Attached files
| file | filename |
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| EX-31.2 - EXHIBIT 31.2 - MOLLER INTERNATIONAL INC | a6733333ex31_2.htm |
| EX-31.1 - EXHIBIT 31.1 - MOLLER INTERNATIONAL INC | a6733333ex31_1.htm |
| EX-32.2 - EXHIBIT 32.2 - MOLLER INTERNATIONAL INC | a6733333ex32_2.htm |
| EX-32.1 - EXHIBIT 32.1 - MOLLER INTERNATIONAL INC | a6733333ex32_1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2011
OR
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File No. 000-33173
Moller International, Inc.
(Exact name of registrant as specified in its charter)
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California
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68-0006075
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(State or other jurisdiction of incorporation)
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(I.R.S. Employer Identification No.)
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1222 Research Park Drive, Davis CA
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95618
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(Address of Principal Executive Office)
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(Zip Code)
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Registrant’s telephone number, including area code: (530) 756-5086
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, 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 large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer ¨
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Accelerated filer ¨
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Non-accelerated filer ¨
(Do not check if a smaller reporting company)
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ¨ No x
As of May 18, 2011, there were 48,349,517 shares of common stock outstanding.
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TABLE OF CONTENTS
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Page #
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1
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2
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4
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5
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7
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8
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8
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9
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9
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9
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9
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9
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9
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11
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12
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13
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14
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ii
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Consolidated Balance Sheet
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Unaudited
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March 31, 2011
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June 30, 2010
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ASSETS
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CURRENT ASSETS
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Cash
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$ | 9,647 | $ | 50,102 | ||||
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Accounts receivable
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2,459 | - | ||||||
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Advances to employees
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635 | 615 | ||||||
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Total current assets
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$ | 12,741 | $ | 50,717 | ||||
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PROPERTY AND EQUIPMENT, net of accumulated depreciation
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9,612 | 10,613 | ||||||
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OTHER ASSETS
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319 | 319 | ||||||
| $ | 22,672 | $ | 61,649 | |||||
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LIABILITIES AND DEFICIT IN STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
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Accounts payable, trade
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$ | 674,408 | $ | 653,552 | ||||
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Accrued liabilities
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367,036 | 346,729 | ||||||
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Accrued liabilities-majority shareholder
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4,109,289 | 3,495,313 | ||||||
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Notes payable-other
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978,182 | 978,182 | ||||||
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Note payable - majority shareholder
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3,135,275 | 3,304,320 | ||||||
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Notes payable - minority shareholders
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82,104 | 88,665 | ||||||
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Deferred wages - employees
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500,391 | 412,425 | ||||||
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Customer deposits
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394,767 | 394,767 | ||||||
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Total current liabilities
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$ | 10,241,452 | $ | 9,673,953 | ||||
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LONG TERM LIABILITIES
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Deferred wages and interest-majority shareholder
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1,712,269 | 1,434,273 | ||||||
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Total liabilities
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11,953,721 | 11,108,226 | ||||||
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DEFICIT IN STOCKHOLDERS' EQUITY
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Common stock, authorized, 150,000,000 shares, no par value
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48,302,458 and 47,997,776 issued and outstanding respectively
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35,639,035 | 35,564,478 | ||||||
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Accumulated deficit
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$ | (47,570,084 | ) | $ | (46,611,055 | ) | ||
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Total stockholders' deficit
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$ | (11,931,049 | ) | $ | (11,046,577 | ) | ||
| $ | 22,672 | $ | 61,649 | |||||
See accompanying notes to unaudited consolidated financial statements.
1
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MOLLER INTERNATIONAL, INC.
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Consolidated Statements Of Operations
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Unaudited
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Three Months Ended
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Nine Months Ended
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31-Mar-11
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31-Mar-10
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31-Mar-11
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31-Mar-10
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REVENUE
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Other revenue
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$ | 91 | $ | 23,296 | $ | 7,025 | $ | 30,030 | ||||||||
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OPERATING EXPENSES
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Selling, general and administrative
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124,097 | 236,790 | 322,470 | 625,863 | ||||||||||||
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Rent expense to majority shareholder
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14,817 | 126,353 | 279,351 | 243,712 | ||||||||||||
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Total expenses
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$ | 138,914 | $ | 363,143 | $ | 601,821 | $ | 869,575 | ||||||||
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Operating Loss
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$ | (138,823 | ) | $ | (339,847 | ) | $ | (594,796 | ) | $ | (839,545 | ) | ||||
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OTHER EXPENSE
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Other income
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13,466 | 14,415 | 150 | |||||||||||||
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Interest expense
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(22,733 | ) | (87,870 | ) | (46,775 | ) | (215,342 | ) | ||||||||
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Interest expense- majority shareholder
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(109,542 | ) | (79,104 | ) | (331,873 | ) | (237,435 | ) | ||||||||
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Total other expense
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$ | (118,809 | ) | $ | (166,974 | ) | $ | (364,233 | ) | $ | (452,627 | ) | ||||
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NET LOSS
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$ | (257,632 | ) | $ | (506,821 | ) | $ | (959,029 | ) | $ | (1,292,172 | ) | ||||
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Loss per common share, basic and diluted
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$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.03 | ) | ||||
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Weighted average common shares outstanding, basic and diluted
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48,263,217 | 47,832,958 | 48,166,419 | 47,682,517 | ||||||||||||
See accompanying notes to unaudited consolidated financial statements.
2
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Consolidated Statement of Cash Flows
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Unaudited
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Nine Months Ended
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March 31,
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March 31,
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Cash Flows From Operating Activities
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Net Loss
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$ | (959,029 | ) | $ | (1,292,172 | ) | ||
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Adjustments to reconcile net loss
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to net cash provided by (used in) operating activities:
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Depreciation expense
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1,000 | - | ||||||
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Stock-based compensation
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67,057 | 172,916 | ||||||
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Imputed interest
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- | 22,661 | ||||||
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Change in assets and liabilities:
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Accounts receivable and other assets
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(2,479 | ) | (301 | ) | ||||
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Accounts payable
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20,857 | 18,972 | ||||||
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Accrued liabilities-related parties
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613,976 | 668,340 | ||||||
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Accrued liabilities and deferred wages
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386,269 | (6,496 | ) | |||||
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Other liabilities
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323,863 | |||||||
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Net Cash Provided by (Used in) Operating Activities
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$ | 127,651 | $ | (92,217 | ) | |||
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Cash Flows Provided from Financing Activities
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Borrowing from related party debt
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$ | 22,624 | $ | 130,685 | ||||
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Proceeds from issuance of common stock
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7,500 | - | ||||||
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Payments related party note payable
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(198,230 | ) | (34,924 | ) | ||||
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Net Cash (Used in) Provided from Financing Activities
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$ | (168,106 | ) | $ | 95,761 | |||
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Net Increase (Decrease) In Cash
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$ | (40,455 | ) | $ | 3,544 | |||
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Cash Balance at Beginning of Period
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50,102 | 3,276 | ||||||
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Cash Balance at End of Period
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$ | 9,647 | $ | 6,820 | ||||
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Supplemental Disclosure of Non-Cash Financing Activities:
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Shares issued as repayment of debt
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$ | - | $ | 272,500 | ||||
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Contributed capital in the form of common shares
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- | 30,319 | ||||||
See accompanying notes to unaudited consolidated financial statements.
3
Notes To Consolidated Financial Statements
Unaudited
NOTE A – ORGANIZATION AND BASIS OF PRESENTATION
The accompanying unaudited financial statements of Moller International, Inc. (“MI”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, these financial statements may not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the audited financial statements and the notes thereto for the fiscal year ended June 30, 2010 filed on Form 10-K. In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to fairly present MI’s financial position as of March 31, 2011, and its results of operations and its cash flows for the nine months ended March 31, 2011 and 2010. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited consolidated financial statements for 2010 as reported in the 10-K have been omitted.
Correction of an error in the prior period
In accordance with ASC 250-10, Accounting Changes and Error Corrections, the consolidated financial statements for the nine months ended March 31, 2010 were corrected for an immaterial error related to imputed interest expense. The impact of this correction was to reduce interest expense and common stock by $22,661. The correction did not impact the net cash used in operating activities as reported in the Consolidated Statements of Cash Flows.
Reclassification
Certain prior year amounts have been reclassified to conform to the current year presentation. For the nine months ended March 31, 2010, we determined that the related party revenues totaling $153,111 should have been reported as expense reimbursement. Consequently, this amount was reclassified as a reduction in operating expenses to conform to the current presentation. Net income and earnings per share remained unchanged.
NOTE B – GOING CONCERN
As of March 31, 2011, MI has accumulated deficits of $47,570,084 and a working capital deficit of $10,228,711. MI currently has limited revenue-producing products and is continuing its development of products in both the Skycar and Rotapower engine programs. Successful completion of product development activities for either or both of these programs will require significant additional sources of capital. Continuation as a going concern is dependent upon MI’s ability to obtain additional financing sufficient to complete product development activities and provide working capital to fund the manufacture and sale of MI’s products. These factors raise substantial doubt as to MI’s ability to continue as a going concern.
Management is currently pursuing additional sources of capital in quantities sufficient to fund product development and manufacturing and sales activities.
4
NOTE C – NOTES PAYABLE – RELATED PARTIES
During the nine months ended March 31, 2011, MI made repayments to related parties amounting to $198,230. During the three months ended March, 31 2011, MI made repayments to related parties amounting to $136,919.
NOTE D - STOCK-BASED COMPENSATION
During the nine months ended March 31, 2011, MI issued 245,859 shares for services to outside consultants and certain employees and estimated the value of these shares at the fair market value of $40,203 on the date of issuance.
During the nine months ended March 31, 2011, MI granted 200,000 options to a non-employee with a term of 3.5 years and an exercise price of $0.15 per share. These options vested immediately and have a fair value of $23,701, as calculated using the Black-Scholes model. Assumptions used in the Black-Scholes model included: (1) discount rate of 0.50%; (2) expected term of 2 years, (3) expected volatility of 177% and (4) zero expected dividends.
During the nine months ended March 31, 2011, MI granted 25,000 options to the Board of Directors for services. These options have a term of 3 years and an exercise price of $0.119 per share. These options vested immediately and have a fair value of $3,153, as calculated using the Black-Scholes model. Assumptions used in the Black-Scholes model included: (1) discount rate of 0.44%; (2) expected term of 1.5 years; (3) expected volatility of 155% and (4) zero expected dividends.
Amortization of stock option expense during the quarter ended March 31, 2011 totaled $26,854.
During the nine months ended March 31, 2011, 3,456,304 options were forfeited.
Options outstanding and exercisable as of March 31, 2011 totaled 7,097,740 with a weighted average exercise price and remaining life of $0.23 and 3 years, respectively. As of March 31, 2011, these options have an intrinsic value of zero.
5
NOTE E - LITIGATION AND CONTINGENCIES
J.F. Wilson & Associates Ltd. v. Estate of Percy Symens, et al.
Moller International (MI) is named as a defendant in a lawsuit pending in Yolo County, California Superior Court – J.F. Wilson & Associates Ltd. V. Estate of Percy Symens, et al. The complaint, filed in April 2005, alleges that MI unlawfully discharged solvents into the environment while doing business at 203 J Street and 920 Third Street in Davis, California during 1968 to 1980. The complaint seeks injunctive relief and damages of an unspecified amount. The Company’s Answer, which denies the allegations in the complaint, was filed in June of 2005, and initial discovery commenced in August of 2005. The case has not been set for trial. On December 20, 2006, defendant and cross-complainant Donald M. Miller died; and on January 7, 2008, the court ordered a stay of proceedings until the court’s Probate Department rules on an application for letters of instruction in connection with Mr. Miller’s estate. The court’s Probate Department issued its ruling on September 17, 2010; but the stay remains in place to afford time to the parties to investigate and assess the environmental conditions at the properties in question.
In a related administrative proceeding initiated on September 26, 2006, the California Central Valley Regional Water Quality Control Board (RWQCB) issued a draft Cleanup and Abatement Order (CAO) in connection with the property at 920 Third Street. MI was named as one of the responsible parties in the draft CAO, and intends to challenge the characterization of MI as a discharger of environmental contaminants, while also complying with the orders of the RWQCB. MI and other parties have submitted comments regarding the draft cleanup and abatement order. The draft CAO has not been finalized. The property owner is proceeding with work to investigate, characterize and remediate the soil and groundwater contamination at this property, with RWQCB oversight.
MI’s probable loss has been estimated at this time in the range of $200,000 to $1,000,000 and has accrued $200,000. It is reasonably possible that these estimates may be significantly revised as the site investigation and other research and analysis proceeds. MI will continue to assess its potential loss in the future as more information is available.
NOTE F - SUBSEQUENT EVENTS
In April the Company issued 47,059 shares of its common stock in accordance with an ongoing agreement for services to consultants working with the Company. These shares were valued at $8,000 or $0.17 per share as determined from the closing price of the Company’s stock at date of issuance.
6
Results of Operations
Three months Ended March 31, 2011 and March 31, 2010
For the three-months ended March 31, 2011, we had a net loss of $257,632 or $0.01 loss per share as compared to a net loss of $506,821 or $0.01 loss per share for the same period of 2010. We continue to pursue the development of the Skycar, Rotapower engine and Aerobot products. We currently propose to produce variations of it M200X, an earlier prototype volantor. Although there is no assurance that this vehicle will meet with success in the market place, the Company is actively seeking support for the program and, if found, may choose to move into the production of these vehicles.
Nine months Ended March 31, 2011 and March 31, 2010
For the nine-months ended March 31, 2011, we had a net loss of $959,029 or $0.02 loss per share as compared to a net loss of $1,292,172 or $0.03 loss per share for the same period of 2010. As stated above, we continue to pursue the development of the Skycar, Rotapower engine and Aerobot products. We currently propose to produce variations of it M200X, an earlier prototype volantor and are attempting to license the Rotapower engine to a potential manufacturing entity.
Going Concern and Liquidity
As of March 31, 2011, MI has accumulated deficits of $47,570,084. MI currently has limited recurring revenue-producing products and is continuing its development of products in both the Skycar and Rotapower engine programs. Successful completion of product development activities for either or both of these programs will require significant additional sources of capital. Continuation as a going concern is dependent upon MI’s ability to obtain additional financing sufficient to complete product development activities and provide working capital to fund the manufacture and sale of MI’s products. These factors raise substantial doubt as to MI’s ability to continue as a going concern.
Management is currently pursuing additional sources of capital in quantities sufficient to fund product development and manufacturing and sales activities.
The majority shareholder of MI, Dr. Paul S. Moller, (“Dr. Moller”), is providing funds received from the refinancing of both real property owned by him personally and real property owned by a limited partnership of which he is the general partner, in the form of short-term, interest-bearing demand loans to MI. As of March 31, 2011, amounts outstanding to him total 3,135,255 from these transactions. In addition, he has deferred payment of current year building rent owed by MI of $496,800. The total deferred rent, including interest owing to Dr. Moller at March 31, 2011 is $4,109,289. He has also agreed to defer his salary. Total amounts due to him for the deferred salaries including accrued interest total $1,712,269.
There can be no assurance that this majority shareholder will continue to have the ability to continue to make such short-term loans to MI in the future. Dr. Moller is under no legal obligation to provide additional loans to the company. In the event that he cannot continue to make such loans, or that MI does not receive funds from other sources, MI may be unable to continue to operate as a going concern.
There is no assurance that the funds generated from these activities or other sources will be sufficient to provide MI with the capital needed to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
7
As a smaller reporting company we are not required to report items under this section.
Evaluation of Disclosure Controls and Procedures
Our President, Paul Moller, acts as the "Certifying Officer" for the Company and is responsible for establishing and maintaining disclosure controls and procedures. The Certifying Officer has designed such disclosure controls and procedures to ensure that material information is made known to him, particularly during the period in which this report was prepared. The Certifying Officer has evaluated the effectiveness of our disclosure controls and procedures as of the date of this report and believes that the disclosure controls and procedures are not effective based on the required evaluation. We believe this is due to the limited resources devoted to accounting and financial reporting during this reporting period and the Company will continue to remedy the shortfall by hiring additional personnel to address its accounting and financial reporting functions as soon as possible and when funding becomes available.
Changes in Internal Controls Over Financial Reporting
There have been no changes in the company’s internal controls over Financial Reporting since the year ended June 30, 2010, although the company is conducting an internal audit with respect to the Sarbanes-Oxley Act provisions and expect the outcome of this audit to result in revisions to some of its existing processes and controls to take effect in the next reporting period.
8
J.F. Wilson & Associates Ltd. v. Estate of Percy Symens, et al.
Moller International (MI) is named as a defendant in a lawsuit pending in Yolo County, California Superior Court – J.F. Wilson & Associates Ltd. V. Estate of Percy Symens, et al. The complaint, filed in April 2005, alleges that MI unlawfully discharged solvents into the environment while doing business at 203 J Street and 920 Third Street in Davis, California during 1968 to 1980. The complaint seeks injunctive relief and damages of an unspecified amount. The Company’s Answer, which denies the allegations in the complaint, was filed in June of 2005, and initial discovery commenced in August of 2005. The case has not been set for trial. On December 20, 2006, defendant and cross-complainant Donald M. Miller died; and on January 7, 2008, the court ordered a stay of proceedings until the court’s Probate Department rules on an application for letters of instruction in connection with Mr. Miller’s estate. The court’s Probate Department issued its ruling on September 17, 2010; but the stay remains in place to afford time to the parties to investigate and assess the environmental conditions at the properties in question.
In a related administrative proceeding initiated on September 26, 2006, the California Central Valley Regional Water Quality Control Board (RWQCB) issued a draft Cleanup and Abatement Order (CAO) in connection with the property at 920 Third Street. MI was named as one of the responsible parties in the draft CAO, and intends to challenge the characterization of MI as a discharger of environmental contaminants, while also complying with the orders of the RWQCB. MI and other parties have submitted comments regarding the draft cleanup and abatement order. The draft CAO has not been finalized. The property owner is proceeding with work to investigate, characterize and remediate the soil and groundwater contamination at this property, with RWQCB oversight.
MI’s probable loss has been estimated at this time in the range of $200,000 to $1,000,000 and has accrued $200,000. It is reasonably possible that these estimates may be significantly revised as the site investigation and other research and analysis proceeds. MI will continue to assess its potential loss in the future as more information is available.
Not applicable
None
None
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(a.)
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Reports on Form 8-K
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9
The following reports were filed on Form 8-K during the period ended March 31, 2011.
February 25, 2011 reported that a revision had been made to a long-standing agreement between Moller International and Freedom Motors. The prior agreement, entered into on 28 October 1999 was jointly signed by Freedom Motors, Aerobotics Inc (no longer in operation), and Moller International. It defined certain terms and conditions defined for certain products, services and equipment. The 28 October 1999 Technology Agreement became known as the “Technology Agreement” between these parties. Subsequently the Board of Directors of Moller International, Inc. and Freedom Motors Inc, agreed to amend this material definitive agreement to increase royalty fees paid by Freedom Motors to Moller International in exchange for the forfeiture of $4 million in debt owed by Freedom Motors to Moller International. Furthermore it was agreed that these royalties will be paid upon the sales of Rotapower® engines as outlined in the amendment dated February 25, 2011.
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(a.) Exhibits
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Exhibit No.
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Description
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31.1
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Certification of CEO
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31.2
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Certification of CFO
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32.1
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Certification of CEO
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32.2
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Certification of CFO
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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.
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MOLLER INTERNATIONAL, INC.
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May 23, 2010
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/s/ Paul S. Moller
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Date
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Paul S. Moller, Ph.D.
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President, CEO, Chairman of the Board
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10