19. Derivative Liability

During the nine months ended May 31, 2026, the Company entered into over-the-counter (“OTC”) put option transactions with FalconX Bravo, Inc. (the “Counterparty”) in connection with its digital asset activities. The derivative portfolio consisted principally of costless collars, together with a limited number of standalone written put and purchased call options.

Each costless collar was executed through the contemporaneous purchase of a put option and sale of a call option referencing the same underlying digital asset, with substantially corresponding notional amounts and expiration dates. The purchased put establishes a minimum settlement price, while the written call limits participation above a specified maximum settlement price. The option premiums were structured to substantially offset at inception, resulting in little or no initial net premium for the paired collar positions.

Each option is separately recognized and measured at fair value under ASC 815. The Company has elected to offset qualifying derivative asset and liability fair values executed with the Counterparty under the parties’ ISDA Master Agreement and related master netting arrangement in accordance with ASC 815-10-45-5. Accordingly, the qualifying derivative positions are presented on a net basis on the condensed interim consolidated balance sheet.

The quarter-end mark-to-market values of the Company’s entire option portfolio were based on valuation information provided by the Counterparty using established option-pricing methodologies consistent with the Black-Scholes-Merton framework. The valuations incorporated the spot prices of the underlying digital assets, contractual strike prices, remaining terms to expiration, expected or implied volatility, risk-free interest rates and applicable settlement provisions. Management independently evaluated the methodology and significant inputs and performed a separate reasonableness assessment. Management’s independently determined values were not materially different from the Counterparty-provided valuations used for financial reporting.

Accordingly, the Company’s derivative instruments are classified as Level 2 within the fair value hierarchy.

The following table reconciles the aggregate gross mark-to-market values of all purchased and written option positions, together with premiums received, to the net derivative liability presented as of May 31, 2026:

 Schedule of derivative position

As of May 31, 2026, the aggregate fair value of purchased option positions was $1,924,906, while the aggregate fair value of written option positions was $1,916,772. Premiums of $73,375 received on outstanding written option positions are included in the measurement of the derivative liability. After giving effect to those premiums, the Company recognized a net derivative liability of $65,241. The reconciliation includes all outstanding derivative positions subject to the FalconX master netting arrangement.

The Company recognized gains from changes in the fair value of its derivative instruments of $26,812 and $42,556 for the three and nine months ended May 31, 2026, respectively. These amounts are presented within gain on change in fair value of derivative liability in the condensed interim consolidated statements of operations and comprehensive loss.

The Company’s derivative arrangements are subject to collateral and margin requirements under the applicable financing and trading agreements with FalconX. As of May 31, 2026, approximately $5.0 million of cash and U.S. dollar-denominated stablecoins were maintained as restricted collateral. Of this amount, substantially all was pledged to satisfy the collateral requirements of the FalconX financing arrangements described in Note 12, while balances maintained within the Company’s derivatives account served as margin collateral supporting outstanding derivative positions and related trading activity under the FalconX trading agreements. The Company’s derivative transactions are subject to initial and ongoing margin requirements established by FalconX on a trade-by-trade basis in accordance with the applicable trading agreements. Margin requirements vary based on the characteristics and risk profile of each position, and the Company may be required to post additional collateral as market values and margin requirements change. In addition, the Company had a $171,414 margin balance payable relating primarily to unsettled spot trading and derivative activity. As of May 31, 2026, the Company maintained $174,320 of cash within its derivatives account as margin collateral supporting outstanding derivative positions under the FalconX trading agreements. Separately, the Company had $345,734 payable for unsettled spot trading transactions. The derivative margin is included in restricted cash, while the unsettled spot payable is included in accounts payable and accrued liabilities. The balances are presented gross because they represent separate assets and obligations and the applicable offsetting criteria have not been met.

Pineapple Financial Inc.

Notes to the Condensed Interim Consolidated Financial Statements - Unaudited

For the period ended May 31, 2026

(Expressed in US Dollars)