SALONA GLOBAL MEDICAL DEVICE CORP MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-Q)

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As used in this Quarterly Report on Form 10-Q, the terms "the Company," "us,"
"our," the "Company" and "Salona" mean Salona Global Medical Device Corporation
(a corporation incorporated under the laws of the Province of British Columbia
formerly known as Brattle Street Investment Corp.) and its subsidiaries (unless
the context indicates a different meaning).

Caution Regarding Forward-Looking Statements

The following discussion and analysis should be read in conjunction with the
condensed consolidated financial statements and related notes. This quarterly
report, including, without limitation, statements under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended ("Securities Act") and Section 21E
of the Securities Exchange Act of 1934, as amended ("Exchange Act"). These
forward-looking statements can be identified by the use of forward-looking
terminology, including the words "believes," "estimates," "anticipates,"
"expects," "intends," "plans," "may," "will," "potential," "projects,"
"predicts," "continue," or "should," or, in each case, their negative or other
variations or comparable terminology. There can be no assurance that actual
results will not materially differ from expectations. Such statements include,
but are not limited to, economic and competitive conditions, the effects of the
COVID 19 pandemic, regulatory changes and other uncertainties, the general
expansion of its business, and other statements which are not statements of
current or historical facts.

The forward-looking statements contained in this quarterly report are based on
the Company's current expectations and beliefs concerning future developments
and their potential effects on the Company. Future developments affecting us may
not be those that the Company have anticipated. These forward-looking statements
involve a number of risks, uncertainties (some of which are beyond its control)
and other assumptions that may cause actual results or performance to be
materially different from those expressed or implied by these forward-looking
statements. These risks and uncertainties include, but are not limited to, those
factors described under the heading "Risk Factors" in this Report as well as in
the Company's Annual Report on Form 10-K for the year ended February 28, 2022
and Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2022,
all of which are difficult to predict. Should one or more of these risks or
uncertainties materialize or should any of these assumptions prove incorrect,
actual results may vary in material respects from those projected in these
forward-looking statements. The Company undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under applicable
securities laws. These risks and others described under "Risk Factors" may not
be exhaustive.

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By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future.  The Company cautions you that forward-looking statements
are not guarantees of future performance and that its actual results of
operations, financial condition and liquidity, and developments in the industry
in which it operates may differ materially from those made in or suggested by
the forward-looking statements contained in this Report. In addition, even if
the Company's results or operations, financial condition and liquidity, and
developments in the industry in which it operates are consistent with the
forward-looking statements contained in this Report, those results or
developments may not be indicative of results or developments in subsequent
periods.

Non-GAAP Measures

Throughout this management discussion and analysis, management uses a number of
financial measures to assess its performance, and these are intended to provide
additional information to investors concerning the Company. Some of these
measures, including net profit (loss) from operations and Adjusted EBITDA (i)
are not calculated in accordance with Generally Accepted Accounting Principles
(GAAP), which are based on the United States Generally Accepted Accounting
Principles (U.S. GAAP), (ii) are not defined by GAAP, and (iii) do not have
standardized meanings that would ensure consistency and comparability between
companies using these measures. Readers are cautioned that the disclosure of
these items is meant to add to, and not replace, the discussion of financial
results as determined in accordance with U.S. GAAP.  The Company's presentation
of this financial measure may not be comparable to similarly titled measures
used by other companies The primary purpose of these non-GAAP measures is to
provide supplemental information that may prove useful to investors who wish to
consider the impact of certain non-cash or uncontrollable items on its operating
performance and who wish to separate revenues and related costs associated with
client acquisition that may not be ongoing.

Financial information presented in this Report is presented in Canadian dollars,
unless otherwise indicated. Unless otherwise indicated, all references to years
are to the Company's fiscal year ended on the last calendar day of February.

Acquisition pipeline

On March 11, 2021, the Company completed a Change of Business, as defined by the
TSX Venture Exchange, to become an acquisition-oriented medical device company
with plans to achieve scale through further acquisitions and organic growth.
The Company presently intends to operate in the recovery science market,
including post-operative pain, wound care and other markets serving the aging
population in the United States.

On May 21, 2021, the Company acquired South Dakota Partners Inc. ("SDP"). SDP
operates a large state-of-the-art production facility located in the State of
South Dakota currently producing proprietary and white label medical devices for
pain management, cold and hot therapy, NMES, PEMF and ultrasound. Information
relating to SDP contained in this Report covers the entire three and six
months ending August 31, 2022.

On September 30, 2021, the Company acquired Simbex, LLC ("Simbex"), an IP-based
business that has a portfolio of several revenue and royalty generating products
ranging from wearable technology to products for physical stability as well as
expertise in development and design of many medical devices on the market it has
innovated over the past several years. Simbex generated over $8,000,000 in
audited revenues in 2020 with reported gross margins of 50% and was cash flow
positive.  Information relating to Simbex contained in this Report covers the
entire three- and six-months ending August 31, 2022.

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On November 29, 2021, the Company acquired the customer lists, sales orders and
supply agreements, and related sales channel and intellectual property assets of
ALG-Health, LLC ("ALG"), a business engaged in the selling medical devices and
supplies to small, independent hospitals, group purchasing organizations,
medical offices and clinics, in exchange for nonvoting securities of ALG Health
Plus which are exchangeable for up to a maximum of 21,000,000 nonvoting Class A
shares of the Company subject to the achievement of certain revenue and EBITDA
targets. In connection with the transaction, its subsidiary ALG Health Plus
entered into an exclusive supply agreement with ALG.

On March 11, 2022, the Company acquired Mio-Guard, LLC, ("Mio-Guard") a business
engaged in medical device sales and marketing serving the Midwest United
States. Mio-Guard and its predecessors had 2021 unaudited annual revenues of
approximately $4.5M (US $3.6M) with 25% gross margins. Since 2009, Mio-Guard has
sold into the athletic training, physical therapy and orthopedics markets for
sports medicine products. Mio-Guard has over fifty sales representatives in the
United States with a focus on the Midwest, South and Central United States and
long-standing relationships with institutions ranging from high school to
college to professional athletics.

On September 23, 2022, the Company acquired DaMar Plastics Manufacturing Inc.
("DaMar"), a business engaged in designing, producing and selling specialty
plastics in several markets including the medical device market. With over 50
years in business, DaMar currently provides the medical and consumer industries
with precision plastic molding technology. The acquisition builds upon the
Company's strategy to create a fully integrated global medical device company
and adds precision plastics technology capabilities to the Company. The addition
of DaMar Plastics to Salona Global is projected to add $6.6 million of revenue
annually with gross profit margins of approximately 45%.

Additionally, the Company's management team has a pipeline of small, privately
held, stand-alone and bolt-on medical device companies targeted for acquisition
in the highly fragmented global market for injury, surgical prevention,
rehabilitation and recovery for the aging population throughout the continuum of
care, which fall into one of three primary categories:

• Small private medical device companies struggling with sufficient capitalization and operational expertise to fully realize the value of their intellectual property;

• Niche players that succeed in developing a handful of quality products often
turn to larger listed companies that do not allow ownership to participate in
the upside of including their device in a larger company; and

• Smaller WE-listed companies that lack liquidity and hedging to offer sufficient upside potential to sellers.

The Company believes it is well positioned to offer upside acquisition targets through equity/cash acquisitions with a liquid listing on the TSXV.

The Company intends to acquire any identified medical device targets using a
structure similar to its prior acquisitions. It is intended that potential
targets would primarily or solely receive Company equity as consideration for
the potential acquisition rather than cash, which would reduce its requirement
for additional capital. Additionally, to date, discussions are most advanced
with targets that are operationally cash flow positive, which may enhance the
Company's ability to borrow for additional capital needs.

Selected financial information

The Company uses Adjusted EBITDA, as calculated below, to assess the financial
health of its acquisitions and determine the overall potential of its business
not including transaction costs and other activities associated with the ongoing
growth strategy of the Company. Adjusted EBITDA is calculated as net loss less
interest, taxes, depreciation, amortization, stock-based compensation, foreign
exchange gain, change in fair value of contingent consideration, and transaction
costs.

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Revenues

                     Three months ended             2022 vs 2021              Six months ended         2022 vs. 2021
                  August 31,     August 31,                        %     August 31,     August 31,
                        2022           2021      $ Change     Change           2022           2021          $ Change     % Change

Revenue $10,044,239 $3,973,773 $6,070,466 153% $20,092,787 $4,564,213 $15,528,574 Gross margin of 340% 3,028,513 1,204,171 1,824,342 152% 6,670,778 1,411,146 5,259,632 373% Adjusted EBITDA $68,733 $546,541 ($477,808) (87%) $1,427,404 $274,821 $1,152,583 419%


Adjusted EBITDA

Adjusted EBITDA is calculated as follows:

                         Three months ended          Six months ended
                                 August 31,     August 31,       August 31,     August 31,
                                       2022           2021             2022           2021
Adjusted EBITDA        $             68,733   $    546,541   $    1,427,404   $    274,821
Less: Stock Based
Compensation                       (378,683 )     (446,213 )       (867,772 )     (465,300 )
Amortization of
intangible asset                   (251,517 )      (70,609 )       (484,852 )      (78,788 )
Depreciation of
property and equipment              (73,909 )      (61,096 )       (144,854 )      (65,956 )
Amortization of
right-of-use asset                 (113,843 )      (35,266 )       (222,218 )      (38,883 )
Interest Expense                   (150,227 )     (136,840 )       (282,076 )     (144,084 )
Foreign exchange
(loss) gain                             (12 )        7,291              232         10,537
Change in fair value
of SDP earn-out
consideration                             -              -       (2,451,600 )            -
Change in fair value
of contingent
consideration                    (8,053,337 )            -       (8,513,030 )            -
Gain on share for debt
settlement                                -              -                -         15,538
Transaction costs
including legal,
financial, audit and
US & Canadian
regulatory expenses                (709,460 )     (886,793 )     (1,348,683 )   (1,225,468 )
Current income tax
expense                             (30,032 )       (1,988 )        (30,032 )       (1,988 )
Deferred income tax
recovery                             60,203              -          119,183              -
Net Loss               $         (9,632,084 ) $ (1,084,973 )   ($12,798,298 ) $ (1,719,571 )




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RESULTS OF OPERATIONS`

Revenues


             Three months ended            2022 vs 2021              Six months ended              2022 vs. 2021

          August 31,     August 31,                        %     August 31,     August 31,
                2022           2021      $ Change     Change           2022           2021       $ Change     % Change
Revenue $ 10,044,239   $  3,973,773   $ 6,070,466       153%   $ 20,092,787 

$4,564,213 $15,528,574 340%


Since the acquisition of SDP on May 21, 2021, Simbex on September 30, 2021,
Mio-Guard on March 11, 2022, and the sales channel assets of ALG on November 28,
2021, the Company has continued generating sales revenue in line with each of
their pre-COVID revenue figures and each continue to grow. From March 1, 2022,
through August 31, 2022, the Company generated sales of $20,092,787.


                                Three months ended             2022 vs 2021             Six months ended          2022 vs. 2021

                             August 31,     August 31,                        %     August 31,     August 31,
                                   2022           2021      $ Change     Change           2022           2021          $ Change     % Change

Direct service personnel $1,478,335 $232,269 $1,246,066 536% $2,992,174 $277,183 $2,714,991 979% Direct material costs 5,240,254 2,537,333 2,702,921 107% 9,876,335 2,875,884 7,000,451 243% Other direct costs

              297,137              -       297,137       100%        553,500              -           553,500         100%


Cost of revenue includes the Company's labor costs expended in the production of
medical devices, and related expenses allocated directly to the production of
medical devices, and its cost of actual materials used in the production process
from March 1, 2022, through August 31, 2022. Cost of revenue also includes the
purchase of trading goods and costs associated with contract service revenue.
The ongoing issues with the global supply chain process caused by COVID-19 and
other economic factors has impacted the Company's ability to source affordable
components. While there can be no assurances, management believes that the
negative impacts on the Company's sourcing of components ,will diminish as the
global supply chain stabilizes.

Amortization, depreciation, interest, transaction costs and foreign exchange gain Change in fair value of earn-out and contingent consideration

                                                      Three months ended             2022 vs 2021               Six months ended         2022 vs. 2021

                                                   August 31,     August 31,                         %     August 31,     August 31,                            %
                                                         2022           2021       $ Change     Change           2022           2021          $ Change     Change
Amortization of intangible assets                $   (251,517 ) $    

(70,609) ($180,908) 256% ($484,852) ($78,788) ($406,064) 515% Depreciation of property, plant and equipment

                (73,909 )      

(61,096 ) (12,813 ) 21% (144,854 ) (65,956 ) (78,898 ) 120% Amortization of rights of use

                 (113,843 )      (35,266 )      (78,577 )     223%       (222,218 )      (38,883 )        (183,335 )     472%
Interest expense                                     (150,227 )     (136,840 )      (13,387 )      10%       (282,076 )     (144,084 )        (137,992 )      96%
Foreign exchange (loss) gain                              (12 )        7,291         (7,303 )   (100%)            232         10,537           (10,305 )    (98%)
Transaction costs including legal, financial,
audit, US & Canadian Regulatory                      (709,460 )     

(886,793) 177,333 (20%) (1,348,683) (1,225,468) (123,215) 10% Change in fair value of earn-out

              -              -              -         -%     (2,451,600 )            -        (2,451,600 )     100%
Change in fair value of contingent consideration   (8,053,337 )            -     (8,053,337 )     100%     (8,513,030 )            -        (8,513,030 )     100%




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Amortization of intangible assets reflects the amortization of intangible assets
such as trademarks, non-compete agreement, intellectual property, and customer
base. The Company depreciates property and equipment across their useful lives.
While there can be no assurances, the Company expects depreciation of property
and equipment and of right of use asset and interest expense to increase as the
Company continues to grow its balance sheet through acquisitions.

The change in fair value of earnout consideration represents the increase in
fair value of SDP's 19,162,000 earnout shares on May 31, 2022, the date of
issuance. The change in fair value of the contingent consideration represents
the obligations resulting from the Simbex, Health Plus and Mio-Guard
acquisitions.  The company assesses its potential obligations related to these
commitments during the quarter and fair values them accordingly.

Transaction costs include legal, financial, audit, US and Canadian regulatory
expenses and other fees incurred in connection with the Change of Business
transaction, the SDP, Simbex, Mio-Guard, and ALG acquisitions, due diligence of
acquisition targets, financing costs, US regulatory costs, and associated
accounting and other costs. While these costs are necessary to the change of its
line of business, they are not operational expenses of the business.

                                       Three months ended            2022 vs 2021              Six months ended         2022 vs. 2021

                                    August 31,     August 31,                       %     August 31,     August 31,
                                          2022           2021     $ Change     Change           2022           2021          $ Change     % Change

Foreign currency conversion gain $419,339 $328,126 $91,213

28% $41,952 $16,001 $25,951 162%


Since the Company operates in the United States, it is exposed to foreign
currency risk. Management is unable to effectively predict swings in the foreign
exchange value of the U.S. Dollar against the Canadian Dollar. When currency is
moved between denominations, a gain or loss may be realized which management is
unable to accurately predict.

Cash and capital resources

The Company funds its operations through cash from operations and asset-based
loans secured by subsidiary inventory and accounts receivable from third
parties. In February 2022, the Company completed a private placement of
7,749,000 units (the "Units") at $0.55 per Unit (consisting of one common share
and one warrant to purchase one common share) for gross proceeds of
approximately $4.26 million. As of August 31, 2022, the Company had $6,938,101
of cash and cash equivalents, which was a decrease of $1,118,999 from the
balance as of February 28, 2022. During the six months ended August 31, 2022,
the Company generated $215,953 from the exercise of 454,817 broker share
purchase warrants. During the six months ended August 31, 2022, the Company
generated $5,329 from the exercise of 28,154 of stock options.

long-term debt

On June 9, 2021, the Company's subsidiary SDP entered into a $6,930,360
(US$5,400,000) revolving loan facility with a third-party financial institution,
which refinanced their existing revolving loan facility and other notes.  All
amounts outstanding under the $6,930,360 revolving loan facility bear interest
at the greater of 4% or prime plus 0.75% per annum, and any accrued unpaid
interest is payable monthly, with a maturity of August 1, 2023. The repayment
obligations under the $6,930,360 facility are secured by a first priority lien
on substantially all of the assets of SDP and are not guaranteed by the Company
or any other subsidiary. In addition, on June 9, 2021, SDP issued a secured
promissory note in the principal amount of $936,696 (US$750,000) which evidenced
the refinancing of two outstanding loans. The note bears interest at the greater
of 6% or prime rate plus 2.75% per annum. Principal and accrued but unpaid
interest due on the note are payable monthly in equal installments over a
36-month period, and the repayment obligations under the note are secured by a
lien on substantially all of the assets of SDP. As of August 31, 2022, the
Company had long term debt of $798,048 related to the above note, as compared to
$856,119 on February 28, 2022.

Cash flow

The following table is a summary of the Company’s cash flows for the six months ended August 31, 2022and August 31, 2021:

                                                           August 31,     

August 31,

                                                                 2022       

2021

Net cash used in operating activities                    $ (1,190,559 ) $   (912,728 )
Net cash (used in) provided by for investing activities      (337,965 )     

937 933

Net cash provided by (used in) financing activities           317,154       (891,734 )
Net decrease in cash and cash equivalents and restricted
cash                                                       (1,211,370 )     (866,529 )




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Net cash used in operating activities

During the period ended August 31, 2022, $1,190,559 was used for operating
activities (compared to $912,728 used for operating activities for the period
ended August 31, 2021). This cash flow was used primarily to improve the back
office and administrative capacity of the Company, fund certain design and
development projects, make expenditures to expand the market for certain
products, support efforts to reduce supply chain constraints and increase
productivity in all aspects of the business.

Net cash (Used in) Provided by investing activities

During the period ended August 31, 2022, $337,965 was used in investing
activities, compared to $937,933 that was provided for the period ended August
31, 2021. The use of cash flow reflects the acquisition of  new property and
equipment of $98,793. It also includes the purchase of intellectual property of
$242,535.

Net cash provided by (used in) financing activities

During the period ended August 31, 2022, $317,154 was provided through financing
activities, compared to $891,734 used during the period ended August 31, 2021.
The cash provided during the period ended August 31, 2022, was primarily from
proceeds from the line of credit and proceeds from the exercise of broker
warrants, offset by lease payments. The cash used in in the period ended August
31, 2021, was primarily for the repayment of long-term debt, offset partially by
the proceeds from the line of credit and proceeds from the exercise of stock
options.

The Company currently intends to meet its short-term and long-term liquidity needs with its existing cash, current assets and cash flow from operating activities.

To date, the Company never paid a cash dividend on its capital stock. Any future
determination to pay cash dividends will be at the discretion of the Company's
Board of Directors (the "Board") and will depend upon the Company's financial
condition, operating results, capital requirements and such other factors as the
Board deems relevant.

Off-balance sheet arrangements

The had no off-balance sheet arrangements during the periods covered by this report.

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