What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-05-29 compared with 2024-07-05 · 396 added, 235 removed, 38 unchanged (94% of the section changed)

1 unchanged sentence

of Operations for the Years February 28, 2025 and February 29, 2024

The Consolidated Medinotec

Group of Companies’ revenue for the year ended February 29, 2024 was $5,020,391 compared to $999,579 in revenue being

recorded in the year ended February 28, 2023, an increase of $4,020,812.

The reason for the higher

sales growth was due to various new distribution agreements in the surgical specialty of cardiology the Company entered into.

These agreements

are short term in nature and can be cancelled on non-performance clauses by either party.

It has a strong geographical country specific

risk which is mainly concentrated to South Africa.

This led to increased revenues in South Africa.

The rapid sales growth is attributable

to the fact that these distributors already have existing business as well as a reputation for quality product in South Africa.

Disa Medinotec

got awarded these contracts due to years of good relationships between the external third party distributors and the current executive

management of Disa Medinotec.

In addition, the Company realized sales for its Trachealator in the United States with no such sales inside

the United States for the prior year period.

The increase for the sales

of the Trachealator product, is substantiated by the roll out of this product as our lead product in the non-occlusive tracheal dilation

market and the increase in its popularity and use within these territories.

The Company recently embarked

on obtaining various distribution contracts from principals to ensure a full sales basket and cash generation to sustain growth and product

development in the near future.

No revenue was generated

by affiliations to related parties during the year ending February 29, 2024.

This table indicates the sales per revenue

stream as a breakdown of the total revenue balance:

For the fiscal year ended February 28, 2025, the Consolidated Medinotec

Group of Companies reported revenue of $9,113,607, an increase of $4,093,216 or 81.5% compared to $5,020,391 in the prior year.

growth was primarily driven by the full-year impact of newly established distribution agreements, the initial commercialization of

a key product in the U.S.

market, and continued expansion of our global sales footprint.

Key Drivers of Revenue Growth

First Full Year Under New Distribution Agreements

During the third quarter of fiscal 2024, the Company entered into multiple new distribution agreements in the surgical cardiology segment,

primarily concentrated in South Africa.

Fiscal 2025 represents the first full year of revenue contribution under these agreements.

performance-based nature of these short-term contracts, while beneficial for flexibility, also introduces potential variability depending

on distributor execution and market dynamics.

Geographic Concentration and Relationship-Driven Wins

The revenue increase was concentrated in South Africa, where our distribution partners brought strong reputations and existing market

These contract awards were, in part, the result of long-standing relationships between distributor principals and current executive

While this contributed to accelerated growth, the geographic concentration poses a potential risk in the event of contract

changes, local disruptions, or economic volatility.

Market Commercialization of Trachealator

In fiscal 2024, we began generating revenue in the United States through sales of our Trachealator device.

This represents the

first year of U.S.

commercialization for the product, which serves the non-occlusive tracheal dilation market.

The rollout has been positively

received and forms a key component of our growth strategy going forward.

Expanded Product Portfolio

The Company also secured several new distribution agreements with international principals late in the fiscal year to broaden its product

These agreements are expected to support future revenue diversification, reduced concentration risk, and additional entry points

into both existing and new markets.

Seasonality and Operating Patterns

While our business is not subject to pronounced

seasonality, we typically observe modest declines in sales during periods that coincide with regional holidays or extended breaks—particularly

in markets like South Africa.

These trends are known and budgeted for as part of our operating planning cycle.

Related Party Transactions

No revenue was generated from related party affiliations

during the fiscal year ended February 28, 2025.

This table indicates the sales per revenue stream

as a breakdown of the total revenue balance:

Medinotec Inc Group Consolidated Years Ended

4 unchanged sentences

Internally Designed/Manufactured Sales

The following table sets

forth financial information by reportable segment for the years ending February 29, 2024 and February 28, 2023:

The following table sets forth financial information

by reportable segment for the years ending February 28, 2025 and February 29, 2024:

Income/(loss) from operations

10 unchanged sentences

Outside the United States

The major component of

total assets is "Cash" of $2,808,910 for the year ending February 29, 2024 and $2,827,457 for the year ending February 28,

A significant portion of this is maintained Inside the United States in USD of $2,478,434 for the year ending February 29, 2024

and $2,582,272 for the year ending February 28, 2023

The major component of total assets is "Cash"

of $2,769,686 for the year ending February 28, 2025 and $2,808,910 for the year ending February 29, 2024.

A significant portion of this

is maintained inside the United States in USD of $2,019,628 for the year ending February 28, 2025 and $2,478,434 for the year ending

February 29, 2024.

Cost of Goods

The Consolidated Medinotec

Group of Companies recorded cost of goods of $2,577,922 constituting a gross profit percentage of 49% for the year ending February 29,

2024 down from $417,757 for the year ending February 28, 2023 with a gross profit percentage of 58%.

The most material

change in the increase in the cost of goods is that it functions in a direct correlation to sales and therefore the cost of goods followed

the same upward trend as sales.

Due to the fact

that distribution revenues are distributed at lower gross profit margins than internally designed products, there has been a substantial

increase in the cost of goods, which has a direct correlation to the amount of distribution sales generated.

No related party

transactions are recorded in cost of sales for the year ending February 29, 2024.

For the fiscal year ended February 28, 2025, the Consolidated

Medinotec Group of Companies recorded cost of goods sold (COGS) of $4,252,821, compared to $2,577,922 for the year ended February 29,

This represents a year-over-year increase of $1,674,899, in line with the significant growth in sales.

Gross profit for fiscal 2025 was $4,860,786, representing

a gross margin of 53%, compared to a gross margin of 49% in fiscal 2024.

The increase in gross margin is primarily attributable to increased

sales, together with manufacturing and sales processes becoming more efficient as time progresses, as well as an improved sales mix

favoring higher-margin products.

The effect of exchange rate differences on imports and exports were also more stable during the year.

Key Factors Affecting COGS and Gross Margin

• Sales-Driven

Increase in COGS:

The rise in COGS is consistent with higher product sales, particularly under third-party distribution agreements, which

resulted in a proportional increase in associated costs.

• Operational

Efficiencies:

As the Group matures operationally, efficiencies in manufacturing and sales processes have improved.

This ongoing operational

refinement has contributed positively to gross margins through reduced unit costs and optimized workflows.

• Stabilization

of Exchange Rates:

The Group is exposed to foreign exchange fluctuations related to both imports and exports, which can materially affect

margins due to timing differences between procurement and sales.

During fiscal 2025, exchange rates remained relatively stable, with

the South African Rand appreciating by approximately 4.6% against the U.S.

This stability helped mitigate currency-related margin

Related Party Transactions

No related party transactions were recorded in cost

of sales for the fiscal year ended February 28, 2025.

Operating Expenses

The Consolidated Medinotec

Group of Companies operating expenses were $1,841,891 for the year ended February 29, 2024, up from $820,409 for the year ended February

Due to the consistent growth

of the company and the popularity of the product, there was also an increase in general compliance costs.

One of the major components

that affects the operating expenses is the costs of compliance for the business.

Certain costs are once off in nature and others will

be recurring.

This will be determined after the markets were entered and all regulatory requirements met.

For the fiscal year ended February 28, 2025, operating

expenses totaled $1,669,287, a decrease from $1,841,891 for the fiscal year ended February 29, 2024.

This decrease was primarily due to

reclassification adjustments, offsetting the increased costs related to business expansion and product rollout.

One of the major components that affect the operating

expenses is the costs of compliance for the business.

Certain costs are once off in nature and others will be recurring.

determined after the markets were entered and all regulatory requirements met.

The Consolidated Medinotec Group of Companies for the Years Ended

Compliance cost

Medinotec Inc Group Consolidated Years Ended

and amortization expense

General and administrative

Research and development

Depreciation and amortization expense

General and administrative expenses

Research and development expenses

Selling expenses

Total operating expenses

R&D activities were conducted in 2024 due to the focus on rolling out the Trachealator in the United States which consumed all production

and testing resources.

R&D activities have resumed and are expected to increase in the next financial year.

and administrative expenses showed significant growth mainly due to increases in independent contractor fees in

the United States and more staff for the new Cardiology distribution Revenues.

included but not as material:

indemnity insurance and payments made to service providers as part of obtaining our quotation on the OTCQX

markets and costs relating to the quotation on the OTC markets that will not be non-recurring in the future are estimated at $30,000 and

all other costs will be repeated in the future.

Non-operating income

Key Drivers of Operating Expense Trends

General and Administrative Expenses :

and administrative (G&A) expenses decreased significantly, although this was partially due to the reclassification of $327,950 in

expenses to revenue in the first quarter of fiscal 2025, relating to activities outside the United States.

Excluding this reclassification,

G&A expenses increased by $48,036, mainly driven by the addition of payroll costs related to new distribution agreements and higher

compliance costs as the Company expanded its market presence.

Research and Development (R&D) :

recorded R&D expenses of $91,133 for the year ended February 28, 2025, up from $22,351 in the prior year.

However, R&D spending

remains a relatively small portion of our overall operating expenses.

This increase was primarily focused on perfecting existing manufacturing

processes to support the scaling of our Trachealator product and other potential product integrations.

Given the nature of our operations,

the majority of our R&D efforts are directed toward refining production methods and ensuring that products can be efficiently manufactured

within our current infrastructure.

We only engage in R&D for products where a working prototype and proof of concept are already in

hand, and we focus exclusively on products that align with our existing capabilities.

This approach significantly reduces our R&D

costs compared to companies engaged in speculative or early-stage development.

Compliance Costs :

A substantial portion of

our operating expenses relates to compliance activities required to maintain international standards, including ISO certifications and

CE/FDA product registrations.

These compliance costs are essential for ensuring that our products meet regulatory requirements in the

markets where we operate.

Additionally, we incur costs for maintaining distribution licenses and product registrations with local health

authorities in each country, such as the South African Health Products Regulatory Authority (SAHPRA) in South Africa.

While some of these

compliance costs are one-time in nature, many will be recurring as the Company enters new territories and ensures ongoing regulatory compliance.

As we expand into more markets, particularly within the medical device industry, these compliance costs will likely increase.

Future Operating Expense Growth

Looking forward, we anticipate that future operating

expenses will grow primarily in two areas:

Regulatory Compliance:

As we expand into additional territories, we expect ongoing costs related to maintaining

and obtaining product registrations, as well as adhering to the evolving regulatory standards in different jurisdictions.

This includes

the maintenance of certifications such as ISO, CE, and FDA approvals, as well as local health authority requirements in each market.

Sales and Marketing:

As we increase our global footprint, particularly with the Trachealator and other products, we expect

to allocate more resources toward sales and marketing efforts.

These costs will be essential to drive product adoption, support new distribution

agreements, and build brand awareness in new regions.

In addition, while R&D expenses will remain relatively

modest, the Company's focus will remain on optimizing manufacturing processes, ensuring that production capabilities are aligned with

increased product demand and the scalability of our operations.

Non-operating income and expenses

Non-operating income and expenses for the fiscal year

ended February 28, 2025, primarily consist of interest earned on free cash and the management of liquid assets.

These amounts are immaterial

relative to our core operating results and do not significantly affect the business’s overall financial performance.

However, there

were some key non-operating transactions that impacted both the balance sheet and income statement during the prior fiscal year.

Note Receivable

The Company decided to provide

full impairment against Innovative Outcomes note receivable on November 30, 2023 which totaled S642,012.

This decision was made in prudence

due to the fact that the receivable is not backed by any Trachealator revenue streams anymore and does not change that Innovative Outcomes

will still be liable for payment of this in the future Interest will accrue as normal until maturity date.

No impairment was recorded

during fiscal 2023.

On November 30, 2023, the Company fully

impaired its note receivable from Innovative Outcomes, which amounted to $642,012.

This decision was made prudently, as the receivable

was no longer supported by any ongoing Trachealator revenue streams.

While the receivable was impaired, it does not eliminate the future

liability of Innovative Outcomes to repay the amount.

No interest income is recognized on the note while it remains impaired.

recoverability of the receivable has not yet been definitively tested.

Interest Expense

Interest expense relates

mostly to interest on the related party loan.

Another component of interest expense relates to interest paid to our logistics service

Interest expense primarily relates to the

interest on the related party loan of $141,748 and the interest paid to our logistics service provider of $28,126.

These expenses are

recorded in line with the terms of the respective agreements and are consistent with prior periods.

Interest Income

Interest income relates to

interest earned on notes receivable for the year as well as interest earned on a tax refund receivable during the year.

The Consolidated Medinotec

Group of Companies for the year ending February 29, 2024 showed total net loss of $404,688 compared to a loss of $352,735 for the year

ended February 28, 2023.

The change is mainly attributable

to the higher sales of the new cardiology distribution business in South Africa and increased sales of the Trachealator, an internally

designed and manufactured product sold in the United States.

The increased sales positioned

the Company in a net profit, however, due to the impairment made on the note receivable, the Company showed an increase in net loss for

the year ended February 29, 2024.

Liquidity and Capital

As of February

29, 2024, the Company had total current assets of $4,379,297 and total assets in the amount of $4,804,279.

Total current liabilities

as of February 29, 2024, were $827,453.

The Company had working capital of $3,551,844 as at February 29, 2024.

In comparison, as of February

28, 2023, the Company had total current assets of $3,369,478 and total assets in the amount of $4,490,432.

Total current liabilities

as of February 28, 2023, was $71,311.

Consolidated, we had working capital of $3,298,167 as of February 28, 2023.

The research and

development phase of the internally designed product lines have largely concluded.

Therefore, we expect to see an increase in sales and

marketing expenses, to build out of the territory of the United States.

Combined with the Cardiology distribution contract business in

South Africa.

A private placement

was completed in the wake of the successful research and development and subsequent regulatory approval in the prior financial year for

$3,467,500 and therefore the Company has enough cash reserves and working capital to fund the roll out in the market of the United States

including new research and development activities and Marketing and Sales functions.

We have cash available

on hand and believe that this cash will be sufficient to fund operations and meet our obligations as they come due within one year from

the date these Condensed Consolidated financial statements are issued.

In the event that we do not achieve the revenue anticipated in

its current operating plan, management has the ability and commitment to reduce operating expenses as necessary.

Our long-term success

is dependent upon our ability to successfully raise additional capital, market our existing services, increase revenues, and, ultimately,

to achieve profitable operations.

Our audited Consolidated

Financial Statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of

liabilities in the normal course of business.

We received FDA 510(k) approval through the substantially equivalence process for Class

II medical devices for our main product being the Trachealator.

During the quarter ending November 30, 2023, the Company also obtained

cardiology distribution revenues in South Africa, which significantly contributed to the overall profitability of the Company.

research and development phase of most products completed, we expect to see an increase in sales being realized against the sales expenditure

following table summarizes our cash flows from continuing operations for the periods indicated:

Interest income for the fiscal year

was earned from two main sources:

the note receivable which was impaired and a tax refund receivable.

No interest income is recognized

on the impaired note receivable, although interest continues to accrue contractually in accordance with the terms of the agreement, while

interest on the tax refund receivable was earned during the prior fiscal year, contributing to the total interest income recognized.

During the fiscal year ended February 28, 2025, no interest was recognized in respect of the note receivable;

while an amount of $8,668

was earned on tax refund receivable, representing a total of $8,668 interest income for the year.

The Consolidated Medinotec Group of Companies reported

a net profit of $2,159,473 for the year ending February 28, 2025, compared to a net loss of $404,688 for the year ended February 29, 2024.

This increase in net income is primarily driven

by the higher sales generated from the new cardiology distribution business in South Africa, as well as the increased sales of the Trachealator,

an internally designed and manufactured product, in the United States.

The growth in both distribution revenues and the Trachealator's

success in new markets were key factors in driving this positive shift in profitability.

Liquidity and Capital Resources

As of February 28, 2025, the Company had

total current assets of $6,423,186 and total assets of $6,808,973.

Total current liabilities as of February 28, 2025, were $1,505,047.

The Company had working capital of $4,918,139 as of February 28, 2025.

In comparison, as of February 29, 2024, the Company had total

current assets of $4,379,297 and total assets of $4,804,279.

Total current liabilities as of February 29, 2024, were $827,453.

Consolidated,

we had working capital of $3,551,844 as of February 29, 2024.

The research and development phase of the

internally designed product lines has largely concluded.

Therefore, we expect to see an increase in sales and marketing expenses, primarily

for the rollout in the United States and the expansion of the cardiology distribution contract business in South Africa.

The Company has sufficient cash reserves and

working capital to fund the roll-out in the market of the United States, including new research and development activities, as well as

marketing and sales functions.

We have cash available on hand and believe

that this cash will be sufficient to fund operations and meet our obligations as they come due within one year from the date these Condensed

Consolidated Financial Statements are issued.

In the event that we do not achieve the revenue anticipated in our current operating plan,

management has the ability and commitment to reduce operating expenses as necessary.

Our long-term success is dependent upon our ability

to successfully raise additional capital, market our existing services, increase revenues, and ultimately achieve profitable operations.

As of February 28, 2025, we have no material

capital expenditure commitments.

All planned capital projects have been completed, and there are no additional contractual obligations

for plant expansion or equipment purchases.

Our manufacturing facility currently operates below its maximum capacity, which allows us

to absorb modest increases in production without significant additional investment.

This available capacity enables us to respond efficiently

to changes in customer demand with minimal incremental capital outlay.

We fund our operations and working capital

needs primarily from cash generated by our ongoing business activities.

Over the past two fiscal years, our operating cash flows have

been positive and sufficient to meet our cash requirements, and we expect this trend to continue in the near future.

We maintain strong

operational controls that allow us to manage our working capital effectively, ensuring liquidity is available for daily operations and

short-term commitments.

In the longer term, we may require additional

capital to support strategic initiatives, including select product enhancements and potential expansion efforts.

While we do not currently

anticipate large-scale capital expenditures, the need for future funding to support ongoing business growth or research and development

(R&D) efforts may arise.

As a smaller reporting company with limited R&D activities, we continue to focus our research investments

on incremental product refinements rather than early-stage or speculative development.

These expenditures remain modest, as previously

disclosed, and are primarily directed toward refining existing production processes.

However, any significant future R&D initiatives

or product development would likely require external funding, either through equity or debt financing.

In terms of liquidity, we currently have sufficient

cash resources to meet our short-term obligations and continue day-to-day operations.

We regularly evaluate cash needs based on forecasted

operational demands and have identified no material trends or uncertainties that would cause a significant change in our liquidity position.

Any potential changes in liquidity would likely arise from strategic decisions, such as expansion or increased investment in R&D,

but we expect that cash flows from ongoing operations will continue to provide the necessary funds.

Capital Resources

As of the end of the latest fiscal period,

our capital requirements are primarily focused on sustaining and optimizing existing operations, rather than large-scale growth or capital

We have no material capital expenditures committed for the near term.

However, as our business continues to evolve, we anticipate

that we may seek external financing options, such as equity offerings or debt financing, should the need arise for larger investments

in new products or significant capacity expansion.

While our current capital structure remains

primarily equity-based, we are mindful of changing trends in the availability and cost of capital resources, including any shifts in equity

or debt market conditions that may affect our financing strategy.

We continue to explore opportunities to optimize our capital resources,

balancing the need for flexibility with prudent financial management.

Currency Fluctuations and Exchange Rate

Given the Company’s exposure to various

currencies, particularly the South African Rand and the U.S.

Dollar, fluctuations in exchange rates could impact our working capital and

cash reserves.

We monitor foreign exchange risks and may take steps to hedge against significant adverse movements.

While we have not

implemented any hedging strategy at this time, we will continue to assess the impact of currency fluctuations on our financial position

and operations.

Funding Strategy for Expansion

As part of our growth strategy, the Company

continues to explore opportunities for alternative funding sources, including strategic partnerships, grants, and government incentives,

to support expansion into new markets and product development initiatives.

These options could provide additional capital if needed for

larger-scale projects or unforeseen expenditures.

Future Plans and Financing Needs

Looking ahead, we anticipate that any major

strategic initiatives, such as entering new markets or funding larger-scale projects, may require additional capital.

We continue to explore

all available financing options to ensure that we can access the necessary resources to fund future growth and innovation.

This includes

potential equity or debt offerings, as well as exploring potential partnerships or other arrangements that could provide non-dilutive

Our audited Consolidated Financial Statements

have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal

course of business.

We received FDA 510(k) approval through the substantially equivalence process for Class II medical devices for our

main product being the Trachealator.

During the quarter ending November 30, 2023, the Company also obtained cardiology distribution revenues

in South Africa, which significantly contributed to the overall profitability of the Company in the 2024 fiscal year.

With the research

and development phase of most products completed, we expect to see an increase in sales being realized against the sales expenditure incurred,

as was the result in the current fiscal year.

The following table summarizes our cash flows

from continuing operations for the periods indicated:

Net cash provided by (used in):

Investing Activities

Financing Activities

Cash flows from

Operating Activities

The increase in net

cash provided by operating activities from continuing operations for year ended February 29, 2024 over the prior year comparable period

was due to a $51,953 increase in net loss, as well as changes in assets and liabilities that had a current period cash flow impact, such

as $500,912 of changes in working capital.

The change in non-cash charges compared to the change in the prior year comparable period was

primarily driven by a $642,012 impairment provision on notes receivable and a $34,672 increase in depreciation, a $120,598 variance in

deferred income taxes, a $139,712 change in provisions and a bad debt write of amounting to $52,133 that was not present in the previous

financial year.

Cash flows from

Investing Activities

The increase in net

cash provided by investing activities was due to a decrease in the issuance of long-term debt relating to the Innovative Outcomes note

receivable in 2023.

Cash flow from

Financing Activities

Cash flow used in

financing activities in 2024 consisted of the repayment of the related party loan.

Cash flow provided by financing activities in 2023

consisted of a $3,577,194 private placement.

Cash flows provided by Operating Activities

Net cash provided by operating activities

from continuing operations increased significantly for the fiscal year ended February 28, 2025.

This improvement was primarily due to

a $2,564,161 increase in profitability, with the Group reporting net income of $2,159,473, compared to a net loss of $404,688 in the

This turnaround was mainly driven by strong growth in distribution revenue, particularly from the launch of the cardiology

distribution business in South Africa and expanded U.S.

sales of the Trachealator product.

Operational cash flow also benefited from

improved working capital management, including better receivables collection and inventory optimization.

Operating expenses were carefully

controlled, allowing the Group to support growth initiatives—especially in sales and marketing—while maintaining positive

cash generation from operations.

Management also notes customer concentration risk, with most customers situated within the South African

segment, which should be considered in assessing the quality and stability of these cash flows.

Management believes that these improvements,

alongside efficiencies and sustained revenue momentum, position the Group for continued positive cash flow generation.

Non-cash adjustments,

including depreciation and share-based compensation, are minimal in our business.

Cash flows used in Investing Activities

Net cash used in investing activities

increased for the fiscal year ended February 28, 2025.

This change was primarily driven by the absence of inflows from a note receivable,

which had generated positive cash flows through repayments in the prior year.

In contrast, during the current year, the outstanding balance

of the note receivable increased and was subsequently impaired, resulting in no corresponding cash inflow.

Additionally, the Group increased its

investment in property, plant, and equipment (PP&E), reflecting continued expansion and operational scaling.

These capital expenditures

contributed to higher cash outflows from investing activities compared to the prior year.

Cash flows used in Financing Activities

Cash flows used in financing activities

for the fiscal years ended February 28, 2025, and February 29, 2024, primarily related to the repayment of a related party loan.

2025, the Company repaid $895,279, an increase compared to $9,680 in the prior year.

This increased repayment reflects the Company’s

continued efforts to reduce financial liabilities and strengthen its balance sheet.

Looking ahead, the Company may evaluate additional financing

options—including potential debt or equity issuances—to support its strategic growth objectives.

This may include funding

expansion into new markets, increasing production capacity, and scaling marketing and distribution efforts to drive long-term value creation.

Off Balance Sheet Arrangements

As of February 29, 2024,

there were no off-balance sheet arrangements.

Critical Accounting Policies

While our significant accounting

policies are described in the notes to our consolidated financial statements, we believe that the accounting policies below are most critical

to understanding our financial condition and historical and future results of operations.

Company generates revenues through two distinct revenue sources:

From the sale of high-quality medical devices which are self-manufactured through in-depth research and development;

Through the distribution of finished products on behalf of other principals around the world into pre-agreed territories which are

usually exclusive territories granted by such principal.

Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its

obligations under each of its arrangements:

the contract with a customer,

the performance obligations in the contract,

the transaction price,

the transaction price to performance obligations in the contract, and

revenue as the performance obligation is satisfied.

Revenue from the sale of self-manufactured

These products are developed in-house.

The Company’s clients are

billed based on a pricelist that is agreed on in each customer’s contract.

Orders are shipped on a per order basis from the Company’s

warehouse with Free-On-Board Inco terms.

Revenues relating to the self-manufactured

products are recognized when control of the promised goods or services is transferred to a customer in an amount that reflects the consideration

that the Company expects to receive in exchange for those products.

Revenue from the distribution

The distribution products are sold

via a network, which consists of a mixture of sub-distributors and in some instances a direct sales force.

The Company’s clients

are billed based on a pricelist that are agreed upon in each customer contract, orders are shipped on a per order basis from the Company’s

warehouse with Free-on-Board Inco terms.

The Company’s sub-distributors order from the Company on the same basis as its customers

and have no preferential return rights on their inventory orders, therefore the client assumes the risk of the sale at point of invoice.

Revenues relating to the distribution

of products are recognized when control of the promised goods or services are transferred to a customer in an amount that reflects the

consideration that the Company expects to receive in exchange for those products.

Goods delivered to a consignee pursuant

to a consignment arrangement are not considered sales, and do not qualify for revenue recognition.

Once it is determined that substantial

risk of loss, rewards of ownership, as well as control of the asset have transferred to the consignee, revenue recognition would then

be appropriate, assuming all other criteria for revenue recognition have been satisfied.

For both revenue streams

The Company has two operating segments,

inside the United States and outside the United States.

These sales are split by these territories and further segregated into the specific

revenue streams sold into these territories.

The Company has no contract assets

or liabilities representing accrued revenues that have not yet been billed to the customers due to certain contractual terms, because

of the fact that orders are placed, invoiced, and shipped on a per order basis as and when the clients require additional inventory.

revenue is recognized at a specific point and time.

Under ASC Topic 606, the Company

estimates the transaction price, including variable consideration, at the commencement of the contract and recognizes revenue at point

of sale when risks and rewards are transferred to the customer.

There are no contract revenue agreements that would need to be recognized

over time and the point of risks and rewards being transferred is very clear.

Payment Terms

Our payment terms vary per segments;

export sales made from within South Africa are subject to prepayment, where accounts are granted.

They generally have payment terms of

30 days from statement and sales made inside the United States are 45 to 60 days.

Terms can be extended by the Company when it deems

the business case and credit worthiness of the customer is strong enough.

The time between a customer’s payment and the receipt

of funds is not significant.

The Company’s contracts with customers do not result in significant obligations associated with returns,

refunds, or warranties.

Payment terms are generally fixed and do not include variable revenues.

Allowance for note receivable impairment

The Company records allowances for

loan impairment when it is determined that the Company will be unable to collect all amounts due according to the terms of the underlying

Interest income on impaired loans is recognized only when interest payments are received.

As of February 28, 2025, there were no off-balance

sheet arrangements.

Critical Accounting Estimates

While our significant accounting policies are described

in the notes to our consolidated financial statements, we believe that the accounting estimates below are most critical to understanding

our financial condition and historical and future results of operations.

Allowance for credit losses on loans receivable

The Company records allowances for loan impairment

when it is determined that the Company will be unable to collect all amounts due according to the terms of the underlying agreement.

income on impaired loans is recognized only when interest payments are received.

The Trachealator product obtained FDA approval in

November 2021, which allowed the Company to sell this product into the United States of America.

Since the Company had no prior sales

channels or infrastructure in the United States, management found it prudent to plan a roll out of the product with a distributor that

had an established network and infrastructure.

For this business, the Company partnered with a company called Innovative Outcomes and

entered into a revolving credit facility to a maximum of $750,000.

Innovative Outcomes would use this to grow both their own distribution

network and infrastructure and also allow for the Company to utilize this network and infrastructure.

However, during the quarter ending

November 30, 2023, there was a material change in strategic focus where the Company would require its products to be marketed to niche

surgical units, Innovative Outcomes would be servicing the wound care clinic market only which meant that the future growth of the combined

network and infrastructure would not be a strategic match between the two entities.

It was therefore decided to separate the network

and infrastructure developed and for each company to pursue its strategic focus.

The note receivable will continue on the same terms

and became payable in the 2024 fiscal year, but the Company decided to provide full impairment against this receivable on November 30,

This decision was made in prudence due to the fact that the receivable is no longer backed by any Trachealator revenue streams.

This does not change that Innovative Outcomes will still be liable for payment of this in the future.

While impaired, no interest income

will be recognized on the receivable.

Should payments be received this provision will be reversed with the same amount of cashflow received.

Management believes that prior allowances for this

note receivable were determined with appropriate assumptions and were as accurate as possible given the information available at the time.

We continuously compare actual repayments and write-offs against our allowances and revise our estimate when subsequent events or newly

obtained information indicate that adjustments are necessary.

There have been no material changes during the current

year to the assumptions or methodologies used in estimating expected credit losses on the note receivable.

Our approach to incorporating

historical loss data, current borrower assessments and forward-looking information remains consistent with prior periods.

Valuation, costing and obsolescence

Inventories are stated at the lower of cost (weighted average)

or net realizable value and consist of raw materials, work-in process and finished goods and include purchased materials, machine time,

direct labor and manufacturing overhead.

Management evaluates the need to record adjustments to write

down inventory to the lower of cost or net realizable value on an annual basis.

The Company’s policy is to assess the valuation

of all inventories, including raw materials, work-in-process and finished goods and it writes down its inventory for estimated obsolescence

based upon the age of inventory and assumptions about future demand and usage.

The provision for stock obsolescence is assessed at the

end of every reporting period.

Due to the long shelf life of our products as well as the ability the resterilize products to reset the

shelf life, this provision, in managements opinion, will never increase significantly.

Recently Issued Accounting

Pronouncements

See Note 2 to our Consolidated

Financial Statements included in Part II, Item 15 of this Annual Report on Form 10-K for more information about recent accounting pronouncements,

the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition

and results of operations.

Inventories are stated at the lower of

cost (weighted average) or net realizable value and consist of raw materials, work-in process and finished goods and include purchased

materials, machine time, direct labor and manufacturing overhead.

Management evaluates the need to record

adjustments to write down inventory to the lower of cost or net realizable value on an annual basis.

The Company’s policy is to

assess the valuation of all inventories, including raw materials, work-in-process and finished goods and it writes down its inventory

for estimated obsolescence based upon the age of inventory and assumptions about future demand and usage.

The provision for stock obsolescence is

assessed at the end of every reporting period.

Due to the long shelf life of our products as well as the ability to re-sterilize products

to reset the shelf life, this provision, in management’s opinion, will never increase significantly.

Management believes that our historical

inventory valuations, including weighted-average cost measurements and obsolescence provisions for raw materials, work-in-process and

finished goods,were determined with appropriate assumptions and were as accurate as possible given the information available.

There have been no material changes during

the current year to the key assumptions or methodologies applied to inventory valuation or obsolescence provisioning.

Our approach to

calculating weighted-average cost, assessing net realizable value for each inventory category and performing annual age-based obsolescence

reviews remains consistent with prior periods.

Management does not anticipate any material

changes to the methodologies or key assumptions used to determine inventory valuation or obsolescence provisions in future periods.

Deferred tax assets and liabilities

We identify temporary differences between

the financial statement basis and tax basis of our assets and liabilities, as well as available loss and credit carryforwards.

the enacted statutory tax rates expected to be in effect when such differences reverse, pursuant to U.S.

federal and state tax law and,

where applicable, South African Income Tax Act provisions.

We then assess positive and negative evidence—such as future taxable

income projections, historical earnings patterns, tax-planning strategies and the expiration dates of carryforwards—to conclude

whether it is “more likely than not” that DTAs will be realized.

A valuation allowance is recorded against DTAs when realization

is not deemed more likely than not.

Management believes that prior deferred

tax asset estimates were prepared with appropriate assumptions and were as accurate as possible given the information available at the

We continue to perform retrospective evaluations of those estimates against actual outcomes to confirm the reasonability of our

methodologies, and we adjust valuation allowances when subsequent events or newly obtained information indicate that revisions are warranted.

There have been no material changes to

the assumptions or estimates used in determining our deferred tax assets and liabilities during the current year.

Our methodologies, including

income forecasts, tax-law interpretations and valuation allowance assessments, remain consistent with those applied in prior periods.

Recently Issued Accounting Pronouncements

See Note 2 to our Consolidated Financial Statements

included in Part IV, Item 15 of this Annual Report on Form 10-K for more information about recent accounting pronouncements, the timing

of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and results

of operations.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis