, August 31 August, 2022

4,903,031

2,922,853

(353,218)

(2,846,278)

4,626,388

Share-based compensation

–

65,674

–

65,674

Foreign exchange translation

–

(73,232)

–

(73,232)

Net loss

–

(762,073)

Balance, November 30, 2022

4,903,031

2,988,527

(426,450)

(3,608,351)

3,856,757

Balance, August 31, 2023

4,903,031

2,955,944

(417,727)

(5,655,315)

1,785,933

Shares issued on Initial Public Offering

on November 3 , 2023

2,751,937

2,751,937

Warrants issued related to Initial Public

Offering

(48,283)

–

(48,283)

Foreign exchange translation

–

24,578

–

24,578

Net loss

–

(897,757)

Balance, November 30, 2023

7,606,685

2,955,944

(393,149)

(6,553,072)

3,616,408

Pineapple Financial Inc.

Condensed Interim Consolidated Statements of Cash Flow – Unaudited

(Expressed in U.S. Dollars)

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

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

Financing activities
Advances received from related parties Proceeds from the loan		87,369		–
Share capital issuance		2,731,658		–
Lease payments Repayment of lease obligations		(40,633)		(15,008)
		2,778,394		(15,008)

Investing activities
Additions to intangible assets		(266,825)		(284,589)
Additions to property and equipment		(2,032)		(39,678)
		(268,857)		(324,267)

The net change in cash		1,486,756		(1,499,104)
Effect of changes in foreign exchange rates		134,417		(15,869)
Cash, beginning of period		720,365		3,896,839
Cash, end of period		2,341,537		2,381,866

Reconciliation of Adjusted Revenue to Total Revenue, net

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

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

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

About Pineapple Financial Inc.

Pineapple Financial Inc. is an award-winning fintech and leading Canadian mortgage brokerage network, focusing on both the long-term success of agents and brokerages, as well as the overall experience of homeowners. With approximately 700 brokers within the network, Pineapple creates cutting-edge cloud-based tools and AI-driven systems to enable its brokers to help Canadians realize their dream of owning a home. Pineapple is active within the community and is proud to sponsor charities across Canada to improve the lives of fellow Canadians.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements, including, but not limited to, the Company’s proposed Offering. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs, including the expectation that the Offering will be successfully completed. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as may be required by law. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions and the completion of the initial public offering on the anticipated terms or at all, and other factors discussed in the “Risk Factors” section of the registration statement filed with the SEC. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC. Additional factors are discussed in the Company’s filings with the SEC, which are available for review at www.sec.gov.

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