Item
1. Financial Information
MEDICAL
INTERNATIONAL TECHNOLOGY, INC.
CONSOLIDATED
BALANCE SHEET
(Unaudited)
|
|
|
June 30,
2016
|
|
|
September 30,
2015
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
399,184
|
|
|
$
|
-
|
|
|
Accounts receivable, net of allowance for bad debt of $2,700 at June 30, 2016
|
|
|
-
|
|
|
|
57,031
|
|
|
Inventories
|
|
|
247,375
|
|
|
|
210,579
|
|
|
Prepaid expenses
|
|
|
27,754
|
|
|
|
7,183
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
674,313
|
|
|
|
274,793
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and Equipment
|
|
|
|
|
|
|
|
|
|
Tooling and machinery
|
|
|
593,935
|
|
|
|
558,706
|
|
|
Furniture and office equipment
|
|
|
144,633
|
|
|
|
128,163
|
|
|
Leasehold improvements
|
|
|
24,158
|
|
|
|
22,871
|
|
|
|
|
|
762,726
|
|
|
|
709,740
|
|
|
Less accumulated depreciation
|
|
|
(668,936
|
)
|
|
|
(578,738
|
)
|
|
Total property and equipment, net
|
|
|
93,790
|
|
|
|
131,002
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
Patents (net of accumulated amortization of $80,933 and $56,993)
|
|
|
64,915
|
|
|
|
53,041
|
|
|
Total assets
|
|
$
|
833,018
|
|
|
$
|
458,836
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
MEDICAL
INTERNATIONAL TECHNOLOGY, INC.
CONSOLIDATED
BALANCE SHEET
(Unaudited)
|
|
|
June 30,
2016
|
|
|
September 30,
2015
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank line
|
|
$
|
-
|
|
|
$
|
74,663
|
|
|
Deferred income
|
|
|
10,622
|
|
|
|
-
|
|
|
Accounts payable and accrued expenses
|
|
|
66,195
|
|
|
|
109,712
|
|
|
Advance from related party
|
|
|
500,000
|
|
|
|
30,000
|
|
|
Short term borrowings
|
|
|
300,000
|
|
|
|
-
|
|
|
Current portion of long term debts
|
|
|
8,477
|
|
|
|
35,795
|
|
|
|
|
|
885,294
|
|
|
|
250,170
|
|
|
Total Liabilities
|
|
|
885,294
|
|
|
|
250,170
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
Preferred stock, $.0001 par value; 3,000,000 shares authorized;
No issued and outstanding shares as of June 30, 2016 and September 30, 2015.
|
|
|
-
|
|
|
|
-
|
|
Common stock, $.0001 par value; 100,000,000 shares authorized;
84,304,627 issued and outstanding as of June 30, 2016 and September 30, 2015
|
|
|
8,430
|
|
|
|
8,430
|
|
|
Additional paid-in capital
|
|
|
12,917,025
|
|
|
|
12,917,025
|
|
|
Accumulated deficit
|
|
|
(12,627,711
|
)
|
|
|
(12,330,450
|
)
|
|
Other comprehensive loss
|
|
|
(350,020
|
)
|
|
|
(386,339
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity (Deficit)
|
|
|
(52,276
|
)
|
|
|
208,666
|
|
|
Total Liabilities and Stockholders' Equity (Deficit)
|
|
$
|
833,018
|
|
|
$
|
458,836
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
MEDICAL
INTERNATIONAL TECHNOLOGY, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
Three-Month Period
Ended June 30,
|
|
|
Nine-Month Period
Ended June 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
Sales
|
|
$
|
50,875
|
|
|
$
|
140,945
|
|
|
$
|
292,125
|
|
|
$
|
439,249
|
|
|
Cost of sales
|
|
|
(69,133
|
)
|
|
|
(39,864
|
)
|
|
|
(144,413
|
)
|
|
|
(121,703
|
)
|
|
Gross profit (loss)
|
|
|
(18,258
|
)
|
|
|
101,081
|
|
|
|
147,712
|
|
|
|
317,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses
|
|
|
(151,403
|
)
|
|
|
(91,057
|
)
|
|
|
(442,091
|
)
|
|
|
(258,896
|
)
|
|
|
|
|
(151,403
|
)
|
|
|
(91,057
|
)
|
|
|
(442,091
|
)
|
|
|
(258,896
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) from operations
|
|
|
(169,661
|
)
|
|
|
10,024
|
|
|
|
(294,379
|
)
|
|
|
58,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
105
|
|
|
|
188
|
|
|
|
497
|
|
|
|
687
|
|
|
Interest expense
|
|
|
(959
|
)
|
|
|
(2,717
|
)
|
|
|
(3,379
|
)
|
|
|
(8,046
|
)
|
|
|
|
|
(854
|
)
|
|
|
(2,529
|
)
|
|
|
(2,882
|
)
|
|
|
(7,359
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit (loss)
|
|
$
|
(170,515
|
)
|
|
$
|
7,495
|
|
|
$
|
(297,261
|
)
|
|
$
|
51,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic profit (loss) per share
|
|
$
|
(0.00
|
)
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
|
|
84,304,627
|
|
|
|
84,304,627
|
|
|
|
84,304,627
|
|
|
|
84,134,297
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
MEDICAL
INTERNATIONAL TECHNOLOGY, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Nine-Month Period Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(297,261
|
)
|
|
$
|
51,291
|
|
|
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
|
80,185
|
|
|
|
64,917
|
|
|
Bad debt
|
|
|
2,700
|
|
|
|
-
|
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
54,331
|
|
|
|
(3,770
|
)
|
|
Inventories
|
|
|
(36,796
|
)
|
|
|
32,948
|
|
|
Prepaid expenses
|
|
|
(20,571
|
)
|
|
|
272
|
|
|
Accounts payable and accrued liabilities
|
|
|
(43,517
|
)
|
|
|
(42,545
|
)
|
|
Deferred income
|
|
|
10,622
|
|
|
|
3,361
|
|
|
Net cash (used) provided by operating activities
|
|
|
(250,307
|
)
|
|
|
106,474
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of patents
|
|
|
(32,061
|
)
|
|
|
(23,052
|
)
|
|
Tooling and machinery
|
|
|
(13,063
|
)
|
|
|
(11,400
|
)
|
|
Net cash used by investing activities
|
|
|
(45,124
|
)
|
|
|
(34,452
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Payments to bank line
|
|
|
(74,663
|
)
|
|
|
(15,257
|
)
|
|
Payments to note payables
|
|
|
(27,318
|
)
|
|
|
(68,644
|
)
|
|
Proceeds from short term borrowings
|
|
|
300,000
|
|
|
|
-
|
|
|
Proceeds from related parties
|
|
|
500,000
|
|
|
|
50,000
|
|
|
Payments to related parties
|
|
|
(30,000
|
)
|
|
|
(20,000
|
)
|
|
Net cash (used) provided by financing activities
|
|
|
668,019
|
|
|
|
(53,901
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates
|
|
|
26,596
|
|
|
|
(11,252
|
)
|
|
Increase in cash
|
|
|
399,184
|
|
|
|
6,869
|
|
|
Cash, beginning of period
|
|
|
-
|
|
|
|
33,767
|
|
|
Cash, end of period
|
|
$
|
399,184
|
|
|
$
|
40,636
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
2,420
|
|
|
$
|
8,046
|
|
|
Cash paid for federal income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
The
accompanying notes are an integral part of these consolidated financial statements.
MEDICAL
INTERNATIONAL TECHNOLOGY, INC.
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
|
|
|
Nine Months Ended
June 30,
2016
|
|
|
Nine Months Ended
June 30,
2015
|
|
|
Net loss
|
|
$
|
(297,261
|
)
|
|
$
|
51,291
|
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
36,319
|
|
|
|
36,200
|
|
|
|
|
|
|
|
|
|
|
|
|
Net comprehensive income (loss)
|
|
$
|
(260,942
|
)
|
|
$
|
87,491
|
|
The
accompanying notes are an integral part of these consolidated financial statements
Medical
International Technology, Inc.
Notes
to Financial Statements
June
30, 2016
(Unaudited)
Note
1 – Basis of Presentation
Interim
Financial Statements
The
accompanying unaudited condensed consolidated financial statements of Medical International Technology, Inc. (“MIT”
or the “Company”) and its subsidiary (collectively referred to as the “Company”) have been prepared in
accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations
of the Securities and Exchange Commission. All significant intercompany balances and transactions have been eliminated. These
financial statements do not include all information and notes required by accounting principles generally accepted in the United
States of America for complete financial statements. It is recommended that these interim unaudited condensed consolidated
financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 2015.
In
the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the nine month periods ended June 30, 2016 are not necessarily indicative of the
results which may be expected for any other interim periods or for the year ending September 30, 2016. The preparation of financial
statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates.
Going
concern
There
can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that
funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional
capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force
the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business.
Further, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they
will not have a significant dilutive effect on the Company’s existing stockholders.
The
accompanying financial statements do not include any adjustments related to the recoverability or classification of asset carrying
amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.
Note
2 – Inventories
Inventories
at June 30, 2016 and September 30, 2015 consist of the following:
|
|
|
June 30,
2016
|
|
|
September 30,
2015
|
|
|
Raw materials
|
|
$
|
149,810
|
|
|
$
|
136,842
|
|
|
Work in process
|
|
|
67,293
|
|
|
|
51,511
|
|
|
Finished goods
|
|
|
30,272
|
|
|
|
22,226
|
|
|
Total
|
|
$
|
247,375
|
|
|
$
|
210,579
|
|
Note
3 – 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 nine months ended June 30, 2016 and 2015 was $58,308 and $47,674,
respectively.
Medical
International Technology, Inc.
Notes
to Financial Statements
June
30, 2016
(Unaudited)
Note
4 – Intangible Assets
As
of June 30, 2016 the Company has net patents on certain technologies aggregating $64,915. Amortization expense for the nine months
ended June 30, 2016 and 2015 were $21,877 and $17,243, respectively. During the nine months ended June 30, 2016, the Company capitalized
patent costs on its needle-free injector of $32,061. Following is a detail of patents at June 30, 2016.
|
|
|
Gross
Intangible
Assets
|
|
|
Accumulated
Amortization
|
|
|
Net
Intangible
Assets
|
|
|
Weighted
Average
Life (Years)
|
|
|
Patents
|
|
$
|
145,848
|
|
|
$
|
80,933
|
|
|
$
|
64,915
|
|
|
|
7.5 through 15
|
|
Note
5 – Joint venture agreement
On
May 6, 2009, the Company entered into a certain joint venture agreement (the “Joint Venture Agreement”) with Jiangsu
Hualan Biotechnology Ltd. (China) (“Jiangsu Hualan”). Pursuant to the Joint Venture Agreement, the parties
thereto established a joint venture company, Jiangsu Hualan MIT Medical Technology (MIT China) Ltd. (“MIT China” or
the “Joint Venture”), focusing on research, production and sales of medical equipments, import and export of medical
equipments and components products, especially Needle-Free Jet Injector products. The total investment by the Joint Venture shall
amount to $2,000,000, and the registered capital shall amount to $1,400,000. The Company invested cash of $426,678
and transferred the license rights to produce and sell the Company’s needle-free injectors products into the Joint Venture. The
license rights were valued at $280,000 under the agreement. The contributions by the Company resulted in the Company
owning 49% of the registered capital of the Joint Venture. Jiangsu Hualan contributed cash of $714,000, and owns 51%
of the registered capital.
Under
the Joint Venture Agreement, the Company appointed 1 member, and Jiangsu Hualan appointed 2 members, to the board of directors
of the Joint Venture. Profits of the Joint Venture will be allocated based upon each party’s investment in the
registered capital.
In
March 2012, MIT China agreed and sold 9% of the joint venture for an investment of 18,000,000 RMB (US$3,000,000). Jiangsu Hualan
now has 46.41%, the Company has 44.59%, and Taizhou Amazon Investment Center has 9% ownership in the MIT China joint venture.
The
Company accounts for its investment in MIT China in accordance with Financial Accounting Standards Board Accounting Standards
Codification 323, “Investment — Equity Method and Joint Venture” (ASC 323), previously referred to as Accounting
Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” Accordingly, the
Company adjusts the carrying amount of its investment in MIT China to recognize its share of earnings or losses. As of June 30,
2016 and September 30, 2015, the Company’s had no recorded investment remaining in the MIT China.
During
the nine and three months ended June 30, 2016, the Company had $95,610 and $0 in sales of products to the joint venture. As of
June 30, 2016 and September 30, 2015, the Company had a receivable from the joint venture of $32,390 and $51,165, respectively.
During
the nine and three months ended June 30, 2015, the Company had approximately $193,000 and $62,000 in sales of products to the
joint venture.
As
of June 30, 2016 and September 30, 2015, the Company had an advance from the joint venture of $500,000 and $0, respectively. The
advance bears no interest and has no formal payment terms.
Note
6 – Bank Line
The
Company, through a hypothec agreement, has a line of credit up to a maximum of $100,000. The line is secured by Investissement
Quebec (a Quebec government entity) and by Karim Menassa (personally) and by account receivables, inventories, equipment and all
other assets of the Company. The line bears interest at the prime rate plus 2.5% (5.75% at September 30, 2015). At June 30, 2016
and September 30, 2015, the Company had $0 and $74,663 outstanding under the agreement.
Medical
International Technology, Inc.
Notes
to Financial Statements
June
30, 2016
(Unaudited)
Note
7 – Related Party Transactions
Related
party balances consist of the following at June 30, 2016 and September 30, 2015:
|
|
|
June 30,
2016
|
|
|
September 30,
2015
|
|
|
Payable to 9211-0766 Quebec Inc – 8% interest, due December 31, 2015
|
|
$
|
-
|
|
|
$
|
30,000
|
|
|
Advance from MIT China – no interest, no maturity date
|
|
|
500,000
|
|
|
|
-
|
|
|
|
|
$
|
500,000
|
|
|
$
|
30,000
|
|
During
the nine and three months ended June 30, 2016, the Company paid approximately $167,000 and $60,000 to a company owned by the President
and CEO for consulting fees.
During
the nine and three months ended June 30, 2015, the Company paid approximately $68,700 and $12,400 to a company owned by the President
and CEO for consulting fees.
Note
8 – Stockholders' Equity (Deficit)
Issuance
of Common Stock
From
time to time, the Company will issue common stock for services rendered, debt reductions or as part of private placement offerings.
For
the nine months ended June 30, 2016, there was no common stock issuance.
Preferred
Stock
As
of June 30, 2016, there was no preferred stock outstanding. Dividend features and voting rights are at the discretion of the Board
of Directors without the requirement of shareholder approval.
Outstanding
Options
As
of June 30, 2016 and 2015, there are no options outstanding to purchase shares of the Company’s common stock.
Outstanding
Warrants
There
are no outstanding warrants
Medical
International Technology, Inc.
Notes
to Financial Statements
June
30, 2016
(Unaudited)
Note
9 –Operating Leases
The
Company leases its office and warehouse space under an operating lease that expires on December 31, 2021. The lease calls for
a monthly rent of $3,600 (CND).Rent expense for the nine month ended June 30, 2016 was approximately $30,500.
Future
minimum lease commitments pertaining to the lease expire as follow:
|
Year ended:
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
$
|
28,000
|
|
|
June 30, 2018
|
|
|
30,000
|
|
|
June 30, 2019
|
|
|
30,000
|
|
|
June 30, 2020
|
|
|
30,000
|
|
|
June 30, 2021
|
|
|
30,000
|
|
|
|
|
$
|
148,000
|
|
Note
10 – Debt
Debt
consists of the following at June 30, 2016 and September 30, 2015:
|
|
|
June 30,
2016
|
|
|
September 30,
2015
|
|
Note payable to a bank, bearing interest at prime plus 3% (6.25% at September 30, 2015),
secured by equipment, due December 20, 2016.
|
|
$
|
8,477
|
|
|
$
|
24,515
|
|
|
Loan Canada Economic Development, no interest, repayment of the contribution in sixteen (16) Equal and consecutive quarterly installments of $5,035 (CND) through May 2016.
|
|
|
-
|
|
|
|
11,280
|
|
|
Short term borrowing payable to an individual, bearing zero interest and no payment terms or maturity
|
|
|
300,000
|
|
|
|
-
|
|
|
Total long-term debt (all current)
|
|
$
|
308,477
|
|
|
$
|
35,795
|
|
Note
11 – Contingencies
Legal
Proceedings
We
are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or
results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our
subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse
effect.
Item
2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The
following plan of operation provides information which management believes is relevant to an assessment and understanding of our
results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto.
This section includes a number of forward-looking statements that reflect our current views with respect to future events and
financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend,
project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty
on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from our predictions.
Business
Development
Expanding
the product line:
Medical
International Technology Inc. (“MIT or the “Company”) has been expanding financial resources in R&D in the
last 5 years. MIT already has 5 products for the human market and 9 products for the animal market. The company has unveiled two
new additions one for the human line and one for its animal line to our distributors.
MIT’s
patented technology has received approval in several countries worldwide. The Company expects that the two new products will be
no exception.
The
Company has decided not to put any physical nor financial effort at this time in pursuing its efforts for the FDA certification
and will resume its effort in fiscal year 2017/2018.
The
Company has decided to put more effort in its existing products and existing market for the next three quarters and the year 2016/2017,
in order to better consolidate and serve our existing Distributor.
Projected
Sales and Market Breakdown
The
following information will outline market expectations by category and timeframe:
Human
applications:
The
Company has decided for the next three quarters and the year 2016/2017 to put more effort in expanding our cosmetic dermatology,
plastic surgery, podiatry market, it will do so through the use of the Med-Jet models MIT MBX, MIT-H-III and the MESO-JET.
Animal
applications:
The
Company has decided for the next three quarters and the year 2016/2017 to put more effort in expanding the pork, cattle, and poultry
markets, using our existing products for mass animal vaccination.
China
Joint Venture
The
creation of MIT China in June of 2009 has given MIT a unique advantage to expand its production operations and increase its sales
and profits in the multi-billion dollar worldwide needle-free injector market. Furthermore, MIT China venture will help MIT supply
large production volumes in lesser time, which will attract large medical and pharmaceutical partners.
The
introduction of our Agro-Jet needle-free injector for animal application is progressing well; our veterinary staff has been successfully
job training our distributors in various regions. We expect that these efforts will result in sales growth for the coming fiscal
quarters and years.
During
the third quarter of fiscal year 2011, MIT China purchased 151,000 sq. ft. of land and began construction of their first building
in Taizhou (China Medical City). This first building of 40,000 sq. ft. when finalized will be used for the production of injectors
for the Chinese market only.
The
work in progress at MIT China for the construction of its 40,000 sq. ft. building is expected to be completed and certified by
the Chinese SFDA by March 2014. We will start planning and purchasing much of the equipment and tools necessary for the assembly
and production of some of our Agro-Jet and Med-Jet products. The production facility should be able to supply a large number of
injectors and disposables to the Chinese market.
Per
the recent discussions and understanding of our general manager, Ethan Sun, with our Joint Venture partner, our plan of sales
and expansion into the Chinese market is progressing and MIT China agreed and sold 9% of their joint venture for an investment
of 18,000,000 RMB (US$3,000,000). MIT China now has 46.41%, we have 44.59%, and Taizhou Amazon Investment Center has 9% ownership
in such venture.
Our
objective is to ensure that our injectors become an indispensable and environmentally friendly product for doctors, dentists,
veterinarians and home users around the world.
We
will continue providing a safe and effective means to help prevent the spread of deadly diseases to both humans and animals through
the use of the Med-Jet® and Agro-Jet® needle-free injection system.
Results
of Operations
Results
of Operations for the three months ended June 30, 2016 and 2015
For
the three-month period ended June 30, 2016 the Company experienced a loss from operations of $169,661 which was primarily
due to selling, general and administrative expenses of $151,403 and sales of $50,875. Gross losses for the period were $18,258.
For
the three-month period ended June 30, 2015 the Company experienced a profit from operations of $10,024 which was primarily
due to selling, general and administrative expenses of $91,057 and sales of $140,945. Gross profits for the period were $101,081.
The
growing net loss between the comparable quarters was due to decreased sales as the Company continues to push its products into
the market along with reduced research and development costs. Sales for the three-month period ending June 30, 2016 were $50,875
compared to sales of $140,945 for the same period last year. Gross loss for the period ending June 30, 2016 represented 36% of
sales, where gross profits for the same period last year represented 72% of sales.
Results
of Operations for the nine months ended June 30, 2016 and 2015
For
the nine-month period ended June 30, 2016 the Company experienced a loss of $292,125 which was primarily due to selling, general
and administrative expenses of $442,091. Gross profits for the period were $147,712.
For
the nine-month period ended June 30, 2015 the Company experienced a profit of $58,650 which was primarily due to selling, general
and administrative expenses of $258,896. Gross profits for the period were $317,546.
The
growing net loss between the comparable quarters was due to decreased sales as the Company continues to push its products into
the market along with reduced research and development costs. Sales for the nine-month period ending June 30, 2016 were $292,125
compared to sales of $439,249 for the same period last year. Gross profits for the period ending June 30, 2016 represented 51%
of sales, where gross profits for the same period last year represented 72% of sales.
Liquidity
and Capital Resources
For
the nine-month period ending June 30, 2016, the Company’s cash position, including access to cash through a revolving line
of credit, increased by $399,184. Net cash used in operating activities was $250,307. Cash used by investing activities was
$45,124, which was primarily the result of $32,061 for the acquisition of new patent rights. Cash provided by financing activities
was $668,019 which was primarily a result of an advance from a related party of $500,000 and a short term borrowing from an individual
of $300,000. In addition repayments were made to the bank line of $74,663 and $57,318 to various other debt. The effect
of exchange rates on cash increased cash balances by $26,596.
For
the nine-month period ending June 30, 2015, the Company’s cash position, including access to cash through a revolving line
of credit, increased by $6,869. Net cash used in operating activities was $106,474. Cash provided by financing activities
was $53,901 which was primarily a result of pay down of debt by $83,901. Cash used by investing activities was $34,452,
which was a result of acquisitions of new patent rights. The effect of exchange rates on cash decreased cash balances by $11,252.
Plan
of Operations
Medical
International Technology's intends to concentrate its activities in the medical and veterinary sectors, in particular, in the
field of equipment and instrumentation. The company's strategy is to build good, reliable and cost effective products, seek and
establish strategic alliances with different pharmaceutical companies and manufacturers to ensure good distribution channels for
its products.
MIT
promotes and sells products in over 30 countries including the United States of America. MIT is exerting every effort and using
its resources to promote its products and to open markets for its technology. As we continue to market our products, we hope to
gain broader acceptance of the needle-free injection technology. MIT is continually researching and developing its products to
the market needs.
We
will continue to seek additional funding to expand operations and develop sales revenue to a volume sufficient to sustain operations
and increase shareholders value.
Product
Development
Per
our previous fillings for FDA approval for our needle-free injector, the MED-JET is designed specifically for mass human inoculations.
The MED-JET is capable of delivering many types of medications such as vaccines, insulin and other types of injectables. Its low-pressure
technology offers an advantage to alternative high pressure systems that can cause blowbacks and expose medical workers and patients
alike to microscopic traces of blood.
According
to the International Sharps Injury Prevention Society (http://www.isips.org), it has been estimated that one out of every seven
workers is accidentally struck by a contaminated sharp point each and every year. The Center for Disease Control (CDC: http://www.cdc.gov/niosh/2000-108.html#5)
estimates that there are 600,000 to 800,000 needle stick injuries per year in the U.S. alone, and many are not reported. More
than 20 types of infectious agents have been transmitted through needlesticks, including hepatitis B and C, tuberculosis, syphilis,
malaria, herpes, diphtheria, gonorrhea, typhus and Rocky Mountain spotted fever. The MED-JET will eliminate this risk to health
care professionals and create a safer workplace. Other advantages include its light weight (0.5 kg) and an excellent medication
absorption rate. Additionally, the system has the ability to increase or decrease the volume and pressure of injection. This technology
is unique to MIT’s MED-JET MBX Injector. The system is designed to inject up to 600 individuals an hour.
The
approval process can be expensive and may take an extended period of time. There can be no assurance that this system will receive
approval from the FDA or if approved gain broad acceptance by the medical community or individual patients.
MIT's
Needle-Free Injection System, designed specifically to allow fast, accurate and safe injections, is rapidly moving toward establishing
itself as a valuable instrument in the fight against disease in both humans and animals. Spurred on by growing fears of a worldwide
epidemic that could match or even exceed the deadly flu pandemic of 1918 which killed millions of people, the MIT team is focusing
its efforts to make its Needle-Free Injection System available to the world.
MIT
will increasingly promote its Agro-Jet needle-free injector. Having the same benefits as Med-Jet, Agro-Jet will become a valuable
instrument in the fight against Avian Flu via its ability to mass inoculate animals at over 1000 injections per hour.
Off
Balance Sheet Arrangements
We
have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources that is material to our stockholders.