Tuesday, July 09, 2019 11:50:02 AM
The Registrant intends to terminate the Production Agreement as soon as it is permitted to do so and it has funds required to do so. The Registrant does not now have such funds available and can give no assurance that it will be able to obtain them.
The Registrant believes that the difference between the cost of manufacturing Medtainers® and the amount that the Registrant is and will be paying Polymation for them is substantial. In the event that Registrant terminates the Production Agreement and manufactures Medtainers® in-house, its operating costs will decrease by the amount of this difference, provided that the Registrant’s production costs are the same as Polymation’s. However, the Registrant will need to acquire the equipment necessary to manufacture Medtainers® and be ready to manufacture Medtainers® before terminating the production Agreement. Until the Registrant terminates the Production Agreement, it will be paying more for Medtainers® than it is paying under the 2013 Distributorship Agreement. Thus, until the Production Contract is terminated, the Registrant’s operating costs will increase over those before the Closing.
To the extent that the Registrant is able to sell more Medtainers® than it will be required to purchase under the Production Contract, it will be able to manufacture them in-house or acquire them from a third party, but unless the number of Medtainers® that it is not required to purchase under the Production Contract is substantial, doing so may not be cost-effective. The Registrant will be able to obtain Medtainers® without relying on Polymation. The Registrant intends to continue its efforts to sell Medtainers® globally, which, if successful, would increase demand for Medtainers® and could cause increase sales volume so as to their production at one or more of the Registrant’s facilities to be cost-effective. As a consequence of the Registrant’s acquisition of the patents and the trademark, it will be able to defend the Medtainer® against infringement and counterfeiting more effectively than at the present time. The Registrant believes that such acquisition will enable it to invite larger companies to explore the possibility of strategic partnerships, expand into other container markets and diversify into associated and\or new markets.
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