Medinotec Inc S-1, filed Jun 2, 2022
Medinotec Inc. (MDNC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MEDINOTEC INC.
(Exact name of registrant as specified in its charter)
| Nevada | 3841 | 36-4990343 |
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(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
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10120 W Flamingo Rd Ste 4 - 2090 Las Vegas NV 89147-8394 +27 87 330 2301 |
Spring Valley Solutions, LLC 4955 S. Durango Rd. Ste. 165 Las Vegas, NV 89103 (702) 982-5686 | |
| (Address, including zip code, and telephone number, including area code, of principal executive offices) | (Name, address, including zip code, and telephone number, including area code, of agent for service) | |
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Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective. | ||
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging Growth Company | ☒ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of each class of securities to be registered |
Amount to be Registered(1) |
Proposed Maximum Offering Price per Share(3) |
Proposed Maximum Aggregate Offering Price(3) |
Amount of Registration Fee | ||||
| Common Stock, par value $0.001 per share | 1,733,750 (2) | $5.00 | $8,668,750 | $803.59 |
| (1) | Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), the shares being registered hereunder include such indeterminate number of shares of our Common Stock as may be issuable with respect to the shares being registered hereunder to prevent dilution by reason of any stock dividend, stock split, recapitalization or other similar transaction. |
| (2) | All 1,733,750 shares of Common Stock are to be offered by the Selling Shareholders named herein and were acquired in connection with a private placement consummated by the Company. |
| (3) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act. |
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
With copies to:
Scott Doney, Esq.
The Doney Law Firm
4955 S. Durango Rd. Ste. 165
Las Vegas, NV 89103
Telephone: (702) 982-5686
The information in this prospectus is not complete and may be changed. This prospectus is included in a registration statement that we filed with the Securities and Exchange Commission. The Selling Shareholders cannot sell these securities under this registration statement until this registration statement becomes effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to Completion, dated June 2, 2022
PROSPECTUS
MEDINOTEC INC.
1,733,750 Shares of Common Stock
This prospectus relates to the resale by the Selling Shareholders of up to 1,733,750 shares of our Common Stock, par value $0.001 per share (the “Common Stock”). We will not receive any proceeds from this offering and have not made any arrangements for the sale of these securities. We will use our best efforts to maintain the effectiveness of the resale registration statement through and until all securities registered under the registration statement have been sold or are otherwise able to be sold pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended.
Our Common Stock is not presently traded on any market or securities exchange. The sales price to the public is fixed at $5.00 per share until such time as the shares of our Common Stock are traded on the OTCQB or OTCQX. This quotation service is a network of securities dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current “bids” and “asks,” as well as volume information. Although we intend to apply for quotation of our Common Stock on the OTCQB or OTCQX through a market maker, public trading of our common stock may never materialize. If our Common Stock becomes traded on the OTCQB or OTCQX, then the sale price to the public will vary according to prevailing market prices or privately negotiated prices by the Selling Shareholders.
We have agreed to pay certain expenses in connection with this registration statement and to indemnify the Selling Shareholders against certain liabilities. The Selling Shareholders will pay all underwriting discounts and selling commissions, if any, in connection with the sale of the shares of Common Stock.
We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common stock involves risks. See "Risk Factors" beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus June 2, 2022
Table of Contents
This prospectus is part of a registration statement we filed with the Securities and Exchange Commission, or the SEC. Under this registration process, the selling shareholders may, from time to time, offer and sell up to 1,733.750 shares of our common stock, as described in this prospectus, in one or more offerings. This prospectus provides you with a general description of the securities the selling shareholders may offer. You should read this prospectus carefully before making an investment decision.
You may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized anyone to provide you with additional or different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the shares of our common stock offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any common stock in any circumstances or any jurisdiction in which such offer or solicitation is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus regardless of the time of delivery of this prospectus or any sale of our common stock. The rules of the SEC may require us to update this prospectus in the future.
As used in this prospectus, unless the context requires otherwise, the terms “we”, “us”, “our”, or “the Company” refer to Medinotec Inc. and its subsidiaries on a consolidated basis. References to “Selling Shareholders” refer to those shareholders listed herein under “Selling Shareholders” and their successors, assignees and permitted transferees.
ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about the Company and its subsidiaries. These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, and can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”, “projects”, “plans”, “goal”, “targets”, “potential”, “estimates”, “pro forma”, “seeks”, “intends”, or “anticipates” or the negative thereof or comparable terminology. Forward-looking statements include discussions of strategy, financial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of various transactions, and statements about the future performance, operations, products and services of the Company and its subsidiaries. We caution our shareholders and other readers not to place undue reliance on such statements.
Our businesses and operations are and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the risk factors set forth in the section entitled “Risk Factors” beginning on page 4 of this prospectus.
All written or oral forward-looking statements attributable to us or any person acting on our behalf made after the date of this prospectus are expressly qualified in their entirety by the risk factors and cautionary statements contained in and incorporated by reference into this prospectus. Unless legally required, we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events.
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The following summary highlights selected information contained elsewhere in this prospectus and in the documents incorporated by reference in this prospectus and does not contain all the information you will need in making your investment decision. You should read carefully this entire prospectus and the documents incorporated by reference in this prospectus before making an investment decision, especially the information presented under the heading “Risk Factors.”
Business Summary
Medinotec Inc. acquires Disa Medinotec (Pty) Ltd (also “Medinotec”) (see page 41 of this Prospectus for the history of the Company), a South African based medical device manufacturing and distribution company. Medinotec is currently considered a global leader in tracheal non-occlusive airway dilation technology.
Thanks to world-class proprietary technology, we were the first in South Africa to manufacture a CE-Marked bare metal coronary stent, the Solar Flex Stent, which was successfully implanted in thousands of coronary artery disease patients for over two decades.
While the Solar Flex was discontinued in 2019 as a result in a shift in coronary stent technology towards drug eluting stents and bioabsorbable scaffolds, Medinotec had already designed and developed a range of Semi-Compliant Percutaneous Transluminal Coronary Angioplasty (“PTCA”) balloon catheters known as the Cape Cross.
Medinotec products also include the Cape Cross Non-Compliant (“NC”) PTCA balloon catheter and a range of medical devices and products, as described below and in depth in the “Our Key Products” section on page 41 of this Prospectus.
In 2018 Medinotec developed its most innovative product to date – the Trachealator. This award-winning balloon catheter was developed to address an as-yet unmet global need in the specialty of advanced airway management, more specifically tracheal dilation. What makes this innovative product a world first is its ability to dilate a patient’s airway while maintaining ventilation to the patient without obstructing his/her airway.
This life-saving device has quite literally changed the way that tracheal and, to a degree, bronchial stenosis, is managed in extremely ill patients. This is especially true in a post Covid-19 world where tracheal stenosis due to extended tracheal intubation is becoming an ever more frequent pathology encountered by surgeons, who, thanks to Medinotec, now have a safe and effective tool at their disposal.
Other products manufactured by Medinotec include:
| § | The “Lamprey” Suction Dissector, a novel surgical tool used in the fields of neurosurgery, ear, nose and throat (“ENT”) surgery and general surgery to safely combine the processes of suctioning blood out of the surgeon’s field of view while allowing him/her to dissect sensitive structures without having to change instruments. |
| § | The Aortic Perfusion and Dilation Catheter, a novel non-occlusive perfusion balloon to allow the expansion of the aortic valve (“BAV” or Balloon Aortic Valvuloplasty) without impeding the cardiac output, which is currently in the mid stages of research and development and could potentially be used to post-dilate the artificial valve in Transcatheter Aortic Valve Implantation (“TAVI”), a rapidly growing market, without the need for pacing. |
| § | A highly specific, niche Chronic Total Occlusion (“CTO”) Catheter of 1mm in diameter. This micro balloon catheter addresses an extremely specific market need for difficult coronary cases and will cement our position as one of the leading specialized coronary balloon catheter manufacturers in the world. |
| § | A new self-expanding, temporary, silicone Tracheal Stent to be used in conjunction with the Trachealator in the treatment of tracheal stenosis. The complimentary nature of this product will build on our current expertise in the field of advanced airway management. |
It is our intention to maintain its manufacturing operations in South Africa, building on the extensive skills we have established in that country. These critical skills are also available to us at a relatively lower cost than they would be in the US, with an estimated saving of 85% to 90% being achieved using our human resources skills and manufacturing facilities in South Africa, our primary territory. Through this listing, we intend building a powerful distribution arm in the US, with a highly competent local sales force, thus creating jobs for US citizens and bolstering the country’s economy and intellectual property (“IP”).
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As of February 28, 2022 in the Holding Company Medinotec Incorporated, we had $10,164 in current assets and current liabilities in the amount of $0. Accordingly, we had working capital of $10,164 as of February 28, 2022. We have incurred net losses of $161 for the year ended February 28, 2022. On 2 March 2022 Medinotec Incorporated proved viability of its business plan to the Shareholders of DISA Medinotec (PTY) Ltd in South Africa which meant that a business combination under common control originated on this date.
As of February 28, 2022, through DISA Medinotec (Pty) Ltd. we had $711,537 in current assets and current liabilities in the amount of $209,018. Accordingly, we had working capital of $502,519 as of February 28, 2022. We have incurred net losses of $167,154 and 36,683 for the years ended February 28, 2022 and 2021, respectively. We have an accumulated deficit as of February 28, 2022 of $476,480 (2021: $309,326), and expect to incur future additional losses as we build out the territory of the United States and expect to return to profitability once this territory established a sales force. We have cash available on hand and believe that this cash will be sufficient to fund operations and meet our obligations as they come due within one year from the date these financial statements are issued. In the event that we do not achieve revenue anticipated in its current operating plan, management has the ability and commitment to reduce operating expenses as necessary. Our long-term success is dependent upon our ability to successfully raise additional capital, market our existing services, increase revenues, and, ultimately, to achieve profitable operations.
Our financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We received FDA approval for one of our main products being the Trachealator in November 2021. As the research and development phase of this product is complete we should see an increase in sales being realized against expenditure incurred. A private placement was done in the wake of the successful research and development and subsequent regulatory approval.
The Offering
| Common stock offered by the Selling Shareholders | 1,733,750 shares of common stock. |
| Selling Shareholders | See “Selling Shareholders” beginning on page 22. |
| Common stock outstanding | 11,733,750 common shares as of May 30, 2022. |
| Use of proceeds | We will not receive any proceeds from the sale or other disposition of the shares of common stock covered by this prospectus. |
| Offering price |
The offering price of the common stock is $5.00 per share. There is no public market for our common stock. We cannot give any assurance that the shares offered will have a market value, or that they can be resold at the offered price if and when an active secondary market might develop, or that a public market for our securities may be sustained even if developed. The absence of a public market for our stock will make it difficult to sell your shares in our stock.
We intend to apply to the OTCQB OR OTCQX, through a market maker that is a licensed broker dealer, to allow the trading of our common stock upon our becoming a reporting entity under the Securities Exchange Act of 1934. If our common stock becomes so traded and a market for the stock develops, the actual price of stock will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling shareholders. The offering price would thus be determined by market factors and the independent decisions of the selling shareholders. |
| Risk Factors | You should consider the matters set forth under “Risk Factors” beginning on page 4, as well as other cautionary statements throughout or incorporated by reference in this prospectus, before deciding to invest in shares of our common stock. |
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Readers and prospective investors in our common stock should carefully consider the following risk factors as well as the other information contained or incorporated by reference in this prospectus.
If any of the following risks actually occurs, our financial condition, results of operations and liquidity could be materially adversely affected. If this were to happen, the value of our common stock could decline, and if you invest in our common stock, you could lose all or part of your investment.
The discussion below highlights some important risks we have identified related to our business and operations and an investment in shares of our common stock, but these should not be assumed to be the only factors that could affect our future performance and condition, financial and otherwise. We do not have a policy of updating or revising forward-looking statements except as otherwise required by law, and silence by management over time should not be construed to mean that actual events are occurring as estimated in such forward-looking statements.
Risks Related to Financial Condition
Our substantial leverage and debt service obligations could adversely affect the business.
As of February 28, 2022, In the consolidated information of the holding company Medinotec Incorporated we had $0 million of current debt. On 2 March 2022 Medinotec Incorporated proved viability of its business plan to the Shareholders of DISA Medinotec (Pty) Ltd in South Africa which meant that a business combination under common control originated on this date
As of February 28, 2022 in the financial statements of DISA Medinotec (Pty) Ltd we had approximately $209,018 of current debt obligations and $1,583,661 of long-term debt outstanding. We may also incur additional indebtedness in the future. This could have adverse consequences, including the following:
| § | making it more difficult for us to satisfy our financial obligations; |
| § | increasing vulnerability to adverse economic, regulatory and industry conditions; |
| § | placing us at a disadvantage to our competitors that are less leveraged; |
| § | limiting the ability to compete and flexibility in planning for, or reacting to, changes in the business and the industry in which we operate; |
| § | limiting the ability to borrow additional funds for working capital, capital expenditures, acquisitions and general corporate or other purposes; and |
| § | exposing us to greater interest rate risk since the interest rate on floating rate borrowings is variable. |
Our debt service obligations require us to use a portion of the operating cash flow to pay interest and principal on indebtedness instead of for other corporate purposes, including funding the future expansion of the business, acquisitions, and ongoing capital expenditures, which could impede growth. If operating cash flow and capital resources are insufficient to service debt obligations, we may be forced to sell assets, seek additional equity or debt financing or to restructure our debt, which could harm long-term business prospects.
Our failure to comply with the terms of our revolving credit facility and other indebtedness could also result in an event of default which, if not cured or waived, could result in the acceleration of all of its debt.
We may need additional financing – any limitation on our ability to obtain such additional financing could have a material adverse effect on the business, financial condition, and results of operations.
Our expansion plans may require additional capital and we may need capital to operate our business in response to circumstances caused by the risks in conducting business in this industry. The raising of additional capital could result in dilution to stockholders. In addition, there is no assurance that we will be able to obtain additional capital if we need it, or that if available, it will be available to us on favorable or reasonable terms. Any limitation on our ability to obtain additional capital as and when needed could have a material adverse effect on the business, financial condition and results of operations.
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Our research and development efforts rely upon investments and investment collaborations, and we cannot guarantee that any previous or future investments or investment collaborations will be successful.
Our mission is to provide a broad range of products to restore patients to fuller, healthier lives, which requires a wide variety of technologies, products and capabilities. The rapid pace of technological development in the medical industry and the specialized expertise required in different areas of medicine make it difficult for one company alone to develop a broad portfolio of technological solution.
In addition to internally generated growth through our research and development efforts, historically we have relied on, and expect to continue to rely on, investments and investment collaborations to provide us with access to new technologies both in areas served by our existing businesses as well as in new areas.
We expect to make future investments where we believe that we can stimulate the development or acquisition of new technologies and products to further strategic objectives and strengthen our existing businesses. Investments and investment collaborations in and with medical technology companies are inherently risky, and we cannot guarantee that any of our previous or future investments or investment collaborations will be successful or will not materially adversely affect the business, results of operations, financial condition and cash flows.
Future changes in financial accounting standards or practices or existing taxation rules or practices may cause adverse or unexpected revenue fluctuations and affect the reported results of operations.
A change in accounting standards or practices or a change in existing taxation rules or practices can have a significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective. This also applies to new standards, practices and rules.
Changes to existing rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business. The fact that we operate in multiple territories and have worldwide footprint heightens this risk in specific territories.
Risks Relating to Business Operations
Covid-19 has had, and is expected to continue to have, an adverse effect on the business, results of operations, financial condition and cash flows, the nature and extent of which are highly uncertain and unpredictable.
Our global operations and interactions with healthcare systems, providers and patients around the world expose us to risks associated with public health crises, including epidemics and pandemics such as Covid-19. In particular, the continuing global spread of Covid-19, including corresponding preventative and precautionary measures that we and other businesses, communities and governments are taking to mitigate the spread of the disease, has led to unprecedented restrictions on, disruptions in, and other related impacts on business and personal activities.
In addition to travel restrictions put in place in early 2020, countries, states and governments may continue to close borders, impose prolonged quarantines or other restrictions and requirements on travel. This will further limit the ability to conduct business in-person, requiring businesses to continue to use alternative methods of communication. It is also likely the pandemic will cause an economic slowdown of potentially extended duration, and even a global recession.
Together with the preventative and precautionary measures being taken, as well as the corresponding need to adapt to new and different methods of communicating and conducting business, Covid-19 is having, and is likely to continue to have, an adverse impact on significant aspects of us, including on demand for and supply of products, operations, supply chains and distribution systems. Our strategic investment partners’ ability to research and develop and bring to market new products and services, and our ability to generate cash flow, are being impacted.
Also, as hospital systems continue to prioritize treatment of Covid-19 patients and otherwise comply with government guidelines, certain medical procedures have been suspended or postponed in many of the markets where our products are marketed and sold, which has caused a decrease in the sales of these products. It is not possible to predict the timing of a broad resumption of deferrable medical procedures or to which extent individuals and hospital systems continue to de-prioritize, delay or cancel these procedures. It is also not possible to determine if unemployment or loss of insurance coverage will adversely impact on people’s ability to pay for our products and services. Both circumstances continue to negatively affect the business, cash flows, financial condition and results of operations.
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The pandemic is also placing strain on healthcare systems and hospitals around the world, resulting in adverse financial impacts on those systems, which could result in reduced future expenditure on capital equipment, including our products and services. It could also disrupt product launches of our new products.
Furthermore, a significant number of our global suppliers, vendors, distributors and manufacturing facilities have been adversely affected by the Covid-19 pandemic. This includes a negative impact on the ability of their employees to get to their places of work and maintain the continuity of their on-site operations. This could impair our ability to move products through distribution channels to our end customers. Any such delay or shortage in the supply of components or materials may result in our inability to satisfy consumer demand for our products in a timely manner or at all, which in turn could harm our reputation, future sales and profitability.
Covid-19 has impacted and may further impact the global economy and capital markets. This includes the negative impact on access to capital markets (including the commercial paper market), foreign currency exchange rates, and interest rates, each of which may adversely impact the business and its liquidity. We could experience loss of sales and profits due to delayed payments or insolvency of healthcare professionals, hospitals and other customers, suppliers and vendors facing liquidity issues. As a result, we may be compelled to take additional measures to preserve our cash flow.
In addition, Covid-19 could adversely impact our ability to retain key employees and to ensure the continued service and availability of skilled personnel necessary to run our complex production processes and operations. This includes executive officers and other members of the management team. It could also impact the ability of third-party suppliers, manufacturers, distributors and vendors to retain their key employees.
To the extent that our management or other personnel are impacted in significant numbers by Covid-19 and are not available to perform their job duties, we could experience delays in, or the suspension of, manufacturing operations, research and product development activities, regulatory work streams, clinical development programs and other important commercial functions. While the impact of Covid-19 has had, and is expected to continue to have, an adverse effect on the business, results of operations, financial condition and cash flows, the nature and extent of such impact remains uncertain and highly unpredictable.
Consolidation in the healthcare industry could have an adverse effect on revenues and results of operations.
Many healthcare companies, including healthcare systems, distributors, manufacturers, providers, and insurers, are consolidating or have formed strategic alliances. As the healthcare industry consolidates, competition to provide goods and services to industry participants will become more intense. Further, this consolidation creates larger enterprises with greater negotiating power, which they can use to negotiate price concessions. If we must reduce our prices because of industry consolidation, or if we lose customers as a result of consolidation, the business, financial condition, results of operations and cash flows could be adversely affected.
Healthcare industry cost-containment measures could result in reduced sales of the Company’s medical devices and medical device components.
Most of our customers and the healthcare providers to whom our customers supply medical devices, rely on third-party payers, including government programs and private health insurance plans, to reimburse some or all of the cost of the procedures in which medical devices that incorporate components our manufacture or assemble are used.
The continuing efforts of governmental authorities, insurance companies and other payers of healthcare costs to contain or reduce these costs could lead to patients being unable to obtain approval for payment from these third-party payers.
If third-party payer payment approval cannot be obtained by patients, sales of finished medical devices that include our components may decline significantly and our customers may reduce or eliminate purchases of these components.
The cost-containment measures that healthcare providers are instituting, both in the US and outside of the US could harm our ability to operate profitably.
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The continuing development of many of our products and offerings depends on our maintaining strong relationships with healthcare professionals.
If we fail to maintain our working relationships with healthcare professionals, many of our products may not be launched and marketed in line with the needs and expectations of the professionals who use and support our products, which could cause a decline in earnings and profitability.
The research, development, marketing and sales of many of our new and improved products depends on our maintaining working relationships with healthcare professionals, relying on them to provide considerable knowledge and experience regarding the development, marketing and sale of products. Physicians assist us as researchers, marketing and product consultants, inventors and public speakers.
In addition, as a result of the Covid-19 pandemic, our access to these professionals has been limited, and travel restrictions, shutdowns and similar measures have impacted the ability to maintain these relationships, thereby affecting the ability to develop, market and sell new and improved products.
Products in development may not come to market/fail to commercialize
We will, at any time, have several innovative products in R&D phase. However, some of these projects may fail to come to market/commercialize for a number of reasons, which could include competitors releasing a similar product at the same time, a lack of viability in terms of production costs or projected sales, or low/no acceptance in the market, etc.
We operate in a highly competitive industry and may be unable to compete effectively.
We compete in medical markets throughout the world, which are characterized by rapid changes resulting from technological advances and scientific discoveries. In the product lines in which we compete, we face competition ranging from large companies with multiple business lines to small, specialized manufacturers that offer a limited selection of niche products. Development by other companies of new or improved products, processes, technologies, or the introduction of reprocessed products or generic versions when our proprietary products lose their patent protection may make existing or planned products less competitive.
In addition, we face competition from providers of alternative medical therapies, such as pharmaceutical companies. We believe our ability to compete depends upon many factors both within and beyond our control, including: product performance and reliability, product technology and innovation, product quality and safety, breadth of product lines, product support services, customer support, cost-effectiveness and price, reimbursement approval from healthcare insurance providers, and changes to the regulatory environment.
Competition may increase as additional companies enter our markets or modify their existing products to compete directly with ours. In addition, academic institutions, governmental agencies and other public and private research organizations also may conduct research, seek patent protection and establish collaborative arrangements for discovery, research, clinical development and marketing of similar products.
These companies and institutions compete with us in recruiting and retaining qualified scientific and management personnel, as well as in acquiring necessary product technologies. From time to time we have lost, and may in the future lose, market share in connection with product problems, physician advisories, safety alerts and publications about its products, which highlights the importance of product quality, product efficacy and quality systems to the business.
In the current environment of managed care, consolidation among healthcare providers, increased competition, and declining reimbursement rates, we have been increasingly required to compete on the basis of price. Further, our continued growth and success depend on our ability to develop, acquire and market new and differentiated products, technologies and intellectual property. As a result, we also face competition for marketing, distribution, and collaborative development agreements, establishing relationships with academic and research institutions and licenses to intellectual property.
In order to continue to compete effectively, we must continue to create, invest in or acquire advanced technology, incorporate this technology into its proprietary products, obtain regulatory approvals in a timely manner, and manufacture and successfully market our products. Given these factors, we cannot guarantee that we will be able to compete effectively or continue its current level of success.
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Reduction or interruption in supply or other manufacturing difficulties may adversely affect operations and related product sales.
The supply of products requires the timely delivery and exact planning due to most of our raw material either being manufactured by suppliers or imported. These suppliers/strategic partners require a sufficient amount of quality components and materials and is highly exacting and complex, due in part to strict regulatory requirements.
We have generally been able to obtain adequate supplies of such finished goods, raw materials, components, and services. However, for reasons of quality assurance, cost effectiveness, or availability, certain components, raw materials, goods and services needed to fill our supply chain are obtained from various sole suppliers.
Although we work closely with our suppliers to ensure continuity of supply while maintaining high quality and reliability, the supply of these goods, components, raw materials and services may be interrupted or insufficient. In addition, due to the stringent regulations and requirements of regulatory agencies, regarding the manufacture and import/export of our products, we may not be able to quickly establish additional or replacement sources. In addition, a reduction or interruption in supply, and an inability to develop alternative sources for such supply, could adversely affect our ability to supply products in a timely or cost-effective manner and could result in lost sales.
Other disruptions in the supply chain process or product sales and fulfilment systems for any reason, including equipment malfunction, failure to follow specific protocols and procedures, supplier facility shut-downs, defective raw materials, natural disasters such as hurricanes, tornadoes or wildfires, property damage from riots, and other environmental factors and the impact of epidemics or pandemics, such as Covid-19, and actions by businesses, communities and governments in response, could lead to launch delays, product shortage, unanticipated costs, lost revenues and damage to our reputation. For example, in the past we have experienced a global information technology (“IT”) systems interruption that affected our customer ordering, distribution, and manufacturing processes, and is currently adversely impacted by the global Covid-19 pandemic. Furthermore, any failure to identify and address manufacturing problems prior to the release of products to customers could result in quality or safety issues.
In addition, several key components are manufactured or sterilized at a particular facility, with limited alternate facilities. If an event occurs that results in damage to or closure of one or more of such facilities, such as the damage caused by natural disasters, power outages, civil unrest and other factors, we may be unable to manufacture or sterilize the relevant products at the previous levels or at all. Because of the time required to approve and license a manufacturing or sterilization facility, a third-party may not be available on a timely basis to replace production capacity in the event manufacturing or sterilization capacity is lost.
Failure to integrate acquired businesses into operations successfully, as well as liabilities or claims relating to such acquired businesses, could adversely affect the business; agreements and contracts entered into with partners and other third parties may not be successful.
As part of our strategy to develop and identify new products and technologies, we have made significant investment in our in-house IP, and may make acquisitions in the future in an effort to bolster both our IP and our product range. Integration of the operations of acquired businesses will require significant efforts, which result in additional expenses and involve significant amounts of management’s time that cannot then be dedicated to other projects.
Failure to manage and coordinate the growth of acquired companies successfully could also have an adverse impact on the business. Furthermore, acquired businesses may have liabilities, or be subject to claims, litigation or investigations that were not anticipated or which exceed estimates at the time of the acquisition.
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In addition, we cannot be certain that the businesses we acquire will become profitable or remain so. Factors that will affect the success of any acquisitions made by us include:
| § | the presence or absence of adequate internal controls and/or significant fraud in the financial systems of acquired companies; |
| § | the ability or inability to integrate IT systems of acquired companies in a secure and reliable manner; |
| § | liabilities, claims, litigation, investigations or other adverse developments relating to acquired businesses or the business practices of acquired companies, including investigations by governmental entities, potential US Foreign Corrupt Practices Act (“FCPA”) or product liability claims or other unanticipated liabilities; |
| § | any decrease in customer loyalty and product orders caused by dissatisfaction with the combined companies’ product lines and sales and marketing practices, including price increases; and |
| § | the ability to retain key employees, and the ability to achieve synergies among acquired companies, such as increasing sales of the integrated company’s products, achieving cost savings, and effectively combining technologies to develop new products. |
We could also experience negative effects on our business, financial condition, results of operations and cash flows from acquisition-related charges, amortization of intangible assets and asset impairment charges. These effects, individually or in the aggregate, could cause a deterioration of its credit rating and result in increased borrowing costs and interest expense.
We have in the past signed, and may pursue in the future, agreements and contracts with third parties to assist our marketing, manufacturing, selling, and distribution efforts. The performance of these partners and third parties cannot be guaranteed, and as such we cannot assure that any agreements or contracts entered into in the future will be successful.
If we fail to manage any expansion or acquisition, the business could be impaired.
We have a very ambitious acquisition strategy and will rely on both organic growth and acquisitive growth to achieve our business goals. We may, therefore, in the future acquire one or more technologies, products or companies that complement the business. We may not, however, be able to integrate these acquisitions effectively, and any such acquisition could bring additional risks, exposures, and challenges to the business.
Due to the nature of our strategic investments division, this may result in acquisitions or joint operations where we do not have full control of the operations or business strategies. This may lead to conflicts or legal matters with joint partners and other shareholders. In cases where we have control, conflicts may arise with minority interests and these would need to be resolved in the legal jurisdiction in which they arise. Litigation and arbitration around these topics can be costly and time consuming and be highly disruptive to the business.
In addition, acquisitions may dilute our earnings per share, disrupt our ongoing business, distract our management and employees, increase our expenses, subject us to liabilities, and increase our risk of litigation, all of which could harm our business. If we use cash to acquire technologies, products, or companies, such use may divert resources otherwise available for other purposes. If we use our common stock to acquire technologies, products, or companies, our stockholders may experience substantial dilution. If we fail to manage any expansions or acquisition, our business could be impaired.
Our future success will depend, in part, upon our ability to manage our expanded business, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. If we are not able to continue the business combinations in an efficient and effective manner, the anticipated benefits may not be realized fully, or at all, or may take longer to realize than expected, and the value of our common stock may be affected adversely.
An inability to realize the full extent of the anticipated benefits of acquisitions, as well as any delays encountered in the integration process, could have an adverse effect upon on our business, financial condition, or results of operations.
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We rely on the proper function, security and availability of our IT systems and data to operate the business, and a breach, cyber-attack or other disruption to these systems or data could materially and adversely affect the business, results of operations, financial condition, cash flows, reputation, or competitive position.
We are increasingly dependent on sophisticated IT systems to operate the business, including to process, transmit and store sensitive data, and many of our products and services include integrated software and IT that collects data regarding patients or connects to its systems.
Like other multi-national corporations, we could experience, and in the past have experienced, attempted or actual interference with the integrity of, and interruptions to, our IT systems, as well as data breaches, such as cyber-attacks, malicious intrusions, breakdowns, interference with the integrity of our products and data or other significant disruptions.
Furthermore, we rely on third-party vendors to supply and/or support certain aspects of our IT systems. These third-party systems could also become vulnerable to cyber-attack, malicious intrusions, breakdowns, interference or other significant disruptions, and may contain defects in design or manufacture or other problems that could result in system disruption or compromise the information security of our own systems.
In addition, we continue to grow in part through new business acquisitions and, as a result, may face risks associated with defects and vulnerabilities in their systems, or difficulties or other breakdowns or disruptions in connection with the integration of the acquisitions into its own IT systems.
Our worldwide operations mean that we are subject to laws and regulations, including data protection and cybersecurity laws and regulations, in many jurisdictions. Any data security breaches, cyber-attacks, malicious intrusions or significant disruptions could result in actions by regulatory bodies and/or civil litigation, any of which could materially and adversely affect the business, results of operations, financial condition, cash flows, reputation or competitive position.
In addition, our IT systems require an ongoing commitment of significant resources to maintain, protect, and enhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving legal and regulatory standards, the increasing need to protect patient and customer information, changes in the techniques used to obtain unauthorized access to data and information systems, and the IT needs associated with changing products and services.
There can be no assurance that the process of consolidating, protecting, upgrading and expanding systems and capabilities, continuing to build security into the design of products, and developing new systems to keep pace with continuing changes in information processing technology will be successful or that additional systems issues will not arise in the future. Further, a greater number of employees are working remotely in response to the Covid-19 pandemic and related government actions, which could expose us to greater risks related to cybersecurity and its IT systems.
If our IT systems, products or services or sensitive data are compromised, patients or employees could be exposed to financial or medical identity theft or suffer a loss of product functionality. We could lose existing customers, have difficulty attracting new customers, have difficulty preventing, detecting, and controlling fraud, be exposed to the loss or misuse of confidential information, have disputes with customers, physicians, and other healthcare professionals, suffer regulatory sanctions or penalties under federal laws, state laws, or the laws of other jurisdictions, experience increases in operating expenses or an impairment in our ability to conduct operations, incur expenses or lose revenues as a result of a data privacy breach, product failure, IT outages or disruptions, or suffer other adverse consequences including lawsuits or other legal action and damage to reputation.
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Our business model is concentrated around developing countries with higher growth rates, although this model also causes forex risk exposure which may cause adverse or unexpected revenue fluctuations and affect the reported results of operations.
Foreign exchange risk refers to the losses that an international financial transaction may incur due to currency fluctuations. Also known as currency risk, FX risk and exchange-rate risk, it describes the possibility that an investment’s value may decrease due to changes in the relative value of the involved currencies. Investors may experience jurisdiction risk in the form of foreign exchange risk. Foreign exchange risk arises when a company engages in financial transactions denominated in a currency other than the currency where that company is based. Any appreciation/depreciation of the base currency or the depreciation/appreciation of the denominated currency will affect the cash flows emanating from that transaction. Foreign exchange risk can also affect investors, who trade in international markets, and businesses engaged in the import/export of products or services to multiple countries.
Our business of import/exports of raw materials and goods exposes us to foreign exchange risk by having account payables and receivables affected by currency exchange rates. This risk originates when a contract between us and our suppliers specifies exact prices for goods or services, as well as delivery dates. If a currency’s value fluctuates between when the contract is signed and the delivery date, it could cause a loss for one of the parties.
Our business model is concentrated around developing countries with higher growth rates causes greater exposure to forex risk which may cause adverse or unexpected revenue fluctuations and affect the reported results of operations. Usually the attractive growth rates of these developing countries offsets the long term forex implications of their volatile currencies
There are three types of foreign exchange risk that we are exposed to:
| § | Transaction risk: This is the risk that we face when we are buying a product from a company located in another country. The price of the product will be denominated in the selling company's currency. If the selling company's currency were to appreciate versus the buying company's currency then the company doing the buying will have to make a larger payment in its base currency to meet the contracted price. |
| § | Translation risk: A parent company owning a subsidiary in another country could face losses when the subsidiary's financial statements, which will be denominated in that country's currency, have to be translated back to the parent company's currency. |
| § | Economic risk: Also called forecast risk, this refers to when market value is continuously impacted by an unavoidable exposure to currency fluctuations for example during the Covid-19 pandemic. |
We continually assess our foreign exchange risks and implements varying strategies based on the current economic conditions to implement hedging strategies to mitigate that risk. This usually involves forward contracts, options, and other exotic financial products that, if done properly, can protect us from unwanted foreign exchange moves during periods of high volatility. We may also impose a strategy of not hedging due to the costs involved outweighing the benefits. We then leave exposures unhedged until market conditions and costs justify proceeding with a hedging strategy into the future.
The long-term strategy is to make certain strategic investments that will generate revenue in first-world, stable currencies to offset the impacts of cost of sales imports in developing currencies.
We operate in countries where the market is dominated by certain players and this creates a sales concentration risk which also causes an accounts receivable concentration risk.
Accounts receivable concentration risk is the level of revenue risk a portfolio holds as a result of relying on a small pool of customers. The bigger the client, the greater the risk to the revenue. 70% in 2022 and 77% in 2021 of our sales were made to a single related party. High customer concentration occurs when any single customer accounts for 20% or more of revenue. Much like anything, there are benefits and risks associated with high customer concentration.
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These relationships have the upside of:
| § | Developing long-term relationships with fewer large customers |
| § | Less contractual agreements and overhead per dollar |
| § | Greater focus on customer service and customer needs |
| § | Work with large customers similarly to partners |
These relationships also pose the following risks and downsides:
| § | Loss can devastate revenue, profit and cash flow |
| § | Holds pricing and negotiating leverage, which can decrease revenue |
| § | Diverts disproportionate amount of resources away from smaller customers |
| § | Causes difficulty diversifying over time |
| § | Can decrease the value of a company |
Due to the nature of the territories that we operate in, it will be impossible to eliminate concentration risk. However, we do plan to diversify into a larger product basket and increase our international footprint, either by growing operations into other territories or alternatively acquiring more business share in other geographical territories.
Our insurance program may not be adequate to cover future losses.
We have elected to combine a mix of self-insurance and insured risks for most of the insurable risks across our company. We made this decision based on cost and availability factors in the insurance marketplace.
We continue to maintain a directors and officers liability insurance policy with third-party insurers that provides coverage for our directors and officers. This policy also covers product liability claims to a limited extent. We also maintain a detailed stock throughput policy to ensure inventory is ensured against losses and fire risk. All other assets fall into the category of self-insurance.
We continue to monitor the insurance marketplace to evaluate the value of obtaining insurance coverage for other categories of losses in the future. Although we believe, based on historical loss trends, that our self-insurance program accruals and existing insurance coverage will be adequate to cover future losses, historical trends may not be indicative of future losses.
The absence of sufficient third-party insurance coverage for other categories of losses increases our exposure to unanticipated claims and these losses could have a materially adverse impact on the business, results of operations, financial condition and cash flows.
Our future growth is dependent upon the development of new products and line extensions, which requires significant research and development, clinical trials and regulatory approvals, all of which are very expensive and time-consuming and may not result in a commercially viable product.
In order to develop new products and improve current product offerings through our strategic partnerships with other principles, we focus our research and development programs largely on the development of, or obtaining the exclusive distribution rights to, next-generation and novel technology offerings across multiple programs and opportunities.
As a part of the regulatory process of obtaining marketing clearance from the respective countries’ regulators for new products, we and our strategic partners conduct and participate in numerous clinical trials with a variety of study designs, patient populations and trial endpoints. Unfavorable or inconsistent clinical data from existing or future clinical trials conducted by us or partners related to us, by our competitors or by third parties, or the market’s perception of this clinical data, may adversely impact our ability to obtain product approvals from the regulators, our position in, and share of, the markets in which we participate and our business, financial condition, results of operations or future prospects.
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If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, our ability to operate and investors’ views of us.
Our failure to maintain the effectiveness of our internal controls in accordance with the requirements of best practices could have a material adverse effect on the business. It could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on the price of the Common Stock. In addition, if our efforts to comply with new or changed laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and the business may be harmed.
Risks Related to Management and Personnel
We depend on our senior management personnel and may not be able to retain or replace these individuals or recruit additional personnel, which could harm our business.
Our future success is substantially dependent on the continued service of Dr. Gregory Vizirgianakis, our Founder, President, Chief Executive Officer and a member of our board of directors, and Pieter van Niekerk, our Chief Financial Officer, Treasurer and a member of our board of directors. Dr. Vizigianakis and Mr. van Niekerk have extensive experience both with our company and in our industry and are familiar with our business, systems and processes. Their loss would be catastrophic to our product offerings and ability to manage our business effectively, as we will likely not be able to find suitable individuals to replace them on a timely basis or at all.
If we are unable to find, train and retain key personnel, including new showroom employees that reflect our brand image and embody our culture, we may not be able to grow or sustain our operations.
We depend on several key management, executive, sales and marketing, and technical personnel. The loss of the services of one or more key employees could delay the achievement of business objectives. Our success will also depend on our ability to attract and retain additional highly-qualified executives, management, sales and marketing and technical personnel to meet its growth goals. We further face intense competition for qualified personnel, many of whom are often subject to competing employment offers, and we do not know whether we will be able to attract and retain such personnel.
Our success depends in a large part on the continued service of the senior management team. In particular, the continued service of this group of individuals is critical to our vision, strategic direction, culture, products and business plan. We do not maintain key-man insurance for any of the senior management team, and thus the loss of any of our executives, even temporarily, or any other member of senior management, could harm the business.
Risk Associated With Legal and Regulatory Matters
We are subject to extensive medical device regulation that may impede or hinder the approval process for our products and, in some cases, may not ultimately result in approval or may result in the recall or seizure of previously approved products.
Our medical devices and business activities are subject to rigorous regulation by numerous federal, state and foreign governmental authorities. Certain state governments and the federal government have enacted legislation aimed at increasing the transparency of interactions with health care providers. Any failure to comply with these legal and regulatory requirements could negatively affect the business.
These regulations include regulations pursuant to the Federal Food, Drug, and Cosmetic Act by the US Food and Drug Administration (“FDA”) and comparable agencies in foreign countries, and by other regulatory agencies and governing bodies. The process of obtaining marketing approval or clearance from the FDA for new products, or with respect to enhancements or modifications to existing products, could:
| • | take a significant amount of time; |
| • | require the expenditure of substantial resources; | |
| • | involve rigorous pre-clinical and clinical testing; | |
| • | require changes to the products; and | |
| • | result in limitations on the proposed uses of the products |
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Marketing approvals or clearances are not the only risk. Regulatory bodies can require the withdrawal of an approved or cleared product from commercial distribution due to failure to comply with regulatory standards or the occurrence of unforeseen problems. As a medical device distributor and in some instances manufacturer through our strategic investments, we are required to register with these agencies and is subject to periodic inspection for compliance.
Consequently, there can be no assurance that we will receive the required clearances from regulatory bodies for new products or modifications to existing products on a timely basis or that any approval will not be subsequently withdrawn. Later discovery of previously unknown problems with a product or manufacturer could result in fines, delays or suspensions of regulatory clearances, seizures or recalls of products, operating restrictions and/or criminal prosecution.
The failure to receive product approval clearance on a timely basis, suspensions of regulatory clearances, seizures or recalls of products or the withdrawal of product approval by regulatory bodies could have a material adverse effect on our business, financial condition or results of operations.
Healthcare policy changes may have a material adverse effect on us.
In response to perceived increases in healthcare costs in recent years, there have been and continue to be proposals by several governments, regulators and third-party payers globally, including the US federal and state governments, to control these costs and, more generally, to reform healthcare systems.
Certain of these proposals could, among other things, limit the prices we are able to charge for products or the amounts of reimbursement available for our products, and could also limit the acceptance and availability of such products.
The adoption of some or all of these proposals could have a material adverse effect on the business, results of operations, financial condition and cash flows. If we experience decreasing prices for our goods and services and we are unable to reduce expenses, there may be a materially adverse effect on the business, results of operations, financial condition and cash flows.
The Company is subject to environmental laws and regulations and the risk of environmental liabilities, violations and litigation
We are subject to numerous US and non-US environmental, health and safety laws and regulations concerning, among other things, the health and safety of employees; the generation, storage, use and transportation of hazardous materials; emissions or discharges of substances into the environment; investigation and remediation of hazardous substances or materials at various sites; chemical constituents in medical products; and end-of-life disposal and take-back programs for medical devices.
Our operations and those of certain third-party suppliers involve the use of substances subject to these laws and regulations, primarily those used in manufacturing and sterilization processes. If we or our suppliers violate these environmental laws and regulations, facilities could be shut down and violators could be fined, criminally charged or otherwise sanctioned.
Furthermore, environmental laws outside of the US are becoming more stringent, resulting in increased costs and compliance burdens. Certain environmental laws also assess liability on current or previous owners or operators of real property for the costs of investigation, removal or remediation of hazardous substances or materials at their properties or at properties which they have disposed of hazardous substances. In addition to clean-up actions brought by governmental authorities, private parties could bring personal injury or other claims due to the presence of, or exposure to, hazardous substances. The ultimate cost of site clean-up and timing of future cash outflows is difficult to predict, given the uncertainties regarding the extent of the required clean-up, the interpretation of applicable laws and regulations, and alternative clean-up methods.
The costs of complying with current or future environmental protection and health and safety laws and regulations, or liabilities arising from past or future releases of, or exposures to, hazardous substances, may exceed our estimates, or have a material adverse effect on the business, results of operations, financial conditions and cash flows.
Finally, in some jurisdictions around the world, culture and practice encourages reuse of disposable products when the product is clearly labelled for single use. Such reuse may expose us to liability in these jurisdictions.
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Claims made against us from time to time can result in litigation that could distract management from our business activities and result in significant liability or damage to our brand.
As a company with expanding operations, we increasingly face the risk of litigation and other claims against us. We have no such claims at present. Litigation and other claims may arise in the ordinary course of our business and include employee claims, commercial disputes, landlord-tenant disputes, intellectual property issues, product-oriented allegations and slip and fall claims. These claims can raise complex factual and legal issues that are subject to risks and uncertainties and could require significant management time. Litigation and other claims against us could result in unexpected expenses and liabilities, which could materially adversely affect our operations and our reputation.
In addition, the medical device industry is characterized by extensive litigation and, from time to time, we are the subject of various claims. Regardless of outcome, such claims are expensive to defend and divert management and operating personnel from other business issues. A successful claim or claims against us could result in payment of significant monetary damages and/or injunctive relief.
Our failure to comply with laws and regulations relating to reimbursement of healthcare goods and services may subject it to penalties and adversely impact its reputation, business, results of operations, financial condition and cash flows.
Our devices, products and therapies are purchased principally by hospitals or physicians that typically bill various third-party payers, such as governmental healthcare programs, private insurance plans and managed care plans, for the healthcare services provided to their patients.
The ability of customers to obtain appropriate reimbursement for products and services from third-party payers is critical because it affects which products customers purchase and the prices they are willing to pay. As a result, our devices, products and therapies are subject to regulation regarding quality and cost for reimbursement and regulation of health are goods and services, including laws and regulations related to kickbacks, false claims, self-referrals and healthcare fraud.
Many territories have similar laws that apply to reimbursement by state and other funded programs as well as in some cases to all payers. In certain circumstances, insurance companies attempt to bring a private cause of action against a manufacturer for causing false claims.
In addition, our strategic investments position the company as a manufacturer of FDA-approved devices reimbursable by federal healthcare programs. We are thus subject to the Physician Payments Sunshine Act, which requires us to annually report certain payments and other transfers of value our company makes to US-licensed physicians or US teaching hospitals. Any failure to comply with these laws and regulations could subject us or our officers and employees to criminal and civil financial penalties.
We are also subject to risks relating to changes in government and private medical reimbursement programs and policies, and changes in legal regulatory requirements in the US and around the world. Implementation of further legislative or administrative reforms to these reimbursement systems, or adverse decisions relating to coverage of / or reimbursement for our products by administrators of these systems, could have an impact on the acceptance of and demand for our products and the prices that customers are willing to pay for them.
Quality problems and product liability claims could lead to recalls or safety alerts, reputational harm, adverse verdicts or costly settlements, and could have a material adverse effect on the business, results of operations, financial condition and cash flows.
Quality is extremely important to us and our customers due to the impact of our products on patients, and the serious and potentially costly consequences of product failure. We are thus exposed to potential product liability risks that are inherent in the design, manufacture, and marketing of medical devices.
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In addition, many products are used in intensive care settings with seriously ill patients and some of the medical devices we sell are designed to be implanted in the human body for long periods of time or indefinitely. Component failures, manufacturing nonconformances, design defects, off-label use, or inadequate disclosure of product-related risks or product related information with respect to our products, if they were to occur, could result in an unsafe condition or injury to, or death of, a patient.
This could lead to recall of, or issuance of a safety alert relating to, our products, and could result in product liability claims and lawsuits, including class actions, which could ultimately result, in certain cases, in the removal from the body of such products and claims regarding costs associated therewith. Due to the strong brand recognition of Medinotec and our brands, a material adverse event involving one of our products could result in reduced market acceptance and demand for all products within that brand, and could harm our reputation and ability to market products in the future.
Further, we may be exposed to additional potential product liability risks related to products designed, manufactured and/or marketed in response to the Covid-19 pandemic, and unpredictable or accelerated changes in demand for certain of our products in connection with Covid-19 and its related impacts could impact development and production of products and services and could increase the risk of regulatory enforcement actions, product defects or related claims, as well as adversely impact our customer relationships and reputation.
Should we fall short of these standards and our products become subject to recalls or safety alerts, our reputation could be damaged, we could lose customers and revenue and results of operations could decline. Our success also depends on the ability to manufacture to exact specification for precision engineered components, sub-assemblies and finished devices from multiple materials. If components fail to meet these standards or fail to adapt to evolving standards, our reputation, competitive advantage and market share could be harmed.
In certain situations, we may undertake a voluntary recall of products or temporarily shut down production lines based on performance relative to our own internal safety and quality monitoring and testing data. Any of the foregoing problems, including future product liability claims or recalls, regardless of their ultimate outcome, could harm our reputation and have a material adverse effect on the business, results of operations, financial condition and cash flows.
We may not be able to protect our intellectual property rights effectively.
Patents, trademarks and other intangible proprietary rights are and will be essential to the business and our ability to compete effectively with other companies. During normal day-to-day trade, we also rely on trade secrets, know-how, continuing technological innovations, strategic alliances and licensing opportunities to develop, maintain and strengthen our competitive position.
We pursue a policy of obtaining patent protection in both the US and overseas for patentable subject matter of our proprietary devices and also attempts to review third-party patents and patent applications to the extent publicly available to develop an effective patent strategy, avoid infringement of third-party patents, identify licensing opportunities and monitor the patent claims of others.
We also operate in an industry that is susceptible to significant intellectual property litigation. This litigation is expensive, complex, and lengthy and its outcome is difficult to predict. Future patent litigation may result in significant royalty or other payments or injunctions that can prevent the sale of products and may significantly divert the attention of our technical and management personnel.
In addition, we may have to take legal action in the future to protect our patents, trade secrets, or know-how or to assert our intellectual property rights against claimed infringement by others. Any such legal action could be costly and time consuming and no assurances can be made that any lawsuit will be successful.
The invalidation of key patents or proprietary rights that we own, or an unsuccessful outcome in lawsuits to protect intellectual property, could have a material adverse effect on the business, financial condition, and results of operations. In the event that the right to market any of our products is successfully challenged, or if we fail to obtain a required license or are unable to design around a patent, the business, financial condition, and results of operations could be compromised.
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eSecurity breaches, loss of data and other disruptions could also compromise sensitive information related to the business, preventing it from accessing critical information or expose us to liability, which could adversely affect the business and reputation.
In the ordinary course of business, we collect and store sensitive data, including patient health information, personally identifiable information about employees, intellectual property, and proprietary business information. We manage and maintain applications and data utilizing on-site and off-site systems. These applications and data encompass a wide variety of business-critical information including research and development information, commercial information and business and financial information.
The secure processing, storage, maintenance and transmission of this critical information is vital to operations and business strategy, and we devote resources to protecting such information. Although we take measures to protect sensitive information from unauthorized access or disclosure, our IT and infrastructure may be vulnerable to attacks by hackers, viruses, breaches or interruptions due to employee error or malfeasance, terrorist attacks, hurricanes, fire, flood, other natural disasters, power loss, computer systems failure, data network failure, internet failure, or lapses in compliance with privacy and security mandates. Any such virus, breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, government enforcement actions and regulatory penalties.
Unauthorized access, loss or dissemination could also interrupt operations, including the ability to receive and ship orders from customers, bill our customers, provide customer support services, conduct research and development activities, process and prepare company financial information, manage various general and administrative aspects of our business and damage our reputation, any of which could adversely affect the business.
Changes in tax laws or exposure to additional income tax liabilities could have a material impact on the business, the results of operations, financial conditions and cash flows.
We are subject to income taxes, as well as non-income-based taxes, in the US, the UAE, South Africa and other jurisdictions in which we operate. The tax laws in these could change on a prospective or retroactive basis, and any such changes could adversely affect us and our effective tax rate.
Taxation regulation in territories around the world can also change very quickly, which may mean that all the implications for businesses may not have been fully thought through by the regulating authorities before final guidelines and laws are issued. Furthermore, any changes made by tax authorities, together with other legislative changes, to the mandatory sharing of company information (financial and operational) with tax authorities on both a local and global basis, could lead to disagreements between jurisdictions with respect to the proper allocation of profits between such jurisdictions. We therefore continuously monitor changes to tax regulation and double tax treaties between the territories in which we operate. We also maintain a comprehensive transfer pricing policy to govern the flow of funds between various tax territories.
We are further subject to ongoing tax audits in the various jurisdictions in which we operate. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provisions. However, there can be no assurance that we will accurately predict the outcomes of these audits, which could have a material impact on the business, financial condition, results of operations, and cash flows.
While we have recorded reserves for potential payments to various tax authorities related to uncertain tax positions, the calculation of such tax liabilities involves the application of complex tax regulations in many jurisdictions. Therefore, any dispute with a tax authority may result in payment that is significantly different from our estimates. If the payment proves to be less than the recorded reserves, the reversal of the liabilities would generally result in tax benefits being recognized in the period when we determine the liabilities to be no longer necessary. Conversely, if the payment proves to be more than the reserves, we would incur additional charges, and these could have a materially adverse effect on the business, financial condition, results of operations, and cash flows.
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The failure to comply with anti-corruption laws could materially adversely affect the business and result in civil and/or criminal sanctions.
FCPA and similar anticorruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business. Because of the predominance of government-administered healthcare systems in many jurisdictions around the world, many of our customer relationships are with governmental entities and are therefore potentially subject to such laws.
We also participate in public-private partnerships and other commercial and policy arrangements with governments around the globe. Global enforcement of anti-corruption laws has increased in recent years, including investigations and enforcement proceedings leading to assessment of significant fines and penalties against companies and individuals.
Our international operations create a risk of unauthorized payments or offers of payments by one of our employees, consultants, sales agents, or distributors. The business maintains policies and programs to implement safeguards to educate employees and agents on these legal requirements, and to prevent and prohibit improper practices. However, existing safeguards and any future improvements may not always be effective, and employees, consultants, sales agents or distributors may engage in conduct for which we could be held responsible.
In addition, regulators could seek to hold us liable for conduct committed by companies in which we invest or that we acquire. Any alleged or actual violations of these regulations may subject us to government scrutiny, criminal or civil sanctions and other liabilities, including exclusion from government contracting, and could disrupt the business, adversely affect our reputation and result in a material adverse effect on the business, results of operations, financial condition and cash flows.
Laws and regulations governing international business operations could adversely impact the business.
The US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), and the Bureau of Industry and Security at the US Department of Commerce (“BIS”) administer certain laws and regulations that restrict US persons and, in some instances, non-US persons, in conducting activities, transacting business with or making investments in certain countries, governments, entities and individuals subject to US economic sanctions.
Our international operations subject us to these laws and regulations, which are complex, restrict business dealings with certain countries, governments, entities, and individuals, and are constantly changing. Further restrictions may be enacted, amended, enforced or interpreted in a manner that materially impacts our operations. From time to time, certain subsidiaries have limited business dealings in countries subject to comprehensive sanctions.
Certain of our subsidiaries sell medical devices, and may provide related services, to distributors and other purchasing bodies in such countries. These business dealings represent an insignificant amount of our consolidated revenues and income, but expose us to a heightened risk of violating applicable sanctions regulations. Violations of these regulations are punishable by civil penalties, including fines, denial of export privileges, injunctions, asset seizures, debarment from government contracts and revocations or restrictions of licenses, as well as criminal fines and imprisonment.
We have established policies and procedures designed to assist with compliance with such laws and regulations. However, there can be no assurance that these will prevent us from violating these regulations in every transaction in which we may engage. As such a violation could adversely affect our reputation, business, financial condition, results of operations and cash flows.
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As an Emerging Growth Company under the Jobs Act, we are permitted to rely on exemptions from certain disclosures requirements.
We qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
| § | have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; |
| § | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); |
| § | submit certain executive compensation matters to shareholder advisory votes, such as "say-on-pay" and "say-on-frequency;" and |
| § | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive's compensation to median employee compensation. |
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
Until such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
Risks Associated With Political Instability and Regional Issues
Political instability may affect the Company’s ability to operate effectively.
Political instability in the countries in which we operate, including South Africa, where recent episodes of violent civil unrest (riots) have further destabilized the country’s economy and resulted in extensive damage to commercial property, may cause increased uncertainty. This may adversely affect investor confidence as well as our business planning, operations and our market capitalization.
This risk extends to global economic uncertainty and heightened geopolitical tensions, such as those between the United States and China as well as Brexit, which can also have an impact on several factors influencing commodity prices, exchange rates, and interest rates, all of which can affect our business in turn.
In South Africa, BEE requirements may restrict growth opportunities and limit the Company’s ability to attract key talent.
In South Africa, the correction of inequalities amongst the key demographic groups of the country as a result of Apartheid is regulated by the Broad-based Black Economic Empowerment Act 53 of 2003. This is a legislative framework for the promotion of BEE that seeks to advance economic transformation and enhance the economic participation of Black people in the South African economy. Companies failing to meet the requirements of the Act and its associated codes may be at risk of not being able to attract investment and may also face more limited opportunities for growth (both organic and acquisitive) and failure to attract, recruit and retain key candidates and suitably qualified personnel.
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The potential damage to property caused by riots and protests may impact the Company’s ability to operate.
Businesses that have operations or own assets in South Africa face risks from events such as civil commotion, public disorder, strikes, riots and terrorism. Resultant damage to property stemming from such events can potentially disrupt our operations and also have an impact on the health and safety of our employees.
Risks Relating to Our Securities
If we undertake future offerings of our common stock, purchasers in this offering will experience dilution of their ownership percentage.
Generally, existing shareholders will experience dilution of their ownership percentage in the company if and when additional shares of common stock are offered and sold. In the future, we may be required to seek additional equity funding in the form of private or public offerings of our common stock. In the event that we undertake subsequent offerings of common stock, your ownership percentage, voting power as a common shareholder, and earnings per share, if any, will be proportionately diluted. This may, in turn, result in a substantial decrease in the per-share value of your common stock.
If a market for our common stock does not develop, shareholders may be unable to sell their shares.
Prior to this offering, there has been no public market for our securities and there can be no assurance that an active trading market for the securities offered herein will develop after this offering, or, if developed, be sustained. We anticipate that, upon completion of this offering, the common stock will be eligible for quotation on the OTCQB or OTCQX. If for any reason, however, our securities are not eligible for initial or continued quotation on the OTCQB or OTCQX or a public trading market does not develop, purchasers of the common stock may have difficulty selling their securities should they desire to do so and purchasers of our common stock may lose their entire investment if they are unable to sell our securities.
Our common stock price may be volatile and could fluctuate widely in price, which could result in substantial losses for investors.
The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including:
| § | new products and services by us or our competitors; |
| § | government regulation of our products and services; |
| § | intellectual property disputes; |
| § | additions or departures of key personnel; |
| § | sales of our common stock; |
| § | our ability to integrate operations, technology, products and services; |
| § | our ability to execute our business plan; |
| § | operating results below expectations; |
| § | loss of any strategic relationship; |
| § | industry developments; |
| § | economic and other external factors; and |
| § | period-to-period fluctuations in our financial results. |
You should consider any one of these factors to be material. Our stock price may fluctuate widely as a result of any of the above.
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
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If securities analysts do not initiate coverage or continue to cover the Common Stock or publish unfavorable research or reports about the business, this may have a negative impact on the market price of the Common Stock.
The trading market for the Common Stock will depend on the research and reports that securities analysts publish about our business and us. We do not have any control over these analysts. There is no guarantee that securities analysts will cover the Common Stock. If securities analysts do not cover the Common Stock, the lack of research coverage may adversely affect our market price.
If we are covered by securities analysts, and the stock is the subject of an unfavorable report, the stock price and trading volume would likely decline. If one or more of these analysts ceases to cover our company or fails to publish regular reports on us, we could lose visibility in the financial markets, which could cause the stock price or trading volume to decline.
Because we will be subject to the “Penny Stock” rules once our shares are quoted on the over-the-counter bulletin board, the level of trading activity in our stock may be reduced.
The Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any listed, trading equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules which may increase the difficulty Purchasers may experience in attempting to liquidate such securities.
If we issue shares of preferred stock with superior rights than the common stock registered in this prospectus, it could result in a decrease in the value of our common stock and delay or prevent a change in control of us.
Our board of directors is authorized to issue up to 20,000,000 shares of preferred stock. Our board of directors has the power to establish the dividend rates, liquidation preferences, voting rights, redemption and conversion terms and privileges with respect to any series of preferred stock. The issuance of any shares of preferred stock having rights superior to those of the common stock may result in a decrease in the value or market price of the common stock. Holders of preferred stock may have the right to receive dividends, certain preferences in liquidation and conversion rights. The issuance of preferred stock could, under certain circumstances, have the effect of delaying, deferring or preventing a change in control of us without further vote or action by the stockholders and may adversely affect the voting and other rights of the holders of common stock.
We do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock.
We do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will occur only if our stock price appreciates.
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Provisions in the Nevada Revised Statutes and our Bylaws could make it very difficult for an investor to bring any legal actions against our directors or officers for violations of their fiduciary duties or could require us to pay any amounts incurred by our directors or officers in any such actions.
Members of our board of directors and our officers will have no liability for breaches of their fiduciary duty of care as a director or officer, except in limited circumstances, pursuant to provisions in the Nevada Revised Statutes and our Bylaws as authorized by the Nevada Revised Statutes. Specifically, Section 78.138 of the Nevada Revised Statutes provides that a director or officer is not individually liable to the company or its shareholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that (1) the director’s or officer’s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and (2) his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law.
This provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages resulting from suits alleging a breach of the duty of care by a director or officer. Accordingly, you may be unable to prevail in a legal action against our directors or officers even if they have breached their fiduciary duty of care.
In addition, our Bylaws allow us to indemnify our directors and officers from and against any and all costs, charges and expenses resulting from their acting in such capacities with us. This means that if you were able to enforce an action against our directors or officers, in all likelihood, we would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement they otherwise would be required to pay. Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations and cash flows, and adversely affect prevailing market prices for our common stock.
All of the shares of common stock covered by this prospectus are being sold by the Selling Shareholders. We will not receive any proceeds from these sales of shares of our common stock.
The Selling Shareholders will pay any underwriting discounts and commissions and expenses incurred by the Selling Shareholders for brokerage, accounting, tax, or legal services or any other expenses incurred by the Selling Shareholders in disposing of the shares. We will bear all other costs, fees, and expenses incurred in effecting the registration of the shares covered by this prospectus, including, without limitation, all registration and filing fees, and fees and expenses of our counsel and our accountants.
DETERMINATION OF OFFERING PRICE
The Selling Shareholders will determine at what price they may sell the offered shares, and such sales may be made at prevailing market prices, or at privately negotiated prices.
We have prepared this prospectus to allow the Selling Shareholders or their successors, assignees or other permitted transferees to sell or otherwise dispose of, from time to time, up to 1,733,750 shares of our Common Stock. The shares of common stock being offered under this prospectus were acquired by the Selling Shareholders in a private offering.
The shares of Common Stock sold to the Selling Shareholders in the private placement were sold pursuant to an exemption from registration provided by Rule 506 of Regulation D under the Securities Act. In connection therewith, the investors made to us certain representations, warranties, covenants, and conditions customary for private placement investments.
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The table below presents information regarding the Selling Shareholders and the shares of our Common Stock that they may sell or otherwise dispose of from time to time under this prospectus. Percentages of beneficial ownership are based upon 11,733,750 shares of Common Stock issued and outstanding as of May 30, 2022. Beneficial ownership is determined under Section 13(d) of the Exchange Act and generally includes voting or investment power with respect to securities and including any securities that grant the Selling Shareholders the right to acquire Common Stock within 60 days of May 30, 2022. Unless otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares, subject to community property laws where applicable.
We do not know when or in what amounts the Selling Shareholders may sell or otherwise dispose of the shares covered hereby. We currently have no agreements, arrangements or understandings with the Selling Shareholders regarding the sale of any of the shares by them other than the registration rights agreement described below. The Selling Shareholders might not sell any or all of the shares covered by this prospectus or may sell or dispose of some or all of the shares other than pursuant to this prospectus. Because the Selling Shareholders may not sell or otherwise dispose of some or all of the shares covered by this prospectus and because there are currently no agreements, arrangements or understandings with respect to the sale or other disposition of any of the shares, we cannot estimate the number of the shares that will be held by the Selling Shareholders after completion of the offering.
Each Selling Shareholder has indicated to us that neither it nor any of its affiliates has held any position or office or had any other material relationship with us in the past three years except as described in the footnotes to the table.
The shares of common stock being offered under this prospectus may be offered for sale from time to time during the period the registration statement of which this prospectus is a part remains effective, by or for the accounts of the Selling Shareholders named below.
| Shares of Common Stock | ||||||||||||
| Name of Selling Shareholder | Beneficially Owned Prior to the Sale of all Shares covered by this Prospectus | Covered by this Prospectus | Beneficially Owned After the Sale of all Shares covered by this Prospectus | As a Percent of Total Outstanding After the Sale of Shares covered by this Prospectus | ||||||||
| ADI BEN YOSEF | 2,500 | 2,500 | 0 | 0 | ||||||||
| AMV AFRICA CAPITAL LTD SRF(1) | 50,000 | 50,000 | 0 | 0 | ||||||||
| BRIAN SCHOFIELD | 25,000 | 25,000 | 0 | 0 | ||||||||
| BRUCE ALISTAIR WILLIAMS | 25,000 | 25,000 | 0 | 0 | ||||||||
| CHRISTOPHER CHARLES HILL | 10,000 | 10,000 | 0 | 0 | ||||||||
| Collumella VC Korlátolt Felelősségű Társaság (2) | 25,000 | 25,000 | 0 | 0 | ||||||||
| DARREN KINGSLEY FOX | 15,000 | 15,000 | 0 | 0 | ||||||||
| DARRYL JOHN DAWSON | 12,500 | 12,500 | 0 | 0 | ||||||||
| DAVID KUZMANICH | 125,000 | 125,000 | 0 | 0 | ||||||||
| DAVID VENN GROOM | 20,000 | 20,000 | 0 | 0 | ||||||||
| DECLAN BRENDAN FALVEY | 5,000 | 5,000 | 0 | 0 | ||||||||
| DICKS FAMMILY SUPERAMMUATION FUND(3) | 12,500 | 12,500 | 0 | 0 | ||||||||
| FRANCESCO CASARINI | 5,000 | 5,000 | 0 | 0 | ||||||||
| FURIO VALERIO SORDINI | 5,000 | 5,000 | 0 | 0 | ||||||||
| HERMAN GIDEON KOTZE | 175,000 | 175,000 | 0 | 0 | ||||||||
| ISABELLE MARIE KATHLEEN MCBRIDE | 2,500 | 2,500 | 0 | 0 | ||||||||
| JESSE CAMERON TERNENT | 10,000 | 10,000 | 0 | 0 | ||||||||
| JOSEPH BRIAN GUBBINS | 125,000 | 125,000 | 0 | 0 | ||||||||
| KENNETH ARMAND KINSY-QUICK | 100,000 | 100,000 | 0 | 0 | ||||||||
| KEVIN DICKS FAMILY TRUST (4) | 25,000 | 25,000 | 0 | 0 | ||||||||
| KIM ANNETTE CHARLES | 25,000 | 25,000 | 0 | 0 | ||||||||
| MICHAEL ROBERT JAMES BUTTON | 10,000 | 10,000 | 0 | 0 | ||||||||
| MICHAEL RONALD BEAMISH | 150,000 | 150,000 | 0 | 0 | ||||||||
| MIKELLI INVESTMENTS LIMITED(5) | 25,000 | 25,000 | 0 | 0 | ||||||||
| NICHOLAS GARNET BEAMISH | 25,000 | 25,000 | 0 | 0 | ||||||||
| NIGEL JOHN CHAPMAN | 25,000 | 25,000 | 0 | 0 | ||||||||
| NISSAN LEEPAZ | 2,500 | 2,500 | 0 | 0 | ||||||||
| PAULA-JANE WILLIAMS | 5,000 | 5,000 | 0 | 0 | ||||||||
| Pecesec SA Nominees (Pty) Ltd(6) | 22,500 | 22,500 | 0 | 0 | ||||||||
| Praesidium Capital Management(7) | 500,000 | 500,000 | 0 | 0 | ||||||||
| RICHARD MALCOLM CHANDLER | 2,500 | 2,500 | 0 | 0 | ||||||||
| SHAMBHALA INVESTMENT GUERNSEY TRUST(8) | 25,000 | 25,000 | 0 | 0 | ||||||||
| ST JOHN JAMES PEREGRINE PERROT | 15,000 | 15,000 | 0 | 0 | ||||||||
| UYS CLOETE | 11,250 | 11,250 | 0 | 0 | ||||||||
| WIJNAND PETRUS MARTINUS MARIA DONKERS | 100,000 | 100,000 | 0 | 0 | ||||||||
| WILHELM GRUISSEM | 10,000 | 10,000 | 0 | 0 | ||||||||
| WILLIAM WESTWOOD MCBRIDE | 5,000 | 5,000 | 0 | 0 | ||||||||
| (1) | Anushika Heeraman has voting and disposition power over these shares. |
| (2) | Lucca Mia Du Preez, has voting and disposition power over these shares. |
| (3) | Joe Dicks has voting and disposition power over these shares. |
| (4) | Joe Dicks has voting and disposition power over these shares. |
| (5) | Michael Papageorge, has voting and disposition power over these shares. |
| (6) | Leister Baily has voting and disposition power over these shares. |
| (7) | Michael Ronald Beamish, has voting and disposition power over these shares. |
| (8) | Holly Ann Hubert, has voting and disposition power over these shares. |
The Selling Shareholders, or their partners, pledgees, donees, transferees or other successors may sell up to all of the shares of our common stock shown in the table above pursuant to this Prospectus in one or more transactions from time to time as described below under “Plan of Distribution.” However, the Selling Shareholders are not obligated to sell any of the shares of our common stock offered by this prospectus.
Information about the Selling Shareholders may change from time to time. Any changed information with respect to which we are given notice will be included in prospectus supplements.
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We are registering the shares of Common Stock to permit the resale of these shares of Common Stock by the Selling Shareholders and any of their transferees, pledgees, assignees, donees, and successors-in-interest from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the Selling Shareholders of the shares of Common Stock. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock.
Each Selling Shareholder (the “Selling Shareholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the OTCQB or OTCQX or stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Shareholder may use any one or more of the following methods when selling securities:
| § | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| § | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| § | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| § | an exchange distribution in accordance with the rules of the applicable exchange; |
| § | privately negotiated transactions; |
| § | settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; |
| § | in transactions through broker-dealers that agree with the Selling Shareholders to sell a specified number of such securities at a stipulated price per security; |
| § | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| § | a combination of any such methods of sale; or |
| § | any other method permitted pursuant to applicable law. |
The Selling Shareholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities or interests therein, the Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Shareholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Shareholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Shareholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
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Because Selling Shareholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Shareholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Shareholders.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Shareholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the Selling Shareholders or any other person. We will make copies of this prospectus available to the Selling Shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following information sets forth the names, ages, and positions of our current directors and executive officers.
| Name | Age | Position(s) and Office(s) Held | ||||
| Gregory Vizirgianakis | 43 | President, Secretary, CEO and Director | ||||
| Pieter van Niekerk | 37 | CFO, Treasurer and Director |
Set forth below is a brief description of the background and business experience of our current executive officer and director.
Gregory Vizirgianakis
The Company is led by Dr Vizirgianakis as the Chief Executive Officer, a qualified medical doctor, with a specialty interest in the field of neuroscience. He has many years of experience in the international and South African health markets. Dr Vizirgianakis is the founding shareholder of DISA Medinotec (Pty) Ltd and has been involved in several successful entrepreneurial ventures. For the last five years, Dr. Vizirgianakis has been employed as CEO of Minoan Medical (Pty) Ltd and DISA Medinotec (Pty) Ltd.
Aside from that provided above, Dr. Vizirgianakis does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
The Board believes that Dr. Vizirgianakis has the experience, qualifications, attributes and skills necessary to serve on the Board because of the fact that he held similar positions for more than 10 years and his designation as a medical doctor, he is also a founding shareholder in the company and has a long standing track record in the industry.
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Pieter van Niekerk
Mr. Pieter van Niekerk is a qualified Chartered Accountant and the Company's CFO and has been involved in multiple listings on various exchanges in the United States of America and South Africa. He has 10 years executive management experience and has been nominated as one of the “Top 35 under 35 Chartered Accountants” in South Africa for two consecutive years. For the last five years, Mr. van Niekerk has been employed as CFO of Minoan Medical (Pty) Ltd and DISA Medinotec (Pty) Ltd.
Aside from that provided above, Mr. van Niekerk does not hold and has not held over the past five years any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act or any company registered as an investment company under the Investment Company Act of 1940.
The Board believes that Mr. van Niekerk has the experience, qualifications, attributes and skills necessary to serve on the Board because of the fact that he held similar positions for more than 10 years and his designation as a chartered accountant, he is also a founding shareholder in the company and has a long standing track record in the industry.
Term of Office
Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Significant Employees
We have no significant employees other than our officer and director.
Family Relationships
There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
Involvement in Certain Legal Proceedings
During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including:
| 1. | Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing; |
| 2. | Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| 3. | Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities: |
| a. | Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; |
| b. | Engaging in any type of business practice; or |
| c. | Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; |
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| 4. | Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity; |
| 5. | Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; |
| 6. | Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; |
| 7. | Being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: |
| a. | Any Federal or State securities or commodities law or regulation; or |
| b. | Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or |
| c. | Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; |
| 8. | Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 30, 2022, the beneficial ownership of our common and preferred stock by each executive officer and director, by each person known by us to beneficially own more than 5% of the our common stock and by the executive officers and directors as a group. Unless otherwise noted, the address of each beneficial owner is located at 349 Grey Eagle Ct., Saint Petersburg, FL 33701.
| Title of class | Name and address of beneficial owner(1) | Number of shares - Beneficial ownership | Percent of class (2) | |||||
| Common | Gregory Vizirgianakis | 9,500,358 | 81% | |||||
| Common | Peter van Niekerk | 401,965 | 3% | |||||
| Total of All Directors and Executive Officers (2 persons): | ||||||||
| More Than 5% Beneficial Owners: | ||||||||
| NONE |
| (1) | As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date. |
| (2) | The percent of class is based on 11,733,750 voting shares as of May 30, 2022. |
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Our authorized capital stock consists of 200,000,000 shares of common stock, with a par value of $0.001 per share, and 20,000,000 shares of preferred stock, with a par value of $0.001 per share. As of May 30, 2022, there were 11,733,750 shares of our common stock issued and outstanding. Our shares are held by 67 stockholders of record. We have not issued any shares of preferred stock.
Common Stock
Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common stock representing fifty percent (50%) of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors.
Subject to any preferential rights of any outstanding series of preferred stock created by our board of directors from time to time, the holders of shares of our common stock will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available therefore.
Subject to any preferential rights of any outstanding series of preferred stock created from time to time by our board of directors, upon liquidation, dissolution or winding up, the holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to such holders.
In the event of any merger or consolidation with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of our common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash). Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
Preferred Stock
Our board of directors is authorized by our articles of incorporation to divide the authorized shares of our preferred stock into one or more series, each of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. Our board of directors is authorized, within any limitations prescribed by law and our articles of incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock including, but not limited to, the following:
| (1) | The number of shares constituting that series and the distinctive designation of that series, which may be by distinguishing number, letter or title; |
| (2) | The dividend rate on the shares of that series, whether dividends will be cumulative, and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that series; |
| (3) | Whether that series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; |
| (4) | Whether that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines; |
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| (5) | Whether or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; |
| (6) | Whether that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
| (7) | The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; and |
| (8) | Any other relative rights, preferences and limitations of that series. |
Provisions in Our Articles of Incorporation and By-Laws That Would Delay, Defer or Prevent a Change in Control
Our articles of incorporation authorize our board of directors to issue a class of preferred stock commonly known as a "blank check" preferred stock. Specifically, the preferred stock may be issued from time to time by the board of directors as shares of one (1) or more classes or series. Our board of directors, subject to the provisions of our Articles of Incorporation and limitations imposed by law, is authorized to adopt resolutions; to issue the shares; to fix the number of shares; to change the number of shares constituting any series; and to provide for or change the following: the voting powers; designations; preferences; and relative, participating, optional or other special rights, qualifications, limitations or restrictions, including the following: dividend rights, including whether dividends are cumulative; dividend rates; terms of redemption, including sinking fund provisions; redemption prices; conversion rights and liquidation preferences of the shares constituting any class or series of the preferred stock.
In each such case, we will not need any further action or vote by our shareholders. One of the effects of undesignated preferred stock may be to enable the board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the board of director's authority described above may adversely affect the rights of holders of common stock. For example, preferred stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock at a premium or may otherwise adversely affect the market price of the common stock.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase shares of our common stock.
Options
We have not issued and do not have outstanding any options to purchase shares of our common stock.
Convertible Securities
We have not issued and do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.
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Certain Anti-Takeover Provisions
Nevada Revised Statutes sections 78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of incorporation and bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in the State of Nevada directly or through an affiliated corporation. Because of these conditions, the statute currently does not apply to our company.
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
The Doney Law Firm, our independent legal counsel, has provided an opinion on the validity of our common stock.
AJSH & Co LLP have audited our financial statements included in this prospectus and registration statement to the extent and for the periods set forth in their audit report. AJSH & Co LLP has presented their report with respect to our audited financial statements. The report of AJSH & Co LLP is included in reliance upon their authority as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the following provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the shares being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Company Overview
Medinotec Inc. was formed on April 26, 2021 in the State of Nevada. On April 26, 2021, we acquired DISA Medinotec Propriety Limited, a South African corporation, from Minoan Medical Proprietary Limited on 2 March 2022 (“Minoan”), a company incorporated in South Africa, and owner of all the capital stock of DISA Medinotec Propriety Limited. We accomplished the acquisition pursuant to the terms and conditions of a Share Exchange Agreement under common control with Minoan whereby we acquired all the capital stock of DISA Medinotec (Pty) Ltd in exchange for the issuance of stock at par value and the transfer of the outstanding loan account. This Purchase was concluded between Minoan and a local newly established investment vehicle of Medinotec Inc called Medinotec Capital Proprietary Limited after Medinotec Inc registered the company as a shelf company by injecteing $10 000 into it on 18 December 2021. Medinotec Capital (Pty) Ltd serves as the acquisition vehicle for Medinotec Inc on the continent of Africa.
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Our History
Prior to the above, in 2015, Disa Vascular, an innovative medical device company that specialized in vascular technology for the treatment of coronary artery disease, was acquired. It was subsequently renamed DISA Medinotec (“Medinotec”). The Company, situated in Cape Town, South Africa and within walking distance from Groote Schuur Hospital, had been developing stents for the international market since 1998. It has since produced high-quality medical devices through in-depth research and development capabilities (“R&D”) and a total commitment to patient care. Today the products are sold via a network of distributor partners both in South Africa and internationally.
A professional team consisting of our CEO and CFO was recruited to implement and execute the strategy, and an infrastructure of a large manufacturing facility was established, substantially increasing our manufacturing and warehousing capabilities.
Various distributors were appointed, and rights obtained to grow sales internationally, especially in Namibia and Mauritius, as well as the Middle East. We subsequently also established various networks to export and distribute our products in Europe, North America, South America, Asia and Australia. In addition, we are finalizing multiple patent and trademark applications in several territories, which will give us the ability not only to maintain our intellectual property but also to market our products aggressively.
The manufacture of medical devices for the treatment of vascular and airway diseases is now done from our facility in Johannesburg, South Africa. Raw materials and components used in manufacture are sourced from a number of local and international suppliers to ensure continuity of supply while maintaining high quality and reliability. Procedures and processes are in place to ensure that these materials meet the regulatory requirements and comply to specifications, and suppliers are regularly evaluated to monitor their quality performance.
The core values of care, learning, continuous improvement, innovation, outstanding delivery, and relationship building are important to the success of the business. The quality of the manufactured products is achieved through careful selection of suppliers and the maintenance of good manufacturing practices, thereby guaranteeing the mitigation of risk.
Our Employees
Attracting the right employees is vital to the success of the company, and the contribution they make to the business is highly valued. Focus on attracting the most competent and suitable people to operate in a rewarding work environment is a priority, particularly in the highly competitive labor market in which we operate.
Seasonality
Sales reflect the cyclical nature of the business, as the number of procedures incorporating our products does decrease in the summer holiday months of December and January. This cyclical nature has been enhanced by the Covid-19 pandemic, which has resulted in an unprecedented decline in healthcare utilization, largely due to the postponement of elective surgeries and patient aversion to exposure to the potential risk of infection in some healthcare settings.
Our Business Strategy
Our objective is to become one of the significant industry players within the next five years. We plan to achieve this by:
| 1. | growing our product range; |
| 2. | building our competences; and |
| 3. | through making strategic acquisitions. |
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Our strategy includes investing in the entire value chain ranging from the importation of raw materials, manufacturing capabilities and the marketing and selling of products, through to the distribution of its products to customers via our sales network.
To date organic growth has been supported by strong management teams and the development of intellectual property identified and then executed upon. Regardless of whether we own 100% of the med-tech or retain a smaller percentage ownership via acquisitions, the model is supported by the strength and reach of the distribution channels we have created or partnered with over the past years.
A high-level overview of our strategy follows on page 31, which is followed by a discussion on how we implement this strategy.
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Our Strategic Differentiators
Two of the most valuable assets we have are our long-term customer relationships and our strong distribution and marketing network. Through our distribution partnership, we have a network of over 100 sales representatives, who cover approximately 60% of all hospital theatre floors on a weekly basis in South Africa. We plan to replicate such a network in the US post listing. Subsequent to obtaining FDA approval for the Trachealator, we have applied for approval for the remainder of our products.
We attribute our success to the following key strengths:
| § | Commitment to innovation: We are dedicated to continuing to develop patentable products and offerings through R&D. We have accelerated R&D efforts and made the route to market shorter. |
| § | Experienced management team: The members of the Company’s management team bring considerable experience to the dynamic environment in which we operate. Their expertise covers a range of disciplines, including industry-specific operating and technical knowledge. The Company has assembled an agile, creative and responsive team that can quickly adapt to changing market conditions |
| § | Extensive geographic footprint: We believe that the strategic location of our facilities and logistics capabilities contribute to our customer retention rates and our ability to reach broader market segments. |
| § | Low-cost operating structure: We focus on building and operating facilities with low operating costs to enable it to better manage market downturns. |
| § | Strong relationships with customers: We have a long and enviable track record of timely delivery of products, which contributes to a reputation for dependability. Our extensive network of technical resources and other expertise enables us to collaborate with customers to develop product offerings to improve their satisfaction. |
| § | Extensive knowledge of setting up distribution channels: We have various exclusive distribution agreements in place with distributors to ensure these distributors include our products into a world-class product mix, which includes some of the most innovative and cutting-edge technologies available today. |
| § | Focus on safety and wellbeing: We focus on the safety of our employees and our patients and maintain safe and responsible operations. We are known in the communities in which we operate as a preferred employer and as a responsible corporate citizen. |
The Three Pillars of our Strategy
| 1. | Innovate and Grow our Product Range |
We are a highly successful Company that has been investing heavily in creating our own IP, as well as the R&D and manufacturing techniques involved in producing unique niche medical devices, thereby creating a value base that is ready to enter advanced high-value markets in the US and Europe.
Our approach, agility and excellent production capabilities have allowed us to capitalise on key medical trends, while our in-depth market knowledge and understanding have enabled us to anticipate market needs well in advance. This, combined with accelerated product development, innovation and speed to market, with a focus on cost reduction, equipment upgrades and low-cost facilities, has proved to be a recipe for success.
We currently have four products that are commercially available and a rich pipeline of developmental projects. We currently derive most of our profits by selling these products in South Africa, leaving ample room to grow the basket offering that sales personnel take to the market. Our plan is also to constantly innovate and enhance our product range to ensure our globally competitiveness.
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The products are generally targeted at more complex, specialized surgical cases and are specifically relevant in medical centers of excellence. During 2018, Medinotec recognized the need to become a significant player in manufacturing in reaction to the risk of price sensitivity.
We currently specialize in niche products within the disciplines of cardiology and respiratory interventions in which we are involved in medical device design, development and manufacture, all supported by a world-class sales and distribution channel. The specialty areas include:
| § | Interventional Cardiology, which involves surgery performed on the heart and vessels to correct life-threatening conditions. The surgery is performed by minimally invasive intravascular methods depending on the condition to be corrected. |
| § | Interventional Endolaryngeal Endoscopy, which involves balloon dilation to treat suitable airway stenosis by ENT surgeons and anesthetists. |
We have a comprehensive range of products, some of which – for example, the Trachealator – are unique in their patent registration. We own the IP, registrations, and patents in multiple jurisdictions. This makes these products very valuable, both from an IP and potential future sales perspective due to the specialist niche and high barriers to entry in these markets.
In the lead up to the listing, during 2021 we embarked on a series of comprehensive market development activities, refocusing resources and efforts to increase awareness of:
| § | the benefits of the Trachealator and other Medinotec products; |
| § | the indications for use, including pediatric indications of use, of our products in territories that accept the European CE Mark; and |
| § | the overall cost efficiency of our products. |
The focus is on markets with surgical centers of excellence, including the Middle East, Western Europe and the US, with the aim of:
| § | increasing the number of surgeons endorsing and using our products, not necessarily through sales, but through skills transfer; |
| § | increasing the number of procedures conducted; and |
| § | solidifying key opinion leader support and publications related to the use of our products during procedures. |
In addition, we appointed and trained various distributors in the Middle East, Western Europe, Asia and South America, with several training initiatives also held in the USA where FDA approval have been granted for the Trachealtor product to start sales in the USA.
In September this year we established the first training center in the African region for our products, which is situated in Johannesburg, South Africa at the Oxygenics International Medical Training Centre. The region has been a major contributor to product placements and surgical cases. The training center is expected to drive increased utilization of our products worldwide by connecting our global partners. Given South Africa’s proximity as a centralized hub it is easily reachable by most of our partners. It is further expected to encourage greater adoption of our technology in other territories and hospitals.
We are pleased to report that in 2021, surgeons performed over 3,000 procedures using our products, over the product have not been marketed to its fullest potential over the previous years as a result of the impact of the Covid-19 pandemic on elective surgeries and hospital operations. Furthermore, a multitude of peer-reviewed clinical papers have been published providing further support of the clinical utility of our products.
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Our growth plan is determined by the surgical devices market, which is currently the main contributor to sales. The sector is expected to achieve a compound annual growth rate (“CAGR”) of nearly 6.5% during the period 2017-2025. (Source: Mordor Intelligence.) Moreover, healthcare in developing countries – our primary target market – is undergoing rapid changes. The growing population in these countries is likely to lead to increased demand for healthcare, including medical devices. The growing burden of diseases and innovative medical treatments currently accounts for nearly two-thirds of the rise in spending.
Spending on healthcare in countries such as China and India is also expected to increase during the forecast period. According to a report by the World Economic Forum, it is estimated that one-third of all global health expenditure will be incurred by emerging economies by 2022. Certain investments in the healthcare sector thus offer attractive long-term financial benefits. Medical care is one such area in which individuals tend to increase spending as incomes grow.
North America is expected to continue dominating the overall market for medical supplies and investment opportunities. The US holds the largest market share in the region due to the superior regulation of surgical devices and a growing awareness among the population of an alternative approach for procedures in the treatment of injuries, and for chronic disease management.
Key Market Trends and Our Response to These
There is currently a massive drive for minimal invasive procedures done at lower costs, which in turn decreases hospitalization and the cost of procedures and theatre time. As this is the primary market for our devices, i.e., minimally invasive procedures, it is important for us to be at the cutting-edge of technological developments at the correct price point to remain relevant. It is also important to diversify product offerings to ensure that all the products used during a procedure can be supplied by one service provider. The price of these devices is also expected to fall given the entry of many new players in the market.
Another market driver is the growing population in developing countries for healthcare and procedures, which has increased significantly in recent few years as previously mentioned.
Major shifts in industry market share have occurred in connection with product problems, physician advisories, safety alerts, results of clinical trials to support superiority claims, and publications about products, reflecting the importance of product quality, product efficacy and quality systems in the medical device industry.
In the current environment of managed care, economically motivated customers, consolidation among healthcare providers, increased competition, and declining reimbursement rates, we have been increasingly required to compete on the basis of price. In order to continue to compete effectively, we must continue to create or acquire advanced technology, incorporate this technology into proprietary product offerings, obtain regulatory approvals in a timely manner, maintain high-quality manufacturing processes, and successfully market these products.
Government and private sector initiatives to limit the growth of healthcare costs, including price regulation, competitive pricing, bidding and tender mechanics, coverage and payment policies, comparative effectiveness of therapies, technology assessments and managed-care arrangements, are continuing in many countries in which the Company does business, including the US.
These initiatives put increased emphasis on the delivery of more cost-effective medical devices and therapies. Government programs, including Medicare and Medicaid, private healthcare insurance and managed-care plans have attempted to control costs by limiting the amount of reimbursement they will pay for particular procedures or treatments, tying reimbursement to outcomes, shifting to population health management, and other mechanisms.
Hospitals, which purchase our technology, are also seeking to reduce costs through a variety of mechanisms, including, for example, centralized purchasing, and in some cases, limiting the number of vendors that may participate in the purchasing program. Hospitals are also aligning interests with physicians through employment and other arrangements, such as gainsharing, where a hospital agrees with physicians to share any realized cost savings resulting from changes in practice patterns such as device standardization. This has created an increased level of price sensitivity among customers for our products.
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The next logical step for us would be to secure investment opportunities and additional distributor relationships through the North American territory and to further deploy this for growth in its distribution channels.
Our Competitor Landscape
Most of our reporting segments operate in highly competitive markets that are characterized by a number of large, multinational players as well as a number of small, regional or local distributors. Some of the major players include Johnson & Johnson, Boston Scientific, Cook Medical, Cordis, B. Braun, Teleflex, Medtronic, Merit Medical, Endotec, Conmed and Cadence.
Competition in all segments is based on price, consistency and quality of product, site location, distribution capability, customer service, reliability of supply, breadth of product offering and technical support. The principal competitive factors in these markets are product features, value-added solutions, reliability, clinical evidence, reimbursement coverage, and price.
We compete with many companies having significantly more capital resources, larger research laboratories and more extensive distribution systems.
| 2. | Build our Competencies |
Our investment in R&D includes a state-of-the-art production facility in Johannesburg, South Africa. This facility allows for a significant increase in capacity and output, with a 400 m2 ISO 7 cleanroom. The facility also has increased laboratory space, including a “dry” laboratory for microscopy, mechanical testing, prototyping and experimentation, and a “wet” laboratory for pressure testing, weighing, experimentation with liquids and 3D printing, as well as a workshop containing turning, milling, grinding and other equipment necessary for building custom machinery and performing repairs or creating prototypes.
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A large packaging area and a dedicated EtO sterilizer facility provide the capacity to perform sterilization on our products. We also operate an ISO 13485 Quality Management System. Our world-class products are also CE-Marked, with IP protection.
We have expertise in numerous innovative medical manufacturing techniques, including balloon forming, several heat and adhesive bonding techniques, device coating, grinding, catheter laminating and many others. Many of products incorporate high-performance medical balloons. As a result, the latest balloon-forming manufacturing technology has been procured and commissioned in the new manufacturing facility to assist in increasing production capabilities of interventional balloon catheter products.
We will further invest in strategic capital projects to introduce innovative technologies, efficiency improvements and capacity expansion in key growth categories. This will be implemented through:
| § | Focusing on processes, from sales management to customer relationships. |
| § | Creating new channels and brand availability. |
| § | Expanding growth strategy through strategic partners. |
| § | Identifying quick-return capital projects. |
As explained in this prospectus, by leveraging off our low-cost base in South Africa we aim to become one of the leading med-tech companies in the world.
| 3. | Make Strategic Bolt-on Acquisitions |
Our acquisitive growth strategy focuses largely centers around capacity or capability-enhancing businesses or as an entry into new or high-growth product categories. We will also focus on acquiring complementary IP and businesses.
This will be implemented through:
| § | proactively identifying strategic bolt-on acquisitions to fill gaps in our existing product categories and manufacturing lines; and |
| § | building strategic alliances with international customers or suppliers. |
Our Implementation Plan
Any business strategy requires a plan that outlines a roadmap for implementation. Our plan outlines how we will continue to ensure world-class manufacturing of our current products, ongoing investment into our own IP, and planned acquisitions to ensure the financial stability of current operations, the longevity of our organization and a smooth integration process for new businesses we may acquire. The key drivers in our plan that support the business strategy are as follows:
| § | Increase our presence and product offering in specialty product end-markets. In the past, we have signed various exclusive distribution agreements across multiple territories to enhance our product basket and reach. |
| § | Our R&D and business development teams work together to enhance existing product offering. These teams also pursue opportunities to acquire new product offerings through business acquisitions and distributorships that are expected to increase our presence and market share in certain specialty product markets and/or allow us to enter new markets. We manage a robust pipeline of new products and business relationships in various stages of development and are also in various stages of expanding capabilities to improve product offerings across our various platforms. |
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| § | Further develop value-added capabilities to maximize margins. We expect to continue investing in ways to increase the value we provide to customers by growing our product offerings, improving our supply chain management, upgrading our IT, and enhancing our customer service model. We are also exploring other ways to expand our reach and our products to provide incremental value to our customers, including new acquisitions to vertically integrate its supply chain and to obtain more of the gross profit share of the entire customer experience. |
| § | Optimize product mix and keep operating costs low. We continue to actively manage our product mix as we seek to maximize profit margins. This requires us to use our proprietary expertise in balancing key variables, such as procurement and processing capacity, transportation availability, customer requirements and pricing. Additionally, we undertake continuous improvement efforts to increase the effectiveness and efficiency of our production and distribution facilities. |
| § | Effectively position logistics capabilities and supply chain network to meet customers’ needs. We continue to strategically position our supply chain in order to deliver according to our customers’ needs. We believe that our supply chain network and logistics capabilities are a competitive advantage that enables us to provide superior service to customers. |
| § | The strategic location of our distribution centers enables us to service major customers within 48 hours (this includes certain deliveries to rural and outlying areas in South Africa, which have limited road access and infrastructure). Additionally, our in-house delivery capabilities allow for direct deliveries and last-minute route adjustments to support our customers. |
| § | Evaluate expansion opportunities and other acquisitions. We expect to continue leveraging our reputation, procurement, distribution capabilities and infrastructure to increase our product offerings and PI, as well as to explore other opportunities to expand our reserve base and sell new products. |
| § | We have completed several projects where we have signed exclusive distribution agreements and agreements, which became operational in 2016-2018. These exclusive agreements have also unlocked the opportunity to bring to market great technological advancements in the medical intervention field in southern Africa. |
| § | We will pursue acquisitions of value-adding products and technologies. We will prioritize acquisitions that will provide us with opportunities to realize synergies, which include entering new geographic markets, acquiring attractive customer contracts, and improving operations. |
| § | Maintain balance sheet strength and flexibility. We intend maintaining financial strength and flexibility to enable us to better manage the business through industry downturns and pursue acquisitions and new growth opportunities as they arise. The business has good cash-producing prospects and this, together with our entrepreneurial mindset, ensures that we are able to quickly pursue opportunities that are time sensitive. |
| § | Carry sufficient levels of inventory to meet the product delivery needs of customers. We aim to carry sufficient inventory, and also to provide payment terms to customers in the normal course of business to meet the operational demands of our customers. Due to the location of our distribution centers in relation to the US, Europe and the Far East, we require our distributors to carry at minimum three (3) months of inventory on fast moving items to avoid supply chain pressures. |
| § | Training and skills development: Our continued investment into the healthcare landscape through training and academic development assists in retaining and maintaining the necessary skills base within southern Africa. Training and skills development in healthcare is an intrinsic and necessary part of our growth strategy. We use a state-of-the-art training facility at our Johannesburg head office, which includes the latest cardiology simulators, to assist young surgeons and health professionals to develop their procedural skills. We also have a full array of non-occlusive balloon dilation technology for training purposes and for hands-on product technical training. |
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Product Distribution
We ship our products to customers directly by freight or by air and through our network of in-house and courier partners. Recent market trends have resulted in more of product volumes being transported by high-efficiency road freight.
During 2022, we shipped 3000 orders to sites and customers. Generally, our distribution centers are strategically located to provide access to road and air freight. We also continually explore ways of optimizing our network to ensure that product remains close to the point of end use. This approach allows us to provide excellent customer service and positions us to take advantage of opportunistic sales.
Product Manufacturing – Quality Assurance and Regulations/Requirements
Quality Management
The safety and quality of our medical devices is assured through rigorous documented procedures and an accredited Quality Management System (“QMS”), which was established in accordance with the requirements of ISO13485, the European Union Medical Device Regulation 2017/745, the US FDA 21 CFR 820 regulations, and the various applicable acts and guidelines legislated by the South African regulatory authorities.
Our QMS is implemented through company policies, procedures and work instructions followed and utilized by all departments. We also maintain an active post-market surveillance program, which enables product performance to be regularly assessed and to be reported to the regulatory authorities if any incident/malfunction occurs that results in severe injury to the patient or death.
Additionally, we maintain quality standards relevant to the storage and distribution of our products. These include technical/quality agreements with our suppliers.
Compliance to all procedures is monitored via an internal audit system and augmented by audits conducted annually by European and American notified bodies.
South African Quality Regulations & Requirements
In South Africa, medical device manufacturing is regulated by the South African Health Products Regulatory Authority (“SAHPRA”), with guidelines published in the Government Gazette No. 40480 in 2016, which refer to licensing of medical devices establishments and the registration required to ensure an acceptable level of safety, quality, and performance. Medinotec is registered with SAHPRA and possesses the above-described licenses and registrations for all our products.
International Quality Regulations
Most of our products carry the CE Mark of approval, ensuring conformity to the legal requirements by the European Union. The valid CE certificates for the devices concerned have been issued in compliance with the Medical Device Directive 93/42/EEC and these devices can therefore be placed on the market until May 2024. We are currently in the process of ensuring compliance to the new Medical Device Regulation 2017/745. In addition, we are in the process of obtaining the required FDA certification for our devices, thus enabling us to market and sell our products in the US, FDA certification for the Trachealtorr have been obtained in Nov 2021 and therefore marketing and sales of this product will start soon inside the USA.
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Our Key Products
We own the patents to premier surgical and healthcare products. The following innovative products are market leaders and meet world-class standards, with the Trachealator being one of our most sought-after and innovative offerings.
The Trachealator
The Trachealator has changed the way that tracheal, and, to a degree, bronchial stenosis is managed in extremely ill patients. While there are multiple causes of tracheal stenosis, it is estimated that thousands of cases are reported every year. Multiple, safe, serial dilations of the trachea are often curative and the Trachealator is currently the only device in the world which allows that procedure to be done with the patient fully awake and un-sedated.
The Trachealator received its CE Mark in 2019 and is currently sold in 14 markets across Europe, South America and Asia and has been
used successfully on thousands of patients. The FDA submission for approval was obtained in Nov 2021. In May of 2021 in recognition of
the technology advancement in the device, it was awarded a Gold Medal in the Medical Design Excellence Awards.
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Fig. 2: The Trachealator.
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The Cape Cross PTCA Catheter
The Company also designed and developed a range of semi-compliant coronary PTCA balloon catheters known as the Cape Cross, which attained a CE Mark and are marketed around the world and in South Africa, becoming a widely used interventional balloons in the market.
A PTCA balloon catheter (also known as a Plain Old Balloon Angioplasty [“POBA”] catheter) is inserted either from the groin or the arm and threaded through the blood vessels, through the aorta into the heart. The cardiac surgeon and/or interventional cardiologist will move the catheter to the blocked artery (plaque). The balloon part of the catheter is inflated to open the blockage in the artery, after which the balloon is deflated, and the entire catheter withdrawn and removed. If this procedure is not effective enough to open the artery, a coronary stent will be placed inside the diseased area of the artery.
Fig. 3. The Cape Cross PTCA Catheter.
The Cape Cross is currently being redesigned to ensure its competitiveness with other PTCA balloon catheters. These design upgrades, which include a lower crossing profile and improved trackability, should be ready by the end of the first quarter of 2022.
Cape Cross Non-Compliant (“NC”) Catheter
On the back of the Cape Cross, the Cape Cross NC Catheter was developed for post dilation purposes. The product has become a mainstay of our cardiology range. It is CE Marked and widely used in South Africa. After a stent is placed in an artery, it is followed up by moving a NC catheter to the site where the stent was placed. The NC catheter balloon part is then inflated inside the stent. This is done to “seat” the stent inside the artery wall. In other words, if the stent was not optimally placed, the NC Catheter can be used to make the stent fit “snugly” against the artery wall to avoid dislodgement and movement of the stent after placement. Both the Cape Cross and the Cape Cross NC balloon catheters have been submitted to the FDA for approval with no anticipated date for release as yet.
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Fig. 4. The Cape Cross Non-Compliant (“NC”) Catheter.
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The “Lamprey” Suction Dissector
The “Lamprey” Suction Dissector is a novel surgical tool used in the fields of neurosurgery, ENT surgery and general surgery to safely combine the processes of suctioning blood out of the surgeon’s field of view while dissecting sensitive structures simultaneously without having to change instruments. It is both a precision and time saving device, which has received the CE Mark.
The “Lamprey” works where the suction is connected to the back of the device when used during surgical procedures. During removal of extra tissue/tumors, etc. it is used to remove the blood from the site as well as any additional pieces of tissue/blood clots/debris etc. Inside the mesh tip at the front end of the device are “fingers” which facilitate the quick removal of debris through the handle to ensure that the canal remains open and free flowing. The device is currently undergoing more user-specific testing with an anticipated market release date of mid-2022. FDA approval for the product has been applied for with no anticipated date yet released.
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Fig. 5. The “Lamprey” Suction Dissector.
Aortic Perfusion and Dilation Catheter (Developmental)
The Aortic Perfusion and Dilation Catheter is a non-occlusive perfusion balloon to allow the expansion of the aortic valve without impeding the cardiac output. It is currently in the mid stages of research and development. This catheter could potentially be used to post dilate the artificial valve in TAVI without the need for pacing. We anticipate the commencement of human trials in mid-2022.
The Micro CTO Catheter (Developmental)
We have started developing a highly specific niche CTO catheter balloon of 1mm diameter in diameter, which is expected to be launched in the second quarter of 2022. This micro-balloon catheter addresses an extremely specific market need for difficult coronary cases and will further cement our position as one of the premier specialized coronary balloon catheter manufacturers.
The Tracheal Stent (Developmental)
We are currently in the initial stages of development of a new self-expanding, temporary, silicone tracheal stent to be used in conjunction with the Trachealator balloon in the treatment of tracheal stenosis. The complimentary nature of this product will further build on our know how in the field of advanced airway management, and we look forward to its further design and testing over the upcoming months.
Product Development Pipeline
| Product | R&D | Production | CE Mark | Local Supply | International Sales | FDA Approval | US Sales |
| Trachealator | ü | ü | ü | ü | ü | ü | r |
| Cape Cross PTCA Catheter | ü | ü | ü | ü | In progress | r | r |
| Cape Cross NC Catheter | ü | ü | ü | ü | In progress | r | r |
| “Lamprey” Suction Dissector | ü | ü | ü | r | r | ||
| Aortic Perfusion and Dilation Catheter | ü | r | r | ||||
| Micro CTO Catheter | ü | ||||||
| Tracheal Stent | ü | r | r |
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Intellectual Property
We currently hold various product registration certificates and operating licenses, which allow us to operate as an importer of raw materials for the manufacture of medical devices and an exporter and distributor of these products within the territories we service. We also hold various patents, trademarks, and other intangible proprietary rights that are considered material to the business and its ability to compete effectively with other companies.
We pursue a policy of obtaining patent protection in the US, China, Europe, Middle East, South America and Australia for patentable subject matter in our products and attempt to review third-party patents and patent applications to the extent publicly available to develop an effective patent strategy. This assists in avoiding the infringement of third-party patents, helps identify licensing opportunities and monitors the patent claims of others.
Trade Secrets
With respect to some of our products, we rely principally on trade secrets, rather than patents, to protect proprietary processes, methods, documentation and other technologies, as well as certain other business information.
Although we seek patents from time to time as discussed above, patent protection for other industrial and specialty products requires a costly federal registration process with an uncertain outcome that would place confidential information in the public domain.
We also rely on trade secrets, expertise, continuing technological innovations, and licensing opportunities to develop, maintain and strengthen our competitive position. We strive to protect our trade secrets indefinitely through the use of confidentiality agreements and other security measures, understanding that these efforts may prove to be ineffective.
Research and Development
All R&D is conducted by Medinotec, which employs the necessary engineers, and technical and support personnel. The in-house technical expertise includes biomedical engineering and product design. The R&D team focuses primarily on developing new products and supporting existing products.
Condition of Physical Assets and Insurance
Parts of the business are capital intensive and require ongoing capital investment for the replacement, modernization and/or expansion of equipment and facilities. We therefore maintain insurance policies against property loss and business interruption and insure against other risks that are typical in the operation of the business, in amounts that we believe to be reasonable. Where costs are deemed to be commercially unviable, we self-insure. Such insurance, however, contains exclusions and limitations on coverage, particularly with respect to environmental liability and political risk. There can thus be no assurance that claims would be paid under such insurance policies in connection with a particular event.
Primary Customers
Our primary customers include hospitals, clinics, third-party healthcare providers, distributors, and other institutions, including governmental healthcare programs and group purchasing organizations (“GPOs”). We also benefit from strong and long-standing relationships with customers in each of the industrial and specialty products end-markets we serve.
Third Party Coverage and Reimbursement
Healthcare providers that purchase medical devices generally rely on third-party payors, including private payors, such as indemnity insurers, employer group health insurance programs and managed care plans, to reimburse all or part of the cost of the products. As a result, demand for our products is and will continue to be dependent in part on the coverage and reimbursement policies of these payors.
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The manner in which reimbursement is sought and obtained varies based upon the type of payor involved and the setting in which the product is furnished and utilized. Reimbursement from Medicare, Medicaid and other third-party payors may be subject to periodic adjustments as a result of legislative, regulatory and policy changes, as well as budgetary pressures.
Possible reductions in, or eliminations of, coverage or reimbursement by third-party payors, or denial of, or provision of uneconomical reimbursement for new products may affect our customers’ revenue and ability to purchase our products. Any changes in the healthcare regulatory, payment or enforcement landscape relative to our customers’ healthcare services have the potential to significantly affect our operations and revenue.
Employees
As of February 28, 2022, we employed a total of 21 full-time employees, and we consider our relationship with employees to be good.
| § | Commercial team: Through our distribution partnerships, our Commercial team consists of over 100 individuals responsible for all aspects of the sales process, including pricing, marketing, transportation and logistics, product development and general customer service. |
| § | Sales team: The team is organized by both region and end-market and comprises a group of experienced and dedicated team members who understand the industry and who are experts in their various medical fields. The team is led out of the Johannesburg head office and is regionally positioned in the major medical markets across southern Africa. As the Company makes decisions to enter or expand its presence in certain markets or regions, it expects to continue to add dedicated team members to support that growth. |
| § | Marketing team: This team coordinates all new and existing customer outreach efforts and identifies emerging market trends and new product opportunities. This includes producing exhibits for trade shows and exhibitions, manufacturing product overview materials, participating in regional industry meetings and other trade associations and managing advertising efforts in trade journals. |
| § | Transportation Warehouse and Logistics team: The team manages domestic and international shipments and product deliveries by directing inbound and outbound ocean vessel and flights traffic, supervising equipment maintenance, coordinating with freight carriers to ensure equipment availability, ensuring compliance with shipping regulations and strategically planning for future growth. This team also ensures storage and shipping happens in accordance with the quality requirements of each product. |
| § | Technical team: The team services and maintains all major equipment held in ours warehouses as well as products purchased by customers requiring regular servicing and general maintenance. |
| § | Customer Services team: This team is dedicated to creating an exceptional customer experience and making it easy to do business with us. It aims to accomplish this by consistently exceeding customer expectations, continually improving service performance, offering efficient and timely responses to customer needs, being available to customers 24/7, and providing customers with personal points of contact. |
These functions are backed up by various back-office functions including, but not limited to, Quality, Finance, Admin and Regulatory staff.
Description of Property
Currently, we do not own any real estate. Our principal executive offices are located at Northlands Business Park, 171 Bush Telegraph Avenue, Northriding, Johannesburg, South Africa. We have entered into a five-year lease for this 8,783 square foot facility, with a cost of approximately $7,000 per month. We believe that our properties are adequate for our current needs, but growth potential may require larger facilities due to anticipated addition of personnel. We do not have any policies regarding investments in real estate, securities or other forms of property.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
Impact of the Covid-19 Pandemic
In March 2020, the impact of Covid-19 and related actions to attempt to control its spread began to impact our consolidated operating results, with year-on-year consolidated revenue trends beginning to weaken rapidly and materially. As these events developed, we executed on our business continuity plans and our crisis management response to address the challenges related to the pandemic.
We are generally following the requirements and protocols published by the US Center for Disease Control and the World Health Organization, as well as local governments, including the South African Government.
We cannot, however, predict when or how actions put in place to restrict/limit infection rates will be lifted as part of our business continuity plans, including work from home requirements and travel restrictions.
We remain focused on the following five priorities:
1. Protecting the Health, Safety and Well-being of our People
| § | As an “essential services provider” as defined by the South African government, Medinotec’s head office has allowed able to stay open during the pandemic, even during the first “hard” lockdown implemented by the government in March 2020. |
| § | However, the majority of our employees continue to work from home, with only certain essential employees not working remotely. |
| § | For employees not working remotely, social distancing protocols have been implemented, and the level of cleaning and sanitizing sites has been increased. |
| § | We have adhered to all necessary protocols and government regulations to make our sites safer. Employee travel has also been curtailed to essential business needs only. |
| § | Critical safety information has been communicated to employees throughout the pandemic. |
| § | Despite the challenges faced and intermittent downtime cause by the adherence to Covid-19 best practices and various levels of lockdowns in South Africa, we have managed to maintain high levels of employee attendance and production output. |
2. Preserving our Financial Stability
| § | We continue to closely monitor the impact of Covid-19 on all aspects of the business and the geographies in which we operate, including the impact on customers, employees, suppliers, business partners, and distribution channels. The extent to which the pandemic impacts the business, the results of operations, and the financial position will depend on future developments, which are extremely uncertain and difficult to predict. |
| § | We have implemented plans to manage costs, including a hiring freeze, a reduction in personnel, and significantly limiting the addition of third-party contracted services, travel (except where necessary to meet customer or regulatory needs), and discretionary spending. |
| § | To the extent the business disruption continues for an extended period, additional cost management actions will be considered. |
| § | We expect consolidated revenue to continue to be impacted negatively and materially in fiscal year 2022 and for negative impacts to continue until Covid-19 and related economic and medical conditions improve. |
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3. Supply Chain Disruptions / Sales channels
| § | We have experienced disruptions to our global supply chain and a decrease in sales due to a decrease in elective surgical procedures. |
| § | This resulted in the need for higher inventory levels of certain products and raw materials to ensure product availability. |
| § | We also increased our focus on production efficiencies and staff attendance to ensure service delivery. |
| § | However, the ultimate effect of these disruptions, including the extent of their adverse effect on our financial and operational results, will be impacted by the length of time that such disruptions continue, which will, in turn, depend on the currently unknown duration of the pandemic and the effect of governmental regulations and other restrictions that might be imposed in response to the pandemic. |
4. Supply Chain Disruptions / Sales channels
| § | We have experienced, and may continue to experience, significant and unpredictable reductions in the demand for our products as healthcare customers divert medical resources and priorities towards the treatment of Covid-19. |
| § | Customers may delay, cancel, or redirect planned expenditures in order to focus resources on Covid-19 or in response to economic disruption related to the pandemic. |
| § | The Covid-19 pandemic and local actions, such as “shelter-in-place” orders, restrictions on the sales team’s ability to travel and access customers, or temporary closures of our facilities or the facilities of our suppliers and their contract manufacturers, could further significantly reduce sales and our ability to ship our products and supply customers. |
| § | However, our sales team remains focused on how to meet the changing needs of customers in this “new normal” environment. |
5. Impact on Capital Markets
Capital markets and worldwide economies have been significantly impacted by the pandemic, and it is possible that this could cause a local and/or global economic recession(s). Such economic recession could have a material adverse effect on our long-term business as hospitals and surgical centers curtail overall spending.
The impact on the capital markets could also negatively affect our ability to borrow under financing arrangements. There are certain limitations on our ability to mitigate the adverse financial impact of these items, including the fixed costs of the business.
Results of Operations for the Years Ended February 28, 2022 and 2021
In considering the financial position of Medinotec Inc. we advise readers of this prospectus to consult the Disa Medinotec Financial Statements, as well as the Medinotec Inc. Consolidated Financial Statements, which provide a fuller overview of the financial position of Medinotec Inc. including comparative results for the periods ended February 2022 and 2021, as well as the post year-end acquisition of DISA Medinotec in South Africa. The transaction had an effective date of 2 March 2022. The below analysis provides the analysis of both the Medinotec Inc Fincial information as well as the DISA Medinotec (PTY) Ltd the subsidiary acquired post year end
Revenues
For Medinotec Inc no revenue was declared for the financial period under review, after the obligations of the purchase agreement has been met on 2 March 2022 DISA Medinotec (Pty) Ltd became a subsidiary of the Group. For the financial period ending 28 February 2022 the DISA Medinotec (PTY) Ltd showed Revenue of $1,215,905 up from $493,642 for the prior financial period ending 28 February 2021. This increase is due to the European market and the fact that lighter Covid restrictions allows for less restricted travel and training to be conducted.
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Cost of Goods
For Medinotec Inc no cost of goods was declared for the financial period under review, after the obligations of the purchase agreement has been met on 2 March 2022 DISA Medinotec (Pty) Ltd became a subsidiary of the Group. For the financial period ending 28 February 2022 DISA Medinotec (PTY) Ltd showed Costs of Goods $ 666,715 up from $191,342. for the prior financial period ending 28 February 2021. This change is mainly due to the increased sales experienced as cost of goods hold a direct relation to sales. This figure also includes certain inventory adjustments for obsolete inventory that was recorded during covid lock down periods
Operating Expenses
For Medinotec Inc Operating expenses incurred for the period ended 28 February 2022 amounted to $610. There are no comparatives since the acquisition occurred post year-end, after the obligations of the purchase agreement has been met on 2 March 2022 DISA Medinotec (Pty) Ltd became a subsidiary of the Group. For the financial period ending 28 February 2022 DISA Medinotec (PTY) Ltd showed total operating expenses of $ 759 394 up from $561 073. for the prior financial period ending 28 February 2021. The change is mainly attributable to the General and Admin expenses which showed a step cost increase to support the higher sales figure due to the amount of countries penetrated during the year there was also an increase in general compliance cost to list products in these countries and to provide initial training and marketing into these countries.
Net Loss
For Medinotec Inc the Net loss for the period ended February 28, 2022 was $(161). There are no comparatives since the acquisition occurred post year-end, after the obligations of the purchase agreement has been met on 2 March 2022 DISA Medinotec (PTY) Ltd became a subsidiary of the Group. For the financial period ending 28 February 2022 the company showed total net loss of $ 167 154 up from a loss of $36 683. for the prior financial period ending 28 February 2021. The change is mainly attributable to the General and Admin expenses which showed a step cost increase to support the higher sales figure.
Liquidity and Capital Resources
For Medinotec Inc as of 28 February 2022, we had total current assets of $10,164 and total assets in the amount of $10,164. Our total current liabilities as of February 28, 2022 was $0. We had working capital of $10,164 as of 28 February 2022. Operating activities generated $10,164 in cash for the period ended February 28, 2022.
Investing activities consumed $10,000 during the period ended 28 February, 2022, largely as a result of the acquisition of the African investment arm, Medinotec Capital (Pty) Ltd.
There are no comparatives since the acquisition occurred post year-end, after the obligations of the purchase agreement has been met on 2 March 2022 DISA Medinotec (Pty) Ltd became a subsidiary of the group. For the financial period ending 28 February 2022 DISA Medinotec (PTY) Ltd we had total current assets of $711,537 and $517,705 for the comparative period ending 28 February 2021 and total assets in the amount of $1,312,866 at 28 Fenruary 2022 and 1,082,801 for the comparative period 28 February 2021. Our total current liabilities as of 28 February 2022, was $209 018 and 103 718 in February 2021. We had working capital of $502,519 as at 28 February 2022 and $413,987 as at 28 February 2021.
Investing activities consumed $90,780 during the period ended 28 February 2022 and $ 279 037 for the prior period ending 28 February 2021, largely as a result investment into Property Plant and Equipment to fund future growth.and to increase manufacturing capabilities.
The success of our business plan beyond the next 12 months is contingent upon us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.
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Off Balance Sheet Arrangements
As of February 28, 2022, there were no off balance sheet arrangements.
Critical Accounting Policies
In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Our critical accounting policies are set forth in Note 3 to the financial statements.
Recently Issued Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operation, financial position or cash flow.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the transactions described below and under the heading “Executive Compensation” (or with respect to which such information is omitted in accordance with SEC regulations), for the past two fiscal years there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.
Rent
The company leases commercial buildings from Minoan Captial (Pty) Ltd (“Minoan Capital”). The chief executive officer of Minoan Capital is also the CEO of DISA Medinotec (Pty) Ltd.
Set forth below is a table showing the Company’s net purchases for the years ended February 28 and accounts payable at February 28 for the indicated time periods below with Minoan Capital:
| For the 12 months ended | |||||
| February 28 | |||||
| 2022 | 2021 | ||||
| Rent paid | $ | 38 157 | $ | 38 157 | |
Rent is comparable to rent charged in the market and thus deemed to be at arm's length.
Related Party Loan
This is an unsecured loan from the parent entity Minoan Medical. During the Covid challenges interest on the loan was waived due to the loan being classified as an equity investment at that stage. The company has a period of 3 years post any IPO date to repay the loan, during these 3 years the loan will carry interest at the prevailing prime lending rate of the time. The current prevailing prime lending rate in South Africa is 8.25%
The company has the option to settle earlier and settlement can be in cash or shares.
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Minoan Medical is a related party of the CEO Dr Gregory Vizirgianakis the terms of this loan is market related and Operational charges are charged to the loan account.
| February 28 | February 28 | ||||||
| 2022 | 2021 | ||||||
| Minoan Medical (Pty) Ltd | $ | 1 583 661 | $ | 1 303 352 | |||
Sales to parent and associates
The company sells the majority of its stock to DISA Life Sciences (Pty) Ltd ("DISA Life Sciences"). DISA Life Sciences and the company is under common control and one of the company's directors are also a director of DISA Life Sciences. Directors are shared to improve corporate governance and insight into the associate.
DISA Life Sciences is the 3rd biggest distributor of medical devices in the Republic of South Africa and therefore Medinotec utilizes their sales foot print for cost efficiencies. All trading are considered to be at arm's length. During the year the company also sold stock to Minoan Medical (Pty) Ltd ("Minoan"). The company is a wholly owned subsidiary of Minoan. Set forth below is a table showing the Company’s sales for the years ended February 28 and accounts receivable at February 28 for the indicated time periods below with DISA Life Sciences & Minoan:
| For the 12 months ended | |||||||
| February 28 | |||||||
| 2022 | 2021 | ||||||
| DISA Life Sciences | |||||||
| Sales | $ | 525 558 | $ | 344 657 | |||
| Accounts receivable | $ | 1 242 | $ | - | |||
| Minoan Medical | |||||||
| Sales | $ | 465 695 | $ | - | |||
| Accounts receivable | $ | - | $ | - | |||
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No Public Market for Common Stock
There is presently no public market for our common stock. We anticipate making an application for trading of our common stock on the OCTQB upon the effectiveness of the registration statement of which this prospectus forms a part. We can provide no assurance that our shares will be traded on the OTCQB or OTCQX, or if traded, that a public market will materialize.
The Securities Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;(d) contains a toll-free telephone number for inquiries on disciplinary actions;(e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and;(f) contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.
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The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with; (a) bid and offer quotations for the penny stock;(b) the compensation of the broker-dealer and its salesperson in the transaction;(c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock if it becomes subject to these penny stock rules. Therefore, because our common stock is subject to the penny stock rules, stockholders may have difficulty selling those securities.
Rule 144 Shares
None of our common stock is currently available for resale to the public under Rule 144. In general, Rule 144 as currently in effect permits our common stock that has been acquired by a person who is an affiliate of ours, or has been an affiliate of ours within the past three months, to be sold into the market in an amount that does not exceed, during any three-month period, the greater of:
| 1. | one percent of the total number of shares of our common stock outstanding; or |
| 2. | the average weekly reported trading volume of our common stock for the four calendar weeks prior to the sale. |
Such sales are also subject to specific manner of sale provisions, a six-month holding period requirement, notice requirements and the availability of current public information about us.
Rule 144 also provides that a person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has for at least six months beneficially owned shares of our common stock that are restricted securities, will be entitled to freely sell such shares of our common stock subject only to the availability of current public information regarding us. A person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned for at least one year shares of our common stock that are restricted securities, will be entitled to freely sell such shares of our common stock under Rule 144 without regard to the current public information requirements of Rule 144.
Dividends
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:
| 1. | we would not be able to pay our debts as they become due in the usual course of business, or; |
| 2. | our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. |
We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.
Recent Sales of Unregistered Securities
On April 26, 2021 the company issued 10,000, 000 shares of common stock to the founding shareholders at 0.001 per share.
On May 30, 2022 the company concluded a pre FDA approval raise which started in October 2021 and concluded on May 30, 2022. This raise was for a total of 1,733,750 shares of common stock at $2 a share.
These securities were issued pursuant to Regulation S promulgated under the Securities Act of 1933, as amended. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
| 51 |
The table below summarizes all compensation awarded to, earned by, or paid to our current executive officer for the fiscal years ended February 28, 2022 and 2021.
| SUMMARY COMPENSATION TABLE | ||||||||||||||||||
| Name and principal position |
Year | Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($)(2) |
Non-Equity Incentive Plan Compensation ($) |
Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
|||||||||
|
Gregory Vizirgianakis CEO |
2022 2021
|
- -
|
- -
|
- -
|
- -
|
- -
|
- -
|
- -
|
- -
|
|||||||||
|
Peter van Niekerk CFO |
2022 2021
|
- -
|
- -
|
- -
|
- -
|
- -
|
- -
|
- -
|
- -
|
|||||||||
Narrative Disclosure to the Summary Compensation Table
Although we do not currently compensate our officers with any regularity, we reserve the right to provide compensation at some time in the future. Our decision to compensate officers depends on the availability of our cash resources with respect to the need for cash to further business purposes.
Outstanding Equity Awards at Fiscal Year-End
The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officers as of February 28, 2022.
| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | ||||||||||||||||||||||||||
| OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||
| Name |
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
Option Exercise Pice ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
|||||||||||||||||
| Gregory Vizirgianakis | ||||||||||||||||||||||||||
| Peter van Niekerk | ||||||||||||||||||||||||||
| 52 |
Index to Financial Statements Required by Article 8 of Regulation S-X:
| Audited Consolidated Financial Statements of Medinotec, Inc.: | |
| F-1 | Report of Independent Registered Public Accounting Firm; |
| F-2 | Consolidated Balance Sheets as of February 28, 2022 and February 28, 2021; |
| F-3 | Consolidated Statements of Operations for the years ended February 28, 2022 and February 28, 2021; |
| F-4 | Consolidated Statement of Stockholders’ Equity as of February 28, 2022; |
| F-5 | Consolidated Statements of Cash Flows for the years ended February 28, 2022 and February 28, 2021; and |
| F-6 | Consolidated Notes to Financial Statements. |
| Audited Financial Statements of DISA Medinotec (PTY) Ltd.: | |
| F-_ | Report of Independent Registered Public Accounting Firm; |
| F-_ | Balance Sheets as of February 28, 2022 and February 28, 2021; |
| F-_ | Statements of Operations and Comprehensive Income/(Loss) for the years ended February 28, 2022 and February 28, 2021; |
| F-_ | Statement of Stockholders’ Equity as of February 28, 2022; |
| F-_ | Statements of Cash Flows for the years ended February 28, 2022 and February 28, 2021; and |
| F-_ | Notes to Financial Statements. |
| 53 |
Medinotec Inc. Group
Nevada Business Identification # NV20212080429
CONSOLIDATED AUDITED FINANCIAL STATEMENTS
for the period 26 April 2021 to 28 February 2022
| F-1 |
A-94/8,
Wazirpur Industrial Area,
Main Ring Road, Delhi-110052
+91 11 45596689
Web : www.ajsh.in
E-mail : info@ajsh.in
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Medinotec Inc.
Opinion on the Financial Statements
We have audited the accompanying Consolidated Balance Sheets of Medinotec Inc. and its subsidiary (collectively, the “Company”) as on 28 February 2022, the related consolidated statement of operations, changes in stockholders’ deficit and cash flow for the period from 26 April 2021 (Inception) to 28 February 2022 and the related notes (collectively referred to as the "Financial Statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of 28 February 2022, and the results of its operations and its cash flow for the period from 26 April 2021 (Inception) to 28 February 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of financial statement. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The Critical Audit Matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
AJSH & Co LLP
We have served as the Company’s auditor since 2022
New Delhi, India
June 02, 2022
| F-2 |
Consolidated Balance Sheets as of February 28, 2022
| As at 28 February 2022 | |||
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | $ | 10,164 | |
| Non-current assets | — | ||
| TOTAL ASSETS | 10,164 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||
| Current liabilities | — | ||
| Non-current liabilities | |||
| Loans | 325 | ||
| TOTAL LIABILITES | 325 | ||
| Stockholders’ equity | |||
| Preferred stock, $.001 par value; shares authorized 20,000,000; None issued or outstanding | — | ||
| Common stock, $.001 par value; shares authorized 200,000,000; 10,000,000 shares issued and outstanding | 10,000 | ||
| Accumulated deficit | (610) | ||
| Accumulated other comprehensive income/(loss) | 449 | ||
| TOTAL STOCKHOLDERS’ EQUITY | 9,839 | ||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 10,164 | ||
The accompanying notes are an integral part of the consolidated financial statements.
| F-3 |
Consolidated Statements of Operations and Comprehensive Income/(Loss)
| For the period 26 April to 28 February 2022 | |||
| Revenue | $ | — | |
| Cost of revenue | — | ||
| Gross profit | — | ||
| Operating expenses: | |||
| General and administrative expenses | 610 | ||
| Loss from operations | (610) | ||
| Other comprehensive income/(loss) | 449 | ||
| Total comprehensive income/(loss) | (161) | ||
| Net loss per share | |||
| Basic | $ | (0.00) | |
| Diluted | $ | (0.00) | |
| Weighted average shares outstanding - basic | 10,000,000 | ||
| Weighted average shares outstanding – diluted | 10,000,000 | ||
The accompanying notes are an integral part of the consolidated financial statements.
| F-4 |
Consolidated Statement of Stockholders’ Equity as of February 28, 2022
| Shares | Common Stock | Other Comprehensive Income/(Loss) | Accumulated | Total Deficit | |||||||||||||||
| Balance at 26 April 2021 | |||||||||||||||||||
| Net loss | — | — | 449 | (610) | (161) | ||||||||||||||
| Issuance of 10,000,000 No Par Value shares | 10,000,000 | 10,000 | — | — | 10,000 | ||||||||||||||
| Balance at 28 February 2022 | 10,000,000 | 10,000 | 449 | (610 | ) | 9,839 | |||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
| F-5 |
Consolidated Statements of Cash Flows for the period April 26, 2021 to February 28, 2022
| For the period 26 April to 28 February 2022 | |||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||
| Net loss | (610) | ||
| Net cash used in operating activities | (610) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||
| Proceeds from issuance of common stock | 10,000 | ||
| Proceeds from issuance of debt | 325 | ||
| Net cash provided by financing activities | 10,325 | ||
| NET CHANGE IN CASH, CASH EQUIVALENTS | 9,715 | ||
| Effect of exchange rate changes on cash | 449 | ||
| CASH, CASH EQUIVALENTS—Beginning of year | — | ||
| CASH, CASH EQUIVALENTS—End of year | 10,164 | ||
The accompanying notes are an integral part of the consolidated financial statements.
| F-6 |
Consolidated Notes to Financial Statements
| 1. | Description of Business |
Medinotec Inc (the “Company” or “COMPANY”), was incorporated in Nevada on 26th April 2021.
During December 2021, the Company established Medinotec Capital (Pty) Ltd in the Republic of South Africa through a capital raise and subsequent investment of $10,000 in the newly established Company.
The Company’s consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
| 2. | Summary of Significant Accounting Policies |
Basis of Presentation—The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP) and the regulations of United States Securities and Exchange Commission.
Consolidation—The consolidated financial statements include the accounts of Medinotec Inc. and its wholly-owned subsidiary i.e. Medinotec Capital Pty Ltd. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates—The preparation of consolidated financial statements in conformity with GAAP 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 periods. These estimates include, but are not limited to, management’s estimate of provisions required for non-collectible accounts receivable, depreciative lives of our assets, determination of technological feasibility, and valuation allowances of our deferred tax assets. Actual results could differ from those estimates.
Foreign Currency Transactions—The Company accounts for foreign currency transactions in accordance with ASC 830, “Foreign Currency Matters” (“ASC 830”), specifically the guidance in subsection ASC 830-20, “Foreign Currency Transactions”. The Company accounts for foreign currency transactions in accordance with ASC 830, “Foreign Currency Matters” (“ASC 830”),specifically the guidance in subsection ASC 830-20, “Foreign Currency Transactions”. The Company’s reporting currency is the US dollar. The functional currency of the Company’s foreign subsidiary is the local currency (South African Rand). Pursuant to ASC 830, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting gains or losses upon settlement reported in foreign exchange gain (loss) in the computation of net income (loss). Gains or losses resulting from translation adjustments are reported under accumulated other comprehensive income (loss).
Cash and cash equivalents—Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. As of 28 February 2022, the Group had cash and cash equivalents of USD 10,164.
Related Party Transactions—Parties are considered to be related to the Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal stockholders of the Company, its management, members of the immediate families of principal stockholders of the Company and its management and other parties with which the Company may deal where one-party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged.
| F-7 |
Fair Value of Financial Instruments—Fair Value of Financial Instruments for certain of the Company’s financial instruments, including cash and accounts payable, the carrying amounts approximate their fair values due to their short maturities. FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
● Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
● Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement. The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging. As of 28 February, 2022, the Group did not identify any assets and liabilities required to be presented on the balance sheet at fair value.
Concentration of credit risk—Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents. The Company has not and does not anticipate incurring any losses related to this credit risk.
Income Taxes—Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company has no material uncertain tax positions for any of the reporting periods presented.
Basic and Diluted Earnings Per Share—Earnings per share is calculated in accordance with ASC Topic 260, Earnings Per Share. Basic earnings per share (“EPS”) is based on the weighted average number of common shares outstanding. Diluted EPS assumes that all dilutive securities are converted. Dilution is computed by applying the treasury stock method. Due to the net loss incurred potentially dilutive instruments would be anti-dilutive. Accordingly, diluted loss per share is the same as basic loss for all periods presented.
Recently Adopted Accounting Pronouncements—In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), and has since issued amendments thereto, related to the accounting for leases (collectively referred to as “ASC 842”). ASC 842 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the consolidated balance sheet for all long-term leases. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition and classification in the consolidated statement of operations. The Company adopted ASC 842 on March 1, 2020. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available.
In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for SEC small business filers for fiscal years beginning after December 15, 2022.
| F-8 |
| 3. | Related-Party Transactions |
The primary shareholder of DISA Medinotec (Pty) Ltd, Medinotec Inc Group and Minoan Capital (Pty) Ltd at the date of the business combination is the same ultimate beneficial shareholder Dr Gregory Vivirgianakis the CEO of the Medinotec Inc Group.
Loan
There was an unsecured interest free loan from a related party Minoan Capital (Pty) Ltd received during the period. The balance of the loan as at February 28, 2022 was:
| 28 February | |||
| 2022 | |||
| Minoan Capital (Pty) Ltd | $ | 325 | |
There were no other related party transactions or balances during the period ended February 28, 2022.
| 4. | Subsequent Events |
The Company embarked on a capital raise at a pre-FDA and pre due diligence phase valuation, which meant a significant risk premium was added to the valuation. Based on this the Board of Medinotec Inc incorporated in Nevada USA had to convince the owners of DISA Medinotec (Pty) Ltd in South Africa of its ability to raise a minimum of $3 million during a private placement before the owners of DISA Medinotec (Pty) Ltd would sell into the strategy of Medinotec Inc in the United States of America. This was proven on 2 March 2022. Therefore, the sale of the business of DISA Medinotec into that of the structure of Medinotec Inc became effective.
On 26 May 2022 the company had $ 3 336 622 in the escrow account of Empire stock transfer. The company plans to close the round as soon as there is no more activity in the escrow account. The raise is being conducted at $2 a share. The company’s agents are entitled to commissions of 5% which can be elected to pay in either stock or cash, the agents are yet to elect their choice when the round officially closes.
Due to the control of the businesses being in principle 95% the same between Medinotec Group USA and the owner of Medinotec South Africa the transaction would be deemed a common control transaction. The fair value consideration payable will be $11 for the outstanding equity and Medinotec Group would take on the responsibility of the loan account payable to Minoan medical $1,583,661. Taking into account the history of operational losses this is deemed to be a fair purchase consideration between the related parties.
| F-9 |
DISA MEDINOTEC (PTY) LTD
Registration Number: 2015/115015/07
Audited Financial Statements
February 28, 2022
| F-10 |
A-94/8,
Wazirpur Industrial Area,
Main Ring Road, Delhi-110052
+91 11 45596689
Web : www.ajsh.in
E-mail : info@ajsh.in
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of DISA Medinotec (Pty) Ltd
Opinion on the Financial Statements
We have audited the accompanying Balance Sheet of DISA Medinotec (Pty) Ltd (the “Company”) as on 28 February 2022 and 28 February 2021, the related statements of operations, changes in stockholders’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the "Financial Statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of 28 February 2022 and 28 February 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company Ability to Continue as a Going Concern
The accompanying Financial Statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the Financial Statements, the Company has an accumulated deficit of $476,480 and $309,326 as of 28 February 2022 and 28 February 2021 respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this uncertainty are also described in the Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of financial statement. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The Critical Audit Matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
AJSH & Co LLP
We have served as the Company’s auditor since 2021.
New Delhi, India
June 02, 2022
| F-11 |
DISA MEDINOTEC (PTY) LTD
BALANCE SHEETS
As of February 28, 2022 and February 28, 2021
| As at | As at | |||||
| February 28 | February 28 | |||||
| 2022 | 2021 | |||||
| Cash and cash equivalents | $ | 121,412 | $ | 41,265 | ||
| Current tax receivable | 105,798 | 1,861 | ||||
| Accounts receivable, less allowance for doubtful accounts | 42,183 | 55,972 | ||||
| Inventories, net | 438,923 | 393,351 | ||||
| Prepaid expenses and other current assets | 3,221 | 25,256 | ||||
| Total current assets | 711,537 | 517,705 | ||||
| Non current assets: | ||||||
| Property, plant and equipment, net of accumulated amortization and depreciation of $ 1,509,747 and $ 1,341,719, respectively | 515,703 | 542,158 | ||||
| Deferred tax assset | 85,626 | 22,938 | ||||
| Total assets | $ | 1,312,866 | $ | 1,082,801 | ||
| Liabilities and shareholders’ equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | 160,687 | 30,022 | ||||
| Accrued expenses and other current liabilities | 48,331 | 73,696 | ||||
| Total current liabilities | 209,018 | 103,718 | ||||
| Non-current liabilities: | ||||||
| Loan payable | 1,583,661 | 1,303,352 | ||||
| Total liabilities | 1,792,679 | 1,407,070 | ||||
| Commitments and contingencies | ||||||
| Shareholders’ equity | ||||||
| Common stock, $0.06509 par value; shares authorized 1,000 ; 169 and 169 shares issued and outstanding in each period | 11 | 11 | ||||
| Accumulated deficit | (476,480) | (309,326) | ||||
| Accumulated other comprehensive income/(loss) | (3,344) | (14,954) | ||||
| Total shareholders’ equity | (479,813) | (324,269) | ||||
| Total liabilities and shareholders’ equity | $ 1,312,866 | $ 1,082,801 | ||||
The accompanying notes are an integral part of the financial statements.
| F-12 |
DISA MEDINOTEC (PTY) LTD
STATEMENTS OF OPERATIONS
For the years ended February 28, 2022 and February 28, 2021
| For the 12 months ended | ||||||||
| February 28 | February 28 | |||||||
| 2022 | 2021 | |||||||
| Revenue | $ | 1,215,905 | $ | 493,642 | ||||
| Cost of revenue | 666,715 | 191,342 | ||||||
| Gross profit | 549,190 | 302,300 | ||||||
| Operating expenses: | ||||||||
| Selling expenses | 17,271 | 13,091 | ||||||
| Depreciation and amortization expense | 106,114 | 109,061 | ||||||
| General and administrative expenses | 600,484 | 409,505 | ||||||
| Research and development expenses | 35,525 | 29,416 | ||||||
| Total operating expenses | 759,394 | 561,073 | ||||||
| LOSS FROM OPERATIONS | (210,204 | ) | (258,773 | ) | ||||
| OTHER INCOME (EXPENSE): | ||||||||
| Interest income | 30 | 1,358 | ||||||
| Interest expense | (4 | ) | (304 | ) | ||||
| Other | (21,979 | ) | 201,343 | |||||
| Total other income/(expense) | (21,953 | ) | 202,397 | |||||
| Profit from operations before income taxes | (232,157 | ) | (56,376 | ) | ||||
| Income tax benefit (expense) | 65,003 | 19,693 | ||||||
| NET LOSS | $ | (167,154 | ) | $ | (36,683 | ) | ||
| Other comprehensive income/(loss) | 11,610 | (14,954 | ) | |||||
| Total comprehensive income/(loss) | $ | (155,544 | ) | $ | (51,637 | ) | ||
| Net loss per share: | ||||||||
| Basic | $ | (989.08 | ) | $ | (217.06 | ) | ||
| Diluted | $ | (989.08 | ) | $ | (217.06 | ) | ||
| Weighted average shares - Basic | 169 | 169 | ||||||
| Weighted average shares - Diluted | 169 | 169 | ||||||
The accompanying notes are an integral part of the financial statements.
| F-13 |
DISA MEDINOTEC (PTY) LTD
STATEMENTS OF SHAREHOLDERS’ EQUITY
As of February 28, 2022
| Common Stock | ||||||||||||||||||||
| Number of Shares | Amount | Accumulated Other Comprehensive Income/(loss) | Accumulated Deficit | Total Shareholders Equity | ||||||||||||||||
| Balance, February 29 2020 | 169 | $ | 11 | $ | — | $ | (272,643 | ) | $ | (272,632 | ) | |||||||||
| Net loss | — | — | (14,954 | ) | (36,683 | ) | (51,637 | ) | ||||||||||||
| Balance, February 28 2021 | 169 | $ | 11 | $ | (14,954 | ) | $ | (309,326 | ) | $ | (324,269 | ) | ||||||||
| Balance, March 1 2021 | 169 | $ | 11 | $ | (14,954 | ) | $ | (309,326 | ) | $ | (324,269 | ) | ||||||||
| Net loss | — | — | 11,610 | (167,154 | ) | (155,544 | ) | |||||||||||||
| Balance, February 28 2022 | 169 | $ | 11 | $ | (3,344 | ) | $ | (476,480 | ) | $ | (479,813 | ) | ||||||||
The accompanying notes are an integral part of the financial statements.
| F-14 |
DISA MEDINOTEC (PTY) LTD
STATEMENTS OF CASH FLOWS
For the years ended February 28, 2022 and February 28, 2021
| For the 12 months ended | ||||||||
| February 28 | ||||||||
| 2022 | 2021 | |||||||
| Operating activities | ||||||||
| Net loss | $ | (167,154 | ) | $ | (36,683 | ) | ||
| Adjustments to reconcile net profit to net cash and cash equivalents used in operating activities: | ||||||||
| Depreciation and amortization | 106,114 | 109,061 | ||||||
| Credit losses | 996 | — | ||||||
| Deferred tax benefit | (65,003 | ) | (19,693 | ) | ||||
| Gains and losses on foreign exchange realised in profit and loss | (2,355 | ) | 2,393 | |||||
| Gains on on disposal of property and equipment | — | (387 | ) | |||||
| Income tax | (106,983 | ) | (2,799 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 13,252 | (53,253 | ) | |||||
| Inventories | (55,513 | ) | 265,428 | |||||
| Prepaid expenses and other current assets | 22,118 | 14,802 | ||||||
| Accounts payable, accrued expenses and other | 111,687 | 19,382 | ||||||
| Net cash generated in operating activities | (142,841 | ) | 298,251 | |||||
| Investing activities | ||||||||
| Acquisition of property, plant and equipment | (90,780 | ) | (279,037 | ) | ||||
| Proceeds from sale of property, plant and equipment | — | 387 | ||||||
| Cash used in investing activities | (90,780 | ) | (278,650 | ) | ||||
| Financing activities | ||||||||
| Proceeds/(Repayments) from/(of) other financial liabilities | 316,989 | (71,882 | ) | |||||
| Net cash (used in) provided by financing activities | 316,989 | (71,882 | ) | |||||
| Net (decrease) increase in cash and cash equivalents | 83,368 | (52,281 | ) | |||||
| Cash and cash equivalents at the beginning of the period | 41,265 | 94,878 | ||||||
| Effects of currency translation on cash and cash equivalents | (3,221 | ) | (1,332 | ) | ||||
| Cash and cash equivalents at the end of the period | $ | 121,412 | $ | 41,265 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | 4 | $ | 304 | ||||
| Income taxes | $ | 106,983 | $ | 2,799 | ||||
| Cash received for: | ||||||||
| Interest | $ | 30 | $ | 1,358 | ||||
| Income taxes | $ | — | $ | — | ||||
The accompanying notes are an integral part of the financial statements.
| F-15 |
DISA MEDINOTEC (PTY) LTD
Notes to Financial Statements.
| 1. | DESCRIPTION OF BUSINESS |
DISA Medinotec (Pty) Ltd (the “Company” or “COMPANY”), was incorporated in the Republic of South Africa in 2015. It was formerly known as DISA Vascular 2015 (Pty) Ltd and changed its name to DISA Medinotec (Pty) Ltd effective 19 October 2020. The Company produces high-quality medical devices through in-depth research and development. The products developed are sold via a network of distributors in many parts of the world and through a direct sales force in South Africa and the United States of America.
The Company is located and headquartered in Johannesburg, South Africa. The Company’s revenues are derived primarily from operations in South Africa and Europe while growing its product offering to penetrate the United States of America in the near future.
Risks and Uncertainties—The Company is subject to a number of risks similar to those of other companies of similar size in its industry, including, but not limited to, the need for successful development of products, the need for additional capital (or financing) to fund operating losses (see below), competition from substitute products and services from larger companies, protection of proprietary technology, patent litigation, dependence on key individuals, and risks associated with changes in information technology.
In addition, the business is subject to additional material risks and uncertainties as a result of the coronavirus (“COVID-19”) pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict, as the response to the pandemic is rapidly evolving. Several jurisdictions are experiencing new increases in the rate of infection by COVID-19, and as a result, the Company’s customers are diverting resources to treat COVID-19 patients and deferring elective surgical procedures, both of which have and are likely to continue to impact demand for the Company’s products.
Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic recession. Such economic disruption could have a material adverse effect on the Company’s business as hospitals and surgery centers curtail and reduce capital and overall spending. Policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions and the Company’s ability to benefit from them remains uncertain.
The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the duration and spread of the outbreak, its severity, the actions taken to contain the virus or address its impact including vaccine distribution and efficacy, South African and foreign government actions to respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume, all of which are uncertain and cannot be predicted.
The Company’s future results of operations and liquidity could be materially and adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operations challenges faced by its customers. As of the date of issuance of these financial statements, the extent to which the COVID-19 pandemic may materially impact the Company’s financial condition, liquidity, or results of operations is uncertain.
| 2. | GOING CONCERN |
The Company incurred net losses of $ 167,154 (2021: $ 36,683), and utilized cash in operations since inception, has an accumulated deficit as of February 28, 2022 of $476,480 (2021: $309,326), as well as expects to incur future additional losses as it builds out the territory of the United States and expects to return to profitability once this territory established a sales force. The Company has cash available on hand and believes that this cash will be sufficient to fund operations and meet its obligations as they come due within one year from the date these financial statements are issued. In the event that the Company does not achieve revenue anticipated in its current operating plan, management has the ability and commitment to reduce operating expenses as necessary. The Company’s long-term success is dependent upon its ability to successfully raise additional capital, market its existing services, increase revenues, and, ultimately, to achieve profitable operations.
The Company’s financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The company received FDA approval for one of its main products being the Trachealator in November 2021. As the research and development phase of this product is complete the company should see an increase in sales being realized against expenditure incurred. A private placement was done in the wake of the successful research and development and subsequent regulatory approval. A discounted cash flow valuation was performed on the company which indicated it turning profitable over the next 2 years.
| F-16 |
| 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation—The financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (US GAAP).
Use of Estimates—The preparation of financial statements in conformity with GAAP 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 periods. These estimates include, but are not limited to, management’s estimate of provisions required for non-collectible accounts receivable, depreciative lives of our assets, determination of technological feasibility, and valuation allowances of our deferred tax assets. Actual results could differ from those estimates.
Foreign Currency— The Company accounts for foreign currency transactions in accordance with ASC 830, “Foreign Currency Matters” (“ASC 830”), specifically the guidance in subsection ASC 830-20, “Foreign Currency Transactions”. The Company accounts for foreign currency transactions in accordance with ASC 830, “Foreign Currency Matters” (“ASC 830”),specifically the guidance in subsection ASC 830-20, “Foreign Currency Transactions”. The Company’s reporting currency is the US dollar. The functional currency of the Company’s foreign subsidiary is the local currency (South African Rand). Pursuant to ASC 830, monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, with the resulting gains or losses upon settlement reported in foreign exchange gain (loss) in the computation of net income (loss). Gains or losses resulting from translation adjustments are reported under accumulated other comprehensive income (loss).
Comprehensive Income (Loss)—Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss), net of tax. Other comprehensive income (loss), net of tax, refers to revenue, expenses, gains, and losses that under generally accepted accounting principles are recorded as an element of members’ equity but are excluded from net income (loss). The Company’s other comprehensive income (loss), net of tax, consists of foreign currency translation adjustments that result from consolidation of its foreign entities.
Cash and Cash Equivalents—The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash and cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. As of February 28, 2022 and February 28, 2021, cash consists primarily of checking and savings deposits.
Accounts Receivable and Allowance for Doubtful Accounts—Accounts receivable are stated at net realizable value. The majority of customers are not extended credit and therefore time to maturity for receivables is short. On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance or if any accounts should be written off based on a past history of write-offs, collections, and current credit conditions. A receivable is considered past due if the Company has not received payments based on agreed-upon terms. The Company generally does not require any security or collateral to support its receivables.
No allowance for doubtful debt was recognized as at February 28, 2022 and February 28, 2021, respectively.
Property and Equipment—Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over the estimated useful lives as follows for the major classes of assets:
| Plant and machinery | 10 years | |
| Laboratory equipment | 5 years | |
| Furniture and fixtures | 6 years | |
| Motor vehicles | 5 years | |
| Computer equipment | 3 years | |
| Office equipment | 6 years | |
| Computer software | 2 years |
Inventories—Inventories are stated at the lower of cost (Weighted Average) or net realizable value and consist of raw materials, work-in process and finished goods and include purchased materials, direct labor and manufacturing overhead. Management evaluates the need to record adjustments to write down inventory to the lower of cost or net realizable value on an annual basis. The Company’s policy is to assess the valuation of all inventories, including raw materials, work-in-process and finished goods and it writes down its inventory for estimated obsolescence based upon the age of inventory and assumptions about future demand and usage.
| F-17 |
Revenue Recognition—The Company generates its revenues from the sale of high-quality medical devices which are self-manufactured through in-depth research and development. The products developed are sold via a network of distributors in many parts of the world and through a direct sales force in South Africa.
Revenues are recognized when control of the promised goods or services are transferred to a customer in an amount that reflects the consideration that the Company expects to receive in exchange for those products.
The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its arrangements:
· identify the contract with a customer,
· identify the performance obligations in the contract,
· determine the transaction price,
· allocate the transaction price to performance obligations in the contract, and
· recognize revenue as the performance obligation is satisfied.
Under ASC Topic 606, the Company estimates the transaction price, including variable consideration, at the commencement of the contract and recognizes revenue over the contract term, rather than when fees become fixed or determinable.
Payment Terms
Our payment terms generally are 30 days from statement. The time between a customer’s payment and the receipt of funds is not significant. Our contracts with customers do not result in significant obligations associated with returns, refunds or warranties. Our payment terms are generally fixed and do not include variable revenues.
Cost of Revenue—Cost of revenue consists primarily of raw material purchases, manufacturing costs and employee benefits paid to operational personnel associated with the production of our medical devices.
Selling Expenses—Selling expenses consist of advertising costs as well as courier and postage.
Depreciation and Amortization—Depreciation is calculated using the straight-line method over estimated useful lives ranging from ten to two years. Depreciation expense for February 28, 2022, was $106,114 (2021: $ 109,061).
General and Administrative—General and administrative expenses include compensation, employee benefits, facility costs (including rent), bad debt costs, professional service fees, and other general overhead costs to support our operations.
Research and Development—Research and development costs that do not meet the criteria for capitalization are expensed as incurred. Research and development expenses include compensation, employee benefits, and stock-based compensation for technology developers and product management employees as well as fees paid to outside consultants and the amortization of capitalized software costs for the Company’s proprietary technology.
Impairment of Long-Lived Assets—The Company assesses long-lived assets for impairment in accordance with the provisions of Financial Accounting Standards Board ASC 360, Property, Plant and Equipment. Long-lived assets (asset group), such as property and equipment subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. As of February 28, 2022 and February 28, 2021, no impairment charge has been recorded.
| F-18 |
Income Taxes—Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
The Company records interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expenses.
Fair Value Measurements—Fair value accounting is applied for all assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company follows the established framework for measuring fair value and expands disclosures about fair value measurements (see Note 3).
Concentrations of Credit Risk—Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. The Company invests its excess cash in low-risk, highly liquid money market funds and certificates of deposit with a major financial institution.
Interest rate Risk—Related party loan interest. Market interest rate risk may result in loss from fluctuations in the future cash flows or fair values of financial instruments. Interest rate risk is managed principally through monitoring interest rate gaps and basis risk and by having pre-approved limits for repricing bands.
Forex Risk—The primary operations and functional currency of the business is in South African Rand. Due to the emerging market nature of this currency the spread volatility of the currency low and high can be material during a year. The conversion of the currency from Rand to reporting currency US Dollar can cause significant up or downward trends that is recorded in reserves under the heading conversion reserve the effect on the financial statements in 2022 and 2021 was $11,610 and $14,954 respectively.
Employee Benefit Plan—The Company contributes 2.5% for eligible employees to a pension plan registered under the laws of South Africa. The company also contributes a third of the medical aid contribution for eligible employees to an approved medical insurance scheme.
Recently Adopted Accounting Pronouncements—In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), and has since issued amendments thereto, related to the accounting for leases (collectively referred to as “ASC 842”). ASC 842 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all long-term leases. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition and classification in the statement of operations. The Company adopted ASC 842 on March 1, 2020. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.
Recent Accounting Pronouncements—In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for SEC small business filers for fiscal years beginning after December 15, 2022. Management is currently assessing the impact that ASU 2016-13 will have on the Company.
| F-19 |
4. FAIR VALUE MEASUREMENTS
Fair Value of Financial Instruments for certain of the Company’s financial instruments, including cash and accounts payable, the carrying amounts approximate their fair values due to their short maturities. FASB ASC Topic 820, Fair Value Measurements and Disclosures, requires disclosure of the fair value of financial instruments held by the Company. FASB ASC Topic 825, Financial Instruments, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
| · | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. |
| · | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| · | Level 3 inputs to the valuation methodology us one or more unobservable inputs which are significant to the fair value measurement. The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic 480, Distinguishing Liabilities from Equity, and FASB ASC Topic 815, Derivatives and Hedging. As of 28 February, 2022, the Company did not identify any assets and liabilities required to be presented on the balance sheet at fair value. |
5. EARNINGS PER SHARE
Earnings per share (“EPS”) is calculated using the two-class method, which allocates earnings among common stock and participating securities to calculate EPS when an entity’s capital structure includes either two or more classes of common stock or common stock and participating securities. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities. As such, unvested shares of restricted stock of the Company are considered participating securities. The dilutive effect of options and their equivalents (including non-vested stock issued under stock-based compensation plans), is computed using the “treasury” method.
Basic income per common share is based on the weighted average number of common shares outstanding during the period. Diluted income per common share includes the dilutive effect of potential common shares outstanding. The following table sets forth the reconciliation of weighted average shares outstanding and diluted weighted average shares outstanding:
| For the 12 months ended | ||||||||
| February 28 | ||||||||
| 2022 | 2021 | |||||||
| Basic weighted average shares outstanding | 169 | 169 | ||||||
| Dilutive
effect of restricted stock awards (participating securities) | — | — | ||||||
| Denominator for basic earnings per share | 169 | 169 | ||||||
| Dilutive effect of stock options | — | — | ||||||
| Diluted weighted average shares outstanding | 169 | 169 | ||||||
| F-20 |
6. PROPERTY. PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
| February 28 | February 28 | |||||||
| 2022 | 2021 | |||||||
| Leasehold improvement | $ | 22,824 | $ | 23,321 | ||||
| Computer equipment | 182,184 | 184,433 | ||||||
| Computer software | 69,842 | 71,363 | ||||||
| Office equipment | 8,676 | 8,865 | ||||||
| Furniture and fixtures | 122,418 | 124,392 | ||||||
| Motor vehicles | 14,846 | 15,170 | ||||||
| Small assets | 16,874 | 17,241 | ||||||
| Plant and machinery | 1,256,690 | 1,196,309 | ||||||
| Laboratory equipment | 298,205 | 304,697 | ||||||
| 1,992,559 | 1,945,791 | |||||||
| Foreign currency adjustment | 32,891 | (61,914 | ) | |||||
| Less: accumulated depreciation and amortization | (1,509,747 | ) | (1,341,719 | ) | ||||
| Property, plant and equipment, net | $ | 515,703 | $ | 542,158 | ||||
Depreciation and amortization of property, plant and equipment totaled approximately $106,114 and $109,061, for the fiscal years ended February 28, 2022 and February 28, 2021 respectively.
The company has not acquired any property and equipment under capital leases.
Additions to property, plant and equipment were as follow:
| February 28 | February 28 | |||||||
| 2022 | 2021 | |||||||
| Computer equipment | $ | 1,681 | — | |||||
| Furniture and fixtures | 676 | 6,849 | ||||||
| Plant and machinery | 85,872 | 300,228 | ||||||
| $ | 88,229 | $ | 307,077 | |||||
7. INVENTORIES
Inventories are summarized as follows:
| February 28, | February 28, | |||||||
| 2022 | 2021 | |||||||
| Merchandise | $ | 438,923 | $ | 393,351 | ||||
| Inventory, gross | 438,923 | 393,351 | ||||||
| Less provisions for obsolescence | — | — | ||||||
| Inventory, net | $ | 438,923 | $ | 393,351 | ||||
During the current period the parent company Minoan Medical (Pty) Ltd transferred inventory to the value of $201,131 to the company.
| F-21 |
8. OTHER FINANCIAL LIABILITIES
Other financial liabilities consists of a loan from the holding company:
| February 28 | February 28 | |||||||
| 2022 | 2021 | |||||||
| Minoan Medical (Pty) Ltd | $ | 1,583,661 | $ | 1,303,352 | ||||
This is an unsecured loan from the related party Minoan Medical. During the Covid challenges interest on the loan was waived due to the loan being classified as an equity investment at that stage. The company has a period of 3 years post any IPO date to repay the loan, during these 3 years the loan will carry interest at the prevailing prime lending rate of the time. The current prevailing prime lending rate in South Africa is 7.75%.
The company has the option to settle earlier and settlement can be in cash or shares.
Minoan Medical is a related party of the Company as the CEO Dr Gregory Vizirgianakis has common control. The terms of this loan is market related.
9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
The following summarizes accrued expenses and other current liabilities:
| February 28 | February 28 | |||||||
| 2022 | 2021 | |||||||
| Accrued payroll, payroll taxes and vacation | $ | 8,714 | $ | 73,320 | ||||
| Deferred rent | 183 | 376 | ||||||
| Value added tax | 39,434 | — | ||||||
| Accrued expenses and other current liabilities | $ | 48,331 | $ | 73,696 | ||||
10. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases office and warehouse spaces under noncancelable operating lease agreements, which expire from 2021 through 2023. The Company is required to pay property taxes, insurance, and normal maintenance costs for certain of these facilities and will be required to pay any increases over the base year of these expenses on the remainder of the Company’s facilities.
Deferred Rent
Certain of the Company’s operating leases contain predetermined fixed escalations of minimum rentals during the lease term. For these leases, the Company recognizes the related rental expense on a straight- line basis over the life of the lease from the date the Company takes possession of the office and records the difference between amounts charged to operations and amounts paid as deferred rent. As of February 28, 2022 and February 28, 2021, $184 and $376, respectively, had been accrued.
| F-22 |
Rental expense for operating leases for the years ended February 28, 2022 and February 28, 2021, was $57,588 and $58,662, respectively.
Future minimum lease payments under noncancelable operating leases as of February 28, 2022, are as follows:
| Years ending February 28 | 2022 | |||||
| 2023 | 41,075 | |||||
| Total minimum future lease payments | 41,075 | |||||
Litigation
From time to time, the Company may become involved in various legal proceedings in the ordinary course of its business and may be subject to third-party infringement claims.
In the normal course of business, the Company may agree to indemnify third parties with whom it enters into contractual relationships, including customers, lessors, and parties to other transactions with the Company, with respect to certain matters. The Company has agreed, under certain conditions, to hold these third parties harmless against specified losses, such as those arising from a breach of representations or covenants, other third-party claims that the Company’s products when used for their intended purposes infringe the intellectual property rights of such other third parties, or other claims made against certain parties. It is not possible to determine the maximum potential amount of liability under these indemnification obligations due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances that are likely to be involved in each particular claim.
From time to time, the Company is subject to various claims that arise in the ordinary course of business. Management believes that any liability of the Company that may arise out of or with respect to these matters will not materially adversely affect the financial position, results of operations, or cash flows of the Company.
At reporting date there is no known material litigation or claims against the Company.
11. COMMON STOCK
As of February 28, 2022 the Company had 831 shares of common stock authorized and available to issue for purposes of satisfying conversion of preferred stock, the exercise of warrants, the exercise and future grant of common stock options, and for purposes of any future business acquisitions and transactions.
12. INCOME TAXES
Profit before income taxes for the year ended February 28, 2022 and February 28, 2021, are as follows:
| 2022 | 2021 | ||||||||
| Local | $ | (232,157 | ) | $ | (56,376 | ) | |||
| Foreign | — | — | |||||||
| Total | $ | -232,157 | $ | -56,376 | |||||
Provision for income taxes for the year ended February 28, 2021 and 2020, consisted of the following:
| 2022 | 2021 | |||||||
| Current tax provision: | ||||||||
| Foreign | $ | — | $ | — | ||||
| Local | — | — | ||||||
| Total current tax provision | — | — | ||||||
| Deferred tax provision: | ||||||||
| Foreign | — | — | ||||||
| Local | 65,003 | 19,693 | ||||||
| Total deferred tax provision | 65,003 | 19,693 | ||||||
| Provision for income taxes | $ | 65,003 | $ | 19,693 | ||||
| F-23 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. There are no uncertain tax positions as defined by ASC 740-10 for the years February 28, 2021 and February 28, 2022. Accordingly, there are no interest or penalties accrued for the current or prior tax year.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
| February 28 | February 28 | |||||||
| 2022 | 2021 | |||||||
| Deferred tax assets / (liabilities) | ||||||||
| Deferred rent | $ | 51 | 105 | |||||
| Leave pay provision | 895 | 724 | ||||||
| Assessed losses | 84,680 | $ | 22,109 | |||||
| 85,626 | 22,938 | |||||||
| Valuation Allowance | — | — | ||||||
| Total net deferred tax assets | $ | 85,626 | $ | 22,938 | ||||
Deferred tax assets refer to assets that are attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets in essence represent future savings of taxes that would otherwise be paid in cash. The realization of the deferred tax assets is dependent upon the generation of sufficient future taxable income, including capital gains. If it is determined that the deferred tax assets cannot be realized, a valuation allowance must be established, with a corresponding charge to net income.
13. RELATED PARTY TRANSACTIONS
Rent
The company leases commercial buildings from Minoan Captial (Pty) Ltd (“Minoan Capital”). The chief executive officer of Minoan Capital is also the CEO of DISA Medinotec (Pty) Ltd.
Set forth below is a table showing the Company’s net purchases for the years ended February 28 and accounts payable at February 28 for the indicated time periods below with Minoan Capital:
| For the 12 months ended | ||||||||
| February 28 | ||||||||
| 2022 | 2021 | |||||||
| Rent paid | $ | 38,157 | $ | 38,157 | ||||
| Accounts payable | $ | — | $ | — | ||||
Rent is comparable to rent charged in the market and thus deemed to be at arm's length.
Loan
This is an unsecured loan from the parent entity Minoan Medical. During the Covid challenges interest on the loan was waived due to the loan being classified as an equity investment at that stage. The company has a period of 3 years post any IPO date to repay the loan, during these 3 years the loan will carry interest at the prevailing prime lending rate of the time. The current prevailing prime lending rate in South Africa is 8.25%.
| F-24 |
The company has the option to settle earlier and settlement can be in cash or shares.
Minoan Medical is a related party of the CEO Dr Gregory Vizirgianakis the terms of this loan is market related.
Operational charges are charged to the loan account.
| February 28 | February 28 | |||||||
| 2022 | 2021 | |||||||
| Minoan Medical (Pty) Ltd | $ | 1,583,661 | $ | 1,303,352 | ||||
Sales to parent and associates
The company sells the majority of its stock to DISA Life Sciences (Pty) Ltd ("DISA Life Sciences"). DISA Life Sciences and the company is under common control and one of the company's directors are also a director of DISA Life Sciences. Directors are shared to improve corporate governance and insight into the associate.
DISA Life Sciences is the 3rd biggest distributor of medical devices in the Republic of South Africa and therefore Medinotec utilizes their sales foot print for cost efficiencies. All trading are considered to be at arm's length.
During the year the company also sold stock to Minoan Medical (Pty) Ltd ("Minoan"). The company is a wholly owned subsidiary of Minoan.
Set forth below is a table showing the Company’s sales for the years ended February 28 and accounts receivable at February 28 for the indicated time periods below with DISA Life Sciences & Minoan:
| For the 12 months ended | ||||||||
| February 28 | ||||||||
| 2022 | 2021 | |||||||
| DISA Life Sciences | ||||||||
| Sales | $ | 525,558 | $ | 344,657 | ||||
| Accounts receivable | $ | 1,242 | $ | — | ||||
| Minoan Medical | ||||||||
| Sales | $ | 465,695 | $ | — | ||||
| Accounts receivable | $ | — | $ | — | ||||
14. SUBSEQUENT EVENTS
The company’s parent entity Minoan Medical opted after year end to transfer the company at a fair consideration to the Medinotec Group of companies which is incorporated in the United States of America. This transfer has a closing condition president that Medinotec Group USA must prove to the Board of Minoan Medical South Africa that the company was able to raise at minimum $3 million through a private placement process. On the date that Medinotec Group USA proves this to Minoan Medical the sales transaction will become effective.
Due to the control of the businesses being in principal 95% the same between Minoan Medical and Medinotec Group USA the transaction would be deemed a common control transaction. The fair value consideration payable will be $11 for the outstanding equity and Medinotec Group would take on the responsibility of the loan account payable to Minoan medical $ 1,583,661. Taking into account the history of operational losses this is deemed to be a fair purchase consideration between the related parties.
| F-25 |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
No events occurred requiring disclosure under Item 304 of Regulation S-K during the fiscal year ending February 28, 2021.
We file annual, quarterly and current reports, proxy statements and other documents with the SEC. These filings contain important information which does not appear in this prospectus. You may read and copy, at prescribed rates, any documents we have filed with the SEC at its Public Reference Room located at 100 F Street, N.E., Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We also file these documents with the SEC electronically. You can access the electronic versions of these filings on the SEC’s website found at http://www.sec.gov.
We have filed with the Securities and Exchange Commission (“SEC”) a registration statement for the securities on Form S-1 under the Securities Act. This prospectus, which forms part of the registration statement, does not contain all the information contained in the registration statement. Whenever a reference is made in this prospectus to any of our contracts or other documents, the reference may not be complete and, for a copy of the contract or document, you should refer to the exhibits that are part of the registration statement.
You may inspect and copy the registration statement at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549 upon payment of certain prescribed fees. You may obtain information on the operation of the SEC’s public reference facilities by calling the SEC at 1-800-SEC-0330. You may also access the registration statement electronically through the SEC’s Electronic Data Gathering, Analysis and Retrieval, or EDGAR, system at the SEC’s website located at http://www.sec.gov.
Until _______________, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
| 54 |
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
| Item 13. | Other Expenses of Issuance and Distribution |
| SEC Registration Fees | $ | $803.59 |
| Accounting Fees and Expenses* | 10,000 | |
| Legal Fees and Expenses* | 10,000 | |
| Miscellaneous* | 5,000 | |
| Total | $ | 25,803.59 |
* Estimates
We will bear our fees and expenses incurred in connection with the registration of shares of common stock in connection with this offering. The Selling Shareholders will bear all selling and other expenses that they incur in connection with their sale of shares of common stock pursuant to the prospectus which is part of this registration statement.
| Item 14. | Indemnification of Directors and Officers. |
Our officers and directors are indemnified as provided by the Nevada Revised Statutes and our bylaws.
Under the governing Nevada statutes, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's articles of incorporation. Our articles of incorporation do not contain any limiting language regarding director immunity from liability. Excepted from this immunity are:
| 1. | a willful failure to deal fairly with the company or its shareholders in connection with a matter in which the director has a material conflict of interest; |
| 2. | a violation of criminal law (unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful); |
| 3. | a transaction from which the director derived an improper personal profit; and |
| 4. | willful misconduct. |
Our bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law; provided, however, that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless:
| 1. | such indemnification is expressly required to be made by law; |
| 2. | the proceeding was authorized by our Board of Directors; |
| 3. | such indemnification is provided by us, in our sole discretion, pursuant to the powers vested us under Nevada law; or; |
| 4. | such indemnification is required to be made pursuant to the bylaws. |
Our bylaws provide that we will advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer, of the company, or is or was serving at the request of the company as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under our bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer of the company, except by reason of the fact that such officer is or was a director of the company in which event this paragraph shall not apply, in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the company.
| 55 |
| Item 15. | Recent Sales of Unregistered Securities. |
On April 26, 2021 the company issued 10,000, 000 shares of common stock to the founding shareholders at 0.001 per share.
On May 30, 2022 the company concluded a pre FDA approval raise which started in October 2021 and concluded on May 30, 2022. This raise was for a total of 1,733,750 shares of common stock at $2 a share.
These securities were issued pursuant to Regulation S promulgated under the Securities Act of 1933, as amended. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
| Item 16. | Exhibits |
| Item 17. | Undertakings. |
The registrant hereby undertakes:
| (a) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | to include any prospectus required by Section 10(a)(3) of the Securities Act; |
(ii) to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(b) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(d) That, for the purpose of determining liability under the Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however , that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(e) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other that the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit of proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
| 56 |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of North Riding, South Africa.
| DATE | SIGNATURE | TITLE | ||
| June 2, 2022 | /s/ Gregory Vizirgianakis | Chief Executive Officer and Director | ||
| Gregory Vizirgianakis | (Principal Executive Officer) |
| DATE | SIGNATURE | TITLE | ||
| June 2, 2022 | /s/ Peter van Niekerk | Chief Financial Officer and Director | ||
| Peter van Niekerk | (Principal Financial Officer and Principal Accounting Officer) |
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| DATE | SIGNATURE | TITLE | ||
| June 2, 2022 | /s/ Gregory Vizirgianakis | Chief Executive Officer and Director | ||
| Gregory Vizirgianakis | (Principal Executive Officer) |
| DATE | SIGNATURE | TITLE | ||
| June 2, 2022 | /s/ Peter van Niekerk | Chief Financial Officer and Director | ||
| Peter van Niekerk | (Principal Financial Office and Principal Accounting Officer) |
| 57 |
SALE OF SHARES AGREEMENT, DATED 2 MARCH, 2022
SALE OF SHARES AGREEMENT
entered into between
Minoan Medical Proprietary Limited,
(Registration Number 2015/055306/07)
(“the Seller”)
and
MEDINOTEC CAPITAL PROPRIETARY LIMITED,
(Registration Number: 2021/000610/07)
(“the Purchaser”)
and
DISA MEDINOTEC PROPRIETARY LIMITED,
(Registration Number: 2015 / 115015 / 07)
(“the Company”)
TABLE OF CONTENTS
| 1. | INTERPRETATION AND PRELIMINARY |
| 2. | INTRODUCTION AND RECORDAL |
| 3. | SUSPENSIVE CONDITIONS |
| 4. | SALE OF SALE SHARES AND THE CLAIMS TIED THERETO |
| 5. | PURCHASE PRICE AND PAYMENT THEREOF |
| 6. | IMPLEMENTATION |
| 7. | CONFIDENTIALITY |
| 8. | BREACH |
| 9. | DISPUTE RESOLUTION |
| 10. | ARBITRATION |
| 11. | DOMICILIUM CITANDI ET EXECUTANDI |
| 12. | GOVERNING LAW AND JURISDICTION |
| 13. | SIGNATURE |
| 1. | INTERPRETATION AND PRELIMINARY |
The headings of the clauses in this Agreement are for the purpose of convenience and reference only and shall not be used in the interpretation of nor modify nor amplify the terms of this Agreement nor any clause hereof. Unless a contrary intention clearly appears, the following terms shall have the meanings assigned to them hereunder and cognate expressions shall have corresponding meanings, namely:
| 1.1. | “Agreement” means this sale of shares agreement, including all annexures attached thereto; |
| 1.2. | “Annual Financial Statements” means the Company’s audited financial statements for the year ending 28 February 2022; |
1.3. “Business” means the business of the Company being the manufacture, marketing and distributing of medical and surgical equipment and related accessories in the Republic of South Africa and the entire world;
| 1.4. | “Business Day” means any day other than a Saturday, Sunday or public holiday officially proclaimed as such in the Republic of South Africa |
| 2 |
| 1.5. | “Claims” means the total amount owing by the Company in respect of loans made into it in respect of loans made to it by the Seller in its capacity as the Company’s sole shareholder, on loan account from time to time, and which Claims are tied to the Shares held by the Seller as set out in the Annual Financial Statements; |
1.6. “Company” means DISA Medinotec Proprietary Limited, registration number 2015 / 115015 / 07, a private company registered and incorporated in accordance with the laws of the Republic of South Africa having its registered office at care Northlands Deco Park, New Market Street, Stand 299 Avant-Garve Street, Northriding, Gauteng 2169, RSA.
1.7. “Effective Date” means, notwithstanding the Signature Date, the 2 March 2022 but subject to the Suspensive Condition referred to in clause 3 below having `been fulfilled or waived;
| 1.8. | “Financial Year” means the period of 12 consecutive months used by the Minoan Group of Companies to account for and report the results of its operations being the period between 1 March and 28 February of each calendar year; |
1.9. “Parties” mean the Seller and the Purchaser, and “Party” means any of the Seller or the Purchaser as the context may indicate;
1.10. “Purchase Price” means the amounts to be paid by the Purchaser to the Seller as more fully delineated in clause 5 below;
1.11. “Purchaser” means Medinotec Capital Proprietary Limited registration number 2021/000610/07, a private company registered and incorporated in accordance with the laws of the Republic of South Africa having its registered office at care Northlands Deco Park, New Market Street, Stand 299 Avant-Garve Street, Northriding, Gauteng 2169, RSA.
| 1.12. | “RSA” means the Republic of South Africa; |
| 1.13. | “Sale Shares” mean the 169 Shares collectively constituting 100% (one hundred percent) of the entire issued share capital of the Company, as at the Effective Date; |
| 1.14. | “Seller” means Minoan Medical Proprietary Limited, registration number 2015/055306/07, a private company registered and incorporated in accordance with the laws of the Republic of South Africa having its registered office at care 170 Bush telegraph Avenue, Northlands Business Park, New Market Street, Northriding, Gauteng 2169, RSA; |
| 1.15. | “Signature Date” means the date of signature of this Agreement by the last person signing; |
| 1.16. | “Suspensive Conditions” means the suspensive conditions contained in clause 3. |
| 2. | INTRODUCTION AND RECORDAL |
| 2.1. | It is recorded that immediately preceding the Effective Date, 100% (one hundred percent) of Sale Shares and the Claims in the Company held by the Seller. |
| 2.2. | The Parties have agreed that the Seller would sell the Sale Shares to the Purchaser and the Purchaser would purchase the Sale Shares from the Seller which would have the effect that the Company would become a wholly owned subsidiary of the Purchaser. |
The Parties have agreed that this Agreement will govern the sale contemplated in clauses 2.1 and 2.2 above and other matters ancillary thereto.
| 3 |
| 3. | SUSPENSIVE CONDITIONS |
3.1. Notwithstanding the Effective Date, this Agreement, save for clauses 1, 3, and 7 to 13 (inclusive), which are of immediate force and effect, is subject to the suspensive condition that an amount of $ 3 000 000.00 (three million US Dollars) is raised by a private placement on or before 30 May 2022, shall be met or waived by the Parties.
| 3.2. | The Parties shall respectively use their reasonable endeavors to procure the due fulfilment of the suspensive conditions contained in clause 3.1. |
3.3. The suspensive conditions in clause 3 have been stipulated for the benefit of the Parties. The Parties shall accordingly be entitled to waive fulfilment of any such condition/s by giving written notice to that effect to the other Party.
| 3.4. | Should the suspensive conditions contained in clause 3.1 not be duly fulfilled or waived by the Parties, then: |
| 3.4.1. | this Agreement shall be of no force and effect; and |
| 3.4.2. | the Parties shall be restored as near as may be possible to the position in which they would have been had this Agreement not been entered into and no Party shall have any claim against the other. |
| 4. | SALE OF SALE SHARES AND THE CLAIMS TIED THERETO |
| 4.1. | The Seller hereby sells to the Purchaser, who hereby purchases from the Seller, the Sale Shares and the Claims, as one indivisible transaction, with effect from the Effective Date, where all benefit of and risk in and to the Sale Shares and the Claims will pass to the Purchaser. |
| 4.2. | For the sake of clarity, it is recorded that all dividends declared and/or paid before the Effective Date in respect of the Sale Shares shall accrue for the benefit of the Seller, and all dividends declared or paid subsequent to the Effective Date in respect of the Sale Shares shall accrue and pass to the benefit of the Purchaser. |
| 5. | PURCHASE PRICE AND PAYMENT THEREOF |
5.1. The purchase consideration payable by the Purchaser to the Seller for the Sale Shares is the amount of R169.00 (One sixty nine RSA Rands), as reflected in the Annual Financial Statements. (“the Equity Purchase Price”)
| 5.2. | The consideration payable by the Purchaser to the Seller for the Claims is the amount of R24,347,993.23 (Twenty-four million, three hundred and forty-seven thousand, Nine hundred and Ninety-three RSA Rand and Twenty-three cents), as reflected in the Annual Financial Statements (“the Claims Purchase Price”). |
| 5.3. | Payment of the Equity Purchase Price and/or of the Claims Purchase Price, referred to in clauses 5.1 and 5.2 shall be made by the Purchaser to the Seller by way of electronic transfer, free of deduction, set-off or bank charges, into the bank account(s) designated in writing by the Seller for this purpose. |
| 5.4. | The Claims Purchase Price as set out in the Annual Financial Statements shall be recalculated so as to reflect the actual amount constituting the Claims as at the Effective Date. In the event that such recalculation results in an increase of the Claims Purchase Price (“the Actual Claims Purchase Price”), then the Actual Claims Purchase Price shall be paid to the Seller by the Purchaser and the Equity Purchase Price shall be reduced by an amount equal to the increase in the Actual Claims Purchase Price. |
| 4 |
5.5. The Actual Claims Purchase Price shall be paid by the Purchaser to the Seller as per agreement between the Purchaser and the Seller on or before the first board meeting held. It is hereby agreed that the Claims may not be deferred for more than three years and it is hereby further agreed that for the period of the deferral, there will be interest accrued at the annual prime interest rate charged by the Seller’s bank from time to time on the Actual Claims Purchase Price which interested shall be for the benefit of the Seller, provided that subject to operational costs in the Company incurred by the Purchaser, the Purchaser may at its discretion pay the to the Seller the Actual Claims Purchase Price plus interest earlier than the three years .
| 6. | IMPLEMENTATION |
On the Effective Date, the Parties and representatives of the Company shall meet at the offices of the Company, either in person or by skype, and the Seller shall, against proof of payment, deliver to the Purchaser:
| 6.1. | the share certificates in respect of the Sale Shares, together with declarations for the transfer thereof in blank as to transferee, duly signed by the Seller; and |
| 6.2. | such other documents as are necessary in order to enable the Purchaser to procure the registration of the Sale Shares into its name. |
| 7. | CONFIDENTIALITY |
| 7.1. | The Parties agree that all information contained in this Agreement shall be treated as confidential and shall not be disclosed to or be discussed with any other person, except as provided for in clause 8.2. |
| 7.2. | The provisions of clause 8.1 do not prohibit disclosure of such information: |
| 7.2.1. | where the prior written consent for such disclosure has been obtained from the relevant Party; |
| 7.2.2. | where such disclosure is necessary to enforce the provisions and terms of this Agreement by way of legal action; and |
| 7.2.3. | where such disclosure is compelled by law or parliamentary procedure. |
| 8. | BREACH |
If any of the Parties commit a breach of this Agreement (“the Defaulting Party”), and/or fail to comply with any of the provisions hereof, then any of the other Parties against whom the breach is committed (“the Innocent Party”) shall be entitled to give the Defaulting Party 10 (ten) Business Days’ notice in writing to remedy such breach and/or failure, and if the Defaulting Party fails to comply with such notice, then the Innocent Party shall forthwith be entitled, but not obliged, without prejudice to any other remedies which the Innocent Party may have in law.
| 9. | DISPUTE RESOLUTION |
| 9.1 | If there is a dispute, controversy or claim (a “Dispute”) between the Parties in respect of this Agreement, including without limitation any question regarding its existence, validity or termination, the Dispute will be resolved pursuant to the process set forth in this clause 9 (the “Dispute Resolution Process”). |
| 9.2 | A Party to this Agreement that wishes a Dispute to be resolved will give a written notice (a “Dispute Notice”) to the other Parties whereupon each Party (or a designated representative of a Party) will attempt in good faith to resolve the Dispute by negotiation. Each Party to the Dispute will provide to the other Parties all information reasonably requested by the other Parties that is relevant to the Dispute and not subject to confidentiality obligations to third parties or to a legally recognized privilege from disclosure. All negotiations and settlement discussions to resolve a Dispute shall be treated as compromise and settlement negotiations between the Parties and shall not be subject to disclosure through discovery or any other process and shall not be admissible into evidence in any proceeding. |
| 5 |
| 9.3 | If the Parties are unable to resolve the Dispute through negotiation within 20 (twenty) Business Days of the date that the Dispute Notice was delivered or such longer period as agreed to by the Parties, then the Dispute shall be settled by binding arbitration in accordance with clause. |
| 10. | ARBITRATION |
| 10.1. | If any Dispute is referred to arbitration in terms of clause 9, such Dispute shall be referred to and be determined by arbitration in terms of the rules of the Arbitration Foundation of Southern Africa (“AFSA”). |
| 10.2. | Any Party to this Agreement may, subject to the provisions of clause 9, demand that a Dispute be determined in terms of this clause by written notice given to the other Parties. |
| 10.3. | This clause shall not preclude any Party from obtaining interim relief on an urgent basis from a court of competent jurisdiction pending the decision of the arbitrator. |
| 10.4. | The Parties hereby consent to the arbitration being dealt with on an urgent basis in terms of the rules of AFSA should any Party by written notice given to the other require the arbitration to be held on an urgent basis. In such event the Parties agree to apply jointly to the AFSA Secretariat as required in terms of the said rules to facilitate such urgent arbitration. |
| 10.5. | The arbitrator shall be, if the matter in dispute is principally: |
| 10.5.1. | a legal matter, a practicing advocate or attorney in South Africa of at least 15 (fifteen) years' standing; |
| 10.5.2. | an accounting matter, independent auditors appointed by agreement between the Parties; |
| 10.5.3. | any other matter, any independent person, agreed upon between the Parties to the Dispute and failing agreement the independent person shall be appointed by AFSA. |
10.6. Should the Parties to the Dispute fail to agree in writing whether the Dispute is principally a legal, accounting or other matter within 7 (seven) days after the arbitration was demanded, the matter shall be deemed to be a legal matter.
10.7. Should the Parties fail to agree in writing on an arbitrator within 14 (fourteen) days after the giving of notice in terms of clause 10.2, the arbitrator shall be appointed at the request of any of the Parties to the Dispute in terms of the rules of AFSA.
10.8. The decision of the arbitrator shall be final and binding on the Parties to the Dispute and may be made an order of the court referred to in clause 10.10 at the instance of any of the Parties to the Dispute.
| 10.9. | The arbitration shall be held at Johannesburg. |
10.10. The Parties hereby consent to the jurisdiction of the High Court of South Africa (the Gauteng High Court, Johannesburg) in respect of the proceedings referred to in clause 10.3.
10.11. The Parties agree to keep the arbitration including the subject-matter of the arbitration and the evidence heard during the arbitration confidential and not to disclose it to anyone except for purposes of an order to be made in terms of clause 10.8.
| 6 |
| 10.12. | Other than where clause 10.3 applies, the provisions of this clause: |
| 10.12.1. | constitute an irrevocable consent by the Parties to any proceedings in terms hereof and no Party shall be entitled to withdraw therefrom or claim at any such proceedings that it is not bound by such provisions; |
| 10.12.2. | are severable from the rest of this Agreement and shall remain in effect despite the termination of or invalidity for any reason of this Agreement. |
| 11. | DOMICILIUM CITANDI ET EXECUTANDI |
The Parties to this Agreement choose as their domicilia citandi et executandi for all purposes under this Agreement, whether in respect of court process, notices or other documents or communications of whatsoever nature, the addresses set out in clause 1.
| 12. | GOVERNING LAW AND JURISDICTION |
This Agreement shall be governed by, construed and interpreted in accordance with the law of the Republic of South Africa, and any legal proceedings arising out of or in connection with this Agreement, shall be instituted in the High Court of South Africa (the Gauteng Local Division, Johannesburg), which shall have exclusive jurisdiction to hear and determine such legal proceedings.
| 13. | SIGNATURES |
Signed by the Parties duly authorized by a resolution passed by the board of directors of the Parties and witnessed on the following dates and at the following places respectively:
| MEDINOTEC CAPITAL PROPRIETARY LIMITED |
|
Signature: /s/ Gregoru Vizirgianakis |
|
Name: Gregory Vizirgianakis |
| Date: 2 March 2022 |
| Place: North Riding South Africa |
|
Witness: |
|
|
Witness: |
| 7 |
DISA MEDINOTEC PROPRIETARY LIMITED
|
Signature: /s/ Gregoru Vizirgianakis | |
|
Name: Gregory Vizirgianakis | |
| Date: 2 March 2022 | |
| Place: North Riding South Africa | |
|
Witness: |
|
|
Witness: |
|
MINOAN MEDICAL PROPRIETARY LIMITED
|
Signature: /s/ Gregoru Vizirgianakis |
|
Name: Gregory Vizirgianakis |
| Date: 2 March 2022 |
| Place: North Riding South Africa |
|
Witness: |
|
|
Witness: |
| 8 |
BARBARA K. CEGAVSKE
Secretary of State
202 North Carson Street
Carson City, Nevada 89701-4201 (775) 684-5708
Website: www.nvsos.gov
www.nvsilverflume.gov
TYPE
OR PRINT - USE DARK INK ONLY - DO NOT HIGH LIGHT
| 1. Name of Entity: (If foreign, name in home jurisdiction) | Minoan Medical Inc. | ||
|
2. Registered Agent for Service of Process: (Check only one box) |
Commercial Registered Noncommercial Registered Agent Office or position with Entity Agent (name only below) (name and address below) (title and address below)
SPRING VALLEY SOLUTIONS, LLC Name of Registered Agent OR Title of Office or Position with Entity 4955 S DURANGO DR STE 165 LAS VEGAS Nevada 89113 Street Address City Zip Code Mailing Address (If different from street address) City Zip Code | ||
| 2a. Certificate of Acceptance of Appointment of Registered Agent: |
I hereby accept appointment as Registered Agent for the above named Entity. If the registered agent is unable to sign the Articles of Incorporation, submit a separate signed Registered Agent Acceptance form.
X Spring Valley Solutions, LLC 04/20/2021
Authorized Signature of Registered Agent or On Behalf of Registered Agent Entity Date | ||
|
3. Governing Board: (NRS 78A, close corporation only, check one box; if yes, complete article 4 below) |
This corporation is a close corporation operating with a board of directors Yes OR No | ||
|
4. Names and Addresses of the Board of Directors/ Trustees or Stockholders (NRS 78: Board of Directors/ Trustees is required. NRS 78a: Required if the Close Corporation is governed by a board of directors. NRS 89: Required to have the Original stockholders and directors. A certificate from the regulatory board must be submitted showing that each individual is licensed at the time of filing. See instructions) |
1) | Gregory Vizirgianakis | |
|
Name Office 202, Gezeri Building, Naif, PO Box 488083 Dubai Address City State Zip Code | |||
| 5. Jurisdiction of Incorporation: (NRS 80 only) |
5a. Jurisdiction of incorporation: ☐ 5b. I declare this entity is in good standing in the jurisdiction of its incorporation. ☐ | ||
BARBARA K. CEGAVSKE
Secretary of State
202 North Carson Street
Carson City, Nevada 89701-4201 (775) 684-5708
Website: www.nvsos.gov
www.nvsilverflume.gov
|
6. Benefit Corporation: (For NRS 78, NRS 78A, and NRS 89, optional. See instructions.) |
By selecting “Yes” you are indicating that the corporation is organized as a Yes benefit corporation pursuant to NRS Chapter 78B with a purpose of creating a general or specific public benefit. The purpose for which the benefit corporation is created must be disclosed in the below purpose field. |
|
7. Purpose/Profession to be practiced: (Required for NRS 80, NRS 89 and any entity selecting Benefit Corporation. See instructions.) |
Any Legal Purpose |
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8. Authorized Shares: (Number of shares corporation is authorized to issue) |
Number of common shares with Par value: 200000000.0 Par value: $ 0.001 Number of preferred shares with Par value: 20000000.0 Par value: $ 0.001 Number of shares with no par value: 0 If more than one class or series of stock is authorized, please attach the information on an additional sheet of paper. |
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9. Name and Signature of: Officer making the statement or Authorized Signer for NRS 80. Name, Address and Signature of the Incorporator for NRS 78, 78A, and 89. NRS 89 - Each Organizer/ Incorporator must be a licensed professional. |
I declare, to the best of my knowledge under penalty of perjury, that the information contained herein is correct and acknowledge that pursuant to NRS 239.330, it is a category C felony to knowingly offer any false or forged instrument for filing in the Office of the Secretary of State.
Gregory Vizirgianakis United Arab Emirates Name Country Office 202, Gezeri Building, Naif , PO Box 488083 Dubai Address City State Zip/Postal Code X Gregory Vizirgianakis (attach additional page if necessary) |
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Filed in the Office of
Secretary of State State Of Nevada |
Business Number E14093812021-5 |
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Filing Number 20211409380 | |
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Filed On 04/26/2021 10:58:05 AM | |
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Number of Pages 6 |
ARTICLES OF INCORPORATION
OF
MINOAN MEDICAL INC.
ARTICLE I NAME
The name of the corporation shall be Minoan Medical Inc. (hereinafter, the “Corporation”).
ARTICLE II REGISTERED OFFICE
The initial office of the Corporation shall be Office 202, Gezeri Building, Naif, PO Box 488083, Dubai, United Arab Emirates. The initial registered agent of the Corporation shall be Spring Valley Solutions, LLC, 4955 S. Durango Rd. Ste. 165, Las Vegas, NV 89113. The Corporation may, from time to time, in the manner provided by law, change the resident agent and the registered office within the State of Nevada. The Corporation may also maintain an office or offices for the conduct of its business, either within or without the State of Nevada.
ARTICLE III CAPITAL STOCK
Section 1. Authorized Shares. The aggregate number of shares which the Corporation shall have authority to issue is two hundred twenty million (220,000,000) shares, consisting of two classes to be designated, respectively, "Common Stock" and "Preferred Stock," with all of such shares having a par value of $.001 per share. The total number of shares of Common Stock that the Corporation shall have authority to issue is two hundred million (200,000,000) shares. The total number of shares of Preferred Stock that the Corporation shall have authority to issue is twenty million (20,000,000) shares. The Preferred Stock may be issued in one or more series, each series to be appropriately designated by a distinguishing letter or title, prior to the issuance of any shares thereof. The voting powers, designations, preferences, limitations, restrictions, and relative, participating, optional and other rights, and the qualifications, limitations, or restrictions thereof, of the Preferred Stock shall hereinafter be prescribed by resolution of the board of directors pursuant to Section 3 of this Article III.
Section 2. Common Stock.
(a) Dividend Rate. Subject to the rights of holders of any Preferred Stock having preference as to dividends and except as otherwise provided by these Articles of Incorporation, as amended from time to time (hereinafter, the "Articles") or the Nevada Revised Statues (hereinafter, the “NRS”), the holders of Common Stock shall be entitled to receive dividends when, as and if declared by the board of directors out of assets legally available therefor.
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(b) Voting Rights. Except as otherwise provided by the NRS, the holders of the issued and outstanding shares of Common Stock shall be entitled to one vote for each share of Common Stock. No holder of shares of Common Stock shall have the right to cumulate votes.
(c) Liquidation Rights. In the event of liquidation, dissolution, or winding up of the affairs of the Corporation, whether voluntary or involuntary, subject to the prior rights of holders of Preferred Stock to share ratably in the Corporation's assets, the Common Stock and any shares of Preferred Stock which are not entitled to any preference in liquidation shall share equally and ratably in the Corporation's assets available for distribution after giving effect to any liquidation preference of any shares of Preferred Stock. A merger, conversion, exchange or consolidation of the Corporation with or into any other person or sale or transfer of all or any part of the assets of the Corporation (which shall not in fact result in the liquidation of the Corporation and the distribution of assets to stockholders) shall not be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation.
(d) No Conversion, Redemption, or Preemptive Rights. The holders of Common Stock shall not have any conversion, redemption, or preemptive rights.
(e) Consideration for Shares. The Common Stock authorized by this Article shall be issued for such consideration as shall be fixed, from time to time, by the board of directors.
Section 3. Preferred Stock.
(a) Designation. The board of directors is hereby vested with the authority from time to time to provide by resolution for the issuance of shares of Preferred Stock in one or more series not exceeding the aggregate number of shares of Preferred Stock authorized by these Articles, and to prescribe with respect to each such series the voting powers, if any, designations, preferences, and relative, participating, optional, or other special rights, and the qualifications, limitations, or restrictions relating thereto, including, without limiting the generality of the foregoing: the voting rights relating to the shares of Preferred Stock of any series (which voting rights, if any, may be full or limited, may vary over time, and may be applicable generally or only upon any stated fact or event); the rate of dividends (which may be cumulative or noncumulative), the condition or time for payment of dividends and the preference or relation of such dividends to dividends payable on any other class or series of capital stock; the rights of holders of Preferred Stock of any series in the event of liquidation, dissolution, or winding up of the affairs of the Corporation; the rights, if any, of holders of Preferred Stock of any series to convert or exchange such shares of Preferred Stock of such series for shares of any other class or series of capital stock or for any other securities, property, or assets of the Corporation or any subsidiary (including the determination of the price or prices or the rate or rates applicable to such rights to convert or exchange and the adjustment thereof, the time or times during which the right to convert or exchange shall be applicable, and the time or times during which a particular price or rate shall be applicable); whether the shares of any series of Preferred Stock shall be subject to redemption by the Corporation and if subject to redemption, the times, prices, rates, adjustments and other terms and conditions of such redemption. The powers, designations, preferences, limitations, restrictions and relative rights may be made dependent upon any fact or event which may be ascertained outside the Articles or the resolution if the manner in which the fact or event may operate on such series is stated in the Articles or resolution. As used in this section "fact or event" includes, without limitation, the existence of a fact or occurrence of an event, including, without limitation, a determination or action by a person, government, governmental agency or political subdivision of a government. The board of directors is further authorized to increase or decrease (but not below the number of such shares of such series then outstanding) the number of shares of any series subsequent to the issuance of shares of that series. Unless the board of directors provides to the contrary in the resolution which fixes the characteristics of a series of Preferred Stock, neither the consent by series, or otherwise, of the holders of any outstanding Preferred Stock nor the consent of the holders of any outstanding Common Stock shall be required for the issuance of any
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new series of Preferred Stock regardless of whether the rights and preferences of the new series of Preferred Stock are senior or superior, in any way, to the outstanding series of Preferred Stock or the Common Stock.
(b) Certificate. Before the Corporation shall issue any shares of Preferred Stock of any series, a certificate of designation setting forth a copy of the resolution or resolutions of the board of directors, and establishing the voting powers, designations, preferences, the relative, participating, optional, or other rights, if any, and the qualifications, limitations, and restrictions, if any, relating to the shares of Preferred Stock of such series, and the number of shares of Preferred Stock of such series authorized by the board of directors to be issued shall be made and signed by an officer of the corporation and filed in the manner prescribed by the NRS.
Section 4. Non-Assessment of Stock. The capital stock of the Corporation, after the amount of the subscription price has been fully paid, shall not be assessable for any purpose, and no stock issued as fully paid shall ever be assessable or assessed, and the Articles shall not be amended in this particular. No stockholder of the Corporation is individually liable for the debts or liabilities of the Corporation.
ARTICLE IV DIRECTORS AND OFFICERS
Section 1. Number of Directors. The members of the governing board of the Corporation are styled as directors. The board of directors of the Corporation shall be elected in such manner as shall be provided in the bylaws of the Corporation. The board of directors shall consist of at least one (1) individual and not more than thirteen (13) individuals. The number of directors may be changed from time to time in such manner as shall be provided in the bylaws of the Corporation.
Section 2. Initial Directors. The name and post office box or street address of the director(s) constituting the initial board of directors is:
Name Address
Gregory Vizirgianakis Office 202, Gezeri Building, Naif, PO Box 488083, Dubai, United Arab Emirates
Pieter van Niekerk Office 202, Gezeri Building, Naif, PO Box 488083, Dubai, United Arab Emirates
Section 3. Limitation of Liability. The liability of directors and officers of the Corporation shall be eliminated or limited to the fullest extent permitted by the NRS. If the NRS is amended to further eliminate or limit or authorize corporate action to further eliminate or limit the liability of directors or officers, the liability of directors and officers of the Corporation shall be eliminated or limited to the fullest extent permitted by the NRS, as so amended from time to time.
Section 4. Payment of Expenses. In addition to any other rights of indemnification permitted by the laws of the State of Nevada or as may be provided for by the Corporation in its bylaws or by agreement, the expenses of officers and directors incurred in defending any threatened, pending, or completed action, suit or proceeding (including without limitation, an action, suit or proceeding by or in the right of the Corporation), whether civil, criminal, administrative or investigative, involving alleged acts or omissions of such officer or director in his or her capacity as an officer or director of the Corporation or member, manager, or managing member of a predecessor limited liability company or affiliate of such limited liability company or while serving in any capacity at the request of the Corporation as a director, officer, employee, agent, member, manager, managing member, partner, or fiduciary of, or in any other capacity for, another corporation or any partnership, joint venture, trust, or other enterprise, shall be paid by
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the Corporation or through insurance purchased and maintained by the Corporation or through other financial arrangements made by the Corporation, as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the officer or director to repay the amount if it is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by the Corporation. To the extent that an officer or director is successful on the merits in defense of any such action, suit or proceeding, or in the defense of any claim, issue or matter therein, the Corporation shall indemnify him or her against expenses, including attorneys' fees, actually and reasonably incurred by him or her in connection with the defense. Notwithstanding anything to the contrary contained herein or in the bylaws, no director or officer may be indemnified for expenses incurred in defending any threatened, pending, or completed action, suit or proceeding (including without limitation, an action, suit or proceeding by or in the right of the Corporation), whether civil, criminal, administrative or investigative, that such director or officer incurred in his or her capacity as a stockholder, including, but not limited to, in connection with such person being deemed an Unsuitable Person (as defined in Article VII hereof).
Section 5. Repeal And Conflicts. Any repeal or modification of Sections 3 or 4 above approved by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the liability of a director or officer of the Corporation existing as of the time of such repeal or modification. In the event of any conflict between Sections 3 or 4 above and any other Article of the Articles, the terms and provisions of Sections 3 or 4 above shall control.
ARTICLE V
COMBINATIONS WITH INTERESTED STOCKHOLDERS
At such time, if any, as the Corporation becomes a "resident domestic corporation", as that term is defined in NRS 78.427, the Corporation shall not be subject to, or governed by, any of the provisions in NRS 78.411 to 78.444, inclusive, as may be amended from time to time, or any successor statute.
ARTICLE VI BYLAWS
The board of directors is expressly granted the exclusive power to make, amend, alter, or repeal the bylaws of the Corporation pursuant to NRS 78.120.
IN WITNESS WHEREOF, the Corporation has caused these articles of incorporation to be executed in its name by its Incorporator on April 21, 2021.
/s/ Gregory Vizirgianakis
Gregory Vizirgianakis
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BARBARA K. CEGAVSKE
Secretary of State
202 North Carson Street
Carson City, Nevada 89701-4201 (775) 684-5708
Website: www.nvsos.gov
www.nvsilverflume.gov
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Filed in the Office of
Secretary of State State Of Nevada |
Business Number E14093812021-5 |
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Filing Number 20211824938 | |
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Filed On 10/15/2021 10:35:55 AM | |
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Number of Pages 3 |
TYPE
OR PRINT - USE DARK INK ONLY - DO NOT HIGHLIGHT
| 1. Entity information |
Name of entity as on file with the Nevada Secretary of State : Medinotec Inc. Entity or Nevada Business Identification Number (NVID) : NV20212080429 |
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2. Restated or Amended and Restated Articles (Select one): (If amending and restating only, complete section 1, 2 and 6.) |
Certificate to Accompany Restated Articles or Amended and Restated Articles Restated Articles - No amendments; articles are restated only and are signed by an officer of the corporation who has been authorized to execute the certificate by resolution of the board of directors adopted on: The certificate correctly sets forth the text of the articles or certificate as amended to the date of the certificate. Amended and Restated Articles * Restated or Amended and Restated Articles must be included with this filing type. |
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3. Type of amendment filing being completed: (Select only one box):
(If amending, complete section 1,3,5 and 6.) |
Certificate of Amendment to Articles of Incorporation (Pursuant to NRS 78.380 - Before Issuance of Stock) The undersigned declare that they constitute at least two-thirds of the following: (Check only one box) incorporators board of directors The undersigned affirmatively declare that to the date of this certificate, no stock of the corporation has been issued |
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Certificate of Amendment to Articles of Incorporation (Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock) The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provisions of the articles of incorporation* have voted in favor of the amendment is: | |
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Officer's Statement (foreign qualified entities only) - Name in home state, if using a modified name in Nevada:
Jurisdiction of formation: Changes to takes the following effect: The entity name has been amended. Dissolution The purpose of the entity has been amended. Merger The authorized shares have been amended. Conversion Other: (specify changes)
* Officer's Statement must be submitted with either a certified copy of or a certificate evidencing the filing of any document, amendatory or otherwise, relating to the original articles in the place of the corporations creation. |
| 4. Effective date and Time: (Optional) |
Date: 10/15/2021 Time: (must not be later than 90 days after the certificate is filed) |
| 5. Information Being Changed: (Domestic corporations only) |
Changes to takes the following effect: The entity name has been amended. The registered agent has been changed. (attach Certificate of Acceptance from new registered agent) The purpose of the entity has been amended. The authorized shares have been amended. The directors, managers or general partners have been amended. IRS tax language has been added. Articles have been added. Articles have been deleted Other. The articles have been amended as follows: (provide article numbers, if available)
SEE BELOW (attach additional page(s) if necessary) |
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6. Signature: (Required) |
X Peter can Niekerk Director Signature of Officer, Incorporator or Authorized Signer Title *If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on the voting power thereof. |
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Please include any required or optional information in space below: (attach additional page(s) if necessary) | |
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ARTICLE I
NAME OF CORPORATION
The name of the Corporation shall be Medinotec Inc. (hereinafter, the "Corporation")
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BY-LAWS
OF
MINOAN MEDICAL INC.
(A NEVADA CORPORATION)
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in the State of Nevada shall be at such place as the board shall resolve.
Section 2. Other Offices. The corporation shall also have and maintain an office or principal place of business at such place as may be fixed by the Board of Directors, and may also have offices at such other places, both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
Section 3. Corporate Seal. The corporate seal shall consist of a die bearing the name of the corporation and the inscription, "Corporate Seal-Nevada." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
Section 4. Place of Meetings. Meetings of the stockholders of the corporation shall be held at such place, either within or without the State of Nevada, as may be designated from time to time by the Board of Directors, or, if not so designated, then at the office of the corporation required to be maintained pursuant to Section 2 hereof.
Section 5. Annual Meeting.
(a) The annual meeting of the stockholders of the corporation, for the purpose of election of directors and for such other business as may lawfully come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be: (A) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (B) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (C) otherwise properly brought before the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not later than the close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year's proxy statement, notice by the stockholder to be timely must be so received not earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or, in the event public announcement of the date of such annual meeting is first made by the corporation fewer than seventy (70) days prior to the date of such annual meeting, the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the corporation. A stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, (iii) the class and number of shares of the corporation which are beneficially owned by the stockholder, (iv) any material interest of the stockholder in such business and (v) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as a proponent to a stockholder proposal. Notwithstanding the foregoing, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholder's meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (b). The chairman of the annual meeting shall, if the facts warrant, determine and declare at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this paragraph (b), and, if he should so determine, he shall so declare at the meeting that any such business not properly brought before the meeting shall not be transacted.
(c) Only persons who are confirmed in accordance with the procedures set forth in this paragraph (c) shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors or by any stockholder of the corporation entitled to vote in the election of directors at the meeting who complies with the notice procedures set forth in this paragraph (c). Such nominations, other than those made by or at the
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direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the corporation in accordance with the provisions of paragraph (b) of this Section 5. Such stockholder's notice shall set forth (i) as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director: (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (c) the class and number of shares of the corporation which are beneficially owned by such person, (D) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder, and (E) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation such person's written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (ii) as to such stockholder giving notice, the information required to be provided pursuant to paragraph (b) of this Section 5. At the request of the Board of Directors, any person nominated by a stockholder for election as a director shall furnish to the Secretary of the corporation that information required to be set forth in the stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth in this paragraph (c). The chairman of the meeting shall, if the facts warrant, determine and declare at the meeting that a nomination was not made in accordance with the procedures prescribed by these Bylaws, and if he should so determine, he shall so declare at the meeting, and the defective nomination shall be disregarded.
(d) For purposes of this Section 5, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.
Section 6. Special Meetings.
(a) Special meetings of the stockholders of the corporation may be called, for any purpose or purposes, by (i) the Chairman of the Board of Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption), and shall be held at such place, on such date, and at such time, as the Board of Directors shall determine.
(b) If a special meeting is called by any person or persons other than the Board of Directors, the request shall be in writing, specifying the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by tele-graphic or other facsimile transmission to the Chairman of the Board of Directors, the Chief Executive Officer, or the Secretary of the corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The Board of Directors shall determine the time and place of such special meeting, which shall be held not less than thirty-five (35) nor more than one hundred twenty (120) days after the date of the receipt of the request. Upon determination of the time and place of the meeting, the officer receiving the request shall cause notice to be given to the stockholders entitled to vote, in accordance with the provisions of Section 7 of these Bylaws. If the notice is not given within sixty (60) days after the receipt of the request, the person or persons requesting the meeting may set the time and place of the meeting and give the notice. Nothing contained in this paragraph (b) shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board of Directors may be held.
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Section 7. Notice of Meetings. Except as otherwise provided by law or the Articles of Incorporation, written notice of each meeting of stockholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting, such notice to specify the place, date and hour and purpose or purposes of the meeting. Notice of the time, place and purpose of any meeting of stockholders may be waived in writing, signed by the person entitled to notice thereof, either before or after such meeting, and will be waived by any stockholder by his attendance thereat in person or by proxy, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.
Section 8. Quorum. At all meetings of stockholders, except where otherwise provided by statute or by the Articles of Incorporation, or by these Bylaws, the presence, in person or by proxy duly authorized, of the holder or holders of not less than fifty percent (50%) of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, either by the chairman of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise provided by law, the Articles of Incorporation or these Bylaws, all action taken by the holders of a majority of the votes cast, excluding abstentions, at any meeting at which a quorum is present shall be valid and binding upon the corporation; provided, however, that directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Where a separate vote by a class or classes or series is required, except where otherwise provided by the statute or by the Articles of Incorporation or these Bylaws, a majority of the outstanding shares of such class or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter and, except where otherwise provided by the statute or by the Articles of Incorporation or these Bylaws, the affirmative vote of the majority (plurality, in the case of the election of directors) of the votes cast, including abstentions, by the holders of shares of such class or classes or series shall be the act of such class or classes or series.
Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting of stockholders, whether annual or special, may be adjourned from time to time either by the chairman of the meeting or by the vote of a majority of the shares casting votes, excluding abstentions. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
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Section 10. Voting Rights. For the purpose of determining those stockholders entitled to vote at any meeting of the stockholders, except as otherwise provided by law, only persons in whose names shares stand on the stock records of the corporation on the record date, as provided in Section 12 of these Bylaws, shall be entitled to vote at any meeting of stockholders. Every person entitled to vote shall have the right to do so either in person or by an agent or agents authorized by a proxy granted in accordance with Nevada law. An agent so appointed need not be a stockholder. No proxy shall be voted after three (3) years from its date of creation unless the proxy provides for a longer period.
Section 11. Joint Owners of Stock. If shares or other securities having voting power stand of record in the names of two (2) or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2) or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the majority so voting binds all; (c) if more than one (1) votes, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally. If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of subsection (c) shall be a majority or even-split in interest.
Section 12. List of Stockholders. The Secretary shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where the meeting is to be held. The list shall be produced and kept at the time and place of meeting during the whole time thereof and may be inspected by any stockholder who is present.
Section 13. Action Without Meeting. No action shall be taken by the stockholders except at an annual or special meeting of stockholders called in accordance with these Bylaws, or by the written consent of the stockholders setting forth the action so taken and signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote upon were present and voted.
Section 14. Organization.
(a) At every meeting of stockholders, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President, or, if the President is absent, a chairman of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy, shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary directed to do so by the President, shall act as secretary of the meeting.
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(b) The Board of Directors of the corporation shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the corporation and their duly authorized and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
Section 15. Number and Qualification. The authorized number of directors of the corporation shall be not less than one (1) nor more than thirteen (13) as fixed from time to time by resolution of the Board of Directors; provided that no decrease in the number of directors shall shorten the term of any incumbent directors. Directors need not be stockholders unless so required by the Articles of Incorporation. If for any cause, the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in these Bylaws.
Section 16. Powers. The powers of the corporation shall be exercised, its business conducted and its property controlled by the Board of Directors, except as may be otherwise provided by statute or by the Articles of Incorporation.
Section 17. Election and Term of Office of Directors. Members of the Board of Directors shall hold office for the terms specified in the Articles of Incorporation, as it may be amended from time to time, and until their successors have been elected as provided in the Articles of Incorporation.
Section 18. Vacancies. Unless otherwise provided in the Articles of Incorporation, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors, shall unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholder vote, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have been elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under this Bylaw in the case of the death, removal or resignation of any director.
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Section 19. Resignation. Any director may resign at any time by delivering his written resignation to the Secretary, such resignation to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of the Board of Directors. If no such specification is made, it shall be deemed effective at the pleasure of the Board of Directors. When one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office for the unexpired portion of the term of the director whose place shall be vacated and until his successor shall have been duly elected and qualified.
Section 20. Removal. Subject to the Articles of Incorporation, any director may be removed by the affirmative vote of the holders of a majority of the outstanding shares of the Corporation then entitled to vote, with or without cause.
Section 21. Meetings.
(a) Annual Meetings. The annual meeting of the Board of Directors shall be held immediately after the annual meeting of stockholders and at the place where such meeting is held. No notice of an annual meeting of the Board of Directors shall be necessary and such meeting shall be held for the purpose of electing officers and transacting such other business as may lawfully come before it.
(b) Regular Meetings. Except as hereinafter otherwise provided, regular meetings of the Board of Directors shall be held in the office of the corporation required to be maintained pursuant to Section 2 hereof. Unless otherwise restricted by the Articles of Incorporation, regular meetings of the Board of Directors may also be held at any place within or without the state of Nevada which has been designated by resolution of the Board of Directors or the written consent of all directors.
(c) Special Meetings. Unless otherwise restricted by the Articles of Incorporation, special meetings of the Board of Directors may be held at any time and place within or without the State of Nevada whenever called by the Chairman of the Board, the President or any two of the directors.
(d) Telephone Meetings. Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting.
(e) Notice of Meetings. Notice of the time and place of all special meetings of the Board of Directors shall be orally or in writing, by telephone, facsimile, email or sms text message, during normal business hours, at least twenty-four (24) hours before the date and time of the meeting, or sent in writing to each director by first class mail, charges prepaid, at least three (3) days before the date of the meeting. Notice of any meeting may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
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(f) Waiver of Notice. The transaction of all business at any meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present shall sign a written waiver of notice. All such waivers shall be filed with the corporate records or made a part of the minutes of the meeting.
Section 22. Quorum and Voting.
(a) Unless the Articles of Incorporation requires a greater number and except with respect to indemnification questions arising under Section 43 hereof, for which a quorum shall be one-third of the exact number of directors fixed from time to time in accordance with the Articles of Incorporation, a quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to time by the Board of Directors in accordance with the Articles of Incorporation provided, however, at any meeting whether a quorum be present or otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting.
(b) At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by the affirmative vote of a majority of the directors present, unless a different vote be required by law, the Articles of Incorporation or these Bylaws.
Section 23. Action Without Meeting. Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and such writing or writings are filed with the minutes of proceedings of the Board of Directors or committee.
Section 24. Fees and Compensation. Directors shall be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor.
Section 25. Committees.
(a) Executive Committee. The Board of Directors may by resolution passed by a majority of the whole Board of Directors appoint an Executive Committee to consist of one (1) or more members of the Board of Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Board of Directors shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, including without limitation the power or authority to declare a dividend, to authorize the issuance of stock and to adopt a certificate of ownership and merger, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee
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shall have the power or authority in reference to amending the Articles of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the bylaws of the corporation.
(b) Other Committees. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, from time to time appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall consist of one (1) or more members of the Board of Directors and shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall such committee have the powers denied to the Executive Committee in these Bylaws.
(c) Term. Each member of a committee of the Board of Directors shall serve a term on the committee coexistent with such member's term on the Board of Directors. The Board of Directors, subject to the provisions of subsections (a) or (b) of this Bylaw may at any time increase or decrease the number of members of a committee or terminate the existence of a committee. The membership of a committee member shall terminate on the date of his death or voluntary resignation from the committee or from the Board of Directors. The Board of Directors may at any time for any reason remove any individual committee member and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
(d) Meetings. Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this Section 25 shall be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter. Special meetings of any such committee may be held at any place which has been determined from time to time by such committee, and may be called by any director who is a member of such committee, upon written notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of written notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends such special meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. A majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee.
Section 26. Organization. At every meeting of the directors, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President, or if the President is absent, the most senior Vice President, or, in the absence of any such officer, a chairman of the meeting chosen by a majority of the directors present, shall preside over the meeting. The Secretary, or in his absence, an Assistant Secretary directed to do so by the President, shall act as secretary of the meeting.
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ARTICLE V
OFFICERS
Section 27. Officers Designated. The officers of the corporation shall include, if and when designated by the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer, the President, one or more Vice Presidents, the Secretary, the Chief Financial Officer, the Treasurer, the Controller, all of whom shall be elected at the annual organizational meeting of the Board of Directors. The Board of Directors may also appoint one or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such other officers and agents with such powers and duties as it shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers as it shall deem appropriate. Any one person may hold any number of offices of the corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the officers of the corporation shall be fixed by or in the manner designated by the Board of Directors.
Section 28. Tenure and Duties of Officers.
(a) General. All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.
(b) Duties of Chairman of the Board of Directors. The Chairman of the Board of Directors, when present, shall preside at all meetings of the stockholders and the Board of Directors. The Chairman of the Board of Directors shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. If there is no President, then the Chairman of the Board of Directors shall also serve as the Chief Executive Officer of the corporation and shall have the powers and duties prescribed in paragraph (c) of this Section 28.
(c) Duties of President. The President shall preside at all meetings of the stockholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors has been appointed and is present. Unless some other officer has been elected Chief Executive Officer of the corporation, the President shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. The President shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time.
(d) Duties of Vice Presidents. The Vice Presidents may assume and perform the duties of the President in the absence or disability of the President or whenever the office of President is vacant. The Vice Presidents shall perform other duties commonly incident to their office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.
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(e) Duties of Secretary. The Secretary shall attend all meetings of the stockholders and of the Board of Directors and shall record all acts and proceedings thereof in the minute book of the corporation. The Secretary shall give notice in conformity with these Bylaws of all meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary shall perform all other duties given him in these Bylaws and other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors shall designate from time to time. The President may direct any Assistant Secretary to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.
(f) Duties of Chief Financial Officer. The Chief Financial Officer shall keep or cause to be kept the books of account of the corporation in a thorough and proper manner and shall render statements of the financial affairs of the corporation in such form and as often as required by the Board of Directors or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the corporation. The Chief Financial Officer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. The President may direct the Treasurer or any Assistant Treasurer, or the Controller or any Assistant Controller to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and each Controller and Assistant Controller shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.
Section 29. Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.
Section 30. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors or to the President or to the Secretary. Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a later time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to the rights, if any, of the corporation under any contract with the resigning officer.
Section 31. Removal. Any officer may be removed from office at any time, either with or without cause, by the affirmative vote of a majority of the directors in office at the time, or by the unanimous written consent of the directors in office at the time, or by any committee or superior officers upon whom such power of removal may have been conferred by the Board of Directors.
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ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
Section 32. Execution of Corporate Instrument. The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the corporation any corporate instrument or document, or to sign on behalf of the corporation the corporate name without limitation, or to enter into contracts on behalf of the corporation, except where otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or otherwise required by law, promissory notes, deeds of trust, mortgages and other evidences of indebtedness of the corporation, and other corporate instruments or documents requiring the corporate seal, and certificates of shares of stock owned by the corporation, shall be executed, signed or endorsed by the Chairman of the Board of Directors, or the President or any Vice President, and by the Secretary or Treasurer or any Assistant Secretary or Assistant Treasurer. All other instruments and documents requiting the corporate signature, but not requiring the corporate seal, may be executed as aforesaid or in such other manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds to the credit of the corporation or in special accounts of the corporation shall be signed by such person .or persons as the Board of Directors shall authorize so to do.
Unless authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
Section 33. Voting of Securities Owned by the Corporation. All stock and other securities of other corporations owned or held by the corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairman of the Board of Directors, the Chief Executive Officer, the President, or any Vice President.
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ARTICLE VII
SHARES OF STOCK
Section 34. Form and Execution of Certificates. Certificates for the shares of stock of the corporation shall be in such form as is consistent with the Articles of Incorporation and applicable law. Every holder of stock in the corporation shall be entitled to have a certificate signed by or in the name of the corporation by the Chairman of the Board of Directors, or the President or any Vice President and by the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the corporation. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Each certificate shall state upon the face or back thereof, in full or in summary, all of the powers, designations, preferences, and rights, and the limitations or restrictions of the shares authorized to be issued or shall, except as otherwise required by law, set forth on the face or back a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this section or otherwise required by law or with respect to this section a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.
Section 35. Lost Certificates. A new certificate or certificates shall be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. The corporation may require, as a condition precedent to the issuance of a new certificate or certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require or to give the corporation a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.
Section 36. Transfers.
(a) Transfers of record of shares of stock of the corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and upon the surrender of a properly endorsed certificate or certificates for a like number of shares.
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(b) The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the Nevada Revised Statutes (“N.R.S.”), Chapter 78.
Section 37. Fixing Record Dates.
(a) In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is filed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
Section 38. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Nevada.
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ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 39. Execution of Other Securities. All bonds, debentures and other corporate securities of the corporation, other than stock certificates (covered in Section 34), may be signed by the Chairman of the Board of Directors, the President or any Vice President, or such other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Chief Financial Officer or Treasurer or an Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature, or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the corporation or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest coupon, shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
Section 40. Declaration of Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Articles of Incorporation.
Section 41. Dividend Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the Board of Directors shall think conducive to the interests of the corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.
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ARTICLE X
FISCAL YEAR
Section 42. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
Section 43. Indemnification of Directors, Executive Officers, Other Officers, Employees and Other Agents.
(a) Directors Officers. The corporation shall indemnify its directors and officers to the fullest extent not prohibited by N.R.S. Chapter 78; provided, however, that the corporation may modify the extent of such indemnification by individual contracts with its directors and officers; and, provided, further, that the corporation shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the corporation, (iii) such indemnification is provided by the corporation, in its sole discretion, pursuant to the powers vested in the corporation under N.R.S. Chapter 78 or (iv) such indemnification is required to be made under subsection (d).
(b) Employees and Other Agents. The corporation shall have power to indemnify its employees and other agents as set forth in N.R.S. Chapter 78.
(c) Expense. The corporation shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer, of the corporation, or is or was serving at the request of the corporation as a director or executive officer of another corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said mounts if it should be determined ultimately that such person is not entitled to be indemnified under this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph (e) of this Bylaw, no advance shall be made by the corporation to an officer of the corporation (except by reason of the fact that such officer is or was a director of the corporation in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation.
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(d) Enforcement. Without the necessity of entering into an express contract, all rights to indemnification and advances to directors and officers under this Bylaw shall be deemed to be contractual rights and be effective to the same extent and as if provided for in a contract between the corporation and the director or officer. Any right to indemnification or advances granted by this Bylaw to a director or officer shall be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. The claimant in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting his claim. In connection with any claim for indemnification, the corporation shall be entitled to raise as a defense to any such action that the claimant has not met the standard of conduct that make it permissible under N.R.S. Chapter 78 for the corporation to indemnify the claimant for the amount claimed. In connection with any claim by an officer of the corporation (except in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such officer is or was a director of the corporation) for advances, the corporation shall be entitled to raise a defense as to any such action clear and convincing evidence that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed in the best interests of the corporation, or with respect to any criminal action or proceeding that such person acted without reasonable cause to believe that his conduct was lawful. Neither the failure of the corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in N.R.S. Chapter 78, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by a director or officer to enforce a right to indemnification or to an advancement of expenses hereunder, the burden of proving that the director or officer is not entitled to be indemnified, or to such advancement of expenses, under this Article XI or otherwise shall be on the corporation.
(e) Non-Exclusivity of Rights. The rights conferred on any person by this Bylaw shall not be exclusive of any other right which such person may have or hereafter acquire under any statute, provision of the Articles of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office. The corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by N.R.S. Chapter 78.
(f) Survival of Rights. The rights conferred on any person by this Bylaw shall continue as to a person who has ceased to be a director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
(g) Insurance. To the fullest extent permitted by N.R.S. Chapter 78, the corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this Bylaw.
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(h) Amendments. Any repeal or modification of this Bylaw shall only be prospective and shall not affect the rights under this Bylaw in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the corporation.
(i) Saving Clause. If this Bylaw or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each director and officer to the full extent not prohibited by any applicable portion of this Bylaw that shall not have been invalidated, or by any other applicable law.
(j) Certain Definitions. For the purposes of this Bylaw, the following definitions shall apply:
(i) The term "proceeding" shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative.
(ii) The term "expenses" shall be broadly construed and shall include, without limitation, court costs, attorneys' fees, witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding.
(iii) The term the "corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent or another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Bylaw with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.
(iv) References to a "director," "executive officer," "officer," "employee," or "agent" of the corporation shall include, without limitation, situations where such person is serving at the request of the corporation as, respectively, a director, executive officer, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise.
(v) References to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this Bylaw.
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ARTICLE XII
NOTICES
Section 44. Notices.
(a) Notice to Stockholders. Whenever, under any provisions of these Bylaws, notice is required to be given to any stockholder, it shall be given in writing, timely and duly deposited in the United States mail, postage prepaid, and addressed to his last known post office address as shown by the stock record of the corporation or its transfer agent.
(b) Notice to directors. Any notice required to be given to any director may be given by the method stated in subsection (a), by telephone, facsimile, email or by sms text message, except that such notice other than one which is delivered personally shall be sent to such address as such director shall have filed in writing with the Secretary, or, in the absence of such filing, to the last known post office address of such director.
(c) Affidavit of Mailing. An affidavit of mailing, executed by a duly authorized and competent employee of the corporation or its transfer agent appointed with respect to the class of stock affected, specifying the name and address or the names and addresses of the stockholder or stockholders, or director or directors, to whom any such notice or notices was or were given, and the time and method of giving the same, shall in the absence of fraud, be prima facie evidence of the facts therein contained.
(d) Time Notices Deemed Given. All notices given by mail, as above provided, shall be deemed to have been given as at the time of mailing, and all notices given by facsimile, telex or telegram shall be deemed to have been given as of the sending time recorded at time of transmission.
(e) Methods of Notice. It shall not be necessary that the same method of giving notice be employed in respect of all directors, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others.
(f) Failure to Receive Notice. The period or limitation of time within which any stockholder may exercise any option or right, or enjoy any privilege or benefit, or be required to act, or within which any director may exercise any power or right, or enjoy any privilege, pursuant to any notice sent him ill the manner above provided, shall not be affected or extended in any manner by the failure of such stockholder or such director to receive such notice.
(g) Notice to Person with Whom Communication Is Unlawful. Whenever notice is required to be given, under any provision of law or of the Articles of Incorporation or Bylaws of the corporation, to any person with whom communication is unlawful, the giving of such notice to such person shall not be require and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of N.R.S. Chapter 78, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.
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(h) Notice to Person with Undeliverable Address. Whenever notice is required to be given, under any provision of law or the Articles of Incorporation or Bylaws of the corporation, to any stockholder to whom (i) notice of two consecutive annual meetings, and all notices of meetings or of the taking of action by written consent without a meeting to such person during the period between such two consecutive annual meetings, or (ii) all, and at least two, payments (if sent by first class mail) of dividends or interest on securities during a twelve-month period, have been mailed addressed to such person at his address as shown on the records of the corporation and have been returned undeliverable, the giving of such notice to such person shall not be required. Any action or meeting which shall be taken or held without notice to such person shall have the same force and effect as if such notice had been duly given. If any such person shall deliver to the corporation a written notice setting forth his then current address, the requirement that notice be given to such person shall be reinstated. In the event that the action taken by the corporation is such as to require the filing of a certificate under any provision of N.R.S. Chapter 78, the certificate need not state that notice was not given to persons to whom notice was not required to be given pursuant to this paragraph.
ARTICLE XIII
AMENDMENTS
Section 45. Amendments.
The Board of Directors shall have the sole power to adopt, amend, or repeal Bylaws as set forth in the Articles of Incorporation.
ARTICLE XIV
LOANS TO OFFICERS
Section 46. Loans to Officers. The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a Director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in these Bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.
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ARTICLE XV
BOARD OF ADVISORS
Section 47. Board of Advisors. The Board of Directors, in its discretion, may establish a Board of Advisors consisting of individuals who may or may not be stockholders or directors of the corporation. The purpose of the Board of Advisors would be to advise the officers and directors of the corporation with respect to such matters as such officers and directors shall choose, and any other such matters which the members of such Board of Advisors deem appropriate in furtherance of the best interest of the corporation. The Board of Advisors shall meet on such basis as the members thereof may determine. The Board of Directors may eliminate the Board of Advisors at any time. No member of the Board of Advisors, nor the Board of Advisors itself, shall have any authority within the corporation or any decision making power and shall be merely advisory in nature. Unless the Board of Directors determines another method of appointment, the President shall recommend possible members to the Board of Directors, who shall approve or reject such appointments.
Declared and certified as the Bylaws of Minoan Medical Inc. on April 14, 2021.
Signature of Officer: /s/ Pieter van Niekerk
Name of Officer: Pieter van Niekerk
Position of Officer: Treasurer
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June 1, 2022
Medinotec Inc.
349 Grey Eagle Ct.
Saint Petersburg, FL 33701
Re: Medinotec Inc. Registration Statement on Form S-1
Ladies and Gentlemen:
I have acted as counsel for Medinotec, Inc., a Nevada corporation (the “Company”), in connection with the registration statement on Form S-1 (the “Registration Statement”) filed with the Securities and Exchange Commission (the “Commission”), and any amendments thereto, pursuant to the Securities Act of 1933, as amended (the “Act”). The Registration Statement relates to the resale registration of 1,733,750 shares of common stock, all of which are to be offered and sold by certain stockholders of the Company (the “Selling Stockholders”) as set forth in the Registration Statement.
In rendering the opinion set forth below, I have reviewed: (a) the Registration Statement and the exhibits attached thereto; (b) the Company's Articles of Incorporation; (c) the Company's Bylaws; (d) certain records of the Company's corporate proceedings as reflected in its minute books; (e) written statements made to me by the Company’s CFO, Treasurer and Director, and (f) such statutes, records and other documents as we have deemed relevant. In my examination, I have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and conformity with the originals of all documents submitted to us as copies thereof. In addition, I have made such other examinations of law and fact, as I have deemed relevant in order to form a basis for the opinion hereinafter expressed.
Based upon the foregoing, I am of the opinion that the shares of common stock to be sold by the Selling Stockholders are legally and validly issued, fully paid and non-assessable.
This opinion is based on Nevada general corporate law, including the statutory provisions, all applicable provisions of the Nevada constitution and reported judicial decisions interpreting those laws.
Very truly yours,
/s/ Scott Doney
Scott Doney, Esq.
CONSENT
I HEREBY CONSENT to the use of my opinion in connection with the Form S-1 Registration Statement and any amendments thereto filed with the Securities and Exchange Commission as counsel for the registrant, Medinotec Inc.
Very truly yours,
/s/ Scott Doney
Scott Doney, Esq
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A-94/8,
Wazirpur Industrial Area,
Main Ring Road, Delhi-110052
+91 11 45596689
Web : www.ajsh.in
E-mail : info@ajsh
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation in the registration statement under The Securities Act of 1933 i.e, Form S-1 of Medinotec Inc. and its subsidiary (collectively, the “Company”) of our report dated June 2, 2022, with respect to the Financial Statements of the Company for the period from April 26, 2021 to February 28, 2022 and the related notes to the financial statements.
AJSH & Co LLP
June 2, 2022
New Delhi, India