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| EX-32.1 - CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 - MEDICAL INTERNATIONAL TECHNOLOGY INC | f10k2008a1ex32i_mit.htm |
| EX-31.1 - CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 - MEDICAL INTERNATIONAL TECHNOLOGY INC | f10k2008a1ex31i_mit.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
AMENDMENT
NO. 1 TO FORM 10-KSB
x ANNUAL REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended September
30, 2008
o TRANSITION REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
transition period
from to
Commission
file number: 000-31469
Medical International Technology, Inc.
(Exact
name of small business issuer as specified in its charter)
1872
Beaulac, Ville Saint-Laurent
Montreal,
Quebec, Canada HR4 2E9
(514)
339-9355
Address
of Principal Executive Offices
Colorado 84-1509950
(State
of
incorporation) (IRS
Employer Identification #)
|
Securities
registered under Section 12(b) of the Exchange Act:
|
None |
|
Securities
registered under Section 12(g) of the Exchange Act:
|
Common Stock, par value $.0001 per share |
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the 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 o No x
Check if
there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or informationstatements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
x
Indicate
by check mark whether the registrant is a shell company (as defined by Rule
12n-2 of the Exchange Act).
YES o NO
x
State
issuer's revenues for its most recent fiscal
year: $328,713
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates as of September 30, 2008 is $0.02 (based on its reported last
sale price by the OTC Pink Sheets).
The
number of shares outstanding of the Registrant's common stock as of September
30, 2008 was 27,058,663.
Transitional
Small Business Disclosure Format: YES o NO
x
EXPANATORY
NOTE
This
Amendment to the annual report on Form 10K/A is being filed to amend our annual
report on Form 10K for the year ended September 30, 2008, which was originally
reported on December 10, 2008. We are filing this Form 10K/A to amend
and restate Item 7, Financial Statements and to revise the
certifications.
As
previously reported on Form 8-K filed on October 29, 2009, the officers of
Medical International Technology, Inc. (the “Company”) concluded that the
financial statements included in our Annual Report on Form 10-K for the years
ended September 30, 2008 and 2007, and the Quarterly Reports for the periods
ended December 31, 2008, March 31, 2009 and June 30, 2009, should be restated to
correct a foreign currency translation error. At each respective
balance sheet date, property and equipment, including accumulated depreciation,
was translated using historical exchange rates at the date of purchase rather
than the current exchange rate at each balance sheet date, as required by SFAS
No. 52. The correction of the translation error had no effect on net
income (loss) or cash flows as previously reported in any
period.
In
addition, the Company will be amending its Statement of Cash Flows for the year
ended September 30, 2007 to properly present and disclose certain non-cash
transactions that were previously included as cash
transactions. There was no effect on the net increase in cash for the
year ended September 30, 2007 as a result of these
corrections.
As the
result of the currency translation error and the incorrect presentation of
non-cash transactions during fiscal 2007, we are restating our financial
statements included in the Annual Report on Form 10-K for the years ended
September 30, 2008 and 2007, and the Quarterly Reports for the periods ended
December 31, 2008, March 31, 2009, June 30, 2009 and associated
disclosures.
For the
convenience of the reader, this Form 10-K/A, sets forth the Original Form 10-K
in its entirety, as amended by this Form 10K/A. However, this Form 10-K/A
amends only Item 7 of Part II in its entirety, in each case, solely as a result
of, and to reflect, the Restatement, and, except as noted above, no other
information in the Original Form 10-K is amended hereby. In addition, Item
15 of Part IV of this Form 10-K/A has been amended to contain the
currently-dated certifications from our Chief Executive Officer and Chief
Financial Officer required under Sections 302 and 906 of the Sarbanes-Oxley Act
of 2002. These certifications are attached to this Form 10-K/A as
Exhibits31.1, 31.2, 32.1, and 32.2.
This Form
10-K/A does not reflect events occurring after the filing of the Original Form
10-K, and does not modify or update the disclosures therein in any way other
than as required to reflect the adjustments described above.
Medical
International Technology, Inc.
Table of
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Medical
International Technology, Inc.
Forward-Looking
Statements
Certain
statements concerning the Company's plans and intentions included herein may
constitute forward-looking statements for purposes of the Securities Litigation
Reform Act of 1995 for which the Company claims a safe harbor under that Act.
There are a number of factors that may affect the future results of the Company,
including, but not limited to, (a) the ability of the company to obtain
additional funding for operations, (b) the continued availability of management
to develop the business plan, (c) regulatory acceptance of our products in
diverse localities and (d) successful development and market acceptance of the
company’s products.
This
periodic report may contain both historical facts and forward-looking
statements. Any forward-looking statements involve risks and
uncertainties, including, but not limited to, those mentioned
above. Moreover, future revenue and margin trends cannot be reliably
predicted.
General
Medical
International Technology, Inc. was incorporated in the State of Colorado on July
19, 1999. The company has tree wholly-owned subsidiaries, Medical
International Technologies Canada, Inc. (MIT Canada), a Canadian company,
acquired in June of 2002, 3567940 Canada inc. a Canadian company, acquired in
June of 2002 and ScanView, a Canadian company, acquired in June of
2007.
Medical
International Technology, Inc. has authorized 100,000,000 shares of common
stock, par value $.0001 and 3,000,000 shares of preferred stock, par value
$.0001. Medical International Technology, Inc.'s common stock is traded on the
NASD's Over-The-Counter Pink Sheets under the symbol "MDLH.PK".
The
Company has a September 30th
fiscal year end.
Description of
Business
Medical International Technology,
Inc.(MIT) is based in Montreal, Canada; specializing in the research,
development, marketing and sale of needle-free jet injector products designed
for humans and animals, for single and mass injections. Needle-free jet injector
technology and products provide advantages over traditional needle injection
techniques and products, including; efficiency, handling security, biological
waste elimination, and patient stress reduction.
ScanView has a unique,
portable and battery operated ultrasound diagnostic medical devices, using a
variety of probes for pathological and physiological evaluation of organs such
as the heart, kidneys, liver, thyroid, uterus and ovaries. They serve equally
well to detect kidney stones, diagnose pregnancy, visualize follicle development
and carry out all other normal ultrasound diagnostic procedures.
Medical
International Technology's intends to concentrate its activities in the medical
and para-medical sectors, in particular, in the field of instrumentation. The
company's strategy is to build a good order agenda for its different products
and establish strategic alliances with different pharmaceutical companies and
manufacturers to ensure good distribution channels for its
products.
MIT Needle-free Jet injector
Segment
The
benefits of needle-free injection compared to needle injection, in particular
with respect to the features of Medical International Technology products, can
be summarized as follows:
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(1)
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Less
tissue damage and less painful;
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(2)
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Simple,
fast and effective;
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(3)
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Precise,
reliable and safe;
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(4)
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Good
absorption of liquids;
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(5)
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Prevents
stress from traditional needle syringes and infections from contaminated
needles;
|
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(6)
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Friendly
to the environment (No biological
waste);
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(7)
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Affordable
and economical;
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(8)
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Efficient
use of medication used.
|
-3-
Medical
International Technology, Inc.
Target Products and
Market
Animal
Sector:
Medical
International Technology, Inc. markets several Models of Agro-Jet Needle-Free
injectors. The AGRO-JET Model MIT II, MIT III, MIT V, MIT VI, MIT X, MIT XI, MIT
XII and MIT XIV. The AGRO-JET technology is a Low pressure, high performance,
semi-automatic needle-free injector intended for the general use of the
livestock market. The Models MIT II and MIT III is intended to target piglets of
up to 20Kg. Piglets are one of the largest markets in the animal sector, because
these animals require a large number of injections during their
growth.
The Model
MIT IIP and MIT XII, is manly targeting the world market for vaccination of
Poultry, eliminating risks associated with cross contamination. The mass
vaccination capabilities and reduced risks of cross contamination make these
models suited to combat pandemic fears like Bird Flu and other global threats
requiring mass vaccinations to prevent their spread.
The
Agro-Jet Models MIT VI and X is a product intended for Pigs larger then 20Kg.,
Swine, Veal, Cattle, Beef Sheep, Equine and other
livestock.
MIT V,
MIT XI and MIT XIV are intended for sporadic injections with a reusable
cartridge, of up to 5 ml.
Human
Sector:
MED-JET
is a similar product to the AGRO-JET Model MIT II intended for the mass
vaccination of Human. MIT has received Health Canada approval and is in the
process of obtaining FDA approval. MIT is marketing and selling its MED-JET in
clinics in Canada and intends to market and sell in many other markets during
the next fiscal year.
PRO-JET
is a variation of the AGRO--JET products, in "pen-form", and intended for use in
the human sector. The main customers targeted will be hospitals, clinics and
individuals who must inject medications at home (diabetics and others).
Needle-free injection technology, for humans even more than for animals, allows
for painless injections and reduces the damage to skin and tissues, especially
for people who must inject themselves frequently, such as:
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(1)
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Diabetics
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(2)
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Allergy
Injections
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(3)
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Vitamins
Injections
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(4)
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Growth
Hormone Injections
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(5)
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Antibiotics
Injections
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(6)
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Birth
Control or Impotence Injections
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(7)
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Vaccines
for Children
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(8)
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Antidote
Vaccines for bee stings or snake bites, for
example
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(9)
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Other
neuroplegics
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Medical
International Technology, Inc. will target the diabetics market in fiscal year
2009. MIT will begin in the markets where our products are currently approved
and continue our efforts in localities where approvals are pending. The market
potential in this sector is extremely large because there are many diabetics
throughout the world and many must inject insulin daily. A secondary market will
be the allergy market. The allergy market includes a similar potential, as the
number of individuals affected is quite large, as are the variety of allergies
that may be involved. We are currently unable to access many of these markets
due to the need for additional regulatory approvals in the localities for the
various applications.
-4-
Medical
International Technology, Inc.
Marketing and
Distribution
MIT
promotes its products in many countries including the United States of America.
MIT is exerting every effort and using its resources to promote its products and
to open markets for its technology. As we continue to market our products, we
hope to gain broader acceptance of the needle-free injection
technology.
MIT has
adopted an approach with potential distributors; whereby, new distributors are
allowed six months to test the market for the AGRO-JET. MIT is then able better
evaluate potential distributors before signing long term Distribution
Agreements. Where MIT may experience difficulties with distributors meeting
their purchasing schedules, we will work with these distributors to assist them
in developing their respective markets.
A new
study published in March of 2007 has shown once more that the MED-JET-MBX has
given excellent results anesthetizing patients who receive medical treatments
which involve multiple injections such as for Hyperhydrosis (excessive sweating
of the hands, feet and under arms) and BOTOX ® injections.
Product
Development
Medical
International Technologies is proceeding with the test requested earlier by the
FDA, and is expecting to finalize the tests during 2009 fiscal
year.
According
to the International Sharps Injury Prevention Society (http://www.isips.org), it
has been estimated that a contaminated sharp point accidentally sticks one out
of every seven workers each and every year. The Center for Disease Control (CDC:
http://www.cdc.gov/niosh/2000-108.html#5) estimates that there are 600,000 to
800,000 needle stick injuries per year in the U.S. alone, and many are not
reported. More than 20 types of infectious agents have been transmitted through
needlesticks, including hepatitis B and C, tuberculosis, syphilis, malaria,
herpes, diphtheria, gonorrhea, typhus and Rocky Mountain spotted fever. The
MED-JET will eliminate this risk to our health care professionals and create a
safer workplace. Other advantages include its light weight (0.5 kg) and an
excellent medication absorption rate. Additionally, the system has the ability
to increase or decrease the volume and pressure of injection. This technology is
unique to MIT’s MED-JET MBX Injector. The system is designed to allow for the
injection of up to 600 individuals an hour.
Other
advantages include its light weight (0.5 kg) and an excellent medication
absorption rate. The system is designed to inject up to 600 individuals an hour.
The MED-JET has patent protection and is approved for use in human medicine in
Canada.
The
approval process can be expensive and may take extended period of time. There
can be no assurance that this system will receive approval from the FDA or if
approved gain broad acceptance by the medical community or individual
patients.
We
previously announced that our needle free injection was chosen for testing in a
study regarding the treatment of Hyperhydrosis. Dr. Antranik Benohanian MD,
FRCPC Dermatologist at Saint Luc Hospital of The Montreal University Hospital
Center, has begun tests of MIT’s human injectors in his Hyperhydrosis studies.
In addition to the underarms, Hyprehydrosis often occurs in the palms, soles of
the feet and even the face. Currently, treatments typically carried out by
needle injections that must be repeated every 4-6 months, in excessive pain to
patients. Many patients are reluctant to receive multiple injections in their
hand and their face due to the pain associated with traditional
injections.
The
results have been published in two major associations. First was the American
Academy of Dermatology and the second, in the British Journal of Dermatology.
These publications provide strong evidence that the MED-JET Model MBX from
Medical International Technology Inc., the only system in the world than can
inject a minute volume of 0.02 ml up to 0.3 ml. fast, reliable and almost
painless, in any part on the human body.
-5-
Medical
International Technology, Inc.
Dr.
Benohanian has continued using the MED-JET Model MBX for the treatment of
Hyperhydrosis on over 100 patients; he is also using the MED-JET Model MBX for
other treatments in the dermatology field.
Other
Doctors in Montreal are also using MED-JET Model MBX and the MED-JET-H-II for
injections of Lidocaine, Botox and Cortisone for different treatment, in
Dermatology, minor surgery, Phisiatric and others.
MIT’s
MED-JET ® MBX injector is expected to reduce patient’s pain and discomfort in
these sensitive areas of the body that is caused by traditional needle
injections. In addition, MIT’s needle free injector results in a less severe
puncture since it has a volume of 0.02cc. Up-to. 3cc. It is important to be able
to increase or decrease the volume and pressure of injection, based on the
comfort level of the patient. This technology is unique to MIT’s MED-JET MBX
Injector.
Hyperhydrosis
is the medical term for excessive sweating. Millions of people worldwide suffer
from this condition. In a recent survey (J Am Acad Dermato 2004:51(2): 241-258),
an estimated 2.8% of the U.S. populations is affected by some form of this
condition, with about a third of them describing their excessive sweating as
barely tolerable or worse. The FDA approved BOTOX injections in July 2004 to
treat severe Hyperhydrosis. Phase III clinical studies supporting the FDA
approval show that 80% of patients experienced a 50% decrease in sweat
production (source: Allergan, Inc. July 20, 2004 press release).
We
previously announced that the Med Jet(r) Needle Free MBX Model Injector and its
advantages in the treatment of palmar hyperhidrosis had been featured in
the June 2005 edition of the Journal of the American Academy of Dermatology
(JAAD). The article is titled: ''Use of needle-free anesthesia in the treatment
of palmar hyperhidrosis with botulinum “A toxin.'' The Journal is dedicated to
the clinical and continuing education needs of the entire dermatologist
community and is internationally known as the leading journal in the field. The
Journal ranks in the top 4.3% of the 5,684 scientific journals most frequently
cited (2000 Science Citation Index).
MIT’s
development of the MED-JET MBX injector is further encouraged by the increased
awareness of the Hyperhydrossis condition and available treatments. We note
mainstream discussion of this condition and the BOTOX injection treatment in the
September 2005 issue of “Shape” magazine in the Beauty Q&A section “stop
SWEATING” which includes a testimonial of the procedure.
Scan View; Ultra Sound
Segment
On
December 19, 2005 the Board of MIT adopted a resolution stating “MIT will
acquire all of the issued and outstanding shares of 9139-2449 Quebec Inc
operating under the name “Scanview” for 2,500,000 restricted common shares of
MIT".
On
December 22, 2005 we announced that MIT would proceed with the ScanView
acquisition. Scanview is a portable ultrasound technology and manufacturing
company in Montreal, Quebec, Canada. Scanview was formed in 2003 to develop,
manufacture and market different models of Real Time Ultrasound Scanners, for
Animal and Human applications.
On June
11 2007, the Board of Director of MIT signed an agreement with 9162-9725 Quebec
Inc a Quebec private company, to purchase all of the issued and outstanding
shares of 9139-2449 Quebec Inc. (SCNAVIEW) common stock, for a total of
2,500,000 Common shares of MIT. Following the signing of the agreement MIT
issued to 9162-9725 Quebec Inc. a total of 2,500,000 Common shares of
MIT.
ScanView
has a unique, portable and battery operated ultrasound diagnostic medical
devices, using a variety of probes for pathological and physiological evaluation
of organs such as the heart, kidneys, liver, thyroid, uterus and ovaries. They
serve equally well to detect kidney stones, diagnose pregnancy, visualize
follicle development and carry out all other normal ultrasound diagnostic
procedures.
ScanView
is a private Canadian company owned by Karim Menassa, our CEO and Director,
owning 55% of Scanview, Michel Bayouk, our CFO and Director, owning 10% of
Scanview and three other unrelated shareholders.
-6-
Medical
International Technology, Inc.
Products
The “SCAN
VIEW I”, “SCANVIEW 100-S” and “SCANVIEW 100-SBF” ultra sound scanners, for
animal and human applications are the first models introduced to the market. New
models for human and animal applications will be available in 2008.
These
portable ultrasound diagnostic medical devices use a variety of probes for
pathological and physiological evaluation of organs such as the heart, kidneys,
liver, thyroid, uterus and ovaries. They serve equally well to detect kidney
stones, diagnose pregnancy, visualize follicle development and carry out all
other normal ultrasound diagnostic procedures.
The “SCANVIEW I” and “SCANVIEW 100-S” and
“SCANVIEW 100-SBF” are battery operated and power supplied, using state
of the art and, latest microelectronics components. The Scanners have a built-in
5-inch, LCD Colour monitor, and an integrated PC base video processor, which
allows images and Cine-loop to be transferred to a PC, reproduced and printed at
any time.
Market
The
Veterinary Market
There are
some 795,000 cattle and pig farms around the world to which the Scan View can be
marketed.
Pork is
the most frequently consumed meat in the world, with a consumption rate of 40%.
The five largest pork producers in the world are, in order of size, China,
United States, Germany, Spain and France. Canada is in thirteenth place, just
behind Japan.
The
American pork industry is a vital part of the U.S. economy, generating many
billions of dollars. In 1995, the United States sold more than 103 million hogs,
for $10.6 billion, or 11.6% of total agricultural sales. In 1997, the country
exported more than $1 billion in pork products.
In 1997,
there were some 138,690-pig farms in the United States. The trend is for these
farms to get bigger: more than 80% of pigs are raised on farms that produce more
than 1,000 pigs per year. Farms producing 50,000 pigs and more per year
substantially increased their market share, rising from 7% in 1988 to 37% in
1997.
Sows have
an average of 6 litters. Each sow gives birth on average to 16 piglets per year.
All sows must be checked for pregnancy in each breeding cycle.
The
Pregnancy diagnosis and back fat measurements program is clearly important in
this industry and accounts for between 30 and 50% of the total veterinary
care.
The
Human Market
While the
“SCANVIEW I” was
originally conceived in response to the needs of veterinary medicine, SCANVIEW
INC. has found an excellent market niche in the human market place.
The new
“SCANVIEW 100-S” for
Human applications was introduced at the end of 2006; the new ultrasound scanner
is for the General Practitioner Clinic industry.
Other
potential markets for the “SCANVIEW 100-S” are First aid
workers in both urban and remote areas, mobile and small clinics around the
world, and field hospitals for armed forces, to name but a few.
There are
over eight hundred (800) clinics in Canada and several thousand in the United
States, which are the target market.
-7-
Medical
International Technology, Inc.
Scanview’s
latest model the “SCANVIEW
100-SBF” which is designed for Human body
fat measurements and introduced at the end of 2006, targeting the booming
cosmetic market (plastic surgeon, liposuction, and many other niche markets)
where baby boomers who seek a rejuvenated appearance spending increasing amounts
to have a younger look. Scanview’s objective in the short
term is to create a niche market for its “SCANVIEW 100-SBF” in this
market and to establish itself as a leader in state-of-the-art ultrasound
scanner in the world.
Competition
There are
several companies producing ultrasound scanners throughout the world, developed
for the human sector. There are only five companies that produce scanners for
the Veterinarian market.
Scanview is believes that it has
surpassed its competition with its “SCANVIEW I”, “SCANVIEW 100-S”
and “SCANVIEW
100-SBF” by having higher performance and better ergonomic
design.
Marketing
Scanview
will expand its distribution network for our products. As discussed, we will
serve two major markets - both human and veterinary medicine. As each market
requires a different approach and has specific individual needs, the marketing
strategy developed for each of these markets is based on SCANVIEW INC. Marketing
management experience and market feedback.
The
foundation of our marketing strategy is based on customer training. Therefore,
each step of our sales and promotional program is geared toward the specific
needs that have been identified for each target market. The objective is to
carefully choose local, influential, successful distributors in selected
territories and optimize market awareness in order to achieve maximum sales
results.
MIT is
continually researching and developing its products to the market
needs.
Patents and
Trademarks
MIT has
obtained trademark registration in United States on the use of AGRO-JET (Reg.
No. 2,712,089) and MED-JET (Reg. No. 2,798,613).
Regulation and
Approvals
MIT
produces products that may require various approvals by government agencies in
the locals in which they are used. These regulations or approvals vary greatly
depending upon the way our products are used. We may not have the required
approvals for various applications of our products in those localities. We
continue to seek approvals for various applications of our products but the
costs associated with achieving such approvals may exceed our available
resources or be commercially impracticable.
We have
received full certification for our Quality Management System granted under the
International Organization for Standardization's ISO: 9001:2000. This includes
Certification for the “Canadian Medical Device Conformity Assessment System”
(CMDCAS), for devices to be licensed by HEALTH CANADA. The company plans to
aggressively market the MED-JET for human use for mass-inoculation. The company
feels that Canadian and other world markets can benefit greatly from the
MED-JET. By using the MED-JET, health officials have an alternative delivery
method that is safer and faster than the traditional needle.
Medical
International Technologies, Inc has received full certification granted under
the International Organization for Standardization, as well as the Canadian
Medical Device Conformity Assessment System, for devices to be licensed by
HEALTH CANADA. These certifications allow MIT to market the Med-Jet Needle-Free
Injector for human use in all countries other than the U.S., at this point. The
Med-Jet injector has been submitted for FDA approval, which, if accepted, will
allow MIT to sell the Med-Jet in the United States, making it a truly worldwide
system.
-8-
Medical
International Technology, Inc.
The
Company is still working to complete FDA filings for the use of the Med-Jet for
injecting anesthesia in a variety of situations and the use of the Med-Jet-H,
for mass vaccination in case of a pandemic, such as Avian Influenza, Polio,
Tuberculosis, or Malaria.
Medical
International Technologies is proceeding with the test requested earlier by the
FDA, and is expecting to finalize the tests during 2008 fiscal
year.
Australian
Wool Innovation Limited (AWI) is in the final stage of negotiation with a
Pharmaceutical partner for the production and Distribution of the various
compounds that will be used with MIT Agro-jet.
MIT is
expecting to negotiate with the Pharmaceutical partner and sign a Supply
agreement as soon as the agreement between AWI and the Pharmaceutical Company is
signed and sealed.
There can
be no assurance that this system will receive approval from the respective
agencies.
Employees
Currently,
the company has six employees, the President and Chief Executive Officer of the
company, and other employees. As operations are expanded additional employees
will be required.
Medical
International Technology, Inc. currently leases its office under an operating
lease that expires October 31, 2009. These offices are a 5,200 square foot
industrial facility in Montreal Canada. Facilities include various machine tools
and test systems for prototyping and light production. The annual lease expense
for the facilities for the year ending September 30, 2008 was $29,000. The
current lease rate is $29,000 annually.
The
company is or was engaged in the following Legal Proceedings:
(a) Ratha
Yip vs. MEDICAL INTERNATIONAL TECHNOLOGIES (MIT CANADA) INC. and Karim Ménassa,
small claim court file 500-32-104717-071, for unpaid accounts to the amount of
$7 000.00 CDN. The plaintiff, Ratha Yip, was the designer for the products of
the company. The company believes it should not be involved in this dispute
because that the plaintiff did not execute the services for which he was
engaged, and intends to vigorously defend itself.
No
matters were submitted to a vote of security holders in the fourth quarter of
the year ending September 30, 2008.
Market
Information
Medical
International Technology, Inc. common stock is currently listed on Pink Sheets
under the symbol “MDLH.PK” and was formerly listed on the NASD Over-The-Counter
Bulletin Board under the symbol “MDLH”, and prior to November 21, 2005 "MDIR".
The following table sets forth, for the periods indicated, the last sale prices
for the Common Stock as reported by the Pink Sheets.
-9-
Medical
International Technology, Inc.
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|
June
2008
|
$ | 0.02 | $ | 0.02 | ||||
|
March
2008
|
$ | 0.02 | $ | 0.02 | ||||
|
December
2007
|
$ | 0.02 | $ | 0.02 | ||||
|
September
2007
|
$ | 0.08 | $ | 0.02 | ||||
|
June
2007
|
0.08 | 0.05 | ||||||
|
March
2007
|
0.1 | 0.05 | ||||||
|
December
2006
|
0.3 | 0.15 | ||||||
|
September
2006
|
0.66 | 0.51 | ||||||
|
June
2006
|
0.61 | 0.45 | ||||||
|
March
2006
|
1.55 | 1.19 | ||||||
|
December
2005
|
1.1 | 0.7 | ||||||
Holders
Medical
International Technology had 27,058,663 shares of common stock issued and
outstanding as of September 30, 2008, which were held by approximately 71
shareholders and an undetermined number of shareholders holding common shares in
street name (CEDE&CO).
Options
The
Company has no option agreements outstanding as of September 30,
2008.
Private
Placements
The
Company has not completed or offered any private placement agreements in during
fiscal 2008.
Preferred
Stock
As of
September 30, 2008 there was no preferred stock outstanding. Dividend features
and voting rights are at the discretion of the Board of Directors without the
requirement of shareholder approval.
There
were no sales of unregistered securities during fiscal 2008.
The
Company has a stock compensation plan, as filed on Form S-8 on September 28,
2006, under which directors are authorized to grant incentive stock options, to
a maximum of one million (1,000,000) shares, to directors, employees and
consultants of the Company. The plan provides both for the direct award or sale
of shares and for the grant of options to purchase shares.
The
following table provides information as of September 30, 2008 regarding
compensation plans (including individual compensation arrangements) under which
equity securities are authorized for issuance:
-10-
Medical
International Technology, Inc.
|
Plan Category
|
Number
of securities
to
be issued
upon
exercise of
outstanding
options,
warrants and rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants and rights
|
Number
of securities
available
for future
issuance
under equity
compensation
plans
(excluding
securities
shown in first column)
|
|||
|
Equity
compensation plans approved by shareholders
(1)(2)
|
0
|
$0.00
|
0
|
|||
|
Equity
compensation plans not approved by shareholders
(1)(3)
|
0
|
$0.00
|
321,700
|
|||
|
Total
|
0
|
$0.00
|
321,700
|
(1) Consists of shares of our
common stock issued or remaining available for issuance under our stock
compensation plan.
(2) Approved by shareholders
of Medical International Technology, Inc.
(3) The total common stock
issued from the maximum 1,000,000 shares authorized under the stock compensation
plan as of September 30, 2008 was 678,300 shares.
Dividend
Policy
Medical
International Technology, Inc. has not paid a cash dividend on its common stock
in the past 12 months. The company does not anticipate paying any cash dividends
on its common stock in the next 12-month period. Management
anticipates that earnings, if any, will be retained to fund the company's
working capital needs and the expansion of its business. The payment
of any dividends is at the discretion of the Board of Directors.
When used
in this Form 10-KSB and in future filings by the company with the Commission,
statements identified by the words “believe”, “positioned”, “estimate”,
“project”, “target”, “continue”, “will”, “intend”, “expect”, “future”,
“anticipates”, and similar expressions express management’s present belief,
expectations or intentions regarding the company’s future performance within the
meaning of the Private Securities Litigation Reform Act of 1995. The
safe harbor in the Private Securities Litigation Act of 1995 does not apply to
statements made in this document. Readers are cautioned not to place
undue reliance on any such forward-looking statements, each of which speaks only
as of the date made. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected. The
company has no obligations to publicly release the result of any revisions which
may be made to any forward-looking statements to reflect anticipated or
unanticipated events or circumstances occurring after the date of such
statements.
Overview
The
following discussions and analysis should be read in conjunction with the
Company’s consolidated financial statements and the notes presented following
the financial statements. The discussion of results, causes and
trends should not be construed to imply any conclusion that such results or
trends will necessarily continue in the future.
Medical
International Technology, Inc. (MIT) is receiving revenues from sales. The
company has maintained operations from these revenues and through equity and
debt financing. The company has been dependent on advances from related parties
to maintain operations. There are no agreements, assurances or commitments to
continue providing these advances. Products are currently developed, assembled
and shipped from our facility. Component manufacturing is subcontracted to
various suppliers and machine shops.
Distribution
agreements are being sought worldwide for the Company’s products.
Critical Accounting
Policies
The
accompanying discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America (“US GAAP”). The preparation of these financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues, and expenses, and related disclosure of contingent assets
and liabilities. These estimates form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from
other sources. We base our estimates and judgments on historical experience and
all available information. However, future events are subject to change, and the
best estimates and judgments routinely require adjustment. US GAAP requires us
to make estimates and judgments in several areas, including those related to
recording various accruals, income taxes, the useful lives of long-lived assets,
such as property and equipment and intangible assets, and potential losses from
contingencies and litigation. We believe the policies discussed below are the
most critical to our financial statements because they are affected
significantly by management’s judgments, assumptions and estimates.
-11-
Medical
International Technology, Inc.
Foreign
Currency Translations
The
Company operates out of its offices in Montreal, Canada and maintains its books
and records in Canadian Dollars. The financial statements herein have been
converted into U.S. Dollars. Balance sheet accounts, other than property and
equipment, have been translated at exchange rates in effect at the end of the
year. Property and equipment is converted at the exchange rate in
effect at the date of purchase. Income statement accounts have been
translated at average exchange rates for the year. Translation gains and losses
are included as a separate component of stockholders’ equity.
Income
Taxes
The
Company accounts for income taxes using the asset and liability method described
on SFAS No. 109, “Accounting For Income Taxes”, the objective of which is
to establish
deferred tax assets and liabilities for the temporary differences between the
financial reporting and the tax bases of Water’s assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized or
settled. A valuation allowance related to deferred tax assets is recorded when
it is more likely than not that some portion or all of the deferred tax assets
will not be realized.
New
Accounting Pronouncements
In
December 2007, the FASB issued SFAS 141 (revised 2007), "Business Combinations".
SFAS 141R is a revision to SFAS 141 and includes substantial changes to the
acquisition method used to account for business combinations (formerly the
"purchase accounting" method), including broadening the definition of a
business, as well as revisions to accounting methods for contingent
consideration and other contingencies related to the acquired business,
accounting for transaction costs, and accounting for adjustments to provisional
amounts recorded in connection with acquisitions. SFAS 141R retains the
fundamental requirement of SFAS 141 that the acquisition method of accounting be
used for all business combinations and for an acquirer to be identified for each
business combination. SFAS 141R is effective for periods beginning on or after
December 15, 2008, and will apply to all business combinations occurring after
the effective date. The Company is currently evaluating the potential impact of
SFAS 141R on its consolidated financial statements.
In
December 2007, the FASB issued SFAS 160, "Non-controlling Interests in
Consolidated Financial Statements - an amendment of Accounting Research Bulletin
No. 51, Consolidated Financial Statements" ("ARB 51"). This Statement amends ARB
51 to establish new standards that will govern the (1) accounting for and
reporting of non-controlling interests in partially owned consolidated
subsidiaries and (2) the loss of control of subsidiaries. Non-controlling
interest will be reported as part of equity in the consolidated financial
statements. Losses will be allocated to the non-controlling interest, and, if
control is maintained, changes in ownership interests will be treated as equity
transactions. Upon a loss of control, any gain or loss on the interest sold will
be recognized in earnings. SFAS 160 is effective for periods beginning after
December 15, 2008. The Company is currently evaluating the potential impacts of
SFAS 160 on its consolidated results of operations and financial
position.
In March
2008, the FASB issued ASAS No. 161, "Disclosure about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133" (SFAS 161), which
establishes, among other things, the disclosure requirements for derivative
instruments and hedging activities. SFAS 161 requires qualitative disclosures
about objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of and gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. SFAS 161 is effective for fiscal periods and interim period
beginning after November 15, 2008. The Company does not expect the adoption of
SFAS 161 to have a material impact on its consolidated results of operations,
financial position or cash flows.
-12-
Medical
International Technology, Inc.
Financial Condition and
Results of Operations
During
the fiscal year ending September 30, 2008 the Company experienced a net loss of
$2,361,882, primarily comprised of selling, general and administrative expenses
of $656,059 and research and development costs of $1,802,085. Included in
research and development costs are expenses of $1,800,000 related to the
Company’s research and development contract with Idee International R&D,
Inc., an affiliated entity. For the prior fiscal year 2007 the
Company experienced a net loss of $898,376 where selling, general and
administrative expenses totaled $830,363. And research and development costs
were $134,294.
Net
comprehensive loss, after adjustment for foreign currency translation, for
fiscal year 2008 was $2,632,393.
For the
twelve-months ended September 30, 2008 the Company experienced a decrease in
sales of $9,813 compared to sales for the prior year. Gross profit for the
twelve-months ended September 30, 2008 was $97,243 or approximately 30% of sales
as compared to $216,652, or 64%. Costs of sales continue to be
increased by the need to customize many of the items ordered to fit the
particular needs of clients utilizing our products in new
applications.
Liquidity and Capital
Resources
During
the fiscal year ending September 30, 2008 the Company’s cash position decreased
by $92,702. Net cash provided by operating activities was $521,257, resulting
primarily from increases in related party payables and deferred
income. Net cash used by financing activities was $332,014, resulting
primarily from debt repayments of $282,318. Net cash used by
investing activities was $4,648, resulting entirely from capital asset
additions. The effect of exchange rates on cash during fiscal 2008
resulted in a decrease in cash values of $277,297.
The
Company has reported a net liability position of $2,629,455 and has accumulated
operation losses since inception of $9,333,413, which raises substantial doubt
about the Company’s ability to continue as a going concern. The continuation of
the Company is dependent upon the continuing financial support of creditors and
stockholders and upon obtaining the capital requirements for the continuing
operations of the Company. Management believes actions planned and presently
being taken provides the opportunity for the Company to continue as a going
concern.
Medical
International Technology, Inc. expects that revenues from existing and
developing sales may not meet its liquidity requirements for the next 12-month
period at its current level of operations. The company has been dependent on
advances from related parties to maintain operations. There are no agreements,
assurances or commitments to continue providing these advances. The company
continues to rely on management to develop the business and work to develop
sales. Management has and may continue to supplement cash flows from sales with
additional equity and debt financing. Substantially, expanded operations are
expected to require additional capital, either from a future offering of equity
or the company pursuing other methods of financing, as appropriate.
Medical
International Technology, Inc. is based in Montreal, Canada; specializing in the
research, development, marketing and sale of needle-free jet injector products
designed for humans and animals, for single and mass injections. Needle-free jet
injector technology and products provide advantages over traditional needle
injection techniques and products, including; efficiency, handling security,
biological waste elimination, and patient stress reduction.
Medical
International Technology's intends to concentrate its activities in the medical
and veterinary sectors, in particular, in the field of equipment and
instrumentation. The company's strategy is to build good, reliable and cost
effective products, seek and establish strategic alliances with different
pharmaceutical companies and manufacturers to ensure good distribution channels
for its products.
MIT
promotes its products in many countries including the United States of America.
MIT is exerting every effort and using its resources to promote its products and
to open markets for its technology. As we continue to market our products, we
hope to gain broader acceptance of the needle-free injection
technology.
MIT is
continually researching and developing its products to the market
needs.
Medical
International Technology, Inc. will continue to seek additional funding to
expand operations and develop sales revenue to a volume sufficient to sustain
operations.
-13-
Medical
International Technology, Inc.
Medical
International Technology, Inc.
Financial
Statements
Contents
|
Page
|
|
|
Report
of Independent Registered Public Accounting Firm
|
15
|
|
Financial
Statements
|
|
|
Consolidated
Balance Sheet
|
16
|
|
Consolidated
Statements of Operations
|
17
|
|
Consolidated
Statements of Comprehensive Loss
|
18
|
|
Consolidated
Statement of Stockholders’ (Deficit)
|
19
|
|
Consolidated
Statements of Cash Flows
|
20
|
|
Notes
to Consolidated Financial Statements
|
21
|
-14-
Report
of Independent Registered Public Accounting Firm
To The
Board of Directors and Stockholders of
Medical
International Technology, Inc.
We have
audited the accompanying consolidated balance sheet of Medical International
Technology, Inc. and subsidiaries as of September 30, 2008 and 2007, and the
related consolidated statements of operations, comprehensive loss, stockholders’
deficit, and cash flows for the years then ended. These financial statements are
the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the 2008 and 2007 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Medical
International Technology, Inc. and subsidiaries as of September 30, 2008 and
2007, and the results of its operations and its cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered recurring losses from operations and has a
working capital deficiency. Those conditions raise substantial doubt about its
ability to continue as a going concern. Management’s plans regarding those
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
/s/ PS STEPHENSON & CO.,
P.C.
Wharton,
Texas
November
21, 2008 except for Note 2, which is October 2,
2009
-15-
MEDICAL
INTERNATIONAL TECHNOLOGY
CONSOLIDATED
BALANCE SHEETS
|
September
30,
|
||||||||
|
2008
|
2007
|
|||||||
|
Assets
|
||||||||
|
Current
assets
|
||||||||
|
Cash
and cash equivalents
|
$
|
94,834
|
$
|
187,536
|
||||
|
Accounts
receivable
|
-
|
6,937
|
||||||
|
Inventories
|
169,459
|
194,826
|
||||||
|
Research
credit receivable
|
-
|
127,718
|
||||||
|
Prepaid
expenses
|
3,565
|
2,764
|
||||||
|
Total
current assets
|
267,858
|
519,781
|
||||||
|
Property
and Equipment
|
||||||||
|
Tooling
and machinery
|
330,873
|
306,684
|
||||||
|
Furniture
and office equipment
|
170,356
|
160,711
|
||||||
|
Leasehold
improvements
|
31,925
|
30,157
|
||||||
|
Total
property and equipment
|
533,154
|
497,552
|
||||||
|
Less
accumulated depreciation
|
(381,358
|
)
|
(299,832
|
)
|
||||
|
Total
property and equipment, net
|
151,796
|
197,720
|
||||||
|
Patents
(net of accumulated amortization of $1,398 and $932)
|
632
|
1,098
|
||||||
|
Total
assets
|
$
|
420,286
|
$
|
718,599
|
||||
|
Liabilities
and Stockholder's Equity (Deficit)
|
||||||||
|
Current
liabilities
|
||||||||
|
Deferred
income
|
$
|
1,353,782
|
$
|
7,494
|
||||
|
Accounts
payable and accrued expenses
|
90,245
|
235,102
|
||||||
|
Amounts
due to related parties
|
1,524,321
|
63,050
|
||||||
|
Loans
payable – related parties
|
-
|
49,696
|
||||||
|
Current
portion of long-term debts
|
8,237
|
283,154
|
||||||
|
Total
current liabilities
|
2,976,585
|
638,496
|
||||||
|
Long-Term
Debts
|
6,860
|
14,261
|
||||||
|
Total
liabilities
|
2,983,445
|
652,757
|
||||||
|
Stockholder's
Equity (Deficit)
|
||||||||
|
Preferred
stock, $.0001 par value; 3,000,000 shares authorized;
|
||||||||
|
No
issued and outstanding shares.
|
-
|
-
|
||||||
|
Common
stock, $.0001 par value; 100,000,000 shares authorized;
|
||||||||
|
27,058,663
and 27,058,663 issued and outstanding, respectively
|
2,706
|
2,706
|
||||||
|
Additional
paid-in capital
|
6,804,339
|
6,804,339
|
||||||
|
Accumulated
deficit
|
(9,333,413
|
)
|
(6,971,531
|
)
|
||||
|
Other
comprehensive income (loss)
|
(36,791
|
)
|
230,328
|
|||||
|
Total
Stockholder's Equity (Deficit)
|
(2,563,159
|
)
|
65,842
|
|||||
|
Total
Liabilities and Stockholder's Equity (Deficit)
|
$
|
420,286
|
$
|
718,599
|
||||
The
accompanying notes are an integral part of these consolidated financial
statements.
-16-
MEDICAL
INTERNATIONAL TECHNOLOGY
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
Years
Ended September 30,
|
||||||||
|
2008
|
2007
|
|||||||
|
Sales
|
$ | 328,713 | $ | 338,526 | ||||
|
Cost
of sales
|
231,470 | 121,874 | ||||||
|
Gross
profit
|
97,243 | 216,652 | ||||||
|
Operating
expenses
|
||||||||
|
Research
and development costs
|
1,802,085 | 134,294 | ||||||
|
Selling,
general and administrative expenses
|
656,059 | 830,363 | ||||||
|
Total
operating expenses
|
2,458,144 | 964,657 | ||||||
|
Operating
income (loss)
|
(2,360,901 | ) | (748,005 | ) | ||||
|
Other
income (expense):
|
||||||||
|
Goodwill
impairment charge
|
- | (131,382 | ) | |||||
|
Interest
income
|
16,798 | 6,474 | ||||||
|
Interest
expense
|
(17,779 | ) | (25,463 | ) | ||||
|
Total
other income (expense)
|
(981 | ) | (150,371 | ) | ||||
|
Income
(loss) before provision for income taxes
|
(2,361,882 | ) | (898,376 | ) | ||||
|
Provision
for (benefit from) income taxes
|
- | - | ||||||
|
Net
loss
|
$ | (2,361,882 | ) | $ | (898,376 | ) | ||
|
Net
loss per common share
|
$ | (0.09 | ) | $ | (0.03 | ) | ||
|
Weighted
average common shares
|
||||||||
|
outstanding
- basic and diluted
|
27,058,663 | 27,058,663 | ||||||
The accompanying notes are
an integral part of these consolidated financial statements.
-17-
MEDICAL
INTERNATIONAL TECHNOLOGY
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
|
Years
Ended September 30,
|
||||||||
|
2008
|
2007
|
|||||||
|
Net
loss
|
$
|
(2,361,882
|
)
|
$
|
(898,376
|
)
|
||
|
Other
comprehensive income (loss)
|
||||||||
|
Foreign
currency translation adjustment
|
(267,119
|
)
|
212,913
|
|||||
|
Comprehensive
loss
|
$
|
(2,629,001
|
)
|
$
|
(685,463
|
)
|
||
The accompanying notes are
an integral part of these consolidated financial statements.
-18-
MEDICAL
INTERNATIONAL TECHNOLOGY
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' (DEFICIT)
|
Additional
|
||||||||||||||||
|
Common
Stock
|
Paid-in
|
Accumulated
|
||||||||||||||
|
Shares
|
Amount
|
Capital
|
Deficit
|
|||||||||||||
|
Balances
- September 30, 2006
|
10,867,737 | $ | 1,086 | $ | 5,786,600 | $ | (6,073,155 | ) | ||||||||
|
Common
shares issued for debts
|
3,920,593 | 392 | 217,811 | |||||||||||||
|
Common
shares issued for services
|
9,498,333 | 951 | 560,185 | |||||||||||||
|
Common
shares issued in private placements
|
272,000 | 27 | 64,993 | |||||||||||||
|
Common
shares issued for the acquisition of Scanview
|
2,500,000 | 250 | 174,750 | |||||||||||||
|
Net
loss for the year ended September 30, 2007
|
(898,376 | ) | ||||||||||||||
|
Balances
- September 30, 2007
|
27,058,663 | 2,706 | 6,804,339 | (6,971,531 | ) | |||||||||||
|
Net
loss for the year ended September 30, 2008
|
(2,361,882 | ) | ||||||||||||||
|
Balances
- September 30, 2008
|
27,058,663 | $ | 2,706 | $ | 6,804,339 | $ | (9,333,413 | ) | ||||||||
The accompanying notes are
an integral part of these consolidated financial statements.
-19-
MEDICAL
INTERNATIONAL TECHNOLOGY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
Years
Ended September 30,
|
||||||||
|
2008
|
2007
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
loss
|
$ | (2,361,882 | ) | $ | (898,376 | ) | ||
|
Adjustments
to reconcile net loss to net cash
|
||||||||
|
provided
by (used in) operating activities:
|
||||||||
|
Depreciation
expense
|
53,963 | 46,446 | ||||||
|
Amortization
expense
|
466 | 466 | ||||||
|
Goodwill
impairment charge
|
- | 131,382 | ||||||
|
Common
stock issued for services
|
- | 561,136 | ||||||
|
Changes
in:
|
||||||||
|
Accounts
receivable
|
6,937 | 12,307 | ||||||
|
Research
credit receivable
|
127,718 | 103,341 | ||||||
|
Inventories
|
25,367 | (48,670 | ) | |||||
|
Prepaid
expenses
|
(801 | ) | 2,604 | |||||
|
Accounts
payable and accrued liabilities
|
(159,805 | ) | (232,063 | ) | ||||
|
Related
party payables
|
1,476,219 | 63,050 | ||||||
|
Deferred
income
|
1,353,075 | (50,064 | ) | |||||
|
Net
cash used by operating activities
|
521,257 | (308,441 | ) | |||||
|
Cash
flows from investing activities:
|
||||||||
|
Tooling
and machinery
|
(4,648 | ) | - | |||||
|
Net
cash used by investing activities
|
(4,648 | ) | - | |||||
|
Cash
flows from financing activities:
|
||||||||
|
Proceeds
from issuance of stock, net
|
- | 65,020 | ||||||
|
Reduction
in amounts due to related parties
|
(49,696 | ) | (50,054 | ) | ||||
|
Issuance
of notes payable
|
- | 294,547 | ||||||
|
Repayment
on notes payable
|
(282,318 | ) | - | |||||
|
Net
cash provided from financing activities
|
(332,014 | ) | 309,513 | |||||
|
Effect
of exchange rates on cash
|
(277,297 | ) | 183,544 | |||||
|
Increase
(decrease) in cash
|
(92,702 | ) | 184,616 | |||||
|
Cash,
beginning of period
|
187,536 | 2,920 | ||||||
|
Cash,
end of period
|
$ | 94,834 | $ | 187,536 | ||||
|
Supplemental
disclosure of cash flow information:
|
||||||||
|
Cash
paid for interest
|
$ | 17,779 | $ | 25,463 | ||||
|
Cash
paid for federal income taxes
|
$ | - | $ | - | ||||
|
Supplemental
disclosure of non-cash transactions
|
||||||||
|
Common
stock issued for debt reductions
|
$ | - | $ | 218,20 4 | ||||
The accompanying notes are
an integral part of these consolidated financial statements.
-20-
Medical
International Technology, Inc.
Note
1 – Business Activities, Related Risks and
Summary of Significant Accounting Policies
Medical
International Technology, Inc. (the "Company") was incorporated in Colorado on
July 19, 1999, under the name, Posterally.com, Inc. The Company filed an
amendment to its articles of incorporation on September 24, 2002 changing its
name to Medical International Technology, Inc.
The
Company is in the business of developing and manufacturing a needle free device
for use in injecting medicine and supplements for human and animal
use.
Going
Concern:
The
Company has incurred net losses aggregating $4,769,891 during the three years
ended June 30, 2008. In addition, the Company has a working capital
deficiency of $2,563,159 and a stockholder’s deficiency of
$2,629,455 at September 30, 2008. These factors, amongst others, raise
substantial doubt about the Company’s ability to continue as a going
concern.
There can
be no assurance that sufficient funds required during the next year or
thereafter will be generated from operations or that funds will be available
from external sources such as debt or equity financings or other potential
sources. The lack of additional capital resulting from the inability to generate
cash flow from operations or to raise capital from external sources would force
the Company to substantially curtail or cease operations and would, therefore,
have a material adverse effect on its business. Further, there can be no
assurance that any such required funds, if available, will be available on
attractive terms or that they will not have a significant dilutive effect on the
Company’s existing stockholders.
The
accompanying financial statements do not include any adjustments related to the
recoverability or classification of asset carrying amounts or the amounts and
classification of liabilities that may result should the Company be unable to
continue as a going concern.
The
Company has developed a plan to address liquidity in the following
ways:
|
●
|
To
raise capital through the sale or exercise of equity
securities
|
| ● | Increase revenue through the sale of needle free devices and related products |
Summary
of Significant Accounting Policies
Principles
of consolidation
The
accompanying financial statements include the accounts and transactions of
Medical International Technology, Inc. and its wholly owned subsidiaries,
Medical International Technologies (MIT Canada) Inc. and 9139-2449 Quebec Inc.
(dba Scanview), which was acquired by the Company on June 11, 2007 (Note
6). Accordingly, the accompanying financial statements only include
the results of operations of Scanview since June 11,
2007. Intercompany transactions and balances have been eliminated in
consolidation.
Foreign
Currency Translations
The
Company operates out of its offices in Montreal, Canada and maintains its books
and records in Canadian Dollars. The financial statements herein have been
converted into U.S. Dollars. Balance sheet accounts have been
translated at exchange rates in effect at the end of the
year. Income statement accounts have been translated at
average exchange rates for the year. Translation gains and losses are included
as a separate component of stockholders’ equity.
Cash and Cash Equivalents
For
purpose of the statements of cash flows, the Company considers cash and cash
equivalents to include cash on hand, amounts due to banks and any other highly
liquid investments with maturities of three months or less.
-21-
Medical
International Technology, Inc.
Allowance
for Doubtful Accounts
The
allowance for doubtful accounts on accounts receivable is charged to income in
amounts sufficient to maintain the allowance for uncollectible accounts at a
level management believes is adequate to cover any probable losses. Management
determines the adequacy of the allowance based on historical write-off
percentages and the current status of accounts receivable. Accounts receivable
are charged off against the allowance when collectability is determined to be
permanently impaired.
Inventories
Inventories
are stated at the lower of cost or net realizable value. Cost is determined on a
first-in, first-out basis. At each balance sheet date, the Company evaluates its
ending inventories for excess quantities and obsolescence. This evaluation
includes an analysis of sales levels by product type. Among other factors, the
Company considers historical and forecasted demand in relation to the inventory
on hand, competitiveness of product offerings, market conditions and product
life cycles when determining the net realizable value of the inventory.
Provisions are made to reduce excess or obsolete inventories to their estimated
net realizable values. Once established, write-downs are considered permanent
adjustments to the cost basis of the excess or obsolete
inventories.
Property
and Equipment
The cost
of property and equipment is depreciated over the estimated useful lives of the
related assets, which range from 5 to 7 years. Depreciation is computed on the
straight-line method for financial reporting purposes and on the declining
balance method for income tax reporting purposes. Depreciation expense for the
year ended September 30, 2008 and 2007 were $53,963 and $46,466,
respectively.
Long-Lived
Assets
In August
2001, SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," was issued establishing new rules and clarifying implementation issues
with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be disposed of, "by allowing a probability-weighted cash
flow estimation approach to measure the impairment loss of a long-lived asset.
The statement also established new standards for accounting for discontinued
operations. Transactions that qualify for reporting in discontinued operations
include the disposal of a component of an entity's operations that comprises
operations and cash flow that can be clearly distinguished, operationally and
for financial reporting purposes, from the rest of the entity. The Company has
adopted this standard and its adoption had no significant effect on the
Company's financial statements.
Intangible
assets
Patents
are being amortized over their remaining lives ranging from 8.5 years through 16
years.
Goodwill
and Purchased Intangible Assets
Goodwill
is tested for impairment on an annual basis and between annual tests in certain
circumstances, and is written down when impaired in accordance with SFAS
No. 142, “Goodwill and Other Intangible Assets.” For goodwill, the Company
performs a two-step impairment test. In the first step, the Company compares the
fair value of the reporting unit to the carrying value, including goodwill. The
Company determines the fair value of the reporting unit based on a weighting of
income and market approaches. If the fair value of the reporting unit exceeds
the carrying value of the net assets assigned to that unit, goodwill is not
impaired and no further testing is performed. If the carrying value of the net
assets assigned to the reporting unit exceeds the fair value of the reporting
unit, then the Company performs the second step of the impairment test in order
to determine the implied fair value of the reporting unit’s goodwill. If the
carrying value of a reporting unit’s goodwill exceeds its implied fair value,
the Company records an impairment loss equal to the difference.
Based on
the impairment tests performed, the Company recorded impairment charges for
goodwill of $131,382 in fiscal 2007, related to the purchase of Scanview (Note
6). Purchased intangible assets other than goodwill are amortized over their
useful lives.
-22-
Medical
International Technology, Inc.
Revenue
Recognition
The
Company recognizes revenue when the related product is shipped to the respective
customer provided that: title and risk of loss have passed to the customer;
persuasive evidence of an arrangement exists; the sales price is fixed or
determinable; and collectability is deemed probable.
Research
and Development
Research
and development expenditures are charged to operations as incurred.
Stock
options
Effective
July 1, 2005, the Company adopted Statement of Financial Accounting Standards
(SFAS) 123(R), “Share-Based Payment,” using the modified prospective method.
SFAS 123(R) establishes standards for the accounting for transactions in which
an entity exchanges its equity instruments for goods or services and requires
that the compensation cost relating to share-based payment transactions be
recognized in financial statements, based on the fair value of the equity or
liability instruments issued, adjusted for estimated forfeitures. The Company
determines the value of stock options utilizing the Black-Scholes option-pricing
model. Compensation costs for share-based awards with pro rata vesting are
allocated to periods on a straight-line basis.
The
Company accounts for options granted to consultants in accordance with Emerging
Issues Task Force (EITF) Issue 96-18, “Accounting for Equity Instruments That
Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services,” and SFAS 123(R).
Net
Loss per Common Share
Basic
earnings per share (“EPS”) is computed by dividing net loss by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution from the exercise or conversion of securities into common
stock, including stock options and warrants. For the years ended Spetember 30,
2008 and 2007, there were no dilutive effects of such securities as the Company
incurred a net loss in each period. There were no outstanding options
or warrants as of September 30, 2008 and 2007.
Use of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Income Taxes
The
Company recognizes income tax expense based on the liability method of
accounting for income taxes. Deferred tax assets and liabilities are recognized
for the income tax effect of temporary differences between the tax basis of
assets and liabilities and their carrying values for financial reporting
purposes. Deferred tax expense or benefit is the result of changes in
deferred tax assets and liabilities during the period. The Company
has recorded a valuation allowance, which reflects the estimated amount of
deferred tax assets that more likely than not will be realized.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit
risk consists principally of cash in banks and trade receivables. The
Company manages this risk by maintaining all deposits in high quality financial
institutions and periodically performing evaluations of the relative credit
standing of the financial institutions that are considered in the Company’s
investment strategy. The Company grants unsecured credit to its customers during
the normal course of business and performs ongoing credit evaluations of its
customers to minimize any potential loss.
Fair
Value of Financial Instruments
The
Company’s financial instruments consist primarily of cash and cash equivalents,
accounts receivable and accounts payable. Management believes that the carrying
values of these assets and liabilities are representative of their respective
fair values based on their short-term nature.
-23-
Medical
International Technology, Inc.
New Accounting
Pronouncements
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”.
This Statement replaces SFAS No. 141, Business Combinations. This
Statement retains the fundamental requirements in Statement 141 that the
acquisition method of accounting (which Statement 141 called the purchase method) be used for
all business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree; b) recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS
No. 141(R) will apply prospectively to business combinations for which the
acquisition date is on or after Company’s fiscal year beginning October 1,
2009.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements”. This Statement amends ARB 51 to establish
accounting and reporting standards for the noncontrolling (minority) interest in
a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. The Company has not yet determined the impact, if any,
that SFAS No. 160 will have on its consolidated financial statements. SFAS
No. 160 is effective for the Company’s fiscal year beginning
October 1, 2009.
In March
2008, the FASB issued ASAS No. 161, "Disclosure about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133" (SFAS 161), which
establishes, among other things, the disclosure requirements for derivative
instruments and hedging activities. SFAS 161 requires qualitative disclosures
about objectives and strategies for using derivatives, quantitative disclosures
about fair value amounts of and gains and losses on derivative instruments, and
disclosures about credit-risk-related contingent features in derivative
agreements. SFAS 161 is effective for fiscal periods and interim period
beginning after November 15, 2008. The Company does not expect the adoption of
SFAS 161 to have a material impact on its consolidated results of operations,
financial position or cash flows.
Note 2 – Restatement
On
October 2, 2009, the officers of Medical International Technology, Inc. (the
“Company”) concluded that the financial statements included in our Annual Report
on Form 10-K for the years ended September 30, 2008 and 2007, and the Quarterly
Reports for the periods ended December 31, 2008, March 31, 2009 and June 30,
2009, should be restated to correct a foreign currency translation
error. At each respective balance sheet date, property and equipment,
including accumulated depreciation, was translated using historical exchange
rates at the date of purchase rather than the current exchange rate at each
balance sheet date, as required by SFAS No. 52. The correction of the
translation error had no effect on net income (loss) or cash flows as previously
reported in any period. The effect of the restatement on specific
items in the balance sheet is as follows:
|
September
30, 2008
|
||||||||||||
|
As
Previously
|
As
|
|||||||||||
|
Reported
|
Adjustments
|
Restated
|
||||||||||
|
Property
and equipment
|
||||||||||||
|
Tooling
and machinery
|
$ | 229,823 | $ | 101,050 | $ | 330,873 | ||||||
|
Furniture
and office equipment
|
133,014 | 37,342 | 170,356 | |||||||||
|
Leasehold
improvements
|
22,163 | 9,762 | 31,925 | |||||||||
|
Total
property and equipment
|
385,000 | 148,154 | 533,154 | |||||||||
|
Less
accumulated depreciation
|
(299,500 | ) | (81,858 | ) | (381,358 | ) | ||||||
|
Total
property and equipment, net
|
$ | 85,500 | $ | 66,296 | $ | 151,796 | ||||||
|
Stockholders'
Equity (Deficit)
|
||||||||||||
|
Other
comprehensive income (loss)
|
$ | (103,087 | ) | $ | 66,296 | $ | (36,791 | ) | ||||
|
Total
stockholders' equity (deficit)
|
$ | (2,629,455 | ) | $ | 66,296 | $ | (2,563,159 | ) | ||||
|
September
30, 2007
|
||||||||||||
|
As
Previously
|
As
|
|||||||||||
|
Reported
|
Adjustments
|
Restated
|
||||||||||
|
Property
and equipment
|
||||||||||||
|
Tooling
and machinery
|
$ | 225,175 | $ | 42,664 | $ | 267,839 | ||||||
|
Furniture
and office equipment
|
133,014 | (3,350 | ) | 129,664 | ||||||||
|
Leasehold
improvements
|
22,163 | 3,643 | 25,806 | |||||||||
|
Total
property and equipment
|
380,352 | 42,957 | 423,309 | |||||||||
|
Less
accumulated depreciation
|
(245,536 | ) | (120,301 | ) | (365,837 | ) | ||||||
|
Total
property and equipment, net
|
$ | 134,816 | $ | (77,344 | ) | $ | 57,472 | |||||
|
Stockholders'
Equity (Deficit)
|
||||||||||||
|
Other
comprehensive income (loss)
|
$ | (33,506 | ) | $ | 10,030 | $ | (23,476 | ) | ||||
|
Total
stockholders' equity (deficit)
|
$ | (3,581,755 | ) | $ | 10,030 | $ | (3,571,725 | ) | ||||
-24-
In
addition, the Company restated its Statement of Cash Flows for the year ended
September 30, 2007 to properly present and disclose certain non-cash
transactions that were previously included as cash
transactions. There was no effect on the net increase in cash for the
year ended September 30, 2007 as a result of these
corrections.
Note 3 – Inventories
Inventories
at September 30, 2008 and 2007 consist of the following:
|
2008
|
2007
|
|||||||
|
Raw
materials
|
$ | 139,604 | $ | 159,698 | ||||
|
Work
in process
|
23,863 | 21,752 | ||||||
|
Finished
goods
|
5,992 | 13,376 | ||||||
|
Total
|
$ | 169,459 | $ | 194,826 | ||||
Note
4 – Research Credit Receivable
Research
and development costs are charged to operations when incurred. For its research
efforts in Canada, the Company receives a cash payment from the Canadian
Government based upon the amount actually incurred. The Company nets the credit
against related costs charged to operations. Research and development expenses
are as follows:
|
2008
|
2007
|
|||||||
|
R&D
Costs
|
$ | 1,802,857 | $ | 163,712 | ||||
|
Less
Credit
|
(3,158 | ) | (29,418 | ) | ||||
| $ | 1,802,085 | $ | 134,294 | |||||
-25-
Medical
International Technology, Inc.
Note
5 – Intangible Assets
As of
September 30, 2008 the Company has net intangible assets totaling $632.
Amortization expenses for the year ended September 30, 2008 and 2007 were $466
and $466, respectively. Intangible assets consist of the following:
|
Gross
Intangible
Assets
|
Accumulated
Amortization
|
Net
Intangible
Assets
|
Weighted
Average
Life
(Years)
|
|||||
|
Patents
|
$2,030
|
$1,398
|
$632
|
8.5
through 16
|
Note
6 – Scanview Acquisition
On June
11, 2007, the Company completed the acquisition of all the issued and
outstanding shares of 9139-2449 Quebec Inc. (dba Scanview), a related party, for
2,500,000 common shares of the Company. ScanView was a private
Canadian company owned 55% by the Company’s CEO, 10% by the Company’s CFO and
three other unrelated shareholders. ScanView has a unique, portable
and battery operated ultrasound diagnostic medical devices, using a variety of
probes for pathological and physiological evaluation of organs such as the
heart, kidneys, liver, thyroid, uterus and ovaries. They serve equally well to
detect kidney stones, diagnose pregnancy, visualize follicle development and
carry out all other normal ultrasound diagnostic procedures.
The
Company valued the common share issued at 0.07 per share or $175,000, which
represented the adjusted average closing share price for the week prior and week
after the closing date. The fair value of the assets acquired by the
Company was approximately $321,603, consisting of cash of $819, tax credits
receivable of $48,429, inventory of $67,334, equipment of $73,639 and goodwill
of $131,382, and the Company assumed approximately $146,603 in liabilities,
consisting of 2 notes payable agreements to a bank aggregating $52,564 (Note 12)
and trade accounts payable and other accrued expenses aggregating
$94,039.
During
the fourth quarter of 2007, the Company determined, based on impairment testing
performed, that the recorded amount of goodwill of $131,382 from the Scanview
purchase was impaired. Accordingly, the Company charged off $131,382
as impairment charges of goodwill.
Note
7 – Related Party Transactions
Related
party balances consist of the following at September 30, 2008 and
2007:
|
2008
|
2007
|
|||||||
|
Payable
to Idee International R&D, Inc.
|
$ | 1,480,378 | $ | - | ||||
|
Payable
to 2849-674 Canada, Inc.
|
34,637 | 62,045 | ||||||
|
Payable
to 9117-2221 Quebec Inc.
|
9,306 | 1,005 | ||||||
| $ | 1,524,321 | $ | 63,050 | |||||
The
Company has borrowed from shareholders and corporations owned by shareholders.
These loans are non-interest bearing and due upon demand. In addition, the
Company has advanced funds to other corporations owned by shareholders. These
loans are also non-interest bearing and due upon demand.
During
fiscal 2008 and effective October 1, 2007, the Company entered into a Research
and Development Contract with Idee International R&D, Inc.(“Idee”), an
entity owned individually by the Company’s CEO and President. Under
the terms of the agreement, Idee will perform specific research and development
on needle-free technologies, as defined in the agreement, from October 1, 2007
to September 30, 2009, and the Company will pay Idee $150,000 per
month. The monthly charge is recorded as research and development
costs on the accompanying consolidated income statement. During the
year ended September 30, 2008, the Company paid Idee $319,622 under this
agreement. The Company has accrued a liability to Idee of $1,480,378
under this contract.
-26-
Medical
International Technology, Inc.
Note 8– Income
Taxes
Deferred
income taxes are provided for the tax effects of temporary differences in the
reporting of income for financial statement and income tax reporting purposes
and arise principally from net operating loss carry-forwards, accrued expenses
and basis differences in fixed assets.
The
Company’s effective tax rate differs from the Federal statutory rates due to the
valuation allowance recorded for the unused net operating loss carry-forwards
deferred tax asset. The company has operating losses of $9,333,413, which can be
used to reduce future taxable income. An allowance has been provided for by the
Company which reduced the tax benefits accrued by the Company for its net
operating losses to zero, as it cannot be determined when, or if, the tax
benefits derived from these operating losses will materialize.
Note 9 – Stockholders' Equity
(Deficit)
Issuance
of Common Stock
Year
Ended September 30, 2008
There
were no common stock issuances during the year ended September 30,
2008.
Year
ended September 30, 2007
For the
year ended September 30, 2007, the Company issued an aggregate of 16,192,546
shares of its common stock for acquisition, consulting and legal services, debts
and private placements. The value assigned to these shares at the market value,
aggregated $1,170,558 and is more fully described below.
For the
1st quarter ended December 31, 2006, the Company issued 779,400 shares of its
common stock for consulting and legal services. The value assigned to these
shares totaled $163,596 the market value of the services rendered, which were
charged to operations.
For the
second quarter ended March 31, 2007, the Company issued 63,750 shares of its
common stock for consulting and legal services. The value assigned to these
shares totaled $10,200 the market value of the services rendered, which were
charged to operations.
For the
third quarter ended June 30, 2007, the Company issued 3,721,310 shares of its
common stock for consulting and legal services. The value assigned to these
shares totaled $195,705 the market value of the services rendered, which were
charged to operations.
For the
fourth quarter ended September 30, 2007, the Company issued 4,954,368 shares of
its common stock for consulting and legal services. The value assigned to these
shares totaled $267,488 the market value of the services rendered, which were
charged to operations.
For the
1st quarter ended December 31, 2006, the Company issued 72,000 shares of its
common stock for private placements. The value assigned to these shares totaled
$14,993.
For the
second quarter ended March 31, 2007, the Company issued 200,000 shares of its
common stock for private placements. The value assigned to these shares totaled
$200,000.
For the
third quarter ended June 30, 2007, the Company issued 2,500,000 shares of its
common stock for acquisition of SCANVIEW. The value assigned to these shares
totaled $175,000.
For the
fourth quarter ended September 30, 2007, the Company issued 3,920,985 shares of
its common stock for debts. The value assigned to these shares totaled
$293,490.
Preferred
Stock
As of
September 30, 2008, there was no preferred stock outstanding. Dividend features
and voting rights are at the discretion of the Board of Directors without the
requirement of shareholder approval.
Outstanding
Options
Effective
October 1, 2006 the company entered into a Consulting services Agreement with
Geoffrey Armstrong engaging him as an administrative manager for the company. As
part of the agreed compensation Mr. Armstrong was granted 750,000 options to
purchase Common shares at a price of $0.40 per share. These options expired on
October 3, 2007.
-27-
Medical
International Technology, Inc.
As of
September 30, 2008, there are no options outstanding to purchase shares of the
Company’s common stock.
Outstanding
Warrants
During
the year ended September 30, 2008, 4,224,000 Series A Stock Purchase Warrants
and 3,224,000 Series B Stock Purchase warrants expired. The Stock
Purchase Warrants had been issued in connection with private placements
completed in fiscal 2006.
As of
September 30, 2008, there are no warrants outstanding to purchase shares of the
Company’s common stock.
Note
10 –Operating Leases
The
Company leases its office and warehouse space under an operating lease that
expires on October 31, 2009. Rent expense for the year ended September 30, 2008
was approximately $33,300.
Future
minimum lease commitments pertaining to the lease expire as follow:
|
Year
ended
|
||||
|
September
30 2009
|
33,300 | |||
|
September
30, 2010
|
2,775 | |||
| $ | 36,075 | |||
Note
11– Unearned Income
Unearned
income consists of the following at September 30, 2008 and 2007:
|
2008
|
2007
|
|||||||
|
Deposits
from customers and distributors
|
$ | 53,782 | $ | 7,494 | ||||
|
Nonrefundable
Distribution Rights Deposit
|
1,300,000 | - | ||||||
|
Total
unearned income
|
$ | 1,353,782 | $ | 7,494 | ||||
On
November 1st,
2007, the Company received a Non-Refundable deposit of $1,300,000 for the
worldwide rights to market and sells all Medical International Technology Inc.’s
present and future Needle-Free Jet-Injectors for the human and animal markets.
This deposit is part of an agreement under negotiation, and will be disclosed
when finalized, which the Company expects to occur in fiscal 2009. The Company
has recorded the deposit as unearned income until such time as a final agreement
is reached, at which time the deposit will be earned as income over the
estimated contractual life of the final agreement.
Note
12 –Notes Payable
Long-term
debt consists of the following at September 30, 2008 and 2007:
|
2008
|
2007
|
|||||||
|
Note
payable to a bank, bearing interest at prime plus 2.5%,
|
||||||||
|
secured
by equipment, due July 21, 2010
|
$ | 15,097 | $ | 22,040 | ||||
|
Note
payable to a bank, bearing interest at prime plus 3%,
|
||||||||
|
secured
by equipment, due August 28, 2008
|
- | 25,375 | ||||||
|
Note
payable to an individual, unsecured and due on demand
|
- | 250,000 | ||||||
|
Total
long-term debt
|
$ | 15,097 | $ | 297,415 | ||||
|
Current
portion of long-term debt
|
(8,237 | ) | (283,154 | ) | ||||
|
Total
long-term debt, net
|
$ | 6,860 | $ | 14,261 | ||||
|
Schedule
maturities of long-term debt are as follows:
|
||||||||
|
Year
ended September 30, 2009
|
$ | 8,237 | ||||||
|
Year
ended September 30, 2010
|
6,860 | |||||||
|
Total
|
$ | 15,097 | ||||||
-28-
Medical
International Technology, Inc.
Note
13 –Contingencies
Legal
Proceedings
From time
to time, the Company is named in legal actions in the normal course of business.
In the opinion of management, the outcome of these matters, if any, will not
have a material impact on the financial condition or results of operations of
the Company.
-29-
Medical
International Technology, Inc.
None
Disclosure
Controls and Procedures
Our
management, with the participation of our Principal Executive Officer and our
Principal Financial Officer, conducted an evaluation of the effectiveness of our
disclosure controls and procedures as of the end of the period covered by this
Annual Report (September 30, 2008), as is defined in Rule 13a-15(e) promulgated
under the Securities Exchange Act of 1934, as amended. Our disclosure controls
and procedures are intended to ensure that the information we are required to
disclose in the reports that we file or submit under the Securities Exchange Act
of 1934 is (i) recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms
and (ii) accumulated and communicated to our management, including the Principal
Executive Officer and Principal Financial Officer to allow timely decisions
regarding required disclosures.
Based on
that evaluation, our Principal Executive Officer and Principal Financial Officer
concluded that, as of the end of the period covered by this Annual Report, our
disclosure controls and procedures were effective.
It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable, and not absolute, assurance that the objectives of the
system will be met. In addition, the design of any control system is based in
part upon certain assumptions about the likelihood of future
events.
Management’s
Report on Internal Control Over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over
our financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the
Exchange Act). Internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of
America.
Our
internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of our assets,
(ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America, and that our
receipts and expenditures are being made only in accordance with authorizations
of our management and directors, and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial
statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. Our management, with the
participation of our Principal Executive Officer and Principal Financial
Officer, conducted an evaluation of the effectiveness of our internal control
over financial reporting based on the framework in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, our Principal Executive Officer and
Principal Financial Officer concluded that, as of the end of the period covered
by this Annual Report, our internal control over financial reporting was
effective.
This
Annual Report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our independent
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit us to provide only management's report in
this Annual Report.
Changes
in Internal Control Over Financial Reporting
During
our most recent fiscal quarter, there have been no changes in our internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect our internal control over financial
reporting.
-30-
Medical
International Technology, Inc.
None.
The
directors and officers are as follows:
NAME POSITION
(S) TENURE
Karim
Menassa Chairman,
President,
Director
June 27, 2002 to present
Michel
Bayouk
Secretary,
Director June
27, 2002 to present
Mr. Karim Menassa, age
57, serves as the President of Medical International Technology, Inc. Mr.
Menassa also serves as a member of the Board of Directors of Medical
International Technology, Inc. Mr. Menassa has developed many state-of-the-art,
efficient and reliable devices, and has marketed various medical devices in more
than 60 countries. Mr. Menassa obtained a degree in Precision Mechanics Design
from the Instituto Salesiano Don Bosco in
Cairo,
Egypt.
Mr. Michel Bayouk, age 62,
serves as the Secretary of Medical International Technology, Inc. Mr. Bayouk
also serves as a member of the Board of Directors of Medical International
Technology, Inc. Mr. Bayouk is a Chartered Accountant and has been involved in
financial auditing since 1970.
The
directors shall be elected at an annual meeting of the stockholders and except
as otherwise provided within the Bylaws of Medical International Technology,
Inc., as pertaining to vacancies, shall hold office until his successor is
elected and qualified.
Although
Medical International Technology, Inc. does not have a separate Audit Committee
and these functions are performed by the entire board, the board of directors of
Medical International Technology, Inc. has determined that for the purpose of
and pursuant to the instructions of item 401(e) of regulation S-B titled Audit
Committee Financial Expert, Mr. Michel Bayouk possesses the attributes of an
Audit committee financial expert. Mr. Bayouk is a board member of Medical
International Technology, Inc. Mr. Bayouk is not independent as defined by item
401(e) (ii) of regulation S-B. He receives compensation for services rendered to
Medical International Technology, Inc. directly or through services rendered by
related companies owned or controlled by him.
Board
of Director Meetings and Committees
The Board
of Directors held no meetings during the year ended September 30, 2008, but
conducted board activities through unanimous consent board resolutions in lieu
of meetings.
Section
16(a) of the Securities Exchange Act of 1934 requires the company’s directors
and officers, and persons who own more than ten-percent (10%) of the company’s
common stock, to file with the Securities and Exchange Commission reports of
ownership on Form 3 and reports of change in ownership on Forms 4 and 5. Such
officers, directors and ten-percent stockholders are also required to furnish
the company with copies of all Section 16(a) reports they file. Based solely on
its review of the copies of such forms received by the company and on written
representations from certain reporting persons, the company believes that all
Section 16(a) reports applicable to its officers, directors and ten-percent
stockholders with respect to the fiscal year ended September 30, 2008 were
filed.
We have adopted a code of ethics that
applies to our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions. The code of ethics is designed to deter wrongdoing and to
promote:
|
•
|
Honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
|
|
•
|
Full,
fair, accurate, timely, and understandable disclosure in reports and
documents that we file with, or submit to, the SEC and in other public
communications made by MIT;
|
-31-
Medical
International Technology, Inc.
|
•
|
Compliance
with applicable governmental laws, rules and
regulations;
|
|
•
|
The
prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code;
and
|
|
•
|
Accountability
for adherence to the code.
|
We will
provide to any shareholder, upon request, a copy of our code of
ethics. Any such request should be directed to our corporate
secretary at 1872 Beaulac, Ville Saint Laurent, Montreal, Quebec, Canada HR4
2E9.
Compensation
Summary
SUMMARY
COMPENSATION TABLE
|
Annual
Compensation
|
Award(s)
|
Payouts
|
|||||||||||||||||||||||||||
|
Restricted
|
Securities
|
||||||||||||||||||||||||||||
|
Other
Annual
|
Stock
|
Underlying
|
LTIP
|
All
Other
|
|||||||||||||||||||||||||
|
Salary
|
Bonus
|
Compensation
|
Award(s)
|
Options/SARs
|
Payouts
|
Compensation
|
|||||||||||||||||||||||
|
Position
|
Year
|
$
|
$
|
$
|
$
|
(#)
|
$
|
$
|
|||||||||||||||||||||
| Karim | 2008 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
|
Menassa
|
2007
|
0 | 0 | 106,338 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
|
President
|
2006
|
0 | 0 | 49,538 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
|
and
Director
|
|||||||||||||||||||||||||||||
|
Michel
|
2008 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
|
Bayouk
|
2007
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
|
Secretary
|
2006
|
0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
|
and
Director
|
|||||||||||||||||||||||||||||
Notes:
|
1.
|
On
April 27, 2007 the Company issued 761,904 restricted common shares at a
price of $0.0525 per share to Idee International R & D Inc., a company
owned 100% by 2849674 Canada Inc. for a debt conversion of $40,000. Karim
Menassa, our President and Director control the entity 2849674 Canada
Inc.
|
|
2.
|
On
April 27, 2007 the Company issued 1,523,809 restricted common shares at a
price of $0.0525 per share to 2849674 Canada Inc. for a debt conversion of
$40,000. Karim Menassa, our President and Director control the entity
2849674 Canada Inc.
|
|
3.
|
On
April 27, 2007 the Company issued 1,391,047 restricted common shares at a
price of $0.0525 per share to 9117-2221 Quebec Inc., for a debt conversion
of $32,000. Michel Bayouk, our Financial Officer and Director control the
entity 9117-2221 Quebec Inc.
|
|
4.
|
On
June 11 2007, the Board of Director of MIT signed an agreement with
9162-9725 Quebec Inc a Quebec private company, to purchase all of the
issued and outstanding shares of 9139-2449 Quebec Inc. (SCNAVIEW) common
stock, for a total of 2,500,000 Common shares of MIT. Following the
signing of the agreement MIT issued to 9162-9725 Quebec Inc. a total of
2,500,000 Common shares of MIT.
|
|
5.
|
ScanView
was a private Canadian company owned by Karim Menassa, our CEO and
Director, owning 55% of Scanview, Michel Bayouk, our CFO and Director,
owning 10% of Scanview and three other unrelated shareholders. On July 17,
2007 the Company issued 3,416,667 restricted common shares at a price of
$0.06 per share to Idee International R & D Inc., a company owned 100%
by 2849674 Canada Inc. for a debt conversion of $205,000. Karim Menassa,
our President and Director control the entity 2849674 Canada
Inc.
|
|
6.
|
On
July 17, 2007 the Company issued 1,733,333 restricted common shares at a
price of $0.06 per share to 2849674 Canada Inc. for a debt conversion of
$104,000. Karim Menassa, our President and Director control the entity
2849674 Canada Inc.
|
|
7.
|
On
August 20, 2007 the Company issued 841,750 restricted common shares at a
price of $0.03 per share to Maurice Menassa for services rendered of US$
25,252.50.
|
|
8.
|
On
August 24, 2007 the Company issued 1,747,684 restricted common shares at a
price of $ 0.0262 per share to 2849674 Canada Inc. for services rendered
of US$ 45,789.33. Karim Menassa, our President and Director control the
entity 2849674 Canada Inc.
|
|
9.
|
On
August 24, 2007 the Company issued 503,926 restricted common shares at a
price of $ 0.0262 per share to IDEE INT’L R&D Inc. for a debt
conversion of US$ 13,202.88. Karim Menassa, our President and Director
control the entity 2849674 Canada
Inc.
|
|
10.
|
On
August 24, 2007 the Company issued 631,106 restricted common shares at a
price of $ 0.0262 per share to 2849674 Canada Inc. for services rendered
of US$ 16,535.00. Karim Menassa, our President and Director control the
entity 2849674 Canada Inc.
|
-32-
Medical
International Technology, Inc.
As of
September 30, 2008, the Company had no group life; health, hospitalization,
medical reimbursement or relocation plans in effect. Further, we had no pension
plans or plans or agreements which provide compensation on the event of
termination of employment or change in control of us.
We do not
pay members of our Board of Directors any fees for attendance or similar
remuneration or reimburse them for any out-of-pocket expenses incurred by them
in connection with our business.
Compensation of
Directors
There was
no compensation paid to any directors of Medical International Technology, Inc.
as director’s fees.
Employment
Agreements
No formal
employment agreements exist with any officer or employee.
Long-Term Incentive
Plan
The
Company has a stock compensation plan under which directors are authorized to
grant incentive stock options, to a maximum of one million (1,000,000) of the
issued and outstanding shares, to directors, employees and consultants of the
Company. The plan provides both for the direct award or sale of shares and for
the grant of options to purchase shares.
The
following table sets forth, all individuals known to beneficially own 5% or more
of the Company's common stock, and all officers and directors of the registrant,
with the amount and percentage of stock beneficially owned as of September 30,
2008:
|
Name
and Address
|
Amount
and Nature
|
||||
|
Of Beneficial Holder
|
of Beneficial Ownership
|
Percentage
|
|||
|
Karim
Menassa
|
14,533,179
shares
|
53.7%
|
|
||
|
President,
Director
|
|||||
|
1872
Beaulac, Ville Saint-Laurent
|
|||||
|
Montreal,
Quebec, Canada HR4 2E7
|
|||||
|
Michel
Bayouk
|
3,281,183
shares
|
12.1%
|
|
||
|
Secretary,
Director
|
|||||
|
1872
Beaulac, Ville Saint-Laurent
|
|||||
|
Montreal,
Quebec, Canada HR4 2E9
|
|||||
|
Officers
and Directors as a Group
|
17,814,362
shares
|
65,
8%
|
|
||
Total
issued and outstanding as of September 30, 2008 was 27,058,663
shares.
Notes:
|
1.
|
Karim
Menassa directly holds common shares of Medical International Technology,
Inc., indirectly through 2849674 Canada, Inc., which is controlled by
Karim Menassa, and indirectly through Idee R&D International, Inc.’s,
which is controlled by Karim Menassa, and also indirectly through
9162-9725 Quebec Inc., witch is also controlled by Karim
Menassa.
|
|
2.
|
Michel
Bayouk directly holds common shares of Medical International Technology,
Inc., indirectly through 1065029 Canada, Inc. which is controlled by
Michel Bayouk, indirectly through 9117-2221 Quebec, Inc. which is 100%
owned by Michel Bayouk, indirectly through Dynagroup Services, Inc., a
company in which Michel Bayouk maintains an interest, and also indirectly
through 9162-9725 Quebec Inc. which Michel Bayouk maintains an
interest.
|
All
ownership is beneficial and of record except as specifically indicated
otherwise. Beneficial owners listed above have sole voting and investment power
with respect to the shares shown unless otherwise indicated.
-33-
Medical
International Technology, Inc.
None
|
31.1
|
Certifications
of the Chief Executive Officer required by Rule 13A-14 or Rule 15D-14
Under the Securities Exchange Act of 1934, As
Amended
|
|
31.2
|
Certifications
of the Chief Financial Officer required by Rule 13A-14 or Rule 15D-14Under
the Securities Exchange Act of 1934, As
Amended
|
|
32.1
|
Certification
of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
32.2
|
Certification
of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
(1)
|
Audit
Fees
|
The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for the audit of the registrant's
annual financial statements and review of financial statements included in the
registrant's Form 10-QSB or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for the fiscal years ending September 30, 2008 and 2007 were: $22,500 and
$22,500 respectively.
|
(2)
|
Audit-Related
Fees
|
The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit or review of the registrant's financial statements and
are not reported under item (1) for the fiscal years ending September 30, 2008
and 2007 were: $0 and $0, respectively.
The
nature of the services comprising the fees herein disclosed are: none
provided.
|
(3)
|
Tax
Fees
|
The
aggregate fees billed for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning for the fiscal years
ending September 30, 2008 and 2007 were: $0 and$0, respectively.
The
nature of the services comprising the fees herein disclosed are: none
provided
|
(4)
|
All
Other Fees
|
No
aggregate fees were billed for professional services provided by the principal
accountant, other than the services reported in items (1) through (3) for the
fiscal years ending September 30, 2008 and 2007.
|
(5)
|
Audit
Committee
|
The
registrant's Audit Committee, or officers performing such functions of the Audit
Committee, have approved the principal accountant's performance of services for
the audit of the registrant's annual financial statements and review of
financial statements included in the registrant's Form 10-QSB or services that
are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for the fiscal year ending September 30, 2008.
Audit-related fees, tax fees, and all other fees, if any, were approved by the
Audit Committee or officers performing such functions of the Audit
Committee.
|
(6)
|
Work
Performance by others
|
None
-34-
Medical
International Technology, Inc.
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
| Medical International Technology, Inc. | |||
|
Date:
November
24, 2009
|
By:
|
/s/ Karim Menassa | |
| Karim Menassa | |||
|
President
and Principal Executive Officer, Interim Secretary
and
Principal Accounting
Officer
|
|||
-35-