| Significant Accounting Policies | Significant
Accounting Policies
a. Nature
of business/basis of preparation The
Unaudited Condensed Consolidated Financial Statements included herein have been prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission
(“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with
GAAP have been condensed or omitted pursuant to such rules and regulations of the SEC for interim financial reporting. The Company’s
management believes that the disclosures are adequate to make the information presented not misleading. These Company’s Unaudited
Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and the notes thereto
included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2023. Emerging
Growth Company (EGC) status The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our
Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
b. Foreign
currency translation
1. Translation
of foreign subsidiary The accounts of the foreign subsidiaries
are translated into the reporting currency United States Dollar. Assets and liabilities are translated at year end exchange rates and
income and expense accounts are translated at average exchange rates in effect during the year. Translation adjustments resulting from
fluctuations in the exchange rates are recorded in accumulated other comprehensive income, a separate component of stockholders' equity.
2. Exposed
to currency variations in subsidiary. The
primary operations and functional currency of a subsidiary's business is in South African Rand. Due to the emerging market nature of
this currency the spread volatility of the currency low and high can be material during a year. The conversion of the currency from Rand
to reporting currency US Dollar can cause significant up or downward trends that are recorded in reserves under the heading accumulated
comprehensive income.
c. Accounts
Receivables Allowance
based on a review and management evaluation. Accounts receivables are presented
on the condensed consolidated balance sheets, net of estimated uncollectible amounts. The carrying amounts of trade accounts receivable
and unbilled accounts receivable represent the maximum credit risk exposure of these assets. On a quarterly basis, in accordance with
FASB ASC 326, Measurement of Credit Losses on Financial Instruments ("ASC 326"), the Company evaluates the collectability of
outstanding accounts receivable balances to determine an allowance for credit losses that reflects its best estimate of the lifetime expected
credit losses. The allowance for credit loss is based on an assessment of past events, current economic conditions, and forecasts of future
events. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful.
As at February 28, 2023 no allowance had been recognized as our United States roll-out had only begun and we therefore did not have sufficient
sales history to make an assessment. Allowance for Credit Losses –
Accounts Receivable The allowance for credit losses required
under ASC 326 is a valuation account that is deducted from the accounts receivables’ amortized cost basis on the Company’s
Unaudited Condensed consolidated balance sheets. Our accounts receivable is generated from the sales revenue. The Company elected to estimate
expected losses using an analytical model based on methods that utilize the accounts receivable aging schedule. This analytical model
incorporates historical loss activity, geographic location, customer-specific information, collection terms and customer amounts. The
Company evaluates the estimated allowance on an aggregate basis as each individual account receivable shares similar risk characteristics.
During the fiscal period, the Company adopted ASC 326 using the modified retrospective transition method and, as of November 30, 2023,
the Company determined that the allowance for credit losses, if any, is immaterial as of adoption date and the Company will continue to
evaluate the accounts receivable portfolio on an on-going basis. An appropriate allowance for doubtful
accounts has been recognized as of November 30, 2023, and February 28, 2023, respectively. Exports out of South Africa are done on a pre-payment
basis with exception of one customer whose account was settled in full post quarter end. Sales inside South Africa are conducted through
DISA Lifesciences whose account was settled in full after the end of the quarter. All sales in the United States were made for the first
time during the first quarter and fully collected post quarter within terms.
d. Revenue
recognition The Company generates revenues
through two distinct revenue sources:
1. From the sale of high-quality medical devices which
are self-manufactured through in-depth research and development; and
2. 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. Revenue from the sale of self-manufactured
products These products are developed in-house. 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, therefore
the client assumes the risk of the sale at delivery and at the point of invoice, which will incur within 72 hours of delivery. 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. The 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:
• identify the contract with a customer,
• identify the performance obligations in the contract,
• determine the transaction price,
• allocate the transaction price to performance obligations in the contract, and
•
recognize revenue as the performance obligation is satisfied. Revenue from the distribution of
products 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
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. The 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:
• identify the contract with a customer,
• identify the performance obligations in the contract,
• determine the transaction price,
• allocate the transaction price to performance obligations in the contract, and
•
recognize revenue as the performance obligation is satisfied. 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. All
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. The Company sells a significant amount
to DISA Vascular Distribution trading as DISA Life Sciences. For the quarter ending November 30, 2023, 79% 64% 66% 66%
e. Research
and development All
research and development expenses are expensed as incurred and are included in operating expenses.
f. Earnings
per share Basic
earnings per share Basic
earnings (loss) per share are computed based on the weighted average number of ordinary shares outstanding during each year.
g. Payables One major European Cardiac supplier constitutes 68% 0%
h. New
accounting pronouncements In September 2022, the Financial Accounting
Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) ASU 2022-04, Liabilities - Supplier
Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations, which enhances transparency surrounding the use
of supplier finance programs. The new guidance requires qualitative and quantitative disclosure sufficient to enable users of the financial
statements to understand the nature, activity during the period, changes from period to period and potential magnitude of such programs.
The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years,
except for the amendment on roll forward information, which is effective for fiscal years beginning after December 15, 2023. The Company
is currently evaluating the ASU to determine its impact on the Company’s disclosures. Recently
Issued Accounting Pronouncements In
August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-05,
Business Combinations-Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”), which
addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements.
The amendments require certain joint ventures to apply a new basis of accounting upon formation by recognizing and initially measuring
most of their assets and liabilities at fair value. The objectives of the amendments are to provide decision-useful information to investors
and other allocators of capital in a joint venture’s financial statements and also to reduce diversity in practice. ASU 2023-05 is
effective for both public and private joint venture entities with a formation date on or after January 1, 2025. Early
adoption is permitted. Entities may elect to apply the guidance retrospectively to joint ventures with a formation date prior to In
June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject
to Contractual Sale Restrictions to clarify that a contractual restriction on the sale of an equity security is not considered part of
a unit of account of the equity security, and, therefore, is not considered in measuring fair value. The amendments also clarify that
an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments also require the
following disclosures for equity securities subject to the contractual sale restrictions. 1.
The fair value of equity securities subject to the contractual sale restrictions reflected on the balance sheet. 2.
The nature and remaining duration of the restriction(s). 3.
The circumstances that could cause a lapse in the restriction(s). This
guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within those financial years. The Company
does not expect the adoption of this standard to have a material impact on the Company’s condensed consolidated financial statements
and related disclosures. In November 2023, the FASB issued ASU
2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which amends the disclosure to improve
reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an annual and
interim basis for to enable investors to develop more decision-useful financial analyses. All public entities will be required to report
segment information in accordance with the new guidance starting in annual periods beginning after December 15, 2023. The Company is currently
assessing potential impacts of ASU 2023-06 and does not expect the adoption of this guidance will have a material impact on its condensed
consolidated financial statements and disclosures as disclosed in Note 20. In December 2023, the FASB issued ASU
2023-09, " Income Taxes (Topic 740): Improvements to Income Tax Disclosures", which amends the disclosure to address investor
requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate
reconciliation and income taxes paid information and includes certain other amendments to improve the effectiveness of income tax disclosures.
For entities other than public business entities, the requirements will be effective for annual periods beginning after December 15, 2025.
The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted.
The Company is currently assessing potential impacts of ASU 2023-09 and does not expect the adoption of this guidance will have a material
impact on its condensed consolidated financial statements and disclosures and the Company is in a loss position and not incurring any
tax expenses. All other ASUs issued and not yet
effective for the three months ended November 30, 2023, and through the date of this report, were assessed and determined to be either
not applicable or are expected to have minimal impact on the Company’s financial position or results of operations. |
