Attached files
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EXCEL - IDEA: XBRL DOCUMENT - MOLLER INTERNATIONAL INC | Financial_Report.xls |
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-31.2 - EX-31.2 - MOLLER INTERNATIONAL INC | ex31-2.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
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, 2015
OR
¨
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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)
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):
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 20, 2015, there were 94,890,593 shares of common stock outstanding.
TABLE OF CONTENTS
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
March 31, 2015
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June 30, 2014
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|||||||
ASSETS
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||||||||
CURRENT ASSETS
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||||||||
Cash
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$
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13,344
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$
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97,846
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||||
Prepaid and other current assets
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27,750
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3,613
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||||||
Total current assets
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41,094
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101,459
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||||||
PROPERTY AND EQUIPMENT, net
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7,968
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7,076
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||||||
Total assets
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$
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49,062
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$
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108,535
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||||
LIABILITIES AND STOCKHOLDERS' DEFICIT
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||||||||
CURRENT LIABILITIES
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||||||||
Accounts payable, trade
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$
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660,472
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$
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643,090
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||||
Due to related party
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303,469
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-
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||||||
Accrued liabilities
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685,267
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590,966
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||||||
Accrued liabilities-majority shareholder
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7,164,338
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6,615,469
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||||||
Notes payable-other
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1,324,399
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1,383,682
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||||||
Note payable - majority shareholder
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1,793,198
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2,188,947
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||||||
Convertible notes payable, net of discount of $168,290 and $123,640
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218,633
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213,240
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||||||
Judgement liability
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287,541
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345,000
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Notes payable - minority shareholders
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208,603
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208,068
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||||||
Derivative Liability
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981,863
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281,251
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||||||
Deferred wages – employees
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1,013,551
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1,035,335
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Deferred other income
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24,598
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24,598
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||||||
Customer deposits
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384,767
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384,767
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||||||
Total current liabilities
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15,050,699
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13,914,413
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LONG TERM LIABILITIES
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||||||||
Deferred wages and interest-majority shareholder
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1,481,980
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1,328,830
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||||||
Total liabilities
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16,532,679
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15,243,243
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||||||
DEFICIT IN STOCKHOLDERS' DEFICIT
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||||||||
Common stock, authorized, 150,000,000 shares, no par value
86,693,061 and 54,876,990 issued and outstanding respectively
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40,114,379
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39,082,892
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||||||
Accumulated deficit
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(56,597,996
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)
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(54,217,600
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)
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||||
Total stockholders' deficit
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(16,483,617
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)
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(15,134,708
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)
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||||
$
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49,062
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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
Three Months Ended
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Nine Months Ended
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|||||||||||||||
March 31, 2015
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March 31, 2014
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March 31, 2015
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March 31, 2014
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OPERATING EXPENSES
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||||||||||||||||
Selling, general and administrative
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$ | 38,578 | $ | 117,963 | $ | 328,747 | $ | 393,813 | ||||||||
Depreciation and Amortization Expense
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- | 366 | 229 | 966 | ||||||||||||
Legal, Accounting, & Professional Fees
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27,635 | 5,460 | 41,843 | 11,120 | ||||||||||||
Research and Development
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- | - | - | 3,290 | ||||||||||||
Rent expense to majority shareholder
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103,277 | 132,651 | 368,581 | 252,652 | ||||||||||||
Total expenses
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169,490 | 256,440 | 739,400 | 661,841 | ||||||||||||
Operating Loss
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(169,490 | ) | (256,440 | ) | (739,400 | ) | (661,841 | ) | ||||||||
OTHER EXPENSE
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||||||||||||||||
Derivative gain (loss)
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(806,137 | ) | 116,881 | (975,889 | ) | 169,090 | ||||||||||
Interest expense
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(225,576 | ) | (92,735 | ) | (479,886 | ) | (289,376 | ) | ||||||||
Interest expense- majority shareholder
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(77,000 | ) | (74,688 | ) | (230,313 | ) | (224,186 | ) | ||||||||
Total other expense
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(1,108,713 | ) | (50,542 | ) | (1,686,088 | ) | (344,472 | ) | ||||||||
OTHER INCOME
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||||||||||||||||
Other income
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$ | 45,092 | $ | - | $ | 45,092 | $ | - | ||||||||
Total other income
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45,092 | - | 45,092 | - | ||||||||||||
NET LOSS
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$ | (1,233,111 | ) | $ | (306,982 | ) | $ | (2,380,396 | ) | $ | (1,006,313 | ) | ||||
Loss per common share, basic
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$ | (0.02 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.02 | ) | ||||
Loss per common share, diluted
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$ | (0.02 | ) | $ | (0.01 | ) | $ | (0.04 | ) | $ | (0.02 | ) | ||||
Weighted average common shares outstanding - Basic
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72,499,198 | 52,273,516 | 62,304,290 | 50,894,049 | ||||||||||||
Weighted average common shares outstanding - Diluted
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72,499,198 | 52,273,516 | 62,304,290 | 50,894,049 |
See accompanying notes to unaudited financial statements.
MOLLER INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
Unaudited
Nine Months Ended
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||||||||
March 31
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March 31
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|||||||
2015
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2014
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|||||||
Cash Flows From Operating Activities
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||||||||
Net loss
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$
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(2,380,396
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)
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$
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(1,006,313
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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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||||||||
Depreciation expense
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229
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966
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||||||
Derivative (gain)/loss
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975,889
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(169,090
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) | |||||
Stock based compensation
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7,792
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123,739
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||||||
Debt discount amortization
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290,491
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125,177
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||||||
Change in assets and liabilities:
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||||||||
Prepaid expenses
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-
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(3,258
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)
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|||||
Other assets
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3,613
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(1,513
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) | |||||
Accounts payable
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17,382
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(58,128
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)
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Accrued liabilities – majority shareholder
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702,019
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769,940
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Accrued liabilities and deferred wages
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17,190
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245,935
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||||||
Net Cash Provided By (Used in) Operating Activities
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$
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(365,791
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) |
$
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27,455
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|||
Cash Flows from Investing Activities
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||||||||
Cash paid for purchase of fixed assets
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(1,121
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) | - | |||||
Cash Used in Investing Activities
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(1,121
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) | - | |||||
Cash Flows Provided from Financing Activities
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||||||||
Advance from related party
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303,469
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- | ||||||
Borrowings on debt – minority shareholders
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10,813
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- | ||||||
Proceeds from convertible notes payable
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-
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192,000
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||||||
Deferred financing costs
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(27,750
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) | - | |||||
Additions on third party notes
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401,905
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- | ||||||
Payments on debt – minority shareholders
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(10,278
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) | - | |||||
Payments on related party note payable
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(395,749
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)
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(192,776
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)
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||||
Net Cash Provided by (Used in) Financing Activities
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$
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282,410
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$
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(776
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) | |||
Net Increase (Decrease) In Cash
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$
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(84,502
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) |
$
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26,679
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|||
Cash, Beginning of Year
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$
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97,846
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$
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5,015
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||||
Cash, End of Year
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$
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13,344
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$
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31,694
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||||
Supplemental Cash Flow Information:
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||||||||
Interest paid
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$
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21,938
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$
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1,715
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||||
Supplemental Disclosure of Non-Cash Financing Activities:
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||||||||
Write off of derivative liability to additional paid-in capital
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607,917
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272,739
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||||||
Note payable converted to common stock
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415,778
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147,222
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||||||
Debt discount for derivative liability
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332,641
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175,222
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||||||
Shares issued to settle accounts payable
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-
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47,538
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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 March 31, 2015, and its results of operations and its cash flows for the nine months ended March 31, 2015 and 2014. 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 financial statements which would substantially duplicate the disclosure contained in the audited 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 March 31, 2015, 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
As of March 31, 2015, MI had outstanding accrued liabilities consisting of accrued rent and accrued interest to our majority shareholder totaling $7,164,338.
NOTE D – NOTES PAYABLE & DERIVATIVE LIABILITIES
Notes Payable
During the nine months ended March 31, 2015 and 2014 MI made repayments on related party notes payable of $395,749 and $192,776, respectively.
Due to Related Party
The liability, Due to Related Party, is a due on demand promissory note from Freedom Motors, Inc. a corporation that Paul Moller, the majority shareholder of MI owns the majority of the outstanding common stock. During the quarter ended March 31, 2015 MI received $303,469 in advances from Freedom Motors, Inc.
Judgement Liability
The liability, Judgement Liability, is related to a legal settlement that was recorded as a note payable in the three months ended March 31, 2015. The estimated liability related to this judgement was previously included, in the amount of $345,000, in accrued liabilities in prior quarters. MI agreed to pay the judgement principal ($300,000) in monthly installments of ($5,000), plus interest.
In the three months ended March 31, 2015 the agreed upon principal was reclassified as a long term note payable and a gain in the amount of $45,000, representing the difference between the estimated liability and the agreed upon judgement principal, was recognized as other income.
During the three months ended March 31, 2015 MI made repayments of $12,459.
Convertible Notes Payable & Derivative Liabilities
During the nine months ended March 31, 2015 and 2014 MI received $401,905 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. During the nine months ended March 31, 2015, promissory notes totaling $415,778 were converted to 31,718,131 shares of MI common stock.
The Company analyzed the conversion options for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that for the instruments immediately convertible, the embedded conversion features should be classified as liabilities due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The embedded conversion features were measured at fair value at inception with the change in fair value recorded to earnings. Additionally, because there is no explicit limit to the number of shares to be issued upon conversion of the above instruments, the Company cannot determine if it will have sufficient authorized shares to settle all other share-settleable instruments, including the warrants granted above. As a result, all other share-settable instruments have also been classified as liabilities.
Derivative Liabilities
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||||
June 30, 2014
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$
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281,251
|
||
Debt discount due to derivative liability
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332,641
|
|||
Write off of derivative liability to additional paid-in capital due to conversion of related notes payable
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(607,917
|
)
|
||
Change in fair value
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975,888
|
|||
March 31, 2015
|
$
|
981,863
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Discount amortization charged to interest expense during the nine months ended March 31, 2015, totaled $290,491.
NOTE E – STOCK-BASED COMPENSATION
During the nine months ended March 31, 2015, MI issued 97,940 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 $7,792.
MI also issued 31,718,131 shares of commons stock in settlement of $415,778 convertible promissory notes.
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:
Level 1
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Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
|
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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
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Level 3
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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).
|
5
The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy as of September 30, 2013 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
|
|||||||||||||
LIABILITIES:
|
||||||||||||||||
Derivative liabilities – 6/30/2014
|
281,251
|
281,251
|
||||||||||||||
Derivative liabilities – 3/31/2015
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981,863
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981,863
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NOTE G – SUBSEQUENT EVENTS
Subsequent to March 31, 2015, the Company issued a total of 8,197,532 shares of common stock to convert loans with a principal balance of $24,000.
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three months Ended March 31, 2015 and March 31, 2014:
For the three-months ended March 31, 2015, we had a net loss of $1,233,111 or $0.02 loss per share as compared to a net loss of $306,982 or $0.01 loss per share for the same period of 2014. 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.
Nine months Ended March 31, 2015 and March 31, 2014:
For the nine-months ended March 31, 2015, we had a net loss of $2,380,396 or $0.04 loss per share as compared to a net loss of $1,006,313 or $0.02 loss per share for the same period of 2014. The decreased loss primarily relates to Derivative Gain recognized in nine months ended March 31, 2015. 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 March 31, 2015, MI had an accumulated deficit of $56,597,996 and a working capital deficit of $15,009,605. 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.
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Description
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||
31.1
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31.2
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32.1
|
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32.2
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101.INS
|
XBRL Instance Document
|
||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL
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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
|
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.
MOLLER INTERNATIONAL, INC.
|
|||
Date: June 3, 2015
|
By:
|
/s/ Paul S. Moller
|
|
Paul S. Moller, Ph.D.
|
|||
President, CEO, Chairman of the Board
|
|||
9