NOTES
TO THE
CONSOLIDATED FINANCIAL STATEMENTS
Note
1 - Business Activities and Related Risks
Medical
International Technology, Inc.
(the "Company") was incorporated in
Colorado
on
July 19, 1999, under the name,
Posterally.com, Inc. The Company filed an amendment to its articles of
incorporation on September 24, 2002 changing its name to Medical International
Technology, Inc.
The
Company is in the business of
developing and manufacturing a needle free device for use in injecting medicine
and supplements for human and animal use.
Note
2 – Summary of Significant Accounting Policies
Principles
of consolidation
The
accompanying financial statements include the accounts and transactions of
Medical International Technology, Inc. and its wholly owned subsidiaries,
Medical International Technologies (MIT Canada) Inc. and 9139-2449 Quebec Inc.
(dba Scanview), which was acquired by the Company on June 11, 2007 (Note
6). Accordingly, the accompanying financial statements only include
the results of operations of Scanview since June 11,
2007. Intercompany transactions and balances have been eliminated in
consolidation.
Foreign
Currency Translations
The
Company operates out of its offices
in
Montreal
,
Canada
and
maintains its books and records in
Canadian Dollars. The financial statements herein have been converted into
U.S.
Dollars. Balance sheet accounts, other than property and equipment, have been
translated at exchange rates in effect at the end of the
year. Property and equipment is converted at the exchange rate in
effect at the date of purchase. Income statement accounts have been
translated at average exchange rates for the year. Translation gains and losses
are included as a separate component of stockholders’
equity.
Allowance
for Doubtful Accounts
The
allowance for doubtful accounts on accounts receivable is charged to income
in
amounts sufficient to maintain the allowance for uncollectible accounts at
a
level management believes is adequate to cover any probable losses. Management
determines the adequacy of the allowance based on historical write-off
percentages and the current status of accounts receivable. Accounts receivable
are charged off against the allowance when collectability is determined to
be
permanently impaired. As of September 30, 2007 and 2006, the Company recorded
$11,397 as a reserve for doubtful accounts.
Inventories
Inventories
consist of raw materials, work in process, and finished
goods. Inventories of raw materials, work in process and finished
goods are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method for raw materials.
MEDICAL
INTERNATIONAL TECHNOLOGY
NOTES
TO THE
CONSOLIDATED FINANCIAL STATEMENTS
Property
and
Equipment
The cost of property and equipment is depreciated
over the estimated useful lives of the related assets, which range from 5 to
7
years. Depreciation is computed on the straight-line method for financial
reporting purposes and on the declining balance method for income tax reporting
purposes. Depreciation expense for the year ended September 30, 2007 and 2006
were $46,446 and $40,798, respectively.
Intangible
assets
Patents
are being amortized over their
remaining lives ranging from 8.5 years through 16 years.
Net
Loss Per
Share
The
Company adopted the provisions of Statement of Financial Accounting Standards
(“SFAS”) No. 128, “Earnings Per Share” (“EPS”) that established standards for
the computation, presentation and disclosure of earnings per share, replacing
the presentation of Primary EPS with a presentation of Basic EPS.
Issuances
Involving Non-cash
Consideration
All
issuances of the Company’s stock for non-cash consideration have been assigned a
dollar amount equaling either the market value of the shares issued or the
value
of consideration received whichever is more readily determinable.
Cash
and Cash Equivalents
For
purpose of the statements of cash flows, the Company considers cash and cash
equivalents to include cash on hand, amounts due to banks and any other highly
liquid investments with maturities of three months or less.
Use
of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Long-Lived
Assets
In
August
2001, SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," was issued establishing new rules and clarifying implementation issues
with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for
Long-Lived Assets to be disposed of, "by allowing a probability-weighted cash
flow estimation approach to measure the impairment loss of a long-lived asset.
The statement also established new standards for accounting for discontinued
operations. Transactions that qualify for reporting in discontinued operations
include the disposal of a component of an entity's operations that comprises
operations and cash flow that can be clearly distinguished, operationally and
for financial reporting purposes, from the rest of the entity. The Company
has
adopted this standard and its adoption had no significant effect on the
Company's financial statements.
Income
Taxes
The
Company recognizes income tax expense based on the liability method of
accounting for income taxes. Deferred tax assets and liabilities are
recognized for the income tax effect of temporary differences between the tax
basis of assets and liabilities and their carrying values for financial
reporting purposes. Deferred tax expense or benefit is the result of
changes in deferred tax assets and liabilities during the period. The
Company has recorded a valuation allowance, which reflects the estimated amount
of deferred tax assets that more likely than not will be realized.
MEDICAL
INTERNATIONAL TECHNOLOGY
NOTES
TO THE
CONSOLIDATED FINANCIAL STATEMENTS
Fair
Value of Financial
Instruments
Pursuant
to SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”, the
Company is required to estimate the fair value of all financial instruments
included on its balance sheet as of September 30, 2007. The Company
considers the carrying value of such amounts in the financial statements to
approximate their fair value.
Revenue
Recognition
The
Company recognizes revenue when the related product is shipped to the respective
customer provided that: title and risk of loss have passed to the customer;
persuasive evidence of an arrangement exists; the sales price is fixed or
determinable; and collectability is deemed probable.
Research
and Development
Research
and development expenditures are charged to operations as incurred.
Goodwill
and Purchased Intangible Assets
Goodwill
is tested for impairment on an annual basis and between annual tests in certain
circumstances, and is written down when impaired in accordance with SFAS
No. 142, “Goodwill and Other Intangible Assets.” For goodwill, the Company
performs a two-step impairment test. In the first step, the Company compares
the
fair value of the reporting unit to the carrying value, including goodwill.
The
Company determines the fair value of the reporting unit based on a weighting
of
income and market approaches. If the fair value of the reporting unit exceeds
the carrying value of the net assets assigned to that unit, goodwill is not
impaired and no further testing is performed. If the carrying value of the
net
assets assigned to the reporting unit exceeds the fair value of the reporting
unit, then the Company performs the second step of the impairment test in order
to determine the implied fair value of the reporting unit’s goodwill. If the
carrying value of a reporting unit’s goodwill exceeds its implied fair value,
the Company records an impairment loss equal to the difference.
Based
on
the impairment tests performed, the Company recorded impairment charges for
goodwill of $131,382 in fiscal 2007, related to the purchase of Scanview (Note
6). Purchased intangible assets other than goodwill are amortized over their
useful lives.
New
Accounting
Pronouncements
In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements” (SFAS No. 157) which establishes a framework for measuring
fair value and enhance disclosures about fair value measurements. SFAS 157
is effective for fiscal years beginning after November 15, 2007. The
measurement and disclosure requirements are effective for the Company beginning
in the first quarter of fiscal 2009. The Company is currently evaluating whether
SFAS No. 157 will result in a change to its fair value
measurements.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (SFAS No. 159) which permits
companies to choose to measure certain financial instruments and certain other
items at fair value. The standard requires that unrealized gains and losses
on
items for which the fair value option has been elected be reported in earnings.
SFAS 159 is effective for the Company beginning in the first quarter of fiscal
2009, although earlier adoption is permitted. The Company is currently
evaluating the impact SFAS No. 159 will have on its consolidated financial
statements.
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”.
This Statement replaces SFAS No. 141,
Business Combinations
.
MEDICAL
INTERNATIONAL TECHNOLOGY
NOTES
TO THE
CONSOLIDATED FINANCIAL STATEMENTS
This
Statement retains the fundamental requirements in Statement 141 that the
acquisition method of accounting (which Statement 141 called the
purchase method
) be used for
all business combinations and for an acquirer to be identified for each business
combination. This Statement also establishes principles and requirements for
how
the acquirer: a) recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any noncontrolling
interest in the acquiree; b) recognizes and measures the goodwill acquired
in
the business combination or a gain from a bargain purchase and c) determines
what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. SFAS
No. 141(R) will apply prospectively to business combinations for which the
acquisition date is on or after Company’s fiscal year beginning October 1,
2009.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements”. This Statement amends ARB 51 to establish
accounting and reporting standards for the noncontrolling (minority) interest
in
a subsidiary and for the deconsolidation of a subsidiary. It clarifies that
a
noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated
financial statements. The Company has not yet determined the impact, if any,
that SFAS No. 160 will have on its consolidated financial statements. SFAS
No. 160 is effective for the Company’s fiscal year beginning
October 1, 2009
Note
3 – Inventories
Inventories
at
September 30, 2007 and 2006 consist of the following:
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
Raw
materials
|
|
$
|
159,698
|
|
|
$
|
46,449
|
|
|
Work
in
process
|
|
|
21,752
|
|
|
|
20,243
|
|
|
Finished
goods
|
|
|
13,376
|
|
|
|
12,130
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
194,826
|
|
|
$
|
78,822
|
|
|
|
|
|
|
|
|
|
|
|
Note
4 – Research Credit Receivable
Research
and development costs are charged to operations when incurred. For its research
efforts in Canada, the Company receives a cash payment from the Canadian
Government based upon the amount actually incurred. The Company nets the credit
against related costs charged to operations. Research and development expenses
are as follows:
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
R&D
Costs
|
|
$
|
163,712
|
|
|
$
|
505,806
|
|
|
Less
Credit
|
|
|
(
29,418
|
)
|
|
|
(
62,890
|
)
|
|
|
|
$
|
134,294
|
|
|
$
|
442,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MEDICAL
INTERNATIONAL TECHNOLOGY
NOTES
TO THE
CONSOLIDATED FINANCIAL STATEMENTS
Note
5 – Intangible Assets
As
of
September 30, 2007 the Company has net intangible assets totaling $1,098.
Amortization expenses for the year ended September 30, 2007 and 2006 were $466
and $466, respectively.
Intangible
assets consist of the following:
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
Average
|
|
|
|
Intangible
|
|
|
Accumulated
|
|
|
Intangible
|
|
Life
|
|
|
|
Assets
|
|
|
Amortization
|
|
|
Assets
|
|
(Years)
|
|
Patents
|
|
$
|
2,030
|
|
|
$
|
932
|
|
|
$
|
1,098
|
|
8.5
through
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
6 – Scanview Acquisition
On
June
11, 2007, the Company completed the acquisition of all the issued and
outstanding shares of 9139-2449 Quebec Inc. (dba Scanview), a related party,
for
2,500,000 common shares of the Company. ScanView was a private
Canadian company owned 55% by the Company’s CEO, 10% by the Company’s CFO and
three other unrelated shareholders. ScanView has a unique, portable
and battery operated ultrasound diagnostic medical devices, using a variety
of
probes for pathological and physiological evaluation of organs such as the
heart, kidneys, liver, thyroid, uterus and ovaries. They serve equally well
to
detect kidney stones, diagnose pregnancy, visualize follicle development and
carry out all other normal ultrasound diagnostic procedures.
The
Company valued the common share issued at 0.07 per share or $175,000, which
represented the adjusted average closing share price for the week prior and
week
after the closing date. The fair value of the assets acquired by the
Company was approximately $321,603, consisting of cash of $819, tax credits
receivable of $48,429, inventory of $67,334, equipment of $73,639 and goodwill
of $131,382, and the Company assumed approximately $146,603 in liabilities,
consisting of 2 notes payable agreements to a bank aggregating $52,564 (Note
12)
and trade accounts payable and other accrued expenses aggregating
$94,039.
During
the fourth quarter of 2007, the Company determined, based on impairment testing
performed, that the recorded amount of goodwill of $131,382 from the Scanview
purchase was impaired. Accordingly, the Company charged off $131,382
as impairment charges of goodwill.
Note
7 – Related Party Transactions
The
Company has borrowed from shareholders and corporations owned by shareholders.
These loans are non-interest bearing and due upon demand. In addition, the
Company has advanced funds to other corporations owned by shareholders. These
loans are also non-interest bearing and due upon demand.
The
company has operating losses of $7,122,729, which can be used to reduce future
taxable income. The potential tax benefits relating to the losses have not
been
recognized in the company’s accounts. The deductibility of these losses expires
between 2009 and 2012.
MEDICAL
INTERNATIONAL TECHNOLOGY
NOTES
TO THE
CONSOLIDATED FINANCIAL STATEMENTS
Note
9
-
Stockholders' Equity
(Deficit)
Issuance
of Common
Stock
For
the
year ended September 30, 2006, the Company issued 54,512 shares of its common
stock for consulting and legal services. The value assigned to these shares
totaled $33,995 the market value of the services rendered, which were charged
to
operations.
On
November 30, 2005, the Company issued 520,000 post-reverse split restricted
common shares at a price of $0.25 per share to Idée International R & D
Inc., a company owned 100% by 2849674 Canada Inc. for a debt conversion of
$130,000.
On
November 30, 2005, the Company issued 320,000 post-reverse split restricted
common shares at a price of $0.25 per share to 2849674 Canada Inc., a company
owned 100% by Karim Menassa for debt conversion of $80,000.
On
November 30, 2005, the Company issued 200,000 post-reverse split restricted
common shares at a price of $0.25 per share to 1065029 Canada Inc., a company
owned 100% by Michel Bayouk for a debt conversion of $50,000.
On
November 30, 2005, the Company issued 128,000 post-reverse split restricted
common shares at a price of $0.25 per share to Karim Menassa, a Director and
Officer of the Company for a debt conversion of $32,000.
On
November 30, 2005, the Company issued 68,000 post-reverse split restricted
common shares at a price of $0.25 per share to 9160-4132 Quebec Inc., a company
owned as to 100% by Michel Bayouk a Director and Officer of the Company for
settlement of debt totaling $17,000.00.
On
November 30, 2005, the Company issued 52,000 post-reverse split restricted
common shares at a price of $ 0.25 per share to Technopro M.S. (2999226 Canada
Inc.) for a debt conversion of $13,000.
On
December 7, 2005, the Company completed two rounds of financing. The Units
in
these offerings were sold in exempt transactions under, Regulation “S” of the
Securities Act of 1933 and are subject to Rule 144 of the Securities Act of
1933, as amended. The securities are restricted pursuant to Rule
144.
The
first
private placement consisted of 2,000,000 Units at a price of $0.25 per unit.
Each unit consisted of one Series A Warrant for the purchase of 2,000,000 shares
of the Company’s common stock at an exercise price of $0.75 per share and one
Series B Warrant for the purchase of 2,000,000 shares of the Company’s common
stock at an exercise price of $1.00 per share. Both the series A and series
B
warrants expire on October 27, 2007. The total amount raised from this placement
was $500,000 of which the company was obligated to pay an 8% finder fee to
Group
InterCapital, Inc., a consulting firm. Net proceeds to the company less the
$40,000 finder fee were $460,000.The purchaser of this offering was a Canadian
entity controlled by a daughter of the individual controlling the consulting
firm.
The
second private placement was for 1,224,000 Units at a price of $0.25 per Unit.
Each unit of this second offering consisted of one Series A Warrant for the
purchase of 1,224,000 shares of the Company’s common stock at an exercise price
of $0.75 per share and one Series B Warrant for the purchase of 1,224,000 shares
of the Company’s common stock at an exercise price of $1.00 per share. Both the
series a and series B warrants expire on November 07, 2007. The total amount
raised from this placement was $306,000 of which the company is obligated to
pay
an 8% finder fee to Group InterCapital, Inc., a consulting firm. Net proceeds
to
the company less the $24,480 finder fee were $281,520.
On
December 20, 2005, the company sold in a private placement 1,000,000 Units
at a
price of $0.60 per Unit. Each unit sold in this offering includes one
(1) Series A Warrant for a total of 1,000,000 shares of the Company's common
stock at an exercise price of $0.75 per share the series A warrant expires
on
December 19, 2007. The total amount raised from this placement was
$600,000 of which the company is obligated to pay a 9% finder fee to 9109-7923
Quebec Inc. Net proceeds to the company less the $54,000 finder fee were
$546,000.
On
February 27, 2006, the company issued 153,400 shares to 2849674 Canada Inc.,
a
company owned as to 100% by Karim Menassa, a director and officer, for a debt
conversion of $61,300.
Additionally,
on February 27, 2006, the company issued 153,400 shares to 1065029 Canada Inc.,
a company owned as to 100% by Michel Bayouk, a director, for a debt conversion
of $61,300.
MEDICAL
INTERNATIONAL TECHNOLOGY
NOTES
TO THE
CONSOLIDATED FINANCIAL STATEMENTS
For
the
year ended September 30, 2007, the Company issued an aggregate of 16,192,546
shares of its common stock for acquisition, consulting and legal services,
debts
and private placements. The value assigned to these shares at the market value,
aggregated $1,170,558 and is more fully described below.
For
the
1st quarter ended December 31, 2006, the Company issued 779,400 shares of its
common stock for consulting and legal services. The value assigned to these
shares totaled $163,596 the market value of the services rendered, which were
charged to operations.
For
the
second quarter ended March 31, 2007, the Company issued 63,750 shares of its
common stock for consulting and legal services. The value assigned to these
shares totaled $10,200 the market value of the services rendered, which were
charged to operations.
For
the
third quarter ended June 30, 2007, the Company issued 3,721,310 shares of its
common stock for consulting and legal services. The value assigned to these
shares totaled $195,705 the market value of the services rendered, which were
charged to operations.
For
the
fourth quarter ended September 30, 2007, the Company issued 4,954,368 shares
of
its common stock for consulting and legal services. The value assigned to these
shares totaled $267,488 the market value of the services rendered, which were
charged to operations.
For
the
1st quarter ended December 31, 2006, the Company issued 72,000 shares of its
common stock for private placements. The value assigned to these shares totaled
$14,993.
For
the
second quarter ended March 31, 2007, the Company issued 200,000 shares of its
common stock for private placements. The value assigned to these shares totaled
$200,000.
For
the
third quarter ended June 30, 2007, the Company issued 2,500,000 shares of its
common stock for acquisition of SCANVIEW. The value assigned to these shares
totaled $175,000.
For
the
fourth quarter ended September 30, 2007, the Company issued 3,920,985 shares
of
its common stock for debts. The value assigned to these shares totaled
$293,490.
Preferred
Stock
As
of
September 30, 2007, there was no preferred stock outstanding. Dividend features
and voting rights are at the discretion of the Board of Directors without the
requirement of shareholder approval.
Outstanding
Options
Effective
October 1, 2006 the company entered into a Consulting services Agreement with
Geoffrey Armstrong engaging him as an administrative manager for the company.
As
part of the agreed compensation Mr. Armstrong was granted 750,000 options to
purchase Common shares at a price of $0.40 per share. These options expire
on
October 3, 2007.
The
company filed a Form S-8 on December 27, 2005 for 750,000 options underlying
a
consulting agreement with Geoffrey Armstrong. Mr. Armstrong exercised 50,000
options in the three-month period ending March 31, 2006 and 200,000 options
on
April 21, 2006. No other options have been exercised through the twelve-month
period ended September 30, 2006 and 500,000 options remain outstanding until
October 3, 2007.
MEDICAL
INTERNATIONAL TECHNOLOGY
NOTES
TO THE
CONSOLIDATED FINANCIAL STATEMENTS
Outstanding
Warrants
On
December 7, 2005, the Company completed two rounds of financing.
The
first
private placement consisted of 2,000,000 Units at a price of $0.25 per unit.
Each unit consisted of one Series A Warrant for the purchase of 2,000,000 shares
of the Company’s common stock at an exercise price of $0.75 per share and one
Series B Warrant for the purchase of 2,000,000 shares of the Company’s common
stock at an exercise price of $1.00 per share. Both the series A and series
B
warrants expire on October 27, 2007. The total amount raised from this placement
was $500,000 of which the company was obligated to pay an 8% finder fee to
a
consulting firm. Net proceeds to the company less the $40,000 finder fee were
$460,000. The purchaser of this offering was a Canadian entity controlled by
a
daughter of the individual controlling the consulting firm.
The
second private placement was for 1,224,000 Units at a price of $0.25 per Unit.
Each unit of this second offering consisted of one Series A Warrant for the
purchase of 1,224,000 shares of the Company’s common stock at an exercise Price
of $0.75 per share and one Series B Warrant for the purchase of 1,224,000 shares
of the Company’s common stock at an exercise price of $1.00 per share. Both the
series A and series B warrants expire on November 07, 2007. The total amount
raised from this placement was $306,000 of which the company is obligated to
pay
an 8% finder fee to a consultant. Net proceeds to the company less the $24,480
finder fee were $281,520.
On
December 20, 2005, the company sold in a private placement 1,000,000 Units
at a
price of $0.60 per Unit. Each unit sold in this offering includes one
(1) Series A Warrant for a total of 1,000,000 shares of the Company's common
stock at an exercise price of $0.75 per share the series A warrant expires
on
December 19, 2007. The total amount raised from this placement was
$600,000 of which the company was obligated to pay a 9% finder fee to 9109-7923
Quebec Inc. Net proceeds to the company less the $54,000 finder fee were
$546,000.
Series
A
- Exercise price of $0.75 for one (1) Common share
2,000,000
expiring October 27,
2007
1,224,000
expiring November 27,
2007
1,000,000
expiring December 19,
2007
Total
Outstanding as of September
30, 2007 was 4,224,000
Series
B
- Exercise price of $1.00 for one (1) Common share
2,000,000
expiring October 27,
2007
1,224,000
expiring November 27,
2007
Total
Outstanding as of September
30, 2007 was 3,224,000
Note
10 - Operating Leases
The
Company leases its office and warehouse space under an operating lease that
expires on December 31, 2009. Rent expense for the year ended September 30,
2007
is $29,525.
Future
minimum lease commitments pertaining to the lease expire as follow:
|
September
30, 20
08
|
|
|
29,525
|
|
|
September
30, 20
0
9
|
|
|
29,525
|
|
|
September
30,
2010
|
|
|
7,380
|
|
|
|
|
|
|
|
|
|
|
$
|
66,430
|
|
MEDICAL
INTERNATIONAL TECHNOLOGY
NOTES
TO THE
CONSOLIDATED FINANCIAL STATEMENTS
Note
11 – Customer Deposit
Customer
Deposit is amounts received in advance at the time an order is placed. The
payments have been recorded as a liability and will be credited to operations
as
the order is shipped.
Note
12 – Notes Payable
Long-term
debt consists of the following at September 30, 2007 and 2006:
|
|
|
2007
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Note
payable to a bank, bearing
interest at prime plus 2.5%
|
|
|
|
|
|
|
|
secured
by
equipment, due July 21, 2010.
|
|
$
|
22,040
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
payable to a bank, bearing
interest at prime plus 3%
|
|
|
|
|
|
|
|
|
|
secured
by
equipment, due August 28, 2008
|
|
|
25,375
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
payable to an individual,
unsecured and due on demand
|
|
|
250,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
297,415
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
portion of long-term
debt
|
|
|
283,154
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
$
|
14,261
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Scheduled
maturities of long-term debt are as follows:
|
September
30, 20
08
|
|
|
283,154
|
|
|
September
30, 20
0
9
|
|
|
7,779
|
|
|
September
30,
2010
|
|
|
6,482
|
|
Note
13 – Contingencies
The
company is engaged in the following Legal Proceedings:
(a)
Farimétal Inc. vs. MEDICAL INTERNATIONAL TECHNOLOGIES (MIT CANADA) INC., court
file 500-22-109826-050, for unpaid account to the amount of $13 029.41CDN.
Furthermore, the company INTERNATIONAL MEDICAL TECHNOLOGIES (MIT CANADA) INC.
made a counterclaim of $16 875.00 US against the plaintiff. By virtue of a
judgment, July 31st, 2006, by the Court of Quebec, the company was condemned
to
pay the sum of $13 029.41 CDN and the legal interest on this sum. The company
concluded an agreement of refund with the other party, and it, after discussion
with the lawyer of Farimetal Inc. against Medical International Technologies
(MIT Canada) Inc. A judgment was entered against the issuer on the 31
st
of July
2006, for Cad$ 16,589.20. The parties have agreed to payments of an initial
payment of Cad$ 2,132.27 and eight monthly payments of Cad$ 1,807.12 As of
September 30, 2006 the remaining balance on this judgment was $
16,589.20.
MEDICAL
INTERNATIONAL TECHNOLOGY
NOTES
TO THE
CONSOLIDATED FINANCIAL STATEMENTS
(b)
Outils Diacarb Inc. vs. MEDICAL INTERNATIONAL TECHNOLOGIES (MIT CANADA) INC.,
court file 500-22-107217-054, for unpaid account to the amount of $17 438.99CDN.
Furthermore, the company INTERNATIONAL MEDICAL TECHNOLOGIES (MIT CANADA) INC.
made a counterclaim of 16, 875.00 US against the plaintiff. This action was
settled by mutual agreement of the parties on August 31, 2006. The settlement
was satisfied on September 7, 2006 for a single payment of Cad$
12,000.
(c)
COMMISSION DES NORMES DU TRAVAIL vs. 9139-2449 QUEBEC INC. and MEDICAL
INTERNATIONAL TECHNOLOGIES (MIT CANADA) INC., court file 500-22-127766-064,
for
unpaid social advantages to the amount of $29 904.00 CDN. The plaintiff who
is
represented by the COMMISSION DES NORMES DU TRAVAIL worked for 9139-2449 QUEBEC
INC. The cause of action arises from a person requesting this amount who was
working as a self-employed consultant to 9139-2449 Quebec Inc (Scan
View).
(d)
MCMILLAN BINCH MENDELSOHN vs. IDÉE INTERNATIONALE R & D, INC. and 3567940
CANADA INC. and 2849674 CANADA INC. and MEDICAL INTERNATIONAL TECHNOLOGIES
(MIT
CANADA) INC., court file 500-22-117377-054, for unpaid account to the amount
of
26, 392.00 CDN. The plaintiff was the legal firm where worked a legal adviser
who was a shareholder of MEDICAL INTERNATIONAL TECHNOLOGIES (MIT CANADA) INC..
On March 26th, 2007 the parties agreed on agreement out of court for an $8
000.00 total sum. The claim related to consultant services of a former attorney
participating on an advisory board. The issuer believes that the law firm was
compensate for all outstanding services and is defending the
claims.
(e)
Alain
Deslauriers vs. 9139-2449 QUÉBEC INC. and MEDICAL INTERNATIONAL TECHNOLOGIES
(MIT CANADA) INC. and Karim Ménassa, court file 500-22-126153-066, for unpaid
accounts to the amount of $52 558.00 CDN. The plaintiff, Alain Deslauriers,
was
the General Manager of 9139-2449 QUEBEC INC. before he gave his dismissal.
The
company and Karim Ménassa believe they should not be involved in this dispute
because the plaintiff is a shareholder of the company and the dispute is
partially about a perceived personal contribution for the proper functioning
of
the company, it is believed the cause should be rejected by the
court.
(f)
Ratha
Yip vs. MEDICAL INTERNATIONAL TECHNOLOGIES (MIT CANADA) INC. and Karim Ménassa,
small claim court file 500-32-104717-071, for unpaid accounts to the amount
of
$7 000.00 CDN. The plaintiff, Ratha Yip, was the designer for the products
of
the company. The company believes it should not be involved in this dispute
because that the plaintiff did not execute the services for which he was
engaged, the court should reject the cause.
Note
14 – Subsequent Event
On
November 1
st
,
2007,
the Company received a Non-Refundable deposit of $1,300,000 for the worldwide
rights to market and sells all Medical International Technology Inc.’s present
and future Needle-Free Jet-Injectors for the human and animal markets. This
deposit is part of an agreement under negotiation, and will be disclosed when
finalized, which the Company expects to occur in fiscal 2008.
Note
15 – Going Concern and Management’s Plans
Generally
accepted accounting principles in the United States of America contemplate
the
continuation of the Company as going concern. However, the Company has
reported
a working capital deficit of $118,715
.
and has accumulated
net losses
since inception of $6,971,531, which raises substantial doubt about the
Company’s ability to continue as a going concern. The continuation of the
Company is dependent upon the continuing financial support of creditors
and
stockholders and upon obtaining the capital requirements for the continuing
operations of the Company. Management believes actions planned and presently
being taken provides the opportunity for the Company to continue as a going
concern.
Medical
International Technology, Inc.
Changes
In / Disagreements with Accountants on Accounting/Financial
Disclosure
None.
Controls
and Procedures
Under
the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures; as such term is defined
under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). Based on this evaluation, our principal
executive officer and our principal financial officer concluded that our
disclosure controls and procedures were effective as of the end of the period
covered by this report. There were no changes in our internal control over
financial reporting during the period covered by this report that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting.
Other
Information
None
Directors,
Executive Officers, Promoters and Control Persons
The
directors and officers are as follows:
|
NAME
|
POSITION
(S)
|
TENURE
|
|
|
|
|
|
Karim
Menassa
|
Chairman,
President,
Director
|
June
27, 2002 to
present
|
|
Michel
Bayouk
|
Secretary,
Director
|
June
27, 2002 to
present
|
|
|
|
|
Mr.
Karim Menassa
, age
56,
serves as the
President of Medical International Technology, Inc. Mr. Menassa also serves
as a
member of the Board of Directors of Medical International Technology, Inc.
Mr.
Menassa has developed many state-of-the-art, efficient and reliable devices,
and
has marketed various medical devices in more than 60 countries. Mr. Menassa
obtained a degree in Precision Mechanics Design from the Instituto Salesiano
Don
Bosco in
Cairo,
Egypt.
Mr.
Michel Bayouk
, age 61,
serves as the Secretary of Medical International Technology, Inc. Mr. Bayouk
also serves as a member of the Board of Directors of Medical International
Technology, Inc. Mr. Bayouk is a Chartered Accountant and has been involved
in
financial auditing since 1970.
Medical
International Technology, Inc.
The
directors shall be elected at an annual meeting of the stockholders and except
as otherwise provided within the Bylaws of Medical International Technology,
Inc., as pertaining to vacancies, shall hold office until his successor is
elected and qualified.
Although
Medical International Technology, Inc. does not have a separate Audit Committee
and these functions are performed by the entire board, the board of directors
of
Medical International Technology, Inc. has determined that for the purpose
of
and pursuant to the instructions of item 401(e) of regulation S-B titled Audit
Committee Financial Expert, Mr. Michel Bayouk possesses the attributes of an
Audit committee financial expert. Mr. Bayouk is a board member of Medical
International Technology, Inc. Mr. Bayouk is not independent as defined by
item
401(e) (ii) of regulation S-B. He receives compensation for services rendered
to
Medical International Technology, Inc. directly or through services rendered
by
related companies owned or controlled by him.
No
non-compete or non-disclosure agreements exist between the management of Medical
International Technology, Inc. and any prior or current employer.
The
directors of Medical International Technology, Inc. are aware of no petitions
or
receivership actions having been filed or court appointed as to the business
activities, officers, directors, or key personnel of Medical International
Technology, Inc.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires the company’s directors
and officers, and persons who own more than ten-percent (10%) of the company’s
common stock, to file with the Securities and Exchange Commission reports of
ownership on Form 3 and reports of change in ownership on Forms 4 and 5. Such
officers, directors and ten-percent stockholders are also required to furnish
the company with copies of all Section 16(a) reports they file. Based solely
on
its review of the copies of such forms received by the company and on written
representations from certain reporting persons, the company believes that all
Section 16(a) reports applicable to its officers, directors and ten-percent
stockholders with respect to the fiscal year ended September 30, 2006 were
filed.
Code
of Ethics
We
have
adopted a code of ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. The code of ethics is designed
to deter wrongdoing and to promote:
|
·
|
Honest
and ethical conduct, including the ethical handling of actual or
apparent
conflicts of interest between personal and professional
relationships;
|
|
·
|
Full,
fair, accurate, timely, and understandable disclosure in reports
and
documents that we file with, or submit to, the SEC and in other public
communications made by MIT;
|
|
·
|
Compliance
with applicable governmental laws, rules and
regulations;
|
|
·
|
The
prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code;
and
|
|
·
|
Accountability
for adherence to the code.
|
Medical
International Technology, Inc.
We
will
provide to any person without charge, upon request, a copy of our code of
ethics. Any such request should be directed to our corporate
secretary at 1872 Beaulac, Ville Saint Laurent, Montreal, Quebec, Canada HR4
2E9, telephone (514) 339-9355.
