Medinotec Inc. 10-K

ITEM 1. BUSINESS Company Overview Medinotec Inc. was registered on April 26, 2021, in the State of Nevada. With an effective date of April 26, 2022, we acquired DISA Medinotec Proprietary Limited, a South African corporation, from Minoan Medical Proprietary Limited ("Minoan"), a company incorporated in South Africa, and owner of all the capital stock of DISA Medinotec Proprietary Limited. We accomplished the acquisition pursuant to the terms and conditions of a Share Exchange Agreement under common control with Minoan whereby we acquired all the capital stock of DISA Medinotec Proprietary Limited in exchange for the issuance of stock at par value and the transfer of the outstanding loan account. This purchase was concluded between Minoan and a local newly established investment vehicle of Medinotec Inc. called Medinotec Capital Proprietary Limited in South Africa after Medinotec Inc. registered the company as a shelf company by injecting $10,000 into it on December 18, 2021. Medinotec Capital Proprietary Limited serves as the acquisition vehicle for Medinotec Inc. on the continent of Africa. Combined these companies now form the Medinotec Group of Companies. We currently generate revenue from two principal sources: (1) internally designed and manufactured proprietary medical devices and (2) distribution of third-party medical products under exclusive or non-exclusive agreements in defined territories. Our proprietary products include the Trachealator (a non-occlusive airway dilation balloon), the Outflo Aortic Valve Dilation Balloon Catheter, and the Cape Cross family of PTCA balloon catheters. We also distribute a range of cardiology and renal dialysis products on behalf of multinational manufacturers, primarily in South Africa. Our History DISA Medinotec Proprietary Limited originated from DISA Vascular 2015, a South African medical device business focused on vascular technologies. DISA Medinotec has historically developed and manufactured medical devices, including products used in cardiology and airway-related procedures. The Company’s products are sold through distributor arrangements in South Africa and certain international markets. Following the acquisition by Medinotec Inc. through Medinotec Capital Proprietary Limited, the Group continued operating its medical device manufacturing activities from Johannesburg, South Africa. The Johannesburg facility includes manufacturing, warehousing, quality, regulatory, and administrative functions. The Company has appointed distributors and obtained distribution rights in certain territories, including South Africa, Namibia, Mauritius, the Middle East, Europe, South America, and portions of Asia. The Company has also taken steps to develop sales channels in the United States following FDA 510(k) clearance for Trachealator in November 2021 and Outflo in March 2025. The Company continues to evaluate additional regulatory filings and patent applications in selected territories, subject to commercial feasibility, regulatory requirements, and available resources. Raw materials and components used in manufacturing are sourced from local and international suppliers. The Company maintains supplier evaluation procedures and quality processes intended to support compliance with applicable regulatory and product specifications. Employees As of February 28, 2026, the Medinotec Group of Companies had 48 employees and independent contractors supporting its operations. This consisted of 36 individual full time employees and 12 independent contractors. The 12 independent contractors include a mix of individual contractors and companies engaged to support the Group’s sales and commercialization activities. 4 Table of Contents Certain of the independent contractors that are companies, including U.S.-based companies, may in turn employ or engage individual sales representatives who participate in sales-related activities for the Group’s products. These individuals are employed or engaged by the relevant independent contractor company and are not employees or individual independent contractors of the Medinotec Group of Companies. Accordingly, where an independent contractor is a company, that company is counted as one independent contractor in the table below, and any individuals employed or engaged by that company are not included in the 48-person count. The Group’s personnel support the following functions: Commercial and sales: pricing, customer engagement, product support, marketing coordination, logistics support, and distributor liaison. Marketing: product materials, trade show support, customer communications, and coordination of industry events. Warehouse and logistics: inbound and outbound shipments, inventory storage, product handling, and shipment coordination in accordance with applicable quality requirements. Technical and manufacturing support: maintenance of manufacturing equipment and technical support for production activities. Customer service: order support, customer communication, and coordination of product-related queries. Back-office and regulatory support: finance, administration, quality, regulatory affairs, and research and development. The Company operates in a specialized industry and seeks to retain personnel with relevant technical, manufacturing, regulatory, commercial, and administrative experience. None of the Company’s employees are represented by a labor union. The Company has not experienced any work stoppages. The table below shows the approximate number of employees and independent contractors, the employment status as full or part time, and the employer within the Medinotec Group of Companies. None of our employees are represented by a labor union with respect to their employment with us. We have not experienced any work stoppages, and we consider our relations with our employees to be good. Employer Number of full-time employees Number of part-time employees Number of independent contractors Medinotec Inc. 3 — 12 Medinotec Capital Proprietary Limited* — — — DISA Medinotec Proprietary Limited 33 — — Total 36 — 12 Group Contractors DISA Medinotec Proprietary Limited holds distribution arrangements with third-party medical device companies for cardiology and renal dialysis products. These arrangements form part of the Company’s third-party distribution business and supplement the Group’s internally manufactured product portfolio. 5 Table of Contents Certain third-party distribution relationships were introduced through Minoan Medical Proprietary Limited, which previously acted as distributor before DISA Medinotec assumed responsibility for the relevant distribution activities. The Company appointed DISA Life Sciences, a South African sub-distributor, to support sales and marketing activities in South Africa. DISA Life Sciences also distributes certain internally manufactured Medinotec products in South Africa. The Company’s principal operating focus remains the development, manufacture, and commercialization of products for which it owns or controls intellectual property, together with the distribution of selected third-party products where management believes such arrangements are commercially appropriate. The Trachealator received FDA 510(k) clearance in November 2021, permitting the Company to market the product in the United States. As the Company did not have an established U.S. sales infrastructure at that time, it entered into a relationship with Innovative Outcomes and provided a revolving credit facility of up to $750,000 to support the development of distribution infrastructure. During the quarter ended November 30, 2023, the Company reassessed the relationship after determining that Innovative Outcomes’ focus on the wound care clinic market was no longer aligned with the Company’s intended focus on niche surgical units. The parties separated their respective distribution activities. The note receivable remained subject to its original terms and became payable during fiscal 2024. The Company recorded a full impairment allowance against the receivable as of November 30, 2023 because the receivable was no longer supported by anticipated Trachealator-related revenue streams. Any future recoveries will be recognized when received, as appropriate. The Company relies on distributor relationships and customer relationships to sell its products, particularly in South Africa. Through its distribution arrangements, the Group has access to a network of sales representatives that service hospitals and healthcare providers in South Africa. The Company may seek to develop or access similar distribution capabilities in the United States; however, there can be no assurance that it will be able to do so on commercially acceptable terms or at all. The Group has historical reliance on two companies for sales into South Africa: there is reliance on DISA Life Sciences Proprietary Limited (“Disa Life Sciences”) as a customer; and for exports out of South Africa there was historical reliance on Minoan Medical (a related party). These relationships provide the Group with more than 100 sales representatives in the South African Market. DISA Life Sciences remains a significant customer and distribution partner in South Africa. The Company expects to continue selling products to DISA Life Sciences while it remains commercially viable to do so. Management’s strategy includes seeking to reduce customer and geographic concentration over time by expanding into additional markets. There can be no assurance that these efforts will be successful. Regulatory requirements, market acceptance, reimbursement, competition, pricing pressure, and other barriers to entry may limit or delay the Company’s ability to diversify revenue away from the South African market and from DISA Life Sciences. The Medinotec Group of Companies operate in countries where the market is dominated by certain players, and this creates a sales concentration risk which also causes an accounts receivable concentration risk. Seasonality Sales reflect the cyclical nature of the business, as the number of procedures incorporating our products does decrease in the summer holiday months of December and January within the South African market, which is currently the predominant market in the Medinotec Group of Companies. 6 Table of Contents Reliance on Other Parties The Medinotec Group of Companies in the past focused solely on product development and manufacturing and therefore outsourced its sales function to two companies, namely, Minoan Medical Proprietary Limited (a related party) and DISA Life Sciences. This was done to preserve funds for R&D and manufacturing and to ensure the products that are developed are launched effectively. • DISA Life Sciences is a South African medical device distributor with an established sales and marketing presence in the South African market. DISA Medinotec entered into the relationship to access existing distribution capabilities rather than building a separate internal sales force for the South African market. DISA Life Sciences uses its own sales personnel and certain subcontractors to support sales within South Africa. Following the Company’s decision to manage exports internally, the DISA Life Sciences relationship primarily relates to sales and distribution within South Africa. Please refer to the related party footnotes in the financial statements and as disclosed in the Section of this Annual Report, entitled, “Certain Relationships and Related Transactions, and Director Independence” where the nature and flow of transactions between related parties have been disclosed in detail. Our Business Strategy As we are currently operating in various markets, the below provides a brief overview of the Company structure as well as each individual entity’s role within the Company: Medinotec Inc The company was incorporated in Nevada in April of 2021. Currently, this company houses the directorship and management of the business and owns the subsidiary, Medinotec Capital Proprietary Limited, which in turn wholly owns DISA Medinotec Proprietary Limited. Medinotec Inc. facilitates all sales into the United States. Medinotec Capital (Pty) Ltd Medinotec Capital Proprietary Limited was incorporated in South Africa as an investment holding company for the Group’s African operations. It currently holds the Company’s investment in DISA Medinotec Proprietary Limited. The use of a holding company structure assists the Group in managing its African investments, intercompany arrangements, and related transfer pricing considerations. Disa Medinotec (Pty) Ltd This is the operational company acquired by Medinotec Capital in March of 2022. This company manufactures and develops the products that are sold to Medinotec Inc. It is a medical device manufacturing and distribution company with distribution channels predominately in South Africa, but also in the Middle East, South America, Europe and portions of Asia, with plans to enter the markets in countries such as Australia, Japan and China that have very strict regulatory approval processes. 7 Table of Contents The Company’s business strategy is focused on: 1. maintaining and expanding its existing product portfolio; 2. developing internal manufacturing, quality, regulatory, and commercial capabilities; and 3. evaluating acquisitions, distribution arrangements, or other strategic transactions where management believes they may support the Company’s operations or market access. Our strategy includes investing in the entire value chain, ranging from the importation of raw materials, manufacturing capabilities and the marketing and selling of products, through to the distribution of our products to customers via our sales network. A high-level overview of our strategy follows in this annual report on Form 10-K , which is followed by a discussion on how we implement this strategy. Operating Capabilities The Company’s operations include product development, manufacturing, quality management, regulatory affairs, sales support, and distribution management. Management believes the following operating capabilities are relevant to the Company’s business: experience in developing and manufacturing selected balloon catheter and airway dilation products; manufacturing operations in South Africa, including cleanroom production capabilities; quality management and regulatory processes applicable to medical device manufacturing; distributor relationships in South Africa and selected international markets; experience with product registration and regulatory submissions in selected jurisdictions; and internal technical, quality, regulatory, finance, and administrative support functions. These capabilities are subject to the risks described in Item 1A, including risks relating to regulation, customer concentration, manufacturing, product quality, market acceptance, competition, and the Company’s ability to obtain additional funding if required. The Three Pillars of our Strategy The Company’s strategy is organized around three areas: (1) maintaining and expanding its proprietary product portfolio, (2) developing internal manufacturing, quality, and regulatory capabilities, and (3) evaluating acquisitions, distribution arrangements, or other strategic relationships where management believes they may support the Company’s business. 1. Innovate and Grow our Product Range DISA Medinotec Proprietary Limited develops and manufactures selected medical devices, including products used in cardiology and airway-related procedures. The Company has invested in product development, intellectual property protection, manufacturing processes, and regulatory submissions for certain products. The Company currently has commercially available products and developmental products. Historically, a significant portion of revenue and gross profit has been generated in South Africa. Management’s strategy includes maintaining the existing South African business while seeking opportunities to commercialize selected products in additional markets, including the United States and certain other regulated markets, subject to regulatory clearance, distributor arrangements, market acceptance, pricing, reimbursement, and available resources. The Company also evaluates changes to existing products and new product development opportunities where management believes these may be commercially viable and consistent with the Company’s technical and regulatory capabilities. 8 Table of Contents The products are generally targeted at more complex, specialized surgical cases and are specifically relevant in medical centers of excellence. During 2018, DISA Medinotec Proprietary Limited recognized the need to become a significant player in manufacturing in reaction to the risk of price sensitivity. DISA Medinotec Proprietary Limited currently specializes in niche products within the disciplines of cardiology and respiratory interventions in which we are involved in medical device design, development, manufacture, all supported by a well-trained and educated sales and distribution channel. The specialty areas include: • Interventional Cardiology, which involves surgery performed on the heart and vessels to correct life-threatening conditions. The surgery is performed by minimally invasive intravascular methods depending on the condition to be corrected. • Interventional Endolaryngeal Endoscopy, which involves balloon dilation to treat suitable airway stenosis by ENT surgeons and anesthetists. The Company’s expansion efforts are focused on markets where the relevant procedures are performed and where the Company believes its products may be commercially viable. These efforts may include: identifying and appointing distributors; supporting product training and technical education where appropriate; obtaining or maintaining required regulatory approvals or registrations; supporting product adoption by healthcare providers; and evaluating whether clinical data, publications, or other product information may support market access. There can be no assurance that these activities will result in increased sales, market acceptance, or reduced customer concentration. In addition, we appointed and trained various distributors in the Middle East, Europe, portions of Asia and South America, with several training initiatives also held in the USA where FDA approval have been granted for the Trachealator and Outflo following the 510(k) substantially equivalence process for Class II medical devices. This has enabled us to start sales in the USA. Demand for the Company’s products is affected by procedure volumes, healthcare infrastructure, hospital purchasing patterns, reimbursement, pricing pressure, regulatory requirements, and broader economic conditions in the markets in which the Company operates. The Company’s current revenue remains concentrated in South Africa, although management continues to evaluate opportunities in other markets where regulatory and commercial conditions support market entry. The United States is an important target market for the Company because certain of its products have received, or may in the future seek, FDA 510(k) clearance. U.S. sales for fiscal 2026 were $611,860, representing 6% of total sales, compared to $678,105, representing 7% of total sales, in fiscal 2025. The Company’s ability to increase U.S. revenue will depend on factors including regulatory clearance, product adoption, distributor or sales arrangements, reimbursement, pricing, competition, and available capital. Key Market Trends and Our Response to These Medical device markets are affected by demand for less invasive procedures, hospital cost controls, reimbursement practices, product innovation, and competition. These factors may create opportunities for products used in minimally invasive procedures, but they may also increase pricing pressure and require ongoing investment in product development, regulatory compliance, quality systems, and commercial support. The Company seeks to respond to these trends by maintaining its current product portfolio, evaluating product development opportunities, managing manufacturing costs, and supporting regulatory submissions in selected markets. The Company’s ability to benefit from these trends is subject to market acceptance, regulatory clearance, reimbursement, competition, and the risks described in Item 1A. 9 Table of Contents Major shifts in industry market share have occurred in connection with product problems, physician advisories, safety alerts, results of clinical trials to support superiority claims, and publications about products, reflecting the importance of product quality, product efficacy and quality systems in the medical device industry. In the current environment of managed care, economically motivated customers, consolidation among healthcare providers, increased competition, and declining reimbursement rates, we have been increasingly required to compete on the basis of price. In order to continue to compete effectively, we must continue to create or acquire advanced technology, incorporate this technology into proprietary product offerings, obtain regulatory approvals in a timely manner, maintain high-quality manufacturing processes, and successfully market these products. Government and private sector initiatives to limit the growth of healthcare costs, including price regulation, competitive pricing, bidding and tender mechanics, coverage and payment policies, comparative effectiveness of therapies, technology assessments and managed-care arrangements, are continuing in many countries in which the Medinotec Group does business, including the US. These initiatives put increased emphasis on the delivery of more cost-effective medical devices and therapies. Government programs, including Medicare and Medicaid, private healthcare insurance and managed-care plans have attempted to control costs by limiting the amount of reimbursement they will pay for particular procedures or treatments, tying reimbursement to outcomes, shifting to population health management, and other mechanisms. Hospitals, which purchase our technology, are also seeking to reduce costs through a variety of mechanisms, including, for example, centralized purchasing, and in some cases, limiting the number of vendors that may participate in the purchasing program. Hospitals are also aligning interests with physicians through employment and other arrangements, such as gainsharing, where a hospital agrees with physicians to share any realized cost savings resulting from changes in practice patterns such as device standardization. This has created an increased level of price sensitivity among customers for our products. The Company may seek additional distributor relationships, strategic relationships, or financing arrangements to support its activities in North America and other selected markets. There can be no assurance that such arrangements will be available on acceptable terms or that they will result in increased revenue. Our Competitor Landscape The Medinotec Group of Companies operates in highly competitive medical device markets characterized by a number of large, multinational players as well as a number of small, regional or local distributors. Some of the major players include Johnson & Johnson, Boston Scientific, Cook Medical, Cordis, B. Braun, Teleflex, Medtronic, Merit Medical, Endotec, Conmed and Cadence. Competition is based on price, consistency and quality of product, site location, distribution capability, customer service, reliability of supply, breadth of product offering and technical support. The principal competitive factors in these markets are product features, value-added solutions, reliability, clinical evidence, reimbursement coverage, and price. We compete with many companies having significantly more capital resources, larger research laboratories and more extensive distribution systems. As a smaller company with limited market share, we are particularly vulnerable to these competitive pressures, especially as we seek to expand commercialization of our proprietary devices into the highly regulated and competitive United States market. As such, there are no assurances that we will be able to compete and gain market share. 10 Table of Contents 2. Build our Competencies The Company has invested in its Johannesburg manufacturing facility, including cleanroom production capacity, laboratory space, packaging areas, sterilization capabilities, and equipment used in the development and manufacture of selected medical devices. The facility supports activities conducted under the Company’s ISO 13485 Quality Management System. The Company’s manufacturing capabilities include processes relevant to balloon catheter and related device production, including balloon forming, bonding, coating, catheter lamination, packaging, and sterilization-related activities. These capabilities support the Company’s current products and certain product development activities. At present, management does not intend to prioritize significant additional expansion of the production facility. The Company expects to focus available resources on maintaining current operations, supporting regulatory and quality requirements, product development, and commercial activities. 3. Make Strategic Bolt-on Acquisitions While strategic bolt-on acquisitions remain a consideration in our business plan, we currently have no active due diligence processes underway and no imminent acquisition transactions at this time. Our Implementation Plan The Company’s implementation plan is focused on the following operating priorities: maintaining manufacturing and quality processes for existing products; supporting regulatory compliance and product registrations in selected jurisdictions; managing distributor and customer relationships in South Africa and selected international markets; evaluating product development opportunities that align with the Company’s technical, regulatory, and financial resources; managing inventory levels to support expected demand while limiting excess or obsolete inventory; managing operating costs and working capital; and evaluating acquisitions, distribution arrangements, or other strategic transactions where management believes they may be commercially appropriate. The Company’s ability to execute this plan depends on, among other factors, available capital, regulatory approvals, supplier performance, production capacity, customer demand, distributor performance, reimbursement, competition, and macroeconomic conditions. Product Distribution We have appointed various distributors to grow sales internationally, especially in Europe, North America, South America, Middle East, portions of Asia as well as Namibia and Mauritius. As of February 28, 2026, the Company was represented in approximately 45 countries and had 31 appointed distributors globally. Product registrations were received in several additional jurisdictions during fiscal 2026, while registrations remained pending in certain other jurisdictions. All exports are managed directly from South Africa by the Company’s export manager. We have had several training initiatives held in the US where FDA approval has been granted for both the Trachealator and Outflo following the 510(k) substantially equivalence process for Class II medical devices 11 Table of Contents The Company intends to continue evaluating distributor arrangements and regulatory requirements in additional markets, including Australia, Japan, and China. Entry into these markets would be subject to local regulatory approvals, commercial feasibility, distributor arrangements, and available resources. Through the operating subsidiary DISA Medinotec Proprietary Limited, we ship our products to customers directly by freight or by air and through our network of in-house and courier partners. Recent market trends have resulted in more product volumes being transported by high-efficiency road freight. The Company maintains distribution facilities in Johannesburg, South Africa and New York, United States of America. These facilities support access to road and air freight routes. The Company evaluates its distribution arrangements from time to time to manage delivery timing, inventory availability, freight costs, and customer requirements. Product Manufacturing – Quality Assurance and Regulatory Requirements Quality Management The Company maintains documented procedures and a Quality Management System (“QMS”) intended to support compliance with ISO 13485, the European Union Medical Device Regulation 2017/745, U.S. FDA 21 CFR 820 regulations, and applicable South African regulatory requirements. Our QMS is implemented through the Medinotec Group of Companies’ policies, procedures and work instructions followed and utilized by all departments. We also maintain an active post-market surveillance program, which enables product performance to be regularly assessed and to be reported to the regulatory authorities if any incident/malfunction occurs that results in severe injury to the patient or death. Additionally, we maintain quality standards relevant to the storage and distribution of our products. These include technical/quality agreements with our suppliers. Since we import raw materials, all manufacturing of the products is performed in DISA Medinotec South Africa’s clean room facilities, and all instructions and quality manuals are written to convert a series of raw materials into finished goods against the applicable quality assurance standards and internal procedures. No manufacturing steps are outsourced at the moment. Compliance to all procedures is monitored via an internal audit system and augmented by audits conducted annually by European and American Notified Bodies. International Quality Regulations Many of our products require CE marking before they can be sold in the European Union. CE marking indicates that a product has been assessed by the manufacturer and deemed to meet EU safety, health and environmental protection requirements. Most of our products carry the CE Mark. It is required for products manufactured anywhere in the world that are then marketed in the European Union. Most of our products carry the CE Mark, ensuring conformity to the legal requirements of the European Union. The valid CE certificates for the devices concerned have been issued in compliance with the Medical Device Directive 93/42/EEC and these devices could initially be placed on the market until May 2024, but an extension has been granted till the end of 2027 due to the European Notified Bodies being unable to handle the volume of the applications. The Company is in the process of addressing applicable requirements under the Medical Device Regulation (MDR) 2017/745. The Trachealator has been certified under this regulation, and technical files for certain remaining products are under review by DEKRA. 12 Table of Contents DEKRA is a global testing, inspection, and certification organization. In Europe, DEKRA is recognized as a Notified Body for medical devices, meaning it is authorized by the European Union to assess whether medical devices comply with EU regulations and standards. This involves evaluating the design, manufacturing process, and quality management systems of medical devices to ensure they meet the required safety and performance criteria before they can be marketed in the EU. DEKRA's role includes conducting conformity assessments, issuing CE certifications, and performing post-market surveillance to ensure ongoing compliance. The Company has obtained FDA 510(k) clearance for the Trachealator, and U.S. sales have commenced. FDA 510(k) clearance has also been obtained for Outflo, and the company is currently implementing marketing strategies in the United States with sales expected to commence in fiscal 2027. There can be no assurance as to the timing or outcome of any pending or future FDA submissions. In addition, we are subject to numerous and increasingly stringent environmental laws and regulations concerning, among other things, the generation, handling, storage, transportation, treatment and disposal of toxic and hazardous substances, the discharge of pollutants into the air and water and the cleanup of contamination. We are required to maintain and comply with environmental permits and controls for some of our operations, and these permits are subject to modification, renewal, and revocation by the issuing authorities. Our environmental compliance may increase in the future because of changes in environmental laws and regulations or increased manufacturing activities at any of our facilities. We could incur significant costs or liabilities because of any failure to comply with environmental laws, including fines, penalties, third-party claims, and the costs of undertaking a clean-up on-site or at a site to which any waste materials were transported. In addition, we are planning to grow in part by acquisition, and our diligence may not have identified environmental impacts from historical operations at sites we may acquire in the future. We have an extensive health and safety program. This also stipulates how we handle waste materials and staff safety in the cleanroom facility. Our health and safety costs are included in our compliance costs. The Medinotec Group of Companies for the Years Ended February 28, 2026 February 28, 2025 Compliance cost $ 362,172 $ 526,603 It should be noted that as we approach market and sales readiness with our products our compliance costs are increased to facilitate the path to sell products into new territories and to ensure legal and statutory compliance in these markets. The fluctuations in annual and quarterly compliance costs can be attributed to these new markets being prepared for sales activities. Compliance costs decreased during fiscal 2026 compared to fiscal 2025, primarily due to lower audit fees following the change in the Company’s independent registered public accounting firm, as well as higher prior-year costs associated with seeking FDA approval for OutFlo, which was granted in March 2025. Medical Device Regulation Regulatory approvals and market acceptance are material to the Company’s business. The regulatory approval process for medical devices, including FDA clearance in the United States and CE/MDR certification in Europe, can be lengthy, costly, and uncertain. If the Company is unable to obtain or maintain required approvals, clearances, registrations, or certifications, or if approvals are delayed, the Company may be unable to commercialize certain products or may experience delays in commercialization. Even where regulatory clearance or certification is obtained, there can be no assurance that the relevant products will achieve market acceptance. See below and Item 1A. Risk Factors for further discussion of regulatory, compliance, and environmental risks in connection with our medical device products. 13 Table of Contents Regulation of Medical Devices in Europe Medical devices placed on the market in the European Economic Area must comply with the Medical Device Regulation (MDR) (EU) 2017/745, which sets out the essential safety and performance requirements that all devices must meet. Under the MDR, manufacturers must undergo a conformity assessment process (typically involving an independent accredited Notified Body for higher-risk devices) to demonstrate compliance before the device can be CE-marked and legally sold throughout the EEA. The Company maintains CE Mark certification for most of its products and is progressing toward full compliance with the MDR. The Trachealator has been certified under the MDR, and technical files for the remaining products are under review by the Notified Body. Regulation of Medical Devices in South Africa In South Africa, medical device manufacturing is regulated by the South African Health Products Regulatory Authority (“SAHPRA”), with guidelines published in the Government Gazette No. 40480 in 2016, which refer to licensing of medical devices establishments and the registration required to ensure an acceptable level of safety, quality, and performance. DISA Medinotec Proprietary Limited is registered with SAHPRA and possesses the above-described licenses and registrations for all our products. Regulation of Medical Devices in Other Key Markets Australia, Japan, and China have their own independent regulatory systems (Therapeutic Goods Administration – TGA; Pharmaceuticals and Medical Devices Agency – PMDA; National Medical Products Administration – NMPA respectively) and do not automatically accept CE marking or FDA clearance. Separate local registrations, testing, and compliance requirements apply in these jurisdictions. The Company is also subject to numerous and increasingly stringent environmental, health and safety laws and regulations in the jurisdictions in which it operates. Federal, State, and Foreign Fraud and Abuse and Physician Payment Transparency Laws. In addition to FDA restrictions on the marketing and promotion of our medical devices, other federal, state and foreign laws may restrict our business practices particularly as we expand commercialization of our products into the United States and other markets where our devices may be reimbursable under government healthcare programs. These laws include, without limitation, anti-kickback, false claims laws, and physician payment transparency laws. The federal Anti-Kickback Statute prohibits knowingly and willfully offering, paying, soliciting, or receiving any remuneration (in cash or in kind) to induce or reward the purchase, order, or recommendation of any item or service reimbursable, in whole or in part, under Medicare, Medicaid, or other federal healthcare programs. Violation of the Anti-Kickback Statute can also result in liability under the Civil Monetary Penalties Law (originally enacted as the Civil Monetary Penalty Act of 1981). Current penalties under the Civil Monetary Penalties Law can reach up to $100,000 per violation plus three times the amount of the remuneration, as well as exclusion from federal healthcare programs such as Medicare and Medicaid. The federal False Claims Act prohibits knowingly presenting or causing to be presented a false or fraudulent claim for payment to the federal government, or knowingly making or using a false record or statement material to a false or fraudulent claim. Liability can arise even without specific intent to defraud. Private parties may bring “qui tam” lawsuits on behalf of the government and share in any recovery. Penalties include civil fines ranging from $14,308 to $28,619 per false claim, plus up to three times the damages sustained by the government, and potential exclusion from federal healthcare programs. The criminal False Claims Act imposes additional penalties for knowingly presenting a false claim to the government. 14 Table of Contents The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) also created federal criminal statutes prohibiting schemes to defraud healthcare benefit programs (including private payers), embezzlement from such programs, and making false statements in connection with the delivery of or payment for healthcare services. Many states have similar fraud and abuse laws that may be broader than their federal counterparts and apply regardless of the payor. In addition, many foreign jurisdictions in which we operate or plan to operate, including the European Union and South Africa, have analogous laws restricting improper payments and promotional activities involving healthcare professionals. The Physician Payments Sunshine Act (now administered through the federal Open Payments program) requires manufacturers of drugs, biologics, and medical devices covered by Medicare, Medicaid, or CHIP to report annually to the Centers for Medicare & Medicaid Services certain payments or other transfers of value made to physicians, teaching hospitals, and other covered recipients. We are subject to these reporting requirements as we commercialize our devices in the United States. Failure to comply with these transparency and fraud and abuse laws could result in significant civil and criminal penalties, exclusion from government programs, and reputational harm. Data Privacy and Security Laws. In addition to other regulatory requirements, we are or may become subject to various federal, state, and foreign laws governing the collection, use, disclosure, and protection of personal information, including protected health information (“PHI”) and other sensitive data. These laws include the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), the European Union General Data Protection Regulation (“GDPR”), and the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act (“CCPA/CPRA”). HIPAA establishes national standards for the privacy and security of PHI. It applies to covered entities (such as healthcare providers and plans) and their business associates (including contractors or agents that create, receive, maintain, or transmit PHI on behalf of a covered entity). HIPAA requires safeguards to protect the confidentiality, integrity, and availability of electronically transmitted or stored PHI, restricts the use and disclosure of PHI, and grants individuals certain rights regarding their health information (such as the right to access or amend records). In the event of a breach of unsecured PHI, HIPAA mandates notification to affected individuals without unreasonable delay and no later than 60 days after discovery. Breaches affecting 500 or more individuals must also be reported to the U.S. Department of Health and Human Services (HHS) and the media. Failure to comply with HIPAA’s privacy and security rules can result in civil monetary penalties of up to $71,000 per violation (adjusted for inflation), with an annual maximum of approximately $2.1 million for identical violations, as well as potential criminal penalties. Many states have data privacy and breach notification laws that are broader than HIPAA or apply regardless of payor. For example, the CCPA/CPRA grants California residents rights to access, delete, and opt out of the sale of their personal information and creates a private right of action for certain data breaches. Although exceptions exist for PHI regulated by HIPAA, the CCPA/CPRA may still apply to certain personal data we process outside of covered healthcare activities. In the European Economic Area, the GDPR and related national laws impose strict requirements on the processing of personal data, including special categories of data such as health information. As we expand operations and potentially process data of EEA individuals (including employees, customers, patients, or clinical trial participants), we must ensure compliance with GDPR principles such as lawful basis for processing, data minimization, security, and accountability. Violations of the GDPR can result in fines of up to 4% of global annual turnover or €20 million, whichever is greater. We maintain policies, procedures, and technical safeguards designed to protect personal and health information; however, as we commercialize our devices in the United States and other regulated markets and handle increasing volumes of patient or clinical data, our exposure to these laws will grow. 15 Table of Contents Healthcare Reform. The U.S. and certain foreign jurisdictions continue to consider or have enacted legislative and regulatory changes to the healthcare system that could affect our ability to sell our products profitably. Policymakers and payors remain focused on containing healthcare costs while seeking to improve quality and expand access. These efforts include ongoing cost-containment measures, value-based payment models, and reforms to reimbursement for medical devices. In the United States, recent initiatives such as the One Big Beautiful Bill Act of 2025 and the new CMS/FDA RAPID coverage pathway (announced in April 2026) aim to accelerate Medicare reimbursement for certain breakthrough devices following FDA approval. While these developments could benefit our U.S. commercialization efforts for products such as the Trachealator and Outflo catheters, broader cost-containment pressures—including site-neutral payments, expanded use of ambulatory surgical centers, and ongoing scrutiny of device pricing—may limit coverage of or reduce reimbursement for procedures using our devices. Any such changes could reduce demand for our products or create additional pricing pressure. In the European Union, the Health Technology Assessment Regulation (effective since January 2025) requires Joint Clinical Assessments for high-risk medical devices, which may influence national reimbursement decisions. In South Africa, the phased implementation of National Health Insurance (NHI) continues, with Phase 2 (2026–2028) focused on centralized purchasing and reimbursement reforms that could affect our local distribution and pricing strategies. We expect additional state, federal, and foreign healthcare reform measures to be adopted in the future. Any of these could limit the amounts that governments or private payors will reimburse for our products or the procedures in which they are used, potentially reducing demand or increasing pricing pressure. Our Key Products The Company’s key products include the Trachealator, the Outflo Aortic Valve Dilation Balloon Catheter, and the Cape Cross family of balloon catheters. Certain additional products remain in development or are subject to regulatory review. The discussion below summarizes the Company’s principal products and selected developmental products. The Trachealator The Trachealator is a non-occlusive airway dilation balloon intended for use in selected airway dilation procedures. Tracheal and bronchial stenosis can arise from a number of causes and may require one or more dilation procedures, depending on the patient and clinical circumstances. The Trachealator received CE Mark approval in 2019 and FDA 510(k) clearance in November 2021. The product is sold in selected markets, including parts of Europe, the Middle East, South America, portions of Asia, South Africa, and the United States. In May 2021, the product received a Gold Medal in the Medical Design Excellence Awards. The Trachealator received the CE Mark of approval by a European notifying body (DEKRA). CE Marking is a qualification mandatory for any product to be sold in countries of the European Union. The USA recognizes only an FDA approval to accept products in its market – a 510(k) accreditation that was obtained in November 2021 for the Trachealator and sales has since commenced in the USA. 16 Table of Contents FDA clearance and CE/MDR certification may support regulatory submissions or market access in certain jurisdictions, but medical device approval requirements differ by country. Some jurisdictions require additional local registrations, testing, certifications, or quality requirements before a product may be sold. The Company evaluates market entry requirements on a jurisdiction-by-jurisdiction basis. For example, Australia (Therapeutic Goods Administration – TGA), Japan (Pharmaceuticals and Medical Devices Agency – PMDA), and China (National Medical Products Administration – NMPA) have their own independent regulatory systems and do not automatically accept CE marking or FDA clearance. The Trachealator The Trachealator Outflo Aortic Valve Dilation Balloon Catheter The Outflo Aortic Perfusion and Dilation Catheter is a non-occlusive perfusion balloon to allow the expansion of the aortic valve without impeding the cardiac output. The product is intended for use in selected procedures involving post-dilation of an artificial valve in TAVI (Transcatheter Aortic Valve Implantation), where clinically appropriate. 17 Table of Contents FDA clearance was obtained on March 11, 2025. Outflo is currently marketed in South Africa, and marketing activities in the United States commenced during the fourth quarter of fiscal 2026. Outflo Aortic Valve Dilation Balloon Catheter The Cape Cross PTCA Catheter The Company designed and developed the Cape Cross range of semi-compliant coronary PTCA catheters. The product has obtained CE Mark approval and is sold in South Africa and selected international markets. A PTCA catheter is inserted either from the groin or the arm and threaded through the blood vessels, through the aorta into the heart. The cardiac surgeon and/or interventional cardiologist will move the catheter to the blocked artery (plaque). The balloon part of the catheter is inflated to open the blockage in the artery, after which the balloon is deflated, and the entire catheter withdrawn and removed. If this procedure is not effective enough to open the artery, a coronary stent will be placed inside the diseased area of the artery. The Cape Cross PTCA Catheter Cape Cross Non-Compliant (“NC”) Catheter The Cape Cross NC Catheter was developed as a non-compliant balloon catheter for post-dilation procedures. The product has obtained CE Mark approval and is sold in South Africa and selected international markets. After placement of a stent, a non-compliant balloon catheter may be used to assist with stent apposition, depending on the clinical circumstances. 18 Table of Contents The Cape Cross Non-Compliant (“NC”) Catheter The Micro CTO Catheter (Developmental) The Company has developed a micro CTO (Chronic Total Occlusion) balloon catheter range with diameters from 0.70 mm to 1.25 mm as a size range extension to the Cape Cross PTCA Catheter. The product is intended for use in selected coronary cases involving chronic total occlusions, subject to applicable regulatory approvals or certifications. The technical file was submitted to the Company’s Notified Body at the end of July 2023 and remains under review. The process of seeking FDA clearance for the Cape Cross PTCA catheter range through the 510(k) substantial equivalence process commenced in January 2024. There can be no assurance as to the timing or outcome of this process. StaXstop Catheter (Developmental) The StaXstop Catheter is an epistaxis catheter intended for use in the management of nasal bleeding. The product remains in the development pipeline and is currently subject to research and development, testing, pre-production prototyping, and related product validation activities. The Company expects that the product will require FDA 510(k) clearance before it may be marketed in the United States. Septus Balloon (Developmental) The Septus Balloon is a nasal fracture balloon intended for use in selected nasal procedures. The product remains in the development pipeline and is currently subject to research and development, testing, and pre-production prototyping activities. Further development, regulatory review, and commercialization assessments will be required before the product may be marketed in applicable jurisdictions. Vaultseal Balloon (Developmental) The Vaultseal Balloon is a balloon product intended for use in selected gynecological procedures. The product remains in the development pipeline and is currently subject to research and development, testing, and pre-production prototyping activities. The Company will continue to evaluate the product’s regulatory pathway, commercial feasibility, and timing of any potential market introduction. 19 Table of Contents Product Development Pipeline The following distinct and finite developmental phases / stages are applicable to all our product pipeline, namely: 1) R&D 2) Pre-production prototyping 3) Testing 4) Production 5) Clinical trials 6) MDR/CE Mark accreditation 7) Local marketing & selling 8) International sales outside the US 9) FDA 510 (k) approval 10) Sales to the United States. The products described have reached the following stages: Trachealator: FDA 510(k) clearance and CE/MDR certification obtained. The Company continues to supply Trachealators to private and academic hospitals throughout the United States. OutFlo Aortic Valve Dilation Balloon Catheter: FDA clearance was obtained on March 11, 2025. Outflo is in market in South Africa, and extensive marketing in the United States has commenced during the fourth quarter of fiscal 2026. Cape Cross PTCA Catheter: Application for FDA 510(k) clearance in progress with external consultants. Final submission pending. CE certification under the MDD has been obtained, and is still valid under Regulation (EU) 2023/607. CE certification under the MDR is in progress. Cape Cross NC Catheter: Application for FDA 510(k) clearance in progress with external consultants. Final submission pending. CE certification under the MDD has been obtained, and is still valid under Regulation (EU) 2023/607. CE certification under the MDR is in progress. 20 Table of Contents Micro CTO Catheter : R&D, testing, and pre-production prototyping completed. Technical File submitted to the Notified Body in July 2023 and remains under review as of the date of this report. StaXstop Catheter: Developmental / Pipeline: An epistaxis catheter - R&D, Testing, Pre-Production Prototyping, Testing, Production, Clinical Trials – FDA 510(k) exempted (Class I product) Septus Balloon: Developmental / Pipeline: A nasal fracture balloon – R&D Testing, Pre-Production Prototyping, Testing. Vaultseal Balloon: Developmental / Pipeline: A gynae vaginal vault sealing balloon: R&D Testing, Pre-Production Prototyping, Testing. See Item 1A. Risk Factors for a discussion of risks associated with product development, clinical trials, and regulatory approvals. Intellectual Property The Medinotec Group of Companies currently holds various product registration certificates and operating licenses, which allow us to operate as an importer of raw materials for the manufacture of medical devices and an exporter and distributor of these products within the territories we service. We also hold various patents, trademarks, and other intangible proprietary rights that are considered material to the business and its ability to compete effectively with other companies. The Medinotec Group pursues patent protection in selected jurisdictions where management believes such protection is appropriate for patentable subject matter in its products. The Company also reviews publicly available third-party patents and patent applications where relevant to its product development and commercialization activities. These activities are intended to support the Company’s intellectual property position and reduce the risk of infringing third-party rights, although there can be no assurance that these efforts will be effective. Due to the Trachealator being fairly new, patent applications for the Trachealator have been filed in the following countries or regions: USA, European Union, China, Australia, Korea and South Africa. All other products are either not novel enough to file a patent or not yet developed far enough to start filing processes. The status of these applications is listed below: 1) USA: Patent No. 12,036,376, B2 has been granted on July 16, 2024. This patent is valid until April 28, 2040. 2) China: Patent No. 201880086558.2 has been granted on March 31, 2023. This patent is valid until December 12, 2038. 3) South Korea: Patent No. 10-2635372 has been granted on February 5, 2024. This patent is valid until September 4, 2040. 4) European Union: European Community Registered Patent No. 18903920.9 / has been granted with effect from March 5, 2025. The patent is valid until March 4, 2045. 5) South Africa: Patent No. 2020/02618 has been granted on July 27, 2022. This patent is valid until July 27, 2040. 6) Australia: Australian Registered Patent No. 2018406682 / has been granted on December 12, 2025. The patent is valid until December 11,2038. No patents have been licensed from third parties. 21 Table of Contents Trade Secrets With respect to some of our products, Medinotec Group of Companies rely principally on trade secrets, rather than patents, to protect proprietary processes, methods, documentation, and other technologies, as well as certain other business information. Although the Medinotec Group of Companies seek patents from time to time as discussed above, patent protection for other industrial and specialty products requires a costly federal registration process with an uncertain outcome that would place confidential information in the public domain. The Company sells to or through hospitals, clinics, third-party healthcare providers, distributors, governmental healthcare programs, and group purchasing organizations. A significant portion of the Company’s revenue is generated through distributor relationships, including DISA Life Sciences in South Africa. Research and Development All R&D is conducted within the Medinotec Group of Companies, which employs the necessary engineers, and technical and support personnel. The in-house technical expertise includes biomedical engineering and product design. The R&D team focuses primarily on developing new products and supporting existing products. Condition of Physical Assets and Insurance Parts of the Medinotec Group of Companies are capital intensive and require ongoing capital investment for the replacement, modernization and/or expansion of equipment and facilities. We therefore maintain insurance policies against property loss and business interruption and insure against other risks that are typical in the operation of the business, in amounts that we believe to be reasonable. Where costs are deemed to be commercially unviable, we self-insure. Such insurance, however, contains exclusions and limitations on coverage, particularly with respect to environmental liability and political risk. There can thus be no assurance that claims would be paid under such insurance policies in connection with a particular event. Primary Customers Medinotec Group of Companies primary customers include hospitals, clinics, third-party healthcare providers, distributors, and other institutions, including governmental healthcare programs and group purchasing organizations (“GPOs”). We also benefit from strong and long-standing relationships with customers in each of the industrial and specialty products end markets we serve. Third Party Coverage and Reimbursement Healthcare providers that purchase medical devices generally rely on third-party payors, including private payors, such as indemnity insurers, employer group health insurance programs and managed care plans, to reimburse all or part of the cost of the products. As a result, demand for our products is and will continue to be dependent in part on the coverage and reimbursement policies of these payors. Possible reductions in, or eliminations of, coverage or reimbursement by third-party payors, or denial of, or provision of uneconomical reimbursement for new products may affect our customers’ revenue and ability to purchase our products. Any changes in the healthcare regulation, payment or enforcement landscape relative to our customers’ healthcare services have the potential to significantly affect our operations and revenue. Additional Information The public may read and copy any materials the Company files with the SEC in the SEC’s Public Reference Section, Room 1580, 100 F Street N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Section by calling the SEC on 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov. 22 Table of Contents