Item 1. Financial Information
CONSOLIDATED BALANCE SHEET
|
|
|
June 30,
2013
|
|
|
September 30,
2012
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
Assets
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
7,891
|
|
|
$
|
303,497
|
|
|
Accounts receivable
|
|
|
36,987
|
|
|
|
56,067
|
|
|
Inventories
|
|
|
306,947
|
|
|
|
316,440
|
|
|
Prepaid expenses
|
|
|
8,826
|
|
|
|
20,203
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
360,651
|
|
|
|
696,207
|
|
|
|
|
|
|
|
|
|
|
|
|
Long Term Investment
|
|
|
|
|
|
|
|
|
|
Investment in MIT China Joint Venture
|
|
|
2,278
|
|
|
|
146,343
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and Equipment
|
|
|
|
|
|
|
|
|
|
Tooling and machinery
|
|
|
667,930
|
|
|
|
713,779
|
|
|
Furniture and office equipment
|
|
|
136,303
|
|
|
|
144,775
|
|
|
Leasehold improvements
|
|
|
27,871
|
|
|
|
29,785
|
|
|
|
|
|
832,104
|
|
|
|
888,339
|
|
|
|
|
|
|
|
|
|
|
|
|
Less accumulated depreciation
|
|
|
(657,973
|
)
|
|
|
(612,592
|
)
|
|
Total property and equipment, net
|
|
|
174,131
|
|
|
|
275,747
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
|
Patents (net of accumulated amortization of $10,149 and $13,516)
|
|
|
36,249
|
|
|
|
44,857
|
|
|
Total assets
|
|
$
|
573,309
|
|
|
$
|
1,163,154
|
|
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED BALANCE SHEET
|
|
|
June 30,
2013
|
|
|
September 30,
2012
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
|
Liabilities and Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank line
|
|
$
|
9,513
|
|
|
$
|
101,660
|
|
|
Deferred income
|
|
|
1,276,427
|
|
|
|
1,385,906
|
|
|
Accounts payable and accrued expenses
|
|
|
166,073
|
|
|
|
160,174
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion of long term debts
|
|
|
51,442
|
|
|
|
51,442
|
|
|
|
|
|
1,503,455
|
|
|
|
1,699,182
|
|
|
Long-Term Debts
|
|
|
101,310
|
|
|
|
148,536
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
1,604,765
|
|
|
|
1,847,718
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.0001 par value; 3,000,000 shares authorized; No issued and outstanding shares
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $.0001 par value; 100,000,000 shares authorized; 83,804,627 shares and 79,090,627 issued and outstanding, respectively
|
|
|
7,979
|
|
|
|
7,979
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
12,867,476
|
|
|
|
12,867,476
|
|
|
Deficit
|
|
|
(13,505,949
|
)
|
|
|
(13,172,164
|
)
|
|
Other comprehensive income (loss)
|
|
|
(399,962
|
)
|
|
|
(387,855
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity (Deficit)
|
|
|
(1,030,456
|
)
|
|
|
(684,564
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity (Deficit)
|
|
$
|
573,309
|
|
|
$
|
1,163,154
|
|
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Three-Months Period
Ended June 30,
|
|
|
Nine-Months Period
Ended June 30,
|
|
|
|
|
2013
(Unaudited)
|
|
|
2012
(Unaudited)
|
|
|
2013
(Unaudited)
|
|
|
2012
(Unaudited)
|
|
|
Sales
|
|
$
|
238,158
|
|
|
$
|
401,157
|
|
|
$
|
528,310
|
|
|
$
|
828,644
|
|
|
Cost of sales
|
|
|
( 97,307
|
)
|
|
|
(95,989
|
)
|
|
|
(166,897
|
)
|
|
|
(195,486
|
)
|
|
Gross profit (loss)
|
|
|
140,851
|
|
|
|
305,168
|
|
|
|
361,413
|
|
|
|
633,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses
|
|
|
(336,492
|
)
|
|
|
(215,403
|
)
|
|
|
(540,372
|
)
|
|
|
(664,266
|
)
|
|
|
|
|
(336,492
|
)
|
|
|
(215,403
|
)
|
|
|
(540,372
|
)
|
|
|
(664,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(195,641
|
)
|
|
|
89,765
|
|
|
|
(178,959
|
)
|
|
|
(31,108
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense) Equity earnings (loss) on MIT China Joint Venture
|
|
|
(90,445
|
)
|
|
|
(80,166
|
)
|
|
|
(144,065
|
)
|
|
|
(184,773
|
)
|
|
Interest income/loss
|
|
|
539
|
|
|
|
240
|
|
|
|
760
|
|
|
|
824
|
|
|
Interest expense
|
|
|
(5,997
|
)
|
|
|
(4,065
|
)
|
|
|
(11,521
|
)
|
|
|
(39,089
|
)
|
|
|
|
|
(95,903
|
)
|
|
|
(83,991
|
)
|
|
|
(154,826
|
)
|
|
|
(223,038
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(291,544
|
)
|
|
$
|
5,774
|
|
|
$
|
(333,785)
|
|
|
$
|
(254,146)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) per share
|
|
$
|
(0.003
|
)
|
|
$
|
(0.0001
|
)
|
|
$
|
(0.004
|
)
|
|
$
|
(0.003
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
|
|
83,804,627
|
|
|
|
83,804,627
|
|
|
|
83,804,627
|
|
|
|
83,804,627
|
|
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Nine-Month Period Ended
|
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(333,785
|
)
|
|
$
|
(254,146
|
)
|
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity loss from MIT China Joint Venture
|
|
|
144,065
|
|
|
|
184,733
|
|
|
Depreciation and amortization expense
|
|
|
94,880
|
|
|
|
94,517
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services
|
|
|
-
|
|
|
|
-
|
|
|
Related party payables settle by common stock
|
|
|
-
|
|
|
|
-
|
|
|
Capitalization of related party debts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
19,080
|
|
|
|
(3,340)
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
9,493
|
|
|
|
46,082
|
|
|
Prepaid expenses
|
|
|
11,377
|
|
|
|
11,380
|
|
|
Accounts payable and accrued liabilities
|
|
|
5,900
|
|
|
|
61,700
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income
|
|
|
(109,479)
|
|
|
|
518
|
|
|
Net cash used by operating activities
|
|
|
(158,469)
|
|
|
|
141,484
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Acquisition of patents
|
|
|
(5,251
|
)
|
|
|
(16,692
|
)
|
|
Investment in MIT China joint venture
|
|
|
-
|
|
|
|
-
|
|
|
Tooling and machinery
|
|
|
-
|
|
|
|
(47,718
|
)
|
|
Net cash used by investing activities
|
|
|
(5,251
|
)
|
|
|
(64,410
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Bank line
|
|
|
(92,147
|
)
|
|
|
(30,765
|
)
|
|
Bank loans
|
|
|
(48,226)
|
|
|
|
27,953
|
|
|
Proceeds from issuance of stock, net
|
|
|
-
|
|
|
|
63,340
|
|
|
Increase in amounts due to related parties
|
|
|
-
|
|
|
|
(152,723)
|
|
|
Issuance of notes payable
|
|
|
-
|
|
|
|
-
|
|
|
Repayment on notes payable
|
|
|
-
|
|
|
|
-
|
|
|
Net cash provided from financing activities
|
|
|
(132,367
|
)
|
|
|
(92,195)
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rates
|
|
|
8,487
|
|
|
|
4,232
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash
|
|
|
(295,606
|
)
|
|
|
(10,889)
|
|
|
Cash, beginning of period
|
|
|
303,497
|
|
|
|
10,889
|
|
|
Cash, end of period
|
|
$
|
7,981
|
|
|
$
|
-
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
10,762
|
|
|
$
|
39,089
|
|
|
Cash paid for federal income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Supplemental disclosure of non-cash transactions
|
|
|
|
|
|
|
|
|
|
Common stock issued for debt reductions
|
|
$
|
-
|
|
|
$
|
-
|
|
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
|
|
|
Nine Months Ended
June 30,
2013
|
|
|
Nine Months Ended
June 30,
2012
|
|
|
Net loss
|
|
$
|
(333,785
|
)
|
|
$
|
(254,146
|
)
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(12,106)
|
|
|
|
(16,742)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net comprehensive income (loss)
|
|
$
|
(345,891
|
)
|
|
$
|
(270,888
|
)
|
The accompanying notes are an integral part of these consolidated financial statements
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ (DEFICIT)
|
|
|
Common Stock
|
|
|
Additional Paid in
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – September 30, 2012
|
|
|
83,804,627
|
|
|
$
|
7,979
|
|
|
$
|
12,867,386
|
|
|
$
|
(13,172,164
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for debts
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Shares issued for services
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Shares issued for additional capital
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period ended June 30, 2013
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(333,785
|
)
|
|
Balance – June 30, 2013
|
|
|
83,894,627
|
|
|
|
7,979
|
|
|
|
12,867,386
|
|
|
|
(13,505,949
|
)
|
The accompanying notes are an integral part of these consolidated financial statements
Notes to Financial Statements
(Unaudited)
Note 1 – Basis of Presentation
Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements of Medical International Technology, Inc. (“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, 2012.
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 months period ended June 30, 2013 are not necessarily indicative of the results which may be expected for any other interim periods or for the year ending September 30, 2013. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Note 2 – Inventories
Inventories at June 30, 2013 and September 30, 2012 consist of the following:
|
|
|
June 30,
2013
|
|
|
September 30,
2012
|
|
|
Raw materials
|
|
$
|
211,833
|
|
|
$
|
242,528
|
|
|
Work in process
|
|
|
83,367
|
|
|
|
63,255
|
|
|
Finished goods
|
|
|
11,747
|
|
|
|
10,657
|
|
|
Total
|
|
$
|
306,947
|
|
|
$
|
316,440
|
|
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, 2013 and 2012 was $84,730 and $59,370, respectively
Note 4 – Intangible Assets
As of June 30, 2013 the Company has net patents on certain technologies aggregating $36,249. Amortization expense for the years ended June 30, 2013 and 2012 were $10,149 and $16,096, respectively. During the nine months ended June 30, 2013, the Company capitalized patent costs on its needle-free injector of $4,424. Following is a detail of patents at June 30, 2013.
|
|
|
Gross
Intangible
Assets
|
|
|
Accumulated
Amortization
|
|
|
Net
Intangible
Assets
|
|
Weighted
Average
Life (Years)
|
|
Patents
|
|
$
|
67,666
|
|
|
$
|
31,417
|
|
|
$
|
36,249
|
|
7.5 through 15
|
Notes to Financial Statements
(Unaudited)
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.
During the period from May 6, 2009 to September 30, 2009, the Joint Venture had not commenced operations. The Joint Venture commenced operations during the Company’s 1st quarter of fiscal 2010.
During the third quarter of fiscal year 2011, MIT China purchased 151,000 sq. ft. of land and began construction of its first building in Taizhou (China Medical City). This first building of 40,000 sq. ft. will be used for the production of injectors for the Chinese market. The first stage (the offices) was completed and employees were moved into the facility in August 2012. The second part of the construction is scheduled to be complete during the first quarter of 2013, which will contain the production facility capable of supplying a large number of injectors and disposables to the Chinese market.
In March 2012, MIT China agreed and sold 9% of the joint venture for an investment of 18,000,000 RMB (US$3,000,000). Jiangsu Hualan now has 46.41%, the Company has 44.59%, and Taizhou Amazon Investment Center has 9% ownership in the MIT China joint venture.
The Company accounts for its investment in MIT China in accordance with Financial Accounting Standards Board Accounting Standards Codification 323, “Investment — Equity Method and Joint Venture” (ASC 323), previously referred to as Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock.” Accordingly, the Company adjusts the carrying amount of its investment in MIT China to recognize its share of earnings or losses. As of September 30, 2012, the Company’s recorded investment in the MIT China was $146,343. During the nine months ended June 30, 2013, the Company recorded an equity loss from its investment in MIT China of $144,065.
Note 6 – Bank Line
The Company has an equipment line of credit up to a maximum of $350,000. The line is secured by account receivables, inventories, equipment and all other assets of the Company. At June 30, 2013, the Company had $9,513 outstanding under the agreement.
Note 7 – Related Party Transactions
There are not related party balances at June 30, 2013 and September 30, 2012:
Notes to Financial Statements
(Unaudited)
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 quarter ended June 30, 2013, there was no common stock issuance.
Preferred Stock
As of June 30, 2013, 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, 2013 and 2012, there are no options outstanding to purchase shares of the Company’s common stock.
Outstanding Warrants
There are no outstanding warrants
Note 9 –Operating Leases
The Company leases its office and warehouse space under an operating lease that expires on December 31, 2014 that calls for a monthly rent of $4,300. Rent expense for the year ended June 30, 2013 was approximately $37,800.
Notes to Financial Statements
(Unaudited)
Future minimum lease commitments pertaining to the lease expire as follow:
|
Year ended
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
|
51,600
|
|
|
Dec 31, 2014
|
|
|
25,200
|
|
|
|
|
|
|
|
|
|
|
$
|
76,800
|
|
Note 10– Deferred Income
Deferred income consists of the following at June 30, 2013 and September 30, 2012:
|
|
|
June 30,
2013
|
|
|
September 30,
2012
|
|
|
Deposits from customers and distributors
|
|
$
|
203,927
|
|
|
$
|
313,406
|
|
|
Non-refundable Distribution Rights Deposit
|
|
|
1,072,500
|
|
|
|
1,072,500
|
|
|
Total
|
|
$
|
1,276,427
|
|
|
$
|
1,385,906
|
|
On November 1, 2007, the Company received a deposit of $1,300,000 for the worldwide rights to market and sells while maintaining MIT CANADA right to sell all Medical International Technology Inc.’s Needle-Free Jet-Injectors for the human and animal markets. This deposit was part of an agreement under negotiation, which was finalized in January 2009. Upon finalization, the Company began recognizing the deposit into income over the contractual life of the agreement. During the year ended September 30, 2010, the Company recognized $130,000 into income under this agreement. During 2011, the Company was notified of potential litigation related to this contract. Accordingly, due to the uncertainty in a final resolution, the Company ceased recognizing income related to this contract during 2011. Upon a final resolution of the dispute, the Company will begin amortizing the deposit into income over the remaining contractual life of the agreement.
Note 11 –Notes Payable
Long-term debt consists of the following at June 30, 2013 and September 30, 2012:
|
|
|
June 30,
2013
|
|
|
September 30,
2012
|
|
|
Note payable to a bank, bearing interest at prime plus 3%, repayment of the loan in sixty (60) equal and consecutive installments of 2,413.12 starting January 20, 2012, secured by equipment, due January 20, 2016.
|
|
$
|
94,272
|
|
|
$
|
123,197
|
|
|
Loan Canada Economic Development, no interest, repayment of the contribution in sixteen (16) equal and consecutive quarterly installment starting twelve (12) month after the project completion date.
|
|
|
57,480
|
|
|
|
76,782
|
|
|
Long-term debt
|
|
$
|
151,752
|
|
|
$
|
199,979
|
|
Future scheduled principal payments under note agreements are as follows:
|
Year ended
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
|
51,442
|
|
|
June 30, 2015
|
|
|
51,442
|
|
|
June 30, 2016
|
|
|
48,868
|
|
|
|
|
|
|
|
|
|
|
$
|
151,752
|
|
Note 12 – 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 will soon be unveiling two new additions to its human product line and one for its animal line.
MIT’s patented technology has received approval in several countries worldwide. The Company expects that the three new products will be no exception.
The Company is refocusing its efforts and will target FDA approval for two of its latest product lines: first, the home use injector for diabetics and other treatments requiring daily injections, and second, product targeting physicians in their clinics for vaccination and other biological injection medications. FDA approval for these two products will help the Company’s credibility all over the world.
MIT products pipeline is already defined for 2012/2013; the realization of these new products design will be achieved by new finance to MIT and or a partnership with Medical and Pharmaceutical Companies.
Diabetes
The Company intends to target diabetes market through its newly developed Med-Jet model MIT-P-I within the next 8 to 10 months. MIT intends to first introduce this product in China in order to grow its production capacity to eventually expand into other countries. The Med-Jet MIT-P-I is designed to be safe, precise, accurate, effective, easy to use and friendly to the environment.
Dentistry
The Company plans to target the potentially lucrative dental Anesthesia market with its Med-Jet model MIT-H-VI within the next 12 to 16 months. MIT intends to introduce this new product in North America first before being introduced into other markets.
Poultry Vaccinations
MIT’s newly designed Agro-Jet model MIT-XII will help prevent the spread of deadly diseases by providing a needle-free alternative to the vaccination of billions of day-old baby chicks yearly. This high speed vaccinator will be able to inject thousands of birds per hour safely, precisely, accurately, effectively, with ease of use and friendly to the environment.
Projected Sales and Market Breakdown
The following information will outline market expectations by category and timeframe:
Human applications:
In the next fiscal year, the Company plans to expand its market for cosmetic dermatology, plastic surgery, and general practitioner for single and mass injections. It will do so through the use of the Med-Jet models MIT MBX and MIT-H-III. The Company also plans to introduce a model MESO-JET a product for the injections on the face for all cosmetic dermatology procedures, as well as the MIT-H-IV-1 and MIT-H-IV-5, the MIT P-I injector for Diabetics, , and the MIT-H-VI Dental injector.
Animal applications:
In the next fiscal year, the Company plans to expand into the pork, cattle, and poultry markets, using our existing and newly redesigned products for mass animal vaccination.
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.
We have recently supplied a CDC (Centre of Disease Control) vaccination clinic in China with one Med-Jet model MIT H-III, and requested an MIT China nurse to be present at the clinic at all times for training, supervision of the proper usage and procedures of our Med-Jet for vaccination.
During 2013, we plan to open a few more CDC vaccination clinics and sell to the dermatology departments in hospitals to better promote our products in China.
We recently received our first important order of 2012, for $196,360 of our new Med-Jet model H-4.
During the first and
second quarters of 2013, we have received few more orders valued at approximately $220,000 from our existing models and disposable nozzles.
Part of these orders has been delivered and been sold to important hospitals across China and mostly in the dermatology departments.
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, 2013 and 2012
For the three-month period ended June 30, 2013 the Company experienced a loss net from operations of $(195,641) which was primarily due to selling, general and administrative expenses of $(336,492) and sales of $238,158. Gross profits for the period were $140,851.
For the three-month period ended June 30, 2012 the Company experienced a gain net from operations of $ 89,765 which was primarily due to selling, general and administrative expenses of $(215,403) and sales of $401,157. Gross profits for the period were $305,168.
The reduced net loss between the comparable quarters was due to increased sales as the Company continues to push its products into the market along with reduced research and development costs. Sales for the nine-month period ending June 30, 2013 were $528,310 compared to sales of $828,644 for the same period last year. Gross profits for the period ending June 30, 2013 represented 68% of sales, where gross profits for the same period last year represented 76% of sales.
Results of Operations for the nine months ended June 30, 2013 and 2012
For the nine-month period ended June 30, 2013 the Company experienced a net loss from operations of $(178,958) which was primarily due to selling, general and administrative expenses of $(540,372). Gross profits for the period were $361,413.
For the nine-month period ended June 30, 2012, the Company experienced a net loss from operations of $(31,108), which was primarily due to selling, general and administrative expenses of $(664,266). Gross profits for the period were $633,158.
Liquidity and Capital Resources
For the nine-month period ending June 30, 2013, the Company’s cash position, including access to cash through a revolving line of credit, decreased $295,606. Net cash used in operating activities was $158,469. Cash used by financing activities was $132,367 which was primarily a result of bank line of $92,147. Cash used by investing activities was $5,251, which was a result of acquisitions of new patent rights. The effect of exchange rates on cash increased cash balances by $8,487.
For the nine-month period ending June 30, 2012, the Company’s cash position, including access to cash through a revolving line of credit, decreased $10,889. Net cash used in operating activities was $141,484. Cash used by financing activities was $92,195 which was primarily a result of decreases in amounts due to related parties of $152,723. Cash used by investing activities was $64,410, which was a result of acquisitions of new patent rights and tooling and machinery. The effect of exchange rates on cash increased cash balances by $4,232.
Plan of Operations
MIT 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, develop sales revenue, conduct presentation to medical and pharmaceutical companies, achieve sales to a volume sufficient to sustain operations and yield a good return to our shareholders.
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.
During the last quarter of 2011 we signed with an outside consultant to help MIT with the FDA approval process and to expedite the approval. This work is proceeding and few more tests must be done in order to file complete documentations to FDA, we have completed all the tests and we have already filled the application, we should now expect a communication from FDA within the next three month.
On December 15, 2005, we received full certification granted under the International Organization for Standardization, as well as the Canadian Medical Device Conformity Assessment System for devices to be licensed by HEALTH CANADA. These certifications allow MIT to currently market the Med-Jet Needle-Free Injector for human use in all countries other than the U.S. The Med-Jet injector has been submitted for FDA approval which, if accepted, will allow MIT to sell the Med-Jet in the United States, making it a truly worldwide system.
MIT's Needle-Free Injection System, designed specifically to allow fast, accurate and safe injections, is rapidly moving toward establishing itself as a valuable instrument in the fight against disease in both humans and animals. Spurred on by growing fears of a worldwide epidemic that could match or even exceed the deadly flu pandemic of 1918 which killed millions of people, the MIT team is focusing its efforts to make its Needle-Free Injection System available to the world.
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.
