Medinotec Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on the evaluation performed as of February 29, 2024, as a result of the material weaknesses in internal control over financial reporting that are described below in Management’s Report on Internal Control Over Financial Reporting, our Chief Executive Officer and Chief Financial Officer determined that our disclosure controls and procedures were not effective as of such date. Management’s Report on Internal Controls Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). A company’s internal control over financial reporting is a process designed by, or under the supervision of, its Chief Executive Officer and Chief Financial Officer, and effected by such company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. As required by the SEC Rules 13a-15(b) and 15d-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report based on the framework set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of February 29, 2024, at the reasonable assurance level due to the material weaknesses described below. 63 Table of Contents 1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the year ended February 29, 2024. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency represented a material weakness. 2. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency represented a material weakness. 3. Effective controls over the control environment were not maintained. Specifically, a formally adopted written code of business conduct and ethics that governs our employees, officers, and directors was not in place. Additionally, management has not developed and effectively communicated to employees its accounting policies and procedures. This has resulted in inconsistent practices and represented a material weakness. To address these material weaknesses, management engaged financial consultants, performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. We have not remedied the material weaknesses as of February 29, 2024. The Company plans to take remedial action to address these weaknesses during the fiscal year ending 2025. Changes in Internal Control Over Financial Reporting There has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during our fourth quarter ended February 29, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except the implementation of the controls identified above. Limitations on Effectiveness of Controls and Procedures The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but there can be no assurance that such improvements will be sufficient to provide us with effective internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. 64 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The following information sets forth the names, ages, and positions of our current directors and executive officers. Name Age Position(s) and Office(s) Held Gregory Vizirgianakis 45 President, Secretary, CEO and Director Pieter van Niekerk 39 CFO, Treasurer and Director Stavros G. Vizirgianakis 52 Director Joseph P. Dwyer 68 Director Athanasios Spirakis 62 Director (1) (1) Appointed as Director on October 11, 2023. Set forth below is a brief description of the background and business experience of our current executive officers and directors. Gregory Vizirgianakis The Company is led by Dr Vizirgianakis as the Chief Executive Officer, a qualified medical doctor, with a specialty interest in the field of neuroscience. He has many years of experience in the international and South African health markets. Dr Vizirgianakis is the founding ultimate shareholder of DISA Medinotec Proprietary Limited and has been involved in several successful entrepreneurial ventures. For the last five years, Dr. Vizirgianakis has been employed as CEO of Minoan Medical nd DISA Medinotec Proprietary Limited. Aside from that provided above, Dr. Vizirgianakis does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. The Board believes that Dr. Vizirgianakis has the experience, qualifications, attributes and skills necessary to serve on the Board because of the fact that he held similar positions for more than 10 years and his designation as a medical doctor, he is also a founding shareholder in the company and has a long-standing track record in the industry. Pieter van Niekerk Mr. Pieter van Niekerk is a qualified Chartered Accountant and the Company's CFO and has been involved in multiple listings on various exchanges in the United States of America and South Africa. He has 10 years executive management experience and has been nominated as one of the “Top 35 under 35 Chartered Accountants” in South Africa for two consecutive years. For the last five years, Mr. van Niekerk has been employed as CFO of Minoan Medical and DISA Medinotec Proprietary Limited. Aside from that provided above, Mr. van Niekerk does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. The Board believes that Mr. van Niekerk has the experience, qualifications, attributes and skills necessary to serve on the Board because of the fact that he held similar positions for more than 10 years and his designation as a chartered accountant, he is also a founding shareholder in the company and has a long-standing track record in the industry. 65 Table of Contents Stavros G. Vizirgianakis Mr. Vizirgianakis became the Interim Chief Executive Officer of Misonix in September 2016 and the full-time President and Chief Executive Officer in December 2016. Mr. Vizirgianakis has a distinguished career in the medical devices field having worked for United States Surgical Corporation as director of sales for sub-Saharan Africa and later Tyco Healthcare in the capacity of General Manager South Africa. In 2006, Mr. Vizirgianakis co-founded Surgical Innovations, which has become one of the largest privately owned medical device distributors in the African region, and now part of the Johannesburg Stock Exchange listed entity Ascendis Health. In that capacity, Mr. Vizirgianakis acted as a distributor of the Company’s products. Mr. Vizirgianakis was Managing Director of Ascendis Medical from January 2014 through July 2016. Mr. Vizirgianakis also served on the board of Tenaxis Medical and is a strategic investor in and advisor to numerous medical device startups and established companies in this field. Aside from that provided above, Mr. Vizirgianakis does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. Mr. Vizirgianakis has a degree in commerce from the University of South Africa. The Board believes Mr. Vizirgianakis’ industry knowledge, sales and marketing experience and his international business relationships qualify him to serve as a director. Joseph P. Dwyer Mr. Dwyer has been serving as the Chief Financial Officer of Archive360, LLC since June, 2022. He served as Misonix’s Chief Financial Officer from August 2, 2017 through November 2021, and then as a financial consultant to Misonix’s acquirer, Bioventus, through April, 2022. From June 2015 to July 2017, Mr. Dwyer provided financial consulting and advisory services to various companies, through the firms Dwyer Holdings and TechCXO. Prior thereto, from November 2012 until June 2015, he was Chief Financial Officer of Virtual Piggy, Inc., a publicly traded technology company. Prior to joining Virtual Piggy, Mr. Dwyer served as chief financial officer of Open Link Financial, Inc., a privately held company, which provides software solutions for trading and risk management in the energy, commodity, and capital markets. During 2011 and 2012, Mr. Dwyer was a member of the board of directors and chairman of the audit committee and served as interim chief administrative officer of Energy Solutions International, Inc., a privately held company providing pipeline management software to energy companies and pipeline operators. From 2010 through 2011, Mr. Dwyer served as chief administrative officer of Capstone Advisory Group, LLC, a privately held financial advisory firm providing corporate restructuring, litigation support, forensic accounting, expert testimony and valuation services. Mr. Dwyer served as a consultant to Verint Systems, Inc., a software company listed on the NASDAQ Global Market, from 2009 through 2010, assisting with SEC reporting and compliance. From 2005 through 2009, Mr. Dwyer served as chief financial officer and executive vice president of AXS-One Inc., a publicly traded software company. During 2004, Mr. Dwyer served as chief financial officer of Synergen, Inc., a privately held software company providing energy technology to utilities. Prior to 2004, Mr. Dwyer also served as chief financial officer and executive vice president of Caminus Corporation, an enterprise application software company that was formerly listed on the NASDAQ National Market, chief financial officer of ACTV, Inc., a digital media company that was formerly listed on the NASDAQ National Market, and chief financial officer of Winstar Global Products, Inc., a manufacturer and distributor of hair care, bath and beauty products until its acquisition by Winstar Communications, Inc. in 1995 when Mr. Dwyer went on to serve as senior vice president, finance of Winstar Communications. Aside from that provided above, Mr. Dwyer does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. Mr. Dwyer received his BBA in Accounting from the University of Notre Dame in 1978 and is licensed as a Certified Public Accountant in the State of New York. 66 Table of Contents Athanasios Spirakis Having received two Masters of Science degrees in Electromechanical & Computer Engineering as well as in Biomedical Engineering in 1984 and 1988 respectively, Mr. Spirakis embarked in an academic career in 1989 becoming a Senior Lecturer and the Head of the Biomechanics Group at the Department of Biomedical Engineering of the University of Cape Town. During Mr Spirakis’ tenure, besides his academic outputs in the form of publications, conference presentations, post-graduate students’ supervision and lecturing, Mr. Spirakis undertook consulting research projects in total Knee and Hip Arthroplasty for Johnson & Johnson (DePuy) and designed orthopaedic implants which were subsequently manufactured by South African & international companies such as Zimmer (now Zimmer-Biomet). In 1995, Mr. Spirakis left the academic world and assumed the responsibilities of Research & Development as well as Quality Assurance & Regulatory Affairs Directorships within Macmed Orthopaedics, a manufacturer of total joint prostheses and spinal implants till the end of 1999. In 2000 Mr. Spirakis became the Business Development Director of two sister South African marketing and selling medical devices organizations, namely SA Biomedical and Orthomedics. The former dealing in medical devices for a large variety of surgical specialties (Cardiac / Vascular / General Surgery / Arthroscopy / Urology / ENT) and the later in total joint replacements. Orthomedics was acquired by J&J in 2008 and Mr. Spirakis continued his involvement as a business development director till 2011 when he became one of the founders and director of Advanced Orthopaedics. In 2016 Mr. Spirakis accepted the Chief Executive Officer position within Elite Surgical, a South African medical devices manufacturer and held it till 2021 when he decided to join Minoan Medical / Disa Life Sciences as their Chief Operating Officer. Aside from that provided above, Mr. Spirakis does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940. Term of Office Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. Significant Employees We have no significant employees other than our officer and director. Family Relationships Aside from Gregory Vizirgianakis and Stavros G. Vizirgianakis, who are brothers, there are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers. 67 Table of Contents Involvement in Certain Legal Proceedings. During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including: 1. Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing; 2. Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities: i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; ii. Engaging in any type of business practice; or iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; 4. Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity; 5. Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; 6. Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; 7. Being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: i. Any Federal or State securities or commodities law or regulation; or ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 8. Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 68 Table of Contents Audit Committee On May 5, 2023, in connection with a requirement for quotation on the OTCQX markets, our Board of Directors authorized the creation of an Audit Committee. Gregory Vizirgianakis, Athanasios Spirakis and Joseph P. Dwyer currently serve on the Audit Committee. Athanasios Spirakis and Joseph P. Dwyer have been determined by the Board to be independent directors within the meaning of NASDAQ Rule 5605. Mr. Dwyer was identified and designated by the Board as an “audit committee financial expert,” as defined by the SEC in Item 407 of Regulation S-K. The Audit Committee approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Audit Committee reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures, including our internal control over financial reporting, and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor. For the fiscal year ending February 29, 2024, the Audit Committee: • Reviewed and discussed the audited financial statements with management, and • Revie wed and discussed the written disclosures and the letter from our independent auditors on the matters relating to the auditor’s independence. Based upon the Audit Committee’s review and discussion of the matters above, the board of directors authorized inclusion of the audited financial statements for the year ended February 29, 2024 to be included in this Annual Report on Form 10-K and filed with the Securities and Exchange Commission. At the 2023 annual meeting of the shareholders, our shareholders did not ratify the appointment of BDO South Africa Inc. as our independent registered public accounting firm for fiscal 2024. As a result of the vote, our audit committee plans to conduct an inquiry into the reasons why ratification was not approved by the shareholders and report its findings to the board of directors for consideration. ITEM 11. EXECUTIVE COMPENSATION. The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the years ended February 29, 2024 and February 28, 2023. SUMMARY COMPENSATION TABLE Name and principal position Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) (2) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Gregory Vizirgianakis 2024 — — — — — — 6,597 — CEO 2023 — — — — — — — — Peter van Niekerk 2024 — — — — — — 3,958 — CFO 2023 — — — — — — — — Narrative Disclosure to the Summary Compensation Table Although we do not currently compensate our officers with any regularity, we reserve the right to provide compensation at some time in the future. Our decision to compensate officers depends on the availability of our cash resources with respect to the need for cash to further business purposes. 69 Table of Contents Outstanding Equity Awards at Fiscal Year-End The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officers as of February 29, 2024. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END OPTION AWARDS STOCK AWARDS Name Number of Securities Underlying Unexercised Options Exercisable Number of Securities Underlying Unexercised Options Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested Gregory Vizirgianakis - - - - - - - - - Peter van Niekerk - - - - - - - - - ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The following table sets forth, as of July 1, 2024 , the beneficial ownership of our common and preferred stock by each executive officer and director, by each person known by us to beneficially own more than 5% of our common stock and by the executive officers and directors as a group. Unless otherwise noted, the address of each beneficial owner is located at Northlands Deco Park | 10 New Market Street | Stand 299 Avant Garde Avenue | North Riding | 2169. Title of class Name and address of beneficial owner (1) Number of shares - Beneficial ownership Percent of class (2) Common Gregory Vizirgianakis (3) 4,750,179 40.5% Common Pieter van Niekerk 401,965 3% Common Stavros G. Vizirgianakis (4) 4,750,179 40.5% Common Joseph P. Dwyer 0 0% Common Athanasios Spirakis 0 0% Total of All Directors and Executive Officers (5 persons): 9,902,323 84% More Than 5% Beneficial Owners: NONE (1) As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date. (2) The percent of class is based on 11,733,750 voting shares as of July 1, 2024. (3) Includes 1,108,327 shares held in his name and 3,641,852 shares held in King Style Investments, formed in Cyprus, in which Gregory has beneficial ownership over 43.39655% of the shares held by King Style Investments. (4) Includes 4,750,179 shares held in King Style Investments, formed in Cyprus, in which Stavros has beneficial ownership over 56.60345% of the shares held by King Style Investments. 70 Table of Contents ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Other than as disclosed below and in “Executive Compensation,” there have been no transactions involving the Company since the beginning of the last fiscal year, or any currently proposed transactions, in which the Company was or is to be a participant and the amount involved exceeds $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest. Related Party Summary Name Relationship with the Medinotec Group of Companies Related transactions with the Medinotec Group of Companies Related Directors with the Medinotec Group of Companies Related Owners with the Medinotec Group of Companies Minoan Medical Proprietary Limited Medical investment company controlled by Dr Gregory Vizirgianakis Related Party Loan Dr Gregory Vizirgianakis Pieter van Niekerk Dr Gregory Vizirgianakis is the ultimate beneficial owner Minoan Capital Proprietary Limited Property investment company controlled by Dr Gregory Vizirgianakis Related party loan Rental Expenses Dr Gregory Vizirgianakis is the ultimate beneficial owner Dr Gregory Vizirgianakis is the ultimate beneficial owner Medinotec Capital Proprietary Limited The African holding company of the Medinotec Group of Companies Related party loan payable to Minoan Capital Dr Gregory Vizirgianakis Pieter van Niekerk Medinotec Incorporated in Nevada is the 100% ultimate parent entity DISA Vascular Distribution Proprietary Limited trading as DISA Life Sciences Distributor appointed by DISA Medinotec Proprietary Limited for Africa Sales Income Pieter van Niekerk – Serves as independent non-executive according to distribution agreement Pieter van Niekerk resigned as a non-executive director on October 14, 2022 and therefore the related party relationship ceased to exist on the same date. n/a external third party DISA Medinotec Proprietary Limited The African operating and manufacturing company Related party loan with Minoan Medical Operational income and expenses with Minoan Medical Dr Gregory Vizirgianakis Pieter van Niekerk Medinotec Incorporated in Nevada is the 100% ultimate parent entity Medinotec Incorporated Nevada Ultimate parent of Medinotec Capital and DISA Medinotec All of the above for its related subsidiaries Dr Gregory Vizirgianakis Pieter van Niekerk Joseph P Dwyer Stavros Vizirgianakis Athanasios Spirakis This is the entity owned by the shareholders and primarily controlled by Dr Gregory Vizirgianakis and his Brother Stavros Vizirgianakis 71 Table of Contents Medinotec Group of Companies The Consolidated group name of Medinotec Incorporated, Medinotec Capital Proprietary Limited and DISA Medinotec Proprietary Limited above for its related subsidiaries Dr Gregory Vizirgianakis Pieter van Niekerk Joseph P Dwyer Stavros Vizirgianakis Athanasios Spirakis This is the entity owned by the shareholders and primarily controlled by Dr Gregory Vizirgianakis and his Brother Stavros Vizirgianakis Pieter van Niekerk Chief financial officer of the Medinotec Group of Companies Transactions relating to mutual entities disclosed above Related directorships disclosed above Minority Shareholder in Medinotec Inc Gregory Vizirgianakis Chief Executive officer of the Minoan Group of Companies Brother of Stavros Vizirgianakis Transactions relating to mutual entities disclosed above Related directorships disclosed above Shareholder in Medinotec Inc and Kingstyle investments. Stavros Vizirgianakis Non-Executive director of the Medinotec Group of companies Brother of Gregory Vizirgianakis Transactions relating to mutual entities disclosed above No Related other Directorships in Medinotec Group of Companies n/a Joseph Dwyer Non-Executive director of the Medinotec Group of companies Transactions relating to mutual entities disclosed above No Related other Directorships in Medinotec Group of Companies n/a Athanasios Spirakis Independent director of the Medinotec Group of companies Transactions relating to mutual entities disclosed above No Related other Directorships in Medinotec Group of Companies n/a a. Rent DISA Medinotec Propriety Limited leases commercial buildings from Minoan Capital Proprietary Limited (“Minoan Capital”). Minoan Capital is owned 100% by the Chief Executive Officer of the Medinotec Group of Companies, Dr. Gregory Vizirgianakis. Pieter van Niekerk, CFO of the Medinotec Group of Companies, also serves as a director on Minoan Medical. Set forth below is a table showing the Consolidated entities’ rent paid for the year ended February 29, 2024, with Minoan Capital: February 29, 2024 February 28, 2023 Rent 32,142 39,984 Rent is comparable to rent charged for similar properties in the same relative area. The Consolidated entities do market research of a Minimum and a Maximum rental value within the area at every renewal of the rental agreement to ensure this is market related, this exercise is undertaken together with a registered property agent who has the appropriate knowledge of the area. The Company leases office and warehouse spaces under a cancelable operating lease agreement with contractual terms from August 1, 2023, to July 31, 2026. The Company is required to pay property taxes, insurance, and normal maintenance costs for certain of these facilities and will be required to pay any increases over the base year of these expenses on the remainder of the Company’s facilities. 72 Table of Contents b. Loan Loans payable consists of a $1,769,957 unsecured loan from the prior parent entity of DISA Medinotec in South Africa called Minoan Medical. This loan originated to fund working capital and capex expansions of DISA Medinotec during the developmental and startup phase. After the acquisition of DISA Medinotec on March 2, 2022, the Company assumed this liability. The Company has a period of 3 years after the IPO date or a date at which the Company starts trading on a recognizable exchange to repay the loan. During these 3 years the loan will carry interest at the prevailing prime lending rate of the time. The Minoan Medical loan decreased by $93,109 during the year ended February 29, 2024. The prevailing prime lending rate on the quarter ending February 29, 2024 in South Africa is 11.75%. The interest charged for the year was $236,873 and a 1% movement in the interest rates constitutes a value of $20,159. The interest rate chargeable is a guideline determined by the South African Reserve Bank and gets utilized by financial institutions to determine the financial gain they may derive from a loan. The Prime rate is therefore an arm’s length transaction and justifiable rate that can be applied to a loan within the borders of the Republic of South Africa. The Consolidated entities, particularly Medinotec Inc. have the option to settle earlier and settlement can be in cash or any form of equivalent. Minoan Medical’s ultimate beneficial owner is the CEO of the Medinotec Group of Companies Dr. Gregory Vizirgianakis and is used to hold his investments of which DISA Medinotec Proprietary Limited Incorporated was one before was got transferred into the Medinotec Group of Companies. Pieter van Niekerk also serves as a director on Minoan Medical. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. BDO served as our independent registered auditors for the year ended February 29, 2024. Audit Fees Please refer below for the total audit fees for the Company’s fiscal years ended February 29, 2024 and February 28, 2023, for professional services rendered by our independent auditors for the audit and review of our financial statements. February 29, 2024 February 28, 2023 Audit Fees 166,271 120,561 Audit Related Fees There were no fees for audit related services rendered by our independent auditors for the years ended February 29, 2024 and February 28, 2023, respectively. Tax Fees For the Company’s fiscal years ended February 29, 2024 and February 28, 2023, there were no fees for professional services rendered by our independent auditors for tax compliance, tax advice, and tax planning. All Other Fees For the Company’s fiscal years ended February 29, 2024 and February 28, 2023, we were not billed any other fees by our auditors. 73 Table of Contents PART IV ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES. (a)(1) FINANCIAL STATEMENTS. The following documents are included on pages F-1 through F-23 attached hereto and are files as part of this Annual Report on Form 10-K. Reference is made to the Index to Consolidated Financial Statements on Page F-1.(a)(2) EXHIBITS. (a)(2) EXHIBITS We have filed the exhibits listed on the accompanying Exhibit Index of this registration statement and below in this Item 15: Incorporated by Exhibit Reference Filed or Furnished Number Exhibit Description Form Exhibit Filing Date Herewith 2.1 Share Exchange Agreement, dated March 2, 2022 S-1 2.1 6/2/2022 3.1 Articles of Incorporation S-1 3.1 6/2/2022 3.2 Articles of Amendment S-1 3.3 6/2/2022 3.3 Bylaws S-1 3.3 6/2/2022 4.1 Unsecured Revolving Promissory Note, dated September 16, 2022 S-1/A 4.1 11/2/2022 4.2 Description of Registrant’s Securities X 10.1 Lease Agreement dated January 28, 2020 between Minoan Capital and DISA Medinotec Proprietary Limited S-1/A 10.1 8/4/2022 10.2 Exclusive Distribution Agreement dated March 1, 2020 between Disa Life Sciences Proprietary Limited and DISA Medinotec Proprietary Limited S-1/A 10.2 8/4/2022 10.3 Letter of Offer, dated April 26, 2021 with Gregory Vizirgianakis S-1/A 10.3 8/30/2022 10.4 Letter of Offer, dated April 26, 2021 with Peter van Niekerk S-1/A 10.4 8/30/2022 10.5 Letter of Offer, dated June 13, 2021 with Stavros Vizirgianakis S-1/A 10.5 8/30/2022 10.6 Letter of Offer, dated June 13, 2021 with Joseph P Dwyer S-1/A 10.6 8/30/2022 10.7 Loan Certificate dated Mary 1, 2017 S-1/A 10.7 8/30/2022 21.1 List of Subsidiaries Medinotec Capital Proprietary Limited and DISA Medinotec Proprietary Limited 10-K 21.1 5/30/2023 31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. X 31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. X 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350. X 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. X 101.SCH Inline XBRL Taxonomy Extension Schema Linkbase Document. X 101.CAL Inline XBRL Taxonomy Calculation Linkbase Document. X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X 101.LAB Inline XBRL Taxonomy Label Linkbase Document. X 101.PRE Inline XBRL Taxonomy Presentation Linkbase Document. X 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ITEM 16. 10-K SUMMARY None 74 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DATE SIGNATURE TITLE July 3, 2024 /s/ Gregory Vizirgianakis Chief Executive Officer and Director Gregory Vizirgianakis (Principal Executive Officer) DATE SIGNATURE TITLE July 3, 2024 /s/ Peter van Niekerk Chief Financial Officer and Director Peter van Niekerk (Principal Financial Officer and Principal Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. DATE SIGNATURE TITLE July 3, 2024 /s/ Gregory Vizirgianakis Chief Executive Officer and Director Gregory Vizirgianakis (Principal Executive Officer) DATE SIGNATURE TITLE July 3, 2024 /s/ Peter van Niekerk Chief Financial Officer and Director Peter van Niekerk (Principal Financial Office and Principal Accounting Officer) DATE SIGNATURE TITLE July 3, 2024 /s/ Stavros G. Vizirgianakis and Director Stavros G. Vizirgianakis DATE SIGNATURE TITLE July 3, 2024 /s/ Joseph P. Dwyer Director Joseph P. Dwyer 75 Table of Contents ITEM 15 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MEDINOTEC, INC. CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED FEBRUARY 29, 2024 AND FEBRUARY 28, 2023 CONTENTS Page Reports of Independent Registered Public Accounting Firms Report for the year ended February 29, 2024 - BDO South Africa Inc. - Firm ID: 1368 F-1 Report for the year ended February 28, 2023 – Mercurius & Associates LLP - Firm ID: 3223 F-2 Consolidated Balance Sheets as of February 29, 2024 and February 28, 2023 F-3 Consolidated Statements of Operations and Comprehensive Loss for the Years Ended February 29, 2024 and February 28, 2023 F-4 Consolidated Statements of Stockholders’ Equity / (Deficit) for the Years Ended February 29, 2024 and February 28, 2023 F-5 Consolidated Statements of Cash Flows for the Years Ended February 29, 2024 and February 28, 2023 F-6 Notes to Consolidated Financial Statements F-7 76 Table of Contents Tel: +27 011 488 1700 Fax: +27 010 060 7000 www.bdo.ca.za Wanderers Office Park 52 Corlett Drive Illovo, 2196 Private Bag X60500 Houghton, 2041 South Africa Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Medinotec Inc. Johannesburg, South Africa Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheet of Medinotec Inc. (the “Company”) as of February 29, 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity/(deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 29, 2024, and the results of its operations and its cash flows for the year then ended , in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ BDO South Africa Inc. BDO South Africa Incorporated Registered Auditors Jacques Barradas We have served as the Company's auditor since 2023. Johannesburg, South Africa July 03, 2024 BDO South Africa Incorporated Registration number: 1995/002310/21 Practice number: 905526 VAT number: 4910148685 Chief Executive Officer: LD Mokoena A full list of all company directors is available on www.bdo.co.za The company’s principal place of business is at The Wanderers Office Park, 52 Corlett Drive, Illovo, Johannesburg where a list of directors’ names is available for inspection. BDO South Africa Incorporated, a South African personal liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. F- 1 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors of Medinotec Inc. Opinion on the Financial Statements We have audited the accompanying Consolidated Balance Sheets of Medinotec Inc. and its subsidiaries (collectively, the “Company”) as on February 28, 2023 and February 28, 2022, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year ended February 28, 2023 and for the period from April 26, 2021 to February 28, 2022 and the related notes (collectively referred to as the "Financial Statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 28, 2023 and February 28, 2022 and the results of its operations and its cash flows for the year ended February 28, 2023 and for the period from April 26, 2021 to February 28, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of financial statement. We believe that our audits provide a reasonable basis for our opinion. Emphasis of Matter We draw attention to Note 2a(ii) to the consolidated financial statements which describes that the Consolidated Balance Sheet as on February 28, 2022 and the related consolidated statement of operations, changes in stockholders’ deficit and cash flow for the period from April 26, 2021 to February 28, 2022 and the related notes have been restated to consolidate the commonly controlled entities retrospectively, as if the transaction had occurred at the beginning of the previous period (i.e. formation date of registrant). Our opinion is not modified with respect to this matter. Critical Audit Matter The Critical Audit Matter are matters arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. Mercurius & Associates LLP (Formerly known as AJSH & Co LLP) We have served as the Company’s auditor since 2022 PCAOB #3223 New Delhi, India May 30, 2023 F- 2 Table of Contents Consolidated Balance Sheets for the Medinotec Group of Companies as of February 29, 2024 and February 28, 2023 2024 $ 2023 $ Assets Current Assets Cash 2,808,910 2,827,457 Accounts receivable, net of allowances 589,761 21,074 Inventory 863,452 354,304 Other current assets 117,174 166,643 Total Current Assets 4,379,297 3,369,478 Note receivable — 605,130 Property, plant and equipment, net of accumulated depreciation 320,122 406,873 Deferred tax asset 42,881 108,951 Operating right-of-use asset 61,979 — Total Assets $ 4,804,279 $ 4,490,432 Liabilities and Stockholders' Equity Current Liabilities Accounts payable and accrued liabilities 801,550 71,311 Due to stockholders/Directors 1,587 — Operating lease liability, current portion 24,316 — Total current Liabilities 827,453 71,311 Long Term Liabilities Loans payable 1,769,957 1,863,066 Operating lease liability, net of current portion 39,698 — Total Liabilities 2,637,108 1,934,377 Equity Capital stock 11,734 11,734 Capital stock additional paid in capital 3,296,391 3,296,391 Retained earnings (Accumulated deficit) - ending ( 1,241,325 ) ( 836,637 ) Accumulated other comprehensive income 100,371 84,567 Total Equity 2,167,171 2,556,055 Total Liabilities and Equity $ 4,804,279 $ 4,490,432 The accompanying notes are an integral part of these audited consolidated financial statements. F- 3 Table of Contents Consolidated Statements of Operations and Comprehensive Loss for the Medinotec Group of Companies for the Years Ended February 29, 2024 and February 28, 2023 2024 $ 2023 $ Revenue 5,020,391 999,579 Cost of goods sold ( 2,577,922 ) ( 417,757 ) Gross profit 2,442,469 581,822 Operating expenses Selling expenses ( 84,564 ) ( 53,818 ) Depreciation and amortization expense ( 63,948 ) ( 53,553 ) General and administrative expenses ( 1,671,028 ) ( 648,172 ) Research and development expenses ( 22,351 ) ( 64,866 ) Total operating expenses ( 1,841,891 ) ( 820,409 ) Income/(loss) from operations 600,578 ( 238,587 ) Non operating income and expenses Interest income 60,590 22,507 Interest expense ( 277,230 ) ( 226,814 ) Other revenue/(expense) 4,304 51,417 Provision for impairment of note receivable ( 642,012 ) — Total non-operating income and expenses ( 854,348 ) ( 152,890 ) Loss before income taxes ( 253,770 ) ( 391,477 ) Income taxes Current income taxes ( 81,198 ) — Deferred income taxes ( 69,720 ) 38,742 Net (loss) ( 404,688 ) ( 352,735 ) Net loss per share, basic and diluted: ( 0.03 ) ( 0.03 ) Weighted average shares used in computing net loss per share, basic and diluted 11,733,750 11,733,750 Net (loss) ( 404,688 ) ( 352,735 ) Other comprehensive income/(loss) Foreign currency translation gain/(loss) 15,804 80,650 Other comprehensive income/(loss) 15,804 80,650 Comprehensive loss ( 388,884 ) ( 272,085 ) The accompanying notes are an integral part of these audited consolidated financial statements. F- 4 Table of Contents Consolidated Statements of Stockholders’ Equity / (Deficit) for the Years Ended February 29, 2024 and February 28, 2023 Common Stock Common Stock Additional Paid in Capital Shares Amount $ Amount $ Retained Earnings/(Accumulated Deficit) $ Accumulated Comprehensive Income $ Total $ Balance, March 1,2022 10,000,000 10,000 — 483,902 3,917 ( 469,985 ) Net (loss) for the period — — — ( 352,735 ) — ( 352,735 ) Other comprehensive income / (loss) — — — — 80,650 80,650 Stock issued Stock issued – pursuant to acquisitions @S2 per share 1,733,750 1,734 3,465,766 — — 3,467,500 Raising fee capitalized — — ( 169,375 ) — — ( 169,375 ) Balance February 28, 2023 11,733,750 11,734 3,296,391 ( 836,637 ) 84,567 2,556,055 Net (loss) for the period — — — ( 404,688 ) — ( 404,688 ) Other comprehensive income / (loss) — — — — 15,804 15,804 Balance, February 29, 2024 11,733,750 11,734 3,296,391 ( 1,241,325 ) 100,371 2,167,171 The accompanying notes are an integral part of these audited consolidated financial statements. F- 5 Table of Contents Consolidated Statements of Cash Flows for the Years Ended February 29, 2024 and February 28, 2023 2024 $ 2023 $ CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) ( 404,688 ) ( 352,735 ) Depreciation 88,225 53,553 Foreign currency transaction gain (loss), unrealized ( 3,916 ) ( 80,643 ) Deferred income taxes and tax credits 97,273 ( 23,325 ) Provisions 139,712 ( 169,375 ) Interest — 156,070 Impairment provision on notes receivable 642,012 — Bad debt write-off 52,133 — Operating lease liability ( 13,299 ) — (Increase)/Decrease in prepayments ( 10,674 ) — (Increase)/Decrease in receivables ( 631,248 ) ( 21,019 ) (Increase)/Decrease in inventories ( 480,640 ) 84,619 Increase/(Decrease) in accounts payable and accrued expenses 621,650 ( 137,708 ) Net cashflow from / (used in) operations 96,540 ( 490,549 ) Accrued interest ( 49,262 ) — Tax paid ( 33,036 ) — TOTAL CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES 14,242 ( 490,549 ) CASH FLOWS FROM INVESTING ACTIVITIES: Payments to acquire property, plant, and equipment ( 2,255 ) 55,277 Cash received from note receivable 12,380 ( 585,000 ) TOTAL CASH FLOWS FROM/(USED BY) INVESTING ACTIVITIES 10,125 ( 529,723 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of long-term debt 1,588 279,069 Repayment of debt ( 9,680 ) — Proceeds from issuance of common stock — 3,298,125 TOTAL CASH FLOWS FROM/(USED BY) FINANCING ACTIVITIES ( 8,092 ) 3,577,194 OTHER ACTIVITIES: Effect of exchange rate on cash and cash equivalents ( 34,822 ) 138,958 Net cash increase (decreases) in cash and cash equivalents ( 18,547 ) 2,695,880 Cash and cash equivalents at beginning of period 2,827,457 131,577 Cash and cash equivalents at end of period 2,808,910 2,827,457 Supplemental disclosures Interest income 60,590 22,507 Interest expense ( 277,230 ) ( 226,814 ) Right-of-use Assets in exchange for lease liabilities 76,940 — The accompanying notes are an integral part of these audited consolidated financial statements. F- 6 Table of Contents Notes to Consolidated Financial Statements 1. Description of Business Medinotec Inc. is a US-based company with a primary investment and operations in DISA Medinotec Proprietary Limited (“DISA Medinotec”), a South African medical device manufacturing and distribution company, which in management’s opinion is a global leader in tracheal non-occlusive airway dilation technology and medical device design. “The Company” consists of Medinotec Inc. in Nevada, which primary operations in the United States is in Long Island, New York. and its wholly owned subsidiaries, Medinotec Capital Proprietary Limited and DISA Medinotec, of which both are incorporated in South Africa. Combined, the Company has experience in establishing facilities for the manufacturing and design of niche medical devices and establishing international distribution networks to commercialize these devices. The Company is seeking to expand sales and distribution operations into the United States of America and other markets. The Company’s audited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company received FDA 510(k) approval through the substantial equivalence process for Class II medical devices for its main product, the Trachealator, in November 2021. The reason for the higher sales growth was due to various new distribution agreements in the surgical speciality of cardiology the Company entered into. These agreements are short term in nature and can be cancelled on non-performance clauses by either party. It has a strong geographical country specific risk which is mainly concentrated to South Africa. This led to increased revenues in South Africa. The rapid sales growth is attributable to the fact that these distributors already have existing business as well as a reputation for quality product in South Africa. Disa Medinotec got awarded these contracts due to years of good relationships between the external third party distributors and the current executive management of Disa Medinotec. In addition, the Company realized sales for its Trachealator in the United States with no such sales inside the United States for the prior year period. The Company recently embarked on obtaining various distribution contracts from principals to ensure a full sales basket and cash generation to sustain growth and product development in the near future. 2. Significant Accounting Policies a. Nature of business/basis of preparation Basis of presentation The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States. Emerging Growth Company (ECG) 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. Prior period reclassification Certain prior period amounts in the consolidated statements of operations and comprehensive loss and consolidated balance sheets have been reclassified to conform with the current period presentation. F- 7 Table of Contents b. Foreign currency translation i. Translation of foreign subsidiary The accounts of the foreign subsidiaries are translated into U.S. dollars. 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. ii. Exposed to currency variations in subsidiary The primary operations and functional currency of both Disa Medinotec (Pty) Ltd and Medinotec Capital (Pty) Ltd 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. The functional currency as well as the reporting currency for Medinotec Inc is the US Dollar. c. Cash and cash equivalents i. Highly liquid investments The Medinotec Group of Companies considers all highly liquid investments with a remaining maturity of three months or less at the time of purchase to be cash equivalents. These cash equivalents consist primarily of term deposits and certificates of deposit. Investments with maturities from greater than three months to one year are classified as short-term investments, while those with maturities in excess of one year are classified as long-term investments. Cash equivalents and short-term investments are stated at cost which approximates market value. d. Accounts Receivable i. Allowance based on a review and management evaluation Accounts receivables are presented on the consolidated balance sheets, net of estimated uncollectible amounts. The carrying amounts of trade accounts receivable represent the maximum credit risk exposure of these assets. 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. One major client constitutes 83 % of the accounts receivable balance as at February 29, 2024, compared to 0 % on February 28, 2023. An allowance for credit losses is calculated taking into account all accounts older than 121+ days. F- 8 Table of Contents e. Property, plant and equipment i. Depreciation rates Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is provided for using the straight-line method over the estimated useful lives as follows for the major classes of assets: Plant and machinery 10 years Laboratory equipment 5 years Furniture and fixtures 6 years Motor vehicles 5 years Computer equipment 3 years Office equipment 6 years Computer software 2 years Leasehold improvements 3 years Small assets 1 year f. Inventories i. Valuation, costing and obsolescence Inventories are stated at the lower of cost (weighted average) or net realizable value and consist of raw materials, work-in process and finished goods and include purchased materials, machine time, direct labor and manufacturing overhead. Management evaluates the need to record adjustments to write down inventory to the lower of cost or net realizable value on an annual basis. The Company’s policy is to assess the valuation of all inventories, including raw materials, work-in-process and finished goods and it writes down its inventory for estimated obsolescence based upon the age of inventory and assumptions about future demand and usage. g. Impairment of long-lived assets The Company assesses long-lived assets for impairment in accordance with the provisions of Financial Accounting Standards Board ASC 360, Property, Plant and Equipment. Long-lived assets (asset group), such as property and equipment subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. h. Leases We determine if an arrangement is a lease at inception. We determine the classification of the lease, whether operating or financing, at the lease commencement date, which is the date the leased assets are made available for use. We use the non-cancelable lease term when recognizing the right-of-use (“ROU”) assets and lease liabilities, unless it is reasonably certain that a renewal or termination option will be exercised. We account for lease components and non-lease components as a single lease component. Modifications are assessed to determine whether incremental differences result in new contract terms and accounted for as a new lease or whether the additional right of use should be included in the original lease and continue to be accounted for with the remaining ROU asset. F- 9 Table of Contents Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. Lease payments consist of the fixed payments under the arrangement, less any lease incentives. Variable costs, such as common area maintenance costs and additional payments for percentage rent, are not included in the measurement of the ROU assets and lease liabilities, but are expensed as incurred. As the implicit rate of the leases is not determinable, we use an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments in determining the present value of the lease payments. Lease expenses are recognized on a straight-line basis over the lease term. We do not recognize ROU assets on lease arrangements with a term of 12 months or less. i. Allowance for loan impairment The Company records allowances for loan impairment when it is determined that the Company will be unable to collect amounts due to the Company according to the terms of the underlying agreement. j. Employee benefit plans The Company contributes 2.5 % for eligible employees to a pension plan registered under the laws of South Africa. The Company also contributes a portion of the medical aid contribution for eligible employees to an approved medical insurance scheme. k. Income taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expenses. l. Financial instruments i. Fair Value Measurements Fair value accounting is applied for all assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The consolidated entities follow the established framework for measuring fair value and expands disclosures about fair value measurements. F- 10 Table of Contents ii. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, trade accounts receivable and loans. The Company invests its excess cash in low-risk, highly liquid money market funds and certificates of deposit with a major financial institution. iii. 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 is recorded in reserves under the heading accumulated comprehensive income. The effect on the reserves for the year ended February 29, 2024 was $ 15,804 compared to $ 80,650 for the year ended February 28, 2023. iv. Interest rate Risk Market interest rate risk may result in loss from fluctuations in the future cash flows or fair values of financial instruments. Interest rate risk is managed principally through monitoring interest rate gaps and basis risk and by having pre-approved limits for repricing bands. The interest rate risk relates solely to the related party loan. m. Comprehensive income / loss i. Comprehensive income / loss Comprehensive loss consists of net loss and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net loss. Our other comprehensive loss represents foreign currency translation adjustment attributable to our operations. Refer to Consolidated Statements of Comprehensive Loss. Total foreign currency transaction gains for the year ended February 29, 2024 was $ 15,804 , compared to $ 80,650 for the year ended February 28, 2023. n. 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. F- 11 Table of Contents 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 sale of self-manufactured products These products are developed in-house. The Company’s clients are billed based on a pricelist that is agreed on in each customers contract. Orders are shipped on a per order basis from the Company’s warehouse with Free-On-Board Inco terms. Revenues relating to the self-manufactured products are recognized when control of the promised goods or services is transferred to a customer in an amount that reflects the consideration that the Company expects to receive in exchange for those products. Revenue from the distribution 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. 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. F- 12 Table of Contents 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 Life Sciences. For the year ending February 29, 2024, 86 % of the Company's total revenue is derived from this single customer in the distribution environment in South Africa compared to 62 % for the year ending February 28, 2023. This table indicates the sales per revenue stream as a breakdown of the total revenue balance: Medinotec Inc Group Consolidated Years Ended Feb 29, 2024 $ Feb 28, 2023 $ Outside of United States of America Internally Designed/Manufactured Sales 976,291 978,112 Distribution Agreement Sales 3,490,133 — Sales Generated inside the United States of America Internally Designed/Manufactured Sales 553,967 21,467 5,020,391 999,579 The following table sets forth financial information by reportable segment for the years ending February 29, 2024 and February 28, 2023: 1. Income/(loss) from operations Inside the United States Outside the United States Total 2024 2023 2024 2023 2024 2023 Revenue 553,967 21,467 4,466,424 978,112 5,020,391 999,579 Cost of goods sold ( 47,708 ) ( 1,746 ) ( 2,530,214 ) ( 416,011 ) ( 2,577,922 ) ( 417,757 ) Gross profit 506,259 19,721 1,936,210 562,101 2,442,469 581,822 Selling expenses ( 30,611 ) ( 9,644 ) ( 53,953 ) ( 44,174 ) ( 84,564 ) ( 53,818 ) Depreciation expense — — ( 63,948 ) ( 53,553 ) ( 63,948 ) ( 53,553 ) General and administrative expenses ( 477,226 ) ( 259,487 ) ( 1,193,802 ) ( 388,685 ) ( 1,671,028 ) ( 648,172 ) Research and development expenses — — ( 22,351 ) ( 64,866 ) ( 22,351 ) ( 64,866 ) Income/(loss) from operations ( 1,578 ) ( 249,409 ) 602,156 10,822 600,578 ( 238,587 ) Provision for impairment of note receivable ( 642,012 ) — — — ( 642,012 ) — F- 13 Table of Contents 2. Total Assets Inside the United States Outside the United States Total 2024 2023 2024 2023 2024 2023 Total assets 2,697,502 3,248,703 2,106,777 1,241,729 4,804,279 4,490,432 The major component of total assets is "Cash" of $ 2,808,910 for the year ending February 29, 2024 and $ 2,827,457 for the year ending February 28, 2023. A significant portion of this is maintained Inside the United States in USD of $ 2,478,434 for the year ending February 29, 2024 and $ 2,582,272 for the year ending February 28, 2023. o. Cost of goods sold Cost of goods sold consists primarily of raw material purchases, manufacturing costs and employee benefits paid to operational personnel associated with the production of our medical devices. p. General and administrative expenses General and administrative expenses consists mostly of personnel costs, consulting fees as well as audit fees. q. Research and development All research and development expenses are expensed as incurred and are included in operating expenses. r. Interest expense Interest expense relates mostly to is an unsecured loan from Minoan Medical which is repayable over the next 2 years . The loan carries interest at the prevailing prime lending rate of the time. The prevailing lending rate in South Africa was 11.75 % at year end. The terms of this loan are deemed to be market related. s. Earnings per share Basic earnings (loss) per share are computed based on the weighted average number of ordinary shares outstanding during each year. The diluted net loss per share is computed by giving effect to all potentially dilutive securities outstanding for the period. For periods in which we report net losses, diluted net loss per share is the same as basic net loss per share because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. t. Principles of consolidation i. Consolidated - all intercompany transactions eliminated The consolidated financial statements include the accounts of Medinotec Inc., Medinotec Capital Proprietary Limited and the financial statements of DISA Medinotec Proprietary Limited, known as “the Company”. All significant intercompany transactions have been eliminated. F- 14 Table of Contents u. Use of estimates i. Actual results could differ The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and may have an impact on future periods. v. Recently issued accounting standards 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 January 1, 2025. The Company does not expect the adoption of this standard to have a material impact on its condensed consolidated financial statements and related disclosures. 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 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. F- 15 Table of Contents 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. 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. 3. Fair Value Measurements The Consolidated entities report all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Level 3—Inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety. At February 29, 2024 and February 28, 2023, all of the Company’s cash and cash equivalents, trade accounts receivable and trade accounts payable were short term in nature, and their carrying amounts approximate fair value. Our current and long-term debt arrangements are classified as level 2 financial instruments. F- 16 Table of Contents 4. Property, plant and equipment a. Accounts by year end Property, plant and equipment consist of the following: Feb 29, 2024 $ Feb 28, 2023 $ Leasehold improvements — 19,134 Computer software — 58,551 Office equipment — 7,273 Motor vehicles 11,889 12,446 Small assets — 14,146 Plant and machinery 1,056,830 1,104,182 Furniture and fittings 99,098 103,578 Computer equipment 145,891 152,731 Laboratory equipment 238,799 249,995 Total cost 1,552,507 1,722,036 Foreign currency adjustment 35,626 90,379 Total accumulated depreciation ( 1,268,011 ) ( 1,405,542 ) Total 320,122 406,873 Depreciation of property, plant and equipment totaled approximately $ 88,225 for the period ending February 29, 2024 compared to $ 53,553 for the period ending February 28, 2023. The Company has not acquired any property and equipment under capital leases. Depreciation Allocation to Cost of Goods Sold: A portion of the depreciation expense related to Property, Plant, and Equipment has been allocated to the Cost of Goods Sold. This practice is in accordance with the company's accounting policy, which recognizes a portion of the depreciation expense as part of the cost of producing goods. The allocation of depreciation to Cost of Goods Sold is based on the estimation of the assets' usage in the production process. This method is employed to better match the cost of assets with the revenue generated during the period. Depreciation of $ 24,277 was allocated to Cost of Goods Sold for the year ending February 29, 2024, compared to $ 26,777 for the year ending February 28, 2023 5. Inventories a. Accounts by period Inventory consists of the following: 2024 $ 2023 $ Stock on hand 861,451 381,390 Less provisions for obsolescence ( 10,221 ) ( 27,086 ) Goods in transit 12,223 — Total 863,452 354,304 F- 17 Table of Contents 6. Note receivable 2024 $ 2023 $ Note receivable — 605,130 Total — 605,130 The Trachealator product obtained FDA approval in November 2021, which allowed the Company to sell this product into the United States of America. Since the Company had no prior sales channels or infrastructure in the United States, management found it prudent to plan a roll out of the product with a distributor that had an established network and infrastructure. For this business, the Company partnered with a company called Innovative Outcomes and entered into a revolving credit facility to a maximum of $ 750,000 . Innovative Outcomes would use this to grow both their own distribution network and infrastructure and also allow for the Company to utilize this network and infrastructure. However, during quarter ending November 30, 2023, there was a material change in strategic focus where the Company would require its products to be marketed to niche surgical units, Innovative Outcomes would be servicing the wound care clinic market only which meant that the future growth of the combined network and infrastructure would not be a strategic match between the two entities. It was therefore decided to separate the network and infrastructure developed and for each company to pursue its strategic focus. T he note receivable will continue on the same terms and become payable later in the 2024 financial year , but the Company decided to provide full impairment against this receivable on November 30, 2023. This decision was made in prudence due to the fact that the receivable is not backed by any Trachealator revenue streams anymore. This does not change that Innovative Outcomes will still be liable for payment of this in the future Interest will accrue as normal until maturity date. Should payments be received this provision will be reversed with the same amount of cashflow received. 7. Loans Payable a. Loans from related parties 2024 $ 2023 $ Minoan Medical Proprietary Limited Opening balance 1,862,793 1,583,672 Interest 236,873 178,584 Received/Issued 2,076,257 3,329,201 Repayments ( 2,323,089 ) ( 3,228,716 ) Foreign exchange difference ( 83,326 ) 232 Closing balance 1,769,688 1,862,793 Minoan Capital Proprietary Limited Opening balance 273 325 Foreign exchange difference ( 4 ) ( 53 ) Closing balance 269 273 Total debt 1,769,957 1,863,066 F- 18 Table of Contents Minoan Medical Proprietary Limited: Loans payable consists of a $ 1,769,688 unsecured loan from the prior parent entity of DISA Medinotec in South Africa called Minoan Medical. This loan originated to fund working capital and capex expansions of DISA Medinotec during the developmental and startup phase. After the acquisition of DISA Medinotec on March 2, 2022, the Company assumed this liability The Company has a period of 3 years after the IPO date or a date at which the Company starts trading on a recognizable exchange to repay the loan. During these 3 years the loan will carry interest at the prevailing prime lending rate of the time .. The prevailing lending rate in South Africa was 11.75 % at year end compared to 10.75 % on February 28, 2023. The terms of this loan are deemed to be market related. The Minoan Medical loan decreased by $ 93,105 during the year ended February 29, 2024. The interest charged for the year was $ 236,873 and a 1% movement in the interest rates constitutes a value of $20,159 . The Company has the option to early settlement in cash or any form of equivalent. Minoan Medical Proprietary Limited’s ultimate beneficial owner is the CEO of the Medinotec Group of Companies Dr. Gregory Vizirgianakis and is used to hold his medical investments and exports of which DISA Medinotec Proprietary Limited Incorporated was one of these investments before it got transferred into the Medinotec Group of Companies. Pieter van Niekerk also serves as a director on Minoan Medical Proprietary Limited. Minoan Capital Proprietary Limited: This is an unsecured, interest free loan with no fixed terms of repayment. Minoan Medical and Minoan Capital are related parties of the Group as the CEO Dr Gregory Vizirgianakis has common control. 8. Accounts payable and accrued expenses a. Accounts payable by period Accounts payable consist of the following: 2024 $ 2023 $ Trade accounts payable 588,640 53,615 Accrued payroll, payroll taxes and leave pay 11,684 6,995 Provision for professional fees 92,000 — Royalties payable 35,139 10,701 Tax liability 53,646 — Other payables 20,441 — Total 801,550 71,311 One major European Cardiac supplier constitutes 61% (0% in prior period) of the total trade accounts payable F- 19 Table of Contents 9. Commitments a. Leases and deferred rent The Company leases office and warehouse spaces under a cancelable operating lease agreement with contractual terms from August 1, 2023 to July 31, 2026. The Company is required to pay property taxes, insurance, and normal maintenance costs for certain of these facilities and will be required to pay any increases over the base year of these expenses on the remainder of the Company’s facilities. Rental expense for operating leases for the period ended February 29, 2024 was $ 32,432 compared to $ 39,984 for the period ended February 28, 2023 Lease cost associated with operating leases is charged to general and administrative expenses in our consolidated financial statements. The exercise of lease renewal options is at our sole discretion. No extension period has been included in the determination of the right of use asset or the lease liability, as we concluded that it is not reasonably certain that we would exercise such option. Maturities of our operating lease liability as of February 29, 2024 was as follows: Years ending February 28: Amounts 2025 30,556 2026 30,556 2027 12,731 Total undiscounted lease payments: 73,843 Less: Imputed Interest ( 9,829 ) Total operating lease liabilities 64,014 Operating lease liabilities, current portion 24,316 Operating lease liabilities, net of current portion 39,698 b. Litigation From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims. In the normal course of business, the consolidated entities my agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Consolidated entities, with respect to certain matters. The Consolidated entities has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Group’s products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Consolidated entities limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each claim. From time to time, the Consolidated entities are subject to various claims that arise in the ordinary course of business. Management believes that any liability of the consolidated entities that may arise out of or with respect to these matters will not materially affect the financial position, results of operations, or cash flows of the Consolidated entities. At the reporting date there is no known material litigation or claims against the Group. F- 20 Table of Contents 10. Stockholders' equity/(deficit) a. Authorized and issued stock by period Authorized: As of February 29, 2024 the Company had 188,266,250 shares of common stock authorized and available to issue for purposes of satisfying conversion of preferred stock, the exercise and future grant of common stock options, and for purposes of any future business acquisitions and transactions. As of February 29, 2024, Medinotec Inc., the parent Company had 20,000,000 shares of preferred stock authorized and available to issue. This has remained unchanged from the previous financial year ending February 28, 2023. Issued and outstanding shares 2024 2023 Common shares 11,733,750 10,000,000 Stock issued — 1,733,750 Total 11,733,750 11,733,750 Amount of shares 2024 $ 2023 $ Common shares 11,734 10,000 Stock issued — 1,734 Total 11,734 11,734 11. Income taxes a. Provision for income taxes The components of income tax expense are as follows: 2024 2023 Current expense from income taxes: Federal ( 47,753 ) — State ( 5,892 ) — Foreign ( 27,553 ) — Total current expense from income taxes ( 81,198 ) — Deferred benefit (expense) from income taxes Federal — — State — — Foreign ( 69,720 ) 38,742 Total deferred benefit (expense) from income taxes ( 69,720 ) 38,742 Total $ ( 150,918 ) $ 38,742 F- 21 Table of Contents The following table sets forth a reconciliation from the U.S statutory federal income tax rate to the effective income tax rate: 2024 2023 Federal income tax rate 21 % 21 % Permanent differences ( 18 %) — State taxes ( 2 %) — Valuation allowance ( 52 %) — Foreign rate differential ( 7 %) ( 11 %) Other ( 1 %) — Effective rate ( 59 %) 10 % b. Deferred taxes/Future income tax assets and valuation allowance The following table sets forth the significant components of deferred tax assets and liabilities: 2024 $ 2023 $ Deferred tax assets Provision for Professional fees 24,840 — Leave pay provision 973 3,102 Provision for stock obsolescence 2,110 — Provision for bad debt 13,792 — Provision for royalties 9,487 — Commission accrual 3,731 — Impairment of note receivable 167,574 — Assessed losses — 105,849 Lease liabilities 17,283 — Total deferred tax assets 236,790 108,951 Less valuation allowance ( 177,175 ) — Deferred tax assets, net 59,615 108,951 Deferred tax liabilities: Right-of-use assets ( 16,734 ) — Total deferred tax liabilities ( 16,734 ) — Deferred tax assets, net 42,881 108,951 Deferred tax assets refer to assets that are attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets in essence represent future savings of taxes that would otherwise be paid in cash. The realization of the deferred tax assets is dependent upon the generation of sufficient future taxable income, including capital gains. If it is determined that the deferred tax assets cannot be realized, a valuation allowance must be established, with a corresponding charge to net income. It is management’s estimate that the deferred tax assets will be utilized in full in the next 12 months. F- 22 Table of Contents c. Other The geographic components of loss before income taxes consisted of the following for the years ended February 29, 2024 and February 28, 2023: 2024 2023 United States operations $ ( 594,328 ) $ ( 239,782 ) International operations 340,558 ( 151,695 ) (Loss) income before taxes $ ( 253,770 ) $ ( 391,477 ) No U.S. federal tax has been provided on the undistributed earnings of the foreign subsidiaries as of February 29, 2024 as the company intends to permanently reinvest the earnings. As of February 28, 2024, the Company has no liabilities for uncertain tax positions. It is the Company’s policy to record interest and penalties as a component of tax expense. The Company files income tax returns in the U.S. Federal jurisdiction, various U.S. state jurisdictions and South Africa. With few exceptions, the fiscal years that remain subject to examination are February 28, 2023 through February 29, 2024. 12. Business acquisitions a. Acquisition of Disa Medinotec Proprietary Limited On March 2, 2022 the Medinotec Inc. and Medinotec Capital Proprietary Limited acquired 100 percent of the issued and outstanding shares of DISA Medinotec Proprietary Limited. The consideration payable was $ 11 for the outstanding equity and the Group assumed the responsibility of the loan account ( $ 1,583,661 ) payable to Minoan Medical Proprietary Limited. Due to the control of businesses being in principal 95% the same between the Group and the previous ultimate beneficial owner of DISA Medinotec Proprietary Limited the transaction would be deemed a common control transaction. Due to common control being established on April 26, 2021 (the incorporation date of the registrant) the effective date is deemed to be at this date. The Group acquired the assets and liabilities: $ Cash 80,975 Accounts and other receivables 41,742 Inventory 424,810 Property, plant and equipment 507,956 Deferred tax assets 22,449 Accounts payable and accrued liabilities ( 120,987 ) Long-term debt ( 1,316,848 ) Common control reserve ( 359,903 ) To properly account for the transfer of the membership interests of DISA Medinotec Proprietary Limited, the Company reviewed the ownership structure of all of the entities involved in the contribution transaction, as contemplated in the Registration Statement, and concluded that in accordance with ASC 805-50-25-2, the contribution of such membership interests will qualify as a transfer of ownership between entities under common control. “When accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or the equity interests shall initially measure the recognized assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer. If the carrying amounts of the assets and liabilities transferred differ from the historical cost of the parent of the entities under common control, for example, because pushdown accounting had not been applied, then the financial statements of the receiving entity shall reflect the transferred assets and liabilities at the historical cost of the parent of the entities under common control.” F- 23 Table of Contents ASC 805-50-15-6 states that the guidance in the Transactions Between Entities Under Common Control Subsections applies to combinations between entities or businesses under common control in which an entity charters a newly formed entity and then transfers some or all of its net assets to that newly chartered entity. If the guidance in the subsection applies, then in accordance with ASC 805-50-30-5, the Company will initially measure the recognized assets and liabilities transferred at their carrying amounts (historical cost) in the accounts of the transferring entity at the date of transfer. The Company believes the financial information of DISA Medinotec Proprietary Limited is properly presented based on the carryover basis of accounting because the transfer of the ownership qualifies as a reorganization of entities under common control. In ASC 805, “control” has the same meaning as “controlling financial interest” in ASC 810-10-15-8. A “controlling financial interest” is generally defined as ownership of a majority voting interest by one entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity. U.S. GAAP does not define the term “common control.” The accounting treatment for the contribution of the membership interests of DISA Medinotec Proprietary Limited into the structure of Medinotec Inc Nevada was based upon the following facts: At the date of incorporation of Medinotec Inc in Nevada April 26, 2021 , Gregory Vizirgianakis (CEO) was the 100 % ultimate beneficial owner of DISA Medinotec Proprietary Limited and owned 95 % of Medinotec Inc in Nevada. Based upon the facts as outlined above, the Company applied the guidance outlined in ASC 805-50 which deals with transactions between entities under common control. Transactions between entities under common control are accounted for in a manner similar to the pooling of-interest method. Thus, the financial statements of the commonly controlled entities would be combined, retrospectively, as if the transaction had occurred at the beginning of the period. However, ASC 805-50-45-5 states that prior years’ comparative information is only adjusted for periods during which the entities were under common control. In addition, ASC 805-50-45-2 requires that the “effects of intra-entity transactions on current assets, current liabilities, revenue, and cost of sales for periods presented and on retained earnings at the beginning of the periods presented shall be eliminated to the extent possible.” DISA Medinotec Proprietary Limited was deemed to be under common control prior to March 2, 2022 share transfer date and therefore the acquisition was retrospectively applied from April 26, 2021, the formation date of registrant. The proforma information as disclosed in this note have been prepared to present this. Proforma 2022 $ Revenue $ 1,215,905 General and administration $ 601,094 Net loss ( 167,764 ) F- 24 Table of Contents 13. Transactions with related parties Name Relationship with the Medinotec Group of Companies Related transactions with the Medinotec Group of Companies Related Directors with the Medinotec Group of Companies Related Owners with the Medinotec Group of Companies Minoan Medical Proprietary Limited Medical investment company controlled by Dr Gregory Vizirgianakis Related Party Loan Dr Gregory Vizirgianakis Pieter van Niekerk Dr Gregory Vizirgianakis is the ultimate beneficial owner Minoan Capital Proprietary Limited Property investment company controlled by Dr Gregory Vizirgianakis Related party loan Rental Expenses Dr Gregory Vizirgianakis is the ultimate beneficial owner Dr Gregory Vizirgianakis is the ultimate beneficial owner Medinotec Capital Proprietary Limited The African holding company of the Medinotec Group of Companies Related party loan payable to Minoan Capital Dr Gregory Vizirgianakis Pieter van Niekerk Medinotec Incorporated in Nevada is the 100% ultimate parent entity DISA Vascular Distribution Proprietary Limited trading as DISA Life Sciences Distributor appointed by DISA Medinotec Proprietary Limited for Africa Sales Income Pieter van Niekerk – Serves as independent non-executive according to distribution agreement Pieter van Niekerk resigned as a non-executive director on October 14, 2022 and therefore the related party relationship ceased to exist on the same date. n/a external third party DISA Medinotec Proprietary Limited The African operating and manufacturing company Related party loan with Minoan Medical Operational income and expenses with Minoan Medical Dr Gregory Vizirgianakis Pieter van Niekerk Medinotec Incorporated in Nevada is the 100% ultimate parent entity F- 25 Table of Contents Medinotec Incorporated Nevada Ultimate parent of Medinotec Capital and DISA Medinotec All of the above for its related subsidiaries Dr Gregory Vizirgianakis Pieter van Niekerk Joseph P Dwyer Stavros Vizirgianakis Athanasios Spirakis This is the entity owned by the shareholders and primarily controlled by Dr Gregory Vizirgianakis and his Brother Stavros Vizirgianakis Medinotec Group of Companies The Consolidated group name of Medinotec Incorporated, Medinotec Capital Proprietary Limited and DISA Medinotec Proprietary Limited above for its related subsidiaries Dr Gregory Vizirgianakis Pieter van Niekerk Joseph P Dwyer Stavros Vizirgianakis Athanasios Spirakis This is the entity owned by the shareholders and primarily controlled by Dr Gregory Vizirgianakis and his Brother Stavros Vizirgianakis Pieter van Niekerk Chief financial officer of the Medinotec Group of Companies Transactions relating to mutual entities disclosed above Related directorships disclosed above Minority Shareholder in Medinotec Inc Gregory Vizirgianakis Chief Executive officer of the Minoan Group of Companies Brother of Stavros Vizirgianakis Transactions relating to mutual entities disclosed above Related directorships disclosed above Shareholder in Medinotec Inc and Kingstyle investments. Stavros Vizirgianakis Non-Executive director of the Medinotec Group of companies Brother of Gregory Vizirgianakis Transactions relating to mutual entities disclosed above No Related other Directorships in Medinotec Group of Companies n/a Joseph Dwyer Non-Executive director of the Medinotec Group of companies Transactions relating to mutual entities disclosed above No Related other Directorships in Medinotec Group of Companies n/a Athanasios Spirakis Independent director of the Medinotec Group of companies Transactions relating to mutual entities disclosed above No Related other Directorships in Medinotec Group of Companies n/a F- 26 Table of Contents a. Rent DISA Medinotec Propriety Limited leases commercial buildings from Minoan Capital Proprietary Limited (“Minoan Capital”). Minoan Capital is owned 100 % by the Chief Executive Officer of the Medinotec Group of Companies, Dr. Gregory Vizirgianakis. Pieter van Niekerk, CFO of the Medinotec Group of Companies, also serves as a director on Minoan Medical Proprietary Limited. We are currently also renting storage and office space in the US on a 12-month lease agreement. Set forth below is a table showing the Consolidated entities' rent paid for the year ended February 29, 2024 and February 28, 2023 with Minoan Capital: 2024 $ 2023 $ Rent 32,142 39,984 Rent is comparable to rent charged for similar properties in the same relative area. The company does market research of a Minimum and a Maximum rental value within the area at every renewal of the rental agreement to ensure this is market related, this exercise is undertaken together with a registered property agent who has the appropriate knowledge of the area. b. Loan This is an unsecured loan from the prior parent entity of DISA Medinotec Proprietary Limited incorporated in South Africa called Minoan Medical Proprietary Limited. This loan originated to fund working capital and capex expansions of DISA Medinotec Proprietary Limited Incorporated during the developmental and startup phase. The Consolidated entities, particularly Medinotec Inc. has the option to settle earlier in cash or any form of equivalent. 14. Subsequent events There were no subsequent events for the year ending February 29, 2024. F- 27