10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2013

OR

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

Commission File No. 000-33173

Moller International, Inc.

(Exact name of registrant as specified in its charter)

California	68-0006075
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)
1222 Research Park Drive, Davis CA	95618
(Address of Principal Executive Office)	(Zip Code)

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   ¨	Accelerated filer   ¨
Non-accelerated filer        ¨ (Do not check if a smaller reporting company)	Smaller reporting company  x

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 20, 2014, there were 52,294,482 shares of common stock outstanding.

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS	1
Unaudited Consolidated Balance Sheets as of December 31, 2013 and June 30, 2012	1
Unaudited Consolidated Statements of Operations for the three and six months ended December 31, 2013 and 2012	2
Unaudited Consolidated Statements of Cash Flows for the six months ended December 31, 2013 and 2012	3
Notes to Consolidated Unaudited Financial Statements (unaudited)	4
ITEM 2 – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF   OPERATIONS	6
ITEM 3 – QUALITATIVE AND QUANTITATIVE FACTORS CONCERNING MARKET RISKS	6
ITEM 4 – CONTROLS AND PROCEDURES	6
PART II - OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS	7
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	7
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES	7
ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	7
ITEM 5 – OTHER MATTERS	7
ITEM 6 – EXHIBITS	7
SIGNATURES	8
EXHIBITS
Exhibit 31.1                  Certification Pursuant to Section 302 of the Sarbanes Oxley Act
Exhibit 31.2                  Certification Pursuant to Section 302 of the Sarbanes Oxley Act
Exhibit 32.1                  Certification Pursuant to Section 906 of the Sarbanes Oxley Act
Exhibit 32.2                  Certification Pursuant to Section 906 of the Sarbanes Oxley Act

PART I - FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

MOLLER INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

 Unaudited

	December 31, 2013			June 30, 2013
ASSETS
CURRENT ASSETS
Cash	$	29,476		$	5,015
Advances to employees		551			1,038
Prepaid Expenses		6,517			-
Total current assets		36,544			6,053
PROPERTY AND EQUIPMENT, net		7,246			7,846
	$	43,790		$	13,899
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable, trade	$	640,330		$	701,798
Accrued liabilities		878,746			805,528
Accrued liabilities-majority shareholder		6,234,752			5,860,191
Notes payable-other		1,261,182			1,333,682
Note payable - majority shareholder		2,327,370			2,476,382
Convertible notes payable, net of discount of $53,569 and $46,575		277,089			234,805
Notes payable - minority shareholders		208,591			208,591
Derivative Liability		275,745			492,461
Deferred wages – employees		964,956			881,886
Customer deposits		384,767			387,767
Total current liabilities		13,453,528			13,383,091
LONG TERM LIABILITIES
Deferred wages and interest-majority shareholder		1,229,868			1,073,080
Total liabilities		14,683,396			14,456,171
DEFICIT IN STOCKHOLDERS' DEFICIT
Common stock, authorized, 150,000,000 shares, no par value 52,208,529 and 49,094,675  issued and outstanding respectively		38,541,504			38,039,975
Accumulated deficit		(53,181,110	)		(52,482,247	)
Total stockholders' deficit		( 14,639,606	)		(14,442,272	)
	$	43,790		$	13,899

See accompanying notes to unaudited consolidated financial statements.

1

MOLLER INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

	Three Months Ended						Six Months Ended
	December 31, 2013			December 31, 2012			December 31, 2013			December 31, 2012
REVENUE
Other revenue	$	3,732		$	-			3,756		$	-
OPERATING EXPENSES
Selling, general and administrative		142,349			159,115			275,850			312,206
Depreciation and Amortization Expense		367						600
Legal, Accounting, & Professional Fees		4,360						5,660
Research and Development		-						3,290
Rent expense to majority shareholder		132,652			91,252			120,001			121,304
Total expenses		279,728			250,367			405,401			433,510
Operating Loss		(275,996	)		(250,367	)		(401,645	)		(433,510	)
OTHER EXPENSE
Derivative gain (loss)		(201,203	)		-			52,209			(38,776)
Interest expense		(115,438	)		(37,098	)		(196,641	)		(141,856	)
Interest expense- majority shareholder		(74,610	)		(80,033	)		(149,498	)		(157,875	)
Total other expense		(391,251	)		(117,131	)		(293,930	)		(338,507	)
NET INCOME (LOSS)	$	(667,247	)	$	(367,498	)	$	(695,575	)	$	(772,017	)
Loss per common share, basic	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)
Loss per common share, diluted	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.02	)
Weighted average common shares outstanding - Basic		51,153,091			49,074,522			50,219,311			49,057,799
Weighted average common shares outstanding - Diluted		51,153,091			49,074,522			50,219,311			49,057,799

See accompanying notes to unaudited consolidated financial statements.

2

MOLLER INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

	Six Months Ended
	December 31			December 31
	2013			2012
Cash Flows From Operating Activities
Net loss	$	(695,575	)	$	(772,017	)
Adjustments to reconcile net loss to net cash       Provided by (used in) operating activities:
Depreciation expense		600			466
Derivative (gain)/loss		(52,209)			38,776
Stock based compensation		34,630			19,255
Debt discount amortization		99,228			68,347
Change in assets and liabilities:
Prepaid expenses		(6,030	)		(4,088	)
Other assets		-			319
Accounts payable		(21,308	)		(29,509	)
Accrued liabilities - related parties		531,349			529,275
Accrued liabilities and deferred wages		153,288			158,739
Net Cash Provided By (Used in) Operating Activities	$	43,973		$	9,563
Cash Flows Provided from Financing Activities
Proceeds from convertible notes payable		129,500			-
Payments on related party note payable		(149,012	)		(11,173	)
Net Cash Provided by (Used in) Financing Activities	$	(19,512	)	$	(11,173	)
Net Increase (Decrease) In Cash	$	24,461		$	(1,610	)
Cash, Beginning of Year	$	5,015		$	2,123
Cash, End of Year	$	29,476		$	513
Supplemental Cash Flow Information:
Interest paid	$	1,715		$	31,376
Supplemental Disclosure of Non-Cash Financing Activities:
Write off of derivative liability to additional paid-in capital		270,729			-
Shares issued as repayment customer deposit		-			772,017
N/P converted to common stock		147,222			-
Debt discount for derivative liability		106,222			-
Shares issued to settle accounts payable		47,538			-

See accompanying notes to unaudited consolidated financial statements.

3

MOLLER INTERNATIONAL, INC.

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, 2013 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, 2013, and its results of operations and its cash flows for the six months ended September 30, 2013 and 2012. 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 2013 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, 2013, 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 December 31, 2013, MI had outstanding accrued liabilities consisting of accrued rent and accrued interest to our majority shareholder totaling $6,234,752.

NOTE D – NOTES PAYABLE & DERIVATIVE LIABILITIES

Notes Payable

During the six months ended December 31, 2013 and 2012 MI made repayments on related party notes payable of $149,012 and $11,173, respectively.

Convertible Notes Payable & Derivative Liabilities

During the six months ended December 31, 2013 and 2012 MI received $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. During the six months ended December 31, 2013, promissory notes totaling $147,222 were converted to 2,651,874 shares of MI common stock.

4

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
June 30, 2013	$	492,461
Additions to derivatives		106,222
Write off of derivative liability to additional paid-in capital due to conversion of related notes payable		(270,729)
Change in fair value		(52,209)
December 31, 2013	$	275,745

Discount amortization charged to interest expense during the six months ended December 31, 2013, totaled $99,228.

NOTE E – STOCK-BASED COMPENSATION

During the six months ended December 31, 2013, MI issued 396,326 shares of common stock for settlement of services and liabilities to outside consultants and certain employees.  We valued these shares at the fair market value on the dates of issuance of $34,630 for the services and $47,538 for the accounts payable.

MI also issued 2,651,874 shares of commons stock in settlement of $147,222 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	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2	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).

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 September 30, 2013 and June 30, 2013. 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-  12/31/2013		275,745		-		-		275,745
Derivative liabilities – 6/30/2013		492,461						492,461

NOTE G – SUBSEQUENT EVENTS

Subsequent to December 31, 2013, the Company issued a total of 40,104 shares of common stock and 3,356 shares of our subsidiary’s stock to convert a loan with a principal balance of $10,000.  Additionally 15,994 shares were issued for services.

5

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Three months Ended December 31, 2013 and December 31, 2012:

For the three-months ended December 31, 2013, we had a net loss of $667,247 or $0.01 loss per share as compared to a net loss of $367,498 or $0.01 loss per share for the same period of 2012.   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, 2013 and December 31, 2012:

For the six-months ended December 31, 2013, we had a net loss of $695,575 or $0.01 loss per share as compared to a net loss of $772,017 or $0.02 loss per share for the same period of 2012.   The decreased loss primarily relates to Derivative Gain recognized in six months ended December 31, 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, 2013, MI had an accumulated deficit of $53,181,110 and a working capital deficit of $13,416,984.  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, 2013, 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. 

6

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	Certification of CEO
31.2	Certification of CFO
32.1	Certification of CEO
32.2	Certification of CFO
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

7

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.

	MOLLER INTERNATIONAL, INC.
Date:  February 20, 2014	By:	/s/ Paul S. Moller
		Paul S. Moller, Ph.D.
		President, CEO, Chairman of the Board

8

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CEO

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul S. Moller, Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Moller International, Inc.;

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

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

registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I, are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a.           designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b.           evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c.           presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a.           all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b.           any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  February 20, 2014

/s/ Paul S. Moller                        

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CFO

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Paul S. Moller, Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Moller International, Inc.;

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

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

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a.           designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b.           evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c.           presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

a.           all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b.           any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  February 20, 2014

/s/ Paul S. Moller                        

Acting Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CEO

CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Moller International (the "Company") on Form 10-Q for the six-months ended December 31, 2013 as filed with the Securities and Exchange commission on the date hereof (the "Report), Paul S. Moller, as Chief Executive Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the Best of his knowledge, that:

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

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

Date: February 20, 2014

Signed:

/s/ Paul S. Moller                          

Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CFO

CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Moller International (the "Company") on Form 10-Q for the six-months ended December 31, 2013 as filed with the Securities and Exchange commission on the date hereof (the "Report), Paul S. Moller, as Chief Financial Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the Best of his knowledge, that:

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

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

Date: February 20, 2014

Signed:

/s/ Paul S. Moller                             

Acting Chief Financial Officer

XML

NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES

6 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE D – NOTES PAYABLE & DERIVATIVE LIABILITIES

Notes Payable

During the six months ended December 31, 2013 and 2012 MI made repayments on related party notes payable of $149,012 and $11,173, respectively.

Convertible Notes Payable & Derivative Liabilities

During the six months ended December 31, 2013 and 2012 MI received $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. During the six months ended December 31, 2013, promissory notes totaling $147,222 were converted to 2,651,874 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
June 30, 2013	$	492,461
Additions to derivatives		106,222
Write off of derivative liability to additional paid-in capital due to conversion of related notes payable		(270,729)
Change in fair value		(52,209)
December 31, 2013	$	275,745

Discount amortization charged to interest expense during the six months ended December 31, 2013, totaled $99,228.

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NOTE C - ACCRUED LIABILITIES - MAJORITY SHAREHOLDER

6 Months Ended

Dec. 31, 2013

Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract]

Other Liabilities Disclosure [Text Block]

NOTE C – ACCRUED LIABILITIES – MAJORITY SHAREHOLDER

As of December 31, 2013, MI had outstanding accrued liabilities consisting of accrued rent and accrued interest to our majority shareholder totaling $6,234,752.

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CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Dec. 31, 2013	Jun. 30, 2013
CURRENT ASSETS
Cash	$ 29,476	$ 5,015
Advances to employees	551	1,038
Prepaid Expenses	6,517	0
Total current assets	36,544	6,053
PROPERTY AND EQUIPMENT, net	7,246	7,846
	43,790	13,899
CURRENT LIABILITIES
Accounts payable, trade	640,330	701,798
Accrued liabilities	878,746	805,528
Accrued liabilities-majority shareholder	6,234,752	5,860,191
Notes payable-other	1,261,182	1,333,682
Note payable - majority shareholder	2,327,370	2,476,382
Convertible notes payable, net of discount of $53,569 and $46,575	277,089	234,805
Notes payable - minority shareholders	208,591	208,591
Derivative Liability	275,745	492,461
Deferred wages – employees	964,956	881,886
Customer deposits	384,767	387,767
Total current liabilities	13,453,528	13,383,091
LONG TERM LIABILITIES
Deferred wages and interest-majority shareholder	1,229,868	1,073,080
Total liabilities	14,683,396	14,456,171
DEFICIT IN STOCKHOLDERS' DEFICIT
Common stock, authorized, 150,000,000 shares, no par value 52,208,529 and 49,094,675 issued and outstanding respectively	38,541,504	38,039,975
Accumulated deficit	(53,181,110)	(52,482,247)
Total stockholders' deficit	(14,639,606)	(14,442,272)
	$ 43,790	$ 13,899

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NOTE A - ORGANIZATION AND BASIS OF PRESENTATION

6 Months Ended

Dec. 31, 2013

Accounting Policies [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

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, 2013 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, 2013, and its results of operations and its cash flows for the six months ended September 30, 2013 and 2012. 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 2013 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.

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NOTE B - GOING CONCERN

6 Months Ended

Dec. 31, 2013

Going Concern Disclosure [Abstract]

Going Concern Disclosure [Text Block]

NOTE B – GOING CONCERN

As of December 31, 2013, 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.

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CONSOLIDATED BALANCE SHEETS (Unaudited) (Parentheticals) (USD $)	Dec. 31, 2013	Jun. 30, 2013
Convertible Notes Payable, Discount (in Dollars)	$ 53,569	$ 46,575
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares outstanding	52,208,529	49,094,675
Common stock, shares issued	52,208,529	49,094,675
Common stock, par value (in Dollars per share)	$ 0	$ 0

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NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) - Schedule of Derivative Liabilities at Fair Value (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
Schedule of Derivative Liabilities at Fair Value [Abstract]
June 30, 2013			$ 492,461
Additions to derivatives			106,222	0
Write off of derivative liability to additional paid-in capital due to conversion of related notes payable			(270,729)	0
Change in fair value	201,203	0	(52,209)	38,776
December 31, 2013	$ 275,745		$ 275,745

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Document And Entity Information	6 Months Ended
	Dec. 31, 2013	Feb. 20, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Moller International Inc
Document Type	10-Q
Current Fiscal Year End Date	--06-30
Entity Common Stock, Shares Outstanding		52,294,482
Amendment Flag	false
Entity Central Index Key	0000871344
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Dec. 31, 2013
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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NOTE E - STOCK-BASED COMPENSATION (Details) (USD $)	6 Months Ended
	Dec. 31, 2013
NOTE E - STOCK-BASED COMPENSATION (Details) [Line Items]
Stock Issued During Period, Shares, Issued for Services (in Shares)	396,326
Stock Issued During Period, Value, Issued for Services	$ 34,630
Debt Conversion, Converted Instrument, Shares Issued (in Shares)	2,651,874
Debt Conversion, Converted Instrument, Amount	147,222
Accounts Payable [Member]
NOTE E - STOCK-BASED COMPENSATION (Details) [Line Items]
Stock Issued During Period, Value, Issued for Services	$ 47,538

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CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013	Dec. 31, 2012
REVENUE
Other revenue	$ 3,732	$ 0	$ 3,756	$ 0
OPERATING EXPENSES
Selling, general and administrative	142,349	159,115	275,850	312,206
Depreciation and Amortization Expense	367	0	600	0
Legal, Accounting, & Professional Fees	4,360	0	5,660	0
Research and Development	0	0	3,290	0
Rent expense to majority shareholder	132,652	91,252	120,001	121,304
Total expenses	279,728	250,367	405,401	433,510
Operating Loss	(275,996)	(250,367)	(401,645)	(433,510)
OTHER EXPENSE
Derivative gain (loss)	(201,203)	0	52,209	(38,776)
Interest expense	(115,438)	(37,098)	(196,641)	(141,856)
Interest expense- majority shareholder	(74,610)	(80,033)	(149,498)	(157,875)
Total other expense	(391,251)	(117,131)	(293,930)	(338,507)
NET INCOME (LOSS)	$ (667,247)	$ (367,498)	$ (695,575)	$ (772,017)
Loss per common share, basic (in Dollars per share)	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.02)
Loss per common share, diluted (in Dollars per share)	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.02)
Weighted average common shares outstanding - Basic (in Shares)	51,153,091	49,074,522	50,219,311	49,057,799
Weighted average common shares outstanding - Diluted (in Shares)	51,153,091	49,074,522	50,219,311	49,057,799

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NOTE G - SUBSEQUENT EVENTS

6 Months Ended

Dec. 31, 2013

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE G – SUBSEQUENT EVENTS

Subsequent to December 31, 2013, the Company issued a total of 40,104 shares of common stock and 3,356 shares of our subsidiary’s stock to convert a loan with a principal balance of $10,000.  Additionally 15,994 shares were issued for services.

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NOTE F - FAIR VALUE MEASUREMENTS

6 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

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	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2	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).

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 September 30, 2013 and June 30, 2013. 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-  12/31/2013		275,745		-		-		275,745
Derivative liabilities – 6/30/2013		492,461						492,461

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NOTE F - FAIR VALUE MEASUREMENTS (Details) - Fair Value, Liabilities Measured on Recurring Basis (USD $)	Dec. 31, 2013	Jun. 30, 2013
LIABILITIES:
Derivative liabilities	$ 275,745	$ 492,461
Fair Value, Inputs, Level 1 [Member]
LIABILITIES:
Derivative liabilities	0	0
Fair Value, Inputs, Level 2 [Member]
LIABILITIES:
Derivative liabilities	0	0
Fair Value, Inputs, Level 3 [Member]
LIABILITIES:
Derivative liabilities	$ 275,745	$ 492,461

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NOTE C - ACCRUED LIABILITIES - MAJORITY SHAREHOLDER (Details) (USD $)	Dec. 31, 2013	Jun. 30, 2013
Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract]
Due to Related Parties, Current	$ 6,234,752	$ 5,860,191

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NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Tables)

6 Months Ended

Dec. 31, 2013

Debt Disclosure [Abstract]

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

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
June 30, 2013	$	492,461
Additions to derivatives		106,222
Write off of derivative liability to additional paid-in capital due to conversion of related notes payable		(270,729)
Change in fair value		(52,209)
December 31, 2013	$	275,745

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NOTE F - FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]

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 September 30, 2013 and June 30, 2013. 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-  12/31/2013		275,745		-		-		275,745
Derivative liabilities – 6/30/2013		492,461						492,461

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NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) (USD $)	6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) [Line Items]
Repayments of Related Party Debt	$ 149,012	$ 11,173
Proceeds from Convertible Debt	129,500	0
Debt Conversion, Original Debt, Amount	147,222	0
Debt Conversion, Converted Instrument, Shares Issued (in Shares)	2,651,874
Amortization of Debt Discount (Premium)	99,228	68,347
Convertible Notes Payable [Member]
NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) [Line Items]
Proceeds from Convertible Debt	129,500
Debt Instrument, Maturity Date, Description	The borrowings are due nine to twelve months after issuance
Debt Instrument, Interest Rate Terms	interest rate of 0% to 8% for 90 days, then increases to 12%
Debt Instrument, Convertible, Terms of Conversion Feature	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
Debt Conversion, Original Debt, Amount	$ 147,222
Debt Conversion, Converted Instrument, Shares Issued (in Shares)	2,651,874
Convertible Notes Payable [Member] | Minimum [Member]
NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) [Line Items]
Debt Instrument, Convertible, Conversion Price (in Dollars per share)	$ 0.24

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	6 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Cash Flows From Operating Activities
Net loss	$ (695,575)	$ (772,017)
Adjustments to reconcile net loss to net cash Provided by (used in) operating activities:
Depreciation expense	600	466
Derivative (gain)/loss	(52,209)	38,776
Stock based compensation	34,630	19,255
Debt discount amortization	99,228	68,347
Change in assets and liabilities:
Prepaid expenses	(6,030)	(4,088)
Other assets	0	319
Accounts payable	(21,308)	(29,509)
Accrued liabilities - related parties	531,349	529,275
Accrued liabilities and deferred wages	153,288	158,739
Net Cash Provided By (Used in) Operating Activities	43,973	9,563
Cash Flows Provided from Financing Activities
Proceeds from convertible notes payable	129,500	0
Payments on related party note payable	(149,012)	(11,173)
Net Cash Provided by (Used in) Financing Activities	(19,512)	(11,173)
Net Increase (Decrease) In Cash	24,461	(1,610)
Cash, Beginning of Year	5,015	2,123
Cash, End of Year	29,476	513
Supplemental Cash Flow Information:
Interest paid	1,715	31,376
Supplemental Disclosure of Non-Cash Financing Activities:
Write off of derivative liability to additional paid-in capital	270,729	0
Shares issued as repayment customer deposit	0	772,017
N/P converted to common stock	147,222	0
Debt discount for derivative liability	106,222	0
Shares issued to settle accounts payable	$ 47,538	$ 0

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NOTE E - STOCK-BASED COMPENSATION

6 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE E – STOCK-BASED COMPENSATION

During the six months ended December 31, 2013, MI issued 396,326 shares of common stock for settlement of services and liabilities to outside consultants and certain employees.  We valued these shares at the fair market value on the dates of issuance of $34,630 for the services and $47,538 for the accounts payable.

MI also issued 2,651,874 shares of commons stock in settlement of $147,222 convertible promissory notes.

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NOTE G - SUBSEQUENT EVENTS (Details) (USD $)	6 Months Ended		2 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Feb. 20, 2014 Subsequent Event [Member] Subsidiary Shares [Member]	Feb. 20, 2014 Subsequent Event [Member]
NOTE G - SUBSEQUENT EVENTS (Details) [Line Items]
Stock Issued During Period, Shares, Conversion of Convertible Securities			3,356	40,104
Debt Conversion, Original Debt, Amount (in Dollars)	$ 147,222	$ 0		$ 10,000
Stock Issued During Period, Shares, Issued for Services	396,326			15,994