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EX-32.1 - CERTIFICATION - MEDICAL INTERNATIONAL TECHNOLOGY INC | f10q1209ex32_mit.htm |
EX-31.1 - CERTIFICATION - MEDICAL INTERNATIONAL TECHNOLOGY INC | f10q1209ex31_mit.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
x QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended December 31, 2009
o TRANSITION REPORT
UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the
period from October 1st 2009
to December 31st
2009
000-31469
(Commission
file number)
Medical International
Technology, Inc.
(Exact
name of small business issuer as specified in its charter)
Colorado
|
84-1509950
|
|
(State
or other jurisdiction
of
incorporation or organization)
|
(IRS
Employer Identification No.)
|
1872
Beaulac
Ville
Saint-Laurent
Montréal, Québec, Canada H4R
2E7
(Address
of principal executive offices)
(514)
339-9355
(Issuer's
telephone number)
(Former
name, former address and former fiscal year, if changed since last
report)
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 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 x No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer £ Accelerated
filer £
Non-accelerated
filer £
Smaller reporting company x
(Do not
check is a smaller reporting company)
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No x
The
number of shares outstanding of each of the issuer's classes of common equity as
of February 16, 2010: 60,357,795 shares of common stock
-1-
MEDICAL
INTERNATIONAL TECHNOLOGY, INC.
FORM
10-Q
December
31, 2009
TABLE
OF CONTENTS
PART
I. FINANCIAL INFORMATION
|
|
Item
1. Consolidated Financial
Statements
|
3
|
Consolidated
Balance Sheet
|
3
|
Consolidated
Statements of Operations,
|
5
|
Consolidated
Statements of Cash Flows
|
6
|
Consolidated
Statements of Comprehensive Loss
|
7
|
Consolidated
Statement of Stockholders’ (Deficit)
|
8
|
Notes
to Unaudited Consolidated Financial Statements
|
9
|
Item
2. Management's Discussion and
Analysis of Financial Condition and Results of Operations
|
13
|
Item
3. Quantitative and Qualitative
Disclosures About Market Risk
|
19
|
Item
4T. Controls and
Procedures
|
19
|
Part
II. OTHER INFORMATION
|
|
Item
1 Legal
Proceedings
|
20
|
Item
1A. Risk Factors
|
20
|
Item
2. Unregistered Sales of Equity
Securities and Use of Proceeds
|
20
|
Item
3. Defaults upon Senior
Securities
|
20
|
Item
4. Submission of Matters to a
Vote of Security Holders
|
20
|
Item
5. Other Information
|
20
|
Item
6. Exhibits
|
20
|
SIGNATURES
|
21
|
-2-
PART
1 - FINANCIAL INFORMATION
Item
1. Financial Information
Medical
International Technology, Inc.
|
Quarterly Financial
Report
|
CONSOLIDATED BALANCE SHEET
|
December
31, 2009
|
September
30, 2009
|
||||||
(Unaudited)
|
(Audited)
|
|||||||
Assets
|
||||||||
Cash
and cash equivalents
|
$
|
82,648
|
$
|
77,461
|
||||
Accounts
receivable
|
3,610
|
5,425
|
||||||
Inventories
|
242,074
|
220,139
|
||||||
Prepaid
expenses
|
5,351
|
5,040
|
||||||
Total
Current Assets
|
333,683
|
308,065
|
||||||
Long Term Investment | ||||||||
Investment
in MIT China Joint Venture
|
437,115
|
426,678
|
||||||
Property
and Equipment
|
||||||||
Tooling
and machinery
|
297,147
|
290,053
|
||||||
Furniture
and office equipment
|
139,327
|
136,001
|
||||||
Leasehold
improvements
|
28,664
|
27,980
|
||||||
465,138
|
454,033
|
|||||||
Less
accumulated depreciation
|
(431
077
|
)
|
(416,409
|
)
|
||||
34,061
|
37,624
|
|||||||
Other
Assets
|
||||||||
Patents
(net of accumulated amortization of $3,172 and $2,612)
|
8,032
|
8,387
|
||||||
Total
assets
|
$
|
812,891
|
$
|
780,754
|
The
accompanying notes are an integral part of these consolidated financial
statements
-3-
Medical
International Technology, Inc.
|
Quarterly Financial
Report
|
CONSOLIDATED BALANCE SHEET
|
||||||||
December
31
2009
|
September
30
2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
Liabilities
and Stockholders' Equity (Deficit)
|
||||||||
Current
Liabilities
|
||||||||
Deferred income
|
$
|
1,199,339
|
$
|
1,226,396
|
||||
Accounts payable and accrued expenses
|
456,653
|
388,903
|
||||||
Amounts due to related parties
|
3,553,982
|
3,332,463
|
||||||
Current portion of long-term debts
|
4,313
|
6,014
|
||||||
5,214,287
|
4,953,776
|
|||||||
Long-Term Debts
|
-
|
-
|
||||||
Total
Liabilities
|
5,214,287
|
4,953,776
|
||||||
Stockholders'
Equity (Deficit)
|
||||||||
Preferred
stock, $.0001 par value; 3,000,000 shares authorized;
|
||||||||
None
issued and outstanding as of December 31, 2007
|
||||||||
Common
stock, $.0001 par value; 100,000,000 shares authorized;
|
||||||||
60,357,795
and 59,087,795 shares issued and
|
||||||||
Outstanding,
respectively
|
6,031
|
5,909
|
||||||
Additional
paid-in capital
|
7,822,355
|
7,699,478
|
||||||
Deficit
|
(11,955,448
|
)
|
(11,667,623
|
)
|
||||
Other
comprehensive income (loss)
|
(274,334)
|
(210,786
|
)
|
|||||
Total
Stockholders' Equity (Deficit)
|
(4,401,396
|
)
|
(4,173,022
|
)
|
||||
Total
Liabilities and Stockholders' Equity (Deficit)
|
$
|
812,891
|
$
|
780,754
|
The
accompanying notes are an integral part of these consolidated financial
statements
-4-
Medical
International Technology, Inc.
|
Quarterly Financial
Report
|
CONSOLIDATED STATEMENTS OF
OPERATIONS
|
||||||||
For
the Three-Month Period Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Sales
|
$
|
208,563
|
$
|
70,915
|
||||
Cost
of sales
|
(54,991
|
)
|
(51,610
|
)
|
||||
Gross
profit
|
153,572
|
19,305
|
||||||
Research
and development costs
|
(152
467
|
)
|
(450,000
|
)
|
||||
Selling,
general, and administrative expenses
|
(283,274
|
)
|
(150,378
|
)
|
||||
(435,741
|
)
|
(600,378
|
)
|
|||||
Net
loss from operations
|
(282,169
|
)
|
(581,073
|
)
|
||||
Other
Income (Expense)
|
||||||||
Interest
income
|
588
|
1,312
|
||||||
Interest
expense
|
(6244
|
)
|
(641
|
)
|
||||
(5,656
|
)
|
671
|
||||||
Net
loss
|
$
|
(287,825
|
)
|
$
|
(580,402
|
)
|
||
Basic
(loss) per share
|
$
|
(0.005
|
)
|
$
|
(0.016
|
)
|
||
Basic
weighted average shares outstanding
|
60,357,795
|
51,058,663
|
The
accompanying notes are an integral part of these consolidated financial
statements
-5-
Medical
International Technology, Inc.
|
Quarterly Financial
Report
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
Three-Month
Period Ended
|
||||||||
December
31,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$
|
(287,825
|
)
|
$
|
(580,402
|
)
|
||
Adjustments
to reconcile net loss to net cash
|
||||||||
provided
by (used in) operating activities:
|
||||||||
Depreciation
expense
|
||||||||
Amortization
expense
|
5,043
|
13,458
|
||||||
Goodwill
impairment charge
|
-
|
-
|
||||||
Common
stock issued for services
|
123
000
|
4000
|
||||||
Changes
in:
|
||||||||
Accounts
receivable
|
1,815
|
(1,868)
|
||||||
Research
credit receivable
|
-
|
-
|
||||||
Inventories
|
(21,935
|
)
|
5,120
|
|||||
Prepaid
expenses
|
(311
|
)
|
830
|
|||||
Accounts
payable and accrued liabilities
|
67,750
|
138,261
|
)
|
|||||
Related
party payables
|
-
|
-
|
||||||
Deferred
income
|
(27,057
|
)
|
(17,617)
|
|||||
Net
cash used by operating activities
|
(139,520
|
)
|
(438,218)
|
|||||
Cash
flows from investing activities:
|
||||||||
Acquisition
of patents
|
-
|
-
|
||||||
Investment
in MIT China joint venture
|
(10,437
|
)
|
-
|
|||||
Tooling
and machinery
|
-
|
-
|
||||||
Net
cash used by investing activities
|
(10,437
|
)
|
||||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from issuance of stock, net
|
-
|
-
|
||||||
Increase
in amounts due to related parties
|
221,519
|
191,446
|
||||||
Issuance
of notes payable
|
-
|
-
|
||||||
Repayment
on notes payable
|
|
(1,701
|
)
|
|
-
|
|||
Net
cash provided from financing activities
|
219,818
|
191,446
|
||||||
Effect
of exchange rates
|
(64,674
|
)
|
168,734
|
|||||
Increase
(decrease) in cash
|
5,188
|
(83,130
|
)
|
|||||
Cash,
beginning of period
|
77,461
|
94,834
|
||||||
Cash,
end of period
|
$
|
82,648
|
$
|
11,704
|
||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid for interest
|
$
|
6,244
|
$
|
641
|
||||
Cash
paid for federal income taxes
|
$
|
-
|
$
|
-
|
||||
Supplemental
disclosure of non-cash transactions
|
||||||||
Common
stock issued for debt reductions
|
$
|
-
|
$
|
-
|
The
accompanying notes are an integral part of these consolidated financial
statements
-6-
Medical
International Technology, Inc.
|
Quarterly Financial
Report
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
LOSS
|
||||||||
First
quarter ending
December
31,
2009
|
First
quarter ending
December
31,
2008
|
|||||||
Net
loss
|
$
|
(287,825
|
)
|
$
|
(580,402
|
)
|
||
Other
comprehensive income (loss)
|
||||||||
Foreign
currency translation adjustment
|
(63,548
|
)
|
104,320
|
|||||
Net comprehensive income (loss)
|
$
|
(351,373
|
)
|
$
|
(476,082
|
)
|
The
accompanying notes are an integral part of these consolidated financial
statements
-7-
Medical
International Technology, Inc.
|
Quarterly Financial
Report
|
|
||||||||||||||||
CONSOLIDATED STATEMENT OF STOCKHOLDERS’
(DEFICIT)
|
||||||||||||||||
Common
Stock
|
Additional
Paid in
|
|||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
|||||||||||||
Balance
– September 30, 2009
|
59,087,795
|
$
|
5,908
|
$
|
7,699,478
|
$
|
(11,667,623
|
)
|
||||||||
Shares
issued for debts
|
-
|
-
|
-
|
-
|
||||||||||||
Shares
issued for services
|
1,270,000
|
123
|
122,877
|
-
|
||||||||||||
Net
loss for the period ended December 31, 2009
|
-
|
-
|
-
|
(287,825
|
)
|
|||||||||||
Balance
– December 31, 2009
|
60,357,795
|
$
|
6,031
|
$
|
7,822,355
|
$
|
(11,955,448
|
)
|
The
accompanying notes are an integral part of these consolidated financial
statements
-8-
Medical
International Technology, Inc.
|
Quarterly Financial
Report
|
Notes
to Financial Statements
(Unaudited)
Note
1 – Basis of Presentation
Interim
Financial Statements
The
accompanying unaudited condensed consolidated financial statements of Medical
International Technology, Inc. and its subsidiary (collectively referred to as
the “Company”) have been prepared in accordance with accounting principles
generally accepted in the United States of America, pursuant to the rules and
regulations of the Securities and Exchange Commission. All
significant intercompany balances and transactions have been
eliminated. These financial statements do not include all information
and notes required by accounting principles generally accepted in the United
States of America for complete financial statements. It is
recommended that these interim unaudited condensed consolidated financial
statements be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2009.
In the
opinion of management, all adjustments (consisting only of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended December
31, 2009 are not necessarily indicative of the results which may be expected for
any other interim periods or for the year ending September 30, 2010. 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 the 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 these
estimates.
Note
2 – Unearned income
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,
which was finalized in January 2009. The Company has recorded the
deposit as unearned income until a final agreement was reached, at
which time the deposit will be earned as income over the estimated contractual
life of the final agreement. As at December 31, 2009, the Company had
earned $ 130,000.
Note
3 – Inventories
Inventories
at December 31, 2009 and September 30, 2009 consist of the
following:
December
31,
2009
|
September
30,
2009
|
|||||||
Raw
materials
|
$
|
185,111
|
$
|
165,193
|
||||
Work
in process
|
47,291
|
42,939
|
||||||
Finished
goods
|
9,672
|
12,007
|
||||||
Total
|
$
|
242,074
|
$
|
220,139
|
||||
-9-
Medical
International Technology, Inc.
|
Quarterly Financial
Report
|
Notes
to Financial Statements
(Unaudited)
Note
4 – Research and Development Costs
Research
and development costs are charged to operations when incurred.
Research
and development expenses are as follows:
December
31,
2009
|
September
30,2009
|
|||||||
R&D
Costs
|
$
|
152,467
|
$
|
450,000
|
||||
$
|
152,467
|
$
|
450,000
|
“On
September 30, 2009, the Company’s research and development contract with Idee
expired. Both Idee and the Company are negotiating a new contract, and are
currently operating under a month to month agreement until a new contract is
finalized. Under the month to month agreement, the Company is to pay Idee
$50,000 per month for specific research and development on needle-free
technologies. As of December 31, 2009, $150,000 was charged to research
and development costs.”
Note
5 – 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
three-months ended December 31, 2009 and 2008 were $5,620, and
$13,584, respectively.
Note
6 – Intangible Assets
As of
December 31, 2009 the Company has net intangible assets totaling $ 3172.
Amortization expenses for the three-months ended December 31, 2009 and 2008 were
$560, and $116, respectively. Intangible assets consist of the
following:
Gross
Intangible
Assets
|
Accumulated
Amortization
|
Net
Intangible
Assets
|
Weighted
Average
Life
(Years)
|
||||||||||
Patents
|
$
|
11,204
|
$
|
3172
|
$
|
8,032
|
8.5
through 16
|
Note
7 – Related Party Transactions
Related
party balances consist of the following at December 31, 2009 and September 30,
2009:
December
31,
2009
|
September
30,
2009
|
|||||||
Payable
to Idee International R&D, Inc.
|
$
|
3,553,982
|
$
|
3,332,463
|
||||
$
|
3,553,982
|
$
|
3,332,463
|
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.
-10-
Medical
International Technology, Inc.
|
Quarterly Financial
Report
|
Notes
to Financial Statements
(Unaudited)
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. The
Company has accrued a liability to Idee of $3,403,892 under this
contract.
Note
8 – Capital Stock
Common
Stock
From time
to time, the Company will issue common stock for services rendered, debt
reductions or as part of private placement offerings. For the quarter
ended December 31, 2009, the Company issued 1,270,000 shares of common stock for
services rendered to the Company. The value of those services was
$123,000, which was based on the fair value per share of the Company’s common
stock at the date of issuance.
Preferred
Stock
As of
December 31, 2009, 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
As of
December 31, 2009, there were no outstanding stock options.
Outstanding
Warrants
During
the year ended September 30, 2009, the Company issued warrants to purchase an
aggregate of 2,500,000 common shares at an exercise price of $0.50 per
share. The warrants were issued in connection with private placements
completed during 2009. The warrants expire on April 15,
2010. The warrant vested immediately and had a term of less than 1
year. The Company estimated the fair value of the warrants using the
Black-Scholes method with assumptions including: (1) term of less than one year;
(2) a computed volatility rate of 92% to 110%; (3) a discount rate of $1.26%;
and (4) zero dividends. The fair value of the warrants was estimated
to be $13,859.
-11-
Medical
International Technology, Inc.
|
Quarterly Financial
Report
|
Notes
to Financial Statements
(Unaudited)
Note
9 – Notes Payable
Long-term
debt consists of the following at December 31, 2009 and September 30,
2009:
December
31,
2009
|
September
30,
2009
|
|||||||
Note
payable to a bank, bearing interest at prime plus 2.5%, secured by
equipment, due July 21, 2010
|
||||||||
$
|
4,313
|
$
|
6,014
|
|||||
Current
portion of long-term debt
|
(4,313)
|
(6,014
|
)
|
|||||
Long-term
debt
|
$
|
-
|
$
|
-
|
||||
Scheduled
maturities of long-term debt are as follows:
|
||||||||
July
21, 2010
|
$
|
4,313
|
-
|
|||||
Note
10 – 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.
Note
11 – Investment in MIT China Joint Venture
On May 6,
2009, the Company entered into a certain joint venture agreement (the “Joint
Venture Agreement”) with Jiangsu Hualan Biotechnology Ltd. (China) (“Jiangsu
Hualan”). Pursuant to the Joint Venture Agreement, the parties
established a joint venture company, Jiangsu Hualan MIT Medical Technology (MIT
China) Ltd. (“MIT China” or the “Joint Venture”), focusing on research,
production and sales of medical equipments, import and export of medical
equipments and components products, especially Needle-Free Jet Injector
products. The total investment by the Joint Venture shall amount to $2,000,000,
and the registered capital shall amount to $1,400,000. The Company
invested cash of $426,678 and transferred the license rights to produce and sell
the Company’s needle-free injectors products into the Joint
Venture. The license rights were valued at $280,000 under the
agreement. The contributions by the Company resulted in the Company
owning 49% of the registered capital of the Joint Venture. Jiangsu
Hualan contributed cash of $714,000, and owns 51% of the registered
capital.
Under the
agreement, the Company appointed 1 member to the Board of Directors of the Joint
Venture and Jiangsu Hualan appointed 2 members to the Board of
Directors. Profits of the Joint Venture will be paid based each
parties investment in the registered capital.
During
the period from May 6, 2009 to September 30, 2009, the Joint Venture had not
commenced operations. The Company expects the Joint Venture to
commence operations during the Company’s second quarter of fiscal year
2010.
-12-
Medical
International Technology, Inc.
The
Company accounts for its investment in MIT China in accordance with Financial
Accounting Standards Board Accounting Standards Codification 323,
“Investment — Equity Method and Joint Venture” (ASC 323), previously
referred to as Accounting Principles Board Opinion No. 18, “The Equity
Method of Accounting for Investments in Common Stock.” Accordingly, the Company
adjusts the carrying amount of its investment in MIT China to recognize its
share of earnings or losses. As of December 31, 2009, the Company’s recorded
investment in the MIT China was $437,115
Item
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The
following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q.
The following discussion contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 relating to future events or our future performance. Actual
results may materially differ from those projected in the forward-looking
statements as a result of certain risks and uncertainties set forth in this
prospectus. Although management believes that the assumptions made and
expectations reflected in the forward-looking statements are reasonable, there
is no assurance that the underlying assumptions will, in fact, prove to be
correct or that actual results will not be different from expectations expressed
in this report.
Recent
Events
On
January 14th, 2010 - Medical International Technology Inc. received clearance by
FINRA to be traded on the OTC Bulletin Board. MIT’s shares are currently posted
for trading on the OTC Bulletin Board under the ticker symbol
MDLH.OB.
On
January 25th, 2010, we redesigned the company website. The new website’s purpose
will be to inform all shareholders about new developments in the following
fields: Management & Advisory Board; Products; Latest News and
Operations.
On
January 28th, 2010, we appointed Mr. Jacques Gauthier and Mr. Michel Carrier as
members of our newly formed Advisory Board.
Mr.
Jacques Gauthier has served on the board of directors of Axcan Pharma Inc. since
1995. He is currently an advisor to the President and Scientific Director at
Montreal Clinical Research Institute. Mr. Gauthier also serves on the board of
directors of a variety of medical and pharmaceutical companies and associations.
He has held various senior management positions, both in Canada and abroad, with
UpJohn Laboratories Inc. and UpJohn International Inc., currently owned by
Pfizer. In 1984, Mr. Gauthier joined BioMega / Boehringer Ingelheim
Research Inc. where he served as president and general manager until
1996.
Mr.
Michel Carrier has held various senior management positions in marketing and
sales over the past 25 years. His vast experience and innovative marketing
methods make him a great asset as a member of MIT’s Advisory Board.
MIT
President and CEO, Mr. Karim Menassa, believes that the nomination and
acceptance by Mr. Gauthier and Mr. Carrier is a very important and positive step
for the immediate and future success of the company.
On
February 4th, 2010, we appointed Mr. Harold Gervais as the 3rd member to join
the newly-formed Advisory Board. Furthermore, Mr. Gervais will also hold the
position of Vice-President and part-time Chief Financial Officer at Medical
International Technology Inc.
Mr.
Harold Gervais, MBA, has more than 25 years of experience in managing businesses
of all sizes. He was Executive Vice President and CFO of ABB Canada and CIO of
ABB Americas. ABB is one of the world’s leader in power and automation
engineering company with revenues of 35Bn in 2008.
-13-
Medical
International Technology, Inc.
Moreover,
Mr. Gervais has held financial and human resources management position at
Kimberly-Clark. Kimberly Clark is leading the world in essentials for a better
life with revenues of 19.1 Billion in 2009.
Mr.
Gervais completed many integration projects, realized the restructuring of
different organizations and the optimization of different accounting systems. He
has also completed several turnaround and financing mandates. Throughout the
years he has developed an expertise for the creation and the execution of
realistic action plans that deliver expected results. He currently sits on the
board of directors of several companies.
The
nomination and acceptance by Mr. Harold Gervais to join MIT’s Advisory Board and
his assuming the position of Vice-President and Chief Financial Officer of
Medical International Technology Inc. will strengthen MIT’s management team. The
addition of Mr. Gervais serves to better control the company’s overall
operations, including the Chinese Joint Venture, in order to reach our
objectives in sales and profits for the coming years.
On
February 9th, 2010, we appointed Dr. Francis Bellido, PhD, MBA, as the 4th
member to join the newly-formed Advisory Board. Mr. Bellido will also hold the
position of Vice-President and Chief Strategy Officer.
Dr.
Francis Bellido has more than 25 years of experience in the Biosciences and
Financial industries. He has held several top executive positions in both small
and large companies. He was President and Chief Operating Officer at
Supratek Pharma, a pharmaceutical company specializing in the development of
cancer drugs. While President and Chief Executive Officer of SGF-Santé he
managed a $500M health science investment portfolio. Dr. Bellido has also held
several executive positions with Eli Lily in the United States and Europe
including Strategic Asset Director, Global Business Unit Manager and Head of
Regulatory Affairs. Dr. Bellido also received a Masters degree in Pharmaceutical
Sciences and a Ph.D. in Medical Microbiology from the University of Geneva in
Switzerland. He received his MBA from the University of Montréal. He has held
the position of Invited Professor at the School of Management of the University
of Québec in Montréal.
The
nomination and acceptance by Dr. Francis Bellido to join MIT’s Advisory Board
and his assuming the position of Vice-President and Chief Strategy Officer of
Medical International Technology Inc. will strengthen MIT’s management team. The
addition of Dr. Bellido will also enrich negotiation opportunities with Medical
and Pharmaceutical companies and help MIT achieve its goal to partner with
multinational corporations.
The creation of a multi-functional Advisory Board, which, when completed, will be composed of many individuals from diverse backgrounds, will serve to strengthen the management of Medical International Technology Inc. in support to the President and Chief Executive Officer Mr. Karim Menassa. Our goal is to increase efficiency and take further advantage of the opportunities ahead in the global market of needle-free jet-injector for human and animal applications.
Business
Development
Expanding the product
line:
Medical
International Technology Inc. has been considerably expanding financial
resources in R&D in the last 5 years, having spent several millions of
dollars. MIT already has 5 products for the human market and 9 products for the
animal market. The company will soon be unveiling two new additions to its human
product line and one for its animal line.
MIT’s
patented technology has received approval in several countries world wide. These
three new products are no exception. The company will continue working towards
obtaining FDA approval, which is expected in the last quarter of this
year.
MIT
products pipeline is already defined for 2010/2011; the realisation of these new
products design will be achieved by new finance to MIT and or a partnership with
Medical and Pharmaceutical Companies.
New products for human diabetes,
dentistry and poultry applications and their market
potentials:
Diabetes
The International Diabetes
Federation states that the diagnosis rate of diabetes has increased over the
last two decades from 30 million to 246 million people with a disproportionate
ratio coming from the United States, India, and China.
-14-
Medical
International Technology, Inc.
Medical
International Technology Inc. is targeting this huge market with their newly
developed Med-Jet model MIT-P-I within the next 8 to 10 month. “With our
successful Chinese joint venture, MIT intends to introduce this new product in
China first, thereafter we will have enough production capacity to sell all over
the world”, said Mr. Karim Menassa. The Med-Jet MIT-P-I is designed to be safe,
precise, accurate, effective, easy to use and friendly to the
environment.
Dentistry
According
to the World Health Organization (WHO) statistics, last updated 26 October 2004,
the number of dentists in the world was numbered in the millions. There are
234,104 registered Dentist in the USA, 18,861 in Canada, 50,920 in China and it
is estimated that 400,000 will be needed by 2030. Statistics show there is an
estimated average of 6 to 10 dentists for every 10,000 people in
Europe.
It is
estimated that 150,000 U.S. dentists could administer about 120 million doses of
local Anaesthetics per year for the gums, for a total market of about $3.5
billion.
Medical
International Technology Inc. is targeting this lucrative market with their
Med-Jet model MIT-H-VI within the next 12 to 16 month. MIT intends to introduce
this new product in North America first; other countries will follow shortly
after. In the Dental Office, painful needle injections are enough to make even
the most rational person skip dental visits. The Med-Jet MIT-H-VI will finally
bring an end to traumatic dental visits.
Poultry
Vaccinations
MIT’s
newly designed Agro-Jet model MIT-XII will help prevent the spread of deadly
diseases by providing a needle-free alternative to the vaccination of billions
of day-old baby chicks yearly. This high speed vaccinator will be able to inject
thousands of birds per hour safely, precisely, accurately, effectively, with
ease of use and friendly to the environment.
Chinese Joint
Venture:
In June
of 2009, the company entered in a Joint Venture with Chinese partners and on
February 10th, 2010, its Chinese Joint Venture has received the production
certification to produce Med-Jet products in China.
MIT
China’s production facilities were the subject of a recent visit by the SFDA.
These facilities were deemed suitable for medical device manufacturing,
including the production of disposable accessories, by the SFDA and have
therefore been granted a production certification.
Clinical
trials of Med-Jet models MIT-MBX and MIT-H-III are set to begin in the near
future. The obtainment of the production certification for human products
together with the results from the clinical trials will represent an essential
stepping-stone toward the ultimate goal of obtaining a licence to sell our
Med-Jet injectors in China.
-15-
Medical
International Technology, Inc.
Projected
Sales and Market Breakdown
On
February 6th 2010 we announced in our Corporate Update that the company firmly
believes it will grow revenues well past US$ 75,000,000 annually within the next
three years. The following information will outline market expectations by
category and timeframe:
Human
applications:
Our
initial target market for the first year is cosmetic Dermatology, Plastic
surgery, and General Practitioner for single and mass injections, using Med-Jet
models MIT MBX and MIT-H-III. The second year, in addition to the previous
models, the introduction of model MIT-H-IV-1 and MIT-H-IV-5 will target private
clinics and hospitals. During the third year, the injector for Diabetics, MIT
P-I, and the Dental injector, MIT-H-VI, will be introduced and will drastically
increase sales to achieve and exceed its forecasted US$ 55,000,000.
Animal
applications:
Our
initial target market for the first year is the pork, cattle, and poultry
markets, using our existing and newly redesigned products for mass animal
vaccination. The second year in addition to the previous models, MIT will
introduce and market its day-old baby chicken injector, a highly-requested
product by farmers around the world. During the third year, MIT will present 2
more new products expected to drastically increase sales to achieve and exceed
its forecasted US$ 20,000,000.
Chinese
Partner
Since its
establishment in 1990, Jiangyin Lanling Bottle Stoppers Co., Ltd. (one of the
members of Hualan Group) has grown to be the leading medical packaging material
manufacturer in China with an extensive product range, unparalleled
manufacturing scale, leading edge technologies and national recognition as a
highly-valued technology enterprise. Lanling is also the leading butyl rubber
stopper producer in the Asia Pacific region. Mr. Hua Guoping, President and
Chairman of Hualan Group, will be working with Medical International
Technology.
China
joint venture
The
creation of the joint venture named Jiangsu Hualan MIT Medical Technology (MIT
CHINA) Ltd., in June of 2009, has given MIT a unique advantage to expand its
production operations and increase its sales and profits in the multi-billion
dollar worldwide needle-free injector market. The joint venture also gives MIT
the opportunity to achieve its goals for the short and long-term
future.
Furthermore,
MIT China venture will help Medical International Technology Inc. supply large
production volumes in lesser time, which will attract large medical and
pharmaceutical partners. Mr. Menassa’s meetings with suppliers in China were
successful and represent an important step towards reducing production cost
without compromising quality.
The
introduction of our Agro-Jet needle-free injector for animal application is
going very well; our veterinary staff is doing an excellent job training our
Distributors in the different provinces. These efforts will result in sales
growth for the coming months and years.
Mr.
Menassa’s meeting with SFDA personnel was very positive. The construction of a
class 10,000 cleanroom lab, recommended by the SFDA, was completed on January
29, 2010. Having received certification for our production facilities earlier
this week brings us a step closer to our goal of beginning production of our
Med-Jet line of products and all the disposable accessories in China for the
Chinese market.
Mr.
Menassa, together with his Chinese partners, also had successful meetings with
two hospitals in the city of Shanghai recommended by SFDA personnel for clinical
trials with Med-Jet models MIT-MBX and MIT-H-III. Our goal is to complete our
clinical trials in June of 2010 and start marketing and selling in July
2010.
Medical
International Technology Inc. objective is to ensure that its injectors become
an indispensable, environmentally friendly product for doctors, dentists,
veterinarians and home users around the world.
-16-
Medical
International Technology, Inc.
Medical
International Technology Inc. will continue providing a safe and effective means
to help prevent the spread of deadly diseases to both humans and animals through
the use of the Med-Jet® and Agro-Jet® needle-free injection system.
Results
of Operations
Results of Operations for
the Three-Months ended December 31, 2009 and 2008
For the
three-month period ended December 31, 2009, the Company experienced a net loss
from operations of $287,825 which was primarily due to research and
development costs of $152,467 and selling, general and administrative
expenses of $283,274. Gross profits for the period were
$153,572.
For the
three-month period ended December 31, 2008, the Company experienced a net loss
from operations of $580,402 which was primarily due to research and
development costs of $450,000 and selling, general and administrative
expenses of $150,378. Gross profits for the period were
$19,305.
The
reduced net loss between the comparable quarters was due to increased sales as
the Company continues to push its products into the market along with reduced
research and development costs. Sales for the three-month period ending December
31, 2009 were $208,563 compared to sales of $70,915 for the same period last
year. Gross profits for the period ending December 31, 2008 represented 73% of
sales, where gross profits for the same period last year represented 27% of
sales. This is primarily a result of the Company experiencing more steady sales
beginning in the last quarter of fiscal 2009. Research and
development costs decreased primarily as a result of the expiration of the Idee
contract, which is currently on a month to month renewal at $50,000 per month,
as compared to a monthly charge in the prior quarter of $150,000 per
month.
Liquidity
and Capital Resources
For the
three-month period ending December 31, 2009, the Company’s cash position
increased to $82,648. Net cash used in operating activities was $139,520,
primarily as a result of the Company’s net loss offset by common stock issued
for services of $123,000; financing activities provided $219,818, which was
primarily as a result of increases in amounts due to related
parties. Cash used by investing activities was $10,437, which was
entirely additional capital invested in the MIT China joint venture. The effect
of exchange rates on cash reduced cash balances by $64,674.
For the
three-month period ending December 31, 2008, the Company’s cash position was
$11,704. Net cash used in operating activities was $438,218, primarily due to
the Company’s net loss during the period. Financing activities provided
$191,446, entirely from increased borrowings from related parties. The effect of
exchange rates on cash increased cash balances by $168,734.
Plan
of Operations
We are
engaged in the business of research, development, marketing and sales of
needle-free jet injector technology and products for humans and animals, for
single and mass injections.
We
continue to market our product in all available markets, seek regulatory
approvals to expand those market opportunities and improve our products for
application to new markets.
We have
recently completed several rounds of financing resulting in net proceeds to the
company of approximately $1,287,520 and continues efforts to secure additional
funding to support and expand operations. Funds from these
sales of our common stock are being used to fund continued operations, develop
and seek regulatory approvals for our products and market those products
worldwide.
We will
continue to seek additional funding to expand operations and develop sales
revenue to a volume sufficient to sustain operations.
-17-
Medical
International Technology, Inc.
Product
Development
We have
filed for FDA approval for its needle-free injector – the MED-JET, designed
specifically for human mass inoculations. The MED-JET is capable of delivering
many types of medications such as vaccines, insulin and other types of
injectables. Its low-pressure technology offers an advantage to alternative high
pressure systems that can cause blowbacks and expose medical workers and
patients alike to microscopic traces of blood.
According
to the International Sharps Injury Prevention Society (http://www.isips.org), it
has been estimated that one out of every seven workers is accidentally stuck by
a contaminated sharp point 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 inject up to 600
individuals an hour.
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.
On
December 15, 2005, we 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.
MIT's
Needle-Free Injection System, designed specifically to allow fast, accurate and
safe injections, is rapidly moving toward establishing itself as a valuable
instrument in the fight against disease in both humans and animals. Spurred on
by growing fears of a world wide epidemic that could match or even exceed the
deadly flu pandemic of 1918, which killed millions of people, the MIT team is
focusing its efforts to make its Needle-Free Injection System available to the
world.
Now that
MIT is able to sell its Med-Jet in all countries, other than the U.S., it is
working to complete two FDA filings. The first of these will be for use of the
Med-Jet for injecting anesthesia in a variety of situations. The second, and
most significant in light of the news coming out of Asia concerning the spread
of Influenza A (H5N1) to humans, will be the Med-Jet-H, for mass vaccination in
case of a pandemic, such as Avian Influenza, Polio, Tuberculosis, Malaria or
HIV.
MIT is
also pursuing increasing interest in its Agro-Jet needle-free injector. Having
the same benefits as Med-Jet, Agro-Jet will become a valuable instrument in the
fight against Avian Flu via its ability to mass inoculate animals at over 1000
injections per hour.
On
December 22, 2005 we announced that as part of its continuing restructuring
program MIT is forming two divisions. The Human Medical Technology Division will
focus on the development, production, marketing and sale of needle-free
injectors and other medical technologies for humans. The Animal Medical
Technology Division will deal with all aspects of the development, production,
marketing and sale of the needle-free injectors and other technologies for
animal applications worldwide.
Off
Balance Sheet Arrangements
We have
no significant off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to our
stockholders.
-18-
Medical
International Technology, Inc.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
Not
required for Smaller Reporting Companies.
Item
4T. Controls and Procedures
(a)
Evaluation of disclosure controls and procedures.
The
principal executive officer and principal financial officer have evaluated our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) as of December 31, 2009. Based on this
evaluation, they have concluded that our disclosure controls and procedures were
effective to ensure that the information required to be disclosed by us in
reports that we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the Commission’s rules and forms, and to ensure that information required to
be disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934 is accumulated and communicated to our management,
including our principal executive and principal financial officers, to allow
timely decisions regarding required disclosure.
(b) Changes
in internal controls.
No change
in our internal controls over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) occurred during the six month period ended
December 31, 2009 that has materially affected, or is reasonably likely to
materially affect, our internal controls over financial reporting.
-19-
PART
II OTHER INFORMATION
Item
1. Legal Proceedings
We are
currently not involved in any litigation that we believe could have a material
adverse effect on our financial condition or results of operations. There is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our common stock, any
of our subsidiaries or of our companies or our subsidiaries’ officers or
directors in their capacities as such, in which an adverse decision could have a
material adverse effect.
Item
1A. Risk Factors
Not
required for Smaller Reporting Companies.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
None.
Item
3. Defaults upon Senior Securities
None.
Item
4. Submission of Matters to a Vote of Security Holders
None.
Item
5. Other information
None.
Item
6. Exhibits
Exhibits
31.1 Certification
of Principal Executive Officer and Principal Accounting Officer pursuant to Rule
13a-14(a)/15(d)-14(a).
32.1 Certification
of Principal Executive Officer and Principal Accounting Officer pursuant to
18U.S.C. Section 1350.
-20-
SIGNATURES
In
accordance with the requirements 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:
February 16, 2010
|
By:
|
/s/ Karim Menassa | |
Karim Menassa | |||
President and Principal Executive Officer | |||
Interim Secretary and Chief Financial Officer |
21