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MMTC > SEC Filings for MMTC > Form 10-Q on 18-Mar-2013All Recent SEC Filings

Show all filings for MICRO IMAGING TECHNOLOGY, INC. | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for MICRO IMAGING TECHNOLOGY, INC.


18-Mar-2013

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operation

Forward-Looking Statements

This Quarterly Report, including the Notes to the Condensed Consolidated Financial Statements and the Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements. The words "believe," "expect," "anticipate," "intends," "projects," and similar expressions identify forward-looking statements. Such statements may include, but are not limited to, projections regarding demand for the Company's products, the impact of the Company's development and manufacturing process on its research and development costs, future research and development expenditures, and the Company's ability to obtain new financing as well as assumptions related to the foregoing. Readers are cautioned not to place undue reliance on forward-looking statements. They reflect opinions, assumptions, and estimates only as of the date they were made, and the Company undertakes no obligation to publicly update or revise any forward-looking statements in this Quarterly Report, whether as a result of new information, future events or circumstances, or otherwise.

Results of Operations

References to fiscal 2013 and fiscal 2012 are for the three month period ended January 31, 2013 and 2012, respectively.

The Company had no sales revenue during the three months ended January 31, 2013 or 2012.

Research and development expenses for the three month period ended January 31, 2013 increased by $40,746 compared to the prior year. These expenses arose from the program which the Company initiated in December 1997 to develop the micro imaging technology for detecting and identifying contaminants in fluids. The overall increase mainly reflects additional expenditures for salaries and related costs, consulting and marketing related expenses and modest increases in overall operating costs, i.e., utilities, supplies and software related to the development program for the Company's technology.

Sales, general and administrative expenses increased by $4,851 for the three months ended January 31, 2013 compared to the prior year period. The increase, though minimal, reflects expanded operational activities resulting in higher costs for salaries and temporary labor, offices supplies, postage, utilities, etc. These increases were partially offset by reductions in consulting expenses, legal fees, shareholder relations expenses, as well as reduced expenditures for research and development supplies..

The Company realized negligible interest income during the three months ended January 31, 2013 as all available capital was utilized to sustain operations. Interest expense for the three month period ended January 31, 2013 decreased by $102,709 compared to the prior period reflecting the conversion of outstanding debt to equity in the past year.

The Company recognized $28,574 in non-cash gain for the three months ended January 31, 2012, related to certain convertible notes with beneficial conversion features (the Series 1 Notes) that were fully converted as of the fiscal year ended October 31, 2012.

Components of other income and expense reflect a gain of $762 in fiscal 2012 on writing off old debt.

The Company recorded the minimum state income tax provision in fiscal 2013 and 2012 as the Company had cumulative net operating losses in all tax jurisdictions.

Liquidity and Capital Resources

At January 31, 2013, the Company had working capital deficit of $679,391. This represents a working capital decrease of $150,725 compared to that reported at October 31, 2012. The decrease primarily reflects overall modest increases in current liabilities, i.e., accounts payable and accrued payroll, while utilizing available cash for operating activities.

Our only source of cash during the three months ended January 31, 2013 has been from the sale of common stock totaling $145,000, including $40,000 received upon the exercise of warrants. Management estimates that it utilized $64,600 per month in working capital on operations for the three months ended January 31, 2013, compared to the approximate $28,500 per month expended during the three month period ended January 31, 2012.

Plan of Operation

Our independent registered public accounting firm has included an explanatory paragraph in its report on the financial statements for the year ended October 31, 2012 which raises substantial doubt about our ability to continue as a going concern.

The Company is in the process of identifying commercial, technical and scientific partners that can aid in advancing the MIT expertise, provide external endorsements of the technology, and accelerate introduction to the market. This strategy is dependent upon our ability to identify and attract the right customers and partners over the next six month period and to secure sufficient additional working capital in a timely manner. There can be no assurances that our efforts will be successful or that the Company will be able to raise sufficient capital to implement our plans or to continue operations.

In April 2012, the Company commenced the production phase of its MIT 1000 Rapid Microbial Identification System with its Hawthorne, California-based manufacturing partner. The first of twenty Systems were received in July 2012, with three additional Systems received in November 2012. The Company participated in several food safety conferences during 2012 and brought significant attention to its MIT 1000 which has led to follow-up contacts from several high profile laboratories and research institutes. The Company continues to develop promotional materials and enhance its website with a view toward generating sales in the near future.

During the latter part of 2008, the Company appointed an exclusive distributor to sell our MIT products in Taiwan and China. The Company has entered into similar arrangements with five other companies granting distribution rights in Turkey, Bulgaria, the United Kingdom, Ireland, Puerto Rico and the Caribbean. In October 2009, the Company entered into a distribution agreement with a Biotek Sdn Bhd, a Malaysian distributor of research and scientific products for the Association of Southeast Asian Nations (ASEAN) (namely Malaysia, Singapore, Thailand, Brunei, Indonesia, Philippines, Vietnam, Cambodia, Laos and Myanmar). All of our distribution agreements remain in effect at this time.

The Company is in the process of developing and marketing and sales strategies with these and other future distributors which the Company believes will assist in generating sales revenues in the near future.

In April 2012, the Company submitted applications to the Association of Advanced Communities Research Institute (AOAC RI) for Performance Test Method Certification for the MIT 1000 System's for accurate bacterial identifications of the pathogens E. coli and Salmonella. In June 2009, the Company received AOAC RI Certification for the identification of the Listeria bacteria species, a rare but lethal food-borne infection. When certified for certification for the two additional pathogenic bacteria identification processes, the Company's System will have the proven capability of identifying over 90 percent of all bacteria-causing, food-related illnesses.

In the opinion of management, available funds and funds anticipated from forthcoming loans and equity sales are expected to satisfy our working capital requirements through April 2013. However, no assurances can be given that the Company will secure additional financing or revenues in a timely manner, if at all, or that such funds would be sufficient to achieve our intended business objectives.

The Company will be required to raise substantial amounts of new financing in the form of additional equity investments, loan financings, or from strategic partnerships, to carry out our business objectives. There can be no assurance that the Company will be able to obtain additional financing on terms that are acceptable to us and at the time required by us, or at all. Further, any financing may cause dilution of the interests of our current stockholders. If the Company is unable to obtain additional equity or loan financing, our financial condition and results of operations will be materially adversely affected. Moreover, estimates of our cash requirements to carry out our current business objectives are based upon various assumptions, including assumptions as to our revenues, net income or loss and other factors, and there can be no assurance that these assumptions will prove to be accurate or that unbudgeted costs will not be incurred. Future events, including the problems, delays, expenses and difficulties frequently encountered by similarly situated companies, as well as changes in economic, regulatory or competitive conditions, may lead to cost increases that could have a material adverse effect on us and our plans. If the Company is not successful in obtaining financing for future developments, whether in the form of loans, licenses or equity transactions, it is unlikely that the Company will have sufficient cash to continue to conduct operations, particularly research and development programs, as currently planned. The Company believes that in order to raise needed capital, the Company may be required to issue debt at significantly higher interest rates or equity securities that are significantly lower than the current market price of our common stock.

No assurances can be given that currently available funds will satisfy our working capital needs for the period estimated, or that the Company can obtain additional working capital through the sale of common stock or other securities, the issuance of indebtedness or otherwise or on terms acceptable to us. Further, no assurances can be given that any such equity financing will not result in a further substantial dilution to the existing stockholders or will be on terms satisfactory to us.

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