Medinotec, Inc. - Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended May 31, 2026

☐ Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________ to __________

Commission File Number: 000-56737

Medinotec Inc.

(Exact name of registrant as specified in its charter)

Nevada		36-4990343
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

Northlands Deco Park | 10 New Market Street | Stand 299 Avant Garde Avenue

North Riding | South Africa | 2169

(Address of principal executive offices)

+27 87 330 2301

(Registrant's telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol		Name of each exchange on which registered
None		N/A		N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 11,755,548 common shares as of July 15, 2026.

Table of Contents

TABLE OF CONTENTS

		Page

	PART I – FINANCIAL INFORMATION

Item 1:	Consolidated Financial Statements (unaudited for period ended May 31, 2026)	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4:	Controls and Procedures	16

	PART II – OTHER INFORMATION

Item 1:	Legal Proceedings	17
Item 1A:	Risk Factors	17
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3:	Defaults Upon Senior Securities	17
Item 4:	Mine Safety Disclosure	17
Item 5:	Other Information	17
Item 6:	Exhibits	17

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Our unaudited consolidated financial statements included in this Form 10-Q are as follows:

Page Number
F-1	Unaudited Consolidated Balance Sheets as of May 31, 2026 and February 28, 2026;
F-2	Unaudited Consolidated Statements of Operations and Comprehensive Income/(Loss) for the three months ended May 31, 2026 and May 31, 2025;
F-3	Unaudited Consolidated Statements of Stockholders’ Equity / (Deficit) for the three months ended May 31, 2026 and May 31, 2025;
F-4	Unaudited Consolidated Statements of Cash Flows for the three months ended May 31, 2026 and May 31, 2025; and
F-5	Notes to the Unaudited Consolidated Financial Statements.

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Consolidated Financial Statements

Consolidated Balance Sheets of the Medinotec Group of Companies as of May 31, 2026 and February 28, 2026

	May 31, 2026 (Unaudited) $		February 28, 2026 (Audited) $
Assets
Current Assets
Cash		2,518,315		2,757,024
Accounts receivable, net of allowances		2,513,601		2,352,474
Inventory		1,425,422		1,236,373
Other current assets		115,991		73,934
Total Current Assets		6,573,329		6,419,805
Property, plant and equipment, net of accumulated depreciation		345,011		331,346
Deferred tax asset		61,688		48,857
Operating right-of-use asset		5,050		12,880
Total Assets	$	6,985,078	$	6,812,888
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued liabilities		1,126,255		1,086,287
Operating lease liability, current portion		5,929		14,905
Total Current Liabilities		1,132,184		1,101,192
Long Term Liabilities
Loans payable		494		501
Total Liabilities		1,132,678		1,101,693
Stockholders’ Equity
Capital stock $.001 par value; shares authorized 200,000,000; 11,755,548 shares issued and outstanding		11,756		11,756
Capital stock additional paid in capital		3,405,359		3,405,359
Retained Earnings		1,934,631		1,712,617
Accumulated other comprehensive income		500,654		581,463
Total Equity		5,852,400		5,711,195
Total Liabilities and Stockholders’ Equity	$	6,985,078	$	6,812,888

The accompanying notes are an integral part of these Consolidated financial statements.

F-1

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Consolidated Statements of Operations and Comprehensive Income/ (Loss) for the Medinotec Group of Companies for the Quarters Ended May 31, 2026 and May 31, 2025 (Unaudited)


	Three months ended (Unaudited)
	May 31, 2026 $			*May 31, 2025 ()** $
Revenue		2,651,095			2,134,026
Cost of goods sold		(1,343,430	)		(1,220,858	)
Gross profit		1,307,665			913,168
Operating expenses
Selling expenses		(503,255	)		(21,773	)
Depreciation and amortization expense		(21,282	)		(7,506	)
General and administrative expense		(594,286	)		(557,418	)
Research and development expenses		(7,970	)		(49,014	)
Total operating expenses		(1,126,793	)		(635,711	)
Income from operations		180,872			277,457
Non-operating income and expenses
Interest income		16,057			819
Interest expense		(6,868	)		(31,925	)
Other revenue		18,438			16,421
Total non-operating income and expenses		27,627			(14,685	)
Income/(loss) before income taxes		208,499			262,772
Income taxes
Current income taxes		—			(262,846	)
Deferred income taxes		13,515			113,858
Net income		222,014			113,784
Net income per share, basic and diluted		0.02			0.01
Weighted average shares used in computing net income per share, basic and diluted		11,755,548			11,733,750
Other comprehensive income/(loss)
Foreign currency translation gain/(loss)		(80,809	)		(15,791	)
Total comprehensive income/(loss)		141,205			97,993

The accompanying notes are an integral part of these Consolidated financial statements.

* Refer to note 15 regarding reclassifications.

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Consolidated Statements of Stockholders’ Equity for the Quarters Ended May 31, 2026 and May 31, 2025 (Unaudited)


	Common Stock				Common Stock Additional Paid in Capital
	Shares		Amount $		Amount $		Accumulated Comprehensive Income $			Retained Earnings (Deficit) $		Total $
Balance, March 1, 2025		11,733,750		11,734		3,296,391		44,589			918,115		4,270,829
Net income (loss) for the period		—		—		—		—			113,784		113,784
Other comprehensive income / (loss)		—		—		—		(15,791	)		—		(15,791	)
Balance, May 31, 2025		11,733,750		11,734		3,296,391		28,798			1,031,899		4,368,822

Balance, March 1, 2026		11,755,548		11,756		3,405,359		581,463			1,712,617		5,711,195
Net income (loss) for the period		—		—		—		—			222,014		222,014
Other comprehensive income / (loss)		—		—		—		(80,809	)		—		(80,809	)
Balance, May 31, 2026		11,755,548		11,756		3,405,359		500,654			1,934,631		5,852,400

The accompanying notes are an integral part of these Consolidated financial statements.

F-3

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Consolidated Statements of Cash Flows for the Quarters Ended May 31, 2026 and May 31, 2025 (unaudited)


	Three months ended (unaudited)
	May 31, 2026 $			May 31, 2025 $
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		222,014			113,784
Depreciation		21,282			7,506
Foreign currency translation gain/(loss), unrealized		7,513			(17,298	)
Deferred income taxes and tax credits		(13,515	)		(113,858	)
Provision for income taxes		—			262,846	)
Provision for doubtful debt – trade receivables		(76,221	)		24,734
Operating lease liability		(8,492	)		(6,857	)
(Increase)/Decrease in prepayments		(41,268	)		(147,160	)
(Increase)/Decrease in receivables		(172,688	)		(1,589,455	)
(Increase)/Decrease in inventories		(203,452	)		7,496
Increase/(Decrease) in accounts payable and accrued expenses		88,702			699,024
Net cashflow used in operations		(176,125	)		(759,238	)
TOTAL CASH FLOWS USED IN OPERATING ACTIVITIES		(176,125	)		(759,238	)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Payments to acquire property, plant, and equipment		(40,350	)		—
TOTAL CASH FLOWS USED IN INVESTING ACTIVITIES		(40,350	)		—
CASH FLOWS USED BY FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt		—			—
Repayment of debt		—			(37,900	)
TOTAL CASH FLOWS USED BY FINANCING ACTIVITIES		—			(37,900	)
OTHER ACTIVITIES:
Effect of exchange rate on cash and cash equivalents		(22,234	)		(21,672	)
Net decrease in cash and cash equivalents		(238,709	)		(818,809	)
Cash and cash equivalents at beginning of the period		2,757,024			2,769,685
Cash and cash equivalents at end of period		2,518,315			1,950,876

Supplemental disclosures:
Interest income		16,057			819
Interest expense		6,868			31,925

The accompanying notes are an integral part of these Consolidated financial statements.

F-4

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Notes to the Consolidated Financial Statements

For the period ended May 31, 2026

Description of Business

Medinotec Inc. is a U.S.-based company incorporated in Nevada. The Company’s primary operations are conducted through its wholly owned subsidiaries, Medinotec Capital (Pty) Ltd and DISA Medinotec (Pty) Ltd (“DISA Medinotec”), both of which are incorporated in South Africa. Medinotec Capital (Pty) Ltd serves as an investment holding company, whilst DISA Medinotec is engaged in the design, manufacture and distribution of medical devices.

The Company’s operations include the development, manufacture and commercialization of medical devices, as well as the establishment and management of related distribution channels. The Company currently has operations in South Africa and the United States, including operations in Long Island, New York.

The Company conducts sales and distribution activities in South Africa and the United States and may evaluate additional markets from time to time.

The Company’s unaudited 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) clearance through the substantial equivalence process for its Trachealator product in November 2021. The Company also received FDA 510(k) clearance for its Outflo product in March 2025.

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 (EGC) status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

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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 period-end exchange rates and income and expense accounts are translated at average exchange rates in effect during the financial period. Translation adjustments resulting from fluctuations in the exchange rates are recorded in accumulated other comprehensive income, a separate component of stockholders' equity.

Exchange gains or losses incurred foreign exchange currency transactions conducted by one of the Company’s operations in a currency other than the operation’s functional currency are reflected in other revenue/(expense).

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 Incorporated 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 Receivables

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.

An allowance for credit losses is calculated taking into account all accounts older than 91+ days.

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e. Property, plant and equipment

i. Depreciation rates


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

The Company utilizes the straight-line method of depreciation for its assets, which allows for the systematic allocation of the cost of the asset over its useful life. The primary categories of assets include plant and machinery and laboratory equipment, which are depreciated based on their estimated useful lives, typically determined by industry standards and historical experience.

To establish the depreciation rate for each asset, the Company considers several factors, including the asset's purchase price, estimated useful life, and residual value at the end of that life. Useful lives are assessed based on the nature of the asset, technological advancements, and the expected rate of wear and tear. For other supportive assets, such as computer equipment, furniture and fittings, motor vehicles, office equipment, off-the-shelf software, leasehold improvements, and smaller assets, the straight-line method is also applied. Each asset's depreciation rate is reviewed periodically and adjusted if necessary to reflect changes in usage patterns or asset conditions. This method ensures that the expense recognition of these assets is consistent with their utilization and accurately reflects the Company’s financial position.

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 a quarterly 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.

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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.

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 credit losses on notes receivable

The Company maintains an allowance for credit losses on loans receivable in accordance with ASC 326, Financial Instruments—Credit Losses. This allowance reflects management’s estimate of expected credit losses over the contractual life of the loans, considering historical loss experience, current conditions, and reasonable and supportable forecasts. The estimate is developed using a combination of quantitative data and qualitative factors, including borrower creditworthiness, loan-specific risk characteristics, macroeconomic trends, and other relevant information. The allowance is adjusted through a provision for credit losses in the Company’s consolidated statements of operations, and loans are charged off against the allowance when deemed uncollectible.

j. Employee benefit plans

The Company contributes 2.5% of basic salaries 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.

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l. Financial instruments

i. Fair Value Measurements

Fair value accounting is applied for all 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 (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.

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 are recorded in reserves under the heading accumulated comprehensive income. The effect on the reserves for the three months ended May 31, 2026 was a loss of $80,809 compared to a loss of $15,791 for the three months ended May 31, 2025.

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 translation losses for the three months ended May 31, 2026 were $80,809 compared to $15,791 for the three months ended May 31, 2025.

n. Revenue recognition

The Company generates revenues through two distinct revenue sources:

From the sale of Company-developed and manufactured medical devices; and

ii.

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.

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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;

ii.

identify the performance obligations in the contract;

iii.

determine the transaction price;

iv.

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 customer’s 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’s 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 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.

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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 creditworthiness 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 quarter ending May 31, 2026, 87% of the Company's total revenue is derived from this single customer in the distribution environment in South Africa compared to 84% for the quarter ending May 31, 2025.

This table indicates the sales per revenue stream as a breakdown of the total revenue balance:

	Medinotec Inc Group Three months ended
	May 31, 2026 (Unaudited) $		May 31, 2025 (Unaudited) $
Outside of United States of America
Internally Designed/Manufactured Sales		215,349		338,862
Distribution Agreement Sales		2,155,651		1,645,101
Sales Generated inside the United States of America
Internally Designed/Manufactured Sales		280,095		150,063
		2,651,095		2,134,026

o. Segment Reporting

Chief Operating Decision Maker (CODM)

The Company’s CODM is the Chief Executive Officer, who is responsible for strategic decision-making and resource allocation. The CEO, with support from the executive leadership team, regularly reviews financial and operational results segmented by geographic region. These reports form the basis for internal decision-making and operational management.

The Company has determined that it operates in two reportable geographic segments: Inside the United States and Outside the United States. These segments reflect the manner in which the Chief Operating Decision Maker (CODM) assesses financial performance and allocates resources.

Basis of Segmentation

Operating segments are determined based on the internal reports regularly reviewed by the CODM. Geographic segmentation reflects the Company's internal management structure and reporting lines, as operations within the United States and internationally are subject to distinct market, regulatory, and customer dynamics.

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Performance Measures Reviewed by CODM

The CODM evaluates segment performance primarily using income/loss from operations, which includes revenues, cost of goods sold, and major operating expenses. This measure is reviewed regularly and is considered the most relevant indicator of segment profitability and operating efficiency. Segment results are prepared on a basis consistent with the Company’s consolidated financial statements, with no adjustments for intersegment transactions.

Granular Segment Expense Reporting

To support effective decision-making, the CODM reviews segment-level performance at a more detailed level than presented in the consolidated financial statements. Specifically, the CODM receives and evaluates reports that disaggregate significant expenses such as:

	•	Selling Expenses
	•	Depreciation
	•	General and Administrative Expenses
	•	Research and Development Expenses

This level of detail enables the CODM to evaluate cost drivers and profitability more effectively across geographic segments.

The following table sets forth financial information by reportable segment for the periods ending May 31, 2026 and May 31, 2025:

Income/(loss) from operations (In U.S. Dollars)


	Inside the United States						Outside the United States						Total
	2026			2025			2026			2025			2026			2025
Revenue		280,095			150,063			2,371,000			1,983,963			2,651,095			2,134,026
Cost of goods sold		(74,576	)		(47,683	)		(1,268,854	)		(1,173,175	)		(1,343,430	)		(1,220,858	)
Gross profit		205,519			102,380			1,102,146			810,788			1,307,665			913,168
Selling expenses		(84,046	)		(5,355	)		(419,209	)		(16,418	)		(503,255	)		(21,773	)
Depreciation expense		—			—			(21,282	)		(7,506	)		(21,282	)		(7,506	)
General and administrative expenses		(145,481	)		(385,842	)		(448,805	)		(171,576	)		(594,286	)		(557,418	)
Research and development expenses		—			—			(7,970	)		(49,014	)		(7,970	)		(49,014	)
Income/(loss) from operations		(24,008	)		(288,817	)		204,880			566,274			180,872			277,457
Other income/(expenditure)														41,142			(163,673	)
Net income/(loss)														222,014			113,784

Other income/(expenditure) includes items not considered by the CODM at segment level, and consist of items such as interest income, interest expense, current income taxes and deferred income taxes.

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The following table sets forth financial information by reportable segment for the periods ending May 31, 2026 and February 28, 2026:

Total Assets (In U.S. Dollars)

Inside the United States

Outside the United States

Total

May 31 2026

Feb 28 2026

May 31 2026

Feb 28 2026

May 31 2026

Feb 28 2026

Total assets

2,278,901

2,058,119

4,706,177

4,754,769

6,985,078

6,812,888

The major component of total assets is "Cash" of $2,518,315 as of May 31, 2026 and $2,757,024 as of February 28, 2026. A significant portion of this is maintained Inside the United States in USD of $1,863,024 as of May 31, 2026 and $1,816,626 as of February 28, 2026.

p. Cost of goods sold

The 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.

q. General and administrative expenses

General and administrative expenses consist mostly of personnel costs, consulting fees as well as audit fees.

r. Research and development

The Company follows the guidance provided in ASC 730, "Research and Development," in accounting for research and development (R&D) expenses. R&D activities primarily focus on the development of new products through modifications of existing technologies or projects with an established proof of concept. As such, the Company typically incurs R&D expenses related to production support, process improvements, and quality enhancement initiatives.

In accordance with ASC 730, the Company expenses all R&D costs as incurred. This includes costs directly related to research activities, as well as expenses associated with the design, development, and testing of new products and processes.

In instances where R&D projects evolve and the nature of the expenses becomes capital in nature, the Company will evaluate these costs against the following criteria to determine if they should be capitalized:

	•	Technological Feasibility: The project must have reached a stage where technological feasibility has been established. This typically occurs when all necessary design, testing, and evaluation processes have been completed, and the product can be produced to meet its specifications.

	•	Intent to Complete: There must be a clear intention to complete the project for sale or use. This involves assessing whether the Company plans to bring the product to market and if there is a viable market for it.

	•	Future Economic Benefits: The project is expected to generate future economic benefits, such as revenue from product sales or cost savings from process improvements.

	•	Directly Attributable Costs: The costs being evaluated for capitalization must be directly attributable to the development of the product or process, including materials, labor, and overhead.

Any costs deemed eligible for capitalization will be recorded as assets and amortized over their useful lives, while all other R&D expenditures will continue to be expensed in the period incurred.

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s. Interest expense

Interest expense is primarily attributable to an unsecured loan from Minoan Medical that accrued interest at the prevailing South African prime lending rate. The loan was fully settled by August 31, 2025, after which no additional interest expense was recognized. At the settlement date, the South African prime lending rate was 10.50%. Management believes the terms of the loan were market-related.

t. Earnings per share

Basic Earnings Per Share (EPS)

Basic earnings (loss) per share are computed based on the weighted average number of common shares outstanding during the reporting period. This calculation provides a straightforward measure of the Company’s earnings attributable to each share.

Diluted Earnings Per Share (EPS)

The diluted earnings per share is computed by giving effect to all potentially dilutive securities outstanding for the period, by applying the treasury stock method. 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. There were no potentially dilutive securities outstanding or issuable as at May 31, 2026; accordingly, no additional shares have been included in the diluted earnings per share calculation.

Treasury Stock Method

For options and warrants, the Company employs the treasury stock method to calculate the dilutive effect. Under this method, it is assumed that the proceeds from the exercise of options and warrants would be used to repurchase common shares at the average market price during the period. The number of shares repurchased is then subtracted from the total number of shares that would be issued upon exercise, resulting in the net increase in shares outstanding. This method effectively illustrates the potential dilution impact of these securities on earnings per share.

u. Principles of consolidation

i. Consolidated - all intercompany transactions eliminated

The consolidated financial statements include the accounts of Medinotec Inc., Medinotec Capital (Pty) Ltd and the financial statements of DISA Medinotec (Pty) Ltd, known as “the Company”. All intercompany transactions have been eliminated.

v. Use of estimates

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. As detailed in the Critical Accounting Estimates section above, the key accounting estimates are as follows:

• Allowance for credit losses

• Inventory: Valuation, costing and obsolescence

• Deferred tax assets

Management continually evaluates these estimates and assumptions based on historical experience and various other factors, including current market conditions. Changes in these estimates may have a material effect on the Company’s financial position and results of operations.

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w. Recently issued accounting standards

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The guidance requires additional disclosures intended to improve transparency regarding the nature of expenses included in certain income statement captions. For public business entities, the guidance is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the effect that adoption of this guidance will have on its consolidated financial statement disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reportable segment disclosure requirements, primarily through expanded disclosures regarding significant segment expenses. The Company adopted this guidance during the year ended February 28, 2026. Adoption did not have a material effect on the Company’s consolidated financial statements, but did affect certain segment disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and usefulness of income tax disclosures, primarily through expanded rate reconciliation and income taxes paid disclosure requirements. For public business entities, the guidance is effective for annual periods beginning after December 15, 2024. For entities other than public business entities, the guidance is effective for annual periods beginning after December 15, 2025. The Company is an emerging growth company and has elected to use the extended transition period for complying with new or revised accounting standards. Accordingly, the Company expects to adopt ASU 2023-09 for the fiscal year beginning March 1, 2026. The Company is currently evaluating the impact of the guidance, but does not expect adoption to have a material effect on its consolidated financial statements. The guidance is expected to affect the presentation and content of the Company’s income tax disclosures.

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 May 31, 2026 and February 28, 2026, 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.

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4. Property, plant and equipment

Property, plant and equipment consist of the following:


	May 31, 2026 (unaudited) $			Feb 28, 2026 $
Computer software		1,133			1,133
Motor vehicles		11,889			11,889
Plant and machinery		1,148,356			1,145,734
Furniture and fittings		99,098			99,098
Computer equipment		185,056			146,437
Laboratory equipment		239,834			239,834
Total cost		1,685,366			1,644,125
Foreign currency adjustment		121,247			120,874
Total accumulated depreciation		(1,461,602	)		(1,433,653	)
Total		345,011			331,346

Depreciation of property, plant and equipment totaled approximately $21,282 for the period ending May 31, 2026 compared to $17,228 for the period ending May 31, 2025.

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 $6,668 was allocated to Cost of Goods Sold for the period ending May 31, 2026, compared to $16,448 for the period ending May 31, 2025.

5. Accounts receivable, net of allowances

a. Accounts receivable by period

Accounts receivable consist of the following:


	May 31, 2026 (unaudited) $			Feb 28, 2026 $
Trade accounts receivable		2,536,260			2,451,911
Allowance for expected credit losses		(22,659	)		(99,437	)
Total		2,513,601			2,352,474

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6. Inventories

a. Accounts by period

Inventory consists of the following:


	May 31, 2026 (unaudited) $			Feb 28, 2026 $
Raw materials		312,971			282,316
Work in progress		42,513			26,836
Finished goods		866,577			978,578
Inventory in transit		253,698			—
Less provisions for obsolescence		(50,337	)		(51,357	)
Total		1,425,422			1,236,373

7. Other current assets

a. Other current assets by period

Other current assets consist of the following:


	May 31, 2026 (unaudited) $		Feb 28, 2026 $
Prepayments		93,172		50,390
Deposits paid		435		3,148
Other receivables		22,384		20,396
Total		115,991		73,934

8. Loans Payable

a. Loans from related parties

	May 31 2026 (unaudited) $			Feb 28 2026 $
Minoan Medical Proprietary Limited
Opening balance		187			940,001
Interest		—			58,731
Received/Issued		—			620,202
Repayments		—			(1,661,932	)
Foreign exchange difference		—			43,185
Closing balance		187			187

Minoan Capital Proprietary Limited
Opening balance		314			276
Foreign exchange difference		(7	)		38
Closing balance		307			314

Total debt		494			501

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Minoan Medical Proprietary Limited:

Loans payable include an unsecured loan of $187 from Minoan Medical, the prior parent entity of DISA Medinotec in South Africa. This loan was initially obtained to support the working capital and capital expenditure expansions of DISA Medinotec during its developmental and startup phases. Following the acquisition of DISA Medinotec on March 2, 2022, the Company assumed this liability.

Under the terms of the loan agreement, the loan was repayable within three years following the occurrence of an initial public offering, defined in the agreement as the point at which the business had achieved sufficient growth to list on a national exchange. During this period, the loan accrued interest at the prevailing South African prime lending rate. At August 31, 2025 the date at which the substantial majority of the loan was settled, the South African prime lending rate was 10.50%. Management believes the terms of the loan were market-related.

During the fiscal year ended February 28, 2026, substantially all amounts previously reflected in loans payable were extinguished through a tripartite set-off and settlement agreement in terms of which DISA Life Sciences undertook to settle the loan payable on behalf of DISA Medinotec. As of May 31, 2026, only an immaterial balance of $187 remained outstanding to Minoan Medical.

Minoan Medical’s ultimate beneficial owner is Dr. Gregory Vizirgianakis, Chief Executive Officer of the Medinotec Group of Companies. Prior to the transfer of DISA Medinotec into the Medinotec group structure, Minoan Medical held Dr. Vizirgianakis’ medical investments and export interests, of which DISA Medinotec was one.

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.

9. Accounts payable and accrued expenses

a. Accounts payable by period

Accounts payable consist of the following:


	May 31, 2026 (unaudited) $		Feb 28, 2026 $
Trade accounts payable		1,059,500		1,003,965
Accrued payroll, payroll taxes and leave pay		44,468		45,566
Royalties payable		22,287		26,211
Tax Liability		—		10,545
Total		1,126,255		1,086,287

One major European Cardiac supplier constitutes 45% (53% on February 28, 2026) of the total trade accounts payable.

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10. Commitments

a. Leases and deferred rent

The Company accounts for leases under ASC 842, Leases. The Company leases office and warehouse spaces under a cancelable operating lease agreement with contractual terms from August 1, 2023 to July 31, 2026 from a third-party entity that is considered a related party due to mutual directorship with a member of the Company’s Board. 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. Management believes the terms of the lease are consistent with market rates and were entered into at arm’s length.

Operating lease right-of-use (ROU) assets and corresponding lease liabilities are recognized on the consolidated balance sheet at the commencement date based on the present value of future lease payments. The Company uses its incremental borrowing rate to discount lease payments, as the implicit rate is not readily determinable. Lease expense is recognized on a straight-line basis over the lease term. Short-term leases (terms of 12 months or less) are not capitalized and are expensed as incurred.

Lease payments in respect of the operating lease liability for the period ended May 31, 2026 was $8,829 compared to $8,014 for the period ended May 31, 2025.

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 May 31, 2026 was as follows:

	Amounts

Remainder of fiscal 2027		6,016
Total undiscounted lease payments:		6,016
Less: Imputed Interest		(87	)
Total operating lease liabilities		5,929

Operating lease liabilities, current portion		5,929

The carrying amount of the operating right-of-use asset as of May 31, 2026 was as follows:

	Amounts

Opening balance at March 1, 2026		12,880
Depreciation for the 3 month period		(7,411	)
Effect of foreign currency translation		(419	)
Closing balance at May 31, 2026		man5,050

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.

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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.

11. Stockholders’ equity

a. Authorized and issued stock by period

Authorized:

As of May 31, 2026 the Company had 188,244,452 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 May 31, 2026, 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, 2026.

Issued and outstanding shares:


	May 31 2026		Feb 28 2026
Common shares		11,755,548		11,733,750
Stock issued		—		21,798
Total		11,755,548		11,755,548

Share capital:


	May 31 2026 $		Feb 28 2026 $
Common shares		11,756		11,734
Stock issued		—		22
Total		11,756		11,756

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12. Income taxes

For the three months ended May 31, 2026 and 2025, our income tax provision was a benefit of $13,515 and an expense of $148,988, respectively. The effective tax rate for the three months ended May 31, 2026 and 2025 was approximately (6)% and 57%, respectively.

Income tax expense or benefit for interim periods is determined using management’s estimate of the annual effective tax rate expected to apply for the full fiscal year, adjusted for discrete items recognized in the period, where applicable. The effective tax rate may differ from the U.S. statutory federal income tax rate of 21% due to several factors, including the geographic mix of income and losses, foreign tax rate differentials, permanent differences, including GILTI, temporary differences, changes in valuation allowances, and changes in applicable tax laws.

The effective tax rate for the three months ended May 31, 2026 differed from the U.S. statutory federal income tax rate primarily due to the geographic mix of taxable income and losses, foreign tax rate differentials, permanent differences, including GILTI, the impact of valuation allowances on deferred tax assets, and the recognition of a deferred income tax benefit during the period.

Although the Company reported consolidated income before income taxes for the three months ended May 31, 2026, no current income tax expense was recorded for the period. Current income tax is determined based on the taxable income or loss of each taxable entity in the relevant jurisdictions, rather than solely on consolidated income before income taxes. DISA Medinotec reported a standalone loss for the period and therefore no current South African income tax expense was recorded.

Medinotec Incorporated, the U.S. parent company, generated standalone book income during the period. However, no current U.S. income tax expense has been recorded for the quarter, as management currently expects Medinotec Incorporated to generate a taxable loss, or no taxable income, for the full fiscal year after considering expected results for the remaining interim periods. In addition, Medinotec Incorporated has net operating loss carryforwards from prior periods which may be available to offset taxable income. The related deferred tax asset continues to be fully offset by a valuation allowance due to management’s assessment that realization is not more likely than not in the near term.

A portion of Medinotec Incorporated’s standalone income related to the recharge of expenses from Medinotec Incorporated to DISA Medinotec. In determining the South African current tax position, DISA Medinotec has treated the recharge as deductible in taxable income in accordance with applicable South African tax law.

The income tax benefit recorded for the three months ended May 31, 2026 related to deferred income taxes. No current income tax expense was recorded for the period.

The effective tax rate for the three months ended May 31, 2025 differed from the U.S. statutory federal income tax rate primarily due to the timing of the realization of temporary differences in South Africa, foreign tax rate differentials, permanent differences, including GILTI, and the impact of valuation allowances on deferred tax assets. The higher effective tax rate for the prior year period was primarily attributable to the timing of taxable and deductible temporary differences in South Africa relative to the level of consolidated pre-tax income for that period.

The effective tax rate is impacted by several factors, including:

	1.	National, federal and foreign tax rates: The statutory federal income tax rate is 21% for the United States and the corporate income tax rate is 27% for South Africa. Differences between statutory rates in the jurisdictions in which the Company operates impact the consolidated effective tax rate.
	2.	Permanent differences: Certain items recognized for financial reporting purposes may not be taxable or deductible for income tax purposes, or may be treated differently under the tax laws of the relevant jurisdiction. These items may include GILTI and other permanent differences specific to the tax laws applicable to the Company’s operations.
	3.	Temporary differences: Timing differences between the recognition of income and expenses for financial reporting purposes and income tax purposes also affect the effective tax rate. Examples include differences relating to depreciation, accruals, provisions and deferred tax assets or liabilities.
	4.	Tax credits: Tax credits, where available and applicable, may reduce the Company’s overall tax liability.
	5.	Changes in tax legislation: Changes in tax laws, tax rates or interpretations in the jurisdictions in which the Company operates may affect the Company’s income tax provision.
	6.	Valuation allowances: The Company evaluates the realizability of deferred tax assets, including tax loss carryforwards, based on all available positive and negative evidence, including historical results and expectations regarding future taxable income. Where management determines that realization of deferred tax assets is not more likely than not, a valuation allowance is recorded.

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As a U.S.-registered company with operations in South Africa, the Company monitors developments relating to the OECD/G20 Pillar Two global minimum tax framework, including South Africa’s implementation of global minimum tax rules. Pillar Two is generally designed to ensure that large multinational enterprise groups are subject to a minimum effective tax rate of 15% in each jurisdiction in which they operate, subject to applicable revenue thresholds, exclusions and local implementation rules. Based on management’s current assessment of the Company’s size, operations and tax profile, the Company does not currently expect Pillar Two to have a material impact on its income tax provision. Management will continue to monitor developments in the jurisdictions in which the Company operates and assess the potential impact of any enacted or substantively enacted rules on future reporting periods.

The Company will continue to monitor its effective tax rate and make adjustments as required based on changes in operations, jurisdictional profitability, valuation allowance assessments and applicable tax legislation.

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	Amounts for the three months ending May 31, 2026
Minoan Medical Proprietary Limited	Medical investment company controlled by Dr Gregory Vizirgianakis	Related Party Loan	Dr Gregory Vizirgianakis	Dr Gregory Vizirgianakis is the ultimate beneficial owner	Loan payable - $187 Account payable - $40,000
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	Loan payable- $307 Lease liability - $5,929 Short term rental expense - $8,127
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	n/a
DISA Medinotec Proprietary Limited	The African operating and manufacturing company	Related party loan with Minoan Medical	Dr Gregory Vizirgianakis Pieter van Niekerk	Medinotec Incorporated in Nevada is the 100% ultimate parent entity	n/a
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	n/a
Medinotec Group of Companies	The Consolidated group name of Medinotec Incorporated, Medinotec Capital Proprietary Limited and DISA Medinotec Proprietary Limited	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	n/a

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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	n/a
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.	n/a
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	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	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	n/a

a. Rent

DISA Medinotec Proprietary 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.

Set forth below is a table showing the Consolidated entities' lease payments for the three months ended May 31, 2026 and May 31, 2025 with Minoan Capital:

May 31, 2026 (unaudited)

May 31, 2025

Lease payments

8,829

8,014

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The Company incurs monthly rental charges payable to Minoan Capital for the use of training centre facilities. As no long-term fixed rental agreement exists and the arrangement is invoiced monthly, the Company does not account for the arrangement as a lease.

Set forth below is a table showing the Consolidated entities' rental expenses relating to the training centre facilities the three months ended May 31, 2026 and May 31, 2025 with Minoan Capital:

May 31, 2026 (unaudited)

May 31, 2025

Rental expense

8,127

—

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

There is an unsecured loan from the prior parent entity of DISA Medinotec Proprietary Limited incorporated in South Africa called Minoan Medical Proprietary Limited (a related party). 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.

There is also an unsecured, interest free loan with no fixed terms of repayment from Minoan Capital.

Minoan Medical and Minoan Capital are related parties of the Group as the CEO Dr Gregory Vizirgianakis has common control.

14 . Subsequent events

Management has evaluated subsequent events through July 15, 2026, the date the consolidated financial statements were issued, and has determined that there were no subsequent events requiring adjustment to or disclosure in the consolidated financial statements.

15 . Reclassification of Financial Statement Items

Certain prior-year amounts have been reclassified to conform to the current-year presentation. These reclassifications relate to amounts previously included in general and administrative expenses that are now presented as cost of goods sold, consistent with the nature of the underlying costs. The reclassifications had no impact on the Company’s net income, cash flows, total assets, total liabilities, or stockholders’ equity.

The adjustment results in:

	May 31, 2025 $

Original item: General and administrative expenses		(12,163	)
Reclassified to: Cost of Goods Sold		12,163

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. These statements include, but are not limited to, statements regarding our future financial position, business strategy, product development and launches, regulatory submissions, revenue expectations, supply chain management, customer and distributor relationships, and market expansion. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “could,” “will,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements are based on our current expectations, estimates and assumptions and are subject to risks and uncertainties, many of which are beyond our control. Actual results, performance or achievements may differ materially from those expressed or implied by these forward-looking statements.

We undertake no obligation to update or revise any forward-looking statements, whether because of new information, future events, or otherwise, except as may be required under applicable securities laws.

These forward-looking statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended February 28, 2026, any updates to those risks included elsewhere in this Quarterly Report on Form 10-Q, and the risks summarized below. These risks include, by way of example and not in limitation:

Financial, Liquidity and Dilution Risks: We may require additional financing, and future equity or debt financing may dilute existing shareholders, increase financial obligations or affect our ability to execute our business strategy.

Customer, Market and Geographic Concentration Risks: We rely on a limited number of customers, distributors and geographic markets, and any material disruption to these relationships or markets could adversely affect revenue, profitability and cash flows.

Operational and Commercial Risks: Our results depend on product development, manufacturing, supply chain continuity, commercialization efforts, distributor performance and our ability to compete effectively in the medical device market.

Regulatory, Legal and Compliance Risks: We are subject to extensive medical device, healthcare, reimbursement, product liability, intellectual property, tax, anti-corruption, data privacy and other legal and regulatory requirements, and non-compliance or adverse developments could result in delays, penalties, litigation or increased costs.

South Africa, Foreign Exchange and Trade Risks: Because a significant portion of our operations is located in South Africa, we are exposed to country-specific political, economic, infrastructure, exchange control, foreign currency, trade, tariff and related risks.

Management, Governance and Securities Risks: We depend on key personnel, have concentrated voting control, have officers and directors located outside the United States, and our common stock trades on the OTCQX market, which may involve limited liquidity and market volatility.

This list is not exhaustive. Readers should carefully consider the risk factors described in our Annual Report on Form 10-K for the year ended February 28, 2026, together with any updates included in this Quarterly Report on Form 10-Q, and should not place undue reliance on forward-looking statements.

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Forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether because of new information, future events or otherwise, except as required by applicable securities laws.

Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

Business Overview

Medinotec Inc. was incorporated in the State of Nevada on April 26, 2021. Effective April 26, 2022, the Company acquired DISA Medinotec Proprietary Limited, a South African company, from Minoan Medical Proprietary Limited (“Minoan”), a South African company and the former owner of all the capital stock of DISA Medinotec Proprietary Limited. The acquisition was completed pursuant to a Share Exchange Agreement under common control with Minoan, under which the Company 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.

The acquisition was completed through Medinotec Capital Proprietary Limited, a South African subsidiary established by Medinotec Inc. following an initial capital contribution of $10,000 on December 18, 2021. Medinotec Capital Proprietary Limited serves as the Company’s acquisition and investment vehicle in South Africa.

Together, Medinotec Inc., Medinotec Capital Proprietary Limited and DISA Medinotec Proprietary Limited comprise the Medinotec group of companies.

The Company currently generates revenue from two principal sources: (1) Company-developed and manufactured medical devices and (2) the distribution of third-party medical devices under exclusive or non-exclusive distribution arrangements in defined territories. The Company’s developed products include the Trachealator, the OutFlo Aortic Valve Dilation Balloon Catheter, and the Cape Cross family of PTCA balloon catheters. The Company distributes a range of cardiology and renal dialysis products on behalf of third-party manufacturers, primarily in South Africa.

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 several causes and may require one or more dilation procedures, depending on the patient and clinical circumstances.

The Trachealator obtained CE marking 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, Asia, South Africa and the United States.

Medical device regulatory requirements differ by jurisdiction. FDA clearance and CE marking may support regulatory submissions or market access in certain jurisdictions, but some countries require additional local registrations, testing, certifications, quality system requirements or other regulatory approvals before a product may be sold. The Company evaluates market entry requirements on a jurisdiction-by-jurisdiction basis.

For example, Australia, Japan and China have their own medical device regulatory systems through the Therapeutic Goods Administration, the Pharmaceuticals and Medical Devices Agency, and the National Medical Products Administration, respectively, and do not automatically accept CE marking or FDA clearance as a basis for market authorization.

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Outflo Aortic Valve Dilation Balloon Catheter

The Outflo Aortic Valve Dilation Balloon Catheter is a non-occlusive perfusion balloon catheter designed for use in selected procedures involving dilation of the aortic valve while maintaining perfusion.

The product is intended for use in selected procedures involving post-dilation of a prosthetic valve in TAVI procedures, where clinically appropriate.

FDA 510(k) clearance was obtained on March 11, 2025. Outflo is currently marketed and sold in South Africa, and marketing activities in the United States commenced during the fourth quarter of fiscal 2026, with the first units sold during the first quarter of fiscal 2027.

The Cape Cross PTCA Catheter

The Cape Cross PTCA Catheter is a semi-compliant coronary PTCA balloon catheter. The product has obtained CE marking and is sold in South Africa and selected international markets.

A PTCA catheter may be used in procedures to dilate a narrowed or blocked coronary artery. The catheter is inserted through the vascular system and positioned at the treatment site. The balloon is then inflated and deflated before the catheter is withdrawn. Depending on the clinical circumstances, a coronary stent may also be placed in the diseased area of the artery.

Cape Cross Non-Compliant (“NC”) Catheter

The Cape Cross Non-Compliant (“NC”) Catheter is a non-compliant balloon catheter developed for post-dilation procedures. The product has obtained CE marking 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.

The Micro CTO Catheter (Developmental)

The Company has developed a Micro CTO 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 clearances, 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 510(k) clearance for the Cape Cross PTCA catheter range 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 subject to research and development, testing, pre-production prototyping and related product validation activities. The Company is evaluating the applicable regulatory pathway for this product, including whether it may qualify as a Class I 510(k)-exempt device 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 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.

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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 subject to research and development, testing and pre-production prototyping activities. The Company continues to evaluate the product’s regulatory pathway, commercial feasibility and timing of any potential market introduction.

Product Development Pipeline

The Company’s product development and commercialization process generally includes the following stages, although not all stages apply to every product and the timing and outcome of each stage may vary:

	1.	Research and development
	2.	Pre-production prototyping
	3.	Testing and validation
	4.	Production readiness
	5.	Clinical evaluation, where required
	6.	CE marking or MDR certification, where applicable
	7.	Local marketing and sales
	8.	International sales outside the United States
	9.	FDA 510(k) clearance or other applicable U.S. regulatory pathway
	10.	Sales in the United States

The products described have reached the following stages:

Trachealator:	FDA 510(k) clearance and CE marking have been obtained. The Company supplies Trachealator products to customers in the United States and selected international markets.

Outflo Aortic Valve Dilation Balloon Catheter:	FDA 510(k) clearance was obtained on March 11, 2025. Outflo is marketed in South Africa, and marketing activities in the United States commenced during the fourth quarter of fiscal 2026, with initial sales in the United States occurring during the first quarter of fiscal 2027.
Cape Cross PTCA Catheter:	The Company is pursuing FDA 510(k) clearance with the assistance of external consultants. Final submission remains pending. CE certification under the MDD has been obtained and remains valid under Regulation (EU) 2023/607. CE certification under the MDR is in progress.

Cape Cross NC Catheter:	The Company is pursuing FDA 510(k) clearance with the assistance of external consultants. Final submission remains pending. CE certification under the MDD has been obtained and remains valid under Regulation (EU) 2023/607. CE certification under the MDR is in progress.

Micro CTO Catheter:	Research and development, testing and pre-production prototyping have been completed. The technical file was submitted to the Notified Body in July 2023 and remains under review as of the date of this report.

StaXstop Catheter:	The product remains in the development pipeline. Activities include research and development, testing, pre-production prototyping, production readiness and validation. The Company is evaluating the applicable regulatory pathway, including whether the product may qualify as a Class I 510(k)-exempt device in the United States.

Septus Balloon:	The product remains in the development pipeline. Activities include research and development, testing and pre-production prototyping.

Vaultseal Balloon:	The product remains in the development pipeline. Activities include research and development, testing and pre-production prototyping.

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Results of Operations for the Three Months ended May 31, 2026 and May 31, 2025

Revenue

The Consolidated Medinotec Group of Companies’ revenue for the period ended May 31, 2026 was $2,651,095 compared to $2,134,026 in revenue for the period ended May 31, 2025, an increase of $517,069, or approximately 24%.

Operating Segments

The Group operates through two primary segments: Sales Outside the United States and Domestic Sales. These segments reflect the Company’s geographic revenue streams. Sales Outside the United States include Company-developed products and third-party products distributed by the Group, while Domestic Sales include sales of the Trachealator and Outflo products within the United States.

Sales Outside the United States

This segment includes both the sale of the Group's in-house developed products (proprietary IP) and the distribution of third-party products. The third-party distribution component generally yields lower margins due to pricing pressures, distributor agreements and competition within the medical device distribution sector. Company-developed products have historically generated higher margins than distributed third-party products.

The performance of this segment is affected by regional demand, regulatory considerations, distributor performance and customer purchasing activity, particularly in regions such as South Africa and broader Southern Africa.

Domestic Sales (United States)

The Domestic Sales segment includes sales in the United States. Historically, this segment has primarily related to the Company’s Trachealator device, which is used in the respiratory market. Beginning in the first quarter of fiscal 2027, this segment also includes sales activity relating to the Company’s Outflo device, which is used in the cardiology market.

Revenue from this segment is primarily affected by sales volumes for the Trachealator and Outflo products, the Company’s sales channels, relationships with U.S. healthcare providers, and the timing and extent of adoption by healthcare institutions.

Sales Concentration

Sales between the Medinotec Group and DISA Life Sciences are expected to continue to represent a significant portion of the Group’s revenue, particularly within the Sales Outside the United States segment. DISA Life Sciences distributes medical device products in South Africa, and South Africa continues to represent a significant portion of the Group’s sales.

The Group continues to evaluate opportunities to reduce its reliance on the South African market over time by expanding into other international markets, including North America, Europe, and selected other markets. Any such expansion will depend on, among other factors, regulatory approvals, the establishment of appropriate distribution channels, market acceptance of the Group’s products, pricing, reimbursement considerations, and competition in those markets.

There is no certainty that the Group will be able to materially reduce its reliance on DISA Life Sciences or the South African market in the short-to-medium term. The timing and success of expansion into new markets are subject to a number of risks and uncertainties, including regulatory requirements, the ability to identify and establish relationships with suitable distribution partners, and the competitive conditions in each relevant market. As a result, customer concentration risk is expected to continue unless and until the Group is able to develop a more diversified revenue base.

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Product Development

The Trachealator product received FDA 510(k) clearance in November 2021, allowing the Company to market and sell the product in the United States. This clearance permits the Company to market and sell the product in the United States, subject to applicable commercial, reimbursement and competitive factors.

The Group sells products through customer relationships and distribution arrangements, particularly in South Africa. In South Africa, the Group’s distribution model is supported by a sales network that services hospitals and other healthcare facilities in South Africa. A significant portion of the Group’s historical revenue has been generated through this distribution structure.

The Group continues to evaluate its sales channels in the United States, including in relation to the Trachealator and the recently launched Outflo product. The development of these sales channels remains subject to market acceptance, the establishment of appropriate commercial relationships, and other operational and regulatory considerations.

On March 11, 2025, the Group received FDA 510(k) clearance for its Outflo Aortic Dilatation Balloon Catheter. This is the Group’s second product to receive FDA 510(k) clearance. The commercial launch and market adoption of this product remain subject to normal commercial, regulatory, reimbursement, and competitive factors.

Outside the U.S. Segment

Revenues from the Group’s Outside the U.S. segment, which includes both Company-developed and distributed products, increased by approximately 20% to $2,371,000 for the three months ended May 31, 2026, compared to $1,983,963 for the same period in the prior year. The increase was primarily attributable to higher volumes in distribution revenue streams in South Africa.

Although overall segment revenues increased, the Group experienced lower sales volumes for certain internally designed and manufactured products within this segment. This decrease was primarily attributable to the allocation of sales and marketing resources toward the Group’s U.S. commercialization activities, as well as market conditions in Europe, including economic slowdown and foreign currency fluctuations, which affected product sales in certain regions.

During the period, the Group continued sales and marketing activities in the Outside the U.S. segment, including maintaining distribution arrangements in South Africa, providing product and sales training, using customer relationship management tools, and performing market research to monitor customer requirements, market trends and competitive conditions.

These activities were intended to support existing sales channels and provide management with information regarding customer requirements and market conditions. There can be no assurance that these activities will result in increased sales, improved margins or expanded market share in future periods.

Inside the U.S. (Domestic) Segment

Revenues from the Group’s Inside the U.S. segment, which includes sales of Company-developed products, increased by approximately 87% to $280,095 for the three months ended May 31, 2026, compared to $150,063 for the same period in the prior year. The increase was primarily attributable to higher sales activity in the U.S. market and initial sales associated with the launch of Outflo. Although revenue increased during the period, sales volumes in the domestic segment remain relatively low as the Group continues to develop its U.S. commercialization activities.

During the period, the Group continued to support the U.S. segment through sales and marketing activities, including expanding sales representation in the U.S. market, conducting product demonstrations and customer outreach, providing product-related education to healthcare professionals, maintaining digital marketing activities, and obtaining feedback from customers and healthcare professionals.

These activities were intended to support awareness of the Group’s products, assist with customer engagement and provide information to management regarding customer requirements and market conditions. There can be no assurance that these activities will result in increased sales, improved margins or broader market acceptance in future periods.

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Cost of Goods

The following tables compare cost of goods sold as dollar amounts and as a percentage of net sales for the three months ended May 31, 2026 and 2025:

	Three Months Ended (unaudited)
	May 31, 2026		May 31, 2025
Total cost of goods sold	$	1,343,430	$	1,220,858

	Three Months Ended (unaudited)
	May 31, 2026			May 31, 2025
Total cost of goods sold %		51	%		57	%

The composition of the cost of sales figures as a percentage to the segments is as follows:

	Three Months Ended (unaudited)
	May 31, 2026			May 31, 2025
Outside United States of America %		94	%		96	%
Inside the United states of America %		6	%		4	%

For the three months ended May 31, 2026, cost of goods sold increased to $1,343,430 from $1,220,858 in the prior-year period. The increase was primarily attributable to higher overall sales activity during the period, particularly increased distribution agreement sales in the Outside the U.S. segment.

Gross margin improved to 49% of sales for the three months ended May 31, 2026, compared to 43% for the three months ended May 31, 2025. Revenue increased by approximately 24% during the period, while cost of goods sold increased by approximately 10%, resulting in improved gross margin.

The Group’s revenue mix continued to include a significant proportion of distribution agreement sales in South Africa. Distribution agreement sales outside the U.S. increased to $2,155,651 for the three months ended May 31, 2026, compared to $1,645,101 in the prior-year period. Internally designed and manufactured sales outside the U.S. decreased to $215,349 from $338,862, while internally designed and manufactured sales inside the U.S. increased to $280,095 from $150,063.

The improvement in gross margin was primarily attributable to revenue increasing at a higher rate than cost of goods sold, together with changes in product mix, customer mix, pricing and cost factors during the period. Gross margin may continue to fluctuate between periods depending on the relative contribution of distribution and internally developed product sales, geographic sales mix, supplier pricing, production costs and foreign exchange movements.

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Operating Expenses

For the three months ended May 31, 2026, operating expenses were $1,126,793, an increase from $635,711 for the same period in the prior year. The increase for the three-month period was primarily driven by investments in growth initiatives, including sales and marketing activities.

One of the major components that affects the operating expenses is the cost of compliance for the business which is included in the General and Administrative line item. Certain costs are once off in nature and others will be recurring.

	Three months ended (Unaudited)

	May 31, 2026		May 31, 2025		Value Change
	$		$		$			% Change
Operating expenses
Depreciation and amortization expense		21,282		7,506		13,776			184	%
General and administrative expenses		594,286		557,418		36,868			7	%
Research and development expenses		7,970		49,014		(41,044	)		(84	%)
Selling expenses		503,255		21,773		481,482			2211	%
Total operating expenses		1,126,793		635,711		491,082			77	%

Operating expenses increased by $491,082, or 77%, to $1,126,793 for the three months ended May 31, 2026, compared to $635,711 for the same period in the prior year.

The increase was primarily attributable to selling expenses, which increased by $481,482 to $503,255 for the three months ended May 31, 2026, compared to $21,773 for the same period in the prior year. The increase was driven primarily by distributor support costs incurred under the Company’s arrangements in the South African market. The Company agreed to reimburse its distribution partner for a portion of that partner’s expenditure incurred in connection with the sale of cardiology and renal dialysis products in South Africa. A substantial portion of these costs related to the distributor’s employee costs for its sales force, together with other expenditure incurred in supporting these sales activities.

These distributor support costs were introduced from the second quarter of the prior fiscal year and were therefore not incurred to the same extent during the three months ended May 31, 2025. As a result, the three months ended May 31, 2026 included a higher level of selling expense compared to the prior-year quarter.

The Company also continues to incur selling and marketing costs in support of its direct and distributor-based sales channels, including customer engagement, product demonstrations, market education and related sales activities. The level and classification of these costs may vary between periods depending on the timing of sales activities, marketing events, conferences, distributor arrangements and the allocation of employee time.

General and administrative expenses increased by $36,868, or 7%, to $594,286 for the three months ended May 31, 2026, compared to $557,418 for the same period in the prior year. General and administrative expenses include personnel costs, professional fees, public company costs, compliance-related costs and other administrative expenses required to support the Group’s operations. A significant portion of the Group’s personnel and operational support functions are located outside the United States, including in South Africa, which affects the Company’s overall cost structure.

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As a medical device company, the Group incurs costs related to regulatory filings, quality systems, product compliance and other requirements applicable to the markets in which it operates. As a publicly traded company quoted on the OTCQX Market, the Group also incurs costs related to public company reporting, investor relations, regulatory compliance and related corporate requirements.

Research and development expenses decreased by $41,044, or 84%, to $7,970 for the three months ended May 31, 2026, compared to $49,014 for the same period in the prior year. The decrease was primarily due to the timing of research and development activities during the respective periods. The Company’s research and development activities generally focus on product development, product improvements, process improvements, manufacturing efficiencies, regulatory readiness and selected projects that management believes are commercially relevant. Research and development expenses may fluctuate between periods depending on the timing and stage of specific projects.

Depreciation and amortization expense included in operating expenses increased by $13,776, or 184%, to $21,282 for the three months ended May 31, 2026, compared to $7,506 for the same period in the prior year. The increase was partly attributable to certain manufacturing equipment becoming available for use in the manufacturing process following regulatory clearance during the fourth quarter of the prior fiscal year. Depreciation and amortization expense may fluctuate between operating expenses and cost of goods sold depending on the nature and use of the related assets during the period.

Excluding the increase in selling expenses, operating expenses increased by $9,600 compared to the prior-year period. Overall, the increase in total operating expenses was primarily attributable to the distributor support cost recovery arrangement, partially offset by decreases in general and administrative expenses and research and development expenses.

Net Income / (Loss)

Net income for the three months ended May 31, 2026 was $222,014, compared to net income of $113,784 for the three months ended May 31, 2025, representing an increase of $108,230.

The increase in net income, despite lower income before income taxes, was primarily attributable to the income tax benefit recognized during the current period compared to income tax expense recognized in the prior year period. The Company recognized an income tax benefit of $13,515 for the three months ended May 31, 2026, compared to income tax expense of $148,988 for the three months ended May 31, 2025, representing a favorable period-on-period change of $162,503. The change in the income tax provision was primarily due to the tax factors described in the income tax disclosure, including the geographic mix of taxable income and losses, the estimated annual tax position of Medinotec Incorporated, foreign tax rate differentials, temporary differences, permanent differences and valuation allowances.

Management views income from operations and contribution from operations by segment as useful measures in assessing the underlying performance of the business, as these measures exclude the impact of financing income and expenses, income tax effects and other items that may vary between periods. Income from operations was $180,872 for the three months ended May 31, 2026, compared to $277,457 for the three months ended May 31, 2025. Although income from operations decreased during the current period, net income increased primarily due to the income tax benefit recognized in the current period compared to income tax expense recognized in the prior year period.

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Segment Contribution to Income/(loss) from operations

Three Months Ended May 31 (unaudited)	Inside the United States ($)						Outside the United States ($)				Total ($)
	2026			2025			2026		2025		2026		2025
Income/(loss) from operations		(24,008	)		(288,817	)		204,880		566,274		180,872		277,457

The Inside the United States segment reported a loss from operations of $24,008 for the three months ended May 31, 2026, compared to a loss from operations of $288,817 for the three months ended May 31, 2025. The reduction in the operating loss was primarily attributable to higher revenue and gross profit in the current period, together with lower general and administrative expenses. This was partially offset by higher selling expenses during the current period.

The Outside the United States segment reported income from operations of $204,880 for the three months ended May 31, 2026, compared to income from operations of $566,274 for the three months ended May 31, 2025. Revenue and gross profit increased in this segment during the current period; however, this was more than offset by higher operating expenses, particularly selling expenses and general and administrative expenses.

Total income from operations was $180,872 for the three months ended May 31, 2026, compared to $277,457 for the three months ended May 31, 2025. The decrease in total income from operations was primarily due to the lower contribution from the Outside the United States segment, partially offset by the reduced operating loss in the Inside the United States segment.

Liquidity and Capital Resources

As of May 31, 2026, the Company reported current assets of $6,573,329 and total assets of $6,985,078. Current liabilities at the same date were $1,132,184, resulting in working capital of $5,441,145. This compares with February 28, 2026, when current assets were $6,419,805 and total assets were $6,812,888, with current liabilities of $1,101,192 and working capital of $5,318,613.

The increase in total assets was primarily attributable to higher current assets, including increases in accounts receivable, inventory and other current assets, partially offset by a decrease in cash and cash equivalents. Accounts receivable increased from $2,352,474 as of February 28, 2026 to $2,513,601 as of May 31, 2026, primarily due to the timing of customer collections and sales activity during the period. Inventory increased from $1,236,373 to $1,425,422, reflecting inventory purchases and stocking requirements. Cash and cash equivalents decreased from $2,757,024 to $2,518,315 during the period.

Current liabilities increased from $1,101,192 as of February 28, 2026 to $1,132,184 as of May 31, 2026, primarily due to an increase in accounts payable and accrued liabilities, partially offset by a decrease in the current portion of operating lease liabilities. Total liabilities increased from $1,101,693 to $1,132,678. Working capital increased by $122,532 during the period, from $5,318,613 as of February 28, 2026 to $5,441,145 as of May 31, 2026.

We believe that funds generated from operations, together with existing cash reserves, will be sufficient to finance our current operations and meet our obligations over the next twelve months. We will continue to monitor our cash requirements and may consider additional funding sources where appropriate to support working capital requirements, capital expenditures, strategic opportunities or other business needs.

In terms of capital allocation for research and development, we continue to follow an R&D-light approach. This approach focuses on selected projects that are closer to commercialization, process improvement, manufacturing efficiencies and regulatory expansion. The Company also uses royalty-based arrangements where appropriate, which limits direct development expenditure while allowing continued participation in selected product development activities.

Looking ahead, we plan to undertake clinical write-ups in new territories to facilitate market entry and compliance with local regulatory requirements. We do not currently anticipate that these activities will exceed $50,000.

To support potential acquisitions, strategic partnerships, capital expenditures and selected R&D initiatives, we may consider additional debt or equity financing or establishing lines of credit to supplement cash flows from operations.

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Cash flow movements

The following table summarizes our cash flows from continuing operations for the periods indicated:

	Three Months Ended May 31, 2026 (unaudited) ($)			Three Months Ended May 31, 2025 (unaudited) ($)
Net cash provided by (used in):
Operating Activities		(176,125	)		(759,238	)
Investing Activities		(40,350	)		—
Financing Activities		—			(37,900	)

Cash flows from Operating Activities

For the three months ended May 31, 2026, net cash used in operating activities was $176,125, compared with net cash used in operating activities of $759,238 for the three months ended May 31, 2025. The decrease in cash used in operating activities was primarily due to a smaller increase in accounts receivable during the current period compared to the prior-year period. Accounts receivable increased by $172,688 during the three months ended May 31, 2026, compared to an increase of $1,589,455 during the three months ended May 31, 2025.

Cash used in operating activities during the current period was mainly attributable to increases in inventory, accounts receivable and prepayments, partially offset by net income for the period and an increase in accounts payable and accrued expenses. Inventory increased by $203,452 during the three months ended May 31, 2026, reflecting inventory purchases and stocking requirements during the period. Prepayments increased by $41,268, primarily reflecting the annual insurance premium made during the period. Accounts payable and accrued expenses increased by $88,702, partially offsetting these working capital outflows.

Overall, although the Company generated net income of $222,014 for the three months ended May 31, 2026, working capital movements resulted in net cash used in operating activities for the period.

Profitability

For the three months ended May 31, 2026, the Company reported net income of $222,014, compared to net income of $113,784 for the three months ended May 31, 2025, representing an increase of $108,230.

Income before income taxes decreased by $54,273, from $262,772 for the three months ended May 31, 2025 to $208,499 for the three months ended May 31, 2026. The decrease was primarily attributable to higher operating expenses, which more than offset the increase in gross profit. Gross profit increased during the current period as a result of higher revenue and improved gross margin; however, this improvement was offset by higher operating expenses.

The increase in net income, despite the decrease in income before income taxes, was primarily attributable to the income tax benefit recognized during the current period, compared to the income tax expense recognized in the prior year period. The Company recognized an income tax benefit of $13,515 for the three months ended May 31, 2026, compared to income tax expense of $148,988 for the three months ended May 31, 2025, representing a favorable period-on-period change of $162,503, as discussed in the income tax disclosure.

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Working Capital Movements

The decrease in net cash used in operating activities was influenced by the Company’s net income for the period and changes in working capital. Working capital movements during the three months ended May 31, 2026 included increases in accounts receivable, inventory and prepayments, partially offset by an increase in accounts payable and accrued expenses.

Trade Receivables: The cash flow movement in accounts receivable was an increase of $172,688 for the three months ended May 31, 2026, compared to an increase of $1,589,455 for the same period in the prior year. The smaller increase in accounts receivable reduced the working capital outflow compared to the prior-year period.
Inventory: The cash flow movement in inventories was an outflow of $203,452 for the three months ended May 31, 2026, compared to an inflow of $7,496 for the same period in the prior year. The increase in inventory during the current period was primarily attributable to inventory in transit at period end of approximately $250,000. This related mainly to third-party devices for which the Company had been invoiced before quarter end, but which had not yet been received by quarter end. These items are typically sold on to our third party distribution partner upon delivery and are not ordinarily held as inventory on hand for an extended period. Excluding the effect of this inventory in transit balance, inventory would have decreased by approximately $40,000 during the period. Accordingly, the reported increase in inventory was primarily a result of the timing of supplier invoicing and delivery around period end, rather than a general increase in inventory held on hand.
Prepayments: Prepayments increased by $41,268 for the three months ended May 31, 2026, compared to an increase of $147,160 for the same period in the prior year. The increase in prepayments primarily reflects the annual insurance premium made during the period.
Accounts Payable and Accrued Expenses: Accounts payable and accrued expenses increased by $88,702 for the three months ended May 31, 2026, compared to an increase of $699,024 for the same period in the prior year. The increase in the current period partially offset the cash outflows from accounts receivable, inventory and prepayments.

Overall, net cash used in operating activities decreased from $759,238 for the three months ended May 31, 2025 to $176,125 for the three months ended May 31, 2026. The decrease in cash used in operating activities was primarily attributable to higher net income and a smaller increase in accounts receivable compared to the prior-year period, partially offset by increases in inventory and prepayments.

Cash flows from Investing Activities

For the three months ended May 31, 2026, net cash used in investing activities was $40,350, compared to no cash flows from investing activities for the three months ended May 31, 2025. The cash used in investing activities during the current period related to the purchase of property, plant and equipment.

The majority of the capital expenditure during the period related to the acquisition of medical simulation equipment. The equipment is intended to support training and product education activities, including product familiarization and the demonstration of procedures in a simulated environment.

Cash flow from Financing Activities

For the three months ended May 31, 2026, the Company reported no cash flows from financing activities, compared to net cash used in financing activities of $37,900 for the three months ended May 31, 2025.

The cash used in financing activities in the prior-year period related to the repayment of debt. No comparable repayments, borrowings, or equity financing transactions occurred during the three months ended May 31, 2026. The loan previously outstanding to Minoan Medical was settled by August 31, 2025, during the prior fiscal year, and therefore no repayments relating to this loan were made during the current period.

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Off Balance Sheet Arrangements

As of May 31, 2026, there were no off-balance sheet arrangements.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting policies” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. There have been no material changes to our critical accounting policies as described in the footnotes to our financial statements included in our annual report on Form 10-K for the year ended February 28, 2026; however, we consider our critical accounting policies to be those related to revenue from the sale of self-manufactured products, revenue from the distribution of products, and inventories valuation, costing and obsolescence.

Recently Issued Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s Consolidated results of operation, financial position or cash flow.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, during the period ended May 31, 2026. The purpose of this evaluation was to ensure that information required to be disclosed by us in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of May 31, 2026, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

No change in our system of internal control over financial reporting occurred during the period covered by this report i.e. the quarter ended May 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material pending legal proceedings. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 1A: Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, investors should carefully consider the risk factors described under “Part I – Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also materially adversely affect our business, financial condition, results of operations and cash flows. There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended February 28, 2026.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults upon Senior Securities

None

Item 4. Mine Safety Disclosure

Not applicable

Item 5. Other Information

None

Item 6. Exhibits

	Exhibit Number		Description of Exhibit
	31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	EX-101.INS**		XBRL Instance Document

	EX-101.SCH**		XBRL Taxonomy Extension Schema Document

	EX-101.CAL**		XBRL Taxonomy Extension Calculation Linkbase

	EX-101.DEF**		XBRL Taxonomy Extension Definition Linkbase

	EX-101.LAB**		XBRL Taxonomy Extension Labels Linkbase

	EX-101.PRE**		XBRL Taxonomy Extension Presentation Linkbase

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Medinotec, Inc.
Date: July 9, 2026
	By:	/s/ Gregory Vizirgianakis
		Gregory Vizirgianakis
	Title:	Chief Executive Officer and Principal Executive Officer

	Medinotec, Inc.
Date: July 9, 2026
	By:	/s/ Pieter van Niekerk
		Pieter van Niekerk
	Title:	Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer