Item 1. Description of Business
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Medico International Inc. (the “Company”) was incorporated in the State of Nevada on September 18, 2015. The Company’s registration statement on Form S-1 was declared effective by the Securities and Exchange Commission on December 22, 2015.
The Company was formed and organized for the purposes of acting as the holding company for Smile More Holding Pte. Ltd., which is a private Singapore corporation (referred to herein as “Smile Central”). Smile Central is a dental company employing the latest techniques in oral care and oral surgery in Singapore. Formed in 2014, Smile Central has expanded to 5 locations in population-dense high foot traffic residential centers all over Singapore.
Smile Central's business objectives are to improve techniques and achieve the following:
- make the existing treatment more effective;
- decrease the recovery time of patients; and
- reduce the cost of innovative/cutting edge dental procedures.
Smile Central is designed to enhance this market with its small core of eminent dentists, key employees, and strong outsourced partners. Management believes that Smile Central has a business model that is easily scalable to effect rapid growth and expansion.
Recent Developments
Due to the continued consolidated losses experience by the Company as the result of the losses of the Company’s wholly-owned subsidiary, Smile More Holdings Pte. Ltd., a Singaporean corporation (“Smile Central”), which included $232,769 for the fiscal year ended December 31, 2015, $801,760 for the fiscal year ended December 31, 2106, the Board of Directors of the Company believed it was in the best interests of the Company and its shareholders to dispose of Smile Central. In addition, the Company had provided Smile Central with over $600,000 in intra-company loans (the “Intra-Company Loan”).
The Company’s former majority shareholders, Eminent Healthcare Pte. Ltd. and Multi Care Pte. Ltd. (the “Majority Shareholders”), became shareholders of the Company in 2015 by exchanging all of the outstanding share capital of Smile Central (“Smile Shares”) for 3,000,000 shares of the Company’s common stock (the “Medico Shares”) and the Majority Shareholders desired to re-acquire the Smile Shares.
On June 5, 2017, the Company closed the transactions under the Share Exchange Agreement (“ Share Exchange Agreement”) by and between the Company, Eminent Healthcare Pte. Ltd., a Singaporean corporation, Multi Care Pte. Ltd., a Singaporean corporation, and Targeted Solutions Global Limited, a United Kingdom Private limited company, for the sale of all of the issued and outstanding ordinary shares of the Company’s 100% wholly-owned subsidiary, Smile More Holdings Pte. Ltd., a Singaporean corporation (the “Stock Purchase”). Prior to the closing of the Stock Purchase, Eminent Healthcare Pte. Ltd. and Multi Care Pte. Ltd. were the Company’s majority shareholders. Liew Min Hin, the Company’s former Chief Financial Officer and former member of the Board of Directors, owns 100% of Eminent Healthcare Pte. Ltd., and is the father of Dr. Daniel Liew, the Company’s former Chief Executive Officer and former member of the Board of Directors.
Pursuant to the Share Exchange Agreement, in consideration for transferring the Smile Shares to the Majority Shareholders and waiving the Intra-Company Loan, the Company received all of the rights, interests, claim and title in that certain US patent known as “Method for diagnosing malignancy in pelvic tumors”, US Patent No. 6,112,108 (the “Patent”), which Targeted Solutions Global Limited, a United Kingdom Private limited company (“TSG”) had the right and ability to deliver to the Company and in connection with the closing of the Share Exchange Agreement, Jiang Chun Yan was appointed as the CEO and sole member of the Company’s Board of Directors.
In addition, under the Share Exchange Agreement, TSG received from the Majority Shareholders the Medico Shares and the Majority Shareholders received $200,000 from TSG.
The effect of the transactions set forth in the Share Exchange Agreement is that commencing June 5, 2017 the Company will no longer own and operate dental clinics in Singapore but will focus its efforts in the area of cancer diagnostics tools in connection with the Patent.
The below information pertains to the operations of Smile Central.
The Company
Through 2016 Smile Central operated 5 dental clinics throughout Singapore, with each clinic meeting its respective revenue and profit targets every quarter so far. Since 2015, Smile Central has expanded its operations by adding a new dental center adjacent to its Aljunied clinic and increasing the number of dental operating chairs at its Jurong location from two (2) to six (6). The facilities for the new dental center in Aljunied have been leased and equipment has been purchased. Smile Central is currently completing renovations to the facilities. Its business model focuses on recruiting qualified and experienced dentists, supported by well-trained clinic support staff. Our dentists have post-graduate training in the fields of endodontics, orthodontics, periodontics, prosthodontics, paedodontics, oral surgery and implant dentistry. Hence, we are able to carry out procedures ranging from the routine cleaning and filling to the most complex ones involving aesthetics and surgery.
In addition to basic dental care, our strengths include:
· Invisible braces for the young and for working adults.
· Dental implants to rehabilitate functionality.
Smile Central positions itself as an affordable dental chain where patients of all demographics can afford basic and complex dental care with government Medisave claims and government-aided subsidies like the Community Health Assist Scheme and the Pioneer Generation subsidy for the elderly.
Planned Services (In Addition to Current List of Services)
Among some of the new techniques and procedures Smile Central is looking to incorporate are:
· Laser Teeth Whitening
· Aesthetic Implants and Implant Maintenance
· Laser Surgery - used to perform soft-tissue surgery, including removing tumors and lesions from the soft tissues of the mouth, as well as tooth cleaning and plaque removal
· Oral and Maxillofacial surgery - the treatment of many diseases, injuries and defects in the head, neck, face, jaws and the hard and soft tissues of the Oral (mouth) and Maxillofacial (jaws and face) region.
Goals for Expansion
According to the Singapore Dental Council, the current dentist-to-population ratio in Singapore is 1:2,960, a ratio we feel is indicative of the scope of expansion possible for the dental industry. In comparison, for 2013-2014, the statistics for the dentist-population ratio in England is around 1:2,000, with some areas having as high a ratio as 1:1,682. We feel that due to the highly-fragmented dental market in Singapore, the market has room to grow by another 40-50%, with 15% yearly gains possible for at least the next 5 years. Management is currently in talks with graduate dentists from overseas (predominantly from the UK and Australia) to employ them to staff the new locations. As is the current practice, each location will be overseen by a senior partner who is also a practicing specialist. Management hopes to staff each new location initially with 3 dentists working under the senior specialist. Leveraging on the existing expertise and business partnerships with suppliers, the new locations will be set up in the most cost-efficient manner in order to capitalize on the current opportunities immediately.
Management also currently has in place a program of sending selected high-performing dentists under its employment to increase their knowledge and expertise through seminars, courses, further study and specialization. This is in line with its policy of training the dentists to assume senior partner positions at new locations.
Direct Competition
The direct competitors of Smile Central are the dental companies with 3-10 clinics in their stable. Smile Central is already leveraging on economies of scale to provide a more professional and comfortable experience for patients at a lower cost, and should see off competition from the individual standalone clinics. The increased suite of services at the new locations should position it above ordinary clinic chains as it is able to provide a well-rounded range of services.
Future Competition
Future competition will come in the form of new clinic chains who consolidate to grow, or chains which acquire standalone clinics to increase their size. Management feels that with constant learning and innovation, Smile Central will be able to stay ahead of the competition by offering continually advanced and modern services and equipment at a competitive price point.
Competitive Analysis
Overall, management contends that the Company competes by being a leading provider of a full line of technologically advanced procedures and techniques, supported by the exceptional core managerial team and the able dentists and staff. One of the primary areas of competition is for diligent and conscientious dentists who are personable and able to form good client-doctor relations. There is also strong competition for more senior dentists with their own clientele.
With our many opportunities for continuing education learning, we believe we will be able to attract young dentists with a view to a long career in the company. Dentists with good PR skills should also be identified and recruited.
Target Market Profile
Smile Central is rolling out a plan to target different segments of the market.
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We actively recruit dentists who are good with kids and who are parents themselves, to cater to the pediatric dental market. Frequently the parents of the kids also come in for treatment when we attend to their kids.
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We target the young professionals who want a comfortable space to have their dental treatment.
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Our dentists take care of the senior citizens by educating them on oral hygiene and providing subsidized oral care.
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There is ethnic diversity in our dentists and staff - they hail from different ethnic groups and are multilingual so as to cater to every segment of the market.
Future Markets
Smile Central plans to build its Singapore network of clinics until it perceives that the Singapore market is saturated. Following that, Smile Central will look to the neighboring countries for expansion, as it believes the level of dental care is lacking in the developing countries around Singapore.
At the same time, moving more towards dental surgery and aesthetics will see the revenues increase as these treatments are more expensive, with some aesthetic surgery going up to $40,000 per patient. 3D Radiography is another segment management is looking to go into - in 3D Radiography, a large volumetric 3D image is created in a single 14 second 3D scan that provides the highest resolution with the lowest radiation dose. This is safer and more comprehensive than traditional radiography, and as the population becomes more savvy and affluent, more would turn towards this rather than traditional radiography.
Governmental Approvals
Smile Central operates within a very strict governmental approval framework and all treatment methods and procedures are completely compliant with governmental laws and guidelines.
Demographics
Singapore’s dental services and equipment and supplies market is expected to grow in tandem with the city state’s reputation as the region’s healthcare hub and center of healthcare excellence. Singapore is ranked sixth out of 191 countries globally and the best in Asia by the World Health Organization.
As a multi-faceted medical hub, Singapore attracts a growing number of medical professionals and multi-national healthcare-related companies from various parts of the world to share and exchange their expertise, conduct healthcare-related research and training as well as host international conferences and events.
With Singapore's well-developed infrastructure and robust medical ecosystem, healthcare providers in Singapore are constantly strengthening their medical capabilities through professional exchanges and access to innovation in medical technology.
In Singapore, medical travelers can receive quality medical care in an environment that is safe and welcoming, with no uncertainties from political instability, social unrest, or worries about poor health safety. This is on top of an efficient transportation system, wide range of accommodation options, and a wide variety of leisure offerings to enhance the experience in Singapore.
Singapore's quality healthcare, as one of the best in the world, is internationally recognized.
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Ranked first for most efficient healthcare system, out of 51 countries, in 2014 by Bloomberg.
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Ranked second in the world for health-care outcomes according to The Economist Intelligence Unit (EIU) in 2014.
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Ranked first as a global favorite medical tourism destination in PHD Chamber Medical and Wellness Tourism Report 2013.
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21 hospitals and medical centres and medical organizations in Singapore have obtained the Joint Commission International (JCI) accreditation.
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Singapore's blood supply ranks among the safest in the world. Blood Services Group HSA (previously known as Singapore's Centre for Transfusion) was appointed a World Health Organization (WHO) Collaborating Blood Centre for Transfusion Medicine for the Western Pacific Region in 1992.
Singapore's increased emphasis on medical tourism has seen the number of tourists traveling to Singapore for healthcare purposes grow significantly. The total medical tourism receipts came in at $832 million in 2013, up from $383 million in 2004, and Singapore's medical tourism market is expected to grow 8.3% per annum from now to 2018.
Singapore’s dental practitioners have seen a steady demand for more complex and specialty dental procedures from foreign visitors who also come here for medical consultation. The country continues to strive to provide first class healthcare systems and facilities to its residents and the international patient market.
The medical and dental sector is also expected to see gains due to the increasing population. The population of Singapore is now 5.4 million, and this is expected to rise to 6.9 million in 2030.
Market Demand
The general status of dental and oral hygiene of Singaporeans is good. Attributing to this success is the Singapore government’s fluoridation of potable water initiative since 1958 and the widespread use of fluoridated toothpaste among the general population. As such, the dental work done by dental practitioners has shifted from the traditional “drill and fill” regime to one that focuses on enhancing the patient’s aesthetic appearance.
The emphasis of the public healthcare service is in preventive dentistry targeted at pupils in schools. Dental care begins with preventive dentistry promoted through the Singapore Health Promotion Board, a statutory board tasked to promote a good and healthy lifestyle among Singaporeans. The Board targets students through a network of 200 static clinics located in schools as well as 30 mobile dental clinics. This plus fluoridation of potable water and availability of fluoridated toothpaste has greatly diminished dental decay and tooth loss.
Singapore provides some of the most advanced dental care in the region. With the third highest GDP per capita income in the world, Singaporeans' demand for the best and most sophisticated dental care is strong. According to a report that highlighted the results of a survey conducted by the Singapore Dental Association, nearly 45% of the population visits the dentist at least twice a year. They spend an average of US$80 for a visit to the dentist.
As an affluent nation, more and more patients are seeking treatment for their children early in the hope of arresting any potential problems with their teeth. More parents are bringing their children to see orthodontists before they lose their baby teeth. Teenagers and adults too are seeking corrective treatments to improve the alignment of their teeth.
Designer and/or transparent braces are popular and appeal to the more aesthetically-conscious and affluent. Costs for such treatments are in the thousands of dollars.
There has also been an increased awareness of oral and dental hygiene. More Singaporeans have adopted a more rigorous approach to oral care by incorporating flossing and gargling with a mouthwash to their typical routine of twice-a-day brushing. Schools have been instrumental in reinforcing this to the children.
Besides serving a more affluent and demanding resident population, dental practitioners have also seen a marked increase in foreign patients seeking dental treatment in Singapore. Wealthy patients from Indonesia, Brunei, Thailand, Malaysia, Philippines, Hong Kong, Cambodia, China and Vietnam began to visit Singapore for medical care in the 1980s. According to a news report, these patients are not looking for a quick clean or check-up, they come for treatments that include cosmetic dentistry that arrest problems of discolored teeth, gaps between teeth, unsightly old crowns and reconstructive work which can cost up to US$60,000.
Singaporean dentists do a lot of overseas teaching and are involved in overseas conferences. They are increasingly seen as experts in their field and are sought after as panelists at dental conferences, to do product demonstrations and as key opinion leaders. According to leading implant suppliers, implants are the fastest growing segment in the global dental market with an annual growth rate of 18-20 percent.
Many dental GPs are improving themselves through workshops and courses and the popular topics include implants and cosmetic dentistry. Cosmetic dentists are now seen as the “plastic surgeons of the dental sector”.
As Singaporean dental practitioners strive to provide more value-added consultations, some are providing their patients more holistic medical care by offering the option for oral cancer screening. Oral cancer is ranked 11th in the list of most common cancers in Singapore, based on information available from the Ministry of Health. Due to the anxiety that may be experienced by patients, this test is conducted selectively only when the patient displays high-risk symptoms and after the dental practitioner provides the appropriate counseling.
Property
Our subsidiary, Smile Central, leases office space for each of our six (6) clinics. The table provided below summarizes the monthly rental cost, before applicable taxes, in Singapore dollars, and the tenancy period for each lease.
Employees
Smile Central employs sixty (60) employees, of which 49 are full-time employees, 11 are part-time employees, 3 full-time doctors (including the Company’s former executive officers, Dr. Liew and Dr. Chew) and 8 contracted doctors.
Item 1A.
Item 1A. Risk Factors
We have a history of losses and may never be profitable.
We have an accumulated deficit totaling $(1,161,700), as of December 31, 2016, and we are not profitable. To date our operations have not generated sufficient operating cash flows to pay for the expenses we incur on a current basis. We may not be able to successfully keep or grow our businesses or achieve profitability from our operations in the near future or at all.
Among other things, our ability to achieve sustainable profitability is dependent on:
· Successful marketing and sale of our dental services and plan;
· Our ability to acquire or open additional dental practices and operate them profitably;
· Our ability to develop additional services and plans to serve dentists and their patients.
There can be no assurance that we will achieve sustainable profitability.
Our cash reserves are not sufficient to pay the amounts owing on outstanding obligations.
At December 31, 2016, we had $2,160,082 in current liabilities and working capital deficit of $(1,120,357). We do not have sufficient reserves to pay the amounts owing. As a result, no assurance can be given that the Company will have the resources to repay any or all of its current obligations. The failure of the Company to pay its obligations will have a material adverse effect on the Company, including the possibility of the Company ceasing to conduct operations.
Our net revenue may be adversely affected by changes in the government Medisave program and the Community Health Assist Scheme program or CHAS.
Our clinics are largely dependent upon reimbursements from the Singapore government insurance reimbursement programs known as Medisave and CHAS. The government of Singapore could at any time act to reduce Medisave and/or CHAS reimbursement rates in response to budgetary shortfalls. These reductions would generally be passed on to our practices and negatively affect our revenue and operating results.
Qualification to be able to participate in the Medisave and CHAS reimbursement programs can take up to three (3) months and limits our ability to open new clinics.
Part of our plan to become profitable includes opening additional dental clinics in Singapore. Our ability to quickly open clinics in a desirable location can be hindered by the amount of time that it takes for a new clinic to become qualified by the government to participate in the Medisave and CHAS reimbursement programs, which can take up to three (3) months. This type of delay could give other competing, established dental practices an advantage over us and impede our ability to enter into a given market.
RISKS RELATED TO REGULATORY MATTERS
Our clinics are subject to extensive laws and regulations. If we fail to comply with existing or new laws or regulations, we could suffer civil penalties.
The practice of dentistry is highly regulated. Our operations are subject to extensive laws, regulations, licensing requirements and guidelines set by the Ministry of Health (“MOH”) and the Singapore Dental Council (“SDC”), including regulations pertaining to our operations, the qualifications and conduct of clinical personnel, billing and reimbursement and the privacy and security of protected health information. Although we strive to maintain a legally-compliant business, our operations may not be in compliance with certain laws or regulations, as written or as may be interpreted. Failure to comply with laws and regulations may cause us to incur civil penalties, fines, shutting down of a clinic, or revocation of dentist practicing certificate. This would significantly limit our ability to operate our business. In addition, we could be excluded from participating in the Medisave and CHAS reimbursement programs.
Guidelines set by MOH can be changed at the MOH’s discretion, which could result in significant cost and potentially loss of time to service patients.
Most of our equipment is subject to guidelines set by the MOH regarding minimum requirements, which can change at the MOH’s discretion. In the event that the MOH’s guidelines are revised, we may be required to replace expensive equipment with new equipment, which would represent a significant new expense incurred by each of our clinics. These changes could occur at any time.
Our business operations could be interrupted by problems with our information systems.
Our business is dependent on information systems for operational processes, financial information and our billing operations. Our information system could be vulnerable to damage or interruption from computer viruses, human error, natural disasters, tele-communications failures, intentional acts of vandalism and similar events. A significant or prolonged interruption in our computer network, data center or software applications could have a material adverse effect on our business, financial condition and results of operations.
A catastrophic event may significantly limit our ability to conduct business as normal.
We operate a complex, geographically dispersed business. Disruption or failure of networks or systems, or injury or damage to personnel or physical infrastructure, caused by a natural disaster, public health crisis, terrorism, cyber attack or other catastrophic event may significantly limit our ability and that of the affiliated practices to conduct business as normal, including our ability to communicate and transact with the affiliated practices, as well as with suppliers and vendors, and the ability of the affiliated practices to provide dental care to patients. We are not adequately insured for losses and disruptions caused by catastrophic events, and we may not have a sufficiently comprehensive enterprise-wide disaster recovery plan in place.
RISKS RELATED TO OUR COMMON STOCK
An active trading market for our common stock may not develop, and you may not be able to resell your shares of our common stock at or above the initial public offering price.
Although our common stock has been approved for listing on OTCQB, an active trading market for our shares has not developed and may never develop or be sustained. The initial public offering price of our common stock was arbitrarily determined by our Chief Executive Officer. This initial public offering price may not be indicative of the market price of our common stock after this offering. In the absence of an active trading market for our common stock, investors may not be able to sell their common stock at or above the initial public offering price or at the time that they would like to sell.
The market price for our common stock will likely be volatile because of several factors, including a limited public float.
The market price of our common stock is likely to be highly volatile because there has been no public trading market for our stock. If our stock is approved for trading on the OTCQB, of which there is no guarantee, we will most likely have limited float, which causes trades of small blocks of stock to have a significant impact on our stock price. You may not be able to resell shares of our common stock following periods of volatility because of the market’s adverse reaction to volatility.
Other factors that could cause such volatility may include, among other things:
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potential investigations, proceedings or litigation that involves or affects us;
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risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned expansion;
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actual or anticipated fluctuations in our operating results;
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overall stock market fluctuations;
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our ability to raise capital when we require it, and to raise such capital on favorable terms;
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conditions or trends in the industry;
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changes in market valuations of other similar companies;
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announcements by us or our competitors of expansion of clinics;
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future sales of common stock;
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actions initiated by the SEC or other regulatory bodies;
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departure of key personnel or failure to hire key personnel; and
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general market conditions.
Any of these factors could have a significant and adverse impact on the market price of our common stock. In addition, the stock market in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock, regardless of our actual operating performance.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.
The trading market for our common stock will depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. There can be no assurance that analysts will cover us or provide favorable coverage. If one or more of the analysts who cover us downgrade our stock or change their opinion of our stock, our share price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
Even if there is no immediate need for capital, we may choose to issue debt or shares of our common stock in the future and such issuances, if any, could have a dilutive effect on your investment.
We may choose to issue debt or shares of our common stock for investment, acquisition or other business purposes. Even if there is not an immediate need for capital, we may choose to issue securities to sell in public or private equity markets if and when conditions are favorable. Raising funds by issuing securities would dilute the ownership interests of our existing stockholders. Additionally, certain types of equity securities we may issue in the future could have rights, preferences or privileges senior to the rights of existing holders of our common stock.
We cannot assure you that we will declare dividends or have the available cash to make dividend payments, and as a result you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.
Although we do not currently intend to pay dividends, to the extent we decide in the future to pay dividends on our common stock, we will pay such dividends at such times and in such amounts as the board of directors determines appropriate and in accordance with applicable law. Our board of directors may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us and such other factors as our board of directors may deem relevant. There can be no assurance that we will pay dividends going forward or as to the amount of such dividends. As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than that which you paid for it.
We are a holding company that depends on cash flow from our wholly owned subsidiary to meet our obligations, and any inability of our subsidiary to pay us dividends or make other payments to us when needed could disrupt or have a negative impact on our business.
We are a holding company with no business operations of our own. Our only significant assets are the outstanding capital stock of our subsidiary, Smile Central, which will conduct all of our operations and own all of our operating assets. Accordingly, our ability to pay our obligations is dependent upon dividends and other distributions from our subsidiary to us. The ability of our subsidiary to pay dividends or make other payments or distributions to us will depend on its respective operating results, and the terms of our current and future financing agreements, which may preclude dividends, distributions or other payments.
In addition, because we are a holding company, claims of our security holders will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our subsidiary. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our subsidiary will be able to satisfy the claims of our security holders only after all of our and our subsidiary’s liabilities and obligations have been paid in full.
Anti-takeover provisions under Nevada law could discourage, delay or prevent a change in control of the Company and may affect the trading price of our common stock.
We are a Nevada corporation and the anti-takeover provisions of the Nevada Revised Statutes may discourage, delay or prevent a third party from acquiring our company, even if doing so may be beneficial to our stockholders. In addition, these provisions could limit the price investors would be willing to pay in the future for shares of our common stock.
Our common stock is and will be subordinate to all of our existing and future indebtedness.
Shares of our common stock are common equity interests in us and, as such, will rank junior to all of our existing and future indebtedness and other liabilities. Additionally, our right to participate in a distribution of assets upon any of our subsidiaries’ liquidation or reorganization is subject to the prior claims of that subsidiary’s creditors.
The Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit your ability to buy and sell our common stock, which could depress the price of our shares.
FINRA has adopted rules that require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.
RISKS RELATED TO AN EMERGING GROWTH COMPANY
We will face new challenges, increased costs and administrative responsibilities as a public company, particularly after we are no longer an “emerging growth company.”
As a publicly traded company with listed equity securities, we will need to comply with certain laws, regulations and requirements, including certain provisions of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, certain regulations of the Securities and Exchange Commission, or SEC, and certain of the OTCQB listing rules applicable to public companies. Complying with these statutes, regulations and requirements will occupy a significant amount of the time of our board of directors and management and will significantly increase our costs and expenses.
We will need to:
institute a more comprehensive compliance framework;
update, evaluate and maintain a system of internal controls over financial reporting in compliance with the requirements of Section 404 of Sarbanes-Oxley and the related rules and regulations of the SEC;
prepare and distribute periodic public reports in compliance with our obligations under the federal securities laws;
revise our existing internal policies, such as those relating to disclosure controls and procedures and insider trading;
comply with SEC rules and guidelines including a requirement to provide our consolidated financial statements in interactive data format using eXtensible Business Reporting Language;
involve and retain to a greater degree outside counsel and accountants in the above activities; and
enhance our investor relations function.
However, for as long as we are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we are permitted to, and intend to, take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. We will remain an emerging growth company for up to five years, although we would cease to be an emerging growth company as of December 31 of a particular year (i) if we had gross revenue of $1 billion or more in such year, (ii) if the market value of our common stock that is held by non-affiliates exceeds $700 million as of June 30 in such year, (iii) if at any point in such year, we would have issued more than $1 billion of non-convertible debt during the three-year period prior thereto or (iv) on the date on which we are deemed a “large accelerated issuer” as defined under the federal securities laws. For so long as we remain an emerging growth company, we will not be required to:
have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of Sarbanes-Oxley;
comply with any requirement that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis);
submit certain executive compensation matters to shareholder advisory votes pursuant to the “say on frequency” and “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and
include detailed compensation discussion and analysis in our filings under the Securities Exchange Act of 1934, as amended, or Exchange Act, and instead may provide a reduced level of disclosure concerning executive compensation.
Although we intend to rely on the exemptions provided in the JOBS Act, the exact implications of the JOBS Act for us are still subject to interpretations and guidance by the SEC and other regulatory agencies. In addition, as our business grows, we may no longer satisfy the conditions of an emerging growth company. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot assure you that we will be able to take advantage of all of the benefits from the JOBS Act. In addition, we also expect that being a public company subject to these rules and regulations will make it more expensive for us to maintain adequate director and officer liability insurance. These factors could also make it more difficult for us to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit committee.
Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and share price.
As a publicly traded company, we will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of Sarbanes-Oxley, which will require, beginning with the filing of our second annual report with the SEC, annual management assessments of the effectiveness of our internal control over financial reporting. However, as an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company. During the course of our testing, we may identify material weaknesses that we may not be able to remediate in time to meet our deadline for compliance with Section 404.
Testing and maintaining internal control can divert our management’s attention from other matters that are important to the operation of our business. We also expect the regulations to increase our legal and financial compliance costs, make it more difficult to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit committee, and make some activities more difficult, time-consuming and costly. We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 and, when applicable to us, our independent registered public accounting firm may not be able or willing to issue an unqualified report on the effectiveness of our internal control over financial reporting. If we conclude that our internal control over financial reporting is not effective, it could have a material adverse effect on our financial condition, results of operations and market for our common stock, and could subject us to regulatory scrutiny.
RISKS RELATED TO OUR ENTERING INTO THE FIELD OF DEVELOPING ULTRASOUND DIAGNOSTICS TOOLS
We have no experience as a company conducting clinical trials.
We have no experience as a company conducting clinical trials and we cannot be certain that any clinical trials we may conduct will be completed on time or at all. Clinical trials require significant financial and management resources, and reliance on third-party clinical investigators, contract research organizations, or CROs, or consultants. Relying on third-party clinical investigators or CROs may force us to encounter delays that are outside of our control.
Clinical trials are expensive, time-consuming and difficult to design and implement.
Human clinical trials are expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. Because our product candidate is based on new technology, we expect that it will require extensive research and development and have substantial related costs. At this time we anticipate that the cost of required research will be at least $840,000, and the actual costs may be significantly higher. In order to conduct such research and development, we will need to raise additional capital through issuances of equity or debt which we may be unsuccessful in doing or on terms favorable to the Company.
Our product candidate may not achieve commercialization and our commercial opportunity may be limited.
Development and obtaining regulatory approval for and commercializing our product candidate will require substantial additional funding and are prone to the risks of failure inherent in medical product development. We cannot provide you any assurance that we will be able to successfully advance our product candidate through the development process.
Even if we receive FDA approval to market our product candidate for the diagnosis of malignancy in a tumor, we cannot assure you that our product candidate will be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives. If we are unable to successfully develop and commercialize our product candidate, our commercial opportunity will be limited.
If we fail to obtain additional financing, we may be unable to complete the development and commercialization of our product candidate.
We expect to spend substantial amounts to on the required research and clinical development of our product candidate. If approved, we will require significant additional amounts in order to launch and commercialize our product candidate. At this time we anticipate that the cost of required research will be at least $840,000, and the actual costs may be significantly higher.
We cannot be certain that additional funding will be available on acceptable terms, or at all. We have no committed source of additional capital and if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of our product candidate.
Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidate.
We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidate, or grant licenses on terms unfavorable to us.
The FDA regulatory approval process is lengthy and time-consuming, and we may experience significant delays in the clinical development and regulatory approval of our product candidate.
The regulatory approval pathway for our product candidate may be uncertain, complex, expensive and lengthy, and approval may not be obtained.
We may experience delays in completing planned clinical trials for a variety of reasons, including delays related to:
· the availability of financial resources to commence and complete the planned trial;
· reaching agreement on acceptable terms with prospective third parties to assist in the research, the terms of which can be subject to extensive negotiation and may vary significantly;
· obtaining approval at each clinical trial site by an independent institutional review board;
· recruiting suitable patients to participate in a trial;
· having patients complete a trial, including having patients enrolled in clinical trials dropping out of the trial before the product candidate is manufactured and returned to the site, or return for post-treatment follow-up;
· clinical trial sites deviating from trial protocol or dropping out of a trial; or
· adding new clinical trial sites.
A clinical trial may be suspended or terminated by us, the institutional review board for the institutions in which such trials are being conducted, the Data Monitoring Committee for such trial, or by the FDA or other regulatory authorities due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. If we experience termination of, or delays in the completion of, any clinical trial of our product candidate, the commercial prospects for our product candidate will be harmed, and our ability to generate product revenue will be delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down our product development and approval process and jeopardize our ability to commence product sales and generate revenue.
Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may ultimately lead to the denial of regulatory approval of our product candidates.
The patent we purchased was issued in August 2000 and expires in August 2020
The patent we purchased (Patent Number: 6,112,108) was issued in August 2000 and the patent protection under the patent expires in August 2020, leaving us a short period of time for protection under the patent.
Item 1B.
Item 1B. Unresolved Staff Comments.
Not applicable to smaller reporting companies.
Item 2.
Item 2. Description of Property
Our subsidiary, Smile Central, leases office space for each of our six (6) clinics. The table provided below summarizes the monthly rental cost, before applicable taxes, in Singapore dollars, and the tenancy period for each lease.
Item 3.
Item 3. Legal Proceedings
None.
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
There is currently a very limited public market for our common shares. Our common shares are listed on the OTC Pink Sheets at this time, but there have been no trades. Trading in stocks quoted on the OTC Pink Sheets is often thin and is characterized by wide fluctuations in trading prices due to many factors that may be unrelated to a company’s operations or business prospects.
OTC Pink Sheet securities are not listed or traded on the floor of an organized national or regional stock exchange. Instead, OTC Pink Sheet securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Pink Sheet issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
Number of Holders
As of June12, 2017, the 3,697,000 issued and outstanding shares of common stock were held by a total of 34 shareholders of record.
Dividends
No cash dividends were paid on our shares of common stock during the fiscal year ended December 31, 2016. We have not paid any cash dividends since September 18, 2015 (inception) and do not foresee declaring any cash dividends on our common stock in the foreseeable future.
Recent Sales of Unregistered Securities
The Company has 500,000,000, $0.001 par value shares of common stock authorized.
On September 19, 2015 we entered into a Share Exchange Agreement with the three (3) owners of Smile Central Dental Group, whereby we agreed to issue 3 million shares of common stock in exchange for all of the issued and outstanding shares of capital stock of Smile Central Dental Group. The three (3) owners of Smile Central Dental Group as a result became the executive officers and directors of Medico International.
Medico International issued the securities to three (3) non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction in which we relied on the registration exemption provided for in Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”), as the conditions of Regulation S were met, including but not limited to the following conditions:
·
Each of the parties receiving shares are residents and citizens of Singapore and were in Singapore at the time of the sale of the shares;
·
Each of the parties receiving shares agree to resell the shares only in accordance with Regulation S, pursuant to a registration under the Act, or pursuant to an available exemption from registration; and
·
The certificate representing the shares sold contain a legend that transfer of the shares is prohibited except in accordance with the provisions of Regulation S, pursuant to a registration under the Act, or pursuant to an available exemption from registration and the hold may engage in hedging transactions with regards to Medico’s common stock unless in compliance with the Act.
As of June 12, 2017, the 3,697,000 issued and outstanding shares of common stock were held by a total of 34 shareholders of record.
Item 6.
Item 6. Selected Financial Data
Not applicable to smaller reporting companies.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
FORWARD LOOKING STATEMENTS
Statements made in this Form 10-K that are not historical or current facts are "forward-looking statements". These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
OVERVIEW
We are a newly formed Nevada corporation organized for the purposes of acting as the holding company for Smile More Holdings Pte. Ltd., which is a Singapore corporation that owns and operates dental clinics in Singapore under the Smile Central name (referred to herein as “Smile Central”). Smile Central is a dental company employing the latest techniques in oral care and oral surgery in Singapore. Smile Central operates out of 5 locations in population-dense high foot traffic residential centers all over Singapore.
Smile Central’s business model focuses on recruiting qualified and experienced dentists, supported by well-trained clinic support staff. Our dentists have post-graduate training in the fields of endodontics, orthodontics, periodontics, prosthodontics, paedodontics, oral surgery and implant dentistry. Hence, we are able to carry out procedures ranging from the routine cleaning and filling to the most complex ones involving aesthetics and surgery.
Years ended December 31, 2016 and December 31, 2015
For the year ended December 31, 2016 we earned Dental Service Revenue of $6,543,428 compared to Dental Service Revenue of $4,905,241 for the year ended December 31, 2015. Cost of Services for the year ended December 31, 2016 were $5,673,813 resulting in a Gross Profit of $869,615, compared to Cost of Services for year ended December 31, 2015 of $3,781,246 resulting in a gross profit of $1,123,995. Dental service revenue for the year ended December 31, 2016 increased by $1,638,187 over the year ended December 31, 2015 due to additional clinics, increased activity, patient treatments and patients.
Operating expenses were $1,884,053 for the year ended December 31, 2016, compared to $1,356,764 for the year ended December 31, 2015, due to additional clinics, increased operations, patient treatments, professional fees and resulting overhead. Operating expenses for the year ended December 31, 2016 were comprised of $845,684 for rental, $384,287 for general and administrative expenses, $299,956 for professional fees, $236,711 for depreciation, and $117,415 for staff costs, compared to $561,167 for rental, $158,781 for general and administrative expenses, $408,413 for professional fees, $139,930 for depreciation, and $88,473 for staff costs for the year ended December 31, 2015.
For the year ended December 31, 2016, we had other income of $102,832 and interest expense of $8,404, compared to $149,894 in other income and $5,833 in interest expense during the year ended December 31, 2015. The decrease in other income was attributed to a gain on forgiveness of debt for the year ending December 31, 2015, that did not re-occur in the year ended December 31, 2016.
LIQUIDITY AND CAPITAL RESOURCES
Years ended December 31, 2016 and December 31, 2015
Cash Flows
Our primary liquidity and capital requirements are for cost of services and administrative expenses. We fund our operations with cash generated from dental service revenue, capital contributions, and issuances of common stock.
Operating Activities
For the year ended December 31, 2016, net cash used in operating activities was $228,287. This negative cash flow related to our net loss of $920,010, adjusted for depreciation of $575,689, an increase in loss on disposal of equipment of $18,967, an increase in accounts receivable of $152,841, a decrease in other receivables of $69,000, an increase in prepaid expenses and deposits of $28,361, an increase in inventory of $29,062, an increase in accounts payable of $163,174, an increase in accrued and other payables of $72,703, and an increase in deferred revenue of $2,454.
This compared to net cash provided by operating activities during the year ended December 31, 2015 in the amount of $272,313.
The Company’s consolidated financial statements accompanying this report have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the foreseeable future. As of December 31, 2016, the Company has accumulated deficit of $1,161,700 since inception and has a working capital deficiency of $1,120,357.
Management's plans include raising capital through the equity markets to fund operations and eventually, generating profit through its business; however, there can be no assurance that the Company will be successful in such activities. The consolidated financial statements accompanying this report do not include any adjustments relating to the recovery of the recorded assets or the classifications of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Investing Activities
For the year ended December 31, 2016, net cash used in investing activities was $438,226, compared to net cash of $361,286 used during the year ended December 31, 2015. The cash used for both periods was primarily driven by the cost of building and opening a total of four (4) dental clinics in Singapore during those periods, which resulted in an increase in the purchase of property, plant, and equipment for the year ended December 31, 2016.
Financing Activities
Net cash provided by financing activities was $620,243 for the year ended December 31, 2016. This was the result of issuance of shares for a total of $697,000, loans from related parties in the amount of $147,020, partially offset by the repayment of capital lease obligations in the amount of $223,777, loans from related parties in the amount of $581,503 and the repayment of capital lease obligations in the amount of $294,502, during the year ended December 31, 2015.
PLAN OF OPERATION
For the period from inception (January 20, 2014) through December 31, 2014, we incurred a net loss of $152,982 and total comprehensive loss of $146,584. However, during the year ended December 31, 2015, we incurred a net loss of $88,708 and total comprehensive loss of $81,732.
Subsequent to December 31, 2015, the Company raised $697,000 from its public offering of stock. The Company will use such funds for the building of additional clinics.
Recent Developments
Due to the continued consolidated losses experienced by the Company as the result of the losses of the Company’s wholly-owned subsidiary, Smile More Holdings Pte. Ltd., a Singaporean corporation (“Smile Central”), which included $232,769 for the fiscal year ended December 31, 2015, $801,760 for the fiscal year ended December 31, 2106, the Board of Directors of the Company believed it was in the best interests of the Company and its shareholders to dispose of Smile Central. In addition, the Company had provided Smile Central with over $600,000 in intra-company loans (the “Intra-Company Loan”).
The Company’s former majority shareholders, Eminent Healthcare Pte. Ltd. and Multi Care Pte. Ltd. (the “Majority Shareholders”), became shareholders of the Company in 2015 by exchanging all of the outstanding share capital of Smile Central (“Smile Shares”) for 3,000,000 shares of the Company’s common stock (the “Medico Shares”) and the Majority Shareholders desired to re-acquire the Smile Shares.
On June 5, 2017, the Company closed the transactions under the Share Exchange Agreement (“ Share Exchange Agreement”) by and between the Company, Eminent Healthcare Pte. Ltd., a Singaporean corporation, Multi Care Pte. Ltd., a Singaporean corporation, and Targeted Solutions Global Limited, a United Kingdom Private limited company, for the sale of all of the issued and outstanding ordinary shares of the Company’s 100% wholly-owned subsidiary, Smile More Holdings Pte. Ltd., a Singaporean corporation (the “Stock Purchase”). Prior to the closing of the Stock Purchase, Eminent Healthcare Pte. Ltd. and Multi Care Pte. Ltd. were the Company’s majority shareholders. Liew Min Hin, the Company’s former Chief Financial Officer and former member of the Board of Directors, owns 100% of Eminent Healthcare Pte. Ltd., and is the father of Dr. Daniel Liew, the Company’s former Chief Executive Officer and former member of the Board of Directors.
Pursuant to the Share Exchange Agreement, in consideration for transferring the Smile Shares to the Majority Shareholders and waiving the Intra-Company Loan, the Company received all of the rights, interests, claim and title in that certain US patent known as “Method for diagnosing malignancy in pelvic tumors”, US Patent No. 6,112,108 (the “Patent”), which Targeted Solutions Global Limited, a United Kingdom Private limited company (“TSG”) had the right and ability to deliver to the Company and in connection with the closing of the Share Exchange Agreement, Jiang Chun Yan was appointed as the CEO and sole member of the Company’s Board of Directors.
In addition, under the Share Exchange Agreement, TSG received from the Majority Shareholders the Medico Shares and the Majority Shareholders received $200,000 from TSG.
The effect of the transactions set forth in the Share Exchange Agreement is that commencing June 5, 2017 the Company will no longer own and operate dental clinics in Singapore but will focus its efforts in the area of cancer diagnostics tools in connection with the Patent.
Recent Developments
On March 7, 2017, the Company filed a Schedule 14C Information statement with the Securities and Exchange Commission in connection with the following action taken pursuant to the written consent of the shareholders holding a majority of the voting power of the Company’s issued and outstanding capital stock, dated as of February 28, 2017 (the “Written Consent”) authorizing the following:
Entry into a Stock Purchase Agreement dated February 28, 2017 (“Stock Purchase Agreement”), with Dr. Daniel Liew, the Company’s Chief Executive Office and a member of the Company’s Board of Directors, for the sale of all of the issued and outstanding ordinary shares of the Company’s 100% wholly-owned subsidiary, Smile More Holdings Pte. Ltd., a Singaporean corporation (the “Stock Purchase”).
The effect of the transactions set forth in the Stock Purchase Agreement is that the Company will no longer own and operate dental clinics in Singapore and will focus its efforts in the area of cancer diagnostics tools. The Company has purchased an ultrasound patent from Ramot University for Applied Research & Industrial Development Ltd. in Israel and is planning to develop the technology to diagnose malignancies in pelvic tumors. The company has also engaged Dr. Ron Tepper (phd), one of the investors of this patent, to help the company develop and bring the ultrasound diagnostics tools to market.
OFF-BALANCE SHEET ARRANGEMENTS
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules of the Securities Exchange Commission.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Company does not hold any assets or liabilities requiring disclosure under this item.
Item 8.
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Medico International Inc.
We have audited the accompanying consolidated balance sheets of Medico International Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for the years then ended. Medico International Inc.’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated 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 audit 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 audit 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.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Medico International Inc. as of December 31, 2016 and 2015, 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 consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3, the Company has incurred net losses and negative working capital since inception. These factors, and the need for additional financing in order for the Company to meet its business plans, raise substantial doubt about the Company’s ability to continue as a going concern.
4806 West Gandy Boulevard · Tampa, Florida 33611 · 813.440.6380
Medico International Inc.
Consolidated Financial Statements
As of and For the Years Ended December 31, 2016 and 2015
MEDICO INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
See the notes to the consolidated financial statements
MEDICO INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
See the notes to the consolidated financial statements
MEDICO INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
See the notes to the consolidated financial statements
MEDICO INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
See the notes to the consolidated financial statements
MEDICO INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Nature of Operations
Medico International Inc. (the “Company” or “Medico”), a Nevada corporation, was formed by the owners and principals of Smile More Holdings Pte. Ltd., a Singaporean corporation (“Smile Central”), for the purpose of acting as the holding company for Smile Central and penetrating the U.S. financial markets. Smile Central owns six (6) dental clinics operating in Singapore. Smile Central’s operations were launched in January 2014 with three (3) clinics and in 2015, an additional two (2) clinics were opened. In 2016, one (1) additional dental clinic was opened. Smile Central plans to continue to expand its operations and create additional clinics in Singapore.
On September 19, 2015, the Company issued a total of 3,000,000 shares of common stock pursuant to the Share Exchange Agreement entered into among Medico, Eminent Healthcare Pte. Ltd. and Multi Care Pte. Ltd. Pursuant to the Share Exchange Agreement, the Company agreed to issue 3,000,000 shares of its common stock in exchange for all of the issued and outstanding shares of capital stock of Smile Central, 30% of which was owned by Eminent Healthcare Pte. Ltd. and 70% of which was owned by Multi Care Pte. Ltd. The Company’s CFO, Liew Min Hin, owns 100% of Eminent Healthcare Pte. Ltd. The shares were issued pursuant to Section 4(2) of the Securities Act of 1993 (“Securities Act”) and are restricted shares as defined in the Securities Act.
Note 2: Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") on the accrual basis of accounting.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated. We currently have no investments accounted for using the equity or cost methods of accounting.
Functional Currency
The Company's functional currency is the Singapore Dollar and reporting currency is the U.S. dollar. All transactions initiated in Singapore Dollar are translated into U.S. dollars in accordance with Accounting Standards Codification (“ASC”) 830-30, "Translation of Financial Statements," as follows:
i) Assets and liabilities at the rate of exchange in effect at the balance sheet date.
ii) Equity at historical rates.
iii) Revenue and expense items at the average rate of exchange prevailing during the period.
Adjustments arising from such translations are included in accumulated other comprehensive gain in stockholders’ deficit.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP require 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 balance sheet and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.
Cash and Cash Equivalents
Cash and cash equivalents consists of cash and all highly liquid investments with a maturity of three months or less.
The Company maintains its cash accounts primarily with banks located in Singapore and they are all denominated in Singapore dollar.
Accounts Receivables
Accounts receivable consist primarily of receivables from provided services. Management determines the allowance for doubtful accounts based on customer credit-worthiness, past transaction history with the customer, current economic industry trends, and changes in customer payment terms. On a continuing basis, management analyzes delinquent receivables, and once these receivables are determined to be uncollectible, they are written off against an existing allowance account. As of December 31, 2016 and 2015, the Company has determined that an allowance for doubtful accounts is not necessary as all accounts are considered fully collectible.
Inventory
Inventory is stated at the lower of cost or market. Cost is computed using weighted average cost, which approximates actual cost, on a first-in, first-out basis. Inventory on hand is evaluated on an on-going basis to determine if any items are obsolete or in excess of future needs. Items determined to be obsolete are reserved for. The Company provides for the possible inability to sell its inventory by providing an excess inventory reserve. As of December 31, 2016 and 2015 the Company determined that no reserve was required.
Property and Equipment
Property and equipment are stated at cost and are depreciated over their estimated useful lives using the straight-line method. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. Upon retirement or disposal of assets, the cost and accumulated depreciation are eliminated from the account and any gain or loss is reflected on the consolidated statements of operations.
Estimated useful lives for computers are 1 ~ 3 years and useful lives for dental equipment, furniture and fittings, office equipment and lab equipment are 3 ~ 5 years. Renovations are included at the lessor of useful life or the life of the lease.
Impairment or Disposal of Long-Lived Assets
The Company evaluates its long-lived assets whenever significant events or changes in circumstances occur that indicate that the carrying amount of an asset may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted future net cash flows from the operations to which the assets relate, based on management’s best estimates using appropriate assumptions and projections at the time, to the carrying amount of the assets. If the carrying value is determined not to be recoverable from future operating cash flows, the asset is deemed impaired and an impairment loss is recognized equal to the amount by which the carrying amount exceeds the estimated fair value of the asset. No such impairment was indicated at December 31, 2016 and 2015.
Fair Value of Financial Instruments Estimates
The Company’s financial instruments including accounts receivable, accounts payable, accrued and other payables and due to related parties are carried at cost, which approximates fair value due to the short-term maturity of these instruments. The recorded value of the Company’s long-term debt approximates its fair value as it bears interest at a floating rate.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to a significant concentration of credit risk include cash. At times, the Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management monitors the credit rating and concentration of risk with these financial institutions on a continuing basis to mitigate risk.
Taxes Collected and Remitted to Governmental Authorities
The Company reports taxes collected from customers, which are primarily goods and service tax, on a net basis.
Revenue Recognition
Revenues are recognized when services are rendered, amounts are reliably measurable, and collectability is assured. Revenue is presented, net of goods and services tax, rebates and discounts.
Advertising
Advertising costs are expensed as incurred. Advertising costs totaled $53,917 and $13,536 for the years ended December 31, 2016 and 2015, respectively.
Income Taxes
Current income tax liabilities for current and prior years are recognized at the amounts expected to be paid to the tax authorities, using the tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date.
Deferred income tax assets/liabilities are recognized for all deductible/taxable temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements except when the deferred income tax assets/liabilities arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting nor taxable profit or loss.
Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax assets and liabilities are measured at:
(i) the tax rates that are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date; and
(ii) the tax consequence that would follow from the manner in which the Company expects, at the balance sheet date, to recover or settle the carrying amounts of its assets and liabilities.
Current and deferred income taxes are recognized as income or expenses in the consolidated statements of operations.
Recent Accounting Pronouncements
In December 2016, the Financial Accounting Standards Board (FASB) has issued ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.” The amendments affect narrow aspects of the guidance issued in ASU 2014-09 including Loan Guarantee Fees, Contract Costs, Provisions for Losses on Construction-Type and Production-Type Contracts, Disclosure of Remaining Performance Obligations, Disclosure of Prior Period Performance Obligations, Contract Modifications, Contract Asset vs. Receivable, Refund Liability, Advertising Costs, Fixed Odds Wagering Contracts in the Casino Industry, and Costs Capitalized for Advisors to Private Funds and Public Funds. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements for FASB ASC Topic 606. Public entities should apply Topic 606 (and related amendments) for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein. The Company is currently evaluating the potential impact that the adoption of this ASU may have on its consolidated financial statements.
Management has considered all recent accounting pronouncements issued. The Company's management believes that these other recent pronouncements will not have a material effect on the Company's consolidated financial statements.
Note 3: Going Concern
These consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the foreseeable future. As of December 31, 2016, the Company has an accumulated deficit of $1,161,700 since inception and has a working capital deficiency of $1,120,357.
Management's plans include raising capital through the equity markets to fund operations and eventually, generating profit through its business; however, there can be no assurance that the Company will be successful in such activities. These consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classifications of the liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 4: Property and Equipment
Depreciation expense of approximately $576,000 and $374,000 was recorded by the Company for the years ended December 31, 2016 and 2015, respectively. Approximately $339,000 and $234,000 is included in the cost of services and approximately $237,000 and $140,000 is included in operating expenses on the Company’s consolidated statements of operations for the years ended December 31, 2016 and 2015, respectively.
Note 5: Capital Leases
The Company leases dental equipment under non-cancellable capital lease arrangements. The terms of those capital leases vary from 3 to 5 years and annual interest rates vary from 3% to 7%.
As of December 31, 2016, the future minimum lease payments under finance leases are as follows:
Note 6: Related Parties Transactions
In support of the Company's efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders or directors. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances were considered temporary in nature and were not formalized by a promissory note.
During the years ended December 31, 2016 and 2015, the Company received net advances of $147,020 and $581,503 by the way of loans from various officers. As of December 31, 2016 and 2015, the Company was obligated to its officers for unsecured, non-interest bearing demand loans with balances totaling $1,150,316 and $1,003,296, respectively.
During the year ended December 31, 2015, one of the Company’s officers forgave $101,864 of expenses paid on behalf of the Company, which was recorded as additional paid in capital.
Note 7: Common Stock
During the year ended December 31, 2016, the Company issued 697,000 shares at $1.00 per share in connection with its registration statement resulting in proceeds of $697,000.
As of December 31, 2016 and 2015, 3,697,000 and 3,000,000 shares of common stock were issued and outstanding, respectively.
Note 8: Income Taxes
The Company accounts for income taxes in accordance with the provisions of FASB ASC 740, Accounting for Uncertainty in Income Taxes. The Company files income tax returns in Singapore and there are currently no federal income tax examinations underway. The Company’s tax year of 2014 and forward are subject to examination by federal taxing authorities for at least five years.
The Company accounts for income taxes using an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.
The provision for income taxes includes:
The Company is subject to taxation in the United States and Singapore.
The provision for income taxes differs from the amounts which would be provided by applying the statutory income tax rate of 17% in Singapore and 34% in the United States to the net income (loss) before provision for income taxes for the following reasons:
Following are the details of deferred tax assets and its valuation allowance:
The related deferred tax benefit on the above unutilized tax losses has a full valuation allowance not recognized against it as there is no certainty of its realization. Management has evaluated tax positions in accordance with ASC 740 and has not identified any significant tax positions, other than those disclosed.
The Company has yet to file its tax return with the Inland Revenue Authority of Singapore for the year of assessment of 2016.
Due to the change in ownership provisions of the income tax laws of United States of America, net operating loss carry forwards of approximately $1,161,700, which expire commencing in fiscal 2035, for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.
Note 9: Commitments and Contingencies
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of December 31, 2016, the Company is not aware of any contingent liabilities that should be reflected in the consolidated financial statements.
The Company leases space for its dental clinics under non-cancelable operating leases. During the years ended December 31, 2016 and 2015, the Company paid rent expenses of $845,684 and $561,167, respectively.
As of December 31, 2016, the approximate future aggregate minimum lease payments under the non-cancellable operating leases were as follows:
Note 10: Subsequent Events
On February 14, 2017, the Company entered into four lease agreements for property, plant, and equipment, which totaled $948,616 Singapore dollars ($655,494 USD). he Company agreed to make monthly payments in regards to these agreements, which end in January 2020.
Due to the continued consolidated losses experience by the Company as the result of the losses of the Company’s wholly-owned subsidiary, Smile More Holdings Pte. Ltd., a Singaporean corporation (“Smile Central”), the Board of Directors of the Company believed it was in the best interests of the Company and its shareholders to dispose of Smile Central. In addition, the Company had provided Smile Central with over $600,000 in intra-company loans (the “Intra-Company Loan”).
The Company’s former majority shareholders, Eminent Healthcare Pte. Ltd. and Multi Care Pte. Ltd. (the “Majority Shareholders”), became shareholders of the Company in 2015 by exchanging all of the outstanding share capital of Smile Central (“Smile Shares”) for 3,000,000 shares of the Company’s common stock (the “Medico Shares”) and the Majority Shareholders desired to re-acquire the Smile Shares.
On June 5, 2017, the Company closed the transactions under the Share Exchange Agreement (“ Share Exchange Agreement”) by and between the Company, Eminent Healthcare Pte. Ltd., a Singaporean corporation, Multi Care Pte. Ltd., a Singaporean corporation, and Targeted Solutions Global Limited, a United Kingdom Private limited company, for the sale of all of the issued and outstanding ordinary shares of the Company’s 100% wholly-owned subsidiary, Smile More Holdings Pte. Ltd., a Singaporean corporation (the “Stock Purchase”). Prior to the closing of the Stock Purchase, Eminent Healthcare Pte. Ltd. and Multi Care Pte. Ltd. were the Company’s majority shareholders. Liew Min Hin, the Company’s former Chief Financial Officer and former member of the Board of Directors, owns 100% of Eminent Healthcare Pte. Ltd., and is the father of Dr. Daniel Liew, the Company’s former Chief Executive Officer and former member of the Board of Directors.
Pursuant to the Share Exchange Agreement, in consideration for transferring the Smile Shares to the Majority Shareholders and waiving the Intra-Company Loan, the Company received all of the rights, interests, claim and title in that certain US patent known as “Method for diagnosing malignancy in pelvic tumors”, US Patent No. 6,112,108 (the “Patent”), which Targeted Solutions Global Limited, a United Kingdom Private limited company (“TSG”) had the right and ability to deliver to the Company and in connection with the closing of the Share Exchange Agreement, Jiang Chun Yan was appointed as the CEO and sole member of the Company’s Board of Directors.
In addition, under the Share Exchange Agreement, TSG received from the Majority Shareholders the Medico Shares and the Majority Shareholders received $200,000 from TSG.
The effect of the transactions set forth in the Share Exchange Agreement is that commencing June 5, 2017 the Company will no longer own and operate dental clinics in Singapore but will focus its efforts in the area of cancer diagnostics tools in connection with the Patent.
Item 9.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Item 9A. Controls and Procedures
Management’s Report on Internal Controls over Financial Disclosure Controls and Procedures
Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), in connection with the preparation of this Annual Report on Form 10-K, as of December 31, 2016.
Based on the review described above, our Chief Executive Officer and Chief Financial Officer determined that our disclosure controls and procedures were effective as of the end of the period covered by this report.
Internal Control Over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. In addition, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Our management assessed our internal control over financial reporting as of December 31, 2016 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2016 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles.
This annual report on Form 10-K 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 on Form 10-K.
Changes in Internal Controls
There were no changes in our internal control over financial reporting that occurred during the fourth quarter ended December 31, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B.
Item 9B. Other Information.
On June 5, 2017, the Company closed the transactions under the Share Exchange Agreement (“ Share Exchange Agreement”) by and between the Company, Eminent Healthcare Pte. Ltd., a Singaporean corporation, Multi Care Pte. Ltd., a Singaporean corporation, and Targeted Solutions Global Limited, a United Kingdom Private limited company, for the sale of all of the issued and outstanding ordinary shares of the Company’s 100% wholly-owned subsidiary, Smile More Holdings Pte. Ltd., a Singaporean corporation (the “Stock Purchase”).
Pursuant to the Share Exchange Agreement, in consideration for transferring the Smile Shares to the Majority Shareholders and waiving the Intra-Company Loan, the Company received all of the rights, interests, claim and title in that certain US patent known as “Method for diagnosing malignancy in pelvic tumors”, US Patent No. 6,112,108 (the “Patent”), which Targeted Solutions Global Limited, a United Kingdom Private limited company (“TSG”) had the right and ability to deliver to the Company and in connection with the closing of the Share Exchange Agreement, Jiang Chun Yan was appointed as the CEO and sole member of the Company’s Board of Directors.
In addition, under the Share Exchange Agreement, TSG received from the Majority Shareholders the Medico Shares and the Majority Shareholders received $200,000 from TSG.
The effect of the transactions set forth in the Share Exchange Agreement is that commencing June 5, 2017 the Company will no longer own and operate dental clinics in Singapore but will focus its efforts in the area of cancer diagnostics tools in connection with the Patent.
PART III
Item 10.
Item 10. Directors, Executive Officers, Promoters and Control Persons of the Company
(a) - (b) Identification of Directors and Executive Officers.
The Company: The following table identifies all of the members of the Company’s Board of Directors and its Executive Officers. The members of the Board serve until the next annual meeting and a successor is appointed and qualified, or until resignation or removal.
Name
Age
Positions Held
Date of Appointment
Jiang Chun Yan
Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary, Member of the Board of Directors
June 5, 2017
(c) Identification of certain significant employees.
The Company currently does not have any employees.
(d) Family relationships. None.
(e) Business experience
Jiang Chun Yan - Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary, Member of the Board of Directors
Jiang Chun Yan holds an MBA. He completed his studies at the University of Shanghai in 2010. He worked as a manager at Shindo Industries in South Korea from 2011 until 2016. He spent 2016 and 2017 looking for new opportunities prior to becoming an officer and director of the Company.
(f) Involvement in certain legal proceedings.
None of the Company’s executive officers or directors have been involved in any legal proceedings during the past five (5) years.
(g) Promoters and control persons.
As a result of the Stock Purchase Agreement, Targeted Solutions Global Limited, a United Kingdom Private limited company (“TSG”), owns 3,000,000 shares of the Company’s common stock, which represents 81.14% of the total shares issued and outstanding. Therefore, TSG is a controlling shareholder of the Company. TSG has not been a party to any legal proceedings at any time during the past five (5) years.
Section 16(a) Beneficial Ownership Reporting Compliance
Not applicable.
Code of Ethics
We do not currently have a Code of Ethics in place for the Company. Our business operations are not complex and are very limited. The Company seeks advice and counsel from outside experts such as our lawyers and accountants on matters relating to corporate governance and financial reporting.
Audit Committee
We do not have an Audit Committee. The Company's board of directors perform some of the same functions of an Audit Committee, such as: recommending a firm of independent certified public accountants to audit the financial statements; reviewing the auditors' independence, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. The Company does not currently have a written audit committee charter or similar document.
Item 11.
Item 11. Executive Compensation
The Company was incorporated in September 2015 and therefore has not paid any salaries to its executive officers. Currently, the Company’s executive officers are compensated only for the services that they provide to Smile Central and the various clinics as detailed below. The Company does not have any plans to the executive officers salaries.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of June 5, 2017 (after giving effect to the transactions under the Stock Purchase Agreement) by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) members of our Board of Directors, and or (iii) our executive officers. Unless otherwise indicated, the stockholder listed possesses sole voting and investment power with respect to the shares shown.
(1) A beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding on April 1, 2016.
As of June 12, 2017, there were 3,697,000 shares of our common stock issued and outstanding.
(2) Jiang Chun Yan was appointed an officer and director of the Company effective June 5, 2017.
The Company has not adopted any equity compensation plans and does not anticipate adopting any equity compensation plans in the near future. Notwithstanding the foregoing, because the Company has limited cash resources at this time, it may issue shares or options to or enter into obligations that are convertible into shares of common stock with its employees and consultants as payment for services or as discretionary bonuses. The Company does not have any arrangements for such issuances or arrangements at this time.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
On September 19, 2015, we issued a total of 3,000,000 shares of common stock pursuant to the Share Exchange Agreement entered into among us, Eminent Healthcare Pte. Ltd. and Multi Care Pte. Ltd., which were the owners of Smile More Holdings Pte. Ltd. Pursuant to the Share Exchange Agreement, we agreed to issue 3,000,000 shares of our common stock in exchange for all of the issued and outstanding shares of capital stock of Smile More Holdings Pte. Ltd. (“Smile Shares”), 30% of which was owned by Eminent Healthcare Pte. Ltd. and 70% of which was owned by Multi Care Pte. Ltd. Our former CFO, Liew Min Hin, owns 100% of Eminent Healthcare Pte. Ltd. The shares were issued pursuant to Section 4(2) of the Securities Act and are restricted shares as defined in the Securities Act. As part of the Stock Purchase Agreement, the Company transferred the Smile Shares to Eminent Healthcare Pte. Ltd. and Multi Care Pte. Ltd.
In support of the Company's efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders or directors. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances were considered temporary in nature and were not formalized by a promissory note.
During the years ended December 31, 2016 and 2015, the Company received net advances of $147,020 and $581,503 by the way of loans from various officers. As of December 31, 2016 and 2015, the Company was obligated to its officers for unsecured, non-interest bearing demand loans with balances totaling $1,150,316 and $1,003,296, respectively.
During the year ended December 31, 2015, one of the Company’s officers forgave $101,864 of expenses paid on behalf of the Company, which was recorded as additional paid in capital.
Item 14.
Item 14. Principal Accounting Fees and Services
The aggregate fees billed by our independent auditors, Accell Audit & Compliance, P.A., for professional services rendered for the audit of our annual financial statements for the years ended December 31, 2016 and 2015 are provided below.
Audit committee policies & procedures
The company does not currently have a standing audit committee. The above services were approved by the company’s Board of Directors.
PART IV
Item 15.
Item 15. Exhibits
The following exhibits are included as part of this report by reference:
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
MEDICO INTERNATIONAL INC.
Dated June 19, 2017
By:
/s/ Jiang Chun Yan
Name:
Jiang Chun Yan
Title:
Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial and Accounting Officer), and Director
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signatures
Title
Date
/s/ Jiang Chun Yan
Chief Executive Officer, Chief Financial Officer, and Director
June 19, 2017
Jiang Chun Yan