1.       General Information

The Company was incorporated in England and Wales on 23 August 2021 under the Companies Act 2006 as a private limited company. The Company subsequently re-registered as a public limited company and changed its name to Medpal AI plc in advance of its admission to trading on the AIM market of the London Stock Exchange.

The Company was admitted to trading on AIM on 26 August 2025 as part of its initial public offering ("IPO"), raising capital to support the development and commercialisation of its technology platform. The Company is registered in England and Wales and operates in accordance with the Companies Act 2006.

The registered office of the Company is 8th Floor The Broadgate Tower, 20 Primrose Street, London, United Kingdom, EC2A 2EW.

The principal activity of the Company is the development and commercialisation of artificial intelligence-enabled digital health and healthcare technology products and service.

1.1.    Basis of preparation

The financial statements for the period ended 31 August 2025 have been prepared by Medpal AI Plc in accordance with UK adopted International Accounting Standards ("UK-IAS") and with the requirements of the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

1.2.     Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 August each year. Per IFRS 10, control is achieved when the Company:

·      has the power over the investee;

·      is exposed, or has rights, to variable returns from its involvement with the investee; and

·      has the ability to use its power to affects its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.  When the Company has less than a majority of the voting rights of an investee, it considers that it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it power, including:

·    the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

·     potential voting rights held by the Company, other vote holders or other parties;

·     rights arising from other contractual arrangements; and

·    any additional facts and circumstances that indicate that the Company has, or does not have,      the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders' meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in profit or loss from the date the Company gains control until the date when the Company ceases to control the subsidiary.  Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation.

The Group recognises any non-controlling interest in the acquired entity at the non-controlling interest's proportionate share of the acquired entity's net identifiable assets.  Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

1.3.  Investment in subsidiary

The consolidated financial statements incorporate the results of subsidiaries using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.

1.4.  Going concern

The Company financial statements have been prepared on the going concern basis, which contemplates that the Company will be able to realise its assets and discharge liabilities in the normal course of business. Despite this, there can be no assurance that the will either achieve or maintain profitability in the future and financial returns arising therefrom may be adversely affected by factors outside the control of the Company.

The independent auditors' opinion indicates that a material uncertainty exists with regard to going concern. Whilst acknowledging this uncertainty, the directors consider it appropriate to prepare the accounts on a going concern basis. The business is at a stage where it requires the maintenance of elevated working capital levels, principally to finance stock holdings necessary to support the rapidly growing customer demand that the pharmacy operation is experiencing.  As a new business, the Company has not yet secured extended credit terms with all of its pharmaceutical suppliers and is therefore currently funding a proportion of stock purchases on shorter settlement cycles. The Directors are actively engaged with suppliers and are confident that appropriate credit arrangements will be agreed in the near term, which will improve the Company's working capital efficiency. In the interim, the directors consider it appropriate to prepare the consolidated financial statements on a going concern basis for the following reasons:

·      during the year the Company raised £2,404,000 after fees from various equity raises including its IPO;

·      as disclosed in the post balance sheet events note 21, the Company completed various fundraise rounds post year end raising a total of £1,993,000 via its at the market (ATM) facility;

·      the Company has a further ability to implement another ATM facility if required;

·      the Company's Board of Directors have significant experience in the debt and equity capital markets and specifically have a successful track record in funding operations and are further considered capable of securing ongoing debt and equity capital financing for the Company; and

·      the Directors have the ability to slow the rate of growth of the business in order to preserve working capital.

In addition, the Directors are satisfied that the Company has appropriate financial controls and cash flow oversight in place to manage its cash requirements prudently and to support the continuation of its planned growth trajectory.

1.5.    Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand, and demand deposits with banks and other financial institutions. A material amount of cash and cash equivalents is held with alternative financial institutions. These funds are fully unrestricted.

1.6.    Foreign currency translation

The financial statements are presented in Sterling which is the Company's functional and presentational currency.

Transactions in currencies other than the functional currency are recognised at the rates of exchange on the dates of the transactions.  At each balance sheet date, monetary assets and liabilities are retranslated at the rates prevailing at the balance sheet date with differences recognised in the Statement of comprehensive income in the period in which they arise.

1.7.    Trade and other receivables

Trade and other receivables are measured at amortised cost, using the effective interest method, less any impairment loss. An allowance for impairment of trade and other receivables is established based on the twelve month expected credit losses unless the credit quality has deteriorated since inception, in which case it is based on lifetime losses.

1.8.    Intangible asset- Internally generated development costs

Internally generated intangible assets relate to development expenditure incurred in respect of the Company's AI platform.

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Development expenditure is capitalised only when the Directors can demonstrate all of the following in accordance with IAS 38 Intangible Assets: the technical feasibility of completing the asset so that it will be available for use; the intention to complete and use the asset; the ability to use the asset; the manner in which the asset is expected to generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development; and the ability to reliably measure the expenditure attributable to the asset.

Capitalised development costs are initially measured at cost. As at 31 August 2025, the Group's AI platform remained under development was not yet available for use. Accordingly, the related development expenditure has been classified as an intangible asset under development and has not been amortised.

Amortisation will commence when the asset is available for use, being when it is in the location and condition necessary for it to operate as intended by management, and will be charged on a straight-line basis over the asset's estimated useful economic life. The asset is assessed annually for indicators of impairment and tested for impairment when such indicators exist, in accordance with IAS 36 Impairment of Assets.

1.9.    Financial instruments

IFRS 9 requires an entity to address the classification, measurement and recognition of financial assets and liabilities.

a)   Classification

The Company classifies its financial assets in the following measurement categories:

·        those to be measured subsequently at fair value (either through OCI or through profit or loss);

·        those to be measured at amortised cost; and

·        those to be measured subsequently at fair value through profit or loss.

The classification depends on the Company's business model for managing the financial assets and the contractual terms of the cashflows.

For assets measured at fair value, gains and losses will be recorded either in profit or loss or in OCI. For investments in equity instruments that are not held for trading, this will depend on whether the Company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

b)   Recognition

Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Company commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cashflows from the financial assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership.

c)   Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.

Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Debt instruments

Amortised cost: Assets that are held for collection of contractual cashflows, where those cashflows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss.

Equity instruments

The Company subsequently measures all equity investments at fair value. Dividends from such investments continue to be recognised in profit or loss as other income when the Company's right to receive payments is established. Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable.

d)   Impairment

The Company assesses, on a forward-looking basis, the expected credit losses associated with any debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Company applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

1.10.  Equity

Share capital is determined using the nominal value of shares that have been issued.

The Share premium account includes any premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from the Share premium account, net of any related income tax benefits.

Equity-settled share-based payments are credited to a share-based payment reserve as a component of equity until related options or warrants are exercised or lapse.

Based on IFRS 2, for equity-settled share-based payment transactions, the entity shall measure the goods or services received, and the corresponding increase in equity, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. The fair value of the service received in exchange for the grant of options and warrants is recognised as an expense, other than those warrants that were issued in relation to the listing which have been recorded against share premium in equity. If the entity cannot estimate reliably the fair value of the goods or services received, the entity shall measure their value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted.  The seed warrants issued to the investors and directors in raising private equity funds is not within the scope of IFRS 2 and accounting policy mentioned doesn't apply.

Share capital to be issued refers to shares that are expected to be settled through the issuance of the Company's equity instruments as of the year-end. In accordance with IAS 32, since these meet the definition of equity, they are classified within equity as 'shares to be issued' and are measured at fair value."

Retained earnings includes all current and prior period results as disclosed in the income statement.

1.11.  Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating decision maker, being responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive Board of Directors.

1.12.  Taxation

Tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the income statement because it excludes items of income and expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

1.13.  Critical accounting judgements and key sources of estimation uncertainty

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for revenues and expenses during the period and the amounts reported for assets and liabilities at the balance sheet date. However, the nature of estimation means that the actual outcomes could differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. The significant accounting judgements and key sources of estimation uncertainty affecting the Company are disclosed below.

Capitalisation of internally generated intangible assets

The Company has capitalised development expenditure in respect of its AI platform, which is classified as an intangible asset under development at 31 August 2025. In determining whether development costs meet the recognition criteria set out in IAS 38 Intangible Assets, the Directors have exercised judgement in assessing whether the platform is technically feasible, whether there is an intention and ability to complete and use the asset, whether adequate resources are available, and whether the platform is expected to generate probable future economic benefits.

The Directors also apply judgement in determining the point at which development expenditure should be capitalised and in distinguishing between research and development activities. Development costs continue to be classified as work in progress and are not amortised until the asset is available for use.

Impairment of intangible assets under development

Intangible assets under development are not amortised but are tested for impairment annually, or more frequently if there are indicators of impairment, in accordance with IAS 36 Impairment of Assets. The Directors have exercised judgement in assessing whether any such indicators exist at the reporting date.

The impairment assessment requires the estimation of the recoverable amount of the asset, being the higher of its value in use and fair value less costs of disposal. This involves significant judgement, including assumptions relating to the timing of commercialisation, expected future cash flows, growth rates and discount rates. Actual outcomes may differ from these estimates and could result in a material adjustment to the carrying value of the intangible asset in future periods.

New standards and interpretations not yet adopted

The Company has adopted the below standards, amendments or interpretations for the first time for its annual reporting period commencing 1 January 2024 which do not have a material impact on the Company:

At the date of approval of these financial statements, the following standards and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases have not yet been adopted by the UK): 

^{*-Not yet endorsed in the UK}

The effect of these new and amended Standards and Interpretations which are in issue but not yet mandatorily effective is not expected to be material.

2.       Segmental analysis

The Company has two reportable segments, Software and Corporate, which are the Company's strategic divisions. For each of the strategic divisions, the Board reviews internal management reports on a regular basis. .

The Company generated no revenue during the year ended 31 August 2025 (2024: £0).

Segmental results are detailed below for the year ended 31 August 2025:

And at 31 August 2024:

3.       ADMINISTRATIVE eXPENSES

This is stated after charging:

4.       DIRECTORS AND Employees

The average number of persons employed by the Company (including directors) during year ended 31 August 2025:

The highest paid director, being the CEO, received fees of £154,250 (2024: £nil). The directors are considered key management personnel of the Company.

5.       AUDITORS' REMUNERATION

6.       taxation.

The Company has total carried forward losses of £4,015,499 (2024: £82,931. The taxable value of the unrecognised deferred tax asset is £762,944 (2024: £347,421) and these losses do not expire. No deferred tax assets in respect of tax losses have not been recognised in the accounts because there is currently insufficient evidence of the timing of suitable future taxable profits against which they can be recovered.

7.   EARNINGS per share

The calculation of the basic and diluted earnings per share is calculated by dividing the profit or loss for the year by the weighted average number of ordinary shares in issue during the year.

8.   INVESTMENT IN SUBSIDIARIES

Medpal Limited was incorporated on 28 August 2025 as a wholly owned subsidiary of the Company. The subsidiary was dormant at 31 August 2025 and had no material transactions during the period. Accordingly, its inclusion in the consolidated financial statements has had no material effect on the Group's financial statements.

9.   INTANGIBLE ASSET-Work in progress

 During the year, the Company acquired the Medpal intellectual property from the founder Jason Drummond under an Asset Purchase Agreement. The total consideration of £192,500 was satisfied through the issue of 192,500,000 ordinary shares, with no liabilities assumed as part of the transaction.

As at 31 August 2025, the Company's intellectual property, comprising the Medpal AI application and supporting software, was still under active development and had not yet reached the condition necessary to be capable of operating as intended by management. Accordingly, the IP was recognised as an intangible asset under development (work in progress), with no amortisation recognised and no indicators of impairment identified at the reporting date.

10.  TRADE AND OTHER RECEIVABLES

11.   Cash and cash equivalents

The majority of the Company's cash at bank is held with alternative financial institutions.

The carrying amounts of the Company's and Company's cash and cash equivalents are denominated in the following currencies:

12.  TRADE AND OTHER PAYABLES

13.  Share capital and share premium 

^{1-         700,000 shares at £0.01 were issued on 19 January 2024 for total proceeds of £7,000}

^{2-         Issue of 56,900,000 shares at nominal value for total proceeds £5,690}

^{3-         Issue of 43,450,000 shares at £0.01 per share for total proceeds of £434,500}

^{4-         Issue of 192,500,000 shares to founder Jason Drummond for the purchase of the Medpal IP}

^{5-         Issue of 5,033,334 shares at £0.03 per share for total proceeds of £151,000}

^{6-         Issue of 2,000,000 fee shares for £0.01 per share in leu of fees}

^{7-         On 1 August 2025, the Company consolidated its ordinary shares on a 2-for-1 basis. The issued share capital was reduced from 692,166,668 ordinary shares of £0.0001 each to 346,083,334 ordinary shares of £0.0002 each. The consolidation did not affect the aggregate nominal value of the issued share capital, which remained £69,216.67.Issue of 12,000,001 and 5,000,000 shares at £0.03 and £0.01 per share raising £410,000}

^{8-         Issue of 50,000,000 shares at £0.04p per share as part of the Company's IPO}

The share premium represents the difference between the nominal value of the shares issued and the actual amount subscribed less; the cost of issue of the shares, the value of the bonus share issue, or any bonus warrant issue.

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have a par value of £0.0002 and the company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

All issued shares are fully paid.

14.  OPTIONS & WARRANTS

Options

Warrants

The fair value of the services received in return for the options and warrants granted are measured by reference to the fair value of the instrument granted. The estimate of the fair value of the instrument granted is measured based on the Black-Scholes valuations model and Barrier valuations model. Measurement inputs and assumptions are shown below in note 15.

15.  SHARE-BASED PAYMENTS RESERVE

During the year, the Company operated a Medpal AI Long Term Incentive Plan (LTIP)  Share Option Plan (Share Option Scheme) as well as awarding warrants to various third parties.

Under IFRS 2, an expense is recognised in the statement of comprehensive income for share based payments, to recognise their fair value at the date of grant. The application of IFRS 2 gave rise to a charge of £2,385,347 for the year ended 31 August 2025 (the  equivalent charges for the year ended 31 August 2024 was £nil). The Company recognised total expenses (all of which related to equity settled share-based payment transactions) under the current plans of:

The estimated fair values of these share warrants, and the inputs used in the Black-Scholes model to calculate those fair values are as follows:

As at 31 August 2025 the weighted average time until expiry is 6.14 years (2024: nil years).

16.     Risk Management

General objectives and policies

The overall objective of the Board is to set policies that seek to reduce as far as practical without unduly affecting the Company's competitiveness and flexibility. Further details regarding these policies are:

Policy on financial risk management

The Company's principal financial instruments comprise cash and cash equivalents, trade and other receivables and trade and other payables. The Company's accounting policies and methods adopted, including the criteria for recognition, the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are set out in note 1 - "Accounting Policies".

The Company does not use financial instruments for speculative purposes. The carrying value of all financial assets and liabilities approximates to their fair value.

Derivatives, financial instruments and risk management

The Company does not use derivative instruments or other financial instruments to manage its exposure to fluctuations in foreign currency exchange rates, interest rates and commodity prices.

Foreign currency risk management

In the current period the impact of foreign currency movement is limited to the impact it has on the relatively small denominations of currency that the Company holds in foreign currencies.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties. The Company's exposure and the credit ratings of its counterparties are monitored by the board of directors to ensure that the aggregate value of transactions is spread amongst approved counterparties.

The Company applies IFRS 9 to measure expected credit losses for receivables, these are regularly monitored and assessed. Receivables are subject to an expected credit loss provision when it is probable that amounts outstanding are not recoverable as set out in the accounting policy. The impact of expected credit losses was immaterial.

The Company's principal financial assets are cash and cash equivalents, loan notes and trade and other receivables. Cash equivalents include amounts held on deposit with financial institutions.

The credit risk on liquid funds held in current accounts and available on demand is limited because the Company's counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

No financial assets have indicators of impairment.

The Company's maximum exposure to credit risk is limited to the carrying amount of financial assets recorded in the financial statements.

Borrowings and interest rate risk

The Company has no borrowings. The Company's principal financial assets are cash and cash equivalents and trade and other receivables. Cash equivalents include amounts held on deposit with financial institutions. The effect of variable interest rates is not significant.

Liquidity risk

During the year ended 31 August 2025 and year ended 31 August 2024, the Company was financed by cash raised through equity funding. Funds raised surplus to immediate requirements are held as short-term cash deposits in Sterling.

The maturities of the cash deposits are selected to maximise the investment return whilst ensuring that funds will be available as required to maintain the Company's operations.

In managing liquidity risk, the main objective of the Company is to ensure that it has the ability to pay all of its liabilities as they fall due. The Company monitors its levels of working capital to ensure that it can meet its liabilities as they fall due. The table below shows the undiscounted cashflows on the Company's financial liabilities on the basis of their earliest possible contractual maturity.

Capital management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders. The overall strategy of the Company is to minimise costs and liquidity risk.

The capital structure of the Company consists of equity attributable to equity holders of the Company, comprising issued share capital, reserves and retained earnings as disclosed in the consolidated statement of changes of equity.

The Company is exposed to a number of risks through its normal operations, the most significant of which are interest, credit, foreign exchange, commodity and liquidity risks. The management of these risks is vested to the board of directors.

17.        FINANCiaL ASSETS AND FINANCIAL LIABILITIES

Group and Company

18.        Related party transactions

Issue of director options

During the year, the Company granted equity-settled options and warrants to Directors and to an entity connected with a Director as part of their remuneration and incentive arrangements in connection with Admission. The options and warrants were granted in consideration for services provided to the Group and are accounted for in accordance with IFRS 2 Share-based Payment.

The options and warrants granted were as follows:

·      Jason Drummond (Chief Executive Officer) - options over 20,154,166 ordinary shares.

·      Justin Drummond (Director) - options over 6,092,499 ordinary shares.

·      Karl Karlsson (Non-executive Chairman) - options over 6,000,000 ordinary shares.

·      Kevin O'Neill (Non-executive Director) - options over 4,030,833 ordinary shares.

·      Adam Monaco (Finance Director) - options over 4,030,833 ordinary shares.

·      Dalheim Limited (entity connected with Karl Karlsson) - warrants over 11,500,001 ordinary shares, with an exercise price of £0.03 per share and an exercise period of five years commencing six months after Admission.

In aggregate, options and warrants over 51,808,332 ordinary shares were granted to Directors and their connected parties during the period. The Directors' option have exercise prices and expiry dates ranging between £0.03 and £0.04 per share and five to seven years from the date of grant.

No cash consideration was paid by the Company in respect of the issue of these warrants.

The fair value of the warrants at the grant date is recognised as an expense over the relevant vesting periods, with a corresponding increase in equity. Further details of the warrants, including vesting conditions and valuation assumptions, are disclosed in note 14 to the financial statements.

Purchase of IP

On 4 April 2025, the group acquired business assets and intellectual property relating to the Medpal AI platform from Jason Drummond, a director of the company, and his nominated recipients.

The total consideration for the acquisition was £192,500, satisfied in full through the issue of 192,500,000 ordinary shares at a price of £0.001 per share. No cash consideration was paid.

19.     CONTINGENT assets & LIABILITIES

Other than those listed above there were no further contingent liabilities at 31 August 2025.

20.  ultimate controlling party

The Directors consider that there is no controlling or ultimate controlling party of the Company.

21.     Events subsequent to year end

The following events occurred after the reporting date of 31 August 2025.

Acquisition of assets from Universal Pharmacy Ltd

On 1 October 2025 the Company announced the conditional acquisition of certain assets from Universal Pharmacy Ltd (in administration). The acquisition was undertaken to support the Group's strategic objectives and expand the functionality and reach of the MedPal AI platform. The assets acquired relate to pharmacy and healthcare services and are in the course of being integrated into the Group's existing operations. The acquisition was completed on 13 February 2026, following receipt of NHS approval in respect of aspects of its pharmacy licence application,  The approval represents a significant operational milestone for the Group and is expected to support future commercial adoption of the MedPal AI platform.

Issue of equity - placing

On 1 October 2025, the Company completed a placing of new ordinary shares to institutional and other investors at an issue price of 8 pence per share to raise gross proceeds of £400,000. The Company also raised £145,304 via the issue of 1,806,300 shares at 8p per share via a WRAP retail offer. The Placing and WRAP shares were admitted to trading on AIM on 8 October 2025.

Issue of equity - ATM facility

On 4 December 2025 the Company announced that it had entered into an At-The-Market ("ATM") equity issuance facility to raise up to £2,000,000 via the issue of new ordinary shares at a price no lower than 5p per share. The Company announced the closure of the ATM facility on 25 February 2026 and the tranches of funds raised via the facility are shown in the table below. Net proceeds of the ATM were approximately £1,843,617.

Secondary listing on the Frankfurt Stock Exchange

On 3 February 2026, the Company announced the completion of a secondary listing of its ordinary shares on the Frankfurt Stock Exchange. The secondary listing is intended to broaden the Company's investor base and increase market visibility.

22.  Independent Auditor's Report to the members of MedPal AI plc

Opinion

We have audited the financial statements of Medpal AI plc (the 'parent company') and its subsidiary (the 'group') for the year ended 31 August 2025 which comprise the Consolidated statement of Comprehensive income, the Consolidated and Parent Company Statements of financial position, the Consolidated and Parent Company Statements of Changes in Equity, the Consolidated and Parent Company Statement of Cashflows and notes to the financial statements, including material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards.

In our opinion, the financial statements:

·      give a true and fair view of the state of the group's and of the parent company's affairs as at 31 August 2025 and of the group's loss for the year then ended;

·      the group financial statements have been properly prepared in accordance with UK adopted international accounting standards;

·      the parent company financial statements have been properly prepared in accordance with UK adopted international accounting standards; and

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor responsibilities for the audit of the financial statements section of our report.

We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to the Going Concern section within the accounting policies, which describes the Directors' assessment of the Group's ability to continue as a going concern. As disclosed in Note 1.2, the Group incurred a pre-tax loss of £4,009,912 (2024: £13,587 loss) during the year. The group is unlikely to generate positive cash flow from operations for the near future and so will continue to be reliant on financing from equity injections and / or the raising of cash through bank loans, or other debt instruments. As stated in Note 1.2, these events or conditions, along with the others matters as set forth in note 1.2, indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

We recognised going concern as a key audit matter, see the relevant section of this report.

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors' assessment of the company's ability to continue to adopt the going concern basis of accounting included (but not limited to):

·      Discussions with management regarding the future funding plans of the Group and obtained an update of the status of such activities.

·      Reviewed managements budgets and forecasts for the group - including future forecast cashflows and budgets.

·      Discussing with management the assumptions used in the above-mentioned forecasts and budgets and obtaining details to support these key assumptions.

·      Subjected budgets and forecasts to sensitivity analysis.

·      Reviewed minutes of board meetings held during the year and any subsequent to the year end.

·      Reviewed post year-end financial statements for each entity and comparing actual performance to managements assessments.

·      Reviewed evidence of upcoming plans to fundraise through brokers including Tennyson.

·      Reviewed any additional financial and nonfinancial subsequent events which may be identified post the year end in relation to going concern.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Key audit matters

Key audit matters are those that, in our professional judgement, were of most significance in our audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

In addition to the matter described in the Material uncertainty related to going concern section, we have determined the matters described below to be the key audit matters to be communicated in our report.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:

We agreed with the Audit Committee that we would report on all differences in excess of £4,100 for both group and parent company reporting. We also report to the Audit Committee on financial statement disclosure matters identified when assessing the overall consistency and presentation of the financial statements.

An overview of the scope of our audit

In designing our audit approach, we determined materiality and assessed risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgements by the directors, including the carrying value and recoverability of intangible assets and going concern. Procedures were then performed to address the risk identified and for the most significant assessed risks of misstatement, the procedures performed are outlined below in the key audit matters section of this report. We re-assessed the risks throughout the audit process and concluded that the scope remained in line with that determined at the planning stage of the audit.

The group includes the listed parent company and a UK-based subsidiary, Medpal AI Limited, of which only Medpal AI plc was considered to be the only component in scope. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate.

No component auditors have been used and as group auditors we audited the sole component in scope. This gave us sufficient audit evidence for our audit opinion on the group financial statements.

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

·      the information given in the strategic report and the directors' report for the financial period for which the financial statements are prepared is consistent with the financial statements; and

·      the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

Other matters - prior year unaudited

The financial statements of the Company for the year ended 31 August 2024 were not audited. Accordingly, the corresponding figures presented for that period are unaudited. Our opinion on the current year's financial statements is not modified in respect of this matter. In accordance with ISA (UK) 710, we have obtained sufficient appropriate audit evidence to satisfy ourselves that the opening balances do not contain misstatements that materially affect the current year's financial statements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

·      adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

·      the parent company financial statements and the part of the directors remuneration report to be audited are not in agreement with the accounting records and returns; or

·      certain disclosures of directors' remuneration specified by law are not made; or

·      we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

·      We obtained an understanding of the legal and regulatory frameworks within which the Company operates focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were the Companies Act 2006 and relevant taxation legislation.

·      We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be the override of controls by management. Our audit procedures to respond to these risks included enquiries of management about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals and reviewing accounting estimates for biases.

·      We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and parent company with those laws and regulations. These procedures included, but were not limited to :

o  Enquiries of management;

o  Review of Board meeting minutes; and

o  Review of legal correspondence.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation.  This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Other matters that we are required to address

We were appointed on 20 November 2025 and this is the first period of our engagement as auditors for the Group.

The non-audit services prohibited by the FRC's Ethical Standard were not provided to the group or the parent company and we remain independent of the group and the parent company in conducting our audit.

Our audit opinion is consistent with the additional report to the audit committee.

Use of our report

This report is made solely to the company's members, as a body, in accordance with our engagement letter. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Steven Johnson FCCA (Senior Statutory Auditor)

For and on behalf of RPG Crouch Chapman LLP