Item 1. Business
Medical International Technology, Inc. (“MIT” or the “Company”) is based in Montreal, Canada. We specialize in production, marketing and the 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.
The Company concentrates its activities in the medical and para-medical sectors, in particular, in the field of medical devices. Our strategy is to build a market for its different products and establish strategic alliances with different pharmaceutical companies, medical devices distributors and manufacturers to ensure good distribution channels for its products.
The benefits of needle-free injection compared to needle injection, in particular with respect to the features of our products, can be summarized as follows:
1.
Less tissue damage and less painful;
2.
Simple, fast and effective;
3.
Precise, reliable and safe;
4.
Good absorption of liquids;
5.
Prevents stress from traditional needle syringes and infections from contaminated needles;
6.
Friendly to the environment (no biological waste);
7.
Affordable and economical; and
8.
Efficient use of medication used.
History
We were incorporated in the State of Colorado on July 19, 1999. We had three wholly-owned subsidiaries, Medical International Technologies (MIT Canada). Inc., a Canadian company acquired in June 2002, 3567940 Canada Inc., a Canadian company, acquired in June 2002 and merged with MIT Canada Inc. For the past 2 years 3567940 Canada Inc. had no activities, no assets and no liabilities. In August of 2011 3567940 Canada Inc. was dissolved. In addition, ScanView, a Canadian company acquired in June 2007, has had no activities for the past 2 years.
China Joint Venture
On May 6, 2009, we entered into a 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”), 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 creation of MIT China 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. Furthermore, MIT China venture will help MIT supply large production volumes in lesser time, which will attract large medical and pharmaceutical partners.
The introduction of our Agro-Jet needle-free injector for animal application is progressing well, and our veterinary staff has been successfully training our distributors in various regions. The Company expects that these efforts will result in sales growth in the next fiscal year.
During the third quarter of fiscal year 2011, MIT China purchased 151,000 sq. ft. of land and began construction of our first building in Taizhou (China Medical City). This first building of 40,000 sq. ft. when finalized will be used for the production of injectors for the Chinese market only.
The work in progress at MIT China for the construction of its 40,000 sq. ft. building, the first stage (the offices) has been completed, and our first move of all our employees to Taishou was conducted in the beginning of August 2012. The other part of the construction is scheduled to be complete by December 2012, our managements and engineers are working hard to plan the purchasing of the equipment and tools necessary for the assembly and production of some of our Agro-Jet and Med-Jet products. The production facility should be able to supply a large number of injectors and disposables to the Chinese market.
Per the recent discussions and understanding of our general manager, Ethan Sun, with our Joint Venture partner, our plan of sales and expansion into the Chinese market is progressing and MIT China agreed and sold 9% of their joint venture for an investment of 18,000,000 RMB (US$3,000,000). MIT China now has 46.41%, we have 44.59%, and Taizhou Amazon Investment Center has 9% ownership in such venture.
We have recently supplied a CDC (Centre of Disease Control) vaccination clinic in China with one Med-Jet model MIT H-III, and requested an MIT China nurse to be present at the clinic at all times for training, supervision of the proper usage and procedures of our Med-Jet for vaccination., the results are very good so far and we expect more uses of our Med-Jet H-III from many of the CDC clinics and hospitals across China in fiscal year 2013.
We are proceeding positively with our SFDA for our new Med-Jet model H-4. We expect our certification in 2013 fiscal year.
Our Model Med-Jet H-4 will target all vaccination clinics, hospitals, all CDC Centers and many other departments that have needs for any biologic injections.
Our objective is to ensure that our injectors become an indispensable and environmentally friendly product for doctors, dentists, veterinarians and home users around the world.
We 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.
Products
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 worldwide. The Company expects that the three new products will be no exception.
The Company is refocusing its efforts and will target FDA approval for two of its latest product lines: first, the home use injector for diabetics and other treatments requiring daily injections, and second, product targeting physicians in their clinics for vaccination and other biological injection medications. FDA approval for these two products will help the Company’s credibility all over the world.
MIT products pipeline is already defined for 2012/2013; the realization of these new products design will be achieved by new finance to MIT and or a partnership with Medical and Pharmaceutical Companies.
Diabetes
The Company intends to target diabetes market through its newly developed Med-Jet model MIT-P-I within the next 8 to 10 months. MIT intends to first introduce this product in China in order to grow its production capacity to eventually expand into other countries. The Med-Jet MIT-P-I is designed to be safe, precise, accurate, effective, easy to use and friendly to the environment.
Dentistry
The Company plans to target the potentially lucrative dental Anesthesia market with its Med-Jet model MIT-H-VI within the next 12 to 16 months. MIT intends to introduce this new product in North America first before being introduced into other markets.
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.
Market Breakdown
Human applications:
In the next fiscal year, the Company plans to expand its market for cosmetic dermatology, plastic surgery, and general practitioner for single and mass injections. It will do so through the use of the Med-Jet models MIT MBX and MIT-H-III. The Company also plans to introduce a model MESO-JET a product for the injections on the face for all cosmetic dermatology procedures, as well as the MIT-H-IV-1 and MIT-H-IV-5, the MIT P-I injector for Diabetics, , and the MIT-H-VI Dental injector.
Animal applications:
In the next fiscal year, the Company plans to expand into the pork, cattle, and poultry markets, using our existing and newly redesigned products for mass animal vaccination.
Patents and Trademarks
We have obtained trademark registration in the United States on the use of AGRO-JET (Reg. No. 2,712,089) and MED-JET (Reg. No. 2,798,613).
Regulation and Approvals
We manufacture and sell 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 Canada 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. These certifications allow us to market the Med-Jet Needle-Free injector for human use in all countries other than the United States, at this point. The Med-Jet injector will be re submitted for FDA approval, which, if accepted, will allow us to sell the Med-Jet in the United States, making it a truly worldwide system. The approval process for the U.S. FDA is expensive and may take an extended period of time. We will target for 2012 and 2013 the actual MED-JET products to receive approval from the FDA.
Product Development
Per our previous fillings for FDA approval for our needle-free injector, the MED-JET is 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 struck 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 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 an 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.
During the last quarter of 2011 we signed with an outside consultant to help MIT with the FDA approval process and to expedite the approval. This work is proceeding and few more tests must be done in order to file complete documentations to FDA, and we are expecting to complete these tests within the second quarter of 2013.
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 currently market the Med-Jet Needle-Free Injector for human use in all countries other than the U.S. 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 worldwide 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 (H1N1) to humans, will be the Med-Jet-H III and H-4, for mass vaccination in case of a pandemic, such as Avian Influenza, Polio, Tuberculosis, Malaria or HIV.
MIT will increasingly promote its Agro-Jet and our new Avian-Jet needle-free injector designed specifically for poultry vaccination. Having the same benefits as Med-Jet, Agro-Jet and Avian-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.
Employees
Currently, the company has three employees and three consultants. As our operations are expanded additional employees will be required.
Item1A. Risk Factors
We are not required to provide this information as we are a smaller reporting company.
Item 1B.
Item 1B. Unresolved Staff Comments
We are not required to provide this information as we are a smaller reporting company.
Item 2.
Item 2. Properties
We currently lease our office under an operating lease that will expire on December 31, 2014. This office is a 7,200 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, 2012 was approximately $50,449.
Item 3.
Item 3. 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.
We are currently involved in litigation with one of our distributors over a contract termination clause in which we plan to vigorously defend. We do not believe this matter will have a material adverse effect on our financial condition or results of operations.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5.
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information
Our common stock is currently listed on the OTCBB under the symbol “MDLH.” As of the date of this Report, 83,804,627 shares of our common stock were issued and outstanding.
Of the 83,804,627 shares of our common stock issued and outstanding, 64,927,074 of such shares are restricted shares. None of these restricted shares are eligible for resale absent registration or an exemption from registration.
Price Range of Common Stock
The following table sets forth the high and low trade information for our common stock for each quarter for the previous two years. The prices reflect inter-dealer quotations, do not include retail mark-ups, markdowns or commissions and do not necessarily reflect actual transactions.
Holders
As of the date of this Report there were approximately 93 holders of record of our common stock. This number does not include shares held by brokerage clearing houses, depositories or others in unregistered form.
Dividend Policy
We have 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.
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth certain information as of the date hereof, with respect to compensation plans under which our equity securities are authorized for issuance:
(a)
(b)
(c)
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 remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation
None
Plans approved by
Security holders
Equity compensation
None
Plans not approved
By security holders
Total
Item 6.
Item 6. Selected Financial Data
We are not required to provide the information required by this Item because we are a smaller reporting company.
Item 7.
Item 7. 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-K. 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.
Overview
Medical International Technology, Inc. is based in Montreal, Canada; specializing in production, 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.
The Company’s major source of revenues is 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.
The creation of MIT China 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. Furthermore, MIT China venture will help MIT supply large production volumes in lesser time, which will attract large medical and pharmaceutical partners.
The introduction of our Agro-Jet needle-free injector for animal application is progressing well, and our our veterinary staff has been successfully training our distributors in various regions. The Company expects that these efforts will result in sales growth in the next fiscal year.
During the third quarter of fiscal year 2011, MIT China purchased 151,000 sq. ft. of land and began construction of our first building in Taizhou (China Medical City). This first building of 40,000 sq. ft. when finalized will be used for the production of injectors for the Chinese market only.
Work in progress at MIT China for the construction of its 40,000 sq. ft. building, the first stage (the offices) has been completed, and our first move of all our employees to Taishou was conducted in the beginning of August 2012. The other part of the construction is scheduled to be completed in the first quarter of 2013, our managements and engineers are working hard to plan the purchasing of the equipment and tools necessary for the assembly and production of some of our Agro-Jet and Med-Jet products. The production facility should be able to supply a large number of injectors and disposables to the Chinese market.
Per the recent discussions and understanding of our general manager, Ethan Sun, with our Joint Venture partner, our plan of sales and expansion into the Chinese market is progressing and MIT China agreed and sold 9% of their joint venture for an investment of 18,000,000 RMB (US$3,000,000). MIT China now has 46.41%, we have 44.59%, and Taizhou Amazon Investment Center has 9% ownership in such venture.
We have recently supplied a CDC (Centre of Disease Control) vaccination clinic in China with one Med-Jet model MIT H-III, and requested an MIT China nurse to be present at the clinic at all times for training, supervision of the proper usage and procedures of our Med-Jet for vaccination., the results are very good so far and we expect more uses of our Med-Jet H-III from many of the CDC clinics and hospitals across China in fiscal year 2013.
We are proceeding positively with our SFDA for our new Med-Jet model H-4. We expect our certification in 2013 fiscal year.
Our Model Med-Jet H-4 will target all vaccination clinics, hospitals, all CDC Centers and many other departments that have needs for any biologic injections.
Our objective is to ensure that our injectors become an indispensable and environmentally friendly product for doctors, dentists, veterinarians and home users around the world.
The Company is pleased to 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.
Management Plan of Operations
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 and sells products in over 30 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.
We will continue to seek additional funding to expand operations and develop sales revenue to a volume sufficient to sustain operations.
Results of Operations
Comparison for the year ended September 30, 2012 to the year ended September 30, 2011
The following table presents the statement of operations for the year ended September 30, 2012 was compared to the comparable period of the year ended September 30, 2011. The discussion following the table is based on these results.
Revenues
The Company’s consolidated revenues increased by $559,055 or 127 % to $996,433 during the fiscal year ending September 30, 2012. This considerable growth in sales was primarily due to the market situation in general.
Cost of Sales
The cost of sales increased slightly by $58,221 in 2012. This slight increase was related to our marketing and selling initiatives in the selected niche markets.
Gross Profit
The gross profit increased by 211% for the year ending September 30, 2012, This increase is due primarily to the marketing and selling initiatives in the selected niche markets that have secured our monthly sales.
Operating Expenses
Selling, general and administrative expenses increased by $7,856 to $710,025.
Liquidity and Capital Resources
During the fiscal year ending September 30, 2012 the Company’s cash position increased by $290,608. Net cash used by operating activities was $370,660, resulting primarily from deferred income and accounts payable. Net cash provided by financing activities was $3,841, resulting primarily from the issuance of stock in private placements netting cash proceeds of $63,340, used bank line of 70,493 and decrease in amounts due to related parties of 152,723. Net cash used by investing activities was $84,537 resulting primarily from the acquisition of Tooling and machinery of 49,434 and acquisition of patent of 35,103. The effect of exchange rates on cash during fiscal 2012 resulted in an increase in cash value of $2,644.
During the fiscal year ending September 30, 2011 the Company’s cash position decreased by $15,827. Net cash used by operating activities was $585,863, resulting primarily from accounts payable, accrued liabilities and inventories. Net cash provided by financing activities was $954,943, resulting primarily from the issuance of stock in private placements netting cash proceeds of $772,572. Net cash used by investing activities was $398,116 resulting primarily from the acquisition of Tooling and machinery of 363,379. The effect of exchange rates on cash during fiscal 2011 resulted in an increase in cash value of $13,209.
The Company has reported a negative working capital position of $1,075,553 and has accumulated operation losses since inception of $13,172,164, 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.
During the year ended September 30, 2012, the Company issued 4,714,000 shares of common stock in connection with private placements, debt reductions and for services. The Company issued 180,000 shares at $0.10 per share for total debt reductions of $18,000, and 4,534,000 shares were issued at $.01 per share for services rendered of $45,340. The private placement proceeds were used to provide additional working capital.
The Company 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.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).
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.
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.
New Accounting Pronouncements
In June 2011, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that revises the manner in which entities present comprehensive income in their financial statements. The guidance requires entities to report comprehensive income in either a single, continuous statement or two separate but consecutive statements. This guidance will become effective for fiscal years beginning after December 15, 2011; however, we have early adopted this guidance as of the end of our fiscal 2011 reporting period as permitted by the guidance. The adoption of this new guidance had no impact on our consolidated financial condition and results of operations.
In May 2011, the FASB issued authoritative guidance to amend the fair value measurement and disclosure requirements. The guidance requires the disclosure of quantitative information about unobservable inputs used a description of the valuation processes used and a qualitative discussion around the sensitivity of the measurements. The guidance will become effective for the Company at the beginning of our second quarter of fiscal 2012. We expect adoption to have no impact on our consolidated financial condition and results of operations.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are not required to provide the information required by this Item because we are a smaller reporting company.
Item 8.
Item 8. Financial Statements and Supplementary Data
Medical International Technology, Inc.
Financial Statements
Contents
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 sheets of Medical International Technology, Inc. and subsidiaries as of September 30, 2012 and 2011, 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 2012 and 2011 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, 2012 and 2011, 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
December 28, 2012
MEDICAL INTERNATIONAL TECHNOLOGY
CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of these consolidated financial statements.
MEDICAL INTERNATIONAL TECHNOLOGY
CONSOLIDATED STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of these consolidated financial statements.
MEDICAL INTERNATIONAL TECHNOLOGY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
The accompanying notes are an integral part of these consolidated financial statements.
MEDICAL INTERNATIONAL TECHNOLOGY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT)
The accompanying notes are an integral part of these consolidated financial statements.
MEDICAL INTERNATIONAL TECHNOLOGY
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these consolidated financial statements.
Note 1 - Business Activities and Related Risks
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 manufacturing and marketing 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 $ 752,432 during the two years ended September 30, 2012. In addition, the Company has a working capital deficiency of $1,075,553 and a stockholder’s deficiency of $684,564 at September 30, 2012. 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:
●
Increase revenue through the sale of needle free devices and related products
●
To raise capital through the sale or exercise of equity securities
Note 2 - 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). 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.
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, 2012 and 2011 were $120,602 and $49,785, respectively.
Long-Lived Assets
FASB Accounting Standards Codification 360-10-40, “Property, Plant, and Equipment, Impairment of Disposal of Long-Lived Assets” (ASC 360-10-40), previously referred to as Statement of Financial Accounting Standards No. 144, “Accounting for Impairment or Disposal of Long-Lived Assets,” requires that long-lived assets, such as property and equipment and purchased intangibles subject to amortization, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market value. Estimates of expected future cash flows represent our best estimate based on currently available information and reasonable and supportable assumptions. Any impairment recognized in accordance with ASC 360-10-40 is permanent and may not be restored. As of September 30, 2012, we had not recognized any impairment of long-lived assets in connection with ASC 360-10-40 based on our reviews.
Patents
Patents on our technologies are being amortized over their remaining lives ranging from 7.5 years through 15 years.
Goodwill and Purchased Intangible Assets
Goodwill and identifiable intangible assets are accounted for in accordance with FASB Accounting Standards Codification 350, “Intangibles - Goodwill and Other” (ASC 350), previously referred to as Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” Under this standard, we assess the impairment of goodwill and identifiable intangible assets at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The first step in the assessment is the estimation of fair value. If step one indicates that impairment potentially exists, we perform the second step to measure the amount of impairment, if any. Goodwill and identifiable intangible asset impairment exists when the estimated fair value is less than its carrying value.
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.
Stock options
Effective October 1, 2005, we adopted the provisions of FASB Accounting Standards Codification 718, “Compensation - Stock Compensation” (ASC 718), previously referred to as Statement of Financial Accounting Standards No. 123R, “Share-Based Payment”. We adopted ASC 718 using the modified prospective transition method. Under this transition method, compensation cost recognized includes (a) the compensation cost for all share-based awards granted prior to, but not yet vested, as of October 1, 2005, based on the grant-date fair value estimated in accordance with the original provisions of ASC 718 and (b) the compensation cost for all share-based awards granted subsequent to September 30, 2005, based on the grant-date fair value estimated in accordance with the provisions of ASC 718. Additionally, we accounted for restricted stock awards granted using the measurement and recognition provisions of ASC 718. We measure the fair value of the restricted stock awards on the grant date and recognize them in earnings over the requisite service period for each separately vesting portion of the award.
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.
Net Loss per Common Share
Basic earnings per share (“EPS”) are 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 September 30, 2012and 2011, there were no dilutive effects of such securities as the Company incurred a net loss in each period. At September 30, 2012, the Company had outstanding warrants to purchase 3,148,332 common shares. There were no outstanding options or warrants as of September 30, 2012.
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 and its subsidiaries file a consolidated federal income tax return under the accrual method of accounting. The Company accounts for income taxes under ASC 740-10-25. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the tax basis of assets and liabilities and their carrying values for financial reporting purposes. When management determines that it is more than likely that a deferred tax asset will not be realized, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. Deferred tax expense or benefit is the result of changes in deferred tax assets and liabilities during the period. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date.
Effective January 1, 2009, the Company adopted guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all federal or state income tax positions. Each income tax position is assessed using a two step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. As of September 30, 2012 and 2011 there were no amounts that had been accrued in respect to uncertain tax positions.
None of the Company’s federal or state income tax returns is currently under examination by the Internal Revenue Service (“IRS”) or state authorities. However, fiscal years 2007 and later remain subject to examination by the IRS and respective states.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist 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.
New Accounting Pronouncements
In June 2011, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that revises the manner in which entities present comprehensive income in their financial statements. The guidance requires entities to report comprehensive income in either a single, continuous statement or two separate but consecutive statements. This guidance will become effective for fiscal years beginning after December 15, 2011; however, we have early adopted this guidance as of the end of our fiscal 2011 reporting period as permitted by the guidance. The adoption of this new guidance had no impact on our consolidated financial condition and results of operations.
In May 2011, the FASB issued authoritative guidance to amend the fair value measurement and disclosure requirements. The guidance requires the disclosure of quantitative information about unobservable inputs used a description of the valuation processes used and a qualitative discussion around the sensitivity of the measurements. The guidance will become effective for the Company at the beginning of our second quarter of fiscal 2012. We expect adoption to have no impact on our consolidated financial condition and results of operations.
Reclassifications
Certain reclassifications have been made to the 2011 financial statements to conform to the 2012 financial statement presentation. Such reclassifications had no effect on consolidated net income as previously reported.
Note 3 - Inventories
Inventories at September 30, 2012 and 2011 consist of the following:
Note 4 - Patents
As of September 30, 2012 the Company has net patents on certain technologies aggregating $23,781. Amortization expense for the years ended September 30, 2012 and 2011 were $13,517 and $6,639, respectively. During the year ended September 30, 2012, the Company capitalized patent costs on its needle-free injector of $35,103. Following is a detail of patents at September 30, 2012.
Note 5 - Joint Venture Agreement
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 Joint Venture commenced operations during the Company’s 1st quarter of fiscal 2010.
During the third quarter of fiscal year 2011, MIT China purchased 151,000 sq. ft. of land and began construction of its first building in Taizhou (China Medical City). This first building of 40,000 sq. ft. will be used for the production of injectors for the Chinese market. The first stage (the offices) was completed and employees were moved into the facility in August 2012. The second part of the construction is scheduled to be complete during the first quarter of 2013, which will contain the production facility capable of supplying a large number of injectors and disposables to the Chinese market.
In March 2012, MIT China agreed and sold 9% of the joint venture for an investment of 18,000,000 RMB (US$3,000,000). Jiangsu Hualan now has 46.41%, the Company has 44.59%, and Taizhou Amazon Investment Center has 9% ownership in the MIT China joint venture.
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 September 30, 2012, the Company’s recorded investment in the MIT China was $146,343. During the year ended September 30, 2012, the Company recorded an equity loss from its investment in MIT China of $95,714.
During the year ended September 30, 2012, the Company had sales of products to the joint venture of $296,350.
Note 6 - Bank Line
The Company, through a hypothec agreement, has an equipment line of credit up to a maximum of $350,000. The line is secured by account receivables, inventories, equipment and all other assets of the Company. At September 30, 2012 and 2011, the Company had $101,660 and $31,167 outstanding under the agreement.
Note 7 - Related Party Transactions
Related party balances consist of the following at September 30, 2012 and 2011
The Company has borrowed from shareholders and corporations owned by shareholders. These loans are bearing interest at 8%, and are due during fiscal 2012.
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 aggregating approximately $12.8 million, which can be used to reduce future taxable income. Pursuant to ASC 740, we must consider all positive and negative evidence regarding the realization of deferred tax assets, including past operating results and future sources of taxable income. Under the provisions of ASC 740, we determined that the entire net deferred tax asset needed to be reserved given recent losses. The total valuation allowance at September 30, 2012 and 2011 was $13.3million and $$13.0million, respectively.
We have adopted the provisions of FIN 48, now under ASC 740. Under ASC 740, the impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained.
Note 9 - Stockholders' Equity (Deficit)
Issuance of Common Stock
Year Ended September 30, 2012
The Company issued 180,000 shares of its common stock for debt reductions of $17,980. The shares were valued at the closing price of the Company’s stock on the date of issuance, or settlement, which represented fair value.
The Company issued an aggregate of 4,534,000 shares of its common stock for services rendered of $45,340, which was based on the closing price at the date of issuance. and represents the fair value of the services provided.
Year Ended September 30, 2011
The Company issued an aggregate of 5,163,332 shares of its common stock for cash under private placement transactions for total proceeds of $517,081.
The Company issued 365,000 shares of its common stock for debt reductions of $36,500. The shares were valued at the closing price of the Company’s stock on the date of issuance, or settlement, which represented fair value.
The Company issued an aggregate of 7,292,000 shares of its common stock for services rendered based on settlement, and represents the fair value of the services provided.
The Company issued an aggregate of 10,000 shares of its common stock for services rendered under S-8 filings. The value of the services provided was $1,000, which was based on the closing price of the Company’s stock on the date of issuance, or settlement, and represents the fair value of the services provided.
Preferred Stock
As of September 30, 2012, 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 September 30, 2012 and 2011, there are no options outstanding to purchase shares of the Company’s common stock.
Outstanding Warrants
During the period ended June 30, 2011, the Company issued warrants to purchase an aggregate of 2,815,000 common shares at an exercise price of $0.15 per share and 333,332 common shares at an exercise price of $0.20 per share. The warrants were issued in connection with private placements completed during 2011. The warrants vested immediately and have terms of one to two years that expire between March 28, 2012 and February 4 2013. As at September 30, 2012, 333,332 common shares at an exercise price of $0.20 per share where no exercised and they expired in March 2012, The total as at September 30 2012 issued warrants to purchase an aggregate of 2,481,668 common shares at an exercise price of $0.15 The Company estimated the fair value of the warrants using the Black-Scholes method with assumptions including: (1) term of 1 year to two years; (2) a computed volatility rate of 205%; (3) a discount rate of $0.45%; and (4) zero dividends. The fair value of the warrants was estimated to be $218,991.
Note 10 - Operating Leases
The Company leases its office and warehouse space under an operating lease that expires on December 31, 2014 that calls for a monthly rent of $4,414. Rent expense for the year ended September 30, 2012 was approximately $50,449.
Future minimum lease commitments pertaining to the lease expire as follow:
Note 11- Deferred Income
Deferred income consists of the following at September 30, 2012 and 2011:
On November 1, 2007, the Company received a deposit of $1,300,000 for the worldwide rights to market and sells while maintaining MIT CANADA right to sell all Medical International Technology Inc.’s Needle-Free Jet-Injectors for the human and animal markets. This deposit was part of an agreement under negotiation, which was finalized in January 2009. Upon finalization, the Company began recognizing the deposit into income over the contractual life of the agreement. During the year ended September 30, 2010, the Company recognized $130,000 into income under this agreement. During 2011, the Company was notified of potential litigation related to this contract. Accordingly, due to the uncertainty in a final resolution, the Company ceased recognizing income related to this contract during 2011. Upon a final resolution of the dispute, the Company will begin amortizing the deposit into income over the remaining contractual life of the agreement.
Note 12 - Notes Payable
Long-term debt consists of the following at September 30, 2012 and September 30, 2011:
Future scheduled principal payments under note agreements are as follows:
Note 13 - Contingencies
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 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control over Financial Reporting.
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but 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 assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of September 30, 2012, the Company’s internal control over financial reporting was effective for the purposes for which it is intended.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
Changes in Internal Control over Financial Reporting
No change in our system of internal control over financial reporting occurred during the period covered by this report, the fourth quarter of the fiscal year ended September 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B.
Item 9B. Other Information
None.
PART III
Item 10.
Item 10. Directors, Executive Officers, and Corporate Governance
Our directors and executive officers of the are as follows:
Mr. Karim Menassa, 61, serves as the President, Chief Executive Officer, Chief Financial Officer, and interim Secretary of the Company since June 27, 2002. Mr. Menassa also serves as a member of the Board of Directors of the Company. 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.
Over the years he has gained a vast and varied experience as an entrepreneur, administrator and medical device product innovator. He has established a significant bank of important and influential contacts in Canada and abroad, touching all aspects of a modern manufacturing industry. His particular strengths are in administration, engineering, product development, and marketing. He is also extremely skilful in international negotiations, having successfully negotiated several multimillion dollar contacts and established distributor relationships in over 60 countries. Some major achievements in his career include:
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Inventor of needle-free jet injector for diabetics
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Inventor of needle-free jet injector for veterinary use
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Inventor of semi-automatic assembly station
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Founder of IDEE International R & D Inc. in 1984
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Founder of IDEE Technologies Inc. in 1985
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Founder of Alliance Medical Inc. in 1989
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Founder of Medical International Technologies (MIT Canada) inc. in 2002
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past ten years that resulted in a judgment, decree, or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions, and Director Independence - Transactions with Related Persons,” none of our directors, director nominees, or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates, or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.
Board of Director Meetings and Committees
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.
The Board of Directors held no meetings during the year ended September 30, 2012, but conducted board activities through unanimous consent board resolutions in lieu of meetings.
Our Board of Directors has no separate committees and our Board of Directors acts as the audit committee and the compensation committee. We do not have an audit committee financial expert serving on our Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
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, 2012 were filed.
Code of Ethics
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:
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Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
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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;
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Compliance with applicable governmental laws, rules and regulations;
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The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
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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 2E7.
Item 11.
Item 11. Executive Compensation
Compensation Summary
The following executives of the Company received compensation in the amounts set forth in the chart below for the fiscal years ended September 30, 2012 and 2011. No other item of compensation was paid to any officer or director of the Company other than reimbursement of expenses.
EXECUTIVE OFFICER COMPENSATION TABLE
As of September 30, 2012, 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.
Compensation of Directors
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.
Employment Agreements
No formal employment agreements exist with any officer or employee.
Long-Term Incentive Plan
The Company has a 2012 stock incentive plan under which directors are authorized to grant incentive stock options, to a maximum of five million (5,000,000) 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.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth certain information as of September 30, 2012 with respect to the holdings of: (1) each person known to us to be the beneficial owner of more than 5% of our common stock; (2) each of our directors, nominees for director and named executive officers; and (3) all directors and executive officers as a group. To the best of our knowledge, each of the persons named in the table below as beneficially owning the shares set forth therein has sole voting power and sole investment power with respect to such shares, unless otherwise indicated.
(1) Based on 83,804,627 shares issued and outstanding as of December 28, 2012.
(2) Karim Menassa directly holds 2,787,422 common shares of the Company, indirectly holds: (i) 21,466 shares through Paulette Menassa, his wife, (ii) 16,285,139 shares through 2849674 Canada, Inc., (iii) 13,666,667 shares through Idee R&D International, Inc., and 9iv) 1,375,000 shares through 9162-9725 Quebec Inc., which are all controlled by Karim Menassa.
Changes in Control
We are not aware of any person who owns of record, or is known to own beneficially, five percent or more of our outstanding securities of any class, other than as set forth above. We do not have an investment advisor. There are no current arrangements which will result in a change in control, other than those set forth above.
Item 13.
Item 13. Certain Relationships and Related Transactions and Director Independence
Related party balances consist of the following at September 30, 2012 and 2011:
The Company has borrowed from shareholders and corporations owned by shareholders. These loans are bearing interest at 8%, and are due during fiscal 2012.
Director Independence
We do not have any independent directors. Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a) (2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:
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the director is, or at any time during the past three years was, an employee of the company;
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the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);
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a family member of the director is, or at any time during the past three years was, an executive officer of the company;
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the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);
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the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or
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The director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.
Mr. Menassa is not considered to be independent because he is an executive officer of the Company.
We do not currently have a separately designated audit, nominating or compensation committee.
Item 14.
Item 14. Principal Accounting Fees and Services
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-Q 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, 2012 and 2011 were: $39,963 and $22,500 respectively.
Audit Related Fees
There were no fees for audit related services for the years ended September 30, 2012 and 2011.
Tax Fees
The Company did not incur any fees for the fiscal years ended September 30, 2012 and 2011 for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended September 30, 2012 and 2011.
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-Q 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, 2012. 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.
Work Performance by Others
None.
PART IV
Item 15.
Item 15. Exhibits
In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.
* Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant had duly caused this report to be signed on its behalf to the undersigned, thereunto duly authorized.
Medical International Technology, Inc.
Date: December 28, 2012
By:
/s/ Karim Menassa
Karim Menassa
President and Principal Executive Officer,
Principal Financial Officer, interim Secretary,
Director (Duly Authorized Principal Executive
Officer and Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed as of the 28th day of December, 2012 by the following persons on behalf of the registrant in the capacities indicated:
/s/ Karim Menassa
President and Principal Executive Officer, Principal Financial Officer, interim Secretary, Director
Karim Menassa