Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - MOLLER INTERNATIONAL INC | Financial_Report.xls |
| EX-31.2 - EX-31.2 - MOLLER INTERNATIONAL INC | ex31-2.htm |
| EX-32.2 - EX-32.2 - MOLLER INTERNATIONAL INC | ex32-2.htm |
| EX-31.1 - EX-31.1 - MOLLER INTERNATIONAL INC | ex31-1.htm |
| EX-32.1 - EX-32.1 - MOLLER INTERNATIONAL INC | ex32-1.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 December 31, 2014
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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
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 February 19, 2015, there were 69,379,796 shares of common stock outstanding.
TABLE OF CONTENTS
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Page
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PART I - FINANCIAL INFORMATION
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1
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1
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2
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3
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4
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7
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7
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7
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PART II - OTHER INFORMATION
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8
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8
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8
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8
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8
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8
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9
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EXHIBITS
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PART I - FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS
MOLLER INTERNATIONAL, INC.
BALANCE SHEETS
Unaudited
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December 31, 2014
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June 30, 2014
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|||||||
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ASSETS
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||||||||
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CURRENT ASSETS
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||||||||
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Cash
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$
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16,345
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$
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97,846
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||||
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Prepaid and other current assets
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29,101
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3,613
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||||||
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Total current assets
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45,446
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101,459
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||||||
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PROPERTY AND EQUIPMENT, net
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7,968
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7,076
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||||||
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Total assets
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$
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53,414
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$
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108,535
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||||
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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||||||||
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CURRENT LIABILITIES
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||||||||
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Accounts payable, trade
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$
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661,424
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$
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643,090
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||||
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Accrued liabilities
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998,324
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935,966
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||||||
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Accrued liabilities-majority shareholder
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6,974,686
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6,615,469
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||||||
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Notes payable-other
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1,383,682
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1,383,682
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Note payable - majority shareholder
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2,133,198
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2,188,947
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||||||
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Convertible notes payable, net of discount of $213,981 and $123,640
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144,327
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213,240
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||||||
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Notes payable - minority shareholders
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201,786
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208,068
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||||||
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Derivative liability
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317,290
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281,251
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||||||
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Deferred wages – employees
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1,038,828
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1,035,335
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||||||
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Deferred other income
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24,598
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24,598
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||||||
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Customer deposits
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384,767
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384,767
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||||||
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Total current liabilities
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14,262,910
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13,914,413
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||||||
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LONG TERM LIABILITIES
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||||||||
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Deferred wages and interest-majority shareholder
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1,430,730
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1,328,830
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||||||
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Total liabilities
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15,693,640
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15,243,243
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||||||
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STOCKHOLDERS' DEFICIT
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||||||||
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Common stock, authorized, 150,000,000 shares, no par value
65,155,058 and 54,876,990 issued and outstanding respectively
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39,724,659
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39,082,892
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||||||
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Accumulated deficit
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(55,364,885
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)
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(54,217,600
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)
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||||
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Total stockholders' deficit
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(15,640,226
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)
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(15,134,708
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)
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||||
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$
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53,414
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$
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108,535
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|||||
See accompanying notes to unaudited financial statements.
MOLLER INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
Unaudited
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Three Months Ended
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Six Months Ended
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|||||||||||||||
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December 31, 2014
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December 31, 2013
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December 31, 2014
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December 31, 2013
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|||||||||||||
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REVENUE
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||||||||||||||||
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Other revenue
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$
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-
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$
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3,732
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$
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-
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$
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3,756
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||||||||
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OPERATING EXPENSES
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||||||||||||||||
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Selling, general and administrative
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112,958
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142,349
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290,169
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275,850
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||||||||||||
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Rent expense to majority shareholder
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132,652
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132,652
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265,304
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120,001
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||||||||||||
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Legal, accounting, & professional fees
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14,208
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4,360
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14,208
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5,660
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||||||||||||
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Research and development
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3,290
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|||||||||||||||
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Depreciation and amortization
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85
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367
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229
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600
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||||||||||||
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Total expenses
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(259,903
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)
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(279,728
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)
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(569,910
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) |
(405,401
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) | ||||||||
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Operating loss
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(259,903
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)
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(275,996
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)
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(569,910
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)
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(401,645
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)
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||||||||
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OTHER INCOME (EXPENSE)
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||||||||||||||||
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Interest expense
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(152,262
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)
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(115,438
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)
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(254,310
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)
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(196,641
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)
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||||||||
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Interest expense- majority shareholder
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(77,000
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)
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(74,610
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)
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(153,313
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)
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(149,498
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)
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||||||||
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Derivative (loss) income
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(187,855
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) |
(201,203
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)
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(169,752
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)
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52,209
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|||||||||
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Total other income (expense)
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(417,117
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)
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(391,251
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)
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(577,375
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)
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(293,930
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)
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||||||||
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NET LOSS
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$
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(677,020
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)
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(667,247
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)
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$
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(1,147,285
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)
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$
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(695,575
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)
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|||||
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Loss per common share - Basic and diluted
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$
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(0.01
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)
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(0.01
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)
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$
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(0.02
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)
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$
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(0.01
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)
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|||||
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Weighted average common shares outstanding
- Basic and diluted
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59,514,263
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51,153,091
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57,400,675
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50,219,311
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||||||||||||
See accompanying notes to unaudited financial statements.
MOLLER INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
Unaudited
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Six Months Ended
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||||||||
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December 31,
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December 31,
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|||||||
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2014
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2013
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|||||||
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Cash Flows From Operating Activities
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||||||||
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Net loss
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$
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(1,147,285
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)
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$
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(695,575
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)
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||
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Adjustments to reconcile net loss to net cash
Provided by (used in) operating activities:
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||||||||
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Depreciation expense
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228
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600
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||||||
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Derivative (gain)/loss
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169,752
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(52,209
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)
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|||||
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Stock based compensation
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7,174
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34,630
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||||||
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Debt discount amortization
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156,583
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99,228
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||||||
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Change in assets and liabilities:
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||||||||
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Prepaid expenses
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2,262
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(6,030
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)
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|||||
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Other assets
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||||||||
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Accounts payable
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18,334
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(21,308
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)
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|||||
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Accrued liabilities - related parties
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461,117
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531,349
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||||||
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Accrued liabilities and deferred wages
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60,485
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153,288
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||||||
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Net Cash Provided By (Used in) Operating Activities
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$
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(271,350
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)
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$
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43,973
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|||
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Cash Flows Provided from Investing Activities
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||||||||
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Purchase of Fixed Assets
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(1,120
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)
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-
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|||||
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Net Cash Used in Investing Activities
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(1,120
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)
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-
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|||||
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Cash Flows Provided from Financing Activities
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||||||||
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Proceeds from convertible notes payable
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280,750
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129,500
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||||||
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Borrowings on note payable
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1,998
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|||||||
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Payment on note payable
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(8,280
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) |
-
|
|||||
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Deferred financing costs
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(27,750
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) | ||||||
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Net payments on related party note payable
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(55,749
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)
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(149,012
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)
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||||
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Net Cash Provided by (Used in) Financing Activities
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$
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190,969
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$
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(19,512
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)
|
|||
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Net Increase (Decrease) In Cash
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$
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(81,501
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)
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$
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24,461
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|||
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Cash, Beginning of Six Months
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$
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97,846
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$
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5,015
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||||
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Cash, End of Six Months
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$
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16,345
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$
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29,476
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Supplemental Cash Flow Information:
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||||||||
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Interest paid
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$
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11,485
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$
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1,715
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||||
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Supplemental Disclosure of Non-Cash Financing Activities:
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||||||||
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Write off of derivative liability to additional paid-in capital
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380,637
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270,729
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||||||
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Note payable and accrued interest converted to common stock
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253,956
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147,222
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||||||
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Shares issued to settle accounts payable
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47,538
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|||||||
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Debt discount for derivative liability
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246,924
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106,222
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||||||
See accompanying notes to unaudited financial statements.
MOLLER INTERNATIONAL, INC.
NOTES TO 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, 2014 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 December 31, 2014, and its results of operations and its cash flows for the six months ended December 31, 2014 and 2013. 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 2014 as reported in the 10-K have been omitted.
Embedded conversion features
The Company evaluates embedded conversion features within convertible debt and convertible preferred stock under ASC 815 “Derivatives and Hedging” to determine whether the embedded conversion features should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial conversion feature.
NOTE B – GOING CONCERN
As of December 31, 2014, MI had an accumulated deficit and a working capital deficit. In addition, MI is currently in the development stage of the Skycar and Rotapower engine programs, and has no revenue producing products. Successful completion of product development activities for either or both of these programs will require significant additional sources of capital. These conditions raise substantial doubt as to our ability to continue as a going concern. Historically, funding was provided by certain shareholders, including the majority shareholder, in the form of short-term notes payable. In addition, the majority shareholder granted us a deferral on the payment of rent for our building. There is no assurance that we will continue to receive funding from shareholders, particularly our major shareholder given he has filed for protection under the federal Chapter 11 reorganization provisions of the federal bankruptcy law. Consequently, we are evaluating several alternatives to raise the additional capital through debt or equity transactions. There is no assurance that our efforts will be successful, however, and the financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
NOTE C – ACCRUED LIABILITIES – MAJORITY SHAREHOLDER
We lease our facility from our majority shareholder. Rent expense to our majority shareholder was $265,304 during the six months ended December 31, 2014. During the six months ended December 31, 2013 our rent expense was $120,001.
As of December 31, 2014, MI had outstanding accrued liabilities consisting of accrued rent, deferred wages and accrued interest to our majority shareholder totaling $6,974,686.
NOTE D – NOTES PAYABLE & DERIVATIVE LIABILITIES
Majority Shareholder
During the six months ended December 31, 2014 and 2013 the Company made repayments on majority shareholder notes payable of $55,749, and $149,012, respectively. The total debt outstanding to majority shareholder at December 31, 2014 is $2,133,198. The debt is unsecured, payable upon demand and bears an annual interest rate of 10%.
Minority Shareholder
During the six months ended December 31, 2014 and 2013 MI made net repayments on related party notes payable of $6,282 and $0. The total due to minority shareholders at December 31, 2014 is $201,786. The debt is unsecured, payable upon demand and bears an annual interest rate of 10%.
Convertible Notes Payable & Derivative Liabilities
During the six months ended December 31, 2014 and 2013 MI received $280,750 and $129,500 related to convertible promissory notes. The borrowings are due nine to twelve months after issuance, carry an interest rate of 0% to 8% for 90 days, then increases to 12%, and is convertible into common stock at the lesser of $0.24 or 60% of the lowest trading price in the 25 trading days prior to conversion and for some instruments 53% and 58% of the average of the three lowest days in the ten trading days prior to conversion. A debt discount of $246,924 was recorded as a result of these convertible notes during the six months ended December 31, 2014. A total of $156,583 of the debt discount was amortized during the period to interest expense. During the six months ended December 31, 2014, promissory notes totaling $253,956 were converted to 10,204,866 shares of MI common stock as a result $380,637 of the derivative liability was reclassed to additional paid in capital. The change in fair value of the derivative liability at December 31, 2014 is $169,752 and is recorded as derivative loss.
The Company analyzed the conversion options for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that for the instruments immediately convertible, the embedded conversion features should be classified as liabilities due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The embedded conversion features were measured at fair value at inception with the change in fair value recorded to earnings. Additionally, because there is no explicit limit to the number of shares to be issued upon conversion of the above instruments, the Company cannot determine if it will have sufficient authorized shares to settle all other share-settleable instruments, including the warrants granted above. As a result, all other share-settable instruments have also been classified as liabilities.
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Derivative Liabilities
|
||||
|
June 30, 2014
|
$
|
281,251
|
||
|
Debt discount due to derivative liability
|
246,924
|
|||
|
Reclass of derivative liability to additional paid-in capital due to conversion of related notes payable
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(380,637
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) | ||
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Change in fair value
|
169,752
|
|||
|
December 31, 2014
|
$
|
317,290
|
||
NOTE E – STOCK-BASED COMPENSATION
During the six months ended December 31, 2014, MI issued 73,202 shares of common stock for settlement of services to outside consultants and certain employees. We valued these shares at the fair market value on the dates of issuance of $7,174.
MI also issued 10,204,866 shares of commons stock in settlement of $253,956 convertible promissory notes and interest.
NOTE F – FAIR VALUE MEASUREMENTS
The Company measures fair value in accordance with a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
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Level 1
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
|
|
Level 2
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Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
|
|
|
Level 3
|
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
|
NOTE F – FAIR VALUE MEASUREMENTS (CONTINUED)
The following table sets forth the Company's consolidated financial assets and liabilities measured at fair value by level within the fair value hierarchy as of December 31, 2014 and June 30, 2014. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
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LIABILITIES:
|
||||||||||||||||
|
Derivative liabilities – 6/30/2014
|
281,251
|
-
|
-
|
281,251
|
||||||||||||
|
Derivative liabilities – 12/31/2014
|
317,290
|
317,290
|
||||||||||||||
NOTE G – SUBSEQUENT EVENTS
Subsequent to December 31, 2014, the Company issued a total of 4,200,000 shares of common stock to convert loans with a principal and interest balance of $42,000. Additionally 24,738 shares were issued for services.
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three months Ended December 31, 2014 and December 31, 2013:
For the three-months ended December 31, 2014, we had a net loss of $677,020 or $0.01 loss per share as compared to a net loss of $667,247 or $0.01 loss per share for the same period of 2013. We continue to pursue the development activities on the Skycar, Rotapower engine project, primarily in the areas of its flight control system (FCS) and the performance advantages of introducing a hybrid approach to generating the high power required to take off and land. 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.
Six months Ended December 31, 2014 and December 31, 2013:
For the six-months ended December 31, 2014, we had a net loss of $1,147,285 or $0.02 loss per share as compared to a net loss of $695,575 or $0.01 loss per share for the same period of 2013. We continue to pursue the development activities on the Skycar, Rotapower engine project, primarily in the areas of its flight control system (FCS) and the performance advantages of introducing a hybrid approach to generating the high power required to take off and land. 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.
Going Concern and Liquidity
As of December 31, 2014, MI had an accumulated deficit of $55,364,885 and a working capital deficit of $14,217,464. In addition, MI is currently in the development stage of the Skycar and Rotapower engine programs, and has no revenue producing products. Successful completion of product development activities for either or both of these programs will require significant additional sources of capital. These conditions raise substantial doubt as to our ability to continue as a going concern. Historically, funding was provided by certain shareholders, including the majority shareholder, in the form of short-term notes payable. In addition, the majority shareholder granted us a deferral on the payment of rent for our building. There is no assurance that we will continue to receive funding from shareholders, particularly our major shareholder given he has filed for protection under the federal Chapter 11 reorganization provisions of the federal bankruptcy law. Consequently, we are evaluating several alternatives to raise the additional capital through debt or equity transactions. There is no assurance that our efforts will be successful, however, and the financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
ITEM 3 – QUALITATIVE AND QUANTITATIVE CONCERNS ABOUT MARKET RISK
As a smaller reporting company we are not required to report items under this section.
ITEM 4 – CONTROLS AND PROCEDURES
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, 2014, although the Company has reviewed its internal controls relative to the Sarbanes-Oxley Act provisions and expects that there will be revisions to some of its existing processes and controls during the current fiscal year.
PART II - OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS
None
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS; PURCHASES OF EQUITY SECURITIES
Not applicable
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 – OTHER MATTERS
None
ITEM 6 – EXHIBITS
(a.) Exhibits
|
Exhibit No.
|
Description
|
||
|
31.1
|
|||
|
31.2
|
|||
|
32.1
|
|||
|
32.2
|
|||
|
101.INS
|
XBRL Instance Document
|
||
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
||
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
||
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
||
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
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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.
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MOLLER INTERNATIONAL, INC.
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Date: February 23, 2015
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By:
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/s/ Paul S. Moller
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Paul S. Moller, Ph.D.
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President, CEO, Chairman of the Board
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