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 September 30, 2014

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 November 14, 2014, there were 57,663,843 shares of common stock outstanding.

TABLE OF CONTENTS

	Page
PART I - FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS	1
Unaudited Balance Sheets as of September 30, 2014 and June 30, 2014	1
Unaudited Statements of Operations for the three months ended September 30, 2014 and 2013	2
Unaudited Statements of Cash Flows for the three months ended September 30, 2014 and 2013	3
Notes to 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.

BALANCE SHEETS

 Unaudited

	September 30, 2014			June 30, 2014
ASSETS
CURRENT ASSETS
Cash	$			$	97,846
Prepaid and other current assets		1,851			3,613
Total current assets		1,851			101,459
PROPERTY AND EQUIPMENT, net		8,053			7,076
Total assets	$	9,904		$	108,535
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable, trade	$	638,514		$	643,090
Accrued liabilities		969,376			935,966
Accrued liabilities-majority shareholder		6,795,034			6,615,469
Notes payable-other		1,354,182			1,383,682
Note payable - majority shareholder		2,139,918			2,188,947
Convertible notes payable, net of discount of $177,534 and $123,640		254,771			213,240
Notes payable - minority shareholders		207,709			208,068
Derivative Liability		290,443			281,251
Deferred wages – employees		1,051,671			1,035,335
Deferred other income		24,598			24,598
Customer deposits		384,767			384,767
Total current liabilities		14,110,983			13,914,413
LONG TERM LIABILITIES
Deferred wages and interest-majority shareholder		1,379,480			1,328,830
Total liabilities		15,490,463			15,243,243
STOCKHOLDERS' DEFICIT
Common stock, authorized, 150,000,000 shares, no par value 56,262,767 and 54,876,990 issued and outstanding respectively		39,207,306			39,082,892
Accumulated deficit		(54,687,865	)		(54,217,600	)
Total stockholders' deficit		(15,480,559	)		(15,134,708	)
	$	9,904		$	108,535

See accompanying notes to unaudited financial statements.

1

MOLLER INTERNATIONAL, INC.

STATEMENTS OF OPERATIONS

Unaudited

	Three Months Ended
	September 30, 2014			September 30, 2013
REVENUE
Other revenue	$	-		$	-
OPERATING EXPENSES
Selling, general and administrative		177,211			125,416
Rent expense to majority shareholder		132,652			-
Depreciation and amortization		144			233
Total expenses		310,007			125,649
Operating Loss		(310,007	)		(125,649	)
OTHER INCOME (EXPENSE)
Interest expense		(102,048	)		(81,203	)
Interest expense- majority shareholder		(76,313	)		(74,888	)
Derivative (loss) income		18,103			253,412
Total other income (expense)		(160,258	)		97,321
NET LOSS	$	(470,265	)	$	(28,328	)
Loss per common share - Basic and diluted	$	(0.01	)	$	(0.00	)
Weighted average common shares outstanding - Basic and diluted		54,675,829			48,751,811

See accompanying notes to unaudited financial statements.

2

MOLLER INTERNATIONAL, INC.

STATEMENTS OF CASH FLOWS

Unaudited

	Three Months Ended
	September 30,			September 30,
	2014			2013
Cash Flows From Operating Activities
Net loss	$	(470,265	)	$	(28,328	)
Adjustments to reconcile net loss to net cash       Provided by (used in) operating activities:
Depreciation expense		144			233
Derivative (gain)/loss		(18,103	)		(253,412)
Stock based compensation		2,460			76,933
Debt discount amortization		46,280			31,577
Change in assets and liabilities:
Prepaid expenses		1,761			(6,517	)
Other assets					487
Accounts payable		(4,576)			(59,706	)
Accrued liabilities - related parties		230,215			261,588
Accrued liabilities and deferred wages		49,746			77,443
Net Cash Provided By (Used in) Operating Activities	$	(162,338	)	$	100,298
Cash Flows Provided from Investing Activities
Purchase of Fixed Assets		(1,120	)		-
Net Cash Provided by (Used in) Investing Activities		(1,120	)		-
Cash Flows Provided from Financing Activities
Proceeds from convertible notes payable		115,000			25,000
Payment on note payable		(359	)		-
Payments on related party note payable		(49,029	)		(104,452	)
Net Cash Provided by (Used in) Financing Activities	$	65,612		$	(79,452	)
Net Increase (Decrease) In Cash	$	(97,846	)	$	20,846
Cash, Beginning of Year	$	97,846		$	5,015
Cash, End of Year	$	-		$	25,861
Supplemental Cash Flow Information:
Interest paid	$	-		$	2,217
Supplemental Disclosure of Non-Cash Financing Activities:
Reclass of derivative liability to additional paid-in capital		72,879			11,462
Note payable converted to common stock		49,075			15,000
Debt discount for derivative liability		100,174			38,722

See accompanying notes to unaudited financial statements.

3

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 September 30, 2014, and its results of operations and its cash flows for the three months ended September 30, 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 September 30, 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 $132,652 during the three months ended September 30, 2014.  During the three months ended September 30, 2013 our rent expense was completely offset by billings to our affiliate, Freedom Motors and as a result our expense was $0.

As of September 30, 2014, MI had outstanding accrued liabilities consisting of accrued rent and accrued interest to our majority shareholder totaling $6,795,034.

NOTE D – NOTES PAYABLE & DERIVATIVE LIABILITIES

Majority Shareholder

During the three months ended September 30, 2014 and 2013 the Company made repayments on majority shareholder notes payable of $49,029 and $104,452, respectively. The total debt outstanding to majority shareholder at September 30, 2014 is $2,139,918. The debt is unsecured, payable upon demand and bears an annual interest rate of 10%.

Minority Shareholder

During the three months ended September 30, 2014 and 2013 MI made repayments on related party notes payable of $359 and $0, respectively. The total due to minority shareholder at September 30, 2014 is $207,709. The debt is unsecured, payable upon demand and bears an annual interest rate of 10%.

Non-Related Party

4

Convertible Notes Payable & Derivative Liabilities

During the three months ended September 30, 2014 and 2013 MI received $115,000 and $25,000 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 $100,174 was recorded as a result of these convertible notes during the three months ended September 30, 2014. A total of $46,280 of the debt discount was amortized during the period to interest expense. During the three months ended September 30, 2014, promissory notes totaling $49,075 were converted to 1,359,783 shares of MI common stockas a result $72,879 of the derivative liability was reclassed to additional paid in capital. The change in fair value of the derivative liability at September 30, 2014 is $18,103 and is recorded as derivative income.

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, 2014	$	281,251
Debt discount due to derivative liability		100,174
Reclass of derivative liability to additional paid-in capital due to conversion of related notes payable		(72,879)
Change in fair value		(18,103	)
September 30, 2014	$	290,443

NOTE E – STOCK-BASED COMPENSATION

During the three months ended September 30, 2014, MI issued 25,994 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 $2,460.

MI also issued 1,359,783 shares of commons stock in settlement of $49,075 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 – 6/30/2014		281,251		-		-		281,251
Derivative liabilities – 9/30/2014		290,443						290,443

NOTE G – SUBSEQUENT EVENTS

Subsequent to September 30, 2014, the Company issued a total of 1,379,727 shares of common stock to convert loans with a principal and interest balance of $47,684.  Additionally 21,349 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 September 30, 2014 and September 30, 2013:

For the three-months ended September 30, 2014, we had a net loss of $470,265 or $0.01 loss per share as compared to a net loss of $28,328 or $0.00 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 September 30, 2014, MI had an accumulated deficit of $54,687,865 and a working capital deficit of $14,109,132.  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. 

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:  November 24, 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:  November 24, 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:  November 24, 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 three-months ended September 30, 2014 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: November 24, 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 three-months ended September 30, 2014 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: November 24, 2014

Signed:

/s/ Paul S. Moller                             

Acting Chief Financial Officer

XML

NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES

3 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE D – NOTES PAYABLE & DERIVATIVE LIABILITIES

Majority Shareholder

During the three months ended September 30, 2014 and 2013 the Company made repayments on majority shareholder notes payable of $49,029 and $104,452, respectively. The total debt outstanding to majority shareholder at September 30, 2014 is $2,139,918. The debt is unsecured, payable upon demand and bears an annual interest rate of 10%.

Minority Shareholder

During the three months ended September 30, 2014 and 2013 MI made repayments on related party notes payable of $359 and $0, respectively. The total due to minority shareholder at September 30, 2014 is $207,709. The debt is unsecured, payable upon demand and bears an annual interest rate of 10%.

Non-Related Party

Convertible Notes Payable & Derivative Liabilities

During the three months ended September 30, 2014 and 2013 MI received $115,000 and $25,000 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 $100,174 was recorded as a result of these convertible notes during the three months ended September 30, 2014. A total of $46,280 of the debt discount was amortized during the period to interest expense. During the three months ended September 30, 2014, promissory notes totaling $49,075 were converted to 1,359,783 shares of MI common stockas a result $72,879 of the derivative liability was reclassed to additional paid in capital. The change in fair value of the derivative liability at September 30, 2014 is $18,103 and is recorded as derivative income.

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, 2014	$	281,251
Debt discount due to derivative liability		100,174
Reclass of derivative liability to additional paid-in capital due to conversion of related notes payable		(72,879)
Change in fair value		(18,103	)
September 30, 2014	$	290,443

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NOTE C - ACCRUED LIABILITIES - MAJORITY SHAREHOLDER

3 Months Ended

Sep. 30, 2014

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

Other Liabilities Disclosure [Text Block]

NOTE C – ACCRUED LIABILITIES – MAJORITY SHAREHOLDER

We lease our facility from our majority shareholder.  Rent expense to our majority shareholder was $132,652 during the three months ended September 30, 2014.  During the three months ended September 30, 2013 our rent expense was completely offset by billings to our affiliate, Freedom Motors and as a result our expense was $0.

As of September 30, 2014, MI had outstanding accrued liabilities consisting of accrued rent and accrued interest to our majority shareholder totaling $6,795,034.

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BALANCE SHEETS (Unaudited) (USD $)	Sep. 30, 2014	Jun. 30, 2014
CURRENT ASSETS
Cash	$ 0	$ 97,846
Prepaid and other current assets	1,851	3,613
Total current assets	1,851	101,459
PROPERTY AND EQUIPMENT, net	8,053	7,076
Total assets	9,904	108,535
CURRENT LIABILITIES
Accounts payable, trade	638,514	643,090
Accrued liabilities	969,376	935,966
Accrued liabilities-majority shareholder	6,795,034	6,615,469
Notes payable-other	1,354,182	1,383,682
Note payable - majority shareholder	2,139,918	2,188,947
Convertible notes payable, net of discount of $177,534 and $123,640	254,771	213,240
Notes payable - minority shareholders	207,709	208,068
Derivative Liability	290,443	281,251
Deferred wages – employees	1,051,671	1,035,335
Deferred other income	24,598	24,598
Customer deposits	384,767	384,767
Total current liabilities	14,110,983	13,914,413
LONG TERM LIABILITIES
Deferred wages and interest-majority shareholder	1,379,480	1,328,830
Total liabilities	15,490,463	15,243,243
STOCKHOLDERS' DEFICIT
Common stock, authorized, 150,000,000 shares, no par value 56,262,767 and 54,876,990 issued and outstanding respectively	39,207,306	39,082,892
Accumulated deficit	(54,687,865)	(54,217,600)
Total stockholders' deficit	(15,480,559)	(15,134,708)
	$ 9,904	$ 108,535

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NOTE A - ORGANIZATION AND BASIS OF PRESENTATION

3 Months Ended

Sep. 30, 2014

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, 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 September 30, 2014, and its results of operations and its cash flows for the three months ended September 30, 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.

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NOTE B - GOING CONCERN

3 Months Ended

Sep. 30, 2014

Going Concern Disclosure [Abstract]

Going Concern Disclosure [Text Block]

NOTE B – GOING CONCERN

As of September 30, 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.

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BALANCE SHEETS (Unaudited) (Parentheticals) (USD $)	Sep. 30, 2014	Jun. 30, 2014
Convertible Notes Payable, Discount (in Dollars)	$ 177,534	$ 123,640
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares outstanding	56,262,767	54,876,990
Common stock, shares issued	56,262,767	54,876,990
Common stock, no par value (in Dollars per share)	$ 0	$ 0

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NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) - Derivative Liability Measured on Recurring Basis, Unobservable Input Reconciliation (USD $)	3 Months Ended
	Sep. 30, 2014
Derivative Liability Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
June 30, 2014	$ 281,251
Debt discount due to derivative liability	100,174
Reclass of derivative liability to additional paid-in capital due to conversion of related notes payable	(72,879)
Change in fair value	(18,103)
September 30, 2014	$ 290,443

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Document And Entity Information	3 Months Ended
	Sep. 30, 2014	Nov. 14, 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		57,663,843
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	Sep. 30, 2014
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1

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NOTE E - STOCK BASED COMPENSATION (Details) (USD $)	3 Months Ended
	Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Issued During Period, Shares, Issued for Services	25,994
Stock Issued During Period, Value, Issued for Services	$ 2,460
Stock Issued During Period, Shares, Conversion of Convertible Securities	1,359,783
Stock Issued During Period, Value, Conversion of Convertible Securities	$ 49,075

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STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
REVENUE
Other revenue	$ 0	$ 0
OPERATING EXPENSES
Selling, general and administrative	177,211	125,416
Rent expense to majority shareholder	132,652	0
Depreciation and amortization	144	233
Total expenses	310,007	125,649
Operating Loss	(310,007)	(125,649)
OTHER INCOME (EXPENSE)
Interest expense	(102,048)	(81,203)
Interest expense- majority shareholder	(76,313)	(74,888)
Derivative (loss) income	18,103	253,412
Total other income (expense)	(160,258)	97,321
NET LOSS	$ (470,265)	$ (28,328)
Loss per common share - Basic and diluted (in Dollars per share)	$ (0.01)	$ 0.00
Weighted average common shares outstanding - Basic and diluted (in Shares)	54,675,829	48,751,811

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NOTE G - SUBSEQUENT EVENTS

3 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE G – SUBSEQUENT EVENTS

Subsequent to September 30, 2014, the Company issued a total of 1,379,727 shares of common stock to convert loans with a principal and interest balance of $47,684.  Additionally 21,349 shares were issued for services.

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NOTE F - FAIR VALUE MEASUREMENTS

3 Months Ended

Sep. 30, 2014

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 – 6/30/2014		281,251		-		-		281,251
Derivative liabilities – 9/30/2014		290,443						290,443

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NOTE F - FAIR VALUE MEASUREMENTS (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (USD $)	Sep. 30, 2014	Jun. 30, 2014
LIABILITIES:
Derivative liabilities	$ 290,443	$ 281,251
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	$ 290,443	$ 281,251

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NOTE C - ACCRUED LIABILITIES - MAJORITY SHAREHOLDER (Details) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014
NOTE C - ACCRUED LIABILITIES - MAJORITY SHAREHOLDER (Details) [Line Items]
Operating Leases, Rent Expense	$ 132,652	$ 0
Due to Related Parties, Current	6,795,034		6,615,469
Majority Shareholder [Member]
NOTE C - ACCRUED LIABILITIES - MAJORITY SHAREHOLDER (Details) [Line Items]
Operating Leases, Rent Expense	$ 132,652	$ 0

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NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Tables)

3 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Derivative Liabilities
June 30, 2014	$	281,251
Debt discount due to derivative liability		100,174
Reclass of derivative liability to additional paid-in capital due to conversion of related notes payable		(72,879)
Change in fair value		(18,103	)
September 30, 2014	$	290,443

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NOTE F - FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and 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 – 6/30/2014		281,251		-		-		281,251
Derivative liabilities – 9/30/2014		290,443						290,443

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NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014
NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) [Line Items]
Notes Payable, Related Parties, Current	$ 2,139,918		$ 2,188,947
Proceeds from Convertible Debt	115,000	25,000
Debt Instrument, Convertible, Beneficial Conversion Feature	100,174	38,722
Amortization of Debt Discount (Premium)	46,280	31,577
Debt Conversion, Original Debt, Amount	49,075	15,000
Embedded Derivative, No Longer Bifurcated, Amount Reclassified to Stockholders' Equity	72,879	11,462
Derivative, Gain (Loss) on Derivative, Net	18,103	253,412
Majority Shareholder [Member]
NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) [Line Items]
Repayments of Debt	49,029	104,452
Notes Payable, Related Parties, Current	2,139,918
Debt Instrument, Interest Rate, Stated Percentage	10.00%
Investor [Member]
NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) [Line Items]
Repayments of Debt	359	0
Notes Payable, Related Parties, Current	207,709
Debt Instrument, Interest Rate, Stated Percentage	10.00%
Convertible Notes Payable [Member] | Minimum [Member]
NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) [Line Items]
Debt Instrument, Term	9 months
Convertible Notes Payable [Member] | Maximum [Member]
NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) [Line Items]
Debt Instrument, Term	12 months
Convertible Notes Payable [Member]
NOTE D - NOTES PAYABLE & DERIVATIVE LIABILITIES (Details) [Line Items]
Proceeds from Convertible Debt	115,000	25,000
Debt Instrument, Interest Rate Terms	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 Instrument, Convertible, Beneficial Conversion Feature	100,174
Amortization of Debt Discount (Premium)	46,280
Debt Conversion, Original Debt, Amount	49,075
Debt Conversion, Converted Instrument, Shares Issued (in Shares)	1,359,783
Embedded Derivative, No Longer Bifurcated, Amount Reclassified to Stockholders' Equity	72,879
Derivative, Gain (Loss) on Derivative, Net	$ 18,103

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STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash Flows From Operating Activities
Net loss	$ (470,265)	$ (28,328)
Adjustments to reconcile net loss to net cash Provided by (used in) operating activities:
Depreciation expense	144	233
Derivative (gain)/loss	(18,103)	(253,412)
Stock based compensation	2,460	76,933
Debt discount amortization	46,280	31,577
Change in assets and liabilities:
Prepaid expenses	1,761	(6,517)
Other assets	0	487
Accounts payable	(4,576)	(59,706)
Accrued liabilities - related parties	230,215	261,588
Accrued liabilities and deferred wages	49,746	77,443
Net Cash Provided By (Used in) Operating Activities	(162,338)	100,298
Cash Flows Provided from Investing Activities
Purchase of Fixed Assets	(1,120)	0
Net Cash Provided by (Used in) Investing Activities	(1,120)	0
Cash Flows Provided from Financing Activities
Proceeds from convertible notes payable	115,000	25,000
Payment on note payable	(359)	0
Payments on related party note payable	(49,029)	(104,452)
Net Cash Provided by (Used in) Financing Activities	65,612	(79,452)
Net Increase (Decrease) In Cash	(97,846)	20,846
Cash, Beginning of Year	97,846	5,015
Cash, End of Year	0	25,861
Supplemental Cash Flow Information:
Interest paid	0	2,217
Supplemental Disclosure of Non-Cash Financing Activities:
Reclass of derivative liability to additional paid-in capital	72,879	11,462
Note payable converted to common stock	49,075	15,000
Debt discount for derivative liability	$ 100,174	$ 38,722

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NOTE E - STOCK BASED COMPENSATION

3 Months Ended

Sep. 30, 2014

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 three months ended September 30, 2014, MI issued 25,994 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 $2,460.

MI also issued 1,359,783 shares of commons stock in settlement of $49,075 convertible promissory notes.

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NOTE G - SUBSEQUENT EVENTS (Details) (USD $)	3 Months Ended		2 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Nov. 21, 2014 Subsequent Event [Member]
NOTE G - SUBSEQUENT EVENTS (Details) [Line Items]
Debt Conversion, Converted Instrument, Shares Issued			1,379,727
Debt Conversion, Original Debt, Amount (in Dollars)	$ 49,075	$ 15,000	$ 47,684
Stock Issued During Period, Shares, Issued for Services	25,994		21,349