0001104659-06-040530.txt : 20060608 0001104659-06-040530.hdr.sgml : 20060608 20060608134952 ACCESSION NUMBER: 0001104659-06-040530 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20060430 FILED AS OF DATE: 20060608 DATE AS OF CHANGE: 20060608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICRO IMAGING TECHNOLOGY, INC. CENTRAL INDEX KEY: 0000808015 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 330056212 STATE OF INCORPORATION: CA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-16416 FILM NUMBER: 06893587 BUSINESS ADDRESS: STREET 1: 23456 S POINTE DR CITY: LAGUNA HILLS STATE: CA ZIP: 92653-1512 BUSINESS PHONE: 9497709347 MAIL ADDRESS: STREET 1: 23456 S POINTE DR STREET 2: SUITE A CITY: LAGUNA HILLS STATE: CA ZIP: 92653 FORMER COMPANY: FORMER CONFORMED NAME: ELECTROPURE INC DATE OF NAME CHANGE: 19960829 FORMER COMPANY: FORMER CONFORMED NAME: HOH WATER TECHNOLOGY CORP DATE OF NAME CHANGE: 19920703 10QSB 1 a06-13397_110qsb.htm QUARTERLY AND TRANSITION REPORTS OF SMALL BUSINESS ISSUERS

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-QSB

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period		Commission file number 0-16416
ended April 30, 2006

MICRO IMAGING TECHNOLOGY, INC.

(Formerly, Electropure, Inc.)

(Exact name of registrant as specified in its charter)

California		33-0056212
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

970 Calle Amanecer, Suite F, San Clemente, California 92673
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (949) 770-9347

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

(Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes o No x.

At June 1, 2006, 13,824,572 shares of the Registrant’s stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: NONE

Micro Imaging Technology, Inc. and Subsidiaries
(A Development Stage Company)
Condensed Consolidated Balance Sheet
(Unaudited)

*ASSETS*
	April 30,
	2006
Current assets:
Cash	$	298,730
Prepaid expenses	36,670
Total current assets	335,400

Fixed assets	100,090
Total assets	$	435,490
*LIABILITIES AND SHAREHOLDERS' DEFICIT*

Notes payable to shareholder	1,870,000
Trade accounts payable	75,656
Accounts payable to officers	41,787
Accrued payroll	100,669
Other accrued expenses	303,211
Redeemable convertible preferred stock, $0.01 par value; 2,600,000 shares authorized, issued and outstanding at April 30, 2006.	26,000
Total liabilities	2,417,323
Commitments and contingencies
Shareholders' deficit:
Series C convertible preferred stock; $1.00 par value; 250,000 shares authorized, issued and outstanding at April 30, 2006; liquidation preference of $1,000,000.	250,000
Series D convertible preferred stock; $1.00 par value; 250,000 shares authorized, issued and outstanding at April 30, 2006; liquidation preference of $500,000.	250,000
Common stock, $0.01 par value; 20,000,000 shares authorized; 13,774,572 shares issued and outstanding at April 30, 2006.	137,745
Class B common stock, $0.01 par value; 839,825 shares authorized: 83,983 shares issued and outstanding at April 30, 2006.	840
Additional paid-in capital	25,960,630
Notes receivable on common stock	(36,933		)
Accumulated deficit from previous operating activities (A)	(27,809,201		)
Deficit accumulated during the development stage	(734,914		)
Total shareholders' deficit	(1,981,833		)
Total liabilities and shareholders' deficit	$	435,490

(A) On October 31, 2005, the Company discontinued its operations. Effectively, on November 1, 2005, the Company became a development stage company.

The accompanying notes are an integral part of the condensed consolidated financial statements.

Micro Imaging Technology, Inc. and Subsidiaries
(A Development Stage Company)
Condensed Consolidated Statements of Operations

(Unaudited)

	Three months ended						Six months ended
	April 30,						April 30,
	2006			2005			2006			2005
							(A)
Operating costs and expenses:
Research and development	$	146,506		$	70,330		$	278,403		$	141,868
Sales, general and administrative	155,207			155,908			380,797			258,417

Loss from operations	(301,713		)	(226,238		)	(659,200		)	(400,285		)

Other income (expense):
Interest income	2,422			344			5,484			689
Interest expense	(37,376		)	(77,898		)	(78,798		)	(159,476		)
Sublease income	—			37,800			—			75,600
Other income (expense), net	—			—			(800		)	—
Other income (expense), net	(34,954		)	(39,754		)	(74,114		)	(83,187		)

Loss from continuing operations before
provision for income tax	(336,667		)	(265,992		)	(733,314		)	(483,472		)
Provision for income tax	—			—			(1,600		)	(1,600		)
Net loss from continuing operations	(336,667		)	(265,992		)	(734,914		)	(485,072		)

Net loss from discontinued operations	—			(14,451		)	—			(45,505		)

Net loss	$	(336,667	)	$	(280,443	)	$	(734,914	)	$	(530,577	)

Net loss per share, basic and diluted,
From continuing operations	$	(0.02	)	$	(0.02	)	$	(0.06	)	$	(0.04	)
From discontinued operations	—			—			—			—
Net loss per share, basic and diluted	$	(0.02	)	$	(0.02	)	$	(0.06	)	$	(0.04	)

Shares used in computing basic and diluted net loss per share	13,675,696			12,765,851			13,355,079			12,627,756

(A) As of November 1, 2005, the Company became a development stage company. The six months ended April 30, 2006 reflected in the condensed consolidated statements of operations also represents the cumulative development stage period from November 1, 2005 to April 30, 2006.

The accompanying notes are an integral part of the condensed consolidated financial statements.

Micro Imaging Technology, Inc. and Subsidiaries
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
(Unaudited)

	Six months ended
	April 30,
	2006			2005
Cash flows from operating activities:
Net loss	$	(734,914	)	$	(530,577	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	2,984			41,726
Common stock issued for services	85,000			—
Non-cash compensation for stock options and warrants	6,000			100
Interest paid with common stock	43,221			20,000
Interest on notes receivable for common stock	(686		)	(686		)
(Increase) decrease in assets:
Trade accounts receivable	—			24,382
Prepaid expenses	(11,080		)	(20,000		)
Inventories	—			(16,968		)
Other assets	—			6,004
Increase (decrease) in liabilities:
Trade accounts payable	(55,039		)	44,242
Accounts payable to officers	4,916			4,595
Customer deposits	—			23,987
Accrued payroll and other expenses	(140,379		)	107,601
Net cash used in operating activities	(799,977		)	(295,594		)
Cash flows from investing activities:
Purchase of fixed assets	(96,591		)	(684		)
Net cash used in investing activities	(96,591		)	(684		)
Cash flows from financing activities:
Principal payments on notes payable	—			(22,614		)
Principal payments on capital lease obligations	—			(1,927		)
Proceeds from issuance of notes payable to a related party	—			370,000
Net cash provided by financing activities	—			345,459
Net change in cash	(896,568		)	49,181
Cash at beginning of period	1,195,298			29,607
Cash at end of period	$	298,730		$	78,788
Supplemental Disclosure of Cash Flow Information
Interest paid	$	—		$	71,187
Income taxes paid	$	800		$	1,600

The accompanying notes are an integral part of the condensed consolidated financial statements.

Forward-Looking Statements

This Quarterly Report on Form 10-QSB, 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. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

1. Nature of our Business, Development Stage Company and Continuance of Operations

These unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America applicable to a going concern which contemplated the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Since inception, the Company has incurred substantial losses and there is substantial doubt that the Company will generate sufficient revenues in the foreseeable future to meet its operating cash requirements. Accordingly, the Company’s ability to continue operations depends on its success in obtaining additional capital in an amount sufficient to meet its cash needs. This raises substantial doubt about its ability to continue as a going concern. These financial statements do not include any adjustments that might result from this uncertainty.

The Company conducts research and development, through its Micro Imaging Technology subsidiary (MIT), on a non-biological identification method and process with the ability to quickly and accurately detect and identify pathogenic microbes such as Cryptosporidium, Giardia, E. coli, Listeria, and Salmonella.

On October 31, 2005, the Company discontinued the operations and sold the assets of its Electropure EDI subsidiary which had been engaged in manufacturing and marketing the “EDI” series of electrodeionization water treatment devices for commercial and industrial high purity water applications. The related operating results of EDI have been excluded from the results from continuing operations and classified as a discontinued operation for the three and six month periods ended April 30, 2005. As of November 1, 2005, the Company became a development stage company. The three and six month periods ended April 30, 2006 reflected in the accompanying unaudited condensed consolidated financials also represents the cumulative development stage period from November 1, 2005 to April 30, 2006. The proceeds of the EDI sale, as well as proceeds from the sale of our building in October 2005, are being focused on furthering the development and commercialization of the patented, proprietary technology held by our MIT subsidiary.

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include all adjustments, consisting solely of normal recurring adjustments which management believes are necessary for a fair presentation of the Company’s financial position at April 30, 2006 and results of operations for the periods presented.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

Results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. The accompanying condensed consolidated financial statements should be read in conjunction with our audited financial statements and footnotes as of and for the year ended October 31, 2005, included in our Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on February 21, 2006.

3. Summary of Significant Accounting Policies

The accounting policies followed are as set forth in Note 1 of the Notes to Financial Statements in the Company’s 2005 Annual Report on Form 10-KSB. The Company has not experienced any material change in its critical accounting policies since October 31, 2005. The Company’s discussion and analysis of its financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments regarding uncertainties that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, the Company evaluates its estimates which are based upon historical experience and on other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The Company considers the following accounting policies to be most critical in their potential effect on its financial position or results of operations.

Stock Based Compensation

In December 2004, the FASB issued SFAS 123R, “Share-Based Payment,” a revision of FASB Statement No. 123. Under this standard, all forms of share-based payment to employees, including stock options, would be treated as compensation and recognized in the income statement. This statement is effective for awards granted, modified or settled in fiscal years beginning after December 15, 2005. In connection with the issuance of SFAS 123R, the Securities and Exchange Commission issued Staff Accounting Bulletin number 107 (“SAB 107”) in March of 2005. SAB 107 provides implementation guidance for companies to use in their adoption of SFAS 123R. The Company will implement the provisions of SFAS 123R in the first quarter of its fiscal year ending October 31, 2007. Management believes that the impact on the Company’s financial statements will approximate the pro forma information presented in the table below.

We currently account for stock options under APB No. 25, “Accounting for Stock Issued to Employees.” The pro forma impact of expensing options, valued using the Black-Scholes valuation model, is disclosed in Note 1 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on February 21, 2006.

The following table illustrates the effect on the Company’s net loss and loss per share as if the Company had applied the fair value recognition provisions of SFAS 123R to its stock based employee compensation awards, and recognized expense over the applicable award vesting period:

	Three months ended April 30,						Six months ended April 30,
	2006			2005			2006			2005
Net loss, as reported:	$	(336,667	)	$	(280,443	)	$	(734,914	)	$	(530,577	)

Add: Stock-based employee compensation included in reported net loss	—			—			—			—
Less: Stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	—			—			(48,500		)	(39,700		)

Pro forma net loss:	$	(336,667	)	$	(280,443	)	$	(783,414	)	$	(570,277	)

Earnings per share:
Basic and diluted, as reported	$	(0.02	)	$	(0.02	)	$	(0.06	)	$	(0.04	)

Basic and diluted, pro forma	$	(0.02	)	$	(0.02	)	$	(0.06	)	$	(0.05	)

Weighted average shares outstanding	13,675,696			12,765,851			13,355,079			12,627,756

The following securities and contingently issuable shares are excluded in the calculation of diluted shares outstanding as their effects would be antidilutive for the periods ended April 30, 2006 and April 30, 2005 as follows:

	2006	2005
Stock options and warrants	3,680,000	4,420,000
Convertible preferred stock	1,500,000	1,500,000
Contingently issuable common shares	516,479	516,479
	5,696,479	6,436,479

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants (“AICPA”), and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

4. Notes Payable

At April 30, 2006, notes payable consisted of the following:

Note payable to major shareholder, collateralized by intellectual property of Micro Imaging Technology subsidiary (MIT), with interest only payments at 8% payable quarterly beginning on June 30, 2001, with balance due in full on January 17, 2006.	(A)	$	1,000,000

Note payable to major shareholder, collateralized by intellectual property of MIT, with principal and interest at 8% per annum due in full on February 23, 2006.		150,000

Convertible notes payable to major shareholder, collateralized by intellectual property of MIT; principal and interest at 8% per annum due in full on February 23, 2006.		550,000

Unsecured convertible notes payable to major shareholder with principal and interest at 8% per annum due in full on February 23, 2006.		170,000
		1,870,000
Less current maturities		(1,870,000		)
Long Term portion of notes payable		$	—

(A) The Company is currently in default of the interest payment provisions on the loan which required payment on or about March 31, June 30, September 30, December 31, 2005 and March 31, 2006.

As of February 23, 2006, the Company is in default of the repayment provisions for all notes payable to our majority shareholder. The Company is currently negotiating with our shareholder for extensions on repayment of these loans.

5. Securities Transactions

Common Stock Issued for Debt

On January 26, 2006, we issued 308,721 shares of common stock to our majority shareholder, Anthony M. Frank, in payment of $43,221 in accrued interest on $335,000 in principal loans made to the Company between

November 2003 and January 2005. The fair market value of the common stock was $0.14 per share on the conversion date.

Common Stock Issued to Consultants

On June 29, 2005, for one-year’s services to be performed, we granted a consultant 600,000 shares of common stock and warrants to purchase 100,000 shares of common stock at exercise price of $0.10 per share, as well as 100,000 shares of common stock at $0.25 per share. The warrants are exercisable through June 29, 2008. The shares vest in increments of 50,000 per month and during the six months ended April 30, 2006, the Company had issued 300,000 shares to the consultant. The fair market value of the shares was $57,000 and was recorded as consulting expense as of the six months ended April 30, 2006.

On January 26, 2006, the Company entered into an Intermediary Consulting Agreement with a Newport Beach, California company to provide consulting services for financing arrangements in exchange for the issuance of 200,000 shares of the Company’s common stock. The fair market value of the shares was $28,000, or $0.14 per share, and was recorded as consulting expense.

Options Issued to Directors and Employees

On January 26, 2006, the Company granted options to purchase a total of 500,000 shares of its common stock under the Company’s 1999 Stock Option Plan to the officers, directors and employees of the Company. The options are exercisable at $0.14 per share and vest in various increments over 5 to 10 years.

As of November 1, 2005, pursuant to the sale of the EDI assets to SnowPure, LLC, the status of Michael Snow as an employee of the Company changed. Consequently, the value of options to purchase 75,000 shares of common stock granted to him in 2003 that vested in January 2006 was recognized as compensation as of the six months ended April 30, 2006. The fair market value of such options was determined to be $0.08 per share, for a total compensation expense of $6,000.

6. Commitments and Contingencies

In December 2005, the Company entered into a one-year Finder’s Fee Agreement with an unrelated party seeking up to $5 million in financing on behalf of the Company. The agreement provides for a 10% commission on the first $1 million realized by the Company and 6% on any additional financing received. The finder will also receive three-year warrants to purchase up to 200,000 shares of common stock at $0.09 per share, pro-rata to the amount of financing received.

On January 26, 2006, the Company entered into a one-year agreement with an unaffiliated party to lease a 4,147 sq. ft. facility located in San Clemente, California. The lease term commenced on April 1, 2006 at the rate of $3,650 per month. As of April 30, 2006, the Company had paid a security deposit equal to the monthly rent and has prepaid one month’s lease payment. The Company has the option to extend the lease for up to 5 one-year terms.

7. Employee Retirement Plan

Commencing on January 1, 2005, the Company sponsored a Simple IRA retirement plan which covers substantially all qualified full-time employees. Participation in the plan is voluntary and employer contributions are determined on an annual basis. Currently employer contributions are being made at the rate of 3% of the employees’ base annual wages. The Company’s contribution to the IRA plan was $4,835 and $4,938 for the six months ended April 30, 2006 and 2005, respectively.

8. Subsequent Events

On May 8, 2006, the Company granted three-year warrants to purchase 250,000 shares of common stock to a consultant for services to be rendered over a one-year period. The warrants are exercisable at $0.20 per share and vest in four equal instruments each calendar quarter commencing on the date of grant.

Also on May 8, 2006, the Company granted three-year warrants to purchase 100,000 shares of common stock to a consultant in consideration for services rendered and to be rendered. The warrants vest in full as of the grant date with an exercise price of $0.20 per share.

On May 31, 2006, we issued an additional 50,000 shares of common stock to a consultant under the terms of a June 2005 agreement.

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

Certain of the statements contained herein, other than statements of historical fact, are forward-looking statements. Such forward-looking statements are based on current management expectations that involve substantial risks and uncertainties, which could cause actual results to differ materially from the results we expect. Potential risks and uncertainties that could affect our future operating results include, without limitation, economic, competitive and legislative developments.

Results of Operations

References to fiscal 2006 and fiscal 2005 are for the six months ended April 30, 2006 and 2005, respectively.

Research and development expenses for the three and six month periods ended April 30, 2006 increased by $76,176 and $136,535, respectively, compared to the prior year. These expenses arise from the program which we initiated in December 1997 to develop the micro imaging technology for detecting and identifying contaminants in fluids. The increase was primarily due to consulting and patent expenses as well as a slight increase in salaries and related expenses in the current fiscal period.

Sales, general and administrative expenses decreased by $701 for the three month period ended April 30, 2006 compared to the prior year period, due primarily to a reduction in depreciation expense on assets sold in October 2005, offset by an increase in accounting expenses. For the six month period ended April 30, 2006, sales, general and administrative expenses increased by $122,380, as compared to the same period in 2005. The Company incurred increased consulting and accounting expenses in fiscal 2006, shareholder relations costs and the expense of leasing back a portion of the building which it sold in October 2005. These increases were partially offset by decreases in depreciation, insurance and legal expenses and property tax on the building sold in October 2005.

Interest income increased by $2,078 and $4,795 for the three and six months ended April 30, 2006 as a result of the short-term investment of proceeds received from the sale of our building and EDI assets in October 2005. Interest expense for the three and six month periods ended April 30, 2006 decreased by $40,522 and $80,678 compared to the comparable prior periods. The difference primarily represents the elimination of mortgage interest as of October 2005 when we sold our building and the lack of short term borrowings that the Company conducted in fiscal 2005.

Components of other income, other than interest, decreased by $37,800 and $74,800 for the three and six months ended April 30, 2006 compared to the prior year periods. The difference primarily relates to monthly sublease payments collected from an unaffiliated tenant until we sold our building in October 2005.

We recorded the minimum state income tax provision in fiscal 2005 and 2006 as we had cumulative net operating losses in all tax jurisdictions.

Discontinued Operations

On October 31, 2005, the Company sold substantially all of the assets owned by and utilized in the operations of its Electropure EDI, Inc. subsidiary to SnowPure, LLC and discontinued its operations. The related operating results of EDI have been excluded from the results from continuing operations and classified as a discontinued operation for the six months ended April 30, 2005 in accordance with the requirements of SFAS 144. The operations from EDI are included in Net Loss from Discontinued Operations on the Consolidated Statements of Operations for the three and six month periods ended April 30, 2005. The following is a summary of the results of discontinued operations relating to EDI for the three and six month periods ended April 30, 2005:

	Three months ended April 30, 2005			Six months ended April 30, 2005
Net sales	$	275,677		$	571,199
Cost of sales	200,542			426,909
Gross profit:	75,135			144,290

Operating costs and expenses:
Research and development	9,605			19,017
Sales, general and administrative	76,818			164,613
Total operating expenses	86,423			183,630

Loss from operations	(11,288		)	(39,340		)

Other expense:
Interest expense	(3,163		)	(6,165		)
Net loss	$	(14,451	)	$	(45,505	)

Liquidity and Capital Resources

At April 30, 2006, we had a working capital deficit of $2,081,923. This represents a $694,986 increase in the working capital deficit compared to that reported at October 31, 2005. A primary component of the increase resulted from the sale of current assets of our EDI subsidiary in October 2005. Additionally, the Company utilized the cash proceeds from the sale, as well as proceeds from the sale of our building in October 2005, on increased research and development expenditures of approximately $135,000 and $120,000 in general and administrative expenses, including accounting and consulting fees and rent expense. We have also made nearly $100,000 in capital expenditures for machinery and equipment as well as leasehold improvements on our new leased facility. Approximately $200,000 in cash was also utilized to reduce accounts payable, accrued payroll and other accrued expenses.

The Company has no revenues. Therefore, since October 2005, our primary source of working capital has been the proceeds from the sale of our building and from the sale of the assets of our EDI subsidiary.

Plan of Operation

In the opinion of management, available funds are expected to satisfy our working capital requirements through August 2006. Our independent registered public accounting firm has included an explanatory paragraph in their report on the financial statements for the year ended October 31, 2005 included in our Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on February 21, 2006, which raises substantial doubt about our ability to continue as a going concern.

Currently, we are seeking working capital through manufacturing arrangements, strategic partnerships, loans and/or the sale of private placement equity so that we may bring the MIT technology to a commercial stage. This approach is intended to optimize the value of the Company for its shareholders. To this end, we intend to seek 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. The implementation of 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.

In December 2005, the Company entered into a one-year Finder’s Fee Agreement with an unrelated party seeking up to $5 million in financing on behalf of the Company. The agreement provides for a 10%

commission on the first $1 million realized by the Company and 6% on any additional financing received. The finder will also receive three-year warrants to purchase up to 200,000 shares of common stock at $0.09 per share, pro-rata to the amount of financing received.

We 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 we 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 shareholders. If we are 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 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 we are not successful in obtaining financing for future developments, whether in the form of loans, licenses or equity transactions, it is unlikely that we will have sufficient cash to continue to conduct operations, particularly research and development programs, as currently planned. We believe that in order to raise needed capital, we 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 we 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 shareholders or will be on terms satisfactory to us.

Item 3. Controls and Procedures

Evaluation of disclosure controls and procedures

In the course of their audit of the Company’s financial statements as at and for the fiscal year ended October 31, 2005, the Company’s independent registered public accounting firm, Hein & Associates LLP, identified and reported a material weakness as it relates to numerous adjusting entries which were undetected due to deficiencies in the Company’s financial statement close process, and, as a result of the audit, were recorded by the Company during the course of the audit to correct the underlying books and records.

The Company carried out an evaluation of the effectiveness of the design and operation of its “disclosure controls and procedures,” as defined in, and pursuant to, Rule 13a-15 of the Securities Exchange Act of 1934, as of the end of the period covered by this report under the supervision and with the participation of the Company’s management, including the Company’s President and Principal Executive Officer and its Principal Financial Officer. Based on that evaluation and the events described above, the Company’s President and Principal Executive Officer and its Principal Financial Officer concluded that, as of their evaluation, the Company’s disclosure controls and procedures were not effective because of the material weaknesses described above and that the remediation efforts of the Company have not been in effect for a sufficient amount of time to allow for testing and validation. A discussion of the remediation efforts is included under “Changes in internal controls over financial reporting.”

Internal Control over Financial Reporting

Section 404 of the Sarbanes-Oxley Act of 2002 (the “Act”) required the Company to include an internal control report in its Annual Report on Form 10-KSB for the year ended October 31, 2005 and in subsequent Annual Reports thereafter.

As previously reported in our Annual Report on Form 10-KSB for the year ended October 31, 2005, we concluded that, as of October 31, 2005, our internal controls over financial reporting were not effective due to:

· Lack of sufficient personnel and technical accounting and financing reporting expertise within the Company’s accounting and finance function;

· Inadequate controls over period-end financial reporting, where our CFO was responsible for preparing or compiling certain critical portions of the quarterly and annual internal financial information and was also responsible for performing a review of this information to monitor the results of operations.

Changes in internal controls over financial reporting

Since October 31, 2005 and through the date of the filing of this Form 10-QSB, and in response to the material weaknesses identified as of October 31, 2005, we have strengthened our procedures to ensure that certain critical portions of the quarterly and annual internal financial information are reported properly and in a timely manner. We have also implemented controls to reduce the risk of errors and omissions as follows:

· Implementation of a comprehensive review checklist which is completed by the Company’s chief financial officer in conjunction with an ongoing review of all existing contracts and agreements to ensure proper and timely accounting treatment;

· Monthly and quarterly procedures have been enhanced to facilitate communication from operations personnel to financial personnel to ensure that transactions which occur throughout the period are promptly addressed and accounted for.

We believe that additional improvements to our internal control over financial reporting may be required to remediate the material weaknesses, including, but not limited to, engaging the services of internal accounting and finance experts.

PART II - OTHER INFORMATION

Item 1 omitted as not applicable.

Item 2. Changes in Securities

On January 26, 2006, the Company issued 308,721 shares of common stock to our majority shareholder upon the conversion of $43,221 in interest accrued on a $335,000 in principal loans. The fair market value of the common stock on the date of conversion was $0.14 per share.

On June 29, 2005, the Company entered into a one-year arrangement with a consultant for administrative, public relations and financial services. In addition to a $5,000 per month consulting fee, the Company has agreed to issue 50,000 shares of common stock to the consultant each month and has granted three-year warrants to purchase: (a) 100,000 shares of common stock at an exercise price of $0.10 per share and (b) 100,000 shares at $0.25 per share. During the six months ended April 30, 2006, we issued 300,000 shares of common stock to the consultant at an aggregate fair market value of $57,000.

On January 26, 2006, we issued 200,000 shares of common stock in exchange for consulting services to be provided. The fair market value of the shares was $28,000 or $0.14 per share as of the issuance date.

In January 2006, the Company granted options to purchase a total of 500,000 shares of the Company’s common stock to various officers, directors and employees of the Company. Such warrants are exercisable at $0.14 per share and expire through January 26, 2016.

Item 3. Defaults Upon Senior Securities

The Company has failed to pay interest as it became due since March 31, 2005 as it relates to the $1 million loan made by Mr. Frank to the Company in January 2001. As of the six months ended April 30, 2006, we are in default of such interest payments in the total amount of $100,000.

As of February 23, 2006, all of the $1,870,000 in notes payable to our majority shareholder became due and payable and we are currently in default pursuant to the terms of the notes. The Company is currently negotiating to extend the maturity dates of the loans.

Item. 4. Submission of Matters to a Vote of Security Holders

As reported on Schedule 14C filed with the Securities and Exchange Commission on May 22, 2006, a majority of the Company’s shareholders, by written consent, approved a proposal to amend the Articles of Incorporation of the Company to increase the number of authorized common shares from 20 million to 100 million shares. The information contained in the above Schedule 14C is herein incorporated by reference.

Item 5 omitted as not applicable.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

31.1		Certification of Chief Executive Officer *
31.2		Certification of Chief Financial Officer *
32.1		906 Certification of Chief Executive Officer *
32.2		906 Certification of Chief Financial Officer *

* Filed herewith

(b) Reports on Form 8-K.

None

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: June 1, 2006

	MICRO IMAGING TECHNOLOGY, INC.

	By	/S/ CATHERINE PATTERSON
		Catherine Patterson (Secretary and Chief Financial Officer with responsibility to sign on behalf of Registrant as a duly authorized officer and principal financial officer)

EX-31.1 2 a06-13397_1ex31d1.htm EX-31

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Floyd H. Panning, Chief Executive Officer of Micro Imaging Technology, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-QSB for the six months ended April 30, 2006, of Micro Imaging Technology, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: June 1, 2006

	/s/ FLOYD H. PANNING
	Floyd H. Panning
	Chief Executive Officer

EX-31.2 3 a06-13397_1ex31d2.htm EX-31

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Catherine Patterson, Chief Financial Officer of Micro Imaging Technology, Inc., certify that:

1. I have reviewed this quarterly report on Form 10-QSB for the six months ended April 30, 2006, of Micro Imaging Technology, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: June 1, 2006

	/s/ CATHERINE PATTERSON
	Catherine Patterson
	Chief Financial Officer

EX-32.1 4 a06-13397_1ex32d1.htm EX-32

EXHIBIT 32.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICERS
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report of Micro Imaging Technology, Inc. (formerly, Electropure, Inc.) (the “Company”) on Form 10-QKSB for the six months ended April 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Floyd H. Panning, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.


	/s/ FLOYD H. PANNING
	Floyd H. Panning
	President and Chief Executive Officer
	June 1, 2006

EX-32.2 5 a06-13397_1ex32d2.htm EX-32

EXHIBIT 32.2

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICERS
Pursuant to 18 U.S.C. 1350
(Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report of Micro Imaging Technology, Inc. (formerly, Electropure, Inc.) (the “Company”) on Form 10-QKSB for the six months ended April 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Catherine Patterson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(3) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(4) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company.

	/s/ CATHERINE PATTERSON
	Catherine Patterson
	Secretary and Chief Financial Officer
	June 1, 2006