Medical Technology & Innovations, Inc. Form 10-QSB September 30, 2005

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-QSB

(Mark One)

[ X ]

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

For the quarterly period ended September 30, 2005

[ ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ___________________ to ___________________

Commission File Number: 33-27610-A

MEDICAL TECHNOLOGY & INNOVATIONS, INC.

(Exact name of small business issuer as specified in its charter)

Florida	65-2954561
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1800 Fruitville Pike Suite 200, Lancaster PA	17601
(Address of principal executive offices)	(Zip Code)

(717) 390-3777
(Issuer’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 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 [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

YES [ ] NO [X]

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date:

January 8, 2007

Common Voting Stock: 6,837,904

Transitional Small Business Disclosure Format (Check One): YES [ ] NO [X]

MEDICAL TECHNOLOGY & INNOVATIONS, INC.

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Consolidated Balance Sheets September 30, 2005 (Unaudited) and June 30, 2005	3

		Consolidated Statements of Operations (Unaudited) For the Three Months Ended September 30, 2005 and 2004	4

		Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended September 30, 2005 and 2004	5

		Notes to Consolidated Financial Statements (Unaudited)	6

	Item 2	Management's Discussion and Analysis or Plan of Operation	7


PART II.	OTHER INFORMATION

	Item 6.	Exhibits	8

SIGNATURES			8

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Medical Technology & Innovations, Inc.

Consolidated Balance Sheets

September 30, 2005 and June 30, 2005

	(Unaudited)
	September 30,			June 30,
	2005			2005
Assets

Current Assets:
Cash	$	4,078,403		$	-
Award Receivable		-			15,626,623

Total Assets	$	4,078,403		$	15,626,623


Liabilities and Stockholders' Equity

Current Liabilities:
Accounts Payable	$	40,000		$	-
Accrued liabilities		239,545			226,625
Accrued legal expenses		-			5,526,041
Accrued consulting services		606,672			4,460,000
Other liabilities		686,412			1,562,947
Current Maturities of Long-Term Debt		1,124,030			1,385,000
Total current liabilities		2,696,659			13,160,613

Long-Term Debt, Net of Current Maturities		-			-
Other Long-Term Liabilities		-			619,766
Total Liabilities		2,696,659			13,780,379


Stockholders' Equity
Common stock, no par value, authorized 28,000,000 shares, outstanding 6,837,904 shares		15,883,711			15,883,711
Preferred Stock, Authorized 100,000,000 Shares $1,000 par value, 12%, noncumulative, outstanding 22.5 shares.		22,500			22,500
Treasury Stock, at cost (78,941 shares)		(436,799	)		(436,799	)
Accumulated Deficit		(14,087,668	)		(13,623,168	)
Total Stockholders' Equity		1,381,744			1,846,244
Total Liabilities and Stockholders' Equity	$	4,078,403		$	15,626,623

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

Medical Technology & Innovations, Inc.

Consolidated Statements of Operations (Unaudited)

For the Three Months Ended September 30, 2005 and 2004

	2005			2004


Operating Expenses
General, and Administrative	$	439,788		$	37,488
Total Operating Expenses		439,788			37,488

Loss from Operations		(439,788	)		(37,488	)

Interest Expense, Net		24,712			17,934

Net Loss	$	(464,500	)	$	(55,422	)

Net Loss per common share (basic and diluted)	$	(0.068	)	$	(0.008	)

Weighted Average Outstanding Shares		6,837,904			6,837,904

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

Medical Technology & Innovations, Inc.

Consolidated Statements of Cash Flows (Unaudited)

For the Three Months Ended September 30, 2005 and 2004

	2005			2004

Cash flows from operating activities
Net loss	$	(464,500	)	$	(55,422	)
Changes in assets and liabilities

Award Receivable		15,626,623			-
Accounts Payable		40,000			-
Accrued legal expenses		(5,526,041	)		-
Accrued consulting services		(3,853,328	)		-
Other liabilities		(876,535	)		37,547
Other long-term liabilities		(619,766	)		-
Accrued interest payable		14,030			-
Accrued liabilities		12,920			17,875
Net cash provided by operating activities		4,353,403			-

Cash flows from financing activities:
Principal payments on long-term debt		(275,000	)		-
Net cash used in financing activities		(275,000	)		-
Net increase in cash		4,078,403			-
Cash at beginning of year		-			-
Cash at end of year	$	4,078,403		$	-

Noncash investing and financing transactions:

Cash paid for interest	$	195,680		$	-

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

Medical Technology & Innovations, Inc.

Notes to Consolidated Financial Statements

For the Three Months Ended September 30, 2005 and 2004

Financial Statements. The unaudited consolidated financial information contained in this report reflects all adjustments (consisting of normal recurring accruals) considered necessary, in the opinion of management, for a fair presentation of results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's June 30, 2005 Annual Report on Form 10-KSB. The results of operations for periods ended September 30 are not necessarily indicative of operations for the full year.

Net Loss Per Common Share. Basic and diluted net loss per common share was computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during each period. The impact of common stock equivalents has been excluded from the computation of weighted average common shares outstanding, as of the effect would be antidilutive.

Stock Option Plans. In April of 1996 the Company’s shareholders approved the 1996 Stock Option Plan, which allows the Board of Directors to grant up to 120,000 options. Under this plan, 68,000 options have been granted. No options have been granted since fiscal 2000. No options have vested since fiscal 2001. No options are outstanding at September 30, 2005.

Preferred Stock. The $1,000 par value convertible preferred stock is convertible into 599 shares of the Company's common stock.

Related Party Transactions. As part of the Agreement in Lieu of Foreclosure, the Company accrued expenses payable to the Chairman of the Board and CEO and his related companies. The Company accrued $79,527 for the three months ended September 30, 2005.

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

This analysis should be read in conjunction with the condensed consolidated financial statements, the notes thereto, and the financial statements and notes thereto included in the Company's June 30, 2005 Annual Report on Form 10-KSB.

All nonhistorical information contained in this Form 10-QSB is a forward-looking statement. The forward looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward looking statements. Factors that might cause such differences include, but are not limited to the following, a slower acceptance of the PhotoScreener in the marketplace, increased foreign competition putting pricing pressures on Steridyne products, changes in economic trends and other unforeseen situations or developments. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof.

Agreement in Lieu of Foreclosure

On August 30, 2002, the Company’s Board of Directors unanimously approved an Agreement in Lieu of Foreclosure (“Agreement”) between (a) the Company and its subsidiaries as Debtors and (b) Polycrest Holdings, Inc. as Creditor. The Board of Directors of each of the Company’s subsidiaries likewise approved the Agreement.

The Agreement transferred the assets of the Company and its subsidiaries to Polycrest Holdings, Inc., except for (a) certain technology that was retained by the Company, part of which it licensed to Polycrest Holdings, Inc. in return for royalties from the sale of IVD products, and (b) the Company’s contingent asset related to the anticipated settlement, award or judgment in the Company’s litigation against LensCrafters, Inc. and Luxottica Group S.p.A. This contingent asset is subject to payment of attorney’s fees and a fee for managing the case and advancing the costs and expenses incurred in the litigation.

The Agreement transferred the liabilities of the Company and its subsidiaries to Polycrest Holdings, Inc. The Company retained certain contingent liabilities, the Company’s lease of its headquarters building, its employment agreement with the Chairman and Chief Executive Officer and contingent liabilities associated with the various litigation matters.

The Agreement released the Company and its subsidiaries from all liabilities related to funds and services that had been advanced by the Chairman and Chief Executive Officer and parties related to him as well as the security agreements that covered those liabilities.

Because the Company’s inability to repay the advances, Polycrest Holdings, Inc. was entitled to foreclose on the assets of the Company and its subsidiaries but instead settled the potential foreclosure actions by entering into the Agreement. The date of the Agreement is September 6, 2002, to reflect the onset of the closing process, which was completed over the following thirty days.

Results of Operations

Comparison of Three Month Periods Ended September 30, 2005 and 2004

Operating expenses for the three months ended September 30, 2005 were $439,788 compared to $37,488 for the comparable period in fiscal 2005 for an increase of $402,300 or 1073%. Operating expenses consist of accrued rent, salaries and expense related to the LensCrafters litigation.

Interest expense was $24,712 and 17,934 for the three months ended September 30, 2005 and 2004, respectively.

Liquidity and Capital Resources

The Company has financed and expects to continue to finance on a short-term basis all of its operations through the proceeds of the LensCrafters litigation received July 25, 2005. The Company may raise additional capital through private and/or public sales of securities in the future.

PART II. - OTHER INFORMATION

Item 6. Exhibits

(a)

Exhibits:

31.1

Rule 13a-14(a) Certification - CEO

31.2

Rule 13a-14(a) Certification - CFO

Rule 13a-14(b) Certification

Signatures

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MEDICAL TECHNOLOGY & INNOVATIONS, INC.

BY:		BY:
	/s/ Jennifer A. Herman		/s/ Jeremy P. Feakins
	Jennifer A. Herman		Jeremy P. Feakins,
	Vice President Finance		Chairman and Chief Executive Officer
	(Chief Financial Officer)

Date: January 8, 2007

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